UNITED STATES
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, 1995 Commission File No.17533
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FEDERAL REALTY INVESTMENT TRUST
-------------------------------
(Exact name of registrant as specified in its charter)
District of Columbia 52-0782497
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
4800 Hampden Lane, Suite 500, Bethesda, Maryland 20814
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(Address of principal executive offices) (Zip Code)
(301) 652-3360
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(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
Preferred Shares of Beneficial Interest*
* None issued, registered pursuant to a shelf registration
Securities registered pursuant to Section 12(g) of the Act:
8 7/8% Senior Notes
8% Senior Notes
6 5/8% Senior 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 12, 1996, the aggregate market value of Common Shares of
Beneficial Interest of Federal Realty Investment Trust held by nonaffiliates was
$733.0 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 issuer's classes
of common stock.
Class Outstanding at March 12, 1996
- ----- -----------------------------
Common Shares of Beneficial Interest 32,221,086
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
PART III
- --------
Portions of the Trust's Proxy Statement in connection with its Annual
Meeting to be held on May 2, 1996 (hereinafter called "1996 Proxy
Statement"). Specifically, the Sections entitled "Summary Compensation
Table", "Employment Agreements", "Aggregated Option Exercises in 1995 and
December 31, 1995 Option Values", "Retirement and Disability Plans", and
"Compensation Committee Interlocks and Insider Participation", "Ownership
of Shares by Trustees and Officers", and "Certain Transactions" appearing
in the 1996 Proxy Statement are incorporated herein by reference.
The Exhibit Index for this report is found on page 25.
This report, including Exhibits, contains 60 pages.
2
PART I & II
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Item 1. Business
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Federal Realty Investment Trust is an owner, operator and redeveloper of
retail properties. Founded in 1962 as a District of Columbia business trust
of unlimited duration, the Trust is a self-administered equity real estate
investment trust. The Trust consolidates the financial statements of one
wholly owned subsidiary, eight partnerships and a joint venture. At December
31, 1995 the Trust owned 70 retail 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 is 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 the Trust expanded this strategy
to include retail buildings and shopping centers in prime established main
street shopping areas. 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
certain of its properties.
The Trust's portfolio of properties has increased from 44 as of January
1, 1991 to 71 at December 31, 1995. During this five year period the Trust
acquired 31 retail properties for approximately $305.3 million. Six of the
acquisitions were in the Chicago, Illinois area and three were in the Boston,
Massachusetts area, both of which are markets the Trust entered during the
past five years. During this same period four shopping centers were sold. Also
during this period the Trust spent over $145 million to renovate, expand,
improve and retenant its properties. One of the retail properties acquired
during the last five years was acquired by means of capital and ground leases,
one was acquired for common shares of the Trust as well as the assumption of a
mortgage and the remainder were acquired primarily for cash. This growth was
financed through borrowing and equity offerings, since each year the Trust has
distributed all or the majority of its cash provided by operating activities
to its shareholders.
The Trust's 70 retail properties, consisting of 55 shopping centers and 15
main street retail buildings, are located in 13
3
states and the District of Columbia, primarily along the East Coast between
the Boston metropolitan area and Richmond, Virginia. Nineteen of the shopping
centers are located in the Washington, D.C. metropolitan area; ten are in
Pennsylvania, primarily in the Philadelphia area; nine are in New Jersey; five
are in Illinois; three are in Virginia; two are in Massachusetts; and there is
one in each of the following states, Connecticut, Georgia, Louisiana,
Michigan, New York, North Carolina and Tennessee. No single property accounts
for over 10% of the Trust's revenues.
The Trust has over 1,700 tenants, ranging from sole proprietors to major
national retailers; no one tenant or corporate group of tenants accounts for
5% 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' sales volumes and reimbursement of certain
operating expenses and real estate taxes.
The Trust intends to continue its strategy of acquiring older, well-
located shopping centers and retail buildings and then enhancing their revenue
potential through a program of renovation, retenanting and remerchandising.
The Trust is also studying sites which are suitable for the development of new
shopping centers. During the years ended December 31, 1995, 1994 and 1993,
retail properties have contributed 96%, 95% and 94%, respectively of the
Trust's total revenue.
The Trust is currently limited to investing east of the Mississippi
River; to change this limitation requires Trustee approval. Investments are
not required to be based on specific allocation by type of property. 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, including 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's current policy is to obtain an environmental study on each property it
seeks to acquire. On recent acquisitions, any substances identified prior to
closing
4
which present an immediate environmental hazard have been or are in the
process of remediation. Costs related to the abatement of asbestos which
increase the value of Trust properties are capitalized. Other costs are
expensed. In 1995 approximately $1.0 million, of which $796,000 was
capitalized abatement costs, was spent on environmental matters. The Trust
has budgeted approximately $2.0 million for 1996 for environmental matters, a
majority of which is projected for asbestos abatement. (See Note 6 of Notes
to Consolidated Financial Statements.)
Current Developments
--------------------
In 1995 the Trust purchased 20 retail properties. Finley Square Shopping
Center in suburban Chicago, Illinois was purchased for approximately $18.8
million in cash; Bristol Shopping Center in Bristol, Connecticut was purchased
for $19.6 million, by assuming a $11.3 million mortgage and by issuing common
shares valued at $7.3 million with the balance in cash; Park & Shop Center in
Washington, D.C. was purchased for $11.2 million in cash; and Shirlington
Shopping Center in Arlington, Virginia was purchased for $23.5 million in
cash. Retail building acquisitions during 1995 were as follows: seven
buildings in West Hartford, Connecticut for $15.3 million; two buildings in
Greenwich,Connecticut for $14.9 million; one building in Westport, Connecticut
for $5.7 million; one building in Brookline, Massachusetts for $3.8 million;
one building in Westfield, New Jersey for $2.2 million; two buildings in
Evanston, Illinois for $3.6 million; and a building contiguous to Bethesda Row
in Bethesda, Maryland for $2.0 million. In addition, the Trust purchased a
building abutting Flourtown Shopping Center, one of its existing centers, for
$3.1 million.
The Trust continued its strategy of renovating, expanding and retenanting
its centers in 1995, spending approximately $33.8 million. These improvements
included an additional $3.8 million on the redevelopment of Congressional
Plaza in Rockville, Maryland, $5.5 million to complete the redevelopment and
retenanting of Gaithersburg Square in Gaithersburg, Maryland and $5.8 million
for the renovation of Brick Plaza in Brick, New Jersey.
The Trust funded its 1995 acquisitions, capital improvement projects and
major debt repayment requirements primarily through three issues of senior
notes, totalling $165.0 million. The notes bear interest at rates ranging
from 6.625% to 8.875% and mature from 2000 to 2005.
At December 31, 1995 the Trust had 195 full-time employees.
5
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, 1995. Except as otherwise noted, retail properties are 100% owned
in fee by the Trust.
Year Year Number of
Completed Acquired Square Feet (1) Tenants Acres
-------------- ------------- ------------------ ---------- -------
Allwood 1958 1988 52,000 8 5
Clifton, NJ 07013 (2)
Andorra 1953 1988 257,000 46 23
Philadelphia, PA 19128 (3)
Bala Cynwyd 1955 1993 266,000 30 22
Bala Cynwyd, PA 19004
Barracks Road 1958 1985 478,000 85 39
Charlottesville, VA 22905 (3)
Bethesda Row 1945-1991 1993 238,000 70 8
Bethesda, MD 20814 (2) (5)
Blue Star 1959 1988 392,000 36 55
Watchung, NJ 07060 (2)
Brainerd Village 1960 1987 218,000 27 20
Chattanooga, TN 37411
Brick Plaza 1958 1989 310,000 29 42
Brick Township, NJ 08723 (2)
Bristol 1959 1995 296,000 40 22
Bristol, CT 06010
Brunswick 1957 1988 261,000 22 22
North Brunswick, NJ 08902 (2)
Clifton 1959 1988 80,000 13 8
Clifton, NJ 07013 (2)
Congressional Plaza 1965 1965 311,000 44 22
Rockville, MD 20852 (4)
Occupancy (1) Principal
Overall / Economic Tenants
----------------------- ----------------
Allwood
Clifton, NJ 07013 (2) 100% / 100% Grand Union
Mandee Shop
Andorra
Philadelphia, PA 19128 (3) 99% / 91% Acme Markets
Andorra Theater
Clover
Bala Cynwyd
Bala Cynwyd, PA 19004 100% / 100% Lord & Taylor
Acme Markets
Barracks Road
Charlottesville, VA 22905 (3) 99% / 97% Rose's
Safeway
Superfresh
Bethesda Row
Bethesda, MD 20814 (2) (5) 94% /89% Giant Food
Giant Pharmacy
Blue Star
Watchung, NJ 07060 (2) 99% / 99% Caldor
Shop Rite
Toys R Us
Brainerd Village
Chattanooga, TN 37411 92% / 92% Office Town
50 Off
Sports Authority
Brick Plaza
Brick Township, NJ 08723 (2) 90% / 89% A&P Supermarket
Steinbach's
Bristol
Bristol, CT 06010 98% / 98% Bradlees
Super Stop & Shop
Brunswick
North Brunswick, NJ 08902 (2) 100% / 99% Caldor
Grand Union
Schwartz Furniture
Clifton
Clifton, NJ 07013 (2) 98% / 98% Acme Markets
Rickel Home Center
Congressional Plaza
Rockville, MD 20852 (4) 99% / 83% Fresh Fields
Tower Records
Container Store
6
Year Year Number of
Completed Acquired Square Feet (1) Tenants Acres
----------- ---------- ----------------- --------- -------
Crossroads 1959 1993 192,000 28 15
Highland Park, IL 60035
Dedham 1959 1993 253,000 35 18
Dedham, MA 02026
Eastgate 1963 1986 159,000 32 17
Chapel Hill, NC 27514
Ellisburg Circle 1959 1992 258,000 36 27
Cherry Hill, NJ 08034
Falls Plaza 1962 1967 60,000 9 6
Falls Church, VA 22046
Feasterville 1958 1980 104,000 14 12
Feasterville, PA 19047 (2)
Federal Plaza 1970 1989 243,000 38 18
Rockville, MD 20852
Finley Square 1974 1995 306,000 19 21
Downers Grove, IL 60515
Flourtown 1957 1980 183,000 23 15
Flourtown, PA 19031
Gaithersburg Square 1966 1993 207,000 35 17
Gaithersburg, MD 20878
Garden Market 1958 1994 134,000 19 12
Western Springs, IL 60558
Governor Plaza 1963 1985 252,000 24 26
Glen Burnie, MD 21961 (3)
Hamilton 1961 1988 180,000 13 18
Hamilton, NJ 08690 (2)
Occupancy (1) Principal
Overall / Economic Tenants
-------------------- -----------------------
Crossroads 88% / 88% Gold Standard Liquors
Highland Park, IL 60035 TJ Maxx
Dedham 100% / 100% Ames
Dedham, MA 02026 Cherry & Webb
Eastgate 98% / 98% Food Lion
Chapel Hill, NC 27514 Southern Season
Ellisburg Circle 98% / 98% Shop Rite
Cherry Hill, NJ 08034 Bed, Bath & Beyond
Falls Plaza 97% / 97% Giant Food
Falls Church, VA 22046 CVS Pharmacy
Feasterville 94% / 94% Eric Theater
Feasterville, PA 19047 (2) Genuardi Markets
Office Max
Federal Plaza 100% / 97% Bed, Bath & Beyond
Rockville, MD 20852 Comp USA
TJ Maxx
Finley Square 94% / 94% Bed, Bath & Beyond
Downers Grove, IL 60515 Service Merchandise
Flourtown 100% / 100% Rickel Home Center
Flourtown, PA 19031 Genuardi Markets
K Mart
Gaithersburg Square 91% / 86% Borders Books
Gaithersburg, MD 20878 Fresh Fields
Bed, Bath & Beyond
Garden Market 92% / 89% Dominick's
Western Springs, IL 60558 Ace Hardware
Governor Plaza 99% / 99% Comp USA
Glen Burnie, MD 21961 (3) Office Depot
Syms
Hamilton 100% / 97% Shop Rite
Hamilton, NJ 08690 (2) Steven's Furniture
A.C. Moore
7
Year Year Number of Occupancy (1)
Completed Acquired Square Feet (1) Tenants Acres Overall/Economic
---------- -------- --------------- --------- ------ ----------------
Huntington 1962 1988 274,000 11 21 99% / 90%
Huntington, NY 11746 (2)
Idylwood Plaza 1991 1994 73,000 18 6 79% / 79%
Falls Church, VA 22030
Lancaster 1958 1980 107,000 17 11 99% / 99%
Lancaster, PA 17601 (2)
Langhorne Square 1966 1985 208,000 31 21 86% / 86%
Levittown, PA 19056
Laurel Centre 1956 1986 382,000 56 26 90% / 90%
Laurel, MD 20707
Lawrence Park 1972 1980 340,000 41 28 97% / 97%
Broomall, PA 19008 (2)
Loehmann's Plaza 1971 1983 245,000 49 18 94% / 94%
Fairfax, VA 22042 (6)
Mid-Pike Plaza 1963 1982 303,000 22 20 99% / 99%
Rockville, MD 20852 (2)
Northeast 1959 1983 303,000 41 19 98% / 97%
Philadelphia, PA 19114
Northeast Plaza 1952 1986 446,000 51 44 79% / 79%
Atlanta, GA 30329
North Lake Commons 1989 1994 123,000 21 13 95% / 95%
Lake Zurich, IL 60047
Old Keene Mill 1968 1976 92,000 21 11 90% / 90%
Springfield, VA 22152
Pan Am 1979 1993 218,000 30 25 98% / 98%
Fairfax, VA 22031
