ROCKVILLE, Md.--(BUSINESS WIRE)--July 28, 2004--Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2004.
- For the second quarter 2004, Funds from Operations (FFO) per diluted share was $0.73 and earnings per diluted share was $0.45.
- When compared to second quarter 2003, same-center property operating income increased 4.4% excluding redevelopment and expansion properties.
- Contractual rent increases on lease rollovers were 14% for the second quarter on a record 481,000 square feet of comparable retail space.
- The Trust's portfolio was 94.2% leased at June 30, 2004, an improvement of 90 basis points versus the end of first quarter 2004.
Financial Results
Federal Realty reported FFO per diluted share of $0.73 in second quarter 2004, a 14.1% increase over the $0.64 of FFO per diluted share reported in second quarter 2003, and a 28.1% increase over the $0.57 of FFO per diluted share for second quarter 2003, after taking into account a $3.4 million ($0.07 per diluted share) charge relating to the redemption of the Trust's 7.95% Series A Cumulative Redeemable Preferred Shares. Total FFO available for common shareholders was $38.6 million for the second quarter of 2004 compared to $27.7 million (taking into account the preferred share redemption charge) for last year's second quarter. FFO is a supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. Net income available for common shareholders was $23.5 million, and earnings per diluted share was $0.45 for the quarter ended June 30, 2004, versus $10.2 million and $0.22 (including the impact of the preferred share redemption charge), respectively, for the second quarter of 2003. A reconciliation of FFO available for common shareholders and FFO per diluted share to net income and earnings per diluted share, respectively, is attached to this press release.
"This quarter's operating results reflect our ability to lease, operate, and redevelop our core portfolio, as well as continuing improvement at Santana Row," commented Donald Wood, Federal Realty's President and Chief Executive Officer. "Occupancy gains, continued strong rent increases on lease rollovers, record comparable space leasing productivity, and robust same-center property operating income growth reflect the effective execution of our business plan, and an improving retail operating environment. In addition, our recent joint venture with Clarion Lion Properties Fund should allow the Trust to further exploit our operating advantages and efficiencies in our strategic East Coast and California markets."
Portfolio Results
On a same-center basis, excluding redevelopment and expansion properties, property operating income increased 4.4% over second quarter 2003.
As of June 30, 2004, Federal Realty's same-center portfolio was 96.6% leased compared to 96.2% on March 31, 2004, and 95.8% on June 30, 2003. Overall, the Trust's portfolio was 94.2% leased as of June 30, 2004, compared to 93.3% on March 31, 2004, and 93.1% on June 30, 2003.
During the second quarter, the Trust signed 87 leases for 496,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased a record 481,000 square feet at a weighted-average cash-basis contractual rent increase per square foot (i.e. excluding the impact of straight-line rents) of 14%. The weighted-average contractual rent on this comparable space for the first year of the new leases is $19.89 per square foot compared to the weighted-average contractual rent of $17.47 per square foot for the last year of the prior leases. The weighted-average contractual rent for the last year of the prior leases is calculated by including both the minimum rent and the percentage rent actually paid during the last year of those leases. On a GAAP basis (i.e. including the impact of straight-line rents), weighted-average rent increases per square foot for comparable retail space were 21% for the second quarter of 2004. As of June 30, 2004, Federal Realty's weighted-average contractual rent for retail and commercial space in its portfolio was $18.25 per square foot.
At Santana Row, Federal Realty's mixed-use community in San Jose, Calif., 90.4% of the retail space was leased to 104 tenants, with nearly 100 stores open and operating as of June 30, 2004. Phase III (CineArts Theatre) is expected to open as planned during third quarter 2004, within projected costs. The 255 existing residential units at Santana Row were 98.8% leased as of June 30, 2004, and the development of the 256 Phase IV residential units remains on schedule and on budget.
Guidance
Federal Realty today reaffirmed previous guidance for 2004 FFO per diluted share at a range of $2.81 to $2.84, and increased guidance for earnings per diluted share to $1.48 to $1.51 because of gain on sale of properties.
