Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2005 Operating Results
Record Earnings Driven by Aggressive Leasing and Successful Redevelopment
ROCKVILLE, Md., Feb. 21 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2005.
- Funds from operations available for common shareholders (FFO) per diluted share was $3.06 and earnings per diluted share was $1.94 for 2005, compared to $2.85 and $1.41, respectively, for 2004.
- When compared to 2004, full year same-center property operating income increased 6.1% including redevelopments and expansions, and 4.5% excluding redevelopments and expansions.
- Guidance for 2006 FFO per diluted share remains unchanged at $3.30 to $3.35.
In fourth quarter 2005, Federal Realty reported FFO of $42.0 million, or $0.78 per diluted share. This compares to FFO of $37.1 million, or $0.70 per diluted share, reported in fourth quarter 2004. For the year ended December 31, 2005, Federal Realty reported FFO of $163.5 million, or $3.06 per diluted share. This compares to FFO of $148.7 million, or $2.85 per diluted share, for the full-year 2004, which included $3.1 million ($0.06 per diluted share) of insurance recovery for lost income from the Santana Row fire.
Net income available for common shareholders was $32.3 million and earnings per diluted share was $0.61 for the quarter ended December 31, 2005 versus $19.0 million and $0.36, respectively, for fourth quarter 2004. For the full year 2005, Federal Realty reported net income available for common shareholders of $103.1 million, or $1.94 per diluted share. This compares to net income available for common shareholders of $72.7 million, or $1.41 per diluted share, for the year ended December 31, 2004, which included $3.1 million of Santana Row insurance recoveries.
FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO and FFO per diluted share to net income available for common shareholders and earnings per diluted share, respectively, is attached to this press release.
On an annual basis, same-center property operating income in 2005 increased 6.1% including redevelopments and expansions, and 4.5% when redevelopments and expansions are excluded. On a same-center basis, including redevelopment and expansion properties, property operating income in fourth quarter 2005 increased 9.3% over fourth quarter 2004. When redevelopment and expansion properties are excluded from same-center results, property operating income increased 6.0% from fourth quarter 2004.
The Trust's overall portfolio improved to 96.3% leased as of December 31, 2005, compared to 95.1% on December 31, 2004. Federal Realty's same-center portfolio was 97.2% leased on December 31, 2005, compared to 96.7% on December 31, 2004.
During fourth quarter 2005, the Trust signed 107 leases for 532,500 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 454,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 19%. The average contractual rent on this comparable space for the first year of the new lease is $21.69 per square foot compared to the average contractual rent of $18.17 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 the 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 31% for fourth quarter 2005.
In 2005, Federal Realty signed 287 leases representing over 1.3 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 22%, and 34% on a GAAP-basis. As of December 31, 2005, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $18.64 per square foot.
"We accomplished our significant growth in 2005 funds from operations without any material contribution from assets acquired over the course of this year," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Our continued strong internal growth, as well as a significant pipeline of redevelopment opportunities, provides the foundation for Federal Realty to produce consistent and reliable growth in earnings in 2006 and beyond."
Federal Realty made significant progress with respect to the sale of residential condominiums at Santana Row in fourth quarter 2005 and early 2006. Through February 13, 2006, the Trust had closed sales on 152 units and had 30 units under contract, with associated gross sales proceeds of $105.3 million and $20.3 million, respectively. Federal Realty has increased its expectations of gross sales proceeds from the sale of the 219 total units at Santana Row to approximately $150 million from $135 million with sellout anticipated to be completed in 2006.
As a result of the continued success of the Santana Row condominium sales, the Trust's Board of Trustees declared a second special dividend of $0.20 per share on its common shares. The special dividend will be payable on March 30, 2006 to common shareholders of record as of March 14, 2006.
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 $0.555 per share on its common shares, resulting in an indicated annual rate of $2.22 per share. The regular common dividend will be payable on April 17, 2006, to common shareholders of record as of March 14, 2006.
Additionally, Federal Realty's Board of Trustees declared a regular quarterly cash dividend of $0.53125 per share on the Trust's Series B Cumulative Redeemable Preferred Shares (NYSE: FRTprB). Dividends on the Series B Cumulative Redeemable Preferred Shares will be payable on April 28, 2006, to shareholders of record on April 17, 2006.
Federal Realty left its guidance for 2006 FFO per diluted share unchanged at a range of $3.30 to $3.35, and its 2006 earnings per diluted share guidance unchanged at a range of $1.56 to $1.61.
Summary of Other Quarterly Activities and Recent Developments
- January 10, 2006 -- Federal Realty announced the acquisition of Crow Canyon Commons, a 228,000 square foot grocer-anchored community shopping center in San Ramon, Calif., for $47.5 million. The purchase increased the Trust's Northern California portfolio to 1.7 million square feet of retail space.
- November 29, 2005 -- Federal Realty priced a $125 million offering of senior unsecured notes. The 5.65% notes are due 2016 and were offered at par. Proceeds from the offering were primarily used to refinance debt maturities and pay down the Trust's credit facility.
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 2005 earnings conference call, which is scheduled for February 22, 2006, 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, http://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 22, 2006, by dialing (866) 448-4809.
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 17.6 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 0.5 million 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 96.3% leased to national, regional, and local retailers as of December 31, 2005, with no single tenant accounting for more than 2.5% 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 38 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 2, 2005, 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 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 we may not be able to sell the condominium units at Santana Row for the expected prices or within the anticipated time frames;
- 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, 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 2, 2005.
