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Federal Realty Investment Trust Announces Second Quarter 2023 Operating Results

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Federal Realty Investment Trust (NYSE:FRT) reported a record quarter with FFO per share of $1.67 and increased its common dividend for the 56th consecutive year. The company's portfolio occupancy and leasing activity showed positive growth. Financial results indicated a slight decrease in net income and an increase in FFO compared to the same period last year.
Positive
  • 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
Negative
  • Slight decrease in net income and earnings per diluted share compared to the same period last year

NORTH BETHESDA, Md., Aug. 2, 2023 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2023. For the three months ended June 30, 2023 and 2022, net income available for common shareholders was $0.72 per diluted share and $0.75 per diluted share, respectively. For the three months ended June 30, 2023 and 2022, operating income was $101.8 million and $93.6 million, respectively.

Highlights for the second quarter and subsequent to quarter-end include:

  • Generated funds from operations available to common shareholders (FFO) per diluted share of $1.67 for the quarter, a company record.  
  • 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 and 94.3% leased, representing year-over-year increases of 80 basis points and 20 basis points, respectively.
  • Issued $350.0 million of fixed rate senior unsecured notes, as a green bond, that mature on May 1, 2028 and bear interest at 5.375%. The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%.
  • Increased the regular quarterly cash dividend to $1.09 per common share, resulting in an indicated annual rate of $4.36 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.
  • Increased 2023 earnings per diluted share guidance to $2.64 - $2.76 and increased 2023 FFO per diluted share guidance to $6.46 - $6.58.
  • Issued the Company's annual Environmental, Social and Governance Report.

"A record quarter for Federal Realty; $1.67 of FFO per share driven by strong results in all aspects of our company and our 56th consecutive year of increased common dividends to our shareholders, also a REIT industry record," said Donald C. Wood, Federal Realty's Chief Executive Officer. "Continued robust leasing activity demonstrates the strength of retail demand for the high-quality product that Federal Realty offers."

Financial Results

Net Income

For the second quarter 2023, net income available for common shareholders was $58.5 million and earnings per diluted share was $0.72 versus $59.7 million and $0.75, respectively, for the second quarter 2022.

FFO

For the second quarter 2023, FFO was $136.9 million, or $1.67 per diluted share, compared to $131.6 million, or $1.65 per diluted share for the second quarter 2022.

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 June 30, 2023, an increase of 80 basis points year-over-year. The portfolio was 94.3% leased as of June 30, 2023, an increase of 20 basis points year-over-year.

Additionally, our comparable residential properties were 98.0% leased as of June 30, 2023.

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 $35.34 per square foot compared to the average contractual rent of $33.09 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%, 19% on a straight-line basis.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the regular quarterly cash dividend to $1.09 per common share, resulting in an indicated annual rate of $4.36 per common share. The regular common dividend will be payable on October 16, 2023 to common shareholders of record as of September 22, 2023. 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.

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 October 16, 2023 to shareholders of record as of October 2, 2023.

Summary of Other Quarterly Activities

  • April 12, 2023 – Federal Realty issued $350.0 million of fixed rate senior unsecured notes, as a green bond, that mature on May 1, 2028 and bear interest at 5.375%. The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%. 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 $2.64 to $2.76 from $2.59 to $2.79 and 2023 FFO per diluted share to $6.46 to $6.58 from $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 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 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 102 properties include approximately 3,300 tenants, in 26 million square feet, and approximately 3,100 residential units. 

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

lbrady@federalrealty.com

Media Inquiries:

Brenda Pomar

Senior Director, Corporate Communications

301.998.8316

bpomar@federalrealty.com

 

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 $2,008,167 and $1,997,583 of consolidated variable interest entities, respectively)

$  9,732,833


$  9,441,945

Construction-in-progress (including $11,441 and $8,477 of consolidated variable interest entities, respectively)

667,554


662,554


10,400,387


10,104,499

Less accumulated depreciation and amortization (including $388,881 and $362,921 of consolidated variable interest entities, respectively)

(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 $190,562 and $191,827 of consolidated variable interest entities, respectively)

$      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, $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 shares issued and outstanding

9,822


9,822

Common shares of beneficial interest, $.01 par, 200,000,000 and 100,000,000 shares authorized, respectively, 81,515,511 and 81,342,959 shares issued and outstanding, respectively

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


$ 120,735


$ 119,195

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


$ 136,860


$ 131,644


$ 267,118


$ 250,792

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:

  1. 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."
  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 is Federal Realty Investment Trust's stock ticker symbol?

The stock ticker symbol for Federal Realty Investment Trust is FRT.

What is the FFO per diluted share for the second quarter of 2023?

The FFO per diluted share for the second quarter of 2023 was $1.67.

What is the occupancy rate of Federal Realty's portfolio as of June 30, 2023?

The portfolio occupancy was 92.8% as of June 30, 2023.

What is the indicated annual rate of Federal Realty's regular quarterly cash dividend per common share?

The indicated annual rate of the regular quarterly cash dividend is $4.36 per common share.

When is Federal Realty's earnings conference call scheduled for the second quarter of 2023?

The earnings conference call is scheduled for Wednesday, August 2, 2023 at 5:30 PM ET.

Federal Realty Investment Trust

NYSE:FRT

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REIT - Retail
Real Estate Investment Trusts
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United States of America
NORTH BETHESDA