Federal Realty Investment Trust Announces Operating Results for the Year and Quarter Ended December 31, 2018

ROCKVILLE, Md., Feb. 13, 2019 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its year and quarter ended December 31, 2018. For the year ended December 31, 2018 and 2017, net income available for common stockholders was $3.18 per diluted share and $3.97 per diluted share, respectively. For the three months ended December 31, 2018 and 2017, net income available for common stockholders was $0.71 per diluted share and $0.67 per diluted share, respectively.

Key Highlights of the full year and quarter include:

• Generated FFO per diluted share of $6.23 for the year compared to $5.74 in 2017 ($5.91 excluding prepayment premium). For the fourth quarter, generated FFO per diluted share of $1.57 compared to $1.30 for the fourth quarter 2017 ($1.47 excluding prepayment premium).  
• Generated comparable property operating income (POI) growth of 3.1% for the year ended 2018. For the fourth quarter, comparable property POI growth was 2.0%.  
• Signed leases for 573,923 square feet of comparable space (622,234 square feet total) in the fourth quarter at an average rent of $32.16 per square foot and achieved cash basis rollover growth on those comparable spaces of 15%. Over the last four quarters, cash basis rollover growth on comparable spaces was 12%. 
• Announced the launch of Phase 3 at Assembly Row which includes 277,000 square feet of office space – anchored by PUMA North America, 500 residential units and 56,000 square feet of ground floor retail.
• Introduced 2019 FFO per diluted share guidance range of $6.30 to $6.46, which reflects the impact of the newly implemented lease accounting standard ASC 842.  

"2018 was a year of records for us; from funds from operations per share of $6.23, to total leasing volume at nearly 2 million square feet, to 51 consecutive years of increased common dividends," said Donald C. Wood, President and Chief Executive Officer of Federal Realty. "The growing diversification of our revenue base, along with the development and redevelopment opportunities being executed by our talented team, gives us confidence that our multi-faceted business plan is the right one to service today's evolving and demanding consumer." 

Financial Results

For the full year 2018, Federal Realty reported net income available for common shareholders of $233.9 million and earnings per diluted share of $3.18. This compares to net income available for common shareholders of $287.5 million and earnings per diluted share of $3.97 for the full year 2017.   Net income available for common shareholders was $52.5 million and earnings per diluted share was $0.71 for the fourth quarter 2018 versus $48.6 million and $0.67, respectively, for the fourth quarter 2017.

For the full year 2018, Federal Realty generated funds from operations available for common shareholders (FFO) of $461.8 million, or $6.23 per diluted share. This compares to FFO of $420.0 million, or $5.74 per diluted share, for the full year 2017. 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. For the fourth quarter 2018, FFO was $117.2 million, or $1.57 per diluted share, compared to $95.5 million, or $1.30 per diluted share for the fourth quarter 2017 ($1.47 if the early extinguishment of debt charge was excluded).

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

The overall portfolio was 94.6% leased as of December 31, 2018, and the comparable portfolio was 95.1% leased.  Comparable property POI increased 3.1% for the year 2018 and 2.0% in the fourth quarter. Comparable property POI represents our consolidated property portfolio other than those properties that distort comparability between periods in two primary categories (1) assets that were not owned for the full quarter in both periods presented and (2) assets currently under development or being repositioned for significant redevelopment and investment.

For the year 2018, Federal Realty signed 402 leases for 2.0 million square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 1.9 million square feet at an average rent of $34.11 per square foot compared to the average contractual rent of $30.37 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 12%.

During fourth quarter 2018, Federal Realty signed 114 leases for 622,234 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 573,923 square feet at an average rent of $32.16 per square foot compared to the average contractual rent of $27.96 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 15%.

Regular Quarterly Dividends

Federal Realty's Board of Trustees declared a regular quarterly cash dividend of $1.02 per common share, resulting in an indicated annual rate of $4.08 per common share. The regular common dividend will be payable on April 15, 2019 to shareholders of record as of March 14, 2019.

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 April 15, 2019 to shareholders of record as of April 1, 2019.

Summary of Other Quarterly Activities and Recent Developments

February 7, 2019 – Federal Realty announced Wendy Seher and Jan Sweetnam have been promoted to executive vice president and will serve as members of the Trust's Executive Committee, in addition to their roles as members of the Investment Committee. Wendy Seher was promoted to Executive Vice President – Eastern Region President. Jan Sweetnam was promoted to Executive Vice President – Western Region Chief Operating Officer.

January 18, 2019 – Federal Realty announced the launch of Phase 3 at Assembly Row which includes 277,000 square feet of office space – anchored by PUMA North America, 500 residential units and 56,000 square feet of ground floor retail. The estimated total investment in Phase 3 is expected to be approximately $475 million. Upon completion of Phase 3, total investment at Assembly Row will be approximately $1.2 billion.

Guidance

Federal Realty introduced 2019 guidance for FFO per diluted share of $6.30 to $6.46 and 2019 earnings per diluted share guidance of $3.14 to $3.30, which reflects the impact of the newly implemented lease accounting standard ASC 842.

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 2018 earnings conference call, which is scheduled for Thursday, February 14, 2019 at 10:00AM ET.  To participate, please call 877.445.3230 five to ten minutes prior to the call start time and use the passcode 2162635 (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, 2019 by dialing 855.859.2056; Passcode: 2162635.

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 densely populated, affluent 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 3,000 tenants, in 24 million square feet, and over 2,600 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 51 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 13, 2019, 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, 2019.

 

 

 

 

 

 

 

 

 

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