ROCKVILLE, Md., Feb. 13, 2018 /PRNewswire/ -- Federal Realty
Investment Trust (NYSE:FRT) today reported operating results for
its year and quarter ended December
31, 2017. Highlights of the full year and quarter
include:
- Generated earnings per diluted share of $3.97 for the year compared to $3.50 in 2016. For the fourth quarter, generated
earnings per diluted share of $0.67
compared to $0.80 for the fourth
quarter 2016.
- Generated FFO per diluted share of $5.74 for the year ($5.91 excluding prepayment premium) compared to
$5.65 in 2016. For the fourth
quarter, generated FFO per diluted share of $1.30 ($1.47
excluding prepayment premium) compared to $1.45 for the fourth quarter 2016.
- Generated same-center property operating income growth of 3.4%
for the year ended 2017. For the fourth quarter, same-center growth
was 2.6%.
- Signed leases for 300,511 sf of comparable space in the fourth
quarter at an average rent of $34.75
psf and achieved cash basis rollover growth on those comparable
spaces of 15%.
- Opportunistically issued $175
million of 3.25% senior unsecured notes due 2027 offered at
99.404% of the principal amount with a re-offer yield of
3.323%.
- Introduced 2018 FFO per diluted share guidance range of
$6.08 to $6.24.
"We remain focused on the future as we navigate through this
transitional time in the retail real estate space," said
Donald C. Wood, President and Chief
Executive Officer of Federal Realty. "Through thoughtful
positioning of our portfolio over the last decade, there are more
arrows in our quiver than ever before. Federal Realty is the only
shopping center company to grow NAREIT-defined FFO year-over-year
for the entirety of the current real estate cycle, and we remain
confident that retail-based real estate in the best locations, with
flexible formats and carefully created environments will be the
future of retail and will thrive in the years to come."
Financial Results
For the full year 2017, Federal Realty reported net income
available for common shareholders of $287.5
million and earnings per diluted share of $3.97. This compares to net income available for
common shareholders of $249.4 million
and earnings per diluted share of $3.50 for the full year 2016. Net
income available for common shareholders was $48.6 million and earnings per diluted share was
$0.67 for the fourth quarter 2017
versus $57.9 million and $0.80, respectively, for the fourth quarter
2016.
For the full year 2017, Federal Realty generated funds from
operations available for common shareholders (FFO) of $420.0 million, or $5.74 per diluted share. Excluding the
$12.3 million early extinguishment of
debt charge in the fourth quarter 2017, FFO per diluted share for
the full year 2017 would have been $5.91. This compares to FFO of $406.4 million, or $5.65 per diluted share, for the full year 2016.
For the fourth quarter 2017, FFO was $95.5
million, or $1.30 per diluted
share ($1.47 if the early
extinguishment of debt charge was excluded), compared to
$104.9 million, or $1.45 per diluted share for the fourth quarter
2016.
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
For the year 2017, same-center property operating income
increased 3.4% when including properties that are being redeveloped
and 0.7% when excluding those properties. In fourth quarter 2017,
same-center property operating income increased 2.6% when including
properties that are being redeveloped and 1.0% when excluding those
properties. As anticipated, the Trust's proactive releasing
initiatives throughout the portfolio negatively impacted the year
end and quarterly results.
The overall portfolio was 95.3% leased as of December 31, 2017, compared to 94.4% on
December 31, 2016. Federal
Realty's same center portfolio was 96.3% leased on December 31, 2017, compared to 95.9% on
December 31, 2016.
For the year 2017, Federal Realty signed 406 leases for 1.8
million square feet of retail space. On a comparable basis (i.e.,
spaces for which there was a former tenant), Federal Realty leased
1.6 million square feet at an average cash-basis contractual rent
increase (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 $38.31 per square foot compared to the average
contractual rent of $33.79 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 for
comparable retail space averaged 26% for the year ended 2017.
During fourth quarter 2017, Federal Realty signed 91 leases for
344,768 square feet of retail space. On a comparable space
basis, Federal Realty leased 300,511 square feet at an average cash
basis contractual rent increase of 15% and 27% on a GAAP
basis. The average contractual rent on this comparable space
for the first year of the new leases is $34.75 per square foot compared to the average
contractual rent of $30.19 per square
foot for the last year of the prior leases.
Regular Quarterly Dividends
Federal Realty also announced today that its Board of Trustees
declared a regular quarterly cash dividend of $1.00 per common share, resulting in an indicated
annual rate of $4.00 per common
share. The regular common dividend will be payable on April 16, 2018 to common shareholders of record
as of March 14, 2018.
Federal Realty's Board of Trustees also declared a quarterly
cash dividend with respect to the Trust's Series C Preferred
Shares. All dividends on the preferred shares will be payable on
April 16, 2018 to preferred
shareholders of record as of April 2,
2018.
