Federal Realty Investment Trust
) posted second-quarter 2014 funds from operations (FFO) per share
of $1.23, surpassing the Zacks Consensus Estimate by 2 cents and
the year-ago quarter figure by 15 cents.
The year-over-year FFO increase of 13.9% was aided by higher
revenues and improved same-store portfolio performance.
Encouragingly, Federal Realty raised its 2014 FFO per share
guidance and quarterly dividend rate.
Total revenue increased 6.7% year over year to $167.9 million
and also exceeded the Zacks Consensus Estimate of $166 million.
Inside the Headlines
During the second quarter, Federal Realty inked 128 lease deals
for 622,916 square feet of space. As of Jun 30, 2014, the company's
overall portfolio was 95.3% leased, flat on a year-over-year
On a comparable space basis (spaces for which a former tenant
was there), Federal Realty leased 536,819 square feet at an average
cash-basis contractual rent escalation of 16% per square foot. Rent
increases (GAAP basis) for comparable retail space averaged 30% per
square foot, compared to 29% in the prior quarter.
Same-center property operating income (excluding assets under
redevelopments and expansions) escalated 4% year over year in the
quarter. As of Jun 30, 2014, Federal Realty's same-center portfolio
was 95.5% leased, up 10 bps year over year.
Federal Realty exited the second quarter with cash and cash
equivalents of approximately $41.3 million, compared to $75.7
million at the end of Mar 2014.
Subsequent to end of the second quarter, in July, Federal Realty
disclosed that it has booked Bank of America Merrill Lynch, the
corporate and investment banking division of Bank of America
) as anchor office tenant at Pike & Rose in North Bethesda, MD.
Also, in July, Federal Realty in collaboration with a discretionary
fund, divested Pleasant Shops in South Weymouth, MA for $34.3
2014 Guidance Raised
Federal Realty raised its outlook for full-year 2014 FFO per
share to the range of $4.90 - $4.94, from $4.86 - $4.93 guided
earlier. The Zacks Consensus Estimate of $4.92 for the same falls
within this range.
Concurrent with the earnings release, Federal Realty declared a
sequential increase of 11.5% in the quarterly dividend rate to 87
cents from 78 cents in the earlier quarter. The dividend is payable
on Oct 15, 2014 to shareholders of record as of Sep 22.
Federal Realty's concerted efforts kept its earnings surprise
momentum alive this season, thanks to decent core operating
portfolio performance. In particular, the company's portfolio of
Class A shopping centers along with the diversified tenant base,
comprising grocery stores and low-end discount retailers, position
it well to maintain the upward trend. Moreover, the guidance raise
boosts investors confidence in the stock. Also, with the dividend
hike the company became the only real estate investment trust
(REIT) to increase its dividend for 47 consecutive years, which is
Federal Realty currently carries a Zacks Rank #3 (Hold).
Investors interested in the retail REIT industry may consider
stocks like General Growth Properties, Inc. (
) and DDR Corp. (
). Both have a Zacks Rank #2 (Buy).
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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