Federal Realty Investment Trust(FRT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited consolidated financial statements and related disclosures for the Trust and Operating Partnership Financial Statements This section presents the unaudited consolidated financial statements for both Federal Realty Investment Trust and Federal Realty OP LP for the three months ended March 31, 2025, including balance sheets, income statements, and cash flow statements Federal Realty Investment Trust Financial Statements This subsection details the consolidated financial statements of Federal Realty Investment Trust, including its balance sheet, income statement, and cash flow statement Balance Sheet Summary (in thousands) | Financial Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $8,621,850 | $8,524,757 | | Total Liabilities | $5,176,245 | $5,100,327 | | Total Shareholders' Equity | $3,264,266 | $3,244,144 | Income Statement Summary (in thousands) | Income Statement Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $309,154 | $291,323 | | Operating Income | $108,133 | $100,194 | | Net Income | $66,578 | $58,016 | | Net Income Attributable to the Trust | $63,768 | $56,736 | | EPS (Basic and Diluted) | $0.72 | $0.66 | Cash Flow Summary (in thousands) | Cash Flow Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $179,044 | $141,160 | | Net Cash used in Investing Activities | ($181,766) | ($66,942) | | Net Cash used in Financing Activities | ($10,018) | ($229,401) | | Decrease in Cash | ($12,740) | ($155,183) | Federal Realty OP LP Financial Statements This subsection presents the financial statements for Federal Realty OP LP, noting its consolidated relationship with the Trust - The Operating Partnership's assets and liabilities are identical to the Parent Company's (the Trust), as the Trust consolidates the Operating Partnership and its only material asset is its investment in the Operating Partnership[13][30] Income Statement Summary (in thousands) | Income Statement Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $309,154 | $291,323 | | Operating Income | $108,133 | $100,194 | | Net Income Attributable to the Partnership | $63,768 | $56,736 | | EPU (Basic and Diluted) | $0.72 | $0.66 | Notes to Consolidated Financial Statements This subsection provides detailed notes explaining the significant accounting policies, transactions, and events impacting the consolidated financial statements - As of March 31, 2025, the company owned or had a majority interest in 103 predominantly retail real estate projects located in major metropolitan markets across the Mid-Atlantic, Northeast, California, and South Florida[38] - On February 25, 2025, the company acquired the fee interest in Del Monte Shopping Center in Monterey, California for $123.5 million[48] - On March 20, 2025, the company amended and restated its $600.0 million unsecured term loan, extending the maturity date to March 20, 2028, with two optional one-year extensions[50] - In January 2024, the Operating Partnership issued $485.0 million of 3.25% Exchangeable Senior Notes due 2029, entering into capped call transactions to reduce potential dilution with a cap price of approximately $143.26 per share[53][57] - On April 10, 2025, the Board of Trustees approved a new common share repurchase program, authorizing the purchase of up to $300.0 million of outstanding common shares[72] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2025 financial performance, highlighting revenue and net income increases, operational metrics, acquisitions, financing, and the business outlook amidst macroeconomic uncertainties Overview and Outlook This subsection provides an overview of the company's portfolio performance, long-term growth strategy, and management's perspective on macroeconomic risks and development projects - As of March 31, 2025, the company's portfolio of 103 retail real estate projects was 95.7% leased and 93.6% occupied[78] - The company's long-term growth strategy focuses on comparable property portfolio growth, expansion through acquisitions, and growth from redevelopments and expansions[95] - Management acknowledges macroeconomic risks including inflation and high interest rates, but believes the strong demographics and infill nature of its properties provide a strategic advantage[79][93] - Key development projects are underway, including Phase IV at Pike & Rose (276,000 sq ft office) and Santana West (369,000 sq ft office), with significant portions already leased[96] Lease Rollovers This subsection details the company's leasing activity for the quarter, including square footage and average rental increases for comparable space leases Leasing Activity (Q1 2025) | Leasing Activity (Q1 2025) | Square Feet | Avg. Rental Increase (Cash Basis) | | :--- | :--- | :--- | | Total