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Federal Realty Investment Trust Announces Fourth Quarter and Full Year 2016 Operating Results

ROCKVILLE, Md., Feb. 13, 2017 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year ended December 31, 2016.  Highlights of the quarter and full year include:

  • Generated earnings per diluted share of $0.80 for the quarter compared to $0.97 in fourth quarter 2015 ($0.73 excluding a $0.24 gain on sale in the fourth quarter 2015). For the year ended 2016, generated earnings per diluted share of $3.50 compared to $3.03 for the year ended 2015.
  • Generated FFO per diluted share of $1.45 for the quarter compared to $1.37 in fourth quarter 2015. For the year ended 2016, generated FFO per diluted share of $5.65 compared to $5.05 for the year ended 2015 ($5.32 excluding prepayment premiums in 2015).
  • Generated same center property operating income growth of 3.0% for the fourth quarter. For the year end 2016, same center growth was 3.1%.   
  • Signed leases for 274,622 sf of comparable space (347,604 sf total) in the fourth quarter at an average rent of $37.10 psf and achieved cash basis rollover growth on those comparable spaces of 15%.
  • Affirmed 2017 FFO per diluted share guidance range of $5.83 - $5.93.

"We are very pleased with our fourth quarter and full year 2016 results – another record for the trust in terms of FFO per share," said Donald C. Wood, President and Chief Executive Officer of Federal Realty. "We are making good progress on anchor box releasing in our core portfolio. The second phases at both Assembly Row and Pike & Rose have been topped off and we are excited for them to begin opening later this year. We continue to execute on our long term, balanced business plan in order to further position our portfolio for the changing retail environment."

Financial Results

Net income available for common shareholders was $57.9 million and earnings per diluted share was $0.80 for fourth quarter 2016 versus $67.8 million and $0.97, respectively, for fourth quarter 2015 ($0.73 per diluted share excluding a $0.24 gain on sale in the fourth quarter 2015). For the full year 2016, Federal Realty reported net income available for common shareholders of $249.4 million and earnings per diluted share of $3.50. This compares to net income available for common shareholders of $209.7 million and earnings per diluted share of $3.03 for the full year 2015.   

In the fourth quarter 2016, Federal Realty generated funds from operations available for common shareholders (FFO) of $104.9 million, or $1.45 per diluted share. This compares to FFO of $96.5 million, or $1.37 per diluted share, in fourth quarter 2015. For the full year 2016, FFO was $406.4 million, or $5.65 per diluted share, compared to $352.9 million, or $5.05 per diluted share for the full year 2015. Excluding an early extinguishment of debt charge in 2015, FFO per diluted share for the full year 2015 was $5.32.

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 fourth quarter 2016, same-center property operating income increased 3.0% when including properties that are being redeveloped and 2.1% when excluding those properties. For the year 2016, same-center property operating income increased 3.1% when including properties that are being redeveloped and 1.9% when excluding those properties.   As anticipated, an unusually high number of anchor vacancies, both proactively pursued and otherwise, negatively impacted the quarterly and year end results.

The overall portfolio was 94.4% leased as of December 31, 2016, compared to 94.3% on December 31, 2015.  Federal Realty's same center portfolio was 95.7% leased on December 31, 2016, compared to 95.9% on December 31, 2015.

During fourth quarter 2016, Federal Realty signed 89 leases for 347,604 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 274,622 square feet at an average cash basis contractual rent increase (i.e., excluding the impact of straight-line rents) of 15%.  The average contractual rent on this comparable space for the first year of the new leases is $37.10 per square foot compared to the average contractual rent of $32.27 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 for comparable retail space averaged 27% for fourth quarter 2016.

For the year 2016, Federal Realty signed 386 leases for 1.7 million square feet of retail space. On a comparable basis, Federal Realty leased 1.5 million square feet at an average cash-basis contractual rent increase of 13%, and 26% on a GAAP-basis. The average contractual rent on this comparable space for the first year of the new leases is $34.72 per square foot compared to the average contractual rent of $30.63 per square foot for the last year of the prior leases. As of December 31, 2016, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $26.91 per square foot, as compared to $26.28 per square foot on December 31, 2015.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.98 per common share, resulting in an indicated annual rate of $3.92 per common share. The regular common dividend will be payable on April 17, 2017 to common shareholders of record as of March 14, 2017.

