Federal Realty Investment Trust Announces Second Quarter 2012 Operating Results

- Common dividend increased for record 45th consecutive year -

Aug 01, 2012, 16:45 ET from Federal Realty Investment Trust

ROCKVILLE, Md., Aug. 1, 2012 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2012.

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Financial Results

In the second quarter 2012, Federal Realty generated funds from operations available for common shareholders (FFO) of $66.8 million or $1.04 per diluted share.  This compares to FFO of $64.3 million, or $1.02 per diluted share, in second quarter 2011.  For the six months ended June 30, 2012, Federal Realty reported FFO of $133.4 million, or $2.08 per diluted share, compared to $125.5 million, or $2.01 per diluted share for the same six-month period in 2011.

Net income available for common shareholders was $32.5 million and earnings per diluted share was $0.51 for the quarter ended June 30, 2012 versus $34.6 million and $0.55, respectively, for second quarter 2011.  Year-to-date, Federal Realty reported net income available for common shareholders of $75.3 million and earnings per diluted share of $1.18.  This compares to net income available for common shareholders of $65.7 million and earnings per diluted share of $1.05 for the six months ended June 30, 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

In second quarter 2012, same-center property operating income increased 3.5% over second quarter 2011.  When redevelopment and expansion properties are excluded from same-center results, property operating income for second quarter 2012 increased 2.7% compared to second quarter 2011.  

The overall portfolio was 94.2% leased as of June 30, 2012, compared to 93.8% on March 31, 2012 and 93.4% on June 30, 2011.  Federal Realty's same-center portfolio was 94.8% leased on June 30, 2012, compared to 94.3% on March 31, 2012 and 93.9% on June 30, 2011.

During the second quarter of 2012, Federal Realty signed 111 leases for 368,795 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 355,527 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 11%. The average contractual rent on this comparable space for the first year of the new leases is $36.08 per square foot, compared to the average contractual rent of $32.64 per square foot for the last year of the prior leases. The previous average contractual rent was 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 21% for second quarter 2012. As of June 30, 2012, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $23.74 per square foot.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees increased the dividend rate on its common shares, declaring a regular quarterly cash dividend of $0.73 per share, resulting in an indicated annual rate of $2.92 per share, an increase of 5.8%. The regular common dividend will be payable on October 15, 2012, to common shareholders of record as of September 21, 2012. This increase represents the 45th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector, and amongst the longest such records for publicly traded companies in the US.

Guidance

Federal Realty increased its guidance for 2012 FFO per diluted share to a range of $4.27 to $4.31, and provided 2012 earnings per diluted share guidance of $2.31 to $2.35.  

"Our portfolio continues to produce impressive operating results, including strong lease rollover, improving occupancy and solid same-center growth," said Don Wood, president and chief executive officer of Federal Realty Investment Trust.  "These key drivers allowed us to increase our dividend for the 45th consecutive year and increase our 2012 FFO per diluted share guidance for the third consecutive quarter."

Summary of Other Quarterly Activities and Recent Developments

  • July, 2012 – Federal Realty received an approximately $6M lease termination fee from Safeway in connection with Safeway's sale of a number of its Genuardi's locations to Giant of Carlisle.  Federal was able to negotiate the fee as part of the global resolution of all three Genuardi's locations in Federal's portfolio which resulted in the assignment of two of those locations to Giant and the termination of the lease at the third location.
  • July, 2012 – Federal Realty announced the pricing of a public offering of $250 million aggregate principal amount of 3.00% senior unsecured notes due August 1, 2022.  The notes were offered at 98.743% of the principal amount with a yield to maturity of 3.147%.  Interest on the notes will be payable on February 1 and August 1 of each year, beginning February 1, 2013. 
  • July, 2012 – Federal Realty broke ground on Pike & Rose, a 3.4 million square-foot transit oriented, mixed-use development.  Maryland Governor Martin O'Malley, Lieutenant Governor Anthony Brown, County Executive Isiah Leggett, County Council President Roger Berliner, The Montgomery County Council and Don Wood, Don Briggs, and Evan Goldman of Federal Realty officially celebrated the start of construction at Pike & Rose and the creation of an estimated 688 jobs from phase one of the project.
  • July, 2012 – Federal Realty announced that Mr. James M. Taylor will succeed Mr. Andrew Blocher as chief financial officer on August 15, 2012.  The move further enhances the Trust's ability to source and evaluate corporate business development and strategic opportunities through Mr. Taylor's extensive experience and real estate relationships over the past two decades. 
  • June, 2012 – Federal Realty rang The Closing Bell at the New York Stock Exchange (NYSE) to commemorate the Trust's 50th Anniversary.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2012 earnings conference call, which is scheduled for August 2, 2012, at 11 a.m. Eastern Daylight Time.  To participate, please call (866) 362-4831 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 website, www.federalrealty.com, which will remain available for 30 days following the call.  A telephone recording of the call will also be available through September 2, 2012, by dialing (888) 286-8010 and using the passcode 72503331.

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 19.2 million square feet located primarily in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, 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 94.2% leased to national, regional, and local retailers as of June 30, 2012, with no single tenant accounting for more than 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 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.  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 16, 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 16, 2012.

