Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2011 Operating Results

-Solid core performance drives record 2011 FFO per share and improved 2012 guidance-

Feb 15, 2012, 17:00 ET from Federal Realty Investment Trust

ROCKVILLE, Md., Feb. 15, 2012 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year ended December 31, 2011.

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Financial Results

Federal Realty generated funds from operations available for common shareholders (FFO) of $62.1 million, or $0.97 per diluted share for fourth quarter 2011 compared to $62.2 million, or $1.01 per diluted share, in fourth quarter 2010.  For the year ended December 31, 2011, Federal Realty reported FFO of $251.6 million, or $4.00 per diluted share compared to $239.2 million, or $3.88 per diluted share, for the year ending December 31, 2010.  FFO for fourth quarter and full year 2011 was negatively impacted by $2.6 million ($0.04 per diluted share) and $3.4 million ($0.05 per diluted share), respectively, of expensed closing costs for the acquisitions of Plaza El Segundo and Montrose Crossing, both of which were acquired in late December 2011.

Net income available for common shareholders was $30.8 million and earnings per diluted share was $0.48 for fourth quarter 2011 versus $32.7 million and $0.53, respectively, for fourth quarter 2010.  For the year ended December 31, 2011, net income available for common shareholders was $143.4 million and earnings per diluted share was $2.28 compared to $122.2 million and $1.98 for 2010.  Net income available for common shareholders and earnings per diluted share for both fourth quarter and the year ended December 31, 2011 were impacted by the same total and per diluted share closing costs described above.

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

Same-center property operating income in fourth quarter 2011 increased 3.6% including redevelopment and expansion properties, and increased 2.8% excluding redevelopment and expansion properties, compared to fourth quarter 2010.  For the year, same-center property operating income in 2011 increased 1.8% including redevelopments and expansions, and increased 1.9% excluding redevelopments and expansions, compared to 2010.  

The overall portfolio was 93.4% leased as of December 31, 2011, compared to 93.3% on September 30, 2011 and 93.9% on December 31, 2010.  Federal Realty's same-center portfolio was 93.9% leased on December 31, 2011, compared to 94.0% on September 30, 2011 and 94.4% on December 31, 2010.

During fourth quarter 2011, the Trust signed 82 leases for 254,557 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 231,394 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 10%.  The average contractual rent on this comparable space for the first year of the new lease is $32.81 per square foot compared to the average contractual rent of $29.80 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 fourth quarter 2011.

For all of 2011, Federal Realty signed 339 leases representing 1.3 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 9%, and 20% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $30.57 per square foot compared to the average cash-basis contractual rent of $28.15 per square foot for the last year of the prior lease.  As of December 31, 2011, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $23.37 per square foot, as compared to $22.77 on December 31, 2010.

"A strong and consistent leasing effort over the past few years as well as solid property operations were key drivers of our record FFO per share results in 2011," commented Don Wood, president and chief executive officer of Federal Realty. "With the addition of high quality acquisitions like Tower Shops, Plaza El Segundo and Montrose Crossing and the significant development activities at Pike & Rose, Assembly Row and Santana Row to complement our proven internal growth strategy, we are confident in our ability to continue to provide earnings growth and value creation for our shareholders going forward."

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 $0.69 per share on its common shares, resulting in an indicated annual rate of $2.76 per share.  The regular common dividend will be payable on April 16, 2012 to common shareholders of record on March 19, 2012.

Guidance

Federal Realty's 2012 guidance for FFO per diluted share was increased to a range of $4.19 to $4.25 and 2012 earnings per diluted share guidance was increased to $2.27 to $2.33.  

