FRT to Control Shopping Center

Federal Realty Investment Trust (FRT - Analyst Report) recently announced that it has bought an 89.9% controlling interest in Montrose Crossing, a shopping center in Rockville, Maryland, for $127 million.

Montrose Crossing, spanning 357,000 square feet, is a dominant shopping center with productive tenant sales anchored by a 73,000 square foot Giant Food, Old Navy, Marshall's and Sports Authority, and consists of a variety of restaurants, service tenants and retail usage.

Subsequent to the acquisition, Federal Realty possesses 1.2 million square feet of existing retail space in Rockville Pike within a mile of Montrose Crossing. This transaction enhances the retail dominance of the company in the Washington, DC sub-market and is expected to be accretive to its earnings in the beginning of 2012.

Federal Realty reported third quarter 2011 FFO (funds from operations) of $63.9 million or $1.01 per share compared with $58.8 million or 95 cents per share in the year-earlier quarter. Funds from operations, 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.

Federal Realty specializes in owning, managing, developing and redeveloping retail, mixed-use and street-retail properties, primarily in densely populated locations. Its community and neighborhood shopping centers are anchored by supermarkets, drug stores or high-volume, value-oriented retailers, which provide consumer necessities.

Federal Realty currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, National Retail Properties. (NNN - Snapshot Report) currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

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