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News Release

Federal Realty Investment Trust Announces Second Quarter 2010 Operating Results
Common dividend increased for 43rd consecutive year -

ROCKVILLE, Md., Aug 04, 2010 /PRNewswire via COMTEX/ --

Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2010.

 

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Financial Results

In the second quarter 2010, Federal Realty generated funds from operations available for common shareholders (FFO) of $60.3 million or $0.98 per diluted share. This compares to FFO of $57.4 million, or $0.97 per diluted share, in second quarter 2009. For the six months ended June 30, 2010, Federal Realty reported FFO of $118.1 million, or $1.92 per diluted share, compared to $95.4 million, or $1.61 per diluted share for the same six-month period in 2009.

Net income available for common shareholders was $31.0 million and earnings per diluted share was $0.50 for the quarter ended June 30, 2010 versus $28.3 million and $0.48, respectively, for second quarter 2009. Year-to-date, Federal Realty reported net income available for common shareholders of $60.1 million and earnings per diluted share of $0.98. This compares to net income available for common shareholders of $38.6 million and earnings per diluted share of $0.65 for the six months ended June 30, 2009.

Year-to-date 2009 results included a litigation provision of $20.8 million, or $0.34 per diluted share, related to a lawsuit involving a property adjacent to Santana Row. Excluding this litigation provision, FFO for the six months ended June 30, 2009 was $116.1 million, or $1.95 per diluted share; net income available for common shareholders was $59.4 million and earnings per diluted share was $1.00.

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

In second quarter 2010, same-center property operating income increased 3.4% over second quarter 2009. When redevelopment and expansionproperties are excluded from same-center results, property operating income for second quarter 2010 increased 4.2% compared to second quarter 2009.

The overall portfolio was 94.2% leased as of June 30, 2010, compared to 94.1% on March 31, 2010 and 94.0% on June 30, 2009. Federal Realty's same-center portfolio was 94.7% leased on June 30, 2010, compared to 94.6% on March 31, 2010 and 94.2% on June 30, 2009.

During the second quarter of 2010, Federal Realty signed 82 leases for 319,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 308,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 4%. The average contractual rent on this comparable space for the first year of the new leases is $27.62 per square foot, compared to the average contractual rent of $26.64 per square foot for the last year of the prior leases. The previous average contractual rent was calculated by including both the minimum rent and any 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 13% for second quarter 2010. As of June 30, 2010, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.55 per square foot.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees increased the dividend rate on its common shares, declaring a regular quarterly cash dividend of $0.67 per share, resulting in an indicated annual rate of $2.68 per share, an increase of 1.5%. The regular common dividend will be payable on October 15, 2010, to common shareholders of record as of September 23, 2010. This increase represents the 43rd consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.

"Our strong performance throughout 2009 and to date in 2010 supports our decision to raise our common dividend and continue our record of dividend achievement," said Don Wood, president and chief executive officer. "Owning and operating a portfolio of high quality retail assets, combined with a solid balance sheet and our disciplined approach to external growth has resulted in consistent performance as we negotiate this difficult economic environment."

Guidance

Federal Realty increased its guidance for 2010 FFO per diluted share to a range of $3.84 to $3.89, and provided 2010 earnings per diluted share guidance of $1.94 to $1.99.

Acquisitions and Portfolio Expansion

In 2010 to date, Federal Realty has committed approximately $60 million of acquisition capital to strengthen its presence in the core markets of Boston, Southern California, Long Island, New York and Bethesda, Maryland.

