<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: September 30, 2000
------------------------------------------
Commission File No. 17533
-------------------------
FEDERAL REALTY INVESTMENT TRUST
-------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-0782497
----------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1626 East Jefferson Street, Rockville, Maryland 20852-4041
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(301) 998-8100
------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No_____.
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 3, 2000
----------------------------------- -------------------------------
Common Shares of Beneficial Interest 39,475,138
This report contains 29 pages.
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
S.E.C. FORM 10-Q
September 30, 2000
I N D E X
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Balance Sheets
September 30, 2000 (unaudited) and
December 31, 1999 (audited) 4
Consolidated Statements of Operations (unaudited)
Nine months ended September 30, 2000 and 1999 5
Consolidated Statements of Operations (unaudited)
Three months ended September 30, 2000 and 1999 6
Consolidated Statements of
Common Shareholders' Equity (unaudited)
Nine months ended September 30, 2000 and 1999 7
Consolidated Statements of Cash Flows (unaudited)
Nine months ended September 30, 2000 and 1999 8
Notes to Consolidated Financial Statements 9-15
Management's Discussion and Analysis of 16-28
Financial Condition and Results of Operations
PART II. OTHER INFORMATION 29
2
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
S.E.C. FORM 10-Q
September 30, 2000
PART I. FINANCIAL INFORMATION
The following financial information is submitted in response to
the requirements of Form 10-Q and does not purport to be financial
statements prepared in accordance with generally accepted accounting
principles since they do not include all disclosures which might be
associated with such statements. In the opinion of management, such
information includes all adjustments, consisting only of normal
recurring accruals, necessary to a fair statement of the results for
the interim periods presented.
3
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
(unaudited)
------------- ------------
ASSETS (in thousands)
<S> <C> <C>
Investments
Real estate, at cost $ 1,804,186 $ 1,721,459
Less accumulated depreciation and amortization (349,822) (317,921)
----------- -----------
1,454,364 1,403,538
Mortgage notes receivable 46,089 53,495
----------- -----------
1,500,453 1,457,033
Other Assets
Cash 13,726 11,738
Accounts and notes receivable 20,585 23,130
Prepaid expenses and other assets, principally
property taxes and lease commissions 38,479 36,807
Debt issue costs 5,796 5,340
----------- -----------
$ 1,579,039 $ 1,534,048
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases $ 121,719 $ 122,026
Mortgages payable 50,459 50,547
Notes payable 330,091 162,768
Accounts payable and accrued expenses 39,956 34,974
Dividends payable 19,863 19,431
Security deposits 5,413 5,068
Prepaid rents 8,468 6,788
Senior notes and debentures 410,000 510,000
5 1/4% Convertible subordinated debentures 75,289 75,289
Investors' interest in consolidated assets 44,266 45,330
Commitments and contingencies
Shareholders' equity
Preferred stock, authorized 15,000,000 shares, $.01 par 7.95% Series A
Cumulative Redeemable Preferred Shares, (stated at
liquidation preference $25 per share), 4,000,000 shares issued in 1997 100,000 100,000
Common shares of beneficial interest, $.01 par, 100,000,000 shares
authorized, 40,867,020 and 40,418,766 issued, respectively 409 404
Additional paid in capital 722,214 713,354
Accumulated dividends in excess of Trust net income (299,621) (286,348)
----------- -----------
523,002 527,410
Less:1,425,833 and 217,644 common shares in treasury - at cost, respectively (27,436) (4,334)
Deferred compensation on restricted shares (17,359) (15,219)
Notes receivable from employee stock plans (4,692) (6,030)
----------- -----------
473,515 501,827
----------- -----------
$ 1,579,039 $ 1,534,048
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
2000 1999
<S> ------------ ----------
(In thousands, except per share data) <C> <C>
Revenue
Rental income $ 192,584 $ 181,078
Other property income 8,148 8,176
Interest income 5,759 5,779
--------- ---------
206,491 195,033
Expenses
Rental 41,057 39,054
Real estate taxes 19,720 18,344
Interest 49,521 45,507
Administrative 9,035 10,888
Depreciation and amortization 39,433 37,313
--------- ---------
158,766 151,106
--------- ---------
Operating income before investors' share
of operations and gain (loss) on sale of real estate 47,725 43,927
Investors' share of operations (4,772) (2,322)
--------- ---------
Income before gain (loss) on sale of real estate 42,953 41,605
Gain (loss) on sale of real estate 3,681 (7,050)
--------- ---------
Net income 46,634 34,555
Dividends on preferred stock (5,963) (5,963)
--------- ---------
Net income available for common shareholders $ 40,671 $ 28,592
========= =========
Earnings per common share, basic
Income before gain (loss) on sale of real estate $ 0.95 $ 0.90
Gain (loss) on sale of real estate 0.10 (0.18)
--------- ---------
$ 1.05 $ 0.72
========= =========
Weighted average number of common shares, basic 38,812 39,534
========= =========
Earnings per common share, diluted
Income before gain (loss) on sale of real estate $ 0.95 $ 0.89
Gain (loss) on sale of real estate 0.09 (0.17)
--------- ---------
$ 1.04 $ 0.72
========= =========
Weighted average number of common shares, diluted 39,949 40,639
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30,
2000 1999
------------- -------------
(In thousands, except per share data)
<S> <C> <C>
Revenue
Rental income $ 64,101 $ 61,971
Other property income 2,683 3,349
Interest income 1,797 1,935
-------- --------
68,581 67,255
Expenses
Rental 13,015 12,950
Real estate taxes 6,741 6,477
Interest 15,992 14,989
Administrative 3,245 5,474
Depreciation and amortization 13,440 12,381
-------- --------
52,433 52,271
-------- --------
Operating income before investors' share
of operations 16,148 14,984
Investors' share of operations (1,727) (798)
-------- --------
Net income 14,421 14,186
Dividends on preferred stock (1,988) (1,988)
-------- --------
Net income available for common shareholders $ 12,433 $ 12,198
======== ========
Earnings per common share, basic $ 0.32 $ 0.31
======== ========
