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News Release

Federal Realty Investment Trust Announces First Quarter 2019 Operating Results

ROCKVILLE, Md., May 2, 2019 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2019. For the three months ended March 31, 2019 and 2018, net income available for common shareholders was $0.78 per diluted share and $0.81 per diluted share, respectively.

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)

Highlights of the quarter include:

  • Generated funds from operations available for common shareholders (FFO) per diluted share of $1.56 for the quarter compared to $1.52 in first quarter 2018.
  • Generated comparable property operating income (POI) growth of 3.5% for the first quarter.
  • Signed leases for 247,331 sf of comparable space in the first quarter at an average rent of $45.07 psf and achieved cash basis rollover growth on those comparable spaces of 10%.
  • Announced the launch of Phase I at Santana West, a 360,000 square foot office building across Winchester Boulevard from Santana Row.
  • Maintained our 2019 FFO per diluted share guidance range to $6.30 - $6.46.

"We're pleased with our first quarter results," said Donald C. Wood, President and Chief Executive Officer. "We continue to execute on our multifaceted business plan with the goal of driving long term real estate value. Our best-in-class located properties are our greatest assets as we navigate the changing retail environment."

Financial Results

Net income available for common shareholders was $58.1 million and earnings per diluted share was $0.78 for first quarter 2019 versus $59.2 million and $0.81, respectively, for first quarter 2018.

In the first quarter 2019, Federal Realty generated FFO of $116.9 million, or $1.56 per diluted share. This compares to FFO of $112.4 million, or $1.52 per diluted share, in first quarter 2018.

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

The overall portfolio was 94.0% leased as of March 31, 2019, and the comparable portfolio was 94.6% leased. In first quarter 2019, comparable property POI increased 3.5%. 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.   

During the first quarter 2019, Federal Realty signed 79 leases for 305,724 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 247,331 square feet at an average rent of $45.07 per square foot compared to the average contractual rent of $41.03 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 10%.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.02 per common share, resulting in an indicated annual rate of $4.08 per common share. The regular common dividend will be payable on July 15, 2019 to common shareholders of record as of June 21, 2019.

Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a 5.000% Series C Cumulative Preferred Share of Beneficial Interest, of $0.3125 per depositary share. All dividends on the depositary shares will be payable on payable on July 15, 2019 to common shareholders of record as of June 21, 2019.

Summary of Other Quarterly Activities and Recent Developments

May 1, 2019Federal Realty announced the launch of Phase I at Santana West, a 360,000 square foot office building across Winchester Boulevard from Santana Row. The estimated total investment in Phase I is expected to be approximately $250 - $270 million.

Guidance

Federal Realty maintained its 2019 guidance for FFO per diluted share of $6.30 to $6.46 and maintained 2019 earnings per diluted share guidance of $3.14 to $3.30.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2019 earnings conference call, which is scheduled for Friday, May 3, 2019 at 10:00AM ET.  To participate, please call 877.445.3230 five to ten minutes prior to the call start time and use the passcode 6892556 (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, 2019 by dialing 855.859.2056; Passcode: 6892556.

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 105 properties include approximately 3,000 tenants, in 24 million square feet, and over 2,600 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 51 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, 2019, 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, 2019.

Investor Inquires:  

Media Inquiries:

Leah Andress Brady   

Brenda Pomar

Investor Relations Manager  

Corporate Communications Manager

301.998.8265 

301.998.8316

lbrady@federalrealty.com   

bpomar@federalrealty.com

 

Federal Realty Investment Trust

Consolidated Balance Sheets

March 31, 2019


March 31,


December 31,



2019


2018



(in thousands, except share and
per share data)


(unaudited)



ASSETS




Real estate, at cost




Operating (including $1,699,440 and $1,701,804 of consolidated variable interest entities, respectively)

$

7,293,205



$

7,307,622


Construction-in-progress (including $62,037 and $51,313 of consolidated variable interest entities, respectively)

540,192



495,274


Assets held for sale

10,771



16,576



7,844,168



7,819,472


Less accumulated depreciation and amortization (including $301,029 and $292,374 of consolidated variable interest entities, respectively)

