ROCKVILLE, Md., Aug 04, 2010 /PRNewswire via COMTEX/ --
Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2010.
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Financial Results
In the second quarter 2010, Federal Realty generated funds from operations available for common shareholders (FFO) of $60.3 million or $0.98 per diluted share. This compares to FFO of $57.4 million, or $0.97 per diluted share, in second quarter 2009. For the six months ended June 30, 2010, Federal Realty reported FFO of $118.1 million, or $1.92 per diluted share, compared to $95.4 million, or $1.61 per diluted share for the same six-month period in 2009.
Net income available for common shareholders was $31.0 million and earnings per diluted share was $0.50 for the quarter ended June 30, 2010 versus $28.3 million and $0.48, respectively, for second quarter 2009. Year-to-date, Federal Realty reported net income available for common shareholders of $60.1 million and earnings per diluted share of $0.98. This compares to net income available for common shareholders of $38.6 million and earnings per diluted share of $0.65 for the six months ended June 30, 2009.
Year-to-date 2009 results included a litigation provision of $20.8 million, or $0.34 per diluted share, related to a lawsuit involving a property adjacent to Santana Row. Excluding this litigation provision, FFO for the six months ended June 30, 2009 was $116.1 million, or $1.95 per diluted share; net income available for common shareholders was $59.4 million and earnings per diluted share was $1.00.
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 second quarter 2010, same-center property operating income increased 3.4% over second quarter 2009. When redevelopment and expansionproperties are excluded from same-center results, property operating income for second quarter 2010 increased 4.2% compared to second quarter 2009.
The overall portfolio was 94.2% leased as of June 30, 2010, compared to 94.1% on March 31, 2010 and 94.0% on June 30, 2009. Federal Realty's same-center portfolio was 94.7% leased on June 30, 2010, compared to 94.6% on March 31, 2010 and 94.2% on June 30, 2009.
During the second quarter of 2010, Federal Realty signed 82 leases for 319,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 308,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 4%. The average contractual rent on this comparable space for the first year of the new leases is $27.62 per square foot, compared to the average contractual rent of $26.64 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 GAAP basis (i.e., including the impact of straight-line rents), rent increases per square foot for comparable retail space averaged 13% for second quarter 2010. As of June 30, 2010, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.55 per square foot.
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees increased the dividend rate on its common shares, declaring a regular quarterly cash dividend of $0.67 per share, resulting in an indicated annual rate of $2.68 per share, an increase of 1.5%. The regular common dividend will be payable on October 15, 2010, to common shareholders of record as of September 23, 2010. This increase represents the 43rd consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
"Our strong performance throughout 2009 and to date in 2010 supports our decision to raise our common dividend and continue our record of dividend achievement," said Don Wood, president and chief executive officer. "Owning and operating a portfolio of high quality retail assets, combined with a solid balance sheet and our disciplined approach to external growth has resulted in consistent performance as we negotiate this difficult economic environment."
Guidance
Federal Realty increased its guidance for 2010 FFO per diluted share to a range of $3.84 to $3.89, and provided 2010 earnings per diluted share guidance of $1.94 to $1.99.
Acquisitions and Portfolio Expansion
In 2010 to date, Federal Realty has committed approximately $60 million of acquisition capital to strengthen its presence in the core markets of Boston, Southern California, Long Island, New York and Bethesda, Maryland.
- Federal Realty formed a joint venture with affiliates of Taurus Investment Holdings LLC, in which the Trust has an 85% interest, to expand the Trust's concentration in Boston. The joint venture plans to acquire, redevelop, and operate up to $200 million of urban mixed-use properties in the Back Bay section of Boston, Massachusetts. Concurrent with the formation of the partnership, the joint venture acquired 111-115 Newbury Street and 127-129 Newbury Street. Taurus Investment Holdings LLC and UrbanMeritage LLC will manage, operate and lease the buildings on behalf of the partnership.
- The Trust has committed to acquire the former Mervyn's building located adjacent to its Escondido Promenade in Escondido, California. Mervyn's had been operating as a shadow anchor to the property since Escondido Promenade's original opening in 1987 before ceasing operations in late 2008. Federal Realty is in significant lease discussions with two anchor users to occupy the former Mervyn's space.
- Federal Realty has contracted to acquire Huntington Square, a 268,000 square foot community shopping center, shadow-anchored by Sears, located on Long Island in East Northport, New York. Huntington Square will increase Federal Realty's presence in Queens and Long Island to nearly 1.5 million square feet of retail space including Forest Hills, Fresh Meadows, Hauppauge Shopping Center, Huntington Shopping Center, Melville Mall, and Greenlawn Plaza.
