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Federal Realty (FRT)
NYSE:FRT
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Federal Realty
(NYSE:FRT)
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Rating:72Outperform
Price Target:
$116.00
▲(6.65% Upside)
Action:ReiteratedDate:02/14/26
The score is driven primarily by improving financial fundamentals (revenue growth, strong 2025 profitability, and better recent free cash flow) alongside a constructive technical uptrend. Earnings-call guidance supports continued mid-single-digit FFO growth despite refinancing and occupancy headwinds. Valuation is the main constraint, with a relatively high P/E only partly offset by the strong dividend yield.
Positive Factors
Revenue Growth
A multi-year top-line recovery and expansion to $1.279B indicates durable demand for FRT’s retail and mixed-use portfolio. Steady revenue growth underpins predictable rental cash flows, supports reinvestment and dividend coverage, and reflects successful leasing and remerchandising execution.
Cash Flow Conversion
Sustained improvement in operating cash flow and free cash flow converting to net income in 2025 strengthens financial flexibility. Reliable FCF supports dividends, redevelopment funding and deleveraging, making the business less reliant on volatile external capital for growth and capital recycling.
Leasing & Development Pipeline
High occupancy, record leasing velocity and a sizable redevelopment/residential pipeline create recurring income growth and embedded yield expansion. Mixed-use development enhances urban relevance and diversifies revenue streams, improving long-term resilience against pure retail-only dynamics.
Negative Factors
Leverage Volatility
While 2025 shows materially improved leverage, the large historical swing indicates balance-sheet volatility tied to transactions and accounting timing. If the lower leverage level isn't sustained, the REIT could face tighter financing constraints and higher interest sensitivity in a rising-rate environment.
Refinancing Interest-Rate Headwind
Material step-up in coupon on maturing debt is a structural earnings drag that reduces free cash flow and FFO margins over multiple years. Higher recurring interest expense compresses payout capacity and slows deleveraging, requiring sustained operational outperformance to offset the financing burden.
Tenant/Credit & Occupancy Risk
Concentration to mall anchors and exposure to retail bankruptcies create recurring credit and occupancy volatility. Anchor transitions and localized tenant failures can depress POI and leasing spreads temporarily, forcing tenant re-leasing, capital outlays, or increased credit reserves that pressure mid-term cash flow.
Federal Realty (FRT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.44B
Dividend Yield4.38%
Average Volume (3M)855.67K
Price to Earnings (P/E)23.3
Beta (1Y)0.55
Revenue Growth6.05%
EPS Growth14.70%
CountryUS
Employees304
SectorReal Estate
Sector Strength53
IndustryREIT - Retail
Share Statistics
EPS (TTM)1.48
Shares Outstanding86,276,030
10 Day Avg. Volume870,790
30 Day Avg. Volume855,674
Financial Highlights & Ratios
PEG Ratio0.53
Price to Book (P/B)2.66
Price to Sales (P/S)6.77
P/FCF Ratio26.14
Enterprise Value/Market Cap1.52
Enterprise Value/Revenue11.18
Enterprise Value/Gross Profit21.48
Enterprise Value/Ebitda14.70
Forecast
1Y Price Target
$113.00Price Target Upside3.89% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)2.86
Revenue Forecast (FY)$1.35B
Federal Realty Business Overview & Revenue Model
Company DescriptionFederal Realty is a recognized leader in the ownership, operation and redevelopment of high-quality retail-based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles. Founded in 1962, Federal Realty's mission is to deliver long-term, sustainable growth through investing in communities where retail demand exceeds supply. Its expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland and Assembly Row in Somerville, Massachusetts. These unique and vibrant environments that combine shopping, dining, living and working provide a destination experience valued by their respective communities. Federal Realty's 106 properties include approximately 3,100 tenants, in 25 million square feet, and approximately 3,200 residential units. Federal Realty has increased its quarterly dividends to its shareholders for 54 consecutive years, the longest record in the REIT industry. Federal Realty is an S&P 500 index member and its shares are traded on the NYSE under the symbol FRT. For additional information about Federal Realty and its properties, visit www.federalrealty.com.
