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News Release

Federal Realty Investment Trust Announces Third Quarter 2006 Operating Results

ROCKVILLE, Md., Nov. 6 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported:

  • Funds from operations available for common shareholders (FFO) per diluted share was $0.85 for the quarter ended September 30, 2006 versus $0.77 for third quarter 2005.


  • As a result of decreased gains on sale of real estate, earnings per diluted common share for third quarter 2006 was $0.41 versus $0.52 for third quarter 2005.


  • FFO per diluted share was $2.49, and earnings per diluted common share was $1.60 for the nine months ended September 30, 2006, versus $2.28 and $1.34, respectively, for the nine months ended September 30, 2005.


  • When compared to third quarter 2005, same-center property operating income increased 6.9% including redevelopments and expansions, and 5.5% excluding redevelopments and expansions.


  • Rent increases on lease rollovers for retail space for which there was a prior tenant were 23% on a cash-basis and 36% on a GAAP-basis for the quarter ended September 30, 2006.


  • The Trust's portfolio was 97.3% leased and 95.6% occupied as of September 30, 2006.


  • Chief Financial Officer, Larry Finger, announces timeline for future retirement. (Logo: http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO )


Financial Results

In third quarter 2006, Federal Realty reported FFO of $45.8 million, or $0.85 per diluted share. This compares to FFO of $41.0 million, or $0.77 per diluted share, reported in third quarter 2005. For the nine months ended September 30, 2006, Federal Realty reported FFO of $133.8 million, or $2.49 per diluted share. This compares to FFO of $121.5 million, or $2.28 per diluted share, for the same nine-month period in 2005.

Net income available for common shareholders was $22.1 million and earnings per diluted common share was $0.41 for the quarter ended September 30, 2006, versus $27.8 million and $0.52, respectively, for third quarter 2005. Net income available for common shareholders included $0.1 million (less than $0.01 per diluted common share) and $9.5 million ($0.18 per diluted common share) of gain on sale of real estate in third quarter 2006 and third quarter 2005, respectively. Year-to-date, Federal Realty reported net income available for common shareholders of $85.7 million, or $1.60 per diluted share. This compares to net income available for common shareholders of $70.9 million, or $1.34 per diluted share, for the nine months ended September 30, 2005.

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

On a same-center basis, including redevelopments and expansions, property operating income increased 6.9% over third quarter 2005. When redevelopments and expansions are excluded from the same-center results, property operating income increased 5.5% from third quarter 2005.

Overall, the Trust's portfolio was 97.3% leased and 95.6% occupied as of September 30, 2006, compared to 95.5% and 92.3%, respectively, on September 30, 2005. Federal Realty's same-center portfolio was 97.7% leased and 96.8% occupied on September 30, 2006, compared to 96.8% and 95.8%, respectively, on September 30, 2005.

During third quarter 2006, the Trust signed 75 leases for approximately 395,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 332,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 23%. The average contractual rent on this comparable space for the first year of the new lease is $20.02 per square foot compared to the average contractual rent of $16.25 per square foot for the last year of the prior lease. The previous average contractual rent is calculated by including both the minimum rent and the 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 36% for third quarter 2006. As of September 30, 2006, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $18.94 per square foot.

"The third quarter was impressive across all of our key business areas; leasing, redevelopment and acquisitions," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "In addition, we have utilized 2006 to strengthen our balance sheet, providing significant financial flexibility to pursue smart investment opportunities in 2007 and beyond."

Residential condominium sales at Santana Row, Federal Realty's mixed-use community in San Jose, Calif., have been completed. The Trust has closed sales on all 219 units with associated gross sales proceeds of approximately $153 million.

Future Retirement of Chief Financial Officer

Larry Finger, Federal Realty's chief financial officer since March 2002, announced his plans to retire from his position as Chief Financial Officer in early 2008. "For nearly five years, Larry and I have worked together day in and day out in developing and executing the Trust's business plan. He is not only a strong business leader, but also a close friend, and we will surely miss him," said Donald C. Wood, Federal Realty's president and chief executive officer. "Since Larry will not be retiring for over a year, there is appropriate time for a thorough search of both internal and external candidates, and their training, to allow for a seamless transition."

Announced Acquisition of Melville Mall

On October 16, 2006, Federal Realty acquired Melville Mall, a 100% leased supermarket-anchored community center located in Huntington, New York, approximately 1-1/2 miles south of the Trust's Huntington Shopping Center. Tenants at Melville Mall include Waldbaum's, Kohl's, Marshall's and Dick's Sporting Goods. Located at the Northeast corner of Walt Whitman Road (Route 110) and Northern State Parkway, Melville Mall's surrounding trade area is affluent with an average household income of $150,000 within a three-mile radius.

Federal Realty acquired control of this 250,000 square foot property through a master lease and secondary financing with a private owner. Under the master lease, the Trust has the option to acquire the property's fee interest in 15 years.

Regular Quarterly Dividends

Federal Realty also announced today that the regular quarterly cash dividend will remain unchanged at $0.575 per share on its common shares, resulting in an indicated annual rate of $2.30 per share. The regular common dividend will be payable on January 16, 2007, to common shareholders of record as of January 2, 2007.

