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News Release

Federal Realty Investment Trust Announces Second Quarter 2004 Operating Results

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