Federal Realty Investment Trust 10-Q for FY2022 Q1

Federal Realty Investment Trust (FRT)

10-Q 2022-05-05 For: 2022-03-31

Added on April 09, 2026

About this 10-Q

Federal Realty Investment Trust filed this 10-Q on May 5, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $256.77M; up 17.7% from $218.16M a year earlier
Net income: $51.98M; up 7.8% from net income of $48.24M a year earlier
Diluted EPS: $0.63; up 5.0% from $0.60 a year earlier

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Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest	FRT	New York Stock Exchange
$.01 par value per share, with associated Common Share Purchase Rights

Depositary Shares, each representing 1/1000 of a share of	FRT-C	New York Stock Exchange
5.00% Series C Cumulative Redeemable Preferred Stock, $.01 par value per share


Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
None	N/A	N/A


PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3

Federal Realty Investment Trust
	Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021	3
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2022 and 2021	4
	Consolidated Statements of Shareholders' Equity (unaudited) for the three months ended March 31, 2022 and 2021	5
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021	6

Federal Realty OP LP
	Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021	7
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2022 and 2021	8
	Consolidated Statements of Capital (unaudited) for the three months ended March 31, 2022 and 2021	9
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021	10

Federal Realty Investment Trust and Federal Realty OP LP
	Notes to Consolidated Financial Statements (unaudited)	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION		32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32

SIGNATURES		34


	March 31,		December 31,
	2022		2021
	(In thousands, except share and per share data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $2,210,901 and $2,207,648 of consolidated variable interest entities, respectively)	$	8,843,063	$	8,814,791
Construction-in-progress (including $21,677 and $18,752 of consolidated variable interest entities, respectively)	662,985		607,271

	9,506,048		9,422,062
Less accumulated depreciation and amortization (including $403,533 and $389,950 of consolidated variable interest entities, respectively)	(2,587,121)		(2,531,095)
Net real estate	6,918,927		6,890,967
Cash and cash equivalents	157,944		162,132
Accounts and notes receivable, net	183,479		169,007
Mortgage notes receivable, net	9,519		9,543
Investment in partnerships	13,183		13,027
Operating lease right of use assets	90,231		90,743
Finance lease right of use assets	49,511		49,832
Prepaid expenses and other assets	245,581		237,069

TOTAL ASSETS	$	7,668,375	$	7,622,320
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $334,640 and $335,301 of consolidated variable interest entities, respectively)	$	339,236	$	339,993

Notes payable, net	301,540		301,466
Senior notes and debentures, net	3,406,491		3,406,088
Accounts payable and accrued expenses	233,773		235,168
Dividends payable	86,617		86,538
Security deposits payable	26,073		25,331
Operating lease liabilities	72,317		72,661
Finance lease liabilities	72,028		72,032
Other liabilities and deferred credits	201,680		206,187
Total liabilities	4,739,755		4,745,464
Commitments and contingencies (Note 5)
Redeemable noncontrolling interests	214,043		213,708
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, 79,417,472 and 78,603,305 shares issued and outstanding, respectively	799		790
Additional paid-in capital	3,572,591		3,488,794
Accumulated dividends in excess of net income	(1,101,154)		(1,066,932)
Accumulated other comprehensive income (loss)	1,525		(2,047)
Total shareholders’ equity of the Trust	2,633,758		2,580,602
Noncontrolling interests	80,819		82,546
Total shareholders’ equity	2,714,577		2,663,148
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	7,668,375	$	7,622,320


	Three Months Ended March 31,
		2022		2021
		(In thousands, except per share data)
REVENUE
Rental income		$	256,507	$	217,135

Mortgage interest income		264		1,026
Total revenue		256,771		218,161
EXPENSES
Rental expenses		56,211		49,238
Real estate taxes		30,560		29,420
General and administrative		12,342		10,258
Depreciation and amortization		71,674		63,874
Total operating expenses		170,787		152,790


Gain on sale of real estate and change in control of interest		—		17,428

OPERATING INCOME		85,984		82,799

OTHER INCOME/(EXPENSE)
Other interest income		120		363
Interest expense		(31,573)		(32,085)


Income (loss) from partnerships		197		(1,338)


NET INCOME		54,728		49,739
Net income attributable to noncontrolling interests		(2,744)		(1,503)
NET INCOME ATTRIBUTABLE TO THE TRUST		51,984		48,236
Dividends on preferred shares		(2,010)		(2,010)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS		$	49,974	$	46,226