Summary of Other Quarterly Activities and Recent Developments
- July 12, 2004 - Federal Realty announced that it formed a joint venture with Clarion Lion Properties Fund, a discretionary fund created and advised by ING Clarion Partners. The joint venture intends to acquire up to $350 million of stabilized, supermarket-anchored shopping centers in the Trust's strategic East Coast and California markets. Federal Realty and Clarion Lion Properties Fund have committed to contribute to the joint venture up to $42 million and $98 million, respectively, of equity capital to acquire properties over the next 24 months.
- June 10, 2004 - Federal Realty's Board of Trustees declared a regular quarterly cash dividend of $0.49 per share on its common shares, resulting in an indicated annual rate of $1.96 per share.
- April 2, 2004 - Federal Realty announced it agreed to sell 2,186,749 common shares of beneficial interest in a public offering. The shares were sold at approximately $45.33 per share, representing a 3.00% discount from the New York Stock Exchange closing price on April 1, 2004 of $46.73, and generated net proceeds to Federal Realty of approximately $99.1 million. The Trust used the net proceeds from the sale primarily to repay amounts outstanding under its revolving credit facility that had been drawn to fund the acquisition of Westgate Mall in San Jose, Calif., on March 31, 2004.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter earnings conference call, which is scheduled for Thursday, July 29, 2004, at 1 p.m. EDT. 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, www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available for 30 days by dialing (800) 679-9654.
About Federal Realty
Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of shopping centers and Street Retail properties. Federal Realty's portfolio contains approximately 16.9 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. The operating portfolio was 94.2% leased to approximately 2,200 national, regional, and local retailers as of June 30, 2004, with no single tenant accounting for more than 2.4% of rental revenue. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 36 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. The factors include, but are not limited to, the risk factors described in our Current Report on Form 8-K filed on March 11, 2004, 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 any redevelopment or renovation project that we do pursue may not perform as anticipated;
- 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 we may have environmental risks at our properties, 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 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 review the risks contained in our annual report on Form 10-K (as amended), 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 11, 2004.
Federal Realty Investment Trust
Summarized Operating Results
June 30, 2004
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
OPERATING RESULTS 2004 2003 2004 2003
----------------- -------- -------- --------- ---------
Revenues
Rental income $92,145 $79,304 $181,423 $158,137
Other property income 6,519 4,186 11,619 8,280
Mortgage interest income 1,216 1,024 2,243 1,861
-------- -------- --------- ---------
99,880 84,514 195,285 168,278
Expenses
Rental 22,509 19,019 44,787 40,415
Real estate taxes 9,526 8,723 18,703 16,415
Administrative 4,588 3,147 8,770 6,421
Depreciation and amortization 23,235 18,126 43,858 35,575
-------- -------- --------- ---------
59,859 49,015 116,117 98,826
-------- -------- --------- ---------
Operating income 40,022 35,499 79,167 69,452
Interest income 389 629 802 991
Interest expense (21,391) (18,252) (42,710) (35,831)
Minority interests (1,192) (1,134) (2,381) (2,204)
-------- -------- --------- ---------
Income from continuing
operations 17,828 16,742 34,878 32,408
Discontinued operations
Operating income from
discontinued operations 228 833 367 1,543
Gain on sale of real estate 8,276 551 8,334 551
-------- -------- --------- ---------
Results from operations of
discontinued assets 8,505 1,384 8,700 2,094
-------- -------- --------- ---------
Net Income 26,332 18,126 43,578 34,502
Dividends on preferred stock (2,869) (4,490) (5,738) (9,346)
Preferred stock redemption
