Morningstar Rating

Stock Research and Analysis

by Todd Lukasik, CFA

Bulls Say

Federal Realty reports greater-than-average (and peer-leading) populations and annual household income within a three-mile radius of its centers, providing a strong demand base for its retail tenants' wares.
Recently, Federal Realty has been writing new leases at levels 30% greater than its average in-place rent, suggesting strong internal growth prospects upon lease expiration and renewal or re-leasing.
Federal Realty estimates it can invest up to another $3 billion in its existing assets, providing an attractive external growth pipeline. Read more 

Bears Say

Federal Realty's portfolio has heavy exposure to the greater Washington area, a great market historically that may face future pressure due to concerns around the levels of government spending.
Federal Realty is putting large amounts of capital to work in an environment of high asset prices. It will be difficult to earn appropriate long-term returns.
In the recent low-rate environment, investors may have bid up prices of other sources of yield, such as REITs. There is risk that capital will flow out of REITs should interest rates rise in the future, pressuring asset values. Read more 

Management

We think Federal Realty has exemplary stewardship. The firm's record of value creation and increased dividends (47 years and counting) is outstanding, and we have been impressed by its ability to glean additional value from existing assets through redevelopment   Read more 

Profile

Formed in 1962, Federal Realty Investment Trust is one of the oldest U.S. REITs. Historically, the firm focused on retail properties, but it has more recently moved into   Read more 

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