-Increased Occupancy and Redevelopment Stabilizations Drive Strong Internal Growth-
ROCKVILLE, Md., May 3 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2006.
- Funds from operations available for common shareholders (FFO) per diluted share was $0.81 and earnings per diluted common share was $0.53 for the quarter ended March 31, 2006, versus $0.74 and $0.40, respectively, for first quarter 2005.
- When compared to first quarter 2005, same-center property operating income increased 6.4% including redevelopments and expansions, and 5.0% excluding redevelopments and expansions.
- Rent increases on lease rollovers for retail space for which there was a prior tenant were 16% on a cash-basis and 27% on a GAAP-basis for the quarter ended March 31, 2006.
- The Trust's portfolio was 96.2% leased and 94.8% occupied as of March 31, 2006.
- Guidance for 2006 FFO per diluted share remains unchanged at $3.30 to $3.35.
Financial Results
In first quarter 2006, Federal Realty reported FFO of $43.4 million, or $0.81 per diluted share. This compares to FFO of $39.3 million, or $0.74 per diluted share, reported in first quarter 2005. Net income available for common shareholders was $28.2 million and earnings per diluted common share was $0.53 for the quarter ended March 31, 2006, versus $21.1 million and $0.40, respectively, for first quarter 2005.
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
On a same-center basis, including redevelopments and expansions, property operating income increased 6.4% over first quarter 2005. When redevelopments and expansions are excluded from the same-center results, property operating income increased 5.0% from first quarter 2005.
Overall, the Trust's portfolio was 96.2% leased and 94.8% occupied as of March 31, 2006, compared to 95.1% and 91.5%, respectively, on March 31, 2005. Federal Realty's same-center portfolio was 97.3% leased and 96.4% occupied on March 31, 2006, compared to 96.6% and 95.4%, respectively, on March 31, 2005.
During first quarter 2006, the Trust signed 82 leases for 349,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 286,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 16%. The average contractual rent on this comparable space for the first year of the new lease is $23.05 per square foot compared to the average contractual rent of $19.85 per square foot for the last year of the prior lease. The previous 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 averaged 27% for first quarter 2006. As of March 31, 2006, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $18.97 per square foot.
"Our first quarter results reflect the continued stabilization of redevelopment projects and the associated increase in occupancy at these properties," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "We continue to focus on our core competencies -- leasing, redevelopment, acquisitions and operations -- capitalizing on the strength of our portfolio and our team."
Residential condominium sales at Santana Row, Federal Realty's mixed-use community in San Jose, Calif., remain strong. Through May 1, 2006, the Trust had closed sales on 189 units and had 19 units under contract, with associated gross sales proceeds of $131.3 million and $12.5 million, respectively. Federal Realty continues to expect gross sales proceeds from the sale of the 219 residential units at Santana Row to be approximately $150 million with sellout anticipated to be completed in 2006.
Guidance
Federal Realty left its guidance for 2006 FFO per diluted share unchanged at a range of $3.30 to $3.35, and its 2006 earnings per diluted common share guidance increased to a range of $1.68 to $1.74.
Summary of Other Quarterly Activities and Recent Developments
- April 8, 2006 -- A ribbon cutting ceremony was held to mark the opening of The Sports Authority sporting goods store at Assembly Square Mall. The grand opening event brings the renovated power center to full occupancy.
- March 20, 2006 -- Federal Realty celebrated the completion of Phase I of the redevelopment of Leesburg Plaza in Leesburg, Va. The center section of the plaza, formerly a vacant Kmart space, is now anchored by Party City, PetSmart, and Champion Billiards Sports Cafe.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2006 earnings conference call, which is scheduled for May 4, 2006, at 11 a.m. Eastern Daylight Time. 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, http://www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available through June 5, 2006, by dialing (866) 448-4809.
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 17.6 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 0.5 million square feet of retail space through its joint venture with Clarion Lion Properties Fund in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 96.2% leased to national, regional, and local retailers as of March 31, 2006, with no single tenant accounting for more than approximately 2.5% 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 38 consecutive years, the longest record in the REIT industry. Shares of Federal Realty 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 most recent annual report on Form 10-K (as amended), and include the following:
- risks that our tenants will not pay rent 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 renovations may cost more, take more time to complete, or fail to perform as expected;
- risks that we may not be able to sell the condominium units at Santana Row for the expected prices or within the anticipated time frames;
- risks that the number of properties we acquire for our own account, and therefore the amount of capital we invest in acquisitions, may be impacted by our real estate partnership;
- 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 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 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 most current annual report on Form 10-K (as amended) and our quarterly reports on Form 10-Q.
