Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Federal Realty Investment Trust (FRT, Financial) reported a strong first quarter with earnings per share of $1.70, exceeding both internal expectations and the prior year.
• The company achieved a high lease rate of 95.9%, with minimal exposure to retail bankruptcies, indicating strong tenant retention and property performance.
• Foot traffic increased year-over-year across key markets, including a 6% rise in Washington DC, 3% at Santana Row, and 11% in Boston, showcasing consumer resilience.
• FRT executed 91 retail leases totaling 430,000 square feet, including a significant deal with Lifetime Fitness at Santana Row, highlighting robust leasing activity.
• The company has a strong liquidity position with approximately $1.5 billion available, providing flexibility for future investments and capital allocation decisions.

Negative Points

• The economic environment remains unpredictable, with potential inflationary pressures due to ongoing government policies and tariff uncertainties.
• Higher property expenses were reported, primarily driven by unexpected snow-related costs, impacting overall financial performance.
• The transaction market is affected by tariff announcements, creating challenges in underwriting and evaluating new opportunities with confidence.
• There is a lack of clarity on construction costs due to tariffs, complicating the predictability of redevelopment and residential development projects.
• Despite strong performance, the company faces challenges in maintaining high leasing volumes due to already high occupancy rates, which may normalize in the future.

Q & A Highlights

Q: Can you clarify the mix of deals executed in the quarter and expectations for rent rollovers in the coming quarters? A: Wendy Seher, Executive Vice President, explained that the mix of deals was mostly due to timing, with some deals hitting right after the first quarter. The first quarter was solid with a good spread of deals across categories like food, grocery, and apparel. Donald Wood, CEO, added that the cutoff was April 10th instead of March 31st, which affected the perception of the quarter's performance.

Q: What factors will drive the acceleration of same-store NOI growth to meet the annual guidance? A: Donald Wood, CEO, stated that the primary driver will be continued gains in occupancy over the course of the year. The leases that have already been done will contribute to this growth, and it is not speculative.

Q: Can you provide more color on the concessions seen in the quarter and the elevated tenant improvements (TIs) in non-comparable segments? A: Donald Wood, CEO, explained that the elevated TIs were driven by one significant deal with Lifetime Fitness at Santana Row. He emphasized that this was a strategic decision and not indicative of a broader trend in concessions.

Q: What is the status of asset dispositions and the potential use of proceeds? A: Donald Wood, CEO, confirmed that they have $250 million in the market with $150 million under contract. The proceeds could be used for various capital allocation scenarios, including acquisitions, developments, or share buybacks, depending on market conditions and opportunities.

Q: How is the performance in the Washington DC area, particularly in terms of sales and restaurant performance? A: Donald Wood, CEO, noted that while they don't have immediate sales data, foot traffic has increased, and they expect sales to follow. He emphasized the resilience of the DC market due to its diverse economy and infrastructure, which supports long-term stability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.