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PRNewswire 13-Feb-2019 4:05 PM
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:
"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:
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.
Federal Realty Investment Trust |
|||||||
Consolidated Balance Sheets |
|||||||
December 31, 2018 |
|||||||
December 31, |
|||||||
2018 |
2017 |
||||||
(in thousands, except share and |
|||||||
per share data) |
|||||||
ASSETS |
|||||||
Real estate, at cost |
|||||||
Operating (including $1,701,804 and $1,639,486 of consolidated variable interest entities, respectively) |
$ |
7,307,622 |
$ |
6,950,188 |
|||
Construction-in-progress (including $51,313 and $43,393 of consolidated variable interest entities, respectively) |
495,274 |
684,873 |
|||||
Assets held for sale |
16,576 |
— |
|||||
7,819,472 |
7,635,061 |
||||||
Less accumulated depreciation and amortization (including $292,374 and $247,410 of consolidated variable interest entities, respectively) |
(2,059,143) |
(1,876,544) |
|||||
Net real estate |
5,760,329 |
5,758,517 |
|||||
Cash and cash equivalents |
64,087 |
15,188 |
|||||
Accounts and notes receivable |
142,237 |
209,877 |
|||||
Mortgage notes receivable, net |
30,429 |
30,429 |
|||||
Investment in real estate partnerships |
26,859 |
23,941 |
|||||
Prepaid expenses and other assets |
265,703 |
237,803 |
|||||
TOTAL ASSETS |
$ |
6,289,644 |
$ |
6,275,755 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Liabilities |
|||||||
Mortgages payable (including $444,388 and $460,372 of consolidated variable interest entities, respectively) |
$ |
474,379 |
$ |
491,505 |
|||
Capital lease obligations |
71,519 |
71,556 |
|||||
Notes payable |
279,027 |
320,265 |
|||||
Senior notes and debentures |
2,404,279 |
2,401,440 |
|||||
Accounts payable and other liabilities |
177,922 |
196,332 |
|||||
Dividends payable |
78,207 |
75,931 |
|||||
Security deposits payable |
17,875 |
16,667 |
|||||
Other liabilities and deferred credits |
182,898 |
169,388 |
|||||
Total liabilities |
3,686,106 |
3,743,084 |
|||||
Commitments and contingencies |
|||||||
Redeemable noncontrolling interests |
136,208 |
141,157 |
|||||
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, 74,249,633 and 73,090,877 shares issued and outstanding, respectively |
745 |
733 |
|||||
Additional paid-in capital |
3,004,442 |
2,855,321 |
|||||
Accumulated dividends in excess of net income |
(818,877) |
(749,367) |
|||||
Accumulated other comprehensive (loss) income |
(416) |
22 |
|||||
Total shareholders' equity of the Trust |
2,345,891 |
2,266,706 |
|||||
Noncontrolling interests |
121,439 |
124,808 |
|||||
Total shareholders' equity |
2,467,330 |
2,391,514 |
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
6,289,644 |
$ |
6,275,755 |
Federal Realty Investment Trust |
|||||||||||||||
Consolidated Income Statements |
|||||||||||||||
December 31, 2018 |
|||||||||||||||
Three Months Ended |
Year Ended |
||||||||||||||
December 31, |
December 31, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
(in thousands, except per share data) |
|||||||||||||||
REVENUE |
|||||||||||||||
Rental income |
$ |
230,864 |
$ |
220,720 |
$ |
895,698 |
$ |
841,461 |
|||||||
Other property income |
3,647 |
2,396 |
16,589 |
12,825 |
|||||||||||
Mortgage interest income |
865 |
841 |
3,149 |
3,062 |
|||||||||||
Total revenue |
235,376 |
223,957 |
915,436 |
857,348 |
|||||||||||
EXPENSES |
|||||||||||||||
Rental expenses |
46,507 |
45,403 |
173,094 |
164,890 |
|||||||||||
Real estate taxes |
28,935 |
28,735 |
114,776 |
107,839 |
|||||||||||
General and administrative |
9,620 |
10,268 |
33,600 |
36,281 |
|||||||||||
Depreciation and amortization |
66,976 |
56,394 |
244,245 |
216,050 |
|||||||||||
Total operating expenses |
152,038 |
140,800 |
565,715 |
525,060 |
|||||||||||
OPERATING INCOME |
83,338 |
83,157 |
349,721 |
332,288 |
|||||||||||
Other interest income |
285 |
222 |
942 |
475 |
|||||||||||
Interest expense |
(28,038) |
(26,173) |
(110,154) |
(100,125) |
|||||||||||
Early extinguishment of debt |
— |
(12,273) |
— |
(12,273) |
|||||||||||
Loss from real estate partnerships |
