Federal Realty Investment Trust Announces Second Quarter 2012 Operating Results - Common dividend increased for record 45th consecutive year -

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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