ROCKVILLE, Md., Jul 28, 2005 (BUSINESS WIRE) -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2005.
-- Funds from operations available for common shareholders (FFO) per diluted share was $0.77 and net income available for common shareholders per diluted share was $0.41 for the quarter ended June 30, 2005 versus $0.73 and $0.45 for second quarter 2004.
-- FFO per diluted share was $1.51 and net income available for common shareholders per diluted share was $0.81 for the six months ended June 30, 2005.
-- When compared to second quarter 2004, same-center property operating income increased 4.9% including redevelopments and expansions.
-- Rent increases on lease rollovers for retail space for which there was a prior tenant were 34% on a cash-basis and 51% on a GAAP-basis for the quarter ended June 30, 2005.
-- The Trust's portfolio was 95.0% leased as of June 30, 2005.
Financial Results
Federal Realty reported FFO of $41.2 million, or $0.77 per diluted share, in second quarter 2005. This compares to FFO of $38.6 million, or $0.73 per diluted share, reported in second quarter 2004, which included $1.0 million ($0.02 per diluted share) of insurance recovery for lost income from the Santana Row fire. For the six months ended June 30, 2005, Federal Realty reported FFO of $80.5 million, or $1.51 per diluted share. This compares to FFO of $73.4 million, or $1.42 per diluted share, for the same six-month period in 2004, which included $2.1 million ($0.04 per diluted share) of Santana Row insurance proceeds.
Net income available for common shareholders was $21.9 million, and net income available for common shareholders per diluted share was $0.41 for the quarter ended June 30, 2005, versus $23.5 million and $0.45, respectively, for the second quarter of 2004. Year-to-date, Federal Realty reported net income available for common shareholders of $43.1 million, or $0.81 per diluted share. This compares to net income available for common shareholders of $37.8 million, or $0.75 per diluted share, for the six months ended June 30, 2004.
FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO available for common shareholders and FFO per diluted share to net income available for common shareholders and net income available for common shareholders per diluted share, respectively, is attached to this press release.
Portfolio Results
On a same-center basis, including redevelopment and expansion properties, property operating income increased 4.9% over second quarter 2004. When redevelopment and expansion properties are excluded from the same-center results, property operating income increased 4.2% from second quarter 2004.
Overall, the Trust's portfolio was 95.0% leased as of June 30, 2005, compared to 94.2% on June 30, 2004. Federal Realty's same-center portfolio was 96.4% leased on June 30, 2005, compared to 96.7% on June 30, 2004.
During the second quarter of 2005, the Trust signed 84 leases for approximately 269,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased 241,000 square feet at a weighted-average cash-basis contractual rent increase per square foot (i.e. excluding the impact of straight-line rents) of 34%. The weighted-average contractual rent on this comparable space for the first year of the new lease is $30.43 per square foot compared to the weighted-average contractual rent of $22.63 per square foot for the last year of the prior lease. The previous weighted-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 51% for the second quarter of 2005. As of June 30, 2005, Federal Realty's weighted-average contractual rent for retail and commercial space in its portfolio is $18.43 per square foot.
"Aggressive management of the portfolio, the strong rent increases on lease rollovers we have achieved over the past two years, and effective execution of the Trust's large redevelopment pipeline were essential components of our strong second quarter performance," commented Donald Wood, Federal Realty's President and Chief Executive Officer. "We also continue to create and capture value at Santana Row, as initial occupancy of the first apartment units in Building Seven occurred in the second quarter, and closings on the first condominium units are anticipated to occur in the current quarter."
At Santana Row, Federal Realty's mixed-use community in San Jose, Calif., 93% of the retail space was leased to 104 tenants, with 100 stores open and operating as of June 30, 2005. As previously announced, Federal Realty is pursuing the potential sale of up to 219 residential condominiums in Buildings Three, Four and Six at Santana Row. Through July 24, 2005, the Trust currently has 43 units under contract, and expects initial closings to commence in Building Four in August 2005. Initial occupancy of the 256 residential rental units on the podium of Building Seven commenced in April 2005, with 71 units leased as of July 24, 2005, and lease-up expected to continue through mid-2006.
