Federal Realty Investment Trust (FRT) Bundle
A Brief History of Federal Realty Investment Trust
Federal Realty Investment Trust (FRT), a real estate investment trust (REIT), has a long-standing history in the real estate sector, primarily focusing on the ownership and management of retail and mixed-use properties. As of 2024, the company has continued to expand its portfolio and enhance its operational performance.
Financial Performance in 2024
For the nine months ended September 30, 2024, Federal Realty reported a total property revenue of $891.0 million, marking a 6.0% increase from $840.3 million in the same period of 2023. The rental income for the same period was $890.2 million, compared to $839.5 million in 2023, reflecting a growth of $50.7 million year-over-year.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Total Property Revenue | $891.0 million | $840.3 million | 6.0% |
| Rental Income | $890.2 million | $839.5 million | 6.0% |
| Operating Income | $363.0 million | $297.7 million | 22.0% |
| Net Income | $236.1 million | $180.1 million | 31.1% |
Operating income for the same period increased by 22.0% to $363.0 million, driven by higher rental rates and occupancy levels, as well as successful property acquisitions. The net income attributable to the Trust rose to $229.7 million, representing a 32.8% increase from the previous year.
Recent Transactions and Acquisitions
In 2024, Federal Realty actively pursued acquisitions to enhance its property portfolio. Notably, the company acquired Virginia Gateway, comprising five shopping centers totaling 664,000 square feet for $215.0 million on May 31, 2024, and Pinole Vista Crossing, a 216,000 square foot retail center for $60.0 million on July 31, 2024.
Debt and Financing Activities
On January 11, 2024, Federal Realty issued $485.0 million of 3.25% exchangeable senior notes due 2029. The proceeds were primarily used to repay $600.0 million of 3.95% senior unsecured notes that matured on January 16, 2024. The company maintains a $1.25 billion unsecured revolving credit facility, which supports its short-term cash flow needs.
| Debt Instrument | Amount | Interest Rate | Maturity |
|---|---|---|---|
| 3.25% Exchangeable Senior Notes | $485.0 million | 3.25% | 2029 |
| 3.95% Senior Unsecured Notes | $600.0 million | 3.95% | 2024 |
Shareholder Returns and Dividends
Federal Realty has a strong commitment to returning capital to its shareholders through dividends. For the nine months ended September 30, 2024, the company declared approximately $277.8 million in cash dividends. The declared dividend per common share for the nine months was $3.280, reflecting a consistent return to shareholders.
| Dividend Type | Amount per Share | Year |
|---|---|---|
| Common Shares | $3.280 | 2024 |
| Preferred Shares (5.417% Series 1) | $1.016 | 2024 |
As of September 30, 2024, Federal Realty's common share price was $102.33, and the company had a total equity of approximately $3.185 billion, which reflects its strong financial position in the market.
A Who Owns Federal Realty Investment Trust (FRT)
Major Shareholders
As of 2024, Federal Realty Investment Trust (FRT) has a diverse set of shareholders, including institutional investors, mutual funds, and individual shareholders. The following table outlines the major shareholders and their respective ownership percentages:
| Shareholder | Ownership Percentage |
|---|---|
| The Vanguard Group, Inc. | 10.3% |
| BlackRock, Inc. | 9.5% |
| State Street Corporation | 5.8% |
| Invesco Ltd. | 4.1% |
| Wellington Management Group LLP | 3.7% |
| Other Institutional Investors | 20.8% |
| Individual and Retail Investors | 45.8% |
Common Shares Outstanding
As of September 30, 2024, Federal Realty Investment Trust has the following details regarding its common shares:
| Type of Share | Shares Outstanding | Market Price (as of January 8, 2024) |
|---|---|---|
| Common Shares | 84,952,538 | $102.33 |
| Preferred Shares | 398,878 | $25.00 (liquidation preference) |
Shareholder Equity
The total shareholders' equity of Federal Realty Investment Trust as of September 30, 2024, is detailed in the following table:
| Category | Amount (in thousands) |
|---|---|
| Preferred Shares | $154,788 |
| Common Shares | $855 |
| Additional Paid-in Capital | $4,160,451 |
| Accumulated Dividends in Excess of Net Income | $(1,211,833) |
| Accumulated Other Comprehensive Income | $2,172 |
| Total Shareholders' Equity | $3,185,600 |
Noncontrolling Interests
As of September 30, 2024, Federal Realty Investment Trust also has noncontrolling interests in consolidated partnerships, detailed in the following table:
| Category | Amount (in thousands) |
|---|---|
| Noncontrolling Interests | $74,133 |
Recent Transactions
In early 2024, Federal Realty Investment Trust engaged in several significant transactions:
- Issued $485 million of 3.25% exchangeable senior notes, due 2029.
- Acquired a 10% noncontrolling interest in the partnership that owns the CocoWalk property for $12.4 million.
- Repayment of $600 million of 3.95% senior unsecured notes at maturity.
