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News Release

Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2010 Operating Results

ROCKVILLE, Md., Feb. 15, 2011 /PRNewswire via COMTEX/ --

Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2010.

 

(Logo: http://photos.prnewswire.com/prnh/20050907/DCW070LOGO )

Financial Results

Federal Realty generated funds from operations available for common shareholders (FFO) of $62.2 million, or $1.01 per diluted share for fourth quarter 2010. This compares to FFO of $60.1 million, or $0.98 per diluted share, in fourth quarter 2009 ($55.4 million or $0.90 per diluted share as adjusted for litigation provision - see below). For the year ending December 31, 2010, Federal Realty reported FFO of $239.2 million, or $3.88 per diluted share. This compares to $211.1 million, or $3.51 per diluted share, for the year ending December 31, 2009 ($227.4 million or $3.78 per diluted share as adjusted for litigation provision).

Net income available for common shareholders was $32.7 million and earnings per diluted share was $0.53 for fourth quarter 2010 versus $31.8 million and $0.52, respectively, for fourth quarter 2009 ($27.1 million or $0.44 per diluted share as adjusted for litigation provision). For the year ending December 31, 2010, Federal Realty reported net income available for common shareholders of $122.2 million and earnings per diluted share of $1.98. This compares to net income available for shareholders of $97.8 million and earnings per diluted share of $1.63 for the year ending December 31, 2009 ($114.1 million or $1.90 per diluted share as adjusted for litigation provision).

Federal Realty's as adjusted financial results in the prior year exclude a $16.4 million litigation provision in 2009 (principally consisting of $20.6 million recorded in the first quarter and a reversal of $4.7 million recorded in the fourth quarter) reflecting the impact of a previously disclosed lawsuit involving a property adjacent to Santana Row. In February 2011, a final ruling on appeals from both Federal Realty and the plaintiff was issued, rejecting both appeals and affirming the final judgment. Payment is expected to be made on the judgment in first quarter 2011 with no further impact expected. See Note 8 of the Consolidated Financial Statements included in Form 10-K filed on February 15, 2011.

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

Same-center property operating income in 2010 increased 2.3% including redevelopments and expansions, and increased 2.1% excluding redevelopments and expansions, compared to 2009. On a quarterly-basis, same-center property operating income in fourth quarter 2010 increased 0.8% including redevelopment and expansionproperties, and increased 1.1% excluding redevelopment and expansionproperties, compared to fourth quarter 2009.

The overall portfolio was 93.9% leased as of December 31, 2010, compared to 93.9% on September 30, 2010 and 94.5% on December 31, 2009. Federal Realty's same-center portfolio was 94.3% leased on December 31, 2010, compared to 94.4% on September 30, 2010 and 94.6% on December 31, 2009.

During fourth quarter 2010, the Trust signed 89 leases for 493,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 490,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 7%. The average contractual rent on this comparable space for the first year of the new lease is $23.68 per square foot compared to the average contractual rent of $22.11 per square foot for the last year of the prior lease. The previous average contractual rent is 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 GAAP basis (i.e., including the impact of straight-line rents), rent increases per square foot for comparable retail space averaged 15% for fourth quarter 2010.

For all of 2010, Federal Realty signed 312 leases representing 1.5 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 8%, and 18% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $26.04 per square foot compared to the average cash-basis contractual rent of $24.11 per square foot for the last year of the prior lease. As of December 31, 2010, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $22.77 per square foot, as compared to $22.14 on December 31, 2009.

"Steady, solid, consistent growth from one of the best retail portfolios in the country," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Over the past several years, as the results of most commercial real estate portfolios in the U.S. have swung wildly, our consistency and predictability is especially appreciated. As the economy continues to improve, I would expect the same from Federal Realty."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees left the regular dividend rate on its common shares unchanged, declaring a regular quarterly cash dividend of $0.67 per share on its common shares, resulting in an indicated annual rate of $2.68 per share. The regular common dividend will be payable on April 15, 2011 to common shareholders of record on March 17, 2011.

Guidance

Federal Realty 2011 guidance for FFO per diluted share remained unchanged at a range of $3.95 to $4.02 and 2011 earnings per diluted share guidance of $2.00 to $2.07. 2011 guidance reflects record expectations for funds from operations per share.

Summary of Other Quarterly Activities and Recent Developments

 

  • January 19, 2011 - Acquired Tower Shops, a 372,000 square foot community center on 67 acres in Davie, Florida for $66.1 million. The property has significant opportunity for redevelopment and expansion and is well-positioned with a strong anchor tenant line-up including Ross, TJ Maxx, DSW, Michaels, Old Navy, Best Buy (opening fall 2011) and shadow-anchors Costco and Home Depot. The acquisition of Tower Shops expands the Trust's portfolio in South Florida to 680,000 square feet of retail space which includes Del Mar Village in Boca Raton and Courtyard Shops in Wellington.

 

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 2010 earnings conference call, which is scheduled for February 16, 2011, at 11 a.m. Eastern Standard Time. To participate, please call (866) 788-0540 five to ten minutes prior to the call start time and use the passcode FRT EARNINGS (required). Federal Realty will also provide an online webcast 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 through March 16, 2011, by dialing (888) 286-8010 and using the passcode 46183132.

