<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
For Fiscal Year Ended:December 31,1999 Commission File No.1-07533
-----------------------------------------------------------------
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
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(Address of principal executive offices) (Zip Code)
(301) 998-8100
--------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
- ------------------- ---------------------
Common Shares of Beneficial Interest New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
7.95% Series A Cumulative Redeemable
Preferred Shares New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
6 5/8% Senior Notes 6.74% Medium-Term Notes
7.48% Senior Debentures 6.99% Medium-Term Notes
8 7/8% Senior Notes 6.82% Medium-Term Notes
8% Senior Notes 8.75% Notes
Subordinated Debt Securities*
* None issued, registered pursuant to a shelf registration
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
At March 14, 2000, the aggregate market value of Common Shares of Beneficial
Interest of Federal Realty Investment Trust held by nonaffiliates was $746.6
million based upon the closing price of such Shares on the New York Stock
Exchange.
Indicate the number of shares outstanding of each of the issuers' classes of
common stock.
Class Outstanding at March 14, 2000
- ----- -----------------------------
Common Shares of Beneficial Interest 39,557,553
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
PART III
--------
Portions of the Trust's Proxy Statement in connection with its Annual
Meeting to be held on May 3, 2000 (hereinafter called "2000 Proxy
Statement"). Specifically, the Sections entitled "Summary Compensation
Table", "Employment Agreements;Termination of Employment and Change in
Control Arrangements", "Aggregated Option Exercises in 1999 and December
31, 1999 Option Values", and "Compensation Committee Interlocks and
Insider Participation", "Ownership of Shares by Trustees and Officers",
"Certain Transactions" and "Section 16(a) Beneficial Ownership Reporting
Compliance" appearing in the 2000 Proxy Statement are incorporated herein
by reference.
2
<PAGE>
PART I & II
-----------
Item 1. Business
------- --------
Federal Realty Investment Trust (the "Trust") is engaged in the ownership,
management, development and redevelopment of prime retail properties. Founded
in 1962, the Trust is a self-administered equity real estate investment trust.
The Trust consolidates the financial statements of various entities which it
controls. At December 31, 1999 the Trust owned 123 retail or mixed use
properties and one apartment complex.
The Trust operates in a manner intended to enable it to qualify as a real
estate investment trust (REIT) under Sections 856- 860 of the Internal Revenue
Code. Under those sections, a REIT which distributes at least 95% of its real
estate investment trust taxable income to its shareholders each year and which
meets certain other conditions will not be taxed on that portion of its
taxable income which is distributed to its shareholders. Therefore, no
provision for Federal income taxes is required.
An important part of the Trust's strategy has been to acquire older, well-
located properties in prime, densely populated and affluent areas and to
enhance their operating performance through a program of renovation,
expansion, reconfiguration and retenanting. The Trust's traditional focus has
been on community and neighborhood shopping centers that are anchored by
supermarkets, drug stores or high volume, value oriented retailers that
provide consumer necessities. Late in 1994, recognizing a trend of consumer
shopping preferences and retailer expansion to main streets, the Trust
expanded its investment strategy to include shopping centers and retail and
mixed use buildings in prime established main street shopping areas. In
addition, since 1997 the Trust has obtained control of various land parcels
for the purpose of developing urban mixed-use projects that center around the
retail component. The Trust believes that these mixed use developments are an
important source of its growth in the future.
The Trust continually evaluates its properties for renovation, retenanting
and expansion opportunities. Similarly, the Trust regularly reviews its
portfolio and from time to time considers selling properties that no longer
fit the Trust's investment criteria and therefore should be monetized or
exchanged into other real estate assets. Proceeds from the sale of such
properties may be used either to acquire other properties (including funding
for development) or to help fund the Trust's share repurchase programs.
The Trust's portfolio of properties has grown from 54 as of January 1, 1995
to 124 at December 31, 1999. During this five year period the Trust acquired
76 retail properties for approximately $651 million. During this same period
six
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shopping centers were sold. Also during this period the Trust spent over
$308 million to develop, renovate, expand, improve and retenant its
properties. Although the Trust usually purchases a 100% fee interest in its
acquisitions, on occasion, it has entered into leases as a means of acquiring
properties. In addition, the Trust has purchased certain properties in
partnership with others. Certain of the partnerships, known as "downreit
partnerships", are a means of allowing property owners to make a tax deferred
contribution of their property in exchange for partnership units, which
receive the same distributions as Trust common shares and may be convertible
into common shares of the Trust. The majority of acquisitions are funded with
cash, but, on occasion, usually in connection with the partnerships, debt
financing is used. Since a significant portion of cash provided by operating
activities is distributed to common and preferred shareholders, capital
outlays for acquisitions, developments and redevelopments require debt or
equity funding.
The Trust's 124 properties are located in fifteen states and the District of
Columbia. Twenty-six of the properties are located in the Washington, D.C.
metropolitan area; twenty-four are in California; fourteen are in Connecticut;
ten are in Pennsylvania, primarily in the Philadelphia area; ten are in New
Jersey; twelve are in Texas; seven are in Illinois; three are in Virginia;
four are in Massachusetts; seven are in New York; two are in Florida; two are
in Arizona; and there is one in each of the following states: Michigan,
North Carolina and Oregon. No single property accounts for over 10% of the
Trust's revenues.
The Trust has traditionally operated its business as a single business
segment. During the fourth quarter of 1998, however, the Trust completed a
comprehensive restructuring program which, among other things, changed the
Trust's operating structure from a functional hierarchy to an asset management
model, where small focused teams are responsible for a portfolio of assets.
As a result the Trust has divided its portfolio of properties into three
operating regions: the Northeast, Mid-Atlantic and West. Each region is
operated under the direction of a regional chief operating officer, with
dedicated leasing, property management and financial staff and operates
largely autonomously with respect to day to day operating decisions. (See
"Segment Results" in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations for a further discussion of the segments
and their results.)
The Trust has approximately 2,200 tenants, ranging from sole proprietors to
major national retailers; no one tenant or corporate group of tenants accounts
for 2% or more of revenue. The Trust's leases with these tenants are
classified as operating leases and typically are structured to include minimum
rents, percentage rents based on tenants' gross sales volumes and
reimbursement of certain operating expenses and real estate taxes.
4
<PAGE>
The Trust continues to seek older, well-located shopping centers and retail
buildings to acquire, renovate, retenant and remerchandise, thereby enhancing
their revenue potential. The Trust also continues to identify and secure
additional sites for new development. During each of the years ended December
31, 1999, 1998 and 1997, retail or mixed-use properties have contributed 96%
of the Trust's total revenue. The extent to which the Trust might mortgage or
otherwise finance investments varies with the investment involved and the
economic climate.
The success of the Trust depends upon, among other factors, the trends of
the economy, access to capital, interest rates, construction costs, retailing
trends, income tax laws, increases or decreases in operating expenses,
governmental regulations, population trends, zoning laws, legislation and the
ability of the Trust to keep its properties leased at profitable levels. The
Trust competes for tenants with other real estate owners and the Trust's
properties account for only a small fraction of the retail space available for
lease. The Trust competes for investment opportunities and debt and equity
capital with individuals, partnerships, corporations, financial institutions,
life insurance companies, pension funds, trust funds and other real estate
investment trusts.
Investments in real property create a potential for environmental
liability on the part of the current and previous owners of, or any mortgage
lender on, such real property. If hazardous substances are discovered on or
emanating from any property, the owner or operator of the property may be held
liable for costs and liabilities relating to such hazardous substances. The
Trust has environmental insurance on many of its properties. Subject to
certain exclusions and deductibles, the insurance provides coverage for
unidentified, pre-existing conditions and for future contamination caused by
tenants and third parties. The Trust's current policy is to require an
environmental study on each property it seeks to acquire. On recent
acquisitions, any substances identified prior to closing which are required,
by applicable laws, to be remediated have been or are in the process of
investigation and remediation. Costs related to the abatement of asbestos
which increase the value of Trust properties are capitalized. Other costs are
expensed. In 1999 and 1998 approximately $952,000 and $616,000, respectively,
of which $654,000 and $453,000, respectively, was capitalized abatement costs,
was spent on environmental matters. The Trust has budgeted approximately
$650,000 in 2000 for environmental matters, a majority of which is projected
for asbestos abatement.
Current Developments
--------------------
In May 1999 the Trust, which had been founded as a District of Columbia
business trust in 1962, reorganized as a Maryland real estate investment trust
by amending and restating its declaration of trust and bylaws.
5
<PAGE>
During 1999 while exploring strategic alternatives to maximize shareholder
value, the Trust considered spinning off certain of its assets (primarily those
related to the development and operation of its main street retail program) in
a taxable transaction to shareholders. Shortly thereafter, the remaining
assets of the Trust were to be merged with another publicly traded shopping
center company in exchange for cash and stock consideration. On September 24,
1999, the Trust announced that merger negotiations were terminated and that the
spin-off was being reevaluated.
In preparing for these transactions, the Trust incurred expenses of
approximately $2.8 million related to legal, accounting, tax and other advisory
services related to the proposed spin-off and the merger. Such costs have been
expensed and are reflected as administrative expenses in the accompanying
consolidated statement of operations. While management continues to evaluate
alternatives to maximize shareholder value, there are currently no plans to
consummate a spin-off or merger transaction.
In 1999, $26.4 million of real estate, consisting of three street retail
properties, was acquired. Improvements to properties totalled $95.1 million,
including $38.7 million on predevelopment and development projects in
Bethesda, Maryland; Los Gatos, California; San Jose, California; San Antonio,
Texas; and Arlington, Virginia. The Trust invested $2.3 million in mortgage
notes receivable with an average weighted stated interest rate of 10%.
Northeast Plaza in Atlanta, Georgia was sold in October 1999 for $19.6
million, resulting in a loss of $6.3 million.
The Trust utilized its unsecured line of credit to fund these acquisitions
and capital expenditures. Repayments on the line of credit were made from the
proceeds of the sale of Northeast Plaza as well as the issuance on November
30, 1999 of $175 million of 8.75% Senior Notes due December 1, 2009.
In December 1999 the Trustees authorized a share repurchase program of up to
an aggregate of 4 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. As of December 31, 1999, 140,400 shares had
been repurchased, at a cost of $2.6 million. As of March 14, 2000, 1,048,600
shares at a cost of $20.0 million had been repurchased.
At December 31, 1999 the Trust had 192 full-time employees.
Executive Officers of the Trust
- -------------------------------
The Executive Officers at December 31, 1999 were:
Name Age Position with Trust
---- --- -------------------
Steven J. Guttman 53 President, Chief Executive
Officer and Trustee
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<PAGE>
Howard S. Biel 52 Senior Vice President, Chief
Development Officer
Nancy J. Herman 36 Vice President, General Counsel
and Secretary
Ron D. Kaplan 36 Senior Vice President-Capital
Markets, Chief Investment Officer
Cecily A. Ward 53 Vice President-Controller and
Treasurer
Donald C. Wood 39 Senior Vice President - Chief
Operating Officer and Chief
Financial Officer
Steven J. Guttman has been the Trust's President and Chief Executive Officer
since April 1980. Mr. Guttman has been associated with the Trust since 1972,
became Chief Operating Officer in 1975 and became a Managing Trustee in 1979.
Howard S. Biel joined the Trust in January 1998 as Senior Vice President-Chief
Development Officer. From 1991 through 1997, Mr. Biel was Regional Partner for
Faison where he was responsible for the development of over one million square
feet of retail and entertainment space in the Mid-Atlantic and Northeast
regions. From 1986 through 1990, Mr. Biel was Executive Vice President for
Western Development Corporation (now the Mills Corporation) where he oversaw the
development and management of over seven million square feet of value oriented
super-regional shopping malls. From 1979 through 1985, he was Senior Vice
President for Development at the Edward J. DeBartolo Corporation where he was
responsible for the planning and development of ten regional malls and several
urban mixed-use projects.
Nancy J. Herman became the Trust's Vice President, General Counsel and Secretary
on December 21, 1998. In this position, Ms. Herman has overall responsibility
for the Trust's legal affairs and human resources. Ms. Herman joined the Trust
in 1990 as a staff attorney. Since that time, she has had responsibility for
managing legal issues related to environmental matters, intellectual property
and computers, insurance and other legal matters. Prior to joining the Trust in
1990, Ms. Herman practiced real estate law at Hogan & Hartson L.L.P.
Ron D. Kaplan joined the Trust in November 1992 as Vice President-Capital
Markets. Mr. Kaplan was formerly a Vice President of Salomon Brothers Inc where
he was responsible for capital raising and financial advisory services for
public and private real estate companies. While at Salomon Brothers which he
joined in 1985, he participated in two of the Trust's debt offerings.
Cecily A. Ward was appointed Vice President - Controller and Treasurer on
December 16, 1999. On February 9, 2000 Ms. Ward was appointed Vice President -
Chief Financial Officer and Treasurer. Ms. Ward joined the Trust in April 1987
as Controller. Prior to
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<PAGE>
joining the Trust, Ms. Ward, a certified public accountant, was employed by
Grant Thornton LLP, the Trust's independent accountants at that time.
Donald C. Wood was appointed Senior Vice President - Chief Operating Officer and
Chief Financial Officer on December 16, 1999. Mr. Wood joined the Trust in May
1998 as Senior Vice President, Chief Financial Officer and Treasurer. Prior to
joining the Trust, Mr. Wood was Senior Vice-President and Chief Financial
Officer for Caesars World, Inc., a wholly-owned subsidiary of ITT Corporation,
where he was responsible for all aspects of finance throughout the company
including strategic planning, process re-engineering, capital allocation and
financial analysis. Prior to joining ITT in 1990, Mr. Wood was employed at
Arthur Andersen & Co. from 1982 where he served in numerous positions including
audit manager.
8
<PAGE>
Item 2. Properties
- ------ ----------
Retail Properties
- -----------------
The following table sets forth information concerning each retail property
in which the Trust owns an equity interest or has a leasehold interest as of
December 31, 1999. Except as otherwise noted, retail properties are 100% owned
in fee by the Trust.
<TABLE>
<CAPTION>
Year Year Number of
NORTHEAST Completed Acquired Square Feet (2) Tenants
------------ ----------- ----------------- ----------
<S> <C> <C> <C> <C>
Allwood 1958 1988 52,000 8
Clifton, NJ 07013 (4)
Andorra 1953 1988 259,000 43
Philadelphia, PA 19128 (5)
Bala Cynwyd 1955 1993 278,000 22
Bala Cynwyd, PA 19004
Blue Star 1959 1988 394,000 33
Watchung, NJ 07060 (4)
Brick Plaza 1958 1989 402,000 35
Brick Township, NJ 08723 (4)
Bristol 1959 1995 296,000 32
Bristol, CT 06010
Brunswick 1957 1988 261,000 18
North Brunswick, NJ 08902 (4)
Clifton 1959 1988 80,000 12
Clifton, NJ 07013 (4)
Crossroads 1959 1993 173,000 24
Highland Park, IL 60035
Dedham 1959 1993 250,000 32
Dedham, MA 02026
Ellisburg Circle 1959 1992 258,000 35
Cherry Hill, NJ 08034
Feasterville 1958 1980 116,000 10
Feasterville, PA 19047
</TABLE>
<TABLE>
<CAPTION>
Occupancy (1) Principal
NORTHEAST Acres (3) Overall / Economic Tenants
----------- -------------------- --------------------
<S> <C> <C> <C>
Allwood 5 100% / 100% Grand Union
Clifton, NJ 07013 (4) Mandee Shop
Andorra 23 96% / 96% Acme Markets
Philadelphia, PA 19128 (5) Andorra Theater
Kohl's
Bala Cynwyd 22 100% / 84% Acme Markets
Bala Cynwyd, PA 19004 Lord & Taylor
Blue Star 55 99% / 88% Kohl's
Watchung, NJ 07060 (4) Shop Rite
Toys R Us
Brick Plaza 42 100% / 99% A&P Supermarket
Brick Township, NJ 08723 (4) Loews Theatre
Steinbach's
Bristol 22 86% / 86% Bradlees
Bristol, CT 06010 Super Stop & Shop
TJ Maxx
Brunswick 22 40% / 29% (11) A&P Supermarket
North Brunswick, NJ 08902 (4)
Clifton 8 91% / 91% Acme Markets
Clifton, NJ 07013 (4)
Crossroads 15 95% / 95% Comp USA
Highland Park, IL 60035 Binny's
Golfsmith
Dedham 18 93% / 93% Ames
Dedham, MA 02026 Cherry & Webb
Ellisburg Circle 27 90% / 90% Bed, Bath & Beyond
Cherry Hill, NJ 08034 Ross Dress For Less
Shop Rite
Feasterville 12 100% / 100% Office Max
Feasterville, PA 19047 Genuardi Markets
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Year Year Number of
Completed Acquired Square Feet (2) Tenants
------------ ----------- ----------------- ----------
<S> <C> <C> <C> <C>
Finley Square 1974 1995 313,000 16
Downers Grove, IL 60515
Flourtown 1957 1980 191,000 20
Flourtown, PA 19031
Fresh Meadows 1949 1997 410,000 70
Queens, NY 11365
Garden Market 1958 1994 134,000 20
Western Springs, IL 60558
Gratiot Plaza 1964 1973 218,000 10
Roseville, MI 48066
Hamilton 1961 1988 190,000 13
Hamilton, NJ 08690 (4)
Hauppauge 1963 1998 131,000 21
Hauppauge, NY 11788
Huntington 1962 1988 279,000 14
Huntington, NY 11746 (4)
Lancaster 1958 1980 107,000 15
Lancaster, PA 17601 (4)
Langhorne Square 1966 1985 209,000 27
Levittown, PA 19056
Lawrence Park 1972 1980 326,000 42
Broomall, PA 19008
Northeast 1959 1983 297,000 36
Philadelphia, PA 19114
North Lake Commons 1989 1994 129,000 20
Lake Zurich, IL 60047
Queen Anne Plaza 1967 1994 149,000 11
Norwell, MA 02061
Rutgers 1973 1988 216,000 18
Franklin, N.J. 08873 (4)
Saugus Plaza 1976 1996 171,000 7
Saugus, MA 01906
</TABLE>
<TABLE>
<CAPTION>
Occupancy (1) Principal
Acres (3) Overall / Economic Tenants
----------- -------------------- --------------------
<S> <C> <C> <C>
Finley Square 21 87% / 86% Bed, Bath & Beyond
Downers Grove, IL 60515 Service Merchandise
Flourtown 15 100% / 100% K Mart
Flourtown, PA 19031 Genuardi Markets
Fresh Meadows 147 98% / 98% Cineplex Odeon
Queens, NY 11365 Filene's
K Mart
Garden Market 12 88% / 88% Dominick's
Western Springs, IL 60558
Gratiot Plaza 20 100% / 100% Bed, Bath and Beyond
Roseville, MI 48066 Best Buy
Farmer Jack
Hamilton 18 100% / 99% Shop Rite
Hamilton, NJ 08690 (4) Steven's Furniture
A.C. Moore
Hauppauge 15 100% / 100% Shop Rite
Hauppauge, NY 11788 Office Max
Huntington 21 100% / 100% Bed, Bath and Beyond
Huntington, NY 11746 (4) Buy Buy Baby
Toys R Us
Lancaster 11 94% / 94% A.C. Moore
Lancaster, PA 17601 (4) Giant Eagle
Langhorne Square 21 96% / 96% Drug Emporium
Levittown, PA 19056 Marshalls
Lawrence Park 28 98% / 96% Acme Markets
Broomall, PA 19008 Jefferson Health Care
Northeast 19 91% / 91% Burlington Coat Factory
Philadelphia, PA 19114 Marshalls
North Lake Commons 14 99% / 98% Dominick's
Lake Zurich, IL 60047
Queen Anne Plaza 18 100% / 100% TJ Maxx
Norwell, MA 02061 Victory Supermarket
Rutgers 27 98% / 98% Edwards Super Food
Franklin, N.J. 08873 (4) K Mart
Saugus Plaza 19 100% / 100% K Mart
Saugus, MA 01906 Super Stop & Shop
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Year Year Number of
Completed Acquired Square Feet (2) Tenants
------------ ----------- ----------------- ----------
<S> <C> <C> <C> <C>
Troy 1966 1980 202,000 21
Parsippany-Troy, NJ 07054
Willow Grove 1953 1984 213,000 25
Willow Grove, PA 19090
Wynnewood 1948 1996 257,000 27
Wynnewood, PA 19096
Retail buildings
- ----------------
Thirteen buildings in CT 1900 - 1991 1994 -1996 233,000 82
One building in MA 1930 1995 13,000 8
Four buildings in NY (21) 1937 - 1987 1997 92,000 16
One building in NJ 1940 1995 11,000 2
Three buildings in IL 1920 - 1927 1995 - 1997 24,000 3
MID ATLANTIC
Barracks Road 1958 1985 484,000 83
Charlottesville, VA 22905 (5)
Bethesda Row 1945 - 1991 1993 299,000 72
Bethesda, MD 20814 (4)
Congressional Plaza 1965 1965 341,000 47
Rockville, MD 20852 (6)
Courthouse Center 1970 1997 38,000 10
Rockville, MD 20852 (7)
Eastgate 1963 1986 159,000 32
Chapel Hill, NC 27514
Falls Plaza 1962 1967 69,000 10
Falls Church, VA 22046
Falls Plaza - East 1960 1972 71,000 19
Falls Church, VA 22046
</TABLE>
<TABLE>
<CAPTION>
Occupancy (1) Principal
Acres (3) Overall / Economic Tenants
----------- -------------------- --------------------
<S> <C> <C> <C>
Troy 19 100% / 100% Comp USA
Parsippany-Troy, NJ 07054 Pathmark
Toys R Us
Willow Grove 14 99% / 99% Barnes and Noble
Willow Grove, PA 19090 Marshalls
Toys R Us
Wynnewood 16 99% / 60% Bed, Bath and Beyond
Wynnewood, PA 19096 Borders Books and Music
Food Fare
Retail buildings
Thirteen buildings in CT - 98% / 97% Eddie Bauer
Pottery Barn
Saks Fifth Avenue
One building in MA - 100% / 100%
Four buildings in NY (5) - 97% / 97% (12) United Artists
One building in NJ - 100% / 100% Legg Mason
Three buildings in IL - 83% / 83% Foodstuffs
Gianni Versace
MID ATLANTIC
Barracks Road 39 97% / 97% Bed, Bath & Beyond
Charlottesville, VA 22905 Harris Teeter
Kroger
Old Navy
Bethesda Row 8 96% / 95% Barnes and Noble
Bethesda, MD 20814 (4) Giant Food
Congressional Plaza 22 97% / 97% Buy Buy Baby
Rockville, MD 20852 (6) Fresh Fields
Tower Records
Courthouse Center 1 86% / 86% Rockville Interiors
Rockville, MD 20852 (7)
Eastgate 17 100% / 94% Food Lion
Chapel Hill, NC 27514 Southern Season
Falls Plaza 6 100% / 77% Giant Food
Falls Church, VA 22046
Falls Plaza - East 5 100% / 100% CVS Pharmacy
Falls Church, VA 22046 Staples
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Year Year Number of
Completed Acquired Square Feet (2) Tenants
------------ ----------- ----------------- ----------
<S> <C> <C> <C> <C>
Federal Plaza 1970 1989 242,000 38
Rockville, MD 20852
Gaithersburg Square 1966 1993 208,000 35
Gaithersburg, MD 20878
Governor Plaza 1963 1985 252,000 23
Glen Burnie, MD 21961 (5)
Idylwood Plaza 1991 1994 73,000 16
Falls Church, VA 22030
Laurel Centre 1956 1986 385,000 52
Laurel, MD 20707
Leesburg Plaza 1967 1998 247,000 26
Leesburg, VA 20176 (7)
Loehmann's Plaza 1971 1983 242,000 55
Fairfax, VA 22042 (8)
Magruder's Center 1955 1997 109,000 23
Rockville, MD 20852 (7)
Mid-Pike Plaza 1963 1982 315,000 21
Rockville, MD 20852 (4)
Old Keene Mill 1968 1976 92,000 20
Springfield, VA 22152
Pan Am 1979 1993 218,000 30
Fairfax, VA 22031
Park & Shop 1930 1995 50,000 12
Washington, DC 20036
Perring Plaza 1963 1985 412,000 17
Baltimore, MD 21134 (5)
Pike 7 Plaza 1968 1997 163,000 25
Vienna, VA 22180 (7)
Quince Orchard 1975 1993 240,000 29
Gaithersburg, MD 20877 (9)
</TABLE>
<TABLE>
<CAPTION>
Occupancy (1) Principal
Acres (3) Overall / Economic Tenants
----------- -------------------- --------------------
<S> <C> <C> <C>
Federal Plaza 18 99% / 98% Comp USA
Rockville, MD 20852 Ross Dress For Less
TJ Maxx
Gaithersburg Square 17 94% / 94% Bed, Bath & Beyond
Gaithersburg, MD 20878 Borders Books and Music
Governor Plaza 26 100% / 100% Office Depot
Glen Burnie, MD 21961 (5) Syms
Idylwood Plaza 6 100% / 100% Fresh Fields
Falls Church, VA 22030
Laurel Centre 26 81% / 81% Giant Food
Laurel, MD 20707 Marshalls
Toys R Us
Leesburg Plaza 24 99% / 99% Giant Food
Leesburg, VA 20176 (7) K Mart
Peebles
Loehmann's Plaza 18 99% / 98% Linens N Things
Fairfax, VA 22042 (8) Loehmann's Dress Shop
Magruder's Center 5 100% / 100% Magruder's
Rockville, MD 20852 (7) Tuesday Morning
Mid-Pike Plaza 20 100% / 100% Bally Total Fitness
Rockville, MD 20852 (4) Filene's Basement
Toys R Us
Old Keene Mill 11 93% / 93% Fresh Fields
Springfield, VA 22152 One Stop Pet & Aquarium
Pan Am 25 91% / 91% Michaels
Fairfax, VA 22031 Micro Center
Safeway
Park & Shop 1 97% / 97% Petco
Washington, DC 20036 Pizzeria Uno
Perring Plaza 27 100% / 100% Burlington Coat Factory
Baltimore, MD 21134 (5) Home Depot
Metro Foods
Pike 7 Plaza 13 100% / 97% Staples
Vienna, VA 22180 (7) TJ Maxx
Quince Orchard 16 99% / 99% Circuit City
Gaithersburg, MD 20877 (9) Dyncorp
Staples
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Year Year Number of
Completed Acquired Square Feet (2) Tenants
------------ ----------- ----------------- ----------
<S> <C> <C> <C> <C>
Shirlington 1940 1995 212,000 43
Arlington, VA 22206
Tower Shopping Center 1960 1998 109,000 32
Springfield, VA 22150
Tysons Station 1954 1978 50,000 15
Falls Church, VA 22043
Wildwood 1958 1969 85,000 35
Bethesda, MD 20814
Williamsburg 1961 1986 251,000 29
Williamsburg, VA 23187
The Shops at Willow Lawn 1957 1983 448,000 101
Richmond, VA 23230
Development
- -----------
Pentagon Row n/a 1999 n/a n/a
Arlington, VA 22202 (9)
Land in Bethesda, MD 20814 1997 - 1998
Retail buildings
- ----------------
Two buildings in FL 1920 1996 28,000 9
WEST COAST
Escondido Promenade 1987 1996 222,000 57
Escondido, CA 92029 (10)
King's Court 1960 1998 78,000 19
Los Gatos, CA 95032 (7) (9)
Peninsula Center 1962 1997 296,000 70
Palos Verdes, CA 90274
150 Post Street 1965 1997 99,000 28
San Francisco, CA 94108
Uptown Shopping Center Various 1997 100,000 69
Portland, OR 97210
</TABLE>
<TABLE>
<CAPTION>
Occupancy (1) Principal
Acres (3) Overall / Economic Tenants
----------- -------------------- --------------------
<S> <C> <C> <C>
Shirlington 16 89% / 89% Carlyle Grand Cafe
Arlington, VA 22206 Cineplex Odeon
Tower Shopping Center 12 96% / 96% Virginia Fine Wine
Springfield, VA 22150 Talbot's Outlet
Tysons Station 4 90% / 90% Trader Joe's
Falls Church, VA 22043
Wildwood 13 100% / 100% CVS Pharmacy
Bethesda, MD 20814 Sutton Place Gourmet
Williamsburg 21 96% / 96% Food Lion
Williamsburg, VA 23187 Peebles
Roses
The Shops at Willow Lawn 37 91% / 91% Dillards
Richmond, VA 23230 Hannaford Brothers
Development
- -----------
Pentagon Row 18 n/a (14)
Arlington, VA 22202 (9)
Land in Bethesda, MD 20814 1.75
Retail buildings
- ----------------
Two buildings in FL - 90% / 90% Express
WEST COAST
Escondido Promenade 18 99% / 99% Toys R Us
Escondido, CA 92029 (10) TJ Maxx
King's Court 8 100% / 100% Lunardi's Supermarket
Los Gatos, CA 95032 (7) (9) Longs Drug
Peninsula Center 24 98% / 98% TJ Maxx
Palos Verdes, CA 90274 Vons Pavilion
150 Post Street 95% / 95% Brooks Brothers
San Francisco, CA 94108 Williams-Sonoma
Uptown Shopping Center 7 99% / 99% Elephant's Delicatessen
Portland, OR 97210
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Year Year Number of
Completed Acquired Square Feet (2) Tenants
------------ ----------- ----------------- ----------
<S> <C> <C> <C> <C>
Development
- -----------
Old Town Center 1962 1997 101,000 14
Los Gatos, CA 95030 (10)
Santana Row 1962 1997 n/a 40
San Jose, CA 95128 (10)
Twelve buildings in San Antonio, TX 1890 - 1935 1998 - 1999 n/a 4
Retail buildings
Eight buildings in Santa Monica, CA (21) 1888 - 1995 1996 - 1998 153,000
Three buildings in Hollywood, CA (21) 1921 - 1991 1999 198,000 14
Five buildings in San Diego, CA (21) 1888 - 1995 1996 - 1997 67,000 15
Three buildings in CA (21) 1922 1996 - 1998 73,000 18
Two buildings in AZ (20) 1996 - 1998 1998 40,000 11
</TABLE>
<TABLE>
<CAPTION>
Occupancy (1) Principal
Acres (3) Overall / Economic Tenants
----------- -------------------- --------------------
<S> <C> <C> <C>
Development
- -----------
Old Town Center 4 88% / 85% (13) Borders Books and Music
Los Gatos, CA 95030 (10) Gap Kids
Santana Row 39 n/a (14)
San Jose, CA 95128 (10)
Twelve buildings in San Antonio, TX - n/a (15)
Retail buildings
Eight buildings in Santa Monica, CA (22) - 100% / 100% (16) Abercrombie & Fitch
Banana Republic
J. Crew
Three buildings in Hollywood, CA (21) - 78% / 78% (17) General Cinema
Hollywood Entertainment Museum
Five buildings in San Diego, CA (21) - 100% / 100% (18) Urban Outfitters
Three buildings in CA (21) - 100% / 100% (19) Pottery Barn
Two buildings in AZ (20) - 100% / 100% Gordon Biersch Brewing Co.
</TABLE>
(1) Overall occupancy is expressed as a percentage of rentable square feet and
includes square feet covered by leases for stores not yet opened. Economic
occupancy is expressed as a percentage of rentable square feet, but only
includes leases currently generating rental income.
