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Federal Realty (FRT) Q4 FFO Meets, Revenues Beat Estimates

Zacks Equity Research

Retail REIT — Federal Realty Investment Trust FRT — posted fourth-quarter 2018 funds from operations (FFO) per share of $1.57, in line with the Zacks Consensus Estimate. Also, the reported figure compares favorably with the prior-year tally of $1.30.

Results reflect growth in revenues. The company witnessed rise in property operating income and lease rollover for comparable properties.

Total revenues for the quarter grew 5.1% year over year to $235.38 million. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $234.16 million.

For full-year 2018, the company reported FFO per share of $6.23, higher than the prior year’s $5.74. This was backed by a 6.8% year-over-year increase in revenues to $915.4 million.

Quarter in Details

During the reported quarter, Federal Realty signed 114 leases for 622,234 square feet of retail space. On a comparable space basis, the company leased 573,923 square feet at an average rent of $32.16 per square foot. This denoted cash-basis rollover growth of 15%.

As of Dec 31, 2018, the company’s overall portfolio was 94.6% leased, slightly down from 95.3% as on Dec 31, 2018. Comparable property portfolio was 95.1% leased as of Dec 31, 2018, down from 95.9% as on Dec 31, 2017.

In addition, property operating income (POI) for comparable properties climbed 2% for the fourth quarter.

Federal Realty exited 2018 with cash and cash equivalents of approximately $64.1 million, significantly up from $15.2 million posted at the end of 2017.

Outlook

For 2019, Federal Realty issued FFO per share guidance of $6.30-$6.46. This reflects the impact of the recently-implemented lease accounting standard ASC 842. The Zacks Consensus Estimate for the same is currently pinned at $6.42, which is within the company’s guided range.

Dividend Update

Federal Realty announced a quarterly cash dividend of $1.02 per share. The dividend will be paid on Apr 15, to shareholders on record as of Mar 14, 2019.

Our Take

Federal Realty’s premium retail real estate assets, diverse tenant base and focus on mixed used properties position it for long-term growth. In addition, its robust balance sheet offers scope for growth, moving ahead. Also, it has enabled the company to hike dividends for 51 consecutive years.

Nevertheless, shrinking footfall at malls amid shift of consumers toward online channels, store closures and bankruptcy of retailers will likely continue to dampen the performance of this retail REIT.

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
 

Federal Realty Investment Trust Price, Consensus and EPS Surprise | Federal Realty Investment Trust Quote

We, now, look forward to the earnings releases of PS Business Parks, Inc. PSB, Realty Income Corporation O and Extra Space Storage Inc. EXR, all of which are scheduled to report their quarterly numbers on Feb 20.

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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Realty Income Corporation (O) : Free Stock Analysis Report
 
Federal Realty Investment Trust (FRT) : Free Stock Analysis Report
 
Extra Space Storage Inc (EXR) : Free Stock Analysis Report
 
PS Business Parks, Inc. (PSB) : Free Stock Analysis Report
 
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