Federal Realty Investment Trust(FRT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited consolidated financial statements for Federal Realty Investment Trust and OP LP, detailing key financial positions and performance Federal Realty Investment Trust Financial Statements Consolidated Balance Sheet Highlights (Federal Realty Investment Trust) | Metric | June 30, 2025 (Unaudited) ($ millions) | December 31, 2024 ($ millions) | | :--- | :--- | :--- | | Total Assets | $8623.8 | $8524.8 | | Total Liabilities | $5122.5 | $5100.3 | | Total Shareholders' Equity | $3320.1 | $3244.1 | Consolidated Income Statement Highlights (Federal Realty Investment Trust) | Metric | Three Months Ended June 30, 2025 ($ millions) | Three Months Ended June 30, 2024 ($ millions) | | :--- | :--- | :--- | | Total Revenue | $311.5 | $296.1 | | Operating Income | $202.7 | $157.0 | | Net Income Attributable to the Trust | $155.9 | $112.0 | | Net Income Available for Common Shareholders | $153.9 | $110.0 | | Diluted EPS | $1.78 | $1.32 | - Net cash provided by operating activities for the six months ended June 30, 2025, was $329.7 million, an increase from $310.9 million in the same period of 2024. Net cash used in investing activities decreased significantly to $116.3 million from $252.6 million year-over-year[31] Federal Realty OP LP Financial Statements - The assets and liabilities of the Operating Partnership are identical to those of the Parent Company, as the Parent Company's only material asset is its interest in the Operating Partnership. The primary difference lies in the capital section, which shows Partner Capital instead of Shareholders' Equity[13][33] Consolidated Income Statement Highlights (Federal Realty OP LP) | Metric | Three Months Ended June 30, 2025 ($ millions) | Three Months Ended June 30, 2024 ($ millions) | | :--- | :--- | :--- | | Total Revenue | $311.5 | $296.1 | | Operating Income | $202.7 | $157.0 | | Net Income Attributable to the Partnership | $155.9 | $112.0 | | Net Income Available for Common Unit Holders | $153.9 | $110.0 | Notes to Consolidated Financial Statements - On February 25, 2025, the company acquired Del Monte Shopping Center in Monterey, California, for $123.5 million[55] - During the first six months of 2025, the company sold a residential building at Santana Row, its Hollywood Boulevard property, and a portion of its White Marsh property for net proceeds of $146.3 million, resulting in a net gain of $77.1 million[55] - In June 2025, the company recognized $14.2 million in income related to the sale of New Market Tax Credits (NMTC) from the Freedom Plaza development, as the seven-year compliance period concluded[68] - 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. No shares have been repurchased under this program as of June 30, 2025[75] - Subsequent to the quarter end, on July 1, 2025, the company acquired two retail shopping centers in Leawood, Kansas (Town Center Crossing and Town Center Plaza) for $289.0 million[81] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q2 2025 financial performance, driven by acquisitions, comparable property growth, and strategic asset sales, maintaining robust liquidity Overview and Outlook - As of June 30, 2025, the company's portfolio of 102 retail real estate projects was 95.4% leased and 93.6% occupied[86] - The company's long-term growth strategy focuses on comparable property growth, portfolio expansion through acquisitions, and value creation from redevelopments and expansions[104][108] - For Q2 2025, the company signed retail leases for 653,000 sq. ft., with comparable space leases showing an average rental increase of 10% on a cash basis[113] - For the first six months of 2025, comparable space leases covering 1,013,000 sq. ft. were signed at an average rental increase of 9% on a cash basis[114] Results of Operations Three Months Ended June 30, 2025 vs 2024 | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Property Revenue | $311.5 | $296.1 | +5.2% | | Property Operating Income (POI) | $213.2 | $201.9 | +5.6% | | Operating Income | $202.7 | $157.0 | +29.1% | | Net Income Attributable to the Trust | $155.9 | $112.0 | +39.2% | - The Q2 2025 increase in operating income was primarily driven by a $76.5 million gain on sale of real estate and $14.2 million in new market tax credit income[134][135][136] Six Months Ended June 30, 2025 vs 2024 | Metric | H1 2025 ($ millions) | H1 2024 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Property Revenue | $620.7 | $587.4 | +5.7% | | Property Operating Income (POI) | $418.0 | $397.5 | +5.2% | | Operating Income | $310.9 | $257.2 | +20.9% | | Net Income Attributable to the Trust | $219.7 | $168.7 | +30.2% | - For the first half of 2025, property revenue growth was driven by a $19.5 million contribution from acquisitions and a $19.7 million increase from comparable properties due to higher rental rates and occupancy[141] Liquidity and Capital Resources - As of June 30, 2025, the company had $177.0 million in cash and cash equivalents and only $17.6 million outstanding on its $1.25 billion revolving credit facility[159] - The company has $645.2 million of debt maturing in the next twelve months, including a $200.0 million mortgage loan with extension options to 2027[158] - The company amended its $600.0 million unsecured term loan, extending the maturity to March 2028 with options to extend further[158] - Remaining costs for development and redevelopment projects are estimated at $306 million, expected to be incurred over the next two years[160] Funds From Operations (FFO) FFO Reconciliation and Per Share Performance | Metric | Three Months Ended June 30, 2025 ($ millions) | Three Months Ended June 30, 2024 ($ millions) | | :--- | :--- | :--- | | Net Income | $159.96 | $114.66 | | FFO Available for Common Shareholders | $165.54 | $141.34 | | FFO per Diluted Share | $1.91 | $1.69 | | Metric | Six Months Ended June 30, 2025 ($ millions) | Six Months Ended June 30, 2024 ($ millions) | | Net Income | $226.53 | $172.67 | | FFO Available for Common Shareholders | $312.02 | $278.06 | | FFO per Diluted Share | $3.61 | $3.33 | Quantitative and Qualitative Disclosures about Market Risk Primary market risk is interest rate exposure on $617.6 million variable-rate debt, largely mitigated by $3.9 billion fixed-rate debt and derivatives - The company's primary market risk exposure is to changes in interest rates on its variable rate debt[179] - As of June 30, 2025, the company had $617.6 million of variable rate debt outstanding. A 1.0% increase in interest rates would result in an approximate $6.2 million increase in annual interest expense[184] - The company had $3.9 billion of fixed-rate debt outstanding as of June 30, 2025, which limits the risk of fluctuating interest rates on the majority of its debt portfolio[183] Controls and Procedures Management concluded that disclosure controls and procedures for both the Trust and OP LP were effective as of June 30, 2025, with no material changes to internal controls - Management concluded that the disclosure controls and procedures for both the Trust and the Operating Partnership were effective as of June 30, 2025[185][187] - There were no material changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[186][188] PART II. OTHER INFORMATION Risk Factors No material changes to risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors from the company's 2024 Annual Report on Form 10-K[191] Unregistered Sales of Equity Securities and Use of Proceeds A new $300.0 million share repurchase program was approved, with no shares repurchased yet; 77,983 downREIT units were redeemed for cash - A new common share repurchase program for up to $300.0 million was approved on April 10, 2025, with no shares repurchased as of August 6, 2025[192] - During Q2 2025, 77,983 downREIT operating partnership units were redeemed for cash[193]