 

  • Federal Realty formed a joint venture with affiliates of Taurus Investment Holdings LLC, in which the Trust has an 85% interest, to expand the Trust's concentration in Boston. The joint venture plans to acquire, redevelop, and operate up to $200 million of urban mixed-use properties in the Back Bay section of Boston, Massachusetts. Concurrent with the formation of the partnership, the joint venture acquired 111-115 Newbury Street and 127-129 Newbury Street. Taurus Investment Holdings LLC and UrbanMeritage LLC will manage, operate and lease the buildings on behalf of the partnership.
  • The Trust has committed to acquire the former Mervyn's building located adjacent to its Escondido Promenade in Escondido, California. Mervyn's had been operating as a shadow anchor to the property since Escondido Promenade's original opening in 1987 before ceasing operations in late 2008. Federal Realty is in significant lease discussions with two anchor users to occupy the former Mervyn's space.
  • Federal Realty has contracted to acquire Huntington Square, a 268,000 square foot community shopping center, shadow-anchored by Sears, located on Long Island in East Northport, New York. Huntington Square will increase Federal Realty's presence in Queens and Long Island to nearly 1.5 million square feet of retail space including Forest Hills, Fresh Meadows, Hauppauge Shopping Center, Huntington Shopping Center, Melville Mall, and Greenlawn Plaza.
  • Federal Realty is under contract to purchase the fee interest in the land underlying a portion of Bethesda Row in Bethesda, Maryland. The land currently underlies shops along the south side of Bethesda Avenue, stretching from the Apple to Amethyst stores, and includes a surface parking lot in the rear.

 

"Upon the completion of these transactions, Federal Realty will have invested approximately $60 million with the ability to create additional value over time through releasing and redevelopment," said Jeff Berkes, executive vice president and chief investment officer. "Strengthening our presence in our core markets by acquiring new assets and increasing our investment in our existing portfolio not only produces strong risk-adjusted returns but also provides us with better operational and ownership flexibility throughout the entire portfolio."

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2010 earnings conference call, which is scheduled for August 5, 2010, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 730-5768 five to ten minutes prior to the call start time and use the passcode FRT EARNINGS (required). Federal Realty will also provide an online webcast on the Company's website, 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, 2010, by dialing (888) 286-8010 and using the passcode 25364905.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 18.2 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 94.2% leased to national, regional, and local retailers as of June 30, 2010, 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 43 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. For more information, please visit www.federalrealty.com.

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 17, 2010, and include the following:

 

  • risks that our tenants will not pay rent, may vacate early or may file for bankruptcy 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 redevelopment or renovation projects that we do pursue 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 partnerships;
  • 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 17, 2010.

    Federal Realty Investment Trust
    Summarized Balance Sheets
    June 30, 2010





                                                                 December
                                                 June 30,           31,
                                                       2010           2009
                                                       ----           ----
                                                     (in thousands)
    ASSETS                                      (unaudited)

    Real estate, at cost
      Operating (including $86,954 and $68,643
       of consolidated variable
        interest entities,  respectively)        $3,660,541     $3,626,476
      Construction-in-progress                      144,987        132,758
                                                    -------        -------
                                                  3,805,528      3,759,234
      Less accumulated depreciation and
       amortization (including $3,524
          and $3,053 of consolidated variable
           interest entities, respectively)        (987,318)      (938,087)
                                                   --------       --------
    Net real estate                               2,818,210      2,821,147

    Cash and cash equivalents                        23,557        135,389
    Accounts and notes receivable, net               72,814         72,191
    Mortgage notes receivable, net                   42,289         48,336
    Investment in real estate partnerships           51,930         35,633
    Prepaid expenses and other assets                94,845        109,613
    TOTAL ASSETS                                 $3,103,645     $3,222,309
                                                 ==========     ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
      Mortgages payable and capital lease
       obligations (including $23,105
           and $23,417 of consolidated variable
            interest entities, respectively)       $596,261       $601,884
      Notes payable                                  20,997        261,745
      Senior notes and debentures                 1,079,880        930,219
      Accounts payable and other liabilities        212,102        219,398
                                                    -------        -------
    Total liabilities                             1,909,240      2,013,246

    Shareholders' equity
        Preferred shares                              9,997          9,997
        Common shares and other shareholders'
         equity                                   1,153,121      1,167,340
                                                  ---------      ---------
    Total shareholders' equity of the Trust       1,163,118      1,177,337
        Noncontrolling interests                     31,287         31,726
    Total shareholders' equity                    1,194,405      1,209,063
                                                  ---------      ---------
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                      $3,103,645     $3,222,309
                                                 ==========     ==========


