ROCKVILLE, Md., Aug. 2 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2006.
- Funds from operations available for common shareholders (FFO) per diluted share was $0.83 and earnings per diluted common share was $0.66 for the quarter ended June 30, 2006, versus $0.77 and $0.41, respectively, for second quarter 2005.
- FFO per diluted share was $1.64 and earnings per diluted common share was $1.19 for the six months ended June 30, 2006, versus $1.51 and $0.81, respectively, for the six months ended June 30, 2005.
- When compared to second quarter 2005, same-center property operating income increased 5.9% including redevelopments and expansions, and 5.6% excluding redevelopments and expansions.
- Rent increases on lease rollovers for retail space for which there was a prior tenant were 17% on a cash-basis and 25% on a GAAP-basis for the quarter ended June 30, 2006.
- The Trust's portfolio was 96.7% leased and 94.7% occupied as of June 30, 2006.
- The common dividend was increased extending the Trust's record of consecutive annual dividend increases to 39 years.
- Guidance for 2006 FFO per diluted share was narrowed to a range of $3.33 to $3.35.
Financial Results
In second quarter 2006, Federal Realty reported FFO of $44.6 million, or $0.83 per diluted share. This compares to FFO of $41.2 million, or $0.77 per diluted share, reported in second quarter 2005. For the six months ended June 30, 2006, Federal Realty reported FFO of $88.0 million, or $1.64 per diluted share. This compares to FFO of $80.5 million, or $1.51 per diluted share, for the same six-month period in 2005.
Net income available for common shareholders was $35.4 million and earnings per diluted common share was $0.66 for the quarter ended June 30, 2006, versus $21.9 million and $0.41, respectively, for second quarter 2005. Year-to-date, Federal Realty reported net income available for common shareholders of $63.5 million, or $1.19 per diluted share. This compares to net income available for common shareholders of $43.1 million, or $0.81 per diluted share, for the six months ended June 30, 2005.
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
On a same-center basis, including redevelopments and expansions, property operating income increased 5.9% over second quarter 2005. When redevelopments and expansions are excluded from the same-center results, property operating income increased 5.6% from second quarter 2005.
Overall, the Trust's portfolio was 96.7% leased and 94.7% occupied as of June 30, 2006, compared to 95.0% and 91.5%, respectively, on June 30, 2005. Federal Realty's same-center portfolio was 97.7% leased and 96.2% occupied on June 30, 2006, compared to 96.4% and 95.5%, respectively, on June 30, 2005.
During second quarter 2006, the Trust signed 76 leases for approximately 325,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 276,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 17%. The average contractual rent on this comparable space for the first year of the new lease is $24.40 per square foot compared to the average contractual rent of $20.90 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 25% for second quarter 2006. As of June 30, 2006, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $18.95 per square foot.
"Our core properties continue to demonstrate the internal growth that we expect to see from our high quality assets in their strong locations; performance that we expect to continue for the foreseeable future," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust.
Residential condominium sales at Santana Row, Federal Realty's mixed-use community in San Jose, Calif., remain strong. Through July 31, 2006, the Trust had closed sales on 215 units and had four units under contract, with associated gross sales proceeds of $149.2 million and $4.0 million, respectively, which would complete the sale of the 219 units.
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees increased the regular dividend rate on its common shares, declaring a regular quarterly cash dividend of $0.575 per share on its common shares, resulting in an indicated annual rate of $2.30 per share, an increase of $0.08 annually. The regular common dividend will be payable on October 16, 2006, to common shareholders of record as of September 22, 2006. This increase represents the 39th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
"We are extremely proud of the company's ability to increase our dividend for the 39th consecutive year," said Wood. "Over the past 39 years, the Trust and the REIT industry have endured many macro- and micro-level issues, and through them all, we have been able to maintain our streak of dividend increases. This is a significant indicator as to the ongoing stability and consistency of our performance."
Additionally, Federal Realty's Board of Trustees declared a regular quarterly cash dividend of $0.53125 per share on the Trust's Series B Cumulative Redeemable Preferred Shares (NYSE: FRTprB). Dividends on the Series B Cumulative Redeemable Preferred Shares will be payable on October 31, 2006, to shareholders of record on October 16, 2006.
Guidance
Federal Realty's guidance for 2006 FFO per diluted share was narrowed to a range of $3.33 to $3.35, and its 2006 earnings per diluted common share guidance increased to a range of $1.97 to $1.99.
Summary of Other Quarterly Activities and Recent Developments
- July 28, 2006 -- The Trust closed a new $300 million unsecured revolving credit facility to replace its existing $300 million unsecured revolving credit facility, which was scheduled to mature on October 7, 2006.
- July 17, 2006 -- The Trust closed a $250 million senior unsecured note offering comprised of a $130 million tranche due January 2017 with a 6.20% coupon, and a $120 million tranche due July 2012 with a 6.00% coupon.
- July 11, 2006 -- Federal Realty announced the appointment of Gail P. Steinel, executive vice president of BearingPoint Inc., to Federal Realty's board of trustees.
- June 8, 2006 -- Federal Realty announced the addition of two grocery- anchored shopping centers to the Trust's joint venture with Clarion Lion Properties Fund. Barcroft Plaza is located in the Washington, D.C. metropolitan area and was acquired for $25.1 million in an off-market transaction. In addition, Greenlawn Plaza, a property that the Trust acquired in 2000, was contributed to the venture. This redeveloped and stabilized property was also acquired in an off-market transaction and valued at $20.4 million when it was contributed to the venture.
