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News Release

Federal Realty Investment Trust Announces Third Quarter 2004 Operating Results

ROCKVILLE, Md.--(BUSINESS WIRE)--Nov. 3, 2004--Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its third quarter ended September 30, 2004.

  • For the third quarter 2004, Funds from Operations available for common shareholders (FFO) per diluted share was $0.72 and net income available for common shareholders per diluted share was $0.30.
  • When compared to third quarter 2003, same-center property operating income increased 4.5% including redevelopments and expansions, and 3.3% excluding redevelopment and expansion properties.
  • Cash-basis contractual rent increases on lease rollovers were 22% for the third quarter on over 400,000 square feet of retail space for which there was a prior tenant.
  • The Trust's portfolio was 94.2% leased at September 30, 2004.

Financial Results

Federal Realty reported FFO per diluted share of $0.72 in third quarter 2004, a 9.1% increase over the $0.66 of FFO per diluted share reported in third quarter 2003. Total FFO available for common shareholders was $38.3 million for the third quarter of 2004 compared to $33.3 million for last year's third quarter. For the nine months ended September 30, 2004, Federal Realty reported FFO of $111.7 million, or $2.14 per diluted share, compared to $89.9 million, or $1.87 per diluted share for the nine months ended September 30, 2003. Federal Realty's FFO results for the nine months ended September 30, 2003, include a $3.4 million ($0.07 per diluted share) charge relating to the redemption of the Trust's 7.95% Series A Cumulative Redeemable Preferred Shares.

Net income available for common shareholders was $15.8 million, and net income available for common shareholders per diluted share was $0.30 for the quarter ended September 30, 2004, versus $21.7 million and $0.44, respectively, for the third quarter of 2003. Net income available for common shareholders increased 23.2% from $43.5 million for the nine months ended September 30, 2003, to $53.6 million, for the nine months ended September 30, 2004. Year to date, net income available for common shareholders per diluted share improved from $0.92 in 2003 to $1.04 in 2004. Net income available for common shareholders and net income available for common shareholders per diluted share for the nine months ended September 30, 2003, include the impact of the preferred share redemption charge discussed above.

FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO available for common shareholders and FFO per diluted share to net income available for common shareholders and net income available for common shareholders per diluted share, respectively, is attached to this press release.

"Careful execution of the Trust's business plan has resulted in consistently improving operating results," commented Donald Wood, Federal Realty's President and Chief Executive Officer. "By focusing our attention on continually improving our high quality existing portfolio, through leasing and redevelopment, and by opportunistically capitalizing on external growth opportunities, we have uniquely positioned ourselves to improve on our success to date."

Portfolio Results

On a same-center basis, including redevelopment and expansion properties, property operating income increased 4.5% over third quarter 2003. When redevelopment and expansion properties are excluded, same-center property operating income increased 3.3% from third quarter 2003.

Overall, the Trust's portfolio was 94.2% leased as of September 30, 2004, an improvement of 110 basis points from December 31, 2003. As of September 30, 2004, Federal Realty's same-center portfolio was 96.5% leased, a 50 basis point improvement over year-end 2003.

During the third quarter of 2004, the Trust signed 79 leases for 418,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased 409,000 square feet at a weighted-average cash-basis contractual rent increase per square foot (i.e. excluding the impact of straight-line rents) of 22%. The weighted-average contractual rent on this comparable space for the first year of the new leases is $22.82 per square foot compared to the weighted-average contractual rent of $18.69 per square foot for the last year of the prior leases. The weighted-average contractual rent for the last year of the prior leases is calculated by including both the minimum rent and the percentage rent actually paid during the last year of those leases. Year to date, the Trust has signed 233 leases for 1.3 million square feet of comparable space, a record for the first three quarters of any year, at a weighted-average cash-basis contractual rent increase per square foot of 18%. On a GAAP basis (i.e. including the impact of straight-line rents), weighted-average rent increases per square foot for comparable space were 33% for the third quarter of 2004. As of September 30, 2004, Federal Realty's weighted-average contractual rent for retail and commercial space in its portfolio was $18.47 per square foot.

