ROCKVILLE, Md.--(BUSINESS WIRE)--May 5, 2004--Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2004.
-- Funds from Operations (FFO) per diluted share increased 7.8%
over first quarter 2003.
-- Earnings per diluted share increased 7.7% versus the quarter
ending March 31, 2003.
-- Compared to first quarter 2003, same-center property
operating income increased 3.7% excluding redevelopments and
expansions, and 4.0% including redevelopments and expansions.
-- Cash rent increases on lease rollovers were 17.0% for the
first quarter on 375,000 square feet of comparable retail
space.
-- FFO per diluted share guidance for 2004 was increased to a
range of $2.81 to $2.84.
Financial Results
Federal Realty reported FFO per diluted share of $0.69 in first quarter 2004, a 7.8% increase over the $0.64 reported in first quarter 2003. On an absolute basis, FFO available to common shareholders was $34.8 million for the first quarter of 2004 compared to $28.9 million for last year's first quarter. Net income available for common shareholders was $14.4 million, and earnings per diluted share were $0.28 for the quarter ended March 31, 2004, versus $11.5 million and $0.26, respectively, for the first quarter of 2003.
Donald Wood, Federal Realty's President and Chief Executive Officer commented, "In the first quarter of 2004, we continued to successfully execute all aspects of the Trust's business plan. We increased the value of our existing portfolio through re-leasing and redevelopment, we acquired Westgate Mall, an asset that is accretive today and whose performance will improve through the recapture of spaces that currently have under-market rents, and we accessed both the public debt and equity markets to further improve our financial flexibility and strengthen our balance sheet."
Portfolio Results
On a same-center basis, including redevelopment and expansion properties, property operating income increased 4.0% over first quarter 2003. When redevelopment and expansion properties are excluded from the same-center results, property operating income increased 3.7% from first quarter 2003.
As of March 31, 2004, Federal Realty's same-center portfolio was 96.2% leased compared to 96.0% on December 31, 2003, and 96.2% on March 31, 2003. Overall, the Trust's portfolio was 93.3% leased as of March 31, 2004, compared to 93.1% on December 31, 2003, and 94.3% on March 31, 2003.
During the first quarter, the Trust signed 84 leases for over 450,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased 375,000 square feet at a weighted-average cash-basis contractual rent increase per square foot (i.e. excluding the impact of straight-line rents) of 17.0%. The weighted-average contractual rent on this comparable space for the first year of the new lease is $21.98 per square foot compared to the weighted-average contractual rent of $18.78 per square foot for the last year of the prior lease. The previous weighted-average contractual rent is calculated by including both the minimum rent and the 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 were 26.9% for the first quarter of 2004. As of March 31, 2004, Federal Realty's weighted-average contractual rent for retail and commercial space in its portfolio was $18.04 per square foot.
At Santana Row, Federal Realty's mixed-use community in San Jose, Calif., 90% of the retail space was leased to 102 tenants as of March 31, 2004. With respect to the residential component of Santana Row, 95% of the 255 existing residential units were leased as of March 31, 2004, and the development of the 256 Phase IV residential units remains on schedule and on budget.
Guidance
Federal Realty is today increasing guidance for 2004 FFO per diluted share to a range of $2.81 to $2.84, or $1.22 to $1.25 of earnings per diluted share.
Summary of Other Quarterly Activities and Recent Developments
-- April 2, 2004 - Federal Realty sold approximately 2.2 million
common shares of beneficial interest in a public offering
underwritten by Wachovia Securities and Legg Mason Wood Walker
Incorporated. The sale generated approximately $99.1 million
of proceeds to the Trust, or $45.33 per share, a 3.00%
discount from the previous day's New York Stock Exchange
closing price of $46.73. The Trust used the net proceeds from
the sale to repay the amounts outstanding under its revolving
credit facility, which had been used to acquire Westgate Mall
on March 31, 2004.