- May 3, 2006 -- Federal Realty announced that its Board of Trustees has declared a regular quarterly cash dividend of $0.555 per share on its common shares, resulting in an indicated annual dividend rate of $2.22 per share.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2006 earnings conference call, which is scheduled for August 3, 2006, 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, 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 September 4, 2006, 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 17.7 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 0.7 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 96.7% leased to national, regional, and local retailers as of June 30, 2006, with no single tenant accounting for more than approximately 2.6% 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 39 consecutive years, the longest 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 most recent annual report on Form 10-K (as amended), 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 we may not be able to sell the condominium units at Santana Row for the expected prices or within the anticipated time frames;
- 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 most current annual report on Form 10-K (as amended) and our quarterly reports on Form 10-Q.
Federal Realty Investment Trust
Summarized Operating Results
June 30, 2006
Financial Highlights
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
CONSOLIDATED OPERATING RESULTS June 30, June 30,
2006 2005 2006 2005
Revenue
Rental income $105,533 $95,762 $210,498 $193,545
Other property income 1,862 2,042 3,956 3,970
Mortgage interest income 1,349 1,449 2,671 2,730
108,744 99,253 217,125 200,245
Expenses
Rental 20,265 19,401 42,329 42,446
Real estate taxes 10,525 8,705 21,076 18,273
General and administrative 4,981 4,982 9,483 9,484
Depreciation and amortization 24,172 22,242 48,078 44,038
59,943 55,330 120,966 114,241
Operating income 48,801 43,923 96,159 86,004
Other interest income 331 1,301 593 1,693
Interest expense (24,754) (21,827) (49,034) (43,890)
Income from real estate partnership 190 153 338 224
Minority interests (1,324) (1,279) (2,397) (2,795)
Income from continuing operations 23,244 22,271 45,659 41,236
Discontinued operations
Loss from discontinued operations (22) (1,066) (143) (316)
Gain on sale of real estate 15,034 3,602 23,771 7,884
Results from discontinued operations 15,012 2,536 23,628 7,568
Net Income 38,256 24,807 69,287 48,804
Dividends on preferred stock (2,869) (2,869) (5,738) (5,738)
Net income available for common
shareholders $35,387 $21,938 $63,549 $43,066
FUNDS FROM OPERATIONS AVAILABLE FOR
COMMON SHAREHOLDERS
Net income $38,256 $24,807 $69,287 $48,804
Gain on sale of real estate (15,034) (3,602) (23,771) (7,884)
Depreciation and amortization of
real estate assets 22,010 20,735 43,884 41,253
Amortization of initial direct
costs of leases 1,825 1,802 3,564 3,428
Depreciation of real estate
partnership assets 151 157 315 314
Funds from operations 47,208 43,899 93,279 85,915
Dividends on preferred stock (2,869) (2,869) (5,738) (5,738)
Income attributable to operating
partnership units 245 194 478 352
Funds from operations available for
common shareholders $44,584 $41,224 $88,019 $80,529
Weighted average number of common
shares, diluted 53,710 53,408 53,688 53,305
Funds from operations available for
common shareholders per diluted
share $0.83 $0.77 $1.64 $1.51
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.39 $0.37 $0.75 $0.68
Discontinued operations 0.28 0.05 0.45 0.14
$0.67 $0.42 $1.20 $0.82
Weighted average number of common
shares, basic 52,842 52,454 52,789 52,333
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.38 $0.36 $0.75 $0.67
Discontinued operations 0.28 0.05 0.44 0.14
$0.66 $0.41 $1.19 $0.81
Weighted average number of common
shares, diluted 53,315 52,986 53,287 52,876
Federal Realty Investment Trust
Summarized Balance Sheets
June 30, 2006
Financial Highlights
(in thousands)
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2006 2005
ASSETS
Real estate, at cost
Operating $2,790,717 $2,731,694
Construction-in-progress 58,334 50,593
Discontinued operations 3,645 47,034
2,852,696 2,829,321
Less accumulated depreciation and
amortization (696,691) (663,750)
Net real estate 2,156,005 2,165,571
Cash and cash equivalents 14,042 8,639
Accounts and notes receivable 38,659 38,161
Mortgage notes receivable 40,796 40,531
Investment in real estate partnership 10,641 9,375
Other assets 88,326 88,575
TOTAL ASSETS $2,348,469 $2,350,852
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases and
mortgage notes $417,189 $419,713
Notes payable 363,119 316,755
Senior notes and debentures 613,458 653,675
Other liabilities 158,159 166,669
Total liabilities 1,551,925 1,556,812
Minority interests 19,215 19,193
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other shareholders'
equity 642,329 639,847
Total shareholders' equity 777,329 774,847
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,348,469 $2,350,852
Federal Realty Investment Trust
Reconciliation of 2006 Net Income to 2006 FFO Guidance
June 30, 2006
2006 Guidance
($ millions except per share
amounts) (1)
Net income $118 to $119
Gain on sale of real estate (24) (24)
Depreciation and amortization of real
estate & joint venture assets 89 89
Amortization of initial direct costs of
leases 7 7
Funds from operations 190 191
Income attributable to operating
partnership units 1 1
Dividends on preferred stock (11) (11)
Funds from operations available for
common shareholders 179 to 180
Weighted Average Shares (diluted) 53.9
Funds from operations available for
common shareholders per diluted share $3.33 $3.35
Note:
(1) Individual items may not add up to total due to rounding.
CONTACT: Investor and Media Inquiries: Andrew Blocher, Vice President, Capital Markets & Investor Relations, +1-301-998-8166, ablocher@federalrealty.com, or Suzanne O'Neill, Manager, Investor Relations, +1-301-998-8358, soneill@federalrealty.com, both of Federal Realty Investment Trust.
SOURCE Federal Realty Investment Trust