At Santana Row, Federal Realty's mixed-use community in San Jose, Calif., 92% of the retail space was leased to 115 tenants, with 101 stores open and operating as of September 30, 2004. Phase III (CineArts Theatre) opened as planned during third quarter 2004. The 255 existing residential units at Santana Row were 98% leased as of September 30, 2004, and the development of the 256 Phase IV residential units remains on schedule and on budget.

Guidance

Federal Realty today narrowed its guidance for 2004 FFO per diluted share to a range of $2.83 to $2.84, and increased guidance for net income per diluted share to a range of $1.30 to $1.31. In addition, management provided initial guidance for 2005 FFO per diluted share of $3.00 to $3.03, and net income per diluted share of $1.24 to $1.27.

"Our guidance for 2004 and 2005 projects real FFO per share growth of 7% in 2004 and 8% to 9% for 2005, after adjusting for Santana Row insurance proceeds and the impact of the 2003 preferred share redemption charge," commented Larry Finger, Federal Realty's Senior Vice President and Chief Financial Officer. "Through our internal growth and redevelopment focused operating strategy, we are confident of our ability to produce top tier FFO per share growth while subjecting our investors to the least amount of risk in the sector."

Summary of Other Quarterly Activities and Recent Developments

  • July 12, 2004 - Federal Realty announced that it formed a joint venture with Clarion Lion Properties Fund, a discretionary fund created and advised by ING Clarion Partners. The joint venture intends to acquire up to $350 million of stabilized, supermarket-anchored shopping centers in the Trust's strategic East Coast and California markets.
  • September 7, 2004 - Federal Realty announced that its Board of Trustees increased the dividend on the Trust's common shares by $0.06 annually, resulting in an annualized rate of $2.02 per share. This increase represented the 37th consecutive year that Federal Realty had increased its common dividend, the longest consecutive record in the REIT sector.
  • September 21, 2004 - Federal Realty announced the acquisition of two supermarket-anchored shopping centers in the Boston metropolitan area for $38 million. The two properties, Campus Plaza in Bridgewater, Mass., and Pleasant Shops in Weymouth, Mass., were acquired for the Trust's joint venture with Clarion Lion Properties Fund.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter earnings conference call, which is scheduled for November 4, 2004, at 11 a.m. Eastern Standard Time. To participate, please call (888) 566-5771 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, www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available for 30 days by dialing (800) 679-9654.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of shopping centers and Street Retail properties. Federal Realty's portfolio (excluding joint venture properties) contains approximately 16.8 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 350,000 square feet of retail space through its joint venture with Clarion Lion Properties Fund. Our operating portfolio (excluding joint venture properties) was 94.2% leased to approximately 2,200 national, regional, and local retailers as of September 30, 2004, with no single tenant accounting for more than 2.3% 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 37 consecutive years, the longest consecutive 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 Current Report on Form 8-K filed on March 11, 2004, 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 any redevelopment or renovation project that we do pursue may not perform as anticipated;
  • 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 we may have environmental risks at our properties, 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 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 review the risks contained in our annual report on Form 10-K (as amended), our quarterly reports on Form 10-Q, and the risks contained in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2004.

