Federal Realty Investment Trust Announces First Quarter 2021 Operating Results

Rhea-AI Summary

Federal Realty Investment Trust (NYSE:FRT) reported its Q1 2021 results with net income of $0.60 per diluted share, down from $0.70 in Q1 2020. Funds from operations (FFO) per share also declined to $1.17 from $1.50 year-over-year. The portfolio was 91.8% leased, with strong leasing demand reflected by a 9% cash basis rollover growth. The company ended the quarter with $780 million in cash and maintained significant liquidity. A regular quarterly dividend of $1.06 per share was declared, with guidance for 2021 earnings per share between $1.54 to $1.70 and FFO of $4.54 to $4.70.

Positive

• Achieved cash basis rollover growth of 9%.
• Portfolio 91.8% leased, indicating strong leasing demand.
• Strong liquidity with $780 million cash and $1 billion undrawn credit facility.
• Regular quarterly cash dividend declared at $1.06 per share.
• Acquired 80% interest in Chesterbrook, a grocery-anchored shopping center valued at $32.1 million.

Negative

• Net income per diluted share decreased from $0.70 in Q1 2020 to $0.60 in Q1 2021.
• FFO per diluted share declined from $1.50 in Q1 2020 to $1.17 in Q1 2021.

NORTH BETHESDA, Md., May 5, 2021 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2021. For the three months ended March 31, 2021 and 2020, net income available for common shareholders was $0.60 per diluted share and $0.70 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 $1.17 for the quarter compared to $1.50 for the first quarter 2020.
• Signed leases for 506,307 square feet of comparable space in the first quarter at an average rent of $36.58 psf and achieved cash basis rollover growth of 9%.
• Ended the quarter with $780 million of cash on hand, $1 billion of availability on its undrawn revolving credit facility and no public bonds maturing until 2023.
• Acquired an 80% interest in Chesterbrook, a grocery-anchored shopping center, in McLean, Virginia subsequent to quarter end based on a gross value of $32.1 million. 
• Declared a regular quarterly cash dividend of $1.06 per common share, resulting in an indicated annual rate of $4.24 per common share payable on July 15, 2021 to common shareholders of record as of June 22, 2021.
• Provided 2021 earnings per diluted share guidance of $1.54 to $1.70 and an FFO per diluted share guidance range of $4.54 to $4.70.
• Provided 2022 earnings per diluted share guidance of $1.74 to $1.94 and an updated 2022 FFO per diluted share guidance range of $5.05 to $5.25.

"A strong quarter on all fronts as our markets continue the re-opening process," said Donald C. Wood, Chief Executive Officer. "We saw another quarter of strong leasing demand from a broad base of high-quality tenants with first quarter 2021 leasing over 37% higher than our 10-year first quarter average. Federal's high-quality open-air shopping centers and mixed-use communities remain at the top of the list as tenants look to relocate and expand their real estate presence."

Financial Results

Net income available for common shareholders was $46.2 million and earnings per diluted share was $0.60 for first quarter 2021 versus $52.8 million and $0.70, respectively, for first quarter 2020.

In the first quarter 2021, Federal Realty generated FFO of $91.1 million, or $1.17 per diluted share. This compares to FFO of $114.3 million, or $1.50 per diluted share, in first 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.

Portfolio Results

The portfolio was 91.8% leased as of March 31, 2021, and the comparable portfolio was 91.7% leased.

During the first quarter 2021, Federal Realty signed 110 leases for 514,636 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 506,307 square feet at an average rent of $36.58 per square foot compared to the average contractual rent of $33.64 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 9%, 17% on a straight-line basis.

COVID-19 Operational Update

All 101 properties remain open and operating. Approximately 98% of our retail tenants based on annualized base rent were open and operating as of April 30, 2021. 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 April 27, 2021, the Company has collected approximately 90% of total first quarter 2021 billed recurring rents. Including rent deferral and abatement agreements, total addressed recurring rent was 96%.

With $780 million of cash and cash equivalents as of March 31, 2021, Federal Realty has approximately $1.8 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 declared a regular quarterly cash dividend of $1.06 per common share, resulting in an indicated annual rate of $4.24 per common share. The regular common dividend will be payable on July 15, 2021 to common shareholders of record as of June 22, 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 July 15, 2021 to shareholders of record as of July 1, 2021.

Summary of Other Quarterly Activities and Recent Developments

March 19, 2021 – Federal Realty sold an 8-acre portion of Graham Park Plaza in Falls Church, Virginia for gross proceeds of $20.3 million.

April 16, 2021 – Federal Realty amended its term loan subsequent to quarter end extending the term to April 16, 2024  plus two one-year extensions, reducing the spread over LIBOR from 135 bps to 80 bps and repaying $100.0 million of the existing loan for a remaining balance of $300.0 million.

April 30, 2021 – Federal Realty acquired Chesterbrook, a 90,000 square foot shopping center anchored by Safeway and Rite Aid located in McLean, Virginia. The acquisition closed subsequent to quarter end based on a gross value of $32.1 million. This acquisition was completed through a newly formed joint venture, in which Federal Realty owns an 80% interest.   

Guidance

Federal Realty provided 2021 guidance for earnings per diluted share of $1.54 to $1.70 and 2021 FFO per diluted share guidance of $4.54 to $4.70.

Additionally, Federal Realty provided 2022 guidance for earnings per diluted share of $1.74 to $1.94 and 2021 FFO per diluted share guidance of $5.05 to $5.25.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its first quarter 2021 earnings conference call, which is scheduled for Wednesday, May 5, 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 13718245 (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 May 19, 2021 by dialing 844.512.2921; Passcode: 13718245.

