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Federal Realty Investment Trust$132.00$1.27.97%

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 Federal Realty Investment Trust Announces Fourth Quarter And Year-End 2014 Operating Results
   Tuesday, February 10, 2015 4:05:00 PM ET

Federal Realty Investment Trust (FRT ) today reported operating results for its fourth quarter and year-ended December 31, 2014.

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Financial Results Federal Realty generated funds from operations available for common shareholders (FFO) of $77.7 million, or $1.13 per diluted share for fourth quarter 2014, which was negatively impacted by a charge for early extinguishment of debt. Without the charges for early extinguishment of debt in 2014 and 2013, FFO would have been $88.2 million or $1.28 per diluted share; this compares to $78.2 million, or $1.18 per diluted share, in fourth quarter 2013. For the year ending December 31, 2014, Federal Realty reported FFO of $327.6 million, or $4.79 per diluted share, which includes the early extinguishment of debt. Excluding the early extinguishment of debt charges in both years, FFO would have been $338.1 million, or $4.94 per diluted share in 2014, compared to $303.2 million, or $4.61 per diluted share in 2013.

Net income available for common shareholders was $35.0 million and earnings per diluted share was $0.51 for fourth quarter 2014 versus $28.3 million and $0.42, respectively, for fourth quarter 2013. For the year ending December 31, 2014, Federal Realty reported net income available for common shareholders of $164.0 million and earnings per diluted share of $2.41. This compares to net income available for shareholders of $162.1 million and earnings per diluted share of $2.46 for the year ending December 31, 2013.

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 in addition to Form 8-K that was filed.

Portfolio Results Same-center property operating income in 2014 increased 4.1% including redevelopments and expansions, and 3.3% excluding redevelopments and expansions compared to 2013. On a quarterly-basis, same-center property operating income in fourth quarter 2014 increased 4.5% including redevelopment and expansion properties, and 3.0% excluding redevelopment and expansion properties, compared to fourth quarter 2013.

The overall portfolio was 95.6% leased as of December 31, 2014, compared to 95.6% on September 30, 2014 and 95.8% on December 31, 2013. Federal Realty’s same-center portfolio was 95.8% leased on December 31, 2014, compared to 95.9% on September 30, 2014 and 95.8% on December 31, 2013.

During fourth quarter 2014, the Trust signed 83 leases for 343,896 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 306,860 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 20%. The average contractual rent on this comparable space for the first year of the new lease is $33.27 per square foot compared to the average contractual rent of $27.76 per square foot for the last year of the prior lease. The previous average contractual rent is calculated by including both the minimum rent and any percentage rent actually paid during the last year of the lease term for the re-leased space. On a GAAP basis (i.e., including the impact of straight-line rents), rent increases per square foot for comparable retail space averaged 32% for fourth quarter 2014.

For all of 2014, Federal Realty signed 340 leases representing 1.5 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 16%, and 29% on a GAAP-basis. The average cash-basis contractual rent on this comparable space for the first year of the new lease is $34.12 per square foot compared to the average cash-basis contractual rent of $29.34 per square foot for the last year of the prior lease. As of December 31, 2014, Federal Realty’s average contractual minimum rent for retail and commercial space in its portfolio is $25.59 per square foot, as compared to $24.54 per square foot on December 31, 2013.

"Our bottom line results for the year represent yet another record for the Trust," commented Donald C. Wood, President and Chief Executive Officer of Federal Realty Investment Trust. "Importantly, we achieved these results while continuing to execute our long term business plan through successfully delivering the initial phases of Pike & Rose and Assembly Row, executing and expanding our redevelopment pipeline, acquiring strategic assets such as San Antonio Center, and capitalizing our balance sheet for the long term. We are pleased with the value creation we are delivering today and how our balanced business plan enhances our prospects for continued growth and value creation."

Summary of Other Quarterly Activities and Recent Developments

-- November 14, 2014 - Federal Realty issued $250 million aggregate principal amount of 4.50% senior unsecured notes due December 1, 2044.

-- December 16, 2014 - In December 2014, Federal Realty redeemed its 5.65% senior unsecured notes due 2016 for an aggregate principal of $125 million and also repaid its $61 million mortgage loan on East Bay Bridge due 2016. The total prepayment premium incurred in the fourth quarter 2014 was $10.5 million.

