FRT Federal Realty Investment Trust

NORTH BETHESDA, Md., Feb. 8, 2023 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its year and quarter ended December 31, 2022. For the year ended December 31, 2022 and 2021, net income available for common shareholders was $4.71 per diluted share and $3.26 per diluted share, respectively. For the three months ended December 31, 2022 and 2021, net income available for common shareholders was $1.40 per diluted share and $1.44 per diluted share, respectively. For the year ended December 31, 2022 and 2021, Federal Realty reported operating income of $526.4 million and $394.7 million, respectively. For the three months ended December 31, 2022 and 2021, operating income was $155.1 million and $147.5 million, respectively.

Highlights for the full year and fourth quarter include:

• Generated funds from operations available to common shareholders (FFO) per diluted share of $6.32 for the year, compared to $5.57 in 2021. For the fourth quarter, generated FFO per diluted share of $1.58, compared to $1.47 for the fourth quarter 2021.
• Generated comparable property operating income (POI) growth of 5.4% for the fourth quarter and 7.7% for the year 2022.
• Continued robust levels of leasing with 105 signed leases for 415,519 square feet of comparable space in the fourth quarter at a cash basis rollover of 10%, bringing 2022 to a record 475 signed leases for nearly 2 million square feet of comparable space.
• Federal Realty's portfolio was 92.8% occupied and 94.5% leased, representing year-over-year increases of 170 basis points and 90 basis points, respectively and 70 basis points and 20 basis point increases, respectively quarter-over-quarter.
• Small shop leased rate was 90.0% as of quarter end representing an increase of 260 basis points year over year and the highest small shop leased rate since first quarter 2017.
• Sold one property for a total sales price of $67.5 million in the fourth quarter, bringing the 2022 total gross disposition proceeds to $136.2 million.
• Introduced 2023 earnings per diluted share guidance of $2.59 to $2.79 and 2023 FFO per diluted share guidance of $6.38 to $6.58.

"2022 ended with a very strong fourth quarter and the first weeks of 2023 look to continue that momentum," said Donald C. Wood, Federal Realty's Chief Executive. "We're more than a year ahead of where we thought we'd be in recovering from the depths of the pandemic in terms of leasing, occupancy and bottom line earnings in large part due to the remarkable resiliency of the markets and sub markets where our high quality retail destinations are located."

Financial Results

Net Income

For the full year 2022, Federal Realty reported net income available for common shareholders of $377.5 million and earnings per diluted share of $4.71. This compares to net income available for common shareholders of $253.5 million and earnings per diluted share of $3.26 for the full year 2021.

For the fourth quarter 2022, net income available for common shareholders was $113.7 million and earnings per diluted share was $1.40 versus $112.9 million and $1.44, respectively, for the fourth quarter 2021.

FFO

For the full year 2022, Federal Realty generated funds from operations available for common shareholders (FFO) of $509.2 million, or $6.32 per diluted share. This compares to FFO of $434.7 million, or $5.57 per diluted share for the full year 2021.

For the fourth quarter 2022, FFO was $129.0 million, or $1.58 per diluted share, compared to $115.8 million, or $1.47 per diluted share for the fourth quarter 2021.

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 December 31, 2022, an increase of 170 basis points year-over-year and 70 basis points over the third quarter 2022. The portfolio was 94.5% leased as of December 31, 2022, an increase of 90 basis points year-over-year and 20 basis points over the third quarter 2022.

Additionally, our comparable residential properties were 96.3% leased as of December 31, 2022.

Leasing Activity

For the full year 2022, Federal Realty signed 497 leases for 2,047,508 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 475 leases for 1,984,887 square feet at an average rent of $37.30 per square foot compared to the average contractual rent of $35.21 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 6%, 15% on a straight-line basis.

During the fourth quarter 2022, Federal Realty signed 110 leases for 425,159 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 105 leases for 415,519 square feet at an average rent of $43.52 per square foot compared to the average contractual rent of $39.60 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 10%, 21% on a straight-line basis.

Transaction Activity

In 2022, Federal Realty acquired 4 properties which total 1.0 million square feet for a gross value of $443.1 million. Additionally, Federal Realty bought a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers totaling 617,000 square feet for a combined price of $58.9 million.

Subsequent to quarter end, Federal Realty acquired the remaining portions of Huntington Square, East Northport, New York, for $35.5 million.  The acquisition included a 180,000 square foot parcel and the entire fee interest of the property giving us full control of the entirety of this 255,000 square foot property located in the heart of Suffolk County's retail corridor.

In the fourth quarter, Federal Realty sold one property for a total sales price of $67.5 million, bringing the 2022 total gross proceeds to $136.2 million for the disposition of 3 non-core assets, a parcel of land and a portion of one property.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.08 per common share, resulting in an indicated annual rate of $4.32 per common share. The regular common dividend will be payable on April 17, 2023 to common shareholders of record as of March 13, 2023.

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 17, 2023 to shareholders of record as of April 3, 2023.

Guidance

Federal Realty introduced 2023 guidance for earnings per diluted share of $2.59 to $2.79 and 2023 FFO per diluted share of $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 fourth quarter 2022 earnings conference call, which is scheduled for Wednesday, February 8, 2023 at 5:00 PM ET.  To participate, please call 1-877-407-9208 five to ten minutes prior to the call start time and use the passcode 13734846 (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 February 22, 2023 by dialing 1-844-512-2921; Passcode: 13734846.

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 103 properties include approximately 3,300 tenants, in 26 million square feet, and approximately 3,000 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 55 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.

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SOURCE Federal Realty Investment Trust