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Federal Realty Investment Trust Announces Third Quarter 2002 Operating Results; Core Portfolio Continues to Drive Strong Results
Federal Realty Investment Trust Announces Third Quarter 2002 Operating Results; Core Portfolio Continues to Drive Strong Results
ROCKVILLE, Md., Oct 30, 2002 (BUSINESS WIRE) -- Federal Realty Investment Trust
(NYSE:FRT) today reported operating results for its third quarter ended
September 30, 2002.
- Funds from operations (FFO) of $0.67 per diluted share beat consensus estimates of $0.64 per diluted share
- Net operating income increased 4.0% on a same-center basis
- 20% average increase, on a cash basis, on lease rollovers
- Occupancy remained strong at 95.5%
- Santana Row grand opening on November 7
The Trust reported FFO of $29.7 million for the third quarter, or $0.67 per diluted share, beating First Call consensus estimates by $0.03 per share. This compares to third quarter 2001 FFO of $28.3 million, or $0.70 per diluted share. Rental income increased 6.0% from $68.2 million in the third quarter of 2001 to $72.3 million in the third quarter of 2002.
On a same-center basis, which excludes the impact of properties acquired, developed or sold during the analyzed periods, rental income increased 3.1% from $67.1 million in the third quarter of 2001 to $69.2 million in the third quarter of 2002.
On a same-center basis, net operating income increased 4.0% versus third quarter 2001.
While same-center net operating income increased, pre-opening expenses at Santana Row, increased preferred dividends, and short-term dilution resulting from recent property disposition and equity proceeds being utilized to pay down balances on the Trust's line of credit offset these increases, resulting in a year-over-year decline in FFO per diluted share.
FRT vs. REIT Industry Same-Center NOI Growth
Over Last 6 Quarters
2Q01 3Q01 4Q01 1Q02 2Q02 3Q02
---- ---- ---- ---- ---- ----
FRT (1) 5.2% 6.5% 6.3% 6.2% 4.7% 4.0%
Peer Group
Average (2) 3.7% 2.4% 1.5% 0.3% -0.3% n/a
(1) FRT same-center NOI growth excludes redevelopment capital. If
redevelopment capital was included, same-center NOI growth would
have exceeded or equalled growth shown in all periods.
(2) Peer group includes KIM, REG, NXL, WRI and PNP. Complete 3Q02
data not yet available.
Source: Morgan Stanley Research
Portfolio Results
At September 30, 2002, overall occupancy remained strong at 95.5%, compared to 95.8% on September 30, 2001. During the third quarter, the Trust signed leases for more than 480,000 square feet of retail space. On a comparable retail space basis, the Trust leased over 375,000 square feet at an average cash increase in rent per square foot of 20%.
The weighted-average new rent on this space was $19.05 per square foot compared to the previous weighted-average rent of $15.93 per square foot. Rent increases on the over 1 million square feet of comparable space leased year-to-date have averaged 13% on a cash basis.
"The strong leasing production that our team has achieved this quarter, and in fact all year, has been very encouraging," stated Donald C. Wood, Federal Realty's president and chief operating officer. "Given the strength of our properties and our leasing team, we would expect to continue to produce sector-leading property operating income growth for the balance of 2002."
Santana Row
At Santana Row, Federal Realty's mixed-use development in San Jose, California, construction continues in advance of the November 7, 2002 grand opening. Phase I of Santana Row will include 445,000 square feet of retail space, 255 residential units and a 214-room boutique hotel.
Summary of Other Quarterly Activities and Recent Developments
- On October 9, Standard & Poor's reaffirmed the Trust's BBB corporate credit rating and removed the Trust from credit watch.
- On October 7, Federal Realty reaffirmed its 2002 FFO guidance of $2.62 per diluted share, and provided 2003 FFO guidance of $2.60 per diluted share, before taking into account any one-time charges related to the previously announced retirement of Steven Guttman, the Trust's chief executive officer, in March 2003. The Trust remains comfortable with both 2002 and 2003 FFO guidance.
- On October 3, Moody's Investor Service reaffirmed its Baa2 senior unsecured debt ratings for the Trust and changed its rating outlook to negative, from stable, as a result of the impact of property loss and cash flow disruption caused by the August 19 fire at Santana Row.
- On September 13, the Trust increased its common dividend to $0.485 per share, marking the 35th consecutive year that Federal Realty has increased its common dividend.
- On August 19, a fire broke out in Building 7 at Santana Row, destroying the vast majority of the residential component and causing smoke and water damage to the retail component of that building. As a result of the fire, the opening of Santana Row was delayed from September 19 to November 7.
- On July 25, the Trust appointed two new members to serve on the Board of Trustees, Amy Lane, former retail investment banking chief at Merrill Lynch and Joseph Vassalluzzo, current vice chairman of Staples, Inc.
Federal Realty's management team will present a more in depth discussion of the Trust's operating performance on its third quarter earnings conference call, which is scheduled for Thursday, October 31, 2002 at 1:00 P.M. Eastern Time. To participate, please call (877) 352-5209 five to ten minutes prior to the 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, www.federalrealty.com, available for 14 days following the conference call. A telephone recording of the call will be available for 14 days by dialing (888) 445-8675.
Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development and re-development of shopping centers and street retail properties. Federal Realty's portfolio contains 15 million square feet located in major metropolitan markets across the United States.
The operating portfolio is currently approximately 96% occupied by over 2,100 national, regional and local retailers with no single tenant accounting for more than 3% of rental revenue.
Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 35 consecutive years, the longest consecutive record in the REIT industry. Shares of Federal Realty are traded on the New York Stock Exchange under the symbol FRT. Additional information about Federal Realty can be found on the Internet at 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 Private Securities Litigation Reform Act of 1995. Although Federal Realty Investment Trust believes the expectations reflected in such forward looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Federal's expectations are detailed from time to time in the Company's SEC reports and filings, including its annual report on Form 10-K. Federal Realty assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Financial Highlights
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
OPERATING RESULTS 2002 2001 2002 2001
----------------- ---------- ---------- ---------- ----------
Revenues
Rental income $ 72,277 $ 68,179 $ 214,242 $ 201,177
Other property
income 4,412 4,292 11,393 10,189
Interest and
other income 1,644 1,678 3,762 5,275
---------- ---------- ---------- ----------
78,333 74,149 229,397 216,641
Expenses
Rental 17,471 15,254 49,288 45,114
Real estate
taxes 7,891 7,284 23,078 20,541
Interest 13,540 17,680 45,313 52,360
Administrative 3,713 3,516 10,209 9,971
Restructuring
expenses - - 8,489 -
Depreciation and
amortization 16,074 14,966 47,826 43,561
---------- ---------- ---------- ----------
58,689 58,700 184,203 171,547
---------- ---------- ---------- ----------
Operating income
before investors'
share of
operations and
discontinued
operations 19,644 15,449 45,194 45,094
Investors' share
of operations (1,081) (1,185) (3,357) (3,991)
---------- ---------- ---------- ----------
Income before
gain on sale of
real estate net
of loss on
abandoned
developments held
for sale and
discontinued
operations 18,563 14,264 41,837 41,103
Income (loss) from
operations of
discontinued
assets (59) 918 1,217 2,581
---------- ---------- ---------- ----------
Income before gain
on sale of real
estate net of
loss on abandoned
developments held
for sale 18,504 15,182 43,054 43,684
Gain on sale of
real estate net of
loss on abandoned
developments held
for sale - - 9,454 7,898
---------- ---------- ---------- ----------
Net income 18,504 15,182 52,508 51,582
Dividends on
preferred
stock (4,856) (1,988) (14,568) (5,963)
---------- ---------- ---------- ----------
Net income
available for
common
shareholders $ 13,648 $ 13,194 $ 37,940 $ 45,619
========== ========== ========== ==========
Earnings per
common share,
basic
Income before
gain on sale
of real
estate net
of loss on
abandoned
developments
held for sale
and
discontinued
operations $ 0.32 $ 0.31 $ 0.66 $ 0.90
Discontinued
operations - 0.03 0.03 0.07
Gain on sale of
real estate net
of loss on
abandoned
developments
held for sale - - 0.23 0.20
---------- ---------- ---------- ----------
$ 0.32 $ 0.34 $ 0.92 $ 1.17
========== ========== ========== ==========
Weighted
average number
of common
shares,
basic 42,802 39,347 41,155 39,061
========== ========== ========== ==========
Earnings per
common share,
diluted
Income before
gain on sale
of real estate
net of loss on
abandoned
developments
held for sale
and
discontinued
operations $ 0.31 $ 0.31 $ 0.66 $ 0.90
Discontinued
operations - 0.02 0.03 0.06
Gain on sale of
real estate net
of loss on
abandoned
developments
held for sale - - 0.22 0.20
---------- ---------- ---------- ----------
$ 0.31 $ 0.33 $ 0.91 $ 1.16
========== ========== ========== ==========
Weighted
average
number of
common
shares,
diluted 44,036 40,492 42,421 40,136
========== ========== ========== ==========
BALANCE SHEET DATA September 30, December 31,
------------------ 2002 2001
---------- ----------
Assets (unaudited)
Real estate, at cost
Operating $1,850,345 $1,741,385
Development 404,195 321,986
Discontinued operations - 40,933
---------- ----------
2,254,540 2,104,304
Less accumulated depreciation
and amortization (435,922) (395,767)
---------- ----------
1,818,618 1,708,537
Other Assets
Mortgage notes receivable 35,570 35,607
Cash and investments 24,652 17,563
Receivables 10,874 15,483
Tax deferred exchange escrows 55,204 6,006
Other assets 58,616 51,685
---------- ----------
Total Assets $2,003,534 $1,834,881
========== ==========
Liabilities and Shareholders' Equity
Obligations under capital
leases, mortgages and construction loans $ 544,721 $ 450,336
Notes payable 192,343 174,843
Senior notes 385,000 410,000
5 1/4% Convertible subordinated debentures 75,000 75,289
Other liabilities 160,081 135,122
Shareholders' Equity 646,389 589,291
---------- ----------
Total Liabilities and Shareholders' Equity $2,003,534 $1,834,881
========== ==========
Three months ended
September September
30, 2002 30, 2002
---------- ----------
Funds From Operations (FFO) (in thousands,
-------------------------- except per share data)
Net income available for common shareholders $ 13,648 $ 13,194
Depreciation and amortization of real
estate assets 14,614 13,764
Amortization of initial direct costs
of leases 1,175 1,039
Income attributable to operating
partnership units 263 289
---------- ----------
Funds From Operations (FFO) $ 29,700 $ 28,286
========== ==========
Weighted average shares outstanding 44,036 40,492
FFO per share $ 0.67 $ 0.70
========== ==========
CONTACT:
Federal Realty Investment Trust, Rockville
Investor Inquiries:
Andrew Blocher, 301/998-8166
ablocher@federalrealty.com
or
Media Inquiries:
Kristine Warner, 301/998-8212
kwarner@federalrealty.com
Copyright (C) 2002 Business Wire. All rights reserved.