Principal
Tenants
-------------
Huntington Bed, Bath and Beyond
Huntington, NY 11746 (2) Service Merchandise
Toys R Us
Idylwood Plaza Storehouse
Falls Church, VA 22030 Fresh Fields
Lancaster Giant Eagle
Lancaster, PA 17601 (2) A.C. Moore
Langhorne Square Drug Emporium
Levittown, PA 19056 Marshalls
Jubilee Lanes
Laurel Centre Giant Food
Laurel, MD 20707 Marshalls
Toys R US
Lawrence Park Acme Markets
Broomall, PA 19008 (2) Best Products
Rickel Home Center
Loehmann's Plaza Scan Furniture
Fairfax, VA 22042 (6) Linens N Things
Mid-Pike Plaza Syms
Rockville, MD 20852 (2) Toys R Us
G Street Fabrics
Northeast Burlington Coat Factory
Philadelphia, PA 19114 Marshalls
Northeast Plaza Publix
Atlanta, GA 30329 Levitz Furniture
North Lake Commons Dominick's
Lake Zurich, IL 60047
Old Keene Mill Fresh Fields
Springfield, VA 22152 Rite Aid
Pan Am Micro Center
Fairfax, VA 22031 Safeway
MJ Designs
8
Year Year Number of
Completed Acquired Square Feet (1) Tenants Acres
--------- -------- -------------- ------- -----
Park & Shop 1930 1995 47,000 11 1
Washington, DC 20036
Perring Plaza 1963 1985 437,000 17 27
Baltimore, MD 21134 (3)
Queen Anne Plaza 1967 1994 149,000 11 18
Norwell, MA 02061
Quince Orchard 1975 1993 238,000 29 16
Gaithersburg, MD 20877 (5)
Roseville 1964 1973 143,000 3 20
Roseville, MI 48066
Rutgers 1973 1988 216,000 18 27
Franklin, N.J. 08873 (2)
Shillington 1956 1980 74,000 19 8
Shillington, PA 19607 (2)
Shirlington 1940 1995 349,000 46 16
Arlington, VA 22206
Town & Country 1968 1973 236,000 24 19
Springfield, IL 62704
Town & Country 1974 1990 215,000 35 26
Hammond, LA 70401 (5)
Troy 1966 1980 205,000 19 19
Parsippany-Troy, NJ 07054 (2)
Tysons Station 1954 1978 50,000 15 4
Falls Church, VA 22043
West Falls 1960 1972 62,000 17 5
Falls Church, VA 22046
Wildwood 1958 1969 85,000 32 13
Bethesda, MD 20814
Occupancy (1) Principal
Overall / Economy Tenants
---------------- ---------------------
Park & Shop 93%/93% Herman's Sporting Goods
Washington, DC 20036 Pizzeria Uno
Perring Plaza 100% /100% Home Depot
Baltimore, MD 21134 (3) Metro Foods
Burlington Coat Factory
Queen Anne Plaza 100% / 100% TJ Maxx
Norwell, MA 02061 Star Markets
Quince Orchard 97% / 73% Circuit City
Gaithersburg, MD 20877 (5) MJ Design
Roseville 100% / 100% Drug Emporium
Roseville, MI 48066 Handy Andy
Rutgers 96% / 96% Foodtown
Franklin, N.J. 08873 (2) K Mart
Shillington 100% / 67% Rite Aid
Shillington, PA 19607 (2)
Shirlington 96%/96% Best Products
Arlington, VA 22206 Cineplex Odeon
Town & Country 96% / 96% Burlington Coat Factory
Springfield, IL 62704 Schnuck Market
Town & Country 91% /91% Weiner's Department Store
Hammond, LA 70401 (5) Winn-Dixie
Troy 99% / 99% Comp USA
Parsippany-Troy, NJ 07054 (2) K Mart
Pathmark
Tysons Station 92% /92% Linens N Things
Falls Church, VA 22043
West Falls 96% /96% Staples
Falls Church, VA 22046
Wildwood 100% / 97% CVS Pharmacy
Bethesda, MD 20814 Sutton Place Gourmet
9
Year Year Number of
Completed Acquired Square Feet (1) Tenants Acres
--------- -------- -------------- --------- -----
Williamsburg 1961 1986 248,000 34 21
Williamsburg, VA 23187
Willow Grove Shopping Center 1953 1984 228,000 29 14
Willow Grove, PA 19090
The Shops at Willow Lawn 1957 1983 435,000 106 37
Richmond, VA 23230 (5)
Retail buildings
- ----------------
Eleven buildings in CT 1900-1991 1994- 1995 192,000 62
One building in MA 1930 1995 12,000 8
One building in NJ 1940 1995 11,000 1
Two buildings in IL 1920-1927 1995 19,000 4
Occupancy (1) Principal
Overall / Economic Tenants
------------------ ---------
Williamsburg 100% /100% Food Lion
Williamsburg, VA 23187 Peebles
Rose's
Willow Grove Shopping Center 87% /77% Marshalls
Willow Grove, PA 19090 Toys R Us
The Shops at Willow Lawn 91% / 91% Leggett Stores
Richmond, VA 23230 (5) Barnes & Noble
Cineplex Odeon
Retail buildings
- ----------------
Eleven buildings in CT 96%/93% Barney's
Eddie Bauer
Saks Fifth Avenue
One building in MA 100%/100% M. Joseph
One building in NJ 35%/35%
Two buildings in IL 100%/100% Foodstuff
(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) The Trust has a leasehold interest in this property.
(3) The Trust owns a 99.9% partnership interest in this center.
(4) The Trust owns a 49% equity interest in this center.
(5) The Trust owns this property subject to a ground lease.
(6) The Trust has a 1% general partnership interest and manages the
partnership. A 99% interest was sold to a limited partner.
Apartments
- ----------
The following table sets forth information concerning the Trust's apartment
development as of December 31, 1995 which is 100% owned by the Trust in fee.
This development is not subject to rent control.
Year Year
Property Completed Acquired Acres 1-BR 2-BR
- --------------------------------------------------------------------------------------------------------------
Rollingwood 1960 1971 14 58 163
Silver Spring, MD
9 three-story buildings
Eff. and
3-BR Total Occupancy
-----------------------------------
Rollingwood 61 282 96%
Silver Spring, MD
9 three-story buildings
10
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, 1995 $23 1/2 $20 $.41
September 30, 1995 23 5/8 21 1/8 .395
June 30, 1995 22 5/8 19 3/4 .395
March 31, 1995 22 20 1/4 .395
December 31, 1994 $23 3/4 $19 5/8 $.395
September 30, 1994 26 1/8 21 .39
June 30, 1994 25 7/8 23 1/2 .39
March 31, 1994 29 1/2 23 .39
The number of holders of record for Federal Realty's common shares of
beneficial interest at December 31, 1995 was 5,342.
For the years ended December 31, 1995 and 1994, $.43 and $.75,
respectively, of dividends paid represented a return of capital.
Dividends declared per quarter during the last two fiscal years were as
follows:
Quarter Ended 1995 1994
------------- ---- ----
March 31 $.395 $ .39
June 30 .395 .39
September 30 .41 .395
December 31 .41 .395
The Trust's common shares of beneficial interest are listed on the New
York Stock Exchange.
11
Item 6. Selected Financial Data.
-----------------------
In thousands, except per share data
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991
OPERATING DATA
- ----------------------------------------------------------------------
Rental Income $142,841 $128,133 $105,948 $89,971 $88,350
Income before gain
on sale of real
estate and extra-
ordinary item 23,655 20,466 16,114 6,987 4,324
Gain (loss)on sale
of real estate (545) --- --- 2,501 61
Extraordinary item -
gain (loss) on early
extinguishment of
debt --- --- 2,016 <58> 415
Net income 23,110 20,466 18,130 9,430 4,800
Net cash provided
by operating
activities (1) 65,117 45,199 35,183 28,236 26,111
Funds from
Operations (2) 57,034 50,404 40,824 29,374 25,701
Dividends declared 51,392 48,196 42,021 36,306 25,771
Weighted average
number of shares
outstanding 31,860 30,679 27,009 22,767 17,304
PER SHARE:
Net income .72 .67 .67 .41 .28
Dividends declared 1.61 1.57 1.55 1.53 1.50
- ----------------------------------------------------------------------
BALANCE SHEET DATA
Real estate
at cost $1,009,682 $852,722 $758,088 $598,867 $566,056
Total assets 886,154 751,804 689,803 603,365 565,716
Mortgage and capital
lease obligations 222,317 235,705 218,545 245,694 225,859
12
Notes payable 49,980 61,883 30,519 6,117 11,665
Senior notes 165,000 --- --- 50,000 50,000
Convertible
subordinated
debentures 75,289 75,289 115,167 46,218 92,003
Shareholders'
equity 327,468 343,222 283,059 222,432 151,134
Number of shares
outstanding 32,160 31,609 28,018 24,718 19,687
(1) Determined in accordance with Financial Accounting Standards Board
Statement No. 95.
(2) Defined as income before depreciation and amortization of real estate
assets and before extraordinary items and significant nonrecurring events less
gains on sale of real estate. Funds from operations differs from net cash
provided by operating activities primarily because funds from operations does
not include changes in operating assets and liabilities. Funds from
operations is a supplemental measure of performance that does not replace net
income as a measure of performance or net cash provided by operating
activities as a measure of liquidity.
13
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
-------------------------------
Federal Realty meets its liquidity requirements through net cash provided
by operating activities, long term borrowing through debt offerings and
mortgages, medium and short term borrowing under revolving credit facilities,
and equity offerings. Because all or a significant portion of the Trust's net
cash provided by operating activities is distributed to shareholders, capital
outlays for property acquisitions, renovation projects and debt repayments
require funding from borrowing or equity offerings.
Net cash provided by operating activities increased from $35.2 million in
1993 to $45.2 million in 1994 to $65.1 million in 1995. The major source of
the $10.0 million increase from 1993 to 1994 was an increase in net income of
$2.3 million and an increase of $4.4 million in depreciation and amortization.
The $19.9 million increase from 1994 to 1995 resulted primarily from a $2.6
million increase in net income, a $5.1 million increase in depreciation and
amortization and a $12.9 million increase in cash provided by changes in
operating assets and liabilities. Dividends paid in cash were $38.1 million
in 1993, $44.0 million in 1994 and $47.9 million in 1995.
In 1995 net cash provided by operating activities was comprised primarily
of $23.1 million in net income increased by $34.9 million of depreciation and
amortization and $6.1 million of cash provided by changes in operating assets
and liabilities. In 1994 net cash provided by operating activities was
primarily comprised of $20.5 million in net income increased by $29.8 million
in depreciation and amortization and decreased by cash used for operating
assets and liabilities of $6.8 million. In 1993 net cash provided by
operating activities was comprised primarily of $18.1 million in net income
increased by $25.4 million of depreciation and amortization and decreased by
$6.4 million of cash used for operating assets and liabilities.
During the period 1993 through 1995, the Trust spent over $370 million to
acquire properties and to improve its properties. These expenditures were
primarily funded from the proceeds of various debt and equity transactions.
In 1995 the Trust purchased 19 retail properties. The Trust also
purchased a building abutting Flourtown Shopping Center, one of its existing
centers, for $3.1 million. The 302,000 square foot Finley Square Shopping
Center in suburban Chicago, Illinois was purchased on April 27, 1995 for
approximately $18.8 million in cash; the 284,000 square foot Bristol Shopping
Center in Bristol, Connecticut was purchased on September 22, 1995 for $19.6
million, by assuming a $11.3 million mortgage and by issuing common shares
valued at $7.3 million with the balance in cash; the 47,000 square foot Park &
Shop Center in Washington, D.C. was purchased on December 1, 1995 for $11.2
million in cash; and on December 21, 1995 the 349,000 square foot Shirlington
Shopping Center in Arlington, Virginia was purchased for $23.5 million in
cash. The
14
retail building acquisitions during 1995 were as follows: seven buildings in
West Hartford, Connecticut for $15.3 million; two buildings in Greenwich,
Connecticut for $14.9 million; one building in Westport, Connecticut for $5.7
million; one building in Brookline, Massachusetts for $3.8 million; one
building in Westfield, New Jersey for $2.2 million; two buildings in Evanston,
Illinois for $3.6 million; and a building contiguous to Bethesda Row in
Bethesda, Maryland for $2.0 million.
During 1995 $33.8 million was expended on improvements to Trust
properties. These improvements included $3.8 million on the redevelopment of
Congressional Plaza in Rockville, Maryland, $5.5 million to complete the
redevelopment and retenanting of Gaithersburg Square in Gaithersburg, Maryland
and $5.8 million for the renovation of Brick Plaza in Brick, New Jersey.
During 1994 the Trust purchased four shopping centers and one retail
building, Idylwood Plaza in Falls Church, Virginia, North Lake Commons in Lake
Zurich, Illinois, Garden Market Shopping Center in Western Springs, Illinois,
Queen Anne Plaza in Norwell, Massachusetts and the Ship's Building in
Westport, Connecticut. In addition, the Trust purchased a 3.9 acre parcel of
land, on which there is a supermarket, which adjoins its Bala Cynwyd Shopping
Center. These properties were acquired for a total cash investment of $48.3
million and a $1.1 million note.
During 1994, $42.3 million was expended on improvements to Trust
properties. These improvements included $15.5 million on the renovation and
expansion of Congressional Plaza in Rockville, Maryland, $4.1 million to
complete the redevelopment of Ellisburg Circle Shopping Center in Cherry Hill,
New Jersey, and $3.9 million to begin the redevelopment and retenanting of
Gaithersburg Square Shopping Center in Gaithersburg, Maryland.
In 1993 the Trust spent $101.8 million to acquire six shopping centers
(Gaithersburg Square and Quince Orchard Shopping Centers in Gaithersburg,
Maryland, Pan Am Shopping Center in Fairfax, Virginia, Crossroads Shopping
Center in Highland Park, Illinois, Bala Cynwyd Shopping Center in suburban
Philadelphia, Pennsylvania, and Dedham Plaza in Dedham, Massachusetts), $6.2
million in connection with the long term lease of Bethesda Row in Bethesda,
Maryland, and $34.3 million in improvements to its properties.
