NORTH BETHESDA, Md., Feb. 8, 2023 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its year and quarter ended December 31, 2022. For the year ended December 31, 2022 and 2021, net income available for common shareholders was $4.71 per diluted share and $3.26 per diluted share, respectively. For the three months ended December 31, 2022 and 2021, net income available for common shareholders was $1.40 per diluted share and $1.44 per diluted share, respectively. For the year ended December 31, 2022 and 2021, Federal Realty reported operating income of $526.4 million and $394.7 million, respectively. For the three months ended December 31, 2022 and 2021, operating income was $155.1 million and $147.5 million, respectively.

Highlights for the full year and fourth quarter include:

  • Generated funds from operations available to common shareholders (FFO) per diluted share of $6.32 for the year, compared to $5.57 in 2021. For the fourth quarter, generated FFO per diluted share of $1.58, compared to $1.47 for the fourth quarter 2021.
  • Generated comparable property operating income (POI) growth of 5.4% for the fourth quarter and 7.7% for the year 2022.
  • Continued robust levels of leasing with 105 signed leases for 415,519 square feet of comparable space in the fourth quarter at a cash basis rollover of 10%, bringing 2022 to a record 475 signed leases for nearly 2 million square feet of comparable space.
  • Federal Realty's portfolio was 92.8% occupied and 94.5% leased, representing year-over-year increases of 170 basis points and 90 basis points, respectively and 70 basis points and 20 basis point increases, respectively quarter-over-quarter.
  • Small shop leased rate was 90.0% as of quarter end representing an increase of 260 basis points year over year and the highest small shop leased rate since first quarter 2017.
  • Sold one property for a total sales price of $67.5 million in the fourth quarter, bringing the 2022 total gross disposition proceeds to $136.2 million.
  • Introduced 2023 earnings per diluted share guidance of $2.59 to $2.79 and 2023 FFO per diluted share guidance of $6.38 to $6.58.

"2022 ended with a very strong fourth quarter and the first weeks of 2023 look to continue that momentum," said Donald C. Wood, Federal Realty's Chief Executive. "We're more than a year ahead of where we thought we'd be in recovering from the depths of the pandemic in terms of leasing, occupancy and bottom line earnings in large part due to the remarkable resiliency of the markets and sub markets where our high quality retail destinations are located."

Financial Results

Net Income

For the full year 2022, Federal Realty reported net income available for common shareholders of $377.5 million and earnings per diluted share of $4.71. This compares to net income available for common shareholders of $253.5 million and earnings per diluted share of $3.26 for the full year 2021.

For the fourth quarter 2022, net income available for common shareholders was $113.7 million and earnings per diluted share was $1.40 versus $112.9 million and $1.44, respectively, for the fourth quarter 2021.

FFO

For the full year 2022, Federal Realty generated funds from operations available for common shareholders (FFO) of $509.2 million, or $6.32 per diluted share. This compares to FFO of $434.7 million, or $5.57 per diluted share for the full year 2021.

For the fourth quarter 2022, FFO was $129.0 million, or $1.58 per diluted share, compared to $115.8 million, or $1.47 per diluted share for the fourth quarter 2021.

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.

Operational Update

Occupancy

The portfolio was 92.8% occupied as of December 31, 2022, an increase of 170 basis points year-over-year and 70 basis points over the third quarter 2022. The portfolio was 94.5% leased as of December 31, 2022, an increase of 90 basis points year-over-year and 20 basis points over the third quarter 2022.

Additionally, our comparable residential properties were 96.3% leased as of December 31, 2022.

Leasing Activity

For the full year 2022, Federal Realty signed 497 leases for 2,047,508 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 475 leases for 1,984,887 square feet at an average rent of $37.30 per square foot compared to the average contractual rent of $35.21 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 6%, 15% on a straight-line basis.

During the fourth quarter 2022, Federal Realty signed 110 leases for 425,159 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 105 leases for 415,519 square feet at an average rent of $43.52 per square foot compared to the average contractual rent of $39.60 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 10%, 21% on a straight-line basis.

Transaction Activity

In 2022, Federal Realty acquired 4 properties which total 1.0 million square feet for a gross value of $443.1 million. Additionally, Federal Realty bought a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers totaling 617,000 square feet for a combined price of $58.9 million.

