Federal Realty (FRT) Q4 FFO Meets Estimates, Revenues Rise Y/Y
Federal Realty Investment Trust’s FRT fourth-quarter 2023 funds from operations (FFO) per share of $1.64 was in line with the Zacks Consensus Estimate. This marked a rise of 3.8% from the year-ago quarter’s tally of $1.58.
Results reflect a rise in revenues and healthy leasing activity that aided FRT’s fourth-quarter performance. However, lower occupancy levels affected the results to some extent. This retail REIT also provided an outlook for 2024.
Quarterly revenues of $291.8 million missed the consensus mark of $293.3 million but improved 4.2% from the year-ago quarter’s tally.
Per Donald C. Wood, Federal Realty's chief executive officer, "Our multi-faceted business plan drove FFO growth, marked by continued growth in our comparable pool, contributions from our redevelopment and expansion program and accretive acquisition activity. We believe that Federal's high-quality open-air shopping centers and mixed-use communities located in the first-tier suburbs of major metropolitan markets remain the real estate of choice for today's top-tier tenants."
For the full-year 2023, Federal Realty’s FFO per share came in at $6.55, higher than the prior-year tally of $6.32, while missing the Zacks Consensus Estimate by a penny. This was backed by 5.4% growth in revenues to $1.13 billion.
Behind the Headlines
In terms of leasing, during the reported quarter, Federal Realty signed 102 leases for 398,378 square feet of retail space. On a comparable space basis, the company signed 100 leases for 393,761 square feet of space at an average rent of $44.57 per square foot. This denotes cash-basis rollover growth of 12% and 23% on a straight-line basis.
On the operational front, occupancy rates in the portfolio decreased 60 basis points (bps) year over year to 92.2% as of Dec 31, 2023. The portfolio was 94.2% leased as of the same date. Our estimate for the metric was the same as the reported figure. Moreover, FRT’s comparable residential properties were 95.9% leased as of the same date.
Sustained robust leasing activity for small shops resulted in a quarter-ending lease rate of 90.7%, marking a 70 bps rise year over year.
Federal Realty exited 2023 with cash and cash equivalents of $250.8 million, up from $85.6 million recorded at the end of 2022.
Guidance
For 2024, FRT estimates FFO per share in the range of $6.65-$6.87. The Zacks Consensus Estimate of $6.77 also stands within this range.
Dividend
Concurrent with the fourth-quarter earnings release, Federal Realty announced a regular quarterly cash dividend of $1.09 per share, indicating an annual rate of $4.36 per share. The dividend will be paid out on Apr 15 to shareholders of record as of Mar 13, 2024.
Federal Realty currently carries a Zacks Rank #2 (Buy). 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 fourth-quarter 2023 FFO per share of $3.69 surpassed the Zacks Consensus Estimate of $3.34. Also, the figure increased 8.5% year over year.
SPG’s results reflect better-than-anticipated revenues on lower property operating expenses and a rise in the base rent per square foot and occupancy levels. However, higher interest expenses partly offset the upsides. This retail behemoth’s 2024 FFO per share outlook was lower than expected.
Kimco Realty Corp. KIM reported fourth-quarter 2023 funds from operations (FFO) per share of 39 cents, in line with the Zacks Consensus Estimate. The figure was only a cent higher than the year-ago quarter’s tally.
Though KIM reported growth in revenues, a rise in interest expenses acted as a dampener. This retail REIT provided an initial outlook for 2024 FFO per share, which is below the consensus mark.
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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