FEDERAL REALTY INVESTMENT TRUST 
By ROCKVILLE, Md., Aug. 4 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its second quarter ended June 30, 2009.
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Financial Results
Federal Realty reported funds from operations available for common shareholders (FFO) of $57.4 million or $0.97 per diluted share, and net income available for common shareholders of $28.3 million or earnings per diluted share of $0.48 for the second quarter 2009. For the six months ended June 30, 2009, Federal Realty reported FFO of $95.4 million, or $1.61 per diluted share. Net income available for common shareholders was $38.6 million and earnings per diluted share was $0.65 for the six months ended June 30, 2009. Excluding the litigation provision, year-to-date FFO was $116.1 million, or $1.95 per diluted share, versus $111.7 million, or $1.89 per diluted share, for the same six-month period in 2008. Net income available for common shareholders excluding the litigation provision was $59.4 million and earnings per diluted share was $1.00 for the six months ended June 30, 2009 versus $58.7 million and $0.99, respectively, for the same six-month period in 2008.
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 attributable to the Trust is attached to this press release.
Portfolio Results
In second quarter 2009, same-center property operating income increased 1.6% over second quarter 2008. When redevelopment and expansion properties are excluded from same-center results, property operating income for second quarter 2009 decreased 1.4% compared to second quarter 2008.
The overall portfolio was 94.0% leased as of June 30, 2009, compared to 94.2% on March 31, 2009 and 95.8% on June 30, 2008. Federal Realty's same-center portfolio was 94.2% leased on June 30, 2009, compared to 94.5% on March 31, 2009 and 96.1% on June 30, 2009.
During the second quarter of 2009, Federal Realty signed 71 leases for 319,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 315,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 16%. The average contractual rent on this comparable space for the first year of the new leases is $26.87 per square foot, compared to the average contractual rent of $23.25 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 29% for second quarter 2009. As of June 30, 2009, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $21.93 per square foot.
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees increased the dividend rate on its common shares, declaring a regular quarterly cash dividend of $0.66 per share, resulting in an indicated annual rate of $2.64 per share, an increase of $0.04 annually or 1.5%. The regular common dividend will be payable on October 15, 2009, to common shareholders of record as of September 23, 2009. This increase represents the 42nd consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
"We believe that a cash dividend is essential to most REIT investors and we are proud to not only continue to pay a quarterly dividend in cash, but to increase that dividend for the 42(nd) consecutive year," said Donald C. Wood, president and chief executive officer of the Trust. "We would not be able to continue this record without a consistent earnings stream which comes from owning the highest quality properties with a steady focus on core operations. In addition, we have demonstrated significant access to capital which has strengthened our balance sheet and provides us the ability to pursue future growth opportunities."
Guidance
Federal Realty narrowed guidance, excluding the provision for litigation, for 2009 FFO per diluted share to a range of $3.82 to $3.87, and provided 2009 earnings per diluted share guidance of $1.91 to $1.96.
Summary of Other Quarterly Activities and Recent Developments
-- June 4, 2009 - Completed a cash tender offer for its outstanding 8.75%
Notes due 2009 (CUSIP No.313747AG2), purchasing an aggregate of
$40,266,000 principal amount of the Securities (representing 24.6% of
the outstanding Securities). The consideration paid for the Securities
was $1,020 per $1,000 in principal amount, plus accrued and unpaid
interest to, but not including, June 4, 2009. The aggregate
consideration paid for the Securities tendered, exclusive of accrued
interest and transaction costs, was approximately $41.1 million.
-- June 4, 2009 - Closed on a $139 million five-year loan secured by four
retail assets located in Northern Virginia at an effective annual rate
of 7.7%.
-- May 4, 2009 - Closed a new $372 million unsecured term loan, proceeds of
which were utilized to retire the Trust's outstanding $200 million
unsecured term loan, pay down the outstanding balance on our revolving
credit facility, and provide capital to retire the 8.75% Notes due
December 1, 2009. The term loan, which bears interest at an annual rate
of LIBOR (subject to a 1.5% floor) plus 300 basis points, will mature in
July 2011. The term loan was increased from its initial size of $200
million, reflecting significant demand from high-quality financial
institutions for the Trust's credit at market leading terms.
