Federal Realty Investment Trust Announces Fourth Quarter And Year-End 2012 Operating Results

ROCKVILLE, Md., Feb. 12, 2013 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2012.

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Financial Results
Federal Realty generated funds from operations available for common shareholders (FFO) of $71.7 million, or $1.11 per diluted share for fourth quarter 2012.  This compares to FFO of $62.1 million, or $0.97 per diluted share, in fourth quarter 2011.  For the year ending December 31, 2012, Federal Realty reported FFO of $277.2 million, or $4.31 per diluted share.  This compares to $251.6 million, or $4.00 per diluted share, for the year ending December 31, 2011.

Net income available for common shareholders was $37.6 million and earnings per diluted share was $0.58 for fourth quarter 2012 versus $30.8 million and $0.48, respectively, for fourth quarter 2011.  For the year ending December 31, 2012, Federal Realty reported net income available for common shareholders of $151.4 million and earnings per diluted share of $2.35.  This compares to net income available for shareholders of $143.4 million and earnings per diluted share of $2.28 for the year ending December 31, 2011. 

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
Same-center property operating income in 2012 increased 6.1% including redevelopments and expansions (4.5% if you exclude the lease termination fee from Safeway), and 5.6% excluding redevelopments and expansions (3.9% if you exclude the lease termination fee from Safeway), compared to 2011. On a quarterly-basis, same-center property operating income in fourth quarter 2012 increased 5.4% including redevelopment and expansion properties, and 4.2% excluding redevelopment and expansion properties, compared to fourth quarter 2011. 

The overall portfolio was 95.3% leased as of December 31, 2012, compared to 95.1% on September 30, 2012 and 93.4% on December 31, 2011.  Federal Realty's same-center portfolio was 95.0% leased on December 31, 2012, unchanged from September 30, 2012 and compared to 94.2% on December 31, 2011.

During fourth quarter 2012, the Trust signed 98 leases for 485,215 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 478,913 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 $32.17 per square foot compared to the average contractual rent of $28.71 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 20% for fourth quarter 2012.

For all of 2012, Federal Realty signed 394 leases representing 1.8 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 13%, and 23% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $31.76 per square foot compared to the average cash-basis contractual rent of $28.22 per square foot for the last year of the prior lease.  As of December 31, 2012, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $23.83 per square foot, as compared to $23.37 per square foot on December 31, 2011.

"The fundamental strength of our operating portfolio and balance sheet were evident in 2012 as we achieved record setting FFO and FFO per share, strong same center POI growth and record levels of leasing at double digit rent increases on average," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust.  "When you combine that fundamental strength with our ability to acquire great assets like East Bay Bridge and the progress we've made on our development and redevelopment pipeline, we're well positioned to continue to deliver strong results in 2013."

Summary of Other Quarterly Activities and Recent Developments

  • December 21, 2012 – Acquired East Bay Bridge shopping center, a 438,000 square foot, grocery-anchored power center spanning two municipalities, Emeryville and Oakland, California.  The Trust paid cash consideration of $53.7 million and assumed an existing $62.9 million mortgage loan secured by the property. 

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 April 15, 2013 to common shareholders of record on March 14, 2013.

Guidance
We have increased our 2013 guidance for FFO per diluted share to a range of $4.53 to $4.58 to reflect the impact of our acquisition of East Bay Bridge.  Our updated earnings per diluted share guidance is $2.12 to $2.17.

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 2012 earnings conference call, which is scheduled for February 13, 2013, at 11 a.m. Eastern Standard Time.  To participate, please call (888) 771-4371 five to ten minutes prior to the call start time and use the passcode 34021480 (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 15, 2013, by dialing (888) 843-7419 and using the passcode 34021480.

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 95.3% leased to national, regional, and local retailers as of December 31, 2012, 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

December 31, 2012


December 31,


2012


2011


(in thousands)





ASSETS




Real estate, at cost




Operating (including $278,826 and $263,570 of consolidated variable interest entities, respectively)

$

4,490,960


$

4,232,608

Construction-in-progress

288,714


193,836


4,779,674


4,426,444

Less accumulated depreciation and amortization (including $12,024 and $4,991 of consolidated variable interest entities, respectively)

(1,224,295)


(1,127,588)

Net real estate

3,555,379


3,298,856

Cash and cash equivalents

36,988


67,806

Accounts and notes receivable, net

73,861


75,921

Mortgage notes receivable, net

55,648


55,967

Investment in real estate partnerships

33,169


34,352

Prepaid expenses and other assets

143,520


133,308

TOTAL ASSETS

$

3,898,565


$

3,666,210





LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages and capital lease obligations (including $205,299 and $207,683 of consolidated variable interest entities, respectively)

