Federal Realty Investment Trust Announces Second Quarter 2014 Operating Results

ROCKVILLE, Md., Aug. 7, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2014.

Financial Results

In the second quarter 2014, Federal Realty generated funds from operations available for common shareholders (FFO) of $83.6 million, or $1.23 per diluted share. This compares to FFO of $71.1 million, or $1.08 per diluted share, in second quarter 2013. For the six months ended June 30, 2014, Federal Realty reported FFO of $165.4 million, or $2.43 per diluted share, compared to $145.2 million, or $2.22 per diluted share for the same six month period in 2013. Excluding the debt prepayment charge in the second quarter 2013, FFO per diluted share was $1.14 in second quarter 2013 and $2.27 for the six months ended June 30, 2013.

Net income available for common shareholders was $43.4 million and earnings per diluted share was $0.64 for the quarter ended June 30, 2014 versus $37.4 million and $0.57, respectively, for second quarter 2013.  Year-to-date, Federal Realty reported net income available for common shareholders of $82.0 million and earnings per diluted share of $1.22.  This compares to net income available for common shareholders of $71.9 million and earnings per diluted share of $1.10 for the six months ended June 30, 2013.

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 2014, same-center property operating income increased 4.2% including redevelopment and expansion properties. When redevelopment and expansion properties are excluded from same-center, property operating income for second quarter 2014 increased 4.0% compared to second quarter 2013.

The overall portfolio was 95.3% leased as of June 30, 2014, compared to 95.6% on March 31, 2014 and 95.3% on June 30, 2013.  Federal Realty's same-center portfolio was 95.5% leased as of June 30, 2014, compared to 95.5% on March 31, 2014 and 95.4% on June 30, 2013.

During second quarter 2014, the Trust signed 128 leases for 622,916 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 536,819 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 16%.  The weighted average contractual rent on this comparable space for the first year of the new lease is $34.93 per square foot compared to the weighted average contractual rent of $30.13 per square foot for the last year of the prior lease.  The previous weighted 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 30% for second quarter 2014.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the dividend rate on its common shares, declaring a regular quarterly cash dividend of $0.87 per share, resulting in an indicated annual rate of $3.48 per share.  This $0.09 per share increase in the regular quarterly dividend is the largest increase in the Trust's history. The regular common dividend will be payable on October 15, 2014 to common shareholders of record on September 22, 2014. This increase represents the 47th 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 team continued to deliver record bottom line results while also driving future value creation with the successful openings of the initial phases of Pike & Rose and Assembly Row, the delivery and stabilization of Misora at Santana Row and the ongoing execution of over $175 million of tactical redevelopment of our core," commented Donald C. Wood, president and chief executive officer of Federal Realty. "The continued success and growth in our business supports our decision to raise our common dividend this year by 12%, marking it as the 47th consecutive year of increased dividends, the only REIT to have such record."

Summary of Other Quarterly Activities and Recent Developments

  • June 12, 2014 – Federal Realty was presented with three prestigious honors by the Alliance for Workplace Excellence (AWE). The Trust received the 2014 Workplace Excellence Seal of Approval Award, 2014 Health & Wellness Seal of Approval Award and 2014 EcoLeadership Award. 2014 marks the seventh consecutive year Federal Realty has won Workplace Excellence and Health & Wellness awards, and the fourth year it has won the EcoLeadership award.
  • July 7, 2014 – Federal Realty announced Bank of America Merrill Lynch as the lead office tenant at Pike & Rose, the new transit-oriented, pedestrian-friendly, mixed-use neighborhood at the top of the White Flint District of North Bethesda.  Bank of America Merrill Lynch will occupy 40,000 square feet, half of the 80,000 square foot LEED certified, Class "A" office building at 11810 Grand Park Avenue in Phase 1 of Pike & Rose.
  • July 24, 2014 – Federal Realty's partnership with a discretionary fund created and advised by ING Clarion Partners closed on the sale of Pleasant Shops in South Weymouth, Massachusetts for a sales price of $34.3 million.

Guidance

We have updated our 2014 guidance for FFO per diluted share to a range of $4.90 to $4.94.  Our earnings per share guidance was updated to $2.55 to $2.61.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2014 earnings conference call, which is scheduled for August 8, 2014, at 11 a.m. Eastern Daylight Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 65481268 (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 August 15, 2014, by dialing (855) 859-2056 and using the passcode 65481268.

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, 2014, 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 47 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 11, 2014, 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 11, 2014.

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

 

 

Federal Realty Investment Trust

Summarized Balance Sheets

June 30, 2014


June 30,


December 31,


2014


2013


(in thousands)


(unaudited)




ASSETS






Real estate, at cost






Operating (including $281,311 and $265,138 of consolidated variable interest entities, respectively)

$

5,004,993



$

4,618,258


Construction-in-progress

472,570



531,205



5,477,563



5,149,463


Less accumulated depreciation and amortization (including $22,840 and $19,086 of consolidated variable interest entities, respectively)

(1,417,376)



(1,350,471)


Net real estate

4,060,187



3,798,992


Cash and cash equivalents

41,312



88,927


Accounts and notes receivable, net

97,741



84,838


Mortgage notes receivable, net

54,932



55,155


Investment in real estate partnership

35,511



32,264


Prepaid expenses and other assets

141,802



159,118


TOTAL ASSETS

$

4,431,485



$

4,219,294








LIABILITIES AND SHAREHOLDERS' EQUITY






Liabilities






Mortgages and capital lease obligations (including $188,739 and $202,782 of consolidated variable interest, entities respectively)

