FEDERAL REALTY INVESTMENT TRUST 
By ROCKVILLE, Md., Feb. 11, 2014 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its fourth quarter and year-ended December 31, 2013.
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Financial Results
Federal Realty generated funds from operations available for common shareholders (FFO) of $68.4 million, or $1.03 per diluted share for fourth quarter 2013 which was negatively impacted by a charge for early extinguishment of debt. Without the charge for early extinguishment of debt, FFO would have been $78.2 million or $1.18 per diluted share, which includes acquisition costs of $0.02 that were incurred during the quarter. This compares to FFO of $71.7 million, or $1.11 per diluted share, in fourth quarter 2012. For the year ending December 31, 2013, Federal Realty reported FFO of $289.9 million, or $4.41 per diluted share which includes the early extinguishment of debt. FFO for calendar year 2013 without the charge for early extinguishment of debt would have been $303.2 million of $4.61 per diluted share. This compares to $277.2 million, or $4.31 per diluted share, for the year ending December 31, 2012.
Net income available for common shareholders was $28.3 million and earnings per diluted share was $0.42 for fourth quarter 2013 versus $37.6 million and $0.58, respectively, for fourth quarter 2012. For the year ending December 31, 2013, Federal Realty reported net income available for common shareholders of $162.1 million and earnings per diluted share of $2.46. This compares to net income available for shareholders of $151.4 million and earnings per diluted share of $2.35 for the year ending December 31, 2012.
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 in addition to Form 8-K that was filed.
Portfolio Results
Same-center property operating income in 2013 increased 4.4% including redevelopments and expansions, and 4.5% excluding redevelopments and expansions compared to 2012. Both of those same-center comparisons exclude the lease termination fee from Safeway last year to more properly reflect comparability. On a quarterly-basis, same-center property operating income in fourth quarter 2013 increased 3.6% including redevelopment and expansion properties, and 4.3% excluding redevelopment and expansion properties, compared to fourth quarter 2012.
The overall portfolio was 95.8% leased as of December 31, 2013, compared to 95.3% on September 30, 2013 and 95.3% on December 31, 2012. Federal Realty's same-center portfolio was 95.9% leased on December 31, 2013, compared to 95.4% on September 30, 2013 and 95.2% on December 31, 2012.
During fourth quarter 2013, the Trust signed 99 leases for 484,144 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 395,906 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 25%. The average contractual rent on this comparable space for the first year of the new lease is $27.24 per square foot compared to the average contractual rent of $21.73 per square foot for the last year of the prior lease. The previous average contractual rent is 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 38% for fourth quarter 2013.
For all of 2013, Federal Realty signed 348 leases representing 1.4 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 20%, and 33% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $32.41 per square foot compared to the average cash-basis contractual rent of $27.00 per square foot for the last year of the prior lease. As of December 31, 2013, Federal Realty's average contractual minimum rent for retail and commercial space in its portfolio is $24.54 per square foot, as compared to $23.83 per square foot on December 31, 2012.
"The 2013 fourth quarter, and in fact the entire year, was another fundamentally strong one in so many respects for our company," said Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust. "Leasing activity in all the markets we serve was robust, particularly in Northern California and Boston, and we were able to drive rent increases that set us up particularly well for growth in 2014. Add to that the January 1(st) acquisitions of two great shopping centers in central New Jersey and a very full development pipeline set to begin to deliver in 2014; you can begin to understand our optimism for the years ahead."
Summary of Other Quarterly Activities and Recent Developments
-- December 9, 2013 - Federal Realty issued $300 million aggregate
principal amount of 3.95% senior unsecured notes due January 15, 2024.
-- December 2013 - On December 27, 2013, Federal Realty redeemed its 5.95%
Senior Unsecured notes ("Notes") due 2014 for aggregate principal of
$150 million. The redemption price was approximately $158.3 million,
including $3.3 million of accrued and unpaid interest. Also, in
December, Federal Realty repaid $129 million of 7.50% mortgage notes due
2014. The total prepayment premium paid during the fourth quarter 2013
for both the Notes and the 7.50% mortgage notes was $9.4 million.