Investor and Media Inquiries: Andrew Blocher Suzanne O'Neill Vice President, Capital Markets Manager, Investor Relations & Investor Relations 301/998-8358 301/998-8166 firstname.lastname@example.org email@example.com Federal Realty Investment Trust Summarized Operating Results December 31, 2005 Financial Highlights (in thousands, except per share data) (unaudited) Three months ended Twelve months ended CONSOLIDATED OPERATING RESULTS December 31, December 31, 2005 2004 2005 2004 Revenues Rental income $103,689 $93,979 $395,403 $370,069 Other property income 3,146 2,712 9,557 10,403 Mortgage interest income 1,331 1,266 5,370 4,915 108,166 97,957 410,330 385,387 Expenses Rental 22,605 24,290 85,086 90,209 Real estate taxes 11,186 9,619 39,564 37,549 General and administrative 5,468 4,721 19,909 18,164 Depreciation and amortization 22,928 22,134 89,457 87,088 62,187 60,764 234,016 233,010 Operating income 45,979 37,193 176,314 152,377 Other interest income 269 419 2,215 1,504 Interest expense (23,012) (21,223) (88,566) (85,058) Income from real estate partnership 143 185 493 205 Minority interests (1,231) (853) (5,234) (4,170) Income from continuing operations 22,148 15,721 85,222 64,858 Discontinued operations (Loss) income before gain on sale of real estate (422) 1,476 (1,358) 5,246 Gain on sale of real estate 13,402 4,721 30,748 14,052 Income from discontinued operations 12,980 6,197 29,390 19,298 Net Income 35,128 21,918 114,612 84,156 Dividends on preferred stock (2,869) (2,869) (11,475) (11,475) Net income available for common shareholders $32,259 $19,049 $103,137 $72,681 FUNDS FROM OPERATIONS AVAILABLE FOR COMMON SHAREHOLDERS Net income $35,128 $21,918 $114,612 $84,156 Gain on sale of real estate (13,402) (4,721) (30,748) (14,052) Depreciation and amortization of real estate assets 20,992 20,503 82,752 81,649 Amortization of initial direct costs of leases 1,776 1,981 6,972 7,151 Depreciation of real estate partnership assets 159 137 630 187 Funds from operations 44,653 39,818 174,218 159,091 Dividends on preferred stock (2,869) (2,869) (11,475) (11,475) Income attributable to operating partnership units 228 175 801 1,055 Funds from operations available for common shareholders $42,012 $37,124 $163,544 $148,671 Weighted average number of common shares, diluted 53,597 52,814 53,469 52,257 Funds from operations available for common shareholders per diluted share $0.78 $0.70 $3.06 $2.85 EARNINGS PER COMMON SHARE, BASIC Income from continuing operations available for common shareholders $0.37 $0.25 $1.40 $1.05 (Loss) income from discontinued operations before gain on sale of real estate (0.01) 0.03 (0.03) 0.10 Gain on sale of real estate 0.25 0.09 0.59 0.27 $0.61 $0.37 $1.96 $1.42 Weighted average number of common shares, basic 52,738 51,870 52,533 51,008 EARNINGS PER COMMON SHARE, DILUTED Income from continuing operations available for common shareholders $0.36 $0.25 $1.39 $1.04 (Loss) income from discontinued operations before gain on sale of real estate - 0.02 (0.03) 0.10 Gain on sale of real estate 0.25 0.09 0.58 0.27 $0.61 $0.36 $1.94 $1.41 Weighted average number of common shares, diluted 53,189 52,372 53,050 51,547 Federal Realty Investment Trust Summarized Balance Sheets December 31, 2005 Financial Highlights (in thousands) December 31, December 31, 2005 2004 ASSETS Real estate, at cost Operating $2,727,488 $2,434,879 Construction-in-progress 50,593 130,040 Discontinued operations 51,240 101,357 2,829,321 2,666,276 Less accumulated depreciation and amortization (663,750) (595,338) Net real estate 2,165,571 2,070,938 Cash and cash equivalents 8,639 30,475 Accounts and notes receivable 38,161 34,849 Mortgage notes receivable 40,531 42,909 Investment in real estate partnership 9,375 9,631 Other assets 88,575 78,094 TOTAL ASSETS $2,350,852 $2,266,896 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Obligations under capital leases and mortgage notes $419,713 $410,885 Notes payable 316,755 325,051 Senior notes and debentures 653,675 568,121 Other liabilities 166,669 153,351 Total liabilities 1,556,812 1,457,408 Minority interests 19,193 18,954 Shareholders' equity Preferred stock 135,000 135,000 Common shares and other shareholders' equity 639,847 655,534 Total shareholders' equity 774,847 790,534 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,350,852 $2,266,896 Federal Realty Investment Trust Reconciliation of Net Income to FFO Guidance December 31, 2005 2006 Guidance ($ millions except per share amounts)(1) Net income $95 to $98 Cumulative effect of change in accounting (SFAS No. 123R) $(2) $(2) Depreciation and amortization of real estate & joint venture assets 88 88 Amortization of initial direct costs of leases 7 7 Funds from operations 188 191 Income attributable to operating partnership units 1 1 Dividends on preferred stock (11) (11) Funds from operations available for common shareholders 177 to 180 Weighted Average Shares (diluted) 53.8 Funds from operations available for common shareholders per diluted share $3.30 to $3.35 Note: (1) Individual items may not add up to total due to rounding.
SOURCE Federal Realty Investment Trust
CONTACT: Andrew Blocher, Vice President, Capital Markets, & Investor Relations, 1-301-998-8166, firstname.lastname@example.org, or Suzanne O'Neill, Manager, Investor Relations, 1-301-998-8358, email@example.com, both of Federal Realty Investment Trust