ROCKVILLE, Md., May 2 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for the quarter ended March 31, 2007.
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- Funds from operations available for common shareholders (FFO) per diluted share was $0.88 and earnings per diluted common share was $0.41 for the quarter ended March 31, 2007, versus $0.81 and $0.53, respectively, for first quarter 2006.
- Same-center property operating income increased 4.5% including redevelopments and expansions, and 4.1% excluding redevelopments and expansions, when compared to first quarter 2006.
- Rent increases on lease rollovers for retail space for which there was a prior tenant were 19% on a cash-basis and 30% on a GAAP-basis for the quarter ended March 31, 2007.
- The Trust's portfolio was 96.6% leased and 95.3% occupied as of March 31, 2007.
- Guidance for 2007 FFO per diluted share remains unchanged at $3.60 to $3.65.
Financial Results
In first quarter 2007, Federal Realty reported FFO of $49.6 million, or $0.88 per diluted share. This compares to FFO of $43.4 million, or $0.81 per diluted share, reported in first quarter 2006. Net income available for common shareholders was $23.1 million and earnings per diluted common share was $0.41 for the quarter ended March 31, 2007, versus $28.2 million and $0.53, respectively, for first quarter 2006. Net income available for common shareholders in first quarter 2006 included $8.7 million ($0.16 per diluted share) of gains on sales of real estate.
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 4.5% over first quarter 2006. When redevelopments and expansions are excluded from same-center results, property operating income increased 4.1% from first quarter 2006.
Overall, the Trust's portfolio was 96.6% leased and 95.3% occupied as of March 31, 2007, compared to 96.2% and 94.8%, respectively, on March 31, 2006. Federal Realty's same-center portfolio was 96.7% leased and 96.3% occupied on March 31, 2007, compared to 97.2% and 96.5%, respectively, on March 31, 2006.
During first quarter 2007, the Trust signed 90 leases for 395,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 334,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 19%. The average contractual rent on this comparable space for the first year of the new lease is $29.18 per square foot compared to the average contractual rent of $24.59 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 30% for first quarter 2007. As of March 31, 2007, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $19.25 per square foot.
"By combining consistently strong operating performance with accretive redevelopment returns and the positive impact from 2006 financing activity, we produced strong year over year growth, in spite of the loss of rent from the Tower Records and Storehouse Furniture bankruptcies," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust.
Guidance
Federal Realty left its guidance for 2007 FFO per diluted share unchanged at a range of $3.60 to $3.65, and revised its 2007 earnings per diluted common share guidance to a range of $1.77 to $1.82.
Summary of Other Quarterly Activities and Recent Developments
- March 9, 2007 -- Federal Realty announced the acquisition of a portfolio of retail assets in the Baltimore metropolitan area from a private owner for approximately $189 million. The portfolio is located in White Marsh, one of the primary retail nodes in the metropolitan Baltimore market, and consists of 665,000 square feet of retail and commercial space. The acquisition was made using a combination of cash, common stock and convertible preferred stock, downREIT units and the assumption of fixed- rate debt.
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2007 earnings conference call, which is scheduled for May 3, 2007, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 383-8003 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 30 days following the call. A telephone recording of the call will also be available through June 4, 2007, by dialing (866) 286- 8010.
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 19.6 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 0.9 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 96.6% leased to national, regional, and local retailers as of March 31, 2007, with no single tenant accounting for more than approximately 2.9% 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 39 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 Annual Report on Form 10-K filed on March 1, 2007 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 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 Annual Report on Form 10-K filed March 1, 2007.
