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News Release

Federal Realty Investment Trust Announces Third Quarter 2013 Operating Results

ROCKVILLE, Md., Oct. 31, 2013 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2013.

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

Financial Results
In the third quarter 2013, Federal Realty generated funds from operations available for common shareholders (FFO) of $76.4 million, or $1.16 per diluted share. This compares to FFO of $72.1 million, or $1.12 per diluted share, in third quarter 2012 which benefited from an unusually large lease termination fee.  For the nine months ended September 30, 2013, Federal Realty reported FFO of $221.6 million, or $3.38 per diluted share, compared to $205.5 million, or $3.20 per diluted share for the same nine-month period in 2012. Excluding early extinguishment of debt, for the nine months ended September 30, 2013, Federal Realty reported FFO of $224.9 million, or $3.43 per diluted share.

Net income available for common shareholders was $62.0 million and earnings per diluted share was $0.94 for the quarter ended September 30, 2013 versus $38.5 million and $0.60, respectively, for third quarter 2012.  Year-to-date, Federal Realty reported net income available for common shareholders of $133.8 million and earnings per diluted share of $2.04.  This compares to net income available for common shareholders of $113.8 million and earnings per diluted share of $1.77 for the nine months ended September 30, 2012.

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 in addition to Form 8-K that was filed.

Portfolio Results
In third quarter 2013, same-center property operating income increased 5.7% excluding properties that are being redeveloped and 4.9% when including those properties. Both of those same-center comparisons exclude the aforementioned lease termination fee from Safeway in last year's quarter to more properly reflect comparability.

The overall portfolio was 95.3% leased as of September 30, 2013, compared to 95.3% on June 30, 2013 and 95.1% on September 30, 2012.  Federal Realty's same-center portfolio was 95.4% leased on September 30, 2013, compared to 95.3% on June 30, 2013 and 95.2% on September 30, 2012.

During the third quarter of 2013, Federal Realty signed 102 leases for 398,637 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 273,505 square feet at an average cash basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 20%. The average contractual rent on this comparable space for the first year of the new leases is $39.12 per square foot, compared to the average contractual rent of $32.66 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 34% for third quarter 2013. As of September 30, 2013, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $24.39 per square foot.

"This was an extremely strong quarter operationally," commented Don Wood, president and chief executive offer. "FFO per share of $1.16 is a quarterly record for us, with 20% more rent upon lease rollovers and 5.7% same store growth equally impressive. We remain very excited about the next couple of years as we supplement this fine performing core portfolio with new retail destinations in our key markets on both coasts."

Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.78 per share, resulting in an indicated annual rate of $3.12 per share. The regular common dividend will be payable on January 15, 2014, to common shareholders of record as of January 2, 2014.

 

Guidance
Federal Realty increased its guidance for 2013 FFO per diluted share to a range of $4.60 to $4.61 from $4.56 to $4.60, excluding the impact of early extinguishment of debt, and 2013 earnings per diluted share guidance of $2.66 to $2.67. In addition, Federal Realty provided initial 2014 FFO per diluted share guidance of $4.84 to $4.92 and 2014 earnings per diluted share guidance of $2.53 to $2.61

 

Summary of Other Quarterly Activities and Recent Developments

  • July/September, 2013 – Federal Realty closed on the sale of its buildings in Forest Hills, New York and San Diego, California.  The total sales price for the two assets is $36 million. These asset sales are part of a reverse 1031 exchange in connection with the acquisition of our shopping center in Darien, Connecticut in April 2013.
  • October 1, 2013Federal Realty acquired the adjacent 12 acre land parcel to Assembly Row for $18 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 2013 earnings conference call, which is scheduled for November 1, 2013, at 10 a.m. Eastern Daylight Time.  To participate, please call (800) 447-0521 five to ten minutes prior to the call start time and use the passcode 35668720 (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 1, 2013, by dialing (888) 843-7419 and using the passcode 35668720.

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 20 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 95.3% leased to national, regional, and local retailers as of September 30, 2013, with no single tenant accounting for more than approximately 3.4% 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 46 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 12, 2013, 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 redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected;
  • risks that we are investing a significant amount in ground-up development projects that may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;
  • 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 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 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 with the Securities and Exchange Commission on February 12, 2013.

