NORTH
BETHESDA, Md., Aug. 2, 2023
/PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today
reported operating results for its second quarter ended
June 30, 2023. For the three months
ended June 30, 2023 and 2022, net
income available for common shareholders was $0.72 per diluted share and $0.75 per diluted share, respectively. For the
three months ended June 30, 2023 and
2022, operating income was $101.8
million and $93.6 million,
respectively.
Highlights for the second quarter and subsequent to quarter-end
include:
- Generated funds from operations available to common
shareholders (FFO) per diluted share of $1.67 for the quarter, a company record.
- Generated 4.6% comparable property operating income (POI)
growth excluding lease termination fees and COVID-19 pandemic
related prior period rents collected for the second quarter.
- Continued robust levels of leasing with 107 signed leases for
576,345 square feet of comparable space in the second quarter at a
cash basis rollover of 7%, highest second quarter comparable
leasing volume on record.
- Federal Realty's portfolio was 92.8% occupied and 94.3% leased,
representing year-over-year increases of 80 basis points and 20
basis points, respectively.
- Issued $350.0 million of fixed
rate senior unsecured notes, as a green bond, that mature on
May 1, 2028 and bear interest at
5.375%. The notes were offered at 99.590% of the principal amount
with a yield to maturity of 5.468%.
- Increased the regular quarterly cash dividend to $1.09 per common share, resulting in an indicated
annual rate of $4.36 per common
share. This increase represents the 56th consecutive
year that Federal Realty has increased its common dividend, the
longest record of consecutive annual dividend increases in the REIT
sector.
- Increased 2023 earnings per diluted share guidance to
$2.64 - $2.76 and increased 2023 FFO per diluted share
guidance to $6.46 - $6.58.
- Issued the Company's annual Environmental, Social and
Governance Report.
"A record quarter for Federal Realty; $1.67 of FFO per share driven by strong results
in all aspects of our company and our 56th consecutive
year of increased common dividends to our shareholders, also a REIT
industry record," said Donald C.
Wood, Federal Realty's Chief Executive Officer. "Continued
robust leasing activity demonstrates the strength of retail demand
for the high-quality product that Federal Realty offers."
Financial Results
Net Income
For the second quarter 2023, net income available for common
shareholders was $58.5 million and
earnings per diluted share was $0.72
versus $59.7 million and $0.75, respectively, for the second quarter
2022.
FFO
For the second quarter 2023, FFO was $136.9 million, or $1.67 per diluted share, compared to $131.6 million, or $1.65 per diluted share for the second quarter
2022.
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
Occupancy
The portfolio was 92.8% occupied as of June 30, 2023, an increase of 80 basis points
year-over-year. The portfolio was 94.3% leased as of June 30, 2023, an increase of 20 basis points
year-over-year.
Additionally, our comparable residential properties were 98.0%
leased as of June 30, 2023.
Leasing Activity
During the second quarter 2023, Federal Realty signed 112 leases
for 602,911 square feet of retail space. On a comparable space
basis (i.e., spaces for which there was a former tenant), Federal
Realty signed 107 leases for 576,345 square feet at an average rent
of $35.34 per square foot compared to
the average contractual rent of $33.09 per square foot for the last year of the
prior leases, representing a cash basis rollover growth on those
comparable spaces of 7%, 19% on a straight-line basis.
Regular Quarterly Dividends
Federal Realty announced today that its Board of Trustees
increased the regular quarterly cash dividend to $1.09 per common share, resulting in an indicated
annual rate of $4.36 per common
share. The regular common dividend will be payable on October 16, 2023 to common shareholders of record
as of September 22, 2023. This
increase represents the 56th consecutive year that Federal Realty
has increased its common dividend, the longest record of
consecutive annual dividend increases in the REIT sector.
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 16, 2023 to
shareholders of record as of October 2,
2023.
Summary of Other Quarterly Activities
- April 12, 2023 – Federal Realty
issued $350.0 million of fixed rate
senior unsecured notes, as a green bond, that mature on
May 1, 2028 and bear interest at
5.375%. The notes were offered at 99.590% of the principal amount
with a yield to maturity of 5.468%. The net proceeds, after
issuance discount, underwriting fees, and other costs were
$345.7 million.
- June 1, 2023 – Federal Realty
repaid its $275.0 million 2.75%
senior unsecured notes at maturity.
- June 1, 2023 – Federal Realty
issued its 2022 Environmental, Social and Governance Report
highlighting the Company's commitment to its ESG initiatives and
accomplishments.
- June 21, 2023 – Federal Realty
was named to The Washington Post's 2023 Top Workplaces list for its
leadership in employee satisfaction and engagement.
Guidance
Federal Realty increased its 2023 guidance for earnings per
diluted share to $2.64 to
$2.76 from $2.59 to $2.79 and
2023 FFO per diluted share to $6.46
to $6.58 from $6.38 to $6.58.
