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News Release

Federal Realty Investment Trust Announces Operating Results for the Year and Quarter Ended December 31, 2019

ROCKVILLE, Md., Feb. 10, 2020 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its year and quarter ended December 31, 2019. For the year ended December 31, 2019 and 2018, net income available for common shareholders was $4.61 per diluted share and $3.18 per diluted share, respectively. For the three months ended December 31, 2019 and 2018, net income available for common shareholders was $1.92 per diluted share and $0.71 per diluted share, respectively.

Federal Realty 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. (PRNewsfoto/Federal Realty Investment Trust)

Key Highlights of the full year and quarter include:

  • Generated funds from operations available for common shareholders (FFO) per diluted share of $6.17 for the year ($6.33 excluding the charge related to the buyout of the Kmart lease at Assembly) compared to $6.23 in 2018. For the fourth quarter, generated FFO per diluted share of $1.58 compared to $1.57 for the fourth quarter 2018.
  • Generated comparable property operating income (POI) growth of 2.9% for the year ended 2019. For the fourth quarter, comparable property POI growth was 2.4%.
  • Signed leases for 461,952 square feet of comparable space in the fourth quarter at an average rent of $37.78 psf and achieved cash basis rollover growth on those comparable spaces of 7%.
  • Sold three properties and two land parcels for $304 million in 2019 including the sale under threat of condemnation of an 11.7-acre portion of San Antonio Center, located in Mountain View, California, for $155 million in the fourth quarter.
  • Purchased three properties in 2019 totaling 380,000 square feet and 123 apartment units for $295 million. Purchased one property subsequent to quarter end totaling 49,000 square feet for $22 million.
  • Introduced 2020 FFO per diluted share guidance range of $6.40 to $6.58.

"With over a billion dollars invested in 2019 acquisitions and construction currently in progress at our established properties, we're committed to maintaining and growing our leadership position in some of the best retail-centric real estate in the country," said Donald C. Wood, Federal Realty's President and Chief Executive Officer. "To be able to make that level of investment while also growing current earnings is a testament to the quality of our real estate and the diversity of our income streams."

Financial Results

For the full year 2019, Federal Realty reported net income available for common shareholders of $345.8 million and earnings per diluted share of $4.61. This compares to net income available for common shareholders of $233.9 million and earnings per diluted share of $3.18 for the full year 2018.   Net income available for common shareholders was $145.3 million and earnings per diluted share was $1.92 for the fourth quarter 2019 versus $52.5 million and $0.71, respectively, for the fourth quarter 2018.

For the full year 2019, Federal Realty generated funds from operations available for common shareholders (FFO) of $465.8 million, or $6.17 per diluted share ($6.33 excluding the $11.9 million charge related to the buyout of the Kmart lease at Assembly). This compares to FFO of $461.8 million, or $6.23 per diluted share, for the full year 2018. For the fourth quarter 2019, FFO was $120.0 million, or $1.58 per diluted share, compared to $117.2 million, or $1.57 per diluted share for the fourth quarter 2018.

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.

Portfolio Results

The overall portfolio was 94.2% leased as of December 31, 2019, and the comparable portfolio was 94.9% leased.  Comparable property POI increased 2.9% for the year 2019 and 2.4% in the fourth quarter. Comparable property POI represents our consolidated property portfolio other than those properties that distort comparability between periods in two primary categories (1) assets that were not owned for the full quarter in both periods presented and (2) assets currently under development or being repositioned for significant redevelopment and investment. Additionally, the charge related to the buyout of the Kmart lease at Assembly is excluded.

For the year 2019, Federal Realty signed 409 leases for 1.7 million square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 1.6 million square feet at an average rent of $40.48 per square foot compared to the average contractual rent of $37.63 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 8%.

During fourth quarter 2019, Federal Realty signed 112 leases for 494,768 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 461,952 square feet at an average rent of $37.78 per square foot compared to the average contractual rent of $35.41 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%.

Regular Quarterly Dividends

Federal Realty's Board of Trustees declared a regular quarterly cash dividend of $1.05 per common share, resulting in an indicated annual rate of $4.20 per common share. The regular common dividend will be payable on April 15, 2020 to common shareholders of record as of March 16, 2020.

Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a 5.000% Series C Cumulative Preferred Share of Beneficial Interest, of $0.3125 per depositary share. All dividends on the depositary shares will be payable on April 15, 2020 to shareholders of record as of April 1, 2020.