$

832,482


$

810,616

Notes payable

299,575


295,159

Senior notes and debentures

1,076,545


1,004,635

Accounts payable and other liabilities

284,950


229,871

Total liabilities

2,493,552


2,340,281

Redeemable noncontrolling interests

94,420


85,325

Shareholders' equity




Preferred shares

9,997


9,997

Common shares and other shareholders' equity

1,276,815


1,206,095

Total shareholders' equity of the Trust

1,286,812


1,216,092

Noncontrolling interests

23,781


24,512

Total shareholders' equity

1,310,593


1,240,604

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,898,565


$

3,666,210

Federal Realty Investment Trust

Summarized Income Statements

December 31, 2012


Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011


(in thousands, except per share data)

















Revenue








Rental income

$

152,363


$

137,249


$

582,335


$

538,701

Other property income

2,369


2,683


20,217


9,260

Mortgage interest income

1,632


1,534


5,466


5,098

Total revenue

156,364


141,466


608,018


553,059

Expenses








Rental expenses

30,065


28,419


112,760


109,549

Real estate taxes

16,885


14,619


66,799


60,620

General and administrative

8,264


9,342


31,158


28,985

Depreciation and amortization

35,337


31,853


142,039


126,208

Total operating expenses

90,551


84,233


352,756


325,362

Operating income

65,813


57,233


255,262


227,697

Other interest income

109


47


689


218

Interest expense

(27,592)


(25,721)


(113,336)


(98,465)

Early extinguishment of debt




296

Income from real estate partnerships

528


607


1,757


1,808

Income from continuing operations

38,858


32,166


144,372


131,554

Discontinued operations








Discontinued operations - income


14



957

Discontinued operations - gain on deconsolidation of VIE




2,026

Discontinued operations - gain on sale of real estate


275



15,075

Results from discontinued operations


289



18,058

Income before gain on sale of real estate

38,858


32,455


144,372


149,612

Gain on sale of real estate



11,860


Net income

38,858


32,455


156,232


149,612

Net income attributable to noncontrolling interests

(1,166)


(1,534)


(4,307)


(5,695)

Net income attributable to the Trust

37,692


30,921


151,925


143,917

Dividends on preferred shares

(135)


(135)


(541)


(541)

Net income available for common shareholders

$

37,557


$

30,786


$

151,384


$

143,376









EARNINGS PER COMMON SHARE, BASIC








Continuing operations

$

0.58


$

0.47


$

2.17


$

2.00

Discontinued operations


0.01



0.29

Gain on sale of real estate



0.19



$

0.58


$

0.48


$

2.36


$

2.29









Weighted average number of common shares, basic

64,392


63,224


63,881


62,438









EARNINGS PER COMMON SHARE, DILUTED








Continuing operations

$

0.58


$

0.47


$

2.16


$

1.99

Discontinued operations


0.01



0.29

Gain on sale of real estate



0.19



$

0.58


$

0.48


$

2.35


$

2.28









Weighted average number of common shares, diluted

64,550


63,379


64,056


62,603

 

Federal Realty Investment Trust

Funds From Operations

December 31, 2012














Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011


(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)













Net income

$

38,858


$

32,455


$

156,232


$

149,612

Net income attributable to noncontrolling interests

(1,166)


(1,534)


(4,307)


(5,695)

Gain on sale of real estate


(275)


(11,860)


(15,075)

Gain on deconsolidation of VIE




(2,026)

Depreciation and amortization of real estate assets

31,283


28,465


125,611


113,188

Amortization of initial direct costs of leases

2,605


2,695


10,935


10,432

Depreciation of joint venture real estate assets

380


467


1,513


1,771

Funds from operations

71,960


62,273


278,124


252,207

Dividends on preferred shares

(135)


(135)


(541)


(541)

Income attributable to operating partnership units

236


248


943


981

Income attributable to unvested shares

(317)


(278)


(1,289)


(1,071)

FFO

$

71,744


$

62,108


$

277,237


$

251,576

FFO per diluted share

$

1.11


$

0.97


$

4.31


$

4.00

Weighted average number of common shares, diluted

64,873


63,740


64,389


62,964

 

Federal Realty Investment Trust




Reconciliation of Net Income to FFO Guidance




December 31, 2012









2013 Guidance


(Dollars in millions except


per share amounts) (1)

Funds from Operations available for common shareholders (FFO)




Net income

$

146


$

149

Net income attributable to noncontrolling interests

(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

300


304

Dividends on preferred shares

(1)


(1)

Income attributable to operating partnership units

1


1

Income attributable to unvested shares

(1)


(1)

FFO

$

299


$

303





Weighted average number of common shares, diluted

66.1


66.1





FFO per diluted share

$

4.53


$

4.58





Note:




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




Investor Inquiries

Media Inquiries

Kristina Lennox

Andrea Simpson

Investor Relations Coordinator

Director, Marketing

301/998-8265

617/684-1511

klennox@federalrealty.com 

asimpson@federalrealty.com

SOURCE Federal Realty Investment Trust



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