<PAGE>
Rule No. 424(b)(5)
Registration No. 33-51029
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED DECEMBER 13, 1993)
2,500,000 SHARES
[LOGO OF FEDERAL REALTY INVESTMENT TRUST APPEARS HERE]
COMMON SHARES
-----------
Founded in 1962, Federal Realty Investment Trust (the "Trust") is an owner,
operator and redeveloper of community and neighborhood shopping centers. At
February 28, 1994, the Trust owned 47 community and neighborhood shopping
centers, one enclosed mall and one apartment complex. The Trust is offering
2,500,000 common shares of beneficial interest, no par or stated value (the
"Shares"). The Trust's Shares are listed on the New York Stock Exchange under
the symbol "FRT." The last reported sale price for the Shares on March 29, 1994
was $26.
Concurrently with the delivery to the Underwriters of the Shares offered
hereby, the Trust will sell to an institutional investor 840,000 additional
Shares at a price of $25.875 per Share, for an aggregate purchase price of
$21,735,000. See "Concurrent Offering."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) TRUST(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................................. $26.00 $1.38 $24.62
- --------------------------------------------------------------------------------
Total(3).................................. $65,000,000 $3,450,000 $61,550,000
================================================================================
</TABLE>
(1) The Trust has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Trust estimated at $325,000.
(3) The Trust has granted the several Underwriters an option to purchase up to
an additional 375,000 Shares to cover over-allotments. If all of such
Shares are purchased, the total Price to Public, Underwriting Discount and
Proceeds to Trust will be $74,750,000, $3,967,500 and $70,782,500,
respectively. See "Underwriting."
-----------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-----------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters. The Underwriters reserve
the right to withdraw, cancel or modify such offer and to reject orders in
whole or in part. It is expected that delivery of the Shares will be made in
New York, New York on or about April 6, 1994.
-----------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
KIDDER, PEABODY & CO.
INCORPORATED
-----------
The date of this Prospectus Supplement is March 29, 1994.
<PAGE>
(Graphics appear here)
---------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OF THE
TRUST AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the detailed information and consolidated financial
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus or incorporated herein and therein by reference. As
used herein, the term "offering" refers to the Shares to be offered and sold
through the Underwriters and the term "concurrent offering" refers to the
Shares to be offered and sold to an institutional investor. See "Concurrent
Offering" and "Underwriting."
THE TRUST
Federal Realty Investment Trust is an owner, operator and redeveloper of
community and neighborhood shopping centers. Founded in 1962, the Trust is a
self-administered real estate investment trust ("REIT") that manages, leases
and supervises renovation of its properties. At February 28, 1994, the Trust
owned 47 community and neighborhood shopping centers and one enclosed mall that
together had approximately 10.6 million rentable square feet and 1,500 tenants.
As of December 31, 1993, the shopping center portfolio had an occupancy rate of
95%.
An important part of the Trust's investment strategy is to acquire older,
well-located centers and to enhance their operating performance through a
program of renovation, expansion, re-configuration, re-leasing and re-
merchandising. The Trust's properties are located in twelve states with
approximately 77% of the Trust's rental income for the year ended December 31,
1993 generated by the properties located in three major metropolitan areas: New
York/New Jersey, Philadelphia and Baltimore/Washington, D.C. The Trust's
strategy is to acquire centers located in well-established, densely populated
communities with attractive retailing demographics and limited opportunities
for new competing developments. The typical Trust property is located on a
major traffic artery, with good visibility and access.
The Trust has made 125 consecutive quarterly distributions and has increased
its distribution rate for each of the last 26 years. This is the longest record
of annual distribution increases in the REIT industry. The current annual
indicated distribution rate is $1.56 per Share.
THE OFFERINGS(1)
<TABLE>
<S> <C>
Shares Offered............................ 2,500,000 Shares in this offering
and 840,000 Shares in the concurrent
offering
Shares to be Outstanding After the Offer-
ings..................................... 31,450,118 Shares
Use of Proceeds........................... Principally to repay debt
New York Stock Exchange Symbol............ FRT
</TABLE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues............................. $82,852 $90,949 $97,652 $100,197 $115,337
Net income........................... 11,997 5,841 4,800 9,430 18,130
Net cash provided by operating activ-
ities(2)............................ 18,696 23,484 26,111 28,236 35,183
Distributions made................... 19,174 23,688 25,426 33,319 40,611
Distributions made per share......... 1.36 1.42 1.49 1.525 1.545
OTHER DATA
Funds from operations(3)............. 20,956 23,985 26,246 30,020 41,489
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1993 AS ADJUSTED(1) (4)
----------------- ------------------
<S> <C> <C>
BALANCE SHEET DATA
Real estate assets, at cost................ $758,088 $758,088
Notes payable.............................. 30,519 30,519
Long-term debt............................. 333,712 293,545
Shareholders' equity....................... 284,199 367,159
</TABLE>
- -------
(1) Assumes no exercise of Underwriters' over-allotment option.
(2) Determined in accordance with Financial Accounting Standards Board
Statement No. 95.
(3) Defined as income before depreciation and amortization and extraordinary
items less gain on sale of real estate. Funds from operations differs from
net cash provided by operating activities primarily because funds from
operations does not include changes in operating assets and liabilities.
Funds from operations is a supplemental measure of performance that does
not replace net income as a measure of performance or net cash provided by
operating activities as a measure of liquidity. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
for additional discussion.
(4) Adjusted to give effect to the offerings and the application of
approximately $40.2 million of the net proceeds to repay debt. See "Use of
Proceeds."
S-3
<PAGE>
THE TRUST
Federal Realty Investment Trust is an owner, operator and redeveloper of
community and neighborhood shopping centers. Founded in 1962, the Trust is a
self-administered real estate investment trust that manages, leases and
supervises renovation of its properties. At February 28, 1994, the Trust owned
47 community and neighborhood shopping centers, one enclosed mall, and one
apartment complex. The shopping center portfolio has approximately 10.6 million
rentable square feet and 1,500 tenants. At December 31, 1993, the occupancy
rate of the shopping centers, excluding centers acquired in the previous twelve
months, was 96%. Including all shopping centers owned at December 31, 1993, the
occupancy rate was 95%.
An important part of the Trust's strategy is to acquire older, well-located
centers and to enhance their operating performance through a program of
renovation, expansion, re-configuration, re-leasing and re-merchandising. The
Trust has focused primarily on community and neighborhood shopping centers that
are anchored by supermarkets, drug stores or high volume, value oriented
retailers that provide consumer necessities. The Trust's shopping center leases
typically are structured to include minimum rents and percentage rents based on
tenants' sales volumes and reimbursement of operating and real estate tax
expenses.
The Trust continually evaluates its properties for renovation, re-tenanting
and expansion opportunities. Similarly, the Trust regularly reviews its
portfolio and from time to time considers selling certain of its properties.
The Trust's operating results are affected by general economic and real estate
conditions, including conditions specific to the markets where the Trust's
properties are located.
