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News Release

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.

Financial Results

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.

Portfolio Results

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.

Special Dividend

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.

Guidance

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                            soneill@federalrealty.com
    ablocher@federalrealty.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, ablocher@federalrealty.com, or Suzanne O'Neill, Manager, Investor Relations, 1-301-998-8358, soneill@federalrealty.com, both of Federal Realty Investment Trust