Summary of Other Quarterly Activities and Recent Developments

  • February 8, 2017Federal Realty announced the promotion of Craig Klimisch to Vice President – Corporate Controller. In this capacity, Mr. Klimisch is responsible for all aspects of accounting functions and processes, internal and external financial reporting and SEC filing requirements. Mr. Klimisch joined Federal Realty in 2011.
  • February 9, 2017Federal Realty announced the acquisition of Hastings Ranch Plaza, a 274,000 square foot shopping center in Pasadena, California. The Trust acquired the leasehold interest in the shopping center for $29.5 million. Hastings Ranch Plaza enjoys immediate access to Interstate 210 at the Rosemead-Michillinda exit and is within walking distance of the Sierra Madre Station on the Metro Gold Line.  Federal Realty anticipates increasing the value over time through potential redevelopment and/or the re-leasing of space currently leased at below market rents. 

Guidance

Federal Realty affirmed our 2017 guidance for FFO per diluted share of $5.83 to $5.93 and 2017 earnings per diluted share guidance of $3.13 to $3.23.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its fourth quarter and year end 2016 earnings conference call, which is scheduled for Tuesday, February 14, 2017 at 12:00PM ET.  To participate, please call 877.445.3230 five to ten minutes prior to the call start time and use the passcode 30117601 (required).  A replay of the webcast will be available on Federal Realty's website at www.federalrealty.com. A telephonic replay of the conference call will also be available through February 21, 2017 by dialing 855.859.2056; Passcode: 30117601.

About Federal Realty

Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Our expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 97 properties include over 2,800 tenants, in approximately 23 million square feet, and over 1,800 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 49 consecutive years, the longest record in the REIT industry. Federal Realty shares are traded on the NYSE under the symbol FRT. For additional information about Federal Realty and its properties, 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 13, 2017, 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 not perform as planned, 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 13, 2017.

 

Investor Inquiries

Media Inquiries

Leah Andress

Andrea Simpson

Investor Relations Associate

Vice President, Marketing

301/998-8265

617/684-1511

landress@federalrealty.com

asimpson@federalrealty.com

 

 

Federal Realty Investment Trust

Consolidated Balance Sheets

December 31, 2016


December 31,


2016


2015


(in thousands, except share and


per share data)

ASSETS




Real estate, at cost




Operating (including $1,226,918 and $1,192,336 of consolidated variable interest
entities, respectively)

$

6,125,957



$

5,630,771


Construction-in-progress

599,260



433,635


Assets held for sale

33,856





6,759,073



6,064,406


Less accumulated depreciation and amortization (including $209,239 and $176,057 of
consolidated variable interest entities, respectively)

(1,729,234)



(1,574,041)


Net real estate

5,029,839



4,490,365


Cash and cash equivalents

23,368



21,046


Accounts and notes receivable, net

116,749



110,402


Mortgage notes receivable, net

29,904



41,618


Investment in real estate partnerships

14,864



41,546


Prepaid expenses and other assets

208,555



191,582


TOTAL ASSETS

$

5,423,279



$

4,896,559


LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable (including $439,120 and $448,315 of consolidated variable
interest entities, respectively)

$

471,117



$

481,084


Capital lease obligations

71,590



71,620


Notes payable

279,151



341,961


Senior notes and debentures

1,976,594



1,732,551


Accounts payable and other liabilities

201,756



146,532


Dividends payable

71,440



66,338


Security deposits payable

16,285



15,439


Other liabilities and deferred credits

115,817



121,787


Total liabilities

3,203,750



2,977,312


Commitments and contingencies




Redeemable noncontrolling interests

143,694



137,316


Shareholders' equity




Preferred shares, authorized 15,000,000 shares, $.01 par: 5.417% Series 1 Cumulative
Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896
shares issued and outstanding

9,997



9,997


Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized,
71,995,897 and 69,493,392 shares issued and outstanding, respectively

722



696


Additional paid-in capital

2,718,325



2,381,867


Accumulated dividends in excess of net income

(749,734)



(724,701)


Accumulated other comprehensive loss

(2,577)



(4,110)


Total shareholders' equity of the Trust

1,976,733



1,663,749


Noncontrolling interests

99,102



118,182


Total shareholders' equity

2,075,835



1,781,931


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

5,423,279



$

4,896,559


 

 

Federal Realty Investment Trust

Consolidated Income Statements

December 31, 2016


Three Months Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015


(in thousands, except per share data)



