FRT Financial Analysis

Analysis Date: 1/29/2025

Business Model

Federal Realty generates revenue primarily through rental income from retail and mixed-use properties

Revenue Sources

• Rental income (minimum rent, cost reimbursements from tenants and percentage rent) - 99.9% of revenue
• Mortgage interest income - 0.1% of revenue

Revenue Distribution by Channel

• 102 predominantly retail real estate projects comprising approximately 26.8 million commercial square feet

Income Statement Analysis

• Revenue increased 5.9% driven by higher rental rates and new property acquisitions
• Property operating income grew 4.5% due to improved occupancy and rental rates
• Operating expenses increased 9.1% from higher maintenance, utilities and insurance costs

Balance Sheet Analysis

• Strong balance sheet with $97 million cash and no balance on $1.25B credit facility
• Total assets increased slightly by 0.5% to $8.48B
• Total equity grew 4.7% from retained earnings and equity issuance

Cash Flow Analysis

• Operating cash flow increased 2.7% showing solid operational performance
• Higher investing outflows from property acquisitions and development projects
• Financing outflows increased due to debt repayment and higher distributions

Capital Allocation

Federal Realty maintains a balanced capital allocation strategy focused on: 1) Property acquisitions and development ($273.9M spent on acquisitions YTD), 2) Regular dividend payments ($3.28 per share declared YTD), 3) Development/redevelopment projects with $182M remaining costs, 4) Maintaining strong balance sheet with investment grade ratings

Management Commentary

Strong leasing momentum with 2.1M sq ft of retail space leased in last 12 months

95.9% leased rate demonstrates solid demand for retail space

Higher interest rates and inflation impacting construction and operating costs

Supply chain disruptions could delay project completions

Overall Sentiment: Cautiously optimistic, focused on managing costs while leveraging strong market position

Recommendation

Rating: Buy

Reason for Rating: Strong operational performance and strategic positioning support long-term growth

Disclaimer: This analysis is based on Federal Realty's Q3 2024 10-Q filing and is for informational purposes only. It should not be considered as investment advice. Past performance does not guarantee future results. All investors should conduct their own research and due diligence before making any investment decisions.

Generated on: 1/29/2025, 5:30:57 AM