-- January 6, 2014 - Federal Realty announced the acquisition of a
controlling interest in two shopping centers totaling 285,600 square
feet in affluent Monmouth County, New Jersey, for a total value of $161
million. The Grove at Shrewsbury and Brook 35 are located on busy Route
35, less than three miles from the Garden State Parkway, serving the NY
Metro emerging bedroom and second home communities of Shrewsbury, Red
Bank, Rumson, Fair Haven, Little Silver and Middletown. The acquisition,
which was effective January 1, 2014, was made using a combination of
downREIT units, cash and the assumption of $68 million of fixed rate
debt secured by the properties.
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees left the regular dividend rate on its common shares unchanged, declaring a regular quarterly cash dividend of $0.78 per share on its common shares, resulting in an indicated annual rate of $3.12 per share. The regular common dividend will be payable on April 15, 2014 to common shareholders of record on March 21, 2014.
Guidance
We have raised our 2014 guidance for FFO per diluted share to a range of $4.86 to $4.93. Our updated earnings per diluted share guidance is $2.54 to $2.62.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its fourth quarter and year-end 2013 earnings conference call, which is scheduled for February 12, 2014, at 11 a.m. Eastern Standard Time. To participate, please call (800) 708-4540 five to ten minutes prior to the call start time and use the passcode 36254568 (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 March 12, 2014, by dialing (888) 843-7419 and using the passcode 36254568.
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 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 95.8% leased to national, regional, and local retailers as of December 31, 2013, with no single tenant accounting for more than approximately 3.5% 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 46 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
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 11, 2014.
Investor Inquiries Media Inquiries
------------------ ---------------
Kristina Lennox Andrea Simpson
Investor Relations Manager Director, Marketing
301/998-8265 617/684-1511
klennox@federalrealty.com asimpson@federalrealty.com
Federal Realty Investment Trust
Summarized Balance Sheets
December 31, 2013
December 31,
------------
2013 2012
---- ----
(in thousands)
ASSETS
Real estate, at cost
Operating (including $265,138 and $264,506 of consolidated variable interest entities, $4,618,258 $4,473,813
respectively)
Construction-in-progress 531,205 288,714
Assets held for sale (discontinued operations) - 17,147
--- ------
5,149,463 4,779,674
Less accumulated depreciation and amortization (including $19,086 and $12,024 of (1,350,471) (1,224,295)
consolidated variable interest entities, respectively)
Net real estate 3,798,992 3,555,379
Cash and cash equivalents 88,927 36,988
Accounts and notes receivable, net 84,838 73,861
Mortgage notes receivable, net 55,155 55,648
Investment in real estate partnership 32,264 33,169
Prepaid expenses and other assets 159,118 143,520
------- -------
TOTAL ASSETS $4,219,294 $3,898,565
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages and capital lease obligations (including $202,782 and $205,299 of consolidated $660,127 $832,482
variable interest entities, respectively)
Notes payable 300,822 299,575
Senior notes and debentures 1,360,913 1,076,545
Accounts payable and other liabilities 321,710 284,950
------- -------
Total liabilities 2,643,572 2,493,552
Redeemable noncontrolling interests 104,425 94,420
Shareholders' equity
Preferred shares 9,997 9,997
Common shares and other shareholders' equity 1,438,163 1,276,815
--------- ---------
Total shareholders' equity of the Trust 1,448,160 1,286,812
Noncontrolling interests 23,137 23,781
------ ------
Total shareholders' equity 1,471,297 1,310,593
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,219,294 $3,898,565
======== ========
Federal Realty Investment Trust
Summarized Income Statements
December 31, 2013
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
(in thousands, except per share
data)
Revenue
Rental income $159,953 $151,784 $620,089 $580,114
Other property income 2,508 2,369 12,169 20,211
Mortgage interest income 1,385 1,632 5,155 5,466
----- ----- ----- -----
Total revenue 163,846 155,785 637,413 605,791
------- ------- ------- -------
Expenses
