Federal Realty Investment Trust Announces Operating Results for the Year and Quarter Ended December 31, 2023

Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its year and quarter ended December 31, 2023. For the year ended December 31, 2023 and 2022, net income available for common shareholders was $2.80 per diluted share and $4.71 per diluted share, respectively. For the three months ended December 31, 2023 and 2022, net income available for common shareholders was $0.76 per diluted share and $1.40 per diluted share, respectively. For the year ended December 31, 2023 and 2022, Federal Realty reported operating income of $406.5 million and $526.4 million, respectively. For the three months ended December 31, 2023 and 2022, operating income was $108.8 million and $155.1 million, respectively.

Highlights for the full year, fourth quarter and subsequent to quarter-end include:

• Generated funds from operations available to common shareholders (FFO) per diluted share of $6.55 for the year, compared to $6.32 in 2022. For the fourth quarter, generated FFO per diluted share of $1.64, compared to $1.58 for the fourth quarter 2022.
• Generated comparable property operating income (POI) excluding lease termination fees and prior period rents collected growth of 4.3% for the year 2023 and 4.4% for the fourth quarter.
• Continued robust levels of leasing with 100 signed comparable retail leases in the fourth quarter at a cash basis rollover of 12%, bringing 2023 to 408 signed leases for over 2 million square feet of comparable space.
  • Comparable leases represented 98% of total retail leases signed in the fourth quarter.
• Federal Realty's portfolio was 92.2% occupied and 94.2% leased at quarter end.
• Continued strong small shop leasing, ending the quarter at 90.7% representing an increase of 70 basis points year-over-year.
• Announced second phase of residential redevelopment at Bala Cynwyd in Bala Cynwyd, PA at a projected cost of $90 - $95 million and projected return on investment (ROI) of 7%.
• Raised $685.0 million of capital in two separate financings:
  • $200.0 million mortgage loan secured by Bethesda Row.
  • $485.0 million of 3.25% Exchangeable Senior Notes due January 2029.
• Repaid $600.0 million 3.95% senior unsecured notes at maturity, January 16, 2024.
• Introduced 2024 earnings per diluted share guidance of $2.72 to $2.94 and 2024 FFO per diluted share guidance of $6.65 to $6.87.

"In 2023, Federal's FFO per diluted share reached an all-time high, showcasing the Company's resilience in the face of elevated interest rates," said 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. We head into 2024 energized and optimistic, poised for another exceptional year ahead."

Financial Results

Net Income

For the full year 2023, Federal Realty reported net income available for common shareholders of $229.0 million and earnings per diluted share of $2.80. This compares to net income available for common shareholders of $377.5 million and earnings per diluted share of $4.71 for the full year 2022, which included significant one-time gains from transaction activity.

For the fourth quarter 2023, net income available for common shareholders was $62.1 million and earnings per diluted share was $0.76 versus $113.7 million and $1.40, respectively, for the fourth quarter 2022.

FFO

For the full year 2023, Federal Realty generated funds from operations available for common shareholders (FFO) of $537.3 million, or $6.55 per diluted share. This compares to FFO of $509.2 million, or $6.32 per diluted share for the full year 2022.

For the fourth quarter 2023, FFO was $134.9 million, or $1.64 per diluted share, compared to $129.0 million, or $1.58 per diluted share for the fourth quarter 2022.

FFO is a non-GAAP supplemental earnings measure which the Trust considers meaningful in measuring its operating performance.  A reconciliation of FFO to net income is attached to this press release.

Operational Update

Occupancy

The portfolio was 92.2% occupied and 94.2% leased as of December 31, 2023.

Additionally, our comparable residential properties were 95.9% leased as of December 31, 2023.

Leasing Activity

For the full year 2023, Federal Realty signed 426 leases for 2,091,071 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 408 leases for 2,027,373 square feet at an average rent of $36.75 per square foot compared to the average contractual rent of $33.43 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 10%, 22% on a straight-line basis. Comparable leases represented 96% of total comparable and non-comparable leases signed during 2023.

During the fourth quarter 2023, Federal Realty signed 102 leases for 398,378 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 100 leases for 393,761 square feet at an average rent of $44.57 per square foot compared to the average contractual rent of $39.97 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 12%, 23% on a straight-line basis. Comparable leases represented 98% of total comparable and non-comparable leases signed during the fourth quarter 2023.

Redevelopment

Subsequent to quarter end, Federal Realty announced the second phase of residential redevelopment at Bala Cynwyd in Bala Cynwyd, PA. The redevelopment will include the demolition of a two level department store building to construct a new six story residential building with 217 residential units, 16,000 square feet of retail and a two-story parking structure with 234 parking stalls. The redevelopment has a projected cost of $90 - $95 million and projected ROI of 7%.

Financing Transactions

On December 28, 2023, one of our wholly-owned subsidiaries entered into a $200.0 million mortgage loan, which bears interest at SOFR plus a 95 basis point spread, matures on December 28, 2025, plus two one-year extensions, at our option, and is secured by our Bethesda Row property. The interest rate is effectively fixed at 5.03% through the initial maturity date.

On January 11, 2024, our Operating Partnership issued $485.0 million aggregate principal amount of 3.25% Exchangeable Senior Notes that mature on January 15, 2029, unless earlier exchanged, purchased or redeemed. See our Form 8-K filing on January 11, 2024 for additional information on this transaction.

On January 16, 2024, we repaid the $600.0 million 3.95% senior unsecured notes at maturity.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees declared a regular quarterly cash dividend of $1.09 per common share, resulting in an indicated annual rate of $4.36 per common share. The regular common dividend will be payable on April 15, 2024 to common shareholders of record as of March 13, 2024.

Federal Realty's Board of Trustees also declared a quarterly cash dividend on its Class C depositary shares, each representing 1/1000 of a 5.000% Series C Cumulative Preferred Share of Beneficial Interest, of $0.3125 per depositary share. All dividends on the depositary shares will be payable on April 15, 2024 to shareholders of record as of April 1, 2024.

View Federal Realty Investment Trust >>