Weighted average number of common shares, basic 38,695 39,634
======== ========
Earnings per common share, diluted $ 0.32 $ 0.30
======== ========
Weighted average number of common shares, diluted 39,774 40,701
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
2000 1999
---------- ------------ ---------- ---------- ---------- ------------
(In thousands, except share data) Shares Amount Additional Shares Amount Additional
Paid-in-Capital Paid-in-Capital
<S> <C> <C> <C> <C> <C> <C>
Common Shares of Beneficial Interest
Balance, beginning of period 40,418,766 $404 $713,354 40,139,675 $707,724 --
Exercise of stock options 67,684 1 1,398 50,167 1,049
Shares issued under dividend reinvestment plan 113,185 1 2,339 119,869 2,691 --
Performance and Restricted Shares granted, net
of Restricted Shares retired 267,385 3 5,123 60,654 1,374 --
---------- ------------ ---------- ---------- ---------- -------------
Balance, end of period 40,867,020 $409 $722,214 40,370,365 $712,838 $0
========== ============ ========== ========== ========== =============
Accumulated Dividends in Excess of Trust Net Income
Balance, beginning of period ($286,348) ($255,211)
Net income 46,634 34,555
Dividends declared to common shareholders (53,945) (53,525)
Dividends declared to preferred shareholders (5,962) (5,962)
--------- ----------
Balance, end of period ($299,621) ($280,143)
========= ==========
Common Shares of Beneficial Interest in Treasury
Balance, beginning of period (217,644) ($4,334) (59,425) ($1,376)
Performance and Restricted Shares (forfeited)
retired (22,789) (470) 1,006 21
Purchase of treasury shares (1,185,400) (22,632) -- --
------------ ------------ ----------- ----------
Balance, end of period (1,425,833) ($27,436) (58,419) ($1,355)
============ ============ =========== ==========
Deferred Compensation on Restricted Shares
Balance, beginning of period (599,427) ($15,219) (582,910) ($14,892)
Performance and Restricted Shares issued,
net of Forfeitures (223,771) (4,256) (41,327) (910)
Vesting of Performance and Restricted Shares 82,323 2,116 7,858 201
------------ ----------- ----------- ----------
Balance, end of period (740,875) ($17,359) (616,379) ($15,601)
============ =========== =========== ==========
Subscriptions receivable from employee stock
plans
Balance, beginning of period (317,606) ($6,030) (337,111) ($6,298)
Subscription loans issued (5,500) (115) (9,083) (190)
Subscription loans paid 70,699 1,453 28,588 458
------------ ----------- ----------- ----------
Balance, end of period (252,407) ($4,692) (317,606) ($6,030)
============ =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
7
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
2000 1999
------------- -------------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 46,634 $ 34,555
Items not requiring cash outlays
Depreciation and amortization 39,433 37,313
(Gain) loss on sale of real estate (3,681) 7,050
Other, net 1,486 1,568
Changes in assets and liabilities
Decrease (increase) in accounts receivable 2,545 (343)
Decrease in prepaid expenses and other
assets before depreciation and amortization (6,277) (3,062)
Increase (decrease) in operating accounts payable,
security deposits and prepaid rent 2,529 (2,748)
Increase in accrued expenses 2,082 348
--------- ---------
Net cash provided by operating activities 84,751 74,681
INVESTING ACTIVITIES
Acquisition of real estate (23,093) (25,337)
Capital expenditures (98,463) (64,974)
Proceeds from sale of real estate 47,157 --
Repayment (Issuance) of mortgage notes receivable, net 2,187 (7,176)
--------- ---------
Net cash used in investing activities (72,212) (97,487)
FINANCING ACTIVITIES
Borrowing of short-term debt, net 155,700 78,853
Borrowing on construction loans 12,747 --
Repayment of senior notes (100,000) --
Issuance of common shares 3,238 2,030
Common shares repurchased (22,632) --
Payments on mortgages, capital leases and notes payable, including
prepayment fees (1,863) (879)
Dividends paid (57,588) (57,113)
Decrease in minority interest, net (153) (2,225)
--------- ---------
Net cash (used in) provided by financing activities (10,551) 20,666
--------- ---------
Increase (decrease) in cash 1,988 (2,140)
Cash at beginning of period 11,738 17,230
--------- ---------
Cash at end of period $ 13,726 $ 15,090
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
8
<PAGE>
Federal Realty Investment Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(unaudited)
NOTE A - ACCOUNTING POLICIES AND OTHER DATA
Reference should be made to the notes to financial statements included in the
Annual Report to shareholders for the year ended December 31, 1999 which contain
the accounting policies and other data of Federal Realty Investment Trust (the
"Trust").
The following table sets forth the reconciliation between basic and diluted
EPS:
<TABLE>
<CAPTION>
Nine months ending Three months ending
September 30, September 30,
Numerator 2000 1999 2000 1999
---------
<S> <C> <C> <C> <C>
Net income available for
common shareholders - basic $40,671 $28,592 $12,433 $12,198
Income attributable to
operating partnership units 1,022 552 278 97
------- ------- ------- -------
Net income available for common
shareholders - diluted $41,693 $29,144 $12,711 $12,295
======= ======= ======= =======
Denominator
-----------
Denominator for basic EPS- 38,812 39,534 38,695 39,634
weighted average shares
Effect of dilutive securities
Stock options and awards 160 234 157 211
Operating partnership units 977 871 922 856
------- ------- ------- -------
Denominator for diluted EPS 39,949 40,639 39,774 40,701
======= ======= ======= =======
</TABLE>
NOTE B - REAL ESTATE ASSETS AND ENCUMBRANCES
On January 5, 2000, the Trust purchased the 75,000 square foot Greenlawn Plaza
in Greenlawn, New York for $6.2 million, with plans to renovate and expand the
center by 35,000 square feet. On February 16, 2000, control of a parcel of land
for future development in Hillsboro, Oregon was acquired for $11.7 million. An
additional $1.6 million will be owed if certain cash flow criteria are met
during the first ten years of operations. On September 26, 2000, the Trust
purchased an additional property on East Houston Street in San Antonio, Texas
for $1.5 million. With this purchase, the Trust assumed a mortgage with an
outstanding balance of $345,000.
9
<PAGE>
On January 1, 2000, the Trust issued 190,000 partnership units valued at $3.6
million in exchange for the minority partner's interest in Loehmann's Plaza.
