Federal Realty Investment Trust Announces Second Quarter 2015 Operating Results

Aug 05, 2015, 16:09 ET from Federal Realty Investment Trust

ROCKVILLE, Md., Aug. 5, 2015 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2015.

Financial Results In the second quarter 2015, Federal Realty generated funds from operations available for common shareholders (FFO) excluding early extinguishment of debt of $92.9 million, or $1.33 per diluted share. This compares to FFO of $83.6 million, or $1.23 per diluted share, in second quarter 2014. FFO, which includes the $19.1 million early extinguishment of debt charge, was $73.9 million, or $1.06 per diluted share for the second quarter 2015. For the six months ended June 30, 2015, FFO excluding early extinguishment of debt was $180.2 million, or $2.59 per diluted share, compared to $165.4 million, or $2.43 per diluted share for the same six month period in 2014. FFO was $161.2 million, or $2.32 per diluted share, for the six months ended June 30, 2015.

Net income available for common shareholders was $43.5 million and earnings per diluted share was $0.63 for second quarter 2015, versus $43.4 million and $0.64, respectively, for second quarter 2014.  Year-to-date, Federal Realty reported net income available for common shareholders of $89.5 million and earnings per diluted share of $1.30. This compares to net income available for common shareholders of $82.0 million and earnings per diluted share of $1.22 for the six months ended June 30, 2014.

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 2015, same-center property operating income increased 4.8% over the prior year when including properties that are being redeveloped and 3.0% when excluding those properties.

The overall portfolio was 95.7% leased as of June 30, 2015, compared to 95.4% on March 31, 2015 and 95.3% on June 30, 2014.  Federal Realty's same center portfolio was 96.2% leased on June 30, 2015, compared to 96.0% leased on March 31, 2015 and 95.9% on June 30, 2014.

During second quarter 2015, Federal Realty signed 85 leases for 313,887 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 296,946 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 $30.41 per square foot compared to the average contractual rent of $26.36 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 25% for second quarter 2015. As of June 30, 2015, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $25.74 per square foot.

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 $0.94 per share, resulting in an indicated annual rate of $3.76 per share, an increase of 8.0%. The regular common dividend will be payable on October 15, 2015 to common shareholders of record on September 22, 2015. This increase represents the 48th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector, and among the longest such records for publicly traded companies in the US.

"We are thrilled to report another strong quarter, and importantly, our 48th consecutive annual dividend increase, extending our best in class track record of consistent growth," commented Donald C. Wood, President and Chief Executive Officer of Federal Realty. "The continued performance of our core portfolio, coupled with the successful deliveries of redevelopment projects and the initial phases of Assembly Row and Pike & Rose, positions us exceptionally well for the future."

Summary of Other Quarterly Activities and Recent Developments

  • April 24, 2015 – Federal Realty closed on the sale of its Houston St. property in San Antonio, Texas, for a sales price of $46.1 million, and realized a gain of $11.5 million.
  • May 4, 2015 – Federal Realty acquired an 80% interest in a 198,000 square foot lifestyle center in South Florida, based on a total value of $87.5 million. Situated in the resurgent Coconut Grove District, at the prominent intersection of Main Highway and Grand Avenue, CocoWalk is well located to serve the affluent, year round residents of Miami-Dade. On July 1, 2015 Federal Realty acquired partial interests in seven street retail buildings, also in the Coconut Grove District, for a total investment of $5.8 million.
  • May 21, 2015 – Federal Realty was presented with three prestigious honors by the Alliance for Workplace Excellence (AWE). The Trust received the 2015 Workplace Excellence Seal of Approval Award, 2015 Health & Wellness Seal of Approval Award and 2015 EcoLeadership Award. 2015 marks the eighth consecutive year Federal Realty has won Workplace Excellence and Health & Wellness awards, and the fifth year it has won the EcoLeadership award.
  • August 3, 2015 – Federal Realty repaid at par $147 million of mortgage loans due November 2015, with an average interest rate of 7.9%.

Guidance Federal Realty increased the midpoint of its 2015 guidance for FFO to $5.29 to $5.33 per diluted share excluding early extinguishment of debt, and updated earnings per diluted share to $2.78 to $2.82.

Conference Call Information Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2015 earnings conference call, which is scheduled for August 6, 2015, at 10 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 68926054 (required).  Federal Realty will also provide an online webcast on the Company's web site, http://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 13, 2015, by dialing (855) 859-2056 and using the passcode 68926054.

About Federal Realty Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles.  Founded in 1962, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply.  Our expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities.  Federal Realty's 90 properties include over 2,600 tenants, in approximately 21 million square feet, and 1500 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 48 consecutive years, the longest record in the REIT industry. Federal Realty shares are traded on the NYSE under the symbol FRT. For additional information about Federal Realty and its properties, 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 10, 2015, 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 renovation projects that we do pursue 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 costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, 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 10, 2015.

