Federal Realty Stock: Valuations Are Fine
Federal Realty Investment Trust (FRT) is a dividend king with a 50-year history of not cutting its payment. That’s why, when COVID came up, I invested heavily in it.
It’s time to look at the firm that has paid out approximately 75% RoR in less than 1.5 years.
How is Federal Realty Investment Trust doing?
Federal Realty, like other retail REITs, has been performing well. Unlike others, it never reduced its payout and so remained a dividend king. It also has one of the greatest portfolios in the industry.
We should not overreact to minor setbacks in a firm’s history, particularly if the company is a reputable one like FRT. FRT handles buildings in 9 major urban areas.
Its financial sheet and credit ratings are top-notch, and its management is well-versed in all economic cycles. The company’s revenue streams vary by market, area, formant, tenant category, and tenant.
The company’s objective has been to diversify by opening properties in San Jose, Bethesda, and Somerville. The company’s metrics were outstanding before the outbreak and remain strong now.
Federal Realty Invest.
Open-air formats are typically less limited, and FRT has been on the forefront, working with tenants to ensure ideas like pick-up and other tenant services are given.
The company’s sales are spread throughout many states, with Maryland accounting for the most. Off category, the company’s centers are segmented as follows, with over 75% including a grocery component.
The company’s revenue continues to come from a wide range of renters. The top tenants are some of the safest firms in the country.
Federal Realty Investment by Tenant
The company’s pipeline includes mixed-use projects and redevelopments of existing buildings. With 3 large mixed-use developments on the east and west coasts, and close to $175 million in redevelopment spending over the next 3 years,
AWESOME LIQUIDITY FOR There is $1.45B in cash and undrawn revolver/credit, with the next credit repayment of $275M in 2024.
3Q21 results indicate robust trends and outstanding fundamentals. The company’s recovery is ahead of plan, and FRT has upped its full-year projection by almost 7%. Very solid performance at $1.51/share FFO. Aside from that, FRT is one of the few REITs to provide us with information for 2022. And 2023-2024.
Second, we boosted our entire year 2021 projection by almost 7%. Third, we increased our ’22 projection, the only shopping center real estate company to do so so far, by over 6% at the midpoint. Dan will also cover 2023 and 2024.
The business handled 119 retail leases for 7% less than the rentals they replaced, validating the company’s space quality.
Demand and shopping rebound astonished even FRT, particularly with delta coming on. Rent collections increased to 96% in 3Q21, with considerably fewer tenant defaults than predicted.
The FFO increased 35% YoY and 7% sequentially. It outperformed predictions by roughly 18%. Improved outcomes and rent dynamics reduce leverage.
Our leverage indicators are also improving. Our run-rate for net debt to EBITDA is 6.0 times pro forma for our 2021 acquisitions over equity. Pro forma for unopened leases, the number is 5.8. Fixed-charge coverage is 3.9 times backed. Our target leverage ratios for net debt EBITDA and fixed charge coverage remain in the low to mid 5s. Almost there.
Based on these fantastic achievements and trends, FRT is lifting forecast by 7.4% for 2022, meaning a 21% YoY increase to 2020, and a 6.54% YoY growth to 2021. The corporation is also looking forward to 2023-2024, and they expect a 5-10% increase in FFO for both years.