ROCKVILLE, Md., Feb. 11, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2013.
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Financial Results
Federal Realty generated funds from operations available for common shareholders (FFO) of $68.4 million, or $1.03 per diluted share for fourth quarter 2013 which was negatively impacted by a charge for early extinguishment of debt. Without the charge for early extinguishment of debt, FFO would have been $78.2 million or $1.18 per diluted share, which includes acquisition costs of $0.02 that were incurred during the quarter. This compares to FFO of $71.7 million, or $1.11 per diluted share, in fourth quarter 2012. For the year ending December 31, 2013, Federal Realty reported FFO of $289.9 million, or $4.41 per diluted share which includes the early extinguishment of debt. FFO for calendar year 2013 without the charge for early extinguishment of debt would have been $303.2 million of $4.61 per diluted share. This compares to $277.2 million, or $4.31 per diluted share, for the year ending December 31, 2012.
Net income available for common shareholders was $28.3 million and earnings per diluted share was $0.42 for fourth quarter 2013 versus $37.6 million and $0.58, respectively, for fourth quarter 2012. For the year ending December 31, 2013, Federal Realty reported net income available for common shareholders of $162.1 million and earnings per diluted share of $2.46. This compares to net income available for shareholders of $151.4 million and earnings per diluted share of $2.35 for the year ending December 31, 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
Same-center property operating income in 2013 increased 4.4% including redevelopments and expansions, and 4.5% excluding redevelopments and expansions compared to 2012. Both of those same-center comparisons exclude the lease termination fee from Safeway last year to more properly reflect comparability. On a quarterly-basis, same-center property operating income in fourth quarter 2013 increased 3.6% including redevelopment and expansion properties, and 4.3% excluding redevelopment and expansion properties, compared to fourth quarter 2012.
The overall portfolio was 95.8% leased as of December 31, 2013, compared to 95.3% on September 30, 2013 and 95.3% on December 31, 2012. Federal Realty's same-center portfolio was 95.9% leased on December 31, 2013, compared to 95.4% on September 30, 2013 and 95.2% on December 31, 2012.
During fourth quarter 2013, the Trust signed 99 leases for 484,144 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 395,906 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 25%. The average contractual rent on this comparable space for the first year of the new lease is $27.24 per square foot compared to the average contractual rent of $21.73 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 38% for fourth quarter 2013.
For all of 2013, Federal Realty signed 348 leases representing 1.4 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 20%, and 33% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $32.41 per square foot compared to the average cash-basis contractual rent of $27.00 per square foot for the last year of the prior lease. As of December 31, 2013, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $24.54 per square foot, as compared to $23.83 per square foot on December 31, 2012.
"The 2013 fourth quarter, and in fact the entire year, was another fundamentally strong one in so many respects for our company," said Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Leasing activity in all the markets we serve was robust, particularly in Northern California and Boston, and we were able to drive rent increases that set us up particularly well for growth in 2014. Add to that the January 1st acquisitions of two great shopping centers in central New Jersey and a very full development pipeline set to begin to deliver in 2014; you can begin to understand our optimism for the years ahead."
Summary of Other Quarterly Activities and Recent Developments
- December 9, 2013 – Federal Realty issued $300 million aggregate principal amount of 3.95% senior unsecured notes due January 15, 2024.
- December 2013 – On December 27, 2013, Federal Realty redeemed its 5.95% Senior Unsecured notes ("Notes") due 2014 for aggregate principal of $150 million. The redemption price was approximately $158.3 million, including $3.3 million of accrued and unpaid interest. Also, in December, Federal Realty repaid $129 million of 7.50% mortgage notes due 2014. The total prepayment premium paid during the fourth quarter 2013 for both the Notes and the 7.50% mortgage notes was $9.4 million.
