FEDERAL REALTY INVESTMENT TRUST ROCKVILLE, Md., Oct. 30, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its third quarter ended September 30, 2014.
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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.
Investor Inquires Media Inquiries
----------------- ---------------
Brittany Schmelz Andrea Simpson
Investor Relations Coordinator Director, Marketing
301/998-8265 617/684-1511
bschmelz@federalrealty.com asimpson@federalrealty.com
Federal Realty Investment Trust
Summarized Balance Sheets
September 30, 2014
September 30, December 31,
2014 2013
---- ----
(in thousands)
(unaudited)
ASSETS
Real estate, at cost
Operating
(including
$281,960
and
$265,138
of
consolidated
variable
interest
entities,
respectively) $5,052,378 $4,618,258
Construction-
in-
progress 484,414 531,205
------- -------
5,536,792 5,149,463
Less
accumulated variable
depreciation interest
and entities,
amortization respectively)
(including
$24,714
and
$19,086
of
consolidated (1,431,466) (1,350,471)
---------- ----------
Net real
estate 4,105,326 3,798,992
Cash and
cash
equivalents 23,917 88,927
Accounts
and notes
receivable,
net 104,746 84,838
Mortgage
notes
receivable,
net 51,191 55,155
Investment
in real
estate
partnership 32,717 32,264
Prepaid
expenses
and other
assets 161,501 159,118
TOTAL
ASSETS $4,479,398 $4,219,294
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities
Mortgages
and variable
capital interest
lease entities,
obligations respectively)
(including
$188,189
and
$202,782
of
consolidated 701,914 660,127
Notes
payable 301,556 300,822
Senior
notes and
debentures 1,361,466 1,360,913
Accounts
payable
and other
liabilities 341,998 321,710
Total
liabilities 2,706,934 2,643,572
Redeemable
noncontrolling
interests 110,865 104,425
Shareholders' equity
Preferred
shares 9,997 9,997
Common
shares
and other
shareholders'
equity 1,563,325 1,438,163
Total
shareholders'
equity of
the Trust 1,573,322 1,448,160
Noncontrolling
interests 88,277 23,137
------ ------
Total
shareholders'
equity 1,661,599 1,471,297
TOTAL
LIABILITIES
AND
SHAREHOLDERS'
EQUITY $4,479,398 $4,219,294
========== ==========
Federal Realty Investment Trust
Summarized Income Statements
September 30, 2014
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
(in thousands, except per share data)
(unaudited)
Revenue
Rental income $166,112 $154,308 $494,688 $460,136
Other property income 3,622 3,480 11,347 9,661
Mortgage interest income 1,204 1,242 3,678 3,770
----- ----- ----- -----
Total revenue 170,938 159,030 509,713 473,567
------- ------- ------- -------
Expenses
Rental expenses 31,908 29,045 100,443 86,755
Real estate taxes 20,374 18,400 58,238 53,604
General and administrative 8,374 7,543 24,202 22,902
Depreciation and amortization 42,660 39,341 127,403 119,615
------ ------ ------- -------
Total operating expenses 103,316 94,329 310,286 282,876
------- ------ ------- -------
Operating income 67,622 64,701 199,427 190,691
Other interest income 2 70 45 165
Interest expense (23,422) (25,762) (69,772) (80,314)
Early extinguishment of debt - - - (3,399)
Income from real estate partnership 446 381 909 1,065
--- --- --- -----
Income from continuing operations 44,648 39,390 130,609 108,208
Discontinued operations
Discontinued operations - income - 115 - 942
Discontinued operations - gain on sale of real estate - 23,861 - 23,861
--- ------ --- ------
Results from discontinued operations - 23,976 - 24,803
Income before gain on sale of real estate 44,648 63,366 130,609 133,011
Gain on sale of real estate - - - 4,994
Gain on sale of real estate in real estate partnership 4,401 - 4,401 -
----- --- ----- ---
Net income 49,049 63,366 135,010 138,005
Net income attributable to noncontrolling interests (1,974) (1,268) (5,637) (3,780)
------ ------ ------ ------
Net income attributable to the Trust 47,075 62,098 129,373 134,225
Dividends on preferred shares (136) (136) (406) (406)
---- ---- ---- ----
