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News Release

Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2006 Operating Results
              - Results reflect continued strong internal growth
                         and redevelopment returns -

ROCKVILLE, Md., Feb. 13 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2006.

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  • Funds from operations available for common shareholders (FFO) per diluted share was $3.26 and earnings per diluted share was $1.92 for 2006, compared to $3.06 and $1.94, respectively, for 2005.


  • FFO per diluted share grew 9.5% to $3.35 in 2006, excluding the impact of the $0.09 per diluted share non-cash redemption charge in fourth quarter 2006, from $3.06 in 2005.


  • When compared to 2005, full year same-center property operating income increased 6.2% including redevelopments and expansions, and 5.4% excluding redevelopments and expansions.


  • Rent increases on lease rollovers for 1.2 million square feet of comparable retail space in 2006 were 18% on a cash-basis and 29% on a GAAP-basis.


  • Guidance for 2007 FFO per diluted share remains unchanged at $3.60 to $3.65.


Financial Results

In fourth quarter 2006, Federal Realty generated FFO of $48.0 million, or $0.86 per diluted share, which excludes the impact of a $4.8 million, or $0.09 per diluted share, non-cash charge relating to the redemption of our Series B Preferred Shares in November 2006. This compares to FFO of $42.0 million, or $0.78 per diluted share, generated and reported in fourth quarter 2005. FFO reported by Federal Realty for fourth quarter 2006 was $43.3 million, or $0.77 per diluted share including the preferred share redemption charge.

For the year ended December 31, 2006, Federal Realty generated FFO of $181.9 million, or $3.35 per diluted share, which excludes the impact of the $4.8 million, or $0.09 per diluted share, non-cash preferred share redemption charge described above. This compares to FFO of $163.5 million, or $3.06 per diluted share, generated and reported in 2005. FFO reported by Federal Realty for the year ended December 31, 2006 was $177.1 million, or $3.26 per diluted share including the preferred share redemption charge.

Net income available for common shareholders was $17.8 million and earnings per diluted share was $0.32 for the quarter ended December 31, 2006 versus $32.3 million and $0.61, respectively, for fourth quarter 2005. For the full year 2006, Federal Realty reported net income available for common shareholders of $103.5 million, or $1.92 per diluted share. This compares to net income available for common shareholders of $103.1 million, or $1.94 per diluted share, for the year ended December 31, 2005. Federal Realty's net income available for common shareholders and earnings per diluted share results include the aforementioned $4.8 million Series B Preferred redemption charge in fourth quarter and year-end 2006 results, and a significant decline in gain on sale of real estate, reflecting the completion of the Santana Row condominium sales in August 2006.

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 is attached to this press release.

Portfolio Results

On an annual basis, same-center property operating income in 2006 increased 6.2% including redevelopments and expansions, and 5.4% excluding redevelopments and expansions. In fourth quarter 2006, same-center property operating income, including redevelopment and expansion properties, increased 4.7% over fourth quarter 2005. When redevelopment and expansion properties are excluded from same-center results, property operating income for fourth quarter 2006 increased 5.0% compared to fourth quarter 2005.

The Trust's overall portfolio was 96.5% leased as of December 31, 2006, compared to 96.3% on December 31, 2005. Federal Realty's same-center portfolio was 96.8% leased on December 31, 2006, compared to 97.2% on December 31, 2005.

During fourth quarter 2006, the Trust signed 84 leases for 321,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 304,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 17%. The average contractual rent on this comparable space for the first year of the new lease is $26.72 per square foot compared to the average contractual rent of $22.80 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 30% for fourth quarter 2006.

In 2006, Federal Realty signed 257 leases representing 1.2 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 18%, 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 $23.45 per square foot compared to the average cash-basis contractual rent of $19.84 per square foot for the last year of the prior lease. As of December 31, 2006, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $18.97 per square foot.

"Our 2006 results continue to reflect the consistency and sustainability of our business strategy," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Strong leasing results and redevelopment returns provide not only significant earnings growth, but considerable value creation for our shareholders."

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 $0.575 per share on its common shares, resulting in an indicated annual rate of $2.30 per share. The regular common dividend will be payable on April 16, 2007 to common shareholders of record as of March 13, 2007.

