Federal Realty Investment Trust Announces Operating Results for the Year and Quarter Ended December 31, 2021

News provided by

Feb 10, 2022, 16:05 ET

NORTH BETHESDA, Md., Feb. 10, 2022 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its year and quarter ended December 31, 2021. For the year ended December 31, 2021 and 2020, net income available for common shareholders was $3.26 per diluted share and $1.62 per diluted share, respectively. For the three months ended December 31, 2021 and 2020, net income available for common shareholders was $1.44 per diluted share and $1.22 per diluted share, respectively.

Highlights for the full year and fourth quarter include:

Generated funds from operations available to common shareholders (FFO) per diluted share of $5.57 for the year, compared to $4.38 in 2020. For the fourth quarter, generated FFO per diluted share of $1.47, compared to $0.99 ($1.14 excluding the early extinguishment of debt charge) for the fourth quarter 2020.
Continued record levels of leasing with 116 signed leases for 597,673 square feet of comparable space in the fourth quarter bringing 2021 to a record 462 signed leases for 2.1 million square feet of comparable space.
Federal Realty's portfolio was 91.1% occupied and 93.6% leased, representing sequential increases of 90 basis points and 80 basis points, respectively, over the third quarter.

250 basis point spread between leased and occupied.

Small shop leased rate was 87.4% as of quarter end, an increase of 130 basis points over the third quarter and an increase of 280 basis points year over year.
Signed leases for 276,586 square feet of office space during the quarter.
Sold two shopping centers and a portion of two properties for a total sales price of $121.4 million in the fourth quarter, bringing the 2021 total disposition proceeds to $141.6 million.
Acquired 5 properties totaling 1.9 million square feet and 135 acres in COVID-era, off-market transactions in 2021.
Increased 2022 earnings per diluted share guidance to $2.30 to $2.50 and increased 2022 FFO per diluted share guidance to $5.75 to $5.95.

"2021 outperformed even our most optimistic expectations," said Donald C. Wood, Chief Executive Officer. "Leasing momentum continued at unprecedented levels, clear indication of strong demand for our properties and our locations. The broad-based leasing that has been done over the past several quarters, along with our development and acquisitions pipelines set Federal up for an active 2022 with all eyes on bottom line earnings growth."

Financial Results

Net Income

For the full year 2021, Federal Realty reported net income available for common shareholders of $253.5 million and earnings per diluted share of $3.26. This compares to net income available for common shareholders of $123.7 million and earnings per diluted share of $1.62 for the full year 2020.

For the fourth quarter 2021, net income available for common shareholders was $112.9 million and earnings per diluted share was $1.44 versus $92.7 million and $1.22, respectively, for the fourth quarter 2020.

FFO

For the full year 2021, Federal Realty generated funds from operations available for common shareholders (FFO) of $434.7 million, or $5.57 per diluted share. This compares to FFO of $333.8 million, or $4.38 per diluted share ($4.52 excluding the $11.2 million early extinguishment of debt charge) for the full year 2020.

For the fourth quarter 2021, FFO was $115.8 million, or $1.47 per diluted share, compared to $75.1 million, or $0.99 per diluted share ($1.14 excluding the early extinguishment of debt charge) for the fourth quarter 2020.

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.

Operational Update

Occupancy

The portfolio was 91.1% occupied as of December 31, 2021, a sequential increase of 90 basis points over the third quarter 2021. The portfolio was 93.6% leased as of December 31, 2021, a sequential increase of 80 basis points over the third quarter 2021. The spread between our leased and occupied percentages was 250 basis points at the end of the fourth quarter.

Additionally, our comparable residential properties were 97.2% leased as of December 31, 2021 compared to 94.8% leased as of December 31, 2020, an increase of 240 basis points.

Leasing Activity

For the full year 2021, Federal Realty signed 492 leases for 2.2 million square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 462 leases for 2.1 million square feet at an average rent of $37.00 per square foot compared to the average contractual rent of $34.52 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%, 16% on a straight-line basis.

During the fourth quarter 2021, Federal Realty signed 125 leases for 619,629 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 116 leases for 597,673 square feet at an average rent of $34.34 per square foot compared to the average contractual rent of $32.49 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 6%, 12% on a straight-line basis.

Transaction Activity

In 2021, Federal Realty acquired 5 shopping centers which total 1.9 million square feet and 135 acres for a gross value of $440.9 million, of which Federal owns an average 82% controlling joint venture interest.

In the fourth quarter, Federal Realty sold two shopping centers and a portion of two properties for a total sales price of $121.4 million, bringing the 2021 total disposition proceeds to $141.6 million.