The Trust's management believes that now is an opportune time to expand the
Trust's portfolio of properties. In its view, many property owners are in the
market to sell properties, often as a result of the owners' financial distress
or pressure from their real estate lenders. Consequently, in 1993 the Trust
raised equity and partially restructured its debt in order to position itself
to acquire additional properties.
The Trust, a District of Columbia business trust of unlimited duration,
maintains its offices at 4800 Hampden Lane, Bethesda, Maryland 20814 (telephone
301/652-3360).
ACQUISITIONS AND REDEVELOPMENT UPDATE
In 1993 the Trust acquired seven shopping centers totalling 1.5 million
square feet. The Trust spent $101.8 million to acquire six of the centers and
$6.2 million was incurred in connection with the long-term lease of the seventh
shopping center. The average occupancy rate of the properties at the time of
their purchase was 94%. The centers are pictured on the inside front cover of
this Prospectus Supplement and include Pan Am Shopping Center in Fairfax,
Virginia; Gaithersburg Square and Quince Orchard Plaza in Gaithersburg,
Maryland; Crossroads Shopping Center in Highland Park, Illinois; Bala Cynwyd
Shopping Center in suburban Philadelphia, Pennsylvania; Dedham Plaza in
suburban Boston, Massachusetts; and Bethesda Row in Bethesda, Maryland.
During 1993 the Trust spent $34.3 million for improvements to its properties.
These improvements included $6.5 million to purchase and renovate a department
store building at the Shops at Willow Lawn in Richmond, Virginia, $4.6 million
to begin renovation and retenanting of Ellisburg Circle in Cherry Hill, New
Jersey, $1.5 million for the first phase of the redevelopment at Huntington
Shopping Center in Huntington, New York, and $2.3 million to begin the
renovation and retenanting at Troy Shopping Center in Troy, New Jersey.
The Trust intends to continue its acquisition and redevelopment activities in
1994. Acquisitions are targeted for the Trust's core major metropolitan markets
of New York/New Jersey, Philadelphia
S-4
<PAGE>
and Baltimore/Washington, D.C. as well as the Chicago, Illinois and Boston,
Massachusetts markets. In addition, the Trust is targeting for acquisition
newer centers in its core markets which meet the Trust's demographic and
credit-quality criteria. The Trust is also exploring site acquisitions in its
core markets to permit the Trust to develop new shopping centers.
Planned redevelopment and re-merchandising activities in 1994 include the
renovation and redevelopment of Congressional Plaza in Rockville, Maryland,
the first phase of redevelopment of Brick Plaza in Brick, New Jersey, the
renovation and re-merchandising of Gaithersburg Square as well as the
completion of the Ellisburg Circle Shopping Center and Huntington Shopping
Center renovations begun in 1993. In total, capital improvements planned for
the Trust's properties in 1994 are budgeted at $49.0 million.
FINANCING UPDATE
In 1993 the Trust sought to strengthen its capital structure, reduce its
cost of funds and improve its access to capital. The Trust accomplished these
objectives through a combination of key financial transactions which are
described below.
In April 1993 the Trust sold 2.8 million Shares in a public offering,
raising net proceeds of $72.8 million. In May 1993 $50.5 million of the
proceeds were used to redeem the Trust's 8.65% Senior Notes.
In 1993 the Trust purchased $3.7 million of its 5 1/4% convertible
subordinated debentures due 2002 (the "Debentures"), so that at December 31,
1993 there was $40.2 million of the original $100 million outstanding. At the
debenture holders' request, the Debentures are required to be redeemed by the
Trust on April 30, 1994 at 120% of their principal amount. To record the
premium, the Trust has recorded interest at 7.53% on the Debentures. A portion
of the proceeds of this offering and the concurrent offering are expected to
be used to meet this obligation.
In October 1993 the Trust took advantage of favorable financing rates and
issued in Europe $75.0 million of 5 1/4% convertible subordinated debentures,
realizing cash proceeds of approximately $73.0 million. The debentures, which
mature in 2003, are convertible into Shares at $36 per Share. The debentures
are redeemable by the Trust, in whole, at any time after October 28, 1998 at
100% of the principal amount plus accrued interest.
During 1993 the Trust prepaid $34.9 million of mortgage obligations which
had a weighted average interest rate of 9.6%.
To further position itself to acquire additional properties, during 1993 the
Trust arranged $70.0 million of unsecured medium-term revolving credit
facilities with three banks. The Trust uses these facilities to fund
acquisitions and other cash requirements until conditions are favorable for
issuing equity or long-term debt. The weighted average interest rate on
borrowings during 1993 on these facilities was 4.2%.
Reflecting the successful results of the Trust's efforts to restructure its
debt and increase its equity, in June 1993 Standard and Poor's raised the
ratings on the Trust's convertible subordinated debentures from BBB- to BBB.
In September 1993 Moody's Investors Service also upgraded the Trust's
subordinated debt, from Ba1 to Baa2.
The Trust is continuing its debt restructuring program in 1994. In February
1994 the Trust borrowed $22.5 million, which was used to pay down the December
1993 balance on the revolving credit facilities. The loan, which is secured by
Northeast Plaza Shopping Center, bears interest at 150 basis points over the
London Interbank Offered Rate (currently 5.25%) and replaces a loan, prepaid
S-5
<PAGE>
in 1993, which was secured by this property and as of January 1994 would have
borne interest at 9.75%.
In addition, the Trust obtained an additional unsecured revolving credit
facility of $15.0 million in February 1994, bringing its total availability to
$85.0 million.
CONCURRENT OFFERING
Concurrently with the delivery to the Underwriters of the Shares in this
offering, an institutional investor will purchase from the Trust 840,000
Shares at the price stated on the cover page of this Prospectus Supplement.
USE OF PROCEEDS
The net proceeds to the Trust from the sale of the Shares offered hereby and
in the concurrent offering are approximately $82,960,000 ($92,192,500 if the
Underwriters' over-allotment option is exercised in full). The Trust intends
to use the majority of the proceeds of these offerings to repay debt,
principally to meet the potential $48.2 million refinancing requirement of the
Debentures (the Trust's 5 1/4% convertible subordinated debentures due 2002
which have an effective interest rate of 7.53%) and to repay the Trust's
revolving credit facilities. The remaining net proceeds from these offerings
are expected to be used for property acquisitions and improvements.
PRICE RANGE OF THE SHARES AND DISTRIBUTIONS
The Trust's Shares are listed on the New York Stock Exchange under the
symbol FRT. The following table sets forth the high and low sale prices of the
Shares for the periods indicated and the distributions made per Share in such
periods.
