Federal Realty Investment Trust Announces First Quarter 2010 Operating Results
ROCKVILLE, Md., May 4 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its first quarter ended March 31, 2010.
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Financial Results
For first quarter 2010, Federal Realty generated funds from operations available for common shareholders (FFO) of $57.8 million, or $0.94 per diluted share, and net income available for common shareholders of $29.1 million, or earnings per diluted share of $0.47. This compares to FFO of $37.8 million, or $0.64 per share, and net income available to common shareholders of $10.3 million, or earnings per diluted share of $0.17, for the quarter ended March 31, 2009. First quarter 2009 results included a provision for litigation of $20.6 million, or $0.35 per diluted share, related to a lawsuit involving a property adjacent to Santana Row. Excluding this litigation provision, FFO for first quarter 2009 was $58.3 million, or $0.99 per diluted share, and net income available for common shareholders was $31.0 million, or $0.52 per diluted share.
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 first quarter 2010, same-center property operating income, excluding redevelopment and expansion properties, increased 2.9% over first quarter 2009. Including redevelopments and expansions, same-center property operating income increased 5.7% compared to first quarter 2009. The same-center results including redevelopments and expansions include $2.3 million of income resulting from the acceleration of the unamortized portion of a lease termination fee relating to our Flourtown Shopping Center in Pennsylvania. When the lease termination fee is excluded, same-center property operating income increased 3.1%.
The overall portfolio was 94.1% leased as of March 31, 2010, compared to 94.5% on December 31, 2009 and 94.2% on March 31, 2009. Federal Realty's same-center portfolio was 94.6% leased as of March 31, 2010, compared to 94.6% on December 31, 2009 and 94.5% on March 31, 2009.
During first quarter 2010, the Trust signed 72 leases for 318,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 308,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 16%. The average contractual rent on this comparable space for the first year of the new lease is $29.19 per square foot compared to the average contractual rent of $25.11 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 27% for first quarter 2010. As of March 31, 2010, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $22.38 per square foot.
"I'm very proud of our first quarter performance despite an economic recovery that still has a long way to go at the consumer level," commented Donald C. Wood, president and chief executive officer of the Trust. "There really is no substitute for great quality real estate when it comes to a tenant's decision to renew or expand, and our first quarter leasing results continue to validate that premise."
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 $0.66 per share on its common shares, resulting in an indicated annual rate of $2.64 per share. The regular common dividend will be payable on July 15, 2010 to common shareholders of record on June 24, 2010.
Guidance
Federal Realty raised 2010 guidance for FFO per diluted share to a range of $3.82 to $3.89 and earnings per diluted share is $1.92 to $1.99.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2010 earnings conference call, which is scheduled for May 5, 2010, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 314-5050 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 June 4, 2010, by dialing (888) 286-8010 and using the passcode 59661908.
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 18.2 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 94.1% leased to national, regional, and local retailers as of March 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 42 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 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 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 17, 2010.
Federal Realty Investment Trust |
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Summarized Balance Sheets |
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March 31, 2010 |
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March 31, |
December 31, |
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2010 |
2009 |
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(in thousands) |
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ASSETS |
(unaudited) |
|||
Real estate, at cost |
||||
Operating (including $86,554 and $68,643 of consolidated variable interest entities, respectively) |
$ 3,650,711 |
$ 3,626,476 |
||
Construction-in-progress |
138,170 |
132,758 |
||
3,788,881 |
3,759,234 |
|||
Less accumulated depreciation and amortization (including $3,289 and $3,053 of consolidated variable interest entities, respectively) |
(963,173) |
(938,087) |
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Net real estate |
2,825,708 |
2,821,147 |
||
Cash and cash equivalents |
22,594 |
135,389 |
||
Accounts and notes receivable, net |
70,953 |
72,191 |
||
Mortgage notes receivable, net |
41,762 |
48,336 |
||
Investment in real estate partnership |
35,453 |
35,633 |
||
Prepaid expenses and other assets |
99,874 |
109,613 |
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TOTAL ASSETS |
$ 3,096,344 |
$ 3,222,309 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Liabilities |
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Mortgages payable and capital lease obligations (including $23,262 and $23,417 of consolidated variable interest entities, respectively) |
$ 599,087 |
$ 601,884 |
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Notes payable |
11,694 |
261,745 |
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Senior notes and debentures |
1,079,906 |
930,219 |
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Accounts payable and other liabilities |
205,096 |
219,398 |
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Total liabilities |
1,895,783 |
2,013,246 |
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Shareholders' equity |
||||
Preferred shares |
9,997 |
9,997 |
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Common shares and other shareholders' equity |
1,159,139 |
1,167,340 |
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Total shareholders' equity of the Trust |
1,169,136 |
1,177,337 |
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Noncontrolling interests |
31,425 |
31,726 |
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Total shareholders' equity |
1,200,561 |
1,209,063 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ 3,096,344 |
$ 3,222,309 |
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Federal Realty Investment Trust |
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Summarized Income Statements |
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March 31, 2010 |
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Three months ended March 31, |
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2010 |
2009 |
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(in thousands, except per share data) |
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(unaudited) |
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Revenue |
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Rental income |
$ 131,492 |
$ 127,206 |
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Other property income |
5,912 |
2,603 |
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Mortgage interest income |
1,066 |
1,267 |
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Total revenue |
138,470 |
131,076 |
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Expenses |
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Rental expenses |
30,003 |
28,697 |
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Real estate taxes |
15,104 |
13,832 |
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General and administrative |
5,375 |
5,145 |
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Litigation provision |
114 |
20,632 |
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Depreciation and amortization |
28,932 |
28,592 |
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Total operating expenses |
79,528 |
96,898 |
