Federal Realty Investment Trust Announces Third Quarter 2010 Operating Results

ROCKVILLE, Md., Nov. 3, 2010 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2010.

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Financial Results

In the third quarter 2010, Federal Realty generated funds from operations available for common shareholders (FFO) of $58.8 million or $0.95 per diluted share. This compares to FFO of $55.6 million, or $0.92 per diluted share, in third quarter 2009.  For the nine months ended September 30, 2010, Federal Realty reported FFO of $177.0 million, or $2.87 per diluted share, compared to $151.0 million, or $2.53 per diluted share for the same nine-month period in 2009.

Net income available for common shareholders was $29.5 million and earnings per diluted share was $0.48 for the quarter ended September 30, 2010 versus $27.3 million and $0.45, respectively, for third quarter 2009.  Year-to-date, Federal Realty reported net income available for common shareholders of $89.6 million and earnings per diluted share of $1.45.  This compares to net income available for common shareholders of $65.9 million and earnings per diluted share of $1.10 for the nine months ended September 30, 2009.

2009 results include a litigation provision related to a lawsuit involving a property adjacent to Santana Row.  Excluding this litigation provision, FFO was $172.0 million, or $2.88 per diluted share for the nine months ended September 30, 2009; net income available for common shareholders was $87.0 million and earnings per diluted share was $1.46.

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

For third quarter 2010, same-center property operating income was flat compared to third quarter 2009.  When redevelopment and expansion properties are included in same-center results, property operating income for third quarter 2010 decreased -0.9% compared to third quarter 2009. For the nine months ended September 30, 2010, same-center property operating income increased 2.2%, and increased 2.6% including redevelopment and expansion properties.

The overall portfolio was 93.9% leased as of September 30, 2010, compared to 94.2% on June 30, 2010 and 94.2% on September 30, 2009.  Federal Realty's same-center portfolio was 94.4% leased on September 30, 2010, compared to 94.7% on June 30, 2010 and 94.4% on September 30, 2009.

During the third quarter of 2010, Federal Realty signed 77 leases for 396,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 349,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 6%. The average contractual rent on this comparable space for the first year of the new leases is $25.17 per square foot, compared to the average contractual rent of $23.83 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 17% for third quarter 2010. As of September 30, 2010, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.64 per square foot.

"Our ability to produce consistent results in a continuously challenging economic environment is a true reflection of the stability of our company," said Don Wood, president and chief executive officer of Federal Realty Investment Trust.  "We continue to focus on a low-risk business strategy of producing growth through the smart leasing of our assets, completion of redevelopment projects at excellent risk-adjusted returns, and sourcing acquisitions in our core markets."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared 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 in cash on January 18, 2011 to common shareholders of record on January 3, 2011.

Guidance

Federal Realty increased its guidance for 2010 FFO per diluted share to a range of $3.85 to $3.87 and 2010 earnings per diluted share guidance of $1.96 to $1.98.    The Trust also established guidance for 2011 FFO per diluted share at a range of $3.95 to $4.02 and 2011 earnings per diluted share guidance of $2.02 to $2.09. 2011 guidance reflects record expectations for funds from operations per share.

Primary assumptions in our 2011 FFO per diluted share guidance include:

• No material changes in portfolio occupancy,
• A $5 million decrease in lease termination fees, principally driven by a significant decline at Flourtown Shopping Center,
• Same-store property operating income growth of 1%, despite the significant decline in lease termination fees, and
• No FFO impact associated with 2011 acquisition activity.

Summary of Other Quarterly Activities and Recent Developments

• August 16, 2010 – Acquired Huntington Square on Long Island in East Northport, New York for $17.6 million.  Huntington Square is a 268,000 square foot community center comprised of 74,000 square feet of multi-tenant gross leasable area leased to national retailers such as Barnes & Noble, Brinker International, Lane Bryant and Chase and shadow-anchored by a 194,000 square foot Sears department store.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2010 earnings conference call, which is scheduled for November 4, 2010, at 1:00 p.m. Eastern Daylight Time.  To participate, please call (866) 202-1971 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 December 3, 2010, by dialing (888) 286-8010 and using the passcode 46509598.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 18.2 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 September 30, 2010, with no single tenant accounting for more than approximately 2.7% 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.  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 17, 2010, 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 redevelopment or renovation projects that we do pursue 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 partnerships;
• 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 17, 2010.

SOURCE Federal Realty Investment Trust