How the Company Makes MoneyFederal Realty generates revenue primarily through rental income from its diverse portfolio of retail and mixed-use properties. The company leases space to a variety of tenants, including well-known national and local retailers, restaurants, and service providers, which contributes significantly to its earnings. Additionally, FRT earns revenue from property management services and development projects, where it may engage in redevelopment or renovation of existing properties to increase their value and rental income potential. The company also benefits from long-term leases with its tenants, which provide predictable cash flows. Strategic partnerships with retailers and developers further enhance its revenue-generating capabilities, as these collaborations can lead to innovative property uses and increased foot traffic. Overall, the combination of rental income, property management, and development activities creates a robust revenue model for Federal Realty.
Federal Realty Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes income from different business areas, highlighting which segments drive growth and profitability, and where there might be vulnerabilities or opportunities.
Analyzes income from different business areas, highlighting which segments drive growth and profitability, and where there might be vulnerabilities or opportunities.
Data provided by:
The Fly
The FlyFederal Realty Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call was predominantly positive: strong operational performance (record leasing, solid comparable POI, high occupancy), accretive acquisitions and disciplined asset recycling, robust liquidity, and defined development pipeline underpin mid-single-digit FFO growth guidance. The main negatives are a near-term financing cost headwind from note refinancings, temporary occupancy disruption from anchor transitions, and a small noncash hit from Saks' bankruptcy. Management guidance and balance-sheet actions indicate these headwinds are manageable and that underlying trends remain constructive for 2026 and 2027.Q4-2025 Updates
Positive Updates
Strong FFO Growth and 2026 Guidance
Fourth-quarter FFO per share $1.84, up 6.4% year-over-year; 2025 full-year Nareit FFO $7.22 and Core FFO $7.06; 2026 guidance Nareit and Core FFO $7.42–$7.52 (midpoint $7.47) representing ~5.8% Core FFO growth vs. 2025.
High Portfolio Occupancy and Leasing Velocity
Portfolio ~96.6% leased and ~94.5% occupied (about +50 bps excluding new acquisitions); Q4 comparable deals 601k sqft (12% rollover) and 2.3M sqft for the year (15% rollover); signed-not-occupied (SNO) spread increased 200 bps contributing ~$27M to in-place POI.
Comparable POI and Cash Rent Momentum
Comparable POI growth averaged 3.8% for 2025 (3.1% Q4); on a cash basis POI was 3.6% for 2025 and 4.3% for Q4; comparable POI guidance for 2026 is 3.0%–3.5% driven by lease rollovers and rent bumps.
Record Leasing and Rent Bumps
Record annual square footage leased in company history with strongest comparable rent spreads in over a decade; Q4 leases had weighted average contractual rent bumps of 2.6%; noncomparable 2025 deals (20) averaged $48.18/sqft producing ~$6.3M incremental rent.
Active and Accretive Transaction Activity
Closed Annapolis Town Center and Village Pointe adding ~1.0M sqft for $340M at initial cash-on-cash yields in the low 7% and targeted unlevered IRRs ~9%; 2025 acquisitions ($750M) expected to contribute at roughly a 7% blended cash cap rate.
Asset Recycling and Attractive Dispositions
Quarterly dispositions closed totaled $169M plus subsequent ~$150M Misora sale and another ~$10M, combined blended cap rate in the low 5s; additional ~$170M of sales in process targeting low-5% cap rates.
Residential Development Pipeline and Yield Profile
Allocated $280M for new residential developments (Blayr at Bala Cynwyd, 301 Washington St, Lot 12 at Santana Row) plus Willow Grove redevelopment adding 261 apartments; underwriting yields ~6.5%–7% with adjacent asset cap rates in low-5% range.
Strong Liquidity and Balance Sheet Actions
Year-end liquidity ~$1.3B (bank facilities + cash); closed $250M delayed draw term loan at SOFR+85bps maturing 2031; pro forma adjusted net debt/EBITDA inside 5.6x (down from 5.7x) and fixed charge coverage 3.9x with target >4x.
Operational Market Strength — California and Suburban Demand
Robust anchor demand particularly in California and durable foot traffic in Greater Washington D.C. (quarterly traffic +3%); mall shops leased 93.8% (up 50 bps) with strong hard goods and home furnishings demand.