Conference Call Information
Federal Realty's management team will present an in-depth
discussion of Federal Realty's operating performance on its second
quarter 2023 earnings conference call, which is scheduled for
Wednesday, August 2, 2023 at
5:30 PM ET. To participate,
please call 1-844-826-3035 five to ten minutes prior to the call
start time and use the passcode 3865860 (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 16,
2023 by dialing 1-844-512-2921; Passcode: 10180484.
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
102 properties include approximately 3,300 tenants, in 26 million
square feet, and approximately 3,100 residential units.
Federal Realty has increased its quarterly dividends to its
shareholders for 56 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 8, 2023, 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, or if the costs of capital we obtain are
significantly higher than historical levels;
- risks associated with general economic conditions, including
inflation and 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 8, 2023 and subsequent
quarterly reports on Form 10-Q.
|
Investor
Inquiries:
Leah Andress
Brady
Vice President,
Investor Relations
301.998.8265
lbrady@federalrealty.com
|
Media
Inquiries:
Brenda
Pomar
Senior Director,
Corporate Communications
301.998.8316
bpomar@federalrealty.com
|
|
Federal Realty Investment Trust
|
|
Consolidated Balance Sheets
|
|
June 30, 2023
|
|
June 30,
|
|
December 31,
|
|
2023
|
|
2022
|
|
(in thousands, except share and per share
data)
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
Real estate, at
cost
|
|
|
|
|
Operating (including
$2,008,167 and $1,997,583 of consolidated variable interest
entities, respectively)
|
$
9,732,833
|
|
$
9,441,945
|
|
Construction-in-progress (including $11,441 and
$8,477 of consolidated variable interest entities,
respectively)
|
667,554
|
|
662,554
|
|
10,400,387
|
|
10,104,499
|
|
Less accumulated
depreciation and amortization (including $388,881 and $362,921 of
consolidated variable interest entities, respectively)
|
(2,839,550)
|
|
(2,715,817)
|
|
Net real
estate
|
7,560,837
|
|
7,388,682
|
|
Cash and cash
equivalents
|
98,064
|
|
85,558
|
|
Accounts and notes
receivable, net
|
195,689
|
|
197,648
|
|
Mortgage notes
receivable, net
|
9,222
|
|
9,456
|
|
Investment in
partnerships
|
34,942
|
|
145,205
|
|
Operating lease right
of use assets, net
|
88,215
|
|
94,569
|
|
Finance lease right of
use assets
|
44,891
|
|
45,467
|
|
Prepaid expenses and
other assets
|
247,016
|
|
267,406
|
|
TOTAL ASSETS
|
$
8,278,876
|
|
$
8,233,991
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Liabilities
|
|
|
|
|
Mortgages payable, net
(including $190,562 and $191,827 of consolidated variable interest
entities, respectively)
|
$ 319,208
|
|
$ 320,615
|
|
Notes payable,
net
|
633,095
|
|
601,077
|
|
Senior notes and
debentures, net
|
3,479,333
|
|
3,407,701
|
|
Accounts payable and
accrued expenses
|
187,027
|
|
190,340
|
|
Dividends
payable
|
90,441
|
|
90,263
|
|
Security deposits
payable
|
29,292
|
|
28,508
|
|
Operating lease
liabilities
|
76,928
|
|
77,743
|
|
Finance lease
liabilities
|
67,655
|
|
67,660
|
|
Other liabilities and
deferred credits
|
237,317
|
|
237,699
|
|
Total
liabilities
|
5,120,296
|
|
5,021,606
|
|
Commitments and
contingencies
|
|
|
|
|
Redeemable
noncontrolling interests
|
178,149
|
|
178,370
|
|
Shareholders'
equity
|
|
|
|
|
Preferred shares,
authorized 15,000,000 shares, $0.01 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), 392,878 shares issued and
outstanding
|
9,822
|
|
9,822
|
|
Common shares of
beneficial interest, $.01 par, 200,000,000 and 100,000,000 shares
authorized, respectively, 81,515,511 and 81,342,959 shares issued
and outstanding, respectively
|
820
|
|
818
|
|
Additional paid-in
capital
|
3,832,983
|
|
3,821,801
|
|
Accumulated dividends
in excess of net income
|
(1,098,432)
|
|
(1,034,186)
|
|
Accumulated other
comprehensive income
|
5,496
|
|
5,757
|
|
Total shareholders'
