Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2007 Operating Results
ROCKVILLE, Md., Feb. 12 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO ) -- Funds from operations available for common shareholders (FFO) per diluted share was $0.92 and earnings per diluted share was $2.14 for fourth quarter 2007, compared to $0.86 (excluding the $0.09 per diluted share non-cash preferred share redemption charge in fourth quarter 2006) and $0.32, respectively, for fourth quarter 2006. -- For year-end 2007, FFO per diluted share was $3.63 and earnings per diluted share were $3.45, compared to $3.35 (excluding the $0.09 per diluted share preferred share redemption charge) and $1.92, respectively, for 2006. -- Same-center property operating income for fourth quarter 2007 increased 4.9% including redevelopments and expansions, and 4.2% excluding redevelopments and expansions, over fourth quarter 2006. -- Rent increases on lease rollovers of comparable retail space for fourth quarter 2007 were 22% on a cash-basis and 31% on a GAAP-basis. -- Guidance for 2008 FFO per diluted share remains unchanged at $3.89 to $3.94. Financial Results
In fourth quarter 2007, Federal Realty generated FFO of $52.8 million, or $0.92 per diluted share. This compares to FFO of $48.0 million, or $0.86 per diluted share (excluding $4.8 million, or $0.09 per diluted share preferred share redemption charge), in fourth quarter 2006. For the year ended December 31, 2007, Federal Realty generated FFO of $206.8 million, or $3.63 per diluted share. This compares to FFO of $181.9 million, or $3.35 per diluted share (excluding the preferred share redemption charge), in 2006.
Net income available for common shareholders was $122.0 million and earnings per diluted share was $2.14 for the quarter ended December 31, 2007 versus $17.8 million and $0.32, respectively, for fourth quarter 2006. For the full year 2007, Federal Realty reported net income available for common shareholders of $195.1 million, or $3.45 per diluted share. This compares to net income available for common shareholders of $103.5 million, or $1.92 per diluted share, for the year ended December 31, 2006. The increases in net income available for common shareholders include an increase in gain on sale of real estate of $95.7 million ($1.68 per diluted share) for the quarter ended December 31, 2007 over the quarter ended December 31, 2006, and $70.8 million ($1.23 per diluted share) for the full year of 2007 over 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.
In fourth quarter 2007, same-center property operating income, including redevelopment and expansion properties, increased 4.9% over fourth quarter 2006. When redevelopment and expansion properties are excluded from same- center results, property operating income for fourth quarter 2007 increased 4.2% compared to fourth quarter 2006. On an annual basis, same-center property operating income in 2007 increased 4.9% including redevelopments and expansions, and 3.5% excluding redevelopments and expansions.
The Trust's overall portfolio was 96.7% leased as of December 31, 2007, compared to 96.5% on December 31, 2006. Federal Realty's same-center portfolio was 96.7% leased on December 31, 2007, compared to 96.8% on December 31, 2006.
During fourth quarter 2007, the Trust signed 93 leases for 483,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 472,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 22%. The average contractual rent on this comparable space for the first year of the new lease is $19.65 per square foot compared to the average contractual rent of $16.04 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 2007.
For all of 2007, Federal Realty signed 312 leases representing 1.6 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 20%, and 30% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $24.21 per square foot compared to the average cash-basis contractual rent of $20.24 per square foot for the last year of the prior lease. As of December 31, 2007, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $20.42 per square foot.
"Federal Realty's business strategy delivered another year of strong results in 2007 with significant contributions from leasing, development, acquisitions and improved operations," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Our high-quality portfolio of assets, low-risk operating strategy, and the strength of our balance sheet, including significant credit facility capacity, positions us to perform well in an uncertain economic environment."
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 $0.61 per share on its common shares, resulting in an indicated annual rate of $2.44 per share. The regular common dividend will be payable on April 15, 2008 to common shareholders of record as of March 19, 2008.
Federal Realty left its guidance for 2008 FFO per diluted share unchanged at a range of $3.89 to $3.94, and revised its 2008 earnings per diluted share guidance to a range of $2.08 to $2.13.