Summary of Other Quarterly Activities and Recent
Developments
February 12, 2018 – Federal Realty
announced promotions within its finance, operating and development
Ranks. Melissa Solis was promoted to
Senior Vice President – Chief Accounting Officer. Christian Fleming was promoted to Vice President
– Asset Management. Patrick McMahon
was promoted to Vice President – Development.
December 21, 2017 – Federal Realty
issued $175 million aggregate
principal amount of 3.25% senior unsecured notes due 2027. The
notes were offered at 99.404% of the principal amount with a
re-offer yield of 3.323%. The notes have the same terms and are of
the same series as the notes that Federal Realty issued on
June 23, 2017. Federal Realty has a
total of $475 million of such notes
outstanding. Federal Realty used the net proceeds from the offering
to redeem all of its outstanding 5.90% Notes due 2020, incurring a
$12.3 million prepayment charge, and
for general corporate purposes.
Guidance
Federal Realty introduced 2018 guidance for FFO per diluted
share of $6.08 to $6.24 and 2018 earnings per diluted share
guidance of $3.01 to $3.17.
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 2017 earnings conference call, which is
scheduled for Wednesday, February 14, 2018 at 9:00AM
ET. To participate, please call 877.445.3230 five to
ten minutes prior to the call start time and use the passcode
5292449 (required). A replay of the webcast will be available
on Federal Realty's website at www.federalrealty.com. A telephonic
replay of the conference call will also be available through
February 21, 2018 by dialing
855.859.2056; Passcode: 5292449.
About Federal Realty
Federal Realty is a recognized leader in the ownership,
operation and redevelopment of high-quality retail based properties
located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, our mission is
to deliver long term, sustainable growth through investing in
densely populated, affluent communities where retail demand exceeds
supply. Our expertise includes creating urban, mixed-use
neighborhoods like Santana Row in
San Jose, California, Pike &
Rose in North Bethesda, Maryland
and Assembly Row in Somerville,
Massachusetts. These unique and vibrant environments that
combine shopping, dining, living and working provide a destination
experience valued by their respective communities. Federal Realty's
104 properties include approximately 3,000 tenants, in
approximately 24 million square feet, and over 2,300 residential
units.
Federal Realty has paid quarterly dividends to its shareholders
continuously since its founding in 1962, and has increased its
dividend rate for 50 consecutive years, the longest record in the
REIT industry. Federal Realty shares are traded on the NYSE under
the symbol FRT. For additional information about Federal Realty and
its properties, 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 13, 2018, 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 not perform as planned, 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 13, 2018.
Investor
Inquires:
|
Media
Inquiries:
|
Leah
Andress
|
Andrea
Simpson
|
Investor Relations
Associate
|
Vice President,
Marketing
|
301.998.8265
|
617.684.1511
|
landress@federalrealty.com
|
asimpson@federalrealty.com
|
Federal Realty
Investment Trust
|
Consolidated
Balance Sheets
|
December 31,
2017
|
|
December
31,
|
|
2017
|
|
2016
|
|
(in thousands,
except share and
|
|
per share
data)
|
ASSETS
|
|
|
|
Real estate, at
cost
|
|
|
|
Operating (including
$1,639,486 and $1,211,605 of consolidated variable interest
entities, respectively)
|
$
|
6,950,188
|
|
|
$
|
6,125,957
|
|
Construction-in-progress (including $43,393 and
$15,313 of consolidated variable interest entities,
respectively)
|
684,873
|
|
|
599,260
|
|
Assets held for
sale
|
—
|
|
|
33,856
|
|
|
7,635,061
|
|
|
6,759,073
|
|
Less accumulated
