Federal Realty Earnings: Sequential Occupancy Gain and Strong Re-Leasing Spreads

Federal Realty Investment Trust's third-quarter results were relatively in line with to slightly above our estimates, leading us to reaffirm our $142 fair value estimate for the no-moat company. Same-store occupancy increased 60 basis points sequentially to 95.8%, higher than our estimate of 95.0% for the quarter. Re-leasing spreads were 14.5%, ahead of our estimate of 11.0% and the best quarter the company has reported since 2018. Same-store revenue grew 3.1% while same-store operating expenses were up 4.8%, leading to same-store net operating income growth of just 2.0%, in line with our 2.4% estimate. However, excluding payments of prior rent and lease termination income, which are nonrecurring in nature, same-store NOI growth would have been 2.9%, slightly above our estimate. Federal Realty reported funds from operations of $1.71 per share, which matched our estimate for the quarter and was 3.5% higher than the $1.65 reported in the third quarter of 2023.