(2) Represents the physical square feet of the property, which may exceed the
rentable square feet used to express occupancy.
(3) Acreage on each individual main street building is not significant.
(4) The Trust has a leasehold interest in this property.
(5) The Trust owns a 99.99% general partnership interest in these properties.
(6) The Trust owns a 55.7% equity interest in this corner.
(7) The Trust owns this property in a "downreit" partnership.
(8) The Trust has a 1% general partnership interest and manages the
partnership. A 99% interest is held by a limited partner.
(9) The Trust owns this property subject to a ground lease.
(10) The Trust owns the controlling interest in this center. A minority owner
has an interest in the profits of the center.
(11) Under redevelopment.
(12) Occupancy is based on two occupied buildings. The other two buildings are
under redevelopment.
(13) 35,000 square feet is under development.
(14) Under development.
(15) The Trust plans to develop these buildings, most of which are currently
vacant.
(16) Occupancy is based on six occupied buildings. The other two buildings are
under redevelopment.
(17) Occupancy is based on one occupied buildings. The other two buildings are
under redevelopment.
(18) Occupancy is based on two occupied buildings. The other three buildings are
under redevelopment.
(19) Occupancy is based on one occupied buildings. The other two buildings are
under redevelopment.
(20) The Trust owns 100% of one building and an 85% partnership interest in the
second building.
(21) The Trust owns a 90% general partnership interest in these buildings.
(22) The Trust owns a 90% general partnership interest in seven of these
buildings and 100% of the eighth building.
14
<PAGE>
Apartments
- ----------
The following table sets forth information concerning the Trust's apartment
development as of December 31, 1999 which is 100% owned by the Trust in fee.
This development is not subject to rent control.
<TABLE>
<CAPTION>
Year Year
Property Completed Acquired Acres 1-BR 2-BR 3-BR Total Occupancy
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rollingwood 1960 1971 14 59 163 61 283 98%
Silver Spring, MD
9 three-story buildings
</TABLE>
15
<PAGE>
Item 3. Legal Proceedings.
- ------ -----------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
None
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
- ------ ---------------------------------------------------------------------
Market Quotations
Dividends
Quarter ended High Low Paid
------------------ --------- -------- ----
December 31, 1999 $20 15/16 $17 $.45
September 30, 1999 24 20 .44
June 30, 1999 24 1/16 20 9/16 .44
March 31, 1999 24 7/8 20 1/4 .44
December 31, 1998 $24 1/2 $20 $.44
September 30, 1998 25 1/8 19 3/8 .43
June 30, 1998 25 7/8 23 1/2 .43
March 31, 1998 25 15/16 23 5/8 .43
The number of holders of record for Federal Realty's common shares of
beneficial interest at March 14, 2000 was 6,663.
For the years ended December 31, 1999 and 1998, $.16 and $.31,
respectively, of dividends paid on common shares represented a return of
capital.
Dividends declared on common shares per quarter during the last two fiscal
years were as follows:
Quarter Ended 1999 1998
------------- ---- ----
March 31 $ .44 $ .43
June 30 .44 .43
September 30 .45 .44
December 31 .45 .44
The Trust's common shares of beneficial interest are listed on the New York
Stock Exchange.
16
<PAGE>
Item 6. Selected Financial Data.
-----------------------
In thousands, except per share data
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Data
<S> <C> <C> <C> <C> <C>
Rental Income $245,833 $222,186 $188,529 $164,887 $142,841
Income before
gain on sale
of real estate 55,493 44,960 40,129 28,754 23,655
Gain (loss) on
sale of real
estate (7,050) --- 6,375 (12) (545)
Net income 48,443 44,960 46,504 28,742 23,110
Net income
available for
common
shareholders 40,493 37,010 44,627 28,742 23,110
Net cash provided
by operating
activities(1) 102,183 90,427 72,170 65,648 65,117
Net cash used in
investing
activities(1) 99,313 187,646 279,343 161,819 134,360
Net cash (used)
provided by
financing
activities(1) (8,362) 97,406 213,175 96,691 75,769
Dividends
declared
on common shares 71,630 69,512 66,636 56,607 51,392
Weighted average
number of common
shares outstanding:
basic 39,574 39,174 38,475 33,175 31,481
diluted 40,638 40,080 38,988 33,573 31,860
Per share:
Earnings per
common share:
basic 1.02 .94 1.16 .87 .73
diluted 1.02 .94 1.14 .86 .72
Dividends declared
per common share 1.78 1.74 1.70 1.66 1.61
Other Data
- ---------------------------------------------------------------------------------------------------------------------------------
Funds from
operations (2) $96,795 $86,536 $79,733 $65,254 $57,034
======= ======= ======= ======= =======
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Balance Sheet Data
Real Estate
at cost $1,721,459 $1,642,136 $1,453,639 $1,147,865 $1,009,682
Total assets 1,534,048 1,484,317 1,316,573 1,035,306 886,154
Mortgage and
capital lease
obligations 172,573 173,480 221,573 229,189 222,317
Notes payable 162,768 263,159 119,028 66,106 49,980
Senior notes 510,000 335,000 255,000 215,00 165,000
Convertible
subordinated
debentures 75,289 75,289 75,289 75,289 75,289
Redeemable
Preferred Shares 100,000 100,000 100,000 --- ---
Shareholders'
equity 501,827 529,947 553,810 388,885 327,468
Number of
common shares
outstanding 40,201 40,080 39,148 35,886 32,160
</TABLE>
(1) Determined in accordance with Financial Accounting Standards Board Statement
No. 95, Statement of Cash Flows.
(2) Defined by the National Association of Real Estate Investment Trusts
(NAREIT) as income available for common shareholders before depreciation and
amortization of real estate assets and before extraordinary items and
significant nonrecurring events less gains on sale of real estate. Effective
January 1, 2000 funds from operation will no longer exclude significant
nonrecurring events. 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. 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.
18
<PAGE>
The calculation of funds from operations for the periods presented
is reflected in the following table:
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997 1996 1995
(in thousands)
<S> <C> <C> <C> <C> <C>
Net income available for
common shareholders $40,493 $37,010 $44,627 $28,742 $23,110
Depreciation and
Amortization 45,388 41,792 37,281 34,128 30,986
Amortization of
initial direct
cost of leases 3,033 2,491 2,249 2,372 2,393
Loss (gain) on sale
of real estate 7,050 - (6,375) 12 545
Income attributable
to partnership units 831 578 - - -
Non-recurring items - 4,665 1,951 - -
------ ----- ------ ------ ------
Funds from
Operations $96,795 $86,536 $79,733 $65,254 $57,034
======= ======= ======= ======= =======
</TABLE>
19
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
- -------------
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto of Federal Realty Investment Trust (the
"Trust"). The Trust and its representatives may from time to time make written
or oral statements that are "forward-looking", within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements contained in this
report and other filings with the Securities and Exchange Commission and in
reports to the Trust's shareholders. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause actual
strategic initiatives, results, performance or achievements of the Trust to be
materially different from the initiatives, results of operations or plans
expressed or implied by such forward-looking statements. Such factors include,
among others, changes in the Trust's business strategy, 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.
The Trust is engaged in the ownership, management, development and
redevelopment of prime retail properties. The Trust, which has traditionally
invested in strip retail shopping centers, has expanded its investments to urban
mixed used properties. Management continually evaluates the future prospects
of its real estate portfolio, not only to identify expansion and renovation
opportunities, but also to identify properties that no longer fit the Trust's
investment criteria and therefore, should be monetized or exchanged into other
real estate assets. At December 31, 1999 the Trust owned 123 retail properties
and one apartment complex.
Liquidity and Capital Resources
- -------------------------------
The Trust 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 $102.2 million in 1999, $90.4
million in 1998, and $72.2 million in 1997, of which $76.6 million, $74.3
million, and $62.6 million, respectively, was distributed to shareholders.
Contributions from newly acquired properties and from retenanted and redeveloped
properties, as more fully described below, were the primary sources of these
increases.
Net cash used in investing activities was $99.3 million in 1999, $187.6
million in 1998, and $279.3 million in 1997. The Trust
20
<PAGE>
acquired properties totaling $26.4 million in 1999, $120.4 million in 1998, and
$275.2 million in 1997 requiring cash outlays of $25.3 million, $92.9 million,
and $251.4 million. During these same three years the Trust expended an
additional $90.8 million, $73.0 million, and $50.3 million in capital
improvements to its properties, of which $38.7 million in 1999 and $25.0 million
in 1998 related to new development (1997 amounts related to new development were
insignificant). The Trust invested $2.3 million, $21.4 million, and $10.4
million in 1999, 1998, and 1997, respectively, in mortgage notes receivable,
with an average weighted stated interest rate of 10%, 10% and 9%, respectively.
Certain of these mortgages also participate in the gross revenues and
appreciation and are convertible into ownership interests in the properties by
which they are secured. Cash of $19.2 million in 1999 and $9.4 million in 1997
was received from the sale of properties.
During 1999 the Trust expended cash of $25.3 million to acquire real estate
and an additional $90.8 million to improve, redevelop and develop its existing
real estate. The Trust acquired a ninety percent interest in three buildings,
valued at $26.4 million, in Hollywood, California for a total cash investment to
the Trust of $23.7 million. The first two buildings have 122,000 and 64,000
leasable square feet, respectively. The third building is vacant pending
redevelopment. In addition, the Trust increased by $1.6 million its partnership
interest in Kings Court in Los Gatos, California.
Of the $90.8 million spent in 1999 on the Trust's existing real estate
portfolio, approximately $38.7 million was invested in predevelopment and
development projects in Bethesda, Maryland; Los Gatos, California; San Jose,
California; San Antonio, Texas; and in Arlington, Virginia. The remaining $52.1
million of capital expenditures relates to improvements to common areas, tenant
work and various redevelopments, including the renovation of Gratiot Plaza, the
expansion and retenanting of Langhorne Square shopping center, the renovation of
Blue Star shopping center, and the redevelopment of retail buildings in Forest
Hills, New York.
Net cash provided by financing activities, before dividend payments, was $68.3
million in 1999, $171.7 million in 1998, and $275.8 million in 1997. The Trust
utilized its unsecured line of credit to initially fund acquisitions, capital
expenditures and balloon debt repayments.
In December 1998 the Trust obtained a four-year loan of $125 million from five
institutional lenders. The loan, which bears interest at LIBOR plus 75 basis
points, had an average weighted interest cost in 1999 of 6.1%. In addition, the
loan requires fees and has the same covenants as the syndicated credit facility.
Proceeds were used to repay amounts drawn on the syndicated credit facility.
In December 1997 the Trust replaced its unsecured medium-term revolving
credit facilities with four banks with a five-year syndicated credit facility,
thereby increasing the aggregate amount available from $135 million to $300
million and decreasing the interest rate from LIBOR plus 75 basis points to
LIBOR plus 65 basis points. As did prior credit facilities, the syndicated
facility
21
<PAGE>
requires fees and has various covenants including the maintenance of a minimum
shareholders' equity and a maximum ratio of debt to net worth. At December 31,
1999, 1998 and 1997, $34.0 million, $134.1 million, and $114.8 million,
respectively, was borrowed under these facilities. The maximum amount borrowed
during 1999, 1998, and 1997 was $205.0 million, $259.1 million, and $114.8
million. The weighted average interest rate on borrowings during 1999, 1998 and
1997 was 5.9%, 6.1%, and 6.5%, respectively. Repayments on the credit facilities
were made from the following debt and equity issuances.
On November 30, 1999 the Trust issued $175 million of 8.75% Notes due December
1, 2009, netting cash proceeds of $172.2 million. The notes pay interest semi-
annually on June 1 and December 1.
On March 5, 1998 the Trust issued $39.5 million of 6.74% Medium-Term Notes due
2004, netting approximately $39.3 million, and $40.5 million of 6.99% Medium-
Term Notes due 2006, netting approximately $40.2 million. The notes pay
interest semi-annually on March 30 and September 30.
In order to minimize the risk of changes in interest rates, from time to time
in connection with the issuance of certain debt issues the Trust will enter into
interest rate hedge agreements. In anticipation of the March 1998 Medium-Term
Note issuance, the Trust purchased a Treasury Yield Hedge (notional amount of
$50 million) on January 13, 1998 which was terminated on March 5, 1998 at a gain
of $1.1 million. The gain is being recognized as a reduction in interest
expense over the terms of the notes. There were no open hedge agreements at
December 31, 1999 and 1998.
In December 1999 the Trustees authorized a share repurchase program of up to
an aggregate of 4 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. As of December 31, 1999, 140,500 shares had been
repurchased at a cost of $2.6 million. As of March 14, 2000, 1,048,600 common
shares at a cost of $20.0 million had been repurchased.
On February 4, 1997 the Trust sold three million common shares to an
institutional investor for $28 per share, netting $83.9 million. On July 29,
1997 the Trust sold $40 million of 6.82% Medium-Term Notes, netting
approximately $39.8 million. On October 6, 1997 the Trust issued four million
7.95% Series A Cumulative Redeemable Preferred Shares at $25 per share in a
public offering, netting approximately $96.8 million.
Capital requirements in 2000 will depend upon acquisition opportunities, new
development efforts, the level of improvements and redevelopments on existing
properties, and the success of the share repurchase program. The Trust has
budgeted approximately $150 million for 2000 for new development and $61 million
for redevelopments, tenant work and improvements to the core portfolio.
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 Trust's $100
million of 8 7/8% Senior Notes matured on January 17, 2000 and were paid with
borrowings on the
22
<PAGE>
revolving credit facility. The next significant maturity is of
$30.7 million of mortgage debt in 2001.
The Trust will need additional capital in order to fund acquisitions,
expansions, developments, refinancings and its share repurchase program.
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 cost of unsecured debt
is partially dependent upon the Trust's debt ratings. Moody's Investors Service
lowered its rating on the Trust's senior unsecured debt from Baa1 to Baa2 in
November 1999 while Standard and Poor's affirmed its rating of BBB+. In January
2000 the Trust obtained a construction loan commitment for up to $24.5 million
in connection with the Trust's Woodmont East development in Bethesda, Maryland.
The Trust believes, based on past experience, that access to the capital needed
to execute its business plan will be available to it.
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 Congressional Plaza 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 at Congressional Plaza at its then fair
market value. Based on management's current estimate of fair market value, the
Trust's estimated cash requirement upon exercise of the put option is
approximately $27 million.
On January 1, 1999 the Loehmann's Plaza Limited Partnership Agreement was
amended to extend the partnership to December 31, 2000 and to delete the put and
call options. On January 1, 2000 the partnership agreement was again amended
and restated. Under this amended and restated agreement, the limited partner
was awarded 190,000 partnership units in exchange for a 98% partnership
interest.
Under the terms of certain other partnerships, 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.
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 the Amended and Restated Loehmann's Plaza Limited
Partnership Agreement and certain other partnerships, the partners may exchange
their operating partnership units, totaling 1,004,589, into cash or the same
number of common shares of the Trust, at the option of the Trust. During the
third quarter of 1999 the Trust redeemed 64,952 operating units for cash of $1.6
million.
23
<PAGE>
As of December 31, 1999 in connection with renovation and development
projects, the Trust has contractual obligations of $59 million.
Results of Operations
- ---------------------
Net income and funds from operations have been affected by the Trust's recent
acquisition, 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. 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 and significant non-recurring events less gains on sale of real estate.
Effective January 1, 2000 funds from operations will no longer exclude
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 (in
thousands):
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Net income available for
common shareholders $40,493 $37,010 $44,627
Depreciation and amortization
of real estate assets 45,388 41,792 37,281
Amortization of initial direct
costs of leases 3,033 2,491 2,249
Income attributable to operating
Partnership units 831 578 -
Loss (gain) on sale of real estate 7,050 (6,375)
Non-recurring items - 4,665 1,951
------- ------- -------
Funds from operations for $96,795 $86,536 $79,733
common shareholders ======= ======= =======
</TABLE>
The Trust's retail leases generally provide for minimum rents with periodic
increases. Most retail tenants pay a majority of on-site operating expenses and
real estate taxes. Many leases also contain a percentage rent clause which
calls for additional rents based on gross tenant sales. These features in the
Trust leases reduce the Trust's exposure to higher costs caused by inflation and
allow it to participate in improved tenant sales.
24
<PAGE>
Consolidated Results
- --------------------
1999 vs. 1998
Rental income, which consists of minimum rent, percentage rent and cost
recoveries, increased 11% from $222.2 million in 1998 to $245.8 million in
1999. If properties acquired and sold in 1999 and 1998 are excluded, rental
income increased 6%,with the recently renovated and retenanted centers
contributing heavily to the growth.
Other property income includes items, which, although recurring, tend to
fluctuate from period to period, such as utility reimbursements, telephone
income, merchant association dues, late fees, and temporary income. Also
included are less regularly recurring items, such as lease termination fees.
Other income increased 9% from $10.3 million in 1998 to $11.2 million in 1999.
An increase of $650,000 in temporary tenant income, an area identified by the
Trust as one with additional growth opportunity, and an increase of $550,000 in
lease termination fees surpassed decreases in telephone income and decreases in
marketing dues, as the Trust discontinued marketing funds at certain shopping
centers in 1999.
Rental expenses increased 8% from $49.5 million in 1998 to $53.7 million in
1999. If properties acquired and sold in 1999 and 1998 are excluded, rental
expenses increased 5%. A $1.2 million increase in the write off of tenant work
and lease costs associated with bankrupt or terminated leases coupled with a
$975,000 increase in snow removal costs offset the decrease in marketing
expenses, consistent with the decrease in marketing dues.
Real estate taxes increased 7% from $23.3 million in 1998 to $25.0 million in
1999. If properties acquired and sold in 1999 and 1998 are excluded, real
estate taxes increased 4%, primarily due to increased taxes on recently
redeveloped properties.
Depreciation and amortization expense increased 9% from $46.0 million in 1998
to $50.0 million in 1999. If properties acquired and sold in 1999 and 1998 are
excluded, depreciation and amortization expense increased 7% due to the impact
of recent tenant work and redevelopments.
Interest income increased 29% from $5.9 million in 1998 to $7.6 million in
1999 due primarily to the issuance of approximately $24 million of mortgage
notes receivable in 1999 and 1998.
In 1999 the Trust incurred interest expense of $68.4 million, of which $6.9
million was capitalized, as compared to 1998's $60.2 million, of which $5.1
million was capitalized. The increase in interest expense reflects the
additional debt issued to help fund the Trust's 1999 real estate acquisitions
and capital improvements of approximately $116 million. The weighted average
interest rate was 7.6% in 1999 compared with 8% in 1998. The ratio of earnings
to combined fixed charges and preferred dividends was 1.52x in 1999 and 1.46x in
1998. The ratio of earnings to fixed charges was 1.70x in 1999 and 1.65x in
1998. The ratio of funds from operations to combined fixed charges and
preferred dividends was 2.40x in 1999 and
25
<PAGE>
2.46x in 1998. The combination of higher leverage with low interest rates has
positively impacted the Trust's net income and funds from operations, on a per
share basis.
Administrative expenses decreased from $16.5 million in 1998 to $15.1 million
in 1999. Both years contained unusual expenses. During the third quarter of
1998, the Trust recorded a $4.7 million charge related to a comprehensive
restructuring program. During the third quarter of 1999, the Trust, in exploring
strategic alternatives to maximize shareholder value, considered spinning off
certain of its assets and merging the remaining assets with another publicly
traded shopping center company. The Trust incurred expenses of approximately
$2.8 million in connection with this proposed merger and spin-off which were not
consummated. In addition, costs related to abandoned acquisition and development
projects increased approximately $1.5 million in 1999 over 1998.
Investors' share of operations represents the minority interest in the income
of certain properties. One third of the increase from $3.1 million in 1998 to
$3.9 million in 1999 is due to the income attributable to the operating
partnership units issued upon the acquisition of Kings Court and Leesburg Plaza
in the second half of 1998. The majority of the remaining increase represents
the minority partners' share of the increased earnings in the southern
California street retail assets, many of which have been redeveloped during 1998
and 1999.
As a result of the foregoing items, net income before loss on the sale of real
estate increased from $48.1 million in 1998 to $59.4 million in 1999, reflecting
both the contribution to net income from the Trust's acquisitions and the
contribution from the core portfolio, primarily the recently redeveloped and
retenanted properties.
During the second quarter of 1999, the Trust recorded a $7.1 million charge,
representing the estimated loss on the potential sale of certain assets,
principally Northeast Plaza in Atlanta, Georgia. On October 18, 1999 the Trust
sold Northeast Plaza for $19.6 million, realizing a loss of $6.3 million.
Consequently, net income increased from $45.0 million in 1998 to $48.4 million
in 1999 with net income available for common shareholders increasing from $37.0
million in 1998 to $40.5 million in 1999.
While the Trust expects growth in 2000 in funds from operations, the growth
may be less than in 1999. Growth in 1999 was fueled by contributions from 1998
acquisitions, by higher leverage combined with low interest rates, by savings
from the 1998 restructuring and by growth in the core portfolio. There were no
significant income producing acquisitions in 1999 to fuel 2000 growth; there
will be no significant contribution in 2000 from the Trust's development
projects and the savings from the 1998 restructuring have already been realized.
Consequently, the growth in 2000 is 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.
26
<PAGE>
The Trust currently expects that demand for its retail space should remain at
levels similar to those in 1999. 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 is also dependent on the amount of leverage and interest
rates. The Trust is currently exploring various options for financing its
development pipeline and other capital needs. This recapitalization will result
in interest rates higher than the Trust's current rates. 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 credit facilities.
1998 vs. 1997
Rental income, which consists of minimum rent, percentage rent and cost
recoveries, increased 18% from $188.5 million in 1997 to $222.2 million in
1998. If properties acquired and sold in 1998 and 1997 are excluded, rental
income increased 5%, due primarily to the favorable impact of redeveloped and
retenanted centers and to higher percentage rent.
Other property income includes items which, although recurring, tend to
fluctuate from period to period, such as utility reimbursements, telephone
income, merchant association dues, late fees, and temporary tenant income. Also
included are less regularly recurring items, such as lease termination fees.
Other income increased 6% from $9.7 million in 1997 to $10.3 million in 1998 due
to contributions from the 1998 and 1997 acquisitions, which were partly offset
by a $1.3 million decrease in lease termination fees.
Rental expenses increased 16% from $42.8 million in 1997 to $49.5 million in
1998, due to the 1998 and 1997 acquisitions. If rental expenses are adjusted
for properties acquired and sold in 1998 and 1997, rental expenses are constant
at $40.6 million. Decreases in environmental expenses and common area expenses
such as snow removal were offset by increases in bad debt expense which had been
unusually low in 1997 due to the recovery in 1997 of amounts written off in
prior years.
Real estate taxes increased 19% from $19.5 million in 1997 to $23.3 million in
1998, due to the 1998 and 1997 acquisitions. If real estate taxes are adjusted
for properties acquired and sold in 1998 and 1997, real estate taxes increased
5% due primarily to increased taxes on recently redeveloped properties.
Depreciation and amortization expenses increased 11% from $41.4 million in
1997 to $46.0 million in 1998 reflecting the impact of properties acquired in
1998 and 1997 and of recent tenant work and property improvements.
27
<PAGE>
In 1998 the Trust incurred interest expense of $60.2 million, of which $5.1
million was capitalized, as compared to 1997's $50.9 million, of which $3.6
million was capitalized. The increase in interest expense reflects the
additional debt issued to fund the Trust's approximately $200 million of real
estate investments made in 1998. The weighted average interest rate was 8% in
1998 compared with 8.5% in 1997. The ratio of earnings to combined fixed
charges and preferred dividends was 1.46x in 1998 and 1.64x in 1997. The ratio
of earnings to fixed charges was 1.65x in 1998 and 1.70x in 1997. The ratio of
funds from operations to combined fixed charges and preferred dividends was
2.46x in 1998 and 2.50x in 1997.
Administrative expenses in 1998 reflect the adoption of the Emerging Issues
Task Force ("EITF") Issue 97-11, which requires the expensing of internal costs
of acquisition activities beginning in late March 1998. Prior to this date,
such costs were capitalized as a component of the basis of the acquired asset.
The increase in administrative expenses from $9.8 million in 1997 to $11.8
million in 1998 is substantially due to its adoption.
Administrative expenses in 1998 included reorganization expenses of $4.7
million representing a one time charge recorded in the third quarter related to
a comprehensive restructuring program. The charge included a provision for
employee severance and related costs, office closing and downsizing expenses, as
well as legal and consulting fees related to the restructuring program. The
Trust's workforce was reduced by approximately 15% including several vice
presidents and other senior personnel. The foundation of the restructuring
effort focused on a change in the Trust's operating model from a functional
hierarchy to an asset management discipline where small focused teams are
responsible for and compensated based on the operating performance of a
portfolio of assets. In addition, the restructuring effort included a
significant downsizing of the Trust's acquisition department, in response to
changing market conditions and business emphasis. In 1997 the Trust incurred
$2.0 million of costs associated with severance and other expenses related to
changes in the Trust's executive management.
Investors' share of operations represents the minority interest in the income
of certain properties. The increase from $1.3 million in 1997 to $3.1 million in
1998 was primarily due to the income attributable to the operating partnership
units issued upon the acquisition of Courthouse, Magruder's, Kings Court and
Leesburg Plaza shopping centers in late 1997 and 1998 and due to the minority
partners' share of the increased earnings in Congressional Plaza.
As a result of the foregoing items, net income before gain on sale of real
estate increased from $40.1 million in 1997 to $45.0 million in 1998, reflecting
not only the contribution to net income from the Trust's acquisitions, but also
the contribution from improved results of the core portfolio. Net income,
including gain on sale of real estate, decreased from $46.5 million in 1997 to
$45.0 million in 1998. In 1997 three shopping centers were sold at a net gain
of $6.4 million. Net income available for common shareholders decreased from
$44.6 million in 1997 to $37.0 million in 1998, due to a full year of preferred
dividends in 1998 of $8.0 million compared with a partial year in 1997 of $1.9
million since
28
<PAGE>
the $100 million of 7.95% Series A Cumulative Redeemable Preferred Shares were
issued in October 1997.
Segment Results
- ---------------
The Trust has traditionally operated its business as a single business
segment. During the fourth quarter of 1998, however, the Trust completed a
comprehensive restructuring program which, among other things, changed the
Trust's operating structure from a functional hierarchy to an asset management
model, where small focused teams are responsible for a portfolio of assets. As a
result the Trust has divided its portfolio of properties into three geographic
operating regions: Northeast, Mid-Atlantic and West. Each region is operated
under the direction of a chief operating officer, with dedicated leasing,
property management and financial staff and operates largely autonomously with
respect to day to day operating decisions. Incentive compensation, throughout
the regional teams, is tied to the net operating income of the respective
portfolios. In 1999 there was a minor reorganization of the regions which moved
the Illinois and Michigan properties to the Northeast region from the Western
region.
Historical operating results for the three regions are as follows (in
thousands):
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Rental income
Northeast $102,452 $ 93,632 $ 80,309
Mid-Atlantic 111,624 103,676 96,818
West 31,757 24,878 11,402
-------- -------- --------
Total $245,833 $222,186 $188,529
======== ======== ========
Net operating income
Northeast $ 74,276 $ 66,396 $ 56,782
Mid-Atlantic 81,425 76,065 71,298
West 22,665 17,311 7,785
-------- -------- --------
Total $178,366 $159,772 $135,865
======== ======== ========
</TABLE>
The Northeast
The Northeast region is comprised of 53 assets, extending from suburban
Philadelphia north to New York and its suburbs into New England and west to
Illinois and Michigan. A significant portion of this portfolio has been held by
the Trust for many years although acquisitions, redevelopment and retenanting
remain major components to the current and future performance of the region.
Several redevelopment projects are currently underway which are expected to add
to revenues and net operating income in 2000 and future years.
When comparing 1999 with 1998, rental income increased 9% from
29
<PAGE>
$93.6 million in 1998 to $102.5 million in 1999. Excluding properties acquired
during the two periods, rental income increased 7%, driven by increases at the
recently redeveloped and retenanted Brick, Feasterville, Gratiot, Huntington,
and Wynnewood shopping centers.
Net operating income increased 12% from $66.4 million in 1998 to $74.3 million
in 1999. Excluding properties acquired in 1998 and 1999, net operating income
increased 9%, primarily due to increases at the recently redeveloped and
retenanted Brick, Feasterville, Gratiot, Huntington, and Wynnewood shopping
centers.
When comparing 1998 with 1997, rental income increased 17% from $80.3 million
in 1997 to $93.6 million in 1998. Excluding properties acquired and sold in
1998 and 1997, rental income increased 5%, driven by increases at the recently
redeveloped and retenanted Brick, Crossroads, Gratiot, Troy and Wynnewood
shopping centers.
Net operating income increased 17% from $56.8 million in 1997 to $66.4 million
in 1998. Excluding properties acquired in 1998 and 1997, net operating income
increased 8%, primarily due to increases at the recently redeveloped and
retenanted Brick, Crossroads, Gratiot, Troy and Wynnewood shopping centers.
The Mid-Atlantic
The Mid-Atlantic region is comprised of 31 assets, extending from Baltimore
south to metropolitan Washington D.C. and further south through Virginia and
North Carolina into Florida. As with the Northeast region, a significant
portion of this portfolio has been held by the Trust for many years although
acquisitions, redevelopment and retenanting remain major components to its
current and future performance. One redevelopment project is currently underway
in this region and two of the Trust's major new development projects, Pentagon
Row and additional phases of Bethesda Row, will be managed by this regional
operating team upon their completion.
When comparing 1999 with 1998, rental income increased 8% from $103.7 million
in 1998 to $111.6 million in 1999. Excluding properties acquired and sold in
1999 and 1998, rental income increased 5%. Net operating income increased 7%
from $76.1 million in 1998 to $81.2 million in 1999. Excluding properties
acquired and sold in 1999 and 1998, net operating income increased 3%.
When comparing 1998 with 1997, rental income increased 7% from $96.8 million
in 1997 to $103.7 million in 1998. Excluding properties acquired and sold in
1998 and 1997, rental income increased 4%, in large part due to increases at
Bethesda Row and new anchors at Barracks Road and Mid-Pike Plaza shopping
centers.
Net operating income increased 7% from $71.3 million in 1997 to $76.1 million
in 1998. Excluding properties acquired and sold in 1998 and 1997, net operating
income increased 3%.
30
<PAGE>
The West
The Western region is comprised of 39 assets, extending from Texas to the West
Coast. Unlike the Northeast and Mid-Atlantic regions, this portfolio is
relatively new to the Trust and is part of a deliberate expansion west over the
past several years. This region is the fastest growing at the Trust and such
major new development projects as Santana Row in San Jose and Houston Street in
San Antonio will be managed by this regional operating team upon their
completion. Several redevelopment projects are currently underway, particularly
in southern California, which are expected to add to revenues and net operating
income in 2000 and future years.
When comparing 1999 with 1998, rental income increased 28% from $24.9 million
in 1998 to $31.8 million in 1999. Excluding properties acquired in 1999 and
1998, rental income increased 11%, driven by the recent redevelopment of Old
Town in Los Gatos and several street retail buildings in southern California.