Summary of Other Quarterly Activities and Recent Developments -- December 21, 2007 -- Announced the pricing of a public offering of 2,000,000 common shares of beneficial interest at a price to the public of $81.21 per share, for net proceeds of approximately $162 million after deducting estimated offering expenses. Net proceeds from the offering will be used for general corporate purposes. The offering closed on December 27, 2007. -- November 9, 2007 -- The Company entered into a new $200 million unsecured term loan facility. The new facility has a one-year term with one one-year extension option and bears interest at LIBOR plus 57.5 basis points, based on the Company's current credit ratings. -- October 31, 2007 -- Acquired the fee interest in Mid-Pike Plaza in Rockville, Maryland, and Huntington Shopping Center in Huntington, New York in exchange for leasehold interests of six retail properties in New Jersey (Allwood, Blue Star, Brunswick, Clifton, Hamilton and Rutgers Shopping Centers) via a Section 1031 tax-deferred exchange and $17.2 million of cash. Due to Mid-Pike Plaza's proximity to Metrorail, the Montgomery County conference center and the desirable, in-fill nature of the site at the intersections of Rockville Pike, the new Montrose Parkway and Old Georgetown Road, the Trust anticipates seeking to entitle the approximately 20 acre site for high-density, mixed-use development, consistent with Montgomery County's Smart Growth initiatives. The fully leased Huntington Shopping Center boasts strong household incomes and population density, consistent with Federal Realty's sector leading demographics, and strong projected NOI growth over the next several years. 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 2007 earnings conference call, which is scheduled for February 13, 2008, at 11 a.m. Eastern Standard Time. To participate, please call (866) 314-5232 five to ten minutes prior to the call's start time and use the Passcode FRT 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 13, 2008, by dialing (888) 286-8010 and using the Passcode 29366920.
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 18.2 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 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 96.7% leased to national, regional, and local retailers as of December 31, 2007, 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 40 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 March 1, 2007 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 1, 2007.
Investor and Media Inquiries Andrew Blocher Senior Vice President, Capital Markets & Investor Relations 301/998-8166 email@example.com Vikki Kayne Vice President, Marketing and Corporate Communications 301/998-8178 firstname.lastname@example.org Federal Realty Investment Trust Summarized Balance Sheets December 31, 2007 December 31, 2007 2006 (in thousands) ASSETS (unaudited) Real estate, at cost Operating $3,304,922 $2,931,391 Construction-in-progress 147,925 99,774 Assets held for sale (discontinued operations) - 173,093 3,452,847 3,204,258 Less accumulated depreciation and amortization (756,703) (740,507) Net real estate 2,696,144 2,463,751 Cash and cash equivalents 50,691 11,495 Accounts and notes receivable 61,108 47,493 Mortgage notes receivable 40,638 40,756 Investment in real estate partnership 29,646 10,322 Prepaid expenses and other assets 111,070 114,789 TOTAL ASSETS $2,989,297 $2,688,606 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Mortgages payable and capital lease obligations $450,084 $406,153 Notes payable 210,820 109,024 Senior notes and debentures 977,556 1,127,508 Capital lease obligations of assets held for sale - 54,245 Accounts payable and other liabilities 204,387 185,407 Total liabilities 1,842,847 1,882,337 Minority interests 31,818 22,191 Shareholders' equity Preferred stock 9,997 - Common shares and other shareholders' equity 1,104,635 784,078 Total shareholders' equity 1,114,632 784,078 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,989,297 $2,688,606 Federal Realty Investment Trust Summarized Income Statements December 31, 2007 Three months ended Year ended December 31, December 31, 2007 2006 2007 2006 (in thousands, except per share data) (unaudited) Revenue Rental income $122,936 $109,667 $468,498 $414,979 Other property income 3,284 1,974 12,834 7,461 Mortgage interest