Company Announcements

Federal Realty Investment Trust Announces First Quarter 2022 Operating Results

NORTH BETHESDA, Md. , May 5, 2022 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2022. For the three months ended March 31, 2022 and 2021, net income available for common shareholders was $0.63 per diluted share and $0.60 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 $1.50 for the quarter compared to $1.17 for the first quarter 2021.
  • Generated comparable property operating income (POI) growth of 14.5% for the first quarter.
  • Continued record levels of leasing with 119 signed leases for 444,398 square feet of comparable space in the first quarter, our most active first quarter on record.
  • Federal Realty's portfolio was 91.2% occupied and 93.7% leased, representing year-over-year increases of 170 basis points and 190 basis points, respectively.
    • Maintained a 250 basis point spread between leased and occupied.
  • Continued strong small shop leasing, ending the quarter at 88.7% leased, an increase of 130 basis points over the fourth quarter and an increase of 490 basis points year over year. 
  • Subsequent to quarter end, closed on phase one of the acquisition of Kingstowne Towne Center in Kingstowne, Virginia, for $100 million and expect to close on phase two for $100 million in July 2022, subject to customary closing conditions. Combined, the property comprises 410,000 square feet of retail space on 45 acres of land.
  • Increased 2022 earnings per diluted share guidance to $2.36 - $2.56 and increased 2022 FFO per diluted share guidance to $5.85 - $6.05, an increase of 10 cents at the midpoint.

"Demand for our product has outpaced even our continually raised expectations," said Donald C. Wood, Chief Executive Officer. "Record leasing combined with in-process expansion at our established mixed-use centers, our continued redevelopment and property improvement efforts and recent selective acquisitions continue to drive bottom line earnings growth. These multiple drivers of growth are what differentiate us over cycles."

Financial Results

Net Income

Net income available for common shareholders was $50.0 million and earnings per diluted share was $0.63 for first quarter 2022 versus $46.2 million and $0.60, respectively, for first quarter 2021.

FFO

In the first quarter 2022, Federal Realty generated FFO of $119.1 million, or $1.50 per diluted share. This compares to FFO of $91.1 million, or $1.17 per diluted share, in first quarter 2021.

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

Occupancy

The portfolio was 91.2% occupied as of March 31, 2022, an increase of 170 basis points over the first quarter 2021. The portfolio was 93.7% leased as of March 31, 2022, an increase of 190 basis points over the first quarter 2021. Both portfolio occupancy and leased rate increased 10 basis points over the fourth quarter 2021, a strong result given that occupancy and leased metrics typically trend down in the first quarter due to traditional seasonality of the business. The spread between our leased and occupied percentages was 250 basis points at the end of the first quarter.

Additionally, our comparable residential properties were 97.7% leased as of March 31, 2022, a sequential increase of 50 basis points over fourth quarter and year-over-year increase of 160 basis points.

Leasing Activity

During the first quarter 2022, Federal Realty signed 124 leases for 460,062 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 444,398 square feet at an average rent of $36.77 per square foot compared to the average contractual rent of $34.31 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%, 17% on a straight-line basis.

Transaction Activity

Subsequent to quarter end, Federal Realty closed on phase one of the acquisition of Kingstowne Towne Center in Kingstowne, Virginia, for $100 million and expects to close on phase two for $100 million in July 2022, subject to customary closing conditions. Combined, the property comprises 410,000 square feet of retail space on 45 acres of land and is anchored by Safeway, Giant, T.J. Maxx, Ross and HomeGoods.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $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 July 15, 2022 to common shareholders of record as of June 22, 2022.

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 July 15, 2022 to shareholders of record as of July 1, 2022.

Guidance

Federal Realty increased its 2022 guidance for earnings per diluted share from $2.30 - $2.50 to $2.36 - $2.56 and 2022 FFO per diluted share from $5.75 to $5.95 to $5.85 - $6.05.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its first quarter 2022 earnings conference call, which is scheduled for Thursday, May 5, 2022 at 11:00 AM ET.  To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13729384 (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 May 19, 2022 by dialing 844.512.2921; Passcode: 13729384.

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 104 properties include approximately 3,100 tenants, in 25 million square feet, and approximately 3,400 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 10, 2022, 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 or to fill existing vacancy;
  • risks that we may not be able to proceed with or obtain necessary approvals for any development, redevelopment or renovation project, and that completion of anticipated or ongoing property development, redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;
  • 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 10, 2022.

