PR Newswire | Nov 5, 2020 04:06PM EST

11/05 15:05 CST

Federal Realty Investment Trust Announces Third Quarter 2020 Operating Results ROCKVILLE, Md., Nov. 5, 2020

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

"Progress in many respects was the theme of the third quarter," said Donald C. Wood, President and Chief Executive Officer. "Improving rent collections, leasing volumes at pre-COVID levels and improved liquidity through our $400 million green bond offering all point to a bright future on the other side of this."

Financial Results

Net (loss) income available for common shareholders was ($30.3) million and earnings per diluted share was ($0.41) for third quarter 2020 which includes the $50.7 million net impairment charge relating to The Shops at Sunset Place. This compares to $63.5 million and $0.84, respectively, for third quarter 2019.

In the third quarter 2020, Federal Realty generated funds from operations available for common shareholders (FFO) of $85.0 million, or $1.12 per diluted share. This compares to FFO of $108.0 million, or $1.43 per diluted share, in the third quarter 2019 which included the $11.9 million charge related to the buyout of the Kmart lease at Assembly.

The year-over-year decreases in net income and FFO were attributable to the impacts of the COVID-19 pandemic with the primary driver being collectibility related adjustment impacts during the third quarter totaling $29.4 million, or $0.39 per share, which included a $1.7 million impact to straight-line rent. The decrease in net income was also driven by The Shops at Sunset Place impairment charge.

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 92.2% leased as of September 30, 2020, and the comparable portfolio was 92.0% leased.

During the third quarter 2020, Federal Realty signed 101 leases for 481,105 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 471,726 square feet at an average rent of $37.38 per square foot compared to the average contractual rent of $37.74 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of -1%, 6% on a straight-line basis. Additionally, Federal Realty signed 13 leases for 63,609 square feet of office space during the third quarter 2020.

COVID-19 Operational Update

All 104 properties remain open and operating. Approximately 97% of our retail tenants based on annualized base rent are open and operating as of October 30, 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 commercial spaces.

As of October 30, 2020, the Company has collected approximately 85% of total third quarter 2020 billed recurring rents and 85% of October 2020.

With $863 million of cash and cash equivalents as of September 30, 2020, Federal Realty has approximately $1.9 billion of liquidity in cash and undrawn availability under its $1.0 billion revolving credit facility. Additionally, subsequent to quarter end, the Company issued $400.0 million of green bonds.

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 declared 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 January 15, 2021, to common shareholders of record as of January 4, 2021.

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 15, 2021, to shareholders of record as of January 4, 2021.

Summary of Other Quarterly Activities and Recent Developments

October 13, 2020 - Federal Realty closed on its inaugural issuance of green bonds, $400.0 million aggregate principal amount of 1.250% notes at an effective yield of 1.379%, maturing February 15, 2026. The company intends to allocate an amount equal to the net proceeds from this offering to the financing and refinancing of recently completed and future eligible green projects.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its third quarter 2020 earnings conference call, which is scheduled for Friday, November 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 13705852 (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 20, 2020 by dialing 844.512.2921; Passcode: 13705852.

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 2,800 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:

* 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 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; * 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 10, 2020 and subsequent quarterly reports on Form 10-Q.

Federal Realty Investment Trust

Consolidated Balance Sheets

September 30, 2020

September December 31, 30,

2020 2019

(in thousands, except share and per share data)

(unaudited)

ASSETS

Real estate, at cost

Operating (including $1,709,234 and $1,676,866 ofconsolidated variable interest entities, $ 7,817,819 $ 7,535,983respectively)

Construction-in-progress (including $81,463 and$102,583 of consolidated variable interest 769,668 760,420entities, respectively)

Assets held for sale - 1,729

8,587,487 8,298,132

Less accumulated depreciation and amortization(including $314,866 and $296,165 of consolidated (2,339,664) (2,215,413)variable interest entities, respectively)

Net real estate 6,247,823 6,082,719

Cash and cash equivalents 863,279 127,432

Accounts and notes receivable, net 164,882 152,572

Mortgage notes receivable, net 39,905 30,429

Investment in partnerships 22,093 28,604

Operating lease right of use assets 92,837 93,774

Finance lease right of use assets 51,437 52,402

Prepaid expenses and other assets 229,037 227,060

TOTAL ASSETS $ 7,711,293 $ 6,794,992

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Mortgages payable, net (including $474,775 and$469,184 of consolidated variable interest $ 549,445 $ 545,679entities, respectively)