- January 6, 2014 – Federal Realty announced the acquisition of a controlling interest in two shopping centers totaling 285,600 square feet in affluent Monmouth County, New Jersey, for a total value of $161 million. The Grove at Shrewsbury and Brook 35 are located on busy Route 35, less than three miles from the Garden State Parkway, serving the NY Metro emerging bedroom and second home communities of Shrewsbury, Red Bank, Rumson, Fair Haven, Little Silver and Middletown. The acquisition, which was effective January 1, 2014, was made using a combination of downREIT units, cash and the assumption of $68 million of fixed rate debt secured by the properties.
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 $0.78 per share on its common shares, resulting in an indicated annual rate of $3.12 per share. The regular common dividend will be payable on April 15, 2014 to common shareholders of record on March 21, 2014.
Guidance
We have raised our 2014 guidance for FFO per diluted share to a range of $4.86 to $4.93. Our updated earnings per diluted share guidance is $2.54 to $2.62.
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 2013 earnings conference call, which is scheduled for February 12, 2014, at 11 a.m. Eastern Standard Time. To participate, please call (800) 708-4540 five to ten minutes prior to the call start time and use the passcode 36254568 (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 12, 2014, by dialing (888) 843-7419 and using the passcode 36254568.
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 95.8% leased to national, regional, and local retailers as of December 31, 2013, with no single tenant accounting for more than approximately 3.5% 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 11, 2014, 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 11, 2014.
Investor Inquiries |
Media Inquiries |
Kristina Lennox |
Andrea Simpson |
Investor Relations Manager |
Director, Marketing |
301/998-8265 |
617/684-1511 |
Federal Realty Investment Trust |
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Summarized Balance Sheets |
|||||||
December 31, 2013 |
|||||||
December 31, |
|||||||
2013 |
2012 |
||||||
(in thousands) |
|||||||
ASSETS |
|||||||
Real estate, at cost |
|||||||
Operating (including $265,138 and $264,506 of consolidated variable interest entities, respectively) |
$ |
4,618,258 |
$ |
4,473,813 |
|||
Construction-in-progress |
531,205 |
288,714 |
|||||
Assets held for sale (discontinued operations) |
— |
17,147 |
|||||
5,149,463 |
4,779,674 |
||||||
Less accumulated depreciation and amortization (including $19,086 and $12,024 of consolidated variable interest entities, respectively) |
(1,350,471) |
(1,224,295) |
|||||
Net real estate |
3,798,992 |
3,555,379 |
|||||
Cash and cash equivalents |
88,927 |
36,988 |
|||||
Accounts and notes receivable, net |
84,838 |
73,861 |
|||||
Mortgage notes receivable, net |
55,155 |
55,648 |
|||||
Investment in real estate partnership |
32,264 |
33,169 |
|||||
Prepaid expenses and other assets |
159,118 |
143,520 |
|||||
TOTAL ASSETS |
$ |
4,219,294 |
$ |
3,898,565 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Liabilities |
|||||||
Mortgages and capital lease obligations (including $202,782 and $205,299 of consolidated variable interest entities, respectively) |
$ |
660,127 |
$ |
832,482 |
|||
Notes payable |
300,822 |
299,575 |