Net operating income increased 31% from $17.3 million in 1998 to $22.7 million
in 1999. Excluding properties acquired in 1999 and 1998, net operating income
increased 14%, driven by the recent redevelopment of Old Town in Los Gatos and
several street retail buildings in southern California.
When comparing 1998 with 1997, rental income increased 118% from $11.4 million
in 1997 to $24.9 million in 1998. Excluding properties acquired in 1998 and
1997, rental income increased 30%, driven by the redevelopment and retenanting
of several street retail buildings in southern California.
Net operating income increased 122% from $7.8 million in 1997 to $17.3 million
in 1998. Excluding properties acquired and sold, net operating income increased
27% from $3.6 million in 1997 to $4.6 million in 1998. This increase resulted
from the redevelopment and retenanting of several street retail buildings in
southern California.
Independent Public Accountants
- ------------------------------
On May 5, 1999, the Trust appointed the accounting firm of Arthur Andersen LLP
as independent public accountants to replace Grant Thornton LLP, which was
dismissed effective the same date. The Trust's Board of Trustees approved the
decision to change independent public accountants upon the recommendation of the
Trust's Audit Committee. During the Trust's fiscal years ended December 31,
1998 and 1997 and interim period through March 31, 1999 there were no
disagreements with Grant Thornton LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure. The
reports issued by Grant Thornton LLP on the financial statements for the years
ended December 31, 1998 and 1997 contained no adverse opinion or disclaimer of
opinion, and were not qualified as to uncertainty, audit scope or accounting
principles.
During the Trust's fiscal years ended December 31, 1998 and 1997 and interim
period through March 31, 1999, the Trust has not
31
<PAGE>
consulted with Arthur Andersen LLP regarding the application of accounting
principles to a specified transaction, the type of audit opinion that might be
rendered on the Trust's financial statements, or any matter that was either the
subject of a disagreement or a reportable event.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
- --------------------------------------------------------------------
The Trust's primary financial market risk is the fluctuation in interest
rates. At December 31, 1999, the Trust had $168.4 million of variable rate
debt. Based upon this balance of variable debt, if interest rates increased 1%,
the Trust's earnings and cash flows would decrease by $1.7 million. If interest
rates decreased 1%, the Trust's earnings and cash flows would increase by $1.7
million. The Trust believes that the change in the fair value of its financial
instruments resulting from a forseeable fluctuation in interest rates would be
immaterial to its total assets and total liabilities.
Item 8. Financial Statements and Supplementary Data.
- ---------------------------------------------------
Included in Item 14.
Item 9. Disagreements on Accounting and Financial Disclosure.
- ------------------------------------------------------------
None.
32
<PAGE>
Part III
--------
Item 10. Directors and Executive Officers of the Registrant.
- ------------------------------------------------------------
(a) The schedule identifying Trustees under the caption "Election of
Trustees" of the 2000 Proxy Statement is incorporated herein by reference
thereto.
(b) Executive Officers of the Registrant
------------------------------------
The information required by this item is included in this report at Item 1
under the caption "Executive Officers of the Registrant".
Item 11. Executive Compensation.
- --------------------------------
The sections entitled "Summary Compensation Table" and "Aggregated Option
Exercises in 1999 and December 31, 1999 Option Values" of the 2000 Proxy
Statement are incorporated herein by reference thereto.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The section entitled "Ownership of Shares by Trustees and Officers" of the 2000
Proxy Statement is incorporated herein by reference thereto.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The section entitled "Certain Transactions" of the 2000 Proxy Statement is
incorporated herein by reference thereto.
33
<PAGE>
Part IV
-------
Item 14. Exhibits, Financial Statement Page No.
- -------- ----------------------------- --------
Schedules, and Reports on
-------------------------
Form 8-K
--------
(a) 1. Financial Statements
--------------------
Reports of Independent
Public Accountants F-1 - F-2
Consolidated Balance Sheets-
December 31, 1999 and 1998 F-3
Consolidated Statements of Common
Operations - years ended
December 31, 1999, 1998
and 1997 F-4
Consolidated Statements of Common
Shareholders' Equity - years
ended December 31, 1999, 1998
and 1997
F-5
Consolidated Statements of
Cash Flows - years ended
December 31, 1999, 1998 and
1997 F-6
Notes to Consolidated
Financial Statements
(Including Selected Quarterly
Data) F-7 - F24
2. Financial Statement Schedules
-----------------------------
Schedule III - Summary of Real Estate
and Accumulated Depreciation..................... F25 - F28
Schedule IV - Mortgage Loans on Real
Estate .......................................... F29 - F30
34
<PAGE>
(a) 3. Exhibits
--------
(3) (i) Articles of Amendment and Restatement of Declaration of
Trust of Federal Realty Investment Trust and Declaration of Trust of
Federal Realty Investment Trust dated May 5, 1999 filed with the
Commission on May 25, 1999 as an exhibit to the Trust's Current Report
on Form 8-K is incorporated herein by reference thereto.
(ii) Bylaws of the Trust dated May 5, 1999 filed with the
Commission on May 25, 1999 as an exhibit to the Trust's Current Report
on Form 8-K is incorporated herein by reference thereto.
(4) (i) A description of a Common Share of Beneficial Interest
certificate is being filed as an exhibit hereto.
(ii) A description of a 7.95% Series A Cumulative Redeemable
Preferred Share certificate is being filed as an exhibit hereto.
(iii) Statement of Designation for Shares, filed on Form 8-K with
the Commission on October 3, 1997, is incorporated herein by reference
thereto.
(iv) The 5 1/4% Convertible Subordinated Debenture due 2002 as
described in Amendment No. 1 to Form S-3 (File No. 33-15264), filed
with the Commission on August 4, 1987 is incorporated herein by
reference thereto.
(v) Amended and Restated Rights Agreement, dated March 11, 1999,
between the Trust and American Stock Transfer & Trust Company, filed
as an exhibit to the Trust's Form 8-A/A filed with the Commission on
March 11, 1999, is incorporated herein by reference thereto.
(vi) Indenture dated December 13, 1993, related to the Trust's
7.48% Debentures due August 15, 2026; 8 7/8% Senior Notes due January
15, 2000; 8% Notes due April 21, 2002; 6 5/8% Notes due 2005; 6.82%
Medium Term Notes due August 1, 2027; 6.74% Medium Term Notes due
March 10, 2004; and 6.99% Medium Term Notes due March 10, 2006, filed
with the commission on December 13, 1993 as exhibit 4(a) to the
Trust's Registration Statement on Form S-3, (File No. 33-51029) and
amended on Form S-3 (File No. 33-63687, effective December 4, 1995 is
incorporated herein by reference thereto.
(vii) Indenture dated September 1, 1998 related to the Trust's
8.75% Notes due December 1, 2009 filed as exhibit 4(a) to the
Trust's Registration Statement on Form S-3 (File No. 333-63619) is
incorporated herein by reference thereto.
(viii) Dividend Reinvestment and Share Purchase Plan, dated
November 3, 1995, filed with the Commission on Form S-3 on November 3,
1995 (File No. 33-63955) is
35
<PAGE>
incorporated herein by reference thereto.
(10) (i) Consultancy Agreement with Samuel J. Gorlitz, as amended,
filed with the Commission as Exhibit 10 (v) to the Trust's Annual
Report on Form 10-K for the year ended December 31, 1983, is
incorporated herein by reference thereto.
(ii) The Trust's 1983 Stock Option Plan adopted May 12, 1983,
filed with the Commission as Exhibit 10 (vi) to the Trust's Annual
Report on Form 10-K for the year ended December 31, 1983, is
incorporated herein by reference.
(iii) Deferred Compensation Agreement with Steven J. Guttman dated
December 13, 1978, filed with the Commission as Exhibit 10 (iv) to the
Trust's Annual Report on Form 10-K for the year ended December 31,
1980 is incorporated herein by reference thereto.
(iv) The Trust's 1985 Non-Qualified Stock Option Plan, adopted on
September 13, 1985, filed with the Commission as a portion of Exhibit
10 to the Trust's Annual Report on Form 10-K for the year ended
December 31, 1985 is incorporated herein by reference thereto.
(v) Amendment No. 3 to Consultancy Agreement with Samuel J.
Gorlitz, filed as a portion of Exhibit 10 to the Trust's Annual Report
on Form 10-K for the year ended December 31, 1988 is incorporated
herein by reference thereto.
(vi) The 1991 Share Purchase Plan, dated January 31, 1991, filed
with the Commission as a portion of Exhibit 10 to the Trust's Annual
Report on Form 10-K for the year ended December 31, 1990 is
incorporated herein by reference thereto.
(vii) Amendment No. 4 to Consultancy Agreement with Samuel J.
Gorlitz, filed with the Commission as an exhibit to the Trust's Annual
Report on Form 10-K for the year ended December 31, 1992 is
incorporated herein by reference thereto.
(viii) Employment and Relocation Agreement between the Trust and
Ron D. Kaplan, dated September 30, 1992, filed as an exhibit to the
Trust's Annual Report on Form 10-K for the year ended December 31,
1992 is incorporated herein by reference thereto.
(ix) Amendment dated October 1, 1992, to Voting Trust Agreement
dated as of March 3, 1989 by and between I. Wolford Berman and Dennis
L. Berman filed as an exhibit to the Trust's Annual Report on Form 10-
K for the year ended December 31, 1992 is incorporated herein by
reference thereto.
(x) Federal Realty Investment Trust Amended and
36
<PAGE>
Restated 1993 Long-Term Incentive Plan, as amended on October 6, 1997
and further amended on May 6, 1998 , filed with the Commission as
portions of Item 10 to the Trust's Annual Report on Form 10K for the
year ended December 31, 1998, is incorporated herein by reference
thereto.
The following documents, filed with the Commission as portions of Item 6 to the
Trust's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993 are incorporated herein by reference thereto:
(xi) Consulting Agreement between Misner Development and Federal
Realty Investment Trust.
(xii) Fiscal Agency Agreement dated as of October 28, 1993 between
Federal Realty Investment Trust and Citibank, N.A.
(xiii) Other Share Award and Purchase Note between Federal Realty
Investment Trust and Ron D. Kaplan, dated January 1, 1994, filed with
the Commission as a portion of Item 6 to the Trust's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1994 is incorporated
herein by reference thereto.
(xiv) Amended and Restated 1983 Stock Option Plan of Federal
Realty Investment Trust and 1985 Non-Qualified Stock Option Plan of
Federal Realty Investment Trust, filed with the Commission on August
17, 1994 on Form S-8, (File No. 33-55111) is incorporated herein by
reference thereto.
(xv) Form of Severance Agreement between Federal Realty
Investment Trust and Certain of its Officers dated December 31, 1994,
filed with the Commission as a portion of Exhibit 10 to the Trust's
Annual Report on Form 10-K for the year ended December 31, 1994, is
incorporated herein by reference thereto.
The following filed with the Commission as portions of Exhibit 10 to the Trust's
Annual Report on Form 10-K for the year ended December 31, 1997, are
incorporated herein by reference thereto:
(xvi) Credit Agreement Dated as of December 19, 1997 by and among
Federal Realty Investment Trust, as Borrower, The Financial
Institutions Party Thereto and Their Assignees Under Section 13.5.(a),
as Lenders, Corestates Bank, N.A., as Syndication Agent, First Union
National Bank, as Administrative Agent and as Arranger, and Wells
Fargo Bank, as Documentation Agent and as Co- Arranger.
(xvii) Performance Share Award Agreement between Federal Realty
Investment Trust and Steven J. Guttman, as of January 1, 1998.
(xviii) Form of Amended and Restated Restricted Share Award
Agreements between Federal Realty Investment Trust and Steven J.
Guttman for the years 1998 through 2002.
37
<PAGE>
(xix) Performance Share Award Agreements between Federal Realty
Investment Trust and Ron D. Kaplan, as of January 1, 1998.
(xx) Restricted Share Award Agreements between Federal Realty
Investment Trust and Ron D. Kaplan, as of January 1, 1998.
(xxi) Amended and Restated Employment Agreement between the Trust
and Steven J. Guttman as of March 6, 1998.
(xxii) Amended and Restated Executive Agreement between the Trust
and Steven J. Guttman as of March 6, 1998.
(xxiii) Executive Agreement between the Trust and Ron D.Kaplan as of
March 6, 1998.
(xxiv) Amended and Restated Severance Agreement between the Trust
and Ron D. Kaplan as of March 6, 1998.
(xxv) Severance Agreement between the Trust and Catherine R. Mack
as of March 6, 1998.
The following filed with the Commission as portions of Exhibit 10 to the Trust's
Annual Report on Form 10-K for the year ended December 31, 1998, is incorporated
herein by reference thereto:
(xxvi) Term Loan Agreement, dated as of December 22, 1998 by and
among Federal Realty Investment Trust, as Borrower, the Financial
Institutions Party Thereto and Their Assignees Under Section 13.5.(d),
as Lenders, Commerzbank Aktiengesellschaft, New York Branch as
Syndication Agent, PNC, National Association, as Administrative Agent
and Fleet National Bank as documentation agent.
The following are filed as exhibits hereto:
(xxvii) Amended and Restated Severance Agreement between the Trust
and Nancy J. Herman as of December 27, 1999.
(xxviii) Performance Share Award Agreement dated as of February 9,
2000 between the Trust and Donald C. Wood.
(xxix) Restricted Share Award Agreement dated as of February 9,
2000 between the Trust and Donald C. Wood.
(xxx) Amendment to Performance Share Award Agreement dated as of
February 25, 2000 between Federal Realty Investment Trust and Steven
J. Guttman.
(xxxi) Amendments to Performance Share Award Agreements dated as of
February 25, 2000 between Federal Realty Investment Trust and Ron D.
Kaplan.
38
<PAGE>
(12) Statements regarding computation of ratios.......
(21) Subsidiaries of the registrant....................
(xxxvii) Articles of Incorporation of Street Retail, Inc., a Maryland
corporation, filed with the Commission as a portion of Exhibit 21 to
the Trust's Annual Report on Form 10-K for the year ended December 31,
1994 is incorporated herein by reference thereto.
(xxxviii) By-Laws of Street Retail, Inc. filed with the Commission as
a portion of Exhibit 21 to the Trust's Annual Report on Form 10-K for
the year ended December 31, 1994 is incorporated herein by reference
thereto.
(23) Consent of Grant Thornton LLP....................
(27) Financial Data Schedule..........................+
(b) Reports on Form 8-K Filed during the Last Quarter
-------------------------------------------------
A Form 8-K, dated November 23, 1999, was filed in response to Item 5.
A Form 8-K, dated November 3, 1999, was filed in response to Item 5.
_________
+ For Edgar filing only.
39
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15 (d) 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
Date: March 21, 2000 By:Steven J. Guttman
-----------------
Steven J. Guttman
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
President and
Trustee (Chief
Steven J. Guttman Executive Officer) March 21, 2000
- ------------------ --------------
Steven J. Guttman
Senior Vice-President,
Donald C. Wood Chief Operating Officer March 21, 2000
- ------------------ --------------
Donald C. Wood
Vice-President,
Chief Financial Officer
And Treasurer (Chief
Cecily A. Ward Accounting Officer) March 21, 2000
- ------------------ --------------
Cecily A. Ward
Dennis L. Berman Trustee March 21, 2000
- ------------------ --------------
Dennis L. Berman
Kenneth D. Brody Trustee March 21, 2000
- ------------------ --------------
Kenneth D. Brody
A. Cornet de Ways Ruart Trustee March 21, 2000
- ----------------------- --------------
Cornet de Ways Ruart
Kristin Gamble Trustee March 21, 2000
- ------------------ --------------
Kristin Gamble
Walter F. Loeb Trustee March 21, 2000
- ------------------ --------------
Walter F. Loeb
Mark S. Ordan Trustee March 21, 2000
- ------------------ --------------
Mark S. Ordan
40
<PAGE>
FINANCIAL STATEMENTS AND
SCHEDULES
<PAGE>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
To the Trustees and Shareholders
Federal Realty Investment Trust:
We have audited the accompanying consolidated balance sheet of Federal Realty
Investment Trust (a Maryland real estate investment trust) and subsidiaries as
of December 31, 1999 and the related consolidated statements of operations,
common shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Federal Realty
Investment Trust and subsidiaries as of December 31, 1999 and the results of
their operations and their cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The financial statement
schedules included on pages F-25 through F-30 of the Form 10-K are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in our audit of
the basic consolidated financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Vienna, Virginia
February 14, 2000
F-1
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED ACCOUNTANTS
Trustees and Shareholders
Federal Realty Investment Trust
We have audited the accompanying consolidated balance sheet of Federal Realty
Investment Trust as of December 31, 1998 and the related consolidated statements
of operations, shareholders' equity, and cash flows for each of the two years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Federal Realty
Investment Trust as of December 31, 1998 and the consolidated results of its
operations and its consolidated cash flows for each of the two years in the
period ended December 31, 1998 in conformity with generally accepted accounting
principles.
In connection with our audits of the consolidated financial statements referred
to above, we have also audited Schedules III and IV as of December 31, 1998 and
for each of the two years then ended. In our opinion, these schedules present
fairly, in all material respects, the information required to be set forth
therein.
Grant Thornton LLP
Washington, D.C.
February 8, 1999
F-2
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
----------- ------------
(in thousands)
<S> <C> <C>
ASSETS
Investments
Real estate, at cost $1,721,459 $1,642,136
Less accumulated depreciation and amortization (317,921) (286,053)
---------- ----------
1,403,538 1,356,083
Mortgage notes receivable 53,495 51,154
---------- ----------
1,457,033 1,407,237
Other Assets
Cash 11,738 17,230
Accounts and notes receivable 23,130 17,873
Prepaid expenses and other assets, principally
property taxes and lease commissions 36,807 38,502
Debt issue costs 5,340 3,475
---------- ----------
$1,534,048 $1,484,317
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases $122,026 $122,401
Mortgages payable 50,547 51,079
Notes payable 162,768 263,159
Accounts payable and accrued expenses 34,974 34,073
Dividends payable 19,431 18,972
Security deposits 5,068 5,214
Prepaid rents 6,788 3,641
Senior notes and debentures 510,000 335,000
5 1/4% Convertible subordinated debentures 75,289 75,289
Investors' interest in consolidated assets 45,330 45,542
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, no par or stated value,
unlimited authorization, 40,139,675 shares issued - 707,724
Common shares of beneficial interest, $.01 par , 100,000,000 shares
authorized, 40,418,766 issued 404 -
Additional paid in capital 713,354 -
Accumulated dividends in excess of Trust net income (286,348) (255,211)
---------- ----------
527,410 552,513
Less: 217,644 and 59,425 common shares in treasury - at cost, respectively, (4,334) (1,376)
Deferred compensation on restricted shares (15,219) (14,892)
Notes receivable from employee stock plans (6,030) (6,298)
---------- ----------
501,827 529,947
---------- ----------
$1,534,048 $1,484,317
========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
-------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C>
Revenue
Rental income $245,833 $222,186 $188,529
Interest and other income 7,649 5,945 6,037
Other property income 11,231 10,347 9,705
-------- -------- --------
264,713 238,478 204,271
Expenses
Rental 53,677 49,490 42,844
Real estate taxes 25,021 23,271 19,525
Interest 61,492 55,125 47,288
Administrative 15,120 16,461 11,744
Depreciation and amortization 50,011 46,047 41,399
-------- -------- --------
205,321 190,394 162,800
-------- -------- --------
Operating income before investors' share
of operations and (loss) gain on sale of real estate 59,392 48,084 41,471
Investors' share of operations (3,899) (3,124) (1,342)
-------- -------- --------
Income before (loss) gain on sale of real estate 55,493 44,960 40,129
(Loss) gain on sale of real estate (7,050) - 6,375
-------- -------- --------
Net income 48,443 44,960 46,504
Dividends on preferred stock (7,950) (7,950) (1,877)
-------- -------- --------
Net income available for common shareholders $40,493 $37,010 $44,627
======== ======== ========
Earnings per common share, basic
Income before (loss) gain on sale of real estate $1.20 $0.94 $0.99
(Loss) gain on sale of real estate (0.18) - 0.17
-------- -------- --------
$1.02 $0.94 $1.16
======== ======== ========
Weighted average number of common shares, basic 39,574 39,174 38,475
======== ======== ========
Earnings per common share, diluted
Income before (loss) gain on sale of real estate $1.19 $0.94 $0.98
(Loss) gain on sale of real estate (0.17) - 0.16
-------- -------- --------
$1.02 $0.94 $1.14
======== ======== ========
Weighted average number of common shares, diluted 40,638 40,080 38,988
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998
---------------------------------------- ----------------------------------------
(In thousands, except per 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 year 40,139,675 $707,724 - 39,200,201 $684,823 -
Adjustment to refect change in par value - ($707,323) 707,323 - - -
Exercise of stock options 52,667 - 1,092 230,908 4,880 -
Shares issued under dividend
reinvestment plan 165,770 2 3,566 167,511 3,990 -
Performance and Restricted Shares granted,
net of Restricted Shares retired 60,654 1 1,373 541,055 14,031 -
Net proceeds from sale of shares - - - - - -
Cost of 7.95% Series A Cumulative
Preferred Shares - - - - - -
---------- --------- -------- ----------- -------- --------
Balance, end of year 40,418,766 $404 $713,354 40,139,675 $707,724 -
========== ========= ======== ========== ======== ========
Accumulated Dividends in Excess
of Trust Net Income
Balance, beginning of year ($255,211) ($222,709)
Net income 48,443 44,960
Dividends declared to common shareholders (71,630) (69,512)
Dividends declared to preferred shareholders (7,950) (7,950)
--------- -----------
Balance, end of year ($286,348) ($255,211)
======== ========
Common Shares of Beneficial Interest
in Treasury
Balance, beginning of year (59,425) ($1,376) (52,386) ($1,002)
Performance and Restricted Shares issued - - 35,000 649
Performance and Restricted Shares forfeited (17,719) (393) (42,039) (1,023)
Purchase of treasury shares (140,500) (2,565) - -
---------- --------- ------------ -----------
Balance, end of year (217,644) ($4,334) (59,425) ($1,376)
======= ======= ======= =======
Deferred Compensation on Restricted Shares
Balance, beginning of year (582,910) ($14,892) (22,000) ($621)
Performance and Restricted Shares issued,
net of forfeitures (31,660) (730) (576,055) (14,679)
Vesting of Performance and Restricted Shares 15,143 403 15,145 408
---------- --------- ------------ -----------
Balance, end of year (599,427) ($15,219) (582,910) ($14,892)
======= ======= ======= =======
Subscriptions receivable from employee
stock plans
Balance, beginning of year (337,111) ($6,298) (382,725) ($6,681)
Subscription loans issued (9,083) (190) (111,114) (2,378)
Subscription loans paid 28,588 458 156,728 2,761
---------- --------- ------------ -----------
Balance, end of year (317,606) ($6,030) (337,111) ($6,298)
======= ======= ======= =======
<CAPTION>
Year ended December 31,
1997
-------------------------------------
(In thousands, except per share data) Shares Amount Additional
Paid-in Capital
<S> <C> <C> <C>
Common Shares of Beneficial Interest
Balance, beginning of year 35,948,044 $597,917 -
Adjustment to refect change in par value - - -
Exercise of stock options 76,184 1,604 -
Shares issued under dividend
reinvestment plan 153,973 4,115 -
Performance and Restricted Shares granted,
net of Restricted Shares retired 22,000 686 -
Net proceeds from sale of shares 3,000,000 83,925 -
Cost of 7.95% Series A Cumulative
Preferred Shares - (3,424) -
----------- --------- ------
Balance, end of year 39,200,201 $684,823 -
=========== ========= ======
Accumulated Dividends in Excess
of Trust Net Income
Balance, beginning of year ($200,700)
Net income 46,504
Dividends declared to common shareholders (66,636)
Dividends declared to preferred shareholders (1,877)
----------
Balance, end of year ($222,709)
=========
Common Shares of Beneficial Interest
in Treasury
Balance, beginning of year (62,386) ($1,186)
Performance and Restricted Shares issued 10,000 184
Performance and Restricted Shares forfeited - -
Purchase of treasury shares - -
----------- ----------
Balance, end of year (52,386) ($1,002)
======== ======
Deferred Compensation on Restricted Shares
Balance, beginning of year - $ -
Performance and Restricted Shares issued,
net of forfeitures (22,000) (621)
Vesting of Performance and Restricted Shares - -
----------- ----------
Balance, end of year (22,000) ($621)
======== ======
Subscriptions receivable from employee
stock plans
Balance, beginning of year (417,434) ($7,146)
Subscription loans issued (16,166) (340)
Subscription loans paid 50,875 805
----------- ----------
Balance, end of year (382,725) ($6,681)
======== ======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
--------- --------- ----------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $48,443 $44,960 $46,504
Items not requiring cash outlays
Depreciation and amortization 50,011 46,047 41,399
Loss (gain) on sale of real estate 7,050 - (6,375)
Other, net 2,395 2,301 818
Changes in assets and liabilities
(Increase) decrease in accounts receivable (5,257) 878 (1,493)
Increase in prepaid expenses and other
assets before depreciation and amortization (2,183) (9,571) (11,263)
(Decrease) increase in operating accounts payable,
security deposits and prepaid rent (1,202) 2,148 (287)
Increase in accrued expenses 2,926 3,664 2,867
------- ------- --------
Net cash provided by operating activities 102,183 90,427 72,170
INVESTING ACTIVITIES
Acquisition of real estate (25,337) (92,946) (251,351)
Capital expenditures (90,796) (73,030) (50,349)
Application of deposit on purchase of real estate - - 23,447
Issuance of mortgage notes receivable, net (2,341) (21,375) (10,447)
Proceeds from sale of real estate 19,161 - 9,364
Other, net - (295) (7)
------- -------- --------
Net cash used in investing activities (99,313) (187,646) (279,343)
FINANCING ACTIVITIES
(Repayment) borrowing of short-term debt, net (100,147) 144,357 55,391
Issuance of senior notes, net of costs 172,193 79,540 39,750
Issuance of common shares 2,243 5,310 86,893
Issuance of preferred shares - - 96,576
Common shares repurchased (2,565)
Payments on mortgages, capital leases and notes payable, including
prepayment fees (1,151) (55,248) (3,712)
Dividends paid (76,617) (74,284) (62,621)
(Decrease) increase in minority interest, net (2,318) (2,269) 898
------- ------- --------
Net cash (used in) provided by financing activities (8,362) 97,406 213,175
------- ------- --------
(Decrease) increase in cash (5,492) 187 6,002
Cash at beginning of year 17,230 17,043 11,041
------- ------- --------
Cash at end of year $11,738 $17,230 $17,043
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
Federal Realty Investment Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998, and 1997
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Federal Realty Investment Trust (the "Trust") invests in income-producing
retail real estate, primarily community and neighborhood shopping centers and
main street retail properties, retail buildings and shopping centers in densely
developed urban and suburban areas. In addition, the Trust has various land
parcels under its control for the purpose of developing mixed-use projects that
center around the retail component.
The Trust operates in a manner intended to enable it to qualify as a real
estate investment trust under Sections 856-860 of the Internal Revenue Code (the
"Code"). Under those sections, a trust which distributes at least 95% of its
real estate trust taxable income to its shareholders each year and which meets
certain other conditions will not be taxed on that portion of its taxable income
which is distributed to its shareholders. Therefore, no provision for Federal
income taxes is required.
The consolidated financial statements of the Trust include the accounts of
the Trust, its wholly owned corporate subsidiaries, several corporations where
the Trust has a majority ownership, numerous partnerships and a joint venture,
all of which it controls. The equity interests of other investors are reflected
as investors' interest in consolidated assets. All significant intercompany
transactions and balances are eliminated in consolidation.
Revenue Recognition. Leases with tenants are classified as operating leases and
are recognized on a straight line basis. Minimum rents are recognized on an
accrual basis over the terms of the related leases with appropriate valuation
adjustments recorded to consider credit and other business risk. Percentage
rents, which represent additional rents based on gross tenant sales, are
recognized at the end of the lease year or other period in which tenant sales'
volumes have been reached and the percentage rents are due. Real estate tax and
other cost reimbursements are recognized on an accrual basis over the periods in
which the expenditures occurred.
Real Estate. Land, buildings and real estate under development are recorded at
cost. Depreciation is computed using the straight-line method. Estimated useful
lives range from three to 25 years on apartment buildings and improvements, and
from three to 35 years on retail properties and improvements. Maintenance and
repair costs are charged to operations as incurred. Major improvements are
capitalized and depreciated over their estimated useful life. The gain or loss
resulting from the sale of properties is included in net income at the time of
sale. The Trust evaluates the carrying value of its long-lived assets in
accordance with Statement of Financial Accounting Standard
F-7
<PAGE>
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". In cases where particular assets are being
held for sale, impairment is based on whether the fair value (estimated sales
price less costs of disposal) of each individual property to be sold is less
than the net book value. Otherwise, impairment is based on whether it is
probable that undiscounted future cash flows from each property will be less
than its net book value. If a property is impaired, its basis is adjusted to its
fair market value. 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.
The Trust, when applicable as lessee, classifies its leases of land and
buildings as operating or capital leases in accordance with the provisions of
SFAS No. 13, "Accounting for Leases".
Certain external and internal costs directly related to the development,
redevelopment and leasing of real estate including applicable salaries and their
related indirect costs are capitalized. The capitalized costs associated with
developments, redevelopments and leasing are depreciated or amortized over the
life of the improvement and lease, respectively. Through March 1998, internal
costs of preacquisition activities incurred in connection with the acquisition
of an operating property were capitalized. On March 19, 1998 the Emerging
Issues Task Force ("EITF") of the Financial Accounting Standards Board reached a
consensus opinion on issue #97-11, "Accounting for Internal Costs Relating to
Real Estate Property Acquisitions" which requires that the internal costs of
preacquisition activities incurred in connection with the acquisition of an
operating property be expensed as incurred. Consequently, the Trust has been
expensing these costs since March 1998.
Interest costs on developments and major redevelopments are capitalized as
part of the development and redevelopment.
Debt Issue Costs. Costs related to the issuance of debt instruments are
capitalized and are amortized as interest expense over the life of the related
issue using the effective interest method. Upon conversion or in the event of
redemption, applicable unamortized costs are charged to shareholders' equity or
to operations, respectively.
Cash and Cash Equivalents. The Trust defines cash as cash on hand, demand
deposits with financial institutions and short term liquid investments with an
initial maturity under three months. Cash balances in individual banks may
exceed insurable amounts from time to time.
Risk Management. In June 1998, SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" was issued. This statement established
accounting and reporting standards for derivative instruments, including certain
derivative instruments
F-8
<PAGE>
embedded in other contracts and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge of the exposure to certain risks. SFAS No. 137, "Deferral of Effective
Date of SFAS No. 133 was issued and delayed the effective date of SFAS No. 133
to all fiscal quarters of fiscal years beginning after June 2000. The Trust
occasionally enters into derivative contracts prior to a scheduled financing or
refinancing in order to minimize the risk of changes in interest rates. The
derivative contracts are designated as hedges when acquired. The cost or gain on
these transactions is recognized as a component of interest expense over the
life of the financing. The Trust does not use derivative financial instruments
for trading or speculative purposes. There were no open derivative contracts at
December 31, 1999 or 1998.
Use of Estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. These estimates are
prepared using management's best judgment, after considering past and current
events. Actual results could differ from these estimates.
