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News Release

Federal Realty Investment Trust Announces Second Quarter 2012 Operating Results
- Common dividend increased for record 45th consecutive year -

ROCKVILLE, Md., Aug. 1, 2012 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20120103/PH29242LOGO )

Financial Results

In the second quarter 2012, Federal Realty generated funds from operations available for common shareholders (FFO) of $66.8 million or $1.04 per diluted share.  This compares to FFO of $64.3 million, or $1.02 per diluted share, in second quarter 2011.  For the six months ended June 30, 2012, Federal Realty reported FFO of $133.4 million, or $2.08 per diluted share, compared to $125.5 million, or $2.01 per diluted share for the same six-month period in 2011.

Net income available for common shareholders was $32.5 million and earnings per diluted share was $0.51 for the quarter ended June 30, 2012 versus $34.6 million and $0.55, respectively, for second quarter 2011.  Year-to-date, Federal Realty reported net income available for common shareholders of $75.3 million and earnings per diluted share of $1.18.  This compares to net income available for common shareholders of $65.7 million and earnings per diluted share of $1.05 for the six months ended June 30, 2011.

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 2012, same-center property operating income increased 3.5% over second quarter 2011.  When redevelopment and expansion properties are excluded from same-center results, property operating income for second quarter 2012 increased 2.7% compared to second quarter 2011.  

The overall portfolio was 94.2% leased as of June 30, 2012, compared to 93.8% on March 31, 2012 and 93.4% on June 30, 2011.  Federal Realty's same-center portfolio was 94.8% leased on June 30, 2012, compared to 94.3% on March 31, 2012 and 93.9% on June 30, 2011.

During the second quarter of 2012, Federal Realty signed 111 leases for 368,795 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 355,527 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 11%. The average contractual rent on this comparable space for the first year of the new leases is $36.08 per square foot, compared to the average contractual rent of $32.64 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 21% for second quarter 2012. As of June 30, 2012, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $23.74 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 $0.73 per share, resulting in an indicated annual rate of $2.92 per share, an increase of 5.8%. The regular common dividend will be payable on October 15, 2012, to common shareholders of record as of September 21, 2012. This increase represents the 45th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector, and amongst the longest such records for publicly traded companies in the US.

Guidance

Federal Realty increased its guidance for 2012 FFO per diluted share to a range of $4.27 to $4.31, and provided 2012 earnings per diluted share guidance of $2.31 to $2.35.  

"Our portfolio continues to produce impressive operating results, including strong lease rollover, improving occupancy and solid same-center growth," said Don Wood, president and chief executive officer of Federal Realty Investment Trust.  "These key drivers allowed us to increase our dividend for the 45th consecutive year and increase our 2012 FFO per diluted share guidance for the third consecutive quarter."

Summary of Other Quarterly Activities and Recent Developments

  • July, 2012 – Federal Realty received an approximately $6M lease termination fee from Safeway in connection with Safeway's sale of a number of its Genuardi's locations to Giant of Carlisle.  Federal was able to negotiate the fee as part of the global resolution of all three Genuardi's locations in Federal's portfolio which resulted in the assignment of two of those locations to Giant and the termination of the lease at the third location.
  • July, 2012 – Federal Realty announced the pricing of a public offering of $250 million aggregate principal amount of 3.00% senior unsecured notes due August 1, 2022.  The notes were offered at 98.743% of the principal amount with a yield to maturity of 3.147%.  Interest on the notes will be payable on February 1 and August 1 of each year, beginning February 1, 2013. 
  • July, 2012 – Federal Realty broke ground on Pike & Rose, a 3.4 million square-foot transit oriented, mixed-use development.  Maryland Governor Martin O'Malley, Lieutenant Governor Anthony Brown, County Executive Isiah Leggett, County Council President Roger Berliner, The Montgomery County Council and Don Wood, Don Briggs, and Evan Goldman of Federal Realty officially celebrated the start of construction at Pike & Rose and the creation of an estimated 688 jobs from phase one of the project.
  • July, 2012 – Federal Realty announced that Mr. James M. Taylor will succeed Mr. Andrew Blocher as chief financial officer on August 15, 2012.  The move further enhances the Trust's ability to source and evaluate corporate business development and strategic opportunities through Mr. Taylor's extensive experience and real estate relationships over the past two decades. 
  • June, 2012 – Federal Realty rang The Closing Bell at the New York Stock Exchange (NYSE) to commemorate the Trust's 50th Anniversary.
 

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2012 earnings conference call, which is scheduled for August 2, 2012, at 11 a.m. Eastern Daylight Time.  To participate, please call (866) 362-4831 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 2, 2012, by dialing (888) 286-8010 and using the passcode 72503331.

