stockrowLatest quarter
Federal Realty reported third-quarter revenue of $339.0 million, up from $322.3 million a year earlier and above the consensus of $337.4 million. Adjusted earnings per share, as counted by the consensus, were $1.87, above the $1.85 estimate. Diluted earnings per share rose to $0.80 from $0.69.
The company’s filing attributed higher revenue at comparable properties to higher rental rates, tenant reimbursements, average occupancy and parking income. It also reported higher revenue from non-comparable properties, primarily because occupancy increased, while property sales reduced revenue.
Federal Realty said property operating income rose as acquisitions, higher rental rates and average occupancy, and property openings offset some of the effect of dispositions. The filing said interest expense increased because of higher average borrowings and a higher average borrowing rate.
The company’s gross margin rose to 67.8% from 67.2%, while free cash flow increased to $85.8 million from $75.2 million. Its filing said quarterly comparable-space leases were signed at an average cash rental increase over the prior leases.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $339.0 million | $322.3 million | 5.20% |
| Diluted EPS | $0.80 | $0.69 | 15.5% |
| Gross margin | 67.8% | 67.2% | 0.6 percentage points |
| Operating margin | 34.5% | 34.3% | 0.1 percentage points |
| Free cash flow | $85.8 million | $75.2 million | 14.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.87 | $1.85 | Beat by 1.08% |
| Revenue | $339.0 million | $337.4 million | In line |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Don Wood said retailer demand and limited new supply supported Federal Realty’s ability to set rents. CFO Dan Guglielmone said higher rental income and recoveries, parking revenue and other income initiatives helped FFO per share of $1.87 exceed the company’s quarterly guidance. He said a straight-line rent write-off partly offset those contributions.
Wood said The Summit in Birmingham, acquired in October, extended Federal Realty’s central-region portfolio. He told analysts that tenants familiar with the company’s coastal properties had shown interest in its central-region locations, while some tenants from the newer properties were interested in coastal locations. He also said properties in Leawood and Omaha were running ahead of the company’s original plan.
Asked about income opportunities at recently acquired properties, Wood said Federal Realty could apply approaches used at existing properties to generate ancillary income. On California, Western Region President Jeff Kreshek described leasing growth across the portfolio and said the company was remerchandising Del Monte and redeveloping Grossmont.
Wood said Federal Realty repurchased nearly 870,000 shares in September and October. Guglielmone put the repurchases at $95.0 million and said the company had asset sales in process to fund investments, including The Summit. In response to a question about the sale pool, he said demand had not been meaningfully affected and that most transactions were expected to close in 2027.
Asked about refinancing, Guglielmone said the company had about $680.0 million of debt maturing around the middle of 2027 and could seek longer-dated unsecured bonds. He said Federal Realty was in the early stages of its 2027 budgeting process, but higher interest rates could increase refinancing headwinds relative to its earlier framework.
Guidance
Federal Realty raised its full-year NAREIT and core funds from operations guidance to $7.54 to $7.58 per share from $7.48 to $7.56. It also raised its outlook for cash-basis comparable property operating income growth to 4.30% to 4.50% and tightened its GAAP comparable growth range to 3.38% to 3.50%.
The company tightened its full-year diluted EPS guidance to $4.23 to $4.27. Guglielmone said the FFO outlook includes roughly $0.03 per share from The Summit in the fourth quarter and reflects share repurchases. He said it excludes targeted dispositions, most of which he expects to close in 2027.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Operating income, Cash Comparable Poi Growth | FY2027 | Federal Realty expects strong cash-basis comparable POI growth in FY2027. | — | — |
| EPS, Summit Non Gaap Ffo Contribution | Q4 FY2026 | $0.03 | — | New |
| Operating income growth, Gaap Comparable Poi Growth | FY2026 | 3.38%–3.50% | — | New |
| Operating income growth, Non Gaap Cash Comparable Poi Growth | FY2026 | 4.30%–4.50% | — | New |
| EPS, Non Gaap Ffo | FY2026 | $7.54–$7.58 | — | New |
| EPS | FY2026 | $4.23–$4.27 | $4.22–$4.30 | Held |
| EPS, Core Ffo | FY2026 | $7.48–$7.56 | — | New |
| EPS, Nareit Ffo | FY2026 | $7.48–$7.56 | — | New |
| Revenue, Parking | FY2026 | $3.0 million | — | New |
| Revenue, Executed Leases | Next 18 months | $31.0 million | — | New |
| Free cash flow, After Dividends and Maintenance Capital | FY2028 | $150.0 million | — | New |
| Free cash flow, After Dividends and Maintenance Capital | FY2026 | $100.0 million | — | New |
| Operating income, Incremental Development | FY2026 | $14.5 million–$15.5 million | — | New |
| Operating income growth, Comparable Gaap | Q2-Q3 FY2026 | 2.00% | — | New |
| Operating income, Redevelopment | FY2026 | $14.0 million–$15.0 million | — | New |
| Operating income growth, Comparable | FY2026 | 3.13%–3.63% | — | New |
| EPS, Nareit and Core Ffo | FY2026 | $7.46–$7.55 | — | New |