Federal Realty Investment Trust
), a real estate investment trust (REIT), reported fourth quarter
2012 FFO (funds from operations) per share of $1.11, beating the
Zacks Consensus Estimate by a cent and the prior-year quarter
figure of 14 cents. The better-than-expected results in the
quarter were primarily due to improved performance in the
same-store portfolio and decent top-line growth.
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For full year 2012, Federal Realty's FFO stood at $4.31 per
share. This exceeded the Zacks Consensus Estimate of $4.30 per
share and the year-ago quarter figure of $4.00 per share.
Total revenue during the reported quarter increased 10.5% year
over year to $156.4 million and marginally topped the Zacks
Consensus Estimate of $155 million. Total revenue for full year
2012 reached $608.0 million, up 9.9% from a year ago and ahead of
the Zacks Consensus Estimate of $599 million.
Quarter in Detail
Federal Realty executed healthy leasing activities during the
quarter. The company signed 98 leases spanning 485,215 square
feet of retail space during fourth quarter 2012.
On a same-store basis, the company leased 478,913 square feet at
an average cash-basis contractual rent increase of 12.0% per
square foot. The average same-store contractual rent for the
first year of the new lease was $32.17 per square foot compared
with the average contractual rent of $28.71 per square foot for
the last year of the prior lease.
Same-store rents per square foot (GAAP) increased 20.0% on an
average during the quarter. As of Dec 31, 2012, Federal Realty's
average contractual cash basis minimum rent for retail and
commercial space was $23.83 per square foot, as compared with
$23.37 per square foot on Dec 31, 2011.
Same-center property operating income in the reported quarter
advanced 5.4% including redevelopment and expansion properties,
and 4.2% excluding redevelopment and expansion properties,
compared to the prior-year quarter.
The overall portfolio was 95.3% leased at the end of the quarter,
compared with 93.4% at the end of the year-ago quarter.
Moreover, Federal Realty's same-center portfolio was 95.0% leased
as of Dec 31, 2012, compared with 94.2% as of Dec 31, 2011.
East Bay Bridge Acquisition
In Dec 2012, Federal Realty acquired a property - East Bay Bridge
Shopping Center - located on the Emeryville and Oakland border
for $53.7 million. Federal Realty also took on an existing
mortgage loan worth $62.9 million secured by the property.
Constructed in 1994, East Bay Bridge boasts a class of
industry-leading tenants such as
The Home Depot, Inc.
). The other noteworthy retailers at the center include Pacific
Sales Kitchen and Bath, Sports Authority and Michael's. In our
view, the strategic acquisition will boost the company's rental
revenue going forward, considering the upscale premium location
of the property and its strong tenant base.
At year-end 2012, Federal Realty had cash and cash equivalents of
around $37.0 million, compared with $67.8 million at the
Encouragingly, Federal Realty increased its FFO guidance for full
year 2013 to $4.53 - $4.58 per share from the prior guidance of
$4.50 - $4.56 per share. The updated guidance reflects the impact
of the East Bay Bridge acquisition.
In addition, Federal Realty declared a regular quarterly cash
dividend of 73 cents per share on its common shares, or $2.92 on
an annualized basis. The dividend will be paid on Apr 15, 2013 to
common shareholders of record on Mar 14.
We are encouraged by Federal Realty's decent performance. The
company owns Class A shopping centers in high-barrier,
high-growth areas that have fared relatively better during the
The recent acquisition of East Bay Bridge Shopping Center is also
a strategic fit and will help enhance its retail dominance in the
Bay area. In addition, Federal Realty has a strong balance sheet
and has paid uninterrupted dividend since its inception.
Federal Realty currently retains a Zacks Rank #3 (Hold).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.