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
