Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, CCA

Federal Realty Investment Trust Announces Second Quarter 2020 Operating Results


ROCKVILLE, Md., Aug. 5, 2020 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2020.

"We remain confident in our ability to weather this pandemic and come out on the other side an even stronger and further differentiated company," said Donald C. Wood, President and Chief Executive Officer. "Continued positive trends in our collections, our fortress balance sheet built for times like these and, most importantly, the continued desirability of our locations, as evidenced by current tenant discussions, gave us the confidence this quarter to increase our dividend for the 53rd year, an industry record and a coveted aspect of Federal Realty's history."

Financial Results

Net income available for common shareholders was $8.5 million and earnings per diluted share was $0.11 for second quarter 2020 versus $78.9 million and $1.05, respectively, for second quarter 2019. 

In the second quarter 2020, Federal Realty generated funds from operations available for common shareholders (FFO) of $58.0 million, or $0.77 per diluted share. This compares to FFO of $121.0 million, or $1.60 per diluted share, in the second quarter 2019.

The year-over-year decrease in net income and FFO was attributable to the impacts of the COVID-19 pandemic with the primary driver being collectibility related adjustment impacts during the second quarter totaling $55.2 million, or $0.73 per share, which included a $9.4 million impact to straight-line rent.

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

The portfolio was 93.0% leased as of June 30, 2020, and the comparable portfolio was 93.7% leased.

During the second quarter 2020, Federal Realty signed 50 leases for 314,679 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 277,681 square feet at an average rent of $28.55 per square foot compared to the average contractual rent of $25.64 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 11%, 23% on a straight-line basis. Additionally, Federal Realty signed 15 leases for 94,805 square feet of office space during the second quarter 2020.

COVID-19 Operational Update

All 104 properties remain open and operating. Approximately 87% of our commercial tenants are open and operating as of July 31, 2020 based on annualized base rent compared to 47% on May 1, 2020. Annualized base rent reflects the aggregate, annualized in-place contractual (defined as rents billed on a cash basis without taking the impact of rent abatements into account) minimum rent for all occupied spaces.

As of July 31, 2020, the Company has collected approximately 68% of total second quarter 2020 billed recurring rents and 76% of July 2020.

As of July 31, 2020, deferral agreements have been executed for $21 million, or 10%, of billed recurring rents for April through June 2020 and have a weighted average repayment period of 9 months.

With $980.0 million of cash and cash equivalents as of June 30, 2020, Federal Realty has approximately $2.0 billion of liquidity in cash and undrawn availability under its $1.0 billion revolving credit facility. 

Additional information on the impact of the COVID-19 pandemic on the Company's business to date is available in a presentation posted on the Investor section of Federal Realty's website

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the regular dividend rate on its common shares, declaring a regular quarterly cash dividend of $1.06 per share, resulting in an indicated annual rate of $4.24 per share.  The regular common dividend will be payable on October 15, 2020, to common shareholders of record on September 22, 2020. This increase represents the 53rd consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector, and solidifies its position as 1 of only 30 companies in any sector to be considered a 'Dividend King'.

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, 2020 to common shareholders of record as of October 1, 2020.

Summary of Other Quarterly Activities and Recent Developments

May 6, 2020 ? Federal Realty closed on a new $400.0 million unsecured term loan. Proceeds were used to repay balances outstanding under the Company's $1.0 billion unsecured credit facility. The term loan bears interest at LIBOR plus 135 basis points and will mature in May 2021, with an option to extend the loan until May 2022.

May 11, 2020 ? Federal Realty closed on its public offering of $400.0 million aggregate principal amount of 3.50% senior notes due 2030 at an effective yield of 3.630% and reopened their 3.95% senior notes due 2024 for an additional $300.0 million aggregate principal amount at an effective yield of 2.944%. The 3.95% senior notes have the same terms and are of the same series as the $300.0 million senior notes issued on December 9, 2013. Federal Realty used the net proceeds from this offering to reduce amounts outstanding under its revolving credit facility and for general corporate purposes.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its second quarter 2020 earnings conference call, which is scheduled for Thursday, August 6, 2020 at 10:00AM ET.  To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13705851 (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 August 20, 2020 by dialing 844.512.2921; Passcode: 13705851.

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 densely populated, affluent 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 2,900 tenants, in 24 million square feet, and approximately 2,800 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 53 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, 2020 and subsequent quarterly reports on Form 10-Q, 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, 2020 and subsequent quarterly reports on Form 10-Q.

Inquiries:
Brenda Pomar, Corporate Communications Manager
301.998.8316 / [email protected]

Federal Realty Investment Trust

Consolidated Balance Sheets

June 30, 2020


June 30,


December 31,


2020


2019


(in thousands, except share and per share data)


(unaudited)



ASSETS




Real estate, at cost




Operating (including $1,754,540 and $1,676,866 of consolidated variable interest entities, respectively)

$

7,790,025



$

7,535,983


Construction-in-progress (including $93,067 and $102,583 of consolidated variable interest entities, respectively)

754,787



760,420


Assets held for sale

1,085



1,729



8,545,897



8,298,132


Less accumulated depreciation and amortization (including $317,925 and $296,165 of consolidated variable interest entities, respectively)

(2,308,403)



(2,215,413)