    Federal Realty Investment Trust
    Summarized Income Statements
    June 30, 2010



                           Three months ended            Six months ended
                                 June 30,                    June 30,
                            2010          2009         2010          2009
                            ----          ----         ----          ----
                               (in thousands, except per share data)
                                            (unaudited)
    Revenue
      Rental income     $130,256      $126,090     $261,748      $253,296
      Other property
       income              2,508         2,941        8,420         5,544
      Mortgage
       interest income     1,071         1,307        2,137         2,574
        Total revenue    133,835       130,338      272,305       261,414
                         -------       -------      -------       -------

    Expenses
      Rental expenses     25,581        25,080       55,584        53,777
      Real estate
       taxes              14,905        14,821       30,009        28,653
      General and
       administrative      5,843         5,276       11,218        10,421
      Litigation
       provision             173           125          287        20,757
      Depreciation and
       amortization       31,178        29,633       60,110        58,225
        Total operating
         expenses         77,680        74,935      157,208       171,833
                          ------        ------      -------       -------
    Operating income      56,155        55,403      115,097        89,581

      Other interest
       income                 33           260          215           350
      Interest expense  (25,418)      (25,830)     (51,380)      (49,413)
      Early
       extinguishment
       of debt                 -          (982)      (2,801)         (968)
      Income from real
       estate
       partnerships          188           399          381           601
    Income from
     continuing
     operations           30,958        29,250       61,512        40,151

    Discontinued
     operations
      Discontinued
       operations -
       income                  -           161            -           218
      Discontinued
       operations -
       gain on sale of
       real estate         1,000           383        1,000         1,298
        Results from
         discontinued
         operations        1,000           544        1,000         1,516
                           -----           ---        -----         -----
    Income before
     gain on sale of
     real estate          31,958        29,794       62,512        41,667

      Gain on sale of
       real estate           410             -          410             -
                             ---           ---          ---           ---
    Net income            32,368        29,794       62,922        41,667

       Net income
        attributable to
        noncontrolling
        interests         (1,254)       (1,377)      (2,588)       (2,766)
                          ------        ------       ------        ------
    Net income
     attributable to
     the Trust            31,114        28,417       60,334        38,901

      Dividends on
       preferred
       shares               (135)         (135)        (271)         (271)
    Net income
     available for
     common
     shareholders        $30,979       $28,282      $60,063       $38,630
                         =======       =======      =======       =======


    EARNINGS PER
     COMMON SHARE,
     BASIC
      Continuing
       operations          $0.47         $0.47        $0.95         $0.62
      Discontinued
       operations           0.02          0.01         0.02          0.03
      Gain on sale of
       real estate          0.01             -         0.01             -
                            ----           ---         ----           ---
                           $0.50         $0.48        $0.98         $0.65
                           =====         =====        =====         =====

      Weighted average
       number of
       common shares,
       basic              61,169        58,917       61,129        58,882
                          ======        ======       ======        ======

    EARNINGS PER
     COMMON SHARE,
     DILUTED
      Continuing
       operations          $0.47         $0.47        $0.95         $0.62
      Discontinued
       operations           0.02          0.01         0.02          0.03
      Gain on sale of
       real estate          0.01             -         0.01             -
                            ----           ---         ----           ---
                           $0.50         $0.48        $0.98         $0.65
                           =====         =====        =====         =====

      Weighted average
       number of
       common shares,
       diluted            61,311        59,042       61,266        59,004
                          ======        ======       ======        ======


