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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 Full Year 2015 Operating Results
   Tuesday, February 09, 2016 4:15:00 PM ET

Federal Realty Investment Trust (FRT ) today reported operating results for its fourth quarter and year ended December 31, 2015. Highlights of the quarter and year end recent activity include:

-- Generated FFO per diluted share of $1.37 for the quarter, an increase of 7.0% over fourth quarter 2014. For the year, generated FFO per diluted share (excluding prepayment premiums) of $5.32, an increase of 7.7% over 2014.

-- Generated same center property operating income growth of 3.8% for the year (or 2.4% when properties under redevelopment are excluded). For the fourth quarter, same center growth was 2.6% (or 1.0% when properties under redevelopment are excluded), reflecting lower occupancy due to the recapture of significant anchor spaces in the same center pool.

-- Federal Realty’s same-center portfolio was 95.4% leased on December 31, 2015, compared to 96.0% on September 30, 2015 and 96.5% on December 31, 2014.

-- Signed leases for 380,714 sf of comparable space at an average rent of $31.88 psf and achieved cash basis rollover growth on comparable spaces of 23%.

-- Sold Courtyard Shops in Wellington, Florida, for $52.8 million and, subsequent to year-end, acquired our JV partner’s 70% interest in our unconsolidated real estate partnership for $153.7 million.

-- Affirmed 2016 FFO per diluted share guidance range of $5.65 to $5.71.

"The fourth quarter and the full year represented yet another record for the Trust in terms of FFO per share" commented Donald C. Wood, President and Chief Executive Officer of Federal Realty. "We are excited about the opportunity to gain control of below market anchor space within the core portfolio and drive value through redevelopment and releasing. In addition, with the first phases of our mixed use developments delivering and the next phases well underway, infill acquisitions that will drive future growth opportunities, and strong leasing and rollover results, we continue to drive successfully all facets of our long term strategic plan."

Financial Results

In the fourth quarter 2015, Federal Realty generated funds from operations available for common shareholders (FFO) of $96.5 million, or $1.37 per diluted share. This compares to FFO of $77.7 million, or $1.13 per diluted share, in fourth quarter 2014. Excluding the early extinguishment of debt charge in fourth quarter 2014, FFO per diluted share was $1.28. For the full year 2015, Federal Realty reported FFO of $352.9 million, or $5.05 per diluted share, which includes the early extinguishment of debt. Excluding the early extinguishment of debt charges in both years, FFO would have been $371.9 million, or $5.32 per diluted share in 2015, compared to $338.1 million, or $4.94 per diluted share in 2014.

Net income available for common shareholders was $67.8 million and earnings per diluted share was $0.97 for fourth quarter 2015 versus $35.0 million and $0.51, respectively, for fourth quarter 2014. For the full year 2015, Federal Realty reported net income available for common shareholders of $209.7 million and earnings per diluted share of $3.03. This compares to net income available for common shareholders of $164.0 million and earnings per diluted share of $2.41 for the full year 2014.

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 for full year 2015 increased 3.8% including redevelopments and expansions, and 2.4% excluding redevelopments and expansions compared to 2014. On a quarterly-basis, same-center property operating income in fourth quarter 2015 increased 2.6% including redevelopment and expansion properties, and 1.0% excluding redevelopment and expansion properties, which reflects lower occupancy due to the recapture of significant anchor spaces in the same center pool.

The overall portfolio was 94.3% leased as of December 31, 2015, compared to 95.5% on September 30, 2015 and 95.6% on December 31, 2014. Federal Realty’s same-center portfolio was 95.4% leased on December 31, 2015, compared to 96.0% on September 30, 2015 and 96.5% on December 31, 2014.

During fourth quarter 2015, the Trust signed 99 leases for 439,061 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 380,714 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 23%. The average contractual rent on this comparable space for the first year of the new lease is $31.88 per square foot compared to the average contractual rent of $26.00 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 35% for fourth quarter 2015.

For all of 2015, Federal Realty signed 316 leases representing 1.4 million square feet of comparable retail space at an average cash-basis contractual rent increase per square foot of 17%, 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 $30.90 per square foot compared to the average cash-basis contractual rent of $26.32 per square foot for the last year of the prior lease. As of December 31, 2015, Federal Realty’s average contractual minimum rent for retail and commercial space in its portfolio is $26.28 per square foot, as compared to $25.59 per square foot on December 31, 2014.

