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Federal Realty (FRT) Q1 FFO Beats Estimates, Revenues Rise Y/Y
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Federal Realty Investment Trust’s (FRT - Free Report) first-quarter 2023 funds from operations (FFO) per share of $1.59 surpassed the Zacks Consensus Estimate of $1.57. This also marked a rise of 6% from the year-ago quarter’s tally of $1.50. Results reflect healthy leasing activity and occupancy levels at its properties.
While quarterly revenues of $273.1 million improved 6.3% from the year-ago quarter’s tally, the same missed the Zacks Consensus Estimate of $276.8 million. However, FRT generated comparable property operating income growth of 3.6% for the first quarter.
Per Donald C. Wood, Federal Realty's chief executive officer, "Leasing volume has remained strong exceeding pre-pandemic levels by 20 – 30%.”
Quarter in Detail
During the reported quarter, Federal Realty signed 107 leases for 524,286 square feet of retail space. On a comparable space basis, the company signed 101 leases for 504,502 square feet of space at an average rent of $34.72 per square foot. This denotes cash-basis rollover growth of 11% and 24% on a straight-line basis. It marks the second straight quarter of a double-digit cash-basis rollover.
On the operational front, occupancy rates in the portfolio increased by 140 basis points (bps) year over year to 92.6% as of Mar 31, 2023. Leased rates also increased by 50 bps year over year to 94.2% as of the same date. Our estimate for the same was 94.4%. Moreover, FRT’s comparable residential properties were 96.9% leased as of the same date.
In the first quarter of 2023, Federal Realty acquired the remaining portions of Huntington Square in East Northport, New York, for $35.5 million, giving the company full control of the 243,000-square-foot property positioned in the heart of Suffolk County's retail corridor. FRT also sold one retail property for $13.2 million.
Federal Realty exited 2023 with cash and cash equivalents of $99.4 million, up from the $85.6 million recorded at the end of 2022.
Guidance
For 2023, Federal Realty maintained its guidance for FFO per share in the range of $6.38-$6.58. The Zacks Consensus Estimate of $6.48 also lies within this range.
Dividend
Concurrent with the first-quarter earnings release, Federal Realty announced a regular quarterly cash dividend of $1.08 per share. This indicates an annual rate of $4.32 per share. The dividend will be paid out on Jul 17 to shareholders of record as of Jun 22, 2023.
Simon Property Group, Inc.’s (SPG - Free Report) first-quarter 2023 FFO per share of $2.74 missed the Zacks Consensus Estimate of $2.80. However, the figure compared favorably with the year-ago quarter’s $2.70.
SPG’s results reflected better-than-anticipated revenues on healthy leasing activity and a rise in the base minimum rent per square foot and occupancy levels. However, higher operating expenses were worrisome. This retail behemoth raised its 2023 FFO per share outlook and dividend.
Kimco Realty Corp.’s (KIM - Free Report) first-quarter 2023 FFO per share came in at 39 cents, meeting the Zacks Consensus Estimate. The figure was in line with the year-ago quarter’s number and our estimate.
KIM's results reflected better-than-anticipated revenues, aided by rental rate growth and a rise in occupancy. It revised its 2023 FFO per share outlook.
Conclusion
Federal Realty's decent first-quarter 2023 performance demonstrates the company's ability to adapt to the evolving needs of consumers and retailers, particularly in the affluent first-ring suburbs of major metropolitan areas where it operates. With its strong leasing volume, growing property operating income and improving occupancy rates, FRT is well-positioned to continue its success throughout 2023. Investors should closely monitor Federal Realty as the company maintains its momentum, delivering solid financial results.
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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Federal Realty (FRT) Q1 FFO Beats Estimates, Revenues Rise Y/Y
Federal Realty Investment Trust’s (FRT - Free Report) first-quarter 2023 funds from operations (FFO) per share of $1.59 surpassed the Zacks Consensus Estimate of $1.57. This also marked a rise of 6% from the year-ago quarter’s tally of $1.50. Results reflect healthy leasing activity and occupancy levels at its properties.
While quarterly revenues of $273.1 million improved 6.3% from the year-ago quarter’s tally, the same missed the Zacks Consensus Estimate of $276.8 million. However, FRT generated comparable property operating income growth of 3.6% for the first quarter.
Per Donald C. Wood, Federal Realty's chief executive officer, "Leasing volume has remained strong exceeding pre-pandemic levels by 20 – 30%.”
Quarter in Detail
During the reported quarter, Federal Realty signed 107 leases for 524,286 square feet of retail space. On a comparable space basis, the company signed 101 leases for 504,502 square feet of space at an average rent of $34.72 per square foot. This denotes cash-basis rollover growth of 11% and 24% on a straight-line basis. It marks the second straight quarter of a double-digit cash-basis rollover.
On the operational front, occupancy rates in the portfolio increased by 140 basis points (bps) year over year to 92.6% as of Mar 31, 2023. Leased rates also increased by 50 bps year over year to 94.2% as of the same date. Our estimate for the same was 94.4%. Moreover, FRT’s comparable residential properties were 96.9% leased as of the same date.
In the first quarter of 2023, Federal Realty acquired the remaining portions of Huntington Square in East Northport, New York, for $35.5 million, giving the company full control of the 243,000-square-foot property positioned in the heart of Suffolk County's retail corridor. FRT also sold one retail property for $13.2 million.
Federal Realty exited 2023 with cash and cash equivalents of $99.4 million, up from the $85.6 million recorded at the end of 2022.
Guidance
For 2023, Federal Realty maintained its guidance for FFO per share in the range of $6.38-$6.58. The Zacks Consensus Estimate of $6.48 also lies within this range.
Dividend
Concurrent with the first-quarter earnings release, Federal Realty announced a regular quarterly cash dividend of $1.08 per share. This indicates an annual rate of $4.32 per share. The dividend will be paid out on Jul 17 to shareholders of record as of Jun 22, 2023.
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.
Federal Realty Investment Trust Price, Consensus and EPS Surprise
Federal Realty Investment Trust price-consensus-eps-surprise-chart | Federal Realty Investment Trust Quote
Performance of Other Retail REITs
Simon Property Group, Inc.’s (SPG - Free Report) first-quarter 2023 FFO per share of $2.74 missed the Zacks Consensus Estimate of $2.80. However, the figure compared favorably with the year-ago quarter’s $2.70.
SPG’s results reflected better-than-anticipated revenues on healthy leasing activity and a rise in the base minimum rent per square foot and occupancy levels. However, higher operating expenses were worrisome. This retail behemoth raised its 2023 FFO per share outlook and dividend.
Kimco Realty Corp.’s (KIM - Free Report) first-quarter 2023 FFO per share came in at 39 cents, meeting the Zacks Consensus Estimate. The figure was in line with the year-ago quarter’s number and our estimate.
KIM's results reflected better-than-anticipated revenues, aided by rental rate growth and a rise in occupancy. It revised its 2023 FFO per share outlook.
Conclusion
Federal Realty's decent first-quarter 2023 performance demonstrates the company's ability to adapt to the evolving needs of consumers and retailers, particularly in the affluent first-ring suburbs of major metropolitan areas where it operates. With its strong leasing volume, growing property operating income and improving occupancy rates, FRT is well-positioned to continue its success throughout 2023. Investors should closely monitor Federal Realty as the company maintains its momentum, delivering solid financial results.
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.