Federal Realty Investment Trust Announces Fourth Quarter and Year-End 2009 Operating Results
ROCKVILLE, Md., Feb. 17 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2009.
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Financial Results
For fourth quarter 2009, Federal Realty generated funds from operations available for common shareholders (FFO) of $60.1 million, or $0.98 per diluted share, and net income available for common shareholders of $31.8 million, or earnings per diluted share of $0.52. The Trust's FFO and net income include a positive $4.7 million ($0.08 per diluted share) adjustment to the litigation provision related to a previously disclosed lawsuit involving a property adjacent to Santana Row resulting from additional information in the appeal process. Excluding the litigation provision, FFO for fourth quarter 2009 was $55.4 million, or $0.90 per share, compared to FFO of $58.6 million, or $0.99 per diluted share, for fourth quarter 2008. In addition, net income available for common shareholders was $27.1 million, and earnings per diluted share was $0.44 for the quarter excluding the litigation provision. This compares to net income of $33.6 million and earnings per diluted share of $0.57 for the fourth quarter 2008.
For the year ending December 31, 2009, Federal Realty reported FFO of $211.1 million, or $3.51 per diluted share, and net income available for common shareholders of $97.8 million, or earnings per diluted share of $1.63. Excluding the full year impact of the litigation provision of $16.4 million, or $0.27 per diluted share, year-to-date FFO was $227.4 million, or $3.78 per diluted share, and net income available for common shareholders was $114.1 million, or $1.90 per diluted share. For the year ending December 31, 2008, the Trust reported FFO of $228.4 million, or $3.85 per diluted share, and net income available for common shareholders of $129.2 million, or $2.19 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 fourth quarter 2009, same-center property operating income, both including and excluding redevelopment and expansion properties, increased 1.0% over fourth quarter 2008. On an annual basis, same-center property operating income in 2009 increased 1.6% including redevelopments and expansions, and decreased 0.3% excluding redevelopments and expansions.
The overall portfolio was 94.5% leased as of December 31, 2009, compared to 94.2% on September 30, 2009 and 95.0% on December 31, 2008. Federal Realty's same-center portfolio was 94.6% leased on December 31, 2009, compared to 94.4% on September 30, 2009 and 95.3% on December 31, 2008.
During fourth quarter 2009, the Trust signed 89 leases for 397,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 360,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 4%. The average contractual rent on this comparable space for the first year of the new lease is $27.58 per square foot compared to the average contractual rent of $26.64 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 13% for fourth quarter 2009.
For all of 2009, Federal Realty signed 309 leases representing 1.2 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 10%, and 20% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $28.60 per square foot compared to the average cash-basis contractual rent of $25.94 per square foot for the last year of the prior lease. As of December 31, 2009, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $22.14 per square foot, as compared to $21.75 on December 31, 2008
"We are pleased to report solid year-end operating results despite 2009 being one of the most challenging years for commercial real estate in recent history," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Our consistent performance is reflective of owning and operating high-quality real estate assets in the strongest markets in the country married with a sound balance sheet and a simple and transparent business strategy."
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 April 15, 2010 to common shareholders of record on March 17, 2010.
Guidance
Federal Realty 2010 guidance for FFO per diluted share remained unchanged at a range of $3.80 to $3.88 and earnings per diluted share of $1.92 to $2.00.
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 2009 earnings conference call, which is scheduled for February 18, 2010, at 10 a.m. Eastern Standard Time. To participate, please call (800) 901-5241 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 18, 2010, by dialing (888) 286-8010 and using the passcode 27967317.
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 94.5% leased to national, regional, and local retailers as of December 31, 2009, 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 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 17, 2010.
Investor and Media Inquiries
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Federal Realty Investment Trust
Summarized Balance Sheets
December 31, 2009
December 31,
2009 2008
---- ----
(in thousands)
ASSETS
Real estate, at cost
Operating $3,626,476 $3,537,790
Construction-in-progress 132,758 115,189
Assets held for sale - 20,706
-- ------
3,759,234 3,673,685
Less accumulated depreciation and amortization (938,087) (846,258)
-------- --------
Net real estate 2,821,147 2,827,427
Cash and cash equivalents 135,389 15,223
Accounts and notes receivable, net 72,191 73,688
Mortgage notes receivable, net 48,336 45,780
Investment in real estate partnership 35,633 29,252
Prepaid expenses and other assets 109,613 101,406
------- -------
TOTAL ASSETS $3,222,309 $3,092,776
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable and capital lease obligations $601,884 $452,810
Notes payable 261,745 336,391
Senior notes and debentures 930,219 956,584
Accounts payable and other liabilities 219,398 200,037
------- -------
Total liabilities 2,013,246 1,945,822
Shareholders' equity
Preferred shares 9,997 9,997
Common shares and other shareholders' equity 1,167,340 1,104,605
--------- ---------
Total shareholders' equity of the Trust 1,177,337 1,114,602
Noncontrolling interests 31,726 32,352
------ ------
Total shareholders' equity 1,209,063 1,146,954
