Federal Realty Investment Trust Announces First Quarter 2016 Operating Results

ROCKVILLE, Md., May 4, 2016 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2016. Highlights of the quarter and recent activity include:

• Generated FFO per diluted share of $1.38 for the quarter, an increase of 9.5% over first quarter 2015.
• Generated same center property operating income growth of 4.2% (or 2.5% when properties under redevelopment are excluded). 
• Federal Realty's same-center portfolio was 95.6% leased on March 31, 2016, compared to 95.4% on December 31, 2015 and 96.2% on March 31, 2015.
• Signed leases for 398,820 sf of comparable space at an average rent of $33.53 psf and achieved cash basis rollover growth on comparable spaces of 13%.
• Acquired our JV partner's 70% interest in our unconsolidated real estate partnership for $153.7 million. 
• Raised $149 million through an underwritten public offering of 1 million common shares.
• Upsized our revolving credit facility to $800 million, extended the maturity date to April 2020 and lowered the pricing to LIBOR plus 82.5 basis points.
• Affirmed 2016 FFO per diluted share guidance range of $5.65 to $5.71.

"We are proud to deliver another quarter of record bottom line results to our shareholders and remain focused on our long term strategic plan," commented Donald C. Wood, President and Chief Executive Officer of Federal Realty. "In our core portfolio, we continue to look for opportunities to take control of below market anchor space and drive value through redevelopment and releasing. In our mixed use portfolio, Assembly Row and Pike & Rose are well into their second phases of development. In addition, with our equity raise in March and credit facility upsize and extension in April, we maintain a solid balance sheet that allows us to continue to execute on our long term strategic plan."

Financial Results

In the first quarter 2016, Federal Realty generated funds from operations available for common shareholders (FFO) of $97.6 million, or $1.38 per diluted share. This compares to FFO of $87.3 million, or $1.26 per diluted share, in first quarter 2015.  Net income available for common shareholders was $76.8 million and earnings per diluted share was $1.10 for first quarter 2016 versus $46.1 million and $0.67, respectively, for first quarter 2015. 

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 the first quarter 2016, same-center property operating income increased 4.2% including redevelopment and expansion properties, and 2.5% excluding redevelopment and expansion properties.

The overall portfolio was 94.1% leased as of March 31, 2016, compared to 94.3% on December 31, 2015 and 95.4% on March 31, 2015.  Federal Realty's same-center portfolio was 95.6% leased on March 31, 2016, compared to 95.4% on December 31, 2015 and 96.2% on March 31, 2015.

During first quarter 2016, the Trust signed 92 leases for 419,781 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 398,820 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 13%.  The average contractual rent on this comparable space for the first year of the new lease is $33.53 per square foot compared to the average contractual rent of $29.67 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 24% for first quarter 2016.

Summary of Other Quarterly Activities and Recent Developments

• January 13, 2016 –Federal Realty acquired the 70% interest owned by affiliates of a discretionary fund advised by Clarion Partners in a joint venture that owns six neighborhood and community centers. Federal Realty purchased the 70% interest in the venture for $153.7 million, consisting of $130 million of cash and assumption of the allocable share of mortgage debt. With this acquisition, Federal Realty successfully concluded the venture that was formed in 2004 and increased its ownership of the six properties from 30% to 100%. The portfolio includes two properties near Boston, Massachusetts (Atlantic Plaza and Campus Plaza); one asset in the New York Metro region (Greenlawn Plaza on Long Island) and three centers in the Washington DC market (Free State Shopping Center and Plaza del Mercado in Suburban Maryland, and Barcroft Plaza in Northern Virginia).
• March 1, 2016 – Federal Realty announced the sale of 1,000,000 common shares in an underwritten public offering. The shares were priced at $149.43 per share, net of underwriters discount, and were sold to Citigroup Global Markets Inc. as the sole bookrunner.
• April 20, 2016 - Federal Realty completed an upsize of its revolving credit facility to $800 million and extended the maturity date to April 20, 2020, subject to two six-month extension options.  The pricing was also lowered to LIBOR plus 82.5 basis points based on the Trust's current rating.

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 $0.94 per share on its common shares, resulting in an indicated annual rate of $3.76 per share.  The regular common dividend will be payable on July 15, 2016 to common shareholders of record on June 22, 2016.

Guidance

We have affirmed our 2016 guidance for FFO per diluted share of $5.65 to $5.71, and updated our earnings per diluted share guidance to $3.49 to $3.56.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its first quarter 2016 earnings conference call, which is scheduled for May 5, 2016, at 11 a.m. Eastern Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 68139087 (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 May 12, 2016 by dialing (855) 859-2056 and using the passcode 68139087.

About Federal Realty

Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Our expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 96 properties include over 2,800 tenants, in approximately 22 million square feet, and over 1,800 residential units. 

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 48 consecutive years, the longest record in the REIT industry. Federal Realty shares are traded on the NYSE under the symbol FRT. For additional information about Federal Realty and its properties, 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 9, 2016, 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 renovation projects that we do pursue 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 costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, 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 9, 2016.

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SOURCE Federal Realty Investment Trust

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