Active acquisition activity with $287 million of investments
NORTH
BETHESDA, Md., Aug. 1, 2024
/PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT)
today reported operating results for its second quarter ended
June 30, 2024. For the three months
ended June 30, 2024 and 2023, net
income available for common shareholders was $1.32 per diluted share and $0.72 per diluted share, respectively. For the
three months ended June 30, 2024 and
2023, operating income was $157.0
million and $101.8 million,
respectively.
Highlights for the second quarter include:
- Generated funds from operations available to common
shareholders (FFO) per diluted share of $1.69 for the quarter, compared to $1.67 for the second quarter of 2023.
- Signed 122 leases for 594,361 square feet of comparable retail
space, a record level of comparable square footage signed in any
second quarter and the second highest of any quarter, at a cash
basis rollover growth of 10% and 23% on a straight-line basis.
- Generated comparable property operating income (POI) growth of
2.9% for the second quarter, excluding lease termination fees and
prior period rents collected.
- Reported portfolio occupancy of 93.1% and a leased rate of
95.3% at quarter end, representing an increase of 110 basis points
and 100 basis points, respectively, quarter-over-quarter.
- Continued strong small shop leasing, ending the quarter at
92.5% leased, with an increase of 110 basis points
quarter-over-quarter and 230 basis points year-over-year.
- During the quarter and subsequent to quarter end:
- Acquired two assets totaling 880,000 square feet on 129 acres
for a total purchase price of $275
million.
- Completed the sale of its remaining assets on Third Street
Promenade in Santa Monica, CA, for
$103 million.
- Increased the regular quarterly cash dividend to $1.10 per common share, resulting in an indicated
annual rate of $4.40 per common
share. This marks the 57th consecutive year that Federal Realty has
increased its common dividend, the longest record of consecutive
annual dividend increases in the REIT sector.
- Tightened and raised 2024 earnings per diluted share guidance
to $3.33 – $3.51, 2024 FFO per diluted share guidance to
$6.70 – $6.88, and 2024 comparable properties growth
excluding lease termination fees and prior period rents collected
assumption to 3% – 4%.
- Issued the company's 2023 Sustainability Report.
"Another record quarter for Federal Realty, starting with funds
from operations per share of $1.69,
to continued record leasing volume, to furthering our REIT industry
record with the 57th consecutive year of increased common
dividends," said Donald C. Wood,
Chief Executive Officer. "The robust leasing demand we continue to
see is a clear indicator of the value and attractiveness of our
properties, setting a solid foundation for strong future earnings
growth."
Financial Results
Net Income
For the second quarter 2024, net income available for common
shareholders was $110.0 million and
earnings per diluted share was $1.32
versus $58.5 million and $0.72, respectively, for the second quarter
2023.
FFO
For the second quarter 2024, FFO was $141.3 million, or $1.69 per diluted share, compared to $136.9 million, or $1.67 per diluted share for the second quarter
2023.
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 93.1% occupied and 95.3% leased as of
June 30, 2024.
Small shop leased rate was 92.5% as of June 30, 2024, an increase of 110 basis points
quarter-over-quarter and 230 basis points year-over-year.
The anchor tenant leased rate was 96.7%, reflecting an increase
of 90 basis points quarter-over-quarter and 30 basis points
year-over-year.
Additionally, residential properties were 97.6% leased as of
June 30, 2024.
Leasing Activity
During the second quarter 2024, Federal Realty signed 124 leases
for 600,669 square feet of retail space. On a comparable space
basis (i.e., spaces for which there was a former tenant), Federal
Realty signed 122 leases for 594,361 square feet at an average rent
of $37.72 per square foot compared to
the average contractual rent of $34.29 per square foot for the last year of the
prior leases, representing a cash basis rollover growth on those
comparable spaces of 10%, 23% on a straight-line basis. Comparable
leases represented 98% of total comparable and non-comparable
retail leases signed during the second quarter 2024.
Transaction Activity
- April 1, 2024 — Acquired the
approximately 10% non-controlling interest in the partnership that
owns CocoWalk in suburban Miami,
Florida for $12.4 million
bringing Federal Realty's ownership to 100%.
- May 31, 2024 — Acquired Virginia
Gateway, a 664,000 square-foot, 110-acre super-regional community
center comprising five adjacent open-air retail properties located
at the highly trafficked intersection of I-66 and Route 29 in
Gainesville, VA, for $215 million, further expanding Federal Realty's
presence in Northern
Virginia.
- July 31, 2024 — Acquired Pinole
Vista Crossing, a dominant 216,000-square-foot, 19-acre regional
open-air grocery-anchored community center located along I-80 in
Pinole, CA, 13 miles north of
Federal Realty's East Bay Bridge Shopping Center, for $60 million, expanding the company's presence in
Northern California's East Bay
sub-market.
- June 5, 2024 — Completed the sale
of its remaining assets on Third Street Promenade in Santa Monica, CA, for $103 million, resulting in a gain on sale of
$52 million.
