Company Announcements

Federal Realty Investment Trust Announces Second Quarter 2021 Operating Results

NORTH BETHESDA, Md., Aug. 4, 2021 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2021. For the three months ended June 30, 2021 and 2020, net income available for common shareholders was $0.57 per diluted share and $0.11 per diluted share, respectively.

Highlights for the quarter and subsequent events include:

  • Generated funds from operations available to common shareholders (FFO) per diluted share of $1.41 for the quarter compared to $0.77 for the second quarter 2020.
  • Record levels of leasing activity with 124 signed leases for 558,490 square feet of comparable space during second quarter and 227 signed leases for 1.1 million square feet of comparable space through the first six months of 2021.
  • Federal Realty's portfolio was 92.7% leased, a sequential increase of 90 basis points.
    • 310 basis point spread between leased and occupied
  • Acquired 4 assets which total 1.76 million square feet on 125 acres of land at a gross value of $407 million, of which Federal owns an average 80% interest. 
  • Increased the regular quarterly cash dividend to $1.07 per common share, resulting in an indicated annual rate of $4.28 per common share. This increase represents the 54th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
  • Increased 2021 earnings per diluted share guidance to $1.91 to $2.01 and increased 2021 FFO per diluted share guidance to $5.05 to $5.15.
  • Increased 2022 earnings per diluted share guidance to $1.99 to $2.19 and increased 2022 FFO per diluted share guidance to $5.30 to $5.50.

"Our team delivered an outstanding quarter exceeding all our of internal forecasts," said Donald C. Wood, Chief Executive Officer. "Our all-time high leasing volumes with best-in-class, relevant tenants coupled with our new acquisitions and existing development pipeline set our company and our assets up to be more dominant, more relevant and therefore more valuable in a post-COVID world."

Financial Results

Net income available for common shareholders was $44.2 million and earnings per diluted share was $0.57 for second quarter 2021 versus $8.5 million and $0.11, respectively, for second quarter 2020.

In the second quarter 2021, Federal Realty generated FFO of $110.1 million, or $1.41 per diluted share. This compares to FFO of $58.0 million, or $0.77 per diluted share, in second quarter 2020.

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.

Operational Update

The portfolio was 92.7% leased as of June 30, 2021, a sequential increase of 90 basis points over the first quarter 2021 and a spread of 310 basis points versus our occupied percentage, 89.6%, at the end of the second quarter.

During the second quarter 2021, Federal Realty signed 133 leases for 576,782 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 124 leases for 558,490 square feet at an average rent of $37.34 per square foot compared to the average contractual rent of $34.72 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 8%, 18% on a straight-line basis.

As of July 28, 2021, the Company has collected approximately 94% of total second quarter 2021 billed recurring rents. Including rent deferral and abatement agreements, total addressed recurring rent was 98%.

With $304 million of cash and cash equivalents as of June 30, 2021, Federal Realty has approximately $1.3 billion of liquidity in cash and undrawn availability under its $1 billion revolving credit facility.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the regular quarterly cash dividend to $1.07 per common share, resulting in an indicated annual rate of $4.28 per common share. The regular common dividend will be payable on October 15, 2021 to common shareholders of record as of September 22, 2021. This increase represents the 54th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector. Federal is 1 of only 32 companies in any sector to be considered a 'Dividend King'.

Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a 5.000% Series C Cumulative Preferred Share of Beneficial Interest, of $0.3125 per depositary share. All dividends on the depositary shares will be payable on October 15, 2021 to shareholders of record as of October 1, 2021.

Summary of Other Quarterly Activities and Recent Developments

Second Quarter 2021 – Federal Realty acquired Grossmont Center in greater San Diego, California, Chesterbrook in McLean, Virginia, and Camelback Colonnade and Hilton Village in the Phoenix Metro area. The 4 assets total 1.76 million square feet on 125 acres of land. Federal acquired its average 80% ownership interest in these assets based on a gross value of $407 million.

