Federal Realty Investment Trust (NYSE:FRT) reported second-quarter 2023 funds from operations (FFO) of $1.67 per share, surpassing the Consensus Estimate of $1.62 and representing a 1.2% increase from the same quarter last year. The company’s strong results were driven by robust leasing activity and high occupancy levels at its properties. In response to the positive performance, FRT shares rose 1.75% in after-hours trading on the NYSE. Revenues for the quarter reached $280.7 million, a 6.3% improvement year-over-year, and surpassed the Consensus Estimate of $277 million. Federal Realty achieved a 4.6% growth in comparable property operating income, excluding lease termination fees and pandemic-related prior-period rents collected. FRT also raised its 2023 FFO per share guidance and increased its dividend. The company’s CEO, Donald C. Wood, emphasized the strong retail demand for Federal Realty’s high-quality product, which drove robust leasing activity during the quarter.

During Q2, Federal Realty signed 112 leases for 602,911 square feet of retail space, with 107 leases for 576,345 square feet of space on a comparable basis at an average rent of $35.34 per square foot. This resulted in a cash-basis rollover growth of 7% and 19% on a straight-line basis, marking the highest second-quarter comparable leasing volume on record.

The company’s portfolio occupancy rates increased by 80 basis points (bps) year-over-year to 92.8% as of June 30, 2023, while leased rates rose by 20 bps to 94.3% on the same date. Federal Realty’s comparable residential properties achieved a high leasing rate of 98% as of the same date.

At the end of Q2 2023, Federal Realty reported cash and cash equivalents of $98.06 million, up from $85.6 million at the end of 2022.

For the full year 2023, Federal Realty raised its FFO per share guidance to a range of $6.46-$6.58 from the previously guided range of $6.38-$6.58. The Consensus Estimate of $6.50 falls within this range.

Additionally, Federal Realty announced a regular quarterly cash dividend of $1.09 per share, up from the previous payment of $1.08 per share, signaling an annual rate of $4.36 per share. This increase marks the 56th consecutive year that FRT has raised its common dividend, making it the REIT sector’s longest record of consecutive annual dividend increases. The dividend will be paid on October 16 to shareholders of record as of September 22, 2023.

Federal Realty Investment Trust’s solid performance in Q2 2023 underscores its ability to meet consumer and retailer needs in major metropolitan areas’ affluent first-ring suburbs. With its strong leasing volume, growing property operating income, and improving occupancy rates, the company is well-positioned for continued success throughout 2023. Investors should keep a close eye on Federal Realty as it sustains momentum and delivers strong financial results.

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