FRT Enters Material Agreement, Creates Debt, Sells Unregistered Equity

TL;DR

**FRT just took on new debt and sold shares privately, likely to fund operations or growth.**

AI Summary

Federal Realty Investment Trust (FRT) and Federal Realty OP LP filed an 8-K on January 11, 2024, reporting events from January 8, 2024. The filing indicates the entry into a material definitive agreement, the creation of a direct financial obligation, and unregistered sales of equity securities. This suggests FRT is raising capital, potentially for new projects or to manage existing debt, which could impact future earnings and dividend stability for shareholders.

Why It Matters

This filing signals Federal Realty Investment Trust is actively managing its capital structure, which could lead to growth opportunities or increased financial leverage, directly affecting shareholder value.

Risk Assessment

Risk Level: medium — The creation of a direct financial obligation and unregistered sales of equity securities can dilute existing shareholders and increase debt, posing a moderate risk to investors.

Analyst Insight

A smart investor would monitor subsequent filings for details on the material definitive agreement and the nature of the financial obligation and equity sales to assess the impact on FRT's balance sheet and future growth prospects.

Key Players & Entities

• Federal Realty Investment Trust (company) — registrant
• Federal Realty OP LP (company) — registrant
• January 8, 2024 (date) — date of earliest event reported
• January 11, 2024 (date) — filing date

Forward-Looking Statements

• Federal Realty Investment Trust will use the capital raised to fund new real estate development projects. (Federal Realty Investment Trust) — medium confidence, target: 2024-12-31
• The unregistered sales of equity securities will lead to a slight dilution of existing shareholder ownership. (shareholders) — high confidence, target: 2024-06-30

FAQ

Key Financial Figures

• $1,000 — change rate of 9.7723 common shares per $1,000 principal amount of Notes, which is sub
• $485,000,000 — ") conducts all of its business, issued $485,000,000 aggregate principal amount of its 3.25%
• $60,000,000 — 29 (the "Notes"), which amount includes $60,000,000 aggregate principal amount of Notes pur
• $122.80 — t to an exchange price of approximately $122.80 per common share). The exchange rate wi
• $143.26 — transactions initially is approximately $143.26 per share, which represents a premium o
• $102.33 — price of the Parent's common shares of $102.33 on the New York Stock Exchange on Janua

Filing Documents

• d712379d8k.htm (8-K) — 61KB
• d712379dex41.htm (EX-4.1) — 588KB
• d712379dex101.htm (EX-10.1) — 98KB
• d712379dex991.htm (EX-99.1) — 244KB
• g712379dsp69.jpg (GRAPHIC) — 6KB
• g712379dsp70.jpg (GRAPHIC) — 8KB
• g712379dsp71.jpg (GRAPHIC) — 7KB
• g712379dsp72.jpg (GRAPHIC) — 8KB
• g712379dsp74.jpg (GRAPHIC) — 8KB
• g712379dsp75.jpg (GRAPHIC) — 11KB
• 0001193125-24-006607.txt ( ) — 1419KB
• frt-20240108.xsd (EX-101.SCH) — 5KB
• frt-20240108_cal.xml (EX-101.CAL) — 1KB
• frt-20240108_def.xml (EX-101.DEF) — 14KB
• frt-20240108_lab.xml (EX-101.LAB) — 18KB
• frt-20240108_pre.xml (EX-101.PRE) — 14KB
• d712379d8k_htm.xml (XML) — 6KB

01

Item 1.01. Entry into a Material Definitive Agreement The information set forth below under the heading "Registration Rights Agreement" in Item 8.01 is incorporated by reference under this Item 1.01.

03

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant The information set forth below under the heading "3.25% Exchangeable Senior Notes due 2029" in Item 8.01 is incorporated by reference under this Item 2.03.

02

Item 3.02 Unregistered Sale of Equity Securities. The information set forth below under the heading "3.25% Exchangeable Senior Notes due 2029" in Item 8.01 is incorporated by reference under this Item 3.02. The Notes (as defined below) were sold to the initial purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). The initial purchasers subsequently resold the Notes to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act. The Issuer relied on these exemptions from registration based in part on representations made by the initial purchasers in the Purchase Agreement, dated January 8, 2024, by and among the Issuer and the Parent, on the one hand, and, on the other hand, J.P. Morgan Securities LLC, BofA Securities, Inc., Wells Fargo Securities, LLC (collectively, the "Representatives") and each of the other Initial Purchasers named in Schedule 1 thereto. Initially, a maximum of 4,739,566 common shares may be issued upon exchange of the Notes, based on the initial maximum exchange rate of 9.7723 common shares per $1,000 principal amount of Notes, which is subject to customary adjustments.

01

Item 8.01. Other Events 3.25% Exchangeable Senior Notes due 2029 On January 11, 2024, Federal Realty OP LP (the "Issuer"), the operating partnership through which Federal Realty Investment Trust (the "Parent") conducts all of its business, issued $485,000,000 aggregate principal amount of its 3.25% Exchangeable Senior Notes due 2029 (the "Notes"), which amount includes $60,000,000 aggregate principal amount of Notes pursuant to the exercise in full by the initial purchasers of their option to acquire additional Notes. The Notes were issued pursuant to, and are governed by, an Indenture, dated as of January 11, 2024 (the "Indenture"), among the Issuer, the Parent and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"). The Notes were sold to the initial purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The initial purchasers subsequently resold the Notes to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act. The notes are the Issuer's senior unsecured obligations and will rank pari passu , or equally, with all of the Issuer's existing and future unsecured and unsubordinated indebtedness. The Notes will be effectively subordinated to the prior claims of each secured mortgage lender to any specific property that secures such lender's mortgage and to all of the unsecured indebtedness and other liabilities, as well as any preferred equity, of the Issuer's subsidiaries. The Notes are not guaranteed by the Parent or any of its or the Issuer's subsidiaries. Interest on the Notes will be payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2024. The Notes will mature on January 15, 2029 unless earlier exchanged, purchased or redeemed.

Forward-Looking Statements

Forward-Looking Statements This Current Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by use of terms such as "propose," "will," "expect," "shall," and similar terms or the negative of such terms, and include, without limitation, statements regarding the expected use of the net proceeds of the offering of the Notes and other information that is not historical information. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. More information about the risks and uncertainties faced by the Issuer and the Parent is contained in the section captioned "Risk Factors" in the Issuer's and the Parent's SEC filings, including their Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as well as subsequent SEC filings. The forward-looking statements contained in this Current Report are as of the date hereof, and, except as required by law, neither the Issuer nor the Parent undertakes any obligation to update any such statements, whether as a result of new information, future events or otherwise.

Financial Statements and Exhibits

Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Description 4.1 Indenture dated January 11, 2024 among the Issuer, the Parent and the Trustee 4.2 Form of 3.25% Exchangeable Senior Note due 2029 (included in Exhibit 4.1) 10.1 Registration Rights Agreement dated January 11, 2024 among the Issuer, the Parent and the Representatives. 99.1 Form of Capped Call Transaction Confirmation 104 Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document).

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. FEDERAL REALTY INVESTMENT TRUST FEDERAL REALTY OP LP Date: January 11, 2024 /s/ Dawn M. Becker Dawn M. Becker Executive Vice President-General Counsel and Secretary

View Full Filing

View this 8-K filing on SEC EDGAR