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Federal Realty Investment Trust Grows Bottom Line Results

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Continuing to reliably grow bottom line results, despite headwinds remains Federal Realty Investment Trust’s focal point and the second quarter didn’t disappoint. That is according to the firm’s CEO Don Wood on the Q2 earnings call. “FFO per share of $1.60 compared favorably with our internal expectations, the Street, and $1.55 recorded in last year’s quarter. Growth over last year’s quarter was 3.2%. The 30th consecutive quarter of increased FFO per share, excluding of course, a couple of debt prepayment charges over that time. No excuses, just bottom line growth.”

Comparable property income grew at 3.5%, largely the result of some big rent starts from proactive re-leasing initiatives like Anthropologie, Bethesda Row, Muji on Third Street Promenade and Bob’s Furniture at Los Jardines with a little help from lease termination fees, he explains.

“Lease termination fees are clearly increasing, if not in number than in amount as numerous retailers are re-evaluating the business plans, and in some cases negotiating out to a plethora of reasons. When it’s economically advantageous for us to engage, we do. When it’s not, we don’t. Lease termination fees were $2.2 million in the second quarter compared with $1.6 million in last year’s second quarter, and contributed 45 basis points to the comparable property income number.”

Sometimes the comparison, which includes all sources of property level cash flow in all periods presented, is positive, sometimes it’s negative, but it’s always an integral part of the firm’s business plan and clear demonstration of the strength of its contracts, he adds.

“Lots of deals done in the second quarter, in fact, at 113 new and renewed leases for comparable space more than we’ve ever done in any three-month period before. There is clearly pressure on pushing rent overall, but overall, we’re having pretty very good success. Those 113 leases represented 379,000 square feet at an average rent of $42.68 a foot, 7% higher than the $39.75 being paid by the previous tenant.”