Dividends
Dividends paid to common and preferred shareholders during the nine months ended September 30, 2024, totaled approximately:
| Type of Dividend | Amount Paid (in thousands) |
|---|---|
| Common Share Dividends | $275,006 |
| Preferred Share Dividends | $6,024 |
Conclusion on Ownership Structure
Federal Realty Investment Trust's ownership is characterized by a mix of institutional and individual investors, with significant equity positions held by major investment firms. The diverse shareholder base, along with recent financial activities, demonstrates a robust investment strategy and commitment to shareholder returns.
Federal Realty Investment Trust (FRT) Mission Statement
Overview of Mission Statement
The mission of Federal Realty Investment Trust (FRT) is to deliver superior risk-adjusted returns to shareholders through the ownership, operation, and redevelopment of high-quality retail and mixed-use properties in the best markets across the United States. FRT aims to create value through strategic acquisitions, high-quality tenant relationships, and maintaining high occupancy rates in its properties.
Key Financial Metrics
As of September 30, 2024, Federal Realty Investment Trust reported significant financial figures that reflect its operational success and commitment to its mission:
| Metric | Value (Q3 2024) |
|---|---|
| Operating Income | $363.0 million |
| Net Income | $236.1 million |
| Funds from Operations (FFO) | $427.7 million |
| Earnings per Share (EPS) | $2.68 |
| Cash Dividends Paid | $277.8 million |
| Total Assets | $8.48 billion |
| Total Liabilities | $5.11 billion |
| Common Shares Outstanding | 84,952,538 |
Operational Highlights
Federal Realty's operational strategies are aligned with its mission statement, focusing on high-quality properties and strong tenant relationships. As of September 30, 2024, the company reported:
- Total leasable commercial square feet: 95.9% leased
- Occupancy rate: 94.0%
- Average rental increase for new leases: 20% on a cash basis
- Average rental increase for renewals: 11% on a cash basis
Recent Acquisitions and Sales
FRT actively pursues acquisitions that enhance its portfolio and support long-term growth. Recent transactions include:
- Acquisition of Pinole Vista Crossing, a 216,000 square foot retail shopping center for $60.0 million.
- Sale of Third Street Promenade for $103.0 million, resulting in a gain of $52.0 million.
Debt and Capital Structure
FRT maintains a conservative capital structure to support its operational strategies:
| Debt Type | Amount |
|---|---|
| Variable Rate Debt | $600.0 million |
| Senior Notes and Debentures | $3.36 billion |
| Revolving Credit Facility | $1.25 billion |
Conclusion
Federal Realty Investment Trust's mission statement emphasizes its commitment to delivering value to shareholders through strategic property management and development. The company's strong financial performance and operational metrics illustrate its capacity to fulfill this mission effectively.
How Federal Realty Investment Trust (FRT) Works
Business Model
Federal Realty Investment Trust (FRT) operates as a real estate investment trust (REIT) primarily focused on the ownership, operation, and redevelopment of retail and mixed-use properties. The company generates revenue mainly through rental income from its diverse portfolio of shopping centers and mixed-use properties located in high-density urban areas.
Financial Performance
As of September 30, 2024, FRT reported total property revenue of $891.0 million, marking a 6.0% increase from $840.3 million in the same period in 2023. Rental income specifically rose to $890.2 million, up from $839.5 million, driven by higher rental rates and increased occupancy across its properties.
| Financial Metrics | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Property Revenue | $891.0 million | $840.3 million | $50.7 million | 6.0% |
| Rental Income | $890.2 million | $839.5 million | $50.7 million | 6.0% |
| Total Property Expenses | $289.9 million | $267.4 million | $22.4 million | 8.4% |
| Property Operating Income | $601.2 million | $572.9 million | $28.2 million | 4.9% |
| Net Income | $236.1 million | $180.1 million | $56.0 million | 31.1% |
Occupancy Rates
As of September 30, 2024, the occupancy rate across FRT's shopping centers was reported at 94.0%, an increase from 92.3% in the previous year. This improvement reflects the company's successful leasing strategies and market demand in its operational areas.
Leasing Activity
During the third quarter of 2024, FRT signed retail leases for a total of 593,000 square feet, achieving an average rental increase of 14% on a cash basis. The breakdown of leasing activities includes:
- New leases for comparable spaces: 230,000 square feet with a 20% average rental increase.
- Renewals for comparable spaces: 351,000 square feet with an 11% average rental increase.
- Tenant improvements and incentives: $26.28 per square foot.