Net income available for common shareholders $46,939 $61,962 $128,967 $133,819
======= ======= ======== ========
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.62 $0.57 $1.84 $1.58
Discontinued operations - 0.37 - 0.38
Gain on sale of real estate 0.07 - 0.07 0.08
---- --- ---- ----
$0.69 $0.94 $1.91 $2.04
===== ===== ===== =====
Weighted average number of common shares, basic 67,559 65,504 67,095 65,118
====== ====== ====== ======
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.62 $0.57 $1.84 $1.58
Discontinued operations - 0.37 - 0.38
Gain on sale of real estate 0.07 - 0.07 0.08
---- --- ---- ----
$0.69 $0.94 $1.91 $2.04
===== ===== ===== =====
Weighted average number of common shares, diluted 67,732 65,647 67,261 65,271
====== ====== ====== ======
Federal Realty Investment Trust
Funds From Operations
September 30, 2014
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
(in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
------------------------------------------------------------
Net income $49,049 $63,366 $135,010 $138,005
Net income attributable to noncontrolling interests (1,974) (1,268) (5,637) (3,780)
Gain on sale of real estate (4,401) (23,861) (4,401) (28,855)
Depreciation and amortization of real estate assets 37,964 35,334 114,012 107,730
Amortization of initial direct costs of leases 3,193 2,680 8,971 8,087
Depreciation of joint venture real estate assets 352 374 1,202 1,121
--- --- ----- -----
Funds from operations 84,183 76,625 249,157 222,308
Dividends on preferred shares (136) (136) (406) (406)
Income attributable to operating partnership units 798 223 2,229 665
Income attributable to unvested shares (378) (344) (1,128) (1,001)
FFO $84,467 $76,368 $249,852 $221,566
Early extinguishment of debt, net of allocation to unvested shares - - - 3,383
--- --- --- -----
FFO excluding early extinguishment of debt $84,467 $76,368 $249,852 $224,949
======= ======= ======== ========
Weighted average number of common shares, diluted 68,649 65,933 68,179 65,568
====== ====== ====== ======
FFO per diluted share $1.23 $1.16 $3.66 $3.38
===== ===== ===== =====
FFO excluding early extinguishment of debt, per diluted share $1.23 $1.16 $3.66 $3.43
===== ===== ===== =====
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
September 30, 2014
2014 Guidance
-------------
(Dollars in millions except
per share amounts) (1)
Funds from Operations available for common shareholders (FFO)
------------------------------------------------------------
Net income $183 $186
Net income attributable to noncontrolling interests (8) (8)
Gain on sale of real estate in real estate partnership (4) (4)
Depreciation and amortization of real estate & joint venture real estate assets 153 153
Amortization of initial direct costs of leases 11 11
Funds from operations 336 337
Dividends on preferred shares (1) (1)
Income attributable to operating partnership units 3 3
Income attributable to unvested shares (1) (1)
FFO $337 $338
==== ====
Weighted average number of common shares, diluted 68.4 68.4
FFO per diluted share $4.92 $4.94
===== =====
2015 Guidance
-------------
(Dollars in millions except
per share amounts) (1)
Funds from Operations available for common shareholders (FFO)
------------------------------------------------------------
Net income $209 $214
Net income attributable to noncontrolling interests (9) (9)
Gain on sale of real estate - -
Depreciation and amortization of real estate & joint venture real estate assets 155 155
Amortization of initial direct costs of leases 13 13
Funds from operations 367 373
Dividends on preferred shares (1) (1)
Income attributable to operating partnership units 4 4
Income attributable to unvested shares (1) (1)
FFO $369 $375
==== ====
Weighted average number of common shares, diluted 70.2 70.2
FFO per diluted share $5.26 $5.34
===== =====
Note:
-----
(1) - Individual items may not add up to total due to rounding.
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SOURCE Federal Realty Investment Trust
