Federal Realty Investment Trust Announces Second Quarter 2013 Operating Results - FFO per share, as adjusted, increases 9.6% to $1.14 for the quarter -

- Common dividend increased for record 46th consecutive year -

ROCKVILLE, Md., Aug. 1, 2013 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20050907/DCW070LOGO )

Financial Results

In the second quarter 2013, Federal Realty generated funds from operations available for common shareholders (FFO) of $71.1 million or $1.08 per diluted share.  This compares to FFO of $66.8 million, or $1.04 per diluted share, in second quarter 2012.  For the six months ended June 30, 2013, Federal Realty reported FFO of $145.2 million, or $2.22 per diluted share, compared to $133.4 million, or $2.08 per diluted share for the same six-month period in 2012. The Trust's reported results include a $3.4 million charge related to the make-whole premium for prepaying the Trust's 5.40% senior notes from the proceeds of the new 2.75% senior notes issuance completed in the second quarter.  Excluding this charge, FFO per diluted share increased 9.6% to $1.14 in second quarter 2013 and 9.1% to $2.27 for the six months ended June 30, 2013.

Net income available for common shareholders was $37.4 million and earnings per diluted share was $0.57 for the quarter ended June 30, 2013 versus $32.5 million and $0.51, respectively, for second quarter 2012.  Year-to-date, Federal Realty reported net income available for common shareholders of $71.9 million and earnings per diluted share of $1.10.  This compares to net income available for common shareholders of $75.3 million and earnings per diluted share of $1.18 for the six months ended June 30, 2012.

FFO is a non-GAAP supplemental earnings measure 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 second quarter 2013, same-center property operating income increased 5.0% over second quarter 2012.  When redevelopment and expansion properties are excluded from same-center results, property operating income for second quarter 2013 increased 5.2% compared to second quarter 2012. 

The overall portfolio was 95.3% leased as of June 30, 2013, compared to 95.1% on March 31, 2013 and 94.2% on June 30, 2012.  Federal Realty's same-center portfolio was 95.3% leased on June 30, 2013, compared to 95.1% on March 31, 2013 and 95.0% on June 30, 2012.

During the second quarter of 2013, Federal Realty signed 111 leases for 504,605 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 470,832 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 15%. The average contractual rent on this comparable space for the first year of the new leases is $31.10 per square foot, compared to the average contractual rent of $27.00 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 29% for second quarter 2013. As of June 30, 2013, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $24.29 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 $0.78 per share, resulting in an indicated annual rate of $3.12 per share, an increase of 6.8%. The regular common dividend will be payable on October 15, 2013, to common shareholders of record as of September 23, 2013. This increase represents the 46th 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.

"Our portfolio continues to outperform expectations and our leasing activity, which produced rollover growth in excess of 15%, sets us up well for the future. We are also pleased with the progress and momentum in our development pipeline and the value creation we expect it to deliver," said Don Wood, president and chief executive officer of Federal Realty Investment Trust.  "Finally, we are proud to increase our dividend for the 46th consecutive year, the only REIT to have such record."

Guidance

Federal Realty increased guidance, excluding the $3.4 million debt prepayment charge, for 2013 FFO per diluted share to a range of $4.56 to $4.60, and provided 2013 earnings per diluted share guidance of $2.41 to $2.45

Summary of Other Quarterly Activities and Recent Developments

  • May 9, 2013 – Federal Realty announced the closing of its public offering of $275 million aggregate principal amount of 2.75% senior unsecured notes due June 1, 2023. 
  • June 10, 2013 – Federal Realty announced the redemption of its 5.40% Senior Unsecured notes due December 1, 2013 (the "Notes") for aggregate principal of $135 million.  The redemption price was approximately $138.5 million, including $0.2 million of accrued and unpaid interest.
  • July 22, 2013 – Federal Realty closed on the sale of its 5th Avenue asset in San Diego, and entered into an agreement to sell its Forest Hills asset in Long Island, New York.  The total sales price for the two assets is $36 million.  The Forest Hills sale is still subject to buyer's due diligence.  These asset sales are part of a reverse 1031 exchange in connection with the acquisition of our shopping center in Darien, Connecticut in April 2013.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2013 earnings conference call, which is scheduled for August 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 35097821 (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 1, 2013, by dialing (888) 843-7419 and using the passcode 35097821.

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 June 30, 2013, with no single tenant accounting for more than approximately 3.4% 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 46 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

June 30, 2013


June 30,


December 31,


2013


2012


(in thousands)


(unaudited)



ASSETS




Real estate, at cost




Operating (including $264,821 and $264,506 of consolidated

variable interest entities, respectively)

$

4,550,534



$

4,490,960


Construction-in-progress

401,385



288,714



4,951,919



4,779,674


Less accumulated depreciation and amortization (including $15,579

and $12,024 of consolidated variable interest entities, respectively)

(1,286,923)



(1,224,295)


Net real estate

3,664,996



3,555,379


Cash and cash equivalents

108,366



36,988


Accounts and notes receivable, net

84,103



73,861


Mortgage notes receivable, net

55,494



55,648


Investment in real estate partnership

33,029



33,169


Prepaid expenses and other assets

139,215



143,520


TOTAL ASSETS

$

4,085,203



$

3,898,565






LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages and capital lease obligations (including $204,055 and

