Federal Realty Investment Trust Announces Operating Results for the Year and Quarter Ended December 31, 2022

Rhea-AI Summary

Federal Realty Investment Trust (NYSE: FRT) announced its operating results for the year and quarter ending December 31, 2022. Net income available for common shareholders rose to $4.71 per diluted share from $3.26 in 2021. Operating income also increased, reaching $526.4 million for 2022, compared to $394.7 million the previous year. The Trust reported FFO per diluted share of $6.32 for 2022, up from $5.57 in 2021. The portfolio's occupancy was 92.8%, with robust leasing activity leading to 105 signed leases in Q4. The Board declared a quarterly dividend of $1.08 per share, payable on April 17, 2023. Guidance for 2023 indicates EPS of $2.59 to $2.79 and FFO of $6.38 to $6.58.

Positive

• Net income per diluted share increased to $4.71 in 2022 from $3.26 in 2021.
• FFO per diluted share rose to $6.32 for 2022, up from $5.57 in 2021.
• Fourth quarter operating income was $155.1 million, compared to $147.5 million in Q4 2021.
• Occupancy increased to 92.8%, an improvement of 170 basis points year-over-year.
• Significant leasing activity with 105 leases signed in Q4, resulting in a cash basis rollover growth of 10%.

Negative

• Fourth quarter net income per diluted share slightly decreased to $1.40 from $1.44 in Q4 2021.

NORTH BETHESDA, Md., Feb. 8, 2023 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) today reported operating results for its year and quarter ended December 31, 2022. For the year ended December 31, 2022 and 2021, net income available for common shareholders was $4.71 per diluted share and $3.26 per diluted share, respectively. For the three months ended December 31, 2022 and 2021, net income available for common shareholders was $1.40 per diluted share and $1.44 per diluted share, respectively. For the year ended December 31, 2022 and 2021, Federal Realty reported operating income of $526.4 million and $394.7 million, respectively. For the three months ended December 31, 2022 and 2021, operating income was $155.1 million and $147.5 million, respectively.

Highlights for the full year and fourth quarter include:

• Generated funds from operations available to common shareholders (FFO) per diluted share of $6.32 for the year, compared to $5.57 in 2021. For the fourth quarter, generated FFO per diluted share of $1.58, compared to $1.47 for the fourth quarter 2021.
• Generated comparable property operating income (POI) growth of 5.4% for the fourth quarter and 7.7% for the year 2022.
• Continued robust levels of leasing with 105 signed leases for 415,519 square feet of comparable space in the fourth quarter at a cash basis rollover of 10%, bringing 2022 to a record 475 signed leases for nearly 2 million square feet of comparable space.
• Federal Realty's portfolio was 92.8% occupied and 94.5% leased, representing year-over-year increases of 170 basis points and 90 basis points, respectively and 70 basis points and 20 basis point increases, respectively quarter-over-quarter.
• Small shop leased rate was 90.0% as of quarter end representing an increase of 260 basis points year over year and the highest small shop leased rate since first quarter 2017.
• Sold one property for a total sales price of $67.5 million in the fourth quarter, bringing the 2022 total gross disposition proceeds to $136.2 million.
• Introduced 2023 earnings per diluted share guidance of $2.59 to $2.79 and 2023 FFO per diluted share guidance of $6.38 to $6.58.

"2022 ended with a very strong fourth quarter and the first weeks of 2023 look to continue that momentum," said Donald C. Wood, Federal Realty's Chief Executive. "We're more than a year ahead of where we thought we'd be in recovering from the depths of the pandemic in terms of leasing, occupancy and bottom line earnings in large part due to the remarkable resiliency of the markets and sub markets where our high quality retail destinations are located."

Financial Results

Net Income

For the full year 2022, Federal Realty reported net income available for common shareholders of $377.5 million and earnings per diluted share of $4.71. This compares to net income available for common shareholders of $253.5 million and earnings per diluted share of $3.26 for the full year 2021.

For the fourth quarter 2022, net income available for common shareholders was $113.7 million and earnings per diluted share was $1.40 versus $112.9 million and $1.44, respectively, for the fourth quarter 2021.

FFO

For the full year 2022, Federal Realty generated funds from operations available for common shareholders (FFO) of $509.2 million, or $6.32 per diluted share. This compares to FFO of $434.7 million, or $5.57 per diluted share for the full year 2021.

For the fourth quarter 2022, FFO was $129.0 million, or $1.58 per diluted share, compared to $115.8 million, or $1.47 per diluted share for the fourth 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.

Operational Update

Occupancy

The portfolio was 92.8% occupied as of December 31, 2022, an increase of 170 basis points year-over-year and 70 basis points over the third quarter 2022. The portfolio was 94.5% leased as of December 31, 2022, an increase of 90 basis points year-over-year and 20 basis points over the third quarter 2022.