Comprehensive Income. The Trust has no comprehensive income and therefore does
not require separate reporting in the accompanying consolidated statements of
operations.
Earnings Per Share. In 1997 the Financial Accounting Standards Board issued
SFAS No. 128 - "Earnings Per Share". Statement 128 replaces the presentation of
primary and fully diluted earnings per share ("EPS") pursuant to Accounting
Principles Board Opinion No. 15 with the presentation of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing net income available for
common shareholders by the weighted number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common shares were exercised or converted
into common shares and then shared in the earnings of the Trust.
F-9
<PAGE>
The following table sets forth the reconciliation between basic and diluted
EPS (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator
- ---------
Net income available for common
shareholders - basic $40,493 $37,010 $44,627
Income attributable to
operating partnership units 831 578 32
------ ------- -------
Net income available for common
shareholders - diluted $41,324 $37,588 $44,659
======= ======= =======
Denominator
- -----------
Denominator for basic EPS-
weighted average shares 39,574 39,174 38,475
Effect of dilutive securities
Stock options and awards 214 292 494
Operating partnership units 850 614 19
------- ------- ------
Weighted average shares - diluted 40,638 40,080 38,988
======= ======= ======
</TABLE>
Stock options are accounted for in accordance with APB 25, whereby if options
are priced at fair market value or above at the date of grant, no compensation
expense is recognized.
NOTE 1: REAL ESTATE AND ENCUMBRANCES
A summary of the Trust's properties at December 31, 1999 and 1998 is as
follows (in thousands):
<TABLE>
<CAPTION>
Accumulated
depreciation and
1999 Cost amortization Encumbrances
---------- ---------------- ------------
<S> <C> <C> <C>
Retail properties $1,506,684 $251,946 $ 50,547
Retail properties
under capital leases 208,135 60,487 122,026
Apartments 6,640 5,488 -
---------- -------- ------------
$1,721,459 $317,921 $172,573
========== ======== ========
1998
Retail properties $1,436,949 $227,728 $ 51,079
Retail properties
under capital leases 198,567 53,088 122,401
Apartments 6,620 5,237 -
---------- -------- ------------
$1,642,136 $286,053 $173,480
========== ======== ============
</TABLE>
F-10
<PAGE>
During 1999, the Trust expended cash of $25.3 million to acquire real
estate and an additional $90.8 million to improve, redevelop and develop its
existing real estate. The Trust acquired a ninety percent interest in three
buildings, valued at $26.4 million, in Hollywood, California for a total cash
investment to the Trust of $23.7 million. The first two buildings have 122,000
and 64,000 leasable square feet, respectively. The third building is vacant
pending redevelopment. In addition, the Trust increased by $1.6 million its
partnership interest in Kings Court in Los Gatos, California.
Of the $90.8 million spent in 1999 on the Trust's existing real estate
portfolio, approximately $38.7 million was invested in predevelopment and
development projects in Bethesda, Maryland; Los Gatos, California; San Jose,
California; San Antonio, Texas; and in Arlington, Virginia. The remaining $52.1
million of capital expenditures relates to improvements to common areas, tenant
work and various redevelopments, including the renovation of Gratiot Plaza, the
expansion and retenanting of Langhorne Square shopping center, the renovation
of Blue Star shopping center, and the redevelopment of street retail assets in
Forest Hills, New York.
The Trust's 123 retail properties at December 31, 1999 are located in 15
states and the District of Columbia. There are approximately 2,200 tenants
providing a wide range of retail products and services. These tenants range
from sole proprietorships to national retailers; no one tenant or corporate
group of tenants account for 2% or more of revenue.
Mortgage notes receivable of $53.5 million are due over various terms from
March 2000 to May 2021 and have an average weighted interest rate of 10%. Under
the terms of certain of these mortgages, the Trust will receive additional
interest based upon the gross income of the secured properties and, upon sale of
the properties, the Trust will share in the appreciation of the properties.
During the second quarter of 1999,the Trust recorded a $7.1 million charge,
representing the estimated loss on the potential sale of certain assets,
principally Northeast Plaza in Atlanta, Georgia. On October 18, 1999 the Trust
sold Northeast Plaza for $19.6 million, realizing a loss of $6.3 million.
On May 13, 1997 the Trust sold Town & Country Shopping Center in Springfield,
Illinois for $7.5 million, resulting in a gain of $5.3 million. On May 30, 1997
Shillington Shopping Center in Shillington, Pennsylvania was sold for $4.6
million, resulting in a gain of $1.7 million. On September 25, 1997 the Trust
sold Brainerd Village Shopping Center in Chattanooga, Tennessee for $10.2
million, resulting in a loss of $659,000.
Mortgages payable and capital lease obligations are due in installments over
various terms extending to 2016 and 2060, respectively, with interest rates
ranging from 4.8% to 11.25%. Certain of the mortgage and capital lease
obligations require additional interest payments based upon property
performance.
F-11
<PAGE>
There were no maturing mortgages in 1999. In 1998 and 1997 the Trust paid off
maturing mortgages totaling $53.5 million and $1.5 million, respectively.
Aggregate mortgage principal payments due during the next two years are
$583,000, and $30.7 million, respectively. There are no further mortgage
principal payments due until 2005 when principal payments begin on the Leesburg
mortgage.
Future minimum lease payments and their present value for property under
capital leases as of December 31, 1999, are as follows (in thousands):
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
2000 $ 11,736
2001 11,736
2002 11,527
2003 11,458
2004 11,673
Thereafter 514,043
---------
572,173
Less amount representing interest (450,147)
---------
Present value $ 122,026
=========
</TABLE>
Leasing Arrangements
- --------------------
The Trust's leases with retail property and apartment tenants are
classified as operating leases. Leases on apartments are generally for a period
of one year, whereas retail property leases generally range from three to 10
years (certain leases with anchor tenants may be longer), and usually provide
for contingent rentals based on sales and sharing of certain operating costs.
The components of rental income are as follows (in thousands):
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Retail properties
Minimum rents $197,299 $178,936 $147,147
Cost reimbursements 39,574 34,897 34,089
Percentage rent 6,277 5,766 4,801
Apartments - rents 2,683 2,587 2,492
-------- -------- --------
$245,833 $222,186 $188,529
======== ======== ========
</TABLE>
The components of rental expense are as follows (in thousands):
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Repairs and maintenance $ 15,347 $ 13,942 $ 12,634
Management fees and costs 10,635 9,510 8,452
Utilities 7,120 7,625 5,957
Payroll - properties 4,440 3,775 3,432
Ground rent 2,933 2,829 2,602
Insurance 2,774 2,610 2,227
Other operating 10,428 9,199 7,540
-------- -------- --------
$ 53,677 $ 49,490 $ 42,844
======== ======== ========
</TABLE>
F-12
<PAGE>
Minimum future retail property rentals on noncancelable operating leases on
operating properties as of December 31, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
2000 $ 193,581
2001 178,766
2002 160,101
2003 140,736
2004 117,855
Thereafter 696,801
----------
$1,487,840
==========
</TABLE>
NOTE 2. FAIR VALUE OF FINANCIAL INSTRUMENTS
- -------------------------------------------
The following disclosure of estimated fair value was determined by the Trust,
using available market information and appropriate valuation methods.
Considerable judgment is necessary to develop estimates of fair value. The
estimates presented herein are not necessarily indicative of the amounts that
could be realized upon disposition of the financial instruments.
The Trust estimates the fair value of its financial instruments using the
following methods and assumptions: (1) quoted market prices, when available, are
used to estimate the fair value of investments in marketable debt and equity
securities; (2) quoted market prices are used to estimate the fair value of the
Trust's marketable convertible subordinated debentures; (3) discounted cash flow
analyses are used to estimate the fair value of long term notes receivable and
payable, using the Trust's estimate of current interest rates for similar notes;
(4) carrying amounts in the balance sheet approximate fair value for cash and
short term borrowings. Notes receivable from officers are excluded from fair
value estimation since they have been issued in connection with employee stock
ownership programs.
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
(in thousands) Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash & equivalents $ 11,738 $ 11,738 $ 17,230 $ 17,230
Investments 2,403 2,403 1,661 1,661
Mortgage notes
receivable 53,495 54,174 51,154 52,433
Mortgages and notes
payable 213,315 213,579 314,238 316,722
Convertible
debentures 75,289 71,058 75,289 71,901
Senior notes 510,000 488,355 355,000 364,269
</TABLE>
F-13
<PAGE>
NOTE 3. NOTES PAYABLE
- ---------------------
The Trust's notes consist of the following (in thousands):
<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Revolving credit facilities $ 34,000 $134,147
Term note with banks 125,000 125,000
Other 3,768 4,012
-------- --------
$162,768 $263,159
======== ========
</TABLE>
In December 1997 the Trust obtained a five year syndicated credit facility for
$300 million which currently bears interest at LIBOR plus 65 basis points and
matures December 2002. The syndicated 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 December 1998 the Trust obtained a four year loan of $125 million from five
institutional lenders. The loan, which bears interest only at LIBOR plus 75
basis points and matures in December 2002, requires fees and has the same
covenants as the syndicated credit facility. The Trust is in compliance with
all covenants.
The maximum drawn under these facilities during 1999, 1998 and 1997 was $330.0
million, $259.1 million and $114.8 million, respectively. In 1999, 1998 and
1997 the weighted average interest rate on borrowings was 5.9%, 6.1% and 6.5%,
respectively, and the average amount outstanding was $296.4 million, $163.6
million and $59.9 million, respectively.
NOTE 4. 5 1/4% CONVERTIBLE SUBORDINATED DEBENTURES
- ---------------------------------------------------
In October 1993 the Trust issued $75.0 million of 5 1/4% convertible
subordinated debentures, realizing cash proceeds of approximately $73.0 million.
The debentures were not registered under the Securities Act of 1933, and were
not publicly distributed within the United States. The debentures, which mature
in 2003, are convertible into shares of beneficial interest 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.
At December 1999 and 1998 the Trust had outstanding $289,000 of 5 1/4%
convertible subordinated debentures due 2002. The debentures which are
convertible into shares of beneficial interest at $30.625 were not registered
under the Securities Act of 1933 and were not publicly distributed within the
United States.
F-14
<PAGE>
NOTE 5. SENIOR NOTES AND DEBENTURES
- -----------------------------------
Unsecured senior notes and debentures at December 31, 1999 and 1998 consist of
the following (in thousands):
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
8.875% Notes due January 15, 2000 $100,000 $100,000
8% Notes due April 21, 2002 25,000 25,000
6.74% Medium-Term Notes due March 10, 2004 39,500 39,500
6.625% Notes due December 1, 2005 40,000 40,000
6.99% Medium-Term Notes due March 10, 2006 40,500 40,500
6.82% Medium-Term Notes due August 1, 2027,
redeemable at par by holder August 1, 2007 40,000 40,000
7.48% Debentures due August 15, 2026,
redeemable at par by holder August 15, 2008 50,000 50,000
8.75% Notes due December 1, 2009 175,000 -
-------- -------
$510,000 $335,000
======== ========
</TABLE>
The 8.875% Notes were paid in full in January 2000; see Note 14. The loan
agreements contain various covenants, including limitations on the amount of
debt and minimum debt service coverage ratios. The Trust is in compliance with
all covenants.
In anticipation of the March 1998 Medium-Term Note issuance, on January 13,
1998 the Trust purchased a Treasury Yield Hedge (notional amount of $50 million)
to minimize the risk of changes in interest rates. The hedge was terminated on
March 5, 1998 at a gain of $1.1 million which is being recognized as a reduction
in interest expense over the term of the notes. There were no open hedge
agreements at December 31, 1999 or 1998.
In September 1998 the Trust filed a $500 million shelf registration statement
with the Securities and Exchange Commission which allows the issuance of debt
securities, preferred shares and common shares. As of December 31, 1999, $325
million is available under the shelf registration.
NOTE 6. DIVIDENDS
- -----------------
On November 4, 1999 the Trustees declared a quarterly cash dividend of $.45
per common share, payable January 14, 2000 to common shareholders of record
January 3, 2000. For the years ended December 31, 1999, 1998 and 1997, $.16,
$.31, and $.19 of dividends paid per common share, respectively, represented a
return of capital.
On November 4, 1999 the Trustees declared a quarterly cash dividend of $.49687
per share on its Series A Cumulative Redeemable Preferred Shares, payable on
January 31, 2000 to shareholders of record on January 14, 2000.
F-15
<PAGE>
NOTE 7. 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 Congressional Plaza 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 at 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.
On January 1, 1999 the Loehmann's Plaza Limited Partnership Agreement was
amended to extend the partnership to December 31, 2000 and to delete the put and
call options. On January 1, 2000 the partnership agreement was again amended
and restated. Under this amended and restated agreement, the limited partner
was awarded 190,000 partnership units in exchange for a 98% partnership
interest.
Under the terms of certain other partnerships, 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.
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 the Amended and Restated Loehmann's Plaza Limited
Partnership Agreement and certain other partnerships, the partners may exchange
their operating partnership units, totaling 1,004,589, into cash or the same
number of common shares of the Trust, at the option of the Trust. During the
third quarter of 1999 the Trust redeemed 64,952 operating units for cash of $1.6
million.
As of December 31, 1999 in connection with renovation and development
projects, the Trust has contractual obligations of $59 million.
The Trust is obligated under ground lease agreements on several shopping
centers requiring minimum annual payments as follows (in thousands):
<TABLE>
<S> <C>
2000 $3,757
2001 4,095
2002 4,321
2003 4,398
2004 4,409
Thereafter 283,971
--------
$304,951
========
</TABLE>
F-16
<PAGE>
NOTE 8. SHAREHOLDERS' EQUITY
- ----------------------------
In May 1999, the Trust reorganized as a Maryland real estate investment trust
by amending and restating its declaration of trust and bylaws. The Amended
Declaration of Trust changed the number of authorized shares of common and
preferred shares from unlimited to 100,000,000 and 15,000,000, respectively. In
addition, all common shares of beneficial interest, no par value, which were
issued and outstanding were changed to common shares of beneficial interest,
$0.01 par value per share and all Series A Cumulative Redeemable Preferred
Shares of beneficial interest, no par value, which were issued and outstanding
were changed to Series A Cumulative Redeemable Preferred Shares of beneficial
interest, $0.01 par value per share.
On February 4, 1997 the Trust sold three million common shares to an
institutional investor for $28 per share, netting $83.9 million.
On October 6, 1997 the Trust issued four million 7.95% Series A Cumulative
Redeemable Preferred Shares at $25 per share in a public offering, realizing
cash proceeds of approximately $96.6 million after costs of $3.4 million. The
Series A Preferred Shares are not redeemable prior to October 6, 2002. On or
after that date, the Preferred Shares may be redeemed, in whole or in part, at
the option of the Trust, at a redemption price of $25 per share plus all accrued
and unpaid dividends. The redemption price is payable solely out of proceeds
from the sale of other capital shares of the Trust. Dividends on the Preferred
Shares will be payable quarterly in arrears on the last day of January, April,
July and October.
The Trust has a Dividend Reinvestment Plan, whereby shareholders may use their
dividends and make optional cash payments to purchase shares. In 1999, 1998,
and 1997, 165,770 shares, 167,511 shares, and 153,973 shares, respectively, were
issued under the Plan.
In December 1999 the Trustees authorized a share repurchase program of up to
an aggregate of 4 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. As of December 31, 1999, 140,500 shares had been repurchased
at a cost of $2.6 million.
In 1999, 65,660 common shares were awarded, and 5,006 shares were forfeited
and retired, to the Trust's president and other key employees under various
incentive compensation programs. Fifteen thousand shares vested upon award, and
the balance vest over terms from 5 to 13 years.
In 1998, 576,055 common shares, of which 35,000 were issued from treasury
shares, were awarded to the Trust's president and certain other officers under
various programs designed to directly link a significant portion of their long
term compensation to the
F-17
<PAGE>
prosperity of the Trust and its shareholders. Ten thousand shares vested upon
award, 491,055 shares vest over terms from 5 to 13 years, and 75,000 shares vest
upon the obtainment of certain performance criteria.
On January 31, 1997, 22,000 restricted shares were granted to an officer and
two employees of the Trust. The shares vest over three years. On September 26,
1997, 10,000 restricted common shares were granted to an officer; the shares,
which were fully vested upon grant, were issued from treasury shares.
In January 1994 under the terms of the 1993 Long Term Incentive Plan, an
officer of the Trust purchased 40,000 common shares at $25 per share with the
assistance of a $1.0 million loan from the Trust. The loan, which has a term of
12 years and a current balance of $625,500, bears interest at 6.24%. Forgiveness
of up to 75% of the loan is subject to the future performance of the Trust. One
eighth of the loan was forgiven on January 31, 1995 and an additional one
sixteenth has been forgiven each January 31 since then as certain performance
criteria of the Trust were met.
In January 1991 the Trustees adopted the Federal Realty Investment Trust Share
Purchase Plan. Under the terms of this plan, officers and certain employees of
the Trust purchased 446,000 common shares at $15.125 per share with the
assistance of loans of $6.7 million from the Trust. Originally, the Plan called
for one sixteenth of the loan to be forgiven each year for eight years, as long
as the participant was still employed by the Trust. The loans for all
participants, but two, were modified in 1994 to extend the term an additional
four years and to tie forgiveness in 1995 and thereafter to certain performance
criteria of the Trust. One sixteenth of the loan has been forgiven during each
year of the plan. At December 31, 1999 the Trust has outstanding purchase loans
to participants of $1.8 million. The purchase loans bear interest at 9.39%.
The shares purchased under the plan may not be sold, pledged or assigned until
both the purchase and tax loans associated with the plan are satisfied and the
term has expired, without the consent of the Compensation Committee of the Board
of Trustees.
Tax loans with a balance of $1.3 million in 1999 and $1.1 million in 1998 have
been made in connection with restricted share grants to the Trust's President
and Chief Investment Officer and in connection with the Share Purchase Plans.
On April 13, 1999, the Shareholder Rights Plan adopted in 1989 expired. On
March 11, 1999 the Trust entered into an Amended and Restated Rights Agreement
with American Stock Transfer and Trust Company, pursuant to which (i)the
expiration date of the Trust's shareholder rights plan was extended for an
additional ten years to April 24, 2009, (ii)the beneficial ownership percentage
at which a person becomes an "Acquiring Person" under the plan was reduced from
20% to 15%, and (iii)certain other amendments were made.
F-18
<PAGE>
NOTE 9. STOCK OPTION PLAN
- -------------------------
The 1993 Long Term Incentive Plan ("Plan") has been amended to authorize the
grant of options and other stock based awards for up to 5.5 million shares.
Options granted under the Plan have ten year terms and vest in one to five
years. Under the Plan, on each annual meeting date during the term of the Plan,
each nonemployee Trustee will be awarded 2,500 options.
The option price to acquire shares under the 1993 Plan and previous plans is
required to be at least the fair market value at the date of grant. As a result
of the exercise of options, the Trust had outstanding from its officers and
employees notes for $3.6 million and $3.4 million at December 31, 1999 and 1998,
respectively. The notes issued under the 1993 Plan bear interest at the
dividend rate on the date of exercise divided by the purchase price of such
shares. The notes issued under the previous plans bear interest at the lesser
of (i) the Trust's borrowing rate or (ii) the current indicated annual dividend
rate on the shares acquired pursuant to the option, divided by the purchase
price of such shares. The notes are collateralized by the shares and are with
recourse. The loans have a term extending to the employee's or officer's
retirement date.
SFAS Statement No. 123, "Accounting for Stock-Based Compensation" requires pro
forma information regarding net income and earnings per share as if the Trust
accounted for its stock options under the fair value method of that Statement.
The fair value for options issued in 1999, 1998, and 1997 has been estimated as
$434,000, $2.6 million, and $4.0 million, respectively, as of the date of grant,
using a binomial model with the following weighted-average assumptions for 1999,
1998 and 1997, respectively: risk-free interest rates of 5.4%, 5.7%,and 6.5%;
volatility factors of the expected market price of the Trust's shares of 15%,
19%, and 19%; and a weighted average expected life of the option of 6.6 years,
6.3 years, and 6.6 years.
Because option valuation models require the input of highly subjective
assumptions, such as the expected stock price volatility, and because changes in
these subjective input assumptions can materially affect the fair value
estimate, the existing model may not necessarily provide a reliable single
measure of the fair value of its stock options.
For purposes of pro forma disclosures, the estimated fair value of the options
are amortized to expense over the options' vesting period. The pro forma
information is as follows (in thousands except for earnings per share):
<TABLE>
<CAPTION>
1999 1998 1997
----------- -------------- -------
<S> <C> <C> <C>
Pro forma net income $ 46,368 $43,179 $45,214
Pro forma earnings per share, basic $.97 $ .90 $ 1.13
Pro forma earnings per share, diluted $.97 $ .88 $ 1.11
</TABLE>
F-19
<PAGE>
A summary of the Trust's stock option activity for the years ended December
31, is as follows:
<TABLE>
<CAPTION>
Shares Weighted
Under Average
Option Exercise Price
---------- --------------
<S> <C> <C>
January 1, 1997 1,433,729 $ 22.74
Options granted 1,611,500 26.43
Options exercised (75,884) 21.05
Options forfeited (121,003) 25.99
----------
December 31, 1997 2,848,342 24.73
Options granted 1,293,500 25.06
Options exercised (228,908) 21.14
Options forfeited (304,118) 25.62
----------
December 31, 1998 3,608,816 25.00
Options granted 720,000 21.12
Options exercised (52,667) 20.73
Options forfeited (380,635) 25.29
----------
December 31, 1999 3,895,514 24.31
========== =======
</TABLE>
At December 31, 1999 and 1998, options for 1.9 million and 1.5 million shares,
respectively, were exercisable. The average remaining contractual life of
options outstanding at December 31, 1999 and 1998 was 6.7 years and 7.1 years,
respectively. The weighted average grant date fair value per option for options
granted in 1999 and 1998 was $.65 and $2.00, respectively. The exercise price
of options outstanding at December 31, 1999 ranged from $17.25 per share to
$27.13 per share.
NOTE 10. SAVINGS AND RETIREMENT PLANS
- -------------------------------------
The Trust has a savings and retirement plan in accordance with the provisions
of Section 401(k) of the Internal Revenue Code. Employees' contributions range,
at the discretion of each employee, from 1% to 17% of compensation up to a
maximum of $10,000. Under the plan, the Trust, out of its current net income,
contributes 50% of each employee's first 5% of contributions. In addition, the
Trust may make discretionary contributions within the limits of deductibility
set forth by the Code. Employees of the Trust, who work over 1,000 hours
annually, are eligible to become plan participants. The Trust's expense for the
years ended December 31, 1999, 1998 and 1997 was $223,000, $218,000 and
$210,000, respectively.
A nonqualified deferred compensation plan for Trust officers was established
in 1994. The plan allows the officers to defer future income until the earlier
of age 65 or termination of employment with the Trust. As of December 31, 1999,
the Trust is liable to participants for approximately $2.4 million under this
plan. Although this is an unfunded plan, the Trust has purchased certain
investments with which to match this obligation.
F-20
<PAGE>
NOTE 11. INTEREST EXPENSE
- -------------------------
The Trust incurred interest expense totaling $68.4 million, $60.2 million and
$50.9 million in 1999, 1998 and 1997, respectively, of which $6.9 million, $5.1
million, and $3.6 million respectively, was capitalized. Interest paid was
$67.0 million in 1999, $57.8 million in 1998, and $49.4 million in 1997.
NOTE 12. ADMINISTRATIVE EXPENSES
- --------------------------------
During 1999 while exploring strategic alternatives to maximize shareholder
value, the Trust considered spinning off certain of its assets (primarily those
related to the development and operation of its main street retail program) in a
taxable transaction to shareholders. Shortly thereafter, the remaining assets
of the Trust were to be merged with another publicly traded shopping center
company in exchange for cash and stock consideration. On September 24, 1999,
the Trust announced that merger negotiations were terminated and that the spin-
off was being reevaluated.
In preparing for these transactions, the Trust incurred expenses of
approximately $2.8 million related to legal, accounting, tax and other advisory
services related to the spin-off and the merger. Such costs have been expensed
and are reflected as administrative expenses in the accompanying consolidated
statement of operations. While management continues to evaluate alternatives to
maximize shareholder value, there are currently no plans to consummate a spin-
off or merger transaction.
At September 30, 1998 the Trust recorded a $4.7 million charge related to a
comprehensive restructuring program, the implementation of which was begun
during the fourth quarter of 1998. As of December 31, 1999 cash payments of $3.9
million had been made against the reserve with most of the remaining cash to be
paid during 2000 in connection with severance agreements.
NOTE 13. Year 2000 Readiness
- ----------------------------
During 1999 the Trust continued to focus on ways to minimize the risk of
disruption from the "Year 2000 Issue" which generally refers to the inability of
systems hardware and software to correctly identify two-digit references to
specific calendar years, beginning with 2000. The Year 2000 Issue could affect
the Trust directly by impairing its internal data-based operations or processing
and indirectly by impairing its suppliers' and tenants' data-based operations or
processing. The Trust identified and remediated all accounting systems and other
internal systems of high priority. In addition the Trust requested information
concerning and reviewed the equipment at its properties, including the use of
embedded chips in machinery. The Trust also communicated with its major banks,
tenants and suppliers to determine their Year 2000 compliance. Expenditures for
Year 2000 remediation were approximately $75,000. To date the operations and
financial condition of the Trust had not been adversely impacted by any Year
2000 failures
F-21
<PAGE>
and the Trust does not believe that there is any material risk to the Trust in
these areas in the future.
NOTE 14. SUBSEQUENT EVENTS
- --------------------------
Under a Restricted Share Agreement designed to link his compensation with the
prosperity of the shareholders, the Trust's President elected to accept stock in
lieu of cash for both his 1999 bonus and his 2000 salary. As a result, in 2000,
35,349 common shares were awarded to the president in lieu of his 2000 cash
salary and 22,222 shares were awarded in lieu of his 1999 cash bonus. The
shares vest at the end of five years if the president is still employed by the
Trust.
Pursuant to the 1999 Incentive Bonus Plan, vice presidents and certain key
employees receive part of their 1999 bonus in Federal Realty shares which vest
over three years. Consequently, on February 9, 2000, 24,038 shares were awarded
under this plan. In addition, 144,700 shares were awarded to certain vice
presidents of the Trust in accordance with programs to link their current and
long-term compensation to the prosperity of the Trust. The shares have vesting
schedules from five to eight years.
On January 5, 2000 the Trust purchased the 75,000 square foot Greenlawn
Shopping Center in Greenlawn, New York for $6.0 million, with plans to renovate
and expand the center by 35,000 square feet.
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. In January
2000 the Trust obtained a construction loan commitment 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 the greater of prime or the
Federal Funds Rate plus .5% or a fixed rate option of LIBOR plus 1.5%, has an
initial term of 24 months with two one year extension options.
From January 1, 2000 through March 14, 2000, the Trust repurchased 908,100
common shares at a cost of $17.4 million, in connection with its share
repurchase program.
NOTE 15. SEGMENT INFORMATION
- ----------------------------
The Trust traditionally operated its business as a single business segment.
During the fourth quarter of 1998, however, the Trust completed a comprehensive
restructuring program which, among other things, divided its portfolio of assets
into three geographic operating regions: Northeast, Mid-Atlantic and West.
During 1999 there was a minor reorganization of the regions which moved the
Illinois and Michigan properties to the Northeast region from the Western
region.
F-22
<PAGE>
A summary of the Trust's operations by geographic region is presented below
(in thousands):
<TABLE>
<CAPTION>
North Mid
1999 East Atlantic West Other Consolidated
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental income $102,452 $111,624 $ 31,757 - $ 245,833
Other income 5,672 3,903 1,656 - 11,231
Rental expense (20,702) (25,096) (7,879) - (53,677)
Real estate tax (13,146) (9,006) (2,869) - (25,021)
-------- -------- -------- ----------
Net operating income 74,276 81,425 22,665 178,366
Interest income - - - 7,649 7,649
Interest expense - - - (61,492) (61,492)
Administrative expense - - - (15,120) (15,120)
Depreciation and
Amortization (22,648) (22,473) (4,101) (789) (50,011)
-------- -------- -------- -------- ----------
Income before investors'
share of operations and
Loss on sale of real
Estate $ 51,628 $ 58,952 $ 18,564 ($69,752) $ 59,392
======== ======== ======== ======== ==========
Capital expenditures $ 32,547 $ 26,444 $ 62,512 - $ 121,503
======== ======== ======== ==========
Real estate assets $715,772 $663,019 $342,668 - $1,721,459
======== ======== ======== ==========
<CAPTION>
North Mid
1998 East Atlantic West Other Consolidated
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental income $ 93,632 $103,676 $ 24,878 - $ 222,186
Other income 5,768 3,637 942 - 10,347
Rental expense (20,259) (22,826) (6,405) - (49,490)
Real estate tax (12,745) (8,422) (2,104) - (23,271)
-------- -------- -------- ----------
Net operating income 66,396 76,065 17,311 159,772
Interest income - - - 5,945 5,945
Interest expense - - - (55,125) (55,125)
Administrative expense - - - (11,796) (11,796)
Reorganization expense - - - (4,665) (4,665)
Depreciation and
Amortization (20,224) (22,218) (2,650) (955) (46,047)
-------- -------- -------- -------- ----------
Income before investors'
share of operations and
gain on sale of real
estate $ 46,172 $ 53,847 $ 14,661 ($66,596) $ 48,084
======== ======== ======== ======== ==========
Capital expenditures $ 56,629 $ 60,687 $ 76,414 - $ 193,730
======== ======== ======== ==========
Real estate assets $684,318 $676,842 $280,976 - $1,642,136
======== ======== ======== ==========
North Mid
East Atlantic West Other Consolidated
1997
- ----------------------------------------------------------------------------------------------------
Rental income $ 80,309 $ 96,818 $ 11,402 - $ 188,529
Other income 4,618 4,867 220 - 9,705
Rental expense (18,072) (22,387) (2,385) - (42,844)
Real estate tax (10,073) (8,000) (1,452) - (19,525)
-------- -------- -------- ----------
Net operating income 56,782 71,298 7,785 135,865
Interest income - - - 6,037 6,037
Interest expense - - - (47,288) (47,288)
Administrative expense - - - (9,793) (9,793)
Reorganization expense - - - (1,951) (1,951)
Depreciation and
Amortization (17,674) (21,690) (1,001) (1,034) (41,399)
-------- -------- -------- -------- ----------
Income before investors'
share of operations and
gain on sale of real
estate $ 39,108 $ 49,608 $ 6,784 ($54,029) $ 41,471
======== ======== ======== ======== ==========
Capital expenditures $113,265 $ 69,704 $152,207 - $ 335,176
======== ======== ======== ==========
Real estate assets $630,105 $618,971 $204,563 - $1,453,639
======== ======== ======== ==========
</TABLE>
There are no transactions between geographic areas.
