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Federal Realty Investment Trust Announces First Quarter 2017 Operating Results

ROCKVILLE, Md., May 3, 2017 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2017.  Highlights of the quarter include:

  • Generated earnings per diluted share of $0.78 for the quarter compared to $1.10 in first quarter 2016 which included a $0.37 gain on change in control of interests.
  • Generated FFO per diluted share of $1.45 for the quarter compared to $1.38 in first quarter 2016, representing growth of 5.1%.
  • Generated same center property operating income growth of 4.3% for the first quarter.
  • Signed leases for 523,869 sf of comparable space (591,765 sf total) in the first quarter at an average rent of $34.91 psf and achieved cash basis rollover growth on those comparable spaces of 11%.
  • Acquired Riverpoint Center, 211,000 sf shopping center on 17 acres of land in Chicago, Illinois for $107 million.
  • Increased our 2017 FFO per diluted share guidance range to $5.85 - $5.93.

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 is located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has the longest consecutive record of annual dividend increases in the REIT industry. (PRNewsFoto/Federal Realty Investment Trust)

"We're very pleased to deliver another quarter of record bottom line results to our shareholders," said Donald C. Wood, President and Chief Executive Office of Federal Realty. "Our team remains focused on uncovering value creative opportunities throughout our existing portfolio – whether it be through redevelopment or remerchandising – in order to keep our centers relevant for years to come. We also continue to identify potential infill acquisitions in order to re-stock our redevelopment pipeline and drive future growth opportunities. Our record results reflect the broad base of our balanced business plan as we continue to position our portfolio to meet the needs of the changing retail environment."

Financial Results

Net income available for common shareholders was $56.1 million and earnings per diluted share was $0.78 for first quarter 2017 versus $76.8 million and $1.10, respectively, for first quarter 2016 which included a $0.37 gain on change in control of interests

In the first quarter 2017, Federal Realty generated funds from operations available for common shareholders (FFO) of $105.8 million, or $1.45 per diluted share. This compares to FFO of $97.6 million, or $1.38 per diluted share, in first quarter 2016.

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 first quarter 2017, same-center property operating income increased 4.3% when including properties that are being redeveloped and 1.0% when excluding those properties. Our proactive anchor releasing efforts to reposition our properties for the future continued to negatively impact our same-store quarterly results.

The overall portfolio was 94.6% leased as of March 31, 2017, compared to 94.4% on December 31, 2016 and 94.1% on March 31, 2016.  Federal Realty's same center portfolio was 95.8% leased on March 31, 2017, compared to 95.7% on December 31, 2016 and 95.9% on March 31, 2016.

During first quarter 2017, Federal Realty signed 114 leases for 591,765 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 523,869 square feet at an average cash basis contractual rent increase (i.e., excluding the impact of straight-line rents) of 11%.  The average contractual rent on this comparable space for the first year of the new leases is $34.91 per square foot compared to the average contractual rent of $31.31 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 straight-line basis, rent increases for comparable retail space averaged 23% for first quarter 2017.

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 July 17, 2017 to common shareholders of record as of June 22, 2017.

Summary of Other Quarterly Activities and Recent Developments

  • March 31, 2017Federal Realty acquired Riverpoint Center, a 211,000 square foot grocery anchored community shopping center with surface parking on 17 acres of land in Chicago, Illinois. The property is located in affluent Lincoln Park and is 3.5 miles northwest of downtown Chicago. The Trust sourced the acquisition off-market for $107 million cash.
  • March 28, 2017Federal Realty announced its exclusive partnership with Freight Farms, a Boston-based company that retrofits shipping containers with vertical farming technology capable of growing acres' worth of produce in a fraction of the space of traditional farms. The partnership empowers anyone to use this technology while repurposing Federal Realty's unused parking spaces as a place to locally and sustainably produce food that benefits the shopping centers' tenants, customers and community.

Guidance

Federal Realty increased its 2017 guidance for FFO per diluted share to $5.85 to $5.93 and 2017 earnings per diluted share guidance to $3.35 to $3.43.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2017 earnings conference call, which is scheduled for Thursday, May 4, 2017 at 11:00AM ET.  To participate, please call 877.445.3230 five to ten minutes prior to the call start time and use the passcode 94377266 (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 May 11, 2017 by dialing 855.859.2056; Passcode: 94377266.

