Federal Realty Investment Trust Updates Status of Three Closed Kmart Locations; One Lease Assumed By Kohl's And Two Others Offer Significant Redevelopment Potential
ROCKVILLE, Md.--(BUSINESS WIRE)--April 23, 2003--Federal Realty Investment Trust (NYSE:FRT) announced today updated information on the status of its three Kmart locations, comprising 326,000 square feet of retail space and $1.7 million of contractual rent, that were closed as a result of the retailer's chapter 11 bankruptcy filing.
Kohl's Corporation is assuming the previous lease for the 150,000 square foot store at Fresh Meadows in Queens, New York. The leases for both the Flourtown Shopping Center in Flourtown, Pennsylvania and Leesburg Plaza in Leesburg, Virginia, will be re-claimed by the Trust and management believes both provide potential for increased earnings and increased value through redevelopment or re-tenanting.
"We are pleased with the outcome of the bankruptcy auction because it offers us the best of both worlds," stated Vice President of Anchor Tenant Leasing, Chris Weilminster. "The lease assumption at Fresh Meadows improves our merchandising mix, protects $1.2 million of contractual rent and associated cost recoveries and enhances the opportunity for increasing small shop rents upon rollover of those leases."
The lease for the former Kmart location at Fresh Meadows will be assumed by Kohl's, an operator of family-oriented specialty department stores. Accordingly, Federal Realty expects no impact to portfolio occupancy or rent as it relates to the Fresh Meadows location.
In addition, Federal Realty will regain control of the previous Kmart locations at Flourtown Shopping Center and Leesburg Plaza, previously representing $300,000 and $225,000 of contractual rent, respectively, under the Kmart leases.
While the near-term impact of the 176,000 square feet of increased vacancy is a 1.1% decrease in portfolio occupancy and a 0.2% decrease in annualized contractual rent, Federal Realty is confident in its ability to effectively redevelop and re-tenant both properties, creating significant increases in earnings and value.
Mr. Weilminster continued, "At Flourtown and Leesburg any temporary disruption in occupancy should be more than offset by improved property operating income associated with redevelopment. We recognize the profitability and strong demand of additional small shop space, and as a result, several of our redevelopment scenarios contemplate reducing the existing 'big box' space."
Since 1995 Federal Realty has recaptured 1.4 million square feet of retail space as a direct result of retailer bankruptcies, and has re-leased over 95% of the space at an average contractual rent increase of 27%.
Most recently, in August 2002, Federal Realty announced the closing of its two Ames locations at Dedham Plaza and Brunswick Shopping Center after the troubled retailer failed to emerge from bankruptcy protection.
At Dedham, Shaw's Supermarket assumed the 80,000 square foot former Ames space with no interruption in rent, while at Brunswick the 62,000 square foot space has recently been re-leased and is projected to produce property operating income more than 16% greater than that previously contributed by Ames.
Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development and redevelopment of shopping centers and street retail properties.
Federal Realty's portfolio contains over 15.4 million square feet located in major metropolitan markets across the United States. The operating portfolio on December 31 2002, excluding Santana Row, is approximately 95.5% occupied by over 2,000 national, regional and local retailers with no single tenant accounting for more than 2.6% of rental revenue.
Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 35 consecutive years, the longest consecutive record in the REIT industry. Shares of Federal Realty are traded on the New York Stock Exchange under the symbol FRT. Additional information about Federal Realty can be found on the Internet at 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 Private Securities Litigation Reform Act of 1995. Although Federal Realty Investment Trust believes the expectations reflected in such forward looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Federal Realty's expectations include:
Federal Realty Investment Trust, Rockville
Andrew Blocher, 301/998-8166
Kristine Warner, 301/998-8212
SOURCE: Federal Realty Investment Trust