depreciation and amortization (including $247,410 and $209,239 of
consolidated variable interest entities, respectively)
|
(1,876,544)
|
|
|
(1,729,234)
|
|
Net real
estate
|
5,758,517
|
|
|
5,029,839
|
|
Cash and cash
equivalents
|
15,188
|
|
|
23,368
|
|
Accounts and notes
receivable
|
209,877
|
|
|
116,749
|
|
Mortgage notes
receivable, net
|
30,429
|
|
|
29,904
|
|
Investment in real
estate partnerships
|
23,941
|
|
|
14,864
|
|
Prepaid expenses and
other assets
|
237,803
|
|
|
208,555
|
|
TOTAL
ASSETS
|
$
|
6,275,755
|
|
|
$
|
5,423,279
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Liabilities
|
|
|
|
Mortgages payable
(including $460,372 and $439,120 of consolidated variable interest
entities, respectively)
|
$
|
491,505
|
|
|
$
|
471,117
|
|
Capital lease
obligations
|
71,556
|
|
|
71,590
|
|
Notes
payable
|
320,265
|
|
|
279,151
|
|
Senior notes and
debentures
|
2,401,440
|
|
|
1,976,594
|
|
Accounts payable and
other liabilities
|
196,332
|
|
|
201,756
|
|
Dividends
payable
|
75,931
|
|
|
71,440
|
|
Security deposits
payable
|
16,667
|
|
|
16,285
|
|
Other liabilities and
deferred credits
|
169,388
|
|
|
115,817
|
|
Total
liabilities
|
3,743,084
|
|
|
3,203,750
|
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
141,157
|
|
|
143,694
|
|
Shareholders'
equity
|
|
|
|
Preferred shares,
authorized 15,000,000 shares, $.01 par:
|
|
|
|
5.0% Series C
Cumulative Redeemable Preferred Shares, (stated at liquidation
preference $25,000 per share), 6,000 and 0 shares issued and
outstanding, respectively
|
150,000
|
|
|
—
|
|
5.417% Series 1
Cumulative Convertible Preferred Shares, (stated at liquidation
preference $25 per share), 399,896 shares issued and
outstanding
|
9,997
|
|
|
9,997
|
|
Common shares of
beneficial interest, $.01 par, 100,000,000 shares authorized,
73,090,877 and 71,995,897 shares issued and outstanding,
respectively
|
733
|
|
|
722
|
|
Additional paid-in
capital
|
2,855,321
|
|
|
2,718,325
|
|
Accumulated dividends
in excess of net income
|
(749,367)
|
|
|
(749,734)
|
|
Accumulated other
comprehensive income (loss)
|
22
|
|
|
(2,577)
|
|
Total shareholders'
equity of the Trust
|
2,266,706
|
|
|
1,976,733
|
|
Noncontrolling
interests
|
124,808
|
|
|
99,102
|
|
Total shareholders'
equity
|
2,391,514
|
|
|
2,075,835
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$
|
6,275,755
|
|
|
$
|
5,423,279
|
|
Federal Realty
Investment Trust
|
Consolidated
Income Statements
|
December 31,
2017
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(in thousands,
except per share data)
|
|
|
REVENUE
|
|
|
|
|
|
|
|
Rental
income
|
$
|
220,720
|
|
|
$
|
200,871
|
|
|
$
|
841,461
|
|
|
$
|
786,583
|
|
Other property
income
|
2,396
|
|
|
2,456
|
|
|
12,825
|
|
|
11,015
|
|
Mortgage
interest income
|
841
|
|
|
782
|
|
|
3,062
|
|
|
3,993
|
|
Total
revenue
|
223,957
|
|
|
204,109
|
|
|
857,348
|
|
|
801,591
|
|
EXPENSES
|
|
|
|
|
|
|
|
Rental
expenses
|
45,403
|
|
|
39,941
|
|
|
164,890
|
|
|
158,326
|
|
Real estate
taxes
|
28,735
|
|
|
24,122
|
|
|
107,839
|
|
|
95,286
|
|
General and
administrative
|
10,268
|
|
|
8,121
|
|
|
36,281
|
|
|
33,399
|
|
Depreciation
and amortization
|
56,394
|
|
|
48,448
|
|
|
216,050
|
|
|
193,585
|
|
Total operating
expenses
|
140,800
|
|
|
120,632
|
|
|
525,060
|
|
|
480,596
|
|
OPERATING
INCOME
|
83,157
|
|
|
83,477
|
|
|
332,288
|
|
|
320,995
|
|
Other interest
income
|
222
|
|
|
89
|
|
|
475
|
|
|
374
|
|
Interest
expense
|
(26,173)
|
|
|
(23,851)
|
|
|
(100,125)
|
|
|
(94,994
|
|
Early
extinguishment of debt
|
(12,273)
|
|
|
—
|
|
|
(12,273)
|
|
|
—
|
|
(Loss) income
from real estate partnerships
|
(121)
|
|
|
9
|
|
|
(417)
|
|
|
50
|
|
INCOME FROM
CONTINUING OPERATIONS
|
44,812
|
|
|
59,724
|
|
|
219,948
|
|
|
226,425
|
|
Gain on sale of
real estate and change in control of interests, net
|
7,973
|
|
|
—
|
|
|
77,922
|
|
|
32,458
|
|
NET INCOME
|
52,785
