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News Release

Federal Realty Investment Trust Announces First Quarter 2017 Operating Results

ROCKVILLE, Md., May 3, 2017 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2017.  Highlights of the quarter include:

  • Generated earnings per diluted share of $0.78 for the quarter compared to $1.10 in first quarter 2016 which included a $0.37 gain on change in control of interests.
  • Generated FFO per diluted share of $1.45 for the quarter compared to $1.38 in first quarter 2016, representing growth of 5.1%.
  • Generated same center property operating income growth of 4.3% for the first quarter.
  • Signed leases for 523,869 sf of comparable space (591,765 sf total) in the first quarter at an average rent of $34.91 psf and achieved cash basis rollover growth on those comparable spaces of 11%.
  • Acquired Riverpoint Center, 211,000 sf shopping center on 17 acres of land in Chicago, Illinois for $107 million.
  • Increased our 2017 FFO per diluted share guidance range to $5.85 - $5.93.

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of high quality retail assets. Federal Realty's portfolio is located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has the longest consecutive record of annual dividend increases in the REIT industry. (PRNewsFoto/Federal Realty Investment Trust)

"We're very pleased to deliver another quarter of record bottom line results to our shareholders," said Donald C. Wood, President and Chief Executive Office of Federal Realty. "Our team remains focused on uncovering value creative opportunities throughout our existing portfolio – whether it be through redevelopment or remerchandising – in order to keep our centers relevant for years to come. We also continue to identify potential infill acquisitions in order to re-stock our redevelopment pipeline and drive future growth opportunities. Our record results reflect the broad base of our balanced business plan as we continue to position our portfolio to meet the needs of the changing retail environment."

Financial Results

Net income available for common shareholders was $56.1 million and earnings per diluted share was $0.78 for first quarter 2017 versus $76.8 million and $1.10, respectively, for first quarter 2016 which included a $0.37 gain on change in control of interests

In the first quarter 2017, Federal Realty generated funds from operations available for common shareholders (FFO) of $105.8 million, or $1.45 per diluted share. This compares to FFO of $97.6 million, or $1.38 per diluted share, in first quarter 2016.

FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance.  A reconciliation of FFO to net income is attached to this press release.

Portfolio Results

In first quarter 2017, same-center property operating income increased 4.3% when including properties that are being redeveloped and 1.0% when excluding those properties. Our proactive anchor releasing efforts to reposition our properties for the future continued to negatively impact our same-store quarterly results.

The overall portfolio was 94.6% leased as of March 31, 2017, compared to 94.4% on December 31, 2016 and 94.1% on March 31, 2016.  Federal Realty's same center portfolio was 95.8% leased on March 31, 2017, compared to 95.7% on December 31, 2016 and 95.9% on March 31, 2016.

During first quarter 2017, Federal Realty signed 114 leases for 591,765 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 523,869 square feet at an average cash basis contractual rent increase (i.e., excluding the impact of straight-line rents) of 11%.  The average contractual rent on this comparable space for the first year of the new leases is $34.91 per square foot compared to the average contractual rent of $31.31 per square foot for the last year of the prior leases.  The previous average contractual rent was calculated by including both the minimum rent and any percentage rent actually paid during the last year of the lease term for the re-leased space.  On a straight-line basis, rent increases for comparable retail space averaged 23% for first quarter 2017.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.98 per common share, resulting in an indicated annual rate of $3.92 per common share. The regular common dividend will be payable on July 17, 2017 to common shareholders of record as of June 22, 2017.

Summary of Other Quarterly Activities and Recent Developments

  • March 31, 2017Federal Realty acquired Riverpoint Center, a 211,000 square foot grocery anchored community shopping center with surface parking on 17 acres of land in Chicago, Illinois. The property is located in affluent Lincoln Park and is 3.5 miles northwest of downtown Chicago. The Trust sourced the acquisition off-market for $107 million cash.
  • March 28, 2017Federal Realty announced its exclusive partnership with Freight Farms, a Boston-based company that retrofits shipping containers with vertical farming technology capable of growing acres' worth of produce in a fraction of the space of traditional farms. The partnership empowers anyone to use this technology while repurposing Federal Realty's unused parking spaces as a place to locally and sustainably produce food that benefits the shopping centers' tenants, customers and community.