- Federal Realty is under contract to purchase the fee interest in the land underlying a portion of Bethesda Row in Bethesda, Maryland. The land currently underlies shops along the south side of Bethesda Avenue, stretching from the Apple to Amethyst stores, and includes a surface parking lot in the rear.
"Upon the completion of these transactions, Federal Realty will have invested approximately $60 million with the ability to create additional value over time through releasing and redevelopment," said Jeff Berkes, executive vice president and chief investment officer. "Strengthening our presence in our core markets by acquiring new assets and increasing our investment in our existing portfolio not only produces strong risk-adjusted returns but also provides us with better operational and ownership flexibility throughout the entire portfolio."
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2010 earnings conference call, which is scheduled for August 5, 2010, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 730-5768 five to ten minutes prior to the call start time and use the passcode FRT EARNINGS (required). Federal Realty will also provide an online webcast on the Company's website, www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available through September 4, 2010, by dialing (888) 286-8010 and using the passcode 25364905.
About Federal Realty
Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 18.2 million square feet located primarily in strategically selected metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 1.0 million square feet of retail space through a joint venture in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 94.2% leased to national, regional, and local retailers as of June 30, 2010, with no single tenant accounting for more than approximately 2.7% 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 43 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P MidCap 400 company and its shares are traded on the NYSE under the symbol FRT. For more information, please 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 17, 2010, 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 redevelopment or renovation projects that we do pursue 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 partnerships;
- 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 February 17, 2010.
Federal Realty Investment Trust
Summarized Balance Sheets
June 30, 2010
December
June 30, 31,
2010 2009
---- ----
(in thousands)
ASSETS (unaudited)
Real estate, at cost
Operating (including $86,954 and $68,643
of consolidated variable
interest entities, respectively) $3,660,541 $3,626,476
Construction-in-progress 144,987 132,758
------- -------
3,805,528 3,759,234
Less accumulated depreciation and
amortization (including $3,524
and $3,053 of consolidated variable
interest entities, respectively) (987,318) (938,087)
-------- --------
Net real estate 2,818,210 2,821,147
Cash and cash equivalents 23,557 135,389
Accounts and notes receivable, net 72,814 72,191
Mortgage notes receivable, net 42,289 48,336
Investment in real estate partnerships 51,930 35,633
Prepaid expenses and other assets 94,845 109,613
TOTAL ASSETS $3,103,645 $3,222,309
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable and capital lease
obligations (including $23,105
and $23,417 of consolidated variable
interest entities, respectively) $596,261 $601,884
Notes payable 20,997 261,745
Senior notes and debentures 1,079,880 930,219
Accounts payable and other liabilities 212,102 219,398
------- -------
Total liabilities 1,909,240 2,013,246
Shareholders' equity
Preferred shares 9,997 9,997
Common shares and other shareholders'
equity 1,153,121 1,167,340
--------- ---------
Total shareholders' equity of the Trust 1,163,118 1,177,337
Noncontrolling interests 31,287 31,726
Total shareholders' equity 1,194,405 1,209,063
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $3,103,645 $3,222,309
========== ==========
Federal Realty Investment Trust
Summarized Income Statements
June 30, 2010
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
---- ---- ---- ----
(in thousands, except per share data)
(unaudited)
Revenue
Rental income $130,256 $126,090 $261,748 $253,296
Other property
income 2,508 2,941 8,420 5,544
Mortgage
interest income 1,071 1,307 2,137 2,574
Total revenue 133,835 130,338 272,305 261,414
------- ------- ------- -------
Expenses
Rental expenses 25,581 25,080 55,584 53,777
Real estate
taxes 14,905 14,821 30,009 28,653
General and
administrative 5,843 5,276 11,218 10,421
Litigation
provision 173 125 287 20,757
Depreciation and
amortization 31,178 29,633 60,110 58,225
Total operating
expenses 77,680 74,935 157,208 171,833
------ ------ ------- -------
Operating income 56,155 55,403 115,097 89,581
Other interest
income 33 260 215 350
Interest expense (25,418) (25,830) (51,380) (49,413)
Early
extinguishment
of debt - (982) (2,801) (968)
Income from real
estate
