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- Press Release
Federal Realty Investment Trust Reports First Quarter 2005 Operating Results; Aggressive Leasing and Increased Occupancy Drive Strong Internal Growth
Federal Realty Investment Trust Reports First Quarter 2005 Operating Results; Aggressive Leasing and Increased Occupancy Drive Strong Internal Growth
ROCKVILLE, Md.--(BUSINESS WIRE)--May 4, 2005--Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2005.
-- Funds from operations available for common shareholders (FFO)
per diluted share was $0.74 and net income available for
common shareholders per diluted share was $0.40 for the
quarter ended March 31, 2005 versus $0.69 and $0.28 for first
quarter 2004.
-- When compared to first quarter 2004, same-center property
operating income increased 6.3% including redevelopments and
expansions.
-- Rent increases on lease rollovers for retail space for which
there was a prior tenant were 14% on a cash-basis and 25% on a
GAAP-basis for the quarter ended March 31, 2005.
-- The Trust's portfolio was 95.1% leased as of March 31, 2005.
-- Federal Realty increased guidance for 2005 FFO per diluted
share to a range of $3.03 to $3.05 and net income available
for common shareholders per diluted share of $1.43 to $1.45.
Financial Results
Federal Realty reported FFO of $39.3 million, or $0.74 per diluted share, in first quarter 2005. This compares to FFO of $34.8 million, or $0.69 per diluted share, reported in first quarter 2004, which included $1.1 million ($0.02 per diluted share) of insurance recovery for lost income from the Santana Row fire. Net income available for common shareholders was $21.1 million, and net income available for common shareholders per diluted share was $0.40 for the quarter ended March 31, 2005, versus $14.4 million and $0.28, respectively, for the first quarter of 2004.
FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance. A reconciliation of FFO available for common shareholders and FFO per diluted share to net income available for common shareholders and net income available for common shareholders per diluted share, respectively, is attached to this press release.
Portfolio Results
On a same-center basis, including redevelopment and expansion properties, property operating income increased 6.3% over first quarter 2004, the highest such growth in the last 12 quarters. When redevelopment and expansion properties are excluded from the same-center results, property operating income increased 4.7% from first quarter 2004.
Overall, the Trust's portfolio was 95.1% leased as of March 31, 2005, compared to 93.3% on March 31, 2004. Federal Realty's same-center portfolio was 96.5% leased on March 31, 2005, compared to 96.1% on March 31, 2004.
During the first quarter of 2005, the Trust signed 60 leases for approximately 257,000 square feet of retail space. On a comparable space basis (i.e. spaces for which there was a former tenant), the Trust leased 225,000 square feet at a weighted-average cash-basis contractual rent increase per square foot (i.e. excluding the impact of straight-line rents) of 14%. The weighted-average contractual rent on this comparable space for the first year of the new lease is $25.88 per square foot compared to the weighted-average contractual rent of $22.61 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 25% for the first quarter of 2005. As of March 31, 2005, Federal Realty's weighted-average contractual rent for retail and commercial space in its portfolio is $18.25 per square foot.
"The significant increase in our internal growth rate this quarter reflects continued aggressive leasing of our portfolio combined with occupancy improvements both in our same-center portfolio as well as at our redevelopment properties," commented Donald Wood, Federal Realty's President and Chief Executive Officer. "Continued strong internal growth and our ability to create significant additional value from our core portfolio, through our large redevelopment pipeline, and through the improving performance and potential condominium sales at Santana Row, are the foundation for Federal Realty to provide well-balanced, risk-adjusted growth in the future."
At Santana Row, Federal Realty's mixed-use community in San Jose, Calif., 94.3% of the retail space was leased to 106 tenants, with 100 stores open and operating as of March 31, 2005. As previously announced, Federal Realty is pursuing the potential sale of up to 219 residential condominiums in buildings three, four and six at Santana Row. To facilitate the sale of these units, the Trust is allowing residential units in these buildings to remain vacant upon the expiration of leases, and as a result, as of March 31, 2005, 91% of the 255 existing residential units were leased. Initial occupancy of the 256 residential rental units on the podium of building seven commenced in April 2005, with lease-up expected to continue through mid-2006.
Guidance
Federal Realty today increased guidance for 2005 FFO per diluted share to a range of $3.03 to $3.05, and net income available for common shareholders per diluted share to $1.43 to $1.45.
Summary of Other Quarterly Activities and Recent Developments
-- March 1, 2005 - Federal Realty acquired Assembly Square Mall
and an adjacent 220,000 square foot retail/industrial complex
for $64 million. The properties are located in the City of
Somerville, Mass., the most densely populated community in New
England, just 1.5 miles from Boston's financial and commercial
districts and easily accessible from I-93. Federal Realty
anticipates investing significant efforts in the master
planning of the site, which could provide investment
opportunities for the Trust over the next ten years.
-- March 3, 2005 - Federal Realty announced that its Board of
Trustees declared a regular quarterly cash dividend of $0.505
per share on its common shares, resulting in an indicated
annual rate of $2.02 per share.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2005 earnings conference call, which is scheduled for May 5, 2005, 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, www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available for 30 days 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 17.4 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 95.1% leased to national, regional, and local retailers as of March 31, 2005, with no single tenant accounting for more than 2.3% 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 37 consecutive years, the longest consecutive 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 Current Report on Form 8-K filed on March 2, 2005, 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 any redevelopment or renovation project that
we do pursue may not perform as anticipated;
-- 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 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 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 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, our quarterly reports on Form 10-Q, and the risks contained in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 2, 2005.