Federal Realty Investment Trust

Summarized Balance Sheets

June 30, 2012

June 30,

December 31,

2012

2011

(in thousands)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $263,631 and $263,570 of consolidated variable interest entities, respectively)

$

4,264,527

$

4,232,608

Construction-in-progress

211,725

193,836

4,476,252

4,426,444

Less accumulated depreciation and amortization (including $8,497 and $4,991 of consolidated variable interest entities, respectively)

(1,169,278)

(1,127,588)

Net real estate

3,306,974

3,298,856

Cash and cash equivalents

82,774

67,806

Accounts and notes receivable, net

76,601

75,921

Mortgage notes receivable, net

55,887

55,967

Investment in real estate partnership

34,055

34,352

Prepaid expenses and other assets

124,638

133,308

TOTAL ASSETS

$

3,680,929

$

3,666,210

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages and capital lease obligations (including $206,506 and $207,683 of consolidated variable interest entities, respectively)

$

805,700

$

810,616

Notes payable

300,089

295,159

Senior notes and debentures

1,004,532

1,004,635

Accounts payable and other liabilities

222,292

229,871

Total liabilities

2,332,613

2,340,281

Redeemable noncontrolling interests

81,858

85,325

Shareholders' equity

Preferred shares

9,997

9,997

Common shares and other shareholders' equity

1,232,084

1,206,095

Total shareholders' equity of the Trust

1,242,081

1,216,092

Noncontrolling interests

24,377

24,512

Total shareholders' equity

1,266,458

1,240,604

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,680,929

$

3,666,210

Federal Realty Investment Trust

Summarized Income Statements

June 30, 2012

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

(in thousands, except per share data)

(unaudited)

Revenue

Rental income

$

141,796

$

133,000

$

282,457

$

267,438

Other property income

4,478

2,146

8,840

4,236

Mortgage interest income

1,286

1,134

2,552

2,255

Total revenue

147,560

136,280

293,849

273,929

Expenses

Rental expenses

26,906

25,133

53,016

54,535

Real estate taxes

16,537

15,547

32,594

30,954

General and administrative

7,139

6,395

14,143

12,446

Depreciation and amortization

35,199

31,871

71,770

62,287

Total operating expenses

85,781

78,946

171,523

160,222

Operating income

61,779

57,334

122,326

113,707

Other interest income

112

20

319

35

Interest expense

(28,733)

(23,905)

(57,526)

(48,949)

Early extinguishment of debt

296

Income from real estate partnerships

438

444

739

767

Income from continuing operations

33,596

33,893

65,858

65,856

Discontinued operations

Discontinued operations - income

509

930

Discontinued operations - gain on deconsolidation of VIE

2,026

2,026

Discontinued operations - gain on sale of real estate

43

43

Results from discontinued operations

2,578

2,999

Income before gain on sale of real estate

33,596

36,471

65,858

68,855

Gain on sale of real estate in real estate partnership

11,860

Net income

33,596

36,471

77,718

68,855

Net income attributable to noncontrolling interests

(993)

(1,714)

(2,129)

(2,912)

Net income attributable to the Trust

32,603

34,757

75,589

65,943

Dividends on preferred shares

(135)

(135)

(271)

(271)

Net income available for common shareholders

$

32,468

$

34,622

$

75,318

$

65,672

EARNINGS PER COMMON SHARE, BASIC

Continuing operations

$

0.51

$

0.51

$

0.99

$

1.01

Discontinued operations

0.04

0.05

Gain on sale of real estate

0.19

$

0.51

$

0.55

$

1.18

$

1.06

Weighted average number of common shares, basic

63,700

62,214

63,556

61,844

EARNINGS PER COMMON SHARE, DILUTED

Continuing operations

$

0.51

$

0.51

$

0.99

$

1.00

Discontinued operations

0.04

0.05

Gain on sale of real estate

0.19

$

0.51

$

0.55

$

1.18

$

1.05

Weighted average number of common shares, diluted

63,880

62,391

63,732

62,012

Federal Realty Investment Trust

Funds From Operations

June 30, 2012

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income

$

33,596

$

36,471

$

77,718

$

68,855

Net income attributable to noncontrolling interests

(993)

(1,714)

(2,129)

(2,912)

Gain on sale of real estate

(43)

(43)

Gain on sale of real estate in real estate partnership

(11,860)

Gain on deconsolidation of VIE

(2,026)

(2,026)

Depreciation and amortization of real estate assets

31,357

28,463

63,772

56,052

Amortization of initial direct costs of leases

2,670

2,813

5,606

5,053

Depreciation of joint venture real estate assets

375

431

756

858

Funds from operations

67,005

64,395

133,863

125,837

Dividends on preferred shares

(135)

(135)

(271)

(271)

Income attributable to operating partnership units

224

241

471

484

Income attributable to unvested shares

(316)

(228)

(631)

(508)

FFO

$

66,778

$

64,273

$

133,432

$

125,542

FFO per diluted share

$

1.04

$

1.02

$

2.08

$

2.01

Weighted average number of common shares, diluted

64,204

62,752

64,074

62,373

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

June 30, 2012

2012 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

154

$

156

Net income attributable to noncontrolling interests

(5)

(5)

Gain on sale of real estate in real estate partnership

(12)

(12)

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

126

126

Amortization of initial direct costs of leases

12

12

Funds from operations

276

278

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

1

1

Income attributable to unvested shares

(1)

(1)

FFO

$

275

$

277

Weighted average number of common shares, diluted

64.3

64.3

FFO per diluted share

$

4.27

$

4.31

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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