These acquisitions and improvements, as well as debt repayment
requirements, were funded through a variety of equity and debt issues. During
1995 the Trust issued $165 million of senior notes: $100.0 million at 8 7/8%
interest in January netting proceeds of approximately $98.9 million; $25.0
million at 8% interest in April, netting approximately $24.9 million; and
$40.0 million at 6 5/8% interest in December, netting approximately $39.6
million. In January 1995 the Trust repaid a $22.5 million mortgage which had
been borrowed in 1994 and a $1.1 million note issued in connection with the
purchase of Queen Anne Plaza in 1994.
In order to protect itself against the risk that the general level of
interest rates for senior notes would rise before the senior notes were priced
in January 1995, the Trust entered into two interest rate hedge agreements in
December 1994 on a total principal
15
amount of $75.0 million. The cost of the agreements, which terminated on
January 20, 1995, was $21,000, which is being amortized into interest expense
over the life of the notes.
In January 1995 in connection with the issuance of the $100.0 million of
senior notes, the Trust executed a five year interest rate swap on $25.0
million, whereby the Trust swappped fixed interest payment obligations of 8.1%
for a floating rate interest payment of three month LIBOR (London Interbank
Offered Rate). The floating rate during the first quarter of 1995 was 6.2%.
In May 1995 the swap was terminated and the Trust sold the swap for $1.5
million, which is being amortized as a deduction to interest expense over the
remaining term.
In April 1994 the Trust raised net proceeds of $61.3 million from a
public offering of 2.5 million common shares of beneficial interest
("shares"). In a concurrent offering of 840,000 shares to an institutional
investor, the Trust raised net proceeds of $21.7 million. In April 1994 the
Trust redeemed $39.8 million principal amount of its 5 1/4% convertible
subordinated debentures due 2002 at a price equal to 120% of their principal
amount or $47.8 million. In November 1994 the Trust spent $4.2 million to
exercise the option to purchase the land at Northeast Shopping Center, $3.4
million of which had been recorded as a capital lease obligation.
In April 1993, 2.8 million shares were issued in a public offering,
netting proceeds of $72.8 million. In December 1993 another 220,000 shares
were issued for $5.4 million in a private placement in connection with the
long term lease of Bethesda Row. The Trust called its 8 3/4% convertible
subordinated debentures and its 8.65% Senior Notes for redemption in 1993.
The Trust redeemed $173,000 principal amount of the 8 3/4% debentures at a
price of $1017.50 per debenture on March 15; the balance of the debentures
that had been outstanding or $2.2 million were converted into shares. The
senior notes were redeemed on May 14, at a price of $1010 for a total
redemption price of $50.5 million. 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, which mature in 2003, are
convertible into shares at $36 per share.
At December 31, 1995 and 1994 the Trust had $130 million of unsecured
medium term revolving credit facilities with four banks. The facilities
require fees and have covenants requiring a minimum shareholders' equity and a
maximum ratio of debt to net worth. The Trust uses these facilities to fund
acquisitions and other cash requirements until conditions are favorable for
issuing equity or long term debt. At December 31, 1995 there was $40.1
million drawn under these facilities; the maximum amount borrowed under these
facilities during 1995 was $66.8 million. Amounts advanced under these
facilities bear interest at LIBOR plus 75 - 100 basis points; the weighted
average interest rate on borrowings during 1995 was 6.9%. At December 31,
1994 there was $54.7 million drawn under these facilities, which was the
maximum drawn during 1994. The weighted average interest rate on borrowings
during 1994 was 5.6%.
At December 1993 the Trust had $70.0 million of unsecured medium term
revolving credit facilities with three banks. The
16
maximum drawn under these facilities in 1993 was $64.1 million and at December
31, 1993, there was $24.4 million outstanding. The weighted average interest
rate on borrowing during 1993 was 4.2%.
The Trust has budgeted $48.0 million for capital improvements to its
properties in 1996. These improvements include: (1) $12.0 million at
Congressional Plaza whose renovation has been expanded to include the
construction of an additional 30,000 square feet of space; (2) $6.7 million to
renovate and expand a portion of Bethesda Row; (3) $5.6 million to retenant
and renovate a portion of Troy Shopping Center; and (4) $2.1 million to
complete the retenanting of Brick Plaza.
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 next
significant maturity is approximately $53.5 million of mortgage obligations
which are due in 1998.
The Trust intends to continue to acquire existing retail properties, both
shopping centers and main street retail buildings. In addition, the Trust is
searching for site acquisitions in its core markets to permit the Trust to
build new shopping centers.
The Trust will need additional capital in order to fund these
acquisitions, expansions and refinancings. Sources of this funding may be
proceeds from the sale of existing properties, additional debt and additional
equity. The timing and choice between additional debt or equity will depend
upon many factors, including the market price for the Trust's shares, interest
rates and the ratio of debt to net worth. The Trust believes that it will be
able to raise this capital as needed, based on its past success in so doing.
Contingencies
-------------
The State of New Jersey Division of Taxation assessed the Trust $364,000
in taxes, penalty and interest for the years 1985 through 1990, since the
State disallowed the dividends paid deduction in computing New Jersey taxable
income. The Trust protested this assessment since the Trust believed that it
was entitled to the deduction. The case was dismissed in December 1995 in
favor of the Trust.
As previously reported, certain of the Trust's shopping centers have some
environmental contamination. The North Carolina Department of the
Environment, Health and Natural Resources ("DEHNR") issued a Notice of
Violation ("NOV") against a former dry cleaner tenant at Eastgate Shopping
Center in Chapel Hill, North Carolina concerning a spill at the shopping
center. As owner of the shopping center, the Trust was named in and received
a copy of the NOV. Estimates to remediate the spill range from $300,000 to
$500,000. The Trust has entered into an agreement with two previous owners of
the shopping center to share the costs to assess and remediate. In 1993 the
Trust recorded a liability of $120,000 as its estimated share of the cleanup
costs.
17
In 1992 contaminants at levels in excess of New Jersey cleanup standards
were identified at a shopping center in New Jersey. The Trust has retained an
environmental consultant to investigate the contamination. The Trust is also
evaluating whether it has insurance coverage for this matter. At this time,
the Trust has not determined what the range of remediation costs might be, but
does not believe that the costs will have a material effect upon the Trust's
financial condition. The Trust has also identified chlorinated solvent
contamination at another property. The contamination appears to be linked to
the current and/or previous dry cleaner. The Trust intends to look to the
responsible parties for any remediation effort. Evaluation of this situation
is preliminary and it is impossible, at this time, to estimate the range of
remediation costs, if any.
On September 22, 1995 the Trust purchased the Bristol Shopping Center in
Bristol, Connecticut. Pursuant to an agreement executed at closing, the Trust
agreed to perform all remedial measures necessary to obtain a final letter of
compliance from the Connecticut Commissioner of Environmental Protection with
respect to certain identified soil and ground water contamination associated
with a former dry cleaning operation. The seller established an escrow
account at closing of $187,500 to cover such remedial measures and has
indemnified the Trust in connection with the identified contamination.
The Trust reserved $2.25 million at closing in 1993 for environmental
issues principally associated with Gaithersburg Square Shopping Center.
Pursuant to an indemnity agreement entered into with the seller at closing,
the Trust agreed to take certain actions with respect to identified
chlorinated solvent contamination. The seller indemnified the Trust for
certain third party claims and government requirements related to
contamination at adjacent properties. During the third quarter of 1995 the
reserve was reduced by $269,000 with a corresponding reduction in the basis of
land at one shopping center since the environmental issue there was resolved.
Pursuant to the provisions of the respective partnership agreements, in
the event of the exercise of put options by the other partners, the Trust
would be required to purchase the 99% limited partnership interest at
Loehmann's Plaza at its then fair market value and a 22.5% interest at
Congressional Plaza at its then fair market value.
Results of Operations
---------------------
Net income and funds from operations have been affected by the Trust's
recent acquisition 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 which excludes
historical cost depreciation, since real estate values have historically risen
and fallen with market conditions rather than over time. Funds from
operations was historically defined as income before depreciation and
amortization and extraordinary items less gains on sale of real estate. The
National Association of Real Estate Investment Trusts (NAREIT)
18
issued a white paper during 1995, which has amended the definition as follows:
income before depreciation and amortization of real estate assets and before
extraordinary items and significant non-recurring events less gains on sale of
real estate. The Trust is complying with this new definition and has
consequently restated funds from operations for prior periods. 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.
The reconciliation of net income to funds from operations is as follows:
Year ended December 31,
(in thousands)
1995 1994 1993
Net income $23,110 $20,466 $18,130
Depreciation and amortization
of real estate assets 30,986 26,479 22,489
Amortization of initial direct
costs of leases 2,393 2,404 2,221
Loss on sale of real estate, extra-
ordinary and non-recurring items 545 1,055 (2,016)
------- ------- -------
Funds from operations $57,034 $50,404 $40,824
======= ======= =======
The Trust's retail leases generally provide for minimum rents, with
periodic increases. Most retail tenants pay a majority of on-site operating
expenses. Many leases also contain a percentage rent clause which calls for
additional rents based on tenant sales, so that at a given sales volume, if
prices increase, so does rental income. These features in the Trust leases
reduce the Trust's exposure to higher costs caused by inflation, although
inflation has not been significant in recent years.
Rental income, which consists of minimum rent, percentage rent, and cost
recoveries, increased 20.9% from $105.9 million in 1993 to $128.1 million in
1994 and 11.5% in 1995 to $142.8 million. If centers acquired and sold in
1993, 1994 and 1995 are excluded, rental income increased 6.1% from 1993 to
1994 and 3.6% from 1994 to 1995.
Minimum rents increased 19.4% in 1994 to $99.9 million from $83.6
million in 1993 and 14% in 1995 to $113.9 million. If centers acquired and
sold in 1993, 1994 and 1995 are excluded, minimum rents increased 4.3% from
1993 to 1994 and 6.2% from 1994 to 1995. Thirty-four percent of the increase
in minimum rent in 1995 was from Congressional Plaza whose occupancy has
increased since its redevelopment was substantially completed in late 1994.
Cost reimbursements consist of tenant reimbursements of real estate taxes
(real estate tax recovery) and common area maintenance expenses (CAM
recovery). After removing the effect of properties purchased and sold during
the past three years, real estate tax recovery has remained fairly constant,
with the largest fluctuation
19
being at Congressional Plaza. Recovery was down in 1994 from 1993 as the
center was vacated for renovation and recovery was up in 1995 compared to 1994
as the center was leased following the renovation. CAM recovery on the
portfolio, adjusted to remove the effect of properties purchased in 1993, 1994
and 1995, was $8.4 million in 1993, $11.7 million in 1994 and $10.0 million in
1995. These fluctuations correspond to fluctuations in CAM expenses,
primarily snow removal, landscaping and security which were up in 1994 as
compared to 1993, but which decreased in 1995.
Other property income includes items which tend to fluctuate from period
to period, such as utility reimbursements, telephone income, merchant
association dues, lease termination fees, late fees and temporary tenant
income. The increases from 1993 to 1995 were due in part to the acquisition
of new properties and in part to the fluctuating nature of the income. Major
increases in 1995 over 1994 resulted from lease termination fees, an
unexpected recovery from a bankrupt tenant, merchant association dues and a
commission on telephone services.
Rental expenses went from $26.5 million in 1993 to $35.8 million in 1994
to $35.1 million in 1995, which represents 23.8% of property income (rental
income plus other property income) in 1993, 26.8% in 1994 and 23.3% in 1995.
The components of rental expense with the greatest percentage increase in 1994
were repairs and maintenance and ground rent. Snow removal expense, a
component of repairs and maintenance, increased from $910,000 in 1993 to over
$2.4 million in 1994 because of new properties and because of increased
expense on the core portfolio resulting from the harsh weather conditions
during 1994. Ground rent increased $2.1 million in 1994 over 1993 because of
the acquisition of Bethesda Row on December 31, 1993, a large part of which is
ground leased. In 1995 the greatest percentage changes were decreases in
repairs and maintenance and in maintenance and security payroll costs. Snow
removal expense decreased to $1.3 million despite the acquisition of new
properties and there has been a decrease in payroll costs as the Trust has
taken measures to control these costs. If rental expenses are adjusted to
remove the effect of properties purchased in 1993, 1994 and 1995, rental
expenses ranged from $24.9 million in 1993 to $27.2 million in 1994 to $24.5
million in 1995. Real estate taxes have ranged from 9.3% of rental income in
1993 to 9.0% in 1994 to 9.6% in 1995. The decline in 1994 was primarily due
to Congressional Plaza, which received a refund of prior year taxes in 1994.
Depreciation and amortization expenses have increased because of the
recent acquisitions and also because of the depreciation on recent tenant work
and property improvements.
Interest income has remained relatively constant in each of the past
three years. The Trust's major sources of interest income are on its mortgage
notes receivable, its notes to officers, and its available cash balances.
Included in interest income in 1995 is the effect of the sale in December 1995
of the Trust's investment in Olympia and York Senior First Mortgage Notes and
other real estate investment trusts, both of which were written down to market
in prior years.
20
Interest expense increased to $39.3 million in 1995 from $31.5 million in
1994, primarily due to interest on the three issues of senior notes in 1995.
Interest expense was relatively constant in 1994 and 1993, $31.5 million and
$31.6 million, respectively. Decreases in interest expense in 1994 from the
repayment of several mortgages, an issue of senior notes and an issue of
convertible subordinated debentures was offset by increases due to an issuance
of convertible subordinated debentures, the interest portion of the capital
lease at Bethesda Row and increased usage of the revolving credit facilities.
The ratio of earnings to fixed charges was 1.55x, 1.61X and 1.5X in 1995, 1994
and 1993, respectively. The ratio of funds from operations to fixed charges
was 2.35x, 2.52x, and 2.27x in 1995, 1994 and 1993, respectively.
