ROCKVILLE, Md., Oct. 29 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2008.
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-- Funds from operations available for common shareholders (FFO) per diluted share was $0.98 and earnings per diluted common share was $0.63 for the quarter ended September 30, 2008, versus $0.92 and $0.41, respectively, for third quarter 2007.
-- FFO per diluted share was $2.87 and earnings per diluted common share was $1.62 for the nine months ended September 30, 2008, versus $2.71 and $1.30, respectively, for the nine months ended September 30, 2007.
-- Rent increases on lease rollovers for retail space for which there was a prior tenant were 23% on a cash-basis and 42% on a GAAP-basis for the quarter ended September 30, 2008.
-- The Trust's portfolio was 95.5% leased and 94.8% occupied as of September 30, 2008.
-- Guidance for 2008 FFO per diluted share remains unchanged at $3.89 to $3.92.
Financial Results
For third quarter 2008, Federal Realty reported FFO of $58.3 million, or $0.98 per diluted share. This compares to FFO of $52.5 million, or $0.92 per diluted share, reported for third quarter 2007. For the nine months ended September 30, 2008, Federal Realty reported FFO of $170.4 million, or $2.87 per diluted share compared to FFO of $154.0 million, or $2.71 per diluted share, for the same nine-month period in 2007.
Net income available for common shareholders was $37.0 million and earnings per diluted common share was $0.63 for the quarter ended September 30, 2008, versus $23.4 million and $0.41, respectively, for third quarter 2007. Year-to-date, Federal Realty reported net income available for common shareholders of $95.7 million, or $1.62 per diluted common share. This compares to net income available for common shareholders of $73.1 million, or $1.30 per diluted common share, for the nine months ended September 30, 2007.
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, property operating income increased 4.8% including redevelopments and expansions, and 2.9% excluding redevelopments and expansions over third quarter 2007. These same-center results exclude a $1.2 million option payment received and reported in third quarter 2007 associated with a terminated purchase option with respect to one of Federal Realty's properties. Including this payment in third quarter 2007 property operating income results in an increase of 3.3% including redevelopments and expansions and 1.4% excluding redevelopments and expansions.
Overall, the Trust's portfolio was 95.5% leased and 94.8% occupied as of September 30, 2008, compared to 96.4% and 95.1%, respectively, on September 30, 2007. Federal Realty's same-center portfolio was 96.0% leased and 95.7% occupied on September 30, 2008, compared to 96.7% and 95.9%, respectively, on September 30, 2007.
During third quarter 2008, the Trust signed 76 leases for 369,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 351,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 23%. The average contractual rent on this comparable space for the first year of the new lease is $25.03 per square foot compared to the average contractual rent of $20.28 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 42% for third quarter 2008. As of September 30, 2008, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $21.63 per square foot.
"The third quarter results were very solid given the state of the current economy," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Our conservative operating strategy, which includes low leverage levels combined with high quality retail properties as its core, tends to really shine through in times like these."
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.65 per share on its common shares, resulting in an indicated annual rate of $2.60 per share. The regular common dividend will be payable on January 15, 2009, to common shareholders of record as of January 2, 2009.
Guidance
Federal Realty's guidance for 2008 FFO per diluted share remains unchanged at $3.89 to $3.92 and its 2008 earnings per diluted common share guidance increased to a range of $2.18 to $2.21.
Summary of Other Quarterly Activities and Recent Developments
-- September 8, 2008 -- Acquired Courtyard Shops, a 127,000 square foot Publix-anchored neighborhood shopping center located in Wellington, Florida, an affluent community in central Palm Beach County, Florida. Federal Realty acquired the property from an institutional owner for $37.9 million. Courtyard Shops boasts average household incomes in excess of $115,000 within a 3-mile radius of the property, a highly productive Publix store, and potential for strong NOI growth. In addition, the property benefits from significant barriers to new competition due to considerable portions of Wellington being protected as an equestrian preserve established to keep the community's character intact as Wellington is world-famous for its equestrian events and polo clubs.
-- August 26, 2008 -- Announced the promotion of Andrew P. Blocher to the position of senior vice president, chief financial officer and treasurer effective September 1, 2008, succeeding Joseph M. Squeri, who left the Trust to pursue other professional interests.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2008 earnings conference call, which is scheduled for October 30, 2008, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 831-6234 five to ten minutes prior to the call's start time and use the passcode EARNINGS (required). Federal Realty will also provide an online webcast on the Company's website, 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 November 28, 2008, by dialing (888) 286-8010 and entering the passcode 54745083.
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 18.1 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 95.5% leased to national, regional, and local retailers as of September 30, 2008, with no single tenant accounting for more than approximately 2.6% 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 41 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.
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 27, 2008 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 February 27, 2008.
