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News Release

Federal Realty Investment Trust Announces Fourth Quarter And Year-End 2014 Operating Results

ROCKVILLE, Md., Feb. 10, 2015 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2014.

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.

Financial Results
Federal Realty generated funds from operations available for common shareholders (FFO) of $77.7 million, or $1.13 per diluted share for fourth quarter 2014, which was negatively impacted by a charge for early extinguishment of debt.  Without the charges for early extinguishment of debt in 2014 and 2013, FFO would have been $88.2 million or $1.28 per diluted share; this compares to $78.2 million, or $1.18 per diluted share, in fourth quarter 2013.  For the year ending December 31, 2014, Federal Realty reported FFO of $327.6 million, or $4.79 per diluted share, which includes the early extinguishment of debt.  Excluding the early extinguishment of debt charges in both years, FFO would have been $338.1 million, or $4.94 per diluted share in 2014, compared to $303.2 million, or $4.61 per diluted share in 2013.

Net income available for common shareholders was $35.0 million and earnings per diluted share was $0.51 for fourth quarter 2014 versus $28.3 million and $0.42, respectively, for fourth quarter 2013.  For the year ending December 31, 2014, Federal Realty reported net income available for common shareholders of $164.0 million and earnings per diluted share of $2.41.  This compares to net income available for shareholders of $162.1 million and earnings per diluted share of $2.46 for the year ending December 31, 2013. 

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 in addition to Form 8-K that was filed.

Portfolio Results
Same-center property operating income in 2014 increased 4.1% including redevelopments and expansions, and 3.3% excluding redevelopments and expansions compared to 2013. On a quarterly-basis, same-center property operating income in fourth quarter 2014 increased 4.5% including redevelopment and expansion properties, and 3.0% excluding redevelopment and expansion properties, compared to fourth quarter 2013. 

The overall portfolio was 95.6% leased as of December 31, 2014, compared to 95.6% on September 30, 2014 and 95.8% on December 31, 2013.  Federal Realty's same-center portfolio was 95.8% leased on December 31, 2014, compared to 95.9% on September 30, 2014 and 95.8% on December 31, 2013.

During fourth quarter 2014, the Trust signed 83 leases for 343,896 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 306,860 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 20%.  The average contractual rent on this comparable space for the first year of the new lease is $33.27 per square foot compared to the average contractual rent of $27.76 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 32% for fourth quarter 2014.

For all of 2014, Federal Realty signed 340 leases representing 1.5 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 16%, and 29% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $34.12 per square foot compared to the average cash-basis contractual rent of $29.34 per square foot for the last year of the prior lease.  As of December 31, 2014, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $25.59 per square foot, as compared to $24.54 per square foot on December 31, 2013.

"Our bottom line results for the year represent yet another record for the Trust," commented Donald C. Wood, President and Chief Executive Officer of Federal Realty Investment Trust. "Importantly, we achieved these results while continuing to execute our long term business plan through successfully delivering the initial phases of Pike & Rose and Assembly Row, executing and expanding our redevelopment pipeline, acquiring strategic assets such as San Antonio Center, and capitalizing our balance sheet for the long term. We are pleased with the value creation we are delivering today and how our balanced business plan enhances our prospects for continued growth and value creation."

Summary of Other Quarterly Activities and Recent Developments

  • November 14, 2014Federal Realty issued $250 million aggregate principal amount of 4.50% senior unsecured notes due December 1, 2044.
  • December 16, 2014 – In December 2014, Federal Realty redeemed its 5.65% senior unsecured notes due 2016 for an aggregate principal of $125 million and also repaid its $61 million mortgage loan on East Bay Bridge due 2016. The total prepayment premium incurred in the fourth quarter 2014 was $10.5 million.
  • January 12, 2015Federal Realty announced the acquisition of a controlling interest in a 376,000-square-foot shopping center in Mountain View, California, based on a total value of $62.2 million. San Antonio Shopping Center is located immediately southeast of the intersection of El Camino Real and San Antonio Road – two major and important thoroughfares serving the Bay Area's affluent, tech and academic driven communities of Mountain View, Palo Alto and Los Altos. The acquisition was made using a combination of approximately 58,000 downREIT units, $27 million of cash ($18 million in one closing and $9 million in a second) and the assumption of $18.7 million of fixed rate debt secured by the property. Federal incurred approximately $1.5 million of transaction related costs associated with the acquisition.

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 $0.87 per share on its common shares, resulting in an indicated annual rate of $3.48 per share.  The regular common dividend will be payable on April 15, 2015 to common shareholders of record on March 20, 2015.

