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Federal Realty's (FRT) Q4 FFO Beats, Revenues Rise Y/Y

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Federal Realty Investment TrustFRT posted fourth-quarter 2016 funds from operations ("FFO") per share of $1.45, which beat the Zacks Consensus Estimate of $1.44 and also came ahead of the prior-year quarter figure of $1.37.

Total revenue for the quarter grew 6.0% year over year to $204.1 million. However, the top line marginally missed the Zacks Consensus Estimate of $204.8 million.

For full-year 2016, this retail REIT reported FFO per share of $5.65, well ahead of the year-ago tally of $5.05. Revenues came in at $801.6 million for the year, up 7.7% from a year ago.

Quarter in Details

During the fourth quarter, Federal Realty inked 89 lease deals for 347,604 square feet of retail space. As of Dec 31, 2016, the company's overall portfolio was 94.4% leased, up 10 basis points (bps) year over year.

On a comparable-space basis (spaces for which a former tenant was there), Federal Realty leased 274,622 square feet, at an average cash-basis contractual rent escalation of 15%. Rent increases (on a GAAP basis) for comparable retail space averaged at 27% for fourth-quarter 2016.

Same-center property operating income (including redevelopments) improved 3.0% year over year. As of Dec 31, 2016, Federal Realty's same-center portfolio was 95.7% leased, down 20 bps year over year. The quarterly results were affected by a high number of anchor vacancies.

Federal Realty exited the fourth quarter with cash and cash equivalents of approximately $23.4 million, up from $21 million at the end of 2015.

Outlook 2017

Federal Realty affirmed its 2017 guidance for FFO per share of $5.83-$5.93. The Zacks Consensus Estimate for the same is currently pegged at $5.89, which lies within the company's guided range.

Dividend Update

Concurrent with the earnings release, Federal Realty declared a quarterly cash dividend of 98 cents per share. The dividend will be paid on Apr 17, 2017 to shareholders on record as of Mar 14.

Our Take

Federal Realty's portfolio of high quality shopping centers, situated mainly in major coastal markets, along with a diversified tenant base comprising grocery stores and low-end discount retailers, positions it well for growth. However, the rising trend in online shopping through the Internet, mobile phones and tablets has intensified competition and adversely affected demand for retail real estates. Moreover, rate hike adds to its woes.

Currently, Federal Realty carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Federal Realty Investment Trust Price, Consensus and EPS Surprise

Federal Realty Investment Trust Price, Consensus and EPS Surprise | Federal Realty Investment Trust Quote

Some better-ranked stocks in the REIT industry include The GEO Group, Inc. GEO , Host Hotels & Resorts, Inc. HST and Urban Edge Properties UE . All these three stocks carry a Zacks Rank #2 (Buy).

The GEO Group' 2017 estimates climbed 2.0% to $2.99 per share, over the past 30 days.

Hotels & Resorts, currently, has a long-term growth rate of 5.0%.

For Urban Edge Properties, the projected growth rate for FFO per share is 38.7% for 2016 and 5.4% for 2017.

Note: 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. All EPS numbers presented in this write up represent FFO per share.

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Federal Realty Investment Trust (FRT): Free Stock Analysis Report

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Geo Group Inc (The) (GEO): Free Stock Analysis Report

Urban Edge Properties (UE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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