About Federal Realty

In 2012, Federal Realty celebrates 50 years of being a proven leader in the ownership, operation, and redevelopment of high quality retail real estate in the country's best markets.   Federal Realty's portfolio (excluding joint venture properties) contains approximately 19.2 million square feet located primarily in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, 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, 2012, with no single tenant accounting for more than 2.5% 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 45 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 16, 2012, 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 redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected;
  • risks that we are investing a significant amount in ground-up development projects that may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;
  • 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 associated with general economic conditions, including local economic conditions in our geographic markets;
  • 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 with the Securities and Exchange Commission on February 16, 2012.

   

Federal Realty Investment Trust

 

Summarized Balance Sheets

 

June 30, 2012

 
 

June 30,

 

December 31,

 
 

2012

 

2011

 
 

(in thousands)

 
 

(unaudited)

     

ASSETS

       

Real estate, at cost

       

Operating (including $263,631 and $263,570 of consolidated variable interest entities, respectively)

$

4,264,527

   

$

4,232,608

   

Construction-in-progress

211,725

   

193,836

   
 

4,476,252

   

4,426,444

   

Less accumulated depreciation and amortization (including $8,497 and $4,991 of consolidated variable interest entities, respectively)

(1,169,278)

   

(1,127,588)

   

Net real estate

3,306,974

   

3,298,856

   

Cash and cash equivalents

82,774

   

67,806

   

Accounts and notes receivable, net

76,601

   

75,921

   

Mortgage notes receivable, net

55,887

   

55,967

   

Investment in real estate partnership

34,055

   

34,352

   

Prepaid expenses and other assets

124,638

   

133,308

   

TOTAL ASSETS

$

3,680,929

   

$

3,666,210

   
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

Liabilities

       

Mortgages and capital lease obligations (including $206,506 and $207,683 of consolidated variable interest entities, respectively)

$

805,700

   

$

810,616

   

Notes payable

300,089

   

295,159

   

Senior notes and debentures

1,004,532

   

1,004,635

   

Accounts payable and other liabilities

222,292

   

229,871

   

Total liabilities

2,332,613

   

2,340,281

   

Redeemable noncontrolling interests

81,858

   

85,325

   

Shareholders' equity

       

Preferred shares

9,997

   

9,997

   

Common shares and other shareholders' equity

1,232,084

   

1,206,095

   

Total shareholders' equity of the Trust

1,242,081

   

1,216,092

   

Noncontrolling interests

24,377

   

24,512

   

Total shareholders' equity

1,266,458

   

1,240,604

   

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,680,929

   

$

3,666,210

   
   
               

 
   

Federal Realty Investment Trust

               

Summarized Income Statements

               

June 30, 2012

               
 

Three Months Ended

 

Six Months Ended

 
 

June 30,

 

June 30,

 
 

2012

 

2011

 

2012

 

2011

 
 

(in thousands, except per share data)

 
 

(unaudited)

 

Revenue

               

Rental income

$

141,796

   

$

133,000

   

$

282,457

   

$

267,438

   

Other property income

4,478

   

2,146

   

8,840

   

4,236

   

Mortgage interest income

1,286

   

1,134

   

2,552

   

2,255

   

Total revenue

147,560

   

136,280

   

293,849

   

273,929

   

Expenses

               

Rental expenses

26,906

   

25,133

   

53,016

   

54,535

   

Real estate taxes

16,537

   

15,547

   

32,594

   

30,954

   

General and administrative

7,139

   

6,395

   

14,143

   

12,446

   

Depreciation and amortization

35,199

   

31,871

   

71,770

   

62,287

   

Total operating expenses

85,781

   

78,946

   

171,523

   

160,222

   

Operating income

61,779

   

57,334

   

122,326

   

113,707

   

Other interest income

112

   

20

   

319

   

35

   

Interest expense

(28,733)

   

(23,905)

   

(57,526)

   

(48,949)

   

Early extinguishment of debt

   

   

   

296

   

Income from real estate partnerships

438

   

444

   

739

   

767

   

Income from continuing operations

33,596

   

33,893

   

65,858

   

65,856

   

Discontinued operations

               

Discontinued operations - income

   

509

   

   

930

   

Discontinued operations - gain on deconsolidation of VIE

   

2,026

   

   

2,026

   

Discontinued operations - gain on sale of real estate

   

43

   

   

43

   

Results from discontinued operations

   

2,578

   

   

2,999

   

Income before gain on sale of real estate

33,596

   

36,471

   

65,858

   