Guidance
We have maintained our 2015 guidance for FFO per diluted share of $5.26 to $5.34, and earnings per diluted share of $2.86 to $2.94.

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 2014 earnings conference call, which is scheduled for February 11, 2015, at 11 a.m. Eastern Standard Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 50846004 (required).  Federal Realty will also provide an online webcast on the Company's website, www.federalrealty.com, which will remain available for 30 days following the call.  A telephone recording of the call will also be available through February 18, 2015, by dialing (855) 859-2056 and using the passcode 50846004.

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, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply.  Our 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 89 properties include over 2,600 tenants, in approximately 20.2 million square feet of retail space, and 1,500 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 47 consecutive years, the longest record in the REIT industry. Federal Realty 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 10, 2015, 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 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 10, 2015.

             

Investor Inquiries

         

Media Inquiries

Brittany Schmelz

         

Andrea Simpson

Investor Relations Coordinator

         

Director, Marketing

301/998-8265

         

617/684-1511

bschmelz@federalrealty.com

         

asimpson@federalrealty.com

 

 

Federal Realty Investment Trust

Summarized Balance Sheets

December 31, 2014

 

December 31,

 

2014

 

2013

 

(in thousands)

           

ASSETS

         

Real estate, at cost

         

Operating (including $282,303 and $265,138 of consolidated variable interest entities, respectively)

$

5,128,757

   

$

4,618,258

 

Construction-in-progress

480,241

   

531,205

 
 

5,608,998

   

5,149,463

 

Less accumulated depreciation and amortization (including $26,618 and $19,086 of consolidated variable interest entities, respectively)

(1,467,050)

   

(1,350,471)

 

Net real estate

4,141,948

   

3,798,992

 

Cash and cash equivalents

47,951

   

88,927

 

Accounts and notes receivable, net

93,291

   

84,838

 

Mortgage notes receivable, net

50,988

   

55,155

 

Investment in real estate partnerships

37,457

   

32,264

 

Prepaid expenses and other assets

175,235

   

159,118

 

TOTAL ASSETS

$

4,546,870

   

$

4,219,294

 
           

LIABILITIES AND SHAREHOLDERS' EQUITY

         

Liabilities

         

Mortgages and capital lease obligations (including $187,632 and $202,782 of consolidated variable interest entities, respectively)

$

635,345

   

$

660,127

 

Notes payable

290,519

   

300,822

 

Senior notes and debentures

1,483,813

   

1,360,913

 

Accounts payable and other liabilities

325,584

   

321,710

 

Total liabilities

2,735,261

   

2,643,572

 

Redeemable noncontrolling interests

119,053

   

104,425

 

Shareholders' equity

         

    Preferred shares

9,997

   

9,997

 

    Common shares and other shareholders' equity

1,594,404

   

1,438,163

 

Total shareholders' equity of the Trust

1,604,401

   

1,448,160

 

    Noncontrolling interests

88,155

   

23,137

 

Total shareholders' equity

1,692,556

   

1,471,297

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,546,870

   

$

4,219,294

 

 

 

Federal Realty Investment Trust

Summarized Income Statements

December 31, 2014

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2014

 

2013

 

2014

 

2013

 

(in thousands, except per share data)

   

Revenue

                     

Rental income

$

171,634

   

$

159,953

   

$

666,322

   

$

620,089

 

Other property income

3,411

   

2,508

   

14,758

   

12,169

 

Mortgage interest income

1,332

   

1,385

   

5,010

   

5,155

 

Total revenue

176,377

   

163,846

   

686,090

   

637,413

 

Expenses

                     

Rental expenses

34,974

   

31,940

   

135,417

   

118,695

 

Real estate taxes

18,268

   

18,155

   

76,506

   

71,759

 

General and administrative

8,114

   

9,068

   

32,316

   

31,970

 

Depreciation and amortization

43,411

   

41,213

   

170,814

   

160,828

 

Total operating expenses

104,767

   

100,376

   

415,053

   

383,252

 

Operating income

71,610

   

63,470

   

271,037

   

254,161

 

Other interest income

49

   

268

   

94

   

433

 

Interest expense

(24,169)

   

(24,663)

   

(93,941)

   

(104,977)

 

Early extinguishment of debt

(10,545)

   

(9,905)

   

(10,545)

   

(13,304)

 

Income from real estate partnerships

334

   

433

   

1,243

   

1,498

 

Income from continuing operations

37,279

   

29,603

   

167,888

   

137,811

 

Discontinued operations

                     

Discontinued operations - income

   

   

   

942

 

