Federal Realty Trust Raises Guidance After Strong Q3 Leasing Performance

Federal Realty Investment Trust (FRT) reported strong third-quarter results driven by record leasing activity, with 727,000 to 774,890 square feet leased at approximately $35.71 per square foot, and funds from operations (FFO) per share of $1.77, exceeding consensus estimates. The company, which focuses on high-quality retail properties in affluent, densely populated markets, completed the acquisition of Annapolis Town Center with a 7% unlevered return and has $280 million committed to development projects. FRT's net profit margin rose to 27.2% from 24% last year, supported by a $79.4 million one-off gain, although analysts caution this gain inflates short-term profitability and expect margins to compress to 21.5% over the next three years amid slower revenue growth and higher costs. Despite earnings per share growth of 20.1% and a valuation discount relative to sector peers, analysts project earnings decline by 2028 and highlight risks from integrating new markets and redevelopment expenses. The company’s strategic positioning in growing, affluent areas has underpinned its historical revenue growth of about 5%, but the outlook reflects tension between durable past profits and challenges to sustaining margins going forward.