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 18.3 million square feet located primarily in strategically selected metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 1.0 million square feet of retail space through a joint venture in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 93.9% leased to national, regional, and local retailers as of December 31, 2010, with no single tenant accounting for more than approximately 2.6% of annualized base rent. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 43 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P MidCap 400 company and its shares 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 Annual Report on Form 10-K filed on February 15, 2011, 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 renovations may cost more, take more time to complete, or fail to perform as expected;
  • 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 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 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 February 15, 2011.

Investor and Media Inquiries

   

Gina Birdsall

Janelle Stevenson

 

Investor Relations

Corporate Communications

 

301/998-8265

301/998-8185

 

gbirdsall@federalrealty.com

jmstevenson@federalrealty.com

 
   

Federal Realty Investment Trust

 

Summarized Balance Sheets

 

December 31, 2010

 
         
   
         
 

December 31,

 
 

2010

 

2009

 
 

(in thousands)

 

ASSETS

       
         

Real estate, at cost

       

Operating (including $97,157 and $68,643 of consolidated variable interest entities,

       

respectively)

$ 3,726,223

 

$ 3,619,562

 

Construction-in-progress

163,200

 

132,758

 

Assets held for sale (discontinued operations)

6,519

 

6,914

 
 

3,895,942

 

3,759,234

 

Less accumulated depreciation and amortization (including $4,431 and $3,053 of

       

consolidated variable interest entities, respectively)

(1,035,204)

 

(938,087)

 

Net real estate

2,860,738

 

2,821,147

 
         

Cash and cash equivalents

15,797

 

135,389

 

Accounts and notes receivable, net

68,997

 

72,191

 

Mortgage notes receivable, net

44,813

 

48,336

 

Investment in real estate partnerships

51,606

 

35,633

 

Prepaid expenses and other assets

117,602

 

109,613

 

TOTAL ASSETS

$ 3,159,553

 

$ 3,222,309

 
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       
         

Liabilities

       

Mortgages payable and capital lease obligations (including $22,785 and $23,417

       

of consolidated variable interest entities, respectively)

$ 589,441

 

$ 601,884

 

Notes payable

97,881

 

261,745

 

Senior notes and debentures

1,079,827

 

930,219

 

Accounts payable and other liabilities

211,274

 

219,398

 

Total liabilities

1,978,423

 

2,013,246

 
         

Shareholders' equity

       

Preferred shares

9,997

 

9,997

 

Common shares and other shareholders' equity

1,139,836

 

1,167,340

 

Total shareholders' equity of the Trust

1,149,833

 

1,177,337

 

Noncontrolling interests

31,297

 

31,726

 

Total shareholders' equity

1,181,130

 

1,209,063

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 3,159,553

 

$ 3,222,309

 
       

Federal Realty Investment Trust

 

Summarized Income Statements

 

December 31, 2010

 
                 
                 
 

Three months ended December 31,

 

Year ended December 31,

 
 

2010

 

2009

 

2010

 

2009

 
 

(in thousands, except per share data)

 
     

Revenue

               

Rental income

$ 134,077

 

$ 133,573

 

$ 525,528

 

$ 512,725

 

Other property income

3,302

 

3,588

 

14,545

 

12,850

 

Mortgage interest income

1,369

 

1,260

 

4,601

 

4,943

 

Total revenue

138,748

 

138,421

 

544,674

 

530,518

 
                 

Expenses

               

Rental expenses

28,494

 

30,580

 

111,034

 

108,627

 

Real estate taxes

13,885

 

15,019

 

59,108

 

58,109

 

General and administrative

7,127

 

5,862

 

24,189

 

22,032

 

Litigation provision

(17)

 

(4,732)

 

330

 

16,355

 

Depreciation and amortization

30,047

 

28,388

 

119,539

 

114,812

 

Total operating expenses

79,536

 

75,117

 

314,200

 

319,935

 

Operating income

59,212

 

63,304

 

230,474

 

210,583

 
                 

Other interest income

23

 

620

 

256

 

1,894

 

Interest expense

(25,203)

 

(29,159)

 

(101,882)

 

(108,781)

 

Early extinguishment of debt

-

 

(1,671)

 

(2,801)

 

(2,639)

 

Income from real estate partnerships

554

 

248

 

1,060

 

1,322

 

Income from continuing operations

34,586

 

33,342

 

127,107

 

102,379

 
                 

Discontinued operations

               

Discontinued operations - (loss) income

(281)

 

24

 

(280)

 

195

 

Discontinued operations - gain on sale of real estate

-

 

-

 

1,000

 

1,298

 

Results from discontinued operations

(281)

 

24

 

720

 

1,493

 

Income before gain on sale of real estate

34,305

 

33,366

 

127,827

 

103,872

 
                 

Gain on sale of real estate

-

 

-

 

410

 

-

 

Net income

34,305

 

33,366

 

128,237

 

103,872

 
                 