On April 6, 2000, the Trust converted a note receivable of $5.8 million to a
90% interest in a partnership owning a 30,000 square foot street retail property
in Santa Monica, California valued at $6.3 million. The property is currently
under construction. The Trust has contributed an additional $1.1 million towards
the construction of the property as of September 30, 2000.
On June 30, 2000, the Trust sold the 296,000 square foot Peninsula Shopping
Center located in Palos Verdes, California for $48.6 million resulting in a gain
of $3.7 million.
In addition, during the first nine months of 2000, the Trust invested $3.7
million in mortgage notes receivable with an average weighted interest rate of
9.7%. A mortgage note receivable of $5.9 million, which earned interest at 10%,
was paid off June 23, 2000. An additional mortgage note receivable of $305,000,
which also earned interest at 10%, was paid off on October 13, 2000.
NOTE C - MORTGAGES AND NOTES PAYABLE
At September 30, 2000, there was $186.3 million borrowed under the Trust's
syndicated credit facility. The maximum drawn during the first nine months of
2000 was $218.1 million. The weighted average interest rate on borrowings for
the nine months ended September 30, 2000 was 7.0%. The facility requires fees
and has various covenants including the maintenance of a minimum shareholders'
equity and a maximum ratio of debt to net worth.
In June 2000, the Trust modified certain covenants and extended its syndicated
credit facility and its $125 million term loan for an additional year to
December 19, 2003. Fees paid for this extension totaled $1.0 million.
On January 17, 2000, the Trust's $100 million of 8.875% Notes matured and were
paid with borrowings on the Trust's revolving credit facilities. On February 29,
2000, the Trust obtained a construction loan for up to $24.5 million in
connection with the Trust's Woodmont East development in Bethesda, Maryland. The
loan, which has a floating interest rate of LIBOR plus 1.2% to 1.5%, depending
on occupancy levels, matures August 29, 2002 with two, one-year extension
options. At September 30, 2000, the outstanding balance on the loan was $12.7
million. The property secures the construction loan facility.
In connection with the land for future development in Hillsboro, Oregon, the
Trust issued a $3.4 million note which was due August 14, 2000. The note has
been extended until June 30, 2001. The loan bears interest at LIBOR plus 1.25%.
The property secures the loan facility.
10
<PAGE>
The Trust assumed a mortgage with the purchase of the new East Houston Street
property in San Antonio, Texas. The mortgage, which matures in October 2008,
bears interest at 7.5% and provides for monthly principal and interest payments.
In anticipation of a mortgage placement in the third quarter of 2000, the
Trust purchased a Treasury Yield Hedge (notional amount of $140 million) to
minimize the risk of changes in interest rates. The hedge was terminated on June
30, 2000 at a gain of $165,000 which will be recognized as a reduction of
interest expense over the term of the mortgage.
On October 23, 2000, the Trust obtained a $152 million mortgage loan which is
secured by five shopping centers, thereby, mitigating its exposure to variable
rate debt and providing funds for its development pipeline. The mortgage, which
bears interest at 7.95%, matures November 1, 2015. The loan provides for
interest only payments for the initial three years, then monthly principal and
interest payments based on a twenty-seven year amortization schedule until the
maturity date. The proceeds from the mortgage loan were used to pay down the
Trust's revolving credit facility. The Trust paid a placement fee of $988,000 to
obtain the mortgage loan.
In July 2000, citing the Trust's pursuit of development and the resultant
capital requirements, Standard and Poor's lowered the rating on the Trust's
senior notes from BBB+ to BBB flat. Under the terms of the syndicated credit
facility, this lowered rating results in an increase in the Trust's borrowing
rate from LIBOR plus 65 basis points to LIBOR plus 80 basis points. The interest
rate on the term loan increases from LIBOR plus 75 basis points to LIBOR plus 95
basis points.
NOTE D - SHAREHOLDERS' EQUITY
During the first nine months of 2000, options for 652,500 shares at prices
ranging from $18 to $22 1/16 per share, fair value at the dates of award, were
awarded to certain employees and Trustees of the Trust. The options vest over
three and four year terms.
In December 1999, the Trustees authorized a share repurchase program of up to
an aggregate of four million of the Trust's common shares. The repurchase
program will end upon the earlier of December 31, 2000 or the date when the
repurchase limit has been met. During the first nine months of 2000, 1,185,400
common shares at a cost of $22.6 million were repurchased bringing the total
purchased under the program as of September 30,2000 to 1,325,900 common shares
at a cost of $25.2 million.
11
<PAGE>
NOTE E - INTEREST EXPENSE
The Trust incurred interest expense totaling $58.5 million during the first
nine months of 2000 and $50.3 million during the first nine months of 1999, of
which $9.0 million and $4.8 million, respectively, was capitalized in connection
with development projects. Interest paid was $56.7 million in the first nine
months of 2000 and $52.9 million in the first nine months of 1999.
NOTE F - COMMITMENTS AND CONTINGENCIES
The Trust is involved in various lawsuits and environmental matters arising in
the normal course of business. Management believes that such matters will not
have a material effect on the financial condition or results of operations of
the Trust.
Pursuant to the provisions of the partnership agreement, in the event of the
exercise of put options by another partner, the Trust would be required to
purchase a 37.5% interest of Congressional Plaza at its then fair market value.
Based on management's current estimate of fair market value, the Trust's
estimated liability upon exercise of the put option is approximately $27
million.
Under the terms of certain other partnership agreements, if certain leasing
and revenue levels are obtained for the properties owned by the partnerships,
the limited partners may require the Trust to purchase their partnership
interests at a formula price based upon net operating income. The purchase
price may be paid in cash or common shares of the Trust, at the election of the
limited partners. In certain of the partnerships, if the limited partners do not
redeem their interest, the Trust may choose to purchase the limited partnership
interests upon the same terms.
Under the terms of other partnership agreements, the partners may redeem their
904,589 operating units for cash or exchange into the same number of common
shares of the Trust, at the option of the Trust.
