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- Press Release
Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2004 Operating Results
Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2004 Operating Results
ROCKVILLE, Md.--(BUSINESS WIRE)--Feb. 16, 2005--Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its fourth quarter and year ended December 31, 2004.
- Federal Realty reported record Funds from Operations available for common shareholders (FFO) per diluted share of $2.85 for the year, and net income per diluted share of $1.41.
- FFO per diluted share was $0.70 for fourth quarter 2004 and net income available for common shareholders per diluted share was $0.36.
- For 2004, same-center property operating income increased 4.3% including redevelopments and expansions, and 3.4% excluding redevelopments and expansions.
- Cash-basis contractual rent increases on lease rollovers were 18% for both the fourth quarter and the year on more than 398,000 and approximately 1.7 million square feet, respectively, of retail space for which there was a prior tenant.
- The Trust's portfolio was 95.1% leased at December 31, 2004.
Financial Results
Federal Realty reported FFO of $37.1 million, or $0.70 per diluted share in fourth quarter 2004. This compares to FFO of $41.4 million, or $0.82 per diluted share reported in fourth quarter 2003, which included approximately $8.0 million ($0.16 per diluted share) of insurance recovery for lost income from the Santana Row fire.
For the year ended December 31, 2004, Federal Realty reported FFO of $148.7 million, or $2.85 per diluted share, including approximately $3.1 million, or $0.06 per diluted share, of Santana Row insurance proceeds. For 2003, the Trust reported FFO of $131.3 million, or $2.70 per diluted share, which included the $8.0 million ($0.16 per diluted share) of Santana Row insurance proceeds, and a $3.4 million ($0.07 per diluted share) charge relating to the redemption of the Trust's 7.95% Series A Cumulative Redeemable Preferred Shares in accordance with generally accepted accounting principles.
Net income available for common shareholders was $19.0 million, and net income available for common shareholders per diluted share was $0.36 for the quarter ended December 31, 2004, versus $32.5 million and $0.66, respectively, for the fourth quarter of 2003. For the year ended December 31, 2004, Federal Realty reported net income available for common shareholders of $72.7 million, or $1.41 per diluted share. This compares to net income available for common shareholders of $76.0 million, or $1.59 per diluted share, for the year ended December 31, 2003.
FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO available for common shareholders and FFO per diluted share to net income available for common shareholders and net income available for common shareholders per diluted share, respectively, is attached to this press release.
"I am extremely proud of what the Trust accomplished in 2004, including our record FFO per share," commented Donald Wood, Federal Realty's President and Chief Executive Officer. "Record leasing activity, effective identification and execution of redevelopment opportunities, and acquisition capacity for both our own portfolio and our joint venture have created tremendous momentum coming out of 2004 that should support our growth for 2005 and beyond."
Portfolio Results
On a same-center basis, property operating income for fourth quarter 2004 increased 3.4% over fourth quarter 2003 both including and excluding redevelopment properties. For the year ended December 31, 2004, same-center property operating income increased 4.3% when redevelopments and expansions are included, and 3.4% when redevelopments and expansions are excluded.
Overall, the Trust's portfolio was 95.1% leased as of December 31, 2004, a 200 basis point improvement from the 93.1% leased at December 31, 2003. As of December 31, 2004, Federal Realty's same-center portfolio was 96.8% leased, compared to 96.1% leased at year-end 2003.
During the fourth quarter of 2004, the Trust signed 96 leases for a total of 454,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased more than 398,000 square feet at a weighted-average cash-basis contractual rent increase per square foot (i.e. excluding the impact of straight-line rents) of 18%. The weighted-average contractual rent on this comparable space for the first year of the new leases is $22.18 per square foot compared to the weighted-average contractual rent of $18.75 per square foot for the last year of the prior leases. The weighted-average contractual rent for the last year of the prior leases is calculated by including both the minimum rent and the percentage rent actually paid during the last year of those leases.
During 2004, Federal Realty signed 320 leases for a record 1.7 million square feet of comparable space at a weighted-average cash-basis contractual rent increase per square foot of 18%. The weighted-average contractual rent on this comparable space for the first year of the new leases is $21.63 per square foot compared to the weighted-average contractual rent of $18.37 per square foot for the last year of the prior leases. The year 2004 was the 14th consecutive year in which the Trust had weighted-average contractual rent increases in excess of 10%.