Subsequent to quarter end, Federal Realty acquired the remaining portions of Huntington Square, East Northport, New York, for $35.5 million.  The acquisition included a 180,000 square foot parcel and the entire fee interest of the property giving us full control of the entirety of this 255,000 square foot property located in the heart of Suffolk County's retail corridor.

In the fourth quarter, Federal Realty sold one property for a total sales price of $67.5 million, bringing the 2022 total gross proceeds to $136.2 million for the disposition of 3 non-core assets, a parcel of land and a portion of one property.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.08 per common share, resulting in an indicated annual rate of $4.32 per common share. The regular common dividend will be payable on April 17, 2023 to common shareholders of record as of March 13, 2023.

Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a 5.000% Series C Cumulative Preferred Share of Beneficial Interest, of $0.3125 per depositary share. All dividends on the depositary shares will be payable on April 17, 2023 to shareholders of record as of April 3, 2023.

Guidance

Federal Realty introduced 2023 guidance for earnings per diluted share of $2.59 to $2.79 and 2023 FFO per diluted share of $6.38 to $6.58.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its fourth quarter 2022 earnings conference call, which is scheduled for Wednesday, February 8, 2023 at 5:00 PM ET.  To participate, please call 1-877-407-9208 five to ten minutes prior to the call start time and use the passcode 13734846 (required).  The teleconference can also be accessed via a live webcast at www.federalrealty.com in the Investors section. 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 22, 2023 by dialing 1-844-512-2921; Passcode: 13734846.

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, Federal Realty's mission is to deliver long-term, sustainable growth through investing in communities where retail demand exceeds supply. Its 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 103 properties include approximately 3,300 tenants, in 26 million square feet, and approximately 3,000 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 55 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its 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 8, 2023, 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 or to fill existing vacancy;
  • risks that we may not be able to proceed with or obtain necessary approvals for any development, redevelopment or renovation project, and that completion of anticipated or ongoing property development, redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;
  • 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, or if the costs of capital we obtain are significantly higher than historical levels;
  • risks associated with general economic conditions, including inflation and local economic conditions in our geographic markets;
  • risks of 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;
  • 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; and
  • risks related to natural disasters, climate change and public health crises (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

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 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 review the risks contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 8, 2023.

Federal Realty Investment Trust

Consolidated Balance Sheets

December 31, 2022


December 31,


December 31,


2022


2021


(in thousands, except share and per share data)





ASSETS




Real estate, at cost




Operating (including $1,997,583 and $2,207,648 of consolidated variable interest entities, respectively)

$  9,441,945


$  8,814,791

Construction-in-progress (including $8,477 and $18,752 of consolidated variable interest entities, respectively)

662,554


607,271


10,104,499


9,422,062

Less accumulated depreciation and amortization (including $362,921 and $389,950 of consolidated variable interest entities, respectively)

(2,715,817)


(2,531,095)

Net real estate

7,388,682


6,890,967

Cash and cash equivalents

85,558


162,132

Accounts and notes receivable, net

197,648


169,007

Mortgage notes receivable, net

9,456


9,543

Investment in partnerships

145,205


13,027

Operating lease right of use assets

94,569


90,743

Finance lease right of use assets

45,467


49,832

Prepaid expenses and other assets

267,406


237,069

TOTAL ASSETS

$  8,233,991


$  7,622,320

LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable, net (including $191,827 and $335,301 of consolidated variable interest entities, respectively)

$     320,615


$     339,993

Notes payable, net

601,077


301,466

Senior notes and debentures, net

3,407,701


3,406,088

Accounts payable and accrued expenses

190,340


235,168

Dividends payable

90,263


86,538

Security deposits payable

28,508


25,331

Operating lease liabilities

77,743


72,661

Finance lease liabilities

67,660


72,032

Other liabilities and deferred credits

237,699


206,187

Total liabilities

5,021,606


4,745,464

Commitments and contingencies




Redeemable noncontrolling interests

178,370


213,708

Shareholders' equity




Preferred shares, authorized 15,000,000 shares, $0.01 par:




5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding

150,000


150,000

5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 392,878 and 399,896 shares issued and outstanding, respectively