68,855

   

Gain on sale of real estate in real estate partnership

   

   

11,860

   

   

Net income

33,596

   

36,471

   

77,718

   

68,855

   

Net income attributable to noncontrolling interests

(993)

   

(1,714)

   

(2,129)

   

(2,912)

   

Net income attributable to the Trust

32,603

   

34,757

   

75,589

   

65,943

   

Dividends on preferred shares

(135)

   

(135)

   

(271)

   

(271)

   

Net income available for common shareholders

$

32,468

   

$

34,622

   

$

75,318

   

$

65,672

   
                 

EARNINGS PER COMMON SHARE, BASIC

               

Continuing operations

$

0.51

   

$

0.51

   

$

0.99

   

$

1.01

   

Discontinued operations

   

0.04

   

   

0.05

   

Gain on sale of real estate

   

   

0.19

   

   
 

$

0.51

   

$

0.55

   

$

1.18

   

$

1.06

   
                 

Weighted average number of common shares, basic

63,700

   

62,214

   

63,556

   

61,844

   
                 

EARNINGS PER COMMON SHARE, DILUTED

               

Continuing operations

$

0.51

   

$

0.51

   

$

0.99

   

$

1.00

   

Discontinued operations

   

0.04

   

   

0.05

   

Gain on sale of real estate

   

   

0.19

   

   
 

$

0.51

   

$

0.55

   

$

1.18

   

$

1.05

   
                 

Weighted average number of common shares, diluted

63,880

   

62,391

   

63,732

   

62,012

   
   
                               

 
   

Federal Realty Investment Trust

                 

Funds From Operations

     

June 30, 2012

                 
   

Three Months Ended

 

Six Months Ended

 
   

June 30,

 

June 30,

 
   

2012

 

2011

 

2012

 

2011

 
   

(in thousands, except per share data)

 

Funds from Operations available for common shareholders (FFO)

                 

Net income

 

$

33,596

   

$

36,471

   

$

77,718

   

$

68,855

   

Net income attributable to noncontrolling interests

 

(993)

   

(1,714)

   

(2,129)

   

(2,912)

   

Gain on sale of real estate

 

   

(43)

   

   

(43)

   

Gain on sale of real estate in real estate partnership

 

   

   

(11,860)

   

   

Gain on deconsolidation of VIE

 

   

(2,026)

   

   

(2,026)

   

Depreciation and amortization of real estate assets

 

31,357

   

28,463

   

63,772

   

56,052

   

Amortization of initial direct costs of leases

 

2,670

   

2,813

   

5,606

   

5,053

   

Depreciation of joint venture real estate assets

 

375

   

431

   

756

   

858

   

Funds from operations

 

67,005

   

64,395

   

133,863

   

125,837

   

Dividends on preferred shares

 

(135)

   

(135)

   

(271)

   

(271)

   

Income attributable to operating partnership units

 

224

   

241

   

471

   

484

   

Income attributable to unvested shares

 

(316)

   

(228)

   

(631)

   

(508)

   

FFO

 

$

66,778

   

$

64,273

   

$

133,432

   

$

125,542

   

FFO per diluted share

 

$

1.04

   

$

1.02

   

$

2.08

   

$

2.01

   

Weighted average number of common shares, diluted

 

64,204

   

62,752

   

64,074

   

62,373

   
   
                                 

 
   

Federal Realty Investment Trust

       

Reconciliation of Net Income to FFO Guidance

       

June 30, 2012

       
         
 

2012 Guidance

 
 

(Dollars in millions except

 
 

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$

154

   

$

156

   

Net income attributable to noncontrolling interests

(5)

   

(5)

   

Gain on sale of real estate in real estate partnership

(12)

   

(12)

   

Depreciation and amortization of real estate & joint venture real estate assets

126

   

126

   

Amortization of initial direct costs of leases

12

   

12

   

Funds from operations

276

   

278

   

Dividends on preferred shares

(1)

   

(1)

   

Income attributable to operating partnership units

1

   

1

   

Income attributable to unvested shares

(1)

   

(1)

   

FFO

$

275

   

$

277

   
         

Weighted average number of common shares, diluted

64.3

   

64.3

   
         

FFO per diluted share

$

4.27

   

$

4.31

   
         

Note:

       

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

       
   
               

 
     

Media Inquiries

Investor Inquiries

 

Andrea Simpson

Kristina Lennox

 

Director, Marketing

Investor Relations Coordinator

 

617/684-1511

301/998-8265

 

asimpson@federalrealty.com

klennox@federalrealty.com

 
     
   

 

SOURCE Federal Realty Investment Trust