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News Release

Federal Realty Investment Trust Announces Second Quarter 2007 Operating Results
             Common Dividend Increased for 40th Consecutive Year

ROCKVILLE, Md., Aug. 1 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2007.

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  • Funds from operations available for common shareholders (FFO) per diluted share was $0.91 and earnings per diluted common share was $0.47 for the quarter ended June 30, 2007, versus $0.83 and $0.66, respectively, for second quarter 2006.
  • FFO per diluted share was $1.79 and earnings per diluted common share was $0.88 for the six months ended June 30, 2007, versus $1.64 and $1.19, respectively, for the six months ended June 30, 2006.
  • When compared to second quarter 2006, same-center property operating income increased 5.8% including redevelopments and expansions, and 3.7% excluding redevelopments and expansions.
  • Rent increases on lease rollovers for retail space for which there was a prior tenant were 19% on a cash-basis and 29% on a GAAP-basis for the quarter ended June 30, 2007.
  • The Trust's portfolio was 96.1% leased and 94.7% occupied as of June 30, 2007.
  • Federal Realty increased its common dividend for the 40th consecutive year from an annualized rate of $2.30 per share to $2.44 per share, a 6.1% increase.
  • Guidance for 2007 FFO per diluted share was narrowed to a range of $3.62 to $3.65.


Financial Results

In second quarter 2007, Federal Realty reported FFO of $51.9 million, or $0.91 per diluted share. This compares to FFO of $44.6 million, or $0.83 per diluted share, reported in second quarter 2006. For the six months ended June 30, 2007, Federal Realty reported FFO of $101.5 million, or $1.79 per diluted share compared to FFO of $88.0 million, or $1.64 per diluted share, for the same six-month period in 2006.

Net income available for common shareholders was $26.6 million and earnings per diluted common share was $0.47 for the quarter ended June 30, 2007, versus $35.4 million and $0.66, respectively, for second quarter 2006. Year-to-date, Federal Realty reported net income available for common shareholders of $49.7 million, or $0.88 per diluted share. This compares to net income available for common shareholders of $63.5 million, or $1.19 per diluted share, for the six months ended June 30, 2006. The declines in net income available for common shareholders reflect a decrease in gain on sale of real estate for the comparative periods of 2007 versus 2006 of $13.2 million ($0.25 per diluted share) for the second quarter, and $21.9 million ($0.41 per diluted share) on a year-to-date basis.

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 5.8% over second quarter 2006. When redevelopments and expansions are excluded from the same-center results, property operating income increased 3.7% from second quarter 2006.

Overall, the Trust's portfolio was 96.1% leased and 94.7% occupied as of June 30, 2007, compared to 96.7% and 94.7%, respectively, on June 30, 2006. Federal Realty's same-center portfolio was 96.4% leased and 95.8% occupied on June 30, 2007, compared to 97.7% and 96.2%, respectively, on June 30, 2006.

During second quarter 2007, the Trust signed 90 leases for approximately 378,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 341,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 19%. The average contractual rent on this comparable space for the first year of the new lease is $26.70 per square foot compared to the average contractual rent of $22.52 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 29% for second quarter 2007. As of June 30, 2007, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $19.51 per square foot.

"Our strong and consistent operating performance is a continuing confirmation of the quality of our real estate and operating platform," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust.

Chief Financial Officer Succession

Federal Realty announced that Joseph Squeri will join the Trust on October 1, 2007, and will succeed Larry Finger as executive vice president, chief financial officer and treasurer. Mr. Squeri served in a variety of positions at Choice Hotels International, from 1997 through 2007, including chief financial officer beginning in 1999, and then more significant operations roles culminating in his position as president and chief operating officer. Prior to his experience at Choice Hotels, Joseph held positions at Arthur Andersen and The Carlyle Group, a leading investment firm in Washington, DC. Mr. Squeri is a graduate of the University of Virginia, and is a certified public accountant.

"We're extremely pleased to have attracted someone with the operating and financial experience and proven track record that Joe possesses," commented Donald Wood. "The transition period from October of this year through Larry's retirement in March 2008, allows us to optimize the impact that Joe can have on our business after working along side Larry and the rest of our senior operating team."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees increased the regular dividend on its common shares, declaring a regular quarterly cash dividend of $0.61 per share on its common shares, resulting in an indicated annual rate of $2.44 per share, an increase of $0.14 annually or 6.1%. The regular common dividend will be payable on October 15, 2007, to common shareholders of record as of September 21, 2007.

This increase represents the 40th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.