-- January 12, 2015 - Federal Realty announced the acquisition of a controlling interest in a 376,000-square-foot shopping center in Mountain View, California, based on a total value of $62.2 million. San Antonio Shopping Center is located immediately southeast of the intersection of El Camino Real and San Antonio Road - two major and important thoroughfares serving the Bay Area’s affluent, tech and academic driven communities of Mountain View, Palo Alto and Los Altos. The acquisition was made using a combination of approximately 58,000 downREIT units, $27 million of cash ($18 million in one closing and $9 million in a second) and the assumption of $18.7 million of fixed rate debt secured by the property. Federal incurred approximately $1.5 million of transaction related costs associated with the acquisition.

Regular Quarterly Dividends Federal Realty also announced today that its Board of Trustees left the regular dividend rate on its common shares unchanged, declaring a regular quarterly cash dividend of $0.87 per share on its common shares, resulting in an indicated annual rate of $3.48 per share. The regular common dividend will be payable on April 15, 2015 to common shareholders of record on March 20, 2015.

Guidance We have maintained our 2015 guidance for FFO per diluted share of $5.26 to $5.34, and earnings per diluted share of $2.86 to $2.94.

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 2014 earnings conference call, which is scheduled for February 11, 2015, at 11 a.m. Eastern Standard Time. To participate, please call (877) 445-3230 five to ten minutes prior to the call start time and use the passcode 50846004 (required). Federal Realty will also provide an online webcast on the Company’s website, www.federalrealty.com, which will remain available for 30 days following the call. A telephone recording of the call will also be available through February 18, 2015, by dialing (855) 859-2056 and using the passcode 50846004.

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, our mission is to deliver long term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Our 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 89 properties include over 2,600 tenants, in approximately 20.2 million square feet of retail space, and 1,500 residential units.

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 47 consecutive years, the longest record in the REIT industry. Federal Realty 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, 2015, 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 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 10, 2015.