705,704



660,127


Notes payable

290,765



300,822


Senior notes and debentures

1,361,282



1,360,913


Accounts payable and other liabilities

344,990



321,710


Total liabilities

2,702,741



2,643,572


Redeemable noncontrolling interests

110,688



104,425


Shareholders' equity






Preferred shares

9,997



9,997


Common shares and other shareholders' equity

1,519,764



1,438,163


Total shareholders' equity of the Trust

1,529,761



1,448,160


    Noncontrolling interests

88,295



23,137


Total shareholders' equity

1,618,056



1,471,297


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,431,485



$

4,219,294


 

Federal Realty Investment Trust










Summarized Income Statements











June 30, 2014













Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013


(in thousands, except per share data)


(unaudited)

Revenue












Rental income

$

162,383



$

153,212



$

328,576



$

305,828


Other property income

4,325



2,913



7,725



6,181


Mortgage interest income

1,239



1,263



2,474



2,528


Total revenue

167,947



157,388



338,775



314,537


Expenses












Rental expenses

31,405



28,209



68,535



57,710


Real estate taxes

19,164



17,632



37,864



35,204


General and administrative

8,124



8,302



15,828



15,359


Depreciation and amortization

40,893



39,757



84,743



80,274


Total operating expenses

99,586



93,900



206,970



188,547


Operating income

68,361



63,488



131,805



125,990


Other interest income

18



65



43



95


Interest expense

(23,213)



(27,147)



(46,350)



(54,552)


Early extinguishment of debt



(3,399)





(3,399)


Income from real estate partnership

250



372



463



684


Income from continuing operations

45,416



33,379



85,961



68,818


Discontinued operations












Discontinued operations - income



424





827


Income before gain on sale of real estate

45,416



33,803



85,961



69,645


Gain on sale of real estate



4,994





4,994


Net income

45,416



38,797



85,961



74,639


   Net income attributable to noncontrolling interests

(1,871)



(1,258)



(3,663)



(2,512)


Net income attributable to the Trust

43,545



37,539



82,298



72,127


Dividends on preferred shares

(135)



(135)



(271)



(271)


Net income available for common shareholders

$

43,410



$

37,404



$

82,027



$

71,856














EARNINGS PER COMMON SHARE, BASIC












Continuing operations

$

0.64



$

0.49



$

1.22



$

1.01


Discontinued operations







0.01


Gain on sale of real estate



0.08





0.08



$

0.64



$

0.57



$

1.22



$

1.10














Weighted average number of common shares, basic

67,110



65,149



66,858



64,922














EARNINGS PER COMMON SHARE, DILUTED












Continuing operations

$

0.64



$

0.49



$

1.22



$

1.01


Discontinued operations







0.01


Gain on sale of real estate



0.08





0.08



$

0.64



$

0.57



$

1.22



$

1.10














Weighted average number of common shares, diluted

67,277



65,311



67,021



65,080


 

Federal Realty Investment Trust













Funds From Operations




June 30, 2014















Three Months Ended


Six Months Ended



June 30,


June 30,



2014


2013


2014


2013



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)













Net income


$

45,416



$

38,797



$

85,961



$

74,639


Net income attributable to noncontrolling interests


(1,871)



(1,258)



(3,663)



(2,512)


Gain on sale of real estate




(4,994)





(4,994)


Depreciation and amortization of real estate assets


36,499



35,834



76,048



72,396


Amortization of initial direct costs of leases


2,947



2,639



5,778



5,407


Depreciation of joint venture real estate assets


441



370



850



746


Funds from operations


83,432



71,388



164,974



145,682


Dividends on preferred shares


(135)



(135)



(271)



(271)


Income attributable to operating partnership units


715



215



1,431



442


Income attributable to unvested shares


(377)



(320)



(752)



(656)


FFO


$

83,635



$

71,148



$

165,382



$

145,197


Early extinguishment of debt, net of allocation to unvested shares




3,383





3,383


       FFO excluding early extinguishment of debt


$

83,635



$

74,531



$

165,382



$

148,580


Weighted average number of common shares, diluted


68,194



65,605



67,939



65,383















FFO per diluted share


$

1.23



$

1.08



$

2.43



$

2.22















FFO excluding early extinguishment of debt, per diluted share


$

1.23



$

1.14



$

2.43



$

2.27















 

 

Federal Realty Investment Trust






Reconciliation of Net Income to FFO Guidance






June 30, 2014













2014 Guidance


(Dollars in millions except


 per share amounts) (1)

Funds from Operations available for common shareholders (FFO)






Net income

$

181



$

185


Net income attributable to noncontrolling interests

(8)



(8)


Gain on sale of real estate

(5)



(5)


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

153



153


Amortization of initial direct costs of leases

11



11


Funds from operations

334



337


Dividends on preferred shares

(1)



(1)


Income attributable to operating partnership units

3



3


Income attributable to unvested shares

(1)



(1)


FFO

$

335



$

338








Weighted average number of common shares, diluted

68.3



68.3








FFO per diluted share

$

4.90



$

4.94



Note:

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

 

 

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SOURCE Federal Realty Investment Trust



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