Federal Realty Investment Trust Announces Third Quarter 2013 Operating Results

31 Oct, 2013, 16:30 ET from Federal Realty Investment Trust

ROCKVILLE, Md., Oct. 31, 2013 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2013.

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Financial Results In the third quarter 2013, Federal Realty generated funds from operations available for common shareholders (FFO) of $76.4 million, or $1.16 per diluted share. This compares to FFO of $72.1 million, or $1.12 per diluted share, in third quarter 2012 which benefited from an unusually large lease termination fee.  For the nine months ended September 30, 2013, Federal Realty reported FFO of $221.6 million, or $3.38 per diluted share, compared to $205.5 million, or $3.20 per diluted share for the same nine-month period in 2012. Excluding early extinguishment of debt, for the nine months ended September 30, 2013, Federal Realty reported FFO of $224.9 million, or $3.43 per diluted share.

Net income available for common shareholders was $62.0 million and earnings per diluted share was $0.94 for the quarter ended September 30, 2013 versus $38.5 million and $0.60, respectively, for third quarter 2012.  Year-to-date, Federal Realty reported net income available for common shareholders of $133.8 million and earnings per diluted share of $2.04.  This compares to net income available for common shareholders of $113.8 million and earnings per diluted share of $1.77 for the nine months ended September 30, 2012.

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 in addition to Form 8-K that was filed.

Portfolio Results In third quarter 2013, same-center property operating income increased 5.7% excluding properties that are being redeveloped and 4.9% when including those properties. Both of those same-center comparisons exclude the aforementioned lease termination fee from Safeway in last year's quarter to more properly reflect comparability.

The overall portfolio was 95.3% leased as of September 30, 2013, compared to 95.3% on June 30, 2013 and 95.1% on September 30, 2012.  Federal Realty's same-center portfolio was 95.4% leased on September 30, 2013, compared to 95.3% on June 30, 2013 and 95.2% on September 30, 2012.

During the third quarter of 2013, Federal Realty signed 102 leases for 398,637 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 273,505 square feet at an average cash basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 20%. The average contractual rent on this comparable space for the first year of the new leases is $39.12 per square foot, compared to the average contractual rent of $32.66 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 34% for third quarter 2013. As of September 30, 2013, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $24.39 per square foot.

"This was an extremely strong quarter operationally," commented Don Wood, president and chief executive offer. "FFO per share of $1.16 is a quarterly record for us, with 20% more rent upon lease rollovers and 5.7% same store growth equally impressive. We remain very excited about the next couple of years as we supplement this fine performing core portfolio with new retail destinations in our key markets on both coasts."

Regular Quarterly Dividends Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.78 per share, resulting in an indicated annual rate of $3.12 per share. The regular common dividend will be payable on January 15, 2014, to common shareholders of record as of January 2, 2014.

Guidance Federal Realty increased its guidance for 2013 FFO per diluted share to a range of $4.60 to $4.61 from $4.56 to $4.60, excluding the impact of early extinguishment of debt, and 2013 earnings per diluted share guidance of $2.66 to $2.67. In addition, Federal Realty provided initial 2014 FFO per diluted share guidance of $4.84 to $4.92 and 2014 earnings per diluted share guidance of $2.53 to $2.61

Summary of Other Quarterly Activities and Recent Developments

  • July/September, 2013 – Federal Realty closed on the sale of its buildings in Forest Hills, New York and San Diego, California.  The total sales price for the two assets is $36 million. 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.
  • October 1, 2013 – Federal Realty acquired the adjacent 12 acre land parcel to Assembly Row for $18 million.

Conference Call Information Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2013 earnings conference call, which is scheduled for November 1, 2013, at 10 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 35668720 (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 1, 2013, by dialing (888) 843-7419 and using the passcode 35668720.

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 September 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.

Investor Inquires

Media Inquiries

Kristina Lennox

Andrea Simpson

Investor Relations Manager

Director, Marketing

301/998-8265

617/684-1511

klennox@federalrealty.com

asimpson@federalrealty.com

 

Federal Realty Investment Trust

Summarized Balance Sheets

September 30, 2013

September 30,

December 31,

2013

2012

(in thousands)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $265,019 and $264,506 of consolidated variable interest            entities, respectively)

$

4,574,676

$

4,473,813

Construction-in-progress

452,406

288,714

Assets held for sale (discontinued operations)

17,147

5,027,082

4,779,674

Less accumulated depreciation and amortization (including $17,327 and $12,024 of          consolidated variable interest entities, respectively)

(1,316,358)

(1,224,295)

Net real estate

3,710,724

3,555,379

Cash and cash equivalents

127,831

36,988

Accounts and notes receivable, net

87,284

73,861

Mortgage notes receivable, net

55,198

55,648

Investment in real estate partnership

32,971

33,169

Prepaid expenses and other assets

145,468

143,520

TOTAL ASSETS

$

4,159,476

$

3,898,565

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages and capital lease obligations (including $203,423 and $205,299 of          consolidated variable interest entities, respectively)

