Federal Realty Investment Trust Announces Second Quarter 2023 Operating Results

Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its second quarter ended June 30, 2023. For the three months ended June 30, 2023 and 2022, net income available for common shareholders was $0.72 per diluted share and $0.75 per diluted share, respectively. For the three months ended June 30, 2023 and 2022, operating income was $101.8 million and $93.6 million, respectively.

Highlights for the second quarter and subsequent to quarter-end include:

• Generated funds from operations available to common shareholders (FFO) per diluted share of $1.67 for the quarter, a company record.  
• Generated 4.6% comparable property operating income (POI) growth excluding lease termination fees and COVID-19 pandemic related prior period rents collected for the second quarter.
• Continued robust levels of leasing with 107 signed leases for 576,345 square feet of comparable space in the second quarter at a cash basis rollover of 7%, highest second quarter comparable leasing volume on record.
• Federal Realty's portfolio was 92.8% occupied and 94.3% leased, representing year-over-year increases of 80 basis points and 20 basis points, respectively.
• Issued $350.0 million of fixed rate senior unsecured notes, as a green bond, that mature on May 1, 2028 and bear interest at 5.375%. The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%.
• Increased the regular quarterly cash dividend to $1.09 per common share, resulting in an indicated annual rate of $4.36 per common share. This increase represents the 56th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
• Increased 2023 earnings per diluted share guidance to $2.64 - $2.76 and increased 2023 FFO per diluted share guidance to $6.46 - $6.58.
• Issued the Company's annual Environmental, Social and Governance Report.

"A record quarter for Federal Realty; $1.67 of FFO per share driven by strong results in all aspects of our company and our 56th consecutive year of increased common dividends to our shareholders, also a REIT industry record," said Donald C. Wood, Federal Realty's Chief Executive Officer. "Continued robust leasing activity demonstrates the strength of retail demand for the high-quality product that Federal Realty offers."

Financial Results

Net Income

For the second quarter 2023, net income available for common shareholders was $58.5 million and earnings per diluted share was $0.72 versus $59.7 million and $0.75, respectively, for the second quarter 2022.

FFO

For the second quarter 2023, FFO was $136.9 million, or $1.67 per diluted share, compared to $131.6 million, or $1.65 per diluted share for the second 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 92.8% occupied as of June 30, 2023, an increase of 80 basis points year-over-year. The portfolio was 94.3% leased as of June 30, 2023, an increase of 20 basis points year-over-year.

Additionally, our comparable residential properties were 98.0% leased as of June 30, 2023.

Leasing Activity

During the second quarter 2023, Federal Realty signed 112 leases for 602,911 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 107 leases for 576,345 square feet at an average rent of $35.34 per square foot compared to the average contractual rent of $33.09 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 7%, 19% on a straight-line basis.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the regular quarterly cash dividend to $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 October 16, 2023 to common shareholders of record as of September 22, 2023. This increase represents the 56th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.

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 October 16, 2023 to shareholders of record as of October 2, 2023.

Summary of Other Quarterly Activities

• April 12, 2023 – Federal Realty issued $350.0 million of fixed rate senior unsecured notes, as a green bond, that mature on May 1, 2028 and bear interest at 5.375%. The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%. The net proceeds, after issuance discount, underwriting fees, and other costs were $345.7 million.
• June 1, 2023 – Federal Realty repaid its $275.0 million 2.75% senior unsecured notes at maturity.
• June 1, 2023 – Federal Realty issued its 2022 Environmental, Social and Governance Report highlighting the Company's commitment to its ESG initiatives and accomplishments.
• June 21, 2023 – Federal Realty was named to The Washington Post's 2023 Top Workplaces list for its leadership in employee satisfaction and engagement.

Guidance

Federal Realty increased its 2023 guidance for earnings per diluted share to $2.64 to $2.76 from $2.59 to $2.79 and 2023 FFO per diluted share to $6.46 to $6.58 from $6.38 to $6.58.

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