partnerships 188 399 381 601
Income from
continuing
operations 30,958 29,250 61,512 40,151
Discontinued
operations
Discontinued
operations -
income - 161 - 218
Discontinued
operations -
gain on sale of
real estate 1,000 383 1,000 1,298
Results from
discontinued
operations 1,000 544 1,000 1,516
----- --- ----- -----
Income before
gain on sale of
real estate 31,958 29,794 62,512 41,667
Gain on sale of
real estate 410 - 410 -
--- --- --- ---
Net income 32,368 29,794 62,922 41,667
Net income
attributable to
noncontrolling
interests (1,254) (1,377) (2,588) (2,766)
------ ------ ------ ------
Net income
attributable to
the Trust 31,114 28,417 60,334 38,901
Dividends on
preferred
shares (135) (135) (271) (271)
Net income
available for
common
shareholders $30,979 $28,282 $60,063 $38,630
======= ======= ======= =======
EARNINGS PER
COMMON SHARE,
BASIC
Continuing
operations $0.47 $0.47 $0.95 $0.62
Discontinued
operations 0.02 0.01 0.02 0.03
Gain on sale of
real estate 0.01 - 0.01 -
---- --- ---- ---
$0.50 $0.48 $0.98 $0.65
===== ===== ===== =====
Weighted average
number of
common shares,
basic 61,169 58,917 61,129 58,882
====== ====== ====== ======
EARNINGS PER
COMMON SHARE,
DILUTED
Continuing
operations $0.47 $0.47 $0.95 $0.62
Discontinued
operations 0.02 0.01 0.02 0.03
Gain on sale of
real estate 0.01 - 0.01 -
---- --- ---- ---
$0.50 $0.48 $0.98 $0.65
===== ===== ===== =====
Weighted average
number of
common shares,
diluted 61,311 59,042 61,266 59,004
====== ====== ====== ======
Federal Realty Investment Trust
Funds From Operations
June 30, 2010
Three months ended Six months ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Funds from
Operations
available for
common (in thousands, except per share data)
--------------
shareholders (FFO)
(1)
------------------
Net income (2) $32,368 $29,794 $62,922 $41,667
Net income
attributable to
noncontrolling
interests (1,254) (1,377) (2,588) (2,766)
Gain on sale of
real estate (1,410) (383) (1,410) (1,298)
Depreciation and
amortization of
real estate
assets 27,797 26,563 53,884 51,999
Amortization of
initial direct
costs of leases 2,561 2,515 4,797 5,182
Depreciation of
joint venture
real estate
assets 345 337 696 691
Funds from
operations 60,407 57,449 118,301 95,475
Dividends on
preferred shares (135) (135) (271) (271)
Income
attributable to
operating
partnership units 244 241 489 484
Income
attributable to
unvested shares (201) (189) (392) (314)
FFO 60,315 57,366 118,127 95,374
Litigation
provision, net of
allocation to
unvested shares 172 124 286 20,689
--- --- --- ------
FFO excluding
litigation
provision $60,487 $57,490 $118,413 $116,063
======= ======= ======== ========
FFO per diluted
share $0.98 $0.97 $1.92 $1.61
Litigation
provision per
diluted share - - - 0.34
--- --- --- ----
FFO per diluted
share excluding
litigation
provision $0.98 $0.97 $1.92 $1.95
===== ===== ===== =====
Weighted average
number of common
shares, diluted 61,680 59,414 61,636 59,377
====== ====== ====== ======
Notes:
------
(1)See Glossary of Terms.
(2)Net income includes certain costs related to the litigation and
appeal process over a parcel of land adjacent to Santana Row;
net income for the six months ended June 30, 2009 also includes a
$20.6 million charge for increasing the accrual for such
litigation matter. We believe FFO excluding this litigation
provision provides a more meaningful evaluation of operations, and
therefore, have included FFO and FFO per share excluding the related
charges.
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
June 30, 2010
2010 Guidance
-------------
(Dollars in
millions except
per share
amounts) (1)
Funds from Operations available for common
shareholders (FFO)
------------------------------------------
Net income $125 $128
Net income attributable to noncontrolling
interests (5) (5)
Gain on sale of real estate (1) (1)
Depreciation and amortization of real estate &
joint venture real estate assets 109 109
Amortization of initial direct costs of leases 9 9
--- ---
Funds from operations 237 240
Dividends on preferred shares (1) (1)
Income attributable to operating partnership
units 1 1
Income attributable to unvested shares (1) (1)
FFO 236 239
Litigation provision (2) 1 1
--- ---
FFO excluding litigation provision $237 $240
==== ====
Weighted average number of common shares,
diluted 61.7 61.7
FFO per diluted share $3.83 $3.88
Litigation provision (2) 0.01 0.01
---- ----
FFO per diluted share excluding litigation
provision $3.84 $3.89
===== =====
Notes:
------
(1)Individual items may not add up to total due to rounding.
(2)Amount represents certain costs related to the litigation and
appeal process over a parcel of land
located adjacent to Santana Row.
Investor and Media
Inquiries
------------------
Gina Birdsall Janelle Stevenson
Investor Relations Corporate Communications
301/998-8265 301/998-8185
gbirdsall@federalrealty.com jmstevenson@federalrealty.com
SOURCE Federal Realty Investment Trust
