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Federal Realty's (FRT) Q2 FFO Beat, Revenues Increase Y/Y

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Federal Realty Investment Trust (FRT - Free Report) posted second-quarter 2016 funds from operations (“FFO”) per share of $1.42, which beat the Zacks Consensus Estimate by a penny. The prior-year quarter FFO per share was $1.06 and excluding the prepayment premiums, that figure was $1.33 per share.

Total revenue for the quarter grew 9.1% year over year to $198 million. However, the top line lagged the Zacks Consensus Estimate of $199 million.

Inside the Headlines

During the second quarter, Federal Realty inked 103 lease deals for 467,364 square feet of retail space. As of Jun 30, 2016, the company’s overall portfolio was 94.5% leased, down 120 basis points (bps) year over year.

Federal Realty Investment Trust (FRT - Free Report) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompany

On a comparable-space basis (spaces for which a former tenant was there), Federal Realty leased 372,778 square feet, at an average cash-basis contractual rent escalation of 12% per square foot. Rent increases (on a GAAP basis) for comparable retail space averaged at 25% per square foot during the quarter.

Same-center property operating income (including redevelopments and expansions) improved 3.5% year over year in the quarter. As of Mar 31, 2016, Federal Realty’s same-center portfolio was 95.9% leased, down 50 bps year over year.

Federal Realty exited the second quarter with cash and cash equivalents of approximately $18.6 million, down from $21 million at the end of 2015.

Dividend Update

Concurrent with the earnings release, Federal Realty declared a quarterly cash dividend of 98 cents per share, marking a 4.3% sequential increase. The dividend will be paid on Oct 17, 2016 to shareholders of record as of Sep 22.

Our Take

Federal Realty’s portfolio of Class A shopping centers, along with a diversified tenant base comprising grocery stores and low-end discount retailers, positions it well for growth. Additionally, the company’s focus on exploring expansion opportunities in premium markets, with growth potential as well as long-term value, bodes well for the future.

FED RLTY INV Price, Consensus and EPS Surprise

FED RLTY INV Price, Consensus and EPS Surprise | FED RLTY INV Quote

Federal Realty currently carries a Zacks Rank #3 (Hold). Investors interested in the retail REIT space may consider stocks like Acadia Realty Trust (AKR - Free Report) , Retail Properties of America, Inc. and STORE Capital Corporation . All these stocks hold a Zacks Rank #2 (Buy).

Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. 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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