While administrative expenses are increasing as the Trust grows and as it
seeks acquisition and development opportunities, administrative expenses as a
percentage of total income have remained relatively constant, at 4.7%, 4.8%
and 4.1%, in 1995, 1994 and 1993, respectively. The major components of the
increase in 1995 over 1994 were in payroll and in costs related to a business
combination that the Trust decided not to pursue. The major component of the
increase in 1994 over 1993 was an increase in costs connected with the review
and analysis of potential property acquisitions which were not purchased.
Other charges consisted of three nonrecurring items in 1994, a $758,000
write off of a mortgage note receivable and accrued interest thereon, an
unrealized loss of $449,000 on an investment in common shares of another real
estate investment trust and a $152,000 recovery of a legal settlement paid in
1987. During 1995 the Trust sold its investments in common shares of other
real estate investment trusts.
Investors' share of operations represents the minority interest in
Congressional Plaza, Loehmann's Plaza and North City Plaza. In 1995 minority
net losses at Loehmann's and North City exceeded the minority net income at
Congressional Plaza.
Income before loss on sale of real estate and extraordinary item
increased from $16.1 million in 1993 to $20.5 million in 1994 to $23.7 million
in 1995, reflecting increased revenues from the Trust's acquisitions and from
improved operating results of the core portfolio.
Loss or gain on the sale of real estate is dependent on the extent and
timing of sales. The Trust regularly reviews its portfolio and does from time
to time sell properties. In 1995 the Trust sold North City Plaza for $1.8
million resulting in a loss on sale of $545,000.
In 1993 the Trust had a net gain of $2.0 million on the early
extinguishment of debt, resulting from a gain on the extinguishment of one
mortgage offset by losses on the redemption of an issue of senior notes, an
issue of convertible subordinated debentures and two other mortgages.
As a result of the foregoing items, net income rose from $18.1 million in
1993 to $20.5 million in 1994 to $23.1 million in 1995.
21
The Trust intends to continue to acquire properties in 1996. If
successful in so doing, these acquisitions should contribute to growth in
rental income and expenses and, thereby, net income. The growth of the core
portfolio, however, 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. Recently there have been a number of
retailer bankruptcies and others are anticipated. These bankruptcies and a
further weakening of the retail environment could adversely impact the Trust,
by increasing vacancies and by 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 the quality of the
Trust's properties will continue to generate demand for its retail space.
Impact of New Accounting Standards
----------------------------------
In October 1995 the Financial Accounting Standards Board (FASB) issued
FASB 123, "Accounting for Stock-Based Compensation". This standard will be
effective for 1996 financial statements and requires that stock based
compensation be accounted for on the fair value method described in FASB 123,
or on the intrinsic value based method of APB 25, whereby if options are
priced at fair market value or above on the date of grant, there is no
compensation expense of the options to the Trust. If APB 25 is used, proforma
net income and earnings per share must be disclosed as if the fair value based
method had been applied. The Trust intends to continue accounting for its
employee stock option plan under APB 25 and therefore the only effect on the
Trust's financial statements will be the proforma disclosure.
Item 8. Financial Statements and Supplementary Data.
---------------------------------------------------
Included in Item 14.
Item 9. Disagreements on Accounting and Financial Disclosure.
------------------------------------------------------------
None.
22
Part III
--------
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
Executive Officers of the Registrant
------------------------------------
The Executive Officers are:
Name Age Position with Trust
---- --- -------------------
Steven J. Guttman 49 President and Chief Executive
Officer and Trustee
Ron D. Kaplan 33 Vice President-Capital Markets
Catherine R. Mack 51 Vice President-General Counsel
and Secretary
Mary Jane Morrow 43 Senior Vice President-Finance and
Treasurer
Hal A. Vasvari 52 Executive Vice President and
Chief Operating Officer
Cecily A. Ward 49 Vice President-Controller
Robert S. Wennett 35 Senior Vice President-
Acquisitions
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.
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 1987, he participated in two of the Trust's debt offerings.
Catherine R. Mack came to the Trust in January 1985 as General Counsel and
became a Vice President in February 1986. Before joining the Trust, Ms.
Mack was an Assistant United States Attorney for the District of Columbia
and, prior to that, an attorney with Fried, Frank, Harris, Shriver and
Jacobson in Washington, D.C. where she represented several local real
estate entities. She has practiced law since 1974.
Mary Jane Morrow joined the Trust in January 1987 as Vice President-Finance
and Treasurer. Before joining Federal Realty, Ms.
23
Morrow was a Partner with Grant Thornton LLP, the Trust's independent
accountants. She was with Grant Thornton LLP for over 10 years and has
extensive experience in real estate and accounting.
Hal A. Vasvari joined Federal Realty Management, Inc., the Trust's former
managing agent, in August 1985 as Executive Vice President. In January 1989,
Mr. Vasvari became Executive Vice President-Management of the Trust. In
December 1994, Mr. Vasvari was appointed Chief Operating Officer. Prior to
August 1985, he was director of leasing for Kravco Co., a developer of
shopping malls and shopping centers.
Cecily A. Ward joined the Trust in April 1987 as Controller. Prior to joining
the Trust, Ms. Ward, a certified public accountant, was with Grant Thornton
LLP, the Trust's independent accountants.
Robert S. Wennett joined the Trust's acquisitions department in April 1986.
Prior to joining the Trust, Mr. Wennett was an associate with Chemical Realty
Corporation in New York where he was involved in real estate financing for
corporate clients.
The schedule identifying Trustees under the caption "Election of Trustees" of
the 1996 Proxy Statement is incorporated herein by reference thereto.
Item 11. Executive Compensation.
-------- -----------------------
The sections entitled "Summary Compensation Table" and "Aggregated Option
Exercises in 1995 and December 31, 1995 Option Values" of the 1996 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
1996 Proxy Statement is incorporated herein by reference thereto.
Item 13. Certain Relationships and Related Transactions.
-------- -----------------------------------------------
The section entitled "Certain Transactions" of the 1996 Proxy Statement is
incorporated herein by reference thereto.
24
Part IV
-------
Item 14. Exhibits, Financial Statement Page No.
-------- ----------------------------- --------
Schedules, and Reports on
-------------------------
Form 8-K
--------
(a) 1. Financial Statements
--------------------
Report of Independent Certified
Public Accountants F-2
Consolidated Balance Sheets-
December 31, 1995 and 1994 F-3
Consolidated Statements of
Operations - years ended
December 31, 1995, 1994
and 1993 F-4
Consolidated Statements of
Shareholders' Equity - years
ended December 31, 1995, 1994
and 1993 F-5
Consolidated Statements of
Cash Flows - years ended
December 31, 1995, 1994 and
1993 F-6
Notes to Consolidated
Financial Statements
(Including Selected Quarterly
Data) F-7 - F20
(a) 2. Financial Statement Schedules
-----------------------------
Schedule III - Summary of Real Estate
and Accumulated Depreciation.............F21 - F24
Schedule IV - Mortgage Loans on Real
Estate ..................................F25 - F26
Report of Independent Certified
Public Accountants........................... F27
25
(a) 3. Exhibits
--------
(3) (i) The Trust's Third Amended and Restated Declaration of
Trust dated May 24, 1984, filed with the Commission on July 5, 1984
as Exhibit 4 to the Trust's Registration Statement on Form S-2 (file
No. 2-92057) is incorporated herein by reference thereto.
(ii) Bylaws of the Trust, filed with the Commission as an exhibit
to the Trust's Current Report on Form 8-K dated February 20, 1985,
as most recently amended and filed with the Commission as an exhibit
to the Trust's Current Report on Form 8-K dated November 30, 1994,
is incorporated herein by reference thereto.
(4) (i) Specimen Share of Beneficial Interest, filed with the
Commission on November 23, 1982 as Exhibit 4 to the Trust's
Registration Statement on Form S-2 (file No. 2-80524), is
incorporated herein by reference thereto.
(ii) Indenture dated March 15, 1985, relating to the Trust's
8 3/4% Convertible Subordinated Debentures Due 2010, filed with the
Commission on March 1, 1985 as Exhibit 4 (a) (2) to the Trust's
Registration Statement on Form S-2 (File No. 2-96136) is
incorporated herein by reference thereto.
(iii) Indenture dated April 1, 1986, relating to the Trust's
8.65% Senior Notes due 1996, filed with the commission on March 27,
1986 as exhibit 4 (a) 1 to the Trust's Registration Statement on
Form S-3, (File No. 33-3934) 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) Shareholder Rights Plan, dated April 13, 1989, filed with the
Commission as an exhibit to the Trust's Current Report on Form 8-K,
dated April 13, 1989, is incorporated herein by reference thereto.
(vi) Indenture dated December 13, 1993, related to the Trust's
8 7/8% Senior Notes due January 15, 2000, the Trust's 8% Notes due
April 21, 2002 and the Trust's 6 5/8% Notes due 2005, 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) is
incorporated herein by reference thereto.
( 9) Voting Trust Agreement..................................*
(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
26
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.
The following documents, 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,
1985, are incorporated herein by reference thereto.
(iv) The Trust's 1985 Non-Qualified Stock Option Plan, adopted on
September 13, 1985
The following documents, 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, 1980, have been modified as noted below, and are incorporated
herein by reference thereto.
(v) Consultancy Agreement with Daniel M. Lyons dated February 22,
1980, as amended (modified as of December l, 1983, to provide for an
annual cost of living increase, not to exceed 10%).
The following documents filed as portions of Exhibit 10 to the Trust's
Annual Report on Form 10-K for the year ended December 31, 1988 are
incorporated herein by reference thereto:
(vi) The 1988 Share Bonus Plan.
(vii) Amendment No. 3 to Consultancy Agreement with Samuel J.
Gorlitz.
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 March 31,
1989 are incorporated herein by reference thereto;
(viii) Executive Agreement between the Trust and Steven J.
Guttman, dated April 13, 1989.
(ix) Executive Agreement between the Trust and Catherine R. Mack,
dated April 13, 1989.
(x) Executive Agreement between the Trust and Mary Jane Morrow,
dated April 13, 1989.
(xi) Executive Agreement between the Trust and Hal A. Vasvari,
dated April 13, 1989.
27
(xii) Employment Agreement between the Trust and Steven J. Guttman,
dated April 13, 1989.
(xiii) Employment Agreement between the Trust and Catherine R.
Mack, dated April 13, 1989.
(xiv) Executive Agreement between the Trust and Robert S.
Wennett, dated April 13 ,1989, modified January 1, 1990, 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, 1989 is
incorporated herein by reference thereto.
(xv) 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.
(xvi) Employment Agreement between the Trust and Robert S. Wennett,
dated January 1, 1992, filed with the Commission as an exhibit to
the Trust's Annual Report on Form 10-K for the year ended December
31, 1991 is incorporated herein by reference thereto.
(xvii) 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.
(xviii) 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.
(xix) 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.
(xx) 1993 Long-Term Incentive Plan and Certified Resolution Re:
Amendment to 1993 Long-Term Incentive Plan, filed with the
Commission as portions of Item 6 to the Trust's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993, are 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:
(xxi) Revolving Credit Agreement dated as of September 1, 1993
among Federal Realty Investment Trust and Corestates Bank.
28
(xxii) Credit Agreement dated as of August 25, 1993 between
Federal Realty Investment Trust and First Union National Bank of
Virginia.
(xxiii) Revolving Credit Agreement dated as of June 22, 1993
between Federal Realty Investment Trust and Signet Bank/Maryland.
(xxiv) Consulting Agreement between Misner Development and
Federal Realty Investment Trust.
(xxv) Fiscal Agency Agreement dated as of October 28, 1993
between Federal Realty Investment Trust and Citibank, N.A.
(xxvi) Credit Agreement dated as of February 11, 1994 between
Federal Realty Investment Trust and Mellon Bank as filed as an
exhibit to the Trust's Annual Report on Form 10-K for the year ended
December 31, 1993 is incorporated herein by reference thereto.
(xxvii) 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.
(xxviii) 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.
The following documents, 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,
1994, are incorporated herein by reference thereto.
(xxix) Form of Severance Agreement between Federal Realty
Investment Trust and Certain of its Officers dated
December 31, 1994.
(xxx) Credit Agreement dated as of September 30, 1994 between
Federal Realty Investment Trust and First Union National Bank of
Virginia.
(xxxi) Second Amendment to Revolving Credit Agreement dated as of
September 30, 1994 between Federal Realty Investment Trust and
Corestates Bank.
(xxxii) First Amendment to Credit Agreement dated September 30,
1994 between Federal Realty Investment Trust and Mellon Bank.
29
(xxxiii) First Amendment to Revolving Credit Agreement dated
September 30, 1994 between Federal Realty Investment Trust and
Signet Bank/Maryland.
(xxxiv) Exclusive Brokerage Agreement between Street Retail Inc.
and Westport Advisors Corporation filed as an exhibit to the Trust's
Quarterly Report on Form 10-Q for quarter ended March 31, 1995 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,
1995 are incorporated herein by reference thereto:
(xxxv) Non-Exclusive Brokerage Agreement between Federal Realty
Investment Trust and Westport Advisors Corporation and Jack Alan
Guttman dated August 20, 1995.
(xxxvi) Exclusive Brokerage Agreement between Street Retail, Inc.
and Westport Advisors Corporation and Jack Alan Guttman dated August
20, 1995.
(11) Statement regarding computation of per share
earnings.........................................*
(12) Statements regarding computation of ratios.......*
(13) Annual Report to Shareholders, Form 10Q or quarterly report to
shareholders.....................................*
(18) Letter regarding change in accounting
principles.......................................*
(19) Report furnished to security holders.............*
(21) Subsidiaries of the registrant....................
(xxxvii) Articles of Incorporation 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.
(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.
(22) Published report regarding matters submitted to
vote of security holders.........................*
(23) Consent of Grant Thornton LLP....................
(24) Power of attorney................................*
(27) Financial Data Schedule..........................+
(99) Additional exhibits..............................*
30
(b) Reports on Form 8-K Filed during the Last Quarter
-------------------------------------------------
A Form 8-K, dated November 17, 1995, was filed in response to Item
7.(c)99
A Form 8-K, dated December 20, 1995 was filed in response
to Item 5.
_________
* Not applicable.
