NORTH BETHESDA, Md., Jan. 8, 2024 /PRNewswire/ -- Federal Realty Investment Trust (NYSE: FRT) ("Federal Realty") announced today that its operating partnership, Federal Realty OP LP (the "Partnership"), launched an offering (the "Offering"), subject to market conditions and other factors, of $400 million aggregate principal amount of exchangeable senior notes due 2029 (the "notes") in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The Partnership also intends to grant the initial purchasers of the notes an option to purchase up to an additional $60.0 million aggregate principal amount of notes.

The notes will be the Partnership's senior unsecured obligations and will accrue interest payable semi-annually in arrears. Subject to certain conditions, the notes will be exchangeable for cash up to the principal amount of the notes exchanged and, in respect of the remainder of the exchange value, if any, in excess thereof, cash or common shares of beneficial interest, par value $.01 per share, of Federal Realty ("common shares"), or a combination thereof, at the election of the Partnership. The interest rate, exchange rate and other terms of the notes will be determined at the time of pricing of the Offering.

The Partnership intends to use the net proceeds from the Offering to pay the cost of the capped call transactions described below, for the repayment of indebtedness and for general corporate purposes. Pending such use, the net proceeds may be invested in short-term, income-producing investments or the Partnership may use the net proceeds to temporarily repay current and/or future amounts outstanding under its revolving credit facility. If the initial purchasers of the notes exercise their option to purchase additional notes, the Partnership expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions with the option counterparties and the remaining net proceeds for the purposes described above.

In connection with the pricing of the notes, Federal Realty and the Partnership expect to enter into privately negotiated capped call transactions relating to the notes with one or more of the initial purchasers of the notes or their respective affiliates and/or other financial institutions (the "option counterparties"). The capped call transactions will cover, subject to customary adjustments, the number of Federal Realty's common shares that will initially underlie the notes.

The capped call transactions are expected generally to reduce the potential dilution to Federal Realty's common shares upon exchange of any notes and/or offset any cash payments the Partnership is required to make in excess of the principal amount of exchanged notes, as the case may be, with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates may enter into various derivative transactions with respect to Federal Realty's common shares and/or purchase Federal Realty's common shares or other securities of Federal Realty in secondary market transactions concurrently with or shortly after the pricing of the notes, including with or from, as the case may be, certain investors in the notes. This activity could increase (or reduce the size of any decrease in) the market price of Federal Realty's common shares or the notes at that time.

In addition, the option counterparties or their respective affiliates may modify or unwind their hedge positions by entering into or unwinding various derivatives with respect to Federal Realty's common shares and/or purchasing or selling Federal Realty's common shares or other securities of Federal Realty or the Partnership in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so following any fundamental change repurchase, redemption or early exchange of the notes and during the 40 trading day period beginning on the 41^st scheduled trading day prior to the maturity date of the notes, or, to the extent the Partnership exercises the relevant election under the capped call transactions, following any other repurchase of the notes). This activity could also cause, reduce the extent of or avoid an increase or a decrease in the market price of Federal Realty's common shares or the notes, which could affect a noteholder's ability to exchange the notes, and, to the extent the activity occurs following exchange or during any observation period related to an exchange of notes, it could affect the number of common shares, if any, and value of the consideration that noteholders will receive upon exchange of the notes.

Neither the notes nor the common shares issuable upon exchange of the notes have been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws. Accordingly, the notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act).

This press release does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any offer or sale of, the notes in any jurisdiction in which the offer, solicitation or sale of the notes would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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 timing, size, and completion of the proposed Offering, the grant to the initial purchasers of the option to purchase additional notes, the expected use of the net proceeds of the Offering, 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. Factors that may cause such a difference include risks and uncertainties related to completion of the Offering on the anticipated terms or at all, market conditions, and the satisfaction of customary closing conditions related to the Offering. More information about the risks and uncertainties faced by Federal Realty and the Partnership is contained in the section captioned "Risk Factors" in Federal Realty's and the Partnership's Securities and Exchange Commission ("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 release are as of the date of this release, and, except as required by law, neither Federal Realty nor the Partnership undertakes any obligation to update any such statements, whether as a result of new information, future events or otherwise.

About Federal Realty

Federal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail-based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, Federal Realty's mission is to deliver long-term, sustainable growth through investing in communities where retail demand exceeds supply. Its expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 102 properties include approximately 3,300 tenants, in approximately 26 million square feet, and approximately 3,100 residential units.

Federal Realty has increased its quarterly dividends per common share for 56 consecutive years on an annualized basis, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its shares are traded on the NYSE under the symbol FRT.

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SOURCE Federal Realty Investment Trust