Guidance
Federal Realty today reconfirmed guidance for 2005 FFO per diluted share to a range of $3.03 to $3.05, and increased guidance for 2005 net income available for common shareholders per diluted share to a range of $1.47 to $1.49.
Summary of Other Quarterly Activities and Recent Developments
-- June 6, 2005 - Federal Realty declared a regular quarterly cash dividend of $0.555 per common share, resulting in an indicated annual rate of $2.22 per share, an increase of $0.20 per share annualized. The dividend increase represents the largest dividend increase in Federal Realty's 43-year history, and the largest percentage increase in the common dividend since 1988.
-- June 30, 2005 - Federal Realty announced the appointment of Jon E. Bortz, chairman, chief executive officer and president of LaSalle Hotel Properties (NYSE:LHO), to Federal Realty's board of trustees. Mr. Bortz will serve on Federal Realty's audit and compensation committees.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2005 earnings conference call, which is scheduled for July 29, 2005, at 11 a.m. Eastern Daylight Time. 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 through Monday, August 29, 2005, by dialing (866) 448-4809.
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 17.4 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 0.5 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 95.0% leased to national, regional, and local retailers as of June 30, 2005, with no single tenant accounting for more than 2.2% of rental revenue. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and, through 2004, has increased its dividend rate for 37 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. These factors include, but are not limited to, the risk factors described in our Current Report on Form 8-K filed on March 2, 2005, 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 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 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, 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 2, 2005.
Federal Realty Investment Trust
Operating Results
June 30, 2005
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
(unaudited)
CONSOLIDATED OPERATING RESULTS
------------------------------ Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues
Rental income $ 97,799 $ 94,771 $197,882 $185,550
Other property income 2,082 2,434 4,030 4,592
Mortgage interest income 1,449 1,304 2,730 2,381
--------- --------- --------- ---------
101,330 98,509 204,642 192,523
Expenses
Rental 20,078 22,065 43,520 43,959
Real estate taxes 10,822 9,369 20,577 18,412
General and administrative 4,981 4,588 9,484 8,770
Depreciation and
amortization 22,956 22,856 45,463 43,103
--------- --------- --------- ---------
58,837 58,878 119,044 114,244
--------- --------- --------- ---------
Operating income 42,493 39,631 85,598 78,279
Other interest income 1,302 301 1,693 662
Interest expense (21,827) (21,391) (43,890) (42,710)
Income from real estate
partnership 153 - 224 -
Minority interests (1,279) (1,192) (2,795) (2,381)
--------- --------- --------- ---------
Income from continuing
operations 20,842 17,349 40,830 33,850
Discontinued operations
Operating income from
discontinued operations 363 707 90 1,394
Gain on sale of real estate 3,602 8,276 7,884 8,334
--------- --------- --------- ---------
Income from discontinued
operations 3,965 8,983 7,974 9,728
--------- --------- --------- ---------
Net Income 24,807 26,332 48,804 43,578
Dividends on preferred
stock (2,869) (2,869) (5,738) (5,738)
--------- --------- --------- ---------
Net income available
for common
shareholders $ 21,938 $ 23,463 $ 43,066 $ 37,840
========= ========= ========= =========
FUNDS FROM OPERATIONS AVAILABLE
FOR COMMON SHAREHOLDERS
------------------------------
Net income $ 24,807 $ 26,332 $ 48,804 $ 43,578
Gain on sale of real estate (3,602) (8,276) (7,884) (8,334)
Depreciation and amortization
of real estate assets 20,735 21,261 41,253 39,987
Amortization of initial direct
costs of leases 1,802 1,787 3,428 3,285
Depreciation on real estate
partnership assets 157 - 314 -
--------- --------- --------- ---------
Funds from operations 43,899 41,104 85,915 78,516