Notes payable, net 402,580 3,781

Senior notes and debentures, net 3,508,824 2,807,134

Accounts payable and accrued expenses 276,396 255,503

Dividends payable 82,688 81,676

Security deposits payable 19,693 21,701

Operating lease liabilities 72,921 73,628

Finance lease liabilities 72,052 72,062

Other liabilities and deferred credits 148,889 157,938

Total liabilities 5,133,488 4,019,102

Commitments and contingencies

Redeemable noncontrolling interests 159,721 139,758

Shareholders' equity

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

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

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

Common shares of beneficial interest, $.01 par,100,000,000 shares authorized, 75,641,074 and 760 75975,540,804 shares issued and outstanding,respectively

Additional paid-in capital 3,174,066 3,166,522

Accumulated dividends in excess of net income (999,664) (791,124)

Accumulated other comprehensive loss (7,300) (813)

Total shareholders' equity of the Trust 2,327,859 2,535,341

Noncontrolling interests 90,225 100,791

Total shareholders' equity 2,418,084 2,636,132

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,711,293 $ 6,794,992

Federal Realty Investment Trust

Consolidated Income Statements

September 30, 2020

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

(in thousands, except per share data)

(unaudited)

REVENUE

Rental income $ 207,410 $ 233,212 $ 613,687 $ 694,435

Mortgage interest income 787 735 2,294 2,204

Total revenue 208,197 233,947 615,981 696,639

EXPENSES

Rental expenses 41,832 54,484 122,561 140,182

Real estate taxes 30,520 29,030 90,183 81,883

General and administrative 9,308 11,060 29,373 32,047

Depreciation and amortization 65,631 59,648 190,603 178,327

Total operating expenses 147,291 154,222 432,720 432,439

Impairment charge (57,218) - (57,218) -

Gain on sale of real estate, net of tax - 14,293 11,682 30,490

OPERATING INCOME 3,688 94,018 137,725 294,690

OTHER INCOME/(EXPENSE)

Other interest income 538 389 1,355 755

Interest expense (36,228) (27,052) (98,746) (82,567)

Loss from partnerships (1,621) (249) (6,657) (1,302)

NET (LOSS) INCOME (33,623) 67,106 33,677 211,576

Net loss (income) attributable to noncontrolling interests 5,334 (1,641) 3,304 (5,065)

NET (LOSS) INCOME ATTRIBUTABLE TO THE TRUST (28,289) 65,465 36,981 206,511

Dividends on preferred shares (2,010) (2,010) (6,031) (6,031)

NET (LOSS) INCOME AVAILABLE FOR COMMON SHAREHOLDERS $ (30,299) $ 63,455 $ 30,950 $ 200,480

EARNINGS PER COMMON SHARE, BASIC AND DILUTED:

Net (loss) income available for common shareholders $ (0.41) $ 0.84 $ 0.40 $ 2.68

Weighted average number of common shares 75,404 74,832 75,386 74,584

Federal Realty Investment Trust

Funds From Operations / Other Supplemental Information

September 30, 2020

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

(in thousands, except per share data)

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

Net (loss) income $ (33,623) $ 67,106 $ 33,677 $ 211,576

Net loss (income) attributable to noncontrolling interests 5,334 (1,641) 3,304 (5,065)

Gain on sale of real estate, net of tax - (14,293) (11,682) (30,490)

Impairment charge, net (2) 50,728 - 50,728 -

Depreciation and amortization of real estate assets 58,224 53,441 170,878 160,253

Amortization of initial direct costs of leases 5,853 4,878 15,562 14,165

Funds from operations 86,516 109,491 262,467 350,439

Dividends on preferred shares (3) (2,010) (1,875) (6,031) (5,625)

Income attributable to operating partnership units 790 658 2,362 2,048

Income attributable to unvested shares (265) (314) (806) (1,004)

FFO (4) $ 85,031 $ 107,960 $ 257,992 $ 345,858

Weighted average number of common shares, diluted (3) 76,149 75,554 76,133 75,342

FFO per diluted share (4) $ 1.12 $ 1.43 $ 3.39 $ 4.59

Notes:

Amounts reflect the components of "net loss (income) attributable to1) noncontrolling interests," but excludes "income attributable to operating partnership units."

2) Impairment charge relates to The Shops at Sunset Place. Amount is net of the allocation to noncontrolling interests.

For the three and nine months ended September 30, 2019, dividends on our3) 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."

Funds from operations available for common shareholders for the three and nine months ended September 30, 2019 includes an $11.9 million4) charge related to the buyout of the Kmart lease at Assembly Row Marketplace. If this charge was excluded, our FFO, FFO per diluted share, and dividend payout ratio as a percentage of FFO for those periods would have been:

Three Months Ended Nine Months Ended

September 30, 2019

(in thousands, except per share data)

FFO $ 119,837 $ 357,735

FFO per diluted share $ 1.59 $ 4.75

Inquiries: Leah Andress BradyInvestor Relations Senior Manager 301.998.8265 lbrady@federalrealty.com

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SOURCE Federal Realty Investment Trust