Federal Realty Investment Trust Announces First Quarter 2013 Operating Results

First Quarter earnings release follows a Standard & Poor's credit rating upgrade to A-

01 May, 2013, 16:30 ET from Federal Realty Investment Trust

ROCKVILLE, Md., May 1, 2013 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2013.

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Financial Results

For first quarter 2013, Federal Realty generated funds from operations available for common shareholders (FFO) of $74.1 million, or $1.14 per diluted share compared to $66.7 million, or $1.04 per diluted share, in first quarter 2012. Net income available for common shareholders was $34.5 million and earnings per diluted share was $0.53 for first quarter 2013 versus $42.9 million and $0.67, respectively, for first quarter 2012.                      

FFO is a non-GAAP supplemental earnings measure defined by the National Association of Real Estate Investment Trusts which the Trust considers meaningful in measuring its operating performance.  A reconciliation of net income to FFO is attached to this press release.

Portfolio Results

In first quarter 2013, same-center property operating income increased 4.4% including redevelopment and expansion properties, and increased 3.2% excluding redevelopment and expansion properties, compared to first quarter 2012.    

The overall portfolio was 95.1% leased as of March 31, 2013, compared to 95.3% on December 31, 2012 and 93.8% on March 31, 2012.  Federal Realty's same-center portfolio was 95.1% leased on March 31, 2013, compared to 95.0% on December 31, 2012 and 94.5% on March 31, 2012.

During first quarter 2013, the Trust signed 80 leases for 266,451 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 254,282 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 12%.  The average contractual rent on this comparable space for the first year of the new lease is $35.78 per square foot compared to the average contractual rent of $31.89 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 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 22% for first quarter 2013.

"Results for the first quarter were quite strong with all components of our business firing on all cylinders," commented Donald C. Wood, president and chief executive officer of Federal Realty. "It's the balance in our business plan that I am so encouraged about. Strong leasing and operations of our core portfolio, key acquisitions providing new redevelopment raw material like Darien Connecticut, and great momentum and progress on the build out of our development pipeline. Taken all together, it's a formidable balance."

Summary of Other Quarterly Activities and Recent Developments

  • April 3, 2013 – Acquired a shopping center on 9 acres directly across from the Noroton Heights train station in affluent Darien, Ct. for $47.3 million. The property is anchored by an Equinox health club, a Stop & Shop grocer and a Walgreens drug store and serves one of the most affluent commuter towns in the nation.
  • April 19, 2013 – Standard & Poor's Rating Services upgraded the Corporate Credit and Senior Unsecured ratings for Federal Realty from BBB+, Positive Outlook, to A-, Stable.
  • April 22, 2013 – Federal Realty completed an upsize of its unsecured revolving credit facility to $600 million and extended the maturity date to April 21, 2017, with a one year extension option. The pricing was also lowered to LIBOR plus 90 basis points at the Trust's current rating. 

Guidance

We have increased our 2013 guidance for FFO per diluted share to a range of $4.55 to $4.59 to reflect the impact of our acquisition of Darien and the benefit to our cost of borrowing from our recent upgrade from Standard & Poor's.  Our updated earnings per share guidance is $2.23 to $2.27.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees left the regular dividend rate on its common shares unchanged, declaring a regular quarterly cash dividend of $0.73 per share on its common shares, resulting in an indicated annual rate of $2.92 per share.  The regular common dividend will be payable on July 15, 2013 to common shareholders of record on June 21, 2013.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2013 earnings conference call, which is scheduled for May 2, 2013, at 11 a.m. Eastern Daylight Time.  To participate, please call (800) 447-0521 five to ten minutes prior to the call start time and use the passcode 34581678 (required).  Federal Realty will also provide an online webcast 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 2, 2013, by dialing (630) 652-3000 and using the passcode 34581678.

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 20 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 95.1% leased to national, regional, and local retailers as of March 31, 2013, with no single tenant accounting for more than approximately 3.2% 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 45 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 12, 2013, 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 redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected;
  • risks that we are investing a significant amount in ground-up development projects that may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;
  • 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 associated with general economic conditions, including local economic conditions in our geographic markets;
  • 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 with the Securities and Exchange Commission on February 12, 2013.