F-23
<PAGE>
NOTE 16. QUARTERLY DATA (UNAUDITED)
- -----------------------------------
The following summary represents the results of operations for each quarter in
1999 and 1998 (in thousands, except per share data):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- -------- ------- ---------
<S> <C> <C> <C> <C>
1999
Revenue $63,583 $64,195 $67,255 $69,680
Net income available
for common shares 11,566 4,828 (1) 12,198 11,901
Earnings per common
share -basic $ .29 $ .12 $ .31 $ .30
Earnings per common
share -diluted (3) .29 .12 .30 .30
1998
Revenue $56,177 $58,402 $59,003 $64,896
Net income available
for common shares 10,706 9,976 5,532 (2) 10,796
Earnings per common
share -basic $ .27 $ .26 $ .14 $ .27
Earnings per common
share -diluted .27 .26 .14 .27
</TABLE>
(1) Net income includes a $7.1 million loss on sale of real estate ($.18 loss
per share - basic and $.17 loss per share - diluted).
(2) Net income includes a $4.7 million charge for reorganization expenses.
(3) The sum of quarterly earnings per common share - diluted, $1.01 differs from
the annual earnings per common share - diluted, $1.02 due to rounding.
F-24
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
-------- -------- -------- --------
Initial cost to company
Cost Capitalized
Building and Subsequent to
Descriptions Encumbrance Land Improvements Acquisition
------------ ----------- ---- ------------ -----------
<S> <C> <C> <C> <C>
ALLWOOD (New Jersey) $3,542,000 $ $3,920,000 $251,000
ANDORRA (Pennsylvania) 2,432,000 12,346,000 3,374,000
ARIZONA BUILDINGS (2) 1,334,000 9,104,000 355,000
BALA CYNWYD (Pennsylvania) 3,565,000 14,466,000 4,077,000
BARRACKS ROAD (Virginia) 4,363,000 16,459,000 17,048,000
BETHESDA ROW (Maryland) 12,576,000 2,157,000 20,821,000 19,824,000
BLUESTAR (New Jersey) 27,031,000 29,922,000 7,025,000
BRICK PLAZA (New Jersey) 21,362,000 24,715,000 25,035,000
BRISTOL (Connecticut) 3,856,000 15,959,000 899,000
BRUNSWICK (New Jersey) 11,253,000 12,456,000 2,796,000
CALIFORNIA RETAIL BUILDINGS
SANTA MONICA (8) 20,055,000 12,709,000 16,972,000
SAN DIEGO (5) 3,844,000 1,352,000 4,265,000
150 POST STREET (San Francisco) 11,685,000 9,181,000 3,310,000
OTHER (6) 15,563,000 21,462,000 4,656,000
CLIFTON (New Jersey) 3,294,000 3,646,000 952,000
CONGRESSIONAL PLAZA (Maryland) 2,793,000 7,424,000 35,400,000
CONNECTICUT RETAIL BUILDINGS (13) 25,061,000 27,739,000 2,212,000
COURTHOUSE CENTER (Maryland) 1,750,000 1,869,000 38,000
CROSSROADS (Illinois) 4,635,000 11,611,000 5,169,000
DEDHAM PLAZA (Massachusetts) 12,369,000 12,918,000 1,600,000
EASTGATE (North Carolina) 1,608,000 5,775,000 4,688,000
ESCONDIDO PROMENADE (California) 9,400,000 11,505,000 12,147,000 656,000
ELLISBURG CIRCLE (New Jersey) 4,028,000 11,309,000 9,528,000
FALLS PLAZA (Virginia) 1,260,000 735,000 6,188,000
FALLS PLAZA - East (Virginia) 538,000 535,000 2,271,000
FEASTERVILLE (Pennsylvania) 1,431,000 1,600,000 8,383,000
FEDERAL PLAZA (Maryland) 27,179,000 10,216,000 17,895,000 32,358,000
FINLEY SQUARE (Illinois) 9,252,000 9,544,000 6,396,000
FLORIDA RETAIL BUILDINGS (2) 5,206,000 1,631,000 17,000
FLOURTOWN (Pennsylvania) 1,345,000 3,943,000 3,140,000
FRESH MEADOWS (New York) 24,625,000 25,255,000 3,446,000
GAITHERSBURG SQUARE (Maryland) 7,701,000 5,271,000 10,145,000
GARDEN MARKET (Illinois) 2,677,000 4,829,000 727,000
GOVERNOR PLAZA (Maryland) 2,068,000 4,905,000 10,190,000
GRATIOT PLAZA (Michigan) 525,000 1,601,000 14,462,000
HAMILTON (New Jersey) 4,882,000 5,405,000 2,146,000
HAUPPAUGE (New York) 8,791,000 15,262,000 1,735,000
HUNTINGTON (New York) 14,461,000 16,008,000 5,691,000
IDYLWOOD PLAZA (Virginia) 4,308,000 10,026,000 672,000
ILLINOIS RETAIL BUILDINGS (3) 2,694,000 2,325,000 3,375,000
KINGS COURT (California) 10,714,000 (57,000)
LANCASTER (Pennsylvania) 549,000 2,103,000 2,532,000
LANGHORNE SQUARE (Pennsylvania) 720,000 2,974,000 13,662,000
LAUREL (Maryland) 7,458,000 22,525,000 14,161,000
LAWRENCE PARK (Pennsylvania) 5,723,000 7,160,000 10,050,000
LEESBURG PLAZA (Virginia) 9,900,000 8,184,000 10,722,000 819,000
LOEHMANN'S PLAZA (Virginia) 1,237,000 15,096,000 5,630,000
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G
-------- -------- -------- --------
Gross amount at which
carried at close of period Accumulated Date
Building and Depreciation and of
Descriptions Land Improvements Total Amortization Construction
------------ ---- ------------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
ALLWOOD (New Jersey) $ $4,171,000 $4,171,000 $1,380,000 1958
ANDORRA (Pennsylvania) 2,432,000 15,720,000 18,152,000 5,438,000 1953
ARIZONA BUILDINGS (2) 1,334,000 9,459,000 10,793,000 390,000 1995-1998
BALA CYNWYD (Pennsylvania) 3,565,000 18,543,000 22,108,000 3,438,000 1955
BARRACKS ROAD (Virginia) 4,363,000 33,507,000 37,870,000 14,112,000 1958
BETHESDA ROW (Maryland) 2,171,000 40,645,000 42,816,000 4,934,000 1945-1999
BLUESTAR (New Jersey) 36,947,000 36,947,000 10,195,000 1959
BRICK PLAZA (New Jersey) 49,750,000 49,750,000 12,288,000 1958
BRISTOL (Connecticut) 3,856,000 16,858,000 20,714,000 2,082,000 1959
BRUNSWICK (New Jersey) 15,252,000 15,252,000 4,704,000 1957
CALIFORNIA RETAIL BUILDINGS
SANTA MONICA (8) 20,055,000 29,681,000 49,736,000 1,833,000 1888-1995
SAN DIEGO (5) 3,844,000 5,617,000 9,461,000 40,000 1888-1995
150 POST STREET (San Francisco) 11,685,000 12,491,000 24,176,000 602,000 1908
OTHER (6) 15,563,000 26,118,000 41,681,000 467,000 var
CLIFTON (New Jersey) 4,598,000 4,598,000 1,319,000 1959
CONGRESSIONAL PLAZA (Maryland) 2,793,000 42,824,000 45,617,000 15,878,000 1965
CONNECTICUT RETAIL BUILDINGS (13) 25,061,000 29,951,000 55,012,000 3,736,000 1900-1991
COURTHOUSE CENTER (Maryland) 1,750,000 1,907,000 3,657,000 112,000 1975
CROSSROADS (Illinois) 4,635,000 16,780,000 21,415,000 3,100,000 1959
DEDHAM PLAZA (Massachusetts) 12,369,000 14,518,000 26,887,000 2,728,000 1959
EASTGATE (North Carolina) 1,608,000 10,463,000 12,071,000 5,233,000 1963
ESCONDIDO PROMENADE (California) 11,505,000 12,803,000 24,308,000 1,070,000 1987
ELLISBURG CIRCLE (New Jersey) 4,028,000 20,837,000 24,865,000 6,490,000 1959
FALLS PLAZA (Virginia) 1,260,000 6,923,000 8,183,000 1,767,000 1962
FALLS PLAZA - East (Virginia) 559,000 2,785,000 3,344,000 2,396,000 1960
FEASTERVILLE (Pennsylvania) 1,431,000 9,983,000 11,414,000 3,610,000 1958
FEDERAL PLAZA (Maryland) 10,216,000 50,253,000 60,469,000 13,383,000 1970
FINLEY SQUARE (Illinois) 9,252,000 15,940,000 25,192,000 2,618,000 1974
FLORIDA RETAIL BUILDINGS (2) 5,206,000 1,648,000 6,854,000 183,000 1920
FLOURTOWN (Pennsylvania) 1,345,000 7,083,000 8,428,000 2,422,000 1957
FRESH MEADOWS (New York) 24,625,000 28,701,000 53,326,000 1,631,000 1946-1949
GAITHERSBURG SQUARE (Maryland) 6,012,000 17,105,000 23,117,000 3,810,000 1966
GARDEN MARKET (Illinois) 2,677,000 5,556,000 8,233,000 1,049,000 1958
GOVERNOR PLAZA (Maryland) 2,068,000 15,095,000 17,163,000 7,971,000 1963
GRATIOT PLAZA (Michigan) 525,000 16,063,000 16,588,000 2,593,000 1964
HAMILTON (New Jersey) 7,551,000 7,551,000 2,892,000 1961
HAUPPAUGE (New York) 8,791,000 16,997,000 25,788,000 541,000 1963
HUNTINGTON (New York) 21,699,000 21,699,000 6,977,000 1962
IDYLWOOD PLAZA (Virginia) 4,308,000 10,698,000 15,006,000 1,959,000 1991
ILLINOIS RETAIL BUILDINGS (3) 2,694,000 5,700,000 8,394,000 570,000 1900-1927
KINGS COURT (California) 10,657,000 10,657,000 492,000 1960
LANCASTER (Pennsylvania) 4,635,000 4,635,000 3,626,000 1958
LANGHORNE SQUARE (Pennsylvania) 720,000 16,636,000 17,356,000 4,852,000 1966
LAUREL (Maryland) 7,458,000 36,686,000 44,144,000 14,481,000 1956
LAWRENCE PARK (Pennsylvania) 5,734,000 17,210,000 22,944,000 11,369,000 1972
LEESBURG PLAZA (Virginia) 8,184,000 11,541,000 19,725,000 399,000 1967
LOEHMANN'S PLAZA (Virginia) 1,248,000 20,715,000 21,963,000 10,427,000 1971
<CAPTION>
COLUMN A COLUMN H COLUMN I
-------- -------- --------
Life on which
depreciation in latest
Date income statements
Descriptions Acquired is computed
------------ -------- -----------
<S> <C> <C>
ALLWOOD (New Jersey) 12/12/88 35 years
ANDORRA (Pennsylvania) 01/12/88 35 years
ARIZONA BUILDINGS (2) 05/07/98 35 years
BALA CYNWYD (Pennsylvania) 09/22/93 35 years
BARRACKS ROAD (Virginia) 12/31/85 35 years
BETHESDA ROW (Maryland) 12/31/93 35 years
BLUESTAR (New Jersey) 12/12/88 35 years
BRICK PLAZA (New Jersey) 12/28/89 35 years
BRISTOL (Connecticut) 9/22/95 35 years
BRUNSWICK (New Jersey) 12/12/88 35 years
CALIFORNIA RETAIL BUILDINGS
SANTA MONICA (8) 1996-1998 35 years
SAN DIEGO (5) 1996-1997 35 years
150 POST STREET (San Francisco) 10/23/97 35 years
OTHER (6) 1996-1999 35 years
CLIFTON (New Jersey) 12/12/88 35 years
CONGRESSIONAL PLAZA (Maryland) 04/01/65 35 years
CONNECTICUT RETAIL BUILDINGS (13) 1994-1996 35 years
COURTHOUSE CENTER (Maryland) 12/17/97 35 years
CROSSROADS (Illinois) 07/19/93 35 years
DEDHAM PLAZA (Massachusetts) 12/31/93 35 years
EASTGATE (North Carolina) 12/18/86 35 years
ESCONDIDO PROMENADE (California) 12/31/96 35 years
ELLISBURG CIRCLE (New Jersey) 10/16/92 35 years
FALLS PLAZA (Virginia) 09/30/67 22 3/4 years
FALLS PLAZA - East (Virginia) 10/05/72 25 years
FEASTERVILLE (Pennsylvania) 07/23/80 20 years
FEDERAL PLAZA (Maryland) 06/29/89 35 years
FINLEY SQUARE (Illinois) 04/27/95 35 years
FLORIDA RETAIL BUILDINGS (2) 02/28/96 35 years
FLOURTOWN (Pennsylvania) 04/25/80 35 years
FRESH MEADOWS (New York) 12/05/97 35 years
GAITHERSBURG SQUARE (Maryland) 04/22/93 35 years
GARDEN MARKET (Illinois) 07/28/94 35 years
GOVERNOR PLAZA (Maryland) 10/01/85 35 years
GRATIOT PLAZA (Michigan) 03/29/73 25 3/4 years
HAMILTON (New Jersey) 12/12/88 35 years
HAUPPAUGE (New York) 08/06/98 35 years
HUNTINGTON (New York) 12/12/88 35 years
IDYLWOOD PLAZA (Virginia) 04/15/94 35 years
ILLINOIS RETAIL BUILDINGS (3) 1995-1997 35 years
KINGS COURT (California) 08/24/98 26 years
LANCASTER (Pennsylvania) 04/24/80 22 years
LANGHORNE SQUARE (Pennsylvania) 01/31/85 35 years
LAUREL (Maryland) 08/15/86 35 years
LAWRENCE PARK (Pennsylvania) 07/23/80 22 years
LEESBURG PLAZA (Virginia) 09/15/98 35 years
LOEHMANN'S PLAZA (Virginia) 07/21/83 35 years
</TABLE>
F-25
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
-------- -------- -------- --------
Initial cost to company
Cost Capitalized
Building and Subsequent to
Descriptions Encumbrance Land Improvements Acquisition
------------ ----------- ---- ------------ -----------
<S> <C> <C> <C> <C>
MAGRUDERS (Maryland) 4,554,000 4,859,000 338,000
MASSACHUSETTS RETAIL BLDG (1) 1,873,000 1,884,000 231,000
MID PIKE PLAZA (Maryland) 10,041,000 10,335,000 5,918,000
NEW JERSEY RETAIL BUILDING (1) 737,000 1,466,000 1,056,000
NEW YORK RETAIL BUILDINGS (4) 7,541,000 7,912,000 6,259,000
NORTHEAST (Pennsylvania) 1,152,000 10,596,000 9,138,000
NORTH LAKE COMMONS (Illinois) 2,782,000 8,604,000 1,485,000
OLD KEENE MILL (Virginia) 638,000 998,000 3,316,000
OLD TOWN CENTER (California) 3,420,000 2,765,000 22,595,000
PAN AM SHOPPING CENTER (Virginia) 8,694,000 12,929,000 2,601,000
PARK & SHOP (District of Columbia) 4,840,000 6,319,000 520,000
PENINSULA (California) 20,880,000 23,288,000 695,000
PERRING PLAZA (Maryland) 2,800,000 6,461,000 14,634,000
PIKE 7 (Virginia) 9,709,000 22,799,000 415,000
QUEEN ANNE PLAZA (Massachusetts) 3,319,000 8,457,000 2,427,000
QUINCE ORCHARD PLAZA (Maryland) 3,197,000 7,949,000 6,004,000
ROLLINGWOOD APTS. (Maryland) 552,000 2,246,000 3,842,000
RUTGERS (New Jersey) 13,035,000 14,429,000 1,328,000
SAUGUS (Massachusetts) 4,383,000 8,291,000 290,000
SHIRLINGTON (Virginia) 9,761,000 14,808,000 4,186,000
TOWER (Virginia) 7,170,000 10,518,000 125,000
TROY (New Jersey) 3,126,000 5,193,000 11,922,000
TYSONS STATION (Virginia) 4,068,000 388,000 453,000 2,538,000
UPTOWN (Oregon) 10,257,000 5,846,000 266,000
WILDWOOD (Maryland) 9,111,000 1,061,000 5,293,000
WILLIAMSBURG (Virginia) 2,758,000 7,160,000 3,412,000
WILLOW GROVE (Pennsylvania) 1,499,000 6,643,000 16,945,000
WILLOW LAWN (Virginia) 3,192,000 7,723,000 43,656,000
WYNNEWOOD (Pennsylvania) 8,055,000 13,759,000 11,571,000
DEVELOPMENT PROJECTS:
PENTAGON ROW (Virginia) 2,955,000 6,130,000
WOODMONT EAST (Bethesda, MD) 6,494,000 4,660,000
TOWN & COUNTRY (California) 41,969,000 1,161,000 17,238,000
TEXAS RETAIL BUILDINGS (12) 13,783,000 1,976,000 5,718,000
TOTALS $172,573,000 $437,196,000 $739,217,000 $545,021,000
============ ============== ============== ==============
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G
-------- -------- -------- --------
Gross amount at which
carried at close of period Accumulated Date
Building and Depreciation and of
Descriptions Land Improvements Total Amortization Construction
------------ ---- ------------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
MAGRUDERS (Maryland) 4,554,000 5,197,000 9,751,000 295,000 1955
MASSACHUSETTS RETAIL BLDG (1) 1,873,000 2,115,000 3,988,000 302,000 1930
MID PIKE PLAZA (Maryland) 16,253,000 16,253,000 7,768,000 1963
NEW JERSEY RETAIL BUILDING (1) 737,000 2,522,000 3,259,000 324,000 1940
NEW YORK RETAIL BUILDINGS (4) 7,541,000 14,171,000 21,712,000 566,000 1937-1987
NORTHEAST (Pennsylvania) 1,153,000 19,733,000 20,886,000 8,410,000 1959
NORTH LAKE COMMONS (Illinois) 2,782,000 10,089,000 12,871,000 1,600,000 1989
OLD KEENE MILL (Virginia) 638,000 4,314,000 4,952,000 2,546,000 1968
OLD TOWN CENTER (California) 3,420,000 25,360,000 28,780,000 323,000 1997-1998
PAN AM SHOPPING CENTER (Virginia) 8,694,000 15,530,000 24,224,000 4,244,000 1979
PARK & SHOP (District of Columbia) 4,840,000 6,839,000 11,679,000 876,000 1930
PENINSULA (California) 20,880,000 23,983,000 44,863,000 1,279,000 1960
PERRING PLAZA (Maryland) 2,800,000 21,095,000 23,895,000 8,613,000 1963
PIKE 7 (Virginia) 9,709,000 23,214,000 32,923,000 1,897,000 1968
QUEEN ANNE PLAZA (Massachusetts) 3,319,000 10,884,000 14,203,000 2,177,000 1967
QUINCE ORCHARD PLAZA (Maryland) 2,928,000 14,222,000 17,150,000 4,436,000 1975
ROLLINGWOOD APTS. (Maryland) 572,000 6,068,000 6,640,000 5,488,000 1960
RUTGERS (New Jersey) 15,757,000 15,757,000 4,823,000 1973
SAUGUS (Massachusetts) 4,383,000 8,581,000 12,964,000 804,000 1976
SHIRLINGTON (Virginia) 9,816,000 18,939,000 28,755,000 2,040,000 1940
TOWER (Virginia) 7,170,000 10,643,000 17,813,000 415,000 1953-1960
TROY (New Jersey) 3,126,000 17,115,000 20,241,000 8,740,000 1966
TYSONS STATION (Virginia) 475,000 2,904,000 3,379,000 2,404,000 1954
UPTOWN (Oregon) 10,257,000 6,112,000 16,369,000 401,000 1913- 1959
WILDWOOD (Maryland) 9,111,000 6,354,000 15,465,000 5,480,000 1958
WILLIAMSBURG (Virginia) 2,758,000 10,572,000 13,330,000 4,645,000 1961
WILLOW GROVE (Pennsylvania) 1,499,000 23,588,000 25,087,000 9,409,000 1953
WILLOW LAWN (Virginia) 7,790,000 46,781,000 54,571,000 21,559,000 1957
WYNNEWOOD (Pennsylvania) 8,055,000 25,330,000 33,385,000 1,881,000 1948
DEVELOPMENT PROJECTS:
PENTAGON ROW (Virginia) 9,085,000 9,085,000
WOODMONT EAST (Bethesda, MD) 6,494,000 4,660,000 11,154,000
TOWN & COUNTRY (California) 41,969,000 18,399,000 60,368,000 589,000 1960-1962
TEXAS RETAIL BUILDINGS (12) 13,783,000 7,694,000 21,477,000 var
TOTALS $440,056,000 $1,281,403,000 $1,721,459,000 $317,921,000
============ ============== ============== ============
<CAPTION>
COLUMN A COLUMN H COLUMN I
-------- -------- --------
Life on which
depreciation in latest
Date income statements
Descriptions Acquired is computed
------------ -------- -----------
<S> <C> <C>
MAGRUDERS (Maryland) 12/17/97 35 years
MASSACHUSETTS RETAIL BLDG (1) 09/07/95 35 years
MID PIKE PLAZA (Maryland) 05/18/82 35 years
NEW JERSEY RETAIL BUILDING (1) 08/16/95 35 years
NEW YORK RETAIL BUILDINGS (4) 12/16/97 35 years
NORTHEAST (Pennsylvania) 08/30/83 35 years
NORTH LAKE COMMONS (Illinois) 04/27/94 35 years
OLD KEENE MILL (Virginia) 06/15/76 33 1/3 years
OLD TOWN CENTER (California) 10/22/97 35 years
PAN AM SHOPPING CENTER (Virginia) 02/05/93 35 years
PARK & SHOP (District of Columbia) 12/01/95 35 years
PENINSULA (California) 12/19/97 35 years
PERRING PLAZA (Maryland) 10/01/85 35 years
PIKE 7 (Virginia) 03/31/97 35 years
QUEEN ANNE PLAZA (Massachusetts) 12/23/94 35 years
QUINCE ORCHARD PLAZA (Maryland) 04/22/93 35 years
ROLLINGWOOD APTS. (Maryland) 01/15/71 25 years
RUTGERS (New Jersey) 12/12/88 35 years
SAUGUS (Massachusetts) 10/01/96 35 years
SHIRLINGTON (Virginia) 12/21/95 35 years
TOWER (Virginia) 08/24/98 35 years
TROY (New Jersey) 07/23/80 22 years
TYSONS STATION (Virginia) 01/17/78 17 years
UPTOWN (Oregon) 09/26/97 35 years
WILDWOOD (Maryland) 05/05/69 33 1/3 years
WILLIAMSBURG (Virginia) 04/30/86 35 years
WILLOW GROVE (Pennsylvania) 11/20/84 35 years
WILLOW LAWN (Virginia) 12/05/83 35 years
WYNNEWOOD (Pennsylvania) 10/29/96 35 years
DEVELOPMENT PROJECTS:
PENTAGON ROW (Virginia) 1998
WOODMONT EAST (Bethesda, MD) 06/03/97
TOWN & COUNTRY (California) 03/05/97 35 years
TEXAS RETAIL BUILDINGS (12) 1998-1999 35 years
TOTALS
</TABLE>
F-26
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
Three Years Ended December 31, 1999
Reconciliation of Total Cost
------------------------------------------------
<TABLE>
<S> <C>
Balance, January 1, 1997 $1,147,865,000
Additions during period
Acquisitions 275,207,000
Improvements 59,969,000
Deduction during period - disposition
of property and miscellaneous retirements (29,402,000)
---------------
Balance, December 31, 1997 1,453,639,000
Additions during period
Acquisitions 120,434,000
Improvements 73,296,000
Deduction during period - disposition
of property and miscellaneous retirements (5,233,000)
---------------
Balance, December 31, 1998 1,642,136,000
Additions during period
Acquisitions 26,355,000
Improvements 95,148,000
Deduction during period - disposition
of property and miscellaneous retirements and impairments (42,180,000)
---------------
$1,721,459,000
===============
Balance, December 31, 1999
</TABLE>
(A) For Federal tax purposes, the aggregate cost basis is approximately
$1,537,033,000 as of December 31, 1999.
F-27
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
Three Years Ended December 31, 1999
Reconciliation of Accumulated Depreciation and Amortization
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
Balance, January 1, 1997 $223,553,000
Additions during period
Depreciation and amortization expense 38,053,000
Deductions during period - disposition of
property and miscellaneous retirements (14,109,000)
--------------
Balance, December 31, 1997 247,497,000
Additions during period
Depreciation and amortization expense 42,542,000
Deductions during period - disposition of
property and miscellaneous retirements (3,986,000)
--------------
Balance, December 31, 1998 286,053,000
Additions during period
Depreciation and amortization expense 46,133,000
Deductions during period - disposition of
property and miscellaneous retirements (14,265,000)
--------------
Balance, December 31, 1999 $317,921,000
==============
</TABLE>
F-28
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- ---------------------------- -------------------------- -------------------------- --------------------------------
Periodic Payment
Description of Lien Interest Rate Maturity Date Terms
- ---------------------------- -------------------------- -------------------------- --------------------------------
<S> <C> <C> <C>
Leasehold mortgage 10% December 2003 Interest only
on shopping monthly; $10,000,000
center in New Jersey balloon payment due
at maturity
Mortgages on retail 10% September 2000 Interest only monthly;
buildings in Florida balloon payment due
and Pennsylvania at maturity
Land in San Jose, 10% December 2003 Interest only monthly;
California balloon payment due
at maturity
Mortgage on 10% March 2000 Interest only
shopping center monthly; balloon
in New Jersey payment due at maturity
Mortgage on retail Greater of prime plus May 2021 Interest only
buildings in Philadelphia 2% or 10% monthly; balloon payment
due at maturity
Mortgage on retail 10% plus participation May 2021 Interest only; balloon
buildings in Philadelphia payment due at maturity
Mortgage on land in 10% plus participation May 2007 None. Balloon and
Santa Monica, California accrued interest due at
maturity
Mortgage on land in 10% plus participation July 2001 None. Balloon and
Santa Monica, California accrued interest due at
maturity
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Column A Column E Column F Column G
- ---------------------------- -------------- -------------- ----------------
Carrying
Face Amount Amount of
Description of Lien Prior Liens of Mortgages Mortgages (1)
- ---------------------------- -------------- -------------- ----------------
<S> <C> <C> <C>
Leasehold mortgage --- $10,000,000 $10,000,000 (2)
on shopping
center in New Jersey
Mortgages on retail 11,548,000 11,548,000
buildings in Florida
and Pennsylvania
Land in San Jose, 4,250,000 4,250,000
California
Mortgage on --- 4,020,000 3,208,000 (3)
shopping center
in New Jersey
Mortgage on retail 25,000,000 7,817,000 (4)
buildings in Philadelphia
Mortgage on retail 9,250,000 9,250,000
buildings in Philadelphia
Mortgage on land in 2,272,000 4,155,000
Santa Monica, California plus accrued
interest and
development cost
Mortgage on land in 2,569,000 3,267,000
Santa Monica, California plus accrued
interest and
development cost
-------------- -------------- ----------------
--- $68,909,000 $53,495,000
============== ============== ================
</TABLE>
1) For Federal tax purposes, the aggregate tax basis is approximately
$53,495,000 as of December 31, 1999. No payments are delinquent on these
mortgages.
2) This mortgage is extendable for up to 45 years with interest increasing to a
maximum of 11%. 3) This mortgage is available for up to $4,020,000. At
December 31, 1999, $3,208,000 was outstanding.
4) This mortgage is available for up to $25,000,000.
F-29
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE - CONTINUED
Three Years Ended December 31, 1999
Reconciliation of Carrying Amount
---------------------------------------------------------------
<TABLE>
<S> <C>
Balance, January 1, 1997 $27,913,000
Additions during period
Issuance of loan 14,072,000
Deductions during period
Collection of loan (3,625,000)
------------
Balance, December 31, 1997 38,360,000
Additions during period
Issuance of loan 21,375,000
Deductions during period
Collection of loan (8,581,000)
------------
Balance, December 31, 1998 51,154,000
Additions during period
Issuance of loans 2,516,000
Deductions during period
Collection of loan (175,000)
------------
Balance, December 31, 1999 $53,495,000
============
</TABLE>
F-30
<PAGE>
EXHIBIT 4 (I)
<TABLE>
<S> <C>
THE TRUST BY AMENDMENT AND
RESTATEMENT OF ITS DECLARATION SEE REVERSE FOR IMPORTANT NOTICE ON
OF TRUST HAS CHANGED ITS GOVERNING TRANSFER RESTRICTIONS AND OTHER INFORMATION
LAW TO THE STATE OF MARYLAND. SEE
REVERSE FOR IMPORTANT NOTICE [PHOTO]
REGARDING GOVERNING DOCUMENTS AND
PAR VALUE PER SHARE.
-------- --------
NUMBER SHARES
-------- --------
CUSIP 313747 20 6
FEDERAL REALTY INVESTMENT TRUST
A BUSINESS TRUST ORGANIZED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA
(GOVERNING LAW CHANGED TO THE STATE OF MARYLAND)
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST, NO PAR
VALUE, IN
Federal Realty Investment Trust, transferable on the books of the Trust in person or by attorney duly authorized in writing upon
surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held
subject to all provisions of the Trust's Declaration of Trust and any amendments thereof, copies of which are on file with the
transfer agent, to all the provisions of which the holder hereof by acceptance of this certificate assents. This certificate is not
valid until countersigned and registered by the transfer agent and registrar. Witness the facsimile Seal of the Trust and the
facsimile signatures of its Trustees or officers.
[SEAL]
Dated:
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, N.Y.) Transfer Agent
and Registrar,
Authorized Signature.
By: /s/ Steven J. Guttman By: /s/ Nancy J. Herman
PRESIDENT SECRETARY
</TABLE>
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM- as tenants in common UNIF GIFT MIN ACT-D...................Custodian ......................
TEN ENT- as tenants by the entireties (Cust) (Minor)
JT TEN- as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as tenants Act............................................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value received,____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________ Common Shares
of Beneficial Interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
Attorney to transfer the said Shares on the books of the within-named Trust with
full power of substitution in the premises.
Dated,________________
(Sign here)_______________________________________
SIGNATURE(S) GUARANTEED:______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCK-BROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
IMPORTANT NOTICE
----------------
DUE TO THE AMENDMENT AND RESTATEMENT OF THE TRUST'S DECLARATION OF TRUST,
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ISSUED AND HELD SUBJECT TO ALL
THE PROVISIONS OF THE BYLAWS OF THE TRUST, AS AMENDED, IN ADDITION TO THE
DECLARATION OF TRUST OF THE TRUST, AS AMENDED, AND HAVE A PAR VALUE PER SHARE OF
$0.01 RATHER THAN NO PAR VALUE PER SHARE.
THE TRUST WILL FURNISH TO ANY SHAREHOLDER, ON REQUEST AND WITHOUT CHARGE, A
FULL STATEMENT OF THE INFORMATION REQUIRED BY SECTION 8-203(d) OF THE
CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH
RESPECT TO THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND OTHER
DISTRIBUTIONS, QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION OF THE
SHARES OF EACH CLASS OF BENEFICIAL INTEREST WHICH THE TRUST HAS AUTHORITY TO
ISSUE AND, IF THE TRUST IS AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN
SERIES, (i) THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE
SHARES OF EACH SERIES TO THE EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD OF
TRUSTEES TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. THE FOREGOING
SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE DECLARATION OF TRUST OF THE TRUST, A COPY OF WHICH
WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS. SUCH REQUEST
MUST BE MADE TO THE SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE OR TO THE
TRANSFER AGENT.