-- April 14, 2009 - Closed a $24.1 million, ten-year loan secured by
Rollingwood Apartments in Silver Spring, Maryland at an effective annual
interest rate of 5.7%.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2009 earnings conference call, which is scheduled for August 5, 2009, at 11 a.m. Eastern Daylight Time. To participate, please call (866) 783-2143 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 September 3, 2009, by dialing (888) 286-8010 and using the passcode 10487453.
About Federal Realty
Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management 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 94.0% leased to national, regional, and local retailers as of June 30, 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. 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 26, 2009 and amended on June 25, 2009, and include the following:
-- risks that our tenants will not pay rent 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 close any pending financing activities, 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 26, 2009 and amended on June 25, 2009.
Investor and Media Inquiries
Gina Birdsall Janelle Stevenson
Investor Relations Corporate Communications
301/998-8265 301/998-8185
gbirdsall@federalrealty.com jmstevenson@federalrealty.com
Federal Realty Investment Trust
Summarized Balance Sheets
June 30, 2009
June 30, December 31,
2009 2008
---- ----
(in thousands)
ASSETS (unaudited)
Real estate, at cost
Operating $3,576,472 $3,567,035
Construction-in-
progress 131,506 106,650
------- -------
3,707,978 3,673,685
Less accumulated
depreciation and
amortization (889,316) (846,258)
-------- --------
Net real estate 2,818,662 2,827,427
Cash and cash
equivalents 170,059 15,223
Accounts and notes
receivable 68,726 73,688
Mortgage notes
receivable 48,464 45,780
Investment in real
estate partnership 28,801 29,252
Prepaid expenses
and other assets 100,244 101,406
------- -------
TOTAL ASSETS $3,234,956 $3,092,776
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable and
capital lease
obligations $607,291 $452,810
Notes payable 383,828 336,391
Senior notes and
debentures 905,114 956,584
Accounts payable
and other
liabilities 223,994 200,037
------- -------
Total liabilities 2,120,227 1,945,822
Shareholders' equity
Preferred stock 9,997 9,997
Common shares and
other shareholders'
equity 1,072,919 1,104,605
--------- ---------
Total shareholders'
equity of the Trust 1,082,916 1,114,602
Noncontrolling
interest 31,813 32,352
------ ------
Total shareholders'
equity 1,114,729 1,146,954
--------- ---------
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $3,234,956 $3,092,776
========== ==========
Federal Realty Investment Trust
Summarized Income Statements
June 30, 2009
Three months Six months ended
ended June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(in thousands, except per share data)
(unaudited)
Revenue
Rental income $126,090 $122,970 $253,296 $244,710
Other property
income 2,941 4,624 5,544 8,010
Mortgage
interest income 1,307 1,118 2,574 2,234
----- ----- ----- -----
Total revenue 130,338 128,712 261,414 254,954
------- ------- ------- -------
Expenses
Rental expenses 25,080 26,183 53,777 53,446
Real estate
taxes 14,821 14,112 28,653 26,440
General and
administrative 5,276 7,118 10,421 14,060
Litigation
provision 125 - 20,757 -
Depreciation
and
amortization 29,633 27,784 58,225 53,174
------ ------ ------ ------
Total
operating
expenses 74,935 75,197 171,833 147,120
------ ------ ------- -------
Operating income 55,403 53,515 89,581 107,834
Other interest
income 260 208 350 547
Interest expense (25,830) (24,476) (49,413) (48,829)
Early
extinguishment
of senior notes (982) - (968) -
Income from
real estate
partnership 399 442 601 773
--- --- --- ---
Income from
continuing
operations 29,250 29,689 40,151 60,325
Discontinued operations
Income from
discontinued
operations 161 694 218 1,376
Gain on sale of
real estate
from
discontinued
operations 383 - 1,298 -
--- - ----- -
Results from
discontinued
operations 544 694 1,516 1,376
--- --- ----- -----
