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News Release

Federal Realty Investment Trust Announces Third Quarter 2010 Operating Results

ROCKVILLE, Md., Nov. 3, 2010 /PRNewswire via COMTEX/ --

Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2010.

 

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Financial Results

In the third quarter 2010, Federal Realty generated funds from operations available for common shareholders (FFO) of $58.8 million or $0.95 per diluted share. This compares to FFO of $55.6 million, or $0.92 per diluted share, in third quarter 2009. For the nine months ended September 30, 2010, Federal Realty reported FFO of $177.0 million, or $2.87 per diluted share, compared to $151.0 million, or $2.53 per diluted share for the same nine-month period in 2009.

Net income available for common shareholders was $29.5 million and earnings per diluted share was $0.48 for the quarter ended September 30, 2010 versus $27.3 million and $0.45, respectively, for third quarter 2009. Year-to-date, Federal Realty reported net income available for common shareholders of $89.6 million and earnings per diluted share of $1.45. This compares to net income available for common shareholders of $65.9 million and earnings per diluted share of $1.10 for the nine months ended September 30, 2009.

2009 results include a litigation provision related to a lawsuit involving a property adjacent to Santana Row. Excluding this litigation provision, FFO was $172.0 million, or $2.88 per diluted share for the nine months ended September 30, 2009; net income available for common shareholders was $87.0 million and earnings per diluted share was $1.46.

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

For third quarter 2010, same-center property operating income was flat compared to third quarter 2009. When redevelopment and expansionproperties are included in same-center results, property operating income for third quarter 2010 decreased -0.9% compared to third quarter 2009. For the nine months ended September 30, 2010, same-center property operating income increased 2.2%, and increased 2.6% including redevelopment and expansion properties.

The overall portfolio was 93.9% leased as of September 30, 2010, compared to 94.2% on June 30, 2010 and 94.2% on September 30, 2009. Federal Realty's same-center portfolio was 94.4% leased on September 30, 2010, compared to 94.7% on June 30, 2010 and 94.4% on September 30, 2009.

During the third quarter of 2010, Federal Realty signed 77 leases for 396,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 349,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 6%. The average contractual rent on this comparable space for the first year of the new leases is $25.17 per square foot, compared to the average contractual rent of $23.83 per square foot for the last year of the prior leases. The previous average contractual rent was calculated by including both the minimum rent and any 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 17% for third quarter 2010. As of September 30, 2010, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.64 per square foot.

"Our ability to produce consistent results in a continuously challenging economic environment is a true reflection of the stability of our company," said Don Wood, president and chief executive officer of Federal Realty Investment Trust. "We continue to focus on a low-risk business strategy of producing growth through the smart leasing of our assets, completion of redevelopment projects at excellent risk-adjusted returns, and sourcing acquisitions in our core markets."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.67 per share on its common shares, resulting in an indicated annual rate of $2.68 per share. The regular common dividend will be payable in cash on January 18, 2011 to common shareholders of record on January 3, 2011.

Guidance

Federal Realty increased its guidance for 2010 FFO per diluted share to a range of $3.85 to $3.87 and 2010 earnings per diluted share guidance of $1.96 to $1.98. The Trust also established guidance for 2011 FFO per diluted share at a range of $3.95 to $4.02 and 2011 earnings per diluted share guidance of $2.02 to $2.09. 2011 guidance reflects record expectations for funds from operations per share.

Primary assumptions in our 2011 FFO per diluted share guidance include:

 

  • No material changes in portfolio occupancy,
  • A $5 million decrease in lease termination fees, principally driven by a significant decline at Flourtown Shopping Center,
  • Same-store property operating income growth of 1%, despite the significant decline in lease termination fees, and
  • No FFO impact associated with 2011 acquisition activity.

 

Summary of Other Quarterly Activities and Recent Developments

 

  • August 16, 2010 - Acquired Huntington Square on Long Island in East Northport, New York for $17.6 million. Huntington Square is a 268,000 square foot community center comprised of 74,000 square feet of multi-tenant gross leasable area leased to national retailers such as Barnes & Noble, Brinker International, Lane Bryant and Chase and shadow-anchored by a 194,000 square foot Sears department store.

 

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2010 earnings conference call, which is scheduled for November 4, 2010, at 1:00 p.m. Eastern Daylight Time. To participate, please call (866) 202-1971 five to ten minutes prior to the call start time and use the passcode FRT EARNINGS (required). Federal Realty will also provide an online webcast 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 through December 3, 2010, by dialing (888) 286-8010 and using the passcode 46509598.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 18.2 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 93.9% leased to national, regional, and local retailers as of September 30, 2010, with no single tenant accounting for more than approximately 2.7% 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 43 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. For more information, please visit www.federalrealty.com.

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 17, 2010, and include the following:

 

  • risks that our tenants will not pay rent, may vacate early or may file for bankruptcy 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 redevelopment or renovation projects that we do pursue 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 partnerships;
  • 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 17, 2010.