Additionally, our comparable residential properties were 96.3% leased as of December 31, 2022.

Leasing Activity

For the full year 2022, Federal Realty signed 497 leases for 2,047,508 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 475 leases for 1,984,887 square feet at an average rent of $37.30 per square foot compared to the average contractual rent of $35.21 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 6%, 15% on a straight-line basis.

During the fourth quarter 2022, Federal Realty signed 110 leases for 425,159 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 105 leases for 415,519 square feet at an average rent of $43.52 per square foot compared to the average contractual rent of $39.60 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 10%, 21% on a straight-line basis.

Transaction Activity

In 2022, Federal Realty acquired 4 properties which total 1.0 million square feet for a gross value of $443.1 million. Additionally, Federal Realty bought a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers totaling 617,000 square feet for a combined price of $58.9 million.

Subsequent to quarter end, Federal Realty acquired the remaining portions of Huntington Square, East Northport, New York, for $35.5 million.  The acquisition included a 180,000 square foot parcel and the entire fee interest of the property giving us full control of the entirety of this 255,000 square foot property located in the heart of Suffolk County's retail corridor.

In the fourth quarter, Federal Realty sold one property for a total sales price of $67.5 million, bringing the 2022 total gross proceeds to $136.2 million for the disposition of 3 non-core assets, a parcel of land and a portion of one property.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.08 per common share, resulting in an indicated annual rate of $4.32 per common share. The regular common dividend will be payable on April 17, 2023 to common shareholders of record as of March 13, 2023.

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 April 17, 2023 to shareholders of record as of April 3, 2023.

Guidance

Federal Realty introduced 2023 guidance for earnings per diluted share of $2.59 to $2.79 and 2023 FFO per diluted share of $6.38 to $6.58.

Conference Call Information

Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its fourth quarter 2022 earnings conference call, which is scheduled for Wednesday, February 8, 2023 at 5:00 PM ET.  To participate, please call 1-877-407-9208 five to ten minutes prior to the call start time and use the passcode 13734846 (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 February 22, 2023 by dialing 1-844-512-2921; Passcode: 13734846.

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 103 properties include approximately 3,300 tenants, in 26 million square feet, and approximately 3,000 residential units. 

Federal Realty has increased its quarterly dividends to its shareholders for 55 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 8, 2023, 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, or if the costs of capital we obtain are significantly higher than historical levels;
• risks associated with general economic conditions, including inflation and 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 8, 2023.

Federal Realty Investment Trust
Consolidated Balance Sheets
December 31, 2022
	December 31,		December 31,
	2022		2021
	(in thousands, except share and per share data)
ASSETS
Real estate, at cost
Operating (including $1,997,583 and $2,207,648 of consolidated variable interest entities, respectively)	$  9,441,945		$  8,814,791
Construction-in-progress (including $8,477 and $18,752 of consolidated variable interest entities, respectively)	662,554		607,271
	10,104,499		9,422,062
Less accumulated depreciation and amortization (including $362,921 and $389,950 of consolidated variable interest entities, respectively)	(2,715,817)		(2,531,095)
Net real estate	7,388,682		6,890,967
Cash and cash equivalents	85,558		162,132
Accounts and notes receivable, net	197,648		169,007
Mortgage notes receivable, net	9,456		9,543
Investment in partnerships	145,205		13,027
Operating lease right of use assets	94,569		90,743
Finance lease right of use assets	45,467		49,832
Prepaid expenses and other assets	267,406		237,069
TOTAL ASSETS	$  8,233,991		$  7,622,320
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages payable, net (including $191,827 and $335,301 of consolidated variable interest entities, respectively)	$     320,615		$     339,993
Notes payable, net	601,077		301,466
Senior notes and debentures, net	3,407,701		3,406,088
Accounts payable and accrued expenses	190,340		235,168
Dividends payable	90,263		86,538
Security deposits payable	28,508		25,331
Operating lease liabilities	77,743		72,661
Finance lease liabilities	67,660		72,032
Other liabilities and deferred credits	237,699		206,187
Total liabilities	5,021,606		4,745,464
Commitments and contingencies
Redeemable noncontrolling interests	178,370		213,708
Shareholders' equity
Preferred shares, authorized 15,000,000 shares, $0.01 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), 392,878 and 399,896 shares issued and outstanding, respectively	9,822		9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 81,342,959 and 78,603,305 shares issued and outstanding, respectively	818		790
Additional paid-in capital	3,821,801		3,488,794
Accumulated dividends in excess of net income	(1,034,186)		(1,066,932)
Accumulated other comprehensive income (loss)	5,757		(2,047)
Total shareholders' equity of the Trust	2,954,012		2,580,602
Noncontrolling interests	80,003		82,546
Total shareholders' equity	3,034,015		2,663,148

