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News Release

Federal Realty Investment Trust Announces Third Quarter 2011 Operating Results

ROCKVILLE, Md., Nov. 3, 2011 /PRNewswire via COMTEX/ --

Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its third quarter ended September 30, 2011.

 

(Logo: http://photos.prnewswire.com/prnh/20050907/DCW070LOGO )

Financial Results

In the third quarter 2011, Federal Realty generated funds from operations available for common shareholders (FFO) of $63.9 million, or $1.01 per diluted share. This compares to FFO of $58.8 million, or $0.95 per diluted share, in third quarter 2010. For the nine months ended September 30, 2011, Federal Realty reported FFO of $189.5 million, or $3.02 per diluted share, compared to $177.0 million, or $2.87 per diluted share for the same nine-month period in 2010.

Net income available for common shareholders was $46.9 million and earnings per diluted share was $0.74 for the quarter ended September 30, 2011 versus $29.5 million and $0.48, respectively, for third quarter 2010. Year-to-date, Federal Realty reported net income available for common shareholders of $112.6 million and earnings per diluted share of $1.80. This compares to net income available for common shareholders of $89.6 million and earnings per diluted share of $1.45 for the nine months ended September 30, 2010.

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

In third quarter 2011, same-center property operating income increased 3.7% over third quarter 2010. When redevelopment and expansion properties are excluded from same-center results, property operating income for third quarter 2011 increased 2.4% compared to third quarter 2010.

The overall portfolio was 93.3% leased as of September 30, 2011, compared to 93.4% on June 30, 2011 and 93.9% on September 30, 2010. Federal Realty's same-center portfolio was 94.0% leased on September 30, 2011, compared to 93.7% on June 30, 2011 and 94.5% on September 30, 2010.

During the third quarter of 2011, Federal Realty signed 92 leases for 385,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 353,000 square feet at an average cash basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 8%. The average contractual rent on this comparable space for the first year of the new leases is $31.62 per square foot, compared to the average contractual rent of $29.24 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 18% for third quarter 2011. As of September 30, 2011, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $23.04 per square foot.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.69 per share, resulting in an indicated annual rate of $2.76 per share. The regular common dividend will be payable on January 17, 2012, to common shareholders of record as of January 3, 2012.

Guidance

Federal Realty increased its guidance for 2011 FFO per diluted share to a range of $4.02 to $4.04, and provided 2011 earnings per diluted share guidance of $2.30 to $2.32. In addition, Federal Realty provided initial 2012 FFO per diluted share guidance of $4.16 to $4.22 and 2012 earnings per diluted share guidance $2.29 to $2.35.

"We produced another very solid quarter based on continued strong leasing and positive impacts from our redevelopment properties," commented Don Wood, president and chief executive officer of Federal Realty. "Looking forward, we have an active development pipeline that will provide future earnings growth and complement our strong existing assets and additional acquisitions."

Summary of Other Quarterly Activities and Recent Developments

 

  • September 12, 2011 - Federal Realty finalized a lease to open a local, organic market at Rockville Town Square. The new grocer will operate under the name "Dawson's Market" and is slated to open in spring 2012, at the intersection of Beall Avenue and North Washington Street in Rockville, Maryland.
  • October 31, 2011 - Federal Realty closed on the sale of the three buildings on Newbury Street owned in its joint venture with an affiliate of Taurus Investment Holdings, LLC created in mid-2010. The sales price of $44 million will result in a gain to Federal Realty of approximately $12 million.

 

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2011 earnings conference call, which is scheduled for November 4, 2011, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 271-0675 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 website, 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 4, 2011, by dialing (888) 286-8010 and using the passcode 14481371.

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 18.6 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 93.3% leased to national, regional, and local retailers as of September 30, 2011, 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 44 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 Supplemental Information 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 15, 2011, 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 costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, 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 associated with general economic conditions, including local economic conditions in our geographic markets;
  • 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 Supplemental Information. Except as 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 review the risks contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 15, 2011.