+ For Edgar filing only.
31
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 13, 1996 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 13, 1996
- --------------------------- --------------
Steven J. Guttman
Senior Vice-President
and Treasurer (Chief
Mary Jane Morrow Financial Officer) March 13, 1996
- --------------------------- --------------
Mary Jane Morrow
Vice-President and
Controller (Principal
Cecily A. Ward Accounting Officer) March 13, 1996
- --------------------------- --------------
Cecily A. Ward
Trustee March 13, 1996
- --------------------------- --------------
Dennis L. Berman
A. Cornet de Ways Ruart Trustee March 13, 1996
- --------------------------- --------------
A. Cornet de Ways Ruart
Trustee March 13, 1996
- --------------------------- --------------
Samuel J. Gorlitz
Kristin Gamble Trustee March 13, 1996
- --------------------------- --------------
Kristin Gamble
Trustee March 13, 1996
- --------------------------- --------------
Morton S. Lerner
Walter F. Loeb Trustee March 13, 1996
- --------------------------- --------------
Walter F. Loeb
Donald H. Misner Trustee March 13, 1996
- --------------------------- --------------
Donald H. Misner
George L. Perry Trustee March 13, 1996
- --------------------------- --------------
George L. Perry
32
FINANCIAL STATEMENTS AND
SCHEDULES
F1
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Trustees and Shareholders
Federal Realty Investment Trust
We have audited the accompanying consolidated balance sheets of Federal Realty
Investment Trust as of December 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. 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, 1995 and 1994 and the consolidated results
of its operations and its consolidated cash flows for each of the three years
in the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
Grant Thornton LLP
Washington, D.C.
February 9, 1996
F2
Federal Realty Investment Trust
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1995 1994
------------- -------------
ASSETS (in thousands)
Investments
Real estate, at cost $1,009,682 $852,722
Less accumulated depreciation and amortization (190,795) (160,636)
---------- ----------
818,887 692,086
Mortgage notes receivable 13,561 13,178
---------- ----------
832,448 705,264
Other Assets
Cash 10,521 3,995
Investments 261 3,588
Notes receivable-officers 1,011 845
Accounts receivable 15,091 16,023
Prepaid expenses and other assets, principally
property taxes and lease commissions 22,987 19,158
Debt issue costs (net of accumulated amortization
of $3,918,000 and $3,206,000, respectively) 3,835 2,931
---------- ----------
$886,154 $751,804
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases $131,829 $132,924
Mortgages payable 90,488 102,781
Notes payable 49,980 61,883
Accrued expenses 19,048 10,675
Accounts payable 8,571 6,566
Dividends payable 13,191 12,486
Security deposits 3,083 2,687
Prepaid rents 787 1,017
Senior notes 165,000 -
5 1/4% Convertible subordinated debentures 75,289 75,289
Investors' interest in consolidated assets 1,420 2,274
Commitments and contingencies - -
Shareholders' equity
Common shares of beneficial interest, no par
or stated value, unlimited authorization,
issued 32,221,670 and 31,669,434 shares,
respectively 508,870 496,958
Accumulated dividends in excess of Trust net income (172,835) (144,553)
Allowance for unrealized loss on marketable securities - (53)
---------- ----------
336,035 352,352
Less 61,328 and 60,200 common shares in treasury-at cost, respectively,
deferred compensation and subscriptions receivable (8,567) (9,130)
---------- ----------
327,468 343,222
---------- ----------
$886,154 $751,804
========== ==========
The accompanying notes are an integral part of these statements.
F-3
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
1995 1994 1993
---------- ---------- ----------
(in thousands, except per share data)
Revenue
Rental income $142,841 $128,133 $105,948
Interest 4,113 3,933 3,894
Other property income 7,435 5,698 5,495
-------- -------- --------
154,389 137,764 115,337
Expense
Rental 35,093 35,830 26,519
Real estate taxes 14,471 12,097 10,324
Interest 39,268 31,462 31,550
Administrative 7,305 6,661 4,675
Other charges -- 1,055 --
Depreciation and amortization 34,901 29,801 25,375
-------- -------- --------
131,038 116,906 98,443
-------- -------- --------
Operating income before investors' share
of operations, loss on sale of real estate and extraordinary item 23,351 20,858 16,894
Investors' share of operations 304 (392) (780)
-------- -------- --------
Income before loss on sale of real estate and extraordinary item 23,655 20,466 16,114
Loss on sale of real estate (545) -- --
-------- -------- --------
Income before extraordinary item 23,110 20,466 16,114
Extraordinary item
Net gain on early extinguishment of debt -- -- 2,016
-------- -------- --------
Net Income $ 23,110 $ 20,466 $ 18,130
======== ======== ========
Weighted Average Number of Common Shares 31,860 30,679 27,009
======== ======== ========
Earnings per share
Income before loss on sale of real estate and extraordinary item $0.74 $0.67 $0.60
Loss on sale of real estate (0.02) -- --
Extraordinary item -- -- 0.07
-------- -------- --------
$0.72 $0.67 $0.67
======== ======== ========
The accompanying notes are an integral part of these statements.
F-4
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Year ended December 31,
1995 1994 1993
--------- --------- --------- --------- --------- ---------
(In thousands, except share amounts) Shares Amount Shares Amount Shares Amount
Common Shares of Beneficial Interest
Balance, beginning of year 31,669,434 $496,958 28,077,999 $408,005 24,777,831 $322,903
Exercise of stock options 20,744 390 47,240 1,035 53,384 1,053
Shares issued under dividend reinvestment plan 193,965 4,181 162,466 3,891 131,620 3,588
Conversion of 8 3/4% subordinated debentures - - - - 137,364 2,209
Conversion of 5 1/4% subordinated debentures due 2002 - - 1,729 64 - -
Shares purchased under share purchase plan - - 40,000 1,000 - -
Shares issued to purchase shopping center 337,527 7,341 - - - -
Net proceeds from sale of shares - - 3,340,000 82,963 2,977,800 78,252
---------- -------- ---------- -------- ---------- --------
Balance, end of year 32,221,670 $508,870 31,669,434 $496,958 28,077,999 $408,005
========== ======== ========== ======== ========== ========
Common Shares of Beneficial Interest
in Treasury, Deferred Compensation and
Subscriptions Receivable
Balance, beginning of year (539,188) ($9,130) (496,499) ($7,759) (465,718) ($7,154)
Amortization of deferred compensation 32,875 547 27,875 422 4,000 89
Net (increase) decrease in stock option loans 5,971 20 (30,564) (793) (34,781) (694)
Purchase of treasury shares (1,128) (25) - -
Purchase (subscription) under share purchase plan 1,375 21 (40,000) (1,000) - -
-------- ------- -------- ------- -------- -------
Balance, end of year (500,095) ($8,567) (539,188) ($9,130) (496,499) ($7,759)
======== ======= ======== ======= ======== =======
Allowance for Unrealized Loss on Marketable Securities
Balance, beginning of year ($53) ($364) ($385)
Change due to recognizing loss on securities 53 334 -
Net unrealized (loss) gain (23) 21
------- ------- ------
Balance, end of year $0 ($53) ($364)
======= ======= ======
Accumulated Dividends in Excess of Trust Net Income
Balance, beginning of year ($144,553) ($116,823) ($92,932)
Net income 23,110 20,466 18,130
Dividends declared to shareholders (51,392) (48,196) (42,021)
---------- ---------- ---------
Balance, end of year ($172,835) ($144,553) ($116,823)
========== ========== =========
The accompanying notes are an integral part of these statements.
F-5
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve months ended December 31,
(In thousands) 1995 1994 1993
------------ --------------------------
OPERATING ACTIVITIES
Net income $23,110 $20,466 $18,130
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 34,900 29,801 25,375
Rent abatements in lieu of leasehold improvements,
net of tenant improvements retired (951) (812) (1,185)
Imputed interest and amortization of debt cost 731 547 520
Amortization of deferred compensation and
forgiveness of officers' notes 531 621 591
Write-down of investments - 1,207 -
Loss on sale of real estate 545 - -
Payment of trustees' fees in shares 136 132 185
Net gain on early extinguishment of debt - - (2,016)
Changes in assets and liabilities
Decrease (increase) in accounts receivable 932 (400) (5,345)
Increase in prepaid expenses and other
assets before depreciation and amortization (4,768) (4,674) (6,484)
Increase (decrease) in operating accounts payable,
security deposits and prepaid rent 1,453 (1,161) 3,221
Increase (decrease) in accrued expenses, net of the premium
put on the 5 1/4% convertible subordinated debentures 8,498 (528) 2,191
-------- ------- -------
Net cash provided by operating activities 65,117 45,199 35,183
INVESTING ACTIVITIES
Acquisition of real estate (105,096) (48,337) (108,007)
Capital expenditures (33,829) (42,286) (34,267)
(Issuance) payments of mortgage notes receivable, net (383) (7) 21
Issuance of notes receivable - officers, net (215) (116) (48)
Proceeds from sale of real estate 1,782 - -
Net decrease in temporary investments 3,381 281 31,607
-------- ------- -------
Net cash used in investing activities (134,360) (90,465) (110,694)
FINANCING ACTIVITIES
Proceeds of mortgage financings - 22,500 -
Regular payments on mortgages, capital leases and notes payable (2,289) (2,080) (2,225)
Balloon payments on mortgages and capital leases,
including prepayment fees (23,601) (3,400) (32,547)
Borrowing (repayment) of short-term debt, net (14,635) 30,332 24,413
Early retirement of 5 1/4% convertible debentures due 2002 - - (4,416)
Redemption of 5 1/4% convertible debentures due 2002, including
premium put - (47,790) -
Redemption of 8 3/4% convertible debentures - - (176)
Issuance (redemption) of senior notes, net of costs 163,384 - (50,505)
Issuance of 5 1/4% convertible debentures due 2003,
net of costs - - 73,025
Dividends paid (47,918) (43,973) (38,087)
Issuance of shares 1,682 84,247 79,489
Decrease in minority interest (854) (210) (141)
-------- ------- -------
Net cash provided by financing activities 75,769 39,626 48,830
-------- ------- -------
Increase (decrease) in cash 6,526 (5,640) (26,681)
Cash at beginning of year 3,995 9,635 36,316
-------- ------- -------
Cash at end of year $10,521 $3,995 $9,635
======== ======= =======
The accompanying notes are an integral part of these statements.
F-6
Federal Realty Investment Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995, 1994, and 1993
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Federal Realty Investment Trust invests predominantly in income-producing
real estate properties, primarily community and neighborhood shopping centers.
Beginning in late 1994 the Trust expanded its investments to main street
retail properties, retail buildings and shopping centers in densely developed
urban and suburban areas. The Trust's leases with tenants are classified as
operating leases and rental income is recognized on an accrual basis over the
terms of the related leases.
The Trust uses the straight-line method in providing for depreciation.
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. The gain or loss resulting
from the sale of properties is included in net income at the time of sale.
The Trust has adopted FAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of". The Trust does not hold
any assets that meet the impairment criteria of FAS 121.
The Trust capitalizes certain costs directly related to the acquisition,
improvement and leasing of real estate including applicable salaries and other
related costs. The capitalized costs associated with unsuccessful
acquisitions are charged to operations when that determination is made. The
capitalized costs associated with improvements and leasing are depreciated or
amortized over the life of the improvement and lease, respectively.
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
interest method. Upon conversion or in the event of redemption, applicable
unamortized costs are charged to shareholders' equity or to operations,
respectively.
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 Trust consolidates the financial statements of one wholly owned
subsidiary, eight partnerships, and a joint venture which are controlled by
the Trust. The equity interests of other investors are reflected as investors'
interest in consolidated assets. All significant intercompany transactions
and balances are eliminated.
F7
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 may exceed insurable amounts.
Earnings per share are computed using the weighted average number of
shares outstanding during the respective periods, including options. 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, there is no compensation
expense of the options to the Trust.
Inherent in the preparation of the Trust's financial statements are
certain estimates. These estimates are prepared using management's best
judgment, after considering past and current events.
Certain previously reported amounts for 1994 and 1993 have been
reclassified to assure comparability of all periods presented. See Note 10.
NOTE 1: REAL ESTATE AND ENCUMBRANCES
A summary of the Trust's properties at December 31, 1995 is as
follows:
Accumulated
depreciation and
Cost amortization Encumbrances
---------- ------------ ------------
(in thousands)
Retail properties $ 802,329 $134,397 $ 90,488
Retail properties
under capital leases 201,121 52,236 131,829
Apartments 6,232 4,162 -
---------- -------- ------------
$1,009,682 $190,795 $222,317
========== ======== ============
The Trust's 70 retail properties are located in 13 states and the
District of Columbia, primarily along the East Coast between the Boston
metropolitan area and Richmond, Virginia. There are approximately 1,700
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 5% or more of revenue.
The Trust purchased 19 retail properties during 1995 for a total cost of
$120.6 million. The Trust also purchased a building abutting Flourtown
Shopping Center, one of its existing centers, for $3.1 million. Finley Square
Shopping Center in suburban Chicago was purchased on April 27, 1995 for $18.8
million in cash; Bristol Shopping Center in Bristol, Connecticut was purchased
on September 22, 1995 for $19.6 million, by assuming a $11.3 million mortgage
and by issuing 337,527 common shares valued at $7.3 million with the balance
in cash; Park & Shop Center in Washington, D.C. was purchased on December 1,
1995 for $11.2 million in cash; and on December 21, 1995 Shirlington Shopping
Center in Arlington, Virginia was purchased for $23.5
F8
million in cash. The retail building acquisitions during 1995 were as
follows: seven buildings in West Hartford, Connecticut for $15.3 million; two
buildings in Greenwich, Connecticut for $14.9 million; one building in
Westport, Connecticut for $5.7 million; one building in Brookline,
Massachusetts for $3.8 million; one building in Westfield, New Jersey for $2.2
million; two buildings in Evanston, Illinois for $3.6 million and one
building in an infill space at Bethesda Row, one of its existing properties in
Bethesda, Maryland, for $2.0 million. In connection with certain of these
purchases, brokerage commissions of $671,000 were incurred to a company that
is fifty percent owned by a brother of the Trust's president. These
commissions were paid pursuant to a brokerage contract on terms comparable to
terms contained in contracts which the Trust has with brokers providing
similar services in other geographic areas.