Federal Realty Investment Trust
Summarized Operating Results
March 31, 2005
----------------------------------------------------------------------
Financial Highlights
(in thousands, except per share data)
(unaudited)
CONSOLIDATED OPERATING RESULTS
------------------------------
Three months
ended March 31,
2005 2004
--------- --------
Revenues
Rental income $100,220 $90,983
Other property income 2,006 2,172
Mortgage interest income 1,281 1,077
--------- --------
103,507 94,232
Expenses
Rental 23,513 21,949
Real estate taxes 9,777 9,066
General and Administrative 4,503 4,182
Depreciation and amortization 22,538 20,266
--------- --------
60,331 55,463
--------- --------
Operating income 43,176 38,769
Other interest income 391 361
Interest expense (22,063) (21,319)
Income from real estate partnership 71 -
Minority interests (1,516) (1,189)
--------- --------
Income from continuing operations 20,059 16,622
Discontinued operations
Operating (loss) income from discontinued
operations (344) 567
Gain on sale of real estate 4,282 57
--------- --------
Results from operations of discontinued assets 3,938 624
--------- --------
Net Income 23,997 17,246
Dividends on preferred stock (2,869) (2,869)
--------- --------
Net income available for
common shareholders $21,128 $14,377
========= ========
FUNDS FROM OPERATIONS AVAILABLE FOR COMMON SHAREHOLDERS
-------------------------------------------------------
Net income $23,997 $17,246
Gain on sale of real estate (4,282) (57)
Depreciation and amortization of
real estate assets 20,519 18,726
Depreciation on real estate partnership 156 -
Amortization of initial direct costs of leases 1,626 1,498
------- -------
Funds from operations 42,016 37,413
Dividends on preferred stock (2,869) (2,869)
Income attributable to operating
partnership units 158 235
-------- -------
Funds from operations available for
common shareholders 39,305 34,779
======= =======
Weighted average number of common
shares, diluted 53,179 50,613
======== =======
Funds from operations available for
common shareholders per diluted share $0.74 $0.69
======== =======
NET INCOME PER COMMON SHARE, BASIC
----------------------------------
Income from continuing operations available
for common shareholders $0.33 $0.28
(Loss) income from discontinued operations (0.01) 0.01
Gain on sale of real estate 0.08 0.00
--------- --------
Net income available for common
shareholders, basic $0.40 $0.29
========= ========
Weighted average number of common shares,
basic 52,190 49,163
========= ========
NET INCOME PER COMMON SHARE, DILUTED
------------------------------------
Income from continuing operations available
for common shareholders $ 0.33 $ 0.27
(Loss) income from discontinued operations (0.01) 0.01
Gain on sale of real estate 0.08 0.00
-------- -------
Net income available for common
shareholders, diluted $0.40 $0.28
======== =======
Weighted average number of common shares,
diluted 53,179 50,613
======== =======
Federal Realty Investment Trust
Summarized Balance Sheets
March 31, 2005
----------------------------------------------------------------------
Financial Highlights
(in thousands)
CONSOLIDATED BALANCE SHEETS
---------------------------
March 31, December 31,
2005 2004
----------- -----------
ASSETS (unaudited)
Real estate, at cost $2,740,608 $2,666,276
Less accumulated depreciation and
amortization (612,605) (595,338)
----------- -----------
Net real estate investments 2,128,003 2,070,938
Cash and cash equivalents 27,645 30,475
Accounts and notes receivable 41,039 34,849
Mortgage notes receivable 42,834 42,909
Investment in real estate partnership 9,496 9,631
Other assets 78,308 78,094
----------- -----------
TOTAL ASSETS $2,327,325 $2,266,896
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases and mortgage
notes $ 409,840 $ 410,885
Notes payable 381,382 325,051
Senior notes and debentures 568,263 568,121
Other liabilities 147,498 153,351
----------- -----------
Total liabilities 1,506,983 1,457,408
Minority interests 19,511 18,954
Shareholders' equity
Preferred stock 135,000 135,000
Common shares and other shareholders' equity 665,831 655,534
----------- -----------
Total shareholders' equity 800,831 790,534
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,327,325 $2,266,896
=========== ===========
Federal Realty Investment Trust
Reconciliation of 2005 Net Income to 2005 FFO Guidance
March 31, 2005
----------------------------------------------------------------------
($ millions except per share amounts) (1)
Forecast
--------
to
Net income $ 88 $ 89
Gain on sale of real estate (4) (4)
Depreciation and amortization of real
estate & joint venture assets 82 82
Amortization of initial direct costs of leases 7 7
--------- -------
Funds from operations 172 173
Income attributable to operating
partnership units 1 1
Dividends on preferred stock (11) (11)
--------- -------
Funds from operations available
for common shareholders 162 to 163
========= =======
Weighted Average Shares (diluted) 53.3
---------
Funds from operations available for common
shareholders per diluted share $3.03 $3.05
--------- -------
Note:
----
(1) Individual items may not add up to total as a result of rounding.
CONTACT: Federal Realty Investment Trust
Andrew Blocher, 301-998-8166
ablocher@federalrealty.com
or
Suzanne O'Neill, 301-998-8358
soneill@federalrealty.com
SOURCE: Federal Realty Investment Trust