THE TRUST WILL FURNISH A FULL STATEMENT OF THE RESTRICTIONS ON
TRANSFERABILITY TO ANY SHAREHOLDER OF THE TRUST ON REQUEST AND WITHOUT CHARGE.
SUCH REQUEST MUST BE MADE TO THE SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE
OR TO THE TRANSFER AGENT.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN AN AMENDED AND RESTATED RIGHTS AGREEMENT BETWEEN FEDERAL
REALTY INVESTMENT TRUST AND AMERICAN STOCK TRANSFER & TRUST COMPANY (THE "RIGHTS
AGENT") DATED AS OF MARCH 11, 1999 (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH
ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICES OF FEDERAL REALTY INVESTMENT TRUST. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE
REDEEMED, MAY EXPIRE, OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. FEDERAL REALTY INVESTMENT TRUST WILL
MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT
CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS ISSUED TO ACQUIRING PERSONS (AS DEFINED IN THE
RIGHTS AGREEMENT) OR CERTAIN RELATED PERSONS AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID WITH RESPECT TO CERTAIN RIGHTS SET FORTH IN
SECTION 11(a)(ii) AND SECTION 13(a) OF THE RIGHTS AGREEMENT.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE TRUST WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.
<PAGE>
EXHIBIT 4 (II)
<TABLE>
<S> <C>
SERIES A SERIES A
CUMULATIVE REDEEMABLE CUMULATIVE REDEEMABLE
PREFERRED SHARES PREFERRED SHARES
$0.01 PAR VALUE PER SHARE [PHOTO] $0.01 PAR VALUE PER SHARE
LIQUIDATION PREFERENCE LIQUIDATION PREFERENCE
$25.00 PER SHARE $25.00 PER SHARE
- -------- --------
NUMBER SHARES
P 1168
- -------- --------
THE TRUST BY AMENDMENT AND
RESTATEMENT OF ITS DECLARATION
OF TRUST HAS CHANGED ITS GOVERNING CUSIP 313747 40 4
LAW TO THE STATE OF MARYLAND. SEE
REVERSE FOR IMPORTANT NOTICE SEE REVERSE FOR IMPORTANT NOTICE ON
REGARDING GOVERNING DOCUMENTS. TRANSFER RESTRICTIONS AND OTHER INFORMATION
FEDERAL REALTY INVESTMENT TRUST
A BUSINESS TRUST ORGANIZED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA
(GOVERNING LAW CHANGED TO THE STATE OF MARYLAND)
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SERIES A CUMULATIVE REDEEMABLE PREFERRED SHARES, $0.01 PAR VALUE PER SHARE, IN
Federal Realty Investment Trust, transferable on the books of the Trust in person or by attorney duly authorized in
writing upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are
issued and shall be held subject to all provisions of the Trust's Declaration of Trust and any amendments thereof, copies
of which are on file with the transfer agent, to all the provisions of which the holder hereof by acceptance of this
certificate assents. This certificate is not valid until countersigned and registered by the transfer agent and registrar.
Witness the facsimile Seal of the Trust and the facsimile signatures of its duly authorized officers.
[SEAL]
Dated: Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, N.Y.) Transfer Agent
and Registrar
By:
/s/ Steven J. Guttman /s/ Nancy J. Herman
PRESIDENT SECRETARY Authorized Signature
</TABLE>
<PAGE>
IMPORTANT NOTICE
----------------
DUE TO THE AMENDMENT AND RESTATEMENT OF THE TRUST'S DECLARATION OF TRUST, THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE ISSUED AND HELD SUBJECT TO ALL THE
PROVISIONS OF THE BYLAWS OF THE TRUST, AS AMENDED, IN ADDITION TO THE
DECLARATION OF TRUST OF THE TRUST, AS AMENDED.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM-D - as tenants in common UNIF GIFT MIN ACT-D.................... Custodian ....................
TEN ENT-D - as tenants by the entireties (Cust) (Minor)
JT TEN-D - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as tenants Act...................................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value received,___________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
____________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
_____________________________________________________ Series A Cumulative
Preferred Shares, $0.01 par value, represented by the within Certificate, and do
hereby irrevocably constitute and appoint ______________________________________
________________________________________________________________________________
Attorney to transfer the said Shares on the books of the within-named Trust with
full power of substitution in the premises.
Dated, _____________________________
(Sign here)_______________________________________
_______________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: ______________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE TRUST WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.
IMPORTANT NOTICE
----------------
THE TRUST WILL FURNISH TO ANY SHAREHOLDER, ON REQUEST AND WITHOUT CHARGE, A
FULL STATEMENT OF THE INFORMATION REQUIRED BY SECTION 8-203(d) OF THE
CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH
RESPECT TO THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND OTHER
DISTRIBUTIONS, QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION OF THE
SHARES OF EACH CLASS OF BENEFICIAL INTEREST WHICH THE TRUST HAS AUTHORITY TO
ISSUE AND, IF THE TRUST IS AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN
SERIES, (i) THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE
SHARES OF EACH SERIES TO THE EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD OF
TRUSTEES TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. THE FOREGOING
SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE DECLARATION OF TRUST OF THE TRUST, A COPY OF WHICH
WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS. SUCH REQUEST
MUST BE MADE TO THE SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE OR TO THE
TRANSFER AGENT. THE TRUST WILL FURNISH A FULL STATEMENT OF THE RESTRICTIONS ON
TRANSFERABILITY TO ANY SHAREHOLDER OF THE TRUST ON REQUEST AND WITHOUT CHARGE.
SUCH REQUEST MUST BE MADE TO THE SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE
OR TO THE TRANSFER AGENT.
<PAGE>
EXHIBIT 10(x)(x)(v)(i)(i)
AMENDED AND RESTATED SEVERANCE AGREEMENT
----------------------------------------
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT ("Amended and Restated
Severance Agreement"), made and entered into as of this 27th day of December,
1999 by and between FEDERAL REALTY INVESTMENT TRUST, a Maryland real estate
investment trust ("Employer"), and NANCY J. HERMAN ("Employee").
WHEREAS, Employee and Employer entered into a Severance Agreement
("Severance Agreement") dated as of August 25, 1999; and
WHEREAS, Employee and Employer wish to amend and restate that Severance
Agreement as set forth herein;
NOW THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained and of other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Termination of Severance Agreement. As of the date first written
----------------------------------
above, the Severance Agreement shall be null and void and of no further force or
effect.
2. Effective Date of Amended and Restated Severance Agreement. This
----------------------------------------------------------
Amended and Restated Severance Agreement shall be effective as of the date first
written above and shall continue and remain in full force and effect until
terminated by the parties in writing.
3. Termination Without Cause. In the event that Employee's employment
-------------------------
with Employer is terminated under any of the circumstances in Sections 3(a) or
3(b), Employee will be deemed to have been Terminated Without Cause and shall
receive payments and benefits as described in this Section 3; provided, however,
in the event Employee's employment with Employer is terminated under any of the
circumstances in Sections 3(a) or 3(b) under circumstances described in Section
8 below, Employee shall receive such payments and benefits as are set forth in
Section 8 in lieu of the payments and benefits under this Section 3:
(a) by Employer other than with Cause (as "Cause" is defined in
Section 5 hereof);
(b) by Employee within six (6) months following the occurrence of one
or more of the following events:
1
<PAGE>
(i) the nature of Employee's duties or the scope of Employee's
responsibilities or authority as of the date first written
above are materially modified by Employer without
Employee's written consent where such material
modification constitutes an actual or constructive
demotion of Employee; provided, however, that a change in
the position(s) to whom Employee reports shall not by
itself constitute a material modification of Employee's
responsibilities; provided, further, that if Employee
voluntarily becomes an employee of an affiliate of the
Employer in connection with a Spin-off (as defined in
Section 17) of that affiliate, the nature of Employee's
duties and the scope of responsibilities and authority
referred to above in this paragraph (i) shall mean those
as in effect as of the first day of employment with the
affiliate following the Spin-off and not those in effect
with the Employer as of the date first written above;
(ii) Employer changes the location of its principal office to
outside a fifty (50) mile radius of Washington, D.C.;
(iii) Employer's setting of Employee's base salary for any year
at an amount which is less than ninety percent (90%) of
the greater of (A) Employee's base salary for 1999, or (B)
Employee's highest base salary during the three (3) then
most recent calendar years (including the year of
termination), regardless of whether such salary reduction
occurs in one year or over the course of years; and
(iv) this Amended and Restated Severance Agreement is not
expressly assumed by any successor (directly or
indirectly, whether by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of Employer.
(c) Decision by Employer to Terminate Without Cause. Employer's
-----------------------------------------------
decision to terminate Employee's employment Without Cause shall
be made by the Board of Trustees.
(d) Severance Payment Upon Termination Without Cause. In the event
------------------------------------------------
of Termination Without Cause other than under circumstances
described in Section 8 below, Employee will receive as severance
pay an amount in cash equal to one (1) year's salary. For the
purpose of calculating amounts payable pursuant to this Section
2
<PAGE>
3(d), "salary" shall be an amount equal to (i) the greater of (A)
Employee's highest annual base salary paid during the previous
three (3) years or (B) Employee's annual base salary in the year
of termination, plus (ii) the greatest annual aggregate amount of
any cash and/or stock bonus paid to Employee in respect of any of
the three (3) fiscal years immediately preceding such termination
(it being understood and agreed that such amount shall not
include compensation paid pursuant to performance share awards).
For purposes of the preceding sentence: (i) a stock bonus will be
considered to have been paid in respect of a particular year if
(A) in the case of a bonus paid under Employer's 1999 Incentive
Bonus Plan (as the same may be amended from time or time, or any
successor plan, the "Bonus Plan"), the stock bonus was awarded in
respect of that year, even if it did not vest in that year, or
(B) in the case of any other stock bonus, the shares vested in
that year (other than as a result of the Termination Without
Cause); and (ii) a stock bonus will be valued (A) in the case of
a bonus paid under the Bonus Plan, at a figure equal to the
number of shares awarded, multiplied by the per-share value
(closing price) on the date on which the bonus was approved by
the Compensation Committee of Employer's Board of Trustees, and
(B) in the case of any other stock bonus, at a figure equal to
the number of shares that vested, multiplied by the per-share
value (closing price) on the date on which they vested. Payment
also will be made for vacation time that has accrued, but is
unused as of the date of termination.
(e) Benefits. In the event of Termination Without Cause other than
--------
under circumstances described in Section 8 below, Employee shall
receive "Full Benefits" for nine (9) months. Employer shall have
satisfied its obligation to provide Full Benefits to Employee if
it (i) pays premiums due in connection with COBRA continuation
coverage to continue Employee's medical and dental insurance
coverage at not less than the levels of coverage immediately
prior to termination of Employee's employment; (ii) maintains at
not less than Employee's highest levels of coverage prior to
Termination Without Cause individual life insurance policies and
accidental death and dismemberment policies for the benefit of
Employee and pays the annual premiums associated therewith; (iii)
to the extent that Employer maintained a long-term disability
policy that provided coverage to Employee in excess of the
coverage provided under Employer's group long-term disability
policy, maintains at not less than Employee's highest levels of
coverage prior to Termination Without Cause an individual long-
term disability policy for the
3
<PAGE>
benefit of Employee and pays the annual premiums associated
therewith, subject to the limitations of the policy; and (iv)
pays the annual premiums associated with Employee's continued
participation, at not less than Employee's highest levels of
coverage prior to Termination Without Cause, under Employer's
group long-term disability policy for a period of one (1) year
following Termination Without Cause, subject to the limitations
of the policy. Notwithstanding the foregoing, Employee shall be
required to pay the premiums and any other costs of such Full
Benefits in the same dollar amount that Employee was required to
pay for such costs immediately prior to Termination Without
Cause.
(f) Stock Options. Notwithstanding any agreement to the contrary,
-------------
in the event of any Termination Without Cause other than under
circumstances described in Section 8 below, the vesting of
options to purchase shares of Employer's common stock granted to
Employee and outstanding as of the date of Employee's termination
and scheduled to vest during the twelve (12) months thereafter
shall be accelerated such that all such options will be vested as
of the date of Employee's termination of employment with
Employer. The terms of the stock option agreements shall
determine the period during which any vested options may be
exercisable.
(g) Outplacement Services. In the event of Termination Without Cause
---------------------
other than under circumstances described in Section 8 below,
Employer shall make available at Employer's expense to Employee
at Employee's option the services of an employment
search/outplacement agency selected by Employer for a period not
to exceed six (6) months from the date of Employee's termination.
(h) Provision of Telephone/Secretary. In the event of Termination
--------------------------------
Without Cause other than under circumstances described in Section
8 below, Employer shall provide Employee for a period not to
exceed six (6) months from Employee's date of termination with a
telephone number assigned to Employee at Employer's offices,
telephone mail and a secretary to answer the telephone. Such
benefits shall not include an office or physical access to
Employer's offices and will cease upon commencement by Employee
of employment with another employer.
(i) Notice. If Employee terminates his or her employment pursuant to
------
Section 3(b) hereof other than under circumstances described in
Section 8 below and (i) Employee is not an executive officer of
4
<PAGE>
Employer, Employee shall give sixty (60) days' written notice to
Employer of such termination, or (ii) if Employee is an executive
officer of Employer, Employee shall give ninety (90) days'
written notice to Employer of such termination.
(j) Notwithstanding the foregoing provisions of this Agreement, it
shall not be considered a Termination Without Cause in the event
that the Employee voluntarily becomes an employee of an affiliate
of the Employer in connection with a Spin-off of that affiliate
if the Employer has assigned this Agreement to the affiliate as
contemplated in Section 17 and the affiliate has assumed the
obligations hereunder.
4. Voluntary Resignation. If Employee is not an executive officer of
---------------------
Employer, Employee shall give sixty (60) days' written notice to Employer of
Employee's resignation from employment in all capacities with Employer other
than under circumstances described in Section 8 below; if Employee is an
executive officer of Employer, Employee shall give ninety (90) days' written
notice to Employer of Employee's resignation from employment in all capacities
with Employer other than under circumstances described in Section 8 below.
5. Severance Benefits Upon Termination With Cause. Employee shall be
----------------------------------------------
deemed to have been terminated with Cause in the event that the employment of
Employee is terminated for any of the following reasons other than under
circumstances described in Section 8 below:
(a) failure (other than failure due to disability) to substantially
perform his or her duties with Employer or an affiliate thereof;
which failure remains uncured after written notice thereof and
the expiration of a reasonable period of time thereafter in which
Employee is diligently pursuing cure ("Failure to Perform");
(b) willful conduct which is demonstrably and materially injurious to
Employer or an affiliate thereof, monetarily or otherwise;
(c) breach of fiduciary duty involving personal profit; or
(d) willful violation in the course of performing his or her duties
for Employer of any law, rule or regulation (other than traffic
violations or misdemeanor offenses). No act or failure to act
shall be considered willful unless done or omitted to be done in
bad faith and without reasonable belief that the action or
omission was in the best interest of Employer.
5
<PAGE>
(e) Decision by Employer to Terminate With Cause. The decision to
--------------------------------------------
terminate the employment of Employee with Cause shall be made by
the Board of Trustees.
(f) Severance Payment Upon Termination with Cause. In the event of
---------------------------------------------
termination for Failure to Perform pursuant to Section 5(a), or
termination for cause pursuant to Section 5(b), (c) or (d) above,
the terms of the stock option agreements between Employer and
Employee thereunder will determine the terms of the vesting of
options and the exercisability of vested options.
(i) For Cause Termination for Failure to Perform. In the
--------------------------------------------
event that Employee's employment is terminated with Cause
pursuant to Section 5(a) above, Employee shall receive as
severance pay an amount in cash equal to one (1) month's
salary for every year of service to Employer in excess of
five (5) years of service; such severance payment shall
not exceed six (6) months' pay. The number of months for
which such a payment is due shall determine the length of
the for cause term ("For Cause Term"). For the purposes of
this Section 5(f)(i) only, "salary" shall mean Employee's
then current annual base salary and shall not include any
bonus or other compensation. Payment shall also be made
for accrued, but unused, vacation time. Employee shall
also receive Full Benefits (as defined above) for the For
Cause Term. In the event that, following Employee's
termination for Failure to Perform, Employee becomes
employed by or affiliated with, as a partner, consultant,
contractor or otherwise, any entity which is substantially
engaged in the business of property investment or
management ("Competitor"), all payments specified in this
Section 5(f)(i) shall cease upon the date Employee
commences such employment or affiliation; provided,
however, Employee shall continue to receive medical and
dental care benefits from Employer until (i) Employee is
eligible to receive medical and dental care benefits from
the Competitor, or (ii) the date of expiration of
Employee's For Cause Term, whichever comes first.
(ii) Other Cause Termination. In the event that Employee's
-----------------------
employment is terminated with Cause pursuant to Section
5(b), (c) or (d), Employee shall receive all base salary
due and payable as of the date of Employee's termination
of
6
<PAGE>
employment. No payment shall be made for bonus or other
compensation. Payment also will be made for accrued, but
unused vacation time.
6. Severance Benefits Upon Termination Upon Disability. Employer may
---------------------------------------------------
terminate Employee upon thirty (30) days' prior written notice if (i) Employee's
Disability has disabled Employee from rendering service to Employer for at least
a six (6) month consecutive period during the term of Employee's employment,
(ii) Employee's "Disability" is within the meaning of such defined term in
Employer's group long-term disability policy, and (iii) Employee is covered
under such policy. In the event of Employee's Termination Upon Disability,
Employee shall be entitled to receive as severance pay each month for the year
immediately following the date of termination an amount in cash equal to the
difference, if any, between (i) the sum of (y) the amount of payments Employee
receives or will receive during that month pursuant to the disability insurance
policies maintained by Employer for Employee's benefit and (z) the adjustment
described in the next sentence and (ii) Employee's base monthly salary on the
date of termination due to Disability. The adjustment referred to in clause (z)
of the preceding sentence is the amount by which any tax-exempt payments
referred to in clause (y) would need to be increased if such payments were
subject to tax in order to make the after-tax proceeds of such payments equal to
the actual amount of such tax-exempt payments.
(a) Benefits. Employee shall receive Full Benefits (as defined
--------
above) for one (1) year following termination due to Disability.
(b) Stock Options. In the event that Employee's employment is
-------------
terminated due to Disability, the terms of the stock option
agreements between Employer and Employee shall determine the
vesting of any options held by Employee as of the date of
termination due to Disability and the exercise period for any
vested option.
7. Severance Benefits Upon Termination Upon Death. If Employee dies,
----------------------------------------------
Employee's estate shall be entitled to receive an amount in cash equal to
Employee's then-current base salary through the last day of the month in which
Employee's death occurs plus any bonus previously awarded but unpaid and any
accrued vacation pay through the last day of the month in which Employee's death
occurs. The terms of the stock option agreements between Employer and Employee
shall determine the vesting of any options held by Employee as of the date of
his or her death and the exercise period for any vested option.
7
<PAGE>
8. Severance Benefits Upon Termination Upon Change in Control.
----------------------------------------------------------
(a) Change in Control Defined. No benefits shall be payable under
-------------------------
this Section 8 unless there shall have occurred a Change in Control of Employer,
as defined below. For purposes of this Section 8, a "Change in Control" of
Employer shall mean any of the following events:
(i) An acquisition in one or more transactions (other than
directly from Employer or pursuant to options granted by Employer) of any voting
securities of Employer (the "Voting Securities") by any "Person" (as the term is
used for purposes of Section 13(d) or 14(d) of the Securities Act of 1934, as
amended (the "Exchange Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of Employer's then
outstanding Voting Securities; provided, however, in determining whether a
Change in Control has occurred, Voting Securities which are acquired in a "Non-
Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) Employer or (2) any corporation or other Person
of which a majority of its voting power or its equity securities or equity
interest is owned directly or indirectly by Employer (a "Subsidiary"), (B)
Employer or any Subsidiary, or (C) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(ii) The individuals who, as of the date of this Amended and
Restated Severance Agreement, are members of the Board of Trustees (the
"Incumbent Trustees"), cease for any reason to constitute at least two-thirds of
the Board; provided, however, that if the election, or nomination for election
by Employer's shareholders, of any new member was approved by a vote of at least
two-thirds of the Incumbent Trustees, such new member shall, for purposes of
this Amended and Restated Severance Agreement, be considered as a member of the
Incumbent Trustees; provided, further, however, that no individual shall be
considered a member of the Incumbent Trustees if such individual initially
assumed office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Trustees (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or
(iii) Approval by shareholders of Employer of
(A) A merger, consolidation or reorganization involving
Employer, unless:
8
<PAGE>
(1) the shareholders of Employer, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least a
majority of the combined voting power of the outstanding voting securities of
the Person resulting from such merger or consolidation or reorganization (the
"Surviving Person") in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger, consolidation or
reorganization,
(2) the individuals who were members of the
Incumbent Trustees immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Person,
(3) no Person (other than Employer or any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by Employer, or any Subsidiary, or any Person which, immediately
prior to such merger, consolidation or reorganization had Beneficial Ownership
of 20% or more of the then outstanding Voting Securities) has Beneficial
Ownership of 20% or more of the combined voting power of the Surviving Person's
then outstanding voting securities, and
(4) a transaction described in clauses (1) through
(3) shall herein be referred to as a "Non-Control Transaction;"
(B) A complete liquidation or dissolution of Employer; or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of Employer to any Person (other than a
transfer to a Subsidiary).
(iv) Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur (A) solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by Employer which, by reducing the number of Voting Securities
outstanding, increases the proportional number of Voting Securities Beneficially
Owned by the Subject Person; provided, however, that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by Employer, and after such share acquisition
by Employer, the Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall occur; or (B) if Employer (1) establishes a wholly-owned subsidiary
("Holding Company"), (2) causes the Holding Company to establish a wholly-owned
subsidiary ("Merger Sub"), and (3) merges with Merger Sub, with Employer as the
surviving entity (such transactions
9
<PAGE>
collectively are referred as the "Reorganization"). Immediately following the
completion of the Reorganization, all references to the Voting Securities shall
be deemed to refer to the voting securities of the Holding Company.
(v) Notwithstanding anything contained in this Amended and
Restated Severance Agreement to the contrary, if Employee's employment is
terminated while this Amended and Restated Severance Agreement is in effect and
Employee reasonably demonstrates that such termination (A) was at the request of
a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control
(a "Third Party") or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes of this Amended and Restated Severance Agreement, the date of a Change
in Control with respect to Employee shall mean the date immediately prior to the
date of such termination of Employee's employment.
(b) Termination of Employment Following Change in Control. If a
-----------------------------------------------------
Change in Control of Employer occurs, Employee shall be entitled to the benefits
provided in this Section 8 upon the subsequent termination of Employee's
employment with Employer for any reason, either voluntarily or involuntarily,
within six (6) months of such Change of Control, unless such termination is
because of Employee's death, Disability or retirement. The term "Retirement"
shall mean termination of employment in accordance with (x) a qualified employee
pension or profit-sharing plan maintained by Employer, or (y) Employer's
retirement policy in effect immediately prior to the Change in Control. For
purposes of this Section 8, Employee's employment shall be terminated by written
notice delivered by either Employer or Employee to the other party. The date of
Employee's termination of employment shall be the earlier of the date of
Employee's or Employer's written notice terminating Employee's employment with
Employer, unless such notice shall specify an effective date of termination
occurring later than the date of such notice, in which event such specified
effective date shall govern ("Termination Date").
(c) Payment of Benefits upon Termination. If, after a Change in
------------------------------------
Control has occurred, Employee's employment with Employer is terminated in
accordance with Section 8(b) above, then Employer shall pay to Employee and
provide Employee, his or her beneficiaries and estate, the following:
(i) Employer shall pay to Employee a single cash payment equal
to the amount described in Section 3(d) above (without giving effect to any
accelerated vesting which may have occurred as a result of the Change in
Control). If Employee's employment is terminated by Employee by a written notice
which specifies a Termination Date at least five (5) business days later than
the date of such notice, the payment shall be made on the Termination Date. If
Employee gives less than five (5)
10
<PAGE>
business days notice, then such payment shall be made within five (5) business
days of the date of such notice;
(ii) Employee shall receive Full Benefits for one (1) year
following the Termination Date;
(iii) Employer, to the extent legally permissible, shall
continue to provide to Employee all other officer perquisites, allowances,
accommodations of employment, and benefits on the same terms and conditions as
such are from time to time made available generally to the other officers of
Employer but in no event less than the highest level of the perquisites,
allowances, accommodations of employment and benefits that were available to
Employee during the last twelve (12) months of Employee's employment prior to
the Change in Control for a period of one (1) year following the Termination
Date;
(iv) For the purposes of this Section 8(c), Employee's right to
receive officer perquisites, allowances and accommodations of employment is
intended to include (A) Employee's right to have Employer provide Employee for a
period not to exceed six (6) months from Employee's Termination Date with a
telephone number assigned to Employee at Employer's offices, telephone mail and
a secretary to answer the telephone; provided, however, such benefits described
in this Section 8(c)(iv)(A) shall not include an office or physical access to
Employer's offices and will cease upon the commencement by Employee of
employment with another employer, and (B) Employee's right to have Employer make
available at Employer's expense to Employee at Employee's option the services of
an employment search/outplacement agency selected by Employee for a period not
to exceed six (6) months.
(v) Upon the occurrence of a Change in Control, all
restrictions on the receipt of any option to acquire or grant of Voting
Securities to Employee shall lapse and such option shall become immediately and
fully exercisable. Notwithstanding any applicable restrictions or any agreement
to the contrary, Employee may exercise any options to acquire Voting Securities
as of the Change in Control by delivery to Employer of a written notice dated on
or prior to the expiration of the stated term of the option.
(d) Redemption.
----------
(i) Except as provided in subsection (ii) below, Employer
shall within five (5) business days of receipt of written notice from Employee
given at any time after the occurrence of a Change in Control but prior to the
latest stated expiration date of any option held by Employee on the date of the
Change in Control, redeem any Voting Securities held by Employee (whether
acquired by exercise of any such option or grant or otherwise), at a price equal
to the average closing price of Voting Securities as quoted on the New York
Stock Exchange, or if such Voting Securities are not listed
11
<PAGE>
thereon, then the average of the closing "bid" and "ask" prices per share in the
over-the-counter securities market for the fifteen (15) trading days prior to
the date of such notice;
(ii) If, during the fifteen (15) day trading period, Voting
Securities are not listed, quoted or reported on any publicly traded securities
market for at least two-thirds (2/3) of the days included in such period, then
the redemption price shall be determined as follows: (A) Employee shall
designate in a written notice to Employer an appraiser to appraise the value of
the Voting Securities to be redeemed; (B) within ten (10) business days of
receipt of such notice Employer shall designate an appraiser to appraise the
value of the Voting Securities to be redeemed, (C) such designated appraisers
shall together designate, within ten (10) business days of the date the
appraiser is designated by Employer, a third appraiser to appraise the value of
such Voting Securities, (D) each appraiser shall value such Voting Securities
within twenty (20) business days of the designation of the third appraiser using
generally accepted appraisal methods for valuing such securities based upon the
value of all of Employer's assets less all of its liabilities without giving
effect for any costs of liquidation or distress sale, if otherwise applicable,
and (E) the average of the three (3) values determined by the three (3)
appraisers shall constitute the price at which Employer must redeem the Voting
Securities covered by Employee's written notice within five (5) business days of
the completion of this appraisal process. All costs and expenses associated with
any appraisal prepared pursuant to this Section 8(d)(ii) shall be borne entirely
by Employer.
(e) Excise Tax Payments.
-------------------
(i) In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Code) that is provided for hereunder (other
than the payment provided for in this Section 8(e)(i)) to be paid to or for the
benefit of Employee (including, without limitation, the payments or benefits
provided for under any provision of this Section 8) or payments or benefits
under any other plan, agreements or arrangement between Employee and Employer (a
"Payment" or "Payments"), be determined or alleged to be subject to an excise or
similar purpose tax pursuant to Section 4999 of the Code or any successor or
other comparable federal, state, or local tax laws or any interest or penalties
incurred by Employee with respect to such excise or similar purpose tax (such
excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax") Employer shall pay to Employee
such additional compensation as is necessary (after taking into account all
federal, state and local taxes (including any interest and penalties imposed
with respect to such taxes), including any income or Excise Tax, payable by
Employee as a result of the receipt of such additional compensation) (a "Gross-
Up Payment") to place Employee in the same after-tax position (including
federal, state and local taxes) Employee would have been in had no such Excise
Tax been paid or incurred.
12
<PAGE>
(ii) All mathematical determinations, and all determinations as
to whether any of the Total Payments are "parachute payments" (within the
meaning of Section 280G of the Code), that are required to be made under this
Section 8(e), including determinations as to whether a Gross-Up Payment is
required, and the amount of such Gross-Up Payment, shall be made by an
independent accounting firm selected by the Employee from among the six (6)
largest accounting firms in the United States (the "Accounting Firm"), which
shall provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matter, both to Employer and the Employee by no later than ten
(10) days following the Termination Date, if applicable, or such earlier time as
is requested by Employer or the Employee (if the Employee reasonably believes
that any of the Payments may be subject to the Excise Tax). If the Accounting
Firm determines that no Excise Tax is payable by the Employee, it shall furnish
the Employee and Employer with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons therefor) and
that the Employee has substantial authority not to report any Excise Tax on her
federal income tax return. If a Gross-Up Payment is determined to be payable, it
shall be paid to the Employee within twenty (20) days after the Determination
(and all accompanying calculations and other material supporting the
Determination) is delivered to Employer by the Accounting Firm. The cost of
obtaining the Determination shall be borne by Employer, any determination by the
Accounting Firm shall be binding upon Employer and the Employee, absent manifest
error. Without limiting the obligation of Employer hereunder, Employee agrees,
in the event that Employer makes a Gross-Up Payment to cover any Excise Tax, to
negotiate with Employer in good faith with respect to procedures reasonably
requested by Employer which would afford Employer the ability to contest the
imposition of such Excise Tax; provided, however, that Employee will not be
required to afford Employer any right to contest the applicability of any such
Excise Tax to the extent that Employee reasonably determines (based upon the
opinion of the Accounting Firm) that such contest is inconsistent with the
overall tax interest of Employee.