Guidance

Federal Realty left its guidance for 2007 FFO per diluted share unchanged at a range of $3.60 to $3.65, and its 2007 earnings per diluted share guidance unchanged at a range of $1.79 to $1.84.

Summary of Other Quarterly Activities and Recent Developments

  • January 5, 2007 - Sam J. Gorlitz, co-founder of Federal Realty, passed away at the age of 89. Mr. Gorlitz established the Trust in 1962 with three properties in the metropolitan D.C. area including Congressional Plaza in Rockville, Maryland. Mr. Gorlitz retired from the Trust's Board of Trustees in 1999, the same year that Federal Realty renamed Park & Shop Center in Washington, D.C. to Sam's Park & Shop to thank him for his contributions to the Company and the industry.


  • November 28, 2006 -- Issued $135 million of 5.40% Notes due 2013. Proceeds of the offering were used to repay outstanding debt.


  • November 27, 2006 -- The Trust redeemed all 5,400,000 outstanding shares of its 8.50% Series B Cumulative Redeemable Preferred Shares.


  • November 6, 2006 -- Federal Realty announced the acquisition of Melville Mall, a 100% leased supermarket-anchored community center located in Huntington, New York, approximately 1-1/2 miles south of the Trust's Huntington Shopping Center. Tenants at Melville Mall include Waldbaum's, Kohl's, Marshall's and Dick's Sporting Goods.


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 2006 earnings conference call, which is scheduled for February 14, 2007, at 11 a.m. Eastern Standard Time. To participate, please call (800) 299-0148 five to ten minutes prior to the call's start time and use the Passcode 12532544 (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 19, 2007, by dialing (888) 286-8010 and using the Passcode 29937458.

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 18.8 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 0.7 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 96.5% leased to national, regional, and local retailers as of December 31, 2006, with no single tenant accounting for more than approximately 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 39 consecutive years, the longest 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 Annual Report on Form 10-K filed on March 3, 2006 (as amended) 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 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 March 3, 2006 (as amended).

    Investor and Media Inquiries
    Andrew Blocher                          Vikki Kayne
    Vice President,                         Vice President,
    Capital Markets &                       Marketing and
    Investor Relations                      Corporate Communications
    301/998-8166                            301/998-8178
    ablocher@federalrealty.com              vkayne@federalrealty.com



    Federal Realty Investment Trust
    Summarized Operating Results
    December 31, 2006


                               Financial Highlights
                      (in thousands, except per share data)
                                   (unaudited)

                                       Three months ended  Twelve months ended
                                          December 31,        December 31,
                                         2006      2005      2006      2005
    Revenue
     Rental income                     $117,192  $103,231  $438,201  $393,548
     Other property income                1,982     3,144     7,726     9,551
     Mortgage interest income             1,317     1,331     5,095     5,370
                                        120,491   107,706   451,022   408,469
    Expenses
     Rental                              24,973    22,546    88,130    84,736
     Real estate taxes                   12,113    11,131    44,898    39,372
     General and administrative           5,593     5,468    21,340    19,909
     Depreciation and amortization       25,561    22,797    97,618    88,927
                                         68,240    61,942   251,986   232,944
     Operating income                    52,251    45,764   199,036   175,525

    Interest-rate swap and other
     interest income                        457       269     2,545     2,215
    Interest expense                    (27,625)  (23,012) (102,808)  (88,566)
    Income from real estate
     partnership                            122       143       656       493
    Minority interests                     (870)   (1,231)   (4,353)   (5,234)
    Income from continuing operations    24,335    21,933    95,076    84,433

    Discontinued operations
     Operating income (loss) from
      discontinued operations                16      (207)     (320)     (569)
     Gain on sale of real estate             90    13,402    23,956    30,748
    Results from discontinued
     operations                             106    13,195    23,636    30,179

    Net income                           24,441    35,128   118,712   114,612

     Dividends on preferred stock        (1,817)   (2,869)  (10,423)  (11,475)
     Preferred stock redemption costs    (4,775)        -    (4,775)        -
    Net income available for common
     shareholders                       $17,849   $32,259  $103,514  $103,137


    EARNINGS PER COMMON SHARE, BASIC
    Continuing operations                 $0.32     $0.36     $1.50     $1.39
    Discontinued operations                 -        0.25      0.44      0.57
                                          $0.32     $0.61     $1.94     $1.96