COVID-19 Collection Update

As of January 31, 2022, the Company has collected approximately 97% of total fourth quarter 2021 billed recurring rents. Including rent deferral and abatement agreements, total addressed recurring rent was 99%.

Conversion to "UPREIT" Partnership

Effective January 1, 2022, Federal Realty completed a holding company merger that resulted in the formation of a new holding company which is now known as Federal Realty Investment Trust and the entity formerly known as Federal Realty Investment Trust converting to a limited partnership now known as Federal Realty OP LP. Detailed information on this conversion can be found in the Form 8K12B filed on January 3, 2022 and the Form 8K filed on January 5, 2022.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.07 per common share, resulting in an indicated annual rate of $4.28 per common share. The regular common dividend will be payable on April 15, 2022 to common shareholders of record as of March 16, 2022.

Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a 5.000% Series C Cumulative Preferred Share of Beneficial Interest, of $0.3125 per depositary share. All dividends on the depositary shares will be payable on April 15, 2022 to shareholders of record as of April 1, 2022.

Guidance

Federal Realty increased its 2022 guidance for earnings per diluted share to $2.30 to $2.50 and 2022 FFO per diluted share to $5.75 to $5.95.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its fourth quarter 2021 earnings conference call, which is scheduled for Thursday, February 10, 2022 at 5:00 PM ET. To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13726468 (required). The teleconference can also be accessed via a live webcast at www.federalrealty.com in the Investors section. A replay of the webcast will be available on Federal Realty's website at www.federalrealty.com. A telephonic replay of the conference call will also be available through February 24, 2022 by dialing 844.512.2921; Passcode: 13726468.

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, Federal Realty's mission is to deliver long-term, sustainable growth through investing in communities where retail demand exceeds supply. Its 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 104 properties include approximately 3,100 tenants, in 25 million square feet, and approximately 3,400 residential units.

Federal Realty has increased its quarterly dividends to its shareholders for 54 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its 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 10, 2022, 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 or to fill existing vacancy;
risks that we may not be able to proceed with or obtain necessary approvals for any development, redevelopment or renovation project, and that completion of anticipated or ongoing property development, redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;
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 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;
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; and
risks related to natural disasters, climate change and public health crises (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

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 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 review the risks contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 10, 2022.

Investor Inquiries:

Leah Andress Brady

Vice President, Investor Relations

301.998.8265

[email protected]

Media Inquiries:

Brenda Pomar

Director, Corporate Communications

301.998.8316

[email protected]

Federal Realty Investment Trust
Consolidated Balance Sheets
December 31, 2021
	December 31,
	2021	2020
	(in thousands, except share and
	per share data)
ASSETS
Real estate, at cost
Operating (including $2,207,648 and $1,703,202 of consolidated variable interest entities, respectively)	$ 8,814,791	$ 7,771,981
Construction-in-progress (including $18,752 and $44,896 of consolidated variable interest entities, respectively)	607,271	810,889
	9,422,062	8,582,870
Less accumulated depreciation and amortization (including $389,950 and $335,735 of consolidated variable interest entities, respectively)	(2,531,095)	(2,357,692)
Net real estate	6,890,967	6,225,178
Cash and cash equivalents	162,132	798,329
Accounts and notes receivable	169,007	159,780
Mortgage notes receivable, net	9,543	39,892
Investment in partnerships	13,027	22,128
Operating lease right of use assets	90,743	92,248
Finance lease right of use assets	49,832	51,116
Prepaid expenses and other assets	237,069	218,953
TOTAL ASSETS	$ 7,622,320	$ 7,607,624
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable, net (including $335,301 and $413,681 of consolidated variable interest entities, respectively)	$ 339,993	$ 484,111
Notes payable	301,466	402,776
Senior notes and debentures	3,406,088	3,404,488
Accounts payable and other expenses	235,168	228,641
Dividends payable	86,538	83,839
Security deposits payable	25,331	20,388
Operating lease liabilities	72,661	72,441
Finance lease liabilities	72,032	72,049
Other liabilities and deferred credits	206,187	152,424
Total liabilities	4,745,464	4,921,157
Commitments and contingencies
Redeemable noncontrolling interests	213,708	137,720
Shareholders' equity
Preferred shares, authorized 15,000,000 shares, $.01 par:
5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding	150,000	150,000
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding	9,997	9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 78,603,305 and 76,727,394 shares issued and outstanding, respectively	790	771
Additional paid-in capital	3,488,794	3,297,305
Accumulated dividends in excess of net income	(1,066,932)	(988,272)
Accumulated other comprehensive loss	(2,047)	(5,644)
Total shareholders' equity of the Trust	2,580,602	2,464,157
Noncontrolling interests	82,546	84,590
Total shareholders' equity	2,663,148	2,548,747
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 7,622,320	$ 7,607,624