(iii) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a
portion thereof) will be paid which should not have been paid (an "Excess
Payment") or a Gross-Up Payment (or a portion thereof) which should have been
paid will not have been paid (an "Underpayment"). An Underpayment shall be
deemed to have occurred (A) upon notice (formal or informal) to Employee from
any governmental taxing authority that Employee's tax liability (whether in
respect of Employee's current taxable year or in respect of any prior taxable
year) may be increased by reason of the imposition of the Excise Tax on a
Payment or Payments with respect to which Employer has failed to make a
sufficient Gross-Up Payment, (B) upon determination by a court, (C) by reason of
determination by Employer (which shall include the position taken by Employer,
together with its consolidated group, on its federal income tax return) or (D)
upon the resolution of the Dispute to Employee's satisfaction. If an
Underpayment occurs, Employee shall
13
<PAGE>
promptly notify Employer and Employer shall promptly, but in any event, at least
five (5) days prior to the date on which the applicable governmental taxing
authority has requested payment, pay to Employee an additional Gross-Up Payment
equal to the amount of the Underpayment plus any interest and penalties (other
than interest and penalties imposed by reason of Employee's failure to file a
timely tax return or pay taxes shown due on Employee's return where such failure
is not due to Employer's actions or omissions) imposed on the Underpayment. An
Excess Payment shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or
Payments (or a portion thereof) with respect to which Employee had previously
received a Gross-Up Payment. A "Final Determination" shall be deemed to have
occurred when Employee has received from the applicable governmental taxing
authority a refund of taxes or other reduction in Employee's tax liability by
reason of the Excess Payment and upon either (x) the date a determination is
made by, or an agreement is entered into with, the applicable governmental
taxing authority which finally and conclusively binds Employee and such taxing
authority, or in the event that a claim is brought before a court of competent
jurisdiction, the date upon which a final determination has been made by such
court and either all appeals have been taken and finally resolved or the time
for all appeals has expired or (y) the statute of limitations with respect to
Employee's applicable tax return has expired. If an Excess Payment is determined
to have been made, the amount of the Excess Payment shall be treated as a loan
by Employer to Employee and Employee shall pay to Employer on demand (but not
less than ten (10) days after the determination of such Excess Payment and
written notice has been delivered to Employee) the amount of the Excess Payment
plus interest at an annual rate equal to the Applicable Federal Rate provided
for in Section 1274(d) of the Code from the date the Gross-Up Payment (to which
the Excess Payment relates) was paid to Employee until date of repayment of the
Excess Payment to Employer.
(iv) Notwithstanding anything contained in this Section 8 to
the contrary, in the event that, according to the Final Determination, an Excise
Tax will be imposed on any Payment or Payments, Employer shall pay to the
applicable governmental taxing authorities as Excise Tax withholding, the amount
of the Excise Tax that Employer has actually withheld from the Payment or
Payments.
(f) No Set-Off. After a Change in Control, Employer shall have no
----------
right of set-off, reduction or counterclaim in respect of any debt or other
obligation of Employee to Employer against any payment, benefit or other
Employer obligation to Employee provided for in this Section 8 or pursuant to
any other plan, agreement or policy.
(g) Interest on Amounts Payable. After a Change of Control, if any
---------------------------
amounts which are required or determined to be paid or payable or reimbursed or
reimbursable to Employee under this Section 8 (or under any other plan,
agreement,
14
<PAGE>
policy or arrangement with Employer) are not so paid promptly at the times
provided herein or therein, such amounts shall accrue interest, compounded daily
at the annual percentage rate which is three percentage points (3%) above the
interest rate which is announced by The Riggs National Bank (Washington, D.C.)
from time to time as its prime lending rate, from the date such amounts were
required or determined to have been paid or payable or reimbursed or
reimbursable to Employee until such amounts and any interest accrued thereon are
finally and fully paid; provided, however, that in no event shall the amount of
interest contracted for, charged or received hereunder exceed the maximum non-
usurious amount of interest allowed by applicable law.
(h) Disputes; Payment of Expenses. At any time after a Change of
------------------------------
Control, all costs and expenses (including legal, accounting and other advisory
fees and expenses of investigation) incurred by Employee in connection with (i)
any dispute as to the validity, interpretation or application of any term or
condition of this Section 8, (ii) the determination in any tax year of the tax
consequences to Employee of any amounts payable (or reimbursable) under this
Section 8, or (iii) the preparation of responses to an Internal Revenue Service
audit of, and other defense of, Employee's personal income tax return for any
year which is the subject of any such audit or an adverse determination,
administrative proceeding or civil litigation arising therefrom that is
occasioned by or related to an audit of the Internal Revenue Service of
Employer's income tax returns are, upon written demand by Employee, to be paid
by Employer (and Employee shall be entitled, upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling Employer)
promptly on a current basis (either directly or by reimbursing Employee). Under
no circumstances shall Employee be obligated to pay or reimburse Employer for
any attorneys' fees, costs or expenses incurred by Employer.
9. Confidentiality - Employer's Obligations. Unless Employee and
----------------------------------------
Employer mutually agree on appropriate language for such purposes, in the event
that Employee's employment is Terminated Without Cause pursuant to Section 3
above, With Cause pursuant to Section 5(a) above, or under circumstances
described in Section 8, or Employee voluntarily resigns, Employer, except to the
extent required by law, will not make or publish, without the express prior
written consent of Employee, any written or oral statement concerning Employee's
work related performance or the reasons or basis for the severing of Employee's
employment relationship with Employer; provided, however, that the foregoing
restriction is not applicable to information which was or became generally
available to the public other than as a result of a disclosure by Employer.
10. Confidentiality - Employee's Obligations. Employee acknowledges and
----------------------------------------
reaffirms that Employee will comply with the terms of the confidentiality letter
executed by Employee upon commencement of Employee's employment with Employer.
15
<PAGE>
11. Payments. In the event of the termination of Employee's employment
--------
under circumstances described in Section 8, the severance payment made pursuant
to that section shall be made as a lump sum payment. In the event of Employee's
voluntary resignation other than under circumstances described in Section 8,
severance payments made pursuant to this Amended and Restated Severance
Agreement shall be made pro rata on a monthly basis. All other severance
payments payable to Employee pursuant to the terms of this Amended and Restated
Severance Agreement may be made either as a lump sum payment or pro rata on a
monthly basis, at Employee's option.
12. Tax Withholding. Employer may withhold from any benefits payable
---------------
under this Amended and Restated Severance Agreement, and pay over to the
appropriate authority, all federal, state, county, city or other taxes (other
than any excise tax imposed under Section 4999 of the Code or any similar tax to
which the indemnity provisions of Section 8(e) of this Amended and Restated
Severance Agreement shall apply) as shall be required pursuant to any law or
governmental regulation or ruling.
13. Arbitration.
-----------
(a) Any controversy, claim or dispute arising out of or relating to
this Amended and Restated Severance Agreement or the breach
thereof shall be settled by arbitration in accordance with the
then existing Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof. The parties irrevocably consent to the jurisdiction of
the federal and state courts located in Maryland for this
purpose. Each such arbitration proceeding shall be located in
Maryland.
(b) The arbitrator(s) may, in the course of the proceedings, order
any provisional remedy or conservatory measure (including,
without limitation, attachment, preliminary injunction or the
deposit of specified security) that the arbitrator(s) consider to
be necessary, just and equitable. The failure of a party to
comply with such an interim order may, after due notice and
opportunity to cure with such noncompliance, be treated by the
arbitrator(s) as a default, and some or all of the claims or
defenses of the defaulting party may be stricken and partial or
final award entered against such party, or the arbitrator(s) may
impose such lesser sanctions as the arbitrator(s) may deem
appropriate. A request for interim or provisional relief by a
party to a court shall not be deemed incompatible with the
agreement to arbitrate or a waiver of that agreement.
16
<PAGE>
(c) The parties acknowledge that any remedy at law for breach of this
Amended and Restated Severance Agreement may be inadequate, and
that, in the event of a breach by Employee of Sections 10 or 16,
any remedy at law would be inadequate in that such breach would
cause irreparable competitive harm to Employer. Consequently, in
addition to any other relief that may be available, the
arbitrator(s) also may order permanent injunctive relief,
including, without limitation, specific performance, without the
necessity of the prevailing party proving actual damages and
without regard to the adequacy of any remedy at law.
(d) In the event that Employee is the prevailing party in such
arbitration, then Employee shall be entitled to reimbursement by
Employer for all reasonable legal and other professional fees and
expenses incurred by Employee in such arbitration or in enforcing
the award, including reasonable attorney's fees.
(e) The parties agree that the results of any such arbitration
proceeding shall be conclusive and binding upon them.
14. Continued Employment. This Amended and Restated Severance Agreement
--------------------
shall not confer upon the Employee any right with respect to continuance of
employment by Employer.
15. Mitigation. Employee shall not be required to mitigate the amount of
----------
any payment, benefit or other Employer obligation provided for in this Amended
and Restated Severance Agreement by seeking other employment or otherwise and no
such payment shall be offset or reduced by the amount of any compensation or
benefits provided to Employee in any subsequent employment.
16. Restrictions on Competition; Solicitation; Hiring.
-------------------------------------------------
(a) During the term of his or her employment by or with Employer, and
for one (1) year from the date of the termination of Employee's
employment with Employer (the "Post Termination Period"),
Employee shall not, without the prior written consent of
Employer, for himself or herself or on behalf of or in
conjunction with any other person, persons, company, firm,
partnership, corporation, business, group or other entity (each,
a "Person"), work on or participate in the acquisition, leasing,
financing, pre-development or development of any project or
property which was considered and actively pursued by Employer or
its affiliates for acquisition, leasing,
17
<PAGE>
financing, pre-development or development within one year prior
to the date of termination of Employee's employment.
(b) During the term of his or her employment by or with Employer, and
thereafter during the Post Termination Period, Employee shall
not, for any reason whatsoever, directly or indirectly, for
himself or herself or on behalf of or in conjunction with any
other Person:
(i) so that Employer may maintain an uninterrupted workforce,
solicit and/or hire any Person who is at the time of
termination of employment, or has been within six (6)
months prior to the time of termination of Employee's
employment, an employee of Employer or its affiliates, for
the purpose or with the intent of enticing such employee
away from or out of the employ of Employer or its
affiliates, provided that Employee shall be permitted to
call upon and hire any member of the Employee's immediate
family;
(ii) in order to protect the confidential information and
proprietary rights of Employer, solicit, induce or attempt
to induce any Person who or that is, at the time of
termination of Employee's employment, or has been within
six (6) months prior to the time of termination of
Employee's employment, an actual customer, client,
business partner, property owner, developer or tenant or a
prospective customer, client, business partner, property
owner, developer or tenant (i.e., a customer, client,
----
business partner, property owner, developer or tenant who
is party to a written proposal or letter of intent with
Employer, in each case written less than six (6) months
prior to termination of Employee's employment) of
Employer, for the purpose or with the intent of (A)
inducing or attempting to induce such Person to cease
doing business with Employer or its affiliates, or (B) in
any way interfering with the relationship between such
Person and Employer or its affiliates; or
(iii) solicit, induce or attempt to induce any Person who is or
that is, at the time of termination of Employee's
employment, or has been within six (6) months prior to the
time of termination of Employee's employment, a tenant,
supplier, licensee or consultant of, or provider of goods
or services to Employer or its affiliates, for the purpose
or with the intent of (A) inducing or attempting to induce
such Person to cease
18
<PAGE>
doing business with Employer or its affiliates or (B) in
any way interfering with the relationship between such
Person and Employer or its affiliates.
(c) The above notwithstanding, the restrictions contained in
subsections (a) and (b) above shall not apply to Employee in the
Post-Termination Period in the event that Employee has ceased to
be employed by Employer under circumstances described in Section
8 of this Amended and Restated Severance Agreement.
(d) Because of the difficulty of measuring economic losses to
Employer as a result of a breach of the foregoing covenants, and
because of the immediate and irreparable damage that could be
caused to Employer for which it would have no other adequate
remedy, Employee agrees that the foregoing covenants, in addition
to and not in limitation of any other rights, remedies or damages
available to Employer at law, in equity or under this Agreement,
may be enforced by Employer in the event of the breach or
threatened breach by Employee, by injunctions and/or restraining
orders. If Employer is involved in court or other legal
proceedings to enforce the covenants contained in this Section
16, then in the event Employer prevails in such proceedings,
Employee shall be liable for the payment of reasonable attorneys'
fees, costs and ancillary expenses incurred by Employer in
enforcing its rights hereunder.
(e) It is agreed by the parties that the covenants contained in this
Section 16 impose a fair and reasonable restraint on Employee in
light of the activities and business of Employer on the date of
the execution of this Agreement and the current plans of
Employer; but it is also the intent of Employer and Employee that
such covenants be construed and enforced in accordance with the
changing activities, business and locations of Employer and its
affiliates throughout the term of these covenants.
(f) It is further agreed by the parties hereto that, in the event
that Employee shall cease to be employed hereunder, and enters
into a business or pursues other activities that, at such time,
are not in competition with Employer or its affiliates or with
any business or activity which Employer or its affiliates
contemplated pursuing, as of the date of termination of
Employee's employment, within twelve (12) months from such date
of termination, or similar activities or business in locations
the operation of which, under such circumstances, does not
violate this Section 16 or any of Employee's
19
<PAGE>
obligations under this Section 16, Employee shall not be
chargeable with a violation of this Section 16 if Employer or its
affiliates subsequently enter the same (or a similar) competitive
business, course of activities or location, as applicable.
(g) The covenants in this Section 16 are severable and separate, and
the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth herein are
unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent that such court
deems reasonable, and the Agreement shall thereby be reformed to
reflect the same.
(h) All of the covenants in this Section 16 shall be construed as an
agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Employee
against Employer whether predicated on this Agreement or
otherwise shall not constitute a defense to the enforcement by
Employer of such covenants. It is specifically agreed that the
Post Termination Period, during which the agreements and
covenants of Employee made in this Section 16 shall be effective,
shall be computed by excluding from such computation any time
during which Employee is in violation of any provision of this
Section 16.
(i) Notwithstanding any of the foregoing, if any applicable law,
judicial ruling or order shall reduce the time period during
which Employee shall be prohibited from engaging in any
competitive activity described in Section 16 hereof, the period
of time for which Employee shall be prohibited pursuant to
Section 16 hereof shall be the maximum time permitted by law.
17. No Assignment. Neither this Amended and Restated Severance Agreement
-------------
nor any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by either Employer or Employee without the prior
written consent of the other party; provided, however, that this provision shall
not preclude Employee from designating one or more beneficiaries to receive any
amount that may be payable after Employee's death and shall not preclude
Employee's executor or administrator from assigning any right hereunder to the
person or persons entitled thereto; provided, further, that in connection with a
voluntary transfer, the Employer may assign this Amended and Restated Severance
Agreement (and its rights, remedies, obligations, and liabilities) to an
affiliate of the Employer without the consent of the Employee in connection with
a spin off of such affiliate (whether by a transfer of shares of beneficial
ownership, assets, or
20
<PAGE>
other substantially similar transaction) to all or substantially all of the
shareholders of the Employer (a "Spin-off") and, upon such assignment, the
affiliate shall be deemed the Employer for all purposes of this Amended and
Restated Severance Agreement. This Amended and Restated Severance Agreement
shall not be terminated either by the voluntary or involuntary dissolution or
the winding up of the affairs of Employer, or by any merger or consolidation
wherein Employer is not the surviving entity, or by any transfer of all or
substantially all of Employer's assets on a consolidated basis. In the event of
any such merger, consolidation or transfer of assets, the provisions of this
Amended and Restated Severance Agreement shall be binding upon and shall inure
to the benefit of the surviving entity or to the entity to which such assets
shall be transferred.
18. Amendment. This Amended and Restated Severance Agreement may be
---------
terminated, amended, modified or supplemented only by a written instrument
executed by Employee and Employer.
19. Waiver. Either party hereto may by written notice to the other: (i)
------
extend the time for performance of any of the obligations or other actions of
the other party under this Amended and Restated Severance Agreement; (ii) waive
compliance with any of the conditions or covenants of the other party contained
in this Amended and Restated Severance Agreement; (iii) waive or modify
performance of any of the obligations of the other party under this Amended and
Restated Severance Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Amended and Restated Severance Agreement shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Amended and
Restated Severance Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach. No failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights to
exercise the same any subsequent time or times hereunder.
20. Severability. In case any one or more of the provisions of this
------------
Amended and Restated Severance Agreement shall, for any reason, be held or found
by determination of the arbitrator(s) pursuant to an arbitration held in
accordance with Section 13 above to be invalid, illegal or unenforceable in any
respect (i) such invalidity, illegality or unenforceability shall not affect any
other provisions of this Amended and Restated Severance Agreement, (ii) this
Amended and Restated Severance Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, and (iii) if
the effect of a holding or finding that any such provision is either invalid,
illegal or unenforceable is to modify to Employee's detriment, reduce or
eliminate any compensation, reimbursement, payment, allowance or other benefit
to Employee intended by Employer and Employee in entering into this Amended and
Restated Severance Agreement, Employer shall promptly negotiate and enter into
an agreement with Employee containing alternative provisions (reasonably
acceptable to
21
<PAGE>
Employee), that will restore to Employee (to the extent legally permissible)
substantially the same economic, substantive and income tax benefits Employee
would have enjoyed had any such provision of this Amended and Restated Severance
Agreement been upheld as legal, valid and enforceable. Failure to insist upon
strict compliance with any provision of this Amended and Restated Severance
Agreement shall not be deemed a waiver of such provision or of any other
provision of this Amended and Restated Severance Agreement.
21. Governing Law. This Amended and Restated Severance Agreement has been
-------------
executed and delivered in the State of Maryland and its validity,
interpretation, performance and enforcement shall be governed by the laws of
said State; provided, however, that any arbitration under Section 13 hereof
shall be conducted in accordance with the Federal Arbitration Act as then in
force.
22. No Attachment. Except as required by law, no right to receive
-------------
payments under this Amended and Restated Severance Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation or the execution, attachment, levy, or similar process
or assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.
23. Source of Payments. All payments provided under this Amended and
------------------
Restated Severance Agreement shall be paid in cash from the general funds of
Employer, and no special or separate fund shall be established and no other
segregation of assets shall be made to assure payment.
24. Headings. The section and other headings contained in this Amended
--------
and Restated Severance Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Amended and Restated Severance
Agreement.
25. Notices. Any notice required or permitted to be given under this
-------
Amended and Restated Severance Agreement shall be in writing and shall be deemed
to have been given when delivered in person or when deposited in the U.S. mail,
registered or certified, postage prepaid, and mailed to Employee's addresses set
forth herein and the business address of Employer, unless a party changes its
address for receiving notices by giving notice in accordance with this Section,
in which case, to the address specified in such notice.
26. Counterparts. This Amended and Restated Severance Agreement may be
------------
executed in multiple counterparts with the same effect as if each of the signing
parties had signed the same document. All counterparts shall be construed
together and constitute the same instrument.
22
<PAGE>
27. Entire Agreement. Except as may otherwise be provided herein, this
----------------
Amended and Restated Severance Agreement supersedes any and all prior written
agreements existing between Employer and Employee with regard to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this Amended
and Restated Severance Agreement to be effective as of the day and year
indicated above.
/s/ Nancy J. Herman
______________________________________________
Employee's Signature
Employee's Permanent Address:
3012 Rodman Street, N.W.
______________________________________________
Washington, DC 20008
______________________________________________
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Walter F. Loeb
__________________________________________
Name: Walter F. Loeb
_________________________________
Title: Chair Compensation Committee
_________________________________
Address: 1626 East Jefferson Street
Rockville, Maryland 20852
23
<PAGE>
Exhibit 10(x)(x)(v)(i)(i)(i)
FEDERAL REALTY INVESTMENT TRUST
RESTRICTED SHARE AWARD AGREEMENT
This Restricted Share Award Agreement (this "Agreement") is made as of
February 9, 2000 between Federal Realty Investment Trust, a Maryland real estate
investment trust (the "Trust"), and Donald C. Wood, an individual employee of
the Trust (the "Key Employee").
WHEREAS, the Compensation Committee of the Board of Trustees of the Trust
(the "Board of Trustees") has authorized the award by the Trust to the Key
Employee under the Trust's Amended and Restated 1993 Long-Term Incentive Plan
(the "Amended Plan") of a Restricted Share Award for a certain number of shares
of beneficial interest of the Trust (the "Shares"); and
WHEREAS, the parties hereto desire to set forth in this Agreement their
respective rights and obligations with respect to such Shares;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Award of Restricted Shares.
--------------------------
1.1. The Trust hereby grants to the Key Employee, as of February 9,
2000 (the "Award Date"), thirty-seven thousand five hundred (37,500) Shares (the
"Restricted Shares"), subject to the restrictions and other terms and conditions
set forth herein and in the Amended Plan.
1.2. On or as soon as practicable after the Award Date, the Trust
shall cause one or more stock certificates representing the Restricted Shares to
be registered in the name of the Key Employee. Such stock certificate or
certificates shall be subject to a stop-transfer order and such other
restrictions as the Board of Trustees or any committee thereof may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Shares are listed and
any applicable federal or state securities law, and the Trust may cause a legend
or legends to be placed on such certificate or certificates to make appropriate
reference to such restrictions.
1.3. The certificate or certificates representing the Restricted
Shares shall be held in custody by the Chief Financial Officer of the Trust
until the Restriction Period
1
<PAGE>
(as hereinafter defined in Paragraph 3) with respect thereto shall have lapsed.
Simultaneously with the execution and delivery of this Agreement, the Key
Employee shall deliver to the Trust one or more undated stock powers endorsed in
blank relating to the Restricted Shares. The Trust shall deliver or cause to be
delivered to the Key Employee or, in the case of the Key Employee's death, to
the Key Employee's Beneficiary, one or more stock certificates for the
appropriate number of Shares, free of all such restrictions, as to which the
restrictions herein shall have expired. Upon forfeiture, in accordance with
Paragraph 3, of all or any portion of the Restricted Shares, the certificate or
certificates representing the forfeited Restricted Shares shall be canceled.
2. Restrictions Applicable to Restricted Shares.
--------------------------------------------
2.1. Beginning on the Award Date, the Key Employee shall have all
rights and privileges of a stockholder with respect to the Restricted Shares,
except that the following restrictions shall apply:
(a) none of the Restricted Shares may be assigned or transferred
(other than by will or the laws of descent and distribution, or in the
Committee's discretion, pursuant to a domestic relations order within
the meaning of Rule 16a-12 of the Securities Exchange Act of 1934, as
amended), pledged (subject to Paragraph 4 hereof) or sold by the Key
Employee during the Restriction Period (as hereinafter defined in
Paragraph 3);
(b) all or a portion of the Restricted Shares may be forfeited
in accordance with Paragraph 3; and
(c) any Shares distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions have not
yet lapsed shall be subject to the same restrictions as such
Restricted Shares and shall be represented by book entry and held in
the same manner as the Restricted Shares with respect to which they
were distributed.
2.2. Any attempt to dispose of Restricted Shares in a manner contrary
to the restrictions set forth in this Agreement shall be null, void and
ineffective. As the restrictions set forth in this Paragraph 2 hereof lapse in
accordance with the terms of this Agreement as to all or a portion of the
Restricted Shares, such shares shall no longer be considered Restricted Shares
for purposes of this Agreement.
3. Restriction Period.
------------------
2
<PAGE>
3.1. Subject to Paragraphs 3.2 through 3.6, the restrictions set
forth in Paragraph 2 shall apply for a period (the "Restriction Period") from
the Award Date until such Restriction Period lapses. For the period of time
beginning on the Award Date until the eighth anniversary of the Award Date, as
of the last day of each month during such period, the Restriction Period with
respect to three hundred ninety-one (391) Restricted Shares shall lapse;
provided, however, that the Restriction Period for any particular Restricted
- -------- -------
Shares shall not lapse on the date set forth above unless the Key Employee
tenders to the Trust (or the Trust otherwise withholds in accordance with
Paragraph 3.6) (i) the amount of any state and federal withholding tax
obligation which will be imposed on the Trust by reason of the lapsing of the
Restriction Period for such Restricted Shares or (ii) an executed promissory
note evidencing the Key Employee's obligation to repay a Tax Loan (as defined in
Paragraph 4) in the amount of any such tax obligation.
3.2. (a) The Restriction Period shall lapse as to all Restricted
Shares if the Key Employee is terminated by the Trust (i) without Cause (as
defined in Paragraph 3.2(b)) or (ii) due to Disability (as defined in Paragraph
3.2(b)), and if the Key Employee or his legal representative tenders (or the
Trust otherwise withholds in accordance with Paragraph 3.6) (x) the amount of
any state and federal withholding tax obligation which will be imposed on the
Trust by reason of the lapsing of the Restriction Period for the Restricted
Shares or (y) an executed promissory note evidencing the Key Employee's
obligation to repay a Tax Loan (in accordance with Paragraph 4) in the amount of
any such tax obligation.
(b) For purposes of this Agreement, the terms "Cause" and
"Disability" shall have the meanings assigned to them in the Severance Agreement
between the Trust and the Key Employee in effect from time to time.
3.3. The Restriction Period shall lapse as to all Restricted Shares
upon the occurrence of a Change in Control. In such event, if the Key Employee
tenders (or the Trust otherwise withholds in accordance with Paragraph 3.6) the
amount of any state and federal withholding tax obligation which will be imposed
on the Trust by reason of the lapsing of the Restriction Period for the
Restricted Shares, the Trust shall deliver or cause to be delivered to the Key
Employee, within ten (10) business days after the Change in Control, one or more
stock certificates representing those Shares as to which the Restriction Period
shall have lapsed. In the event of a Change in Control, the Trust shall make a
payment to the Key Employee in the amount of federal and state income taxes that
he will incur as a result of the lapsing of the Restriction Period with respect
to all Restricted Shares under this Paragraph 3.3 (the "Income Tax Payment");
provided, however, that the Trust shall withhold from such Income Tax Payment
- -------- -------
and pay to the applicable government taxing authorities, any amounts required to
be withheld with respect to the Income Tax Payment under applicable law.
3
<PAGE>
3.4. In the event of the death of the Key Employee, the Restriction
Period shall lapse as to three hundred ninety-one (391) Restricted Shares as
provided in Paragraph 3.1, as of the last day of the month in which the Key
Employee dies, if the Key Employee's legal representative tenders (or the Trust
otherwise withholds in accordance with Paragraph 3.6) (i) the amount of any
state and federal withholding tax obligation which will be imposed on the Trust
by reason of the lapsing of the Restriction Period for such Restricted Shares or
(ii) an executed promissory note evidencing the Key Employee's estate's
obligation to repay a Tax Loan (in accordance with Paragraph 4) in the amount of
any such tax obligation. After the Restriction Period with respect to such
Shares has lapsed, all rights of the Key Employee to any and all then-remaining
Restricted Shares shall terminate and be forfeited.
3.5. If during the Restriction Period (i) the Key Employee is
terminated by the Trust for Cause or (ii) the Key Employee voluntarily
terminates his employment in all capacities with the Trust (other than due to
Disability, death or after a Change in Control), then all rights of the Key
Employee to any and all then-remaining Restricted Shares shall terminate and be
forfeited.
3.6. In the event the Key Employee or his legal representative (i)
fails to promptly tender to the Trust any required tax withholding amount in
accordance with this Paragraph 3 or (ii) elects not to execute a promissory note
evidencing his obligation to repay a Tax Loan (in accordance with Paragraph 4)
in the amount of any required tax withholding amount, then the Trust shall
retain a portion of the Restricted Shares sufficient to meet its tax withholding
obligation.
4. Tax Loan. (a) The Trust shall extend loans to the Key Employee
--------
from time to time to provide him with funds to pay the federal and state taxes
that he will incur as a result of the lapsing of the Restriction Period with
respect to Restricted Shares except with respect to federal and state taxes
incurred as a result of the lapsing of the Restriction Period with respect to
Restricted Shares under Paragraph 3.3 ("Tax Loans"). The Key Employee will
execute promissory notes in the form attached to this Agreement to evidence his
obligation to repay such Tax Loans. The Key Employee hereby pledges the
Restricted Shares awarded to him hereunder as to which the Restriction Period
has lapsed, and assigns to the Trust all quarterly cash or other dividends paid
on the Restricted Shares awarded to him hereunder as collateral to secure his
obligation to repay any Tax Loans extended to him hereunder and any accrued but
unpaid Interest on such Tax Loans. As of each date a Tax Loan is extended to the
Key Employee, the dollar amount of such Tax Loan so issued to the Key Employee
hereunder shall not exceed 50% of the Fair Market Value of the Shares awarded to
the Key Employee hereunder as to which the Restriction Period has then lapsed.
4
<PAGE>
(b) In the event of a Change in Control, the Trust shall extend a
loan to the Key Employee to provide him with funds to pay the federal and state
income taxes that he will incur as a result of (i) the forgiveness of any Tax
Loans extended under Paragraph 4(a) and (ii) receipt of the Income Tax Payment
(in accordance with Paragraph 4.4) (the "Change in Control Tax Loan"). The Key
Employee will execute a promissory note in the form attached to this Agreement
to evidence his obligation to repay such Change in Control Tax Loan.
5. Miscellaneous.
-------------
5.1. Definitions; Application of Amended Plan. Capitalized terms
----------------------------------------
used in this Agreement, unless otherwise defined herein, have the respective
meanings given to such terms in the Amended Plan. The terms of the Amended Plan
are incorporated by reference as if set forth herein in their entirety and,
except as specifically provided herein, shall govern the terms of this
Restricted Share Award Agreement.
5.2. Notices. Any notice required or permitted to be given under
-------
this Agreement shall be in writing and shall be deemed to have been given when
delivered in person or when deposited in the U.S. mail, registered or certified,
postage prepaid, and mailed to the respective addresses set forth herein, unless
a party changes its address for receiving notices by giving notice in accordance
with this Paragraph, in which case, to the address specified in such notice.
5.3. Continued Employment. This Agreement shall not confer upon the
--------------------
Key Employee any right with respect to continuance of employment by the Trust.
5.4. Entire Agreement; Amendment. This Agreement constitutes the
---------------------------
entire agreement of the parties with respect to the subject matter hereof and
shall supersede all prior agreements and understandings, oral or written,
between the parties with respect thereto. No provision of this Agreement may be
amended, modified or waived at any time unless such amendment, modification or
waiver shall be agreed to in writing and signed by both of the parties hereto.
5.5. Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the heirs and representatives of the Key Employee and the assigns
and successors of the Trust, but neither this Agreement nor any rights
hereunder, subject to Paragraph 2.1(a), shall be assignable or otherwise subject
to hypothecation by the Key Employee.
5
<PAGE>
5.6. Severability. If, for any reason, any provision of this
------------
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not so held invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity shall
in no way affect the rest of such provision not held so invalid, and the rest of
such provision, together with all other provisions of this Agreement, shall to
the full extent consistent with law continue in full force and effect.
5.7. Governing Law. This Agreement and its validity, interpretation,
-------------
performance and enforcement shall be governed by the laws of the State of
Maryland other than the conflict of laws provisions of such laws, and shall be
construed in accordance therewith.
5.8. Certain References. References to the Key Employee in any
------------------
provision of this Agreement under circumstances where the provision should
logically be construed to apply to the Key Employee's executors or the
administrators, or the person or persons to whom all or any portion of the
Restricted Shares may be transferred by will or the laws of descent and
distribution, shall be deemed to include such person or persons.
5.9. Headings. The headings of Paragraphs hereof are included solely
--------
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
5.10. Source of Payments. Payments provided under this Agreement, if
------------------
any, shall be paid in cash from the general funds of the Trust, and no special
or separate fund shall be established and no other segregation of assets shall
be made to assure payment.
5.11. Counterparts. This Agreement may be executed in multiple
------------
counterparts with the same effect as if each of the signing parties had signed
the same document. All counterparts shall be construed together and constitute
the same instrument.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be duly executed
and the Key Employee has hereunto set his hand effective as of the day and year
first above written.
