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NORTH BETHESDA, Md., Nov. 3, 2022 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its third quarter ended September 30, 2022. For the three months ended September 30, 2022 and 2021, net income available for common shareholders was $1.89 per diluted share and $0.64 per diluted share, respectively.
Highlights for the quarter and subsequent events include:
"Another great quarter of outperformance with continued record leasing, a robust forward pipeline and bottom-line growth," said Donald C. Wood, Chief Executive Officer. "The sector leading household income and population levels that surround our properties are the best defense in today's uncertain macro environment."
Financial Results
Net Income
Net income available for common shareholders was $154.1 million and earnings per diluted share was $1.89 for third quarter 2022 versus $50.1 million and $0.64 respectively, for third quarter 2021.
FFO
In the third quarter 2022, Federal Realty generated FFO of $129.3 million, or $1.59 per diluted share. This compares to FFO of $118.0 million, or $1.51 per diluted share, in third 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.
Portfolio Results
Occupancy
The portfolio was 92.1% occupied as of September 30, 2022, an increase of 10 basis points quarter-over-quarter and an increase of 190 basis points year-over-year. The portfolio was 94.3% leased as of September 30, 2022, an increase of 20 basis points quarter-over-quarter and an increase of 150 basis points year-over-year. The spread between our leased and occupied percentages was 220 basis points at the end of the third quarter.
Additionally, our residential properties were 97.0% leased as of September 30, 2022, a sequential increase of 20 basis points over second quarter.
Leasing Activity
During the third quarter 2022, Federal Realty signed 126 leases for 584,949 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 119 leases for 562,859 square feet at an average rent of $34.57 per square foot compared to the average contractual rent of $33.61 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 3%, 13% on a straight-line basis.
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 January 17, 2023 to common shareholders of record as of January 3, 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 January 17, 2023 to shareholders of record as of January 3, 2023.
Summary of Other Activities
Guidance
Federal Realty increased its 2022 guidance for earnings per diluted share to $3.88 - $3.93 from $2.50 - $2.65 and 2022 FFO per diluted share to $6.27 - $6.32 from $6.10 - $6.25.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its third quarter 2022 earnings conference call, which is scheduled for Thursday, November 3, 2022 at 5:00 PM ET. To participate, please call 844.826.3035 five to ten minutes prior to the call start time and use the passcode 10171249 (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 November 17, 2022 by dialing 844.512.2921; Passcode: 10171249.
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 104 properties include approximately 3,200 tenants, in 26 million square feet, and approximately 3,300 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 10, 2022, 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 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 10, 2022 and subsequent quarterly reports on Form 10-Q.
Federal Realty Investment Trust | |||
Consolidated Balance Sheets | |||
September 30, 2022 | |||
September 30, | December 31, | ||
2022 | 2021 | ||
(in thousands, except share and per share data) | |||
(unaudited) | |||
ASSETS | |||
Real estate, at cost | |||
Operating (including $1,963,129 and $2,207,648 of consolidated variable interest | $ 9,323,359 | $ 8,814,791 | |
Construction-in-progress (including $23,448 and $18,752 of consolidated variable | 681,641 | 607,271 | |
10,005,000 | 9,422,062 | ||
Less accumulated depreciation and amortization (including $349,553 and $389,950 of | (2,660,799) | (2,531,095) | |
Net real estate | 7,344,201 | 6,890,967 | |
Cash and cash equivalents | 146,214 | 162,132 | |
Accounts and notes receivable, net | 187,149 | 169,007 | |
Mortgage notes receivable, net | 9,475 | 9,543 | |
Investment in partnerships | 122,822 | 13,027 | |
Operating lease right of use assets | 95,187 | 90,743 | |
Finance lease right of use assets | 45,756 | 49,832 | |
Prepaid expenses and other assets | 266,203 | 237,069 | |
TOTAL ASSETS | $ 8,217,007 | $ 7,622,320 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Liabilities | |||
Mortgages payable, net (including $192,442 and $335,301 of consolidated variable | $ 321,299 | $ 339,993 | |
Notes payable, net | 568,302 | 301,466 | |
Senior notes and debentures, net | 3,407,298 | 3,406,088 | |
Accounts payable and accrued expenses | 245,610 | 235,168 | |
Dividends payable | 90,121 | 86,538 | |
Security deposits payable | 28,042 | 25,331 | |
Operating lease liabilities | 78,234 | 72,661 | |
Finance lease liabilities | 67,662 | 72,032 | |
Other liabilities and deferred credits | 242,800 | 206,187 | |