Summary of Other Quarterly Activities and Recent Developments

  • January 2012 – Federal Realty announced the acquisition of the following properties:
    • Plaza El Segundo (January 3, 2012) – a controlling interest in Plaza El Segundo, a 381,000 square foot, landmark, retail property in El Segundo, California for $8.5 million.  We are entitled to receive the majority of the cash flow associated with the operating property up to approximately 75%.  In addition, the Trust acquired a 100% interest in an adjacent, unimproved 8.1-acre land parcel for future development for $15.9 million of cash.
    • Montrose Crossing (January 9, 2012) - an 89.9% controlling interest in Montrose Crossing, a 357,000 square foot, grocery-anchored shopping center in Rockville, Maryland.  With the acquisition, Federal Realty controls 1.2 million square feet of existing retail space on Rockville Pike within a mile of Montrose Crossing - at Congressional Plaza, Federal Plaza and Mid-Pike Plaza - with expectations of expanding that presence with the development of Pike & Rose.
  • February 8, 2012 – Federal Realty announced the execution of a 44,000 square foot lease with iPic Entertainment for an eight-screen theater, dining, and entertainment venue at Pike & Rose, its 24+ acre mixed use development in Rockville, Maryland.
  • January 6, 2012 – The execution of binding documents with AvalonBay Communities for the first phase of construction at Assembly Row was announced, the issuance of the Notice to Proceed by the Massachusetts Bay Transportation Authority (MBTA) for the construction of a new rapid transit station, and the execution of a 60,000 square foot lease with AMC Theatres for a 12-screen theatre.  These milestones clear the remaining obstacles for construction to commence at Assembly Row, Federal Realty's 50+ acre mixed use development in Somerville, MA.
  • November 28, 2011 – Federal Realty announced the closing of a new $275 million unsecured term loan that bears interest at an annual rate of LIBOR plus 145 basis points and will mature in November 2018.  Prior to closing, Federal Realty swapped $275 million of LIBOR exposure through November 1, 2018 at a rate of 1.72%, resulting in a fixed rate of 3.17% throughout the term of the loan.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its fourth quarter and year-end 2011 earnings conference call, which is scheduled for February 16, 2012, at 11 a.m. Eastern Standard Time.  To participate, please call (800) 299-7089 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 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 March 16, 2012, by dialing (888) 286-8010 and using the passcode 84931684.

About Federal Realty

In 2012, Federal Realty celebrates 50 years of being a proven leader in the ownership, operation, and redevelopment of high quality retail real estate in the country's best markets.   Federal Realty's portfolio (excluding joint venture properties) contains approximately 19.3 million square feet located primarily in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as in 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 93.4% leased to national, regional, and local retailers as of December 31, 2011, with no single tenant accounting for more than approximately 2.5% 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 44 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 15, 2012, 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 15, 2012.

Federal Realty Investment Trust

Summarized Balance Sheets

December 31, 2011

December 31,

2011

2010

(in thousands)

ASSETS

Real estate, at cost

Operating (including $271,468 and $78,846 of consolidated variable interest entities, respectively)

$

4,240,708

$

3,695,848

Construction-in-progress

193,836

163,200

Assets held for sale/disposal (discontinued operations) (including $0 and $18,311 of consolidated variable interest entities, respectively)

36,894

4,434,544

3,895,942

Less accumulated depreciation and amortization (including $4,991 and $4,431 of consolidated variable interest entities, respectively)

(1,127,588)

(1,035,204)

Net real estate

3,306,956

2,860,738

Cash and cash equivalents

67,806

15,797

Accounts and notes receivable, net

76,152

68,997

Mortgage notes receivable, net

55,967

44,813

Investment in real estate partnerships

34,352

51,606

Prepaid expenses and other assets

118,675

117,602

TOTAL ASSETS

$

3,659,908

$

3,159,553

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages and capital lease obligations (including $207,683 and $22,785 of consolidated variable interest entities, respectively)

$

810,616

$

589,441

Notes payable

295,159

97,881

Senior notes and debentures

1,004,635

1,079,827

Accounts payable and other liabilities

223,569

211,274

Total liabilities

2,333,979

1,978,423

Redeemable noncontrolling interests

85,325

65,362

Shareholders' equity

   Preferred shares

9,997

9,997

   Common shares and other shareholders' equity

1,206,095

1,084,739

Total shareholders' equity of the Trust

1,216,092

1,094,736

   Noncontrolling interests

24,512

21,032

Total shareholders' equity

1,240,604

1,115,768

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,659,908

$

3,159,553

Federal Realty Investment Trust

Summarized Income Statements

December 31, 2011

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

(in thousands, except per share data)

