PR Newswire | Aug 4, 2021 04:06PM EDT

08/04 15:05 CDT

Federal Realty Investment Trust Announces Second Quarter 2021 Operating Results NORTH BETHESDA, Md., Aug. 4, 2021

NORTH BETHESDA, Md., Aug. 4, 2021 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2021. For the three months ended June 30, 2021 and 2020, net income available for common shareholders was $0.57 per diluted share and $0.11 per diluted share, respectively.

Highlights for the quarter and subsequent events include:

* Generated funds from operations available to common shareholders (FFO) per diluted share of $1.41 for the quarter compared to $0.77 for the second quarter 2020. * Record levels of leasing activity with 124 signed leases for 558,490 square feet of comparable space during second quarter and 227 signed leases for 1.1 million square feet of comparable space through the first six months of 2021. * Federal Realty's portfolio was 92.7% leased, a sequential increase of 90 basis points. * 310 basis point spread between leased and occupied

* Acquired 4 assets which total 1.76 million square feet on 125 acres of land at a gross value of $407 million, of which Federal owns an average 80% interest. * Increased the regular quarterly cash dividend to $1.07 per common share, resulting in an indicated annual rate of $4.28 per common share. This increase represents the 54th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector. * Increased 2021 earnings per diluted share guidance to $1.91 to $2.01 and increased 2021 FFO per diluted share guidance to $5.05 to $5.15. * Increased 2022 earnings per diluted share guidance to $1.99 to $2.19 and increased 2022 FFO per diluted share guidance to $5.30 to $5.50.

"Our team delivered an outstanding quarter exceeding all our of internal forecasts," said Donald C. Wood, Chief Executive Officer. "Our all-time high leasing volumes with best-in-class, relevant tenants coupled with our new acquisitions and existing development pipeline set our company and our assets up to be more dominant, more relevant and therefore more valuable in a post-COVID world."

Financial Results

Net income available for common shareholders was $44.2 million and earnings per diluted share was $0.57 for second quarter 2021 versus $8.5 million and $0.11, respectively, for second quarter 2020.

In the second quarter 2021, Federal Realty generated FFO of $110.1 million, or $1.41 per diluted share. This compares to FFO of $58.0 million, or $0.77 per diluted share, in second quarter 2020.

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

The portfolio was 92.7% leased as of June 30, 2021, a sequential increase of 90 basis points over the first quarter 2021 and a spread of 310 basis points versus our occupied percentage, 89.6%, at the end of the second quarter.

During the second quarter 2021, Federal Realty signed 133 leases for 576,782 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 124 leases for 558,490 square feet at an average rent of $37.34 per square foot compared to the average contractual rent of $34.72 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 8%, 18% on a straight-line basis.

As of July 28, 2021, the Company has collected approximately 94% of total second quarter 2021 billed recurring rents. Including rent deferral and abatement agreements, total addressed recurring rent was 98%.

With $304 million of cash and cash equivalents as of June 30, 2021, Federal Realty has approximately $1.3 billion of liquidity in cash and undrawn availability under its $1 billion revolving credit facility.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the regular quarterly cash dividend to $1.07 per common share, resulting in an indicated annual rate of $4.28 per common share. The regular common dividend will be payable on October 15, 2021 to common shareholders of record as of September 22, 2021. This increase represents the 54th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector. Federal is 1 of only 32 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, 2021 to shareholders of record as of October 1, 2021.

Summary of Other Quarterly Activities and Recent Developments

Second Quarter 2021 - Federal Realty acquired Grossmont Center in greater San Diego, California, Chesterbrook in McLean, Virginia, and Camelback Colonnade and Hilton Village in the Phoenix Metro area. The 4 assets total 1.76 million square feet on 125 acres of land. Federal acquired its average 80% ownership interest in these assets based on a gross value of $407 million.

June 1, 2021 - Federal Realty issued its 2020 corporate responsibility report highlighting the Company's ESG initiatives and accomplishments and established reduction targets of 15% for landlord controlled electric usage and 30% for greenhouse gas emissions by the end of 2025.

May 2021 - The Institute for Market Transformation and the U.S. Department of Energy's (DOE) Better Buildings Alliance announced Federal Realty as a 2021 Green Lease Leader. Green Lease Leaders sets national standards for what constitutes a green lease, while recognizing landlords and tenants who modernize their leases to spur collaborative action on energy efficiency, cost-savings, air quality, and sustainability in buildings.

May 2021 - Federal Realty was selected by GlobeSt. as one of commercial real estate's Best Places to Work in 2021. The annual series identifies and recognizes the most respected, rewarding workplaces that achieve outstanding performance.

Guidance

Federal Realty increased its 2021 guidance for earnings per diluted share to $1.91 to $2.01 and 2021 FFO per diluted share guidance to $5.05 to $5.15.

Additionally, Federal Realty increased its 2022 guidance for earnings per diluted share to $1.99 to $2.19 and 2022 FFO per diluted share guidance to $5.30 to $5.50.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its second quarter 2021 earnings conference call, which is scheduled for Wednesday, August 4, 2021 at 5:00 PM ET. To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13721508 (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 18, 2021 by dialing 844.512.2921; Passcode: 13721508.

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 105 properties include approximately 3,000 tenants, in 25 million square feet, and approximately 2,900 residential units.

Federal Realty has increased its quarterly dividends to its shareholders for 54 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 11, 2021, 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 redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected; * risk 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 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 11, 2021 and subsequent quarterly reports on Form 10-Q.

