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10.02.2022 22:05:00
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Federal Realty Investment Trust Announces Operating Results for the Year and Quarter Ended December 31, 2021
NORTH BETHESDA, Md., Feb. 10, 2022 /PRNewswire/ -- Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its year and quarter ended December 31, 2021. For the year ended December 31, 2021 and 2020, net income available for common shareholders was $3.26 per diluted share and $1.62 per diluted share, respectively. For the three months ended December 31, 2021 and 2020, net income available for common shareholders was $1.44 per diluted share and $1.22 per diluted share, respectively.
Highlights for the full year and fourth quarter include:
- Generated funds from operations available to common shareholders (FFO) per diluted share of $5.57 for the year, compared to $4.38 in 2020. For the fourth quarter, generated FFO per diluted share of $1.47, compared to $0.99 ($1.14 excluding the early extinguishment of debt charge) for the fourth quarter 2020.
- Continued record levels of leasing with 116 signed leases for 597,673 square feet of comparable space in the fourth quarter bringing 2021 to a record 462 signed leases for 2.1 million square feet of comparable space.
- Federal Realty's portfolio was 91.1% occupied and 93.6% leased, representing sequential increases of 90 basis points and 80 basis points, respectively, over the third quarter.
- 250 basis point spread between leased and occupied.
- Small shop leased rate was 87.4% as of quarter end, an increase of 130 basis points over the third quarter and an increase of 280 basis points year over year.
- Signed leases for 276,586 square feet of office space during the quarter.
- Sold two shopping centers and a portion of two properties for a total sales price of $121.4 million in the fourth quarter, bringing the 2021 total disposition proceeds to $141.6 million.
- Acquired 5 properties totaling 1.9 million square feet and 135 acres in COVID-era, off-market transactions in 2021.
- Increased 2022 earnings per diluted share guidance to $2.30 to $2.50 and increased 2022 FFO per diluted share guidance to $5.75 to $5.95.
"2021 outperformed even our most optimistic expectations," said Donald C. Wood, Chief Executive Officer. "Leasing momentum continued at unprecedented levels, clear indication of strong demand for our properties and our locations. The broad-based leasing that has been done over the past several quarters, along with our development and acquisitions pipelines set Federal up for an active 2022 with all eyes on bottom line earnings growth."
Financial Results
Net Income
For the full year 2021, Federal Realty reported net income available for common shareholders of $253.5 million and earnings per diluted share of $3.26. This compares to net income available for common shareholders of $123.7 million and earnings per diluted share of $1.62 for the full year 2020.
For the fourth quarter 2021, net income available for common shareholders was $112.9 million and earnings per diluted share was $1.44 versus $92.7 million and $1.22, respectively, for the fourth quarter 2020.
FFO
For the full year 2021, Federal Realty generated funds from operations available for common shareholders (FFO) of $434.7 million, or $5.57 per diluted share. This compares to FFO of $333.8 million, or $4.38 per diluted share ($4.52 excluding the $11.2 million early extinguishment of debt charge) for the full year 2020.
For the fourth quarter 2021, FFO was $115.8 million, or $1.47 per diluted share, compared to $75.1 million, or $0.99 per diluted share ($1.14 excluding the early extinguishment of debt charge) for the fourth quarter 2020.
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 91.1% occupied as of December 31, 2021, a sequential increase of 90 basis points over the third quarter 2021. The portfolio was 93.6% leased as of December 31, 2021, a sequential increase of 80 basis points over the third quarter 2021. The spread between our leased and occupied percentages was 250 basis points at the end of the fourth quarter.
Additionally, our comparable residential properties were 97.2% leased as of December 31, 2021 compared to 94.8% leased as of December 31, 2020, an increase of 240 basis points.
Leasing Activity
For the full year 2021, Federal Realty signed 492 leases for 2.2 million square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 462 leases for 2.1 million square feet at an average rent of $37.00 per square foot compared to the average contractual rent of $34.52 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%, 16% on a straight-line basis.
During the fourth quarter 2021, Federal Realty signed 125 leases for 619,629 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 116 leases for 597,673 square feet at an average rent of $34.34 per square foot compared to the average contractual rent of $32.49 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 6%, 12% on a straight-line basis.
Transaction Activity
In 2021, Federal Realty acquired 5 shopping centers which total 1.9 million square feet and 135 acres for a gross value of $440.9 million, of which Federal owns an average 82% controlling joint venture interest.
In the fourth quarter, Federal Realty sold two shopping centers and a portion of two properties for a total sales price of $121.4 million, bringing the 2021 total disposition proceeds to $141.6 million.