Investor Inquiries:

Leah Andress Brady

Vice President, 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

March 31, 2022


March 31,


December 31,


2022


2021


(in thousands, except share and
per share data)


(unaudited)



ASSETS




Real estate, at cost




               Operating (including $2,210,901 and $2,207,648 of consolidated variable interest

               entities, respectively)

$  8,843,063


$  8,814,791

               Construction-in-progress (including $21,677 and $18,752 of consolidated variable
               interest entities, respectively)

662,985


607,271


9,506,048


9,422,062

               Less accumulated depreciation and amortization (including $403,533 and $389,950 of
               consolidated variable interest entities, respectively)

(2,587,121)


(2,531,095)

     Net real estate

6,918,927


6,890,967

     Cash and cash equivalents

157,944


162,132

     Accounts and notes receivable, net

183,479


169,007

     Mortgage notes receivable, net

9,519


9,543

     Investment in partnerships

13,183


13,027

     Operating lease right of use assets

90,231


90,743

     Finance lease right of use assets

49,511


49,832

     Prepaid expenses and other assets

245,581


237,069

TOTAL ASSETS

$  7,668,375


$  7,622,320

LIABILITIES AND SHAREHOLDERS' EQUITY




     Liabilities




               Mortgages payable, net (including $334,640 and $335,301 of consolidated variable
               interest entities, respectively)

$      339,236


$      339,993

               Notes payable, net

301,540


301,466

               Senior notes and debentures, net

3,406,491


3,406,088

               Accounts payable and accrued expenses

233,773


235,168

               Dividends payable

86,617


86,538

               Security deposits payable

26,073


25,331

               Operating lease liabilities

72,317


72,661

               Finance lease liabilities

72,028


72,032

               Other liabilities and deferred credits

201,680


206,187

     Total liabilities

4,739,755


4,745,464

     Commitments and contingencies




     Redeemable noncontrolling interests

214,043


213,708

     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,
          79,417,472 and 78,603,305 shares issued and outstanding, respectively

799


790

          Additional paid-in capital

3,572,591


3,488,794

          Accumulated dividends in excess of net income

(1,101,154)


(1,066,932)

          Accumulated other comprehensive income (loss)

1,525


(2,047)

     Total shareholders' equity of the Trust

2,633,758


2,580,602

          Noncontrolling interests

80,819


82,546

     Total shareholders' equity

2,714,577


2,663,148

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$  7,668,375


$  7,622,320

 

Federal Realty Investment Trust




Consolidated Income Statements




March 31, 2022





Three Months Ended


March 31,


2022


2021


(in thousands, except
per share data)


(unaudited)

REVENUE




     Rental income

$    256,507


$    217,135

     Mortgage interest income

264


1,026

          Total revenue

256,771


218,161

EXPENSES




     Rental expenses

56,211


49,238

     Real estate taxes

30,560


29,420

     General and administrative

12,342


10,258

     Depreciation and amortization

71,674


63,874

          Total operating expenses

170,787


152,790





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


17,428





OPERATING INCOME

85,984


82,799





OTHER INCOME/(EXPENSE)




     Other interest income

120


363

     Interest expense

(31,573)


(32,085)

     Income (loss) from partnerships

197


(1,338)

NET INCOME

54,728


49,739

   Net income attributable to noncontrolling interests

(2,744)


(1,503)

NET INCOME ATTRIBUTABLE TO THE TRUST

51,984


48,236

     Dividends on preferred shares

(2,010)


(2,010)

NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$      49,974


$      46,226





EARNINGS PER COMMON SHARE, BASIC:




     Net income available for common shareholders

$           0.63


$           0.60

     Weighted average number of common shares

78,446


76,842

EARNINGS PER COMMON SHARE, DILUTED:




     Net income available for common shareholders

$           0.63


$           0.60

     Weighted average number of common shares

78,543


76,842

 

 

 

Federal Realty Investment Trust





Funds From Operations

March 31, 2022







Three Months Ended



March 31,



2022


2021



(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)



Net income


$       54,728


$       49,739

Net income attributable to noncontrolling interests


(2,744)


(1,503)

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



(17,428)

Depreciation and amortization of real estate assets


62,977


57,103

Amortization of initial direct costs of leases


5,793


4,744

          Funds from operations


120,754


92,655

Dividends on preferred shares (1)


(1,875)


(2,010)

Income attributable to downREIT operating partnership units


706


785

Income attributable to unvested shares


(436)


(325)

          FFO


$     119,149


$       91,105

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


79,299


77,582

FFO per diluted share (2)


$            1.50


$            1.17

 

Notes:

  1. For the three months ended March 31, 2022, 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. The weighted average common shares used to compute FFO per diluted common share includes downREIT 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