June 1, 2021Federal Realty issued its 2020 corporate responsibility report highlighting the Company's ESG initiatives and accomplishments and established reduction targets of 15% for landlord controlled electric usage and 30% for greenhouse gas emissions by the end of 2025.

May 2021The Institute for Market Transformation and the U.S. Department of Energy's (DOE) Better Buildings Alliance announced Federal Realty as a 2021 Green Lease Leader. Green Lease Leaders sets national standards for what constitutes a green lease, while recognizing landlords and tenants who modernize their leases to spur collaborative action on energy efficiency, cost-savings, air quality, and sustainability in buildings.

May 2021Federal Realty was selected by GlobeSt. as one of commercial real estate's Best Places to Work in 2021. The annual series identifies and recognizes the most respected, rewarding workplaces that achieve outstanding performance.

Guidance

Federal Realty increased its 2021 guidance for earnings per diluted share to $1.91 to $2.01 and 2021 FFO per diluted share guidance to $5.05 to $5.15.

Additionally, Federal Realty increased its 2022 guidance for earnings per diluted share to $1.99 to $2.19 and 2022 FFO per diluted share guidance to $5.30 to $5.50.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its second quarter 2021 earnings conference call, which is scheduled for Wednesday, August 4, 2021 at 5:00 PM ET.  To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13721508 (required).  The teleconference can also be accessed via a live webcast at www.federalrealty.com in the Investors section. 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 August 18, 2021 by dialing 844.512.2921; Passcode: 13721508.

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, Federal Realty's mission is to deliver long-term, sustainable growth through investing in communities where retail demand exceeds supply. Its 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 105 properties include approximately 3,000 tenants, in 25 million square feet, and approximately 2,900 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 54 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its 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 11, 2021, 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 redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;
  • risk 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 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;
  • 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; and
  • risks related to natural disasters, climate change and public health crises (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

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 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 review the risks contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 11, 2021 and subsequent quarterly reports on Form 10-Q.

Investor Inquiries:

Leah Andress Brady

Director, Investor Relations

301.998.8265

lbrady@federalrealty.com 

Media Inquiries:

Brenda Pomar

Director, Corporate Communications

301.998.8316

bpomar@federalrealty.com 

 

Federal Realty Investment Trust

Consolidated Balance Sheets

June 30, 2021


June 30,


December 31,


2021


2020


(in thousands, except share and per share data)


(unaudited)



ASSETS




Real estate, at cost




Operating (including $2,184,537 and $1,703,202 of consolidated variable interest entities, respectively)

$

8,412,137



$

7,771,981


Construction-in-progress (including $24,679 and $44,896 of consolidated variable interest entities, respectively)

858,488



810,889



9,270,625



8,582,870


Less accumulated depreciation and amortization (including $359,198 and $335,735 of consolidated variable interest entities, respectively)

(2,444,329)



(2,357,692)


Net real estate

6,826,296



6,225,178


Cash and cash equivalents

304,268



798,329


Accounts and notes receivable, net

153,293



159,780


Mortgage notes receivable, net

9,534



39,892


Investment in partnerships

11,560



22,128


Operating lease right of use assets

92,457



92,248


Finance lease right of use assets

50,474



51,116


Prepaid expenses and other assets

230,994



218,953


TOTAL ASSETS

$

7,678,876



$

7,607,624


LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable, net (including $396,732 and $413,681 of consolidated variable interest entities, respectively)

$

466,026



$

484,111


Notes payable, net

301,625



402,776


Senior notes and debentures, net

3,405,282



3,404,488


Accounts payable and accrued expenses

253,092



228,641


Dividends payable

84,881



83,839


Security deposits payable

23,381



20,388


Operating lease liabilities

74,129



72,441


Finance lease liabilities

72,041



72,049


Other liabilities and deferred credits

209,957



152,424


Total liabilities

4,890,414



4,921,157


Commitments and contingencies




Redeemable noncontrolling interests

212,623



137,720


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 shares issued and outstanding

150,000



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, 77,760,588 and 76,727,394 shares issued and outstanding, respectively

