Federal Realty Raises Outlook as Core FFO Climbs
The property owner signed a record 124 comparable retail leases covering 819,273 square feet.
Federal Realty Investment Trust (FRT), the retail and mixed-use property owner, raised its 2026 outlook after second-quarter Core FFO increased 6.8% and leasing activity reached a record.
The quarter extended the operating momentum behind the long-term framework Federal Realty introduced at its May investor day, which set FFO and AFFO per-share growth targets through 2028. Adjusted comparable-property operating income rose 4.2% to $200.7 million, outpacing the 2.8% increase in reported comparable-property POI.
Revenue rose 7.8% to $335.7 million from $311.5 million a year earlier, led by rental income of $325.9 million. Net income available to common shareholders fell to $83.7 million, or $0.97 a diluted share, from $153.9 million, or $1.78 a share. Lower real-estate sale gains and a tax-credit benefit in the prior-year quarter drove the decline.
Core FFO increased to $1.88 a diluted share from $1.76. Nareit FFO declined 1.6% to $1.88 a share because the year-earlier period included $13.0 million, or $0.15 a share, of one-time new-markets tax-credit income.
Commercial property provided the rental-income growth. Commercial minimum rents rose to $225.8 million from $208.5 million, and residential minimum rents declined to $21.9 million from $26.4 million. Lease-termination fees increased to $4.6 million from $1.1 million, helping other lease-related rental income rise to $9.3 million.
Average rent on the quarter's comparable retail leases increased 15% on a cash basis to $33.68 a square foot and 28% on a straight-line basis. Portfolio occupancy held at 93.8% from the first quarter and increased 20 basis points from a year earlier. The leased rate remained 96.1% sequentially and rose 70 basis points year over year.
Federal Realty now expects 2026 EPS of $4.22 to $4.30, up from its previous range of $3.94 to $4.03. Its Nareit and Core FFO forecast is $7.48 to $7.56 a share, compared with $7.46 to $7.55 previously. The company also raised its comparable-property POI growth forecast to 3.25% to 3.75%.
The quarterly common dividend increased 3% to $1.16 a share, lifting the indicated annual rate to $4.64 and extending Federal Realty's annual dividend-growth streak to 59 years.