Federal Realty Investment Trust Announces Third Quarter 2012 Operating Results

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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