Federal Realty Investment Trust Announces Fourth Quarter And Year-End 2013 Operating Results - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

Federal Realty Investment Trust Announces Fourth Quarter And Year-End 2013 Operating Results

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SOURCE Federal Realty Investment Trust

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 1st 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,

respectively)

$

4,618,258



$

4,473,813


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

consolidated variable interest entities, respectively)

(1,350,471)



(1,224,295)


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

variable interest entities, respectively)

$

660,127



$

832,482


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.




 

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