2010 ANNUAL REPORT Boston 5 Middlesex Avenue, Suite 401 Somerville, MA 02145 T 617.684.1500 F 617.623.3601

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2010 ANNUAL REPORT Boston 5 Middlesex Avenue, Suite 401 Somerville, MA 02145 T 617.684.1500 F 617.623.3601 LOCATIONS CORPORATE HEADQUARTERS 1626 East Jefferson Street Rockville, MD 20852-4041 Scan this code t 301.998.8100 with your phone f 301.998.3700 to see more. Federal Realty Investment Trust Download the i-nigma app to REGIONAL OFFICES get started. POISED 2010 ANNUAL REPORT Boston 5 Middlesex Avenue, Suite 401 Somerville, MA 02145 t 617.684.1500 f 617.623.3601 Philadelphia 50 East Wynnewood Road, Suite 200 Wynnewood, PA 19096 t 610.896.5870 f 610.896.5876 San Jose 3055 Olin Avenue, Suite 2100 San Jose, CA 95128-2069 t 408.551.4600 f 408.551.4616 South Florida 7015 Beracasa Way, Suite 204 Boca Raton, FL 33433 t 561.347.6522 f 561.368.6223 federalrealty.com 98454_Cvr 1 3/10/11 3:02 PM THE SHOPS AT EASTGATE Chapel Hill, NC Lisa collaborates with Planimetron and HZDG on Federal Realty’s website and online leasing tools. It starts with the proper stance: a firm financial footing, the result of our prudent and thoughtful investment approach. Drawing on decades of experience, we target our efforts at owning, operating, developing, and redeveloping high-quality retail real estate, serving markets with dense BOARD OF TRUSTEES populations, strong household incomes, and high barriers to entry by competitors. We remain focused on the long term. It is precisely this poised, (TOP, FROM LEFT) Jon E. Bortz, Chairman and CEO, Pebblebrook Hotel Trust balanced approach that created a healthy balance sheet and one of the David W. Faeder, Managing Partner, Fountain Square Properties lowest costs of capital in the industry. That means Federal Realty is poised Kristin Gamble, President, Flood Gamble Associates, Inc. (LEFT) for action, already taking aim as greater opportunities emerge. And the Gail P. Steinel, President, Executive Advisors people of Federal Realty, by building and maintaining productive partnerships (BOTTOM, FROM LEFT) with key players, are poised to continue their remarkable record of success in Warren M. Thompson, President and Chairman, Thompson Hospitality Corporation Joseph S. Vassalluzzo, Non-Executive Chairman, Federal Realty Investment Trust, Former Vice Chairman, Staples, Inc. the passionate pursuit of value creation. Donald C. Wood, President and Chief Executive Officer, Federal Realty Investment Trust SANTANA ROW Randy, Jeff and Jan tour 300 Santana Row with San Jose, CA CB Richard Ellis, our offi ce broker for the project. 2 federalrealty.com NYSE: FRT 98454_Cvr 2 3/10/11 3:02 PM Newly constructed Equinox Fitness Club at Bethesda Row. BETHESDA ROW Bethesda, MD (ABOVE LEFT) Lisa Denson, Vice President, Information Technology and Special Projects Annette Wilde, Director, Planimetron, Inc. Karen Zuckerman, President and Executive Creative Director, HZDG (LEFT) Randy Paul, Vice President, Development, West Coast Jeff Berkes, Executive Vice President, Chief Investment Offi cer Jan Sweetnam, Vice President, Western Region Chief Operating Offi cer Michael A. Grado, Senior Vice President, Silicon Valley Brokerage Services, CB Richard Ellis (RIGHT) Chris Weilminster, Senior Vice President, Leasing (2nd from left) Wendy Seher, Vice President, Leasing (center) Debbie Colson, Senior Vice President, Legal Operations (2nd from right) Chris, Wendy and Debbie discuss the recent Owners of Matchbox Vintage Pizza Bistro (l–r): opening of Matchbox Vintage Pizza Bistro with Perry Smith, Andrew Kim, Mark Neal, Ty Neal the owners at Congressional Plaza in Maryland. federalrealty.com NYSE: FRT 3 98454_Txt 3 3/10/11 2:43 PM CONGRESSIONAL PLAZA Rockville, MD LANCASTER SHOPPING CENTER (ABOVE RIGHT) Lancaster, PA Evan Goldman, Vice President, Development (3rd from left) Dawn Becker, Executive Vice President, Chief Operating Offi cer (center) John Tschiderer, Vice President, Development (2nd from right) Tommy Mann, Development Associate (right) Members of the White Flint community (left) 4 federalrealty.com NYSE: FRT 98454_Txt 4 3/10/11 2:43 PM ASSEMBLY SQUARE MARKETPLACE Somerville, MA Evan, Dawn and John describe the redevelopment of Mid-Pike Plaza in Montgomery County, Md., with members of the White Flint community. These community members have been supporters of the White Flint Sector Plan and the redevelopment of Mid-Pike Plaza. WELL POSITIONED We build success by creating community destinations. Each one of our retail destinations around the country is well positioned to succeed, because each is uniquely designed to refl ect its surroundings and satisfy the needs of its community. In densely populated areas of high average household income, our properties have the demographics to attract quality retailers, the retailers to attract shoppers repeatedly, and the synergy to become cherished, sustainable gathering places where people want to be. THE VILLAGE AT SHIRLINGTON Arlington, VA federalrealty.com NYSE: FRT 5 98454_Txt 5 3/10/11 2:44 PM DEAR FELLOW SHAREHOLDERS: Federal Realty has never been about explosive growth didn’t want to sell and smart real estate lenders, knowing through acquisitions. We