<< Back

News Release

Federal Realty Investment Trust Announces Third Quarter 2008 Operating Results

ROCKVILLE, Md., Oct. 29 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO)

-- Funds from operations available for common shareholders (FFO) per diluted share was $0.98 and earnings per diluted common share was $0.63 for the quarter ended September 30, 2008, versus $0.92 and $0.41, respectively, for third quarter 2007.

-- FFO per diluted share was $2.87 and earnings per diluted common share was $1.62 for the nine months ended September 30, 2008, versus $2.71 and $1.30, respectively, for the nine months ended September 30, 2007.

-- Rent increases on lease rollovers for retail space for which there was a prior tenant were 23% on a cash-basis and 42% on a GAAP-basis for the quarter ended September 30, 2008.

-- The Trust's portfolio was 95.5% leased and 94.8% occupied as of September 30, 2008.

-- Guidance for 2008 FFO per diluted share remains unchanged at $3.89 to $3.92.

Financial Results

For third quarter 2008, Federal Realty reported FFO of $58.3 million, or $0.98 per diluted share. This compares to FFO of $52.5 million, or $0.92 per diluted share, reported for third quarter 2007. For the nine months ended September 30, 2008, Federal Realty reported FFO of $170.4 million, or $2.87 per diluted share compared to FFO of $154.0 million, or $2.71 per diluted share, for the same nine-month period in 2007.

Net income available for common shareholders was $37.0 million and earnings per diluted common share was $0.63 for the quarter ended September 30, 2008, versus $23.4 million and $0.41, respectively, for third quarter 2007. Year-to-date, Federal Realty reported net income available for common shareholders of $95.7 million, or $1.62 per diluted common share. This compares to net income available for common shareholders of $73.1 million, or $1.30 per diluted common share, for the nine months ended September 30, 2007.

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, property operating income increased 4.8% including redevelopments and expansions, and 2.9% excluding redevelopments and expansions over third quarter 2007. These same-center results exclude a $1.2 million option payment received and reported in third quarter 2007 associated with a terminated purchase option with respect to one of Federal Realty's properties. Including this payment in third quarter 2007 property operating income results in an increase of 3.3% including redevelopments and expansions and 1.4% excluding redevelopments and expansions.

Overall, the Trust's portfolio was 95.5% leased and 94.8% occupied as of September 30, 2008, compared to 96.4% and 95.1%, respectively, on September 30, 2007. Federal Realty's same-center portfolio was 96.0% leased and 95.7% occupied on September 30, 2008, compared to 96.7% and 95.9%, respectively, on September 30, 2007.

During third quarter 2008, the Trust signed 76 leases for 369,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 351,000 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 $25.03 per square foot compared to the average contractual rent of $20.28 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 42% for third quarter 2008. As of September 30, 2008, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $21.63 per square foot.

"The third quarter results were very solid given the state of the current economy," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Our conservative operating strategy, which includes low leverage levels combined with high quality retail properties as its core, tends to really shine through in times like these."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.65 per share on its common shares, resulting in an indicated annual rate of $2.60 per share. The regular common dividend will be payable on January 15, 2009, to common shareholders of record as of January 2, 2009.

Guidance

Federal Realty's guidance for 2008 FFO per diluted share remains unchanged at $3.89 to $3.92 and its 2008 earnings per diluted common share guidance increased to a range of $2.18 to $2.21.

Summary of Other Quarterly Activities and Recent Developments

-- September 8, 2008 -- Acquired Courtyard Shops, a 127,000 square foot Publix-anchored neighborhood shopping center located in Wellington, Florida, an affluent community in central Palm Beach County, Florida. Federal Realty acquired the property from an institutional owner for $37.9 million. Courtyard Shops boasts average household incomes in excess of $115,000 within a 3-mile radius of the property, a highly productive Publix store, and potential for strong NOI growth. In addition, the property benefits from significant barriers to new competition due to considerable portions of Wellington being protected as an equestrian preserve established to keep the community's character intact as Wellington is world-famous for its equestrian events and polo clubs.