COVID-19 Collection Update
As of January 31, 2022, the Company has collected approximately 97% of total fourth quarter 2021 billed recurring rents. Including rent deferral and abatement agreements, total addressed recurring rent was 99%.
Conversion to "UPREIT" Partnership
Effective January 1, 2022, Federal Realty completed a holding company merger that resulted in the formation of a new holding company which is now known as Federal Realty Investment Trust and the entity formerly known as Federal Realty Investment Trust converting to a limited partnership now known as Federal Realty OP LP. Detailed information on this conversion can be found in the Form 8K12B filed on January 3, 2022 and the Form 8K filed on January 5, 2022.
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 April 15, 2022 to common shareholders of record as of March 16, 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 April 15, 2022 to shareholders of record as of April 1, 2022.
Guidance
Federal Realty increased its 2022 guidance for earnings per diluted share to $2.30 to $2.50 and 2022 FFO per diluted share to $5.75 to $5.95.
Conference Call Information
Federal Realty's management team will present an in-depth discussion of Federal Realty's operating performance on its fourth quarter 2021 earnings conference call, which is scheduled for Thursday, February 10, 2022 at 5:00 PM ET. To participate, please call 877.407.9208 five to ten minutes prior to the call start time and use the passcode 13726468 (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 24, 2022 by dialing 844.512.2921; Passcode: 13726468.
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 | |||
December 31, 2021 | |||
December 31, | |||
2021 | 2020 | ||
(in thousands, except share and | |||
per share data) | |||
ASSETS | |||
Real estate, at cost | |||
Operating (including $2,207,648 and $1,703,202 of consolidated variable interest entities, respectively) | $ 8,814,791 | $ 7,771,981 | |
Construction-in-progress (including $18,752 and $44,896 of consolidated variable interest entities, respectively) | 607,271 | 810,889 | |
9,422,062 | 8,582,870 | ||
Less accumulated depreciation and amortization (including $389,950 and $335,735 of consolidated variable interest entities, respectively) | (2,531,095) | (2,357,692) | |
Net real estate | 6,890,967 | 6,225,178 | |
Cash and cash equivalents | 162,132 | 798,329 | |
Accounts and notes receivable | 169,007 | 159,780 | |
Mortgage notes receivable, net | 9,543 | 39,892 | |
Investment in partnerships | 13,027 | 22,128 | |
Operating lease right of use assets | 90,743 | 92,248 | |
Finance lease right of use assets | 49,832 | 51,116 | |
Prepaid expenses and other assets | 237,069 | 218,953 | |
TOTAL ASSETS | $ 7,622,320 | $ 7,607,624 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Liabilities | |||
Mortgages payable, net (including $335,301 and $413,681 of consolidated variable interest entities, respectively) | $ 339,993 | $ 484,111 | |
Notes payable | 301,466 | 402,776 | |
Senior notes and debentures | 3,406,088 | 3,404,488 | |
Accounts payable and other expenses | 235,168 | 228,641 | |
Dividends payable | 86,538 | 83,839 | |
Security deposits payable | 25,331 | 20,388 | |
Operating lease liabilities | 72,661 | 72,441 | |
Finance lease liabilities | 72,032 | 72,049 | |
Other liabilities and deferred credits | 206,187 | 152,424 | |
Total liabilities | 4,745,464 | 4,921,157 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 213,708 | 137,720 | |
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, 78,603,305 and 76,727,394 shares issued and outstanding, respectively | 790 | 771 | |
Additional paid-in capital | 3,488,794 | 3,297,305 | |
Accumulated dividends in excess of net income | (1,066,932) | (988,272) | |
Accumulated other comprehensive loss | (2,047) | (5,644) | |
Total shareholders' equity of the Trust | 2,580,602 | 2,464,157 | |
Noncontrolling interests | 82,546 | 84,590 | |
Total shareholders' equity | 2,663,148 | 2,548,747 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 7,622,320 | $ 7,607,624 | |
Federal Realty Investment Trust | ||||||||
Consolidated Income Statements | ||||||||
December 31, 2021 | ||||||||
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
(in thousands, except per share data) | ||||||||
REVENUE | ||||||||
Rental income | $ 253,888 | $ 218,484 | $ 948,842 | $ 832,171 | ||||
Mortgage interest income | 266 | 1,029 | 2,382 | 3,323 | ||||
Total revenue | 254,154 | 219,513 | 951,224 | 835,494 | ||||
EXPENSES | ||||||||