Free Cash Flow Visibility
Projected free cash flow after dividends and maintenance capex expected to exceed $100M in 2026, increasing in 2027 as redevelopment projects stabilize and straight-line rent converts to cash.
Negative Updates
Refinancing Interest-Rate Headwind
Assumed refinancing of 1.25% notes at ~4.25%–4.5% introduces a financing headwind of ~170–180 bps, estimated to reduce midpoint Core FFO growth by roughly $0.12/share.
Temporary Occupancy Disruption from Anchor Transitions
Expect occupancy to dip into the mid-93% range in H1 2026 due to anchor lease expirations and downtime, creating a ~75 bps drag on comparable POI growth before recovery to mid/upper-94% by year-end.
Near-Term FFO Impact from Saks Bankruptcy
Post-year-end Saks filing triggered a noncash straight-line rent write-off of roughly $0.03/share, causing Q4 FFO to come in slightly below midpoint guidance.
Guidance Moderation vs. 2025 POI Growth
Comparable POI decelerates from 3.8% in 2025 to guidance of 3.0%–3.5% in 2026, reflecting temporary leasing timing and rollover dynamics.
Leverage Metrics Still Elevated
Adjusted net debt/EBITDA annualized at 5.7x (5.6x pro forma), which while improving is still toward the higher end of target and subject to further improvement via asset sales and deleveraging.
Uncertainty Around 2026 Acquisitions
Guidance does not include any 2026 acquisitions (none deemed probable), and management notes acquisition activity may be back-end weighted — creating optionality but also timing uncertainty for growth upside.
Credit Reserve and Bankruptcy Exposure
Management models a credit reserve of ~60–85 bps of rental income in 2026; Saks and other retailer bankruptcies present localized risk (Saks locations are high-quality assets but outcome timing is uncertain).
Company Guidance
Federal Realty guided both Nareit and Core FFO to $7.42–$7.52 per share for 2026 (midpoint $7.47), with Core FFO growth of ~5.8% versus 2025 (Nareit growth ~3.5%); 2025 Core FFO was $7.06 and Nareit FFO $7.22 (a $0.15 difference from new market tax credit income). Key operational assumptions include comparable POI growth of 3.0%–3.5%, comparable lease rollovers in the low‑to‑mid teens, incremental POI from the development/expansion pipeline of $13M–$15M, and an occupancy trajectory dipping to the mid‑93% range in 1H then returning to the mid/upper‑94% range by year‑end; guidance assumes no one‑time adjustments and only the recently announced dispositions. Financial and capital assumptions: guidance reflects a full year contribution from $750M of 2025 acquisitions at ~7.0% blended cash cap (7.5% GAAP cap), assumes refinancing the 1.25% notes at ~4.25%–4.5% (a ~170–180 bps headwind), a credit reserve of ~60–85 bps of rental income, >$100M free cash flow after dividends and maintenance cap in 2026, Q1 FFO of $1.80–$1.83 (Q2/Q3 mid‑$1.80s, Q4 mid‑$1.90s), year‑end liquidity of ~$1.3B, a $250M delayed‑draw term loan at SOFR+85bps maturing in 2031, pro‑forma adjusted net debt/EBITDA inside 5.6x trending to low‑mid‑5x (4Q at 5.7x), fixed charge coverage ~3.9x with a target to exceed 4x, a ~$500M ongoing redevelopment pipeline and ~780 residential units in the development pipeline.Federal Realty Financial Statement Overview
Summary
Income statement strength is solid (steady revenue growth to $1.279B and strong 2025 profitability), and operating cash flow/free cash flow have improved materially in recent years with strong 2025 cash conversion. Offsetting this, historical leverage was elevated and both earnings/margins and free cash flow showed variability earlier in the period, though 2025 reported a sharp deleveraging improvement that needs to prove durable.Income Statement