$

792,862

$

832,482

Notes payable

299,828

299,575

Senior notes and debentures

1,213,508

1,076,545

Accounts payable and other liabilities

328,348

284,950

Total liabilities

2,634,546

2,493,552

Redeemable noncontrolling interests

93,820

94,420

Shareholders' equity

Preferred shares

9,997

9,997

Common shares and other shareholders' equity

1,397,995

1,276,815

Total shareholders' equity of the Trust

1,407,992

1,286,812

Noncontrolling interests

23,118

23,781

Total shareholders' equity

1,431,110

1,310,593

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

4,159,476

$

3,898,565

 

Federal Realty Investment Trust

Summarized Income Statements

September 30, 2013

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

(in thousands, except per share data)

(unaudited)

Revenue

Rental income

$

154,308

$

146,943

$

460,136

$

428,330

Other property income

3,480

9,007

9,661

17,842

Mortgage interest income

1,242

1,282

3,770

3,834

Total revenue

159,030

157,232

473,567

450,006

Expenses

Rental expenses

29,045

29,658

86,755

82,609

Real estate taxes

18,400

17,224

53,604

49,680

General and administrative

7,543

8,751

22,902

22,894

Depreciation and amortization

39,341

34,847

119,615

106,451

Total operating expenses

94,329

90,480

282,876

261,634

Operating income

64,701

66,752

190,691

188,372

Other interest income

70

261

165

580

Interest expense

(25,762)

(28,218)

(80,314)

(85,744)

Early extinguishment of debt

(3,399)

Income from real estate partnerships

381

490

1,065

1,229

Income from continuing operations

39,390

39,285

108,208

104,437

Discontinued operations

Discontinued operations - income

115

371

942

1,077

Discontinued operations - gain on sale of real estate

23,861

23,861

Results from discontinued operations

23,976

371

24,803

1,077

Income before gain on sale of real estate

63,366

39,656

133,011

105,514

Gain on sale of real estate

4,994

11,860

Net income

63,366

39,656

138,005

117,374

Net income attributable to noncontrolling interests

(1,268)

(1,012)

(3,780)

(3,141)

Net income attributable to the Trust

62,098

38,644

134,225

114,233

Dividends on preferred shares

(136)

(136)

(406)

(406)

Net income available for common shareholders

$

61,962

$

38,508

$

133,819

$

113,827

EARNINGS PER COMMON SHARE, BASIC

Continuing operations

$

0.57

$

0.59

$

1.58

$

1.57

Discontinued operations

0.37

0.01

0.38

0.02

Gain on sale of real estate

0.08

0.19

$

0.94

$

0.60

$

2.04

$

1.78

Weighted average number of common shares, basic

65,504

64,014

65,118

63,711

EARNINGS PER COMMON SHARE, DILUTED

Continuing operations

$

0.57

$

0.59

$

1.58

$

1.56

Discontinued operations

0.37

0.01

0.38

0.02

Gain on sale of real estate

0.08

0.19

$

0.94

$

0.60

$

2.04

$

1.77

Weighted average number of common shares, diluted

65,647

64,202

65,271

63,891

 

Federal Realty Investment Trust

Funds From Operations

September 30, 2013

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income

$

63,366

$

39,656

$

138,005

$

117,374

Net income attributable to noncontrolling interests

(1,268)

(1,012)

(3,780)

(3,141)

Gain on sale of real estate

(23,861)

(28,855)

(11,860)

Depreciation and amortization of real estate assets

35,334

30,556

107,730

94,328

Amortization of initial direct costs of leases

2,680

2,724

8,087

8,330

Depreciation of joint venture real estate assets

374

377

1,121

1,133

Funds from operations

76,625

72,301

222,308

206,164

Dividends on preferred shares

(136)

(136)

(406)

(406)

Income attributable to operating partnership units

223

236

665

707

Income attributable to unvested shares

(344)

(340)

(1,001)

(970)

FFO

76,368

72,061

221,566

205,495

Early extinguishment of debt, net of allocation to unvested shares

3,383

FFO excluding early extinguishment of debt

$

76,368

$

72,061

$

224,949

$

205,495

Weighted average number of common shares, diluted

65,933

64,526

65,568

64,227

FFO per diluted share

$

1.16

$

1.12

$

3.38

$

3.20

FFO excluding early extinguishment of debt, per diluted share

$

1.16

$

1.12

$

3.43

$

3.20

 

Federal Realty Investment Trust

Reconciliation of Net Income to FFO Guidance

September 30, 2013

2013 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

178

$

179

Net income attributable to noncontrolling interests

(5)

(5)

Gain on sale of real estate in real estate partnership

(29)

(29)

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

145

145

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

303

304

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

$

302

$

303

Weighted average number of common shares, diluted

65.8

65.8

FFO per diluted share

$

4.60

$

4.61

2014 Guidance

(Dollars in millions except

per share amounts) (1)

Funds from Operations available for common shareholders (FFO)

Net income

$

177

$

183

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

146

146

Amortization of initial direct costs of leases

11

11

Funds from operations

329

334

Dividends on preferred shares

(1)

(1)

Income attributable to operating partnership units

1

1

Income attributable to unvested shares

(1)

(1)

FFO

$

328

$

333

Weighted average number of common shares, diluted

67.7

67.7

FFO per diluted share

$

4.84

$

4.92

Note:

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

 

SOURCE Federal Realty Investment Trust



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