|
|
|
59,724
|
|
|
297,870
|
|
|
258,883
|
|
Net
income attributable to noncontrolling interests
|
(2,129)
|
|
|
(1,687)
|
|
|
(7,956)
|
|
|
(8,973
|
|
NET INCOME
ATTRIBUTABLE TO THE TRUST
|
50,656
|
|
|
58,037
|
|
|
289,914
|
|
|
249,910
|
|
Dividends on
preferred shares
|
(2,011)
|
|
|
(135)
|
|
|
(2,458)
|
|
|
(541
|
|
NET INCOME AVAILABLE
FOR COMMON SHAREHOLDERS
|
$
|
48,645
|
|
|
$
|
57,902
|
|
|
$
|
287,456
|
|
|
$
|
249,369
|
|
EARNINGS PER COMMON
SHARE, BASIC
|
|
|
|
|
|
|
|
Net income
available for common shareholders
|
$
|
0.67
|
|
|
$
|
0.81
|
|
|
$
|
3.97
|
|
|
$
|
3.51
|
|
Weighted
average number of common shares, basic
|
72,515
|
|
|
71,628
|
|
|
72,117
|
|
|
70,877
|
|
EARNINGS PER COMMON
SHARE, DILUTED
|
|
|
|
|
|
|
|
Net income
available for common shareholders
|
$
|
0.67
|
|
|
$
|
0.80
|
|
|
$
|
3.97
|
|
|
$
|
3.50
|
|
Weighted
average number of common shares, diluted
|
72,598
|
|
|
71,785
|
|
|
72,233
|
|
|
71,049
|
|
Federal Realty
Investment Trust
|
Funds From
Operations
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(in thousands,
except per share data)
|
Funds from Operations
available for common shareholders (FFO)
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
52,785
|
|
|
$
|
59,724
|
|
|
$
|
297,870
|
|
|
$
|
258,883
|
|
Net income
attributable to noncontrolling interests
|
|
(2,129)
|
|
|
(1,687)
|
|
|
(7,956)
|
|
|
(8,973)
|
|
Gain on sale of real
estate and change in control of interests, net
|
|
(7,973)
|
|
|
—
|
|
|
(77,632)
|
|
|
(31,133)
|
|
Depreciation and
amortization of real estate assets
|
|
49,607
|
|
|
42,392
|
|
|
188,719
|
|
|
169,198
|
|
Amortization of
initial direct costs of leases
|
|
4,594
|
|
|
4,146
|
|
|
19,124
|
|
|
16,875
|
|
Funds from
operations
|
|
96,884
|
|
|
104,575
|
|
|
420,125
|
|
|
404,850
|
|
Dividends on
preferred shares (1)
|
|
(1,876)
|
|
|
(135)
|
|
|
(1,917)
|
|
|
(541)
|
|
Income attributable
to operating partnership units
|
|
788
|
|
|
748
|
|
|
3,143
|
|
|
3,145
|
|
Income attributable
to unvested shares
|
|
(310)
|
|
|
(267)
|
|
|
(1,374)
|
|
|
(1,095)
|
|
FFO (2)
|
|
$
|
95,486
|
|
|
$
|
104,921
|
|
|
$
|
419,977
|
|
|
$
|
406,359
|
|
Weighted average
number of common shares, diluted (1)
|
|
73,481
|
|
|
72,549
|
|
|
73,122
|
|
|
71,869
|
|
FFO per diluted share
(2)
|
|
$
|
1.30
|
|
|
$
|
1.45
|
|
|
$
|
5.74
|
|
|
$
|
5.65
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
1)
|
For the three months
and year ended December 31, 2017, dividends on our Series 1
preferred stock are not deducted in the calculation of FFO
available to common shareholders, as the related shares are
dilutive and included in "weighted average common shares,
diluted."
|
2)
|
If the $12.3 million
early extinguishment of debt charge incurred in the fourth quarter
of 2017 was excluded, our FFO and FFO per diluted share would have
been:
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December 31,
2017
|
|
December 31,
2017
|
|
|
(in thousands,
except per share data)
|
FFO
|
|
$
|
107,719
|
|
|
$
|
432,210
|
|
FFO per diluted
share
|
|
$
|
1.47
|
|
|
$
|
5.91
|
|
Federal Realty
Investment Trust
|
Reconciliation of
FFO Guidance
|
December 31,
2017
|
|
The following table
provides a reconciliation of the range of estimated earnings per
diluted share to estimated FFO per diluted share for the full year
2018. Estimates do not include the impact from potential
acquisitions or potential dispositions which have not closed as of
February 13, 2018.
|
|
|
|
|
|
Full Year 2018
Guidance
Range
|
|
|
|
Low
|
|
High
|
Estimated net income
available to common shareholders, per diluted share
|
$
|
3.01
|
|
|
$
|
3.17
|
|
Adjustments:
|
|
|
|
Estimated
depreciation and amortization
|
3.07
|
|
|
3.07
|
|
Estimated FFO per
diluted share
|
$
|
6.08
|
|
|
$
|
6.24
|
|
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SOURCE Federal Realty Investment Trust