Federal Realty Investment Trust Announces Second Quarter 2007 Operating Results

ROCKVILLE, Md., Aug. 1 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust today reported operating results for its second quarter ended June 30, 2007.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050907/DCW070LOGO ) -- Funds from operations available for common shareholders (FFO) per diluted share was $0.91 and earnings per diluted common share was $0.47 for the quarter ended June 30, 2007, versus $0.83 and $0.66, respectively, for second quarter 2006. -- FFO per diluted share was $1.79 and earnings per diluted common share was $0.88 for the six months ended June 30, 2007, versus $1.64 and $1.19, respectively, for the six months ended June 30, 2006. -- When compared to second quarter 2006, same-center property operating income increased 5.8% including redevelopments and expansions, and 3.7% excluding redevelopments and expansions. -- Rent increases on lease rollovers for retail space for which there was a prior tenant were 19% on a cash-basis and 29% on a GAAP-basis for the quarter ended June 30, 2007. -- The Trust's portfolio was 96.1% leased and 94.7% occupied as of June 30, 2007. -- Federal Realty increased its common dividend for the 40th consecutive year from an annualized rate of $2.30 per share to $2.44 per share, a 6.1% increase. -- Guidance for 2007 FFO per diluted share was narrowed to a range of $3.62 to $3.65. Financial Results

In second quarter 2007, Federal Realty reported FFO of $51.9 million, or $0.91 per diluted share. This compares to FFO of $44.6 million, or $0.83 per diluted share, reported in second quarter 2006. For the six months ended June 30, 2007, Federal Realty reported FFO of $101.5 million, or $1.79 per diluted share compared to FFO of $88.0 million, or $1.64 per diluted share, for the same six-month period in 2006.

Net income available for common shareholders was $26.6 million and earnings per diluted common share was $0.47 for the quarter ended June 30, 2007, versus $35.4 million and $0.66, respectively, for second quarter 2006. Year-to-date, Federal Realty reported net income available for common shareholders of $49.7 million, or $0.88 per diluted share. This compares to net income available for common shareholders of $63.5 million, or $1.19 per diluted share, for the six months ended June 30, 2006. The declines in net income available for common shareholders reflect a decrease in gain on sale of real estate for the comparative periods of 2007 versus 2006 of $13.2 million ($0.25 per diluted share) for the second quarter, and $21.9 million ($0.41 per diluted share) on a year-to-date basis.

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

On a same-center basis, including redevelopments and expansions, property operating income increased 5.8% over second quarter 2006. When redevelopments and expansions are excluded from the same-center results, property operating income increased 3.7% from second quarter 2006.

Overall, the Trust's portfolio was 96.1% leased and 94.7% occupied as of June 30, 2007, compared to 96.7% and 94.7%, respectively, on June 30, 2006. Federal Realty's same-center portfolio was 96.4% leased and 95.8% occupied on June 30, 2007, compared to 97.7% and 96.2%, respectively, on June 30, 2006.

During second quarter 2007, the Trust signed 90 leases for approximately 378,000 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), the Trust leased 341,000 square feet at an average cash-basis contractual rent increase per square foot (i.e., excluding the impact of straight-line rents) of 19%. The average contractual rent on this comparable space for the first year of the new lease is $26.70 per square foot compared to the average contractual rent of $22.52 per square foot for the last year of the prior lease. The previous average contractual rent is calculated by including both the minimum rent and the percentage rent actually paid during the last year of the lease term for the re-leased space. On a GAAP basis (i.e., including the impact of straight-line rents), rent increases per square foot for comparable retail space averaged 29% for second quarter 2007. As of June 30, 2007, Federal Realty's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $19.51 per square foot.

"Our strong and consistent operating performance is a continuing confirmation of the quality of our real estate and operating platform," commented Donald C. Wood, president and chief executive officer of Federal Realty Investment Trust.

Chief Financial Officer Succession

Federal Realty announced that Joseph Squeri will join the Trust on October 1, 2007, and will succeed Larry Finger as executive vice president, chief financial officer and treasurer. Mr. Squeri served in a variety of positions at Choice Hotels International, from 1997 through 2007, including chief financial officer beginning in 1999, and then more significant operations roles culminating in his position as president and chief operating officer. Prior to his experience at Choice Hotels, Joseph held positions at Arthur Andersen and The Carlyle Group, a leading investment firm in Washington, DC. Mr. Squeri is a graduate of the University of Virginia, and is a certified public accountant.

"We're extremely pleased to have attracted someone with the operating and financial experience and proven track record that Joe possesses," commented Donald Wood. "The transition period from October of this year through Larry's retirement in March 2008, allows us to optimize the impact that Joe can have on our business after working along side Larry and the rest of our senior operating team."

