Federal Realty Investment Trust Announces Third Quarter 2018 Operating Results

ROCKVILLE, Md., Oct. 31, 2018 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its third quarter ended September 30, 2018.  Highlights of the quarter and recent activity include:

• Generated earnings per diluted share of $0.82 for the quarter compared to $1.47 in third quarter 2017, which included a $0.70 gain on sale of real estate.
• Generated funds from operations available for common shareholders (FFO) per diluted share of $1.58 for the quarter compared to $1.50 in third quarter 2017.
• Generated comparable property property operating income (POI) growth of 3.5% for the third quarter.
• Signed leases for 447,765 square feet of comparable space (469,214 square feet total) in the third quarter at an average rent of $38.31 per square foot and achieved cash basis rollover growth on those comparable spaces of 6%. Over the last four quarters, cash basis rollover growth on comparable spaces was 12%.
• Signed a long-term lease with Splunk Inc. for 301,000 square feet of office area at 700 Santana Row, a 319,000 square foot, Class-A mixed-use office and retail building under construction at Santana Row
• Increased 2018 FFO per diluted share guidance range to $6.18 to $6.24.

"I couldn't be more pleased with the way our portfolio and our team are responding to changing consumer spending preferences" said Donald C. Wood, President and Chief Executive Officer of Federal Realty. "A big part of our ability to consistently and sustainably grow earnings—this quarter is the best result we've ever posted— is the breadth of the product type that we acquire, build and operate in some of the strongest markets in the country. The retail and entertainment experience that we create on the ground floor is an integral part of our ability to generate revenues from office users, apartment renters and hotel guests who work, live and stay above."

Financial Results

Net income available for common shareholders was $60.5 million and earnings per diluted share was $0.82 for third quarter 2018 versus $106.6 million and $1.47, respectively, for third quarter 2017 which included a $0.70 gain on sale of real estate. Year-to-date Federal Realty reported net income available for common shareholders of $181.4 million and earnings per diluted share of $2.47 which included a $0.14 gain on sale of real estate. This compares to net income available for common shareholders of $238.8 million and earnings per diluted share of $3.30 for the nine months ended September 30, 2017 which included a $0.97 gain on sale of real estate.

In third quarter 2018, Federal Realty generated funds from operations available for common shareholders of $117.3 million, or $1.58 per diluted share. This compares to FFO of $110.0 million, or $1.50 per diluted share, in third quarter 2017. For the nine months ended September 30, 2017, FFO was $344.6 million, or $4.66 per diluted share, compared to $324.5 million, or $4.45 per diluted share for the same nine month period in 2017.

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

In third quarter 2018, comparable property POI increased 3.5%. 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.

The overall portfolio was 94.8% leased as of September 30, 2018, compared to 94.9% on September 30, 2017.  Federal Realty's comparable portfolio was 95.2% leased on September 30, 2018, compared to 95.4% on September 30, 2017.

During third quarter 2018, Federal Realty signed 101 leases for 469,214 square feet of retail space.  On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 447,765 square feet at an average rent of $38.31 per square foot compared to the average contractual rent of $36.22 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 6%. Over the last four quarters, cash basis rollover growth on comparable spaces was 12%.

Summary of Other Quarterly Activities and Recent Developments

• August 27, 2018 –Federal Realty announced that Splunk Inc. (NASDAQ: SPLK) signed a long-term lease for 301,000 square feet of office space in 700 Santana Row, a 319,000 square foot, Class-A mixed-use office and retail building under construction at Santana Row at the intersection of Santana Row and Olsen Drive.

Dividend Declarations

Federal Realty's Board of Trustees declared a regular quarterly cash dividend of $1.02 per share, resulting in an indicated annual rate of $4.08 per share. The regular common dividend will be payable on January 15, 2019 to common shareholders of record as of January 2, 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 January 15, 2019 to shareholders of record as of January 2, 2019.

Guidance

Federal Realty raised its guidance for 2018 FFO per diluted share to a range of $6.18 to $6.24 and increased 2018 earnings per diluted share guidance to a range of $3.23 to $3.29.

Federal Realty will provide preliminary expectations for 2019 FFO per diluted share on the Trust's third quarter 2018 earnings conference call.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its third quarter 2018 earnings conference call, which is scheduled for Thursday, November 1, 2018 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 6491417 (required).  Federal Realty will also provide an online webcast on the Company's web site, http://www.federalrealty.com, which will remain available for 30 days following the call.  A telephonic replay of the conference call will also be available through November 8, 2018 by dialing 855.859.2056; Passcode: 6491417.

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 105 properties include approximately 3,000 tenants, in approximately 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, 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.

 

 

 

 

 

 

 

 

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SOURCE Federal Realty Investment Trust