(705) |
(121) |
(3,398) |
(417) |
|||||||||||
INCOME FROM CONTINUING OPERATIONS |
54,880 |
44,812 |
237,111 |
219,948 |
|||||||||||
Gain on sale of real estate, net |
1,502 |
7,973 |
11,915 |
77,922 |
|||||||||||
NET INCOME |
56,382 |
52,785 |
249,026 |
297,870 |
|||||||||||
Net income attributable to noncontrolling interests |
(1,875) |
(2,129) |
(7,119) |
(7,956) |
|||||||||||
NET INCOME ATTRIBUTABLE TO THE TRUST |
54,507 |
50,656 |
241,907 |
289,914 |
|||||||||||
Dividends on preferred shares |
(2,011) |
(2,011) |
(8,042) |
(2,458) |
|||||||||||
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS |
$ |
52,496 |
$ |
48,645 |
$ |
233,865 |
$ |
287,456 |
|||||||
EARNINGS PER COMMON SHARE, BASIC |
|||||||||||||||
Net income available for common shareholders |
$ |
0.71 |
$ |
0.67 |
$ |
3.18 |
$ |
3.97 |
|||||||
Weighted average number of common shares, basic |
73,790 |
72,515 |
73,274 |
72,117 |
|||||||||||
EARNINGS PER COMMON SHARE, DILUTED |
|||||||||||||||
Net income available for common shareholders |
$ |
0.71 |
$ |
0.67 |
$ |
3.18 |
$ |
3.97 |
|||||||
Weighted average number of common shares, diluted |
73,796 |
72,598 |
73,302 |
72,233 |
Federal Realty Investment Trust |
||||||||||||||||
Funds From Operations / Other Supplemental Information |
||||||||||||||||
December 31, 2018 |
||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||
December 31, |
December 31, |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
(in thousands, except per share data) |
||||||||||||||||
Funds from Operations available for common shareholders (FFO) |
||||||||||||||||
Net income |
$ |
56,382 |
$ |
52,785 |
$ |
249,026 |
$ |
297,870 |
||||||||
Net income attributable to noncontrolling interests |
(1,875) |
(2,129) |
(7,119) |
(7,956) |
||||||||||||
Gain on sale of real estate, net (1) |
(1,502) |
(7,973) |
(11,915) |
(77,632) |
||||||||||||
Depreciation and amortization of real estate assets |
55,604 |
49,607 |
213,098 |
188,719 |
||||||||||||
Amortization of initial direct costs of leases |
10,069 |
4,594 |
24,603 |
19,124 |
||||||||||||
Funds from operations |
118,678 |
96,884 |
467,693 |
420,125 |
||||||||||||
Dividends on preferred shares |
(1,875) |
(1,876) |
(7,500) |
(1,917) |
||||||||||||
Income attributable to operating partnership units |
754 |
788 |
3,053 |
3,143 |
||||||||||||
Income attributable to unvested shares |
(330) |
(310) |
(1,469) |
(1,374) |
||||||||||||
FFO (2) |
$ |
117,227 |
$ |
95,486 |
$ |
461,777 |
$ |
419,977 |
||||||||
Weighted average number of common shares, diluted |
74,630 |
73,481 |
74,153 |
73,122 |
||||||||||||
FFO per diluted share (2) |
$ |
1.57 |
$ |
1.30 |
$ |
6.23 |
$ |
5.74 |
||||||||
Notes: |
|
1) |
The gain on sale of real estate for the year ended December 31, 2018 includes a $7.2 million net gain related to condominium units sold at Assembly Row and Pike & Rose. For the three months and year ended December 31, 2017, the gain on sale of real estate includes $1.5 million and $5.4 million, respectively, of net gains related to Assembly Row condominium units under the percentage-of-completion method. Effective January 1, 2018, we adopted a new accounting standard related to revenue recognition, which results in a change in our revenue recognition policy for condominium sales. See Note 2 of our December 31, 2018 Form 10-K for additional information regarding the adoption. |
2) |
If the $12.3 million early extinguishment of debt charge incurred in the fourth quarter of 2017 was excluded, our FFO, FFO per diluted share, and dividend payout ratio as a percentage of FFO would have been: |
Three Months Ended |
Year Ended |
|||||||
December 31, 2017 |
December 31, 2017 |
|||||||
(in thousands, except per share data) |
||||||||
FFO |
$ |
107,719 |
$ |
432,210 |
||||
FFO per diluted share |
$ |
1.47 |
$ |
5.91 |
||||
Dividend payout ratio as a percentage of FFO |
68 |
% |
66 |
% |
Investor Inquires: |
Media Inquiries: |
Leah Andress Brady |
Brenda Pomar |
Investor Relations Manager |
Corporate Communications Manager |
301.998.8265 |
301.998.8316 |
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SOURCE Federal Realty Investment Trust