Federal Realty Investment Trust Announces Second Quarter 2024 Operating Results

Federal Realty Investment Trust has reported operating results for its second quarter ended June 30, 2024. For the three months ended June 30, 2024 and 2023, net income available for common shareholders was $1.32 per diluted share and $0.72 per diluted share, respectively. For the three months ended June 30, 2024 and 2023, operating income was $157.0 million and $101.8 million, respectively.

Highlights for the second quarter include:

• Generated funds from operations available to common shareholders (FFO) per diluted share of $1.69 for the quarter, compared to $1.67 for the second quarter of 2023.
• Signed 122 leases for 594,361 square feet of comparable retail space, a record level of comparable square footage signed in any second quarter and the second highest of any quarter, at a cash basis rollover growth of 10% and 23% on a straight-line basis.
• Generated comparable property operating income (POI) growth of 2.9% for the second quarter, excluding lease termination fees and prior period rents collected.
• Reported portfolio occupancy of 93.1% and a leased rate of 95.3% at quarter end, representing an increase of 110 basis points and 100 basis points, respectively, quarter-over-quarter.
• Continued strong small shop leasing, ending the quarter at 92.5% leased, with an increase of 110 basis points quarter-over-quarter and 230 basis points year-over-year.
• During the quarter and subsequent to quarter end:
  • Acquired two assets totaling 880,000 square feet on 129 acres for a total purchase price of $275 million.
  • Completed the sale of its remaining assets on Third Street Promenade in Santa Monica, CA, for $103 million.
• Increased the regular quarterly cash dividend to $1.10 per common share, resulting in an indicated annual rate of $4.40 per common share. This marks the 57th consecutive year that Federal Realty has increased its common dividend, the longest record of consecutive annual dividend increases in the REIT sector.
• Tightened and raised 2024 earnings per diluted share guidance to $3.33 – $3.51, 2024 FFO per diluted share guidance to $6.70 – $6.88, and 2024 comparable properties growth excluding lease termination fees and prior period rents collected assumption to 3% – 4%.
• Issued the company's 2023 Sustainability Report.

"Another record quarter for Federal Realty, starting with funds from operations per share of $1.69, to continued record leasing volume, to furthering our REIT industry record with the 57th consecutive year of increased common dividends," said Donald C. Wood, Chief Executive Officer. "The robust leasing demand we continue to see is a clear indicator of the value and attractiveness of our properties, setting a solid foundation for strong future earnings growth."

Financial Results

Net Income

For the second quarter 2024, net income available for common shareholders was $110.0 million and earnings per diluted share was $1.32 versus $58.5 million and $0.72, respectively, for the second quarter 2023.

FFO

For the second quarter 2024, FFO was $141.3 million, or $1.69 per diluted share, compared to $136.9 million, or $1.67 per diluted share for the second quarter 2023.

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 93.1% occupied and 95.3% leased as of June 30, 2024.

Small shop leased rate was 92.5% as of June 30, 2024, an increase of 110 basis points quarter-over-quarter and 230 basis points year-over-year.

The anchor tenant leased rate was 96.7%, reflecting an increase of 90 basis points quarter-over-quarter and 30 basis points year-over-year.

Additionally, residential properties were 97.6% leased as of June 30, 2024.

Leasing Activity

During the second quarter 2024, Federal Realty signed 124 leases for 600,669 square feet of retail space. On a comparable space basis (i.e., spaces for which there was a former tenant), Federal Realty signed 122 leases for 594,361 square feet at an average rent of $37.72 per square foot compared to the average contractual rent of $34.29 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 10%, 23% on a straight-line basis. Comparable leases represented 98% of total comparable and non-comparable retail leases signed during the second quarter 2024.

Transaction Activity

• April 1, 2024 — Acquired the approximately 10% non-controlling interest in the partnership that owns CocoWalk in suburban Miami, Florida for $12.4 million bringing Federal Realty's ownership to 100%.
• May 31, 2024 — Acquired Virginia Gateway, a 664,000 square-foot, 110-acre super-regional community center comprising five adjacent open-air retail properties located at the highly trafficked intersection of I-66 and Route 29 in Gainesville, VA, for $215 million, further expanding Federal Realty's presence in Northern Virginia.
• July 31, 2024 — Acquired Pinole Vista Crossing, a dominant 216,000-square-foot, 19-acre regional open-air grocery-anchored community center located along I-80 in Pinole, CA, 13 miles north of Federal Realty's East Bay Bridge Shopping Center, for $60 million, expanding the company's presence in Northern California's East Bay sub-market.
• June 5, 2024 — Completed the sale of its remaining assets on Third Street Promenade in Santa Monica, CA, for $103 million, resulting in a gain on sale of $52 million.

Regular Quarterly Dividends

Federal Realty announced today that its Board of Trustees increased the regular quarterly cash dividend to $1.10 per common share, resulting in an indicated annual rate of $4.40 per common share. The regular common dividend will be payable on October 15, 2024 to common shareholders of record as of October 1, 2024. This increase represents the 57th 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 15, 2024 to shareholders of record as of October 1, 2024.

2024 Guidance

Federal Realty has updated its 2024 guidance, as summarized in the table below:

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