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Federal Realty (FRT) Q2 FFO Beats, View Up, Dividend Hiked

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Federal Realty Investment Trust’s (FRT - Free Report) second-quarter 2022 funds from operations (FFO) per share of $1.65 surpassed the Zacks Consensus Estimate of $1.50. This also compared favorably with the year-ago quarter’s tally of $1.41.

Results reflect better-than-anticipated revenues. This retail REIT raised its guidance for 2022 FFO per share and hiked its dividend.

Quarterly revenues of $264.1 million topped the consensus mark of $253 million and improved by 14.02% from the year-ago quarter’s tally. For the second quarter, FRT generated comparable property operating income (“POI”) growth of 8.2%.

Quarter in Detail

During the reported quarter, Federal Realty signed 137 leases for 577,338 square feet of retail space. On a comparable space basis, the company signed 132 leases for 562,111 square feet of space at an average rent of $35.86 per square foot. This denotes cash-basis rollover growth of 5%, 13% on a straight-line basis.

As of Jun 30, 2022, FRT’s portfolio was 92.0% occupied, denoting a quarter-over-quarter expansion of 80 basis points (bps) and 240 bps year over year. The company maintained a 210-bps spread between leased and occupied.

Federal Realty also experienced continued strong small shop leasing, ending the quarter at 89.3% leased. This reflects an increase of 360 bps year over year.

Federal Realty exited the second quarter of 2022 with cash and cash equivalents of $176.6 million, up from the $162.1 million recorded at the end of 2021.

Guidance

For 2022, FRT raised its guidance and now estimates FFO per share in the range of $6.10-$6.25 compared with the $5.85-$6.05 range projected earlier. The Zacks Consensus Estimate for the same stands at $6.02.

Federal Realty also increased comparable POI growth expectations to 5.5-7.0% from the 3.5-5.0% guided earlier.

Dividend Raise

Concurrent with the second-quarter earnings release, Federal Realty announced an increase in its regular quarterly cash dividend of $1.08 per share from $1.07 paid earlier. This indicates an annual rate of $4.32 per share. The dividend will be paid out on Oct 17 to shareholders of record as of Sep 22, 2022. The latest hike marks the 55th consecutive year of common dividend increases by FRT.

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

Performance of Retail REITs

Simon Property Group, Inc.’s (SPG - Free Report) second-quarter 2022 comparable FFO per share of $2.96 exceeded the Zacks Consensus Estimate of $2.91. The figure compared favorably with the year-ago quarter’s $2.92. Simon Property Group’s quarterly results reflected healthy operating performance and growth in occupancy levels. The retail REIT behemoth also raised the 2022 FFO per share outlook based on the quarterly results and also announced a hike in the quarterly dividend.

Kimco Realty Corp.’s (KIM - Free Report) second-quarter 2022 FFO per diluted share came in at 40 cents, surpassing the Zacks Consensus Estimate of 38 cents. The figure grew 17.6% from the year-ago quarter’s 34 cents. Results reflected year-over-year growth in the top line. The rise in occupancy levels and rental rate growth aided Kimco’s performance. KIM also raised the 2022 FFO outlook.

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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