Guidance

Federal Realty's guidance for 2006 FFO per diluted share was narrowed to a range of $3.34 to $3.35, and its 2006 earnings per diluted common share guidance increased to a range of $2.00 to $2.01, ignoring the impact of any preferred share redemption charge upon redemption of the Trust's Series B Preferred Shares. Upon the redemption of the Trust's Series B Preferred Shares, the Trust will recognize a charge of $4.8 million ($0.09 per diluted share), which would result in adjusted FFO per diluted share and earnings per diluted share guidance of $3.25 to $3.26 and $1.91 to $1.92, respectively. In addition, the Trust provided initial earnings guidance for 2007 of $3.60 to $3.65 for FFO per diluted share, and $1.79 to $1.84 for earnings per diluted common share.

Summary of Other Quarterly Activities and Recent Developments

  • October 20, 2006 -- The Trust announced its intention to redeem all 5,400,000 outstanding shares of its 8.50% Series B Cumulative Redeemable Preferred Shares, no par value ("Series B Preferred Shares") (FRTPrB - CUSIP No. 313747503), effective November 27, 2006.


  • September 25, 2006 -- The Trust issued $70 million of 6.20% Notes due 2017 and $55 million of 6.00% Notes due 2012. The 2017 and 2012 Notes are each fully fungible and form single issues with the Notes issued on July 17, 2006.


  • September 19, 2006 -- Federal Realty raised approximately $150 million, through the issuance of approximately 2,000,000 common shares of beneficial interest in a public offering.


  • August 28, 2006 -- Federal Realty announced the acquisition of three retail assets in the Boston metropolitan area from a private developer through an off-market transaction for approximately $150 million.


  • July 28, 2006 -- The Trust closed a new $300 million unsecured revolving credit facility to replace its existing $300 million unsecured revolving credit facility, which was scheduled to mature on October 7, 2006.


  • July 17, 2006 -- The Trust closed a $250 million senior unsecured note offering comprised of a $130 million tranche due January 2017 with a 6.20% coupon, and a $120 million tranche due July 2012 with a 6.00% coupon.


  • July 11, 2006 -- Federal Realty announced the appointment of Gail P. Steinel, executive vice president of BearingPoint Inc., to Federal Realty's board of trustees.


Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2006 earnings conference call, which is scheduled for November 6, 2006, at 11 a.m. Eastern Standard Time. To participate, please call (888) 323-8819 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, http://www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available through December 5, 2006, by dialing (866) 503-3181.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 18.6 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 0.7 million square feet of retail space through its joint venture with Clarion Lion Properties Fund in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 97.3% leased to national, regional, and local retailers as of September 30, 2006, with no single tenant accounting for more than approximately 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 39 consecutive years, the longest 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 most recent annual report on Form 10-K (as amended), 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 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 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 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 most current annual report on Form 10-K (as amended) and our quarterly reports on Form 10-Q.

    Investor and Media Inquiries
    Andrew Blocher                           Vikki Quinn
    Vice President,                          Vice President,
    Capital Markets & Investor Relations     Marketing & Corp. Comm.
    301/998-8166                             301/998-8178
    ablocher@federalrealty.com               vquinn@federalrealty.com




    Federal Realty Investment Trust
    Summarized Operating Results
    September 30, 2006


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

                                       Three months ended   Nine months ended
    CONSOLIDATED OPERATING RESULTS        September 30,       September 30,
                                          2006     2005      2006      2005
    Revenue
     Rental income                      $110,511  $96,772  $321,009  $290,317
     Other property income                 1,787    2,437     5,743     6,406
     Mortgage interest income              1,107    1,310     3,778     4,040
                                         113,405  100,519   330,530   300,763
    Expenses
     Rental                               20,826   19,746    63,156    62,190
     Real estate taxes                    11,709    9,968    32,785    28,241
     General and administrative            6,265    4,957    15,747    14,441
     Depreciation and amortization        23,979   22,093    72,056    66,130
                                          62,779   56,764   183,744   171,002
     Operating income                     50,626   43,755   146,786   129,761

    Interest-rate swap and other
     interest income                       1,495      254     2,088     1,946
    Interest expense                     (26,149) (21,664)  (75,183)  (65,554)
    Income from real estate partnership      196      126       533       349
    Minority interests                    (1,086)  (1,208)   (3,483)   (4,003)
    Income from continuing operations     25,082   21,263    70,741    62,499

    Discontinued operations
     Operating (loss) income from
      discontinued operations               (193)     (46)     (336)     (362)
     Gain on sale of real estate              95    9,463    23,866    17,347
    Results from discontinued
     operations                              (98)   9,417    23,530    16,985

    Net income                            24,984   30,680    94,271    79,484

    Dividends on preferred stock          (2,869)  (2,869)   (8,607)   (8,607)
    Net income available for common
     shareholders                        $22,115  $27,811   $85,664   $70,877