9,822


9,997

Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 81,342,959 and 78,603,305 shares issued and outstanding, respectively

818


790

Additional paid-in capital

3,821,801


3,488,794

Accumulated dividends in excess of net income

(1,034,186)


(1,066,932)

Accumulated other comprehensive income (loss)

5,757


(2,047)

Total shareholders' equity of the Trust

2,954,012


2,580,602

Noncontrolling interests

80,003


82,546

Total shareholders' equity

3,034,015


2,663,148

 

Federal Realty Investment Trust








Consolidated Income Statements








December 31, 2022









Three Months Ended


Year Ended


December 31,


December 31,


2022


2021


2022


2021


(in thousands, except per share data)


(unaudited)

REVENUE








Rental income

$    279,776


$    253,888


$ 1,073,292


$    948,842

Mortgage interest income

281


266


1,086


2,382

Total revenue

280,057


254,154


1,074,378


951,224

EXPENSES








Rental expenses

62,769


56,647


228,958


198,121

Real estate taxes

33,196


30,224


127,824


118,496

General and administrative

13,590


14,499


52,636


49,856

Depreciation and amortization

79,165


77,816


302,409


279,976

Total operating expenses

188,720


179,186


711,827


646,449









Gain on deconsolidation of VIE



70,374


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

63,760


72,522


93,483


89,950









OPERATING INCOME

155,097


147,490


526,408


394,725









OTHER INCOME/(EXPENSE)








Other interest income

585


108


1,072


809

Interest expense

(38,282)


(32,187)


(136,989)


(127,698)

Income from partnerships

292


1,331


5,170


1,245

NET INCOME

117,692


116,742


395,661


269,081

   Net income attributable to noncontrolling interests

(1,999)


(1,806)


(10,170)


(7,583)

NET INCOME ATTRIBUTABLE TO THE TRUST

115,693


114,936


385,491


261,498

Dividends on preferred shares

(2,008)


(2,011)


(8,034)


(8,042)

NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$    113,685


$    112,925


$    377,457


$    253,456









EARNINGS PER COMMON SHARE, BASIC:








Net income available for common shareholders

$          1.40


$          1.45


$          4.71


$          3.26

Weighted average number of common shares

80,966


77,536


79,854


77,336

EARNINGS PER COMMON SHARE, DILUTED:








Net income available for common shareholders

$          1.40


$          1.44


$          4.71


$          3.26

Weighted average number of common shares

81,613


78,556


80,508


77,368

 

Federal Realty Investment Trust









Funds From Operations



December 31, 2022











Three Months Ended


Year Ended



December 31,


December 31,



2022


2021


2022


2021



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)







Net income


$ 117,692


$ 116,742


$ 395,661


$ 269,081

Net income attributable to noncontrolling interests


(1,999)


(1,806)


(10,170)


(7,583)

Gain on deconsolidation of VIE




(70,374)


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


(63,760)


(72,464)


(93,483)


(89,892)

Depreciation and amortization of real estate assets


70,582


68,941


266,741


243,711

Amortization of initial direct costs of leases


8,139


5,924


27,268


26,051

Funds from operations


130,654


117,337


515,643


441,368

Dividends on preferred shares (1)


(1,875)


(1,875)


(7,500)


(8,042)

Income attributable to downREIT operating partnership units


699


731


2,810


2,998

Income attributable to unvested shares


(445)


(427)


(1,797)


(1,581)

FFO


$ 129,033


$ 115,766


$ 509,156


$ 434,743

Weighted average number of common shares, diluted (1)(2)


81,707


78,556


80,603


78,072

FFO per diluted share (2)


$       1.58


$       1.47


$       6.32


$       5.57


Notes:

1)

For the three months and year ended December 31, 2022 and the three months ended December 31, 2021, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and are included in "weighted average common shares, diluted."

2)

For the three months and year ended December 31, 2021, the weighted average common shares used to compute FFO per diluted common share includes downREIT operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share, but is anti-dilutive for the computation of dilutive EPS for these periods.

 




Investor Inquiries:


Media Inquiries:

Leah Andress Brady 


Brenda Pomar

Vice President, Investor Relations


Director, Corporate Communications

301.998.8265


301.998.8316

lbrady@federalrealty.com


bpomar@federalrealty.com




 

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