Guidance

Federal Realty increased its 2017 guidance for FFO per diluted share to $5.85 to $5.93 and 2017 earnings per diluted share guidance to $3.35 to $3.43.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2017 earnings conference call, which is scheduled for Thursday, May 4, 2017 at 11:00AM ET.  To participate, please call 877.445.3230 five to ten minutes prior to the call start time and use the passcode 94377266 (required).  A replay of the webcast will be available on Federal Realty's website at www.federalrealty.com. A telephonic replay of the conference call will also be available through May 11, 2017 by dialing 855.859.2056; Passcode: 94377266.

About Federal Realty

Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Our expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 98 properties include over 2,800 tenants, in approximately 23 million square feet, and over 1,800 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 49 consecutive years, the longest record in the REIT industry. Federal Realty shares are traded on the NYSE under the symbol FRT. For additional information about Federal Realty and its properties, visit www.FederalRealty.com.

Safe Harbor Language

Certain matters discussed within this press release may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although Federal Realty believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. These factors include, but are not limited to, the risk factors described in our Annual Report on Form 10-K filed on February 13, 2017, and include the following:

  • risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;
  • risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that completion of anticipated or ongoing property redevelopments or renovation projects that we do pursue may cost more, take more time to complete, or fail to perform as expected;
  • risks that we are investing a significant amount in ground-up development projects that may not perform as planned, may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;
  • risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, that environmental issues may develop at our properties and result in unanticipated costs, and, because real estate is illiquid, that we may not be able to sell properties when appropriate;
  • risks that our growth will be limited if we cannot obtain additional capital;
  • risks associated with general economic conditions, including local economic conditions in our geographic markets;
  • risks of financing, such as our ability to consummate additional financings or obtain replacement financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense; and
  • risks related to our status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this press release. Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise. You should carefully review the risks and risk factors included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2017.

 

Investor Inquires:

 

Media Inquiries:

Leah Andress

 

Andrea Simpson

Investor Relations Associate

 

Vice President, Marketing

301.998.8265

 

617.684.1511

landress@federalrealty.com

 

asimpson@federalrealty.com

 

 

 

Federal Realty Investment Trust

Consolidated Balance Sheets

March 31, 2017

 

March 31,

 

December 31,

 

2017

 

2016

 

(in thousands, except share and per share data)

 

(unaudited)

   

ASSETS

     

Real estate, at cost

     

Operating (including $1,235,147 and $1,226,918 of consolidated variable interest entities, respectively)

$

6,294,142

   

$

6,125,957

 

Construction-in-progress

687,356

   

599,260

 

Asset held for sale

33,856

   

33,856

 
 

7,015,354

   

6,759,073

 

Less accumulated depreciation and amortization (including $217,449 and $209,239 of consolidated variable interest entities, respectively)

(1,766,239)

   

(1,729,234)

 

Net real estate

5,249,115

   

5,029,839

 

Cash and cash equivalents

20,112

   

23,368

 

Accounts and notes receivable, net

115,775

   

116,749

 

Mortgage notes receivable, net

29,904

   

29,904

 

Investment in real estate partnerships

14,540

   

14,864

 

Prepaid expenses and other assets

226,754

   

208,555

 

TOTAL ASSETS

$

5,656,200

   

$

5,423,279

 

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Liabilities

     

Mortgages payable (including $436,494 and $439,120 of consolidated variable interest entities, respectively)

$

468,284

   

$

471,117

 

Capital lease obligations

71,582

   

71,590

 

Notes payable

496,311

   

279,151

 

Senior notes and debentures

1,977,192

   

1,976,594

 

Accounts payable and accrued expenses

191,901

   

201,756

 

Dividends payable

71,647

   

71,440

 

Security deposits payable

16,499

   

16,285

 

Other liabilities and deferred credits

144,979

   

115,817

 

Total liabilities

3,438,395

   

3,203,750

 

Commitments and contingencies

     

Redeemable noncontrolling interests

141,003

   

143,694

 

Shareholders' equity

     

Preferred shares, authorized 15,000,000 shares, $.01 par: 5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding

9,997

   

9,997

 

Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 72,236,981 and 71,995,897 shares issued and outstanding, respectively

725

   

722

 

Additional paid-in capital

2,736,921

   

2,718,325

 

Accumulated dividends in excess of net income

(764,458)

   

(749,734)

 

