Federal Realty Investment Trust Announces Second Quarter 2013 Operating Results

ROCKVILLE, Md., Aug. 1, 2013 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2013.

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Financial Results

In the second quarter 2013, Federal Realty generated funds from operations available for common shareholders (FFO) of $71.1 million or $1.08 per diluted share.  This compares to FFO of $66.8 million, or $1.04 per diluted share, in second quarter 2012.  For the six months ended June 30, 2013, Federal Realty reported FFO of $145.2 million, or $2.22 per diluted share, compared to $133.4 million, or $2.08 per diluted share for the same six-month period in 2012. The Trust's reported results include a $3.4 million charge related to the make-whole premium for prepaying the Trust's 5.40% senior notes from the proceeds of the new 2.75% senior notes issuance completed in the second quarter.  Excluding this charge, FFO per diluted share increased 9.6% to $1.14 in second quarter 2013 and 9.1% to $2.27 for the six months ended June 30, 2013.

Net income available for common shareholders was $37.4 million and earnings per diluted share was $0.57 for the quarter ended June 30, 2013 versus $32.5 million and $0.51, respectively, for second quarter 2012.  Year-to-date, Federal Realty reported net income available for common shareholders of $71.9 million and earnings per diluted share of $1.10.  This compares to net income available for common shareholders of $75.3 million and earnings per diluted share of $1.18 for the six months ended June 30, 2012.

FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance.  A reconciliation of net income to FFO is attached to this press release.

Portfolio Results

In second quarter 2013, same-center property operating income increased 5.0% over second quarter 2012.  When redevelopment and expansionproperties are excluded from same-center results, property operating income for second quarter 2013 increased 5.2% compared to second quarter 2012. 

The overall portfolio was 95.3% leased as of June 30, 2013, compared to 95.1% on March 31, 2013 and 94.2% on June 30, 2012.  Federal Realty's same-center portfolio was 95.3% leased on June 30, 2013, compared to 95.1% on March 31, 2013 and 95.0% on June 30, 2012.

During the second quarter of 2013, Federal Realty signed 111 leases for 504,605 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 470,832 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 15%. The average contractual rent on this comparable space for the first year of the new leases is $31.10 per square foot, compared to the average contractual rent of $27.00 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 2013. As of June 30, 2013, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio was $24.29 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 $0.78 per share, resulting in an indicated annual rate of $3.12 per share, an increase of 6.8%. The regular common dividend will be payable on October 15, 2013, to common shareholders of record as of September 23, 2013. This increase represents the 46th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector, and amongst the longest such records for publicly traded companies in the US.

"Our portfolio continues to outperform expectations and our leasing activity, which produced rollover growth in excess of 15%, sets us up well for the future. We are also pleased with the progress and momentum in our development pipeline and the value creation we expect it to deliver," said Don Wood, president and chief executive officer of Federal Realty Investment Trust.  "Finally, we are proud to increase our dividend for the 46^th consecutive year, the only REIT to have such record."

Guidance

Federal Realty increased guidance, excluding the $3.4 million debt prepayment charge, for 2013 FFO per diluted share to a range of $4.56 to $4.60, and provided 2013 earnings per diluted share guidance of $2.41 to $2.45. 

Summary of Other Quarterly Activities and Recent Developments

• May 9, 2013 – Federal Realty announced the closing of its public offering of $275 million aggregate principal amount of 2.75% senior unsecured notes due June 1, 2023. 
• June 10, 2013 – Federal Realty announced the redemption of its 5.40% Senior Unsecured notes due December 1, 2013 (the "Notes") for aggregate principal of $135 million.  The redemption price was approximately $138.5 million, including $0.2 million of accrued and unpaid interest.
• July 22, 2013 – Federal Realty closed on the sale of its 5th Avenue asset in San Diego, and entered into an agreement to sell its Forest Hills asset in Long Island, New York.  The total sales price for the two assets is $36 million.  The Forest Hills sale is still subject to buyer's due diligence.  These asset sales are part of a reverse 1031 exchange in connection with the acquisition of our shopping center in Darien, Connecticut in April 2013.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2013 earnings conference call, which is scheduled for August 2, 2013, at 11 a.m. Eastern Daylight Time.  To participate, please call (800) 447-0521 five to ten minutes prior to the call start time and use the passcode 35097821 (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 September 1, 2013, by dialing (888) 843-7419 and using the passcode 35097821.

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 95.3% leased to national, regional, and local retailers as of June 30, 2013, with no single tenant accounting for more than approximately 3.4% 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 12, 2013, 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 12, 2013.

SOURCE Federal Realty Investment Trust