-- March 31, 2004 - Federal Realty announced the acquisition of
Westgate Mall, a 637,000 square foot shopping center in San
Jose, California. The Trust acquired the fee interest in the
shopping center for $97.0 million in cash from a private
owner. Federal Realty expects to increase the value of the
property through the re-leasing of retail space that is
currently substantially below market. In addition, the Trust
is evaluating potential long-term redevelopment opportunities
for the shopping center. Westgate Mall was 98% leased as of
March 31, 2004, with the tenancy consisting primarily of
strong national and regional merchants including Safeway,
Target, Burlington Coat Factory, Ross Dress For Less,
Nordstrom Rack, Barnes & Noble, Any Mountain Sporting Goods,
Old Navy, and Michaels.
-- March 3, 2004 - Federal Realty announced that its Board of
Trustees had declared a regular quarterly cash dividend of
$0.49 per share on its common shares, resulting in an
indicated annual rate of $1.96 per share.
-- January 21, 2004 - Federal Realty priced a $75 million
offering of seven-year senior unsecured notes. The 4.50% notes
are due February 15, 2011, and were offered at 99.698% of par.
Proceeds from the offering were primarily used to repay
existing corporate debt.
-- January 13, 2004 - Federal Realty increased its previously
issued FFO per diluted share guidance for 2003 to $2.69, and
to a range of $2.78 to $2.82 for 2004. The increase in FFO
guidance resulted from the final settlement of the Santana Row
fire insurance claim.
-- January 5, 2004 - Federal Realty announced the sale of four
Street Retail properties, totaling 62,000 square feet, in West
Hartford, Conn. - 967 and 970 Farmington Avenue, 27-43 LaSalle
Road, and 1253 New Britain Avenue - for $15.7 million,
generating a book gain of approximately $7.9 million. The
sales price reflects a 7.6% capitalization rate based on
Federal Realty's estimates of forward 12-month property
operating income.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter earnings conference call, which is scheduled for Thursday, May 6, 2004, at 11 a.m. EDT. To participate, please call (888) 566-5771 five to ten minutes prior to the call's start time and use the Passcode EARNINGS (required). The conference leader is Andrew Blocher. Federal Realty will also provide an online Web Simulcast on the company's Web site, www.federalrealty.com, which will remain available for 14 days following the call. A telephone recording of the call will also be available for 14 days by dialing (800) 679-9654.
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 approximately 16.9 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. The operating portfolio was approximately 93% leased to more than 2,200 national, regional, and local retailers as of March 31, 2004, with no single tenant accounting for more than 2.4 % 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 36 consecutive years, the longest consecutive record in the REIT industry.
Shares of Federal Realty are traded on the NYSE 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 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. The factors that may impact these expectations include:
-- risks of financing, such as our ability to meet existing
financial covenants and the possibility of increases in rental
rates that would result in increased interest expense;
-- risks that our growth will be limited if we cannot obtain
additional capital;
-- risks normally associated with the real estate industry,
including risks that our tenants will not pay rent or that we
may be unable to renew leases or relet space at favorable
rents as leases expire, that new acquisitions or our
development, construction and renovation projects may fail to
perform as expected, that competition for acquisitions could
result in increased prices, that we may have environmental
risks at our properties, and, because real estate is illiquid,
that we may not be able to sell properties when appropriate;
-- risks that we may not proceed with or obtain necessary
approvals for any redevelopment, and that any redevelopment or
expansion that we do pursue may not perform as anticipated;
-- risks related to our status as a REIT for federal income tax
purposes, such as the existence of complex 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; and
-- those additional risks detailed from time to time in our SEC
reports, including our annual report on Form 10-K, our
quarterly reports on Form 10-Q, and our statement of risk
factors on Form 8-K.