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,222,309 $3,092,776
========== ==========
Federal Realty Investment Trust
Summarized Income Statements
December 31, 2009
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(in thousands, except per share data)
(unaudited)
Revenue
Rental income $133,755 $130,323 $513,220 $501,627
Other property income 3,598 1,998 12,856 14,013
Mortgage interest income 1,260 1,206 4,943 4,548
----- ----- ----- -----
Total revenue 138,613 133,527 531,019 520,188
------- ------- ------- -------
Expenses
Rental expenses 30,662 28,724 108,806 109,718
Real estate taxes 15,035 14,349 58,173 55,481
General and administrative 5,862 7,281 22,032 26,732
Litigation provision (4,732) - 16,355 -
Depreciation and amortization 28,458 29,218 115,093 111,022
------ ------ ------- -------
Total operating expenses 75,285 79,572 320,459 302,953
------ ------ ------- -------
Operating income 63,328 53,955 210,560 217,235
Other interest income 620 254 1,894 916
Interest expense (29,159) (24,997) (108,781) (99,163)
Early extinguishment of debt (1,671) - (2,639) -
Income from real estate
partnership 248 432 1,322 1,612
--- --- ----- -----
Income from continuing
operations 33,366 29,644 102,356 120,600
Discontinued operations
Income from discontinued
operations - 257 218 1,981
Gain on sale of real estate
from discontinued operations - 5,134 1,298 12,572
-- ----- ----- ------
Results from discontinued
operations - 5,391 1,516 14,553
-- ----- ----- ------
Net income 33,366 35,035 103,872 135,153
Net income attributable to
noncontrolling interests (1,396) (1,310) (5,568) (5,366)
------ ------ ------ ------
Net income attributable to the
Trust 31,970 33,725 98,304 129,787
Dividends on preferred shares (135) (135) (541) (541)
---- ---- ---- ----
Net income available for common
shareholders $31,835 $33,590 $97,763 $129,246
======= ======= ======= ========
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.52 $0.48 $1.60 $1.94
Discontinued operations - 0.09 0.03 0.25
-- ---- ---- ----
$0.52 $0.57 $1.63 $2.19
===== ===== ===== =====
Weighted average number of
common shares, basic 61,008 58,789 59,704 58,665
====== ====== ====== ======
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.52 $0.48 $1.60 $1.94
Discontinued operations - 0.09 0.03 0.25
-- ---- ---- ----
$0.52 $0.57 $1.63 $2.19
===== ===== ===== =====
Weighted average number of
common shares, diluted 61,142 58,935 59,830 58,889
====== ====== ====== ======
Federal Realty Investment Trust
Funds From Operations
December 31, 2009
Three months
ended Year ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Funds from Operations available (in thousands, except per share data)
for common shareholders (FFO) (1)
----------------------------------
Net income $33,366 $35,035 $103,872 $135,153
Net income attributable to
noncontrolling interests (1,396) (1,310) (5,568) (5,366)
Gain on sale of real estate - (5,134) (1,298) (12,572)
Depreciation and amortization of
real estate assets 25,423 27,413 103,104 101,450
Amortization of initial direct
costs of leases 2,443 2,330 9,821 8,771
Depreciation of joint venture real
estate assets 342 339 1,388 1,331
--- --- ----- -----
Funds from operations 60,178 58,673 211,319 228,767
Dividends on preferred shares (135) (135) (541) (541)
Income attributable to operating
partnership units 245 243 974 950
Income attributable to unvested
shares (193) (184) (687) (779)
---- ---- ---- ----
FFO (2) 60,095 58,597 211,065 228,397
Litigation provision, net of
allocation to unvested shares (2)
(4,718) - 16,301 -
------ -- ------ --
FFO excluding litigation provision
(2) $55,377 $58,597 $227,366 $228,397
======= ======= ======== ========
FFO per diluted share (3) $0.98 $0.99 $3.51 $3.85
Litigation provision per diluted
share (2) (0.08) - 0.27 -
----- -- ---- --
FFO per diluted share excluding
litigation provision (2)(3) $0.90 $0.99 $3.78 $3.85
===== ===== ===== =====
Weighted average number of common
shares, diluted 61,513 59,309 60,201 59,266
====== ====== ====== ======
Notes:
------
(1) See Glossary of Terms.
(2) FFO and FFO per diluted share for 2009, includes a ($4.7) million
and $16.4 million litigation provision charge for the three months
and year ended December 31, 2009, respectively, related to
litigation regarding a parcel of land located adjacent to Santana
Row as well as other costs related to the litigation and appeal
process. FFO excluding litigation provision excludes this charge.
(3) Effective January 1, 2009, we adopted a new accounting standard
which requires us to calculate FFO per diluted share for all
periods presented using the two-class method. The implementation
resulted in no change to FFO per share for the three months ended
December 31, 2008 and a decrease to reported FFO per diluted share
from $3.87 to $3.85 for the year ended December 31, 2008.
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
December 31, 2009
2010 Guidance
-------------
(Dollars in
millions except
per share
amounts)(1)
Funds from Operations available for common
shareholders (FFO)
------------------------------------------
Net income $123 $128
Net income attributable to noncontrolling interests (5) (5)
Gain on sale of real estate - -
Depreciation and amortization of real estate & real
estate partnership assets 107 107
Amortization of initial direct costs of leases 9 9
- -
Funds from operations 234 239
Dividends on preferred shares (1) (1)
Income attributable to operating partnership units 1 1
Income attributable to unvested shares (1) (1)
-- --
FFO 233 239
Litigation provision (2) 1 1
-- --
FFO excluding litigation provision $234 $239
==== ====
Weighted average number of common shares, diluted 61.7 61.7
FFO per diluted share $3.79 $3.87
Litigation provision (2) 0.01 0.01
---- ----
FFO per diluted share excluding litigation provision $3.80 $3.88
===== =====
Notes:
------
(1) Individual items may not add up to total due to rounding.
(2) Amount represents a charge for litigation regarding a parcel of
land located adjacent to Santana Row as well as other costs
related to the litigation and appeal process.
SOURCE Federal Realty Investment Trust
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