income 1,174 1,317 4,560 5,095 Total revenue 127,394 112,958 485,892 427,535 Expenses Rental 26,741 24,232 100,389 84,763 Real estate taxes 13,293 10,798 47,234 41,198 General and administrative 7,304 5,593 25,575 21,340 Depreciation and amortization 26,226 24,292 101,675 92,793 Total operating expenses 73,564 64,915 274,873 240,094 Operating income 53,830 48,043 211,019 187,441 Other interest income 298 331 921 2,042 Interest expense (27,118) (25,545) (111,365) (95,234) Income from real estate partnership 275 122 1,395 656 Income from continuing operations before minority interests 27,285 22,951 101,970 94,905 Minority interests (1,281) (870) (5,590) (4,353) Income from continuing operations 26,004 22,081 96,380 90,552 Discontinued operations Discontinued Operations - Income 345 2,270 4,389 4,204 Discontinued Operations - Gain on sale of real estate 95,819 90 94,768 16,515 Results from discontinued operations 96,164 2,360 99,157 20,719 Income before gain on sale of real estate 122,168 24,441 195,537 111,271 Gain on sale of real estate - - - 7,441 Net income 122,168 24,441 195,537 118,712 Dividends on preferred stock (135) (1,817) (442) (10,423) Preferred stock redemption costs - (4,775) - (4,775) Net income available for common shareholders $122,033 $17,849 $195,095 $103,514 EARNINGS PER COMMON SHARE, BASIC Continuing operations $0.46 $0.28 $1.71 $1.41 Discontinued operations 1.70 0.04 1.77 0.39 Gain on sale of real estate - - - 0.14 $2.16 $0.32 $3.48 $1.94 Weighted average number of common shares, basic 56,526 55,092 56,108 53,469 EARNINGS PER COMMON SHARE, DILUTED Continuing operations $0.45 $0.28 $1.70 $1.40 Discontinued operations 1.69 0.04 1.75 0.38 Gain on sale of real estate - - - 0.14 $2.14 $0.32 $3.45 $1.92 Weighted average number of common shares, diluted 56,955 55,576 56,543 53,962 Federal Realty Investment Trust Funds From Operations December 31, 2007 Three months ended Year ended December 31, December 31, 2007 2006 2007 2006 (in thousands, (in thousands, Funds from Operations available except per share except per share for common shareholders(FFO)(1) data) data) Net income 122,168 24,441 195,537 118,712 Gain on sale of real estate (95,819) (90) (94,768) (23,956) Depreciation and amortization of real estate assets 23,656 23,196 95,565 88,649 Amortization of initial direct costs of leases 2,361 2,013 8,473 7,390 Depreciation of real estate partnership assets 326 214 1,241 768 Funds from operations 52,692 49,774 206,048 191,563 Dividends on preferred stock (135) (1,817) (442) (10,423) Income attributable to operating partnership units 232 88 1,156 748 Preferred stock redemption costs - (4,775) - (4,775) FFO $52,789 $43,270 $206,762 $177,113 FFO per diluted share $0.92 $0.77 $3.63 $3.26 Preferred stock redemption costs per diluted share - 0.09 - 0.09 FFO per diluted share before preferred stock redemption costs $0.92 $0.86 $3.63 $3.35 Weighted average number of common shares, diluted 57,336 55,941 56,999 54,351 Notes: (1) See Glossary of Terms. Federal Realty Investment Trust Reconciliation of Net Income to FFO Guidance December 31, 2007 2008 Guidance ($ millions except per share amounts)(1) Net income $123 to $126 Gain on sale of real estate 0 0 Depreciation and amortization of real estate & real estate partnership assets 97 97 Amortization of initial direct costs of leases 10 10 Funds from operations 230 233 Income attributable to operating partnership units 1 1 Dividends on preferred stock (1) (1) Funds from operations available for common shareholders 231 to 234 Weighted Average Shares (diluted) 59.4 Funds from operations available for common shareholders per diluted share $3.89 $3.94 Note: (1) Individual items may not add up to total due to rounding.
SOURCE Federal Realty Investment Trust -0- 02/12/2008 /CONTACT: Investor and Media Inquiries: Andrew Blocher, Senior Vice President, Capital Markets & Investor Relations, +1-301-998-8166, email@example.com, or Vikki Kayne, Vice President, Marketing and Corporate Communications, +1-301-998-8178, firstname.lastname@example.org, both of Federal Realty Investment Trust/ /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, email@example.com/ /Web site: http://www.federalrealty.com/ (FRT) CO: Federal Realty Investment Trust ST: Maryland IN: FIN RLT REA SU: ERN DIV ERP CCA PM-BS -- NETU118 -- 4012 02/12/2008 16:45 EST http://www.prnewswire.com