Investor Inquiries

Media Inquiries

Brittany Schmelz

Andrea Simpson

Investor Relations Coordinator

Director, Marketing

301/998-8265

617/684-1511

bschmelz@federalrealty.com

asimpson@federalrealty.com

 

Federal Realty Investment Trust

Summarized Balance Sheets

June 30, 2015

June 30,

December 31,

2015

2014

(in thousands)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $355,241 and $282,303 of consolidated variable interest entities, respectively)

$

5,336,688

$

5,128,757

Construction-in-progress

507,491

480,241

5,844,179

5,608,998

Less accumulated depreciation and amortization (including $30,099 and $26,618 of consolidated variable interest entities, respectively)

(1,508,397)

(1,467,050)

Net real estate

4,335,782

4,141,948

Cash and cash equivalents

22,175

47,951

Accounts and notes receivable, net

106,218

93,291

Mortgage notes receivable, net

50,677

50,988

Investment in real estate partnerships

37,748

37,457

Prepaid expenses and other assets

181,238

175,235

TOTAL ASSETS

$

4,733,838

$

4,546,870

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages and capital lease obligations (including $179,303 and $187,632 of consolidated variable interest entities, respectively)

$

648,079

$

635,345

Notes payable

396,911

290,519

Senior notes and debentures

1,494,515

1,483,813

Accounts payable and other liabilities

332,407

325,584

Total liabilities

2,871,912

2,735,261

Redeemable noncontrolling interests

120,360

119,053

Shareholders' equity

Preferred shares

9,997

9,997

Common shares and other shareholders' equity

1,625,575

1,594,404

Total shareholders' equity of the Trust

1,635,572

1,604,401

    Noncontrolling interests

105,994

88,155

Total shareholders' equity

1,741,566

1,692,556

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,733,838

$

4,546,870

Federal Realty Investment Trust

Summarized Income Statements

June 30, 2015

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

(in thousands, except per share data)

(unaudited)

Revenue

Rental income

$

175,884

$

162,383

$

357,050

$

328,576

Other property income

4,420

4,325

6,885

7,725

Mortgage interest income

1,157

1,239

2,318

2,474

Total revenue

181,461

167,947

366,253

338,775

Expenses

Rental expenses

32,623

31,405

74,062

68,535

Real estate taxes

20,667

19,164

41,061

37,864

General and administrative

9,299

8,124

18,152

15,828

Depreciation and amortization

42,671

40,893

84,655

84,743

Total operating expenses

105,260

99,586

217,930

206,970

Operating income

76,201

68,361

148,323

131,805

Other interest income

74

18

103

43

Interest expense

(23,445)

(23,213)

(47,613)

(46,350)

Early extinguishment of debt

(19,072)

(19,072)

Income from real estate partnerships

406

250

626

463

Income from continuing operations

34,164

45,416

82,367

85,961

Gain on sale of real estate

11,509

11,509

Net income

45,673

45,416

93,876

85,961

   Net income attributable to noncontrolling interests

(2,041)

(1,871)

(4,058)

(3,663)

Net income attributable to the Trust

43,632

43,545

89,818

82,298

Dividends on preferred shares

(135)

(135)

(271)

(271)

Net income available for common shareholders

$

43,497

$

43,410

$

89,547

$

82,027

EARNINGS PER COMMON SHARE, BASIC

Continuing operations

$

0.46

$

0.64

$

1.13

$

1.22

Gain on sale of real estate

0.17

0.17

$

0.63

$

0.64

$

1.30

$

1.22

Weighted average number of common shares, basic

68,531

67,110

68,449

66,858

EARNINGS PER COMMON SHARE, DILUTED

Continuing operations

$

0.46

$

0.64

$

1.13

$

1.22

Gain on sale of real estate

0.17

0.17

$

0.63

$

0.64

$

1.30

$

1.22

Weighted average number of common shares, diluted

68,713

67,277

68,638

67,021

Federal Realty Investment Trust

Funds From Operations

June 30, 2015

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income

$

45,673

$

45,416

$

93,876

$

85,961

Net income attributable to noncontrolling interests

(2,041)

(1,871)

(4,058)

(3,663)

Gain on sale of real estate

(11,509)

(11,509)

Depreciation and amortization of real estate assets

37,390

36,499

74,344

76,048

Amortization of initial direct costs of leases

3,676

2,947

7,116

5,778

Depreciation of joint venture real estate assets

336

441

666

850

Funds from operations

73,525

83,432

160,435

164,974

Dividends on preferred shares

(135)

(135)

(271)

(271)

Income attributable to operating partnership units

808

715

1,641

1,431

Income attributable to unvested shares

(256)

(377)

(573)

(752)

FFO

$

73,942

$

83,635

$

161,232

$

165,382

Early extinguishment of debt, net of allocation to unvested shares

19,006

19,006

FFO excluding early extinguishment of debt

$

92,948

$

83,635

$

180,238

$

165,382

       Weighted average number of common shares, diluted

69,647

68,194

69,581

67,939

FFO per diluted share

$

1.06

$

1.23

$

2.32

$

2.43

FFO excluding early extinguishment of debt, per diluted share

$

1.33

$

1.23

$

2.59

$

2.43

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

June 30, 2015

2015 Guidance

(Dollars in millions except

 per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

202

$

205

Net income attributable to noncontrolling interests

(8)

(8)

Gain on sale of real estate

(12)

(12)

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

154

154

Amortization of initial direct costs of leases

14

14

Funds from operations

350

353

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

3

3

Income attributable to unvested shares

(1)

(1)

FFO

$

352

$

355

Early extinguishment of debt, net of allocation to unvested shares

19

19

FFO excluding early extinguishment of debt

$

371

$

374

Weighted average number of common shares, diluted

70.1

70.1

FFO excluding early extinguishment of debt, per diluted share

$

5.29

$

5.33

Note:

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

SOURCE Federal Realty Investment Trust



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