ROCKVILLE, Md., Nov. 1, 2012 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its third quarter ended September 30, 2012.
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Financial Results
In the third quarter 2012, Federal Realty generated funds from operations available for common shareholders (FFO) of $72.1 million, or $1.12 per diluted share. This compares to FFO of $63.9 million, or $1.01 per diluted share, in third quarter 2011. For the nine months ended September 30, 2012, Federal Realty reported FFO of $205.5 million, or $3.20 per diluted share, compared to $189.5 million, or $3.02 per diluted share for the same nine-month period in 2011.
Net income available for common shareholders was $38.5 million and earnings per diluted share was $0.60 for the quarter ended September 30, 2012 versus $46.9 million and $0.74, respectively, for third quarter 2011. Year-to-date, Federal Realty reported net income available for common shareholders of $113.8 million and earnings per diluted share of $1.77. This compares to net income available for common shareholders of $112.6 million and earnings per diluted share of $1.80 for the nine months ended September 30, 2011.
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 third quarter 2012, same-center property operating income increased 10.3% (4.0% excluding the lease termination fee from Safeway described below) over third quarter 2011. When redevelopment and expansion properties are excluded from same-center results, property operating income for third quarter 2012 increased 10.4% (3.5% excluding the lease termination fee from Safeway described below) compared to third quarter 2011.
The overall portfolio was 95.1% leased as of September 30, 2012, compared to 94.2% on June 30, 2012 and 93.3% on September 30, 2011. Federal Realty's same-center portfolio was 95.0% leased on September 30, 2012, compared to 94.8% on June 30, 2012 and 94.3% on September 30, 2011.
During the third quarter of 2012, Federal Realty signed 109 leases for 531,573 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 504,082 square feet at an average cash basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 11%. The average contractual rent on this comparable space for the first year of the new leases is $28.43 per square foot, compared to the average contractual rent of $25.63 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 25% for third quarter 2012. As of September 30, 2012, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $23.95 per square foot.
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.73 per share, resulting in an indicated annual rate of $2.92 per share. The regular common dividend will be payable on January 15, 2013, to common shareholders of record as of January 2, 2013.
Guidance
Federal Realty updated its guidance for 2012 FFO per diluted share to a range of $4.29 to $4.31 and 2012 earnings per diluted share guidance of $2.35 to $2.37. In addition, Federal Realty provided initial 2013 FFO per diluted share guidance of $4.50 to $4.56 and 2013 earnings per diluted share guidance of $2.39 to $2.45.
"We delivered a record quarter driven by strong leasing, improving occupancy and increasing rents, all of which were further augmented by larger lease termination fees," commented Don Wood, president and chief executive officer of Federal Realty. "Looking forward, we expect to see continued strong performance in our core portfolio, complemented by our active development/redevelopment pipeline and potential acquisitions."
Summary of Other Quarterly Activities and Recent Developments
- October 2012 – Federal Realty announced that Harold Nafash has joined the Trust as senior director of acquisitions, northeast. Mr. Nafash will be based out of New Jersey, and will source and underwrite retail acquisitions in the Trust's core markets within the Northeast region, including metropolitan New York, Boston, and Philadelphia.
- August 2012 – As previously announced, Mr. James M. Taylor succeeded Mr. Andrew Blocher as chief financial officer effective August 15, 2012. Following a transition, Mr. Blocher left the Trust effective September 30, 2012. The Company incurred approximately $2.1 million in costs associated with the CFO transition.
- July 2012 – As previously announced, Federal Realty received an approximately $6 million termination fee from Safeway in connection with the termination of its Genuardi's lease at our Ellisburg property.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2012 earnings conference call, which is scheduled for November 2, 2012, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 271-0675 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 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 2, 2012, by dialing (888) 286-8010 and using the passcode 67340939.
About Federal Realty
In 2012, Federal Realty celebrates 50 years of being a proven leader in the ownership, operation, and redevelopment of high quality retail real estate in the country's best markets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 19.1 million square feet located primarily in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, 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 95.1% leased to national, regional, and local retailers as of September 30, 2012, with no single tenant accounting for more than approximately 3.1% 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 45 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. For more information, please 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 16, 2012, 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 16, 2012.
