Should You Continue Holding Federal Realty Stock in Your Portfolio?

Core Viewpoint - Federal Realty's high-quality retail properties and strategic initiatives position the company for long-term growth despite challenges from e-commerce and elevated interest expenses [1][2][10][11]. Company Overview - Federal Realty operates a portfolio of premium retail assets primarily located in affluent coastal markets, benefiting from strong demographic trends and a diverse tenant base [5]. - The company has a solid balance sheet with $123.4 million in cash and $1.25 billion in total unsecured revolving credit facility as of Q4 2024, indicating ample liquidity for future growth [7]. Financial Performance - The Zacks Consensus Estimate for Federal Realty's 2025 FFO per share has been revised upward to $7.16, reflecting an optimistic outlook despite a 17.8% decline in shares over the past three months [3]. - Year-over-year growth in rental income is projected at 5.4%, 4%, and 4.4% for 2025, 2026, and 2027, respectively, supported by a well-located portfolio [6][9]. Dividend Policy - Federal Realty has a strong commitment to dividend payouts, having increased its common dividends for 57 consecutive years, which is attractive to REIT shareholders [8]. Market Challenges - The rise of e-commerce poses a significant challenge to brick-and-mortar retail, potentially impacting market share and consumer spending due to macroeconomic uncertainties [10]. - Elevated interest rates remain a concern, with total debt at approximately $4.47 billion as of Dec. 31, 2024, and a projected 2.3% increase in interest expenses for 2025 [11].