Net real estate

6,237,494



6,082,719


Cash and cash equivalents

980,039



127,432


Accounts and notes receivable, net

167,641



152,572


Mortgage notes receivable, net

30,332



30,429


Investment in partnerships

22,879



28,604


Operating lease right of use assets

93,494



93,774


Finance lease right of use assets

51,758



52,402


Prepaid expenses and other assets

206,293



227,060


TOTAL ASSETS

$

7,789,930



$

6,794,992


LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities




Mortgages payable, net (including $475,757 and $469,184 of consolidated variable interest entities, respectively)

$

551,034



$

545,679


Notes payable, net

402,477



3,781


Senior notes and debentures, net

3,508,461



2,807,134


Accounts payable and accrued expenses

244,482



255,503


Dividends payable

81,915



81,676


Security deposits payable

18,922



21,701


Operating lease liabilities

73,527



73,628


Finance lease liabilities

72,056



72,062


Other liabilities and deferred credits

146,372



157,938


Total liabilities

5,099,246



4,019,102


Commitments and contingencies




Redeemable noncontrolling interests

159,583



139,758


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), 399,896 shares issued and outstanding

9,997



9,997


Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 75,633,140 and 75,540,804 shares issued and outstanding, respectively

760



759


Additional paid-in capital

3,170,480



3,166,522


Accumulated dividends in excess of net income

(889,195)



(791,124)


Accumulated other comprehensive loss

(7,758)



(813)


Total shareholders' equity of the Trust

2,434,284



2,535,341


Noncontrolling interests

96,817



100,791


Total shareholders' equity

2,531,101



2,636,132


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

7,789,930



$

6,794,992


 

Federal Realty Investment Trust


Consolidated Income Statements


June 30, 2020



Three Months Ended


Six Months Ended


June 30,


June 30,


2020


2019


2020


2019


(in thousands, except per share data)


(unaudited)

REVENUE








Rental income

$

175,479



$

229,731



$

406,277



$

461,223


Mortgage interest income

748



734



1,507



1,469


Total revenue

176,227



230,465



407,784



462,692


EXPENSES








Rental expenses

36,417



41,438



80,729



85,698


Real estate taxes

30,599



25,166



59,663



52,853


General and administrative

9,814



11,422



20,065



20,987


Depreciation and amortization

62,784



59,057



124,972



118,679


Total operating expenses

139,614



137,083



285,429



278,217










Gain on sale of real estate, net of tax

11,682



16,197



11,682



16,197










OPERATING INCOME

48,295



109,579



134,037



200,672










OTHER INCOME/(EXPENSE)








Other interest income

509



189



817



366


Interest expense

(34,073)



(27,482)



(62,518)



(55,515)


(Loss) income from partnerships

(3,872)



381



(5,036)



(1,053)


NET INCOME

10,859



82,667



67,300



144,470


 Net income attributable to noncontrolling interests

(352)



(1,765)



(2,030)



(3,424)


NET INCOME ATTRIBUTABLE TO THE TRUST

10,507



80,902



65,270



141,046


Dividends on preferred shares

(2,011)



(2,011)



(4,021)



(4,021)


NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS

$

8,496



$

78,891



$

61,249



$

137,025










EARNINGS PER COMMON SHARE, BASIC AND DILUTED:








Net income available for common shareholders

$

0.11



$

1.05



$

0.81



$

1.83


Weighted average number of common shares

75,394



74,713



75,377



74,458


 

Federal Realty Investment Trust




Funds From Operations



June 30, 2020






Three Months Ended


Six Months Ended



June 30,


June 30,



2020


2019


2020


2019



(in thousands, except per share data)




Funds from Operations available for common shareholders (FFO) (1)



Net income


$

10,859



$

82,667



$

67,300



$

144,470


Net income attributable to noncontrolling interests


(352)



(1,765)



(2,030)



(3,424)


Gain on sale of real estate, net


(11,682)



(16,197)



(11,682)



(16,197)


Depreciation and amortization of real estate assets


56,608



53,323



112,654



106,812


Amortization of initial direct costs of leases


4,809



4,537



9,709



9,287


Funds from operations


60,242



122,565



175,951



240,948


Dividends on preferred shares (2)


(2,011)



(1,875)



(4,021)



(3,750)


Income attributable to operating partnership units (3)


?



661



1,572



1,390


Income attributable to unvested shares


(249)



(346)



(541)



(690)


FFO


$

57,982



$

121,005



$

172,961



$

237,898


Weighted average number of common shares, diluted (2)(3)


75,394



75,456



76,126



75,235


FFO per diluted share


$

0.77



$

1.60



$

2.27



$

3.16












Notes:



1)

Amounts reflect the components of "net income attributable to noncontrolling interests," but excludes "income attributable to operating partnership units."



2)

For the three and six months ended June 30, 2019, 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 included in "weighted average common shares, diluted."



3)

For the three months ended June 30, 2020, income attributable to operating partnership units is not added back in the calculation of FFO available to common shareholders, as the related shares are not dilutive and are not included in "weighted average common shares, diluted" for this period. For the six months ended June 30, 2020 and the three and six months ended June 30, 2019, the weighted average common shares used to compute FFO per diluted common share includes 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 but is anti-dilutive for the computation of dilutive EPS for these periods.

 

SOURCE Federal Realty Investment Trust


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