Federal Realty Investment Trust |
|||||||
Summarized Balance Sheets |
|||||||
September 30, 2012 |
|||||||
September 30, |
December 31, |
||||||
2012 |
2011 |
||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
ASSETS |
|||||||
Real estate, at cost |
|||||||
Operating (including $263,664 and $263,570 of consolidated variable interest entities, |
$ |
4,276,146 |
$ |
4,232,608 |
|||
Construction-in-progress |
264,982 |
193,836 |
|||||
4,541,128 |
4,426,444 |
||||||
Less accumulated depreciation and amortization (including $10,253 and $4,991 of |
(1,195,336) |
(1,127,588) |
|||||
Net real estate |
3,345,792 |
3,298,856 |
|||||
Cash and cash equivalents |
147,680 |
67,806 |
|||||
Accounts and notes receivable, net |
82,152 |
75,921 |
|||||
Mortgage notes receivable, net |
55,661 |
55,967 |
|||||
Investment in real estate partnership |
33,871 |
34,352 |
|||||
Prepaid expenses and other assets |
139,183 |
133,308 |
|||||
TOTAL ASSETS |
$ |
3,804,339 |
$ |
3,666,210 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Liabilities |
|||||||
Mortgages and capital lease obligations (including $205,907 and $207,683 of |
$ |
802,341 |
$ |
810,616 |
|||
Notes payable |
299,618 |
295,159 |
|||||
Senior notes and debentures |
1,076,456 |
1,004,635 |
|||||
Accounts payable and other liabilities |
232,151 |
229,871 |
|||||
Total liabilities |
2,410,566 |
2,340,281 |
|||||
Redeemable noncontrolling interests |
81,851 |
85,325 |
|||||
Shareholders' equity |
|||||||
Preferred shares |
9,997 |
9,997 |
|||||
Common shares and other shareholders' equity |
1,277,700 |
1,206,095 |
|||||
Total shareholders' equity of the Trust |
1,287,697 |
1,216,092 |
|||||
Noncontrolling interests |
24,225 |
24,512 |
|||||
Total shareholders' equity |
1,311,922 |
1,240,604 |
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
3,804,339 |
$ |
3,666,210 |
Federal Realty Investment Trust |
|||||||||||||||
Summarized Income Statements |
|||||||||||||||
September 30, 2012 |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2012 |
2011 |
2012 |
2011 |
||||||||||||
(in thousands, except per share data) |
|||||||||||||||
(unaudited) |
|||||||||||||||
Revenue |
|||||||||||||||
Rental income |
$ |
147,515 |
$ |
134,014 |
$ |
429,972 |
$ |
401,452 |
|||||||
Other property income |
9,008 |
2,341 |
17,848 |
6,577 |
|||||||||||
Mortgage interest income |
1,282 |
1,309 |
3,834 |
3,564 |
|||||||||||
Total revenue |
157,805 |
137,664 |
451,654 |
411,593 |
|||||||||||
Expenses |
|||||||||||||||
Rental expenses |
29,679 |
26,595 |
82,695 |
81,130 |
|||||||||||
Real estate taxes |
17,320 |
15,047 |
49,914 |
46,001 |
|||||||||||
General and administrative |
8,751 |
7,197 |
22,894 |
19,643 |
|||||||||||
Depreciation and amortization |
34,932 |
32,068 |
106,702 |
94,355 |
|||||||||||
Total operating expenses |
90,682 |
80,907 |
262,205 |
241,129 |
|||||||||||
Operating income |
67,123 |
56,757 |
189,449 |
170,464 |
|||||||||||
Other interest income |
261 |
136 |
580 |
171 |
|||||||||||
Interest expense |
(28,218) |
(23,795) |
(85,744) |
(72,744) |
|||||||||||
Early extinguishment of debt |
— |
— |
— |
296 |
|||||||||||
Income from real estate partnerships |
490 |
434 |
1,229 |
1,201 |
|||||||||||
Income from continuing operations |
39,656 |
33,532 |
105,514 |
99,388 |
|||||||||||
Discontinued operations |
|||||||||||||||
Discontinued operations - income |
— |
13 |
— |
943 |
|||||||||||
Discontinued operations - gain on deconsolidation of VIE |
— |
— |
— |
2,026 |
|||||||||||
Discontinued operations - gain on sale of real estate |
— |
14,757 |
— |
14,800 |
|||||||||||
Results from discontinued operations |
— |
14,770 |
— |
17,769 |
|||||||||||
Income before gain on sale of real estate |
39,656 |
48,302 |
105,514 |
117,157 |
|||||||||||
Gain on sale of real estate in real estate partnership |
— |
— |
11,860 |
— |
|||||||||||
Net income |
39,656 |
48,302 |
117,374 |
117,157 |
|||||||||||
Net income attributable to noncontrolling interests |
(1,012) |
(1,249) |
(3,141) |
(4,161) |
|||||||||||
Net income attributable to the Trust |
38,644 |
47,053 |
114,233 |
112,996 |
|||||||||||
Dividends on preferred shares |
(136) |
(136) |
(406) |
(406) |
|||||||||||
Net income available for common shareholders |
$ |
38,508 |
$ |
46,917 |
$ |
113,827 |
$ |
112,590 |
|||||||
EARNINGS PER COMMON SHARE, BASIC |
|||||||||||||||
Continuing operations |