12
<PAGE>
NOTE G - COMPONENTS OF RENTAL INCOME
The components of rental income for the periods ended September 30 are as
follows (in thousands):
Nine Months Three Months
2000 1999 2000 1999
---- ---- ---- ----
Retail properties
Minimum rents $155,181 $146,446 $51,134 $49,728
Cost reimbursements 31,075 28,644 11,112 10,110
Percentage rents 4,253 3,986 1,156 1,460
Apartments 2,075 2,002 699 673
-------- -------- ------- -------
$192,584 $181,078 $64,101 $61,971
======== ======== ======= =======
13
<PAGE>
NOTE H - SEGMENT INFORMATION
The Trust operates its portfolio of properties in three geographic
operating regions: Northeast, Mid-Atlantic and West.
A summary of the Trust's operations by geographic region is presented below
(in thousands):
<TABLE>
<CAPTION>
Nine months ended Mid-
September 30, 2000 Northeast Atlantic West Other Total
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental income $ 83,991 $ 83,956 $ 24,637 $ 192,584
Other income 3,082 2,954 2,112 8,148
Rental expense (17,057) (17,939) (6,061) (41,057)
Real estate tax (10,741) (6,762) (2,217) (19,720)
----------- ----------- ----------- -----------
Net operating income 59,275 62,209 18,471 139,955
Interest income $ 5,759 5,759
Interest expense (49,521) (49,521)
Administrative expense (9,035) (9,035)
Depreciation and
Amortization (18,702) (16,140) (3,880) (711) (39,433)
----------- ----------- ----------- ----------- -----------
Income before investors'
share of operations $ 40,573 $ 46,069 $ 14,591 ($53,508) $ 47,725
=========== =========== =========== =========== ===========
Capital expenditures $ 32,706 $ 39,322 $ 58,910 $ 130,938
=========== =========== =========== ===========
Real estate assets $ 748,136 $ 699,666 $ 356,384 $ 1,804,186
=========== =========== =========== ===========
Nine months ended Mid-
September 30, 1999 Northeast Atlantic West Other Total
----------------------------------------------------------------------------------------------------------------------------------
Rental income $ 75,596 $ 82,710 $ 22,772 $ 181,078
Other income 4,419 2,719 1,038 8,176
Rental expense (15,217) (18,160) (5,677) (39,054)
Real estate tax (9,538) (6,744) (2,062) (18,344)
----------- ----------- ----------- -----------
Net operating income 55,260 60,525 16,071 131,856
Interest income $ 5,779 5,779
Interest expense (45,507) (45,507)
Administrative expense (10,888) (10,888)
Depreciation and
Amortization (16,784) (17,024) (2,879) (626) (37,313)
----------- ----------- ----------- ----------- -----------
Income before investors'
share of operations $ 38,476 $ 43,501 $ 13,192 ($51,242) $ 43,927
=========== =========== =========== =========== ===========
Capital expenditures $ 24,407 $ 17,401 $ 53,160 $ 94,968
=========== =========== =========== ===========
Real estate assets $ 707,982 $ 687,134 $ 334,058 $ 1,729,174
=========== =========== =========== ===========
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Three months ended Mid-
September 30, 2000 Northeast Atlantic West Other Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental income $ 28,937 $ 28,146 $ 7,018 $ 64,101
Other income 1,088 846 749 2,683
Rental expense (5,294) (5,811) (1,910) (13,015)
Real estate tax (3,709) (2,410) (622) (6,741)
----------- ----------- ----------- -----------
Net operating income 21,022 20,771 5,235 47,028
Interest income $ 1,797 1,797
Interest expense (15,992) (15,992)
Administrative expense (3,245) (3,245)
Depreciation and
Amortization (6,440) (5,485) (1,290) (225) (13,440)
----------- ----------- ----------- ----------- -----------
Income before investors'
share of operations $ 14,582 $ 15,286 $ 3,945 ($ 17,665) $ 16,148
=========== =========== =========== =========== ===========
Capital expenditures $ 7,722 $ 17,663 $ 17,932 $ 43,317
=========== =========== =========== ===========
Real estate assets $ 748,136 $ 699,666 $ 356,384 $ 1,804,186
=========== =========== =========== ===========
Three months ended Mid-
September 30, 1999 Northeast Atlantic West Other Total
----------------------------------------------------------------------------------------------------------------------------------
Rental income $ 25,686 $ 28,197 $ 8,088 $ 61,971
Other income 1,869 1,155 325 3,349
Rental expense (4,541) (6,322) (2,087) (12,950)
Real estate tax (3,524) (2,349) (604) (6,477)
----------- ----------- ----------- -----------
Net operating income 19,490 20,681 5,722 45,893
Interest income $ 1,935 1,935
Interest expense (14,989) (14,989)
Administrative expense (5,474) (5,474)
Depreciation and
amortization (5,710) (5,501) (993) (177) (12,381)
----------- ----------- ----------- ----------- -----------
Income before investors'
share of operations $ 13,780 $ 15,180 $ 4,729 ($ 18,705) $ 14,984
=========== =========== =========== =========== ===========
Capital expenditures $ 11,240 $ 5,801 $ 10,228 $ 27,269
=========== =========== =========== ===========
Real estate assets $ 707,982 $ 687,134 $ 334,058 $ 1,729,174
=========== =========== =========== ===========
</TABLE>
There are no transactions between geographic areas.
15
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
FORM 10-Q
September 30, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with the Consolidated Financial
Statements and Notes thereto. Certain statements made in this report contain
forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause actual
results, performance or achievements of the Trust to be materially different
from the results of operations or plans expressed or implied by such forward-
looking statements. Such factors include, among others, general economic and
business conditions which will affect credit-worthiness of tenants, financing
availability and cost, retailing trends and rental rates; risks of real estate
development and acquisitions; governmental and environmental regulations; and
competition with other real estate companies and technology. Portions of this
discussion include certain forward-looking statements about the Trust's and
management's intentions and expectations. Although these intentions and
expectations are based upon reasonable assumptions, many factors, such as
general economic conditions, local and national real estate conditions,
increases in interest rates and operating costs, may cause actual results to
differ materially from current expectations.
LIQUIDITY AND CAPITAL RESOURCES
Federal Realty meets its liquidity requirements through net cash provided by
operating activities, along with traditional debt and equity funding
alternatives available to it. A significant portion of cash provided by
operating activities is distributed to common and preferred shareholders in the
form of dividends. Accordingly, capital outlays for property acquisitions,
major renovation and development projects and balloon debt repayments require
debt or equity funding. The Trust also expects proceeds from the sale of
selected assets to provide an additional source of capital in 2000 and 2001.
