Federal Realty Investment Trust Announces Third Quarter 2012 Operating Results

Nov 01, 2012, 16:30 ET from Federal Realty Investment Trust

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

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Financial Results In the third quarter 2012, Federal Realty generated funds from operations available for common shareholders (FFO) of $72.1 million, or $1.12 per diluted share. This compares to FFO of $63.9 million, or $1.01 per diluted share, in third quarter 2011.  For the nine months ended September 30, 2012, Federal Realty reported FFO of $205.5 million, or $3.20 per diluted share, compared to $189.5 million, or $3.02 per diluted share for the same nine-month period in 2011.

Net income available for common shareholders was $38.5 million and earnings per diluted share was $0.60 for the quarter ended September 30, 2012 versus $46.9 million and $0.74, respectively, for third quarter 2011.  Year-to-date, Federal Realty reported net income available for common shareholders of $113.8 million and earnings per diluted share of $1.77.  This compares to net income available for common shareholders of $112.6 million and earnings per diluted share of $1.80 for the nine months ended September 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 third quarter 2012, same-center property operating income increased 10.3% (4.0% excluding the lease termination fee from Safeway described below) over third quarter 2011.  When redevelopment and expansion properties are excluded from same-center results, property operating income for third quarter 2012 increased 10.4% (3.5% excluding the lease termination fee from Safeway described below) compared to third quarter 2011. 

The overall portfolio was 95.1% leased as of September 30, 2012, compared to 94.2% on June 30, 2012 and 93.3% on September 30, 2011.  Federal Realty's same-center portfolio was 95.0% leased on September 30, 2012, compared to 94.8% on June 30, 2012 and 94.3% on September 30, 2011.

During the third quarter of 2012, Federal Realty signed 109 leases for 531,573 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 504,082 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 $28.43 per square foot, compared to the average contractual rent of $25.63 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 third quarter 2012. As of September 30, 2012, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $23.95 per square foot.

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.73 per share, resulting in an indicated annual rate of $2.92 per share. The regular common dividend will be payable on January 15, 2013, to common shareholders of record as of January 2, 2013.

Guidance

Federal Realty updated its guidance for 2012 FFO per diluted share to a range of $4.29 to $4.31 and 2012 earnings per diluted share guidance of $2.35 to $2.37. In addition, Federal Realty provided initial 2013 FFO per diluted share guidance of $4.50 to $4.56 and 2013 earnings per diluted share guidance of $2.39 to $2.45

"We delivered a record quarter driven by strong leasing, improving occupancy and increasing rents, all of which were further augmented by larger lease termination fees," commented Don Wood, president and chief executive officer of Federal Realty.  "Looking forward, we expect to see continued strong performance in our core portfolio, complemented by our active development/redevelopment pipeline and potential acquisitions."

Summary of Other Quarterly Activities and Recent Developments

  • October 2012 – Federal Realty announced that Harold Nafash has joined the Trust as senior director of acquisitions, northeast.  Mr. Nafash will be based out of New Jersey, and will source and underwrite retail acquisitions in the Trust's core markets within the Northeast region, including metropolitan New York, Boston, and Philadelphia.
  • August 2012 – As previously announced, Mr. James M. Taylor succeeded Mr. Andrew Blocher as chief financial officer effective August 15, 2012.  Following a transition, Mr. Blocher left the Trust effective September 30, 2012.  The Company incurred approximately $2.1 million in costs associated with the CFO transition. 
  • July 2012 – As previously announced, Federal Realty received an approximately $6 million termination fee from Safeway in connection with the termination of its Genuardi's lease at our Ellisburg property.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2012 earnings conference call, which is scheduled for November 2, 2012, at 11 a.m. Eastern Daylight Time.  To participate, please call (866) 271-0675 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 December 2, 2012, by dialing (888) 286-8010 and using the passcode 67340939.

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 19.1 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 95.1% leased to national, regional, and local retailers as of September 30, 2012, with no single tenant accounting for more than approximately 3.1% 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

September 30, 2012

September 30,

December 31,

2012

2011

(in thousands)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $263,664 and $263,570 of consolidated variable interest entities,           respectively)

$

4,276,146

$

4,232,608

Construction-in-progress

264,982

193,836

4,541,128

4,426,444

Less accumulated depreciation and amortization (including $10,253 and $4,991 of           consolidated variable interest entities, respectively)

(1,195,336)

(1,127,588)

Net real estate

3,345,792

3,298,856

Cash and cash equivalents

147,680

67,806

Accounts and notes receivable, net

82,152

75,921

Mortgage notes receivable, net

55,661

55,967

Investment in real estate partnership

33,871

34,352

Prepaid expenses and other assets

139,183

133,308

TOTAL ASSETS

$

3,804,339

$

3,666,210

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages and capital lease obligations (including $205,907 and $207,683 of           consolidated variable interest entities, respectively)