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Operating income |
58,942 |
34,178 |
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Other interest income |
182 |
90 |
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Interest expense |
(25,962) |
(23,583) |
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Early extinguishment of debt |
(2,801) |
14 |
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Income from real estate partnership |
193 |
202 |
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Income from continuing operations |
30,554 |
10,901 |
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Discontinued operations |
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Income from discontinued operations |
- |
57 |
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Gain on sale of real estate from discontinued operations |
- |
915 |
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Results from discontinued operations |
- |
972 |
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Net income |
30,554 |
11,873 |
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Net income attributable to noncontrolling interests |
(1,334) |
(1,389) |
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Net income attributable to the Trust |
29,220 |
10,484 |
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Dividends on preferred shares |
(135) |
(135) |
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Net income available for common shareholders |
$ 29,085 |
$ 10,349 |
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EARNINGS PER COMMON SHARE, BASIC |
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Continuing operations |
$ 0.47 |
$ 0.16 |
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Discontinued operations |
- |
0.01 |
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$ 0.47 |
$ 0.17 |
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Weighted average number of common shares, basic |
61,089 |
58,841 |
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EARNINGS PER COMMON SHARE, DILUTED |
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Continuing operations |
$ 0.47 |
$ 0.16 |
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Discontinued operations |
- |
0.01 |
||
$ 0.47 |
$ 0.17 |
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Weighted average number of common shares, diluted |
61,220 |
58,960 |
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Federal Realty Investment Trust |
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Funds From Operations |
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March 31, 2010 |
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Three months ended March 31, |
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2010 |
2009 |
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Funds from Operations available for common |
(in thousands, except per share data) |
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shareholders (FFO) (1) |
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Net income (2) |
$ 30,554 |
$ 11,873 |
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Net income attributable to noncontrolling interests |
(1,334) |
(1,389) |
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Gain on sale of real estate |
- |
(915) |
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Depreciation and amortization of real estate assets |
26,087 |
25,436 |
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Amortization of initial direct costs of leases |
2,236 |
2,667 |
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Depreciation of joint venture real estate assets |
351 |
354 |
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Funds from operations |
57,894 |
38,026 |
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Dividends on preferred shares |
(135) |
(135) |
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Income attributable to operating partnership units |
245 |
- |
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Income attributable to unvested shares |
(192) |
(130) |
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FFO |
57,812 |
37,761 |
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Litigation provision, net of allocation to unvested shares |
114 |
20,565 |
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FFO excluding litigation provision |
$ 57,926 |
$ 58,326 |
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FFO per diluted share |
$ 0.94 |
$ 0.64 |
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Litigation provision per diluted share |
- |
0.35 |
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FFO per diluted share excluding litigation provision |
$ 0.94 |
$ 0.99 |
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Weighted average number of common shares, diluted |
61,591 |
58,960 |
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Notes: (1) See Glossary of Terms. (2) Net income for 2010 includes certain charges related to the litigation and appeal process over a parcel of land adjacent to Santana Row and 2009 net income includes a $20.6 million charge for increasing the accrual for such litigation matter. We believe FFO excluding this litigation provision provides a more meaningful evaluation of operations, and therefore, have included FFO and FFO per share excluding the related charges. |
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Federal Realty Investment Trust |
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Reconciliation of Net Income to FFO Guidance |
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March 31, 2010 |
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2010 Guidance |
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(Dollars in millions except |
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per share amounts) (1) |
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Funds from Operations available for common shareholders (FFO) |
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Net income |
$ 124 |
$ 128 |
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Net income attributable to noncontrolling interests |
(5) |
(5) |
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Gain on sale of real estate |
- |
- |
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Depreciation and amortization of real estate & real estate partnership assets |
108 |
108 |
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Amortization of initial direct costs of leases |
9 |
9 |
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Funds from operations |
235 |
240 |
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Dividends on preferred stock |
(1) |
(1) |
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Income attributable to operating partnership units |
1 |
1 |
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Income attributable to unvested shares |
(1) |
(1) |
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FFO |
235 |
239 |
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Litigation provision (2) |
1 |
1 |
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FFO excluding litigation provision |
$ 236 |
$ 240 |
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Weighted average number of common shares, diluted |
61.7 |
61.7 |
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FFO per diluted share |
$ 3.81 |
$ 3.88 |
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Litigation provision (2) |
0.01 |
0.01 |
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FFO per diluted share excluding litigation provision |
$ 3.82 |
$ 3.89 |
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Notes: (1) Individual items may not add up to total due to rounding. (2) Amount represents certain costs related to the litigation and appeal process over a parcel of land located adjacent to Santana Row. |
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Investor and Media Inquiries |
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Gina Birdsall |
Janelle Stevenson |
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Investor Relations |
Corporate Communications |
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301/998-8265 |
301/998-8185 |
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SOURCE Federal Realty Investment Trust
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