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Federal Realty Investment Trust FRT

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Federal Realty Outperforms Our Expectations and Raises Both 2021 and 2022 Guidance in Q2

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

Second-quarter results for Federal Realty were well ahead of our expectations. However, we don't plan any material changes to our $122 fair value estimate for the no-moat company given the company's updated 2022 guidance. Same-store occupancy increased 80 basis points sequentially to 92.5% in the second quarter, better than our estimate of occupancy falling to 91.5%. Re-leasing spreads continue to be strong despite the pandemic, seeing rents on leases signed during the quarter increase 7.5% with leases to new tenants up 10.2% over the prior rent. Second-quarter rent collection improved to 94% compared with 90% in the first quarter and improved to 98% compared with 96% if rent abatement and rent deferral agreements are included. Improving rent collection drove same-store net operating income growth of 39.4% in the quarter, ahead of our 28.1% estimate in the second quarter. As a result, funds from operations came in at $1.41 for the quarter, above of our estimate of $1.25 in the quarter and well above the $0.77 figure reported in the second quarter of 2020 but still below the $1.60 level reported in the second quarter of 2019.

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Company Profile

Business Description

Federal Realty Investment Trust is a shopping center-focused retail real estate investment trust that owns high-quality properties in eight of the largest metropolitan markets. Its portfolio includes an interest in 101 properties, which includes 23.4 million square feet of retail space and over 2,600 multifamily units. Federal's retail portfolio includes grocery-anchored centers, superregional centers, power centers, and mixed-use urban centers. Federal Realty has focused on owning assets in highly desirable areas with significant growth, and as a result, the average population density and average median household income are higher for its portfolio than for any other retail REIT.

909 Rose Avenue, Suite 200
North Bethesda, MD, 20852
T +1 301 998-8100
Sector Real Estate
Industry REIT - Retail
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 311