Federal Realty Investment Trust Announces Third Quarter 2013 Operating Results

PR Newswire

ROCKVILLE, Md., Oct. 31, 2013 /PRNewswire/ -- Federal Realty Investment Trust (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.

 

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