Investor Inquires

Media Inquiries

Kristina Lennox

Andrea Simpson

Investor Relations Manager

Director, Marketing

301/998-8265

617/684-1511

klennox@federalrealty.com

asimpson@federalrealty.com

 

Federal Realty Investment Trust

 

Summarized Balance Sheets

 

September 30, 2013

 
   
 

September 30,

 

December 31,

 
 

2013

 

2012

 
 

(in thousands)

 
 

(unaudited)

     

ASSETS

       

Real estate, at cost

       

Operating (including $265,019 and $264,506 of consolidated variable interest 
          entities, respectively)

$

4,574,676

   

$

4,473,813

   

Construction-in-progress

452,406

   

288,714

   

Assets held for sale (discontinued operations)

   

17,147

   
 

5,027,082

   

4,779,674

   

Less accumulated depreciation and amortization (including $17,327 and $12,024 of 
        consolidated variable interest entities, respectively)

(1,316,358)

   

(1,224,295)

   

Net real estate

3,710,724

   

3,555,379

   

Cash and cash equivalents

127,831

   

36,988

   

Accounts and notes receivable, net

87,284

   

73,861

   

Mortgage notes receivable, net

55,198

   

55,648

   

Investment in real estate partnership

32,971

   

33,169

   

Prepaid expenses and other assets

145,468

   

143,520

   

TOTAL ASSETS

$

4,159,476

   

$

3,898,565

   
         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

Liabilities

       

Mortgages and capital lease obligations (including $203,423 and $205,299 of 
        consolidated variable interest entities, respectively)

$

792,862

   

$

832,482

   

Notes payable

299,828

   

299,575

   

Senior notes and debentures

1,213,508

   

1,076,545

   

Accounts payable and other liabilities

328,348

   

284,950

   

Total liabilities

2,634,546

   

2,493,552

   

Redeemable noncontrolling interests

93,820

   

94,420

   

Shareholders' equity

       

Preferred shares

9,997

   

9,997

   

Common shares and other shareholders' equity

1,397,995

   

1,276,815

   

Total shareholders' equity of the Trust

1,407,992

   

1,286,812

   

Noncontrolling interests

23,118

   

23,781

   

Total shareholders' equity

1,431,110

   

1,310,593

   

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,159,476

   

$

3,898,565

   
 

 

 

Federal Realty Investment Trust

Summarized Income Statements

September 30, 2013

       
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2013

 

2012

 

2013

 

2012

 

(in thousands, except per share data)

 

(unaudited)

Revenue

             

Rental income

$

154,308

   

$

146,943

   

$

460,136

   

$

428,330

 

Other property income

3,480

   

9,007

   

9,661

   

17,842

 

Mortgage interest income

1,242

   

1,282

   

3,770

   

3,834

 

Total revenue

159,030

   

157,232

   

473,567

   

450,006

 

Expenses

             

Rental expenses

29,045

   

29,658

   

86,755

   

82,609

 

Real estate taxes

18,400

   

17,224

   

53,604

   

49,680

 

General and administrative

7,543

   

8,751

   

22,902

   

22,894

 

Depreciation and amortization

39,341

   

34,847

   

119,615

   

106,451

 

Total operating expenses

94,329

   

90,480

   

282,876

   

261,634

 

Operating income

64,701

   

66,752

   

190,691

   

188,372

 

Other interest income

70

   

261

   

165

   

580

 

Interest expense

(25,762)

   

(28,218)

   

(80,314)

   

(85,744)

 

Early extinguishment of debt

   

   

(3,399)

   

 

Income from real estate partnerships

381

   

490

   

1,065

   

1,229

 

Income from continuing operations

39,390

   

39,285

   

108,208

   

104,437

 

Discontinued operations

             

Discontinued operations - income

115

   

371

   

942

   

1,077

 

Discontinued operations - gain on sale of real estate

23,861

   

   

23,861

   

 

Results from discontinued operations

23,976

   

371

   

24,803

   

1,077

 

Income before gain on sale of real estate

63,366

   

39,656

   

133,011

   

105,514

 

Gain on sale of real estate

   

   

4,994

   

11,860

 

Net income

63,366

   

39,656

   

138,005

   

117,374

 

Net income attributable to noncontrolling interests

(1,268)

   

(1,012)

   

(3,780)

   

(3,141)

 

Net income attributable to the Trust

62,098

   

38,644

   

134,225

   

114,233

 

Dividends on preferred shares

(136)

   

(136)

   

(406)

   

(406)

 

Net income available for common shareholders

$

61,962

   

$

38,508

   

$

133,819

   

$

113,827

 
               

EARNINGS PER COMMON SHARE, BASIC

             

Continuing operations

$

0.57

   