Discontinued operations - gain on sale of real estate

   

   

   

23,861

 

Results from discontinued operations

   

   

   

24,803

 

Income before gain on sale of real estate

37,279

   

29,603

   

167,888

   

162,614

 

Gain on sale of real estate

   

   

4,401

   

4,994

 

Net income

37,279

   

29,603

   

172,289

   

167,608

 

 Net income attributable to noncontrolling interests

(2,117)

   

(1,147)

   

(7,754)

   

(4,927)

 

Net income attributable to the Trust

35,162

   

28,456

   

164,535

   

162,681

 

Dividends on preferred shares

(135)

   

(135)

   

(541)

   

(541)

 

Net income available for common shareholders

$

35,027

   

$

28,321

   

$

163,994

   

$

162,140

 
                       

EARNINGS PER COMMON SHARE, BASIC

                     

Continuing operations

$

0.51

   

$

0.43

   

$

2.35

   

$

2.01

 

Discontinued operations

   

   

   

0.38

 

Gain on sale of real estate

   

   

0.07

   

0.08

 
 

$

0.51

   

$

0.43

   

$

2.42

   

$

2.47

 
                       

Weighted average number of common shares, basic

67,997

   

65,965

   

67,322

   

65,331

 
                       

EARNINGS PER COMMON SHARE, DILUTED

                     

Continuing operations

$

0.51

   

$

0.42

   

$

2.34

   

$

2.00

 

Discontinued operations

   

   

   

0.38

 

Gain on sale of real estate

   

   

0.07

   

0.08

 
 

$

0.51

   

$

0.42

   

$

2.41

   

$

2.46

 
                       

Weighted average number of common shares, diluted

68,179

   

66,113

   

67,492

   

65,483

 

 

 

Federal Realty Investment Trust

Funds From Operations

December 31, 2014

                 
   

Three Months Ended

 

Year Ended

   

December 31,

 

December 31,

   

2014

 

2013

 

2014

 

2013

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

                       

Net income

 

$

37,279

   

$

29,603

   

$

172,289

   

$

167,608

 

Net income attributable to noncontrolling interests

 

(2,117)

   

(1,147)

   

(7,754)

   

(4,927)

 

Gain on sale of real estate

 

   

   

(4,401)

   

(28,855)

 

Depreciation and amortization of real estate assets

 

38,493

   

37,143

   

152,505

   

144,873

 

Amortization of initial direct costs of leases

 

3,420

   

2,607

   

12,391

   

10,694

 

Depreciation of joint venture real estate assets

 

353

   

384

   

1,555

   

1,504

 

Funds from operations

 

77,428

   

68,590

   

326,585

   

290,897

 

Dividends on preferred shares

 

(135)

   

(135)

   

(541)

   

(541)

 

Income attributable to operating partnership units

 

798

   

223

   

3,027

   

888

 

Income attributable to unvested shares

 

(346)

   

(305)

   

(1,474)

   

(1,306)

 

FFO

 

77,745

   

68,373

   

327,597

   

289,938

 

Early extinguishment of debt, net of allocation to unvested shares

 

10,499

   

9,861

   

10,498

   

13,244

 

FFO excluding early extinguishment of debt

 

$

88,244

   

$

78,234

   

$

338,095

   

$

303,182

 

Weighted average number of common shares, diluted

 

69,096

   

66,399

   

68,410

   

65,778

 
                         

FFO per diluted share

 

$

1.13

   

$

1.03

   

$

4.79

   

$

4.41

 
                         

FFO excluding early extinguishment of debt, per diluted share

 

$

1.28

   

$

1.18

   

$

4.94

   

$

4.61

 
                         

 

 

Federal Realty Investment Trust

         

Reconciliation of Net Income to FFO Guidance

         

December 31, 2014

         
           
 

2015 Guidance

 

(Dollars in millions except

 

 per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

         

Net income

$

209

   

$

214

 

Net income attributable to noncontrolling interests

(9)

   

(9)

 

Gain on sale of real estate

   

 

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

155

   

155

 

Amortization of initial direct costs of leases

13

   

13

 

Funds from operations

367

   

373

 

Dividends on preferred shares

(1)

   

(1)

 

Income attributable to operating partnership units

4

   

4

 

Income attributable to unvested shares

(1)

   

(1)

 

FFO

$

369

   

$

375

 
           

Weighted average number of common shares, diluted

70.2

   

70.2

 
           

FFO per diluted share

$

5.26

   

$

5.34

 
           

Note:

         

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

         

 

 

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SOURCE Federal Realty Investment Trust