<TABLE>
<CAPTION>
DISTRIBUTIONS
HIGH LOW MADE
------ ---- -------------
<S> <C> <C> <C>
1992
1st Quarter............. $22 1/2 $18 3/4 $ .380
2nd Quarter............. 21 3/4 20 .380
3rd Quarter............. 25 21 3/8 .380
4th Quarter............. 25 1/4 22 .385
------
1.525
1993
1st Quarter............. 29 23 7/8 .385
2nd Quarter............. 28 7/8 24 3/4 .385
3rd Quarter............. 30 1/4 25 1/2 .385
4th Quarter............. 29 7/8 24 1/8 .390
------
1.545
1994
1st Quarter (through
March 29, 1994)........ 29 1/2 23 .390
</TABLE>
The last reported sale price of the Shares on the New York Stock Exchange on
March 29, 1994 was $26 per Share. As of December 31, 1993, there were 4,564
registered holders of Shares.
The Trust has made 125 consecutive quarterly distributions and has increased
its distribution rate every year for each of the last 26 years. The current
indicated annual distribution rate is $1.56 per Share. On March 3, 1994 the
Trust declared a cash dividend of $.39 per Share, payable on April 15,
S-6
<PAGE>
1994 to shareholders of record on March 25, 1994. The Trust's ability to make
distributions depends on a number of factors, including its net cash provided
by operating activities, capital commitments and debt repayment schedules.
For federal income tax purposes, distributions made to shareholders may
consist of ordinary income, capital gains distributions, non-taxable return of
capital or a combination thereof. Distributions that exceed the Trust's current
and accumulated earnings and profits constitute a return of capital and reduce
the shareholder's basis in his Shares. To the extent that a distribution
exceeds both current and accumulated earnings and profits and the shareholder's
basis in his Shares, it will generally be treated as gain from the sale or
exchange of that shareholder's Shares. If the Trust designates certain
distributions as capital gains distributions in accordance with Section
857(b)(3)(B) and (C) of the Internal Revenue Code of 1986, as amended (the
"Code"), such distributions will be taxable as long-term capital gains to the
shareholder, regardless of the length of time the shareholder has held his
Shares. Under Section 291 of the Code, however, a corporate shareholder may be
required to treat up to 20% of a capital gains distribution as ordinary income.
Any loss upon the sale or exchange of Shares held for six months or less will
be treated as long-term capital loss to the extent of any capital gains
distributions received by the shareholder. The Trust annually notifies
shareholders as to the taxability of distributions made during the preceding
year. Since 1989, cash distributions per Share made to shareholders have been
taxable as set forth below.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Ordinary income................................. $1.03 $1.05 $ .83 $ .610 $1.095
Capital gains................................... -- .06 -- -- --
Return of capital............................... .33 .31 .66 .915 .450
----- ----- ----- ------ ------
Total distributions made........................ $1.36 $1.42 $1.49 $1.525 $1.545
===== ===== ===== ====== ======
</TABLE>
The Trust offers a dividend reinvestment plan which allows its shareholders
to automatically reinvest distributions, as well as make voluntary cash
payments towards the purchase of additional Shares.
S-7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Trust and should be read in conjunction with the Consolidated Financial
Statements and Notes incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------ -------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues
Rental income......... $ 72,771 $ 80,698 $ 88,350 $ 89,971 $105,948
Interest.............. 6,588 6,545 4,675 5,514 3,894
Other property income. 3,493 3,706 4,627 4,712 5,495
-------- -------- -------- -------- --------
82,852 90,949 97,652 100,197 115,337
Expenses
Interest.............. 33,129 34,709 38,147 35,201 31,550
Depreciation and amor-
tization............. 16,174 19,091 21,922 23,033 25,375
Property expenses..... 24,817 26,751 29,254 29,795 36,843
General and adminis-
trative.............. 3,569 5,005 3,364 4,744 4,675
-------- -------- -------- -------- --------
77,689 85,556 92,687 92,773 98,443
-------- -------- -------- -------- --------
Income before investors'
share of operations,
gain on sale of real
estate and extraordi-
nary item.............. 5,163 5,393 4,965 7,424 16,894
Investors' share of op-
erations............... (381) (499) (641) (437) (780)
-------- -------- -------- -------- --------
Income before gain on
sale of real estate and
extraordinary item..... 4,782 4,894 4,324 6,987 16,114
Gain on sale of real es-
tate................... 7,215 947 61 2,501 --
-------- -------- -------- -------- --------
Income before extraordi-
nary item.............. 11,997 5,841 4,385 9,488 16,114
Extraordinary item...... -- -- 415 (58) 2,016
-------- -------- -------- -------- --------
Net income.............. $11,997 $ 5,841 $ 4,800 $ 9,430 $ 18,130
======== ======== ======== ======== ========
Earnings per share
Income before gain on
sale of real estate
and extraordinary
item................. $ .33 $ .29 $ .25 $ .30 $ .60
Gain on sale of real
estate............... .49 .06 -- .11 --
Extraordinary item.... -- -- .03 -- .07
-------- -------- -------- -------- --------
Net income............ $ .82 $ .35 $ .28 $ .41 $ .67
======== ======== ======== ======== ========
Weighted average out-
standing shares........ 14,672 16,695 17,304 22,767 27,009
Net cash provided by op-
erating activities(1).. $ 18,696 $ 23,484 $ 26,111 $ 28,236 $ 35,183
Distributions made...... 19,174 23,688 25,426 33,319 40,611
Distributions made per
share.................. 1.36 1.42 1.49 1.525 1.545
OTHER DATA
Funds from opera-
tions(2)............... 20,956 23,985 26,246 30,020 41,489
BALANCE SHEET DATA
Cash and investments.... 65,107 33,792 51,631 71,910 13,643
Real estate assets, at
cost................... 514,552 555,879 566,056 598,867 758,088
Total assets............ 565,779 553,396 566,062 603,811 690,943
Mortgages and capital
lease obligations...... 204,616 203,287 225,859 245,694 218,545
Notes payable........... 29,357 31,222 11,665 6,117 30,519
Senior notes............ 50,000 50,000 50,000 50,000 --
8 3/4% Convertible sub-
ordinated debentures... 5,630 4,576 4,338 2,371 --
5 1/4% Convertible sub-
ordinated debentures
due 2002............... 100,000 100,000 87,665 43,847 40,167
5 1/4% Convertible sub-
ordinated debentures
due 2003............... -- -- -- -- 75,000
Total liabilities....... 419,665 424,050 414,582 380,933 406,744
Shareholders' equity.... 146,114 129,346 151,480 222,878 284,199
</TABLE>
- --------
(1) Determined in accordance with Financial Accounting Standards Board
Statement No. 95.
(2) Defined as income before depreciation and amortization and extraordinary
items less gain on sale of real estate. Funds from operations differs from
net cash provided by operating activities primarily because funds from
operations does not include changes in operating assets and liabilities.
Funds from operations is a supplemental measure of performance that does
not replace net income as a measure of performance or net cash provided by
operating activities as a measure of liquidity. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
for additional discussion.
S-8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Trust meets its liquidity requirements through net cash provided by
operating activities, long-term borrowing through debt offerings and
mortgages, medium and short-term borrowing under lines of credit, and equity
offerings. Because all or a significant portion of the Trust's net cash
provided by operating activities is distributed to shareholders, capital
outlays for property acquisitions, renovation projects and debt repayments
require funding from borrowing or equity offerings.
