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News Release

Federal Realty Investment Trust Announces First Quarter 2018 Operating Results
- Reports 3.8% comparable property POI growth and 22% comparable lease rollover -

ROCKVILLE, Md., May 2, 2018 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2018.  Highlights of the quarter include:

  • Generated earnings per diluted share of $0.81 for the quarter compared to $0.78 in first quarter 2017.
  • Generated funds from operations available for common shareholders (FFO) per diluted share of $1.52 for the quarter compared to $1.45 in first quarter 2017.
  • Generated comparable property property operating income (POI) growth of 3.8% for the first quarter.
  • Signed leases for 403,250 sf of comparable space in the first quarter at an average rent of $31.51 psf and achieved cash basis rollover growth on those comparable spaces of 22%.
  • Maintained our 2018 FFO per diluted share guidance range to $6.08 - $6.24.

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 with our first quarter results," said Donald C. Wood, President and Chief Executive Officer. "The combination of new retail tenant openings on both coasts, strong residential occupancy at our mixed use destinations and disciplined spending have come together for an impressive and powerful financial result in the quarter."

Financial Results

Net income available for common shareholders was $59.2 million and earnings per diluted share was $0.81 for first quarter 2018 versus $56.1 million and $0.78, respectively, for first quarter 2017.

In the first quarter 2018, Federal Realty generated FFO of $112.4 million, or $1.52 per diluted share. This compares to FFO of $105.8 million, or $1.45 per diluted share, in first quarter 2017.

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 2018, comparable property POI increased 3.8%. Comparable property POI represents our consolidated property portfolio other than those properties that distort comparability between periods in two primary categories (1) assets that were not owned for the full quarter in both periods presented and (2) assets currently under development or being repositioned for significant redevelopment and investment.   

The overall portfolio was 94.8% leased as of March 31, 2018 compared to 94.6% on March 31, 2017.  Federal Realty's comparable property portfolio was 95.3% leased on March 31, 2018 compared to 95.1% on March 31, 2017.

During the first quarter 2018, on a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 78 leases for 403,250 square feet at an average cash basis contractual rent increase (i.e., excluding the impact of straight-line rents) of 22%.  The average contractual rent on this comparable space for the first year of the new leases is $31.51 per square foot compared to the average contractual rent of $25.91 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 31% for first quarter 2018.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.00 per common share, resulting in an indicated annual rate of $4.00 per common share. The regular common dividend will be payable on July 16, 2018 to common shareholders of record as of June 22, 2018.

Guidance

Federal Realty maintained its 2018 guidance for FFO per diluted share of  $6.08 to $6.24 and updated 2018 earnings per diluted share guidance to $3.05 to $3.21.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2018 earnings conference call, which is scheduled for Thursday, May 3, 2018 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 9071259 (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 10, 2018 by dialing 855.859.2056; Passcode: 9071259.

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, Federal Realty's mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Its 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 104 properties include approximately 3,000 tenants, in approximately 24 million square feet, and over 2,500 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 50 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its 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, 2018, 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, 2018.

 

Federal Realty Investment Trust

Consolidated Balance Sheets

March 31, 2018

 

March 31,

 

December 31,

 

2018

 

2017

 

(in thousands, except share and
per share data)

 

(unaudited)

   

ASSETS

     

Real estate, at cost

     

Operating (including $1,656,951 and $1,639,486 of consolidated variable interest entities, respectively)

$

7,051,962

   

$

6,950,188

 

Construction-in-progress (including $39,171 and $43,393 of consolidated variable interest entities, respectively)

633,090

   

684,873

 

Assets held for sale

36,905

   

 
 

7,721,957

   

7,635,061

 

Less accumulated depreciation and amortization (including $257,604 and $247,410 of consolidated variable interest entities, respectively)

(1,922,110)

   

(1,876,544)

 

Net real estate

5,799,847

   

5,758,517

 

Cash and cash equivalents

64,407

   

15,188

 

Accounts and notes receivable, net

143,148

   

209,877

 

Mortgage notes receivable, net

30,429

   

30,429

 

Investment in real estate partnerships

23,513

   

23,941

 

Prepaid expenses and other assets

232,281

   

237,803

 

TOTAL ASSETS

$

6,293,625

   

$

6,275,755

 

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Liabilities

     

Mortgages payable, net (including $448,641 and $460,372 of consolidated variable interest entities, respectively)

$

479,333

   

$

491,505

 

Capital lease obligations

71,547

   

71,556

 

Notes payable, net

382,396

   

320,265

 

Senior notes and debentures, net

2,402,138

   

2,401,440

 

Accounts payable and accrued expenses

181,361

   

196,332

 