Summary of Other Quarterly Activities and Recent Developments

-- October 1, 2015 - Federal Realty acquired an 85% interest in The Shops at Sunset Place, a 515,000-square-foot mixed-use center in South Miami, Florida, based on a gross value of $110.2 million. The transaction includes the assumption of an existing $70.8 million mortgage with an interest rate of 5.6 percent and maturity date of September 2020.

-- November 19, 2015 - Federal Realty closed on the sale of Courtyard Shops, a grocery anchored shopping center located in Wellington, Florida for $52.8 million and realized a gain of $16.8 million.

-- January 13, 2016 -Federal Realty acquired the 70% interest owned by affiliates of a discretionary fund advised by Clarion Partners in a joint venture that owns six neighborhood and community centers. Federal Realty purchased the 70% interest in the venture for $153.7 million, consisting of $130 million of cash and assumption of the allocable share of mortgage debt. With this acquisition, Federal Realty successfully concluded the venture that was formed in 2004 and increased its ownership of the 820,000 square foot portfolio from 30% to 100%. The portfolio includes two properties near Boston, Massachusetts (Atlantic Plaza and Campus Plaza); one asset in the New York Metro region (Greenlawn Plaza on Long Island) and three centers in the Washington DC market (Free State Shopping Center and Plaza del Mercado in Suburban Maryland, and Barcroft Plaza in Northern Virginia).

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 $0.94 per share on its common shares, resulting in an indicated annual rate of $3.76 per share. The regular common dividend will be payable on April 15, 2016 to common shareholders of record on March 18, 2016.

Guidance

We have affirmed our 2016 guidance for FFO per diluted share of $5.65 to $5.71, and updated our earnings per diluted share guidance to $3.47 to $3.54.

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 2015 earnings conference call, which is scheduled for February 10, 2016, 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 20889236 (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 17, 2016 by dialing (855) 859-2056 and using the passcode 20889236.

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 90 properties include over 2,700 tenants, in approximately 21 million square feet, and over 1,700 residential units.

Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 48 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 9, 2016, 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 9, 2016.