Federal Realty Investment Trust

       

Summarized Balance Sheets

       

September 30, 2010

       
         
   
         
 

September 30,

 

December 31,

 
 

2010

 

2009

 
 

(in thousands)

 

ASSETS

(unaudited)

     
         

Real estate, at cost

       

Operating (including $97,265 and $68,643 of consolidated variable interest entities,

       

respectively)

$ 3,688,805

 

$ 3,626,476

 

Construction-in-progress

158,060

 

132,758

 
 

3,846,865

 

3,759,234

 

Less accumulated depreciation and amortization (including $3,803 and $3,053 of

       

consolidated variable interest entities, respectively)

(1,011,975)

 

(938,087)

 

Net real estate

2,834,890

 

2,821,147

 
         

Cash and cash equivalents

9,174

 

135,389

 

Accounts and notes receivable, net

74,443

 

72,191

 

Mortgage notes receivable, net

43,828

 

48,336

 

Investment in real estate partnerships

51,769

 

35,633

 

Prepaid expenses and other assets

113,055

 

109,613

 

TOTAL ASSETS

$ 3,127,159

 

$ 3,222,309

 
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       
         

Liabilities

       

Mortgages payable (including $22,946 and $23,417 of consolidated variable interest

       

entities, respectively) and capital lease obligations

$ 593,395

 

$ 601,884

 

Notes payable

47,940

 

261,745

 

Senior notes and debentures

1,079,854

 

930,219

 

Accounts payable and other liabilities

219,094

 

219,398

 

Total liabilities

1,940,283

 

2,013,246

 
         

Shareholders' equity

       

Preferred shares

9,997

 

9,997

 

Common shares and other shareholders' equity

1,145,499

 

1,167,340

 

Total shareholders' equity of the Trust

1,155,496

 

1,177,337

 

Noncontrolling interests

31,380

 

31,726

 

Total shareholders' equity

1,186,876

 

1,209,063

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 3,127,159

 

$ 3,222,309

 
       

Federal Realty Investment Trust

               

Summarized Income Statements

               

September 30, 2010

               
                 
                 
 

Three months ended September 30,

 

Nine months ended September 30,

 
 

2010

 

2009

 

2010

 

2009

 
 

(in thousands, except per share data)

 
 

(unaudited)

 

Revenue

               

Rental income

$ 130,144

 

$ 126,169

 

$ 391,892

 

$ 379,465

 

Other property income

2,825

 

3,714

 

11,245

 

9,258

 

Mortgage interest income

1,095

 

1,109

 

3,232

 

3,683

 

Total revenue

134,064

 

130,992

 

406,369

 

392,406

 
                 

Expenses

               

Rental expenses

27,140

 

24,367

 

82,724

 

78,144

 

Real estate taxes

15,263

 

14,485

 

45,272

 

43,138

 

General and administrative

5,844

 

5,749

 

17,062

 

16,170

 

Litigation provision

60

 

330

 

347

 

21,087

 

Depreciation and amortization

29,591

 

28,410

 

89,701

 

86,635

 

Total operating expenses

77,898

 

73,341

 

235,106

 

245,174

 

Operating income

56,166

 

57,651

 

171,263

 

147,232

 
                 

Other interest income

18

 

924

 

233

 

1,274

 

Interest expense

(25,299)

 

(30,209)

 

(76,679)

 

(79,622)

 

Early extinguishment of debt

-

 

-

 

(2,801)

 

(968)

 

Income from real estate partnerships

125

 

473

 

506

 

1,074

 

Income from continuing operations

31,010

 

28,839

 

92,522

 

68,990

 
                 

Discontinued operations

               

Discontinued operations - income

-

 

-

 

-

 

218

 

Discontinued operations - gain on sale of real estate

-

 

-

 

1,000

 

1,298

 

Results from discontinued operations

-

 

-

 

1,000

 

1,516

 

Income before gain on sale of real estate

31,010

 

28,839

 

93,522

 

70,506

 
                 

Gain on sale of real estate

-

 

-

 

410

 

-

 

Net income

31,010

 

28,839

 

93,932

 

70,506

 
                 

Net income attributable to noncontrolling interests

(1,370)

 

(1,406)

 

(3,958)

 

(4,172)

 

Net income attributable to the Trust

29,640

 

27,433

 

89,974

 

66,334

 
                 

Dividends on preferred shares

(136)

 

(136)

 

(406)

 

(406)

 

Net income available for common shareholders

$ 29,504

 

$ 27,297

 

$ 89,568

 

$ 65,928

 
                 
                 

EARNINGS PER COMMON SHARE, BASIC

               

Continuing operations

$ 0.48

 

$ 0.45

 

$ 1.43

 

$ 1.08

 

Discontinued operations

-

 

-

 

0.02

 

0.03

 

Gain on sale of real estate

-

 

-

 

0.01

 

-

 
 

$ 0.48

 

$ 0.45

 

$ 1.46

 

$ 1.11

 
                 

Weighted average number of common shares, basic

61,215

 

60,016

 

61,158

 

59,264

 
                 

EARNINGS PER COMMON SHARE, DILUTED

               

Continuing operations

$ 0.48

 

$ 0.45

 

$ 1.42

 

$ 1.07

 

Discontinued operations

-

 

-

 

0.02

 