fee - (3,423) - (3,423)
-------- -------- --------- ---------
Net income available for
common shareholders $23,463 $10,213 $37,840 $21,733
======== ======== ========= =========
FUNDS FROM OPERATIONS AVAILABLE
FOR COMMON SHAREHOLDERS
-------------------------------
Net income $26,332 $18,126 $43,578 $34,502
Gain on sale of real
estate (8,276) (551) (8,334) (551)
Depreciation and
amortization of real
estate assets 21,261 16,363 39,987 32,161
Amortization of initial
direct costs of leases 1,787 1,392 3,285 2,746
Income attributable to
operating partnership
units 403 235 638 441
-------- -------- --------- ---------
Funds from Operations 41,507 35,565 79,154 69,299
Dividends on preferred
stock (2,869) (4,490) (5,738) (9,346)
Preferred stock
redemption fee - (3,423) - (3,423)
-------- -------- --------- ---------
Funds from operations
available for common
shareholders 38,638 27,652 73,416 56,530
======== ======== ========= =========
Weighted average number
of common shares,
diluted 52,681 48,376 51,593 46,876
======== ======== ========= =========
Funds from operations per
share available for
common shareholders $0.73 $0.57 $1.42 $1.21
======== ======== ========= =========
EARNINGS PER COMMON SHARE, BASIC
--------------------------------
Income from continuing
operations available for
common shareholders $0.29 $0.19 $0.58 $0.43
Income from discontinued
operations 0.00 0.02 0.01 0.04
Gain on sale of real estate 0.17 0.01 0.16 0.01
-------- -------- --------- ---------
$0.46 $0.22 $0.75 $0.48
======== ======== ========= =========
Weighted average number
of common shares, basic 51,359 47,161 50,207 45,726
======== ======== ========= =========
EARNINGS PER COMMON SHARE,
DILUTED
--------------------------
Income from continuing
operations available to
common shareholders $0.29 $0.19 $0.58 $0.43
Income from discontinued
operations 0.00 0.02 0.01 0.03
Gain on sale of real estate 0.16 0.01 0.16 0.01
-------- -------- --------- ---------
$0.45 $0.22 $0.75 $0.47
======== ======== ========= =========
Weighted average number
of common shares,
diluted 52,681 48,376 51,593 46,876
======== ======== ========= =========
Federal Realty Investment Trust
Summarized Balance Sheet
June 30, 2004
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
CONSOLIDATED BALANCE SHEETS
---------------------------
June 30, December 31,
2004 2003
------------ ------------
(unaudited)
ASSETS
Real estate, at cost $ 2,624,408 $ 2,470,149
Less accumulated depreciation and
amortization (552,138) (514,177)
------------ ------------
Net real estate investments 2,072,270 1,955,972
Cash and cash equivalents 45,103 34,968
Mortgage notes receivable 44,907 41,500
Accounts receivable 34,494 31,207
Other assets 78,439 79,788
------------ ------------
TOTAL ASSETS $ 2,275,213 $ 2,143,435
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases,
mortgages and construction loans $ 412,684 $ 414,357
Notes payable 338,500 361,323
Senior notes and debentures 570,500 535,000
Other liabilities 133,686 111,799
------------ ------------
Total liabilities 1,455,370 1,422,479
Minority interests 29,864 29,582
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other shareholders'
equity 654,979 556,374
------------ ------------
Total shareholders' equity 789,979 691,374
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,275,213 $ 2,143,435
============ ============
Federal Realty Investment Trust
Reconciliation of 2004 EPS to 2004 FFO Guidance
June 30, 2004
----------------------------------------------------------------------
($ millions except per share amounts)
Forecast Per Share
-------- ---------
Net income $77 to $79 $1.48 to $1.51
Gain on sale of real estate (8) (8)
Depreciation and amortization of real
estate assets 81 81
Amortization of initial direct costs
of leases 7 7
Income attributable to operating
partnership units 1 1
----- ----
Funds from Operations 158 160
Dividends on preferred stock (11) (11)
----- ----
Funds from operations available for
common shareholders 147 to 149 $2.81 to $2.84
===== ====
Weighted Average Shares (diluted) 52.3
CONTACT:
Federal Realty Investment Trust
Investor Inquiries:
Andrew Blocher, 301-998-8166
ablocher@federalrealty.com
or
Media Inquiries:
Kristine Warner, 301-998-8212
kwarner@federalrealty.com
SOURCE: Federal Realty Investment Trust