Regular Quarterly Dividends
Federal Realty announced today that its Board of Trustees
increased the regular quarterly cash dividend to $1.10 per common share, resulting in an indicated
annual rate of $4.40 per common
share. The regular common dividend will be payable on October 15, 2024 to common shareholders of record
as of October 1, 2024. This increase
represents the 57th 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 15, 2024 to
shareholders of record as of October 1,
2024.
2024 Guidance
Federal Realty has updated its 2024 guidance, as summarized in
the table below:
|
Full Year 2024
Guidance
|
Revised
Guidance
|
Prior
Guidance
|
|
2024 Earnings per
diluted share
|
$3.33 to
$3.51
|
$2.74 to
$2.94
|
|
2024 FFO per diluted
share
|
$6.70 to
$6.88
|
$6.67 to
$6.87
|
Conference Call Information
Federal Realty's management team will present an in-depth
discussion of Federal Realty's operating performance on its second
quarter 2024 earnings conference call, which is scheduled for
Thursday, August 1, 2024 at
5:00 PM ET. To participate, please
call 1-844-826-3035 or 1-412-317-5195 five to ten minutes prior to
the call start time. 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
15, 2024 by dialing 1-844-512-2921 or 1-412-317-6671;
Passcode: 10189450.
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 Northern and Southern California. 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 3,400 tenants, in 27 million
commercial square feet, and approximately 3,100 residential
units.
Federal Realty has increased its quarterly dividends to its
shareholders for 57 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 12, 2024 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 12, 2024 and subsequent
quarterly reports on Form 10-Q.
|
Federal Realty Investment Trust
|
|
Consolidated Balance Sheets
|
|
June 30, 2024
|
|
June 30,
|
|
December 31,
|
|
2024
|
|
2023
|
|
(in thousands, except share and
per share data)
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
Real estate, at
cost
|
|
|
|
|
Operating (including
$1,829,059 and $2,021,622 of consolidated variable interest
entities, respectively)
|
$ 10,222,540
|
|
$
9,932,891
|
|
Construction-in-progress (including $9,132 and $8,677
of consolidated variable interest
entities, respectively)
|
553,365
|
|
613,296
|
|
10,775,905
|
|
10,546,187
|
|
Less accumulated
depreciation and amortization (including $410,922 and $416,663
of
consolidated variable interest entities, respectively)
|
(3,054,555)
|
|
(2,963,519)
|
|
Net real
estate
|
7,721,350
|
|
7,582,668
|
|
Cash and cash
equivalents
|
103,234
|
|
250,825
|
|
Accounts and notes
receivable, net
|
194,611
|
|
201,733
|
|
Mortgage notes
receivable, net
|
9,170
|
|
9,196
|
|
Investment in
partnerships
|
33,937
|
|
34,870
|
|
Operating lease right
of use assets, net
|
86,997
|
|
86,993
|
|
Finance lease right of
use assets, net
|
6,740
|
|
6,850
|
|
Prepaid expenses and
other assets
|
265,128
|
|
263,377
|
|
TOTAL ASSETS
|
$
8,421,167
|
|
$
8,436,512
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Liabilities
|
|
|
|
|
Mortgages payable, net
(including $187,972 and $189,286 of consolidated variable
interest entities, respectively)
|
$ 515,637
|
|
$ 516,936
|
|
Notes payable,
net
|
683,280
|
|
601,945
|
|
Senior notes and
debentures, net
|
3,354,755
|
|
3,480,296
|
|
Accounts payable and
accrued expenses
|
176,686
|
|
174,714
|
|
Dividends
payable
|
93,492
|
|
92,634
|
|
Security deposits
payable
|
29,805
|
|
30,482
|
|
Operating lease
liabilities
|
75,950
|
|
75,870
|
|
Finance lease
liabilities
|
12,726
|
|
12,670
|
|
Other liabilities and
deferred credits
|
225,465
|
|
225,443
|
|
Total
liabilities
|
5,167,796
|
|
5,210,990
|
|
Commitments and
contingencies
|
|
|
|
|
Redeemable
noncontrolling interests
|
182,558
|
|
183,363
|
|
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), 392,878 shares issued and
outstanding
|
9,822
|
|
9,822
|
|
Common shares of
beneficial interest, $.01 par, 200,000,000 shares authorized,
respectively, 83,590,543 and 82,775,286 shares issued and
outstanding, respectively
|
841
|
|
833
|
|
Additional paid-in
capital
|
4,005,249
|
|
3,959,276
|
|
Accumulated dividends
in excess of net income
|
(1,177,336)
|
|
(1,160,474)
|
|
Accumulated other
comprehensive income
|
7,042
|
|
4,052
|
|
Total shareholders'
equity of the Trust
|
2,995,618
|
|
2,963,509
|
|