782



771


Additional paid-in capital

3,395,189



3,297,305


Accumulated dividends in excess of net income

(1,062,641)



(988,272)


Accumulated other comprehensive loss

(3,238)



(5,644)


Total shareholders' equity of the Trust

2,490,089



2,464,157


Noncontrolling interests

85,750



84,590


Total shareholders' equity

2,575,839



2,548,747


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

7,678,876



$

7,607,624


 

Federal Realty Investment Trust

Consolidated Income Statements

June 30, 2021









Three Months Ended


Six Months Ended


June 30,


June 30,


2021


2020


2021


2020


(in thousands, except per share data)


(unaudited)

REVENUE








Rental income

$

230,795



$

175,479



$

447,930



$

406,277


Mortgage interest income

830



748



1,856



1,507


Total revenue

231,625



176,227



449,786



407,784


EXPENSES








Rental expenses

42,918



36,417



92,156



80,729


Real estate taxes

29,323



30,599



58,743



59,663


General and administrative

12,846



9,814



23,104



20,065


Depreciation and amortization

67,675



62,784



131,549



124,972


Total operating expenses

152,762



139,614



305,552



285,429










Gain on sale of real estate and change in control of interest



11,682



17,428



11,682










OPERATING INCOME

78,863



48,295



161,662



134,037










OTHER INCOME/(EXPENSE)








Other interest income

250



509



613



817


Interest expense

(31,177)



(34,073)



(63,262)



(62,518)


Income (loss) from partnerships

123



(3,872)



(1,215)



(5,036)


NET INCOME

48,059



10,859



97,798



67,300


   Net income attributable to noncontrolling interests

(1,855)



(352)



(3,358)



(2,030)


NET INCOME ATTRIBUTABLE TO THE TRUST

46,204



10,507



94,440



65,270


Dividends on preferred shares

(2,011)



(2,011)



(4,021)



(4,021)


NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

44,193



$

8,496



$

90,419



$

61,249










EARNINGS PER COMMON SHARE, BASIC:








Net income available for common shareholders

$

0.57



$

0.11



$

1.16



$

0.81


Weighted average number of common shares

77,474



75,394



77,160



75,377


EARNINGS PER COMMON SHARE, DILUTED:








Net income available for common shareholders

$

0.57



$

0.11



$

1.16



$

0.81


Weighted average number of common shares

77,505



75,394



77,162



75,377



 

Federal Realty Investment Trust

Funds From Operations

June 30, 2021











Three Months Ended


Six Months Ended



June 30,


June 30,



2021


2020


2021


2020



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)











Net income


$

48,059



$

10,859



$

97,798



$

67,300


Net income attributable to noncontrolling interests


(1,855)



(352)



(3,358)



(2,030)


Gain on sale of real estate and change in control of interest




(11,682)



(17,428)



(11,682)


Depreciation and amortization of real estate assets


56,431



56,608



113,534



112,654


Amortization of initial direct costs of leases


9,181



4,809



13,925



9,709


Funds from operations


111,816



60,242



204,471



175,951


Dividends on preferred shares (1)


(2,011)



(2,011)



(4,021)



(4,021)


Income attributable to operating partnership units (2)


740





1,525



1,572


Income attributable to unvested shares


(398)



(249)



(721)



(541)


FFO


$

110,147



$

57,982



$

201,254



$

172,961


Weighted average number of common shares, diluted (1)(2)


78,203



75,394



77,881



76,126


FFO per diluted share


$

1.41



$

0.77



$

2.58



$

2.27











Notes:



1)

For the three and six months ended June 30, 2021 and 2020, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."



2)

For the three months ended June 30, 2020, income attributable to operating partnership units is not added back in the calculation of FFO available to common shareholders, as the related shares are not dilutive and are not included in "weighted average common shares, diluted" for this period. For the three months ended June 30, 2021 and 2020 and the six months ended June 30, 2020, the weighted average common shares used to compute FFO per diluted common share includes operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of dilutive EPS for these periods.

 

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SOURCE Federal Realty Investment Trust