Dividends on preferred stock (2,869) (2,869) (5,738) (5,738)
Income attributable to
operating partnership units 194 403 352 638
--------- --------- --------- ---------
Funds from operations
available for common
shareholders 41,224 38,638 80,529 73,416
========= ========= ========= =========
Weighted average number of
common shares, diluted 53,408 52,681 53,305 51,593
========= ========= ========= =========
Funds from operations
available for common
shareholders per diluted
share $ 0.77 $ 0.73 $ 1.51 $ 1.42
========= ========= ========= =========
NET INCOME PER COMMON SHARE,
BASIC
------------------------------
Income from continuing
operations available for
common shareholders $ 0.34 $ 0.28 $ 0.67 $ 0.56
Income from discontinued
operations 0.01 0.02 - 0.03
Gain on sale of real estate 0.07 0.16 0.15 0.16
--------- --------- --------- ---------
Net income available for
common shareholders,
basic $ 0.42 $ 0.46 $ 0.82 $ 0.75
========= ========= ========= =========
Weighted average number of
common shares, basic 52,454 51,359 52,333 50,207
========= ========= ========= =========
NET INCOME PER COMMON SHARE,
DILUTED
------------------------------
Income from continuing
operations available for
common shareholders $ 0.34 $ 0.28 $ 0.66 $ 0.56
Income from discontinued
operations 0.01 0.01 - 0.03
Gain on sale of real estate 0.06 0.16 0.15 0.16
--------- --------- --------- ---------
Net income available for
common shareholders,
diluted $ 0.41 $ 0.45 $ 0.81 $ 0.75
========= ========= ========= =========
Weighted average number of
common shares, diluted 52,986 52,681 52,876 51,593
========= ========= ========= =========
Federal Realty Investment Trust
Summarized Balance Sheets
June 30, 2005
----------------------------------------------------------------------
Financial Highlights
(in thousands)
CONSOLIDATED BALANCE SHEETS
---------------------------
June 30, December 31,
2005 2004
------------ ------------
ASSETS (unaudited)
Real estate, at cost
Operating $ 2,614,198 $ 2,516,610
Construction-in-progress 140,632 130,286
Discontinued operations - 19,380
------------ ------------
2,754,830 2,666,276
Less accumulated depreciation and
amortization (630,861) (595,338)
------------ ------------
Net real estate investments 2,123,969 2,070,938
Cash and cash equivalents 13,625 30,475
Accounts and notes receivable 34,823 34,849
Mortgage notes receivable 41,882 42,909
Investment in real estate partnership 9,519 9,631
Other assets 73,204 78,094
------------ ------------
TOTAL ASSETS $ 2,297,022 $ 2,266,896
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases and
mortgage notes $ 408,748 $ 410,885
Notes payable 365,340 325,051
Senior notes and debentures 568,404 568,121
Other liabilities 157,812 153,351
------------ ------------
Total liabilities 1,500,304 1,457,408
Minority interests 19,134 18,954
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other shareholders'
equity 642,584 655,534
------------ ------------
Total shareholders' equity 777,584 790,534
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,297,022 $ 2,266,896
============ ============
Federal Realty Investment Trust
Reconciliation of 2005 Net Income to 2005 FFO Guidance
June 30, 2005
----------------------------------------------------------------------
($ millions except per share amounts) (1)
Forecast
--------
to
Net income $ 90 $ 91
Gain on sale of real estate (8) (8)
Depreciation and amortization of real estate
& joint venture assets 84 84
Amortization of initial direct costs of
leases 7 7
-------- --------
Funds from operations 173 174
Income attributable to operating partnership
units 1 1
Dividends on preferred stock (11) (11)
-------- --------
Funds from operations available for common
shareholders 162 to 163
======== ========
Weighted Average Shares (diluted) 53.4
--------
Funds from operations available for common
shareholders per diluted share $ 3.03 $ 3.05
-------- --------
Note:
-----
(1) Individual items may not add up to total due to rounding.
SOURCE: Federal Realty Investment Trust
Federal Realty Investment Trust, Rockville
Andrew Blocher, 301-998-8166
ablocher@federalrealty.com
or
Suzanne O'Neill, 301-998-8358
soneill@federalrealty.com
