Analyst Note| Kevin Brown |
Federal Realty saw a significant impact to second-quarter results because of the ongoing coronavirus pandemic. However, we didn't see anything surprising from the quarter that would materially change our $100 fair value estimate for the no-moat company. Comparable occupancy fell 80 basis points sequentially to 91.4%, the lowest point in at least two decades for the company. However, re-leasing spreads were resilient as they were up 11.3%, the first double-digit gain in a year and a half, due to a 31.6% increase on lease signed with new tenants. Still, the company collected only 68% of its billed rent, which caused same-store net operating income to decline 33.8%. The loss of revenue in the quarter caused the company to report funds from operations of just $0.77, slightly less than half of the $1.60 the company reported in the second quarter of 2019.