Federal Realty Investment Trust Announces Second Quarter 2023 Operating Results
- Record FFO per share of $1.67 for the quarter
- Increased regular quarterly cash dividend to $1.09 per common share
- Occupancy of the portfolio increased to 92.8% and leasing activity demonstrated growth
- Slight decrease in net income and earnings per diluted share compared to the same period last year
Highlights for the second quarter and subsequent to quarter-end include:
- Generated funds from operations available to common shareholders (FFO) per diluted share of
for the quarter, a company record.$1.67 - Generated
4.6% comparable property operating income (POI) growth excluding lease termination fees and COVID-19 pandemic related prior period rents collected for the second quarter. - Continued robust levels of leasing with 107 signed leases for 576,345 square feet of comparable space in the second quarter at a cash basis rollover of
7% , highest second quarter comparable leasing volume on record. - Federal Realty's portfolio was
92.8% occupied and94.3% leased, representing year-over-year increases of 80 basis points and 20 basis points, respectively. - Issued
of fixed rate senior unsecured notes, as a green bond, that mature on May 1, 2028 and bear interest at$350.0 million 5.375% . The notes were offered at99.590% of the principal amount with a yield to maturity of5.468% . - Increased the regular quarterly cash dividend to
per common share, resulting in an indicated annual rate of$1.09 per common share. This increase represents the 56th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.$4.36 - Increased 2023 earnings per diluted share guidance to
-$2.64 and increased 2023 FFO per diluted share guidance to$2.76 -$6.46 .$6.58 - Issued the Company's annual Environmental, Social and Governance Report.
"A record quarter for Federal Realty;
Financial Results
Net Income
For the second quarter 2023, net income available for common shareholders was
FFO
For the second quarter 2023, FFO was
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
Additionally, our comparable residential properties were
Leasing Activity
During the second quarter 2023, Federal Realty signed 112 leases for 602,911 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 107 leases for 576,345 square feet at an average rent of
Regular Quarterly Dividends
Federal Realty announced today that its Board of Trustees increased the regular quarterly cash dividend to
Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a
Summary of Other Quarterly Activities
- April 12, 2023 – Federal Realty issued
of fixed rate senior unsecured notes, as a green bond, that mature on May 1, 2028 and bear interest at$350.0 million 5.375% . The notes were offered at99.590% of the principal amount with a yield to maturity of5.468% . The net proceeds, after issuance discount, underwriting fees, and other costs were .$345.7 million - June 1, 2023 – Federal Realty repaid its
$275.0 million 2.75% senior unsecured notes at maturity. - June 1, 2023 – Federal Realty issued its 2022 Environmental, Social and Governance Report highlighting the Company's commitment to its ESG initiatives and accomplishments.
- June 21, 2023 – Federal Realty was named to The Washington Post's 2023 Top Workplaces list for its leadership in employee satisfaction and engagement.
Guidance
Federal Realty increased its 2023 guidance for earnings per diluted share to
Conference Call Information
Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its second quarter 2023 earnings conference call, which is scheduled for Wednesday, August 2, 2023 at 5:30 PM ET. To participate, please call 1-844-826-3035 five to ten minutes prior to the call start time and use the passcode 3865860 (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 16, 2023 by dialing 1-844-512-2921; Passcode: 10180484.
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
Federal Realty has increased its quarterly dividends to its shareholders for 56 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 and subsequent quarterly reports on Form 10-Q.
Investor Inquiries: Leah Andress Brady Vice President, Investor Relations 301.998.8265 | Media Inquiries: Brenda Pomar Senior Director, Corporate Communications 301.998.8316 |
Federal Realty Investment Trust | |||
Consolidated Balance Sheets | |||
June 30, 2023 | |||
June 30, | December 31, | ||
2023 | 2022 | ||
(in thousands, except share and per share data) | |||
(unaudited) | |||
ASSETS | |||
Real estate, at cost | |||
Operating (including | $ 9,732,833 | $ 9,441,945 | |
Construction-in-progress (including | 667,554 | 662,554 | |
10,400,387 | 10,104,499 | ||
Less accumulated depreciation and amortization (including | (2,839,550) | (2,715,817) | |
Net real estate | 7,560,837 | 7,388,682 | |
Cash and cash equivalents | 98,064 | 85,558 | |
Accounts and notes receivable, net | 195,689 | 197,648 | |
