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News Release

Federal Realty Investment Trust Announces Third Quarter 2014 Operating Results

ROCKVILLE, Md., Oct. 30, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2014.

Financial Results

In the third quarter 2014, Federal Realty generated funds from operations available for common shareholders (FFO) of $84.5 million, or $1.23 per diluted share. This compares to FFO of $76.4 million, or $1.16 per diluted share, in third quarter 2013.  For the nine months ended September 30, 2014, Federal Realty reported FFO of $249.9 million, or $3.66 per diluted share, compared to $221.6 million, or $3.38 per diluted share for the same nine-month period in 2013. 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 $46.9 million and earnings per diluted share was $0.69 for the quarter ended September 30, 2014 versus $62.0 million and $0.94, respectively, for third quarter 2013. Year-to-date, Federal Realty reported net income available for common shareholders of $129.0 million and earnings per diluted share of $1.91.  This compares to net income available for common shareholders of $133.8 million and earnings per diluted share of $2.04 for the nine months ended September 30, 2013.

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 2014, same-center property operating income increased 3.3% over the prior year, excluding properties that are being redeveloped and 4.4% when including those properties.

The overall portfolio was 95.6% leased as of September 30, 2014, compared to 95.3% on June 30, 2014 and 95.3% on September 30, 2013.  Federal Realty's same-center portfolio was 95.9% leased on September 30, 2014, compared to 95.5% on June 30, 2014 and 95.4% on September 30, 2013.

During the third quarter of 2014, Federal Realty signed 108 leases for 434,165 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 372,693 square feet at an average cash basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 13%. The average contractual rent on this comparable space for the first year of the new leases is $35.69 per square foot, compared to the average contractual rent of $31.55 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 23% for third quarter 2014. As of September 30, 2014, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $25.36 per square foot.

"We are very pleased with another quarter of strong performance," commented Don Wood, President and Chief Executive Officer, "as the core continues to power forward and the successful Phase I openings of Pike & Rose and Assembly Row drive increased visibility on additional opportunities for growth for many years to come."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.87 per share, resulting in an indicated annual rate of $3.48 per share. The regular common dividend will be payable on January 15, 2015, to common shareholders of record as of January 2, 2015.

Guidance

Federal Realty increased its guidance for 2014 FFO per diluted share to a range of $4.92 to $4.94, from $4.90 to $4.94. 2014 earnings per diluted share guidance is $2.57 to $2.61. In addition, Federal Realty provided initial 2015 FFO per diluted share guidance of $5.26 to $5.34 and 2015 earnings per diluted share guidance of $2.86-$2.94

Summary of Other Quarterly Activities and Recent Developments

  • October 30, 2014 – Federal Realty announced that it is proceeding with Phase II of Pike & Rose, which will add 185,000 square feet of new retail space, 264 high-end apartments, 104 luxury condominium residences, over 800 new parking spaces, and a 177-room, Canopy by Hilton hotel. The hotel, one of the first of Hilton's new lifestyle brand, will be developed by a partnership between Federal Realty and the Buccini/Pollin Group.
  • September 10, 2014 – Federal Realty's Assembly Row announced several key grand opening milestones: Assembly Station opened for business on the MBTA's Orange Line, connecting the Assembly Row neighborhood to the Line's 200,000 daily riders; 43 of 59 tenants in the initial phase, including the Marketplace, are now open and operating; and Partners Healthcare commenced construction to bring more than 700,000 square feet of office to relocate over 4,500 employees to Assembly Row starting in late 2016.
  • August 28, 2014 – Federal Realty amended its term loan agreement, lowering the spread over LIBOR by 40 basis points to 90 basis points based on the Trust's current credit rating and providing the Trust an option to extend the November 2018 maturity date by one year.
  • July 24, 2014 – Federal Realty's partnership with a discretionary fund created and advised by ING Clarion Partners closed on the sale of Pleasant Shops in South Weymouth, Massachusetts for a sales price of $34.3 million. As a result of this sale, the Trust recorded a gain of approximately $4.4 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 2014 earnings conference call, which is scheduled for October 31, 2014, at 11 a.m. Eastern Daylight Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 94267792 (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 November 7, 2014, by dialing (855) 859-2056 and using the passcode 94267792.

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 0.8 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 95.6% leased to national, regional, and local retailers as of September 30, 2014, with no single tenant accounting for more than approximately 3.2% 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 47 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 11, 2014, 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 renovation projects that we do pursue 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 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 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 11,2014.

