Federal Realty Investment Trust Earnings Call Insights: Pike & Rose Site, Maturity Schedule

On Tuesday, Federal Realty Investment Trust (NYSE:FRT) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Pike & Rose Site

Craig Schmidt – Bank of America – Merrill Lynch: It sounds like there is a lot of activity surrounding your Pike & Rose site, I wondered if you could describe some of that development activity in that general area and all the things that are going on?

Don Wood – President and CEO: Sure Craig. The White Flint district which encompasses, which starts down Lerner’s mall and then comes up the hill and peaks, right at the top where our property is at the corner of Old Georgetown and Rockville Pike is under — will be under development at some point over the next few years because it’s all part of the overall sector plan and so this will be identification if you will of an entire area. There is more residential programs, some of those are other companies that are betting that include JBG will be in there, the Learners themselves will be in there as part of that and there are number of other developers who are part of that project, part of the overall district, so you’ll see more residential. There will be more office and certainly more retail, and one of the things that we’re doing as part of this is we’ve been very, very involved in this process all the way through. In fact Evan Goldman and Don Briggs, are two guys who really have marshalled this thing beautifully frankly all the way through, have a great relationship with all the other partners. So I think if you look at this area, Craig, 10 years from now, you won’t believe the transformation. We certainly will be in the ground first in terms of new stuff as part of the district and so we’ll be delivering in 2014 ahead of most of us.

Craig Schmidt – Bank of America – Merrill Lynch: I am just wondering if you are pleased with Assembly Row that you have a sense of the mix of restaurant outlet tenants and other, what would the breakup be by those sort of three categories?

Don Wood – President and CEO: In total, we’re putting another 325,000 square feet there and most of it is going to be outlet and so you’ll see roughly, not to have a breakout exactly right here. 150 on outlet and then you’ll see service and you’ll see the theatre, which takes a big piece of it. Theatre itself takes 62,000 of that away and the rest will be service and restaurants.

Maturity Schedule

Christy McElroy – UBS: Andy, just wanted to follow-up on the maturity schedule. With regard to the $175 million of notes you have coming due this summer, is that something you would look to refine a public bond market or may be with a bank unsecured term loan and can you talk about sort of the potential cost of these options if you’ve had preliminary discussions at all?

Andrew Blocher – SVP, CFO and Treasurer: Yeah Christy, we have the ability through the accordion feature of the term loan. That market is dragging up, to some extent in the seven year basis, and at this point, I think it makes sense for us to go, as long as we possibly can, based on where the market is currently. We are in a very good position, where we are currently contemplating long term debt, equity financing or a combination of both. From a near term FFO perspective, the impact between long term debt and equity is – really minimal impact on FFO and one of the things that we haven’t seen yet is, any real trading in our bonds since Fitch upgraded us to A-, that’s something that I want to get a better handle on, but indicative pricing currently, on the two new 10-year note would probably be in this up 4% range, and if we were to go really long and go out to, call it 30 years, we can go out and do something in 5.25% range. So we are thinking through that right now. We are blessed with having a lot of options, so it all comes down to the qualitative balance sheet, but we haven’t affirmatively made a decision yet.

Christy McElroy – UBS: Given some of the low rates that we have seen on some of the preferred deals lately, is that an option that you would consider?

Andrew Blocher – SVP, CFO and Treasurer: Certainly, we consider everything. The issue with respect to the preferreds is, I feel like – I get kind of a REIT market price, with respect to the preferreds, which doesn’t fully contemplate all of the qualities that we have, which are reflected in things like senior unsecured notes, and certainly, with respect to our equity.

Christy McElroy – UBS: Just on the lease term fees, can you attribute this quarter’s volume to any specific tenants or movements within the portfolio, and I think last quarter, you gave a range of $2 million to $3 million for the year, does that still hold?

Andrew Blocher – SVP, CFO and Treasurer: I think that the range that we are talking about is probably going to be in the $3 million to $4 million range, there was one lease term fee in particular for tenant down at Third Street, that was the biggest part of it, it was about $1.8 million of the $2.4 million total.

Christy McElroy – UBS: Then just lastly, at what point do the H&M take occupancy at Santana Row?

Chris Weilminster – SVP, Leasing: H&M will be taking occupancy early this summer when we’re done with our work and as we anticipate that they will be opening in the fall of this year, before the holidays?