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Federal Realty Hits 52-Week High

Zacks Equity Research

Shares of Federal Realty Investment Trust (FRT) touched a 52-week high of $121.01 towards the end of the trading session on Monday, Jun 2, 2014, as it gained momentum following strong first-quarter 2014 results. The closing price of $120.86 of this retail real estate investment trust (:REIT) represented a robust year-to-date return of 20.6%. The average trading volume for the session was around 0.29 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving retail market fundamentals and expected year-over-year funds from operations (:FFO) per share growth of 6.72% for 2014.

Growth Drivers

Federal Realty bounced back with its earnings surprise streak in first-quarter 2014, after posting in-line results in the prior quarter, thanks to strong core operating properties’ performance. In particular, the company’s portfolio of Class A shopping centers along with the diversified tenant base, comprising grocery stores and low-end discount retailers, position it well to maintain the upward trend.

Moreover, Federal Realty has been capitalizing on expansion opportunities in premium markets, which generate high-income growth and long-term value creation potential. In connection to this, the acquisition of New Jersey-based premium assets in the quarter and the leasing and development progress at 3 properties – Pike & Rose, Assembly Row and The Point – bode well for Federal Realty.

On May 8, 2014, Federal Realty posted first-quarter 2014 funds from operations (:FFO) per share of $1.21, surpassing the Zacks Consensus Estimate of $1.19 by 1.7% and the year-ago quarter figure of $1.14 by 6.1%. Higher revenues, rent escalations and improved same-store portfolio performance aided the results.

Over the last 30 days, the Zacks Consensus Estimate for 2014 and 2015 remained stable at $4.92 and $5.36 per share, respectively.

Other Stocks to Consider

Apart from Federal Realty, other retail REITs that reached 52-week highs on Jun 2 include Simon Property Group Inc. (SPG), General Growth Properties, Inc (GGP) and The Macerich Company (MAC).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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