EARNINGS PER COMMON SHARE, BASIC:




Net income available for common shareholders		$	0.63	$	0.60
Weighted average number of common shares		78,446		76,842
EARNINGS PER COMMON SHARE, DILUTED:




Net income available for common shareholders		$	0.63	$	0.60
Weighted average number of common shares		78,543		76,842

COMPREHENSIVE INCOME		$	58,644	$	53,433

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST		$	55,556	$	51,580


☒			QUARTERLY REPORT PURSUANT TO THE SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


	Shareholders’ Equity of the Trust
	Preferred Shares			Common Shares			Additional Paid-in Capital		Accumulated Dividends in Excess of Net Income		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
	(In thousands, except share data)


























BALANCE AT DECEMBER 31, 2021	405,896	$	159,997	78,603,305	$	790	$	3,488,794	$	(1,066,932)	$	(2,047)	$	82,546	$	2,663,148

Net income, excluding $1,735 attributable to redeemable noncontrolling interests	—	—		—	—		—		51,984		—		1,009		52,993
Other comprehensive income - change in fair value of interest rate swaps, excluding $344 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		3,572		—		3,572
Dividends declared to common shareholders ($1.07 per share)	—	—		—	—		—		(84,196)		—		—		(84,196)
Dividends declared to preferred shareholders	—	—		—	—		—		(2,010)		—		—		(2,010)
Distributions declared to noncontrolling interests, excluding $1,744 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		—		(1,759)		(1,759)
Common shares issued, net	—	—		729,769	8		82,741		—		—		—		82,749


Shares issued under dividend reinvestment plan	—	—		3,770	—		502		—		—		—		502
Share-based compensation expense, net of forfeitures	—	—		108,891	1		4,178		—		—		—		4,179
Shares withheld for employee taxes	—	—		(38,270)	—		(4,601)		—		—		—		(4,601)
Conversion and redemption of downREIT OP units	—	—		10,007	—		977		—		—		(977)		—



BALANCE AT MARCH 31, 2022	405,896	$	159,997	79,417,472	$	799	$	3,572,591	$	(1,101,154)	$	1,525	$	80,819	$	2,714,577
































BALANCE AT DECEMBER 31, 2020	405,896	$	159,997	76,727,394	$	771	$	3,297,305	$	(988,272)	$	(5,644)	$	84,590	$	2,548,747

Net income, excluding $808 attributable to redeemable noncontrolling interests	—	—		—	—		—		48,236		—		695		48,931
Other comprehensive income - change in fair value of interest rate swaps, excluding $350 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		3,344		—		3,344
Dividends declared to common shareholders ($1.06 per share)	—	—		—	—		—		(82,371)		—		—		(82,371)
Dividends declared to preferred shareholders	—	—		—	—		—		(2,010)		—		—		(2,010)
Distributions declared to noncontrolling interests, excluding $696 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		—		(784)		(784)
Common shares issued, net	—	—		847,493	8		87,206		—		—		—		87,214


Shares issued under dividend reinvestment plan	—	—		6,280	—		545		—		—		—		545
Share-based compensation expense, net of forfeitures	—	—		147,712	2		4,147		—		—		—		4,149
Shares withheld for employee taxes	—	—		(27,429)	—		(2,805)		—		—		—		(2,805)
Conversion and redemption of downREIT OP units	—	—		5,016	—		519		—				(519)		—



BALANCE AT MARCH 31, 2021	405,896	$	159,997	77,706,466	$	781	$	3,386,917	$	(1,024,417)	$	(2,300)	$	83,982	$	2,604,960


	Preferred Units		Common Units		Accumulated Other Comprehensive Income (Loss)		Total Partner Capital		Noncontrolling Interests in Consolidated Partnerships		Total Capital


BALANCE AT DECEMBER 31, 2021	$	154,963	$	2,427,686	$	(2,047)	$	2,580,602	$	82,546	$	2,663,148

Net income, excluding $1,735 attributable to redeemable noncontrolling interests	2,010		49,974		—		51,984		1,009		52,993
Other comprehensive income - change in fair value of interest rate swaps, excluding $344 attributable to redeemable noncontrolling interest	—		—		3,572		3,572		—		3,572
Distributions declared to common unit holders	—		(84,196)		—		(84,196)		—		(84,196)
Distributions declared to preferred unit holders	(2,010)		—		—		(2,010)		—		(2,010)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,744 attributable to redeemable noncontrolling interests	—		—		—		—		(1,759)		(1,759)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs	—		82,749		—		82,749		—		82,749