On a GAAP basis (i.e. including the impact of straight-line rents), weighted-average rent increases per square foot for comparable space were 29.6% for the fourth quarter of 2004 and 27.5% for the year ended December 31, 2004. As of December 31, 2004, Federal Realty's weighted-average contractual rent for all retail and commercial space in its portfolio was $18.33 per square foot.
At Santana Row, Federal Realty's mixed-use community in San Jose, Calif., 94% of the retail space was leased to 110 tenants, with 105 stores open and operating as of December 31, 2004. The 255 existing residential units at Santana Row were 95% leased as of December 31, 2004, and the development of the 256 Phase IV residential units remains on budget with the first unit deliveries expected in Spring 2005.
Guidance
Federal Realty today increased guidance for 2005 FFO per diluted share to a range of $3.01 to $3.04, and net income per diluted share to $1.41 to $1.44.
Summary of Other Quarterly Activities and Recent Developments
- December 7, 2004 - Federal Realty announced the acquisition of a supermarket-anchored shopping center in the Boston metropolitan area for $16.5 million. The property, Atlantic Plaza in North Reading, Mass., was acquired through the Trust's joint venture with Clarion Lion Properties Fund.
- December 14, 2004 - Federal Realty announced that its Board of Trustees had declared a regular quarterly cash dividend of $0.505 per share on its common shares, resulting in an indicated annual dividend rate of $2.02 per share.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its fourth quarter and year-end 2004 earnings conference call, which is scheduled for February 17, 2005, at 11 a.m. Eastern Standard Time. To participate, please call (888) 566-5771 five to ten minutes prior to the call's start time and use the Passcode EARNINGS (required). The conference leader is Andrew Blocher. Federal Realty will also provide an online Web Simulcast on the Company's Web site, www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available for 30 days by dialing (800) 679-9654.
About Federal Realty
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 (excluding joint venture properties) contains approximately 16.9 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 460,000 square feet of retail space through its joint venture with Clarion Lion Properties Fund in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 95.1% leased to approximately 2,200 national, regional, and local retailers as of December 31, 2004, with no single tenant accounting for more than 2.3% of rental revenue. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 37 consecutive years, the longest consecutive record in the REIT industry. Shares of Federal Realty are traded on the NYSE under the symbol FRT.
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 Current Report on Form 8-K filed on March 11, 2004, and include the following:
- risks that our tenants will not pay rent 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 any redevelopment or renovation project that we do pursue may not perform as anticipated;
- risks that the number of properties we acquire for our own account, and therefore the amount of capital we invest in acquisitions, may be impacted by our real estate partnership;
- 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 we may have environmental risks at our properties, 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 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 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 review the risks contained in our annual report on Form 10-K, our quarterly reports on Form 10-Q, and the risks contained in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2004.
Federal Realty Investment Trust
Summarized Operating Results
December 31, 2004
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
(unaudited)
CONSOLIDATED OPERATING Three months ended Twelve months ended
RESULTS December 31, December 31,
---------------------- 2004 2003 2004 2003
--------- --------- --------- ---------
Revenues
Rental income $ 94,548 $ 95,402 $371,856 $338,057
Other property income 4,880 3,140 17,503 10,407
Mortgage interest
income 1,266 770 4,915 4,103
--------- --------- --------- ---------
100,694 99,312 394,274 352,567
Expenses
Rental 24,898 23,629 91,614 82,289
Real estate taxes 9,827 9,005 38,296 34,126
General and
Administrative 4,721 2,178 18,164 11,820
Depreciation and
amortization 22,823 20,934 89,709 74,468
--------- --------- --------- ---------
62,269 55,746 237,783 202,703
--------- --------- --------- ---------
Operating income 38,425 43,566 156,491 149,864
Other interest income 421 534 1,506 1,274
Interest expense (21,223) (20,682) (85,058) (75,232)
Income from real estate
partnership 183 - 205 -
Minority interests (853) (1,413) (4,170) (4,670)
--------- --------- --------- ---------
Income from continuing
operations 16,953 22,005 68,974 71,236