Net income 29,794 30,383 41,667 61,701
Net income
attributable to
noncontrolling
interests (1,377) (1,409) (2,766) (2,741)
------ ------ ------ ------
Net income
attributable to
the Trust 28,417 28,974 38,901 58,960
Dividends on
preferred stock (135) (135) (271) (271)
---- ---- ---- ----
Net income
available for
common
shareholders $28,282 $28,839 $38,630 $58,689
======= ======= ======= =======
EARNINGS PER COMMON
SHARE, BASIC
Continuing
operations $0.47 $0.48 $0.62 $0.98
Discontinued
operations 0.01 0.01 0.03 0.02
$0.48 $0.49 $0.65 $1.00
===== ===== ===== =====
Weighted
average number
of common
shares, basic 58,917 58,636 58,882 58,570
====== ====== ====== ======
EARNINGS PER COMMON
SHARE, DILUTED
Continuing
operations $0.47 $0.48 $0.62 $0.97
Discontinued
operations 0.01 0.01 0.03 0.02
$0.48 $0.49 $0.65 $0.99
===== ===== ===== =====
Weighted
average number
of common
shares, diluted 59,042 58,906 59,004 58,843
====== ====== ====== ======
Federal Realty Investment Trust
Funds From Operations
June 30, 2009
Three months Six months ended
ended June 30, June 30,
--------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Funds from Operations (in thousands, except per share data)
available for common
shareholders (FFO) (1)
---------------------
Net income attributable to the
Trust $28,417 $28,974 $38,901 $58,960
Gain on sale of real estate (383) - (1,298) -
Depreciation and amortization
of real estate assets 26,563 25,050 51,999 48,000
Amortization of initial direct
costs of leases 2,515 2,283 5,182 4,305
Depreciation of joint venture
real estate assets 337 331 691 661
--- --- --- ---
Funds from operations 57,449 56,638 95,475 111,926
Dividends on preferred stock (135) (135) (271) (271)
Income attributable to
operating
partnership units 241 231 484 463
Income attributable to unvested
shares (189) (201) (314) (389)
---- ---- ---- ----
FFO (2) 57,366 56,533 95,374 111,729
Litigation provision, net of
allocation to unvested
shares (2) 124 - 20,689 -
--- - ------ -
FFO excluding litigation
provision (2) $57,490 $56,533 $116,063 $111,729
======= ======= ======== ========
FFO per diluted share (3) $0.97 $0.95 $1.61 $1.89
Litigation provision per
diluted
share (2) - - 0.34 -
- - ---- -
FFO per diluted share excluding
litigation provision (2) (3) $0.97 $0.95 $1.95 $1.89
===== ===== ===== =====
Weighted average number of
common shares, diluted 59,414 59,284 59,377 59,222
====== ====== ====== ======
Notes:
------
(1) See Glossary of Terms.
(2) For the three and six months ended June 30, 2009, FFO includes a
$0.1 million and a $20.8 million, respectively, 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. FFO
excluding litigation provision excludes this charge.
(3) Effective January 1, 2009, we adopted FSP EITF No. 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities", and consequently have
calculated FFO per diluted share under the two-class method, as
defined in SFAS No. 128, for all periods presented. The
implementation resulted in a decrease of $0.01 to FFO per diluted
share for the three months ended June 30, 2008.
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
June 30, 2009
2009 Guidance
-------------
(Dollars in millions except
per share amounts)(1)
Funds from Operations available for
common shareholders (FFO)
---------------------
Net income attributable to the Trust $93 $96
Gain on sale of real estate (1) (1)
Depreciation and amortization of real estate
& real estate partnership assets 105 105
Amortization of initial direct costs
of leases 9 9
--- ---
Funds from operations 206 209
Dividends on preferred stock (1) (1)
Income attributable to operating
partnerships units 1 1
Income attributable to unvested shares (1) (1)
--- ---
FFO 206 209
Litigation provision (2) 21 21
--- ---
FFO excluding litigation provision $227 $230
==== ====
Weighted average number of common
shares, diluted 59.4 59.4
FFO per diluted share $3.47 $3.52
Litigation provision (2) 0.35 0.35
---- ----
FFO per diluted share excluding
litigation provision $3.82 $3.87
===== =====
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