In order to improve its capital structure and to finance and expand its real
estate portfolio, the Trust raised equity and debt during 1992 and 1993. The
Trust took advantage of the favorable interest rate environment by replacing
higher rate debt with lower rate debt and replaced near term maturing debt
with longer term debt. Equity has increased to $284.2 million at December
1993, while total debt was $364.2 million at December 31, 1993. The Trust's
debt to equity ratio has consequently dropped from 2.5 to 1 at December 31,
1991 to 1.28 to 1 at December 31, 1993.
In June 1992 the Trust sold 3.4 million Shares in a public offering, raising
net proceeds of $66.5 million. In April 1993 another 2.8 million Shares were
issued in a public offering, netting proceeds of $72.8 million. In December
1993 another 220,000 Shares were issued for $5.4 million in a private
placement in connection with the long-term lease of a property.
In March 1992 the Trust exchanged $22.6 million principal amount of its 5
1/4% convertible subordinated debentures due 2002 for 1.3 million Shares.
Another $21.2 million principal amount of these debentures were retired in
1992 when they were repurchased by the Trust with proceeds from the public
offerings. The Trust purchased an additional $3.7 million of these debentures
in 1993, so that at December 31, 1993 there were $40.2 million of the original
$100.0 million outstanding.
The Trust called its 8 3/4% convertible subordinated debentures and its
8.65% Senior Notes for redemption in 1993. The Trust redeemed $173,000
principal amount of the 8 3/4% debentures at a price of $1017.50 per debenture
on March 15; the balance of the debentures that had been outstanding or $2.2
million were converted into Shares. The Senior Notes were redeemed on May 14,
at a price of $1010 per note for a total redemption price of $50.5 million.
In October 1993 the Trust took advantage of favorable financing rates and
issued in Europe $75.0 million of 5 1/4% convertible subordinated debentures,
realizing cash proceeds of approximately $73.0 million. The debentures, which
mature in 2003, are convertible into Shares at $36 per Share. The debentures
are redeemable by the Trust, in whole, at any time after October 28, 1998 at
100% of the principal amount plus accrued interest.
The Trust placed a $30.0 million mortgage on Federal Plaza in 1992; the
mortgage bears interest beginning at 8 1/4%, resetting every three years, and
matures in 2001. During 1992 the Trust prepaid $6.3 million of mortgage
obligations and then in 1993 the Trust prepaid another $34.9 million of
mortgage obligations; the interest rates on these mortgages were higher than
current rates.
At December 31, 1993 the Trust had $70.0 million of unsecured, medium-term
revolving credit facilities with three banks. All three facilities require
fees and have covenants requiring a minimum shareholders' equity and a maximum
ratio of debt to net worth. The Trust uses these facilities to fund
acquisitions and other cash requirements until conditions are favorable for
issuing equity or long-term debt. The maximum drawn under these facilities
during 1993 was $64.1 million; at December 31, 1993 the Trust had $24.4
million outstanding under these facilities. The average weighted interest
S-9
<PAGE>
rate on borrowings during 1993 on these facilities was 4.2%. These medium-term
facilities replace a $20.0 million unsecured line of credit which was
available at December 1992. The increase in the Trust's revolving credit
facilities is indicative of the improvement since 1991 in the credit
environment. The Trust obtained an additional unsecured revolving credit
facility of $15.0 million in February 1994, bringing its total availability to
$85.0 million.
In February 1994 the Trust borrowed $22.5 million, which was used to pay
down the December 1993 balances on the revolving credit facilities. The loan,
which is secured by the Northeast Plaza Shopping Center, bears interest at 150
basis points over LIBOR, the London Interbank Offered Rate, and is due on
January 31, 1995.
In June 1993 Standard and Poor's raised the ratings on the Trust's
convertible subordinated debentures from BBB- to BBB, reflecting the
successful results of the Trust's restructuring of its debt and increasing of
its equity. In September 1993 Moody's Investors Service also upgraded the
Trust's subordinated debt, from Ba1 to Baa2.
The Trust's long-term debt has varying maturity dates and in a number of
instances includes balloon payments or other contractual provisions that could
require significant repayments during a particular period. The earliest
balloon repayment is in April 1994, when the holders of the Trust's 5 1/4%
convertible subordinated debentures due 2002 may require the Trust to redeem
the debentures for $48.2 million (120% of the principal amount). The next
balloon repayment is in 1998 when approximately $41.3 million of mortgages are
due.
Major expenditures of capital by the Trust during 1993 included the
following: (1) $101.8 million to acquire six shopping centers; (2) $6.2
million incurred in connection with the long-term lease of a seventh shopping
center; (3) $32.5 million to prepay mortgages; (4) $50.5 million to redeem the
Senior Notes; (5) $4.6 million to redeem portions of the convertible
subordinated debt; and (6) $34.3 million in improvements to properties. These
improvements included $6.5 million to purchase and renovate a department store
building at The Shops at Willow Lawn, $4.6 million to begin renovation and
retenanting of Ellisburg Circle Shopping Center, $1.5 million for the first
phase of the redevelopment at Huntington Shopping Center, $2.3 million to
begin the renovation and retenanting at Troy Shopping Center and $9.5 million
in tenant work. Cash requirements for these expenditures were met by the net
proceeds of the recent equity and debt offerings and from borrowings on the
revolving credit facilities.
Major expenditures of capital by the Trust during 1992 included the
following: (1) $15.3 million to purchase Ellisburg Circle Shopping Center; (2)
$9.1 million to purchase the land underlying Wildwood Shopping Center which
had been subject to a long-term ground lease; (3) $8.5 million to repay short-
term borrowings; (4) $23.6 million to repurchase 5 1/4% convertible
subordinated debentures due 2002; (5) $8.0 million to prepay mortgages; and
(6) $15.2 million in improvements to properties. Cash requirements for these
expenditures were met by the net proceeds from the sale of Sargent Road and
25th Street Shopping Centers, the net proceeds from the mortgage on Federal
Plaza and the proceeds of public offerings.
The Trust has budgeted $49.0 million for capital improvements to its
properties in 1994. These improvements include: (1) $14.0 million to begin the
renovation and redevelopment of Congressional Plaza; (2) $4.0 million to begin
renovation at Brick Plaza; (3) $6.0 million to begin renovation of
Gaithersburg Square; and (4) approximately $9.0 million for tenant work. In
addition the Trust has budgeted $48.2 million to redeem the 5 1/4% convertible
subordinated debentures due 2002, which the holders may require the Trust to
redeem in April 1994, and $4.1 million to exercise an option to purchase the
land at Northeast Shopping Center in December 1994. These expenditures will be
paid from proceeds from borrowings under its medium-term revolving credit
facilities and from the proceeds of this offering and the concurrent offering.
