Retail real estate investment trust (REIT) -
Federal Realty Investment Trust
) reported second-quarter 2013 core FFO (funds from operations)
per share of $1.14, beating the Zacks Consensus Estimate by a
cent and the year-ago quarter figure by 9.6%.
FED RLTY INV (FRT): Free Stock Analysis
KIMCO REALTY CO (KIM): Free Stock Analysis
MACERICH CO (MAC): Free Stock Analysis Report
SIMON PROPERTY (SPG): Free Stock Analysis
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The healthy results came on the back of improved performance in
the same-store portfolio and decent top-line growth. It has also
marginally raised its outlook for the full year.
Continuing with its effort to enhance shareholders' wealth,
Federal Realty announced a 6.8% hike in its quarterly dividend
rate, depicting the 46th consecutive year of dividend hike.
Quarter in Detail
Including certain charges related to the prepayment of seniors
notes, Federal Realty's FFO per share came in at $1.08, up from
$1.04 reported in the year-ago quarter.
Total revenue during the reported quarter increased 7.0% year
over year to $157.9 million and marginally topped the Zacks
Consensus Estimate of $157 million.
Same-center property operating income escalated 5.0% year over
year including redevelopment and expansion of properties. As of
Jun 30, 2013, the same-center portfolio was 95.3% leased, up 20
basis points (bps) from the prior-quarter end and 30 bps from the
Federal Realty executed healthy leasing activities in the
quarter. The company signed 111 leases spanning 504,605 square
feet of retail space. On a comparable space basis (spaces for
which a former tenant was there), it leased 470,832 square feet
at an average cash-basis contractual rent increase of 15.0% per
square foot. Rent increases per square foot (GAAP basis) for
comparable retail space averaged 29% for the reported quarter.
Federal Realty exited the quarter with cash and cash equivalents
of approximately $108.4 million, up from $37.0 million as of Dec
During the quarter, Federal Realty closed a $275 million senior
unsecured notes offering (due 2013) as well as redeemed senior
unsecured notes (due Dec 2013) for an aggregate principal of $135
In July, Federal Realty accomplished the disposition of 5th
Avenue asset in San Diego and penned a deal to vend its Forest
Hills asset in Long Island, New York for $36 million in total.
The dispositions occur as part of a reverse 1031 exchange related
to the Darien, Conn.-based shopping center acquisition in April.
Excluding the $3.4 million debt prepayment charge, Federal Realty
forecasts 2013 FFO per share in the range of $4.56 - $4.60. This
reflects an increase from the prior forecast of $4.55-4.59 in FFO
The increased dividend stands at 78 cents per share, up 6.8% from
the prior rate of 73 cents. It will be paid on Oct 15, 2013 to
shareholders of record as of Sep 23.
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. Moreover, the
strategic buyout of the Darien shopping center enhanced its
retail dominance in the Connecticut region.
A raise in outlook as well as a dividend hike boost investors'
confidence on the stock. Yet, a huge development pipeline, stiff
competition and online purchases somewhat restrict its growth
Federal Realty currently carries a Zacks Rank #3 (Hold). Other
better performing REITs include
Kimco Realty Corporation
The Macerich Company
Simon Property Group Inc.
), all carrying a Zacks Rank #2 (Buy), respectively.
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.