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Federal Realty (FRT) Q1 FFO & Revenues Beat, View Intact

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Retail REIT — Federal Realty Investment Trust (FRT - Free Report) — posted first-quarter 2018 funds from operations (FFO) per share of $1.52, beating the Zacks Consensus Estimate of $1.50. Also, the reported figure compared favorably with the prior-year quarter tally of $1.45.

Results reflect growth in revenues. The company experienced rise in property operating income and lease rollover for comparable properties. Specifically, solid residential occupancy at its mixed-use properties, new retail tenant openings and controlled expenditure attributed to its performance in the first quarter, management noted.

Total revenues for the quarter grew 8.7% year over year to $225.4 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $223.8 million.

Quarter in Details

During the reported quarter, on a comparable space basis, Federal Realty signed 78 lease deals for 403,250 square feet of space. The leases were signed at an average rent of $31.51 per square feet, denoting cash-basis rollover growth of 22%.

As of Mar 31, 2018, the company’s overall portfolio was 94.8% leased, up from 94.6% as on Mar 31, 2017. Comparable property portfolio was 95.3% leased as of Mar 31, 2018, up from 95.1% as on Mar 31, 2017.

In addition, property operating income (POI) for comparable properties climbed 3.8% for the first quarter.

Federal Realty exited first-quarter 2018 with cash and cash equivalents of approximately $64.4 million, up from $15.2 million posted at the end of 2017.

Outlook

For 2018, Federal Realty maintained its FFO per share guidance of $6.08-$6.24. The Zacks Consensus Estimate for the same is currently pegged at $6.17, which is within the company’s guided range.

Dividend Update

Concurrently, Federal Realty announced a quarterly cash dividend of $1.00 per share. The dividend will be paid on Jul 16 to shareholders on record as of Jun 22, 2018.

Our Take

Federal Realty’s portfolio of premium retail assets — mainly situated in the major coastal markets from Washington, D.C. to Boston, San Francisco and Los Angeles — along with a diverse tenant base, positions it well for decent growth. Efforts to improve the company’s operating performance through expansion, renovation and re-tenanting support long-term profitability.

Nevertheless, shrinking footfall at malls amid online retail taking precedence, store closures and bankruptcy of retailers might continue to hurt this retail REIT’s performance. Also, rate hike adds to its woes.

Federal Realty currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Federal Realty Investment Trust Price, Consensus and EPS Surprise
 


We now look forward to the earnings releases of other REITs like Apartment Investment and Management Company (AIV - Free Report) , EPR Properties (EPR - Free Report) and Realty Income Corporation (O - Free Report) . While Apartment Investment and Management Company is scheduled to release earnings on May 7, EPR Properties and Realty Income are slated to report quarterly numbers on May 8.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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