S-10
<PAGE>
The State of New Jersey Division of Taxation has assessed the Trust $364,000
in taxes, penalty and interest for the years 1985 through 1990, since the State
has disallowed the dividends paid deduction in computing New Jersey taxable
income. The Trust has filed a complaint in the Tax Court of New Jersey
contesting the assessment since the Trust believes that it is entitled to the
deduction. At this time, the outcome of this matter is unknown.
The North Carolina Department of the Environment, Health and Natural
Resources issued a Notice of Violation ("NOV") against a dry cleaner tenant at
Eastgate Shopping Center in Chapel Hill, North Carolina concerning a spill at
the shopping center. As owner of the shopping center, the Trust was named in
and received a copy of the NOV. Estimates to remediate the spill range from
$300,000 to $500,000. An agreement is being drawn with two previous owners of
the shopping center to share the costs to remediate. The Trust has recorded a
liability of $120,000 as its estimated share of the cleanup costs.
Contaminants at levels in excess of New Jersey cleanup standards were
identified at a shopping center in New Jersey. The Trust has retained an
environmental consultant to investigate the contamination. The Trust is also
evaluating whether it has insurance coverage for this matter. At this time, the
Trust is unable to determine what the range of remediation costs might be. The
Trust has also identified chlorinated solvent contamination at two other
properties. In each case, the contamination appears to be linked to the current
and/or previous dry cleaner. The Trust intends to look to the responsible
parties for any remediation effort. Evaluation of these situations is
preliminary and it is impossible to estimate the range of remediation costs, if
any.
The Trust reserved at closing $2.25 million for environmental issues
principally associated with the recently acquired Gaithersburg Square. Pursuant
to an indemnity agreement entered into with the seller at closing, the Trust
agreed to take certain actions with respect to identified chlorinated solvent
contamination. The seller indemnified the Trust for certain third party claims
and government requirements related to contamination at adjacent properties.
Management believes that the combination of cash available at December 31,
1993, the revolving credit facilities, and the unencumbered value of the
Trust's properties provide the Trust with adequate capital resources and
liquidity for operating purposes in the near future. The Trust, however,
continues to renovate its existing centers and seeks to acquire more shopping
centers. The Trust will need to raise additional equity or issue additional
debt in order to fund its planned renovations in 1994 and to purchase any
additional shopping centers. The Trust believes that it has the ability to
raise this needed capital through the offering of equity and debt securities so
that it may pursue its growth plans as well as to meet its longer term capital
and debt financing needs, including scheduled loan payments and contractual
repayment obligations.
RESULTS OF OPERATIONS
Funds from operations is defined as income before depreciation and
amortization and extraordinary items less gains on sale of real estate.
Management believes that funds from operations is an appropriate supplemental
measure of the Trust's operating performance because it believes that
reductions for depreciation and amortization charges are not meaningful in
evaluating income-producing real estate, which have historically been
appreciating assets. The Trust acquires, evaluates and sells income-producing
properties based upon operating income without taking into account property
depreciation and amortization charges and utilizes funds from operations,
together with
S-11
<PAGE>
other factors, in setting shareholder distribution levels. Gains on sale of
real estate and extraordinary items are also excluded from this supplemental
measure of performance because such amounts are not part of the ongoing
operations of the Trust's portfolio. Funds from operations does not replace net
income as a measure of performance or net cash provided by operating activities
as a measure of liquidity.
Funds from operations increased 38% in 1993 to $41.5 million from $30.0
million in 1992. Funds from operations increased 14% in 1992 to $30.0 million
from $26.2 million in 1991.
The Trust's shopping center leases generally provide for minimum rents, with
periodic increases. Most shopping center tenants pay a majority of on-site
operating expenses. Many leases also contain a percentage rent clause which
calls for additional rents based on tenant sales, so that at a given sales
volume if prices increase, so does rental income. These features in the Trust
leases reduce the Trust's exposure to higher costs caused by inflation,
although inflation has not been significant in recent years.
Rental income, which consists of minimum rent, percentage rent, and cost
recoveries, increased from $90.0 million in 1992 to $105.9 million in 1993. If
centers acquired and sold in 1992 and 1993 are excluded, rental income
increased 8.8% from $88.5 million in 1992 to $96.3 million in 1993. Perring
Plaza, whose redevelopment was completed late in 1992, and Huntington Shopping
Center, whose first phase of retenanting and redevelopment was completed in
1993, contributed 39% of this increase. Rental income increased from $88.4
million in 1991 to $90.0 million in 1992; if centers acquired and sold in 1992
and 1991 are excluded, rental income increased 3.5% from $85.5 million to $88.8
million.
Minimum rents increased from $66.9 million in 1991 to $68.8 million in 1992
to $81.3 million in 1993. If centers acquired and sold during these years are
excluded, minimum rents increased from $64.7 million in 1991 to $67.8 million
in 1992 to $73.6 million in 1993. Forty-eight percent of the increase from 1992
to 1993 was contributed by Perring Plaza and Huntington Shopping Center. Of the
1992 increase, $400,000 was contributed by Perring Plaza and $1.2 million was
contributed by Federal Plaza which was under redevelopment until May 1991.
Cost reimbursements, which generally increase as expenses increase, rose from
$14.7 million in 1991 to $14.9 million in 1992 to $18.2 million in 1993.
Excluding centers acquired and sold during the three-year period, cost
reimbursements increased from $14.3 million in 1991 to $14.6 million in 1992 to
$16.4 million in 1993. The increase in 1993 recoveries relates to a
corresponding increase in expense in 1993 as discussed below, while the small
increase in 1992 from 1991 relates to the corresponding slight increase in
expense in 1992 as compared to 1991.
Percentage rents are a fluctuating source of revenue based on tenant sales
volume and lease rollovers. When leases are renewed the Trust seeks to set
minimum rent at levels that include the past year's percentage rents.
Percentage rents have decreased from $4.6 million in 1991 to $4.2 million in
1992 to $4.1 million in 1993. Excluding centers sold and acquired during the
three-year period, percentage rents have decreased from $4.3 million in 1991 to
$4.0 million in 1992 to $3.9 million in 1993. The decreases resulted primarily
from rolling percentage rent into minimum rents as leases renew and from the
expiration of certain leases.
Other property income, which includes items which tend to fluctuate from
period to period, such as utility reimbursements, telephone income, merchant
association dues, lease termination fees and temporary occupant income, has
risen from $4.6 million in 1991 to $4.7 million in 1992 to $5.5 million in
1993. Excluding centers bought and sold during the three-year period, other
property income increased from $4.4 million in 1991 to $4.6 million in 1992 to
$4.8 million in 1993. The increase in 1993 was due primarily to an increase in
lease termination fees.
