What's in Store for Federal Realty in This Earnings Season?

Core Viewpoint - Federal Realty Investment Trust (FRT) is preparing to report its third-quarter 2024 results on October 30, with analysts and investors keen to evaluate its performance amid current economic conditions [1][2]. Industry Overview - The U.S. retail real estate market experienced a pullback in net absorption for shopping centers in Q3, leading to a slight negative shift [3]. - Negative net absorption totaled 0.26 million square feet, primarily driven by a decline of 1.8 million square feet in the southern region [4]. - Asking rents for U.S. shopping centers increased by 3.4% year over year, reaching $24.54 per square foot [4]. - New construction activity remains low, with only 11.1 million square feet under construction in a market with an inventory of 4.31 billion square feet, indicating minimal supply risk [5]. Company Performance Insights - FRT is expected to benefit from its portfolio of high-quality retail properties located in major coastal markets, which enhances its resilience and growth potential [6]. - The company has maintained high occupancy rates due to favorable demographics and a diverse tenant base, which contributes to stable rental income [7]. - FRT's strategic focus on mixed-use properties is likely to support its performance by attracting varied tenants and consumers [7]. Financial Projections - FRT's leasing rate is estimated at 95.4%, reflecting a 10 basis point increase sequentially, while rent per square foot is projected to grow by 3.6% year over year [9]. - The Zacks Consensus Estimate for quarterly revenues is $301.24 million, indicating a 5.11% increase from the previous year [9]. - Rental income from minimum rents is expected to reach $196.03 million, up from $187.30 million year-over-year, while rental income from cost reimbursements is projected at $57.51 million, an increase from $53.64 million [10]. - Interest expenses are estimated to increase by 3.5% year-over-year for the third quarter of 2024 [10]. Analyst Sentiment - Analysts have shown caution regarding FRT's activities in the upcoming quarter, with the Zacks Consensus Estimate for FFO per share remaining unchanged at $1.72, suggesting a 4.24% year-over-year increase [11]. - The current Earnings ESP for FRT is 0.00%, and it holds a Zacks Rank of 3, indicating a neutral outlook for potential surprises in FFO per share [12].