Regular Quarterly Dividends

Federal Realty also announced today that its Board of Trustees increased the regular dividend on its common shares, declaring a regular quarterly cash dividend of $0.61 per share on its common shares, resulting in an indicated annual rate of $2.44 per share, an increase of $0.14 annually or 6.1%. The regular common dividend will be payable on October 15, 2007, to common shareholders of record as of September 21, 2007.

This increase represents the 40th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.

"We are thrilled to be increasing our common dividend rate for the 40th consecutive year," said Andrew Blocher, senior vice president, capital markets and investor relations. "Our dividend record is a testament to the ability of the Trust's high quality real estate to produce consistent results over a sustained time period despite volatility in the market and the economy."

Guidance

Federal Realty's guidance for 2007 FFO per diluted share was narrowed to a range of $3.62 to $3.65, and its 2007 earnings per diluted common share guidance increased to a range of $2.12 to $2.15.

Summary of Other Quarterly Activities and Recent Developments -- June 4, 2007 -- Federal Realty acquired Shoppers' World, a 169,000 square foot Whole Foods-anchored neighborhood shopping center located on U.S. 29 in Charlottesville, Virginia, in an off-market transaction from a private owner. This acquisition further enhances Federal Realty's ownership in Charlottesville, Virginia, as the Trust now owns and operates 650,000 square feet of retail space. -- June 25, 2007 -- Federal Realty completed the sale of three non-core properties in suburban New England for $63.0 million. All three properties -- Riverside Plaza and Key Road Plaza in Keene, N.H., and Bath Shopping Center in Bath, Maine -- were acquired in August 2006 to facilitate the purchase of $150 million of high-quality assets in the Boston metropolitan area. The $63.0 million sales price for the three properties generated a book gain of approximately $2 million. -- July 17, 2007 -- Federal Realty announced that Warren M. Thompson, president and chairman of Thompson Hospitality Corporation, was nominated and appointed to serve on Federal Realty's board of trustees. Mr. Thompson's term will run until the Trust's annual meeting of shareholders in May 2008, and he will serve on the Trust's audit committee and nominating and corporate governance committee. Conference Call Information

Federal Realty's management team will present an in-depth discussion of the Trust's operating performance on its second quarter 2007 earnings conference call, which is scheduled for August 2, 2007, at 11 a.m. Eastern Daylight Time. To participate, please call [phone] five to ten minutes prior to the call's start time and use the passcode EARNINGS (required). The conference leader is Andrew Blocher. Federal Realty will also provide an online Web Simulcast on the Company's Web site, http://www.federalrealty.com/ , which will remain available for 30 days following the call. A telephone recording of the call will also be available through August 31, 2007, by dialing [phone] and entering the passcode 24455828.

About Federal Realty

Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 19.5 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 1.0 million square feet of retail space through its joint venture with Clarion Lion Properties Fund in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 96.1% leased to national, regional, and local retailers as of June 30, 2007, with no single tenant accounting for more than approximately 2.9% of annualized base rent. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 40 consecutive years, the longest record in the REIT industry. Shares of Federal Realty are traded on the NYSE under the symbol FRT.

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 March 1, 2007 and include the following:

-- risks that our tenants will not pay rent or that we may be unable to renew leases or re-let space at favorable rents as leases expire; -- risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that completion of anticipated or ongoing property redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected; -- risks that the number of properties we acquire for our own account, and therefore the amount of capital we invest in acquisitions, may be impacted by our real estate partnership; -- 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 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 of financing, such as our ability to consummate additional financings or obtain replacement 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; and -- 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.

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 may be 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 carefully review the risks and risk factors included in our Annual Report on Form 10-K filed March 1, 2007.

