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