    Federal Realty Investment Trust
    Funds From Operations
    June 30, 2010




                            Three months ended            Six months ended
                                 June 30,                     June 30,
                                 --------                     --------
                            2010          2009          2010          2009
                            ----          ----          ----          ----
    Funds from
     Operations
     available for
     common                     (in thousands, except per share data)
    --------------
      shareholders (FFO)
       (1)
      ------------------
    Net income (2)       $32,368       $29,794       $62,922       $41,667
    Net income
     attributable to
     noncontrolling
     interests           (1,254)       (1,377)        (2,588)       (2,766)
    Gain on sale of
     real estate         (1,410)          (383)       (1,410)       (1,298)
    Depreciation and
     amortization of
     real estate
     assets               27,797        26,563        53,884        51,999
    Amortization of
     initial direct
     costs of leases       2,561         2,515         4,797         5,182
    Depreciation of
     joint venture
     real estate
     assets                  345           337           696           691
      Funds from
       operations         60,407        57,449       118,301        95,475
    Dividends on
     preferred shares       (135)         (135)         (271)         (271)
    Income
     attributable to
     operating
     partnership units       244           241           489           484
    Income
     attributable to
     unvested shares        (201)         (189)         (392)         (314)
      FFO                 60,315        57,366       118,127        95,374
      Litigation
       provision, net of
       allocation to
       unvested shares       172           124           286        20,689
                             ---           ---           ---        ------
    FFO excluding
     litigation
     provision           $60,487       $57,490      $118,413      $116,063
                         =======       =======      ========      ========

    FFO per diluted
     share                 $0.98         $0.97         $1.92         $1.61
    Litigation
     provision per
     diluted share             -             -             -          0.34
                             ---           ---           ---          ----
    FFO per diluted
     share excluding
     litigation
     provision             $0.98         $0.97         $1.92         $1.95
                           =====         =====         =====         =====

      Weighted average
       number of common
       shares, diluted    61,680        59,414        61,636        59,377
                          ======        ======        ======        ======




    Notes:
    ------
    (1)See Glossary of Terms.
    (2)Net income includes certain costs related to the litigation and
    appeal process over a parcel of land adjacent to Santana Row;
    net income for the six months ended June 30, 2009 also includes a
    $20.6 million charge for increasing the accrual for such
    litigation matter.  We believe FFO excluding this litigation
    provision provides a more meaningful evaluation of operations, and
    therefore, have included FFO and FFO per share excluding the related
    charges.

    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    June 30, 2010



                                                           2010 Guidance
                                                           -------------
                                                            (Dollars in
                                                          millions except
                                                             per share
                                                            amounts) (1)
    Funds from Operations available for common
     shareholders (FFO)
    ------------------------------------------
    Net income                                           $125         $128
    Net income attributable to noncontrolling
     interests                                             (5)          (5)
    Gain on sale of real estate                            (1)          (1)
    Depreciation and amortization of real estate &
     joint venture real estate assets                     109          109
    Amortization of initial direct costs of leases          9            9
                                                          ---          ---
    Funds from operations                                 237          240
    Dividends on preferred shares                          (1)          (1)
    Income attributable to operating partnership
     units                                                  1            1
    Income attributable to unvested shares                 (1)          (1)
    FFO                                                   236          239
    Litigation provision (2)                                1            1
                                                          ---          ---
    FFO excluding litigation provision                   $237         $240
                                                         ====         ====

    Weighted average number of common shares,
     diluted                                             61.7         61.7

    FFO per diluted share                               $3.83        $3.88
    Litigation provision (2)                             0.01         0.01
                                                         ----         ----
    FFO per diluted share excluding litigation
     provision                                          $3.84        $3.89
                                                        =====        =====




    Notes:
    ------
    (1)Individual items may not add up to total due to rounding.
    (2)Amount represents certain costs related to the litigation and
    appeal process over a parcel of land
    located adjacent to Santana Row.


    Investor and Media
     Inquiries
    ------------------
    Gina Birdsall                Janelle Stevenson
    Investor Relations           Corporate Communications
    301/998-8265                 301/998-8185
    gbirdsall@federalrealty.com   jmstevenson@federalrealty.com


SOURCE Federal Realty Investment Trust