Rental expenses | 56,647 | 48,359 | 198,121 | 170,920 | ||||
Real estate taxes | 30,224 | 29,059 | 118,496 | 119,242 | ||||
General and administrative | 14,499 | 12,307 | 49,856 | 41,680 | ||||
Depreciation and amortization | 77,816 | 64,424 | 279,976 | 255,027 | ||||
Total operating expenses | 179,186 | 154,149 | 646,449 | 586,869 | ||||
Impairment charge | — | — | — | (57,218) | ||||
Gain on sale of real estate and change in control of interest | 72,522 | 86,435 | 89,950 | 98,117 | ||||
OPERATING INCOME | 147,490 | 151,799 | 394,725 | 289,524 | ||||
OTHER INCOME/(EXPENSE) | ||||||||
Other interest income | 108 | 539 | 809 | 1,894 | ||||
Interest expense | (32,187) | (37,543) | (127,698) | (136,289) | ||||
Early extinguishment of debt | — | (11,179) | — | (11,179) | ||||
Income (loss) from partnerships | 1,331 | (1,405) | 1,245 | (8,062) | ||||
NET INCOME | 116,742 | 102,211 | 269,081 | 135,888 | ||||
Net income attributable to noncontrolling interests | (1,806) | (7,486) | (7,583) | (4,182) | ||||
NET INCOME ATTRIBUTABLE TO THE TRUST | 114,936 | 94,725 | 261,498 | 131,706 | ||||
Dividends on preferred shares | (2,011) | (2,011) | (8,042) | (8,042) | ||||
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS | $ 112,925 | $ 92,714 | $ 253,456 | $ 123,664 | ||||
EARNINGS PER COMMON SHARE, BASIC: | ||||||||
Net income available for common shareholders | $ 1.45 | $ 1.22 | $ 3.26 | $ 1.62 | ||||
Weighted average number of common shares | 77,536 | 75,898 | 77,336 | 75,515 | ||||
EARNINGS PER COMMON SHARE, DILUTED: | ||||||||
Net income available for common shareholders | $ 1.44 | $ 1.22 | $ 3.26 | $ 1.62 | ||||
Weighted average number of common shares | 78,556 | 75,898 | 77,368 | 75,515 | ||||
Federal Realty Investment Trust | ||||||||
Funds From Operations | ||||||||
December 31, 2021 | ||||||||
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
(in thousands, except per share data) | ||||||||
Funds from Operations available for common shareholders (FFO) | ||||||||
Net income | $ 116,742 | $ 102,211 | $ 269,081 | $ 135,888 | ||||
Net income attributable to noncontrolling interests | (1,806) | (7,486) | (7,583) | (4,182) | ||||
Gain on sale of real estate and change in control of interests, net | (72,464) | (80,240) | (89,892) | (91,922) | ||||
Impairment charge, net (1) | — | — | — | 50,728 | ||||
Depreciation and amortization of real estate assets | 68,941 | 57,972 | 243,711 | 228,850 | ||||
Amortization of initial direct costs of leases | 5,924 | 4,853 | 26,051 | 20,415 | ||||
Funds from operations | 117,337 | 77,310 | 441,368 | 339,777 | ||||
Dividends on preferred shares (2) | (1,875) | (2,011) | (8,042) | (8,042) | ||||
Income attributable to operating partnership units (3) | 731 | — | 2,998 | 3,151 | ||||
Income attributable to unvested shares | (427) | (247) | (1,581) | (1,037) | ||||
FFO (4) | $ 115,766 | $ 75,052 | $ 434,743 | $ 333,849 | ||||
Weighted average number of common shares, diluted (2)(3) | 78,556 | 75,898 | 78,072 | 76,261 | ||||
FFO per diluted share (4) | $ 1.47 | $ 0.99 | $ 5.57 | $ 4.38 | ||||
Notes: | |
1) | Impairment charge relates to The Shops at Sunset Place. Amount is net of the allocation to noncontrolling interests. See our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information. |
2) | For 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 included in "weighted average common shares, diluted." |
3) | For the three months ended December 31, 2020, income attributable to operating partnership units is not added back in the calculation of FFO available to common shareholders, as the related shares are not dilutive and are not included in "weighted average common shares, diluted" for this period. For the three months and year ended December 31, 2021 and the year ended December 31, 2020, the weighted average common shares used to compute FFO per diluted common share includes 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. |
4) | FFO available for common shareholders for the year ended December 31, 2020 includes a $11.2 million charge related to early extinguishment of debt. If this charge was excluded, our FFO and FFO per diluted share would have been: |
Three Months Ended | Year Ended | |||
December 31, | December 31, | |||
2020 | 2020 | |||
(in thousands, except per share data) | ||||
FFO | $ 87,002 | $ 344,994 | ||
FFO per diluted share | $ 1.14 | $ 4.52 | ||
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SOURCE Federal Realty Investment Trust
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