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Federal Realty Investment Trust (NYSE: FRT) recently stated operating results for its fourth quarter and year ended December 31, 2016. Highlights of the quarter and full year include:

  • Generated earnings per diluted share of $0.80 for the quarter contrast to $0.97 in fourth quarter 2015 ($0.73 apart from a $0.24 gain on sale in the fourth quarter 2015). For the year ended 2016, generated earnings per diluted share of $3.50 contrast to $3.03 for the year ended 2015.
  • Generated FFO per diluted share of $1.45 for the quarter contrast to $1.37 in fourth quarter 2015. For the year ended 2016, generated FFO per diluted share of $5.65 contrast to $5.05 for the year ended 2015 ($5.32 apart from prepayment premiums in 2015).
  • Generated same center property operating income growth of 3.0% for the fourth quarter. For the year end 2016, same center growth was 3.1%.
  • Signed leases for 274,622 sf of comparable space (347,604 sf total) in the fourth quarter at an average rent of $37.10 psf and achieved cash basis rollover growth on those comparable spaces of 15%.
  • Affirmed 2017 FFO per diluted share guidance range of $5.83 – $5.93.

“We are very happy with our fourth quarter and full year 2016 results – another record for the trust in terms of FFO per share,” said Donald C. Wood, President and Chief Executive Officer of Federal Realty. “We are making good progress on anchor box releasing in our core portfolio. The second phases at both Assembly Row and Pike & Rose have been topped off and we are excited for them to begin opening later this year. We continue to execute on our long term, balanced business plan in order to further position our portfolio for the changing retail environment.”

Financial Results

Net income available for common shareholders was $57.9 million and earnings per diluted share was $0.80 for fourth quarter 2016 as contrast to $67.8 million and $0.97, respectively, for fourth quarter 2015 ($0.73 per diluted share apart from a $0.24 gain on sale in the fourth quarter 2015). For the full year 2016, Federal Realty stated net income available for common shareholders of $249.4 million and earnings per diluted share of $3.50. This compares to net income available for common shareholders of $209.7 million and earnings per diluted share of $3.03 for the full year 2015.

In the fourth quarter 2016, Federal Realty generated funds from operations available for common shareholders (FFO) of $104.9 million, or $1.45 per diluted share. This compares to FFO of $96.5 million, or $1.37 per diluted share, in fourth quarter 2015. For the full year 2016, FFO was $406.4 million, or $5.65 per diluted share, contrast to $352.9 million, or $5.05 per diluted share for the full year 2015. Apart From an early extinguishment of debt charge in 2015, FFO per diluted share for the full year 2015 was $5.32.

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

In fourth quarter 2016, same-center property operating income raised 3.0% when counting properties that are being redeveloped and 2.1% when apart from those properties. For the year 2016, same-center property operating income raised 3.1% when counting properties that are being redeveloped and 1.9% when apart from those properties. As anticipated, an unusually high number of anchor vacancies, both proactively pursued and otherwise, negatively influenced the quarterly and year end results.

The overall portfolio was 94.4% leased as of December 31, 2016, contrast to 94.3% on December 31, 2015. Federal Realty’s same center portfolio was 95.7% leased on December 31, 2016, contrast to 95.9% on December 31, 2015.

During fourth quarter 2016, Federal Realty signed 89 leases for 347,604 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty leased 274,622 square feet at an average cash basis contractual rent increase (i.e., apart from the impact of straight-line rents) of 15%. The average contractual rent on this comparable space for the first year of the new leases is $37.10 per square foot contrast to the average contractual rent of $32.27 per square foot for the last year of the prior leases. The previous average contractual rent was calculated by counting both the minimum rent and any percentage rent actually paid during the last year of the lease term for the re-leased space. On a GAAP basis (i.e., counting the impact of straight-line rents), rent increases for comparable retail space averaged 27% for fourth quarter 2016.

For the year 2016, Federal Realty signed 386 leases for 1.7 million square feet of retail space. On a comparable basis, Federal Realty leased 1.5 million square feet at an average cash-basis contractual rent increase of 13%, and 26% on a GAAP-basis. The average contractual rent on this comparable space for the first year of the new leases is $34.72 per square foot contrast to the average contractual rent of $30.63 per square foot for the last year of the prior leases. As of December 31, 2016, Federal Realty’s average contractual minimum rent for retail and commercial space in its portfolio is $26.91 per square foot, as contrast to $26.28 per square foot on December 31, 2015.

Regular Quarterly Dividends

Federal Realty also declared recently that its Board of Trustees declared a regular quarterly cash dividend of $0.98 per common share, resulting in an indicated annual rate of $3.92 per common share. The regular common dividend will be payable on April 17, 2017 to common shareholders of record as of March 14, 2017.

Summary of Other Quarterly Activities and Recent Developments

  • February 8, 2017 – Federal Realty declared the promotion of Craig Klimisch to Vice President – Corporate Controller. In this capacity, Mr. Klimisch is responsible for all aspects of accounting functions and processes, internal and external financial reporting and SEC filing requirements. Mr. Klimisch joined Federal Realty in 2011.
  • February 9, 2017 – Federal Realty declared the acquisition of Hastings Ranch Plaza, a 274,000 square foot shopping center in Pasadena, California. The Trust attained the leasehold interest in the shopping center for $29.5 million. Hastings Ranch Plaza enjoys immediate access to Interstate 210 at the Rosemead-Michillinda exit and is within walking distance of the Sierra Madre Station on the Metro Gold Line. Federal Realty anticipates increasing the value over time through potential redevelopment and/or the re-leasing of space presently leased at below market rents.

Guidance

Federal Realty affirmed our 2017 guidance for FFO per diluted share of $5.83 to $5.93 and 2017 earnings per diluted share guidance of $3.13 to $3.23.

 

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