Mortgage notes receivable, net | 9,222 | 9,456 | |
Investment in partnerships | 34,942 | 145,205 | |
Operating lease right of use assets, net | 88,215 | 94,569 | |
Finance lease right of use assets | 44,891 | 45,467 | |
Prepaid expenses and other assets | 247,016 | 267,406 | |
TOTAL ASSETS | $ 8,278,876 | $ 8,233,991 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Liabilities | |||
Mortgages payable, net (including | $ 319,208 | $ 320,615 | |
Notes payable, net | 633,095 | 601,077 | |
Senior notes and debentures, net | 3,479,333 | 3,407,701 | |
Accounts payable and accrued expenses | 187,027 | 190,340 | |
Dividends payable | 90,441 | 90,263 | |
Security deposits payable | 29,292 | 28,508 | |
Operating lease liabilities | 76,928 | 77,743 | |
Finance lease liabilities | 67,655 | 67,660 | |
Other liabilities and deferred credits | 237,317 | 237,699 | |
Total liabilities | 5,120,296 | 5,021,606 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 178,149 | 178,370 | |
Shareholders' equity | |||
Preferred shares, authorized 15,000,000 shares, | |||
150,000 | 150,000 | ||
9,822 | 9,822 | ||
Common shares of beneficial interest, | 820 | 818 | |
Additional paid-in capital | 3,832,983 | 3,821,801 | |
Accumulated dividends in excess of net income | (1,098,432) | (1,034,186) | |
Accumulated other comprehensive income | 5,496 | 5,757 | |
Total shareholders' equity of the Trust | 2,900,689 | 2,954,012 | |
Noncontrolling interests | 79,742 | 80,003 | |
Total shareholders' equity | 2,980,431 | 3,034,015 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 8,278,876 | $ 8,233,991 |
Federal Realty Investment Trust | |||||||
Consolidated Income Statements | |||||||
June 30, 2023 | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
REVENUE | |||||||
Rental income | $ 280,388 | $ 263,830 | $ 553,186 | $ 520,337 | |||
Mortgage interest income | 291 | 269 | 552 | 533 | |||
Total revenue | 280,679 | 264,099 | 553,738 | 520,870 | |||
EXPENSES | |||||||
Rental expenses | 55,610 | 51,169 | 110,815 | 107,380 | |||
Real estate taxes | 32,381 | 31,265 | 64,947 | 61,825 | |||
General and administrative | 11,913 | 13,604 | 24,458 | 25,946 | |||
Depreciation and amortization | 78,974 | 74,461 | 157,611 | 146,135 | |||
Total operating expenses | 178,878 | 170,499 | 357,831 | 341,286 | |||
Gain on sale of real estate | — | — | 1,702 | — | |||
OPERATING INCOME | 101,801 | 93,600 | 197,609 | 179,584 | |||
OTHER INCOME/(EXPENSE) | |||||||
Other interest income | 2,422 | 133 | 3,054 | 253 | |||
Interest expense | (42,884) | (32,074) | (82,109) | (63,647) | |||
Income from partnerships | 1,665 | 2,808 | 2,181 | 3,005 | |||
NET INCOME | 63,004 | 64,467 | 120,735 | 119,195 | |||
Net income attributable to noncontrolling interests | (2,505) | (2,791) | (4,901) | (5,535) | |||
NET INCOME ATTRIBUTABLE TO THE TRUST | 60,499 | 61,676 | 115,834 | 113,660 | |||
Dividends on preferred shares | (2,008) | (2,008) | (4,016) | (4,018) | |||
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS | $ 58,491 | $ 59,668 | $ 111,818 | $ 109,642 | |||
EARNINGS PER COMMON SHARE, BASIC: | |||||||
Net income available for common shareholders | $ 0.72 | $ 0.75 | $ 1.37 | $ 1.38 | |||
Weighted average number of common shares | 81,214 | 79,202 | 81,178 | 78,826 | |||
EARNINGS PER COMMON SHARE, DILUTED: | |||||||
Net income available for common shareholders | $ 0.72 | $ 0.75 | $ 1.37 | $ 1.38 | |||
Weighted average number of common shares | 81,214 | 79,202 | 81,178 | 78,855 |
Federal Realty Investment Trust | ||||||||
Funds From Operations | ||||||||
June 30, 2023 | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
(in thousands, except per share data) | ||||||||
Funds from Operations available for common shareholders (FFO) | ||||||||
Net income | $ 63,004 | $ 64,467 | ||||||
Net income attributable to noncontrolling interests | (2,505) | (2,791) | (4,901) | (5,535) | ||||
Gain on sale of real estate | — | — | (1,702) | — | ||||
Depreciation and amortization of real estate assets | 70,486 | 65,727 | 140,990 | 128,704 | ||||
Amortization of initial direct costs of leases | 7,567 | 5,882 | 15,352 | 11,675 | ||||
Funds from operations | 138,552 | 133,285 | 270,474 | 254,039 | ||||
Dividends on preferred shares (1) | (1,875) | (1,875) | (3,750) | (3,750) | ||||
Income attributable to downREIT operating partnership units | 688 | 701 | 1,381 | 1,407 | ||||
Income attributable to unvested shares | (505) | (467) | (987) | (904) | ||||
FFO | ||||||||
Weighted average number of common shares, diluted (1)(2) | 81,945 | 79,952 | 81,911 | 79,608 | ||||
FFO per diluted share (2) | $ 1.67 | $ 1.65 | $ 3.26 | $ 3.15 | ||||
Notes:
- For the three and six months ended June 30, 2023 and 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 are included in "weighted average common shares, diluted."
- 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
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