"We are thrilled to be increasing our common dividend rate for the 40th consecutive year," said Andrew Blocher, senior vice president, capital markets and investor relations. "Our dividend record is a testament to the ability of the Trust's high quality real estate to produce consistent results over a sustained time period despite volatility in the market and the economy."

Guidance

Federal Realty's guidance for 2007 FFO per diluted share was narrowed to a range of $3.62 to $3.65, and its 2007 earnings per diluted common share guidance increased to a range of $2.12 to $2.15.

Summary of Other Quarterly Activities and Recent Developments

  • June 4, 2007 -- Federal Realty acquired Shoppers' World, a 169,000 square foot Whole Foods-anchored neighborhood shopping center located on U.S. 29 in Charlottesville, Virginia, in an off-market transaction from a private owner. This acquisition further enhances Federal Realty's ownership in Charlottesville, Virginia, as the Trust now owns and operates 650,000 square feet of retail space.
  • June 25, 2007 -- Federal Realty completed the sale of three non-core properties in suburban New England for $63.0 million. All three properties -- Riverside Plaza and Key Road Plaza in Keene, N.H., and Bath Shopping Center in Bath, Maine -- were acquired in August 2006 to facilitate the purchase of $150 million of high-quality assets in the Boston metropolitan area. The $63.0 million sales price for the three properties generated a book gain of approximately $2 million.
  • July 17, 2007 -- Federal Realty announced that Warren M. Thompson, president and chairman of Thompson Hospitality Corporation, was nominated and appointed to serve on Federal Realty's board of trustees. Mr. Thompson's term will run until the Trust's annual meeting of shareholders in May 2008, and he will serve on the Trust's audit committee and nominating and corporate governance committee.


Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2007 earnings conference call, which is scheduled for August 2, 2007, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 383-8119 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 August 31, 2007, by dialing (888) 286-8010 and entering the passcode 24455828.

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 19.5 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 1.0 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 96.1% leased to national, regional, and local retailers as of June 30, 2007, with no single tenant accounting for more than approximately 2.9% 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 40 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 Annual Report on Form 10-K filed on March 1, 2007 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 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 Annual Report on Form 10-K filed March 1, 2007.

    Investor and Media Inquiries
    Andrew Blocher                        Vikki Kayne
    Senior Vice President,                Vice President,
    Capital Markets & Investor Relations  Marketing & Corporate Communications
    301/998-8166                          301/998-8178
    ablocher@federalrealty.com            vkayne@federalrealty.com



    Federal Realty Investment Trust
    Summarized Balance Sheets
    June 30, 2007

                                                 June 30,        December 31,
                                                   2007              2006
                                                       (in thousands)
    ASSETS                                      (unaudited)

    Real estate, at cost
     Operating                                  $3,316,513        $3,025,210
     Construction-in-progress                      109,215            99,774
     Assets held for sale (discontinued
      operations)                                   15,987            79,274
                                                 3,441,715         3,204,258
    Less accumulated depreciation and
     amortization                                 (785,291)         (740,507)
    Net real estate                              2,656,424         2,463,751

    Cash and cash equivalents                       11,718            11,495
    Accounts and notes receivable                   52,753            47,493
    Mortgage notes receivable                       40,775            40,756
    Investment in real estate partnership           30,191            10,322
    Prepaid expenses and other assets              109,294           114,789
    TOTAL ASSETS                                $2,901,155        $2,688,606

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
     Obligations under capital leases and
      mortgages payable                           $528,002          $460,398
     Notes payable, including revolving
      credit facility                              157,925           109,024
     Senior notes and debentures                 1,127,548         1,127,508
     Accounts payable and other liabilities        184,693           185,407
    Total liabilities                            1,998,168         1,882,337

    Minority interests                              38,033            22,191

    Shareholders' equity
     Preferred stock                                 9,997                 -
     Common shares and other shareholders'
      equity                                       854,957           784,078
    Total shareholders' equity                     864,954           784,078
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $2,901,155        $2,688,606


    Federal Realty Investment Trust
    Summarized Income Statements
    June 30, 2007

                                       Three months ended   Six months ended
                                            June 30,            June 30,
                                         2007      2006      2007      2006
                                       (in thousands, except per share data)
                                                    (unaudited)
    Revenue
     Rental income                     $119,920  $105,329  $237,096  $210,302
     Other property income                2,557     1,866     4,995     3,960
     Mortgage interest income             1,127     1,349     2,257     2,671
                                        123,604   108,544   244,348   216,933
    Expenses
     Rental                              24,370    20,305    49,498    42,473
     Real estate taxes                   11,991    10,503    23,335    21,049
     General and administrative           6,036     4,981    11,640     9,483
     Depreciation and amortization       26,526    24,176    52,472    48,087
                                         68,923    59,965   136,945   121,092
    Operating income                     54,681    48,579   107,403    95,841