0.03

 

Gain on sale of real estate

-

 

-

 

0.01

 

-

 
 

$ 0.48

 

$ 0.45

 

$ 1.45

 

$ 1.10

 
                 

Weighted average number of common shares, diluted

61,359

 

60,140

 

61,297

 

59,387

 
               

Federal Realty Investment Trust

 

Funds From Operations

 

September 30, 2010

 
   
   
                   
   

Three months ended September 30,

 

Nine months ended September 30,

 
   

2010

 

2009

 

2010

 

2009

 

Funds from Operations available for common

(in thousands, except per share data)

 

shareholders (FFO) (1)

               

Net income (2)

$ 31,010

 

$ 28,839

 

$ 93,932

 

$ 70,506

 

Net income attributable to noncontrolling interests

(1,370)

 

(1,406)

 

(3,958)

 

(4,172)

 

Gain on sale of real estate

-

 

-

 

(1,410)

 

(1,298)

 

Depreciation and amortization of real estate assets

26,491

 

25,682

 

80,375

 

77,681

 

Amortization of initial direct costs of leases

2,429

 

2,196

 

7,226

 

7,378

 

Depreciation of joint venture real estate assets

368

 

355

 

1,064

 

1,046

 

Funds from operations

58,928

 

55,666

 

177,229

 

151,141

 

Dividends on preferred shares

(136)

 

(136)

 

(406)

 

(406)

 

Income attributable to operating partnership units

247

 

245

 

736

 

729

 

Income attributable to unvested shares

(197)

 

(180)

 

(590)

 

(494)

 

FFO

58,842

 

55,595

 

176,969

 

150,970

 

Litigation provision, net of allocation to unvested shares

59

 

329

 

346

 

21,018

 

FFO excluding litigation provision

$ 58,901

 

$ 55,924

 

$ 177,315

 

$ 171,988

 
                 

FFO per diluted share

$ 0.95

 

$ 0.92

 

$ 2.87

 

$ 2.53

 

Litigation provision per diluted share

-

 

-

 

0.01

 

0.35

 

FFO per diluted share excluding litigation provision

$ 0.95

 

$ 0.92

 

$ 2.88

 

$ 2.88

 
                   
 

Weighted average number of common shares, diluted

61,729

 

60,511

 

61,667

 

59,759

 
                   
                   

Notes:

 

(1) See Glossary of Terms.

 

(2) Net income includes certain costs related to the litigation and appeal process over a parcel of land adjacent to Santana Row; net income for the nine months ended September 30, 2009 also includes a $20.6 million charge for increasing the accrual for such litigation matter. We believe FFO excluding this litigation provision provides a more meaningful evaluation of operations, and therefore, have included FFO and FFO per share excluding the related charges.

 
                   

Federal Realty Investment Trust

       

Reconciliation of Net Income to FFO Guidance

       

September 30, 2010

       
         
   
 

2010 Guidance

 
 

(Dollars in millions except

 
 

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$ 126

 

$ 127

 

Net income attributable to noncontrolling interests

(5)

 

(5)

 

Gain on sale of real estate

(1)

 

(1)

 

Depreciation and amortization of real estate & joint venture real estate assets

109

 

109

 

Amortization of initial direct costs of leases

9

 

9

 

Funds from operations

237

 

239

 

Dividends on preferred shares

(1)

 

(1)

 

Income attributable to operating partnership units

1

 

1

 

Income attributable to unvested shares

(1)

 

(1)

 

FFO

237

 

238

 

Litigation provision (2)

1

 

1

 

FFO excluding litigation provision

$ 238

 

$ 239

 
         

Weighted average number of common shares, diluted

61.7

 

61.7

 
         

FFO per diluted share

$ 3.84

 

$ 3.86

 

Litigation provision

0.01

 

0.01

 

FFO per diluted share excluding litigation provision

$ 3.85

 

$ 3.87

 
         
         
 

2011 Guidance

 
 

(Dollars in millions except

 
 

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$ 131

 

$ 135

 

Net income attributable to noncontrolling interests

(5)

 

(5)

 

Gain on sale of real estate

-

 

-

 

Depreciation and amortization of real estate & joint venture real estate assets

111

 

111

 

Amortization of initial direct costs of leases

9

 

9

 

Funds from operations

245

 

250

 

Dividends on preferred shares

(1)

 

(1)

 

Income attributable to operating partnership units

1

 

1

 

Income attributable to unvested shares

(1)

 

(1)

 

FFO

$ 245

 

$ 249

 
         

Weighted average number of common shares, diluted

61.9

 

61.9

 
         

FFO per diluted share

$ 3.95

 

$ 4.02

 
         
         

Notes:

 

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

 

(2) Amount represents a charge for litigation regarding a parcel of land located adjacent to Santana Row as well as other costs related to the litigation and appeal process.

 
       

Investor and Media Inquiries

   

Gina Birdsall

Janelle Stevenson

 

Investor Relations

Corporate Communications

 

301/998-8265

301/998-8185

 

gbirdsall@federalrealty.com

jmstevenson@federalrealty.com

 
   

SOURCE Federal Realty Investment Trust