Net cash provided by operating activities was $84.8 million in the first nine
months of 2000 and $74.7 million in the first nine months of 1999, of which
$57.6 million and $57.1 million, respectively, was distributed to shareholders.
Contributions from retenanted and redeveloped properties, as more fully
described below, were the primary sources of these increases.
16
<PAGE>
Net cash used in investing activities was $72.2 million during the first nine
months of 2000 and $97.5 million during the first nine months of 1999. The Trust
purchased real estate totaling $26.3 million in the first nine months of 2000
and 1999, requiring cash outlays of $21.0 million and $23.7 million,
respectively. In addition, the Trust purchased 100,000 operating units in the
partnership that owns the Magruders and Courthouse shopping centers in Maryland
from a minority partner for $2.1 million in cash during the first nine months of
2000 and 64,952 operating units in the partnership that owns the Kings Court
shopping center in California from a minority partner for $1.6 million in cash
during the first nine months of 1999. During these two periods, the Trust
expended an additional $98.5 million and $65.0 million, respectively, in capital
improvements to its properties. The Trust invested $3.7 million during the first
nine months of 2000 and $7.2 million during the first nine months of 1999 in
mortgage notes receivable with an average weighted interest rate of 9.7% and
10%, respectively. One mortgage note receivable of $5.9 million, which earned
interest at 10%, was paid off June 23, 2000. An additional mortgage note
receivable of $305,000, which also earned interest at 10%, was paid off on
October 13, 2000. Cash of $47.2 million was received in June 2000 from the sale
of a property.
On January 5, 2000, the Trust purchased the 75,000 square foot Greenlawn Plaza
in Greenlawn, New York for $6.2 million, with plans to renovate and expand the
center by 35,000 square feet. On February 16, 2000, control of a parcel of land
for future development in Hillsboro, Oregon was acquired for $11.7 million. An
additional $1.6 million will be owed if certain cash flow criteria are met
during the first ten years of operations. On September 26, 2000, the Trust
purchased an additional property on East Houston Street in San Antonio, Texas
for $1.5 million. With this purchase, the Trust assumed a mortgage with an
outstanding balance of $345,000.
On January 1, 2000, the Trust issued 190,000 partnership units valued at $3.6
million in exchange for the minority partner's interest in Loehmann's Plaza.
On April 6, 2000, the Trust converted a note receivable of $5.8 million to a
90% interest in a partnership owning a 30,000 square foot street retail property
in Santa Monica, California valued at $6.3 million. The property is currently
under construction. The Trust has contributed an additional $1.1 million towards
the construction of the property as of September 30, 2000.
On June 30, 2000, the Trust sold the 296,000 square foot Peninsula Shopping
Center located in Palos Verdes, California for $48.6 million resulting in a gain
of $3.7 million.
Of the $98.5 million spent in the first nine months of 2000 on the Trust's
existing real estate portfolio, approximately $53.1 million was invested in
predevelopment and development projects in Bethesda, Maryland; San Jose,
California; and Arlington, Virginia. The remaining $45.4 million of capital
expenditures relates to
17
<PAGE>
improvements to common areas, tenant work and various redevelopments, including
the renovation of Greenlawn Plaza.
Net cash provided by financing activities, before dividend payments, was $47.0
million in the first nine months of 2000 and $77.8 million in the first nine
months of 1999. The Trust utilized the proceeds from the sale of Peninsula
Shopping Center, two unsecured borrowings and its unsecured line of credit to
fund acquisitions, capital expenditures and share repurchases in 2000.
On February 29, 2000, the Trust obtained a construction loan for up to $24.5
million in connection with the Trust's Woodmont East development in Bethesda,
Maryland. The loan, which has a floating interest rate of LIBOR plus 1.2% to
1.5%, depending on occupancy levels, matures August 29, 2002 with two one-year
extension options. At September 30, 2000, the outstanding balance on the loan
was $12.7 million. The property secures the construction loan facility.
In connection with the land for future development in Hillsboro, Oregon, the
Trust issued a $3.4 million note which was due August 14, 2000. The note has
been extended until June 30, 2001. The loan bears interest at LIBOR plus 1.25%.
The property secures the loan facility. The Trust assumed a mortgage with the
purchase of the new East Houston Street property in San Antonio, Texas. The
mortgage, which matures in October 2008, bears interest at 7.5% and provides for
monthly principal and interest payments.
At September 30, 2000, there was $186.3 million borrowed under the syndicated
credit facility. The maximum drawn during the first nine months of 2000 was
$218.1 million. The weighted average interest rate on borrowings for the nine
months ended September 30, 2000 was 7.0%. The facility requires fees and has
various covenants, including the maintenance of a minimum shareholders' equity
and a maximum ratio of debt to net worth. In June 2000, the Trust modified
certain covenants and extended its syndicated credit facility and its $125
million term loan for an additional year to December 19, 2003. Fees paid for
this extension totaled $1.0 million.
On October 23, 2000, the Trust obtained a $152 million mortgage loan which is
secured by five shopping centers, thereby, mitigating its exposure to variable
rate debt and providing funds for its development pipeline. The mortgage, which
bears interest at 7.95%, matures November 1, 2015. The loan provides for
interest only payments for the initial three years, then monthly principal and
interest payments based on a twenty-seven year amortization schedule until the
maturity date. The proceeds from the mortgage loan were used to pay down the
Trust's revolving credit facility. The Trust paid a placement fee of $988,000 to
obtain the mortgage loan.
In July 2000, citing the Trust's pursuit of development and the resultant
capital requirements, Standard and Poor's lowered the rating on the Trust's
senior notes from BBB+ to BBB flat. Under the terms of the syndicated credit
facility, this lowered rating results in an increase in the Trust's borrowing
rate from LIBOR plus 65 basis
18
<PAGE>
points to LIBOR plus 80 basis points. The interest rate on the term loan
increases from LIBOR plus 75 basis points to LIBOR plus 95 basis points.
Capital requirements for the remainder of 2000 will depend on new development
efforts, acquisition opportunities, the level of improvements and redevelopments
on existing properties and the level of common shares that the Trust may
repurchase. The Trust will fund these capital requirements with its syndicated
credit facility.
