Federal Realty Edges Past Estimates - Analyst Blog
November 10 2011 - 3:00AM
Zacks
Federal Realty Investment
Trust (FRT), a leading real estate investment trust
(REIT), reported third quarter 2011 FFO (funds from operations) of
$63.9 million or $1.01 per share compared with $58.8 million or
$0.95 per share in the year-earlier quarter.
Fund from operations, 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. The reported quarterly FFO beat the Zacks Consensus
Estimate by 2 cents.
Total revenue during the reported
quarter increased to $137.7 million from $133.4 million in the
year-ago quarter. The reported revenue were marginally ahead of the
Zacks Consensus Estimate of $137.0 million.
Despite challenging market
conditions, Federal Realty executed healthy leasing activities
during the quarter. The company signed 92 leases spanning 385,000
square feet of retail space during third quarter 2011.
On a same-store basis, the company
leased 353,000 square feet at an average cash-basis contractual
rent increase of 8.0% per square foot. The average same-store
contractual rent for the first year of new leases was $31.62 per
square foot, compared to $29.24 for the last year of the prior
leases.
Same-store rents per square foot
(GAAP) increased 18.0% on an average during the quarter. As of
September 30, 2011, Federal Realty's average contractual, cash
basis minimum rent for retail and commercial space was $23.04 per
square foot.
Same-store net operating income,
excluding redevelopment and expansion properties increased 2.4% on
a year-over-year basis. The overall portfolio was 93.3% leased at
the end of the quarter, compared with 93.9% in the prior-year
quarter, while the same-store portfolio was 94.0% leased compared
with 94.5% in the year-ago period.
Federal Realty continues to focus
on a low-risk business strategy of growth through prudent leasing
of assets and completion of redevelopment projects at high
risk-adjusted returns. The company is strengthening its presence in
the core markets by acquiring new assets, which would eventually
lead to better operational and ownership flexibility throughout the
entire portfolio.
Federal Realty maintained its
quarterly dividend rate of 69 cents per share or $2.76 per share on
an annualized basis. At quarter-end, the company had cash and cash
equivalents of $22.1 million. With strong quarterly results,
Federal Realty increased its FFO guidance for full year 2011 from
the earlier range of $3.95 – $4.02 per share to $4.02 – $4.04. In
addition, the company provided an initial FFO guidance for fiscal
2012 in the range of $4.16 – $4.22 per share.
We maintain our ‘Neutral’
recommendation on Federal Realty, which currently retains a Zacks
#3 Rank that translates into a short-term ‘Hold’ rating. We also
have a ‘Neutral’ recommendation and a Zacks #2 Rank (short-term
‘Buy’) for Acadia Realty Trust (AKR), one of the
competitors of Federal Realty.
ACADIA RLTY TR (AKR): Free Stock Analysis Report
FED RLTY INV (FRT): Free Stock Analysis Report
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