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 101 properties include approximately 2,800 tenants, in 23 million square feet, and approximately 2,900 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 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.

Federal Realty Investment Trust
Consolidated Balance Sheets
March 31, 2021
	March 31,				December 31,
	2021				2020
	(in thousands, except share and per share data)
	(unaudited)
ASSETS
Real estate, at cost
Operating (including $1,731,961 and $1,703,202 of consolidated variable interest entities, respectively)	$	7,840,664			$	7,771,981
Construction-in-progress (including $35,359 and $44,896 of consolidated variable interest entities, respectively)	868,193				810,889
	8,708,857				8,582,870
Less accumulated depreciation and amortization (including $347,041 and $335,735 of consolidated variable interest entities, respectively)	(2,393,380)				(2,357,692)
Net real estate	6,315,477				6,225,178
Cash and cash equivalents	779,901				798,329
Accounts and notes receivable, net	161,249				159,780
Mortgage notes receivable, net	39,879				39,892
Investment in partnerships	12,148				22,128
Operating lease right of use assets	82,721				92,248
Finance lease right of use assets	50,795				51,116
Prepaid expenses and other assets	227,431				218,953
TOTAL ASSETS	$	7,669,601			$	7,607,624
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable, net (including $397,084 and $413,681 of consolidated variable interest entities, respectively)	$	466,950			$	484,111
Notes payable, net	403,081				402,776
Senior notes and debentures, net	3,404,879				3,404,488
Accounts payable and accrued expenses	254,515				228,641
Dividends payable	84,872				83,839
Security deposits payable	20,867				20,388
Operating lease liabilities	63,023				72,441
Finance lease liabilities	72,045				72,049
Other liabilities and deferred credits	156,227				152,424
Total liabilities	4,926,459				4,921,157
Commitments and contingencies
Redeemable noncontrolling interests	138,182				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 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, 77,706,466 and 76,727,394 shares issued and outstanding, respectively	781				771
Additional paid-in capital	3,386,917				3,297,305
Accumulated dividends in excess of net income	(1,024,417)				(988,272)
Accumulated other comprehensive loss	(2,300)				(5,644)
Total shareholders' equity of the Trust	2,520,978				2,464,157
Noncontrolling interests	83,982				84,590
Total shareholders' equity	2,604,960				2,548,747
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	7,669,601			$	7,607,624

 

Federal Realty Investment Trust
Consolidated Income Statements
March 31, 2021
	Three Months Ended
	March 31,
	2021				2020
	(in thousands, except per share data)
	(unaudited)
REVENUE
Rental income	$	217,135			$	230,798
Mortgage interest income	1,026				759
Total revenue	218,161				231,557
EXPENSES
Rental expenses	49,238				44,312
Real estate taxes	29,420				29,064
General and administrative	10,258				10,251
Depreciation and amortization	63,874				62,188
Total operating expenses	152,790				145,815
Gain on sale of real estate and change in control of interest	17,428				—
OPERATING INCOME	82,799				85,742
OTHER INCOME/(EXPENSE)
Other interest income	363				308
Interest expense	(32,085)				(28,445)
Loss from partnerships	(1,338)				(1,164)
NET INCOME	49,739				56,441
Net income attributable to noncontrolling interests	(1,503)				(1,678)
NET INCOME ATTRIBUTABLE TO THE TRUST	48,236				54,763
Dividends on preferred shares	(2,010)				(2,010)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	46,226			$	52,753
EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders	$	0.60			$	0.70
Weighted average number of common shares	76,842				75,360

 

Federal Realty Investment Trust
Funds From Operations
March 31, 2021
		Three Months Ended
		March 31,
		2021				2020
		(in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
Net income		$	49,739			$	56,441
Net income attributable to noncontrolling interests		(1,503)				(1,678)
Gain on sale of real estate and change in control of interest		(17,428)				—
Depreciation and amortization of real estate assets		57,103				56,046
Amortization of initial direct costs of leases		4,744				4,900
Funds from operations		92,655				115,709
Dividends on preferred shares (1)		(2,010)				(1,875)
Income attributable to operating partnership units (2)		785				790
Income attributable to unvested shares		(325)				(356)
FFO		$	91,105			$	114,268
Weighted average number of common shares, diluted (1)(2)		77,582				76,208
FFO per diluted share		$	1.17			$	1.50

Notes:

1. For the three months ended March 31, 2020, 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."
2. For the three months ended March 31, 2021 and 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.

 

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

Media Inquiries: Brenda Pomar Corporate Communications Manager 301.998.8316 bpomar@federalrealty.com

 

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SOURCE Federal Realty Investment Trust

FAQ

What were Federal Realty's earnings per share for Q1 2021?

Federal Realty reported earnings per diluted share of $0.60 for Q1 2021.

What is the dividend declared by Federal Realty for Q2 2021?

Federal Realty declared a regular quarterly cash dividend of $1.06 per common share for Q2 2021.

What is Federal Realty's FFO guidance for 2021?

Federal Realty's FFO per diluted share guidance for 2021 is between $4.54 and $4.70.

How much cash did Federal Realty have at the end of Q1 2021?

Federal Realty had $780 million in cash on hand at the end of Q1 2021.

What percentage of Federal Realty's portfolio was leased in Q1 2021?

As of March 31, 2021, Federal Realty's portfolio was 91.8% leased.