Investor and Media Inquiries Andrew Blocher Vikki Kayne Senior Vice President, Vice President, Capital Markets & Investor Relations Marketing & Corporate Communications 301/998-8166 301/[e-mail]Federal Realty Investment Trust Summarized Balance Sheets June 30, 2007 June 30, December 31, 2007 2006 (in thousands) ASSETS (unaudited) Real estate, at cost Operating $3,316,513 $3,025,210 Construction-in-progress 109,215 99,774 Assets held for sale (discontinued operations) 15,987 79,274 3,441,715 3,204,258 Less accumulated depreciation and amortization (785,291) (740,507) Net real estate 2,656,424 2,463,751 Cash and cash equivalents 11,718 11,495 Accounts and notes receivable 52,753 47,493 Mortgage notes receivable 40,775 40,756 Investment in real estate partnership 30,191 10,322 Prepaid expenses and other assets 109,294 114,789 TOTAL ASSETS $2,901,155 $2,688,606 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Obligations under capital leases and mortgages payable $528,002 $460,398 Notes payable, including revolving credit facility 157,925 109,024 Senior notes and debentures 1,127,548 1,127,508 Accounts payable and other liabilities 184,693 185,407 Total liabilities 1,998,168 1,882,337 Minority interests 38,033 22,191 Shareholders' equity Preferred stock 9,997 - Common shares and other shareholders' equity 854,957 784,078 Total shareholders' equity 864,954 784,078 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,901,155 $2,688,606 Federal Realty Investment Trust Summarized Income Statements June 30, 2007 Three months ended Six months ended June 30, June 30, 2007 2006 2007 2006 (in thousands, except per share data) (unaudited) Revenue Rental income $119,920 $105,329 $237,096 $210,302 Other property income 2,557 1,866 4,995 3,960 Mortgage interest income 1,127 1,349 2,257 2,671 123,604 108,544 244,348 216,933 Expenses Rental 24,370 20,305 49,498 42,473 Real estate taxes 11,991 10,503 23,335 21,049 General and administrative 6,036 4,981 11,640 9,483 Depreciation and amortization 26,526 24,176 52,472 48,087 68,923 59,965 136,945 121,092 Operating income 54,681 48,579 107,403 95,841 Other interest income 330 331 680 593 Interest expense (29,728) (24,754) (59,044) (49,034) Income from real estate partnership 363 190 647 338 Income from continuing operations before minority interests 25,646 24,346 49,686 47,738 Minority interests (1,384) (1,324) (2,681) (2,397) Income from continuing operations 24,262 23,022 47,005 45,341 Discontinued operations Income from discontinued operations 607 200 1,000 175 Gain on sale of real estate from discontinued operations 1,849 7,593 1,849 16,330 Results from discontinued operations 2,456 7,793 2,849 16,505 Income before gain on sale of real estate 26,718 30,815 49,854 61,846 Gain on sale of real estate - 7,441 - 7,441 Net income 26,718 38,256 49,854 69,287 Dividends on preferred stock (135) (2,869) (171) (5,738) Net income available for common shareholders $26,583 $35,387 $49,683 $63,549 EARNINGS PER COMMON SHARE, BASIC Continuing operations $0.43 $0.38 $0.84 $0.75 Discontinued operations 0.04 0.15 0.05 0.31 Gain on sale of real estate - 0.14 - 0.14 $0.47 $0.67 $0.89 $1.20 Weighted average number of common shares, basic 56,168 52,842 55,797 52,789 EARNINGS PER COMMON SHARE, DILUTED Continuing operations $0.43 $0.38 $0.83 $0.74 Discontinued operations 0.04 0.14 0.05 0.31 Gain on sale of real estate - 0.14 - 0.14 $0.47 $0.66 $0.88 $1.19 Weighted average number of common shares, diluted 56,591 53,315 56,258 53,287 Federal Realty Investment Trust Funds From Operations June 30, 2007 Three months ended Six months ended June 30, June 30, 2007 2006 2007 2006 (in thousands, (in thousands, Funds from Operations available for except per share except per share common shareholders (FFO) (1) data) data) Net income $26,718 $38,256 $49,854 $69,287 Gain on sale of real estate (1,849) (15,034) (1,849) (23,771) Depreciation and amortization of real estate assets 24,317 22,010 48,259 43,884 Amortization of initial direct costs of leases 2,107 1,825 4,177 3,564 Depreciation of real estate partnership assets 323 151 591 315 Funds from operations 51,616 47,208 101,032 93,279 Dividends on preferred stock (135) (2,869) (171) (5,738) Income attributable to operating partnership units 399 245 644 478 FFO $51,880 $44,584 $101,505 $88,019 FFO per diluted share $0.91 $0.83 $1.79 $1.64 Weighted average number of common shares, diluted 57,149 53,710 56,750 53,688 Notes: (1)See Glossary of Terms. FFO available for common shareholders excludes the gain on sale of condominiums at Santana Row. Federal Realty Investment Trust Reconciliation of Net Income to FFO Guidance June 30, 2007 2007 Guidance (in millions except per share amounts) (1) Net income $120 to $122 Gain on sale of real estate (21) (21) Depreciation and amortization of real estate & real estate partnership assets 98 98 Amortization of initial direct costs of leases 8 8 Funds from operations 205 207 Income attributable to operating partnership units 1 1 Dividends on preferred stock 0 0 Funds from operations available for common shareholders 206 to 208 Weighted Average Shares (diluted) 57.0 Funds from operations available for common shareholders per diluted share $3.62 $3.65 Note: (1) Individual items may not add up to total due to rounding.
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