Revenue

Rental income

$

137,249

$

132,663

$

538,701

$

522,651

Other property income

2,683

3,302

9,260

14,545

Mortgage interest income

1,534

1,369

5,098

4,601

Total revenue

141,466

137,334

553,059

541,797

Expenses

Rental expenses

28,419

28,185

109,549

110,519

Real estate taxes

14,619

13,623

60,620

58,663

General and administrative

9,342

7,110

28,985

24,519

Depreciation and amortization

31,853

29,654

126,208

118,878

Total operating expenses

84,233

78,572

325,362

312,579

Operating income

57,233

58,762

227,697

229,218

Other interest income

47

23

218

256

Interest expense

(25,721)

(25,203)

(98,465)

(101,882)

Early extinguishment of debt

296

(2,801)

Income from real estate partnerships

607

554

1,808

1,060

Income from continuing operations

32,166

34,136

131,554

125,851

Discontinued operations

Discontinued operations - income

14

169

957

976

Discontinued operations - gain on deconsolidation of VIE

2,026

Discontinued operations - gain on sale of real estate

275

15,075

1,000

Results from discontinued operations

289

169

18,058

1,976

Income before gain on sale of real estate

32,455

34,305

149,612

127,827

Gain on sale of real estate

410

Net income

32,455

34,305

149,612

128,237

  Net income attributable to noncontrolling interests

(1,534)

(1,489)

(5,695)

(5,447)

Net income attributable to the Trust

30,921

32,816

143,917

122,790

Dividends on preferred shares

(135)

(135)

(541)

(541)

Net income available for common shareholders

$

30,786

$

32,681

$

143,376

$

122,249

EARNINGS PER COMMON SHARE, BASIC

Continuing operations

$

0.47

$

0.53

$

2.00

$

1.95

Discontinued operations

0.01

0.29

0.03

Gain on sale of real estate

0.01

$

0.48

$

0.53

$

2.29

$

1.99

Weighted average number of common shares, basic

63,224

61,251

62,438

61,182

EARNINGS PER COMMON SHARE, DILUTED

Continuing operations

$

0.47

$

0.53

$

1.99

$

1.94

Discontinued operations

0.01

0.29

0.03

Gain on sale of real estate

0.01

$

0.48

$

0.53

$

2.28

$

1.98

Weighted average number of common shares, diluted

63,379

61,405

62,603

61,324

Federal Realty Investment Trust

Funds From Operations

December 31, 2011

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income

$

32,455

$

34,305

$

149,612

$

128,237

Net income attributable to noncontrolling interests

(1,534)

(1,489)

(5,695)

(5,447)

Gain on sale of real estate

(275)

(15,075)

(1,410)

Gain on deconsolidation of VIE

(2,026)

Depreciation and amortization of real estate assets

28,465

26,812

113,188

107,187

Amortization of initial direct costs of leases

2,695

2,326

10,432

9,552

Depreciation of joint venture real estate assets

467

435

1,771

1,499

Funds from operations

62,273

62,389

252,207

239,618

Dividends on preferred shares

(135)

(135)

(541)

(541)

Income attributable to operating partnership units

248

244

981

980

Income attributable to unvested shares

(278)

(259)

(1,071)

(847)

FFO

$

62,108

$

62,239

$

251,576

$

239,210

FFO per diluted share

$

0.97

$

1.01

$

4.00

$

3.88

Weighted average number of common shares, diluted

63,740

61,769

62,964

61,693

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

December 31, 2011

2012 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

151

$

154

Net income attributable to noncontrolling interests

(5)

(5)

Gain on sale of real estate

(12)

(12)

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

123

123

Amortization of initial direct costs of leases

11

11

Funds from operations

269

273

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

1

1

Income attributable to unvested shares

(1)

(1)

FFO

$

268

$

272

Weighted average number of common shares, diluted

63.9

63.9

FFO per diluted share

$

4.19

$

4.25

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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