Investor and Media Inquiries
Andrew Blocher Suzanne O'Neill
Vice President, Capital Markets Manager, Investor Relations
& Investor Relations 301/998-8358
301/998-8166 soneill@federalrealty.com
ablocher@federalrealty.com
Federal Realty Investment Trust
Summarized Operating Results
March 31, 2006
Financial Highlights
(in thousands, except per share data)
(unaudited)
CONSOLIDATED OPERATING RESULTS Three months ended March 31,
2006 2005
Revenue
Rental income $105,488 $98,307
Other property income 2,095 1,930
Mortgage interest income 1,322 1,281
108,905 101,518
Expenses
Rental 22,190 23,191
Real estate taxes 10,611 9,603
General and administrative 4,501 4,502
Depreciation and amortization 24,036 21,929
61,338 59,225
Operating income 47,567 42,293
Other interest income 263 391
Interest expense (24,280) (22,063)
Income from real estate partnership 148 71
Minority interests (1,073) (1,516)
Income from continuing operations 22,625 19,176
Discontinued operations
(Loss) income from discontinued
operations (331) 539
Gain on sale of real estate 8,737 4,282
Results from discontinued operations 8,406 4,821
Net Income 31,031 23,997
Dividends on preferred stock (2,869) (2,869)
Net income available for common
shareholders $28,162 $21,128
FUNDS FROM OPERATIONS AVAILABLE FOR
COMMON SHAREHOLDERS
Net income $31,031 $23,997
Gain on sale of real estate (8,737) (4,282)
Depreciation and amortization of real
estate assets 21,874 20,519
Amortization of initial direct costs
of leases 1,739 1,626
Depreciation of real estate
partnership assets 165 156
Funds from operations 46,072 42,016
Dividends on preferred stock (2,869) (2,869)
Income attributable to operating
partnership units 233 158
Funds from operations available for
common shareholders $43,436 $39,305
Weighted average number of common
shares, diluted 53,662 53,179
Funds from operations available for
common shareholders per diluted
share $0.81 $0.74
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.37 $0.31
Discontinued operations 0.16 0.09
$0.53 $0.40
Weighted average number of common
shares, basic 52,731 52,190
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.37 $0.31
Discontinued operations 0.16 0.09
$0.53 $0.40
Weighted average number of common
shares, diluted 53,254 52,742
Federal Realty Investment Trust
Summarized Balance Sheets
March 31, 2006
Financial Highlights
(in thousands)
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2006 2005
ASSETS
Real estate, at cost
Operating $2,774,603 $2,743,658
Construction-in-progress 55,579 50,593
Discontinued operations 15,254 35,070
2,845,436 2,829,321
Less accumulated depreciation and
amortization (682,049) (663,750)
Net real estate 2,163,387 2,165,571
Cash and cash equivalents 4,792 8,639
Accounts and notes receivable 39,413 38,161
Mortgage notes receivable 40,368 40,531
Investment in real estate partnership 9,376 9,375
Other assets 90,533 88,575
TOTAL ASSETS $2,347,869 $2,350,852
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases
and mortgage notes $418,467 $419,713
Notes payable 360,210 316,755
Senior notes and debentures 613,316 653,675
Other liabilities 166,683 166,669
Total liabilities 1,558,676 1,556,812
Minority interests 19,480 19,193
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other
shareholders' equity 634,713 639,847
Total shareholders' equity 769,713 774,847
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,347,869 $2,350,852
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
March 31, 2006
2006 Guidance
($ millions except per share
amounts) (1)
Net income $102 to $105
Gain on sale of real estate (9) (9)
Depreciation and amortization of
real estate & partnership assets 88 88
Amortization of initial direct
costs of leases 7 7
Funds from operations 189 191
Income attributable to operating
partnership units 1 1
Dividends on preferred stock (11) (11)
Funds from operations available
for common shareholders 178 to 180
Weighted Average Shares (diluted) 53.9
Funds from operations available
for common shareholders per
diluted share $3.30 to $3.35
Note:
(1) Individual items may not add up to total due to rounding.
SOURCE Federal Realty Investment Trust
CONTACT: Investor and Media Inquiries: Andrew Blocher, Vice President, Capital Markets & Investor Relations, +1-301-998-8166, ablocher@federalrealty.com, or Suzanne O'Neill, Manager, Investor Relations, +1-301-998-8358, soneill@federalrealty.com, both of Federal Realty Investment Trust