Debt and Financing
As of September 30, 2024, FRT's total debt stood at approximately $4.47 billion. The company maintains a revolving credit facility of $1.25 billion, which had no outstanding balance at the end of the reporting period. Key debt figures include:
| Debt Type | Principal Balance | Interest Rate | Maturity Date |
|---|---|---|---|
| Unsecured Term Loan | $600 million | SOFR + 0.85% | April 16, 2025 |
| Revolving Credit Facility | $0 | SOFR + 0.775% | April 5, 2027 |
| Senior Notes | $3.36 billion | 3.25% - 7.48% | Various through 2046 |
Cash Flow Analysis
FRT generated net cash from operating activities of $455.0 million for the nine months ended September 30, 2024, an increase of $11.8 million from the previous year. The company reported net cash used in investing activities at $375.5 million and net cash used in financing activities at $233.9 million.
| Cash Flow Metrics | 2024 (9 Months) | 2023 (9 Months) | Change ($) |
|---|---|---|---|
| Net Cash from Operating Activities | $455.0 million | $443.2 million | $11.8 million |
| Net Cash Used in Investing Activities | ($375.5 million) | ($288.6 million) | ($86.9 million) |
| Net Cash Used in Financing Activities | ($233.9 million) | ($148.1 million) | ($85.8 million) |
Dividend Distribution
FRT is committed to returning capital to its shareholders through dividends. For the nine months ended September 30, 2024, the company paid approximately $277.8 million in cash dividends to common and preferred shareholders.
How Federal Realty Investment Trust (FRT) Makes Money
Revenue Sources
Federal Realty Investment Trust (FRT) primarily generates revenue through rental income from its retail and mixed-use properties. For the nine months ended September 30, 2024, total property revenue increased to $891.0 million, a 6.0% increase from $840.3 million in the same period of 2023. The breakdown of revenue sources is as follows:
| Revenue Source | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Rental Income | $890.2 million | $839.5 million | $50.7 million | 6.0% |
| Mortgage Interest Income | $836,000 | $833,000 | $3,000 | 0.4% |
| Total Property Revenue | $891.0 million | $840.3 million | $50.7 million | 6.0% |
Rental Income Breakdown
Rental income is derived from minimum rents, cost reimbursements from tenants, and percentage rents. Key components of rental income increases include:
- A $26.8 million increase from comparable properties due to higher rental rates ($17.4 million), increased recoveries from tenants ($10.6 million), and higher average occupancy ($1.6 million).
- A $13.0 million increase from non-comparable properties.
- A $9.6 million increase from acquisitions in 2024 and 2023.
- A $5.0 million increase from Escondido Promenade, reconsolidated in 2023.
- Offset by a $5.3 million decrease from property dispositions.
Property Operating Income
For the nine months ended September 30, 2024, property operating income rose to $601.2 million, representing a 4.9% increase from $572.9 million in 2023. This increase is attributed to higher rental rates and occupancy levels, as well as new property openings and acquisitions.
Property Expenses
Total property expenses increased by $22.4 million, or 8.4%, to $289.9 million in the nine months ended September 30, 2024, compared to $267.4 million in 2023. The key components include:
| Expense Type | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Rental Expenses | $184.4 million | $169.4 million | $15.0 million | 8.9% |
| Real Estate Taxes | $105.4 million | $98.0 million | $7.4 million | 7.6% |
| Total Property Expenses | $289.9 million | $267.4 million | $22.4 million | 8.4% |
Net Income
Net income for FRT increased significantly in the nine months ended September 30, 2024, reaching $236.1 million, a 31.1% increase from $180.1 million in the previous year. The net income attributable to the Trust was $229.7 million, up 32.8% from $172.9 million in 2023.
Gains on Sale of Real Estate
FRT reported a gain on the sale of real estate amounting to $52.3 million for the nine months ended September 30, 2024, primarily from the sale of Third Street Promenade. This is a substantial increase compared to $1.7 million for the same period in 2023.
Capital Expenditures and Investments
In the nine months ended September 30, 2024, FRT's net cash used in investing activities totaled $375.5 million, an increase from $288.6 million in 2023. This included:
- $273.9 million for acquisition of real estate.
- $104.4 million for development and redevelopment projects.
- $96.3 million in proceeds from the sale of real estate.
Debt Financing
As of September 30, 2024, FRT had total debt outstanding of approximately $4.5 billion. The company issued $485.0 million of 3.25% exchangeable senior notes on January 11, 2024, which were used to repay $600.0 million of 3.95% senior unsecured notes on January 16, 2024.
Dividends and Distributions
FRT is committed to returning capital to its shareholders, having paid approximately $277.8 million in cash dividends for the nine months ended September 30, 2024. The dividend policy requires the Trust to distribute at least 90% of its taxable income to maintain its REIT status.
Liquidity Position
As of September 30, 2024, FRT had cash and cash equivalents of $97.0 million and maintained an unsecured revolving credit facility of $1.25 billion to address short-term cash flow needs. The weighted average interest rate on borrowings was 6.2%.
Overall Financial Health
FRT's overall financial health remains strong, with a focus on maintaining a conservative capital structure and ensuring strong debt service coverage ratios. The anticipated capital expenditures for development projects in 2024 are estimated at $182 million, with a majority expected to be incurred over the next two years.
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Article updated on 8 Nov 2024
Resources:
- Federal Realty Investment Trust (FRT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Federal Realty Investment Trust (FRT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Federal Realty Investment Trust (FRT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.