Common units issued under dividend reinvestment plan	—		502		—		502		—		502
Share-based compensation expense, net of forfeitures	—		4,179		—		4,179		—		4,179
Common units withheld for employee taxes	—		(4,601)		—		(4,601)		—		(4,601)
Conversion and redemption of downREIT OP units	—		977		—		977		(977)		—



BALANCE AT MARCH 31, 2022	$	154,963	$	2,477,270	$	1,525	$	2,633,758	$	80,819	$	2,714,577
































BALANCE AT DECEMBER 31, 2020	$	154,963	$	2,314,838	$	(5,644)	$	2,464,157	$	84,590	$	2,548,747

Net income, excluding $808 attributable to redeemable noncontrolling interests	2,010		46,226		—		48,236		695		48,931
Other comprehensive income - change in fair value of interest rate swaps, excluding $350 attributable to redeemable noncontrolling interests	—		—		3,344		3,344		—		3,344
Distributions declared to common unit holders	—		(82,371)		—		(82,371)		—		(82,371)
Distributions declared to preferred unit holders	(2,010)		—		—		(2,010)		—		(2,010)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $696 attributable to redeemable noncontrolling interests	—		—		—		—		(784)		(784)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs	—		87,214		—		87,214		—		87,214


Common units issued under dividend reinvestment plan	—		545		—		545		—		545
Share-based compensation expense, net of forfeitures	—		4,149		—		4,149		—		4,149
Common units withheld for employee taxes	—		(2,805)		—		(2,805)		—		(2,805)
Conversion and redemption of downREIT OP units	—		519		—		519		(519)		—



BALANCE AT MARCH 31, 2021	$	154,963	$	2,368,315	$	(2,300)	$	2,520,978	$	83,982	$	2,604,960


	Three Months Ended
	March 31,
	2022		2021
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	36,188	$	38,626
Interest capitalized	(4,615)		(6,541)
Interest expense	$	31,573	$	32,085
Cash paid for interest, net of amounts capitalized	$	30,436	$	29,973
Cash paid for income taxes	$	4	$	—
NON-CASH INVESTING AND FINANCING TRANSACTIONS:





DownREIT operating partnership units redeemed for common shares	$	977	$	519
Shares issued under dividend reinvestment plan	$	432	$	430


	March 31, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	640,776	$	640,491	$	641,459	$	655,864
Senior notes and debentures	$	3,406,491	$	3,367,161	$	3,406,088	$	3,649,776


	March 31, 2022								December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Interest rate swaps	$	—	$	1,930	$	—	$	1,930	$	—	$	(1,511)	$	—	$	(1,511)


					Change
	2022		2021		Dollars		%
	(Dollar amounts in thousands)
Rental income	$	256,507	$	217,135	$	39,372	18.1	%

Mortgage interest income	264		1,026		(762)		(74.3)	%
Total property revenue	256,771		218,161		38,610		17.7	%
Rental expenses	56,211		49,238		6,973		14.2	%
Real estate taxes	30,560		29,420		1,140		3.9	%
Total property expenses	86,771		78,658		8,113		10.3	%
Property operating income (1)	170,000		139,503		30,497		21.9	%
General and administrative expense	(12,342)		(10,258)		(2,084)		20.3	%
Depreciation and amortization	(71,674)		(63,874)		(7,800)		12.2	%

Gain on sale of real estate and change in control of interest	—		17,428		(17,428)		(100.0)	%
Operating income	85,984		82,799		3,185		3.8	%
Other interest income	120		363		(243)		(66.9)	%
Interest expense	(31,573)		(32,085)		512		(1.6)	%
Income (loss) from partnerships	197		(1,338)		1,535		114.7	%


Total other, net	(31,256)		(33,060)		1,804		(5.5)	%

Net income	54,728		49,739		4,989		10.0	%
Net income attributable to noncontrolling interests	(2,744)		(1,503)		(1,241)		82.6	%
Net income attributable to the Trust	$	51,984	$	48,236	$	3,748	7.8	%


	Three Months Ended March 31,
	2022		2021
	(In thousands)
Net cash provided by operating activities	$	103,069	$	115,106
Net cash used in investing activities	(88,194)		(74,841)
Net cash used in financing activities	(11,849)		(48,719)
Increase (decrease) in cash, cash equivalents and restricted cash	3,026		(8,454)
Cash, cash equivalents, and restricted cash at beginning of year	175,163		816,896
Cash, cash equivalents, and restricted cash at end of period	$	178,189	$	808,442