Federal Realty Investment Trust
Summarized Income Statements
March 31, 2007
Three months ended March 31,
2007 2006
(in thousands, except per share data)
(unaudited)
Revenue
Rental income $118,933 $104,964
Other property income 2,438 2,094
Mortgage interest income 1,130 1,322
122,501 108,380
Expenses
Rental 25,648 22,065
Real estate taxes 11,665 10,551
General and administrative 5,604 4,501
Depreciation and amortization 26,357 23,906
69,274 61,023
Operating income 53,227 47,357
Other interest income 350 263
Interest expense (29,317) (24,280)
Income from real estate partnership 284 148
Minority interests (1,296) (1,073)
Income from continuing operations 23,248 22,415
Discontinued operations
Loss from discontinued operations (112) (121)
Gain on sale of real estate - 8,737
Results from discontinued operations (112) 8,616
Net income 23,136 31,031
Dividends on preferred stock (36) (2,869)
Net income available for common
shareholders $23,100 $28,162
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.42 $0.37
Discontinued operations - 0.16
$0.42 $0.53
Weighted average number of common
shares, basic 55,422 52,731
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.41 $0.37
Discontinued operations - 0.16
$0.41 $0.53
Weighted average number of common
shares, diluted 55,921 53,254
Federal Realty Investment Trust
Funds From Operations
March 31, 2007
Three months ended March 31,
2007 2006
(in thousands, except per share data)
Funds from Operations available for
common shareholders (FFO) (1)
Net income $23,136 $31,031
Gain on sale of real estate - (8,737)
Depreciation and amortization of real
estate assets 23,942 21,874
Amortization of initial direct costs
of leases 2,070 1,739
Depreciation of real estate
partnership assets 268 165
Funds from operations 49,416 46,072
Dividends on preferred stock (36) (2,869)
Income attributable to operating
partnership units 245 233
FFO $49,625 $43,436
FFO per diluted share $0.88 $0.81
Weighted average number of
common shares, diluted 56,345 53,662
Federal Realty Investment Trust
Summarized Balance Sheets
March 31, 2007
March 31, December 31,
2007 2006
(in thousands)
ASSETS (unaudited)
Real estate, at cost
Operating $3,318,605 $3,084,731
Construction-in-progress 104,963 99,774
Assets held for sale (discontinued
operations) 19,753 19,753
3,443,321 3,204,258
Less accumulated depreciation and
amortization (763,575) (740,507)
Net real estate 2,679,746 2,463,751
Cash and cash equivalents 15,987 11,495
Accounts and notes receivable 50,996 47,493
Mortgage notes receivable 40,716 40,756
Investment in real estate partnership 31,661 10,322
Prepaid expenses and other assets 110,257 114,789
TOTAL ASSETS $2,929,363 $2,688,606
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases and
mortgage notes $532,761 $460,398
Notes payable 168,475 109,024
Senior notes and debentures 1,127,528 1,127,508
Accounts payable and other
liabilities 194,997 185,407
Total liabilities 2,023,761 1,882,337
Minority interests 38,623 22,191
Shareholders' equity
Preferred stock 9,997 -
Common shares and other
shareholders' equity 856,982 784,078
Total shareholders' equity 866,979 784,078
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,929,363 $2,688,606
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
March 31, 2007
2007 Guidance
(in millions except per share
amounts) (1)
Net income $100 to $103
Gain on sale of real estate (1) (1)
Depreciation and amortization of
real estate & real estate
partnership assets 96 96
Amortization of initial direct
costs of leases 8 8
Funds from operations 203 206
Income attributable to operating
partnership units 1 1
Dividends on preferred stock 0 0
Funds from operations available
for common shareholders 204 to 207
Weighted Average Shares (diluted) 56.8
Funds from operations available
for common shareholders per
diluted share $3.60 $3.65
Note:
(1) Individual items may not add up to total due to rounding.
Investor and Media Inquiries
Andrew Blocher Vikki Kayne
Senior Vice President, Vice President,
Capital Markets & Investor Marketing & Corporate
Relations Communications
301/998-8166 301/998-8178
ablocher@federalrealty.com vkayne@federalrealty.com
SOURCE Federal Realty Investment Trust
CONTACT: Investor and Media Inquiries, Andrew Blocher, Senior Vice
President, Capital Markets & Investor Relations, +1-301-998-8166,
ablocher@federalrealty.com, or Vikki Kayne, Vice President, Marketing &
Corporate Communications, +1-301-998-8178, vkayne@federalrealty.com, both of
Federal Realty Investment Trust
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