Investor Inquires

Media Inquiries

Brittany Schmelz

Andrea Simpson

Investor Relations Coordinator

Director, Marketing

301/998-8265

617/684-1511

bschmelz@federalrealty.com

asimpson@federalrealty.com

 

 

Federal Realty Investment Trust

Summarized Balance Sheets

September 30, 2014

 

September 30,

 

December 31,

 

2014

 

2013

 

(in thousands)

 

(unaudited)

     

ASSETS

         

Real estate, at cost

         

Operating (including $281,960 and $265,138 of consolidated variable interest entities, respectively)

$

5,052,378

   

$

4,618,258

 

Construction-in-progress

484,414

   

531,205

 
 

5,536,792

   

5,149,463

 

Less accumulated depreciation and amortization (including $24,714 and $19,086 of consolidated variable interest entities, respectively)

(1,431,466)

   

(1,350,471)

 

Net real estate

4,105,326

   

3,798,992

 

Cash and cash equivalents

23,917

   

88,927

 

Accounts and notes receivable, net

104,746

   

84,838

 

Mortgage notes receivable, net

51,191

   

55,155

 

Investment in real estate partnership

32,717

   

32,264

 

Prepaid expenses and other assets

161,501

   

159,118

 

TOTAL ASSETS

$

4,479,398

   

$

4,219,294

 
           

LIABILITIES AND SHAREHOLDERS' EQUITY

         

Liabilities

         

Mortgages and capital lease obligations (including $188,189 and $202,782 of consolidated variable interest entities, respectively)

701,914

   

660,127

 

Notes payable

301,556

   

300,822

 

Senior notes and debentures

1,361,466

   

1,360,913

 

Accounts payable and other liabilities

341,998

   

321,710

 

Total liabilities

2,706,934

   

2,643,572

 

Redeemable noncontrolling interests

110,865

   

104,425

 

Shareholders' equity

         

Preferred shares

9,997

   

9,997

 

Common shares and other shareholders' equity

1,563,325

   

1,438,163

 

Total shareholders' equity of the Trust

1,573,322

   

1,448,160

 

    Noncontrolling interests

88,277

   

23,137

 

Total shareholders' equity

1,661,599

   

1,471,297

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,479,398

   

$

4,219,294

 

 

 

Federal Realty Investment Trust

                     

Summarized Income Statements

                     

September 30, 2014

                     
 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2014

 

2013

 

2014

 

2013

 

(in thousands, except per share data)

 

(unaudited)

Revenue

                     

Rental income

$

166,112

   

$

154,308

   

$

494,688

   

$

460,136

 

Other property income

3,622

   

3,480

   

11,347

   

9,661

 

Mortgage interest income

1,204

   

1,242

   

3,678

   

3,770

 

Total revenue

170,938

   

159,030

   

509,713

   

473,567

 

Expenses

                     

Rental expenses

31,908

   

29,045

   

100,443

   

86,755

 

Real estate taxes

20,374

   

18,400

   

58,238

   

53,604

 

General and administrative

8,374

   

7,543

   

24,202

   

22,902

 

Depreciation and amortization

42,660

   

39,341

   

127,403

   

119,615

 

Total operating expenses

103,316

   

94,329

   

310,286

   

282,876

 

Operating income

67,622

   

64,701

   

199,427

   

190,691

 

Other interest income

2

   

70

   

45

   

165

 

Interest expense

(23,422)

   

(25,762)

   

(69,772)

   

(80,314)

 

Early extinguishment of debt

   

   

   

(3,399)

 

Income from real estate partnership

446

   

381

   

909

   

1,065

 

Income from continuing operations

44,648

   

39,390

   

130,609

   

108,208

 

Discontinued operations

                     

Discontinued operations - income

   

115

   

   

942

 

Discontinued operations - gain on sale of real estate

   

23,861

   

   

23,861

 

Results from discontinued operations

   

23,976

   

   

24,803

 

Income before gain on sale of real estate

44,648

   

63,366

   

130,609

   

133,011

 

Gain on sale of real estate

   

   

   

4,994

 

Gain on sale of real estate in real estate partnership

4,401

   

   

4,401

   

 

Net income

49,049

   

63,366

   

135,010

   

138,005

 

   Net income attributable to noncontrolling interests

(1,974)

   

(1,268)

   

(5,637)

   

(3,780)

 

Net income attributable to the Trust

47,075

   

62,098

   

129,373

   

134,225

 

Dividends on preferred shares

(136)

   

(136)

   

(406)

   

(406)

 

Net income available for common shareholders

$

46,939

   

$

61,962

   

$

128,967

   

$

133,819

 
                       

EARNINGS PER COMMON SHARE, BASIC

                     

Continuing operations

$

0.62

   