Federal Realty assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Federal Realty Investment Trust
Summarized Operating Results
March 31, 2004
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
(unaudited)
OPERATING RESULTS Three months
ended March 31,
----------------------------------------------------
2004 2003
-------- --------
Revenue
Rental income $89,643 $79,247
Other property income 5,091 4,083
Interest and other income 1,439 1,215
-------- --------
96,173 84,545
Expenses
Rental 22,401 21,527
Real estate taxes 9,223 7,736
-------- --------
Total property operating expenses 31,624 29,263
-------- --------
Property operating income (1) 64,549 55,282
Interest 21,319 17,579
Administrative 4,182 3,274
Depreciation and amortization 20,622 17,333
-------- --------
Total other expenses 46,123 38,186
-------- --------
Income before minority interests and discontinued
operations 18,426 17,096
Minority Interests (1,189) (1,070)
-------- --------
Income from continuing operations 17,237 16,026
-------- --------
Operating income from discontinued operations (48) 350
Gain on sale of real estate 57 -
-------- --------
Income from discontinued operations 9 350
-------- --------
Net income 17,246 16,376
Dividends on preferred stock (2,869) (4,856)
-------- --------
Net income available for common shareholders $14,377 $11,520
======== ========
FUNDS FROM OPERATIONS AVAILABLE FOR COMMON SHAREHOLDERS
--------------------------------------------------------------
Net income available for common shareholders $14,377 $11,520
Gain on sale of real estate (57) -
Depreciation and amortization of real estate
assets 18,726 15,798
Amortization of initial direct costs of leases 1,498 1,354
Income attributable to operating partnership units 235 206
-------- --------
Funds from operations available for common
shareholders $34,779 $28,878
======== ========
Weighted average number of common shares, diluted 50,613 45,354
======== ========
Funds from operations per share $0.69 $0.64
======== ========
EARNINGS PER COMMON SHARE, BASIC
----------------------------------------------------
Income from continuing operations $0.29 $0.25
Discontinued operations 0.00 0.01
-------- --------
$0.29 $0.26
======== ========
Weighted average number of common shares,
basic 49,163 44,271
======== ========
EARNINGS PER COMMON SHARE, DILUTED
----------------------------------------------------
Income from continuing operations $0.28 $0.25
Discontinued operations 0.00 0.01
-------- --------
$0.28 $0.26
======== ========
Weighted average number of common shares,
diluted 50,613 45,354
======== ========
(1) See Glossary of Terms
Federal Realty Investment Trust
Summarized Balance Sheet
March 31, 2004
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
CONSOLIDATED BALANCE SHEETS
-----------------------------------------------
March December
31, 31,
2004 2003
----------- -----------
(unaudited)
ASSETS
Real estate, at cost
Operating $2,491,842 $2,342,315
Development 105,106 127,834
----------- -----------
2,596,948 2,470,149
Less accumulated depreciation and
amortization (532,280) (514,177)
----------- -----------
Net real estate investments 2,064,668 1,955,972
Cash and cash equivalents 27,940 34,968
Mortgage notes receivable 42,419 41,500
Accounts receivable 34,916 31,207
Other assets 79,112 79,788
----------- -----------
TOTAL ASSETS $2,249,055 $2,143,435
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases, mortgages
and construction loans $413,528 $414,357
Notes payable 426,537 361,323
Senior notes and debentures 570,500 535,000
Other liabilities 125,899 111,799
----------- -----------
Total liabilities 1,536,464 1,422,479
Minority interests 28,952 29,582
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other shareholders'
equity 548,639 556,374
----------- -----------
Total shareholders' equity 683,639 691,374
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,249,055 $2,143,435
=========== ===========
Federal Realty Investment Trust
Reconciliation of 2004 EPS to 2004 FFO Guidance
March 31, 2004
----------------------------------------------------------------------
($ millions except per share amounts)
Forecast Per Share
--------- -----------
Net Income Available to Common to to
Shareholders $63 $65 $1.22 $1.25
Depreciation and Amortization of
Real Estate Assets 82 82 1.57 1.57
Income Attributable to Operating
Partnership Units 1 1 0.02 0.02
--------- ----- ------ ------
Funds from Operations $146 to $148 $2.81 to $2.84
========= ===== ====== ======
Weighted Average Shares (diluted) 52.1
CONTACT: Federal Realty Investment Trust
Investor Inquiries:
Andrew Blocher, 301-998-8166
ablocher@federalrealty.com
or
Media Inquiries:
Kristine Warner, 301-998-8212
kwarner@federalrealty.com
SOURCE: Federal Realty Investment Trust
