Federal Realty Investment Trust
), a real estate investment trust (REIT), reported first-quarter
2013 FFO (funds from operations) per share of $1.14, beating the
Zacks Consensus Estimate by 2 cents and the prior-year quarter
figure of $1.04. The better-than-expected results were
attributable to improved performance in the same-store portfolio
and decent top-line growth.
Total revenue during the reported quarter increased 7.8% to
$157.8 million from $146.3 million and marginally topped the
Zacks Consensus Estimate of $156 million.
Quarter in Detail
Federal Realty executed healthy leasing activities in the
quarter. The company signed 80 leases spanning 266,451 square
feet of retail space. On a same-store basis, it leased 254,282
square feet at an average cash-basis contractual rent increase of
12.0% per square foot.
The average same-store contractual rent for the first year of
the new lease was $35.78 per square foot, compared with the
average contractual rent of $31.89 per square foot for the last
year of the prior lease.
Same-store rent per square foot (GAAP) increased 22.0% on an
average in the quarter. As of March 31, 2013, the overall
portfolio was 95.1% leased, compared with 93.8% at the end of the
year-ago quarter. Moreover, Federal Realty's same-center
portfolio was 95.1% leased as of Mar 31, 2013, compared with
94.5% as of Mar 31, 2012.
Same-center property operating income in the reported quarter
increased 4.4% including redevelopment and expansion properties,
and 3.2% excluding redevelopment and expansion properties,
compared to the prior-year quarter.
As of March 31, 2013, Federal Realty had cash and cash
equivalents of approximately $31.3 million, compared to $37.0
million as of Dec 31, 2012.
Following the quarter-end, on Apr 19, Federal Realty received
an upgradation of the Corporate Credit and Senior Unsecured
ratings from BBB+, Positive Outlook, to A-, Stable by Standard
& Poor's Rating Services.
On Apr 3, 2013, Federal Realty acquired a shopping center
located in vibrant Darien, CT for $47.3 million. The property is
anchored by an Equinox health club, a Stop & Shop grocer and
)'s drug store.
Federal Realty increased its FFO guidance for full-year 2013 to
$4.55-4.59 per share from the prior guidance of $4.53-4.58 per
share. The updated guidance reflects the impact of the
Darien-based shopping center acquisition and cost benefits from
the rating upgradation.
In addition, Federal Realty declared a regular quarterly cash
dividend of 73 cents per share on its common shares, or $2.92 on
an annualized basis. The dividend will be paid on Jul 15, 2013 to
common shareholders of record as of Jun 21.
We are encouraged by Federal Realty's decent performance in
another consecutive quarter. The company owns Class A shopping
centers in high-barrier, high-growth areas that have fared
relatively better during the economic downturn.
The recent Shopping Center acquisition is also a strategic fit
and will enhance its retail dominance in the Conn. area going
forward. In addition, Federal Realty has a strong balance sheet
and has consistently paid its dividends since inception.
Federal Realty currently retains a Zacks Rank #3 (Hold). Other
better performing REITs include
Cedar Shopping Centers Inc.
Agree Realty Corp.
), carrying a Zacks Rank #1 (Strong Buy) and a Zacks Rank #2
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
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