On August 1, 1995 the Trust sold the 111,000 square foot North City
Shopping Center in New Castle, Pennsylvania for $1.8 million, resulting in a
loss of $545,000.
The Trust purchased four shopping centers in 1994. Idylwood Plaza in
Falls Church, Virginia was purchased for $14.3 million in cash; North Lake
Commons in Lake Zurich, Illinois was purchased for $10.9 million in cash;
Garden Market Shopping Center in Western Springs, Illinois was purchased for
$7.6 million in cash; and Queen Anne Plaza in Norwell, Massachusetts was
purchased for $10.7 million in cash and a $1.1 million note which was paid in
January 1995. In addition the Trust purchased a 3.9 acre parcel of land
underlying a supermarket which adjoins its Bala Cynwyd Shopping Center
for cash of $1.1 million and a retail building in Westport, Connecticut for
cash of $3.8 million.
During 1993 the Trust acquired seven shopping centers. Pan Am Shopping
Center in Fairfax, Virginia was acquired for $21.6 million in cash;
Gaithersburg Square in Gaithersburg, Maryland was purchased for $11.0 million
in cash and the assumption of a $2.0 million liability which is the estimated
cost to remediate certain preexisting environmental issues; Quince Orchard
Plaza in Gaithersburg, Maryland and its adjoining office building were
purchased for $10.9 million in cash and the assumption of a liability of
approximately $250,000 to remediate preexisting environmental issues;
Crossroads Shopping Center in Highland Park, Illinois was purchased for $16.2
million in cash; Bala Cynwyd Shopping Center in suburban Philadelphia,
Pennsylvania was purchased for $17.0 million in cash; Dedham Plaza in Dedham,
Massachusetts was purchased for $25.0 million in cash and the assumption of a
$250,000 liability to remediate existing environmental issues; and the
leasehold interest in Bethesda Row in Bethesda, Maryland was acquired with
$6.2 million in cash.
Mortgage notes receivable consist of two notes in 1995 and 1994 and three
notes in 1993 collateralized by shopping centers. All three notes were issued
in connection with either the acquisition or sale of Trust properties. In
1994 one note for $700,000 with accrued interest thereon was deemed
uncollectible and therefore was written off.
F-9
In January 1994 a $22.5 million one year mortgage was placed on Northeast
Plaza in Atlanta, Georgia. The mortgage, which bore interest at LIBOR (London
Interbank Offered Rate), plus 100 to 150 basis points was repaid in January
1995. In 1993 the Trust prepaid mortgages on Laurel, Northeast and Northeast
Plaza shopping centers, resulting in a net gain of $2.9 million which was
recorded as a component of the net gain on early extinguishment of debt.
In November 1994 the Trust exercised an option to purchase the ground
underlying the Northeast Shopping Center in Philadelphia, Pennsylvania for
$4.2 million, $3.4 million of which had been recorded as a capital lease
obligation.
Mortgages payable and capital lease obligations are due in installments
over various terms extending to 2060 with actual or imputed interest rates
ranging from 7.9% to 11.25%. Certain of the mortgage and capital lease
obligations require additional interest payments based upon property
performance.
Aggregate mortgage principal payments due during the next five years are
$1.3 million, $1.4 million, $54.5 million, $532,000, and $583,000,
respectively.
Future minimum lease payments and their present value for property under
capital leases as of December 31, 1995 are as follows:
Year ending December 31, (in thousands)
1996 $ 12,953
1997 12,969
1998 13,002
1999 13,005
2000 13,441
Thereafter 547,387
---------
612,757
Less amount representing interest (480,928)
---------
Present value $ 131,829
=========
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 and usually provide for contingent rentals based on sales and
sharing of certain operating costs.
F10
The components of rental income are as follows:
(in thousands) Year ended December 31,
1995 1994 1993
-------- -------- ----------
Retail properties
Minimum rents $111,454 $ 97,503 $ 81,291
Cost reimbursements 23,961 23,774 18,171
Percentage rent 4,977 4,478 4,147
Apartments - rents 2,449 2,378 2,339
-------- -------- --------
$142,841 $128,133 $105,948
======== ======== ========
The components of rental expense are as follows:
(in thousands) Year ended December 31,
1995 1994 1993
-------- -------- --------
Management fees and costs $5,707 $ 5,316 $ 5,213
Repairs and maintenance 8,140 9,238 6,452
Utilities 4,936 4,981 3,944
Payroll - properties 3,230 4,094 3,205
Ground rent 2,852 2,510 375
Insurance 2,281 1,879 1,585
Other operating 7,947 7,812 5,745
-------- --------- --------
$ 35,093 $ 35,830 $ 26,519
======== ======== ========
Minimum future retail property rentals on noncancelable operating leases
as of December 31, 1995 are as follows:
Year ending December 31, (in thousands)
1996 $120,878
1997 112,474
1998 100,554
1999 89,803
2000 77,526
Thereafter 347,620
--------
$848,855
========
NOTE 2. INVESTMENTS
-------------------
At December 31, 1994 the Trust's investments of $3.6 million consisted of
$4.7 million of Olympia and York Senior First Mortgage Notes due March 20,
1999, which were carried at $3.1 million and $500,000 of marketable equity
securities and mutual funds which were stated at market. In 1994 the Trust
recognized an unrealized loss of $449,000 on these equity securities. In 1995
the Trust sold the equity securities realizing an additional loss of $54,000.
The Olympia and York Senior Notes were also sold in 1995, at a gain of
$200,000 over their recorded value. At December 31, 1995 investments
consisted of mutual funds stated at market.
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS
-------------------------------------------
The following disclosure of estimated fair value was determined by the
Trust, using available market information and
F11
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.
December 31, 1995 December 31, 1994
(in thousands) Carrying Fair Carrying Fair
Value Value Value Value
------------------- -------------------
Cash & equivalents $ 10,521 $ 10,521 $ 3,995 $ 3,995
Investments 261 261 3,588 3,588
Mortgage notes
receivable 13,561 15,027 13,178 13,459
Mortgages and notes
payable 140,468 146,801 164,664 165,700
Convertible
debentures 75,289 66,932 75,289 54,585
Senior notes 165,000 176,653 - -
NOTE 4. NOTES PAYABLE
---------------------
At December 31, 1995 and 1994 the Trust had notes payable of $50.0
million and $61.9 million, respectively. Of these balances, $40.1 million in
1995 and $54.7 million in 1994 were issued under the Trust's revolving credit
facilities.
The remaining balance of notes payable was issued in connection with the
acquisition, leasing or renovation of properties. A $2.5 million noninterest
bearing note which is due on or before December 16, 1996, was issued in
September 1995 in connection with a lease transaction at Barracks Road. A
note, with a balance of $1.4 million at December 31, 1995, was issued in
connection with the buyout of a tenant at Queen Anne Plaza in January 1995.
The noninterest bearing note of $2.2 million, due in annual installments of
$200,000 for 11 years was recorded at its discounted value using an interest
rate of 8 7/8%.
In December 1994 the Trust issued a one month note payable January 1995
for $1.1 million in connection with the purchase of Queen Anne Plaza. A 10%
note, payable in equal monthly installments with a final maturity in 2013,
issued in connection
F-12
with the renovation of Perring Plaza had a balance of $2.9 million in 1995 and
$3.0 million in 1994. A note issued in connection with the acquisition of
Federal Plaza, bearing interest at 11% and maturing in 1996, with a balance of
$2.9 million in 1994 and $3.0 million in 1995 comprises the majority of the
balance of the notes payable.
At December 31, 1995 and 1994 the Trust had $130 million of unsecured
medium term revolving credit facilities with four banks. The facilities,
which bear interest at LIBOR plus 75 to 100 basis points at December 31, 1995,
at LIBOR plus 85 to 100 basis points prior to December 1995, require fees and
have covenants requiring a minimum shareholders' equity and a maximum ratio of
debt to net worth. The maximum drawn under these facilities during 1995 and
1994 was $66.8 million and $54.7 million, respectively. In 1995 and 1994 the
weighted average interest rate on borrowings was 6.9% and 5.6%, respectively,
and the average amount outstanding was $26.7 million and $26.3 million,
respectively.
NOTE 5. DIVIDENDS
-----------------
On November 27, 1995 the Trustees declared a quarterly cash dividend of
$.41 per share, payable January 12, 1996 to shareholders of record January 2,
1996. For the years ended December 31, 1995, 1994 and 1993, $.43, $.75 and
$.45 of dividends paid per share, respectively, represented a return of
capital.
NOTE 6. COMMITMENTS AND CONTINGENCIES
-------------------------------------
Pursuant to the provisions of the Loehmann's Plaza Limited Partnership
Agreement, on or after September 1, 1995 the limited partner may require the
Trust to purchase his interest in the Partnership at its then fair market
value.
The Congressional Plaza Shopping Center Joint Venture Agreement provides
that upon six months advance notice the Trust can be required to purchase its
pro rata share of one venturer's 22.5% or greater joint venture interest for a
purchase price based on the appraised fair market value of the shopping
center, but no less than the percentage of joint venture interest being sold
multiplied by the difference between $17.5 million and the remaining principal
balance of any liabilities of the Joint Venture.
The State of New Jersey Division of Taxation assessed the Trust $364,000
in taxes, penalty and interest for the years 1985 through 1990, since the
State disallowed the dividends paid deduction in computing New Jersey taxable
income. The Trust protested this assessment since the Trust believed that it
was entitled to the deduction. The case was dismissed in December 1995 in
favor of the Trust.
As previously reported,certain of the Trust's shopping centers have some
environmental contamination. The North Carolina Department of the
Environment, Health and Natural
F13
Resources ("DEHNR") issued a Notice of Violation ("NOV") against a former dry
cleaner tenant at Eastgate Shopping Center in Chapel Hill, North Carolina
concerning a spill at the shopping center. As owner of the shopping center,
the Trust was named in and received a copy of the NOV. Estimates to remediate
the spill range from $300,000 to $500,000. The Trust has entered into an
agreement with two previous owners of the shopping center to share the costs
to assess and remediate. In 1993 the Trust recorded a liability of $120,000
as its estimated share of the cleanup costs.
In 1992 contaminants at levels in excess of New Jersey cleanup standards
were identified at a shopping center in New Jersey. The Trust has retained an
environmental consultant to investigate the contamination. The Trust is also
evaluating whether it has insurance coverage for this matter. At this time,
the Trust has not determined what the range of remediation costs might be, but
does not believe that the costs will have a material effect upon the Trust's
financial condition. The Trust has also identified chlorinated solvent
contamination at another property. The contamination appears to be linked to
the current and/or previous dry cleaner. The Trust intends to look to the
responsible parties for any remediation effort. Evaluation of this situation
is preliminary and it is impossible, at this time, to estimate the range of
remediation costs, if any.
On September 22, 1995 the Trust purchased the Bristol Shopping Center in
Bristol, Connecticut. Pursuant to an agreement executed at closing, the Trust
agreed to perform all remedial measures necessary to obtain a final letter of
compliance from the Connecticut Commissioner of Environmental Protection with
respect to certain identified soil and ground water contamination associated
with a former dry cleaning operation. The seller established an escrow
account at closing of $187,500 to cover such remedial measures and has
indemnified the Trust in connection with the identified contamination.
The Trust reserved $2.25 million at closing in 1993 for environmental
issues, principally associated with Gaithersburg Square Shopping Center.
Pursuant to an indemnity agreement entered into with the seller at closing,
the Trust agreed to take certain actions with respect to identified
chlorinated solvent contamination. The seller indemnified the Trust for
certain third party claims and government requirements related to
contamination at adjacent properties. During the third quarter of 1995 the
reserve was reduced by $269,000 with a corresponding reduction in the basis of
land at one shopping center since the environmental issue there was resolved.
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, 1995, the Trust is liable to participants for approximately
$261,000 under this plan. Although this is an unfunded plan, the Trust has
purchased certain investments with which to match this obligation.
F-14
The Trust has entered into agreements with certain key employees whereby
if these employees voluntarily or involuntarily leave the employment of the
Trust within six months after a "change of control" (defined as control of 35%
or more of outstanding shares) of the Trust, they will be entitled to a lump
sum cash payment equal to one to three times their annual salary as of the
date of termination and have their health and welfare benefits and executive
privileges continued for a period of one to three years. In the event of a
change of control, the Trust also agreed that all restrictions on the exercise
or receipt of any stock options and stock grants shall lapse upon termination
of employment and that all shares owned at termination shall be redeemed by
the Trust at a formula price.
The Trust had previously entered into employment agreements with its
President and certain other key employees for terms of up to three years,
which automatically renewed at the end of each month unless either party
notified the other that it elected not to extend the term. During 1994 the
Trust offered certain of the employees covered under these agreements, other
than the President, a severance agreement in lieu of the employment agreement.
Two employees retained their employment agreements, which agreements now have
a fixed declining term. The severance agreement prescribes that, among other
things, if the employee is terminated without cause, he/she is entitled to
salary for up to 18 months and benefits for up to nine months.
As of December 31, 1995 in connection with the renovation of certain
shopping centers, the Trust has contractual obligations of $7.4 million. In
addition the Trust is contractually obligated under leases to provide up to
$6.0 million in building and tenant improvements.
The Trust is obligated under ground lease agreements on several shopping
centers requiring minimum annual payments as follows:
(in thousands)
1996 $2,851
1997 2,851
1998 2,851
1999 2,859
2000 2,855
Thereafter 157,799
--------
$172,066
========
NOTE 7. 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 1995 and 1994 the Trust had outstanding $289,000 of 5 1/4%
convertible subordinated debentures due 2002. The
F15
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.