S-12
<PAGE>
Rental expenses have increased from year-to-year in dollar amount,
especially in 1993 where $2.1 million of the increase is due to newly acquired
centers. However, rental expenses have remained fairly stable as a percentage
of property income (rental income plus other income); 21.9% in 1991, 22.1% in
1992 and 23.8% in 1993. Of the expenses included in rental expense, the
greatest changes have been in repairs and maintenance and other operating
expenses. Snow removal expense is the primary reason for the increase in
repairs and maintenance. Other operating expenses have increased due to an
increase in bad debt, environmental expense and marketing expenses for the
centers. Real estate taxes have remained stable as a percentage of property
income, at approximately 9.3%.
Depreciation and amortization charges have increased from $21.9 million in
1991 to $23.0 million in 1992 to $25.4 million in 1993. The increase in 1993
is due to depreciation on the recent acquisitions and renovations, while in
1992 the increase was primarily due to increased depreciation on Federal
Plaza, depreciation on renovations and increased amortization of lease costs.
Interest income decreased from $5.5 million in 1992 to $3.9 million in 1993
due primarily to lower cash balances, as cash was used for acquisitions,
renovations, and debt repayments. Interest income increased from $4.7 million
in 1991 to $5.5 million in 1992, despite lower interest rates in 1992 since
average cash balances were higher in 1992 due to the temporary investment of
the proceeds of public offerings.
Interest expense has decreased from $35.2 million in 1992 to $31.6 million
in 1993, reflecting the redemption of the Senior Notes and the 8 3/4%
convertible subordinated debentures, the reduction in the 5 1/4% convertible
subordinated debentures due 2002 and the prepayment of various mortgages,
partially offset by interest expense of the revolving credit facilities and
interest on the 5 1/4% convertible subordinated debentures due 2003. Interest
expense decreased from $38.1 million in 1991 to $35.2 million in 1992 due
primarily to the exchange and repurchase of $56.2 million of the Trust's 5
1/4% convertible subordinated debentures due 2002 in 1991 and 1992.
Administrative expenses have ranged from 3.6% of property income (rental
income plus other income) in 1991 to 4.3% in 1992 to 4.2% in 1993. During the
worst of the recession in 1991 the Trust reduced overhead expenses by reducing
the number of employees and freezing or reducing many salaries. Employment
practices have now returned to normal.
Other charges of $682,000 in 1992 is comprised of two items. One is the
$960,000 writedown of an investment in Olympia and York notes, partially
offset by the recovery of $278,000 of a legal settlement.
Income before gain on sale of real estate and extraordinary item increased
$9.1 million from 1992 to 1993, primarily because of increased revenues from
recent acquisitions and redevelopments and because of the decrease in interest
expense. Income before gain on sale of real estate and extraordinary item
increased $2.7 million in 1992 from 1991 due to an increase in revenue coupled
with a decrease in interest expense partially offset by higher depreciation
and amortization, administrative expense and net other charges.
Gain on sale of real estate is dependent on the extent and timing of sales.
The 1992 gain was primarily due to the sale of Sargent Road and 25th Street
Shopping Centers. The 1991 gain was on the sale of Lawrence Village Shopping
Center.
In 1993 the Trust had a net gain of $2.0 million on the early extinguishment
of debt, resulting from a $3.1 million gain on the extinguishment of the
mortgage at Northeast Plaza, offset by losses on the redemption of the Senior
Notes, convertible subordinated debentures and two mortgages. In 1992 the
Trust had a net loss of $58,000 on the early extinguishment of debt, resulting
from the prepayment of two mortgages and the exchange and repurchase of its 5
1/4% convertible subordinated debentures due 2002. In 1991 the Trust had a net
gain of $415,000 on the early extinguishment of debt, consisting of a gain on
the repurchase of the Trust's 5 1/4% convertible subordinated debentures due
2002 partially offset by $587,000 in prepayment fees on the early
extinguishment of three mortgages.
As a result of the foregoing items, net income was $18.1 million in 1993,
$9.4 million in 1992 and $5.8 million in 1991.
S-13
<PAGE>
IMPACT OF NEW ACCOUNTING STANDARDS
In May 1993 the Financial Accounting Standards Board (FASB) issued FASB No.
115, "Accounting for Certain Investments in Debt and Equity Securities." This
standard will be effective for 1994 financial statements and requires the
classification of debt and equity investments into one of three categories:
held-to-maturity, trading or available-for-sale. The Trust does not believe
that the implementation of the standard in 1994 will have a material effect on
the Trust's financial statements since the Trust's current accounting for debt
and equity investments does not differ materially from the standard.
PROPERTIES
The Trust currently owns or has leasehold interests in 47 neighborhood and
community shopping centers, one enclosed mall (Willow Lawn) and one apartment
complex. The following table sets forth information concerning the Trust's
properties as of December 31, 1993.
<TABLE>
<CAPTION>
CAPITAL PERCENT
IMPROVEMENTS LEASED AT
YEAR RENTABLE ACQUISITION SINCE TOTAL DECEMBER 31, PRINCIPAL
ACQUIRED SQUARE FEET COST ACQUISITION COST 1993 TENANTS
-------- ----------- ------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
Allwood 1988 52,000 $ 3,920,000 $ 94,000 $ 4,014,000 97% Grand Union
Clifton, N.J.(1) Mandee Shop
Andorra 1988 252,000 14,778,000 1,235,000 16,013,000 98 Clover
Philadelphia, Pa. Andorra Theater
Acme Markets
Bala Cynwyd 1993 228,000 16,986,000 298,000 17,284,000 94 Lord & Taylor
Bala Cynwyd, Pa. Olive Garden
Barracks Road 1985 450,000 20,822,000 8,121,000 28,943,000 99 Rose's
Charlottesville, Va. Safeway
The Grocery Store