Description of Debt	Original Debt Issued	Principal Balance as of March 31, 2022		Stated Interest Rate as of March 31, 2022		Maturity Date
	(Dollars in thousands)
Mortgages payable
Secured fixed rate








Azalea	Acquired	$	40,000	3.73	%	November 1, 2025
Bell Gardens	Acquired	12,056		4.06	%	August 1, 2026
Plaza El Segundo	125,000	125,000		3.83	%	June 5, 2027
The Grove at Shrewsbury (East)	43,600	43,600		3.77	%	September 1, 2027
Brook 35	11,500	11,500		4.65	%	July 1, 2029
Hoboken (24 Buildings) (1)	56,450	56,102		LIBOR + 1.95%		December 15, 2029
Various Hoboken (14 Buildings) (2)	Acquired	31,586		Various		Various through 2029
Chelsea	Acquired	4,751		5.36	%	January 15, 2031
Hoboken (1 Building) (3)	Acquired	16,148		3.75	%	July 1, 2042
Subtotal		340,743
Net unamortized debt issuance costs and premium		(1,507)
Total mortgages payable, net		339,236

Notes payable
Revolving credit facility (4) (6)	1,000,000	—		LIBOR + 0.775%		January 19, 2024
Term loan (5) (6)	400,000	300,000		LIBOR + 0.80%		April 16, 2024
Various	7,239	2,584		11.31%		Various through 2028


Subtotal		302,584
Net unamortized debt issuance costs		(1,044)
Total notes payable, net		301,540

Senior notes and debentures (6)
Unsecured fixed rate


	Unsecured			Secured		Total
	(In thousands)
2022	$	693		$	2,515	$	3,208
2023	275,758			3,549		279,307
2024	900,659		(1)(2)	3,688		904,347
2025	383			48,033		48,416
2026	429,254			26,657		455,911
Thereafter	2,115,037			256,301		2,371,338
	$	3,721,784		$	340,743	$	4,062,527	(3)


EXHIBIT INDEX

Exhibit No.						Description

2.1						Merger Agreement and Plan of Reorganization dated December 2, 2021, by and among the Operating Partnership (f.k.a. Federal Realty Investment Trust, the "Predecessor"), the Parent Company (f.k.a. FRT Holdco REIT), and FRT Merger Sub REIT (previously filed as Exhibit 2.1 to our Current Report on Form 8-K filed on December 2, 2021 and incorporated herein by reference)

10.1						Omnibus Assignment, Assumption and Amendment entered into between the Predecessor and the Parent Company (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on January 3, 2022 and incorporated herein by reference)

10.2						Second Amendment to Amended and Restated Credit Agreement and Consent, dated as of January 1, 2022, by and among the Predecessor, as borrower, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (previously filed as Exhibit 10.2 to our Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference)

10.3						Second Amendment to Term Loan Agreement and Consent, dated as of January 1, 2022, by and among the Predecessor, as borrower, each of the lenders party thereto and PNC Bank, National Association, as administrative agent (previously filed as Exhibit 10.3 to our Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference)

31.1						Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)

31.2						Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty Investment Trust (filed herewith)

31.3						Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)

31.4						Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)

32.1						Section 1350 Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)

32.2						Section 1350 Certification of Chief Financial Officer - Federal Realty Investment Trust (filed herewith)

32.3						Section 1350 Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)

32.4						Section 1350 Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)

101						The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.

104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


						FEDERAL REALTY INVESTMENT TRUST
						FEDERAL REALTY OP LP

May 5, 2022						/s/ Donald C. Wood
						Donald C. Wood,
						Chief Executive Officer and Trustee
						(Principal Executive Officer)


May 5, 2022						/s/ Daniel Guglielmone
						Daniel Guglielmone
						Executive Vice President - Chief Financial Officer and Treasurer
						(Principal Financial and Accounting Officer)


May 5, 2022						/S/ DANIEL GUGLIELMONE
						Daniel Guglielmone,
						Executive Vice President - Chief Financial Officer and Treasurer
						(Principal Financial and Accounting Officer)


May 5, 2021						/S/ DONALD C. WOOD
						Donald C. Wood,
						President, Chief Executive Officer and Trustee
						(Principal Executive Officer)