Federal Realty to Report Q2 Earnings: What to Expect From the Stock?

Core Viewpoint - Federal Realty Investment Trust (FRT) is preparing to report its second-quarter 2025 results, with analysts and investors keen to evaluate its performance amid current economic conditions [1] Company Performance - In the last reported quarter, FRT's funds from operations (FFO) per share was $1.70, exceeding the Zacks Consensus Estimate by $0.01, and reflecting a 3.7% increase from $1.64 in the same quarter last year [2] - Over the past four quarters, FRT has surpassed estimates twice, met once, and missed once, with an average beat of 0.15% [3] U.S. Retail Real Estate Market - The U.S. shopping center market experienced a slight pullback in net absorption, with negative net absorption of 6.5 million square feet in Q2 2025, an improvement from negative 7.1 million square feet in Q1 2025 [4][5] - The national vacancy rate increased by 50 basis points year over year to 5.8%, although it remains lower than the 6.4% level from 2017 to 2019 [6] - Asking rents for U.S. shopping centers rose by 2.3% year over year to $24.99 per square foot in Q2 2025 [7] Factors Influencing FRT's Performance - FRT is expected to benefit from its premium retail assets in upscale locations and a diverse tenant base, with 80% of its centers featuring grocery components [8][9] - The estimated leased occupancy rate for FRT is 95.4%, a decrease of 30 basis points sequentially, while rent per square foot is projected to grow by 0.7% year over year [9] - FRT's Q2 FFO per share is projected at $1.73, reflecting a 2.4% year-over-year increase, with rental revenues expected to grow by 3.4% [10] Revenue Projections - The Zacks Consensus Estimate for FRT's quarterly revenues is $310.70 million, indicating a 4.95% increase from the previous year [11] - Rental income from minimum rents is projected at $201.56 million, up from $194.55 million in the year-ago period [11] Interest Expenses - High interest expenses are anticipated to have a slight negative impact on FRT's performance during the quarter, with a marginal year-over-year increase expected [12] Analyst Sentiment - Analysts have shown cautious confidence in FRT, with the Zacks Consensus Estimate for Q2 FFO per share remaining unchanged at $1.73 for over three months [13] - FRT has an Earnings ESP of +2.37% and a Zacks Rank of 3, indicating a potential for a positive surprise in FFO [14]