Rental expenses 31,940 30,007 118,695 112,616
Real estate taxes 18,155 16,774 71,759 66,454
General and administrative 9,068 8,264 31,970 31,158
Depreciation and amortization 41,213 35,250 160,828 141,701
------ ------ ------- -------
Total operating expenses 100,376 90,295 383,252 351,929
------- ------ ------- -------
Operating income 63,470 65,490 254,161 253,862
Other interest income 268 109 433 689
Interest expense (24,663) (27,592) (104,977) (113,336)
Early extinguishment of debt (9,905) - (13,304) -
Income from real estate partnerships 433 528 1,498 1,757
--- --- ----- -----
Income from continuing operations 29,603 38,535 137,811 142,972
Discontinued operations
Discontinued operations - income - 323 942 1,400
Discontinued operations - gain on sale of real estate - - 23,861 -
--- --- ------ ---
Results from discontinued operations - 323 24,803 1,400
--- --- ------ -----
Income before gain on sale of real estate 29,603 38,858 162,614 144,372
Gain on sale of real estate - - 4,994 11,860
--- --- ----- ------
Net income 29,603 38,858 167,608 156,232
Net income attributable to noncontrolling interests (1,147) (1,166) (4,927) (4,307)
------ ------ ------ ------
Net income attributable to the Trust 28,456 37,692 162,681 151,925
Dividends on preferred shares (135) (135) (541) (541)
---- ---- ---- ----
Net income available for common shareholders $28,321 $37,557 $162,140 $151,384
======= ======= ======== ========
EARNINGS PER COMMON SHARE, BASIC
Continuing operations $0.43 $0.57 $2.01 $2.15
Discontinued operations - 0.01 0.38 0.02
Gain on sale of real estate - - 0.08 0.19
--- --- ---- ----
$0.43 $0.58 $2.47 $2.36
===== ===== ===== =====
Weighted average number of common shares, basic 65,965 64,392 65,331 63,881
====== ====== ====== ======
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations $0.42 $0.57 $2.00 $2.14
Discontinued operations - 0.01 0.38 0.02
Gain on sale of real estate - - 0.08 0.19
--- --- ---- ----
$0.42 $0.58 $2.46 $2.35
===== ===== ===== =====
Weighted average number of common shares, diluted 66,113 64,550 65,483 64,056
====== ====== ====== ======
Federal Realty Investment Trust
Funds From Operations
December 31, 2013
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2013 2012 2013 2012
---- ---- ---- ----
(in thousands, except per
share data)
Funds from Operations available for common shareholders (FFO)
------------------------------------------------------------
Net income $29,603 $38,858 $167,608 $156,232
Net income attributable to noncontrolling interests (1,147) (1,166) (4,927) (4,307)
Gain on sale of real estate - - (28,855) (11,860)
Depreciation and amortization of real estate assets 37,143 31,283 144,873 125,611
Amortization of initial direct costs of leases 2,607 2,605 10,694 10,935
Depreciation of joint venture real estate assets 384 380 1,504 1,513
--- --- ----- -----
Funds from operations 68,590 71,960 290,897 278,124
Dividends on preferred shares (135) (135) (541) (541)
Income attributable to operating partnership units 223 236 888 943
Income attributable to unvested shares (305) (317) (1,306) (1,289)
---- ---- ------ ------
FFO 68,373 71,744 289,938 277,237
Early extinguishment of debt, net of allocation to unvested shares 9,861 - 13,244 -
----- --- ------ ---
FFO excluding early extinguishment of debt $78,234 $71,744 $303,182 $277,237
===== ===== ====== ======
Weighted average number of common shares, diluted 66,399 64,873 65,778 64,389
====== ====== ====== ======
FFO per diluted share $1.03 $1.11 $4.41 $4.31
FFO excluding early extinguishment of debt, per diluted share $1.18 $1.11 $4.61 $4.31
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
December 31, 2013
2014
Guidance
---------
(Dollars
in
millions
except
per share
amounts)
(1)
Funds from Operations available for common shareholders (FFO)
------------------------------------------------------------
Net income $180 $185
Net income attributable to noncontrolling interests (8) (8)
Depreciation and amortization of real estate & joint venture real estate assets 148 148
Amortization of initial direct costs of leases 11 11
Funds from operations 331 336
Dividends on preferred shares (1) (1)
Income attributable to operating partnership units 3 3
Income attributable to unvested shares (1) (1)
--- ---
FFO $332 $337
==== ====
Weighted average number of common shares, diluted 68.3 68.3
FFO per diluted share $4.86 $4.93
=== ===
Note:
-----
(1) - Individual items may not add up to total due to rounding.
SOURCE Federal Realty Investment Trust