Revenue has grown steadily from $835M (2020) to $1.279B (2025), showing a durable top-line recovery and expansion. Profitability is strong for the period, with net margin improving meaningfully versus 2023–2024 and reaching ~32% in 2025 (after a higher ~36% in 2022). A key watch-out is volatility in earnings and margins over time (notably the step-down in 2023–2024 before rebounding in 2025), which suggests results can be sensitive to operating conditions and/or non-recurring items.78
Positive
Balance Sheet
Leverage has historically been elevated (debt-to-equity ~1.4–1.8 from 2020–2024), which can limit flexibility in a higher-rate environment. However, 2025 shows a sharp improvement with debt-to-equity down to ~0.35 alongside higher equity, materially strengthening the capital structure versus prior years. Returns on equity are healthy overall (roughly ~8%–13% across the period), but the large year-over-year swing in reported debt levels warrants monitoring for consistency and sustainability of the improved leverage profile.62
Positive
Cash Flow
Operating cash flow has trended up consistently from $370M (2020) to $622M (2025), supporting the quality of the business model. Free cash flow has improved substantially from negative in 2020 to strongly positive in 2023–2025, and in 2025 free cash flow matches net income (free cash flow to net income = 1.0), indicating strong cash conversion that year. The main weakness is variability in free cash flow generation earlier in the period (very low in 2021–2022 and negative in 2020), implying cash generation can fluctuate with investment needs and timing.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.28B | 1.20B | 1.13B | 1.07B | 951.22M |
| Gross Profit | 124.41M | 810.65M | 769.06M | 717.60M | 634.61M |
| EBITDA | 972.60M | 822.41M | 736.79M | 835.06M | 676.75M |
| Net Income | 411.08M | 295.21M | 236.99M | 385.49M | 261.50M |
Balance Sheet | |||||
| Total Assets | 9.13B | 8.52B | 8.44B | 8.23B | 7.62B |
| Cash, Cash Equivalents and Short-Term Investments | 107.42M | 123.41M | 250.82M | 85.56M | 162.13M |
| Total Debt | 5.03B | 4.56B | 4.69B | 4.47B | 4.19B |
| Total Liabilities | 5.63B | 5.10B | 5.21B | 5.02B | 4.75B |
| Stockholders Equity | 3.25B | 3.17B | 2.96B | 2.95B | 2.58B |
Cash Flow | |||||
| Free Cash Flow | 331.04M | 327.80M | 244.71M | 100.07M | 30.84M |
| Operating Cash Flow | 622.38M | 574.56M | 555.83M | 516.77M | 471.35M |
| Investing Cash Flow | -743.07M | -446.83M | -358.32M | -786.00M | -660.12M |
| Financing Cash Flow | 102.95M | -252.30M | -33.85M | 190.41M | -452.97M |
Federal Realty Technical Analysis
Positive
108.77
Price Trends
102.94
Positive
99.79
Positive
96.86
Positive
Market Momentum
1.75
Negative
65.39
Neutral
76.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRT, the sentiment is Positive. The current price of 108.77 is above the 20-day moving average (MA) of 105.67, above the 50-day MA of 102.94, and above the 200-day MA of 96.86, indicating a bullish trend. The MACD of 1.75 indicates Negative momentum. The RSI at 65.39 is Neutral, neither overbought nor oversold. The STOCH value of 76.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FRT.
Federal Realty Risk Analysis
Federal Realty disclosed 14 risk factors in its most recent earnings report. Federal Realty reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Federal Realty Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.61B | 21.90 | 8.89% | 6.04% | 4.53% | -3.46% | |
79 Outperform | $9.66B | 45.55 | 3.47% | 4.28% | 14.67% | -5.17% | |
77 Outperform | $14.45B | 28.02 | 7.74% | 4.15% | 5.38% | 3.13% | |
73 Outperform | $9.28B | 24.17 | 12.86% | 4.41% | 6.07% | -0.28% | |
72 Outperform | $9.44B | 23.25 | 12.76% | 4.38% | 6.05% | 14.70% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
65 Neutral | $5.39B | 19.05 | 9.35% | 4.55% | 3.67% | ― |
* Real Estate Sector Average
FRT
Federal Realty
108.77
7.98
7.91%
ADC
Agree Realty
80.48
9.44
13.29%
NNN
NNN REIT
45.32
4.90
12.13%
REG
Regency Centers
79.00
4.34
5.81%
KRG
Kite Realty Group
26.05
4.00
18.17%
BRX
Brixmor Property
30.27
3.50
13.07%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.