Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

What's In The Cards For Federal Realty's (FRT) Q4 Earnings?

By Zacks Investment ResearchStock MarketsFeb 04, 2020 09:36PM ET
What's In The Cards For Federal Realty's (FRT) Q4 Earnings?
By Zacks Investment Research   |  Feb 04, 2020 09:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Federal Realty Investment Trust (NYSE:FRT) is set to report fourth-quarter and full-year 2019 results after market close on Feb 10. Both its revenues and funds from operations (FFO) are anticipated to reflect marginal year-over-year growth.

In the last reported quarter, this retail real estate investment trust (REIT) delivered an in-line performance in terms of FFO per share. Results reflected rise in property operating income and cash-basis rollover growth on comparable spaces.

Over the last four quarters, it surpassed estimates on two occasions and reported in-line results in the other two, the average positive surprise being 0.48%. The graph below depicts the surprise history of the company:

Let’s see how things are shaping up for this announcement.

Factors that Might Have Influenced Q4 Performance

For Federal Realty, the company’s portfolio of premium retail assets, along with a diverse tenant base, both national and local, positions it well for decent growth. With superior demographics, dense population and strong household income, the company’s properties have a decent scope of enjoying solid demand.

However, though upbeat consumer confidence and a healthy economy have infused optimism into the retail market, mall traffic continues to suffer amid rapid shift in customers’ shopping preferences and patterns with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures. Further, retailers unable to cope with competition are filing bankruptcies. This has emerged as a pressing concern for retail REITs like Federal Realty, as the trend is curtailing demand for the retail real estate space considerably. Such events are likely to have affected the company’s performance in the December-end quarter.

In fact, store closures and bankruptcies have been affecting the retail real estate market, for long, which has been undergoing structural changes. In addition, the recent data from Reis shows that the retail and the Mall vacancy rates both increased in the quarter. Particularly, the retail vacancy rate inched up 0.1% to 10.2% in the fourth quarter. Further, retail rent growth was just 0.1%, while mall rents remained flat.

Furthermore, amid fast-evolving retail environment, Federal Realty is undertaking concerted measures to reposition, redevelop and re-merchandise its portfolio. Although repositioning and redevelopment are a strategic fit for long-term growth, such initiatives involve considerable upfront costs, tend to drag down near-term profitability, and might have curbed the company’s growth tempo in the quarter.

Amid these, the Zacks Consensus Estimate for quarterly revenues is pegged at $238.4 million, indicating a 1.3% rise from the year-ago reported figure.

However, Federal Realty’s activities during the quarter did not win analyst confidence. In fact, the consensus estimate for fourth-quarter FFO per share moved down marginally to $1.60 in a month’s time. Nevertheless, this indicates a year-over-year rise of 1.9%.

For 2019, Federal Realty expects FFO per share of $6.16-$6.22. Excluding the charge related to the buyout of the Kmart lease at Assembly, the company estimates FFO per share of $6.32-$6.38. The Zacks Consensus Estimate for the same is currently pinned at $6.35, indicating a 1.9% projected increase year on year on revenues of $934.3 million.

Key Developments in Q4

In December, Federal Realty announced that it has sold under threat of condemnation a portion of San Antonio Center, in Mountain View, CA, for $155 million. A school will be constructed by the Los Altos School District on the 11.7-acre sold land. The regional shopping center, aggregating 35 acres, was acquired by the company in 2015 for $62.2 million.

Additionally, in November, Federal Realty announced the acquisition of a 147,000-square-foot grocery-anchored neighborhood shopping center — Georgetowne Shopping Center — in Brooklyn, NY. The company has shelled out $83.7 million in cash to buy this surfaced-parked shopping center on 9 acres in Brooklyn's Georgetown neighborhood. The move comes as part of the company’s growth endeavors through portfolio expansions in locations that exhibit solid demographics and high barriers to entry. The company also plans to enhance the property value over time through continued remerchandising and space lease up with the possibility of augmenting square footage.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a positive surprise in terms of FFO per share for Federal Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Federal Realty carries a Zacks Rank #4 (Sell) and Earnings ESP of -1.09%.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Healthpeak Properties, Inc. (NYSE:PEAK) , slated to release fourth-quarter earnings on Feb 11, has an Earnings ESP of +1.15% and carries a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vornado Realty Trust (NYSE:VNO) , set to report quarterly numbers on Feb 18, has an Earnings ESP of +5.62% and carries a Zacks Rank of 3, currently.

Host Hotels & Resorts, Inc. (NYSE:HST) , scheduled to release October-December quarter results on Feb 19, has an Earnings ESP of +1.52% and currently holds a Zacks Rank #3.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft (NASDAQ:MSFT) in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

Federal Realty Investment Trust (FRT): Free Stock Analysis Report

Vornado Realty Trust (VNO): Free Stock Analysis Report

Host Hotels & Resorts, Inc. (HST): Free Stock Analysis Report

Healthpeak Properties, Inc. (PEAK): Free Stock Analysis Report

Original post

Zacks Investment Research
What's In The Cards For Federal Realty's (FRT) Q4 Earnings?

Related Articles

What's In The Cards For Federal Realty's (FRT) Q4 Earnings?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email