Discontinued operations
Operating income from
discontinued
operations 244 1,065 1,130 3,208
Gain on sale of real
estate 4,721 12,330 14,052 20,053
--------- --------- --------- ---------
Results from operations of
discontinued assets 4,965 13,395 15,182 23,261
--------- --------- --------- ---------
Net Income 21,918 35,400 84,156 94,497
Dividends on preferred
stock (2,869) (2,869) (11,475) (15,084)
Preferred stock
redemption fee - - - (3,423)
--------- --------- --------- ---------
Net income available
for common
shareholders $ 19,049 $ 32,531 $ 72,681 $ 75,990
========= ========= ========= =========
FUNDS FROM OPERATIONS
AVAILABLE FOR COMMON
SHAREHOLDERS
---------------------
Net income $ 21,918 $ 35,400 $ 84,156 $ 94,497
Gain on sale of real
estate (4,721) (12,330) (14,052) (20,053)
Depreciation and
amortization of real
estate assets 20,503 19,067 81,649 68,202
Depreciation on joint
venture real estate
assets 137 - 187 -
Amortization of
initial direct costs
of leases 1,981 1,628 7,151 5,801
--------- --------- --------- ---------
Funds from operations 39,818 43,765 159,091 148,447
Dividends on preferred
stock (2,869) (2,869) (11,475) (15,084)
Income attributable to
operating partnership
units 175 501 1,055 1,317
Preferred stock
redemption fee - - - (3,423)
--------- --------- --------- ---------
Funds from operations
available for common
shareholders 37,124 41,397 148,671 131,257
========= ========= ========= =========
Weighted average
number of common
shares, diluted 52,814 50,447 52,257 48,619
========= ========= ========= =========
Funds from operations
per share available
for common
shareholders $ 0.70 $ 0.82 $ 2.85 $ 2.70
========= ========= ========= =========
NET INCOME PER COMMON
SHARE, BASIC
---------------------
Income from continuing
operations available
for common
shareholders $ 0.27 $ 0.39 $ 1.13 $ 1.09
Income from
discontinued
operations 0.10 0.27 0.29 0.51
--------- --------- --------- ---------
Net income available
for common
shareholders,
basic $ 0.37 $ 0.66 $ 1.42 $ 1.60
========= ========= ========= =========
Weighted average number
of common shares,
basic 51,870 49,066 51,008 47,379
========= ========= ========= =========
NET INCOME PER COMMON
SHARE, DILUTED
---------------------
Income from continuing
operations available
for common
shareholders $ 0.27 $ 0.39 $ 1.12 $ 1.11
Income from
discontinued
operations 0.09 0.27 0.29 0.48
--------- --------- --------- ---------
Net income available
for common
shareholders,
diluted $ 0.36 $ 0.66 $ 1.41 $ 1.59
========= ========= ========= =========
Weighted average number
of common shares,
diluted 52,372 50,447 51,547 48,619
========= ========= ========= =========
Federal Realty Investment Trust
Summarized Balance Sheets
December 31, 2004
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
(unaudited)
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31, December 31,
2004 2003
----------- -----------
ASSETS
Real estate, at cost $2,666,276 $2,470,149
Less accumulated depreciation and
amortization (595,338) (514,177)
----------- -----------
Net real estate investments 2,070,938 1,955,972
Cash and cash equivalents 30,475 34,968
Accounts and notes receivable 34,849 31,207
Mortgage notes receivable 42,909 41,500
Investment in real estate partnership 9,631 -
Other assets 78,094 77,538
----------- -----------
TOTAL ASSETS $2,266,896 $2,141,185
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases and
mortgage notes $ 410,885 $ 414,357
Notes payable 325,051 361,323
Senior notes and debentures 568,121 532,750
Other liabilities 153,351 111,799
----------- -----------
Total liabilities 1,457,408 1,420,229
Minority interests 18,954 29,582
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other shareholders'
equity 655,534 556,374
----------- -----------
Total shareholders' equity 790,534 691,374
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,266,896 $2,141,185
=========== ===========
Federal Realty Investment Trust
Reconciliation of 2005 EPS to 2005 FFO Guidance
December 31, 2004
----------------------------------------------------------------------
($ millions except per share amounts)
Forecast
--------
to
Net income $ 86 $ 88
Gain on sale of real estate (4) (4)
Depreciation and amortization of real estate &
joint venture assets 81 81
Amortization of initial direct costs of leases 7 7
------ ------
Funds from operations 170 172
Income attributable to operating partnership units 1 1
Dividends on preferred stock (11) (11)
------ ------
Funds from operations available for common
shareholders 160 to 162
====== ======
Weighted Average Shares (diluted) 53.1
------
Funds from operations available for common
shareholders per share $3.01 $3.04
------ ------
CONTACT:
Federal Realty Investment Trust, Rockville
Investor and Media Inquiries
Andrew Blocher, 301-998-8166
ablocher@federalrealty.com
or
Suzanne O'Neill, 301-998-8358
soneill@federalrealty.com
SOURCE: Federal Realty Investment Trust