Longer term, the Trust will need additional capital in order to fund
acquisitions, expansions and developments, particularly Santana Row. Sources of
this funding may be additional debt, both secured and unsecured; additional
equity; proceeds from the sale of properties; and joint venture relationships.
The timing and choice of capital sources will depend on the cost and
availability of that capital, among other things. The Trust believes, based on
past experience, that access to the capital needed to execute its business plan
will be available to it.
SANTANA ROW
In the next several years, the Trust's single largest capital need is expected
to come from the development of Santana Row, a multi-phase mixed-use project to
be built on 42 acres in San Jose, California in the heart of Silicon Valley. The
project will consist of residential, retail and hotel properties, creating a
community with the feel of an urban district. Phase 1 of the project, for which
construction is just underway, includes, Santana Row, the "1,500 foot long main
street" framed by nine buildings which will contain approximately 520,000 square
feet of retail space, 497 residential units and a 200 room hotel, as well as the
central utility plant. Phase 1 is expected to begin generating revenue in mid-
2002 and be stabilized within the following year. The total cost of Phase 1,
which includes the land and infrastructure for the later phases, is expected to
be $475 million. As of September 30, 2000, the Trust has incurred $81 million
including the purchase of the land. Site preparation has been completed and
excavation was begun in early October 2000. The Trust is in discussions with
several lenders to secure construction financing for Phase 1. Initial unlevered
returns on Phase 1 of Santana Row are expected to modestly exceed the cost of
construction financing currently estimated in the 8.75% range. There can be no
assurance, however, that either the projected returns or the construction
financing will be obtained.
The Trust expects that the passage of time and the buildout of later phases
will significantly enhance total returns on the project. Returns on later phases
are expected to surpass the initial returns on Phase 1, since the land and
infrastructure costs of the entire project are included in Phase 1. The ability
to achieve these higher returns both on Phase 1 and on later phases, however,
are dependent on many factors which cannot be assured and are not entirely
within the Trust's control. These factors include among others, continued strong
demand for retail and residential space at current or increasing prices, the
ability to construct the later phases at reasonable prices, the availability of
capital and the general economy, particularly Silicon Valley.
19
<PAGE>
CONTINGENCIES
The Trust is involved in various lawsuits and environmental matters arising in
the normal course of business. Management believes that such matters will not
have a material effect on the financial condition or results of operations of
the Trust.
Pursuant to the provisions of the partnership agreement, in the event of the
exercise of put options by another partner, the Trust would be required to
purchase a 37.5% interest of Congressional Plaza at its then fair market value.
Based on management's current estimate of fair market value, the Trust's
estimated liability upon exercise of the put option is approximately $27
million.
Under the terms of certain other partnership agreements, if certain leasing
and revenue levels are obtained for the properties owned by the partnerships,
the limited partners may require the Trust to purchase their partnership
interests at a formula price based upon net operating income. The purchase
price may be paid in cash or common shares of the Trust, at the election of the
limited partners. In certain of the partnerships, if the limited partners do not
redeem their interest, the Trust may choose to purchase the limited partnership
interests upon the same terms.
Under the terms of other partnership agreements, the partners may redeem their
904,589 operating units for cash or exchange into the same number of common
shares of the Trust, at the option of the Trust.
20
<PAGE>
RESULTS OF OPERATIONS
Net income and funds from operations have been affected by the Trust's recent
redevelopment and financing activities. The Trust has historically reported its
funds from operations in addition to its net income and net cash provided by
operating activities. Funds from operations is a supplemental measure of real
estate companies' operating performance. As of January 1, 2000, the National
Association of Real Estate Investment Trusts ("NAREIT") defines funds from
operations as follows: income available for common shareholders before
depreciation and amortization of real estate assets and before extraordinary
items less gains on sale of real estate. Prior to January 1, 2000, funds from
operations also excluded significant nonrecurring events. 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. Rather, funds from operations
has been adopted by real estate investment trusts to provide a consistent
measure of operating performance in the industry. Nevertheless, funds from
operations, as presented by the Trust, may not be comparable to funds from
operations as presented by other real estate investment trusts.
The reconciliation of net income to funds from operations is as follows:
<TABLE>
<CAPTION>
Nine months ending Three months ending
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income available for common $40,671 $28,592 $12,433 $12,198
shareholders - basic
(Gain) loss on sale of (3,681) 7,050 - -
real estate
Depreciation and amortization of 35,852 33,849 12,229 11,232
real estate assets
Amortization of initial direct 2,597 2,235 897 775
costs of leases
Income attributable to operating 1,022 552 278 191
partnership units
Funds from operations for common ------- -------- ------- -------
shareholders $76,461 $72,278 $25,837 $24,396
======= ======= ======= =======
----------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 2000 and 1999
Consolidated Results
--------------------
Rental income, which consists of minimum rent, percentage rent and cost
recoveries, increased 6.4% from $181.1 million in the first nine months of 1999
to $192.6 million in the first nine months of 2000. If properties acquired,
sold and developed in 2000 and 1999 are excluded, rental income increased 7.7%,
due primarily to the favorable impact of redeveloped and retenanted centers.
Other property income includes items such as utility reimbursements, telephone
income, merchant association dues, late fees and temporary tenant income.
Other property income remained constant for the first nine months of 2000
compared to 1999. On a same center basis, other property income decreased
$398,000 for the first nine months of 2000 compared to 1999.
Rental expenses increased 5.1% from $39.1 million in the first nine months of
1999 to $41.1 million in the first nine months of 2000. If rental expenses are
adjusted for properties acquired, sold and developed in 2000 and 1999, rental
expenses increased 6.0% from $36.1 million in 1999 to $38.2 million in 2000,
primarily due to increased snow removal and utility costs in 2000. Rental
expense as a percentage of property income remained constant in both periods at
21%.
Real estate taxes increased 7.5% from $18.3 million in the first nine months
of 1999 to $19.7 million in the first nine months of 2000. If real estate taxes
are adjusted for properties acquired, sold and developed in 2000 and 1999, real
estate taxes increased 7.4% due primarily to increased taxes on recently
redeveloped properties.
Depreciation and amortization expenses increased 5.7% from $37.3 million in
the first nine months of 1999 to $39.4 million in the first nine months of 2000
reflecting the impact of recent tenant work and property improvements.