Summary of Other Quarterly Activities and Recent Developments

December 11, 2019Federal Realty announced the sale under threat of condemnation of an 11.7-acre portion of San Antonio Center, located in Mountain View, California, for $155 million. The land sold under the condemnation threat is needed for the eventual construction of a school by the Los Altos School District. Tenants on the sold portion of the property include Kohl's, 24 Hour Fitness, Jo-Ann, and various small shop tenants. Tenant condemnation awards, yet to be finalized, will be paid out of Federal Realty's sale proceeds. Federal Realty purchased San Antonio Center, which totals 33 acres, in 2015 for $62.2 million.

November 15, 2019Federal Realty acquired Georgetowne Shopping Center, a 147,000 square foot grocery anchored neighborhood shopping center with surface parking on 9 acres in Brooklyn, New York, for $83.7 million cash. The Property is located in Brooklyn'sGeorgetown neighborhood.

Third & Fourth Quarter 2019 – Federal Realty acquired 37 mixed-use buildings in Hoboken, New Jersey totaling 158,000 square feet and 123 apartments for $189.2 million. The properties are located along historic Washington Street and 14th Street, two of Hoboken's main commercial thoroughfares. The Trust acquired the properties through a newly formed joint venture in which the Trust owns 90%. Two additional buildings are expected to close in 2020.

January 10, 2020Federal Realty acquired a 49,000 square foot shopping center adjacent to the Trust's Fairfax Junction property in Fairfax, Virginia for $22.3 million. Combined, the properties total 124,000 square feet and 11 acres and have over 1,000 feet of frontage along Lee Highway in Fairfax.

Guidance

Federal Realty introduced 2020 guidance for FFO per diluted share of $6.40 to $6.58 and 2020 earnings per diluted share guidance of $3.21 to $3.40.

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 2019 earnings conference call, which is scheduled for Tuesday, February 11, 2020 at 9:00AM ET.  To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13697618 (required).  A replay of the webcast will be available on Federal Realty's website at www.federalrealty.com. A telephonic replay of the conference call will also be available through February 25, 2020 by dialing 844.512.2921; Passcode: 13697618.

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, Federal Realty's mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Its 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 104 properties include approximately 3,000 tenants, in 24 million square feet, and over 2,700 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 52 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its 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, 2020, 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 not perform as planned, 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, 2020.

 

Federal Realty Investment Trust

Consolidated Balance Sheets

December 31, 2019



December 31,


2019


2018


(in thousands, except share and


per share data)

ASSETS




Real estate, at cost




Operating (including $1,676,866 and $1,701,804 of consolidated variable interest
entities, respectively)

$

7,535,983



$

7,307,622

Construction-in-progress (including $102,583 and $51,313 of consolidated variable
interest entities, respectively)

760,420



495,274

Assets held for sale

1,729



16,576


8,298,132



7,819,472

Less accumulated depreciation and amortization (including $296,165 and $292,374 of
consolidated variable interest entities, respectively)

(2,215,413)



(2,059,143)

Net real estate

6,082,719



5,760,329

Cash and cash equivalents

127,432



64,087

Accounts and notes receivable

152,572



142,237

Mortgage notes receivable, net

30,429



30,429

Investment in partnerships

28,604



26,859

Operating lease right of use assets

93,774



Finance lease right of use assets

52,402



Prepaid expenses and other assets

227,060



265,703

TOTAL ASSETS

$

6,794,992



$

6,289,644

LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable, net (including $469,184 and $444,388 of consolidated variable
interest entities, respectively)

$

545,679



$

474,379

Capital lease obligations



71,519

Notes payable

3,781



279,027

Senior notes and debentures

2,807,134



2,404,279

Accounts payable and other liabilities

255,503



177,922

Dividends payable

81,676



78,207

Security deposits payable

21,701



17,875

Operating lease liabilities

73,628



Finance lease liabilities

72,062



Other liabilities and deferred credits

157,938



182,898

Total liabilities

4,019,102



3,686,106

Commitments and contingencies




Redeemable noncontrolling interests

139,758



136,208

Shareholders' equity




Preferred shares, authorized 15,000,000 shares, $.01 par:




5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation
preference $25,000 per share), 6,000 shares issued and outstanding

150,000



150,000

5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation
preference $25 per share), 399,896 shares issued and outstanding

9,997



9,997

Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized,
75,540,804 and 74,249,633 shares issued and outstanding, respectively

759



745

Additional paid-in capital

3,166,522



3,004,442

Accumulated dividends in excess of net income

(791,124)



(818,877)