Accumulated other comprehensive loss

(1,493)

   

(2,577)

 

Total shareholders' equity of the Trust

1,981,692

   

1,976,733

 

Noncontrolling interests

95,110

   

99,102

 

Total shareholders' equity

2,076,802

   

2,075,835

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

5,656,200

   

$

5,423,279

 

 

 

Federal Realty Investment Trust

     

Consolidated Income Statements

     

March 31, 2017

     
 

Three Months Ended

 

March 31,

 

2017

 

2016

 

(in thousands, except per share data)

 

(unaudited)

REVENUE

     

Rental income

$

204,447

   

$

195,308

 

Other property income

2,190

   

2,312

 

Mortgage interest income

752

   

724

 

Total revenue

207,389

   

198,344

 

EXPENSES

     

Rental expenses

41,109

   

42,819

 

Real estate taxes

25,090

   

22,794

 

General and administrative

8,267

   

8,010

 

Depreciation and amortization

51,379

   

47,799

 

Total operating expenses

125,845

   

121,422

 

OPERATING INCOME

81,544

   

76,922

 

Other interest income

106

   

103

 

Interest expense

(23,758)

   

(23,729)

 

Income from real estate partnerships

   

41

 

INCOME FROM CONTINUING OPERATIONS

57,892

   

53,337

 

Gain on sale of real estate and change in control of interests

178

   

25,726

 

NET INCOME

58,070

   

79,063

 

   Net income attributable to noncontrolling interests

(1,880)

   

(2,108)

 

NET INCOME ATTRIBUTABLE TO THE TRUST

56,190

   

76,955

 

Dividends on preferred shares

(135)

   

(135)

 

NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

56,055

   

$

76,820

 

EARNINGS PER COMMON SHARE, BASIC

     

Continuing operations

$

0.78

   

$

0.73

 

Gain on sale of real estate and change in control of interests, net

   

0.37

 
 

$

0.78

   

$

1.10

 

Weighted average number of common shares, basic

71,862

   

69,771

 

EARNINGS PER COMMON SHARE, DILUTED

     

Continuing operations

$

0.78

   

$

0.73

 

Gain on sale of real estate and change in control of interests, net

   

0.37

 
 

$

0.78

   

$

1.10

 

Weighted average number of common shares, diluted

72,005

   

69,957

 

 

 

 

Federal Realty Investment Trust

       

Funds From Operations

March 31, 2017

       
   

Three Months Ended

   

March 31,

   

2017

 

2016

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

       

Net income

 

$

58,070

   

$

79,063

 

Net income attributable to noncontrolling interests

 

(1,880)

   

(2,108)

 

Gain on sale of real estate and change in control of interests, net

 

(70)

   

(25,726)

 

Depreciation and amortization of real estate assets

 

44,682

   

41,728

 

Amortization of initial direct costs of leases

 

4,684

   

4,204

 

Funds from operations

 

105,486

   

97,161

 

Dividends on preferred shares

 

(135)

   

(135)

 

Income attributable to operating partnership units

 

784

   

855

 

Income attributable to unvested shares

 

(340)

   

(292)

 

FFO

 

$

105,795

   

$

97,589

 

Weighted average number of common shares, diluted

 

72,805

   

70,867

 

FFO per diluted share

 

$

1.45

   

$

1.38

 
         

 

 

 

Federal Realty Investment Trust

     

Reconciliation of FFO Guidance

     

March 31, 2017

     
       

The following table provides a reconciliation of the range of estimated earnings per diluted share to estimated FFO per diluted share for the full year 2017. Estimates do not include the impact from potential acquisitions, potential dispositions, or land sale gains which have not closed as of May 3, 2017.

       
       
 

Full Year 2017 Guidance Range

   
 

Low

 

High

Estimated net income available to common shareholders, per diluted share

$

3.35

   

$

3.43

 

Adjustments:

     

Estimated gain on sale of real estate, net

(0.25)

   

(0.25)

 

Estimated depreciation and amortization of real estate

2.50

   

2.50

 

Estimated amortization of initial direct costs of leases

0.24

   

0.24

 

Estimated FFO per diluted share

$

5.85

   

$

5.93

 
 

Note:

Individual items may not add up to total due to rounding.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/federal-realty-investment-trust-announces-first-quarter-2017-operating-results-300450874.html

SOURCE Federal Realty Investment Trust