(2,105,159)



(2,059,143)


Net real estate

5,739,009



5,760,329


Cash and cash equivalents

43,003



64,087


Accounts and notes receivable, net

137,779



142,237


Mortgage notes receivable, net

30,429



30,429


Investment in real estate partnerships

30,530



26,859


Operating lease right of use assets

95,402




Finance lease right of use assets

53,365




Prepaid expenses and other assets

221,849



265,703


TOTAL ASSETS

$

6,351,366



$

6,289,644


LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable, net (including $441,107 and $444,388 of consolidated variable interest entities, respectively)

$

452,466



$

474,379


Capital lease obligations



71,519


Notes payable, net

299,106



279,027


Senior notes and debentures, net

2,404,987



2,404,279


Accounts payable and accrued expenses

156,029



177,922


Dividends payable

78,547



78,207


Security deposits payable

19,381



17,875


Operating lease liabilities

75,057




Finance lease liabilities

72,071




Other liabilities and deferred credits

157,451



182,898


Total liabilities

3,715,095



3,686,106


Commitments and contingencies




Redeemable noncontrolling interests

134,708



136,208


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, 74,836,984 and 74,249,633 shares issued and outstanding, respectively

752



745


Additional paid-in capital

3,071,981



3,004,442


Accumulated dividends in excess of net income

(843,947)



(818,877)


Accumulated other comprehensive loss

(625)



(416)


Total shareholders' equity of the Trust

2,388,158



2,345,891


Noncontrolling interests

113,405



121,439


Total shareholders' equity

2,501,563



2,467,330


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

6,351,366



$

6,289,644












Federal Realty Investment Trust





Consolidated Income Statements





March 31, 2019






Three Months Ended



March 31,



2019


2018



(in thousands, except per share data)



(unaudited)


REVENUE





Rental income

$

231,492



$

224,648



Mortgage interest income

735



757



Total revenue

232,227



225,405



EXPENSES





Rental expenses

44,260



44,773



Real estate taxes

27,687



28,448



General and administrative

9,565



7,929



Depreciation and amortization

59,622



58,110



Total operating expenses

141,134



139,260








Gain on sale of real estate, net of tax



3,316








OPERATING INCOME

91,093



89,461








OTHER INCOME/(EXPENSE)





Other interest income

177



179



Interest expense

(28,033)



(26,184)



Loss from partnerships

(1,434)



(525)



NET INCOME

61,803



62,931



   Net income attributable to noncontrolling interests

(1,659)



(1,684)



NET INCOME ATTRIBUTABLE TO THE TRUST

60,144



61,247



Dividends on preferred shares

(2,010)



(2,010)



NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

58,134



$

59,237



EARNINGS PER COMMON SHARE, BASIC:





Net income available for common shareholders

$

0.78



$

0.81



Weighted average number of common shares

74,200



72,905



EARNINGS PER COMMON SHARE, DILUTED:





Net income available for common shareholders

$

0.78



$

0.81



Weighted average number of common shares

74,200



72,968




 

Federal Realty Investment Trust





Funds From Operations

March 31, 2019







Three Months Ended



March 31,



2019


2018



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO) (1)






Net income


$

61,803



$

62,931


Net income attributable to noncontrolling interests


(1,659)



(1,684)


Gain on sale of real estate, net




(3,316)


Depreciation and amortization of real estate assets


53,489



51,351


Amortization of initial direct costs of leases


4,750



4,600


Funds from operations


118,383



113,882


Dividends on preferred shares


(1,875)



(1,875)


Income attributable to operating partnership units


729



775


Income attributable to unvested shares


(344)



(388)


FFO


$

116,893



$

112,394


Weighted average number of common shares, diluted


75,010



73,838


FFO per diluted share


$

1.56



$

1.52







Notes:


1)

In connection with the adoption of the new lease accounting standard, effective January 1, 2019, certain internal and external legal leasing costs no longer qualify for capitalization. As a result, capitalized leasing costs excluding external commissions decreased to $0.4 million for the three months ended March 31, 2019, compared to $1.6 million for the three months ended March 31, 2018.

 

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SOURCE Federal Realty Investment Trust