Analyst Note| Kevin Brown, CFA |
No-moat Federal Realty reported first-quarter results that were slightly ahead of our expectations for the quarter. However, given that our full-year estimates are near the high end of management’s guidance range for 2022, we don’t anticipate making any material changes to our $138 fair value estimate. Same-store occupancy sequentially improved 10 basis points to 93.6% and is now up 170 basis points year over year. Re-leasing spreads were up 7.2% in the first quarter, in line with our estimate. Same-store revenue was up 10.3% largely due to fewer required rent abatements in the quarter and Federal Realty collecting approximately $5 million of previously owed rent. Meanwhile, same-store operating expenses only increased 2.5%, leading to same-store net operating income growth of 14.5% that was largely in line with our estimate of 15.3% growth in the quarter. Despite Federal Realty reporting same-store growth in line with our expectations, funds from operations came in at $1.50 in the quarter, 8 cents higher than our estimate, due to higher growth from stabilizing properties and higher than anticipated tenant recovery revenue.