Federal Realty Investment Trust Announces First Quarter 2022 Operating Results

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Federal Realty Investment Trust (NYSE:FRT) announced its Q1 2022 results, reporting net income of $50.0 million or $0.63 per diluted share, up from $46.2 million or $0.60 per diluted share year-over-year. The Trust generated funds from operations (FFO) of $119.1 million, or $1.50 per diluted share, compared to $91.1 million, or $1.17 per diluted share in Q1 2021. With a portfolio occupancy of 91.2% and leasing of 93.7%, the company signed 119 leases for 444,398 square feet. They also announced a quarterly dividend of $1.07, with guidance for earnings per diluted share increased to $2.36 - $2.56.

Positive

• Net income rose to $50.0 million, or $0.63 per diluted share, compared to $46.2 million in Q1 2021.
• FFO increased to $119.1 million, or $1.50 per diluted share, from $91.1 million in the prior year.
• Leasing activity hit record levels with 119 leases signed for 444,398 square feet.
• Portfolio occupancy improved to 91.2% and leased rate to 93.7%, both up year-over-year.
• The company increased its 2022 earnings guidance to $2.36 - $2.56 per diluted share.

Negative

• None.

NORTH BETHESDA, Md., May 5, 2022 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its first quarter ended March 31, 2022. For the three months ended March 31, 2022 and 2021, net income available for common shareholders was $0.63 per diluted share and $0.60 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 $1.50 for the quarter compared to $1.17 for the first quarter 2021.
• Generated comparable property operating income (POI) growth of 14.5% for the first quarter.
• Continued record levels of leasing with 119 signed leases for 444,398 square feet of comparable space in the first quarter, our most active first quarter on record.
• Federal Realty's portfolio was 91.2% occupied and 93.7% leased, representing year-over-year increases of 170 basis points and 190 basis points, respectively.
• Maintained a 250 basis point spread between leased and occupied.
• Continued strong small shop leasing, ending the quarter at 88.7% leased, an increase of 130 basis points over the fourth quarter and an increase of 490 basis points year over year. 
• Subsequent to quarter end, closed on phase one of the acquisition of Kingstowne Towne Center in Kingstowne, Virginia, for $100 million and expect to close on phase two for $100 million in July 2022, subject to customary closing conditions. Combined, the property comprises 410,000 square feet of retail space on 45 acres of land.
• Increased 2022 earnings per diluted share guidance to $2.36 - $2.56 and increased 2022 FFO per diluted share guidance to $5.85 - $6.05, an increase of 10 cents at the midpoint.

"Demand for our product has outpaced even our continually raised expectations," said Donald C. Wood, Chief Executive Officer. "Record leasing combined with in-process expansion at our established mixed-use centers, our continued redevelopment and property improvement efforts and recent selective acquisitions continue to drive bottom line earnings growth. These multiple drivers of growth are what differentiate us over cycles."

Financial Results

Net Income

Net income available for common shareholders was $50.0 million and earnings per diluted share was $0.63 for first quarter 2022 versus $46.2 million and $0.60, respectively, for first quarter 2021.

FFO

In the first quarter 2022, Federal Realty generated FFO of $119.1 million, or $1.50 per diluted share. This compares to FFO of $91.1 million, or $1.17 per diluted share, in first 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 91.2% occupied as of March 31, 2022, an increase of 170 basis points over the first quarter 2021. The portfolio was 93.7% leased as of March 31, 2022, an increase of 190 basis points over the first quarter 2021. Both portfolio occupancy and leased rate increased 10 basis points over the fourth quarter 2021, a strong result given that occupancy and leased metrics typically trend down in the first quarter due to traditional seasonality of the business. The spread between our leased and occupied percentages was 250 basis points at the end of the first quarter.

Additionally, our comparable residential properties were 97.7% leased as of March 31, 2022, a sequential increase of 50 basis points over fourth quarter and year-over-year increase of 160 basis points.

Leasing Activity

During the first quarter 2022, Federal Realty signed 124 leases for 460,062 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 444,398 square feet at an average rent of $36.77 per square foot compared to the average contractual rent of $34.31 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%, 17% on a straight-line basis.

Transaction Activity

Subsequent to quarter end, Federal Realty closed on phase one of the acquisition of Kingstowne Towne Center in Kingstowne, Virginia, for $100 million and expects to close on phase two for $100 million in July 2022, subject to customary closing conditions. Combined, the property comprises 410,000 square feet of retail space on 45 acres of land and is anchored by Safeway, Giant, T.J. Maxx, Ross and HomeGoods.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $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 July 15, 2022 to common shareholders of record as of June 22, 2022.

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, 2022 to shareholders of record as of July 1, 2022.

Guidance

Federal Realty increased its 2022 guidance for earnings per diluted share from $2.30 - $2.50 to $2.36 - $2.56 and 2022 FFO per diluted share from $5.75 to $5.95 to $5.85 - $6.05.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its first quarter 2022 earnings conference call, which is scheduled for Thursday, May 5, 2022 at 11:00 AM ET.  To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13729384 (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, 2022 by dialing 844.512.2921; Passcode: 13729384.

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 3,100 tenants, in 25 million square feet, and approximately 3,400 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 10, 2022, 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 or to fill existing vacancy;
• risks that we may not be able to proceed with or obtain necessary approvals for any development, redevelopment or renovation project, and that completion of anticipated or ongoing property development, redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;
• 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 10, 2022.

