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.
-- 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.
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.
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.
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 firstname.lastname@example.org email@example.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, firstname.lastname@example.org, or Corporate Communications, Janelle Stevenson, +1-301-998-8185, email@example.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, firstname.lastname@example.org/ /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