Federal Realty Investment Trust
Summarized Operating Results
September 30, 2004

----------------------------------------------------------------------

                         Financial Highlights
                (in thousands, except per share data)
                             (unaudited)

                                Three months ended  Nine months ended
OPERATING RESULTS                   September 30,      September 30,
-----------------                  2004     2003      2004      2003
                                 -------- -------- --------- ---------

Revenues
   Rental income                 $91,599  $80,424  $271,975  $238,563
   Other property income           7,416    4,626    19,030    12,885
   Mortgage interest income        1,142      886     3,385     3,018
                                 -------- -------- --------- ---------
                                 100,157   85,936   294,390   254,466
Expenses
   Rental                         22,624   18,952    67,167    59,366
   Real estate taxes              10,033    8,897    28,655    25,312
   Administrative                  4,673    3,221    13,443     9,642
   Depreciation and amortization  23,666   18,576    67,148    53,820
                                 -------- -------- --------- ---------
                                  60,996   49,646   176,413   148,140
                                 -------- -------- --------- ---------
   Operating income               39,161   36,290   117,977   106,326

Interest income                      548      316     1,350     1,057
Interest expense                 (21,125) (18,719)  (63,835)  (54,550)
Income from real estate
 partnership                          19        -        19         -
Minority interests                  (936)  (1,053)   (3,317)   (3,257)
                                 -------- -------- --------- ---------
Income from continuing
 operations                       17,667   16,834    52,194    49,576

Discontinued operations
   Operating income from
    discontinued operations           (4)     589       713     1,798
   Gain on sale of real estate       997    7,172     9,331     7,723
                                 -------- -------- --------- ---------
Results from operations of
 discontinued assets                 993    7,761    10,044     9,521
                                 -------- -------- --------- ---------

Net Income                        18,660   24,595    62,238    59,097

   Dividends on preferred stock   (2,869)  (2,869)   (8,607)  (12,215)
   Preferred stock redemption fee      -        -         -    (3,423)
                                 -------- -------- --------- ---------
             Net income available
              for common
              shareholders       $15,791  $21,726   $53,631   $43,459
                                 ======== ======== ========= =========



FUNDS FROM OPERATIONS AVAILABLE
 FOR COMMON SHAREHOLDERS
-------------------------------
             Net income          $18,660  $24,595   $62,238   $59,097
             Gain on sale of real
              estate                (997)  (7,172)   (9,331)   (7,723)
             Depreciation and
              amortization of
              real estate assets  21,376   16,974    61,145    49,146
             Depreciation on JV
              real estate assets      50        -        50         -
             Amortization of
              initial direct
              costs of leases      1,882    1,427     5,170     4,173
                                 -------- -------- --------- ---------
             Funds from
              operations          40,971   35,824   119,272   104,693
             Dividends on
              preferred stock     (2,869)  (2,869)   (8,607)  (12,215)
             Income attributable
              to operating
              partnership units      242      375     1,032       816
             Preferred stock
              redemption fee           -        -         -    (3,423)
                                 -------- -------- --------- ---------
             Funds from
              operations
              available for
              common shareholders 38,344   33,330   111,697    89,871
                                 ======== ======== ========= =========


                Weighted average
                 number of common
                 shares, diluted  52,934   50,216    52,074    48,004
                                 ======== ======== ========= =========

             Funds from
              operations per
              share available for
              common shareholders  $0.72    $0.66     $2.14     $1.87
                                 ======== ======== ========= =========

EARNINGS PER COMMON SHARE, BASIC
--------------------------------
      Income from continuing
       operations available for
       common shareholders         $0.28    $0.28     $0.86     $0.73
      Income from discontinued
       operations                   0.02     0.16      0.20      0.20
                                 -------- -------- --------- ---------
                   Net income
                    available for
                    common
                    shareholders,
                    basic          $0.30    $0.44     $1.06     $0.93
                                 ======== ======== ========= =========

          Weighted average number
           of common shares,
           basic                  51,640   48,935    50,722    46,810
                                 ======== ======== ========= =========

EARNINGS PER COMMON SHARE,
 DILUTED
--------------------------
      Income from continuing
       operations available for
       common shareholders         $0.28    $0.29     $0.85     $0.72
      Income from discontinued
       operations                   0.02     0.15      0.19      0.20
                                 -------- -------- --------- ---------
                   Net income
                    available for
                    common
                    shareholders,
                    diluted        $0.30    $0.44     $1.04     $0.92
                                 ======== ======== ========= =========

