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Federal Realty (FRT) Beats Q2 FFO Estimates, Hikes Dividend

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Retail REIT — Federal Realty Investment Trust (FRT - Free Report) — posted second-quarter 2019 funds from operations (FFO) per share of $1.60, which beat the Zacks Consensus Estimate of $1.58. The reported figure also improves from the prior-year tally of $1.55.

Results reflect rise in property operating income and cash-basis rollover growth on comparable spaces. The company also hiked its regular quarterly dividend.

Total revenues grew 2.5% year over year to $230.5 million. However, the top-line figure missed the Zacks Consensus Estimate of $233.8 million.

Quarter in Details

During the reported quarter, Federal Realty signed 115 leases for 382,656 square feet of retail space. On a comparable space basis, the company leased 378,756 square feet at average rent of $42.68 per square foot. This denotes cash-basis rollover growth of 7%.

As of Jun 30, 2019, the company’s overall portfolio was 94.1%, down 90 basis points (bps) year over year. As of that date, comparable property portfolio was 94.6% leased, down 110 bps from the prior-year period. In addition, property operating income (POI) for comparable properties jumped 3.5% for the second quarter.

Federal Realty exited second-quarter 2019 with cash and cash equivalents of approximately $105.9 million, up from $64.1 million posted at the end of 2018.

Outlook

For 2019, Federal Realty maintained its FFO per share guidance at $6.30-$6.46. The Zacks Consensus Estimate for the same is currently pinned at $6.39, within the company’s guided range.

Dividend Hike

Federal Realty announced a hike in its dividend rate, increasing the quarterly cash dividend to $1.05 per share from the $1.02 paid earlier. This represents an increase of 2.9% and marks the 52nd consecutive year of common dividend hikes. The increased dividend will be paid on Oct 15, to shareholders on record as of Sep 23, 2019.

Our Take

We are encouraged with Federal Realty’s better-than-anticipated performance in terms of FFO per share in the second quarter. The company’s premium retail real estate assets, diverse tenant base and focus on mixed used properties position it well for long-term growth. In addition, the company’s robust balance sheet offers scope for growth. Also, it has enabled the company to raise dividends for 52 straight years.

Nevertheless, the choppy retail real estate market is a concern. Shrinking footfall at malls amid shift of consumers toward online channels, store closures and bankruptcy of retailers will likely continue to affect this retail REIT’s performance. However, the repositioning and redevelopment efforts will likely help the company sail through the current turbulent scenario and grow over the long haul.

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 and EPS Surprise

Federal Realty Investment Trust price-consensus-eps-surprise-chart | Federal Realty Investment Trust Quote

We, now, look forward to the earnings releases of other REITs like Realty Income Corporation (O - Free Report) , Host Hotels & Resorts, Inc. (HST - Free Report) and Mack-Cali Realty Corporation , which are slated to report their quarterly numbers next week.

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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