Federal Realty Investment Trust
Consolidated Income Statements
December 31, 2021
	Three Months Ended		Year Ended
	December 31,		December 31,
	2021	2020	2021	2020
	(in thousands, except per share data)

REVENUE
Rental income	$ 253,888	$ 218,484	$ 948,842	$ 832,171
Mortgage interest income	266	1,029	2,382	3,323
Total revenue	254,154	219,513	951,224	835,494
EXPENSES
Rental expenses	56,647	48,359	198,121	170,920
Real estate taxes	30,224	29,059	118,496	119,242
General and administrative	14,499	12,307	49,856	41,680
Depreciation and amortization	77,816	64,424	279,976	255,027
Total operating expenses	179,186	154,149	646,449	586,869

Impairment charge	—	—	—	(57,218)
Gain on sale of real estate and change in control of interest	72,522	86,435	89,950	98,117

OPERATING INCOME	147,490	151,799	394,725	289,524

OTHER INCOME/(EXPENSE)
Other interest income	108	539	809	1,894
Interest expense	(32,187)	(37,543)	(127,698)	(136,289)
Early extinguishment of debt	—	(11,179)	—	(11,179)
Income (loss) from partnerships	1,331	(1,405)	1,245	(8,062)
NET INCOME	116,742	102,211	269,081	135,888
Net income attributable to noncontrolling interests	(1,806)	(7,486)	(7,583)	(4,182)
NET INCOME ATTRIBUTABLE TO THE TRUST	114,936	94,725	261,498	131,706
Dividends on preferred shares	(2,011)	(2,011)	(8,042)	(8,042)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$ 112,925	$ 92,714	$ 253,456	$ 123,664
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	$ 1.45	$ 1.22	$ 3.26	$ 1.62
Weighted average number of common shares	77,536	75,898	77,336	75,515
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$ 1.44	$ 1.22	$ 3.26	$ 1.62
Weighted average number of common shares	78,556	75,898	77,368	75,515

Federal Realty Investment Trust
Funds From Operations
December 31, 2021


	Three Months Ended		Year Ended
	December 31,		December 31,
	2021	2020	2021	2020
	(in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
Net income	$ 116,742	$ 102,211	$ 269,081	$ 135,888
Net income attributable to noncontrolling interests	(1,806)	(7,486)	(7,583)	(4,182)
Gain on sale of real estate and change in control of interests, net	(72,464)	(80,240)	(89,892)	(91,922)
Impairment charge, net (1)	—	—	—	50,728
Depreciation and amortization of real estate assets	68,941	57,972	243,711	228,850
Amortization of initial direct costs of leases	5,924	4,853	26,051	20,415
Funds from operations	117,337	77,310	441,368	339,777
Dividends on preferred shares (2)	(1,875)	(2,011)	(8,042)	(8,042)
Income attributable to operating partnership units (3)	731	—	2,998	3,151
Income attributable to unvested shares	(427)	(247)	(1,581)	(1,037)
FFO (4)	$ 115,766	$ 75,052	$ 434,743	$ 333,849
Weighted average number of common shares, diluted (2)(3)	78,556	75,898	78,072	76,261
FFO per diluted share (4)	$ 1.47	$ 0.99	$ 5.57	$ 4.38


Notes:
1)	Impairment charge relates to The Shops at Sunset Place. Amount is net of the allocation to noncontrolling interests. See our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.
2)	For the three months ended December 31, 2021, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."
3)	For the three months ended December 31, 2020, income attributable to operating partnership units is not added back in the calculation of FFO available to common shareholders, as the related shares are not dilutive and are not included in "weighted average common shares, diluted" for this period. For the three months and year ended December 31, 2021 and the year ended December 31, 2020, the weighted average common shares used to compute FFO per diluted common share includes operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of dilutive EPS for these periods.
4)	FFO available for common shareholders for the year ended December 31, 2020 includes a $11.2 million charge related to early extinguishment of debt. If this charge was excluded, our FFO and FFO per diluted share would have been:

	Three Months Ended	Year Ended
	December 31,	December 31,
	2020	2020
	(in thousands, except per share data)
FFO	$ 87,002	$ 344,994
FFO per diluted share	$ 1.14	$ 4.52