Investor Inquiries: Leah Andress Brady Vice President, Investor Relations 301.998.8265 lbrady@federalrealty.com

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

 

Federal Realty Investment Trust
Consolidated Balance Sheets
March 31, 2022
	March 31,		December 31,
	2022		2021
	(in thousands, except share and per share data)
	(unaudited)
ASSETS
Real estate, at cost
Operating (including $2,210,901 and $2,207,648 of consolidated variable interest                entities, respectively)	$  8,843,063		$  8,814,791
Construction-in-progress (including $21,677 and $18,752 of consolidated variable                interest entities, respectively)	662,985		607,271
	9,506,048		9,422,062
Less accumulated depreciation and amortization (including $403,533 and $389,950 of                consolidated variable interest entities, respectively)	(2,587,121)		(2,531,095)
Net real estate	6,918,927		6,890,967
Cash and cash equivalents	157,944		162,132
Accounts and notes receivable, net	183,479		169,007
Mortgage notes receivable, net	9,519		9,543
Investment in partnerships	13,183		13,027
Operating lease right of use assets	90,231		90,743
Finance lease right of use assets	49,511		49,832
Prepaid expenses and other assets	245,581		237,069
TOTAL ASSETS	$  7,668,375		$  7,622,320
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable, net (including $334,640 and $335,301 of consolidated variable                interest entities, respectively)	$      339,236		$      339,993
Notes payable, net	301,540		301,466
Senior notes and debentures, net	3,406,491		3,406,088
Accounts payable and accrued expenses	233,773		235,168
Dividends payable	86,617		86,538
Security deposits payable	26,073		25,331
Operating lease liabilities	72,317		72,661
Finance lease liabilities	72,028		72,032
Other liabilities and deferred credits	201,680		206,187
Total liabilities	4,739,755		4,745,464
Commitments and contingencies
Redeemable noncontrolling interests	214,043		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), 399,896 shares issued and outstanding	9,997		9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized,           79,417,472 and 78,603,305 shares issued and outstanding, respectively	799		790
Additional paid-in capital	3,572,591		3,488,794
Accumulated dividends in excess of net income	(1,101,154)		(1,066,932)
Accumulated other comprehensive income (loss)	1,525		(2,047)
Total shareholders' equity of the Trust	2,633,758		2,580,602
Noncontrolling interests	80,819		82,546
Total shareholders' equity	2,714,577		2,663,148
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$  7,668,375		$  7,622,320

 

Federal Realty Investment Trust
Consolidated Income Statements
March 31, 2022
	Three Months Ended
	March 31,
	2022		2021
	(in thousands, except per share data)
	(unaudited)
REVENUE
Rental income	$    256,507		$    217,135
Mortgage interest income	264		1,026
Total revenue	256,771		218,161
EXPENSES
Rental expenses	56,211		49,238
Real estate taxes	30,560		29,420
General and administrative	12,342		10,258
Depreciation and amortization	71,674		63,874
Total operating expenses	170,787		152,790
Gain on sale of real estate and change in control of interest	—		17,428
OPERATING INCOME	85,984		82,799
OTHER INCOME/(EXPENSE)
Other interest income	120		363
Interest expense	(31,573)		(32,085)
Income (loss) from partnerships	197		(1,338)
NET INCOME	54,728		49,739
Net income attributable to noncontrolling interests	(2,744)		(1,503)
NET INCOME ATTRIBUTABLE TO THE TRUST	51,984		48,236
Dividends on preferred shares	(2,010)		(2,010)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$      49,974		$      46,226
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	$           0.63		$           0.60
Weighted average number of common shares	78,446		76,842
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$           0.63		$           0.60
Weighted average number of common shares	78,543		76,842

 

 

 

Federal Realty Investment Trust
Funds From Operations
March 31, 2022
		Three Months Ended
		March 31,
		2022		2021
		(in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
Net income		$       54,728		$       49,739
Net income attributable to noncontrolling interests		(2,744)		(1,503)
Gain on sale of real estate and change in control of interest		—		(17,428)
Depreciation and amortization of real estate assets		62,977		57,103
Amortization of initial direct costs of leases		5,793		4,744
Funds from operations		120,754		92,655
Dividends on preferred shares (1)		(1,875)		(2,010)
Income attributable to downREIT operating partnership units		706		785
Income attributable to unvested shares		(436)		(325)
FFO		$     119,149		$       91,105
Weighted average number of common shares, diluted (1)(2)		79,299		77,582
FFO per diluted share (2)		$            1.50		$            1.17

 

Notes:

1. For the three months ended March 31, 2022, 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. The weighted average common shares used to compute FFO per diluted common share includes downREIT 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

FAQ

What was Federal Realty's net income for Q1 2022?

Federal Realty reported a net income of $50.0 million for Q1 2022.

How much did Federal Realty increase its earnings per diluted share guidance for 2022?

Federal Realty increased its earnings per diluted share guidance for 2022 to $2.36 - $2.56.

What was the occupancy rate of Federal Realty's portfolio as of March 31, 2022?

The occupancy rate of Federal Realty's portfolio was 91.2% as of March 31, 2022.

How many leases did Federal Realty sign in Q1 2022?

Federal Realty signed 119 leases for 444,398 square feet in Q1 2022.

What was Federal Realty's FFO per diluted share in Q1 2022?

Federal Realty generated FFO of $1.50 per diluted share in Q1 2022.