Total liabilities | 5,049,368 | 4,745,464 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 185,759 | 213,708 | |
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 and 399,896 shares issued and outstanding, respectively | 9,822 | 9,997 | |
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, | 817 | 790 | |
Additional paid-in capital | 3,794,247 | 3,488,794 | |
Accumulated dividends in excess of net income | (1,060,027) | (1,066,932) | |
Accumulated other comprehensive income (loss) | 6,084 | (2,047) | |
Total shareholders' equity of the Trust | 2,900,943 | 2,580,602 | |
Noncontrolling interests | 80,937 | 82,546 | |
Total shareholders' equity | 2,981,880 | 2,663,148 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 8,217,007 | $ 7,622,320 |
Federal Realty Investment Trust | |||||||
Consolidated Income Statements | |||||||
September 30, 2022 | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
REVENUE | |||||||
Rental income | $ 273,179 | $ 247,024 | $ 793,516 | $ 694,954 | |||
Mortgage interest income | 272 | 260 | 805 | 2,116 | |||
Total revenue | 273,451 | 247,284 | 794,321 | 697,070 | |||
EXPENSES | |||||||
Rental expenses | 58,809 | 49,318 | 166,189 | 141,474 | |||
Real estate taxes | 32,803 | 29,529 | 94,628 | 88,272 | |||
General and administrative | 13,100 | 12,253 | 39,046 | 35,357 | |||
Depreciation and amortization | 77,109 | 70,611 | 223,244 | 202,160 | |||
Total operating expenses | 181,821 | 161,711 | 523,107 | 467,263 | |||
Gain on deconsolidation of VIE | 70,374 | — | 70,374 | — | |||
Gain on sale of real estate and change in control of interest | 29,723 | — | 29,723 | 17,428 | |||
OPERATING INCOME | 191,727 | 85,573 | 371,311 | 247,235 | |||
OTHER INCOME/(EXPENSE) | |||||||
Other interest income | 234 | 88 | 487 | 701 | |||
Interest expense | (35,060) | (32,249) | (98,707) | (95,511) | |||
Income (loss) from partnerships | 1,873 | 1,129 | 4,878 | (86) | |||
NET INCOME | 158,774 | 54,541 | 277,969 | 152,339 | |||
Net income attributable to noncontrolling interests | (2,636) | (2,419) | (8,171) | (5,777) | |||
NET INCOME ATTRIBUTABLE TO THE TRUST | 156,138 | 52,122 | 269,798 | 146,562 | |||
Dividends on preferred shares | (2,008) | (2,010) | (6,026) | (6,031) | |||
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS | $ 154,130 | $ 50,112 | $ 263,772 | $ 140,531 | |||
EARNINGS PER COMMON SHARE, BASIC: | |||||||
Net income available for common shareholders | $ 1.90 | $ 0.64 | $ 3.31 | $ 1.81 | |||
Weighted average number of common shares | 80,765 | 77,485 | 79,480 | 77,269 | |||
EARNINGS PER COMMON SHARE, DILUTED: | |||||||
Net income available for common shareholders | $ 1.89 | $ 0.64 | $ 3.31 | $ 1.81 | |||
Weighted average number of common shares | 81,511 | 77,575 | 80,137 | 77,287 |
Federal Realty Investment Trust | ||||||||
Funds From Operations | ||||||||
September 30, 2022 | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
(in thousands, except per share data) | ||||||||
Funds from Operations available for common shareholders (FFO) | ||||||||
Net income | $ 158,774 | $ 54,541 | $ 277,969 | $ 152,339 | ||||
Net income attributable to noncontrolling interests | (2,636) | (2,419) | (8,171) | (5,777) | ||||
Gain on deconsolidation of VIE | (70,374) | — | (70,374) | — | ||||
Gain on sale of real estate and change in control of interest | (29,723) | — | (29,723) | (17,428) | ||||
Depreciation and amortization of real estate assets | 67,455 | 61,236 | 196,159 | 174,770 | ||||
Amortization of initial direct costs of leases | 7,454 | 6,202 | 19,129 | 20,127 | ||||
Funds from operations | 130,950 | 119,560 | 384,989 | 324,031 | ||||
Dividends on preferred shares (1) | (1,875) | (1,875) | (5,625) | (6,031) | ||||
Income attributable to downREIT operating partnership units | 704 | 742 | 2,111 | 2,267 | ||||
Income attributable to unvested shares | (449) | (438) | (1,353) | (1,156) | ||||
FFO | $ 129,330 | $ 117,989 | $ 380,122 | $ 319,111 | ||||
Weighted average number of common shares, diluted (1)(2) | 81,511 | 78,365 | 80,232 | 77,997 | ||||
FFO per diluted share (2) | $ 1.59 | $ 1.51 | $ 4.74 | $ 4.09 |
Notes: | |
1) | For the three and nine months ended September 30, 2022 and the three months ended September 30, 2021, 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 common shares, diluted." |
2) | The weighted average common shares used to compute FFO per diluted common share for all periods presented includes downREIT operating partnership units that were excluded from the computation of diluted EPS for the three and nine months ended September 30, 2021. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share for all periods presented but is anti-dilutive for the computation of dilutive EPS for the three and nine months ended September 30, 2021. |
Investor Inquiries: Leah Andress Brady Vice President, Investor Relations 301.998.8265 | Media Inquiries: Brenda Pomar Director, Corporate Communications 301.998.8316 |
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SOURCE Federal Realty Investment Trust