Investor Inquires

Media Inquiries

 

Kristina Lennox

Andrea Simpson

 

Investor Relations Coordinator

Director, Marketing

 

301/998-8265

617/684-1511

 

klennox@federalrealty.com

asimpson@federalrealty.com

 
   
   

Federal Realty Investment Trust

 

Summarized Balance Sheets

 

September 30, 2011

 
 

September 30, 2011

 

December 31, 2010

 
 

(in thousands)

 
 

(unaudited)

     

ASSETS

       

Real estate, at cost

       

Operating (including $68,930 and $78,846 of consolidated variable interest entities, respectively)

$

3,812,705

 

$

3,695,848

 

Construction-in-progress

207,715

 

163,200

 

Assets held for sale/disposal (discontinued operations) (including $0 and $18,311 of consolidated variable interest entities, respectively)

4,203

 

36,894

 
 

4,024,623

 

3,895,942

 

Less accumulated depreciation and amortization (including $4,727 and $4,431 of consolidated variable interest entities, respectively)

(1,102,997)

 

(1,035,204)

 

Net real estate

2,921,626

 

2,860,738

 

Cash and cash equivalents

22,070

 

15,797

 

Accounts and notes receivable, net

78,503

 

68,997

 

Mortgage notes receivable, net

56,076

 

44,813

 

Investment in real estate partnerships

57,828

 

51,606

 

Prepaid expenses and other assets

118,745

 

117,602

 

TOTAL ASSETS

$

3,254,848

 

$

3,159,553

 
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

Liabilities

       

Mortgages and capital lease obligations (including $22,287 and $22,785 of consolidated variable interest entities, respectively)

$

547,957

 

$

589,441

 

Notes payable

178,232

 

97,881

 

Senior notes and debentures

1,004,686

 

1,079,827

 

Accounts payable and other liabilities

200,846

 

211,274

 

Total liabilities

1,931,721

 

1,978,423

 

Shareholders' equity

       

Preferred shares

9,997

 

9,997

 

Common shares and other shareholders' equity

1,282,409

 

1,139,836

 

Total shareholders' equity of the Trust

1,292,406

 

1,149,833

 

Noncontrolling interests

30,721

 

31,297

 

Total shareholders' equity

1,323,127

 

1,181,130

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,254,848

 

$

3,159,553

 
   
           

Federal Realty Investment Trust

 

Summarized Income Statements

 

September 30, 2011

 
 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
 

2011

 

2010

 

2011

 

2010

 
 

(in thousands, except per share data)

 
 

(unaudited)

 

Revenue

                       

Rental income

$

134,014

 

$

129,527

 

$

401,452

 

$

389,988

 

Other property income

 

2,341

   

2,824

   

6,577

   

11,243

 

Mortgage interest income

 

1,309

   

1,095

   

3,564

   

3,232

 

Total revenue

 

137,664

   

133,446

   

411,593

   

404,463

 

Expenses

                       

Rental expenses

 

26,595

   

27,030

   

81,130

   

82,334

 

Real estate taxes

 

15,047

   

15,185

   

46,001

   

45,040

 

General and administrative

 

7,197

   

5,904

   

19,643

   

17,409

 

Depreciation and amortization

 

32,068

   

29,431

   

94,355

   

89,224

 

Total operating expenses

 

80,907

   

77,550

   

241,129

   

234,007

 

Operating income

 

56,757

   

55,896

   

170,464

   

170,456

 

Other interest income

 

136

   

18

   

171

   

233

 

Interest expense

 

(23,795)

   

(25,299)

   

(72,744)

   

(76,679)

 

Early extinguishment of debt

 

--

   

--

   

296

   

(2,801)

 

Income from real estate partnerships

 

434

   

125

   

1,201

   

506

 

Income from continuing operations

 

33,532

   

30,740

   

99,388

   

91,715

 

Discontinued operations

                       

Discontinued operations - income

 

13

   

270

   

943

   

807

 

Discontinued operations - gain on deconsolidation of VIE

 

--

   

--

   

2,026

   

--

 

Discontinued operations - gain on sale of real estate

 

14,757

   

--

   

14,800

   

1,000

 

Results from discontinued operations

 

14,770

   

270

   

17,769

   

1,807

 

Income before gain on sale of real estate

 

48,302

   

31,010

   

117,157

   

93,522

 

Gain on sale of real estate

 

--

   

--

   

--

   

410

 

Net income

 

48,302

   

31,010

   

117,157

   

93,932

 

Net income attributable to noncontrolling interests

 

(1,249)

   

(1,370)

   

(4,161)

   

(3,958)

 

Net income attributable to the Trust

 

47,053

   

29,640

   

112,996

   

89,974

 

Dividends on preferred shares

 

(136)

   

(136)

   

(406)

   

(406)

 

Net income available for common shareholders

$

46,917

 

$

29,504

 

$

112,590

 

$

89,568

 
                         