          Weighted average number
           of common shares,
           diluted                52,934   50,216    51,273    48,004
                                 ======== ======== ========= =========








Federal Realty Investment Trust
Summarized Balance Sheet
September 30, 2004

----------------------------------------------------------------------

                         Financial Highlights
                (in thousands, except per share data)

CONSOLIDATED BALANCE SHEETS
---------------------------
                                           September 30,  December 31,
                                               2004          2003
                                           -------------  ------------
                                            (unaudited)
ASSETS

Real estate, at cost                         $2,659,903    $2,470,149
  Less accumulated depreciation and
   amortization                                (573,246)     (514,177)
                                           -------------  ------------
Net real estate investments                   2,086,657     1,955,972

Cash and cash equivalents                        23,437        34,968
Mortgage notes receivable                        45,079        41,500
Accounts and notes receivable                    34,748        31,207
Other assets                                     77,021        79,788
Investment in real estate partnership            14,078             -
                                           -------------  ------------
TOTAL ASSETS                                 $2,281,020    $2,143,435
                                           =============  ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
    Obligations under capital leases and
     mortgage loans                            $411,831      $414,357
    Notes payable                               320,090       361,323
    Senior notes and debentures                 567,980       535,000
    Other liabilities                           156,106       111,799
                                           -------------  ------------
Total liabilities                             1,456,007     1,422,479

Minority interests                               35,250        29,582

Shareholders' equity
    Preferred stock                             135,000       135,000
    Common shares and other shareholders'
     equity                                     654,763       556,374
                                           -------------  ------------
Total shareholders' equity                      789,763       691,374
                                           -------------  ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $2,281,020    $2,143,435
                                           =============  ============






Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
September 30, 2004

----------------------------------------------------------------------
Reconciliation of 2004 Net Income to 2004 FFO Guidance
($ millions except per share amounts)
                                                         Forecast
                                                    ------------------


    Net income                                           $78 to   $79
    Gain on sale of real estate                           (9)      (9)
    Depreciation and amortization of real estate
     assets                                               83       83
    Amortization of initial direct costs of leases         7        7

    Funds from Operations                                159      160

    Income attributable to operating partnership
     units                                                 2        2
    Dividends on preferred stock                         (11)     (11)
                                                    ---------   ------
    Funds from operations available for common
     shareholders (1)                                    150 to   151
                                                    =========   ======

    Weighted Average Shares (diluted)                   52.9
                                                    ---------   ------
    Funds from operations available for common
     shareholders per share                            $2.83 to $2.84
                                                    =========   ======

Reconciliation of 2005 Net Income to 2005 FFO
 Guidance
($ millions except per share amounts)                    Forecast
                                                    ------------------


    Net income                                           $75 to   $77
    Gain on sale of real estate                            -        -
    Depreciation and amortization of real estate
     assets                                               86       86
    Amortization of initial direct costs of leases         7        7

    Funds from Operations                                168      170

    Income attributable to operating partnership
     units                                                 2        2
    Dividends on preferred stock                         (11)     (11)
                                                    ---------   ------
    Funds from operations available for common
     shareholders (1)                                    159 to   161
                                                    =========   ======

    Weighted Average Shares (diluted)                   53.1
                                                    ---------   ------
    Funds from operations available for common
     shareholders per share                            $3.00 to $3.03
                                                    =========   ======

Note:
-----
(1) Individual items may not add up to total as a result of rounding.

CONTACT:
Federal Realty Investment Trust
Investor and Media Inquiries:
Andrew Blocher, Vice President, Capital Markets & Investor Relations
301/998-8166
ablocher@federalrealty.com
or
Suzanne O'Neill
Manager, Investor Relations
301/998-8358
soneill@federalrealty.com

SOURCE: Federal Realty Investment Trust