In April 1994, $39.8 million of the debentures were redeemed at a price
equal to 120% of their principal amount or $47.8 million, in accordance with a
premium put. A principal amount of $53,000 of these debentures was converted
into 1,729 shares in 1994. During 1993 the Trust purchased $3.7 million of
these debentures, resulting in a loss of $74,000 which was recorded as a
component of the net gain on early extinguishment of debt.
NOTE 8. SENIOR NOTES
--------------------
On January 19, 1995 the Trust issued $100.0 million of 8 7/8% Notes, due
January 15, 2000. The notes, which were issued at a price of 99.815%, pay
interest semiannually on January 15 and July 15 and are not redeemable prior
to maturity. After deducting the underwriting discount and other costs, the
Trust netted approximately $98.9 million.
In order to protect itself against the risk that the general level of
interest rates for such securities would rise before the senior notes were
priced, in December 1994, the Trust entered into two interest rate hedge
agreements on a total principal amount of $75.0 million. The cost of the
agreements, which terminated on January 20, 1995, was $21,000, which is being
amortized into interest expense over the life of the notes.
In January 1995 the Trust executed a five year interest rate swap on
$25.0 million, whereby the Trust swapped fixed interest payment obligations of
8.1% for a floating rate interest payment of three month LIBOR. The floating
rate during the first quarter of 1995 was 6.2%. In May 1995 the swap was
terminated and the Trust sold the swap for $1.5 million, which is being
amortized as a deduction to interest expense over the remaining term.
On April 21, 1995 the Trust issued $25.0 million of senior notes, netting
$24.9 million after deducting discounts and costs. The notes, which are due
April 21, 2002 and bear interest at 8%, payable semiannually on April 21 and
October 21, were issued at a price of 99.683%.
On December 8, 1995 the Trust issued an additional $40.0 million of
senior notes, netting $39.6 million after deducting costs. The notes, which
mature on December 1, 2005 and bear interest at 6 5/8%, payable June 1 and
December 1, were issued at a price of 99.3%.
NOTE 9. SHAREHOLDERS' EQUITY
----------------------------
In September 1995 the Trust issued 337,527 shares of beneficial interest
valued at $7.3 million in partial consideration for the purchase of Bristol
Shopping Center.
In April 1994 the Trust raised net proceeds of $61.3 million from a
public offering of 2.5 million shares of beneficial
F16
interest ("shares"). In a concurrent offering of 840,000 shares to an
institutional investor, the Trust raised net proceeds of $21.7 million. In
April 1993 the Trust sold 2.8 million shares in a public offering, raising net
proceeds of $72.8 million. In December 1993 the Trust sold 220,000 shares for
$5.4 million in a private placement in connection with the long term lease of
a property.
The Trust has a Dividend Reinvestment Plan, whereby shareholders may use
their dividends to purchase shares. In November 1995 and March 1993, the
Trust registered an additional 1.0 million shares and 500,000 shares,
respectively, with the Securities and Exchange Commission in connection with
the plan. In 1995, 1994, and 1993, 193,965 shares, 162,466 shares and 131,620
shares, respectively, were issued under the Plan.
On January 1, 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, 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; another one sixteenth was forgiven on
January 31, 1996 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 was forgiven in
1995. The Trust has loaned participants $839,000 to pay the taxes due in
connection with the plan. The purchase loans and the tax 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 are satisfied and the term has
expired.
Under the terms of the 1988 Share Bonus Plan, 108,000 shares were granted
to officers and key employees. During the year ended December 31, 1993, the
last 4,000 shares were vested and charged to operations. In connection with
these shares, the Trust has made loans to the participants to pay the taxes
due in connection with the plan. The notes bear interest at the lesser of
(i) the Trust's borrowing rate or (ii) the Trust's current indicated annual
dividend rate divided by the purchase price of such shares. Notes issued under
this plan are being forgiven over three years from issuance if the officer is
still employed by the Trust. During the years ended December 31, 1995, 1994
and 1993, $49,000, $74,000 and $80,000, respectively, was forgiven. The tax
loans under this plan and the share purchase plan are recorded as notes
receivable-officers.
F17
In connection with a restricted share grant, the Trust accepted from the
President a noninterest bearing note for $210,000. One installment of
$105,000 was paid on the note in 1992 and the second installment is due April
15, 2001.
In 1987 the Trust purchased approximately $887,000 worth of shares of other
real estate investment trusts ("REITs") as a long term investment. In 1994
the Trust recognized an unrealized loss of $449,000 on these shares, since
the decline in value of one investment appeared to be permanent. Due to
temporary price declines in the other REITs, the Trust had an allowance for
unrealized losses of $53,000 as of December 31, 1994. The Trust sold these
shares in 1995, recognizing an additional loss of $54,000.
At December 31, 1995, the Trust had 61,328 shares in treasury at a cost
of $1.2 million . At December 31, 1994 and 1993, the Trust had 60,200 shares
in treasury at a cost of $1.1 million.
On April 13, 1989, the Trustees adopted a Shareholder Rights Plan (the
Plan). Under the Plan, one right was issued for each outstanding share of
common stock held as of April 24, 1989, and a right will be attached to each
share issued in the future. The rights are exercisable into common shares
upon the occurrence of certain events, including acquisition by a person or
group of certain levels of beneficial ownership or a tender offer by such a
person or group. The rights are redeemable by the Trust for $.01 and expire on
April 24, 1999.
NOTE 10. STOCK OPTION PLAN
--------------------------
The 1993 Long Term Incentive Plan ("Plan") was approved by shareholders
in May 1993. On the date of approval, 472,500 options were awarded to
officers, employees and nonemployee Trustees. On December 16, 1993, 69,000
options were awarded to employees. Under the Plan, on each annual meeting
date during the term of the plan, each nonemployee Trustee will be awarded
2,500 options. Accordingly on each of May 10, 1995 and May 4, 1994, 20,000
options were awarded to nonemployee Trustees. On February 15, 1995,
719,000 stock options at $20.75 per share were granted to employees of the
Trust.
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 has outstanding from its officers
and employees notes for $1.9 million. 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. In September 1995 the terms of the option
loans were modified. The loans, which previously had a five year term, may
now have a term extending to the employee's or officer's retirement date.
Consequently these loans are now
F18
being classified as subscriptions receivable, a component of stockholder's
equity, rather than as notes receivable-officers. The 1994 and 1993 balances
of notes receivable-officers and subscriptions receivable have been
reclassified to allow comparability.
Shares available Outstanding
for future Options Price
option grants Shares per share
---------------- ------- ------------
December 31,1992 171,537 373,250
Expiration of 1989 plan (171,537) -
Adoption of 1993 plan 6,000,000 -
Options granted (541,500) 541,500 $25.75-$26.00
Options exercised - (53,384) $15.00-$24.125
Options expired 2,500 (8,250) $20.875-$26.00
--------- ---------
December 31, 1993 5,461,000 853,116
Options granted (20,000) 20,000 $24.875
Options exercised - (47,240) $18.00-$22.625
Options expired (1,750) $20.875-$25.75
--------- ---------
December 31, 1994 5,441,000 824,126
Options granted (739,000) 739,000 $20.75-$22.00
Options exercised --- (20,744) $15.00-$20.875
Options expired (47,750) $17.25-$26.00
--------- ---------
December 31, 1995 4,702,000 1,494,632
========= =========
NOTE 11. SAVINGS AND RETIREMENT PLAN
------------------------------------
The Trust has a savings and retirement plan in accordance with the
provisions of Section 401(k) of the Internal Revenue Code. Under the plan,
the Trust, out of its current net income, contributed 50% of each employee's
contribution. Employees' contributions range, at the discretion of each
employee, from 1% to 5% of compensation. 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, 1995, 1994 and 1993 was $158,000, $147,000 and $133,000,
respectively. In 1995 the Trust recorded a liability for an additional
contribution of 1% of salary for all nonofficer employees who are eligible for
the 401(k) plan; this is in addition to another 1% of salary which will be
paid to all eligible nonofficer employees as a bonus for 1995.
The plan was amended in December 1995 so that effective January 1, 1996
nonofficer participants may defer compensation to the maximum levels
allowable, currently the lesser of $9,500 or 17% of income. The Trust will
continue to contribute 50% of the deferral up to 5% of compensation.
NOTE 12. INTEREST EXPENSE
-------------------------
The Trust incurred interest expense totaling $40.2 million, $31.8 million
and $31.8 million, in 1995, 1994 and 1993, respectively, of which $975,000,
$348,000 and $216,000,
F19
respectively, was capitalized. Interest paid was $33.4 million in 1995, $39.9
million in 1994 which included $8.0 million of the premium on the 5 1/4%
convertible subordinated debentures which were redeemed in April 1994, and
$31.4 million in 1993.
NOTE 13. SUBSEQUENT EVENTS
--------------------------
On February 16, 1996, 58,681 options at $21.125 were issued to employees
of the Trust.
On February 28, 1996 the Trust purchased two buildings in Winter Park,
Florida for a combined purchase price of $6.7 million.
NOTE 14. QUARTERLY DATA (UNAUDITED)
-----------------------------------
The following summary represents the results of operations for each
quarter in 1995 and 1994:
(in thousands, except per share amounts)
Net Earnings
Revenue Income per share
------- ------ ---------
1995
----
March 31 $36,927 $6,623 $.21
June 30 36,989 5,203 (1) .16
September 30 38,973 5,918 .19
December 31 41,500 5,366 .16
1994
----
March 31 $33,692 $4,083 $.15
June 30 32,794 5,206 .17
September 30 34,796 4,966 .16
December 31 36,482 6,211 .19
(1) Income before loss on sale of real estate was $5.7 million or $.18 per
share.
F-20
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------------------------------------------------------------------------------------
Initial cost to company Gross amount at which
Cost Capitalized carried at close of period
Building and Subsequent to Building and
Descriptions Encumbrance Land Improvements Acquisition Land Improvements
- ---------------------------------------------------------------------------------------------------------------------------------
ALLWOOD (New Jersey) $3,569,000 $ $3,920,000 $231,000 $ $4,151,000
ANDORRA (Pennsylvania) 2,432,000 12,346,000 1,529,000 2,432,000 13,875,000
BALA CYNWYD (Pennsylvania) 3,565,000 14,466,000 1,520,000 3,565,000 15,986,000
BARRACKS ROAD (Virginia) 21,765,000 4,363,000 16,459,000 11,080,000 4,363,000 27,539,000
BETHESDA AVENUE ROW (Maryland) 12,576,000 459,000 20,409,000 1,478,000 459,000 21,887,000
BLUESTAR (New Jersey) 27,238,000 29,922,000 1,235,000 31,157,000
BRAINERD VILLAGE (Tennessee) 1,920,000 8,006,000 3,649,000 1,920,000 11,655,000
BRICK PLAZA (New Jersey) 21,362,000 24,715,000 10,851,000 35,566,000
BRISTOL (Connecticut) 11,221,000 3,856,000 15,959,000 0 3,856,000 15,959,000
BRUNSWICK (New Jersey) 11,338,000 12,456,000 890,000 13,346,000
CLIFTON (New Jersey) 3,319,000 3,646,000 117,000 3,763,000
CONGRESSIONAL PLAZA (Maryland) 2,793,000 7,424,000 23,134,000 2,793,000 30,558,000
CONNECTICUT RETAIL BUILDINGS (11) 18,377,000 21,557,000 1,087,000 18,377,000 22,644,000
CROSSROADS (Illinois) 4,635,000 11,611,000 773,000 4,635,000 12,384,000
DEDHAM PLAZA (Massachusetts) 12,369,000 12,918,000 537,000 12,369,000 13,455,000
EASTGATE (North Carolina) 1,608,000 5,775,000 4,283,000 1,608,000 10,058,000
ELLISBURG CIRCLE (New Jersey) 4,028,000 11,309,000 9,608,000 4,028,000 20,917,000
FALLS PLAZA (Virginia) 4,327,000 530,000 735,000 1,319,000 530,000 2,054,000
FEASTERVILLE (Pennsylvania) 837,000 1,600,000 2,420,000 4,020,000
FEDERAL PLAZA (Maryland) 28,797,000 10,216,000 17,895,000 31,065,000 10,216,000 48,960,000
FINLEY SQUARE (Illinois) 9,252,000 9,544,000 568,000 9,252,000 10,112,000
FLOURTOWN (Pennsylvania) 1,345,000 3,943,000 1,539,000 1,345,000 5,482,000
FOREST CITY (Michigan) 525,000 1,601,000 2,069,000 525,000 3,670,000
GAITHERSBURG SQUARE (Maryland) 7,701,000 5,271,000 9,630,000 7,701,000 14,901,000