equity of the Trust
|
2,900,689
|
|
2,954,012
|
|
Noncontrolling
interests
|
79,742
|
|
80,003
|
|
Total shareholders'
equity
|
2,980,431
|
|
3,034,015
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$
8,278,876
|
|
$
8,233,991
|
|
Federal Realty Investment Trust
|
|
|
|
|
|
|
|
|
Consolidated Income Statements
|
|
|
|
|
|
|
|
|
June 30, 2023
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 30,
|
|
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in thousands, except per share
data)
|
|
(unaudited)
|
|
REVENUE
|
|
|
|
|
|
|
|
|
Rental
income
|
$
280,388
|
|
$
263,830
|
|
$
553,186
|
|
$
520,337
|
|
Mortgage interest
income
|
291
|
|
269
|
|
552
|
|
533
|
|
Total
revenue
|
280,679
|
|
264,099
|
|
553,738
|
|
520,870
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Rental
expenses
|
55,610
|
|
51,169
|
|
110,815
|
|
107,380
|
|
Real estate
taxes
|
32,381
|
|
31,265
|
|
64,947
|
|
61,825
|
|
General and
administrative
|
11,913
|
|
13,604
|
|
24,458
|
|
25,946
|
|
Depreciation and
amortization
|
78,974
|
|
74,461
|
|
157,611
|
|
146,135
|
|
Total operating
expenses
|
178,878
|
|
170,499
|
|
357,831
|
|
341,286
|
|
|
|
|
|
|
|
|
|
Gain on sale of real
estate
|
—
|
|
—
|
|
1,702
|
|
—
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
101,801
|
|
93,600
|
|
197,609
|
|
179,584
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME/(EXPENSE)
|
|
|
|
|
|
|
|
|
Other interest
income
|
2,422
|
|
133
|
|
3,054
|
|
253
|
|
Interest
expense
|
(42,884)
|
|
(32,074)
|
|
(82,109)
|
|
(63,647)
|
|
Income from
partnerships
|
1,665
|
|
2,808
|
|
2,181
|
|
3,005
|
|
NET INCOME
|
63,004
|
|
64,467
|
|
120,735
|
|
119,195
|
|
Net
income attributable to noncontrolling interests
|
(2,505)
|
|
(2,791)
|
|
(4,901)
|
|
(5,535)
|
|
NET INCOME ATTRIBUTABLE
TO THE TRUST
|
60,499
|
|
61,676
|
|
115,834
|
|
113,660
|
|
Dividends on preferred
shares
|
(2,008)
|
|
(2,008)
|
|
(4,016)
|
|
(4,018)
|
|
NET INCOME AVAILABLE
FOR COMMON SHAREHOLDERS
|
$ 58,491
|
|
$ 59,668
|
|
$
111,818
|
|
$
109,642
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE, BASIC:
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
$
0.72
|
|
$
0.75
|
|
$
1.37
|
|
$
1.38
|
|
Weighted average
number of common shares
|
81,214
|
|
79,202
|
|
81,178
|
|
78,826
|
|
EARNINGS PER COMMON
SHARE, DILUTED:
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
$
0.72
|
|
$
0.75
|
|
$
1.37
|
|
$
1.38
|
|
Weighted average
number of common shares
|
81,214
|
|
79,202
|
|
81,178
|
|
78,855
|
|
Federal Realty Investment Trust
|
|
|
|
|
|
|
|
|
|
Funds From Operations
|
|
|
|
June 30, 2023
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
(in thousands, except per share
data)
|
|
Funds from Operations available for common
shareholders (FFO)
|
|
|
|
|
|
|
|
Net income
|
|
$
63,004
|
|
$
64,467
|
|
$ 120,735
|
|
$ 119,195
|
|
Net income attributable
to noncontrolling interests
|
|
(2,505)
|
|
(2,791)
|
|
(4,901)
|
|
(5,535)
|
|
Gain on sale of real
estate
|
|
—
|
|
—
|
|
(1,702)
|
|
—
|
|
Depreciation and
amortization of real estate assets
|
|
70,486
|
|
65,727
|
|
140,990
|
|
128,704
|
|
Amortization of initial
direct costs of leases
|
|
7,567
|
|
5,882
|
|
15,352
|
|
11,675
|
|
Funds from
operations
|
|
138,552
|
|
133,285
|
|
270,474
|
|
254,039
|
|
Dividends on preferred
shares (1)
|
|
(1,875)
|
|
(1,875)
|
|
(3,750)
|
|
(3,750)
|
|
Income attributable to
downREIT operating partnership units
|
|
688
|
|
701
|
|
1,381
|
|
1,407
|
|
Income attributable to
unvested shares
|
|
(505)
|
|
(467)
|
|
(987)
|
|
(904)
|
|
FFO
|
|
$ 136,860
|
|
$ 131,644
|
|
$ 267,118
|
|
$ 250,792
|
|
Weighted average number
of common shares, diluted (1)(2)
|
|
81,945
|
|
79,952
|
|
81,911
|
|
79,608
|
|
FFO per diluted share
(2)
|
|
$
1.67
|
|
$
1.65
|
|
$
3.26
|
|
$
3.15
|
|
|
|
|
|
|
|
|
|
Notes:
- For the three and six months ended June 30, 2023 and 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 are included in "weighted average common
shares, diluted."
- 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