Accumulated other comprehensive loss

(813)



(416)

Total shareholders' equity of the Trust

2,535,341



2,345,891

Noncontrolling interests

100,791



121,439

Total shareholders' equity

2,636,132



2,467,330

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

6,794,992



$

6,289,644

 

 

Federal Realty Investment Trust

Consolidated Income Statements

December 31, 2019



Three Months Ended


Year Ended


December 31,


December 31,


2019


2018


2019


2018


(in thousands, except per share data)



REVENUE








Rental income

$

238,303



$

234,511



$

932,738



$

912,287


Mortgage interest income

846



865



3,050



3,149


Total revenue

239,149



235,376



935,788



915,436


EXPENSES








Rental expenses

47,649



46,507



187,831



173,094


Real estate taxes

29,044



28,935



110,927



114,776


General and administrative

10,707



9,620



42,754



33,600


Depreciation and amortization

61,431



66,976



239,758



244,245


Total operating expenses

148,831



152,038



581,270



565,715










Gain on sale of real estate, net

85,903



1,502



116,393



11,915










OPERATING INCOME

176,221



84,840



470,911



361,636










OTHER INCOME/(EXPENSE)








Other interest income

511



285



1,266



942


Interest expense

(27,056)



(28,038)



(109,623)



(110,154)


Loss from partnerships

(710)



(705)



(2,012)



(3,398)


NET INCOME

148,966



56,382



360,542



249,026


     Net income attributable to noncontrolling interests

(1,611)



(1,875)



(6,676)



(7,119)


NET INCOME ATTRIBUTABLE TO THE TRUST

147,355



54,507



353,866



241,907


Dividends on preferred shares

(2,011)



(2,011)



(8,042)



(8,042)


NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

145,344



$

52,496



$

345,824



$

233,865


EARNINGS PER COMMON SHARE, BASIC








Net income available for common shareholders

$

1.92



$

0.71



$

4.61



$

3.18


Weighted average number of common shares, basic

75,305



73,790



74,766



73,274


EARNINGS PER COMMON SHARE, DILUTED








Net income available for common shareholders

$

1.92



$

0.71



$

4.61



$

3.18


Weighted average number of common shares, diluted

75,305



73,796



74,766



73,302


 

 

Federal Realty Investment Trust

Funds From Operations

December 31, 2019
















Three Months Ended


Year Ended



December 31,


December 31,



2019


2018


2019


2018



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO) (1)











Net income


$

148,966



$

56,382



$

360,542



$

249,026


Net income attributable to noncontrolling interests


(1,611)



(1,875)



(6,676)



(7,119)


Gain on sale of real estate, net


(85,903)



(1,502)



(116,393)



(11,915)


Depreciation and amortization of real estate assets


54,886



55,604



215,139



213,098


Amortization of initial direct costs of leases


5,194



10,069



19,359



24,603


Funds from operations


121,532



118,678



471,971



467,693


Dividends on preferred shares


(1,875)



(1,875)



(7,500)



(7,500)


Income attributable to operating partnership units


655



754



2,703



3,053


Income attributable to unvested shares


(351)



(330)



(1,355)



(1,469)


FFO (2)


$

119,961



$

117,227



$

465,819



$

461,777


Weighted average number of common shares, diluted


76,024



74,630



75,514



74,153


FFO per diluted share (2)


$

1.58



$

1.57



$

6.17



$

6.23











 

Notes:




1)

In connection with the adoption of the new lease accounting standard, effective January 1, 2019, certain internal
and external legal leasing costs no longer qualify for capitalization. As a result, capitalized leasing costs excluding
external commissions decreased to $0.5 million and $2.2 million for the three months and year ended December 
31, 2019, respectively, from $2.2 million and $7.5 million for the three months and year ended December 31, 2018,
respectively.

2)

For the year ended December 31, 2019, FFO includes an $11.9 million charge related to the buyout of the Kmart
lease at Assembly Row Marketplace. If this charge was excluded, our FFO, FFO per diluted share, and dividend
payout ratio as a percentage of FFO would have been:


 




















Year Ended




















December 31, 2019




















(in thousands, except
per share data)

FFO



















$

477,696


FFO per diluted share



















$

6.33


 

Investor Inquires:

Media Inquiries:

Leah Andress Brady

Brenda Pomar

Investor Relations Senior Manager

Corporate Communications Manager

301.998.8265

301.998.8316

lbrady@federalrealty.com

bpomar@federalrealty.com

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SOURCE Federal Realty Investment Trust