GARDEN MARKET (Illinois) 2,677,000 4,829,000 254,000 2,677,000 5,083,000
GOVERNOR PLAZA (Maryland) 2,068,000 4,905,000 9,818,000 2,068,000 14,723,000
HAMILTON (New Jersey) 4,920,000 5,405,000 1,776,000 7,181,000
HUNTINGTON (New York) 14,571,000 16,008,000 4,230,000 20,238,000
IDYLWOOD PLAZA (Virginia) 4,308,000 10,026,000 225,000 4,308,000 10,251,000
ILLINOIS RETAIL BUILDINGS (2) 1,291,000 2,325,000 24,000 1,291,000 2,349,000
LANCASTER (Pennsylvania) 1,231,000 2,103,000 2,541,000 4,644,000
LANGHORNE SQUARE (Pennsylvania) 720,000 2,974,000 8,243,000 720,000 11,217,000
LAUREL (Maryland) 7,458,000 22,525,000 12,148,000 7,458,000 34,673,000
LAWRENCE PARK (Pennsylvania) 4,144,000 7,160,000 5,390,000 12,550,000
LOEHMANN'S PLAZA (Virginia) 6,499,000 1,237,000 15,096,000 4,484,000 1,248,000 19,569,000
MASSACHUSETTS RETAIL BLDG (1) 1,873,000 1,884,000 32,000 1,873,000 1,916,000
MID PIKE PLAZA (Maryland) 10,041,000 10,335,000 5,257,000 15,592,000
NEW JERSEY RETAIL BUILDINGS (1) 737,000 1,466,000 111,000 737,000 1,577,000
NORTHEAST (Pennsylvania) 1,500,000 1,152,000 10,596,000 8,549,000 1,152,000 19,145,000
NORTHEAST PLAZA (Georgia) 6,930,000 26,236,000 5,073,000 6,933,000 31,306,000
NORTH LAKE COMMONS (Illinois) 2,529,000 8,604,000 275,000 2,529,000 8,879,000
OLD KEENE MILL (Virginia) 7,094,000 638,000 998,000 2,483,000 638,000 3,481,000
PAN AM SHOPPING CENTER (Virginia) 8,694,000 12,929,000 2,330,000 8,694,000 15,259,000
PARK & SHOP (District of Columbia) 4,840,000 6,319,000 73,000 4,840,000 6,392,000
PERRING PLAZA (Maryland) 2,800,000 6,461,000 14,261,000 2,800,000 20,722,000
QUEEN ANNE PLAZA (Massachusetts) 3,319,000 8,457,000 2,099,000 3,319,000 10,556,000
QUINCE ORCHARD PLAZA (Maryland) 3,197,000 7,949,000 3,065,000 2,928,000 11,283,000
ROLLINGWOOD APTS. (Maryland) 552,000 2,246,000 3,433,000 572,000 5,659,000
RUTGERS (New Jersey) 13,135,000 14,429,000 610,000 15,039,000
SHILLINGTON (Pennsylvania) 716,000 1,387,000 1,595,000 2,982,000
SHIRLINGTON (Virginia) 8,761,000 14,808,000 0 8,761,000 14,808,000
COLUMN F COLUMN G COLUMN H COLUMN I
- ------------------------------------------------------------------------------------------------------------------------------
Life on which
Accumulated Date depreciation in latest
Depreciation and of Date income statements
Total Amortization Construction Acquired is computed
- ------------------------------------------------------------------------------------------------------------------------------
ALLWOOD (New Jersey) $4,151,000 $834,000 1958 12/12/88 35 years
ANDORRA (Pennsylvania) 16,307,000 3,192,000 1953 01/12/88 35 years
BALA CYNWYD (Pennsylvania) 19,551,000 1,042,000 1955 09/22/93 35 years
BARRACKS ROAD (Virginia) 31,902,000 9,388,000 1958 12/31/85 35 years
BETHESDA AVENUE ROW (Maryland) 22,346,000 1,136,000 1945-1991 12/31/93 35 years
BLUESTAR (New Jersey) 31,157,000 6,339,000 1959 12/12/88 35 years
BRAINERD VILLAGE (Tennessee) 13,575,000 2,994,000 1960 12/31/87 35 years
BRICK PLAZA (New Jersey) 35,566,000 5,178,000 1958 12/28/89 35 years
BRISTOL (Connecticut) 19,815,000 113,000 1959 9/22/95 35 years
BRUNSWICK (New Jersey) 13,346,000 2,817,000 1957 12/12/88 35 years
CLIFTON (New Jersey) 3,763,000 751,000 1959 12/12/88 35 years
CONGRESSIONAL PLAZA (Maryland) 33,351,000 8,391,000 1965 04/01/65 20 years
CONNECTICUT RETAIL BUILDINGS (11) 41,021,000 317,000 1900-1991 1994-1995 35 years
CROSSROADS (Illinois) 17,019,000 907,000 1959 07/19/93 35 years
DEDHAM PLAZA (Massachusetts) 25,824,000 778,000 1959 12/31/93 35 years
EASTGATE (North Carolina) 11,666,000 3,431,000 1963 12/18/86 35 years
ELLISBURG CIRCLE (New Jersey) 24,945,000 2,186,000 1959 10/16/92 35 years
FALLS PLAZA (Virginia) 2,584,000 1,517,000 1962 09/30/67 22 3/4 years
FEASTERVILLE (Pennsylvania) 4,020,000 2,705,000 1958 07/23/80 20 years
FEDERAL PLAZA (Maryland) 59,176,000 7,463,000 1970 06/29/89 35 years
FINLEY SQUARE (Illinois) 19,364,000 158,000 1974 04/27/95 35 years
FLOURTOWN (Pennsylvania) 6,827,000 1,301,000 1957 04/25/80 35 years
FOREST CITY (Michigan) 4,195,000 1,572,000 1964 03/29/73 25 3/4 years
GAITHERSBURG SQUARE (Maryland) 22,602,000 641,000 1966 04/22/93 35 years
GARDEN MARKET (Illinois) 7,760,000 186,000 1958 07/28/94 35 years
GOVERNOR PLAZA (Maryland) 16,791,000 5,114,000 1963 10/01/85 35 years
HAMILTON (New Jersey) 7,181,000 1,642,000 1961 12/12/88 35 years
HUNTINGTON (New York) 20,238,000 3,806,000 1962 12/12/88 35 years
IDYLWOOD PLAZA (Virginia) 14,559,000 488,000 1991 04/15/94 35 years
ILLINOIS RETAIL BUILDINGS (2) 3,640,000 6,000 1900-1927 1995 35 years
LANCASTER (Pennsylvania) 4,644,000 2,667,000 1958 04/24/80 22 years
LANGHORNE SQUARE (Pennsylvania) 11,937,000 3,330,000 1966 01/31/85 35 years
LAUREL (Maryland) 42,131,000 9,152,000 1956 08/15/86 35 years
LAWRENCE PARK (Pennsylvania) 12,550,000 8,335,000 1972 07/23/80 22 years
LOEHMANN'S PLAZA (Virginia) 20,817,000 7,558,000 1971 07/21/83 35 years
MASSACHUSETTS RETAIL BLDG (1) 3,789,000 18,000 1930 09/07/95 35 years
MID PIKE PLAZA (Maryland) 15,592,000 5,786,000 1963 05/18/82 35 years
NEW JERSEY RETAIL BUILDINGS (1) 2,314,000 0 1940 08/16/95 35 years
NORTHEAST (Pennsylvania) 20,297,000 5,353,000 1959 08/30/83 35 years
NORTHEAST PLAZA (Georgia) 38,239,000 9,336,000 1952 12/31/86 35 years
NORTH LAKE COMMONS (Illinois) 11,408,000 419,000 1989 04/27/94 35 years
OLD KEENE MILL (Virginia) 4,119,000 1,810,000 1968 06/15/76 33 1/3 years
PAN AM SHOPPING CENTER (Virginia) 23,953,000 1,531,000 1979 02/05/93 35 years
PARK & SHOP (District of Columbia) 11,232,000 0 1930 12/01/95 35 years
PERRING PLAZA (Maryland) 23,522,000 4,826,000 1963 10/01/85 35 years
QUEEN ANNE PLAZA (Massachusetts) 13,875,000 419,000 1967 12/23/94 35 years
QUINCE ORCHARD PLAZA (Maryland) 14,211,000 878,000 1975 04/22/93 35 years
ROLLINGWOOD APTS. (Maryland) 6,231,000 4,162,000 1960 01/15/71 25 years
RUTGERS (New Jersey) 15,039,000 2,947,000 1973 12/12/88 35 years
SHILLINGTON (Pennsylvania) 2,982,000 1,764,000 1956 07/23/80 20 years
SHIRLINGTON (Virginia) 23,569,000 0 1940 12/21/95 35 years
F-21
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------------------------------------------------------------------------------------
Initial cost to company Gross amount at which
Cost Capitalized carried at close of period
Building and Subsequent to Building and
Descriptions Encumbrance Land Improvements Acquisition Land Improvements
- ---------------------------------------------------------------------------------------------------------------------------------
TOWN & COUNTRY (Louisiana) 1,326,000 3,440,000 601,000 1,326,000 4,041,000
TOWN & COUNTRY (Illinois) 904,000 2,483,000 4,893,000 904,000 7,376,000
TROY (New Jersey) 2,832,000 5,193,000 5,397,000 10,590,000
TYSONS STATION (Virginia) 4,319,000 388,000 453,000 2,351,000 475,000 2,717,000
WESTFALLS (Virginia) 4,966,000 538,000 535,000 2,066,000 559,000 2,580,000
WILDWOOD (Maryland) 9,111,000 1,061,000 5,163,000 9,111,000 6,224,000
WILLIAMSBURG (Virginia) 2,758,000 7,160,000 2,529,000 2,758,000 9,689,000
WILLOW GROVE (Pennsylvania) 1,600,000 6,643,000 16,641,000 1,600,000 23,284,000
WILLOW LAWN (Virginia) 3,192,000 7,723,000 38,840,000 3,192,000 46,563,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTALS $222,317,000 $175,572,000 $536,638,000 $297,472,000 $175,445,000 $834,237,000
=========== =========== =========== =========== =========== ===========
COLUMN F COLUMN G COLUMN H COLUMN I
- ------------------------------------------------------------------------------------------------------------------------------
Life on which
Accumulated Date depreciation in latest
Depreciation and of Date income statements
Total Amortization Construction Acquired is computed
- ------------------------------------------------------------------------------------------------------------------------------
TOWN & COUNTRY (Louisiana) 5,367,000 647,000 1974 12/31/90 35 years
TOWN & COUNTRY (Illinois) 8,280,000 5,729,000 1968 10/15/73 25 years
TROY (New Jersey) 10,590,000 5,552,000 1966 07/23/80 22 years
TYSONS STATION (Virginia) 3,192,000 2,369,000 1954 01/17/78 17 years
WESTFALLS (Virginia) 3,139,000 1,771,000 1960 10/05/72 25 years
WILDWOOD (Maryland) 15,335,000 4,505,000 1958 05/05/69 33 1/3 years
WILLIAMSBURG (Virginia) 12,447,000 3,029,000 1961 04/30/86 35 years
WILLOW GROVE (Pennsylvania) 24,884,000 6,832,000 1953 11/20/84 35 years
WILLOW LAWN (Virginia) 49,755,000 13,677,000 1957 12/05/83 35 years
- --------------------------------- -------------------------------
TOTALS $1,009,682,000 $190,795,000
============= ===========
F-22
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
Three Years Ended December 31, 1995
Reconciliation of Total Cost
---------------------------------------
Balance, January 1, 1993 $598,867,000
Additions during period
Acquisitions 123,083,000
Improvements 37,110,000
Deduction during period - disposition
of property and miscellaneous retirements (972,000)
---------------
Balance, December 31, 1993 758,088,000
Additions during period
Acquisitions 49,438,000
Improvements 46,916,000
Deductions during period - miscellaneous retirements (1,720,000)
---------
Balance, December 31, 1994 852,722,000
Additions during period
Acquisitions 123,722,000
Improvements 38,001,000
Deduction during period - disposition
of property and miscellaneous retirements (4,763,000)
---------
Balance, December 31, 1995 $1,009,682,000
--------------
(A) For Federal tax purposes, the aggregate cost basis is approximately
$892,762,000 as of December 31, 1995.
F-23
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
Three Years Ended December 31, 1995
Reconciliation of Accumulated Depreciation and Amortization
-------------------------------------------------------------------
Balance, January 1, 1993 $113,182,000
Additions during period
Depreciation and amortization expense 22,643,000
Deductions during period - disposition of
property and miscellaneous retirements (780,000)
--------------
Balance, December 31, 1993 135,045,000
Additions during period
Depreciation and amortization expense 26,681,000
Deductions during period - miscellaneous
retirements (1,090,000)
--------------
Balance, December 31, 1994 160,636,000
Additions during period
Depreciation and amortization expense 31,550,000
Deductions during period - disposition of
property and miscellaneous retirements (1,391,000)
---------
Balance, December 31, 1995 $190,795,000
==============
F-24
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
Year Ended December 31, 1995
Column A Column B Column C Column D Column E Column F Column G
------------------- ------------- ------------ ---------------- ------------ ------------ --------------
Carrying
Periodic Payment Face Amount Amount of
Description of Lien Interest Rate Maturity Date Terms Prior Liens of Mortgage Mortgages (1)
------------------- ------------- ------------ ---------------- ------------ ------------ ---------------
Leasehold mortgage 10% December 2003 Interest only --- 10,000,000 10,000,000 (2)
on shopping monthly; $10,000,000
center in New Jersey balloon payment
December 2003
Mortgage on 10% January 1997 Interest only --- 4,020,000 3,182,000 (3)
shopping center monthly; balloon
in New Jersey payment January 1997
Mortgage on retail Greater of prime November 1997 Interest only 900,000 379,000 (4)
buildings in Philadelphia plus 2% or 10% monthly; balloon
payment January 1997
------------ ------------ -----------
--- $14,920,000 $13,561,000
============ ============ ===========
1) For Federal tax purposes, the aggregate tax basis is approximately
$13,561,000 as of December 31, 1995. 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, 1994,
$3,178,000 was outstanding.
4) This mortgage is available for up to $900,000.
F-25
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE-CONTINUED
Year Ended December 31, 1995
RECONCILIATION OF
CARRYING AMOUNT
-----------------
Balance, January 1, 1993 $16,693,000
Additions during period
Increase in existing loan 47,000
Deductions during period
First trust on wrap mortgage
transferred to borrower (2,801,000)
Collections of principal (68,000)
-----------------
Balance, December 31, 1993 13,871,000
Additions during period
Increase in existing loan 7,000
Deductions during period
Wrap portion of wrap mortgage
written off as uncollectible (700,000)
-----------------
Balance, December 31, 1994 13,178,000
Additions during period
Increase in existing loan 4,000
Issuance of loan 379,000
-----------------
Balance, December 31, 1995 $13,561,000
=================
F-26
Report of Independent Certified Public Accountants
--------------------------------------------------
on Supplemental Information
---------------------------
Trustees and Shareholders
Federal Realty Investment Trust
In connection with our audit of the consolidated financial statements of
Federal Realty Investment Trust referred to in our report dated February 9,
1996 which is included in this Form 10-K, we have also audited Schedules III
and IV as of December 31, 1995 and for each of the three 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 9, 1996
F-27