Federal Realty Investment Trust Announces Third Quarter 2023 Operating Results

Federal Realty Investment Trust (NYSE:FRT) today reported operating results for its third quarter ended September 30, 2023. For the three months ended September 30, 2023 and 2022, net income available for common shareholders was $0.67 per diluted share and $1.89 per diluted share, respectively. For the three months ended September 30, 2023 and 2022, operating income was $100.1 million and $191.7 million, respectively.

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

• Generated funds from operations available to common shareholders (FFO) per diluted share of $1.65 for the quarter.  
• Generated 3.8% comparable property operating income (POI) growth for the quarter.
• Highest year-to-date comparable leasing volume on record with 1.6 million square feet of comparable space signed in the first nine months of 2023.
• Continued robust levels of leasing with 100 signed leases for 552,765 square feet of comparable space in the quarter at a cash basis rollover of 11%.
• Federal Realty's portfolio was 92.3% occupied and 94.0% leased. Both metrics reflect a negative impact of approximately 100 basis points resulting from the vacating of the final Bed Bath & Beyond leases.
• Continued strong small shop leasing, ending the quarter at 90.7% leased, an increase of 50 basis points quarter-over-quarter and 80 basis points year-over-year.
• Tightened and raised 2023 earnings per diluted share guidance to $2.65 - $2.73 and 2023 FFO per diluted share guidance to $6.50 - $6.58.

"In the first nine months of 2023, we achieved a Federal Realty record by leasing over 1.6 million square feet of comparable space," said Donald C. Wood, Federal Realty's Chief Executive Officer. "Our business's strength lies in superior demographics, fueling active leasing at our premium retail destinations. We remain focused on continuing to grow occupancy over the coming quarters."

Financial Results

Net Income

For the third quarter 2023, net income available for common shareholders was $55.0 million and earnings per diluted share was $0.67 versus $154.1 million and $1.89, respectively, for the third quarter 2022.

FFO

For the third quarter 2023, FFO was $135.3 million, or $1.65 per diluted share, compared to $129.3 million, or $1.59 per diluted share for the third 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 92.3% occupied as of September 30, 2023, an increase of 20 basis points year-over-year. The portfolio was 94.0% leased as of September 30, 2023. Both the occupied and leased metrics reflect a negative impact of approximately 100 basis points resulting from the vacating of the final Bed Bath & Beyond leases.

Small shop leased rate was 90.7% as of September 30, 2023, an increase of 50 basis points quarter-over-quarter and 80 basis points year-over-year.

Additionally, our residential properties were 97.8% leased as of September 30, 2023.

Leasing Activity

During the third quarter 2023, Federal Realty signed 105 leases for 565,496 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 552,765 square feet at an average rent of $34.51 per square foot compared to the average contractual rent of $31.17 per square foot for the last year of the prior leases, representing a cash basis rollover growth on those comparable spaces of 11%, 21% on a straight-line basis.

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 January 16, 2024 to common shareholders of record as of January 2, 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 January 16, 2024 to shareholders of record as of January 2, 2024.

Summary of Other Activities

• August 28, 2023 – Federal Realty earned a place on The San Francisco Chronicle's 2023 Top Workplaces list for its commitment to employee well-being and satisfaction.
• October 12, 2023 – Federal Realty acquired the fee interest under a portion of its Mercer on One (formerly known as Mercer Mall) property for $55.0 million pursuant to the purchase option included in the master lease.
• October 27, 2023 – Federal Realty sold a building on Third Street Promenade in Santa Monica, California for $17.2 million.

Guidance

Federal Realty tightened and raised its 2023 guidance for earnings per diluted share to $2.65 to $2.73 from $2.64 to $2.76 and its 2023 FFO per diluted share to $6.50 to $6.58 from $6.46 to $6.58.

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