 

Federal Realty Investment Trust
Consolidated Income Statements
December 31, 2022
	Three Months Ended				Year Ended
	December 31,				December 31,
	2022		2021		2022		2021
	(in thousands, except per share data)
	(unaudited)
REVENUE
Rental income	$    279,776		$    253,888		$ 1,073,292		$    948,842
Mortgage interest income	281		266		1,086		2,382
Total revenue	280,057		254,154		1,074,378		951,224
EXPENSES
Rental expenses	62,769		56,647		228,958		198,121
Real estate taxes	33,196		30,224		127,824		118,496
General and administrative	13,590		14,499		52,636		49,856
Depreciation and amortization	79,165		77,816		302,409		279,976
Total operating expenses	188,720		179,186		711,827		646,449
Gain on deconsolidation of VIE	—		—		70,374		—
Gain on sale of real estate and change in control of interest	63,760		72,522		93,483		89,950
OPERATING INCOME	155,097		147,490		526,408		394,725
OTHER INCOME/(EXPENSE)
Other interest income	585		108		1,072		809
Interest expense	(38,282)		(32,187)		(136,989)		(127,698)
Income from partnerships	292		1,331		5,170		1,245
NET INCOME	117,692		116,742		395,661		269,081
Net income attributable to noncontrolling interests	(1,999)		(1,806)		(10,170)		(7,583)
NET INCOME ATTRIBUTABLE TO THE TRUST	115,693		114,936		385,491		261,498
Dividends on preferred shares	(2,008)		(2,011)		(8,034)		(8,042)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$    113,685		$    112,925		$    377,457		$    253,456
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	$          1.40		$          1.45		$          4.71		$          3.26
Weighted average number of common shares	80,966		77,536		79,854		77,336
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$          1.40		$          1.44		$          4.71		$          3.26
Weighted average number of common shares	81,613		78,556		80,508		77,368

 

Federal Realty Investment Trust
Funds From Operations
December 31, 2022
		Three Months Ended				Year Ended
		December 31,				December 31,
		2022		2021		2022		2021
		(in thousands, except per share data)
Funds from Operations available for common shareholders (FFO)
Net income		$ 117,692		$ 116,742		$ 395,661		$ 269,081
Net income attributable to noncontrolling interests		(1,999)		(1,806)		(10,170)		(7,583)
Gain on deconsolidation of VIE		—		—		(70,374)		—
Gain on sale of real estate and change in control of interest		(63,760)		(72,464)		(93,483)		(89,892)
Depreciation and amortization of real estate assets		70,582		68,941		266,741		243,711
Amortization of initial direct costs of leases		8,139		5,924		27,268		26,051
Funds from operations		130,654		117,337		515,643		441,368
Dividends on preferred shares (1)		(1,875)		(1,875)		(7,500)		(8,042)
Income attributable to downREIT operating partnership units		699		731		2,810		2,998
Income attributable to unvested shares		(445)		(427)		(1,797)		(1,581)
FFO		$ 129,033		$ 115,766		$ 509,156		$ 434,743
Weighted average number of common shares, diluted (1)(2)		81,707		78,556		80,603		78,072
FFO per diluted share (2)		$       1.58		$       1.47		$       6.32		$       5.57

Notes:
1)	For the three months and year ended December 31, 2022 and the three months ended December 31, 2021, 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 are included in "weighted average common shares, diluted."
2)	For the three months and year ended December 31, 2021, 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.

 

Investor Inquiries:		Media Inquiries:
Leah Andress Brady		Brenda Pomar
Vice President, Investor Relations		Director, Corporate Communications
301.998.8265		301.998.8316
lbrady@federalrealty.com		bpomar@federalrealty.com

 

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SOURCE Federal Realty Investment Trust

FAQ

What are the 2022 financial results for Federal Realty (FRT)?

Federal Realty reported a net income of $4.71 per diluted share for 2022, up from $3.26 in 2021, and FFO of $6.32 per diluted share.

What was the operating income for Federal Realty (FRT) in Q4 2022?

The operating income for Q4 2022 was $155.1 million, an increase from $147.5 million in Q4 2021.

What is Federal Realty's (FRT) dividend for April 2023?

Federal Realty declared a quarterly cash dividend of $1.08 per common share, payable on April 17, 2023.

What is Federal Realty's (FRT) guidance for 2023?

Federal Realty's 2023 guidance estimates earnings per diluted share of $2.59 to $2.79 and FFO per diluted share of $6.38 to $6.58.

How much leasing activity did Federal Realty (FRT) have in Q4 2022?

In Q4 2022, Federal Realty signed 105 leases for 415,519 square feet, with a cash basis rollover growth of 10%.