Dividends payable

75,667

   

75,931

 

Security deposits payable

17,072

   

16,667

 

Other liabilities and deferred credits

169,460

   

169,388

 

Total liabilities

3,778,974

   

3,743,084

 

Commitments and contingencies

     

Redeemable noncontrolling interests

141,541

   

141,157

 

Shareholders' equity

     

Preferred shares, authorized 15,000,000 shares, $.01 par:

     

5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding

150,000

   

150,000

 

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, 73,216,520 and 73,090,877 shares issued and outstanding, respectively

735

   

733

 

Additional paid-in capital

2,859,717

   

2,855,321

 

Accumulated dividends in excess of net income

(769,311)

   

(749,367)

 

Accumulated other comprehensive loss

489

   

22

 

Total shareholders' equity of the Trust

2,251,627

   

2,266,706

 

Noncontrolling interests

121,483

   

124,808

 

Total shareholders' equity

2,373,110

   

2,391,514

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

6,293,625

   

$

6,275,755

 
       

 

 

       
       

Federal Realty Investment Trust

     

Consolidated Income Statements

     

March 31, 2018

     
 

Three Months Ended

 

March 31,

 

2018

 

2017

 

(in thousands, except per share data)

 

(unaudited)

REVENUE

     

Rental income

$

220,581

   

$

204,447

 

Other property income

4,067

   

2,190

 

Mortgage interest income

757

   

752

 

Total revenue

225,405

   

207,389

 

EXPENSES

     

Rental expenses

44,773

   

41,109

 

Real estate taxes

28,448

   

25,090

 

General and administrative

7,929

   

8,267

 

Depreciation and amortization

58,110

   

51,379

 

Total operating expenses

139,260

   

125,845

 

OPERATING INCOME

86,145

   

81,544

 

Other interest income

179

   

106

 

Interest expense

(26,184)

   

(23,758)

 

Loss from real estate partnerships

(525)

   

 

INCOME FROM CONTINUING OPERATIONS

59,615

   

57,892

 

Gain on sale of real estate, net

3,316

   

178

 

NET INCOME

62,931

   

58,070

 

   Net income attributable to noncontrolling interests

(1,684)

   

(1,880)

 

NET INCOME ATTRIBUTABLE TO THE TRUST

61,247

   

56,190

 

Dividends on preferred shares

(2,010)

   

(135)

 

NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

59,237

   

$

56,055

 

EARNINGS PER COMMON SHARE, BASIC:

     

Net income available for common shareholders

$

0.81

   

$

0.78

 

Weighted average number of common shares

72,905

   

71,862

 

EARNINGS PER COMMON SHARE, DILUTED:

     

Net income available for common shareholders

$

0.81

   

$

0.78

 

Weighted average number of common shares

72,968

   

72,005

 
                           

 

 

Federal Realty Investment Trust

       

Funds From Operations

March 31, 2018

       
   

Three Months Ended

   

March 31,

   

2018

 

2017

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

       

Net income

 

$

62,931

   

$

58,070

 

Net income attributable to noncontrolling interests

 

(1,684)

   

(1,880)

 

Gain on sale of real estate, net (1)

 

(3,316)

   

(70)

 

Depreciation and amortization of real estate assets

 

51,351

   

44,682

 

Amortization of initial direct costs of leases

 

4,600

   

4,684

 

Funds from operations

 

113,882

   

105,486

 

Dividends on preferred shares (2)

 

(1,875)

   

(135)

 

Income attributable to operating partnership units

 

775

   

784

 

Income attributable to unvested shares

 

(388)

   

(340)

 

FFO

 

$

112,394

   

$

105,795

 

Weighted average number of common shares, diluted (2)

 

73,838

   

72,805

 

FFO per diluted share

 

$

1.52

   

$

1.45

 
         

Notes:

 

1)

Gain on sale of real estate for the three months ended March 31, 2018 is related to condominium units sold at Assembly Row and Pike & Rose. Effective January 1, 2018, we adopted a new accounting standard related to revenue recognition, which results in a change in our revenue recognition policy for condominium sales. See Note 2 of our March 31, 2018 Form 10-Q for additional information regarding the adoption.

2)

For the three months ended March 31, 2018, dividends on our Series 1 preferred shares are not deducted in the calculation of FFO available to common shareholders, as the related shares are dilutive and included in "weighted average common shares, diluted."

 

Investor Inquires:

Media Inquiries:

Leah Andress Brady

Andrea Simpson

Investor Relations Associate

Vice President, Marketing

301.998.8265

617.684.1511

lbrady@federalrealty.com 

asimpson@federalrealty.com

 

 

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SOURCE Federal Realty Investment Trust