|||||
Senior notes and debentures |
1,360,913 |
1,076,545 |
|||||
Accounts payable and other liabilities |
321,710 |
284,950 |
|||||
Total liabilities |
2,643,572 |
2,493,552 |
|||||
Redeemable noncontrolling interests |
104,425 |
94,420 |
|||||
Shareholders' equity |
|||||||
Preferred shares |
9,997 |
9,997 |
|||||
Common shares and other shareholders' equity |
1,438,163 |
1,276,815 |
|||||
Total shareholders' equity of the Trust |
1,448,160 |
1,286,812 |
|||||
Noncontrolling interests |
23,137 |
23,781 |
|||||
Total shareholders' equity |
1,471,297 |
1,310,593 |
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
4,219,294 |
$ |
3,898,565 |
Federal Realty Investment Trust |
|||||||||||||||
Summarized Income Statements |
|||||||||||||||
December 31, 2013 |
|||||||||||||||
Three Months Ended |
Year Ended |
||||||||||||||
December 31, |
December 31, |
||||||||||||||
2013 |
2012 |
2013 |
2012 |
||||||||||||
(in thousands, except per share data) |
|||||||||||||||
Revenue |
|||||||||||||||
Rental income |
$ |
159,953 |
$ |
151,784 |
$ |
620,089 |
$ |
580,114 |
|||||||
Other property income |
2,508 |
2,369 |
12,169 |
20,211 |
|||||||||||
Mortgage interest income |
1,385 |
1,632 |
5,155 |
5,466 |
|||||||||||
Total revenue |
163,846 |
155,785 |
637,413 |
605,791 |
|||||||||||
Expenses |
|||||||||||||||
Rental expenses |
31,940 |
30,007 |
118,695 |
112,616 |
|||||||||||
Real estate taxes |
18,155 |
16,774 |
71,759 |
66,454 |
|||||||||||
General and administrative |
9,068 |
8,264 |
31,970 |
31,158 |
|||||||||||
Depreciation and amortization |
41,213 |
35,250 |
160,828 |
141,701 |
|||||||||||
Total operating expenses |
100,376 |
90,295 |
383,252 |
351,929 |
|||||||||||
Operating income |
63,470 |
65,490 |
254,161 |
253,862 |
|||||||||||
Other interest income |
268 |
109 |
433 |
689 |
|||||||||||
Interest expense |
(24,663) |
(27,592) |
(104,977) |
(113,336) |
|||||||||||
Early extinguishment of debt |
(9,905) |
— |
(13,304) |
— |
|||||||||||
Income from real estate partnerships |
433 |
528 |
1,498 |
1,757 |
|||||||||||
Income from continuing operations |
29,603 |
38,535 |
137,811 |
142,972 |
|||||||||||
Discontinued operations |
|||||||||||||||
Discontinued operations - income |
— |
323 |
942 |
1,400 |
|||||||||||
Discontinued operations - gain on sale of real estate |
— |
— |
23,861 |
— |
|||||||||||
Results from discontinued operations |
— |
323 |
24,803 |
1,400 |
|||||||||||
Income before gain on sale of real estate |
29,603 |
38,858 |
162,614 |
144,372 |
|||||||||||
Gain on sale of real estate |
— |
— |
4,994 |
11,860 |
|||||||||||
Net income |
29,603 |
38,858 |
167,608 |
156,232 |
|||||||||||
Net income attributable to noncontrolling interests |
(1,147) |
(1,166) |
(4,927) |
(4,307) |
|||||||||||
Net income attributable to the Trust |
28,456 |
37,692 |
162,681 |
151,925 |
|||||||||||
Dividends on preferred shares |
(135) |
(135) |
(541) |
(541) |
|||||||||||
Net income available for common shareholders |
$ |
28,321 |
$ |
37,557 |
$ |
162,140 |
$ |
151,384 |
|||||||
EARNINGS PER COMMON SHARE, BASIC |
|||||||||||||||
Continuing operations |
$ |
0.43 |
$ |
0.57 |
$ |
2.01 |
$ |
2.15 |
|||||||
Discontinued operations |
— |
0.01 |
0.38 |
0.02 |
|||||||||||
Gain on sale of real estate |
— |
— |
0.08 |
0.19 |
|||||||||||
$ |
0.43 |
$ |
0.58 |
$ |
2.47 |
$ |
2.36 |
||||||||
Weighted average number of common shares, basic |
65,965 |
