Federal Realty Investment Trust’s FRT fourth-quarter 2023 funds from operations (FFO) per share of $1.64 was in line with the Zacks Consensus Estimate. This marked a rise of 3.8% from the year-ago quarter’s tally of $1.58.

Results reflect a rise in revenues and healthy leasing activity that aided FRT’s fourth-quarter performance. However, lower occupancy levels affected the results to some extent. This retail REIT also provided an outlook for 2024.

Quarterly revenues of $291.8 million missed the consensus mark of $293.3 million but improved 4.2% from the year-ago quarter’s tally.

Per Donald C. Wood, Federal Realty's chief executive officer, "Our multi-faceted business plan drove FFO growth, marked by continued growth in our comparable pool, contributions from our redevelopment and expansion program and accretive acquisition activity. We believe that Federal's high-quality open-air shopping centers and mixed-use communities located in the first-tier suburbs of major metropolitan markets remain the real estate of choice for today's top-tier tenants."

For the full-year 2023, Federal Realty’s FFO per share came in at $6.55, higher than the prior-year tally of $6.32, while missing the Zacks Consensus Estimate by a penny. This was backed by 5.4% growth in revenues to $1.13 billion.

Behind the Headlines

In terms of leasing, during the reported quarter, Federal Realty signed 102 leases for 398,378 square feet of retail space. On a comparable space basis, the company signed 100 leases for 393,761 square feet of space at an average rent of $44.57 per square foot. This denotes cash-basis rollover growth of 12% and 23% on a straight-line basis.

On the operational front, occupancy rates in the portfolio decreased 60 basis points (bps) year over year to 92.2% as of Dec 31, 2023. The portfolio was 94.2% leased as of the same date. Our estimate for the metric was the same as the reported figure. Moreover, FRT’s comparable residential properties were 95.9% leased as of the same date.

Sustained robust leasing activity for small shops resulted in a quarter-ending lease rate of 90.7%, marking a 70 bps rise year over year.

Federal Realty exited 2023 with cash and cash equivalents of $250.8 million, up from $85.6 million recorded at the end of 2022.

Guidance

For 2024, FRT estimates FFO per share in the range of $6.65-$6.87. The Zacks Consensus Estimate of $6.77 also stands within this range.

Dividend

Concurrent with the fourth-quarter earnings release, Federal Realty announced a regular quarterly cash dividend of $1.09 per share, indicating an annual rate of $4.36 per share. The dividend will be paid out on Apr 15 to shareholders of record as of Mar 13, 2024.