Investor and Media Inquiries
Gina Birdsall Janelle Stevenson
Investor Relations Corporate Communications
301/998-8265 301/998-8185
gbirdsall@federalrealty.com jmstevenson@federalrealty.com
Federal Realty Investment Trust
Summarized Balance Sheets
September 30, 2008
September 30, December 31,
2008 2007
ASSETS (in thousands)
(unaudited)
Real estate, at cost
Operating $3,547,709 $3,267,081
Construction-in-progress 91,169 147,925
Assets held for sale (discontinued operations) - 37,841
3,638,878 3,452,847
Less accumulated depreciation and amortization (822,291) (756,703)
Net real estate 2,816,587 2,696,144
Cash and cash equivalents 48,991 50,691
Accounts and notes receivable 69,439 61,108
Mortgage notes receivable 40,437 40,638
Investment in real estate partnership 29,422 29,646
Prepaid expenses and other assets 106,666 111,070
TOTAL ASSETS $3,111,542 $2,989,297
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable and capital lease obligations $455,982 $450,084
Notes payable 341,912 210,820
Senior notes and debentures 956,627 977,556
Accounts payable and other liabilities 208,271 204,387
Total liabilities 1,962,792 1,842,847
Minority interests 32,085 31,818
Shareholders' equity
Preferred stock 9,997 9,997
Common shares and other shareholders' equity 1,106,668 1,104,635
Total shareholders' equity 1,116,665 1,114,632
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,111,542 $2,989,297
Federal Realty Investment Trust
Summarized Income Statements
September 30, 2008
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
(in thousands, except per share data)
(unaudited)
Revenue
Rental income $126,654 $117,801 $371,792 $343,821
Other property income 4,005 4,634 12,015 9,550
Mortgage interest income 1,108 1,129 3,342 3,386
Total revenue 131,767 123,564 387,149 356,757
Expenses
Rental expenses 27,562 25,225 81,011 73,024
Real estate taxes 14,760 12,030 41,331 33,767
General and administrative 5,391 7,172 19,451 18,894
Depreciation and amortization 28,642 25,045 81,837 75,450
Total operating expenses 76,355 69,472 223,630 201,135
Operating income 55,412 54,092 163,519 155,622
Other interest income 115 192 662 623
Interest expense (25,337) (28,732) (74,166) (84,247)
Income from real estate
partnership 407 473 1,180 1,120
Income from continuing operations
before minority interests 30,597 26,025 91,195 73,118
Minority interests (1,315) (1,629) (4,056) (4,309)
Income from continuing operations 29,282 24,396 87,139 68,809
Discontinued operations
Income from discontinued operations 382 2,019 1,485 5,611
Gain (loss) on sale of real estate
from discontinued operations 7,438 (2,900) 7,438 (1,051)
Results from discontinued
operations 7,820 (881) 8,923 4,560
Net income 37,102 23,515 96,062 73,369
Dividends on preferred stock (136) (136) (406) (307)
Net income available for common
shareholders $36,966 $23,379 $95,656 $73,062
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.50 $0.43 $1.48 $1.23
Discontinued operations 0.13 (0.01) 0.15 0.08
$0.63 $0.42 $1.63 $1.31
Weighted average number of common
shares, basic 58,720 56,302 58,624 55,967
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.50 $0.43 $1.47 $1.22
Discontinued operations 0.13 (0.02) 0.15 0.08
$0.63 $0.41 $1.62 $1.30
Weighted average number of common
shares, diluted 58,950 56,690 58,902 56,404
Federal Realty Investment Trust
Funds From Operations
September 30, 2008
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
Funds from Operations available
for common shareholders (FFO)(1) (in thousands, except per share data)
Net income $37,102 $23,515 $96,062 $73,369
(Gain) loss on sale of real estate (7,438) 2,900 (7,438) 1,051
Depreciation and amortization of
real estate assets 26,037 23,651 74,037 71,910
Amortization of initial direct costs
of leases 2,136 1,945 6,441 6,122
Depreciation of joint venture real
estate assets 331 324 992 915
Funds from operations 58,168 52,335 170,094 153,367
Dividends on preferred stock (136) (136) (406) (307)
Income attributable to operating
partnership units 244 279 707 923
FFO $58,276 $52,478 $170,395 $153,983
FFO per diluted share $0.98 $0.92 $2.87 $2.71
Weighted average number of common
shares, diluted 59,327 57,148 59,280 56,885
Notes:
(1)See Glossary of Terms.
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
September 30, 2008
2008 Guidance
($ millions except
per share amounts)(1)
Net income $129 to $131
Gain on sale of real estate (7) (7)
Depreciation and amortization of real estate
& real estate partnership assets 100 100
Amortization of initial direct costs of leases 9 9
Funds from operations 230 232
Dividends on preferred stock (1) (1)
Income attributable to operating partnership units 1 1
Funds from operations available for common shareholders 231 to 232
Weighted Average Shares (diluted) 59.3
Funds from operations available for common
shareholders per diluted share $3.89 $3.92
Note:
(1) Individual items may not add up to total due to rounding.
SOURCE Federal Realty Investment Trust
-0- 10/29/2008
/CONTACT: Investor Relations, Gina Birdsall +1-301-998-8265,
gbirdsall@federalrealty.com, or Corporate Communications, Janelle Stevenson,
+1-301-998-8185, jmstevenson@federalrealty.com, both of Federal Realty
Investment Trust/
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/Web site: http://www.federalrealty.com /
(FRT)
CO: Federal Realty Investment Trust
ST: Maryland
IN: FIN RLT
SU: ERN ERP DIV CCA
RB-CS
-- NEW112 --
7782 10/29/2008 17:00 EDT http://www.prnewswire.com