During the first nine months of 2000, the Trust incurred interest expense of
$58.5 million, of which $9.0 million was capitalized, as compared to 1999's
$50.3 million, of which $4.8 million was capitalized. The increase in interest
expense reflects the additional debt issued to fund the Trust's share repurchase
and capital improvement programs. The ratio of earnings to combined fixed
charges and preferred dividends was 1.43x and 1.54x for the first nine months of
2000 and 1999, respectively. The ratio of earnings to fixed charges was 1.6x
and 1.7x during the first nine months of 2000 and 1999, respectively. The ratio
of funds from operations to combined fixed charges and preferred dividends was
2.0x for the first nine months of 2000 and 2.2x for the first nine months of
1999.
Administrative expenses decreased from $10.9 million in the
22
<PAGE>
first nine months of 1999 to $9.0 million in the first nine months of 2000.
During the third quarter of 1999 the Trust recorded a $2.5 million charge
related to a terminated merger transaction. The decrease in these costs was
offset by increased personnel costs. The tight labor market in the Trust's
operating regions resulted in higher compensation costs both to existing and new
employees.
On June 30, 2000, the Trust sold the 296,000 square foot Peninsula Shopping
Center located in Palos Verdes, California for $48.6 million resulting in a gain
of $3.7 million. During the second quarter of 1999, the Trust recorded a $7.1
million charge, representing the estimated loss on a potential sale of certain
assets, principally Northeast Plaza in Atlanta, Georgia, thereby valuing the
assets at their estimated fair value less estimated costs to sell. On October
18, 1999, the Trust sold Northeast Plaza for $19.6 million, realizing a loss of
$6.3 million.
As a result of the foregoing items, net income before gain (loss) on the sale
of real estate increased from $41.6 million in the first nine months of 1999 to
$43.0 million in the first nine months of 2000, while net income increased from
$34.6 million during the first nine months of 1999 to $46.6 million during the
first nine months of 2000 and net income available for common shareholders
increased from $28.6 million to $40.7 million.
The Trust expects growth in net income and funds from operations during the
fourth quarter of 2000 to be consistent with that of the first three quarters.
The growth in the remainder of 2000 will continue to be primarily dependent on
contributions from the core portfolio. Growth of net income from the core
portfolio is, in part, dependent on controlling expenses, some of which are
beyond the complete control of the Trust, such as snow removal and trends in the
retailing environment, such as the evolution of the Internet and demand for
retail space. The Trust currently expects that demand for its retail space
should remain at its current levels. A weakening of the retail environment
could, however, adversely impact the Trust by increasing vacancies and
decreasing rents. In past weak retail and real estate environments, the Trust
has been able to replace weak and bankrupt tenants with stronger tenants;
management believes that due to the quality of the Trust's properties there will
continue to be demand for its space. Growth in net income and funds from
operations in 2001 is expected to be slower than in 2000, due in part, to higher
interest rates and higher administrative costs, which offset the positive impact
of the Bethesda and Pentagon new developments.
Growth in net income is also dependent on the amount of leverage and interest
rates. The Trust's leverage is increasing as it finances its development
pipeline. In addition, the Trust will continue to have exposure to changes in
market interest rates. As interest rates increase, net income and funds from
operations, as well as the ultimate cost of the Trust's development projects
will be negatively impacted due to the variable interest rates on the Trust's
revolving
23
<PAGE>
credit facilities.
Segment Results
---------------
The Trust operates its portfolio of properties in three geographic operating
regions: Northeast, Mid-Atlantic and West.
Historical operating results for the three regions are as follows (in
thousands):
For the nine months ended
September 30,
2000 1999
--------------------------------------------------------------------------
Rental income
Northeast $ 83,991 $ 75,596
Mid-Atlantic 83,956 82,710
West 24,637 22,772
-------- --------
Total $192,584 $181,078
======== ========
Net operating income
Northeast $ 59,275 $ 55,260
Mid-Atlantic 62,209 60,525
West 18,471 16,071
-------- --------
Total $139,955 $131,856
======== ========
The Northeast
--------------
The Northeast region is comprised of fifty-four assets, extending from
suburban Philadelphia north through New York and its suburbs into New England
and west to Illinois and Michigan.
When comparing the first nine months of 2000 with 1999, rental income
increased 11.1% from $75.6 million in 1999 to $84.0 million in 2000. Excluding
properties acquired since January 1, 1999, on a same center basis, rental income
increased 10.5%, primarily due to increases at recently redeveloped and
retenanted shopping centers, such as Bala Cynwyd, Lawrence Park, Gratiot,
Langhorne Square and Wynnewood.
Net operating income increased 7.3% from $55.3 million in 1999 to $59.3
million in 2000. Excluding properties acquired since January 1, 1999, net
operating income increased 6.8%, primarily due to increases at the recently
redeveloped and retenanted shopping centers.
The Mid-Atlantic
----------------
The Mid-Atlantic region is comprised of thirty assets, located from
Baltimore south to metropolitan Washington, D.C. and
24
<PAGE>
further south through Virginia, North Carolina and Florida.
When comparing the first nine months of 2000 with 1999, rental income
increased 1.5% from $82.7 million in 1999 to $84.0 million in 2000. On a same
center basis, excluding Northeast Plaza in Atlanta, Georgia which was sold in
1999 and the recently developed Phase 3 of the Bethesda Row project in Bethesda,
Maryland, rental income increased 3.3%, due in part to new anchor leases at
several centers.
When comparing the first nine months of 2000 with 1999, net operating income
increased 2.8% from $60.5 million in 1999 to $62.2 million in 2000. On the same
center basis as above net operating income increased 4.5%, due primarily to the
new anchor leases and lease termination fees.
The West
--------
The Western region is comprised of thirty-eight assets, located from Texas to
the West Coast.
When comparing the first nine months of 2000 with 1999, rental income
increased 8.2% from $22.8 million in 1999 to $24.6 million in 2000. Excluding
newly developed properties, Santana Row, which is currently under development,
and properties acquired and sold since January 1, 1999, rental income increased
18.5%, due primarily to recently redeveloped and retenanted properties in the
Los Angeles and San Francisco, California areas.