 

Federal Realty Investment Trust

Summarized Balance Sheets

March 31, 2013

March 31,

December 31,

2013

2012

(in thousands)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $278,885 and $278,826 of consolidated variable interest entities, respectively)

$

4,497,312

$

4,490,960

Construction-in-progress

327,840

288,714

4,825,152

4,779,674

Less accumulated depreciation and amortization (including $13,801 and $12,024 of consolidated variable interest entities, respectively)

(1,257,767)

(1,224,295)

Net real estate

3,567,385

3,555,379

Cash and cash equivalents

31,274

36,988

Accounts and notes receivable, net

77,154

73,861

Mortgage notes receivable, net

55,693

55,648

Investment in real estate partnership

33,131

33,169

Prepaid expenses and other assets

141,295

143,520

TOTAL ASSETS

$

3,905,932

$

3,898,565

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages and capital lease obligations (including $204,681 and $205,299 of consolidated variable interest entities, respectively)

$

819,665

$

832,482

Notes payable

299,595

299,575

Senior notes and debentures

1,076,635

1,076,545

Accounts payable and other liabilities

282,258

284,950

Total liabilities

2,478,153

2,493,552

Redeemable noncontrolling interests

94,249

94,420

Shareholders' equity

Preferred shares

9,997

9,997

Common shares and other shareholders' equity

1,300,056

1,276,815

Total shareholders' equity of the Trust

1,310,053

1,286,812

Noncontrolling interests

23,477

23,781

Total shareholders' equity

1,333,530

1,310,593

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,905,932

$

3,898,565

 

Federal Realty Investment Trust

Summarized Income Statements

March 31, 2013

Three Months Ended

March 31,

2013

2012

(in thousands, except per share data)

(unaudited)

Revenue

Rental income

$

153,219

$

140,661

Other property income

3,268

4,362

Mortgage interest income

1,265

1,266

Total revenue

157,752

146,289

Expenses

Rental expenses

29,515

26,110

Real estate taxes

17,651

16,057

General and administrative

7,057

7,004

Depreciation and amortization

40,624

36,571

Total operating expenses

94,847

85,742

Operating income

62,905

60,547

Other interest income

30

207

Interest expense

(27,405)

(28,793)

Income from real estate partnerships

312

301

Income from continuing operations

35,842

32,262

Gain on sale of real estate in real estate partnership

11,860

Net income

35,842

44,122

Net income attributable to noncontrolling interests

(1,254)

(1,136)

Net income attributable to the Trust

34,588

42,986

Dividends on preferred shares

(135)

(135)

Net income available for common shareholders

$

34,453

$

42,851

EARNINGS PER COMMON SHARE, BASIC

Continuing operations

$

0.53

$

0.48

Gain on sale of real estate

0.19

$

0.53

$

0.67

Weighted average number of common shares, basic

64,692

63,411

EARNINGS PER COMMON SHARE, DILUTED

Continuing operations

$

0.53

$

0.48

Gain on sale of real estate

0.19

$

0.53

$

0.67

Weighted average number of common shares, diluted

64,847

63,585

 

Federal Realty Investment Trust

Funds From Operations

March 31, 2013

Three Months Ended

March 31,

2013

2012

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income

$

35,842

$

44,122

Net income attributable to noncontrolling interests

(1,254)

(1,136)

Gain on sale of real estate in real estate partnership

(11,860)

Depreciation and amortization of real estate assets

36,562

32,415

Amortization of initial direct costs of leases

2,768

2,936

Depreciation of joint venture real estate assets

376

381

Funds from operations

74,294

66,858

Dividends on preferred shares

(135)

(135)

Income attributable to operating partnership units

227

247

Income attributable to unvested shares

(336)

(316)

FFO

$

74,050

$

66,654

FFO per diluted share

$

1.14

$

1.04

Weighted average number of common shares, diluted

65,158

63,943

 

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

March 31, 2013

2013 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

153

$

156

Net income attributable to noncontrolling interests

(5)

(5)

Gain on sale of real estate in real estate partnership

(5)

(5)

Depreciation and amortization of real estate & joint venture real estate assets

148

148

Amortization of initial direct costs of leases

11

11

Funds from operations

302

304

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

1

1

Income attributable to unvested shares

(1)

(1)

FFO

$

301

$

303

Weighted average number of common shares, diluted

66.1

66.1

FFO per diluted share

$

4.55

$

4.59

Note:

(1) - Individual items may not add up to total due to rounding.

 

Media Inquiries

Investor Inquiries

Andrea Simpson

Kristina Lennox

Director, Marketing

Investor Relations Coordinator

617/684-1511

301/998-8265

asimpson@federalrealty.com

klennox@federalrealty.com

 

SOURCE Federal Realty Investment Trust



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