pride ourselves on operating and how hard it is to compile a portfolio of truly great real estate, redeveloping the highest-quality retail real estate in markets worked with the owners by modifying and extending debt with strong populations, strong household incomes, and terms rather than forcing a disruptive and costly foreclosure. signifi cant barriers to competitive entry. Newly acquired They knew inherently that great, high-quality commercial properties that join this collection must be able to enhance real estate in the best locations is always signifi cantly more our growth, not detract from it. valuable over the long term than any short-term marketplace might suggest. Nonetheless, through the depths of the economic recession in 2008 and 2009, many of us in the commercial real estate It’s the ultimate confl ict at a high-quality real estate company business smiled wryly in preparation for what we thought like Federal Realty: disappointment that we couldn’t fi nd would assuredly be countless opportunities for great retail real more truly great acquisitions at accretive prices over the past estate acquisitions from distressed sellers. Those distressed year or two; yet satisfaction in the knowledge that the 18 sellers would happily turn over their prized properties at million square feet of great retail real estate that we already bargain prices in order to divest themselves of onerous bank own is worth a fortune, and that it will always be appreciated and other debt obligations, we thought. by investors for its value over the long term. But to date, those “bargains” have not surfaced in any meaningful quantity. Owners of truly “A” quality retail centers (ABOVE RIGHT) Don Briggs, Senior Vice President, Development Richard A. Davey, General Manager, MBTA & Rail & Transit Administrator, MassDOT Don Wood, President and Chief Executive Offi cer (RIGHT) Neil Burka, Property Manager John Hendrickson, Vice President, Northeast Region Chief Operating Offi cer Robin McBride, Vice President, Mid-Atlantic Region Chief Operating Offi cer David Hawn, President, Dedicated Roof and Hydro Solutions ESCONDIDO PROMENADE Escondido, CA 6 federalrealty.com NYSE: FRT 98454_Txt 6 3/10/11 2:44 PM Don and Don discuss the future Orange Line T Station at Assembly Row in Somerville, Mass., with MassDOT. Federal Realty and the MBTA recently reached an agreement for the future T station. Neil, John and Robin overlook operations of Rockville Town Square in Maryland with Dedicated Roof and Hydro Solutions, a consultant for the project. federalrealty.com NYSE: FRT 7 98454_Txt 7 3/10/11 2:44 PM Cumulative Change in FFO Per Share Since 2005 40% 30% Federal Realty 20% Investment Trust 10% 0% Peer Group Average(1) -10% -20% -30% -40% -50% 2005 2006 2007 2008 2009 2010 NOTE: (1) Peer group includes Developers Diversifi ed Realty, Equity One, Kimco Realty, Regency Centers, and Weingarten Realty Investors. 2010 was a year of incremental and steady improvement for • Delivered our latest phase of development at Bethesda Federal Realty. There were some smart acquisitions that we Row, Hampden Lane, on time, on budget, and fully leased; were able to get done (discussed later in the letter), but what • Increased our footprint at Escondido Promenade in we’re most proud of is the performance of our existing portfolio San Diego, and on Long Island with the acquisition of and the steps we were able to take to set us up for an even Huntington Square, and recently added our third shopping better future. So here’s what happened at Federal Realty in center in South Florida outside of Fort Lauderdale; 2010. In this still very fragile economy, we: • Completed and leased up most of our newly constructed • Grew top-line revenues 2.7% to a record $545 million; offi ce building at Santana Row in San Jose, Calif., broke • Grew same-center property operating income 2.1% to ground on our 109-unit luxury apartment building there, a record $350 million; and accelerated plans to build the next one; • Grew Funds from Operations (FFO) per share 2.6% to • Signed a deal with partner AvalonBay Communities to a record $3.88 per share; build approximately 400 luxury apartments at Assembly • Grew 2010 fourth quarter FFO to $1.01 per share—the Row in Somerville, Mass.; celebrated the approval of a fi rst time in our 49-year history that any quarter exceeded new Orange Line “T” station at our site; and hope to break one dollar per share; ground on this exciting project in late 2011; • Negotiated 312 new leases and renewals at rent that was, • Celebrated the approval of the White Flint sector on average, 8% higher than the previous tenant; plan and the massing plan for our Mid-Pike mixed- use redevelopment, making way for the fi rst phase of • Maintained occupancy levels year over year at 93.2%; construction in late 2012. • Made our fi rst investments in two buildings on Newbury Street in Boston; And, by the way, we increased the dividend rate on our • Bought the land under two of our strongest-performing common shares for the 43rd year in a row to an annual rate of centers in the Washington, D.C., area: Bethesda Row $2.68 per share, to be paid entirely in cash.
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