When comparing the first nine months of 2000 with 1999, net operating income
increased 14.9% from $16.1 million in 1999 to $18.5 million in 2000. Excluding
newly developed properties, Santana Row, which is currently under development,
and properties acquired and sold since January 1, 1999, net operating income
increased 31.7%, due to increases from the recently redeveloped and retenanted
properties as mentioned above.
25
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000 and 1999
Consolidated Results
--------------------
Rental income, which consists of minimum rent, percentage rent and cost
recoveries, increased 3.4% from $62.0 million in the third quarter of 1999 to
$64.1 million in the third quarter of 2000. If properties acquired, sold and
developed in 2000 and 1999 are excluded, rental income increased 7.3%, due
primarily to the favorable impact of redeveloped and retenanted centers.
Other property income includes items such as utility reimbursements, telephone
income, merchant association dues, late fees and temporary tenant income.
Other property income decreased 19.9% from $3.3 million in the third quarter of
1999 to $2.7 million in the third quarter of 2000 due primarily to a decrease in
lease termination fees.
Rental expenses remained constant at $13.0 million in the third quarter of
1999 and 2000. If rental expenses are adjusted for properties acquired, sold
and developed in 2000 and 1999, rental expenses increased 4.2% from $11.8
million in 1999 to $12.3 million in 2000. Rental expense as a percentage of
property income remained constant in both periods at 20%.
Real estate taxes increased 4.1% from $6.5 million in the third quarter of
1999 to $6.7 million in the third quarter of 2000. If real estate taxes are
adjusted for properties acquired, sold and developed in 2000 and 1999, real
estate taxes increased 4.5% due primarily to increased taxes on recently
redeveloped properties.
Depreciation and amortization expenses increased 8.6% from $12.4 million in
the third quarter of 1999 to $13.4 million in the third quarter of 2000
reflecting the impact of recent tenant work and property improvements.
During the third quarter of 2000, the Trust incurred interest expense of $19.8
million, of which $3.8 million was capitalized, as compared to 1999's $17.0
million, of which $2.0 million was capitalized. The increase in interest
expense reflects the additional debt issued to fund the Trust's share repurchase
and capital improvement programs.
Administrative expenses decreased from $5.5 million in the third quarter of
1999 to $3.2 million in the third quarter of 2000. During the third quarter of
1999, the Trust recorded a $2.5 million charge related to a terminated merger
transaction. The decrease in these costs was offset by increased personnel
costs. The tight labor market in the Trust's operating regions resulted in
higher compensation costs both to existing and new employees.
As a result of the foregoing items, net income increased from
26
<PAGE>
$14.2 million during the third quarter of 1999 to $14.4 million during the third
quarter of 2000 and net income available for common shareholders increased from
$12.2 million to $12.4 million.
Segment Results
---------------
The Trust operates its portfolio of properties in three geographic operating
regions: Northeast, Mid-Atlantic and West.
Historical operating results for the three regions are as follows (in
thousands):
For the three months ended
September 30,
2000 1999
------------------------------------------------------------------------------
Rental income
Northeast $28,937 $25,686
Mid-Atlantic 28,146 28,197
West 7,018 8,088
------- -------
Total $64,101 $61,971
======= =======
Net operating income
Northeast $21,022 $19,490
Mid-Atlantic 20,771 20,681
West 5,235 5,722
------- -------
Total $47,028 $45,893
======= =======
The Northeast
--------------
The Northeast region is comprised of fifty-four assets, extending from
suburban Philadelphia north through New York and its suburbs into New England
and west to Illinois and Michigan.
When comparing the third quarter of 2000 with 1999, rental income increased
12.7% from $25.7 million in 1999 to $28.9 million in 2000. Excluding properties
acquired since January 1, 1999, on a same center basis, rental income increased
11.6%, primarily due to increases at recently redeveloped and retenanted
shopping centers, such as Bala Cynwyd, Lawrence Park, Gratiot, Langhorne Square
and Wynnewood.
Net operating income increased 7.9% from $19.5 million in 1999 to $21.0
million in 2000. Excluding properties acquired since January 1, 1999, net
operating income increased 6.8%, primarily due to increases at the recently
redeveloped and retenanted shopping centers.
27
<PAGE>
The Mid-Atlantic
----------------
The Mid-Atlantic region is comprised of thirty assets, located from
Baltimore south to metropolitan Washington, D.C. and further south through
Virginia, North Carolina and Florida.
When comparing the third quarter of 2000 with 1999, rental income remained
constant at $28.2 million. On a same center basis, excluding Northeast Plaza in
Atlanta, Georgia which was sold in 1999 and the recently developed Phase 3 of
the Bethesda Row project in Bethesda, Maryland, rental income increased 1.6%,
due in part to new anchor leases at several centers offset by vacancies at
centers being renovated.
When comparing the third quarter of 2000 with 1999, net operating income
remained constant at $20.7 million. On a same center basis as above, net
operating income increased 2.4%, due primarily to the new anchor leases offset
by vacancies at centers being renovated.
The West
--------
The Western region is comprised of thirty-eight assets, located from Texas to
the West Coast.
When comparing the third quarter of 2000 with 1999, rental income decreased
13.2% from $8.1 million in 1999 to $7.0 million in 2000. Excluding newly
developed properties, Santana Row, which is currently under development, and
properties acquired and sold since January 1, 1999, rental income increased
16.0% due primarily to recently redeveloped and retenanted properties in the Los
Angeles and San Francisco, California areas.
When comparing the third quarter of 2000 with 1999, net operating income
decreased 8.5% from $5.7 million in 1999 to $5.2 million in 2000. Excluding
newly developed properties, Santana Row, which is currently under development,
and properties acquired and sold since January 1, 1999, net operating income
increased 24.4%, due to increases from the recently redeveloped and retenanted
properties as mentioned above.
28
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
(27) Financial Data Schedules Edgar filing only
(B) Reports on Form 8-K
A Form 8-K, dated June 30, 2000, was filed on July 26, 2000 in response to
Item 5.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FEDERAL REALTY INVESTMENT TRUST
-------------------------------
(Registrant)
November 3, 2000 Steven J. Guttman
-----------------
Steven J. Guttman, President
(Chief Executive Officer)
November 3, 2000 Cecily A. Ward
--------------
Cecily A.Ward,Chief Financial Officer
(Principal Accounting Officer)
29
