Federal Realty Investment Trust (FRT), which owns mainly grocery-anchored community shopping centers, has a proven track record, making it one of the country’s strongest real estate investment trust (REIT) companies.
Federal Realty has increased its dividend payout for 44 straight years, the longest consecutive streak in the REIT industry. The dividend has climbed 13 percent over the past four years, with the yield recently standing at 2.93 percent.
Federal Realty’s stock offered a total return of 22.29 percent over the past year, beating Morningstar’s index of retail REITs by more than 4 percentage points.
Its19.3 million square feet of property are located mainly in top metropolitan markets in the Northeast, Mid-Atlantic, and California. As of Sept. 30, an impressive 93.3 percent of Federal Realty’s property was leased to national, regional, and local retailers.
Rocking demographics
Real estate is all about location, location, location, and Federal Realty has good ones. Morningstar estimates that an average of more than 100,000 people with average annual household incomes topping $100,000 live within three miles of Federal Realty's shopping centers.
It’s no wonder then that the REIT has been able to sport an occupancy rate of about 95 percent on average since 2003. Rent increases on expiring leases averaged 17 percent since 1998, and its lofty average rent per square foot stands at about $23.
Standard & Poor’s analyst Robert McMillan has a hold rating on Federal Realty shares. “We think shareholders will benefit from the solid growth we expect the trust to generate from its ownership of shopping centers in relatively affluent metropolitan markets, which generally have meaningful barriers to entry,” he writes.
Federal Realty’s profit soared 56 percent in the third quarter to $48.3 million from a year earlier. Revenue gained 3 percent to $137.7 million.
The company next reports on Feb. 15.
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