Noncontrolling
interests
|
75,195
|
|
78,650
|
|
Total shareholders'
equity
|
3,070,813
|
|
3,042,159
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$
8,421,167
|
|
$
8,436,512
|
|
Federal Realty Investment Trust
|
|
Consolidated Income Statements
|
|
June 30, 2024
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 30,
|
|
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(in thousands, except per share
data)
|
|
(unaudited)
|
|
REVENUE
|
|
|
|
|
|
|
|
|
Rental
income
|
$
295,775
|
|
$
280,388
|
|
$
586,820
|
|
$
553,186
|
|
Mortgage interest
income
|
277
|
|
291
|
|
555
|
|
552
|
|
Total
revenue
|
296,052
|
|
280,679
|
|
587,375
|
|
553,738
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Rental
expenses
|
58,891
|
|
55,610
|
|
120,550
|
|
110,815
|
|
Real estate
taxes
|
35,289
|
|
32,381
|
|
69,349
|
|
64,947
|
|
General and
administrative
|
12,092
|
|
11,913
|
|
24,098
|
|
24,458
|
|
Depreciation and
amortization
|
85,049
|
|
78,974
|
|
168,453
|
|
157,611
|
|
Total operating
expenses
|
191,321
|
|
178,878
|
|
382,450
|
|
357,831
|
|
|
|
|
|
|
|
|
|
Gain on sale of real
estate
|
52,280
|
|
—
|
|
52,280
|
|
1,702
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
157,011
|
|
101,801
|
|
257,205
|
|
197,609
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME/(EXPENSE)
|
|
|
|
|
|
|
|
|
Other interest
income
|
1,051
|
|
2,422
|
|
2,534
|
|
3,054
|
|
Interest
expense
|
(44,312)
|
|
(42,884)
|
|
(88,005)
|
|
(82,109)
|
|
Income from
partnerships
|
905
|
|
1,665
|
|
937
|
|
2,181
|
|
NET INCOME
|
114,655
|
|
63,004
|
|
172,671
|
|
120,735
|
|
Net
income attributable to noncontrolling interests
|
(2,673)
|
|
(2,505)
|
|
(3,953)
|
|
(4,901)
|
|
NET INCOME ATTRIBUTABLE
TO THE TRUST
|
111,982
|
|
60,499
|
|
168,718
|
|
115,834
|
|
Dividends on preferred
shares
|
(2,008)
|
|
(2,008)
|
|
(4,016)
|
|
(4,016)
|
|
NET INCOME AVAILABLE
FOR COMMON SHAREHOLDERS
|
$
109,974
|
|
$ 58,491
|
|
$
164,702
|
|
$
111,818
|
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON
SHARE, BASIC:
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
$
1.32
|
|
$
0.72
|
|
$
1.98
|
|
$
1.37
|
|
Weighted average
number of common shares
|
82,932
|
|
81,214
|
|
82,768
|
|
81,178
|
|
EARNINGS PER COMMON
SHARE, DILUTED:
|
|
|
|
|
|
|
|
|
Net income available
for common shareholders
|
$
1.32
|
|
$
0.72
|
|
$
1.98
|
|
$
1.37
|
|
Weighted average
number of common shares
|
83,563
|
|
81,214
|
|
82,768
|
|
81,178
|
|
Federal Realty Investment Trust
|
|
Funds From Operations
|
|
June 30, 2024
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
(in thousands, except per share
data)
|
|
Funds from Operations available for common
shareholders (FFO)
|
|
|
|
|
|
|
|
Net income
|
|
$ 114,655
|
|
$
63,004
|
|
172,671
|
|
120,735
|
|
Net income attributable
to noncontrolling interests
|
|
(2,673)
|
|
(2,505)
|
|
(3,953)
|
|
(4,901)
|
|
Gain on sale of real
estate
|
|
(52,280)
|
|
—
|
|
(52,280)
|
|
(1,702)
|
|
Depreciation and
amortization of real estate assets
|
|
75,157
|
|
70,486
|
|
149,095
|
|
140,990
|
|
Amortization of initial
direct costs of leases
|
|
8,179
|
|
7,567
|
|
15,916
|
|
15,352
|
|
Funds from
operations
|
|
143,038
|
|
138,552
|
|
281,449
|
|
270,474
|
|
Dividends on preferred
shares (1)
|
|
(1,875)
|
|
(1,875)
|
|
(3,750)
|
|
(3,750)
|
|
Income attributable to
downREIT operating partnership units
|
|
688
|
|
688
|
|
1,380
|
|
1,381
|
|
Income attributable to
unvested shares
|
|
(514)
|
|
(505)
|
|
(1,017)
|
|
(987)
|
|
FFO
|
|
$ 141,337
|
|
$ 136,860
|
|
$ 278,062
|
|
$ 267,118
|
|
Weighted average number
of common shares, diluted (1)(2)
|
|
83,657
|
|
81,945
|
|
83,495
|
|
81,911
|
|
|
|
|
|
|
|
|
|
|
FFO per diluted share
(2)
|
|
$
1.69
|
|
$
1.67
|
|
$
3.33
|
|
$
3.26
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
(1)
|
For the three
and six months ended June 30, 2024 and 2023, 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 number of common
shares, diluted."
|
|
(2)
|
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 for all period presented, but is anti-dilutive for the
computation of dilutive EPS for the six months ended June 30,
2024 and the three and six months ended June 30,
2023.
|
Inquiries:
Brenda Pomar
Senior Director, Corporate Communications
301.998.8316
bpomar@federalrealty.com
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SOURCE Federal Realty Investment Trust