Retail Leases Signed | 430,000 | N/A | | Comparable Space Leases | 369,000 | 6% | | - New Leases | 175,000 | 2% | | - Renewals | 194,000 | 8% | Results of Operations This subsection analyzes the company's financial performance for the quarter, detailing changes in revenue, expenses, and net income Financial Performance (in thousands) | Metric (in thousands) | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total property revenue | $309,154 | $291,323 | $17,831 | 6.1% | | Total property expenses | $104,371 | $95,719 | $8,652 | 9.0% | | Property operating income | $204,783 | $195,604 | $9,179 | 4.7% | | Operating income | $108,133 | $100,194 | $7,939 | 7.9% | | Net income | $66,578 | $58,016 | $8,562 | 14.8% | - The $17.8 million increase in property revenue was driven by an $11.0 million increase from comparable properties (due to higher occupancy and rental rates), a $9.4 million contribution from acquisitions, and a $1.7 million increase from non-comparable properties[108][114] - The $8.7 million increase in property expenses was primarily due to a $4.7 million increase at comparable properties (higher snow removal, utilities) and a $2.1 million increase from acquisitions[110][111][115] Liquidity and Capital Resources This subsection discusses the company's current liquidity position, available capital, debt maturities, and estimated costs for ongoing development projects - As of March 31, 2025, the company had $109.2 million in cash and cash equivalents and $44.6 million outstanding on its $1.25 billion revolving credit facility; it also has capacity to issue up to $750.0 million in common shares under its ATM program[124] - The company has $644.6 million of debt maturing in the next twelve months, including a $200.0 million mortgage loan with two one-year extension options[123] - Remaining costs for development and redevelopment projects in progress are estimated at $204 million, with the majority expected to be incurred in the next two years[125] Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $179,044 | $141,160 | | Net cash used in investing activities | ($181,766) | ($66,942) | | Net cash used in financing activities | ($10,018) | ($229,401) | Funds From Operations (FFO) This subsection provides a reconciliation of net income to Funds From Operations (FFO), a key metric for real estate investment trusts FFO Reconciliation (in thousands) | FFO Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (in thousands) | $66,578 | $58,016 | | FFO (in thousands) | $148,172 | $138,411 | | FFO available for common shareholders (in thousands) | $146,476 | $136,725 | | FFO per diluted share | $1.70 | $1.64 | Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to market risk, primarily interest rate fluctuations on its debt, and provides a sensitivity analysis - The company's primary market risk is from interest rate fluctuations on its debt[144][146] - As of March 31, 2025, the company had $3.9 billion of fixed-rate debt; a hypothetical 1.0% increase in market interest rates would decrease the fair value of this debt by approximately $153.0 million[148] - The company had $644.6 million of variable-rate debt outstanding; a hypothetical 1.0% increase in market interest rates would increase annual interest expense by approximately $6.4 million[149] Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal controls over financial reporting - Management, including the CEO and CFO, concluded that the disclosure controls and procedures for both the Trust and the Operating Partnership were effective as of March 31, 2025[150][152] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[151][153] PART II. OTHER INFORMATION This section covers other required disclosures, including updates on risk factors, equity sales, and other miscellaneous items Risk Factors This section states there have been no material changes to the risk factors previously disclosed in the company's latest annual report - There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K[156] Unregistered Sales of Equity Securities and Use of Proceeds This section discloses the approval of a new common share repurchase program and the redemption of operating partnership units for common shares - On April 10, 2025, the Board of Trustees approved a new common share repurchase program for up to $300.0 million; no shares have been repurchased under this program as of May 8, 2025[157] - During the three months ended March 31, 2025, the company redeemed 1,158 downREIT operating partnership units for common shares[158] Other Items (Defaults, Mine Safety, Other Info, Exhibits) This section confirms no defaults on senior securities, no applicable mine safety disclosures, and lists exhibits filed with the report - The company reported no defaults upon senior securities for the period[160]