$205,299 of consolidated variable interest entities, respectively)

$

796,666



$

832,482


Notes payable

299,979



299,575


Senior notes and debentures

1,213,333



1,076,545


Accounts payable and other liabilities

297,288



284,950


Total liabilities

2,607,266



2,493,552


Redeemable noncontrolling interests

94,150



94,420


Shareholders' equity




Preferred shares

9,997



9,997


Common shares and other shareholders' equity

1,350,720



1,276,815


Total shareholders' equity of the Trust

1,360,717



1,286,812


Noncontrolling interests

23,070



23,781


Total shareholders' equity

1,383,787



1,310,593


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,085,203



$

3,898,565


 


Federal Realty Investment Trust

Summarized Income Statements

June 30, 2013










Three Months Ended


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012


(in thousands, except per share data)


(unaudited)

Revenue








Rental income

$

153,769



$

141,796



$

306,988



$

282,457


Other property income

2,915



4,478



6,183



8,840


Mortgage interest income

1,263



1,286



2,528



2,552


    Total revenue

157,947



147,560



315,699



293,849


Expenses








Rental expenses

28,229



26,906



57,744



53,016


Real estate taxes

17,650



16,537



35,301



32,594


General and administrative

8,302



7,139



15,359



14,143


Depreciation and amortization

39,853



35,199



80,477



71,770


    Total operating expenses

94,034



85,781



188,881



171,523


Operating income

63,913



61,779



126,818



122,326


Other interest income

64



112



94



319


Interest expense

(27,147)



(28,733)



(54,552)



(57,526)


Early extinguishment of debt

(3,399)





(3,399)




Income from real estate partnerships

372



438



684



739


Income from continuing operations

33,803



33,596



69,645



65,858


Gain on sale of real estate

4,994





4,994



11,860


Net income

38,797



33,596



74,639



77,718


Net income attributable to noncontrolling interests

(1,258)



(993)



(2,512)



(2,129)


Net income attributable to the Trust

37,539



32,603



72,127



75,589


Dividends on preferred shares

(135)



(135)



(271)



(271)


Net income available for common shareholders

$

37,404



$

32,468



$

71,856



$

75,318










EARNINGS PER COMMON SHARE, BASIC








Continuing operations

$

0.49



$

0.51



$

1.02



$

0.99


Gain on sale of real estate

0.08





0.08



0.19



$

0.57



$

0.51



$

1.10



$

1.18










Weighted average number of common shares, basic

65,149



63,700



64,922



63,556










EARNINGS PER COMMON SHARE, DILUTED








Continuing operations

$

0.49



$

0.51



$

1.02



$

0.99


Gain on sale of real estate

0.08





0.08



0.19



$

0.57



$

0.51



$

1.10



$

1.18










Weighted average number of common shares, diluted

65,311



63,880



65,080



63,732


 


Federal Realty Investment Trust

Funds From Operations

June 30, 2013












Three Months Ended


Six Months Ended



June 30,


June 30,



2013


2012


2013


2012



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)









Net income


$

38,797



$

33,596



$

74,639



$

77,718


Net income attributable to noncontrolling interests


(1,258)



(993)



(2,512)



(2,129)


Gain on sale of real estate


(4,994)





(4,994)



(11,860)


Depreciation and amortization of real estate assets


35,834



31,357



72,396



63,772


Amortization of initial direct costs of leases


2,639



2,670



5,407



5,606


Depreciation of joint venture real estate assets


370



375



746



756


Funds from operations


71,388



67,005



145,682



133,863


Dividends on preferred shares


(135)



(135)



(271)



(271)


Income attributable to operating partnership units


215



224



442



471


Income attributable to unvested shares


(320)



(316)



(656)



(631)


FFO


71,148



66,778



145,197



133,432


Early extinguishment of debt, net of allocation to unvested shares


3,383





3,383




FFO excluding early extinguishment of debt


$

74,531



$

66,778



$

148,580



$

133,432


Weighted average number of common shares, diluted


65,605



64,204



65,383



64,074











FFO per diluted share


$

1.08



$

1.04



$

2.22



$

2.08











FFO excluding early extinguishment of debt, per diluted share


$

1.14



$

1.04



$

2.27



$

2.08


 

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

June 30, 2013






2013 Guidance


(Dollars in millions except


per share amounts) (1)

Funds from Operations available for common shareholders (FFO)




Net income

$

162



$

164


Net income attributable to noncontrolling interests

(5)



(5)


Gain on sale of real estate in real estate partnership

(16)



(16)


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

147



147


Amortization of initial direct costs of leases

11



11


Prepayment Premium on 5.40% Notes

3



3


Funds from operations excluding Prepayment Premium on 5.40% Notes

302



305


Dividends on preferred shares

(1)



(1)


Income attributable to operating partnership units

1



1


Income attributable to unvested shares

(1)



(1)


FFO excluding Prepayment Premium on 5.40% Notes

$

301



$

304






Weighted average number of common shares, diluted

66.0



66.0






FFO per diluted share

$

4.56



$

4.60



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 Manager

617/684-1511

301/998-8265

asimpson@federalrealty.com

klennox@federalrealty.com

 

 

SOURCE Federal Realty Investment Trust



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