Bethesda Row 1993 223,000 18,823,000 -- 18,823,000 94 Giant Food
Bethesda, Md.(1) Giant Pharmacy
Blue Star 1988 398,000 29,922,000 680,000 30,602,000 100 Caldor
Watchung, N.J.(1) Shop Rite
Toys R Us
Brainerd Village 1987 216,000 9,926,000 1,707,000 11,633,000 68 Office Depot
Chattanooga, Tn. 50 Off
Brick Plaza 1989 314,000 24,715,000 2,459,000 27,174,000 100 A&P Supermarkets
Brick Township, N.J.(1) Steinbach's
Brunswick 1988 261,000 12,456,000 529,000 12,985,000 100 Caldor
New Brunswick, N.J.(1) Grand Union
Clifton 1988 80,000 3,646,000 69,000 3,715,000 100 Acme Markets
Clifton, N.J.(1) Channel Home
Congressional Plaza 1965 247,000 10,217,000 2,857,000 13,074,000 72 Fresh Fields
Rockville, Md.(2) Tower Records
Crossroads 1993 197,000 16,246,000 187,000 16,433,000 97 Gold Standard Liquors
Highland Park, Il. TJ Maxx
Dedham Plaza 1993 255,000 25,287,000 -- 25,287,000 99 Ames
Dedham, Ma. Workout Plus
Eastgate 1986 159,000 7,383,000 4,040,000 11,423,000 98 Southern Season
Chapel Hill, N.C. Food Lion
Ellisburg Circle 1992 255,000 15,337,000 5,021,000 20,358,000 98 Shop Rite
Cherry Hill, N.J. Ross Dress for Less
Falls Plaza 1967 67,000 1,265,000 1,179,000 2,444,000 100 Giant Food
Falls Church, Va. Peoples Drug
Feasterville 1980 98,000 1,600,000 2,144,000 3,744,000 96 Genuardi Markets
Feasterville, Pa.(1) Eric Theater
Office Max
Federal Plaza 1989 243,000 28,111,000 31,046,000 59,157,000 98 Bed, Bath & Beyond
Rockville, Md. CompUSA
T.J. Maxx
Flourtown 1980 106,000 2,153,000 788,000 2,941,000 98 Channel Home
Flourtown, Pa. Genuardi Markets
Gaithersburg Square 1993 162,000 12,972,000 219,000 13,191,000 88 Peoples Drug
Gaithersburg, Md. Superfresh Food Markets
Governor Plaza 1985 269,000 6,973,000 9,817,000 16,790,000 97 Office Depot
Glen Burnie, Md. Frank's Nursery
Syms
Hamilton 1988 180,000 5,405,000 1,105,000 6,510,000 100 Steven's Furniture
Hamilton, N.J.(1) Shop Rite
</TABLE>
S-14
<PAGE>
<TABLE>
<CAPTION>
CAPITAL PERCENT
IMPROVEMENTS LEASED AT
YEAR RENTABLE ACQUISITION SINCE TOTAL DECEMBER 31, PRINCIPAL
ACQUIRED SQUARE FEET COST ACQUISITION COST 1993 TENANTS
-------- ----------- ------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
Huntington 1988 275,000 $ 16,008,000 $ 2,871,000 $ 18,879,000 100% Service Merchandise
Huntington, N.Y.(1) Bed, Bath & Beyond
Toys R Us
Lancaster 1980 106,000 2,103,000 1,850,000 3,953,000 93 Giant Eagle
Lancaster, Pa.(1)
Langhorne Square 1985 189,000 3,694,000 8,060,000 11,754,000 98 Marshalls
Langhorne, Pa. Luxury Linens
Laurel Centre 1986 379,000 29,983,000 10,248,000 40,231,000 95 Giant Food
Laurel, Md. Marshalls
Toys R Us
Lawrence Park 1980 334,000 7,160,000 4,534,000 11,694,000 98 Best Products
Broomall, Pa.(1) Acme Markets
Rickel Home Center
Loehmann's Plaza 1983 245,000 16,333,000 4,099,000 20,432,000 95 Holiday Spa
Fairfax, Va.(3) Linens N Things
Mid-Pike Plaza 1982 301,000 10,335,000 4,670,000 15,005,000 100 Syms
Rockville, Md.(1) Toys R Us
North City Plaza 1987 111,000 2,500,000 455,000 2,955,000 92 Kmart
New Castle, Pa.(4) Joseph's Supermarket
Northeast 1983 303,000 11,748,000 6,710,000 18,458,000 96 Burlington Coat Factory
Philadelphia, Pa. Marshalls
Northeast Plaza 1986 446,000 33,166,000 5,085,000 38,251,000 92 Levitz Furniture
Atlanta, Ga. Sportstown
Publix
Old Keene Mill 1976 92,000 1,636,000 1,806,000 3,442,000 95 Fresh Fields
Springfield, Va. Sassafras
Pan Am 1993 218,000 21,623,000 1,051,000 22,674,000 91 Micro Center
Fairfax, Va. Safeway
Perring Plaza 1985 413,000 9,261,000 13,583,000 22,844,000 96 Metro Foods
Baltimore, Md. Home Depot
Quince Orchard Plaza 1993 241,000 11,146,000 644,000 11,790,000 91 Circuit City
Gaithersburg, Md. MJ Design
U.S. Dept. of Energy
Roseville 1973 140,000 2,126,000 1,958,000 4,084,000 100 F&M Distributors
Roseville, Mi. Handy Andy
Rutgers 1988 217,000 14,429,000 95,000 14,524,000 100 Foodtown
Franklin, N.J.(1) Kmart
Shillington 1980 74,000 1,387,000 1,566,000 2,953,000 81 Rite Aid
Shillington, Pa.(1) Homestyle Buffet
Town & Country Plaza 1990 214,000 4,766,000 506,000 5,272,000 81 Winn-Dixie
Hammond, La.(5) Weiner's Department
Store
Town & Country 1973 236,000 3,387,000 4,913,000 8,300,000 100 Burlington Coat Factory
Springfield, Il. National Supermarkets
Troy 1980 205,000 5,193,000 4,506,000 9,699,000 97 Kmart
Parsippany-Troy, Pathmark
N.J.(1) CompUSA
Tysons Station 1978 50,000 841,000 2,237,000 3,078,000 100 Sassafras
Falls Church, Va. Linens N Things
Westfalls 1972 60,000 1,073,000 1,781,000 2,854,000 100 Staples
Falls Church, Va.
Wildwood 1969 84,000 10,196,000 4,669,000 14,865,000 100 Sutton Place Gourmet
Bethesda, Md. Peoples Drug
Williamsburg 1986 239,000 9,918,000 1,935,000 11,853,000 96 Rose's
Williamsburg, Va. Peebles
Food Lion
Willow Grove 1984 220,000 8,243,000 15,127,000 23,370,000 100 Toys R Us
Willow Grove, Pa. Marshalls
Willow Lawn 1983 451,000 10,915,000 35,641,000 46,556,000 95 Leggett Stores
Richmond, Va.(5) J.C. Penney
---------- ------------ ------------ ------------
Total or Average 10,555,000 $538,113,000 $214,195,000 $752,308,000 96%(6)
========== ============ ============ ============ ===
APARTMENT COMPLEX
Rollingwood Apartments 1971 282 units $ 2,798,000 $ 2,982,000 $ 5,780,000 95%
Silver Spring, Md.
</TABLE>
- -------
(1) The Trust has a leasehold interest in this center.
(2) The Trust owns a 49% equity interest in this center.
(3) The Trust owns a 1% general partnership interest and manages the
partnership.
(4) The Trust owns an 88% general partnership interest in this center.
(5) The Trust owns this center subject to a ground lease.
(6) Does not include shopping centers acquired during the past 12 months.
S-15
<PAGE>
MANAGEMENT
The Trustees and Officers of the Trust are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE OTHER DIRECTORSHIPS
---- --- ------------------------------------------------
<S> <C> <C>
Dennis L. Berman........... 43 Trustee; General Partner, GDR Partnerships and
Vingarden Associates, builders/developers,
Berman Enterprises
A. Cornet de Ways Ruart.... 60 Trustee; Director, SIPEF S.A., an international
holding company principally of agricultural
interests; Director of Interbrew S.A.