    FUNDS FROM OPERATIONS AVAILABLE FOR
     COMMON SHAREHOLDERS
    Net income                           $24,984  $30,680   $94,271   $79,484
    Gain on sale of real estate              (95)  (9,463)  (23,866)  (17,347)
    Depreciation and amortization of
     real estate assets                   21,570   20,506    65,452    61,754
    Amortization of initial direct
     costs of leases                       1,814    1,768     5,378     5,195
    Depreciation of real estate
     partnership assets                      236      157       553       471
    Funds from operations                 48,509   43,648   141,788   129,557
    Dividends on preferred stock          (2,869)  (2,869)   (8,607)   (8,607)
    Income attributable to operating
     partnership units                       182      215       660       573
    Funds from operations available to
     common shareholders                 $45,822  $40,994  $133,841  $121,523


    Weighted average number of common
     shares, diluted                      54,066   53,559    53,815    53,405

    Funds from operations available for
     common shareholders per dilutive
     share                                 $0.85    $0.77     $2.49     $2.28

    EARNINGS PER COMMON SHARE, BASIC
    Continuing operations                  $0.42    $0.35     $1.17     $1.03
    Discontinued operations                  -       0.18      0.45      0.32
                                           $0.42    $0.53     $1.62     $1.35

    Weighted average number of common
     shares, basic                        53,187   52,618    52,923    52,443

    EARNINGS PER COMMON SHARE, DILUTED
    Continuing operations                  $0.41    $0.34     $1.16     $1.02
    Discontinued operations                  -       0.18      0.44      0.32
                                           $0.41    $0.52     $1.60     $1.34

    Weighted average number of common
     shares, diluted                      53,676   53,149    53,418    52,982



    Federal Realty Investment Trust
    Summarized Balance Sheets
    September 30, 2006


                              Financial Highlights
                                 (in thousands)


    CONSOLIDATED BALANCE SHEETS
                                              September 30,      December 31,
                                                  2006              2005
    ASSETS

    Real estate, at cost
     Operating                                  $3,013,914        $2,731,694
     Construction-in-progress                       74,447            50,593
     Discontinued operations                             -            47,034
                                                 3,088,361         2,829,321
    Less accumulated depreciation and
     amortization                                 (718,006)         (663,750)
    Net real estate                              2,370,355         2,165,571

    Cash and cash equivalents                       66,424             8,639
    Accounts and notes receivable                   45,274            38,161
    Mortgage notes receivable                       40,795            40,531
    Investment in real estate partnership           10,581             9,375
    Other assets                                   106,693            88,575
    TOTAL ASSETS                                $2,640,122        $2,350,852

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
     Obligations under capital leases and
      mortgage notes                              $434,936          $419,713
     Notes payable                                  86,072           316,755
     Senior notes and debentures                   992,488           653,675
     Other liabilities                             183,385           166,669
    Total liabilities                            1,696,881         1,556,812

    Minority interests                              18,644            19,193

    Shareholders' equity
     Preferred stock                               135,000           135,000
     Common shares and other
      shareholders' equity                         789,597           639,847
    Total shareholders' equity                     924,597           774,847
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                     $2,640,122        $2,350,852



    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    September 30, 2006



                                                        2006 Guidance
                                               ($ millions except per share
                                                        amounts) (1)

        Net income                                   $118 to            $119
        Gain on sale of real estate                   (24)               (24)
        Depreciation and amortization of
         real estate & joint venture
         assets                                        90                 90
        Amortization of initial direct
         costs of leases                                7                  7
        Funds from operations                         191                192
        Income attributable to operating
         partnership units                              1                  1
        Dividends on preferred stock                  (11)               (11)
        Funds from operations available
         for common shareholders before
         preferred stock redemption                   181 to             182

        Preferred stock redemption (2)                 (5)                (5)

        Funds from operations available
         to common shareholders after
         preferred stock redemption                   176                177


        Weighted Average Shares (diluted)            54.3

        Funds from operations available
         for common shareholders per
         diluted share before preferred
         stock redemption                           $3.34              $3.35

        Funds from operations available
         for common shareholders per
         diluted share after preferred
         stock redemption                           $3.25              $3.26

    Note:
    (1) Individual items may not add up to total due to rounding.
    (2) Preferred stock anticipated to be redeemed effective November 27,
        2006.


                                                       2007 Guidance
                                                 ($ millions except per share
                                                         amounts) (1)

        Net income                                   $100 to            $102
        Gain on sale of real estate                     0                  0
        Depreciation and amortization of
         real estate & joint venture
         assets                                        94                 94
        Amortization of initial direct
         costs of leases                                7                  7
        Funds from operations                         201                203
        Income attributable to operating
         partnership units                              1                  1
        Dividends on preferred stock                    -                  -
        Funds from operations available
         for common shareholders                      202 to             204

        Weighted Average Shares (diluted)            56.0

        Funds from operations available
         for common shareholders per
         diluted share                              $3.60              $3.65


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

SOURCE Federal Realty Investment Trust

CONTACT: Investor and Media Inquiries: Andrew Blocher, Vice President,
Capital Markets & Investor Relations, +1-301-998-8166,
ablocher@federalrealty.com, or Vikki Quinn, Vice President, Marketing & Corp.
Comm., +1-301-998-8178, vquinn@federalrealty.com, both of Federal Realty
Investment Trust