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Federal Realty Investment Trust (FRT - Analyst Report) posted fourth-quarter 2013 core FFO (funds from operations) per share of $1.18, in line with the Zacks Consensus Estimate and higher than the year-ago quarter figure of $1.11.

The decent results came on the back of notable leasing activity, rent escalations and improved same-store portfolio performance. Also, Federal Realty raised its 2014 FFO per share outlook.

Including the debt’s early extinguishment charges, reported FFO in the quarter came in at $1.03 per share, down from $1.11 per share in the comparable prior year period.

Total revenue during the reported quarter escalated 5.2% year over year to $163.8 million and exceeded the Zacks Consensus Estimate of $161 million.

For full-year 2013, Federal Realty’s core FFO stood at $4.61 per share on revenues of $637.4 million. This was higher than the prior-year core FFO per share of $4.31 on revenues of $605.8 million. Also, the reported FFO for 2013 was $4.41 per share, up from $4.31 per share in 2012.

Quarterly Details

Federal Realty inked 99 lease deals for 484,144 square feet of retail space. As of Dec 31, 2013, the company’s overall portfolio was 95.8% leased, up 50 basis points (bps) both year over year and sequentially. 

On a comparable space basis (spaces for which a former tenant was there), Federal Realty leased 395,906 square feet at an average cash-basis contractual rent increase of 25% per square foot. Rent increases (GAAP basis) for comparable retail space averaged 38% per square foot, up from 34% in prior quarter.

Same-center property operating income (excluding assets under redevelopments and expansions) escalated 4.3% year over year. As of Dec 31, 2013, the company’s same-center portfolio was 95.9% leased, up 70 bps year over year and 50 bps sequentially.


Federal Realty exited 2013 with cash and cash equivalents of approximately $88.9 million, up from $37.0 million at the end of 2012.

2014 Outlook Raised

Federal Realty increased its guidance for full-year 2014 FFO per share in the range of $4.86 – $4.93, from $4.84 – $4.92 forecasted earlier. The Zacks Consensus Estimate of $4.90 for the same is within this range.


Concurrent with the earnings release, Federal Realty declared a quarterly dividend of 78 cents per share. The dividend is payable on Apr 15, 2014 to shareholders of record as of Mar 21, 2014.

Subsequent to Quarter-end Activity

On Jan 6, 2014, Federal Realty disclosed the buyout of a controlling stake in two shopping centers –The Grove at Shrewsbury and Brook 35 – in New Jersey for $161 million. These properties serve the flourishing NY Metro area and boast outlets of some renowned national and regional retailers such as The Gap, Inc. (GPS - Analyst Report), Coach, Inc. (COH - Analyst Report) and ANN INC. (ANN - Snapshot Report).

Our Viewpoint

Although one-time expenses related to debt broke Federal Realty’s earnings surprise streak, this retail real estate investment trust (REIT) assures a comeback in the quarters ahead. In particular, the company’s portfolio of Class A shopping centers along with the diversified tenant base, comprising grocery stores and low-end discount retailers, position it well to maintain the upward trend. Also, the acquisition of New Jersey.-based premium shopping centers is commendable. Moreover, a raise in the outlook boosts investors’ confidence in the stock and is thus noteworthy.

Federal Realty currently carries a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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