Investor Inquiries: Media Inquiries:

Leah Andress Brady Brenda Pomar

Director, Investor Relations Director, Corporate Communications

301.998.8265 301.998.8316

lbrady@federalrealty.com bpomar@federalrealty.com

Federal Realty Investment Trust

Consolidated Balance Sheets

June 30, 2021

June 30, December 31,

2021 2020

(in thousands, except share and per share data)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $2,184,537 and $1,703,202 of consolidated variable interest entities, $8,412,137$7,771,981respectively)

Construction-in-progress (including $24,679 and $44,896 of consolidated variable interest 858,488 810,889 entities, respectively)

9,270,625 8,582,870

Less accumulated depreciation and amortization (including $359,198 and $335,735 of consolidated (2,444,329)(2,357,692)variable interest entities, respectively)

Net real estate 6,826,296 6,225,178

Cash and cash equivalents 304,268 798,329

Accounts and notes receivable, net 153,293 159,780

Mortgage notes receivable, net 9,534 39,892

Investment in partnerships 11,560 22,128

Operating lease right of use assets 92,457 92,248

Finance lease right of use assets 50,474 51,116

Prepaid expenses and other assets 230,994 218,953

TOTAL ASSETS $7,678,876$7,607,624

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages payable, net (including $396,732 and $413,681 of consolidated variable interest $466,026 $484,111 entities, respectively)

Notes payable, net 301,625 402,776

Senior notes and debentures, net 3,405,282 3,404,488

Accounts payable and accrued expenses 253,092 228,641

Dividends payable 84,881 83,839

Security deposits payable 23,381 20,388

Operating lease liabilities 74,129 72,441

Finance lease liabilities 72,041 72,049

Other liabilities and deferred credits 209,957 152,424

Total liabilities 4,890,414 4,921,157

Commitments and contingencies

Redeemable noncontrolling interests 212,623 137,720

Shareholders' equity

Preferred shares, authorized 15,000,000 shares, $.01 par:

5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 150,000 150,000 per share), 6,000 shares issued and outstanding

5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per 9,997 9,997 share), 399,896 shares issued and outstanding

Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 77,760,588 and 782 771 76,727,394 shares issued and outstanding, respectively

Additional paid-in capital 3,395,189 3,297,305

Accumulated dividends in excess of net income (1,062,641)(988,272)

Accumulated other comprehensive loss (3,238) (5,644)

Total shareholders' equity of the Trust 2,490,089 2,464,157

Noncontrolling interests 85,750 84,590

Total shareholders' equity 2,575,839 2,548,747

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,678,876$7,607,624

Federal Realty Investment Trust

Consolidated Income Statements

June 30, 2021

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

(in thousands, except per share data)

(unaudited)

REVENUE

Rental income $230,795$175,479$447,930$406,277

Mortgage interest income 830 748 1,856 1,507

Total revenue 231,625 176,227 449,786 407,784

EXPENSES

Rental expenses 42,918 36,417 92,156 80,729

Real estate taxes 29,323 30,599 58,743 59,663

General and administrative 12,846 9,814 23,104 20,065

Depreciation and amortization 67,675 62,784 131,549 124,972

Total operating expenses 152,762 139,614 305,552 285,429



Gain on sale of real estate and - 11,682 17,428 11,682 change in control of interest



OPERATING INCOME 78,863 48,295 161,662 134,037



OTHER INCOME/(EXPENSE)

Other interest income 250 509 613 817

Interest expense (31,177) (34,073) (63,262) (62,518)

Income (loss) from partnerships 123 (3,872) (1,215) (5,036)

NET INCOME 48,059 10,859 97,798 67,300

Net income attributable to (1,855) (352) (3,358) (2,030) noncontrolling interests

NET INCOME ATTRIBUTABLE TO THE 46,204 10,507 94,440 65,270 TRUST

Dividends on preferred shares (2,011) (2,011) (4,021) (4,021)

NET INCOME AVAILABLE FOR COMMON $44,193 $8,496 $90,419 $61,249 SHAREHOLDERS



EARNINGS PER COMMON SHARE, BASIC:

Net income available for common $0.57 $0.11 $1.16 $0.81 shareholders

Weighted average number of common 77,474 75,394 77,160 75,377 shares

EARNINGS PER COMMON SHARE, DILUTED:

Net income available for common $0.57 $0.11 $1.16 $0.81 shareholders

Weighted average number of common 77,505 75,394 77,162 75,377 shares

Federal Realty Investment Trust

Funds From Operations

June 30, 2021

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

(in thousands, except per share data)

Funds from Operations available for common shareholders (FFO)

Net income $48,059 $10,859$97,798 $67,300

Net income attributable to (1,855) (352) (3,358) (2,030) noncontrolling interests

Gain on sale of real estate and change in control of - (11,682)(17,428) (11,682) interest

Depreciation and amortization 56,431 56,608 113,534 112,654 of real estate assets

Amortization of initial direct9,181 4,809 13,925 9,709 costs of leases

Funds from operations 111,816 60,242 204,471 175,951

Dividends on preferred shares (2,011) (2,011) (4,021) (4,021) (1)

Income attributable to operating partnership units 740 - 1,525 1,572 (2)

Income attributable to (398) (249) (721) (541) unvested shares

FFO $110,147$57,982$201,254$172,961

Weighted average number of 78,203 75,394 77,881 76,126 common shares, diluted (1)(2)

FFO per diluted share $1.41 $0.77 $2.58 $2.27



Notes:

For the three and six months ended June 30, 2021 and 2020, dividends on our1) 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."

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. For2) the three months ended June 30, 2021 and 2020 and the six months ended June 30, 2020, 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.

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SOURCE Federal Realty Investment Trust