Investor Inquiries           Media Inquiries
Leah Andress                 Andrea Simpson
Investor Relations Associate Director, Marketing
301/998-8265                 617/684-1511
landress@federalrealty.com   asimpson@federalrealty.com
Federal Realty Investment Trust
Summarized Balance Sheets
December 31, 2015
                                                                                                                                        December 31,
                                                                                                                                        2015              2014
                                                                                                                                        (in thousands)
ASSETS
Real estate, at cost
Operating (including $485,971 and $282,303 of consolidated variable interest entities, respectively)                                    $     5,630,771   $     5,128,757
Construction-in-progress                                                                                                                433,635           480,241
                                                                                                                                        6,064,406         5,608,998
Less accumulated depreciation and amortization (including $35,782 and $26,618 of consolidated variable interest entities, respectively) (1,574,041)       (1,467,050)
Net real estate                                                                                                                         4,490,365         4,141,948
Cash and cash equivalents                                                                                                               21,046            47,951
Accounts and notes receivable, net                                                                                                      110,402           93,291
Mortgage notes receivable, net                                                                                                          41,618            50,988
Investment in real estate partnerships                                                                                                  41,546            37,457
Prepaid expenses and other assets                                                                                                       206,732           175,235
TOTAL ASSETS                                                                                                                            $     4,911,709   $     4,546,870
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages and capital lease obligations (including $254,241 and $187,632 of consolidated variable interest entities, respectively)      $     554,442     $     635,345
Notes payable                                                                                                                           343,600           290,519
Senior notes and debentures                                                                                                             1,744,324         1,483,813
Accounts payable and other liabilities                                                                                                  350,096           325,584
Total liabilities                                                                                                                       2,992,462         2,735,261
Redeemable noncontrolling interests                                                                                                     137,316           119,053
Shareholders’ equity
Preferred shares                                                                                                                        9,997             9,997
Common shares and other shareholders’ equity                                                                                            1,653,752         1,594,404
Total shareholders’ equity of the Trust                                                                                                 1,663,749         1,604,401
Noncontrolling interests                                                                                                                118,182           88,155
Total shareholders’ equity                                                                                                              1,781,931         1,692,556
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                              $     4,911,709   $     4,546,870
Federal Realty Investment Trust
Summarized Income Statements
December 31, 2015
                                                    Three Months Ended            Year Ended
                                                    December 31,                  December 31,
                                                    2015           2014           2015           2014
                                                    (in thousands, except per share data)
Revenue
Rental income                                       $    189,200   $    171,634   $    727,812   $    666,322
Other property income                               2,446          3,411          11,810         14,758
Mortgage interest income                            861            1,332          4,390          5,010
Total revenue                                       192,507        176,377        744,012        686,090
Expenses
Rental expenses                                     39,092         34,974         147,593        135,417
Real estate taxes                                   22,959         18,268         85,824         76,506
General and administrative                          8,119          8,114          35,645         32,316
Depreciation and amortization                       46,423         43,411         174,796        170,814
Total operating expenses                            116,593        104,767        443,858        415,053
Operating income                                    75,914         71,610         300,154        271,037
Other interest income                               40             49             149            94
Interest expense                                    (23,207)       (24,169)       (92,553)       (93,941)
Early extinguishment of debt                        --             (10,545)       (19,072)       (10,545)
Income from real estate partnerships                430            334            1,416          1,243
Income from continuing operations                   53,177         37,279         190,094        167,888
Gain on sale of real estate                         16,821         --             28,330         4,401
Net income                                          69,998         37,279         218,424        172,289
Net income attributable to noncontrolling interests (2,044)        (2,117)        (8,205)        (7,754)
Net income attributable to the Trust                67,954         35,162         210,219        164,535
Dividends on preferred shares                       (135)          (135)          (541)          (541)
Net income available for common shareholders        $    67,819    $    35,027    $    209,678   $    163,994
EARNINGS PER COMMON SHARE, BASIC
Continuing operations                               $    0.74      $    0.51      $    2.63      $    2.35
Gain on sale of real estate                         0.24           --             0.41           0.07
                                                    $    0.98      $    0.51      $    3.04      $    2.42
Weighted average number of common shares, basic     69,272         67,997         68,797         67,322
EARNINGS PER COMMON SHARE, DILUTED
Continuing operations                               $    0.73      $    0.51      $    2.62      $    2.34
Gain on sale of real estate                         0.24           --             0.41           0.07
                                                    $    0.97      $    0.51      $    3.03      $    2.41
Weighted average number of common shares, diluted   69,456         68,179         68,981         67,492
Federal Realty Investment Trust
Funds From Operations
December 31, 2015
                                                                    Three Months Ended         Year Ended
                                                                    December 31,               December 31,
                                                                    2015          2014         2015           2014
                                                                    (in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
Net income                                                          $    69,998   $   37,279   $    218,424   $   172,289
Net income attributable to noncontrolling interests                 (2,044)       (2,117)      (8,205)        (7,754)
Gain on sale of real estate                                         (16,821)      --           (28,330)       (4,401)
Depreciation and amortization of real estate assets                 40,293        38,493       152,888        152,505
Amortization of initial direct costs of leases                      4,222         3,420        15,026         12,391
Depreciation of joint venture real estate assets                    326           353          1,344          1,555
Funds from operations                                               95,974        77,428       351,147        326,585
Dividends on preferred shares                                       (135)         (135)        (541)          (541)
Income attributable to operating partnership units                  878           798          3,398          3,027
Income attributable to unvested shares                              (243)         (346)        (1,147)        (1,474)
FFO                                                                 96,474        77,745       352,857        327,597
Early extinguishment of debt, net of allocation to unvested shares  --            10,499       19,006         10,498
FFO excluding early extinguishment of debt                          $    96,474   $   88,244   $    371,863   $   338,095
Weighted average number of common shares, diluted                   70,391        69,096       69,920         68,410
FFO per diluted share                                               $    1.37     $   1.13     $    5.05      $   4.79
FFO excluding early extinguishment of debt, per diluted share       $    1.37     $   1.28     $    5.32      $   4.94
Federal Realty Investment Trust
Reconciliation of FFO Guidance
December 31, 2015
The following table provides a reconciliation of the range of estimated earnings per diluted share to estimated FFO per diluted share for the full year 2016. Estimates do not include the impact from potential acquisitions or dispositions which have not closed as of February 9, 2016.
                                                                                2016 Guidance
                                                                                Low                                        High
Net income available to common shareholders, per diluted share                  $                                   3.47   $      3.54
Adjustments:
Gain on change in control of interests                                          (0.34)                                     (0.34)
Depreciation and amortization of real estate & joint venture real estate assets 2.30                                       2.30
Amortization of initial direct costs of leases                                  0.22                                       0.22
All other amounts                                                               0.00                                       0.00
FFO per diluted share                                                           $                                   5.65   $      5.71
Note:
Individual items may not add up to total due to rounding.

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SOURCE Federal Realty Investment Trust

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