Investor Inquiries                  Media Inquiries
Brittany Schmelz                    Andrea Simpson
Investor Relations Coordinator      Director, Marketing
301/998-8265                        617/684-1511
bschmelz@federalrealty.com          asimpson@federalrealty.com
Federal Realty Investment Trust
Summarized Balance Sheets
December 31, 2014
                                                                                                                                        December 31,
                                                                                                                                        2014              2013
                                                                                                                                        (in thousands)
ASSETS
Real estate, at cost
Operating (including $282,303 and $265,138 of consolidated variable interest entities, respectively)                                    $     5,128,757   $     4,618,258
Construction-in-progress                                                                                                                480,241           531,205
                                                                                                                                        5,608,998         5,149,463
Less accumulated depreciation and amortization (including $26,618 and $19,086 of consolidated variable interest entities, respectively) (1,467,050)       (1,350,471)
Net real estate                                                                                                                         4,141,948         3,798,992
Cash and cash equivalents                                                                                                               47,951            88,927
Accounts and notes receivable, net                                                                                                      93,291            84,838
Mortgage notes receivable, net                                                                                                          50,988            55,155
Investment in real estate partnerships                                                                                                  37,457            32,264
Prepaid expenses and other assets                                                                                                       175,235           159,118
TOTAL ASSETS                                                                                                                            $     4,546,870   $     4,219,294
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages and capital lease obligations (including $187,632 and $202,782 of consolidated variable interest entities, respectively)      $     635,345     $     660,127
Notes payable                                                                                                                           290,519           300,822
Senior notes and debentures                                                                                                             1,483,813         1,360,913
Accounts payable and other liabilities                                                                                                  325,584           321,710
Total liabilities                                                                                                                       2,735,261         2,643,572
Redeemable noncontrolling interests                                                                                                     119,053           104,425
Shareholders’ equity
Preferred shares                                                                                                                        9,997             9,997
Common shares and other shareholders’ equity                                                                                            1,594,404         1,438,163
Total shareholders’ equity of the Trust                                                                                                 1,604,401         1,448,160
Noncontrolling interests                                                                                                                88,155            23,137
Total shareholders’ equity                                                                                                              1,692,556         1,471,297
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                              $     4,546,870   $     4,219,294
Federal Realty Investment Trust
Summarized Income Statements
December 31, 2014
                                                      Three Months Ended            Year Ended
                                                      December 31,                  December 31,
                                                      2014           2013           2014           2013
                                                      (in thousands, except per share data)
Revenue
Rental income                                         $    171,634   $    159,953   $    666,322   $    620,089
Other property income                                 3,411          2,508          14,758         12,169
Mortgage interest income                              1,332          1,385          5,010          5,155
Total revenue                                         176,377        163,846        686,090        637,413
Expenses
Rental expenses                                       34,974         31,940         135,417        118,695
Real estate taxes                                     18,268         18,155         76,506         71,759
General and administrative                            8,114          9,068          32,316         31,970
Depreciation and amortization                         43,411         41,213         170,814        160,828
Total operating expenses                              104,767        100,376        415,053        383,252
Operating income                                      71,610         63,470         271,037        254,161
Other interest income                                 49             268            94             433
Interest expense                                      (24,169)       (24,663)       (93,941)       (104,977)
Early extinguishment of debt                          (10,545)       (9,905)        (10,545)       (13,304)
Income from real estate partnerships                  334            433            1,243          1,498
Income from continuing operations                     37,279         29,603         167,888        137,811
Discontinued operations
Discontinued operations - income                      --             --             --             942
Discontinued operations - gain on sale of real estate --             --             --             23,861
Results from discontinued operations                  --             --             --             24,803
Income before gain on sale of real estate             37,279         29,603         167,888        162,614
Gain on sale of real estate                           --             --             4,401          4,994
Net income                                            37,279         29,603         172,289        167,608
Net income attributable to noncontrolling interests   (2,117)        (1,147)        (7,754)        (4,927)
Net income attributable to the Trust                  35,162         28,456         164,535        162,681
Dividends on preferred shares                         (135)          (135)          (541)          (541)
Net income available for common shareholders          $    35,027    $    28,321    $    163,994   $    162,140
EARNINGS PER COMMON SHARE, BASIC
Continuing operations                                 $    0.51      $    0.43      $    2.35      $    2.01
Discontinued operations                               --             --             --             0.38
Gain on sale of real estate                           --             --             0.07           0.08
                                                      $    0.51      $    0.43      $    2.42      $    2.47
Weighted average number of common shares, basic       67,997         65,965         67,322         65,331
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations                                 $    0.51      $    0.42      $    2.34      $    2.00
Discontinued operations                               --             --             --             0.38
Gain on sale of real estate                           --             --             0.07           0.08
                                                      $    0.51      $    0.42      $    2.41      $    2.46
Weighted average number of common shares, diluted     68,179         66,113         67,492         65,483
Federal Realty Investment Trust
Funds From Operations
December 31, 2014
                                                                    Three Months Ended        Year Ended
                                                                    December 31,              December 31,
                                                                    2014         2013         2014          2013
                                                                    (in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
Net income                                                          $   37,279   $   29,603   $   172,289   $    167,608
Net income attributable to noncontrolling interests                 (2,117)      (1,147)      (7,754)       (4,927)
Gain on sale of real estate                                         --           --           (4,401)       (28,855)
Depreciation and amortization of real estate assets                 38,493       37,143       152,505       144,873
Amortization of initial direct costs of leases                      3,420        2,607        12,391        10,694
Depreciation of joint venture real estate assets                    353          384          1,555         1,504
Funds from operations                                               77,428       68,590       326,585       290,897
Dividends on preferred shares                                       (135)        (135)        (541)         (541)
Income attributable to operating partnership units                  798          223          3,027         888
Income attributable to unvested shares                              (346)        (305)        (1,474)       (1,306)
FFO                                                                 77,745       68,373       327,597       289,938
Early extinguishment of debt, net of allocation to unvested shares  10,499       9,861        10,498        13,244
FFO excluding early extinguishment of debt                          $   88,244   $   78,234   $   338,095   $    303,182
Weighted average number of common shares, diluted                   69,096       66,399       68,410        65,778
FFO per diluted share                                               $   1.13     $   1.03     $   4.79      $    4.41
FFO excluding early extinguishment of debt, per diluted share       $   1.28     $   1.18     $   4.94      $    4.61
Federal Realty Investment Trust
Reconciliation of Net Income to FFO Guidance
December 31, 2014
                                                                                2015 Guidance
                                                                                (Dollars in millions except
                                                                                per share amounts) (1)
Funds from Operations available for common shareholders (FFO)
Net income                                                                      $   209    $   214
Net income attributable to noncontrolling interests                             (9)        (9)
Gain on sale of real estate                                                     --         --
Depreciation and amortization of real estate & joint venture real estate assets 155        155
Amortization of initial direct costs of leases                                  13         13
Funds from operations                                                           367        373
Dividends on preferred shares                                                   (1)        (1)
Income attributable to operating partnership units                              4          4
Income attributable to unvested shares                                          (1)        (1)
FFO                                                                             $   369    $   375
Weighted average number of common shares, diluted                               70.2       70.2
FFO per diluted share                                                           $   5.26   $   5.34
Note:
(1) - Individual items may not add up to total due to rounding.

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SOURCE Federal Realty Investment Trust

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