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Walter F. Loeb
_____________________________
6
<PAGE>
Name: Walter F. Loeb
Title: Chair, Compensation Committee
Address:
1626 East Jefferson Street
Rockville, Maryland 20852
KEY EMPLOYEE:
/s/ Donald C. Wood
______________________________________
DONALD C. WOOD
Address:
55 Warwick Stone Way
Great Falls, Virginia 22066
7
<PAGE>
Exhibit 10(x)(x)(i)(x)
FEDERAL REALTY INVESTMENT TRUST
PERFORMANCE SHARE AWARD AGREEMENT
This Performance Share Award Agreement (this "Agreement") is made as of
February 9, 2000 between Federal Realty Investment Trust, a Maryland real estate
investment trust (the "Trust"), and Donald C. Wood, an individual employee of
the Trust (the "Key Employee").
WHEREAS, the Compensation Committee of the Board of Trustees of the Trust
(the "Board of Trustees") has authorized the award by the Trust to the Key
Employee under the Trust's Amended and Restated 1993 Long-Term Incentive Plan
(the "Amended Plan") of a Performance Share Award for a certain number of shares
of beneficial interest of the Trust (the "Shares"); and
WHEREAS, the parties hereto desire to set forth in this Agreement their
respective rights and obligations with respect to such Shares.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Award of Performance Shares.
---------------------------
1.1. The Trust hereby grants to the Key Employee, as of February 9,
2000 (the "Award Date"), thirty-seven thousand five hundred (37,500) Shares (the
"Performance Shares"), subject to the restrictions and other terms and
conditions set forth herein and in the Amended Plan.
1.2. On or as soon as practicable after the Award Date, the Trust
shall cause one or more stock certificates representing the Performance Shares
to be registered in the name of the Key Employee. Such stock certificate or
certificates shall be subject to a stop-transfer order and such other
restrictions as the Board of Trustees or any committee thereof may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Shares are listed and
any applicable federal or state securities law, and the Trust may cause a legend
or legends to be placed on such certificate or certificates to make appropriate
reference to such restrictions.
1.3. The certificate or certificates representing the Performance
Shares shall be held in custody by the Chief Financial Officer of the Trust
until the Restriction Period (as hereinafter defined in Paragraph 4) with
respect thereto shall have lapsed.
<PAGE>
Simultaneously with the execution and delivery of this Agreement, the Key
Employee shall deliver to the Trust one or more undated stock powers endorsed in
blank relating to the Performance Shares. The Trust shall deliver or cause to be
delivered to the Key Employee or, in the case of the Key Employee's death, to
the Key Employee's Beneficiary, one or more stock certificates for the
appropriate number of Shares, free of all such restrictions, as to which the
restrictions herein shall have expired. Upon forfeiture, in accordance with
Paragraph 4, of all or any portion of the Performance Shares, the certificate or
certificates representing the forfeited Performance Shares shall be canceled.
2. Restrictions Applicable to Performance Shares.
---------------------------------------------
2.1. Beginning on the Award Date, the Key Employee shall have all
rights and privileges of a stockholder with respect to the Performance Shares,
except that the following restrictions shall apply:
(a) none of the Performance Shares may be assigned or
transferred (other than by will or the laws of descent and
distribution, or in the Committee's discretion, pursuant to a domestic
relations order within the meaning of Rule 16a-12 of the Securities
Exchange Act of 1934, as amended), pledged (subject to Paragraph 5) or
sold by the Key Employee during the Restriction Period (as hereinafter
defined in Paragraph 4);
(b) all or a portion of the Performance Shares may be forfeited
in accordance with Paragraph 4; and
(c) any Shares distributed as a dividend or otherwise with
respect to any Performance Shares as to which the restrictions have
not yet lapsed shall be subject to the same restrictions as such
Performance Shares and shall be represented by book entry and held in
the same manner as the Performance Shares with respect to which they
were distributed.
2.2. Any attempt to dispose of Performance Shares in a manner
contrary to the restrictions set forth in this Agreement shall be null, void and
ineffective.
3. Performance Period.
------------------
The Performance Period shall be the period beginning on January 1,
2000 and ending on December 31, 2007. Within the Performance Period there shall
be eight
-2-
<PAGE>
Award Periods; each such Award Period shall begin on January 1 and end on
December 31 of the same year.
4. Restriction Period.
------------------
4.1. Subject to Paragraphs 4.2 through 4.8, the restrictions set
forth in Paragraph 2 shall apply for a period (the "Restriction Period") from
the Award Date until such Restriction Period lapses. The number of Performance
Shares as to which the Restriction Period shall lapse during the Performance
Period shall be determined by the Committee in accordance with this Paragraph 4.
4.2. (a) Promptly after the announcement or other publication by the
Trust of its final results of operations for each of the first through the
eighth Award Periods, the Committee shall determine the extent to which the
Performance Target (as defined in Paragraph 4.2(b)) has been met or exceeded by
the Trust within such Award Period, and shall determine, in accordance with this
Performance Share Award Agreement, the number of Performance Shares, if any, as
to which the Restriction Period will lapse with respect to such Award Period;
provided, however, that the Restriction Period for any particular Performance
- -------- -------
Shares shall not lapse unless the Key Employee tenders to the Trust (or the
Trust otherwise withholds in accordance with Paragraph 4.8) (i) the amount of
any state and federal withholding tax obligation which will be imposed on the
Trust by reason of the lapsing of the Restriction Period for such Performance
Shares or (ii) an executed promissory note evidencing the Key Employee's
obligation to repay a Tax Loan (as hereinafter defined in Paragraph 5) in the
amount of any such tax obligation. The Trust will promptly notify the Key
Employee (or the executors or administrators of his estate) of its
determinations under this Paragraph 4.2 (the "Determination Notice"). The
Determination Notice shall specify the number of Performance Shares as to which
the Restriction Period has lapsed to the extent that the Performance Target has
been met by the Trust within the Award Period. The Trust will file the
Determination Notice with the minutes of the Committee.
(b) The Performance Target will have been met or exceeded based
upon the application of an annual test, which shall meet the criteria set forth
in Section 8.01(a) of the Amended Plan. The Committee shall establish both a
threshold level, the attainment of which shall result in the Restriction Period
lapsing as to 4,687.5 Performance Shares, and a maximum level, the attainment of
which will result in the Restriction Period lapsing as to 7,500 Performance
Shares. The Performance Target (both the threshold level and the maximum level)
for the 2000 Award Period is attached to this Agreement, and the Performance
Target for each subsequent Award Period shall be attached to this Agreement as
it is established by the Committee. In the event that the Committee fails to
establish a Performance Target for an Award Period during the first calendar
quarter of such Award Period, the Performance Target for the prior Award Period
shall be deemed to apply. If, in any Award Period, the Trust does not meet or
-3-
<PAGE>
exceed the Performance Target (after taking into account the lapsing of
Performance Shares resulting therefrom), the Restriction Period will not lapse
as to any Performance Shares allocable to such Award Period.
4.3. If there are any Performance Shares as to which the Restriction
Period has not lapsed after the Committee has determined the number of
Performance Shares as to which the Restriction Period will lapse with respect to
the eighth Award Period (the "Remaining Shares"), then on January 1, 2009, and
on January 1 of each of the four succeeding calendar years, the Restriction
Period shall lapse with respect to one-fifth of the number of Remaining Shares;
provided, however, that the Restriction Period for any particular Performance
- -------- -------
Shares shall not lapse unless the Key Employee tenders to the Trust (or the
Trust otherwise withholds in accordance with Paragraph 4.8) (i) the amount of
any state and federal withholding tax obligation which will be imposed on the
Trust by reason of the lapsing of the Restriction Period for such Performance
Shares or (ii) an executed promissory note evidencing the Key Employee's
obligation to repay a Tax Loan (in accordance with Paragraph 5) in the amount of
any such tax obligation.
4.4. The Restriction Period shall lapse as to all Performance Shares
upon the occurrence of a Change in Control. In such event, if the Key Employee
tenders (or the Trust otherwise withholds in accordance with Paragraph 4.8) the
amount of any state and federal withholding tax obligation which will be imposed
on the Trust by reason of the lapsing of the Restriction Period for the
Performance Shares, the Trust shall deliver or cause to be delivered to the Key
Employee, within ten (10) business days after the Change in Control, one or more
stock certificates representing those Performance Shares as to which the
Restriction Period shall have lapsed. In the event of a Change in Control, the
Trust shall make a payment to the Key Employee in the amount of federal and
state income taxes that he will incur as a result of the lapsing of the
Restriction Period with respect to all Performance Shares under this Paragraph
4.4 (the "Income Tax Payment"); provided, however, that the Trust shall withhold
-------- -------
from such Income Tax Payment and pay to the applicable government taxing
authorities, any amounts required to be withheld with respect to the Income Tax
Payment under applicable law.
4.5. (a) The Restriction Period shall lapse as to all Performance
Shares in the event (i) of the termination of the Key Employee due to Disability
(as defined in Paragraph 4.5(b)) or (ii) the Key Employee is terminated by the
Trust without Cause (as defined in Paragraph 4.5(b)), if the Key Employee or his
legal representative tenders (or the Trust otherwise withholds in accordance
with Paragraph 4.8) (i) the amount of any state and federal withholding tax
obligation which will be imposed on the Trust by reason of the lapsing of the
Restriction Period for such Restricted Shares or (ii) an executed promissory
note evidencing the Key Employee's obligation to repay a Tax Loan (as defined in
Paragraph 4) in the amount of any such tax obligation.
-4-
<PAGE>
(b) For purposes of this Agreement, the terms "Cause" and
"Disability" shall have the meanings assigned to them in the Severance Agreement
between the Trust and the Key Employee in effect from time to time.
4.6. In the event (i) of the Key Employee's death or (ii) the Key
Employee resigns from employment in all capacities with the Trust, the
Restriction Period shall lapse as to (x) the number of Performance Shares as to
which the Restriction Period was to lapse at the end of the Award Period during
which the Key Employee died or resigned from employment in all capacities with
the Trust, times (y) (A) the number of months the Key Employee was employed
during the Award Period (including, in the event of the Key Employee's death,
the month in which his death occurred, as a whole month) (in the event of the
Key Employee's resignation from employment in all capacities with the Trust, if
the Key Employee resigned before the 16th day of a month, that month shall be
treated as a month in which he did not work) divided by (B) twelve; provided,
--------
however, that the Restriction Period will not lapse as to any Restricted Shares
- -------
unless the Key Employee or his legal representative tenders (or the Trust
otherwise withholds in accordance with Paragraph 4.8) (i) the amount of any
state and federal withholding tax obligation which will be imposed on the Trust
by reason of the lapsing of the Restriction Period for such Performance Shares
or (ii) an executed promissory note evidencing the Key Employee's or his
estate's obligation to repay a Tax Loan (as defined in Paragraph 4) in the
amount of any such tax obligation. After the Restriction Period with respect to
this number of Performance Shares has lapsed, all rights of the Key Employee to
any and all then-remaining Performance Shares as to which the Restriction Period
has not lapsed shall terminate and be forfeited.
4.7. If the Key Employee is terminated by the Trust for Cause during
the Restriction Period, then all rights of the Key Employee to any and all then-
remaining Performance Shares as to which the Restriction Period has not lapsed
shall terminate and be forfeited.
4.8. In the event the Key Employee or his legal representative (i)
fails to promptly tender to the Trust any required tax withholding amount in
accordance with this Paragraph 4 or (ii) elects not to execute a promissory note
evidencing his obligation to repay a Tax Loan (in accordance with Paragraph 5)
in the amount of any required tax withholding amount, then the Trust shall
retain a portion of the Performance Shares sufficient to meet its tax
withholding obligation.
5. Tax Loan. (a) The Trust shall extend loans to the Key Employee
--------
from time to time to provide him with funds to pay the federal and state taxes
that he will incur as a result of the lapsing of the Restriction Period with
respect to Performance Shares except with respect to federal and state taxes
incurred as a result of the lapsing of the Restriction Period with respect to
Performance Shares under Paragraph 4.4 ("Tax Loans"). The Key Employee will
execute promissory notes in the form attached
-5-
<PAGE>
to this Agreement to evidence his obligation to repay such Tax Loans. The Key
Employee hereby pledges the Performance Shares awarded to him hereunder as to
which the Restriction Period has lapsed, and assigns to the Trust all quarterly
cash or other dividends paid on the Performance Shares awarded to him hereunder
as collateral to secure his obligation to repay any Tax Loans extended to him
hereunder and any accrued but unpaid Interest on such Tax Loans. As of each date
a Tax Loan is extended to the Key Employee, the dollar amount of such Tax Loan
so issued to the Key Employee hereunder shall not exceed 50% of the Fair Market
Value of the Shares awarded to the Key Employee hereunder as to which the
Restriction Period has then lapsed.
(b) In the event of a Change in Control, the Trust shall extend a
loan to the Key Employee to provide him with funds to pay the federal and state
income taxes that he will incur as a result of (i) the forgiveness of any Tax
Loans extended under Paragraph 5(a) and (ii) receipt of the Income Tax Payment
(in accordance with Paragraph 4.4) (the "Change in Control Tax Loan"). The Key
Employee will execute a promissory note in the form attached to this Agreement
to evidence his obligation to repay such Change in Control Tax Loan.
6. Miscellaneous.
-------------
6.1. Definitions; Application of Amended Plan. Capitalized terms used
----------------------------------------
in this Agreement, unless otherwise defined herein, have the respective meanings
given to such terms in the Amended Plan. The terms of the Amended Plan are
incorporated by reference as if set forth herein in their entirety and, except
as specifically provided herein, shall govern the terms of this Performance
Share Award Agreement.
6.2. Notices. Any notice required or permitted to be given under
-------
this Agreement shall be in writing and shall be deemed to have been given when
delivered in person or when deposited in the U.S. mail, registered or certified,
postage prepaid, and mailed to the respective addresses set forth herein, unless
a party changes its address for receiving notices by giving notice in accordance
with this Paragraph, in which case, to the address specified in such notice.
6.3. Continued Employment. This Agreement shall not confer upon the
--------------------
Key Employee any right with respect to continuance of employment by the Trust.
6.4. Entire Agreement; Amendment. This Agreement constitutes the
---------------------------
entire agreement of the parties with respect to the subject matter hereof and
shall supersede all prior agreements and understandings, oral or written,
between the parties with respect thereto. No provision of this Agreement may be
amended, modified or waived at any time unless such amendment, modification or
waiver shall be agreed to in writing and signed by both of the parties hereto.
-6-
<PAGE>
6.5. Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the heirs and representatives of the Key Employee and the assigns
and successors of the Trust, but neither this Agreement nor any rights
hereunder, subject to Paragraph 2.1(a), shall be assignable or otherwise subject
to hypothecation by the Key Employee.
6.6. Severability. If, for any reason, any provision of this
------------
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not so held invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity shall
in no way affect the rest of such provision not held so invalid, and the rest of
such provision, together with all other provisions of this Agreement, shall to
the full extent consistent with law continue in full force and effect.
6.7. Governing Law. This Agreement and its validity, interpretation,
-------------
performance and enforcement shall be governed by the laws of the State of
Maryland other than the conflict of laws provisions of such laws, and shall be
construed in accordance therewith.
6.8. Certain References. References to the Key Employee in any
------------------
provision of this Agreement under circumstances where the provision should
logically be construed to apply to the Key Employee's executors or the
administrators, or the person or persons to whom all or any portion of the
Restricted Shares may be transferred by will or the laws of descent and
distribution, shall be deemed to include such person or persons.
6.9. Headings. The headings of Paragraphs hereof are included solely
--------
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
6.10. Source of Payments. Payments provided under this Agreement, if
------------------
any, shall be paid in cash from the general funds of the Trust, and no special
or separate fund shall be established and no other segregation of assets shall
be made to assure payment.
6.11. Counterparts. This Agreement may be executed in multiple
------------
counterparts with the same effect as if each of the signing parties had signed
the same document. All counterparts shall be construed together and constitute
the same instrument.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be duly executed
and the Key Employee has hereunto set his hand effective as of the day and year
first above written.
-7-
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Walter F. Loeb
____________________________________
Name: Walter F. Loeb
Title: Chair, Compensation Committee
Address:
1626 East Jefferson Street
Rockville, Maryland 20852
KEY EMPLOYEE:
/s/ Donald C. Wood
_______________________________________
DONALD C. WOOD
Address:
55 Warwick Stone Way
Great Falls, Virginia 22066
-8-
<PAGE>
ATTACHMENT TO WOOD PERFORMANCE SHARE AWARD AGREEMENT
Performance Target for 2000 Award Period
----------------------------------------
<TABLE>
<CAPTION>
Funds From Operations/Annual Number of Performance Shares as to which
Per Share Growth Rate/1/ Restriction Period Lapses
<S> <C>
Less than 5% None
Threshold level: Equal to or greater than 5% but less 4,687.5 shares
than 7%
Maximum level: Equal to or greater than 7% 7,500 shares
</TABLE>
________________________
/1/ As the same may be adjusted for specific items as agreed between the
Committee and the Key Employee.
-9-
<PAGE>
Exhibit 10(x)(x)(x)
AMENDMENT TO
PERFORMANCE SHARE AWARD AGREEMENT
This Amendment to Performance Share Award Agreement (this "Amendment") is
made as of February 25, 2000, between Federal Realty Investment Trust, a
Maryland real estate investment trust (the "Trust"), and Steven J. Guttman, an
individual employee of the Trust (the "Key Employee").
WHEREAS, the Trust and the Key Employee entered into that certain
Performance Share Award Agreement dated as of January 1, 1998 (the "Performance
Share Agreement") setting forth the terms of the award by the Trust to the Key
Employee under the Trust's Amended and Restated 1993 Long-Term Incentive Plan
(the "Amended Plan") of a Performance Share Award of 300,000 shares of
beneficial interest of the Trust (the "Performance Shares"); and
WHEREAS, the Performance Share Agreement provided for the Performance
Shares to vest according to the attainment of certain fixed performance target
levels set forth therein (the "Performance Target"); and
WHEREAS, the Compensation Committee of the Board of Trustees of the Trust
(the "Committee") has determined that the Performance Target, rather than
remaining at a fixed level for the entire term of the Agreement, should be
established annually by the Committee at the beginning of each year in order to
better align the Key Employee's financial incentives under the Agreement with
successful execution of the Trust's business plan for that year.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Paragraph 4.2(b) of the Performance Share Agreement is hereby amended
to read in its entirety as follows:
"Beginning with the Award Period commencing on January 1, 2000, the
Performance Target will have been met or exceeded based upon the
application of an annual test, which shall meet the criteria set forth
in Section 8.01(a) of the Amended Plan. The Committee shall establish
both a threshold level, the attainment of which shall result in the
Restriction Period lapsing as to 37,500 Performance Shares, and a
maximum level, the attainment of which will result in the Restriction
Period lapsing as to 60,000 Performance Shares. The Performance Target
(both the threshold level and the maximum level) for the 2000 Award
Period is attached to this
<PAGE>
Agreement, and the Performance Target for each subsequent Award Period
shall be attached to this Agreement as it is established by the
Committee. In the event that the Committee fails to establish a
Performance Target for an Award Period during the first calendar
quarter of such Award Period, the Performance Target for the prior
Award Period shall be deemed to apply. If, in any Award Period, the
Trust does not meet or exceed the Performance Target (after taking
into account the lapsing of Performance Shares resulting therefrom),
the Restriction Period will not lapse as to any Performance Shares
allocable to such Award Period."
2. Appendix A to the Performance Share Agreement is hereby deleted in its
entirety, as is the reference in Paragraph 4.2(a) to Appendix A.
3. Capitalized terms used in this Amendment, unless otherwise defined
herein, have the respective meanings given to such terms in the Performance
Share Agreement.
4. Except as specifically modified hereby, the Performance Share
Agreement remains in full force and effect, and the Trust and the Key Employeee
hereby ratify and reaffirm each and all of the terms and provisions of the
Performance Share Agreement as modified hereby.
5. This Amendment may be executed in multiple counterparts with the same
effect as if each of the signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Amendment to be duly executed
and the Key Employee has hereunto set his hand effective as of the day and year
first above written.
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Walter F. Loeb
__________________________________
Name: Walter F. Loeb
Title: Chair, Compensation Committee
Address:
1626 East Jefferson Street
Rockville, Maryland 20852
STEVEN J. GUTTMAN
/s/ Steven J. Guttman
_____________________________________
Address:
5126 Wissioming Road
Bethesda, Maryland 20816
-3-
<PAGE>
ATTACHMENT TO GUTTMAN PERFORMANCE SHARE AWARD AGREEMENT
Performance Target for 2000 Award Period
----------------------------------------
<TABLE>
<CAPTION>
Funds From Operations/Annual Number of Performance Shares as to which
Per Share Growth Rate/1/ Restriction Period Lapses
<S> <C>
Less than 5% None
Threshold level: Equal to or greater than 5% but less 37,500 shares
than 7%
Maximum level: Equal to or greater than 7% 60,000 shares
</TABLE>
______________________
/1/ As the same may be adjusted for specific items as agreed between the
Committee and the Key Employee.
-4-
<PAGE>
Exhibit 10(x)(x)(x)(i)
AMENDMENT TO
PERFORMANCE SHARE AWARD AGREEMENT
This Amendment to Performance Share Award Agreement (this "Amendment") is
made as of February 25, 2000, between Federal Realty Investment Trust, a
Maryland real estate investment trust (the "Trust"), and Ron D. Kaplan, an
individual employee of the Trust (the "Key Employee").
WHEREAS, the Trust and the Key Employee entered into that certain
Performance Share Award Agreement dated as of January 1, 1998 (the "Performance
Share Agreement") setting forth the terms of the award by the Trust to the Key
Employee of a Performance Share Award of 12,500 shares of beneficial interest of
the Trust (the "Performance Shares"); and
WHEREAS, the Performance Share Agreement provided for the Performance
Shares to vest according to the attainment of certain fixed performance target
levels set forth therein (the "Performance Target"); and
WHEREAS, the Compensation Committee of the Board of Trustees of the Trust
(the "Committee") has determined that the Performance Target, rather than
remaining at a fixed level for the entire term of the Agreement, should be
established annually by the Committee at the beginning of each year in order to
better align the Key Employee's financial incentives under the Agreement with
successful execution of the Trust's business plan for that year.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Paragraph 4.2(b) of the Performance Share Agreement is hereby amended
to read in its entirety as follows:
"Beginning with the Award Period commencing on January 1, 2000, the
Performance Target will have been met or exceeded based upon the
application of an annual test, which shall meet the criteria set forth
in Section 8.01(a) of the Amended Plan. The Committee shall establish
both a threshold level, the attainment of which shall result in the
Restriction Period lapsing as to 1,563 Performance Shares, and a
maximum level, the attainment of which will result in the Restriction
Period lapsing as to 2,500 Performance Shares. The Performance Target
(both the threshold level and the maximum level) for the 2000 Award
Period is attached to this Agreement, and the Performance Target for
each subsequent Award Period
1
<PAGE>
shall be attached to this Agreement as it is established by the
Committee. In the event that the Committee fails to establish a
Performance Target for an Award Period during the first calendar
quarter of such Award Period, the Performance Target for the prior
Award Period shall be deemed to apply. If, in any Award Period, the
Trust does not meet or exceed the Performance Target (after taking
into account the lapsing of Performance Shares resulting therefrom),
the Restriction Period will not lapse as to any Performance Shares
allocable to such Award Period."
2. Appendix A to the Performance Share Agreement is hereby deleted in its
entirety, as is the reference in Paragraph 4.2(a) to Appendix A.
3. Capitalized terms used in this Amendment, unless otherwise defined
herein, have the respective meanings given to such terms in the Performance
Share Agreement.
4. Except as specifically modified hereby, the Performance Share
Agreement remains in full force and effect, and the Trust and the Key Employeee
hereby ratify and reaffirm each and all of the terms and provisions of the
Performance Share Agreement as modified hereby.
5. This Amendment may be executed in multiple counterparts with the same
effect as if each of the signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Amendment to be duly executed
and the Key Employee has hereunto set his hand effective as of the day and year
first above written.
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Walter F. Loeb
__________________________________
Name: Walter F. Loeb
Title: Chair, Compensation Committee
Address:
1626 East Jefferson Street
Rockville, Maryland 20852
RON D. KAPLAN
/s/ Ron D. Kaplan
_____________________________________
Address:
7909 Greentree Road
Bethesda, Maryland 20817
-3-
<PAGE>
ATTACHMENT TO KAPLAN PERFORMANCE SHARE AWARD AGREEMENT
Performance Target for 2000 Award Period
----------------------------------------
<TABLE>
<CAPTION>
Funds From Operations/Annual Number of Performance Shares as to which
Per Share Growth Rate/1/ Restriction Period Lapses
<S> <C>
Less than 5% None
Threshold level: Equal to or greater than 5% but less 1,563 shares
than 7%
Maximum level: Equal to or greater than 7% 2,500 shares
</TABLE>
__________________________
/1/ As the same may be adjusted for specific items as agreed between the
Committee and the Key Employee.
-4-
<PAGE>
AMENDMENT TO
PERFORMANCE SHARE AWARD AGREEMENT
This Amendment to Performance Share Award Agreement (this "Amendment") is
made as of February 25, 2000, between Federal Realty Investment Trust, a
Maryland real estate investment trust (the "Trust"), and Ron D. Kaplan, an
individual employee of the Trust (the "Key Employee").
WHEREAS, the Trust and the Key Employee entered into that certain
Performance Share Award Agreement dated as of January 1, 1998 (the "Performance
Share Agreement") setting forth the terms of the award by the Trust to the Key
Employee under the Trust's Amended and Restated 1993 Long-Term Incentive Plan
(the "Amended Plan") of a Performance Share Award of 50,000 shares of beneficial
interest of the Trust (the "Performance Shares"); and
WHEREAS, the Performance Share Agreement provided for the Performance
Shares to vest according to the attainment of certain fixed performance target
levels set forth therein (the "Performance Target"); and
WHEREAS, the Compensation Committee of the Board of Trustees of the Trust
(the "Committee") has determined that the Performance Target, rather than
remaining at a fixed level for the entire term of the Agreement, should be
established annually by the Committee at the beginning of each year in order to
better align the Key Employee's financial incentives under the Agreement with
successful execution of the Trust's business plan for that year.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Paragraph 4.2(b) of the Performance Share Agreement is hereby amended
to read in its entirety as follows:
"Beginning with the Award Period commencing on January 1, 2000, the
Performance Target will have been met or exceeded based upon the
application of an annual test, which shall meet the criteria set forth
in Section 8.01(a) of the Amended Plan. The Committee shall establish
both a threshold level, the attainment of which shall result in the
Restriction Period lapsing as to 6,250 Performance Shares, and a
maximum level, the attainment of which will result in the Restriction
Period lapsing as to 10,000 Performance Shares. The Performance Target
(both the threshold level and the maximum level) for the 2000 Award
Period is attached to this Agreement, and the Performance Target for
each subsequent Award Period shall be attached to this
<PAGE>
Agreement as it is established by the Committee. In the event that the
Committee fails to establish a Performance Target for an Award Period
during the first calendar quarter of such Award Period, the
Performance Target for the prior Award Period shall be deemed to
apply. If, in any Award Period, the Trust does not meet or exceed the
Performance Target (after taking into account the lapsing of
Performance Shares resulting therefrom), the Restriction Period will
not lapse as to any Performance Shares allocable to such Award
Period."
2. Appendix A to the Performance Share Agreement is hereby deleted in its
entirety, as is the reference in Paragraph 4.2(a) to Appendix A.
3. Capitalized terms used in this Amendment, unless otherwise defined
herein, have the respective meanings given to such terms in the Performance
Share Agreement.
4. Except as specifically modified hereby, the Performance Share
Agreement remains in full force and effect, and the Trust and the Key Employee
hereby ratify and reaffirm each and all of the terms and provisions of the
Performance Share Agreement as modified hereby.
5. This Amendment may be executed in multiple counterparts with the same
effect as if each of the signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Amendment to be duly executed
and the Key Employee has hereunto set his hand effective as of the day and year
first above written.
FEDERAL REALTY INVESTMENT TRUST
By: /s/ Walter F. Loeb
__________________________________
Name: Walter F. Loeb
Title: Chair, Compensation Committee
Address:
1626 East Jefferson Street
Rockville, Maryland 20852
RON D. KAPLAN
/s/ Ron D. Kaplan
_____________________________________
Address:
7909 Greentree Road
Bethesda, Maryland 20817
-3-
<PAGE>
ATTACHMENT TO KAPLAN PERFORMANCE SHARE AWARD AGREEMENT
Performance Target for 2000 Award Period
----------------------------------------
<TABLE>
<CAPTION>
Funds From Operations/Annual Number of Performance Shares as to which
Per Share Growth Rate/1/ Restriction Period Lapses
<S> <C>
Less than 5% None
Threshold level: Equal to or greater than 5% but less 6,250 shares
than 7%
Maximum level: Equal to or greater than 7% 10,000 shares
</TABLE>
______________________
/1/ As the same may be adjusted for specific items as agreed between the
Committee and the Key Employee.
-4-
<PAGE>
Exhibit 12
FEDERAL REALTY INVESTMENT TRUST
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Net earnings before loss (gain) on sale of real estate $55,493 $44,960 $40,129
Add back:
Fixed charges 69,978 61,189 51,885
Deduct:
Capitalized interest (6,867) (5,078) (3,649)
------- ------- -------
Earnings available for fixed charges and preferred
dividends $118,604 $101,071 $88,365
======== ======== =======
Fixed Charges
Interest expense $61,492 $55,125 $47,288
Capitalized interest 6,867 5,078 3,649
Interest portion of rent expense 1,619 986 948
------- ------- -------
Total fixed charges 69,978 61,189 51,885
Preferred dividends 7,950 7,950 1,877
------- ------- -------
Total fixed charges and preferred dividends $77,928 $69,139 $53,762
======= ======= =======
Ratio of Earnings to Fixed Charges and
Preferred Dividends 1.52 1.46 1.64
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Accountants
- ----------------------------------
We have issued our reports dated February 8, 1999 accompanying the consolidated
financial statements and schedules included in the Annual Report of Federal
Realty Investment Trust on Form 10K for the year ended December 31, 1998. We
hereby consent to the incorporation by reference of said reports in the
Registration Statements of Federal Realty Investment Trust on Form S-3 (File No.
333-63619, effective September 30, 1998, which pursuant to Rule 429 of the
Securities and Exchange Act of 1934 constitutes a post-effective amendment to
File No. 33-63687, effective December 4, 1995; File No. 33-63955, effective
November 3, 1995; and File No. 33-15264, effective August 4, 1987).
Grant Thornton LLP
Washington, D.C.
March 15, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet of Federal Realty Investment Trust as of December 31,
1999 and the related consolidated statement of operations for the twelve months
ended December 31, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> $11,738
<SECURITIES> 0
<RECEIVABLES> 23,130
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,721,459
<DEPRECIATION> (317,921)
<TOTAL-ASSETS> 1,534,048
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 920,630
0
100,000
<COMMON> 713,758
<OTHER-SE> (311,931)
<TOTAL-LIABILITY-AND-EQUITY> 1,534,048
<SALES> 0
<TOTAL-REVENUES> 257,064
<CGS> 0
<TOTAL-COSTS> 78,698
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,492
<INCOME-PRETAX> 40,493
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,493
<EPS-BASIC> 1.02
<EPS-DILUTED> 1.02
<FN> Current assets and current liabilities are not listed since Federal Realty
does not prepare a classified balance sheet.
</TABLE>