Federal Realty Investment Trust Announces Second Quarter 2008 Operating Results
ROCKVILLE, Md., July 30 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2008.
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-- Funds from operations available for common shareholders (FFO) per diluted share was $0.96 and earnings per diluted share was $0.49 for second quarter 2008, compared to $0.91 and $0.47, respectively, for second quarter 2007.
-- FFO per diluted share was $1.89 and earnings per diluted common share was $1.00 for the six months ended June 30, 2008, versus $1.79 and $0.88, respectively, for the six months ended June 30, 2007.
-- Same-center property operating income for second quarter 2008 increased 4.1% including redevelopments and expansions, and 3.6% excluding redevelopments and expansions, over second quarter 2007.
-- Rent increases on lease rollovers of comparable retail space for second quarter 2008 were 25% on a cash-basis and 42% on a GAAP-basis.
-- Federal Realty increased its common dividend for the 41st consecutive year from an annualized rate of $2.44 per share to $2.60 per share, a 6.6% increase.
-- Guidance for 2008 FFO per diluted share was narrowed to $3.89 to $3.92. Financial Results
In second quarter 2008, Federal Realty generated FFO of $56.7 million, or $0.96 per diluted share. This compares to FFO of $51.9 million, or $0.91 per diluted share in second quarter 2007. For the six months ended June 30, 2008, Federal Realty reported FFO of $112.1 million, or $1.89 per diluted share compared to FFO of $101.5 million, or $1.79 per diluted share, for the same six-month period in 2007.
Net income available for common shareholders was $28.8 million and earnings per diluted share was $0.49 for the quarter ended June 30, 2008 versus $26.6 million and $0.47, respectively, for second quarter 2007. Year-to-date, Federal Realty reported net income available for common shareholders of $58.7 million, or $1.00 per diluted share. This compares to net income available for common shareholders of $49.7 million, or $0.88 per diluted share, for the six months ended June 30, 2007.
FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO and FFO per diluted share to net income is attached to this press release.
In second quarter 2008, same-center property operating income, including redevelopment and expansion properties, increased 4.1% over second quarter 2007. When redevelopment and expansion properties are excluded from same-center results, property operating income for second quarter 2008 increased 3.6% compared to second quarter 2007.
The Trust's overall portfolio was 95.8% leased as of June 30, 2008, compared to 96.1% on June 30, 2007. Federal Realty's same-center portfolio was 96.1% leased on June 30, 2008, compared to 96.3% on June 30, 2007.
During second quarter 2008, the Trust signed 90 leases for 253,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 239,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 25%. The average contractual rent on this comparable space for the first year of the new lease is $36.39 per square foot compared to the average contractual rent of $29.21 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 42% for second quarter 2008. Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $21.06 per square foot.
"The performance of our portfolio reflects continued demand by tenants for high quality assets in our strong retail locations, despite the inevitable impact of these difficult economic conditions," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust.
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 $0.65 per share, resulting in an indicated annual rate of $2.60 per share, an increase of $0.16 annually or 6.6%. The regular common dividend will be payable on October 15, 2008, to common shareholders of record as of September 23, 2008. This increase represents the 41st consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
"We are pleased to be able to increase our common dividend for the 41st consecutive year, particularly given the current economic environment," stated Andrew Blocher, senior vice president, capital markets and investor relations. "Our strong dividend record demonstrates the Trust's ability to withstand changing operating conditions over the long term."
Federal Realty narrowed its guidance range for 2008 FFO per diluted share to $3.89 to $3.92, and revised its 2008 earnings per diluted share guidance to a range of $2.08 to $2.11. The Trust's 2008 guidance does not include any potential damages associated with two lawsuits that are described in detail in Note E (Commitments and Contingencies) of the Trust's Form 10-Q.
Summary of Other Quarterly Activities and Recent Developments
-- June 2, 2008 - Federal Realty acquired Del Mar Village, a 154,000 square foot grocery-anchored, neighborhood shopping center at the intersection of Palmetto Park Road and Powerline Road in Boca Raton, Florida. The acquisition of Del Mar Village reflects the Trust's strategy of acquiring assets in Palm Beach, Broward and Miami-Dade counties in South Florida - areas that possess dense populations, a high degree of affluence and significant barriers to entry. Federal Realty acquired the property from a private owner for $41.7 million in cash.
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 July 31, 2008, at 11:00 a.m. Eastern Daylight Time. To participate, please call (866) 700-0161 five to ten minutes prior to the call's start time and use the passcode FRT 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 August 29, 2008, by dialing (888) 286-8010 and using the passcode 95318246.
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 18.4 million square feet located primarily in strategically selected 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 a joint venture in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 95.8% leased to national, regional, and local retailers as of June 30, 2008, with no single tenant accounting for more than approximately 2.7% 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 41 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P MidCap 400 company and its shares 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 February 27, 2008 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 February 27, 2008.