$ |
0.60 |
$ |
0.51 |
$ |
1.59 |
$ |
1.52 |
|||||||
Discontinued operations |
— |
0.23 |
— |
0.28 |
|||||||||||
Gain on sale of real estate |
— |
— |
0.19 |
— |
|||||||||||
$ |
0.60 |
$ |
0.74 |
$ |
1.78 |
$ |
1.80 |
||||||||
Weighted average number of common shares, basic |
64,014 |
62,818 |
63,711 |
62,172 |
|||||||||||
EARNINGS PER COMMON SHARE, DILUTED |
|||||||||||||||
Continuing operations |
$ |
0.60 |
$ |
0.51 |
$ |
1.58 |
$ |
1.52 |
|||||||
Discontinued operations |
— |
0.23 |
— |
0.28 |
|||||||||||
Gain on sale of real estate |
— |
— |
0.19 |
— |
|||||||||||
$ |
0.60 |
$ |
0.74 |
$ |
1.77 |
$ |
1.80 |
||||||||
Weighted average number of common shares, diluted |
64,202 |
62,990 |
63,891 |
62,341 |
Federal Realty Investment Trust |
||||||||||||||||
Funds From Operations |
||||||||||||||||
September 30, 2012 |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||
(in thousands, except per share data) |
||||||||||||||||
Funds from Operations available for common shareholders (FFO) |
||||||||||||||||
Net income |
$ |
39,656 |
$ |
48,302 |
$ |
117,374 |
$ |
117,157 |
||||||||
Net income attributable to noncontrolling interests |
(1,012) |
(1,249) |
(3,141) |
(4,161) |
||||||||||||
Gain on sale of real estate |
— |
(14,757) |
— |
(14,800) |
||||||||||||
Gain on sale of real estate in real estate partnership |
— |
— |
(11,860) |
— |
||||||||||||
Gain on deconsolidation of VIE |
— |
— |
— |
(2,026) |
||||||||||||
Depreciation and amortization of real estate assets |
30,556 |
28,671 |
94,328 |
84,723 |
||||||||||||
Amortization of initial direct costs of leases |
2,724 |
2,684 |
8,330 |
7,737 |
||||||||||||
Depreciation of joint venture real estate assets |
377 |
446 |
1,133 |
1,304 |
||||||||||||
Funds from operations |
72,301 |
64,097 |
206,164 |
189,934 |
||||||||||||
Dividends on preferred shares |
(136) |
(136) |
(406) |
(406) |
||||||||||||
Income attributable to operating partnership units |
236 |
249 |
707 |
733 |
||||||||||||
Income attributable to unvested shares |
(340) |
(285) |
(970) |
(793) |
||||||||||||
FFO |
$ |
72,061 |
$ |
63,925 |
$ |
205,495 |
$ |
189,468 |
||||||||
FFO per diluted share |
$ |
1.12 |
$ |
1.01 |
$ |
3.20 |
$ |
3.02 |
||||||||
Weighted average number of common shares, diluted |
64,526 |
63,350 |
64,227 |
62,702 |
Federal Realty Investment Trust |
|||||||
Reconciliation of Net Income to FFO Guidance |
|||||||
September 30, 2012 |
|||||||
2012 Guidance |
|||||||
(Dollars in millions except |
|||||||
per share amounts) (1) |
|||||||
Funds from Operations available for common shareholders (FFO) |
|||||||
Net income |
$ |
156 |
$ |
158 |
|||
Net income attributable to noncontrolling interests |
(4) |
(4) |
|||||
Gain on sale of real estate in real estate partnership |
(12) |
(12) |
|||||
Depreciation and amortization of real estate & joint venture real estate assets |
126 |
126 |
|||||
Amortization of initial direct costs of leases |
11 |
11 |
|||||
Funds from operations |
277 |
278 |
|||||
Dividends on preferred shares |
(1) |
(1) |
|||||
Income attributable to operating partnership units |
1 |
1 |
|||||
Income attributable to unvested shares |
(1) |
(1) |
|||||
FFO |
$ |
276 |
$ |
278 |
|||
Weighted average number of common shares, diluted |
64.4 |
64.4 |
|||||
FFO per diluted share |
$ |
4.29 |
$ |
4.31 |
2013 Guidance |
|||||||
(Dollars in millions except |
|||||||
per share amounts) (1) |
|||||||
Funds from Operations available for common shareholders (FFO) |
|||||||
Net income |
$ |
163 |
$ |
167 |
|||
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 |
128 |
128 |
|||||
Amortization of initial direct costs of leases |
11 |
11 |
|||||
Funds from operations |
297 |
301 |
|||||
Dividends on preferred shares |
(1) |
(1) |
|||||
Income attributable to operating partnership units |
1 |
1 |
|||||
Income attributable to unvested shares |
(1) |
(1) |
|||||
FFO |
$ |
297 |
$ |
300 |
|||
Weighted average number of common shares, diluted |
65.9 |
65.9 |
|||||
FFO per diluted share |
$ |
4.50 |
$ |
4.56 |
|||
Note: |
|||||||
(1) - Individual items may not add up to total due to rounding. |
Investor Inquires |
Media Inquiries |
Kristina Lennox |
Andrea Simpson |
Investor Relations Coordinator |
Director, Marketing |
301/998-8265 |
617/684-1511 |
SOURCE Federal Realty Investment Trust
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