Federal Realty Investment Trust Announces Third Quarter 2014 Operating Results

ROCKVILLE, Md., Oct. 30, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2014.

Financial Results

In the third quarter 2014, Federal Realty generated funds from operations available for common shareholders (FFO) of $84.5 million, or $1.23 per diluted share. This compares to FFO of $76.4 million, or $1.16 per diluted share, in third quarter 2013.  For the nine months ended September 30, 2014, Federal Realty reported FFO of $249.9 million, or $3.66 per diluted share, compared to $221.6 million, or $3.38 per diluted share for the same nine-month period in 2013. Excluding early extinguishment of debt, for the nine months ended September 30, 2013, Federal Realty reported FFO of $224.9 million, or $3.43 per diluted share.

Net income available for common shareholders was $46.9 million and earnings per diluted share was $0.69 for the quarter ended September 30, 2014 versus $62.0 million and $0.94, respectively, for third quarter 2013. Year-to-date, Federal Realty reported net income available for common shareholders of $129.0 million and earnings per diluted share of $1.91.  This compares to net income available for common shareholders of $133.8 million and earnings per diluted share of $2.04 for the nine months ended September 30, 2013.

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 2014, same-center property operating income increased 3.3% over the prior year, excluding properties that are being redeveloped and 4.4% when including those properties.

The overall portfolio was 95.6% leased as of September 30, 2014, compared to 95.3% on June 30, 2014 and 95.3% on September 30, 2013.  Federal Realty's same-center portfolio was 95.9% leased on September 30, 2014, compared to 95.5% on June 30, 2014 and 95.4% on September 30, 2013.

During the third quarter of 2014, Federal Realty signed 108 leases for 434,165 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 372,693 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 leases is $35.69 per square foot, compared to the average contractual rent of $31.55 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 23% for third quarter 2014. As of September 30, 2014, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $25.36 per square foot.

"We are very pleased with another quarter of strong performance," commented Don Wood, President and Chief Executive Officer, "as the core continues to power forward and the successful Phase I openings of Pike & Rose and Assembly Row drive increased visibility on additional opportunities for growth for many years to come."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees declared a regular quarterly cash dividend of $0.87 per share, resulting in an indicated annual rate of $3.48 per share. The regular common dividend will be payable on January 15, 2015, to common shareholders of record as of January 2, 2015.

Guidance

Federal Realty increased its guidance for 2014 FFO per diluted share to a range of $4.92 to $4.94, from $4.90 to $4.94. 2014 earnings per diluted share guidance is $2.57 to $2.61. In addition, Federal Realty provided initial 2015 FFO per diluted share guidance of $5.26 to $5.34 and 2015 earnings per diluted share guidance of $2.86-$2.94. 

Summary of Other Quarterly Activities and Recent Developments

• October 30, 2014 – Federal Realty announced that it is proceeding with Phase II of Pike & Rose, which will add 185,000 square feet of new retail space, 264 high-end apartments, 104 luxury condominium residences, over 800 new parking spaces, and a 177-room, Canopy by Hilton hotel. The hotel, one of the first of Hilton's new lifestyle brand, will be developed by a partnership between Federal Realty and the Buccini/Pollin Group.
• September 10, 2014 – Federal Realty's Assembly Row announced several key grand opening milestones: Assembly Station opened for business on the MBTA's Orange Line, connecting the Assembly Row neighborhood to the Line's 200,000 daily riders; 43 of 59 tenants in the initial phase, including the Marketplace, are now open and operating; and Partners Healthcare commenced construction to bring more than 700,000 square feet of office to relocate over 4,500 employees to Assembly Row starting in late 2016.
• August 28, 2014 – Federal Realty amended its term loan agreement, lowering the spread over LIBOR by 40 basis points to 90 basis points based on the Trust's current credit rating and providing the Trust an option to extend the November 2018 maturity date by one year.
• July 24, 2014 – Federal Realty's partnership with a discretionary fund created and advised by ING Clarion Partners closed on the sale of Pleasant Shops in South Weymouth, Massachusetts for a sales price of $34.3 million. As a result of this sale, the Trust recorded a gain of approximately $4.4 million.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2014 earnings conference call, which is scheduled for October 31, 2014, at 11 a.m. Eastern Daylight Time.  To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 94267792 (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 November 7, 2014, by dialing (855) 859-2056 and using the passcode 94267792.

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 0.8 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 ­­­95.6% leased to national, regional, and local retailers as of September 30, 2014, with no single tenant accounting for more than approximately 3.2% 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 47 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 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 11,2014.

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SOURCE Federal Realty Investment Trust

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