Net income attributable to noncontrolling interests

(1,489)

 

(1,396)

 

(5,447)

 

(5,568)

 

Net income attributable to the Trust

32,816

 

31,970

 

122,790

 

98,304

 
                 

Dividends on preferred shares

(135)

 

(135)

 

(541)

 

(541)

 

Net income available for common shareholders

$ 32,681

 

$ 31,835

 

$ 122,249

 

$ 97,763

 
                 
                 

EARNINGS PER COMMON SHARE, BASIC

               

Continuing operations

$ 0.53

 

$ 0.52

 

$ 1.97

 

$ 1.60

 

Discontinued operations

-

 

-

 

0.01

 

0.03

 

Gain on sale of real estate

-

 

-

 

0.01

 

-

 
 

$ 0.53

 

$ 0.52

 

$ 1.99

 

$ 1.63

 
                 

Weighted average number of common shares, basic

61,251

 

61,008

 

61,182

 

59,704

 
                 

EARNINGS PER COMMON SHARE, DILUTED

               

Continuing operations

$ 0.53

 

$ 0.52

 

$ 1.96

 

$ 1.60

 

Discontinued operations

-

 

-

 

0.01

 

0.03

 

Gain on sale of real estate

-

 

-

 

0.01

 

-

 
 

$ 0.53

 

$ 0.52

 

$ 1.98

 

$ 1.63

 
                 

Weighted average number of common shares, diluted

61,405

 

61,142

 

61,324

 

59,830

 
               

Federal Realty Investment Trust

 

Funds From Operations

 

December 31, 2010

 
   
   
                   
   

Three months ended December 31,

 

Year ended December 31,

 
   

2010

 

2009

 

2010

 

2009

 

Funds from Operations available for common

(in thousands, except per share data)

 

shareholders (FFO) (1)

               

Net income (2)

$ 34,305

 

$ 33,366

 

$ 128,237

 

$ 103,872

 

Net income attributable to noncontrolling interests

(1,489)

 

(1,396)

 

(5,447)

 

(5,568)

 

Gain on sale of real estate

-

 

-

 

(1,410)

 

(1,298)

 

Depreciation and amortization of real estate assets

26,812

 

25,423

 

107,187

 

103,104

 

Amortization of initial direct costs of leases

2,326

 

2,443

 

9,552

 

9,821

 

Depreciation of joint venture real estate assets

435

 

342

 

1,499

 

1,388

 

Funds from operations

62,389

 

60,178

 

239,618

 

211,319

 

Dividends on preferred shares

(135)

 

(135)

 

(541)

 

(541)

 

Income attributable to operating partnership units

244

 

245

 

980

 

974

 

Income attributable to unvested shares

(259)

 

(193)

 

(847)

 

(687)

 

FFO

62,239

 

60,095

 

239,210

 

211,065

 

Litigation provision, net of allocation to unvested shares

(17)

 

(4,718)

 

329

 

16,301

 

FFO excluding litigation provision

$ 62,222

 

$ 55,377

 

$ 239,539

 

$ 227,366

 
                 

FFO per diluted share

$ 1.01

 

$ 0.98

 

$ 3.88

 

$ 3.51

 

Litigation provision per diluted share

-

 

(0.08)

 

-

 

0.27

 

FFO per diluted share excluding litigation provision

$ 1.01

 

$ 0.90

 

$ 3.88

 

$ 3.78

 
                   
 

Weighted average number of common shares, diluted

61,769

 

61,513

 

61,693

 

60,201

 
                   
                   
                   

Notes:

 

(1) See Glossary of Terms.

 

(2) Net income includes a charge of $0.3 million and $16.4 million in 2010 and 2009, respectively, for adjusting the accrual for litigation regarding a parcel of land adjacent to Santana Row as well as certain costs related to the litigation and appeal process. A final ruling on the appeal was issued in February 2011 rejecting the appeals and affirming the final judgment against us. We believe FFO excluding this litigation provision provides a more meaningful evaluation of operations, and therefore, have included FFO and FFO per share excluding the related charges.

 
                   

Federal Realty Investment Trust

 

Reconciliation of Net Income to FFO Guidance

 

December 31, 2010

 
         
   
 

2011 Guidance

 
 

(Dollars in millions except

 
 

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$ 129

 

$ 134

 

Net income attributable to noncontrolling interests

(5)

 

(5)

 

Gain on sale of real estate

(0)

 

(0)

 

Depreciation and amortization of real estate & joint venture real estate assets

112

 

112

 

Amortization of initial direct costs of leases

9

 

9

 

Funds from operations

245

 

250

 

Dividends on preferred shares

(1)

 

(1)

 

Income attributable to operating partnership units

1

 

1

 

Income attributable to unvested shares

(1)

 

(1)

 

FFO

$ 245

 

$ 249

 
         

Weighted average number of common shares, diluted

61.9

 

61.9

 
         

FFO per diluted share

$ 3.95

 

$ 4.02

 
         
         

Notes:

 

(1) Individual items may not add up to total due to rounding.

 
       

SOURCE Federal Realty Investment Trust