$

0.57

   

$

1.84

   

$

1.58

 

Discontinued operations

   

0.37

   

   

0.38

 

Gain on sale of real estate

0.07

   

   

0.07

   

0.08

 
 

$

0.69

   

$

0.94

   

$

1.91

   

$

2.04

 
                       

Weighted average number of common shares, basic

67,559

   

65,504

   

67,095

   

65,118

 
                       

EARNINGS PER COMMON SHARE, DILUTED

                     

Continuing operations

$

0.62

   

$

0.57

   

$

1.84

   

$

1.58

 

Discontinued operations

   

0.37

   

   

0.38

 

Gain on sale of real estate

0.07

   

   

0.07

   

0.08

 
 

$

0.69

   

$

0.94

   

$

1.91

   

$

2.04

 
                       

Weighted average number of common shares, diluted

67,732

   

65,647

   

67,261

   

65,271

 

 

 

Federal Realty Investment Trust

                       

Funds From Operations

     

September 30, 2014

                       
   

Three Months Ended

 

Nine Months Ended

   

September 30,

 

September 30,

   

2014

 

2013

 

2014

 

2013

   

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

                       

Net income

 

$

49,049

   

$

63,366

   

$

135,010

   

$

138,005

 

Net income attributable to noncontrolling interests

 

(1,974)

   

(1,268)

   

(5,637)

   

(3,780)

 

Gain on sale of real estate

 

(4,401)

   

(23,861)

   

(4,401)

   

(28,855)

 

Depreciation and amortization of real estate assets

 

37,964

   

35,334

   

114,012

   

107,730

 

Amortization of initial direct costs of leases

 

3,193

   

2,680

   

8,971

   

8,087

 

Depreciation of joint venture real estate assets

 

352

   

374

   

1,202

   

1,121

 

Funds from operations

 

84,183

   

76,625

   

249,157

   

222,308

 

Dividends on preferred shares

 

(136)

   

(136)

   

(406)

   

(406)

 

Income attributable to operating partnership units

 

798

   

223

   

2,229

   

665

 

Income attributable to unvested shares

 

(378)

   

(344)

   

(1,128)

   

(1,001)

 

FFO

 

$

84,467

   

$

76,368

   

$

249,852

   

$

221,566

 

Early extinguishment of debt, net of allocation to unvested shares

 

   

   

   

3,383

 

       FFO excluding early extinguishment of debt

 

$

84,467

   

$

76,368

   

$

249,852

   

$

224,949

 

Weighted average number of common shares, diluted

 

68,649

   

65,933

   

68,179

   

65,568

 
                         

FFO per diluted share

 

$

1.23

   

$

1.16

   

$

3.66

   

$

3.38

 
                         

FFO excluding early extinguishment of debt, per diluted share

 

$

1.23

   

$

1.16

   

$

3.66

   

$

3.43

 
                         

 

 

Federal Realty Investment Trust

         

Reconciliation of Net Income to FFO Guidance

         

September 30, 2014

         
           
 

2014 Guidance

 

(Dollars in millions except

 

 per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

         

Net income

$

183

   

$

186

 

Net income attributable to noncontrolling interests

(8)

   

(8)

 

Gain on sale of real estate in real estate partnership

(4)

   

(4)

 

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

153

   

153

 

Amortization of initial direct costs of leases

11

   

11

 

Funds from operations

336

   

337

 

Dividends on preferred shares

(1)

   

(1)

 

Income attributable to operating partnership units

3

   

3

 

Income attributable to unvested shares

(1)

   

(1)

 

FFO

$

337

   

$

338

 
           

Weighted average number of common shares, diluted

68.4

   

68.4

 
           

FFO per diluted share

$

4.92

   

$

4.94

 
             
 

2015 Guidance

 
 

(Dollars in millions except

 
 

 per share amounts) (1)

 

Funds from Operations available for common shareholders (FFO)

           

Net income

$

209

   

$

214

   

Net income attributable to noncontrolling interests

(9)

   

(9)

   

Gain on sale of real estate

   

   

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

155

   

155

   

Amortization of initial direct costs of leases

13

   

13

   

Funds from operations

367

   

373

   

Dividends on preferred shares

(1)

   

(1)

   

Income attributable to operating partnership units

4

   

4

   

Income attributable to unvested shares

(1)

   

(1)

   

FFO

$

369

   

$

375

   
             

Weighted average number of common shares, diluted

70.2

   

70.2

   
             

FFO per diluted share

$

5.26

   

$

5.34

   
     

Note:

   

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

   

   

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SOURCE Federal Realty Investment Trust