$

0.59

   

$

1.58

   

$

1.57

 

Discontinued operations

0.37

   

0.01

   

0.38

   

0.02

 

Gain on sale of real estate

   

   

0.08

   

0.19

 
 

$

0.94

   

$

0.60

   

$

2.04

   

$

1.78

 

Weighted average number of common shares, basic

65,504

   

64,014

   

65,118

   

63,711

 

EARNINGS PER COMMON SHARE, DILUTED

             

Continuing operations

$

0.57

   

$

0.59

   

$

1.58

   

$

1.56

 

Discontinued operations

0.37

   

0.01

   

0.38

   

0.02

 

Gain on sale of real estate

   

   

0.08

   

0.19

 
 

$

0.94

   

$

0.60

   

$

2.04

   

$

1.77

 

Weighted average number of common shares, diluted

65,647

   

64,202

   

65,271

   

63,891

 

 

Federal Realty Investment Trust

Funds From Operations

September 30, 2013

 
   
   

Three Months Ended

 

Nine Months Ended

   

September 30,

 

September 30,

   

2013

 

2012

 

2013

 

2012

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

               

Net income

 

$

63,366

   

$

39,656

   

$

138,005

   

$

117,374

 

Net income attributable to noncontrolling interests

 

(1,268)

   

(1,012)

   

(3,780)

   

(3,141)

 

Gain on sale of real estate

 

(23,861)

   

   

(28,855)

   

(11,860)

 

Depreciation and amortization of real estate assets

 

35,334

   

30,556

   

107,730

   

94,328

 

Amortization of initial direct costs of leases

 

2,680

   

2,724

   

8,087

   

8,330

 

Depreciation of joint venture real estate assets

 

374

   

377

   

1,121

   

1,133

 

Funds from operations

 

76,625

   

72,301

   

222,308

   

206,164

 

Dividends on preferred shares

 

(136)

   

(136)

   

(406)

   

(406)

 

Income attributable to operating partnership units

 

223

   

236

   

665

   

707

 

Income attributable to unvested shares

 

(344)

   

(340)

   

(1,001)

   

(970)

 

FFO

 

76,368

   

72,061

   

221,566

   

205,495

 

Early extinguishment of debt, net of allocation to unvested shares

 

   

   

3,383

   

 

FFO excluding early extinguishment of debt

 

$

76,368

   

$

72,061

   

$

224,949

   

$

205,495

 

Weighted average number of common shares, diluted

 

65,933

   

64,526

   

65,568

   

64,227

 
                 

FFO per diluted share

 

$

1.16

   

$

1.12

   

$

3.38

   

$

3.20

 
                 

FFO excluding early extinguishment of debt, per diluted share

 

$

1.16

   

$

1.12

   

$

3.43

   

$

3.20

 
                 

 

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

September 30, 2013

       
 

2013 Guidance

 

(Dollars in millions except

 

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

     

Net income

$

178

   

$

179

 

Net income attributable to noncontrolling interests

(5)

   

(5)

 

Gain on sale of real estate in real estate partnership

(29)

   

(29)

 

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

145

   

145

 

Amortization of initial direct costs of leases

11

   

11

 

Prepayment Premium on 5.40% Notes

3

   

3

 

Funds from operations excluding Prepayment Premium on 5.40% Notes

303

   

304

 

Dividends on preferred shares

(1)

   

(1)

 

Income attributable to operating partnership units

1

   

1

 

Income attributable to unvested shares

(1)

   

(1)

 

FFO excluding Prepayment Premium on 5.40% Notes

$

302

   

$

303

 
       

Weighted average number of common shares, diluted

65.8

   

65.8

 
       

FFO per diluted share

$

4.60

   

$

4.61

 
       
       
 

2014 Guidance

 

(Dollars in millions except

 

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

     

Net income

$

177

   

$

183

 

Net income attributable to noncontrolling interests

(5)

   

(5)

 

Gain on sale of real estate in real estate partnership

   

 

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

146

   

146

 

Amortization of initial direct costs of leases

11

   

11

 

Funds from operations

329

   

334

 

Dividends on preferred shares

(1)

   

(1)

 

Income attributable to operating partnership units

1

   

1

 

Income attributable to unvested shares

(1)

   

(1)

 

FFO

$

328

   

$

333

 
       

Weighted average number of common shares, diluted

67.7

   

67.7

 
       

FFO per diluted share

$

4.84

   

$

4.92

 
 

Note:

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

 

SOURCE Federal Realty Investment Trust