Investor and Media Inquiries Andrew Blocher Gina Birdsall Senior Vice President, Investor Relations Coordinator Capital Markets and Investor Relations 301/998-8265 301/998-8166 firstname.lastname@example.org email@example.com Federal Realty Investment Trust Summarized Balance Sheets June 30, 2008 June 30, December 31, 2008 2007 (in thousands) ASSETS (unaudited) Real estate, at cost Operating $3,458,460 $3,304,922 Construction-in-progress 110,929 147,925 3,569,389 3,452,847 Less accumulated depreciation and amortization (801,752) (756,703) Net real estate 2,767,637 2,696,144 Cash and cash equivalents 20,281 50,691 Accounts and notes receivable 66,431 61,108 Mortgage notes receivable 40,488 40,638 Investment in real estate partnership 29,400 29,646 Prepaid expenses and other assets 102,310 111,070 TOTAL ASSETS $3,026,547 $2,989,297 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Mortgages payable and capital lease obligations $446,531 $450,084 Notes payable 241,933 210,820 Senior notes and debentures 977,470 977,556 Accounts payable and other liabilities 217,332 204,387 Total liabilities 1,883,266 1,842,847 Minority interests 32,037 31,818 Shareholders' equity Preferred stock 9,997 9,997 Common shares and other shareholders' equity 1,101,247 1,104,635 Total shareholders' equity 1,111,244 1,114,632 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,026,547 $2,989,297 Federal Realty Investment Trust Summarized Income Statements June 30, 2008 Three months ended Six months ended June 30, June 30, 2008 2007 2008 2007 (in thousands, except per share data) (unaudited) Revenue Rental income $123,952 $115,281 $246,673 $227,045 Other property income 4,624 2,546 8,010 4,916 Mortgage interest income 1,118 1,127 2,234 2,257 Total revenue 129,694 118,954 256,917 234,218 Expenses Rental expenses 26,306 23,501 53,633 47,799 Real estate taxes 14,346 11,215 26,909 21,783 General and administrative 7,039 6,114 13,973 11,722 Depreciation and amortization 27,795 25,493 53,195 50,405 Total operating expenses 75,486 66,323 147,710 131,709 Operating income 54,208 52,631 109,207 102,509 Other interest income 209 207 550 432 Interest expense (24,476) (28,178) (48,829) (55,515) Income from real estate partnership 442 363 773 647 Income from continuing operations before minority interests 30,383 25,023 61,701 48,073 Minority interests (1,409) (1,384) (2,741) (2,681) Income from continuing operations 28,974 23,639 58,960 45,392 Discontinued operations Income from discontinued operations - 1,230 - 2,613 Gain on sale of real estate from discontinued operations - 1,849 - 1,849 Results from discontinued operations - 3,079 - 4,462 Net income 28,974 26,718 58,960 49,854 Dividends on preferred stock (135) (135) (271) (171) Net income available for common shareholders $28,839 $26,583 $58,689 $49,683 EARNINGS PER COMMON SHARE, BASIC Continuing operations $0.49 $0.42 $1.00 $0.81 Discontinued operations - 0.05 - 0.08 $0.49 $0.47 $1.00 $0.89 Weighted average number of common shares, basic 58,636 56,168 58,570 55,797 EARNINGS PER COMMON SHARE, DILUTED Continuing operations $0.49 $0.42 $1.00 $0.80 Discontinued operations - 0.05 - 0.08 $0.49 $0.47 $1.00 $0.88 Weighted average number of common shares, diluted 58,934 56,591 58,872 56,258 Federal Realty Investment Trust Funds From Operations June 30, 2008 Three months ended Six months ended June 30, June 30, 2008 2007 2008 2007 (in thousands, except per share data) Funds from Operations available for common shareholders (FFO) (1) Net income 28,974 26,718 $58,960 $49,854 Gain on sale of real estate - (1,849) - (1,849) Depreciation and amortization of real estate assets 25,050 24,317 48,000 48,259 Amortization of initial direct costs of leases 2,283 2,107 4,305 4,177 Depreciation of joint venture real estate assets 331 323 661 591 Funds from operations 56,638 51,616 111,926 101,032 Dividends on preferred stock (135) (135) (271) (171) Income attributable to operating partnership units 231 399 463 644 FFO $56,734 $51,880 $112,118 $101,505 FFO per diluted share $0.96 $0.91 $1.89 $1.79 Weighted average number of common shares, diluted 59,311 57,149 59,251 56,750 Federal Realty Investment Trust Reconciliation of Net Income to FFO Guidance June 30, 2008 2008 Guidance ($ millions except per share amounts) (1) Net income $123 to $125 Gain on sale of real estate 0 0 Depreciation and amortization of real estate & real estate partnership assets 99 99 Amortization of initial direct costs of leases 9 9 Funds from operations 231 232 Income attributable to operating partnership units 1 1 Dividends on preferred stock (1) (1) Funds from operations available for common shareholders 231 to 233 Weighted Average Shares (diluted) 59.3 Funds from operations available for common shareholders per diluted share $3.89 $3.92 Note: (1) Individual items may not add up to total due to rounding.
SOURCE Federal Realty Investment Trust -0- 07/30/2008 /CONTACT: Andrew Blocher, Senior Vice President, Capital Markets and Investor Relations, +1-301-998-8166, firstname.lastname@example.org, or Gina Birdsall, Investor Relations Coordinator, +1-301-998-8265, email@example.com, both of Federal Realty Investment Trust/ /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, firstname.lastname@example.org/ /Web site: http://www.federalrealty.com / (FRT) CO: Federal Realty Investment Trust ST: Maryland IN: FIN RLT REA SU: ERN DIV CCA ERP AM-CS -- NEW103 -- 1828 07/30/2008 17:00 EDT http://www.prnewswire.com