$

802,341

$

810,616

Notes payable

299,618

295,159

Senior notes and debentures

1,076,456

1,004,635

Accounts payable and other liabilities

232,151

229,871

Total liabilities

2,410,566

2,340,281

Redeemable noncontrolling interests

81,851

85,325

Shareholders' equity

Preferred shares

9,997

9,997

Common shares and other shareholders' equity

1,277,700

1,206,095

Total shareholders' equity of the Trust

1,287,697

1,216,092

Noncontrolling interests

24,225

24,512

Total shareholders' equity

1,311,922

1,240,604

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,804,339

$

3,666,210

 

Federal Realty Investment Trust

Summarized Income Statements

September 30, 2012

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

(in thousands, except per share data)

(unaudited)

Revenue

Rental income

$

147,515

$

134,014

$

429,972

$

401,452

Other property income

9,008

2,341

17,848

6,577

Mortgage interest income

1,282

1,309

3,834

3,564

Total revenue

157,805

137,664

451,654

411,593

Expenses

Rental expenses

29,679

26,595

82,695

81,130

Real estate taxes

17,320

15,047

49,914

46,001

General and administrative

8,751

7,197

22,894

19,643

Depreciation and amortization

34,932

32,068

106,702

94,355

Total operating expenses

90,682

80,907

262,205

241,129

Operating income

67,123

56,757

189,449

170,464

Other interest income

261

136

580

171

Interest expense

(28,218)

(23,795)

(85,744)

(72,744)

Early extinguishment of debt

296

Income from real estate partnerships

490

434

1,229

1,201

Income from continuing operations

39,656

33,532

105,514

99,388

Discontinued operations

Discontinued operations - income

13

943

Discontinued operations - gain on deconsolidation of VIE

2,026

Discontinued operations - gain on sale of real estate

14,757

14,800

Results from discontinued operations

14,770

17,769

Income before gain on sale of real estate

39,656

48,302

105,514

117,157

Gain on sale of real estate in real estate partnership

11,860

Net income

39,656

48,302

117,374

117,157

Net income attributable to noncontrolling interests

(1,012)

(1,249)

(3,141)

(4,161)

Net income attributable to the Trust

38,644

47,053

114,233

112,996

Dividends on preferred shares

(136)

(136)

(406)

(406)

Net income available for common shareholders

$

38,508

$

46,917

$

113,827

$

112,590

EARNINGS PER COMMON SHARE, BASIC

Continuing operations

$

0.60

$

0.51

$

1.59

$

1.52

Discontinued operations

0.23

0.28

Gain on sale of real estate

0.19

$

0.60

$

0.74

$

1.78

$

1.80

Weighted average number of common shares, basic

64,014

62,818

63,711

62,172

EARNINGS PER COMMON SHARE, DILUTED

Continuing operations

$

0.60

$

0.51

$

1.58

$

1.52

Discontinued operations

0.23

0.28

Gain on sale of real estate

0.19

$

0.60

$

0.74

$

1.77

$

1.80

Weighted average number of common shares, diluted

64,202

62,990

63,891

62,341

 

Federal Realty Investment Trust

Funds From Operations

September 30, 2012

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income

$

39,656

$

48,302

$

117,374

$

117,157

Net income attributable to noncontrolling interests

(1,012)

(1,249)

(3,141)

(4,161)

Gain on sale of real estate

(14,757)

(14,800)

Gain on sale of real estate in real estate partnership

(11,860)

Gain on deconsolidation of VIE

(2,026)

Depreciation and amortization of real estate assets

30,556

28,671

94,328

84,723

Amortization of initial direct costs of leases

2,724

2,684

8,330

7,737

Depreciation of joint venture real estate assets

377

446

1,133

1,304

Funds from operations

72,301

64,097

206,164

189,934

Dividends on preferred shares

(136)

(136)

(406)

(406)

Income attributable to operating partnership units

236

249

707

733

Income attributable to unvested shares

(340)

(285)

(970)

(793)

FFO

$

72,061

$

63,925

$

205,495

$

189,468

FFO per diluted share

$

1.12

$

1.01

$

3.20

$

3.02

Weighted average number of common shares, diluted

64,526

63,350

64,227

62,702

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

September 30, 2012

2012 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

156

$

158

Net income attributable to noncontrolling interests

(4)

(4)

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

11

11

Funds from operations

277

278

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

1

1

Income attributable to unvested shares

(1)

(1)

FFO

$

276

$

278

Weighted average number of common shares, diluted

64.4

64.4

FFO per diluted share

$

4.29

$

4.31

2013 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

163

$

167

Net income attributable to noncontrolling interests

(5)

(5)

Gain on sale of real estate in real estate partnership

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

128

128

Amortization of initial direct costs of leases

11

11

Funds from operations

297

301

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

1

1

Income attributable to unvested shares

(1)

(1)

FFO

$

297

$

300

Weighted average number of common shares, diluted

65.9

65.9

FFO per diluted share

$

4.50

$

4.56

Note:

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

Investor Inquires

Media Inquiries

Kristina Lennox

Andrea Simpson

Investor Relations Coordinator

Director, Marketing

301/998-8265

617/684-1511

klennox@federalrealty.com

asimpson@federalrealty.com

 

SOURCE Federal Realty Investment Trust



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