EARNINGS PER COMMON SHARE, BASIC

                       

Continuing operations

$

0.51

 

$

0.48

 

$

1.52

 

$

1.42

 

Discontinued operations

 

0.23

   

--

   

0.28

   

0.03

 

Gain on sale of real estate

 

--

   

--

   

--

   

0.01

 
 

$

0.74

 

$

0.48

 

$

1.80

 

$

1.46

 

Weighted average number of common shares, basic

 

62,818

   

61,215

   

62,172

   

61,158

 
                         

EARNINGS PER COMMON SHARE, DILUTED

                       

Continuing operations

$

0.51

 

$

0.48

 

$

1.52

 

$

1.41

 

Discontinued operations

 

0.23

   

--

   

0.28

   

0.03

 

Gain on sale of real estate

 

--

   

--

   

--

   

0.01

 
 

$

0.74

 

$

0.48

 

$

1.80

 

$

1.45

 

Weighted average number of common shares, diluted

 

62,990

   

61,359

   

62,341

   

61,297

 
                       

Federal Realty Investment Trust

 

Funds From Operations

 

September 30, 2011

 
   

Three Months Ended

 

Nine Months Ended

 
   

September 30,

 

September 30,

 
   

2011

 

2010

 

2011

 

2010

 
   

(in thousands, except per share data)

 

Funds from Operations available for common shareholders (FFO)

                 

Net income

 

$

48,302

   

$

31,010

   

$

117,157

   

$

93,932

   

Net income attributable to noncontrolling interests

 

(1,249)

   

(1,370)

   

(4,161)

   

(3,958)

   

Gain on sale of real estate

 

(14,757)

   

--

   

(14,800)

   

(1,410)

   

Gain on deconsolidation of VIE

 

--

   

--

   

(2,026)

   

--

   

Depreciation and amortization of real estate assets

 

28,671

   

26,491

   

84,723

   

80,375

   

Amortization of initial direct costs of leases

 

2,684

   

2,429

   

7,737

   

7,226

   

Depreciation of joint venture real estate assets

 

446

   

368

   

1,304

   

1,064

   

Funds from operations

 

64,097

   

58,928

   

189,934

   

177,229

   

Dividends on preferred shares

 

(136)

   

(136)

   

(406)

   

(406)

   

Income attributable to operating partnership units

 

249

   

247

   

733

   

736

   

Income attributable to unvested shares

 

(285)

   

(197)

   

(793)

   

(590)

   

FFO

 

$

63,925

   

$

58,842

   

$

189,468

   

$

176,969

   

FFO per diluted share

 

$

1.01

   

$

0.95

   

$

3.02

   

$

2.87

   

Weighted average number of common shares, diluted

 

63,350

   

61,729

   

62,702

   

61,667

   
                   
                                 
   

Federal Realty Investment Trust

       

Reconciliation of Net Income to FFO Guidance

       

September 30, 2011

       
 

2011 Guidance

 
 

(Dollars in millions except

 
 

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$

151

 

$

152

 

Net income attributable to noncontrolling interests

(5)

 

(5)

 

Gain on sale of real estate

(15)

 

(15)

 

Gain on deconsolidation of VIE

(2)

 

(2)

 

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

115

 

115

 

Amortization of initial direct costs of leases

10

 

10

 

Funds from operations

254

 

255

 

Dividends on preferred shares

(1)

 

(1)

 

Income attributable to operating partnership units

1

 

1

 

Income attributable to unvested shares

(1)

 

(1)

 

FFO

$

253

 

$

254

 
         

Weighted average number of common shares, diluted

63.0

 

63.0

 
         

FFO per diluted share

$

4.02

 

$

4.04

 
         
 

2012 Guidance

 
 

(Dollars in millions except

 
 

per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

       

Net income

$

152

 

$

156

 

Net income attributable to noncontrolling interests

(5)

 

(5)

 

Gain on sale of real estate

(12)

 

(12)

 

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

122

 

122

 

Amortization of initial direct costs of leases

10

 

10

 

Funds from operations

267

 

271

 

Dividends on preferred shares

(1)

 

(1)

 

Income attributable to operating partnership units

1

 

1

 

Income attributable to unvested shares

(1)

 

(1)

 

FFO

$

266

 

$

270

 
         

Weighted average number of common shares, diluted

63.9

 

63.9

 
         

FFO per diluted share

$

4.16

 

$

4.22

 
         

Note:

       

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

       
   
           

SOURCE Federal Realty Investment Trust