-- August 26, 2008 -- Announced the promotion of Andrew P. Blocher to the position of senior vice president, chief financial officer and treasurer effective September 1, 2008, succeeding Joseph M. Squeri, who left the Trust to pursue other professional interests.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2008 earnings conference call, which is scheduled for October 30, 2008, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 831-6234 five to ten minutes prior to the call's start time and use the passcode EARNINGS (required). Federal Realty will also provide an online webcast on the Company's website, 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 November 28, 2008, by dialing (888) 286-8010 and entering the passcode 54745083.

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 18.1 million square feet located primarily in strategically selected metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 1.0 million square feet of retail space through a joint venture in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 95.5% leased to national, regional, and local retailers as of September 30, 2008, with no single tenant accounting for more than approximately 2.6% 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 41 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P MidCap 400 company and its shares 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 Annual Report on Form 10-K filed on February 27, 2008 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 Annual Report on Form 10-K filed February 27, 2008.

    Investor and Media Inquiries
    Gina Birdsall                      Janelle Stevenson
    Investor Relations                 Corporate Communications
    301/998-8265                       301/998-8185
    gbirdsall@federalrealty.com        jmstevenson@federalrealty.com



    Federal Realty Investment Trust
    Summarized Balance Sheets
    September 30, 2008



                                                    September 30, December 31,
                                                        2008          2007
    ASSETS                                                (in thousands)
                                                     (unaudited)
    Real estate, at cost
      Operating                                      $3,547,709   $3,267,081
      Construction-in-progress                           91,169      147,925
      Assets held for sale (discontinued operations)          -       37,841
                                                      3,638,878    3,452,847
    Less accumulated depreciation and amortization     (822,291)    (756,703)
    Net real estate                                   2,816,587    2,696,144

    Cash and cash equivalents                            48,991       50,691
    Accounts and notes receivable                        69,439       61,108
    Mortgage notes receivable                            40,437       40,638
    Investment in real estate partnership                29,422       29,646
    Prepaid expenses and other assets                   106,666      111,070
    TOTAL ASSETS                                     $3,111,542   $2,989,297

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities
      Mortgages payable and capital lease obligations  $455,982     $450,084
      Notes payable                                     341,912      210,820
      Senior notes and debentures                       956,627      977,556
      Accounts payable and other liabilities            208,271      204,387
    Total liabilities                                 1,962,792    1,842,847

    Minority interests                                   32,085       31,818

    Shareholders' equity
      Preferred stock                                     9,997        9,997
      Common shares and other shareholders' equity    1,106,668    1,104,635
    Total shareholders' equity                        1,116,665    1,114,632
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $3,111,542   $2,989,297



    Federal Realty Investment Trust
    Summarized Income Statements
    September 30, 2008

                                        Three months ended   Nine months ended
                                           September 30,        September 30,
                                          2008      2007      2008      2007
                                        (in thousands, except per share data)
                                                    (unaudited)
    Revenue
    Rental income                      $126,654  $117,801  $371,792  $343,821
      Other property income               4,005     4,634    12,015     9,550
      Mortgage interest income            1,108     1,129     3,342     3,386
        Total revenue                   131,767   123,564   387,149   356,757

    Expenses
      Rental expenses                    27,562    25,225    81,011    73,024
      Real estate taxes                  14,760    12,030    41,331    33,767
      General and administrative          5,391     7,172    19,451    18,894
      Depreciation and amortization      28,642    25,045    81,837    75,450
        Total operating expenses         76,355    69,472   223,630   201,135

    Operating income                     55,412    54,092   163,519   155,622

      Other interest income                 115       192       662       623
      Interest expense                  (25,337)  (28,732)  (74,166)  (84,247)
      Income from real estate
       partnership                          407       473     1,180     1,120
    Income from continuing operations
     before minority interests           30,597    26,025    91,195    73,118

      Minority interests                 (1,315)   (1,629)   (4,056)   (4,309)
    Income from continuing operations    29,282    24,396    87,139    68,809