64,392 |
65,331 |
63,881 |
|||||||||||
EARNINGS PER COMMON SHARE, DILUTED |
|||||||||||||||
Continuing operations |
$ |
0.42 |
$ |
0.57 |
$ |
2.00 |
$ |
2.14 |
|||||||
Discontinued operations |
— |
0.01 |
0.38 |
0.02 |
|||||||||||
Gain on sale of real estate |
— |
— |
0.08 |
0.19 |
|||||||||||
$ |
0.42 |
$ |
0.58 |
$ |
2.46 |
$ |
2.35 |
||||||||
Weighted average number of common shares, diluted |
66,113 |
64,550 |
65,483 |
64,056 |
Federal Realty Investment Trust |
||||||||||||||||||
Funds From Operations |
||||||||||||||||||
December 31, 2013 |
||||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||||
December 31, |
December 31, |
|||||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||
Funds from Operations available for common shareholders (FFO) |
||||||||||||||||||
Net income |
$ |
29,603 |
$ |
38,858 |
$ |
167,608 |
$ |
156,232 |
||||||||||
Net income attributable to noncontrolling interests |
(1,147) |
(1,166) |
(4,927) |
(4,307) |
||||||||||||||
Gain on sale of real estate |
— |
— |
(28,855) |
(11,860) |
||||||||||||||
Depreciation and amortization of real estate assets |
37,143 |
31,283 |
144,873 |
125,611 |
||||||||||||||
Amortization of initial direct costs of leases |
2,607 |
2,605 |
10,694 |
10,935 |
||||||||||||||
Depreciation of joint venture real estate assets |
384 |
380 |
1,504 |
1,513 |
||||||||||||||
Funds from operations |
68,590 |
71,960 |
290,897 |
278,124 |
||||||||||||||
Dividends on preferred shares |
(135) |
(135) |
(541) |
(541) |
||||||||||||||
Income attributable to operating partnership units |
223 |
236 |
888 |
943 |
||||||||||||||
Income attributable to unvested shares |
(305) |
(317) |
(1,306) |
(1,289) |
||||||||||||||
FFO |
68,373 |
71,744 |
289,938 |
277,237 |
||||||||||||||
Early extinguishment of debt, net of allocation to unvested shares |
9,861 |
— |
13,244 |
— |
||||||||||||||
FFO excluding early extinguishment of debt |
$ |
78,234 |
$ |
71,744 |
$ |
303,182 |
$ |
277,237 |
||||||||||
Weighted average number of common shares, diluted |
66,399 |
64,873 |
65,778 |
64,389 |
||||||||||||||
FFO per diluted share |
$ |
1.03 |
$ |
1.11 |
$ |
4.41 |
$ |
4.31 |
||||||||||
FFO excluding early extinguishment of debt, per diluted share |
$ |
1.18 |
$ |
1.11 |
$ |
4.61 |
$ |
4.31 |
||||||||||
Federal Realty Investment Trust |
|||||||
Reconciliation of Net Income to FFO Guidance |
|||||||
December 31, 2013 |
|||||||
2014 Guidance |
|||||||
(Dollars in millions except |
|||||||
per share amounts) (1) |
|||||||
Funds from Operations available for common shareholders (FFO) |
|||||||
Net income |
$ |
180 |
$ |
185 |
|||
Net income attributable to noncontrolling interests |
(8) |
(8) |
|||||
Depreciation and amortization of real estate & joint venture real estate assets |
148 |
148 |
|||||
Amortization of initial direct costs of leases |
11 |
11 |
|||||
Funds from operations |
331 |
336 |
|||||
Dividends on preferred shares |
(1) |
(1) |
|||||
Income attributable to operating partnership units |
3 |
3 |
|||||
Income attributable to unvested shares |
(1) |
(1) |
|||||
FFO |
$ |
332 |
$ |
337 |
|||
Weighted average number of common shares, diluted |
68.3 |
68.3 |
|||||
FFO per diluted share |
$ |
4.86 |
$ |
4.93 |
|||
Note: |
|||||||
(1) - Individual items may not add up to total due to rounding. |
SOURCE Federal Realty Investment Trust
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