    Weighted average number of common
     shares, basic                       55,092    52,738    53,469    52,533

    EARNINGS PER COMMON SHARE, DILUTED
    Continuing operations                 $0.32     $0.36     $1.48     $1.37
    Discontinued operations                 -        0.25      0.44      0.57
                                          $0.32     $0.61     $1.92     $1.94

    Weighted average number of common
     shares, diluted                     55,576    53,189    53,962    53,050



    Federal Realty Investment Trust
    Funds From Operations
    December 31, 2006



                                       Three months ended  Twelve months ended
                                           December 31,       December 31,
                                          2006     2005      2006      2005
                                          (in thousands,     (in thousands,
    Funds from Operations available       except per share   except per share
     for common shareholders (FFO)             data)              data)
    Net income                           $24,441  $35,128  $118,712  $114,612
    Gain on sale of real estate              (90) (13,402)  (23,956)  (30,748)
    Depreciation and amortization of
     real estate assets                   23,196   20,992    88,649    82,752
    Amortization of initial direct costs
     of leases                             2,013    1,776     7,390     6,972
    Depreciation of real estate
     partnership assets                      214      159       768       630
    Funds from operations                 49,774   44,653   191,563   174,218
    Dividends on preferred stock          (1,817)  (2,869)  (10,423)  (11,475)
    Income attributable to operating
     partnership units                        88      228       748       801
    Preferred stock redemption costs      (4,775)     -      (4,775)      -
    FFO                                  $43,270  $42,012  $177,113  $163,544


    FFO per diluted share                  $0.77    $0.78     $3.26     $3.06
    Preferred stock redemption costs per
     diluted share                          0.09      -        0.09       -
    FFO per diluted share before
     preferred stock
     redemption costs                      $0.86    $0.78     $3.35     $3.06

        Weighted average number of
         common shares, diluted           55,941   53,597    54,351    53,469




    Federal Realty Investment Trust
    Summarized Balance Sheets
    December 31, 2006

                              Financial Highlights
                                 (in thousands)
                                   (unaudited)


                                               December 31,      December 31,
                                                   2006              2005
    ASSETS

    Real estate, at cost
     Operating                                  $3,104,484        $2,731,694
     Construction-in-progress                       99,774            50,593
     Discontinued operations                             -            47,034
                                                 3,204,258         2,829,321
    Less accumulated depreciation and
     amortization                                 (740,507)         (663,750)
    Net real estate                              2,463,751         2,165,571

    Cash and cash equivalents                       11,495             8,639
    Accounts and notes receivable                   47,493            38,161
    Mortgage notes receivable                       40,756            40,531
    Investment in real estate partnership           10,322             9,375
    Other assets                                   114,789            88,575
    TOTAL ASSETS                                $2,688,606        $2,350,852

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
     Obligations under capital leases and
      mortgage notes                              $460,398          $419,713
        Notes payable                              109,024           316,755
        Senior notes and debentures              1,127,508           653,675
        Other liabilities                          185,407           166,669
    Total liabilities                            1,882,337         1,556,812

    Minority interests                              22,191            19,193

    Shareholders' equity
        Preferred stock                                  -           135,000
        Common shares and other
         shareholders' equity                      784,078           639,847
    Total shareholders' equity                     784,078           774,847
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                     $2,688,606        $2,350,852


    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    December 31, 2006

                                                         2007 Guidance
                                    (in millions except per share amounts) (1)



        Net income                                   $100 to             $102
        Gain on sale of real estate                     0                   0
        Depreciation and amortization of
         real estate & joint venture
         assets                                        94                  94
        Amortization of initial direct
         costs of leases                                7                   7
        Funds from operations                         201                 203
        Income attributable to operating
         partnership units                              1                   1
        Funds from operations available
         for common shareholders                      202 to              204

        Weighted Average Shares (diluted)            56.0

        Funds from operations available
         for common shareholders per
         diluted share                              $3.60               $3.65


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

SOURCE Federal Realty Investment Trust

CONTACT: Investor and Media Inquiries: Andrew Blocher, Vice President,
Capital Markets & Investor Relations, +1-301-998-8166,
ablocher@federalrealty.com, or Vikki Kayne, Vice President, Marketing and
Corporate, +1-301-998-8178, vkayne@federalrealty.com, both of Federal Realty
Investment Trust
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