     Other interest income                  330       331       680       593
     Interest expense                   (29,728)  (24,754)  (59,044)  (49,034)
     Income from real estate partnership    363       190       647       338
    Income from continuing operations
     before minority interests           25,646    24,346    49,686    47,738

     Minority interests                  (1,384)   (1,324)   (2,681)   (2,397)
    Income from continuing operations    24,262    23,022    47,005    45,341

    Discontinued operations
     Income from discontinued operations    607       200     1,000       175
     Gain on sale of real estate from
      discontinued operations             1,849     7,593     1,849    16,330
     Results from discontinued
      operations                          2,456     7,793     2,849    16,505
    Income before gain on sale of real
     estate                              26,718    30,815    49,854    61,846

     Gain on sale of real estate              -     7,441         -     7,441

    Net income                           26,718    38,256    49,854    69,287

     Dividends on preferred stock          (135)   (2,869)     (171)   (5,738)
    Net income available for common
     shareholders                       $26,583   $35,387   $49,683   $63,549


    EARNINGS PER COMMON SHARE, BASIC
     Continuing operations                $0.43     $0.38     $0.84     $0.75
     Discontinued operations               0.04      0.15      0.05      0.31
     Gain on sale of real estate            -        0.14       -        0.14
                                          $0.47     $0.67     $0.89     $1.20

    Weighted average number of common
     shares, basic                       56,168    52,842    55,797    52,789

    EARNINGS PER COMMON SHARE, DILUTED
     Continuing operations                $0.43     $0.38     $0.83     $0.74
     Discontinued operations               0.04      0.14      0.05      0.31
     Gain on sale of real estate            -        0.14       -        0.14
                                          $0.47     $0.66     $0.88     $1.19

    Weighted average number of common
     shares, diluted                     56,591    53,315    56,258    53,287


    Federal Realty Investment Trust
    Funds From Operations
    June 30, 2007

                                        Three months ended  Six months ended
                                              June 30,          June 30,
                                           2007     2006      2007     2006
                                           (in thousands,    (in thousands,
    Funds from Operations available for   except per share  except per share
     common shareholders (FFO) (1)              data)              data)

    Net income                            $26,718  $38,256   $49,854  $69,287
    Gain on sale of real estate            (1,849) (15,034)   (1,849) (23,771)
    Depreciation and amortization of real
     estate assets                         24,317   22,010    48,259   43,884
    Amortization of initial direct costs
     of leases                              2,107    1,825     4,177    3,564
    Depreciation of real estate
     partnership assets                       323      151       591      315
     Funds from operations                 51,616   47,208   101,032   93,279
    Dividends on preferred stock             (135)  (2,869)     (171)  (5,738)
    Income attributable to operating
     partnership units                        399      245       644      478
     FFO                                  $51,880  $44,584  $101,505  $88,019


     FFO per diluted share                  $0.91    $0.83     $1.79    $1.64

       Weighted average number of common
        shares, diluted                    57,149   53,710    56,750   53,688

    Notes:
    (1)See Glossary of Terms.  FFO available for common shareholders excludes
       the gain on sale of condominiums at Santana Row.


    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    June 30, 2007

                                                          2007 Guidance
                                                 (in millions except per share
                                                           amounts) (1)

        Net income                                   $120   to          $122
        Gain on sale of real estate                   (21)               (21)
        Depreciation and amortization of real
         estate & real estate partnership assets       98                 98
        Amortization of initial direct
         costs of leases                                8                  8
        Funds from operations                         205                207
        Income attributable to operating
         partnership units                              1                  1
        Dividends on preferred stock                    0                  0
        Funds from operations available
         for common shareholders                      206   to           208

        Weighted Average Shares (diluted)            57.0

        Funds from operations available
         for common shareholders per diluted share  $3.62              $3.65

    Note:
    (1) Individual items may not add up to total due to rounding.

SOURCE Federal Realty Investment Trust
CONTACT: Andrew Blocher, Senior Vice President, Capital Markets &
Investor Relations, +1-301-998-8166, ablocher@federalrealty.com, or Vikki
Kayne, Vice President, Marketing & Corporate Communications, +1-301-998-8178,
vkayne@federalrealty.com, both of Federal Realty Investment Trust
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