Samuel J. Gorlitz.......... 76 Trustee and Founder; President, Gorlitz
Associates, real estate developers
Steven J. Guttman.......... 47 Trustee; President and Chief Executive Officer;
Trustee, International Council of Shopping
Centers
Ron D. Kaplan.............. 31 Vice President, Capital Markets
Arnold M. Kronstadt........ 74 Trustee; Founding Partner, Collins & Kronstadt-
Leahy Hogan Collins Draper, architects and
planners; Director, Carl M. Freeman Associates,
Inc., real estate builders-developers
Morton S. Lerner........... 66 Trustee; Retired President and Chief Executive
Officer of Lerner Shoes, Inc.; Director,
Wachovia Bank
Walter F. Loeb............. 69 Trustee; President, Loeb Associates, management
consulting firm; Publisher, Loeb Retail Letter;
Director, Intertan, Inc., a holding company for
foreign retailers; Director, Color Tile, Inc., a
retailer; Retired Principal and Senior Retail
Analyst, Morgan Stanley & Co., Inc.
Catherine R. Mack.......... 49 Vice President, General Counsel; Secretary
Donald H. Misner........... 59 Trustee; Employee of the Trust
Mary Jane Morrow........... 41 Senior Vice President, Finance; Treasurer
George L. Perry............ 60 Trustee; Senior Fellow, Brookings Institution;
Director, State Farm Insurance Company and
various mutual funds managed by the Dreyfus
Corporation
Hal A. Vasvari............. 50 Executive Vice President, Management
Robert S. Wennett.......... 33 Senior Vice President, Acquisitions
</TABLE>
The Trustees and Officers as a group beneficially own approximately 5.6% of
the outstanding Shares of the Trust.
S-16
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Alex. Brown & Sons Incorporated, Dean
Witter Reynolds Inc. and Kidder, Peabody & Co. Incorporated are acting as
representatives (the "Representatives"), has severally agreed to purchase from
the Trust the number of Shares set forth below opposite their respective names.
The Underwriters are committed to purchase all of such Shares if any are
purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. 385,000
Alex. Brown & Sons Incorporated.................................... 385,000
Dean Witter Reynolds Inc. ......................................... 385,000
Kidder, Peabody & Co. Incorporated................................. 385,000
A.G. Edwards & Sons, Inc. ......................................... 60,000
Ferris, Baker Watts, Incorporated.................................. 60,000
Goldman, Sachs & Co. .............................................. 60,000
Lehman Brothers Inc. .............................................. 60,000
Montgomery Securities.............................................. 60,000
Morgan Stanley & Co. Incorporated.................................. 60,000
PaineWebber Incorporated........................................... 60,000
Prudential Securities Incorporated................................. 60,000
Smith Barney Shearson Inc. ........................................ 60,000
Advest, Inc. ...................................................... 30,000
The Chapman Company................................................ 30,000
Davenport & Co. of Virginia, Inc. ................................. 30,000
Doft & Co., Inc. .................................................. 30,000
Folger Nolan Fleming Douglas Incorporated.......................... 30,000
Gruntal & Co., Incorporated........................................ 30,000
Janney Montgomery Scott Inc. ...................................... 30,000
Johnston, Lemon & Co. Incorporated................................. 30,000
Edward D. Jones & Co. ............................................. 30,000
Kemper Securities, Inc. ........................................... 30,000
Legg Mason Wood Walker, Incorporated............................... 30,000
Scott & Stringfellow, Inc. ........................................ 30,000
Tucker Anthony Incorporated........................................ 30,000
Wheat, First Securities, Inc. ..................................... 30,000
---------
Total........................................................ 2,500,000
=========
</TABLE>
The Representatives of the Underwriters have advised the Trust that they
propose initially to offer the Shares to the public at the public offering
price set forth on the cover of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $.75 per Share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $.10 per Share on
S-17
<PAGE>
sales to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
The Trust has granted the Underwriters an option exercisable within 30 days
after the date hereof to purchase up to 375,000 additional Shares to cover
over-allotments, if any, at the initial public offering price, less the
underwriting discount set forth on the cover page of this Prospectus
Supplement. If the Underwriters exercise this option, each of the Underwriters
will have a firm commitment, subject to certain conditions, to purchase
approximately the same percentage thereof which the number of Shares to be
purchased by it shown in the foregoing table bears to the 2,500,000 Shares
initially offered hereby.
In the Underwriting Agreement, the Trust has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
The Trust and the executive officers of the Trust and the Trustees have
agreed that for a period of 90 days from the date of this Prospectus Supplement
they will not, without the prior written consent of the Representatives, offer,
sell or otherwise dispose of any Shares (except for Shares issued pursuant to
employee benefit plans, the conversion of outstanding debentures, the Trust's
Dividend Reinvestment and Share Purchase Plan and certain other agreements).
S-18
<PAGE>
[GRAPHIC APPEARS HERE]
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN CONNEC-
TION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICI-
TATION OF AN OFFER TO BUY, THE SHARES IN ANY JURISDICTION WHERE, OR TO ANY PER-
SON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DE-
LIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HERE-
UNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT AND PRO-
SPECTUS OR IN THE AFFAIRS OF THE TRUST SINCE THE DATE HEREOF.
------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............................................. S-3
The Trust................................................................. S-4
Concurrent Offering....................................................... S-6
Use of Proceeds........................................................... S-6
Price Range of the Shares and Distributions............................... S-6
Selected Consolidated Financial Data...................................... S-8
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-9
Properties................................................................ S-14
Management................................................................ S-16
Underwriting.............................................................. S-17
<CAPTION>
PROSPECTUS
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Trust................................................................... 3
Use of Proceeds............................................................. 4
Ratios of Earnings to Fixed Charges......................................... 4
Description of Debt Securities.............................................. 4
Description of Preferred Shares............................................. 15
Description of Common Shares................................................ 20
Plan of Distribution........................................................ 22
Legal Opinions.............................................................. 23
Experts..................................................................... 23
</TABLE>
================================================================================
================================================================================
2,500,000 SHARES
[LOGO OF FEDERAL REALTY INVESTMENT TRUST APPEARS HERE]
COMMON SHARES
----------------
PROSPECTUS SUPPLEMENT
----------------
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
DEAN WITTER REYNOLDS INC.
KIDDER, PEABODY & CO.
INCORPORATED
MARCH 29, 1994
================================================================================
<PAGE>
GRAPHICS APPENDIX LIST
PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS REFERENCE
- --------------------------------------------------------------------------------
TX2 Above Typeset Language:
In two columns of four boxes each-The upper left-hand
corner box reads "1993 Property Acquisitions" - other
seven boxes are actual photos of the acquired
properties. Each property is identified.
- --------------------------------------------------------------------------------
IBC A map of the USA from Mississippi River east w/ dots to
indicate Federal Realty property locations. 3-Areas
are magnified to the right of the USA map. They are:
-- New York/New Jersey Metropolitan Area
-- Philadelphia Metropolitan Area
-- Washington D.C./Baltimore Metropolitan Area
In each magnified area there are dots to indicate
property locations.
