Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2010 Operating Results

ROCKVILLE, Md., Feb. 15, 2011 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2010.

(Logo:  http://photos.prnewswire.com/prnh/20050907/DCW070LOGO )

Financial Results

Federal Realty generated funds from operations available for common shareholders (FFO) of $62.2 million, or $1.01 per diluted share for fourth quarter 2010.  This compares to FFO of $60.1 million, or $0.98 per diluted share, in fourth quarter 2009 ($55.4 million or $0.90 per diluted share as adjusted for litigation provision – see below).  For the year ending December 31, 2010, Federal Realty reported FFO of $239.2 million, or $3.88 per diluted share.  This compares to $211.1 million, or $3.51 per diluted share, for the year ending December 31, 2009 ($227.4 million or $3.78 per diluted share as adjusted for litigation provision).

Net income available for common shareholders was $32.7 million and earnings per diluted share was $0.53 for fourth quarter 2010 versus $31.8 million and $0.52, respectively, for fourth quarter 2009 ($27.1 million or $0.44 per diluted share as adjusted for litigation provision).  For the year ending December 31, 2010, Federal Realty reported net income available for common shareholders of $122.2 million and earnings per diluted share of $1.98.  This compares to net income available for shareholders of $97.8 million and earnings per diluted share of $1.63 for the year ending December 31, 2009 ($114.1 million or $1.90 per diluted share as adjusted for litigation provision).  

Federal Realty's as adjusted financial results in the prior year exclude a $16.4 million litigation provision in 2009 (principally consisting of $20.6 million recorded in the first quarter and a reversal of $4.7 million recorded in the fourth quarter) reflecting the impact of a previously disclosed lawsuit involving a property adjacent to Santana Row.  In February 2011, a final ruling on appeals from both Federal Realty and the plaintiff was issued, rejecting both appeals and affirming the final judgment.  Payment is expected to be made on the judgment in first quarter 2011 with no further impact expected.   See Note 8 of the Consolidated Financial Statements included in Form 10-K filed on February 15, 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

Same-center property operating income in 2010 increased 2.3% including redevelopments and expansions, and increased 2.1% excluding redevelopments and expansions, compared to 2009. On a quarterly-basis, same-center property operating income in fourth quarter 2010 increased 0.8% including redevelopment and expansion properties, and increased 1.1% excluding redevelopment and expansion properties, compared to fourth quarter 2009.  

The overall portfolio was 93.9% leased as of December 31, 2010, compared to 93.9% on September 30, 2010 and 94.5% on December 31, 2009.  Federal Realty's same-center portfolio was 94.3% leased on December 31, 2010, compared to 94.4% on September 30, 2010 and 94.6% on December 31, 2009.

During fourth quarter 2010, the Trust signed 89 leases for 493,000 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 490,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 7%.  The average contractual rent on this comparable space for the first year of the new lease is $23.68 per square foot compared to the average contractual rent of $22.11 per square foot for the last year of the prior lease.  The previous 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 15% for fourth quarter 2010.

For all of 2010, Federal Realty signed 312 leases representing 1.5 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 8%, and 18% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $26.04 per square foot compared to the average cash-basis contractual rent of $24.11 per square foot for the last year of the prior lease.  As of December 31, 2010, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $22.77 per square foot, as compared to $22.14 on December 31, 2009.

"Steady, solid, consistent growth from one of the best retail portfolios in the country," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Over the past several years, as the results of most commercial real estate portfolios in the U.S. have swung wildly, our consistency and predictability is especially appreciated. As the economy continues to improve, I would expect the same from Federal Realty."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees left the regular dividend rate on its common shares unchanged, declaring a regular quarterly cash dividend of $0.67 per share on its common shares, resulting in an indicated annual rate of $2.68 per share.  The regular common dividend will be payable on April 15, 2011 to common shareholders of record on March 17, 2011.

Guidance

Federal Realty 2011 guidance for FFO per diluted share remained unchanged at a range of $3.95 to $4.02 and 2011 earnings per diluted share guidance of $2.00 to $2.07. 2011 guidance reflects record expectations for funds from operations per share.

Summary of Other Quarterly Activities and Recent Developments

• January 19, 2011 – Acquired Tower Shops, a 372,000 square foot community center on 67 acres in Davie, Florida for $66.1 million.  The property has significant opportunity for redevelopment and expansion and is well-positioned with a strong anchor tenant line-up including Ross, TJ Maxx, DSW, Michaels, Old Navy, Best Buy (opening fall 2011) and shadow-anchors Costco and Home Depot.  The acquisition of Tower Shops expands the Trust's portfolio in South Florida to 680,000 square feet of retail space which includes Del Mar Village in Boca Raton and Courtyard Shops in Wellington.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its fourth quarter and year-end 2010 earnings conference call, which is scheduled for February 16, 2011, at 11 a.m. Eastern Standard Time.  To participate, please call (866) 788-0540 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 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 March 16, 2011, by dialing (888) 286-8010 and using the passcode 46183132.

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 18.3 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 93.9% leased to national, regional, and local retailers as of December 31, 2010, with no single tenant accounting for more than approximately 2.6% 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 43 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 15, 2011, 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 the number of properties we acquire for our own account, and therefore the amount of capital we invest in acquisitions, may be impacted by our real estate partnership;
• 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 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 February 15, 2011.

SOURCE Federal Realty Investment Trust