REVENUE








Rental income

$

200,871



$

189,200



$

786,583



$

727,812


Other property income

2,456



2,446



11,015



11,810


Mortgage interest income

782



861



3,993



4,390


Total revenue

204,109



192,507



801,591



744,012


EXPENSES








Rental expenses

39,941



39,092



158,326



147,593


Real estate taxes

24,122



22,959



95,286



85,824


General and administrative

8,121



8,119



33,399



35,645


Depreciation and amortization

48,448



46,423



193,585



174,796


Total operating expenses

120,632



116,593



480,596



443,858


OPERATING INCOME

83,477



75,914



320,995



300,154


Other interest income

89



40



374



149


Interest expense

(23,851)



(23,207)



(94,994)



(92,553)


Early extinguishment of debt







(19,072)


Income from real estate partnerships

9



430



50



1,416


INCOME FROM CONTINUING OPERATIONS

59,724



53,177



226,425



190,094


Gain on sale of real estate and change in control of interests



16,821



32,458



28,330


NET INCOME

59,724



69,998



258,883



218,424


   Net income attributable to noncontrolling interests

(1,687)



(2,044)



(8,973)



(8,205)


NET INCOME ATTRIBUTABLE TO THE TRUST

58,037



67,954



249,910



210,219


Dividends on preferred shares

(135)



(135)



(541)



(541)


NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

57,902



$

67,819



$

249,369



$

209,678


EARNINGS PER COMMON SHARE, BASIC








Continuing operations

$

0.81



$

0.74



$

3.07



$

2.63


Gain on sale of real estate and change in control of interests, net



0.24



0.44



0.41



$

0.81



$

0.98



$

3.51



$

3.04


Weighted average number of common shares, basic

71,628



69,272



70,877



68,797


EARNINGS PER COMMON SHARE, DILUTED








Continuing operations

$

0.80



$

0.73



$

3.06



$

2.62


Gain on sale of real estate and change in control of interests, net



0.24



0.44



0.41



$

0.80



$

0.97



$

3.50



$

3.03


Weighted average number of common shares, diluted

71,785



69,456



71,049



68,981


 

 

Federal Realty Investment Trust

Funds From Operations

December 31, 2016









Three Months Ended


Year Ended



December 31,


December 31,



2016


2015


2016


2015



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)









Net income


$

59,724



$

69,998



$

258,883



$

218,424


Net income attributable to noncontrolling interests


(1,687)



(2,044)



(8,973)



(8,205)


Gain on sale of real estate and change in control of interests, net




(16,821)



(31,133)



(28,330)


Depreciation and amortization of real estate assets


42,392



40,619



169,198



154,232


Amortization of initial direct costs of leases


4,146



4,222



16,875



15,026


Funds from operations


104,575



95,974



404,850



351,147


Dividends on preferred shares


(135)



(135)



(541)



(541)


Income attributable to operating partnership units


748



878



3,145



3,398


Income attributable to unvested shares


(267)



(243)



(1,095)



(1,147)


FFO (1)


104,921



96,474



406,359



352,857


Weighted average number of common shares, diluted


72,549



70,391



71,869



69,920


FFO per diluted share (1)


$

1.45



$

1.37



$

5.65



$

5.05












Notes:

1)

If the $19.1 million early extinguishment of debt charge incurred in the second quarter of 2015 was excluded, our FFO for the year ended December 31, 2015 would have been $371.9 million, and FFO per diluted share would have been $5.32.

 

 

Federal Realty Investment Trust




Reconciliation of FFO Guidance




December 31, 2016








The following table provides a reconciliation of the range of estimated earnings per diluted share to estimated FFO per diluted share for the full year 2017. Estimates do not include the impact from potential acquisitions, potential dispositions, or land sale gains which have not closed as of February 13, 2017.






Full Year 2017 Guidance
Range




Low


High

Estimated net income available to common shareholders, per diluted share

$

3.13



$

3.23


Adjustments:




Estimated depreciation and amortization of real estate

2.46



2.46


Estimated amortization of initial direct costs of leases

0.24



0.24


Estimated FFO per diluted share

$

5.83



$

5.93


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/federal-realty-investment-trust-announces-fourth-quarter-and-full-year-2016-operating-results-300406390.html

SOURCE Federal Realty Investment Trust



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