Federal Realty Earnings: In-Line Quarter as Occupancy Reaches High Point

Fourth-quarter results for no-moat Federal Realty were in line with our expectations, leading us to reaffirm our $142 fair value estimate. Same-store occupancy increased 30 basis points sequentially and 200 basis points year over year to 96.2%, the highest occupancy level reported by the company in at least the past decade. Re-leasing spreads came in at 10.0% in the fourth quarter, relatively in line with the 10.5% average the company has seen over the prior eight quarters. Same-store revenue grew 3.9% while same-store operating expenses were up 4.2%, leading to same-store net operating income growth of 3.8% in the fourth quarter that was slightly ahead of our 3.5% estimate. Federal Realty reported funds from operations of $1.73 per share, relatively in line with our $1.74 estimate and 5.5% higher than the $1.64 figure reported in the fourth quarter of 2023.