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 98 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 Inquires:


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

March 31, 2017


March 31,


December 31,


2017


2016


(in thousands, except share and per share data)


(unaudited)



ASSETS




Real estate, at cost




Operating (including $1,235,147 and $1,226,918 of consolidated variable interest entities, respectively)

$

6,294,142



$

6,125,957


Construction-in-progress

687,356



599,260


Asset held for sale

33,856



33,856



7,015,354



6,759,073


Less accumulated depreciation and amortization (including $217,449 and $209,239 of consolidated variable interest entities, respectively)

(1,766,239)



(1,729,234)


Net real estate

5,249,115



5,029,839


Cash and cash equivalents

20,112



23,368


Accounts and notes receivable, net

115,775



116,749


Mortgage notes receivable, net

29,904



29,904


Investment in real estate partnerships

14,540



14,864


Prepaid expenses and other assets

226,754



208,555


TOTAL ASSETS

$

5,656,200



$

5,423,279


LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable (including $436,494 and $439,120 of consolidated variable interest entities, respectively)

$

468,284



$

471,117


Capital lease obligations

71,582



71,590


Notes payable

496,311



279,151


Senior notes and debentures

1,977,192



1,976,594


Accounts payable and accrued expenses

191,901



201,756


Dividends payable

71,647



71,440


Security deposits payable

16,499



16,285


Other liabilities and deferred credits

144,979



115,817


Total liabilities

3,438,395



3,203,750


Commitments and contingencies




Redeemable noncontrolling interests

141,003



143,694


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, 72,236,981 and 71,995,897 shares issued and outstanding, respectively

725



722


Additional paid-in capital

2,736,921



2,718,325


Accumulated dividends in excess of net income

(764,458)



(749,734)


Accumulated other comprehensive loss

(1,493)



(2,577)


Total shareholders' equity of the Trust

1,981,692



1,976,733


Noncontrolling interests

95,110



99,102


Total shareholders' equity

2,076,802



2,075,835


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

5,656,200



$

5,423,279


 

 

Federal Realty Investment Trust




Consolidated Income Statements




March 31, 2017





Three Months Ended


March 31,


2017


2016


(in thousands, except per share data)


(unaudited)

REVENUE




Rental income

$

204,447



$

195,308


Other property income

2,190



2,312


Mortgage interest income

752



724


Total revenue

207,389



198,344


EXPENSES




Rental expenses

41,109



42,819


Real estate taxes

25,090



22,794


General and administrative

8,267



8,010


Depreciation and amortization

51,379



47,799


Total operating expenses

125,845



121,422


OPERATING INCOME

81,544



76,922


Other interest income

106



103


Interest expense

(23,758)



(23,729)


Income from real estate partnerships



41


INCOME FROM CONTINUING OPERATIONS

57,892



53,337


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

178



25,726


NET INCOME

58,070



79,063


   Net income attributable to noncontrolling interests

(1,880)



(2,108)


NET INCOME ATTRIBUTABLE TO THE TRUST

56,190



76,955


Dividends on preferred shares

(135)



(135)


NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

56,055



$

76,820


EARNINGS PER COMMON SHARE, BASIC




Continuing operations

$

0.78



$

0.73


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



0.37



$

0.78



$

1.10


Weighted average number of common shares, basic

71,862



69,771


EARNINGS PER COMMON SHARE, DILUTED




Continuing operations

$

0.78



$

0.73


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



0.37



$

0.78



$

1.10


Weighted average number of common shares, diluted

72,005



69,957


 


 

Federal Realty Investment Trust





Funds From Operations

March 31, 2017







Three Months Ended



March 31,



2017


2016



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)





Net income


$

58,070



$

79,063


Net income attributable to noncontrolling interests


(1,880)



(2,108)


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


(70)



(25,726)


Depreciation and amortization of real estate assets


44,682



41,728


Amortization of initial direct costs of leases


4,684



4,204


Funds from operations


105,486



97,161


Dividends on preferred shares


(135)



(135)


Income attributable to operating partnership units


784



855


Income attributable to unvested shares


(340)



(292)


FFO


$

105,795



$

97,589


Weighted average number of common shares, diluted


72,805



70,867


FFO per diluted share


$

1.45



$

1.38







 


 

Federal Realty Investment Trust




Reconciliation of FFO Guidance




March 31, 2017








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 May 3, 2017.










Full Year 2017 Guidance Range




Low


High

Estimated net income available to common shareholders, per diluted share

$

3.35



$

3.43


Adjustments:




Estimated gain on sale of real estate, net

(0.25)



(0.25)


Estimated depreciation and amortization of real estate

2.50



2.50


Estimated amortization of initial direct costs of leases

0.24



0.24


Estimated FFO per diluted share

$

5.85



$

5.93



Note:

Individual items may not add up to total due to rounding.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/federal-realty-investment-trust-announces-first-quarter-2017-operating-results-300450874.html

SOURCE Federal Realty Investment Trust



NYSE Listing: FRT

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