    Discontinued operations
      Income from discontinued operations   382     2,019     1,485     5,611
      Gain (loss) on sale of real estate
       from discontinued operations       7,438    (2,900)    7,438    (1,051)
        Results from discontinued
         operations                       7,820      (881)    8,923     4,560

    Net income                           37,102    23,515    96,062    73,369

      Dividends on preferred stock         (136)     (136)     (406)     (307)
    Net income available for common
     shareholders                       $36,966   $23,379   $95,656   $73,062


    EARNINGS PER COMMON SHARE, BASIC
    Continuing operations                 $0.50     $0.43     $1.48     $1.23
    Discontinued operations                0.13     (0.01)     0.15      0.08
                                          $0.63     $0.42     $1.63     $1.31

    Weighted average number of common
     shares, basic                       58,720    56,302    58,624    55,967

    EARNINGS PER COMMON SHARE, DILUTED
      Continuing operations               $0.50     $0.43     $1.47     $1.22
      Discontinued operations              0.13     (0.02)     0.15      0.08
                                          $0.63     $0.41     $1.62     $1.30

      Weighted average number of common
       shares, diluted                   58,950    56,690    58,902    56,404



    Federal Realty Investment Trust
    Funds From Operations
    September 30, 2008

                                        Three months ended   Nine months ended
                                           September 30,        September 30,
                                           2008     2007      2008      2007
    Funds from Operations available
     for common shareholders (FFO)(1)    (in thousands, except per share data)

    Net income                           $37,102  $23,515   $96,062   $73,369
    (Gain) loss on sale of real estate    (7,438)   2,900    (7,438)    1,051
    Depreciation and amortization of
     real estate assets                   26,037   23,651    74,037    71,910
    Amortization of initial direct costs
     of leases                             2,136    1,945     6,441     6,122
    Depreciation of joint venture real
     estate assets                           331      324       992       915
      Funds from operations               58,168   52,335   170,094   153,367
    Dividends on preferred stock            (136)    (136)     (406)     (307)
    Income attributable to operating
     partnership units                       244      279       707       923
    FFO                                  $58,276  $52,478  $170,395  $153,983

    FFO per diluted share                  $0.98    $0.92     $2.87     $2.71

        Weighted average number of common
         shares, diluted                  59,327   57,148    59,280    56,885

    Notes:
      (1)See Glossary of Terms.



    Federal Realty Investment Trust
    Reconciliation of Net Income to FFO Guidance
    September 30, 2008

                                                             2008 Guidance
                                                          ($ millions except
                                                         per share amounts)(1)

    Net income                                              $129   to   $131
    Gain on sale of real estate                               (7)         (7)
    Depreciation and amortization of real estate
     & real estate partnership assets                        100         100
    Amortization of initial direct costs of leases             9           9
    Funds from operations                                    230         232
    Dividends on preferred stock                              (1)         (1)
    Income attributable to operating partnership units         1           1
    Funds from operations available for common shareholders  231   to    232

    Weighted Average Shares (diluted)                       59.3

    Funds from operations available for common
     shareholders per diluted share                        $3.89       $3.92

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

SOURCE  Federal Realty Investment Trust
    -0-                             10/29/2008
    /CONTACT:  Investor Relations, Gina Birdsall +1-301-998-8265,
gbirdsall@federalrealty.com, or Corporate Communications, Janelle Stevenson,
+1-301-998-8185, jmstevenson@federalrealty.com, both of Federal Realty
Investment Trust/
    /Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO
              AP Archive:  http://photoarchive.ap.org
              PRN Photo Desk, photodesk@prnewswire.com/
    /Web site:  http://www.federalrealty.com /
    (FRT)

CO:  Federal Realty Investment Trust
ST:  Maryland
IN:  FIN RLT
SU:  ERN ERP DIV CCA

RB-CS
-- NEW112 --
7782 10/29/2008 17:00 EDT http://www.prnewswire.com