Federal Realty Raises 2026 Funds-from-Operations Guidance to $7.54–$7.58 a Share
Key Facts
Federal Realty raised its 2026 guidance for diluted funds from operations per share to a range of $7.54–$7.58, from $7.48–$7.56, after reporting third-quarter results for the period ended September 30 on October 30. Both Nareit FFO and Core FFO were $1.87 a share, up 5.6% from $1.77 in the same period of 2025. The company reported results before the market opened on October 30, and its shares closed at $110.19 that day, lower than the previous session's close. The guidance increase followed operating performance that included rent growth and an annual improvement in the leased rate. The company also raised its full-year outlook for adjusted comparable property operating income growth to 4.375%–4.625%, from 4.00%–4.50%.
The improvement extended beyond funds from operations: net income available to common shareholders was $64.2 million, and diluted earnings per share were $0.74 in the third quarter. In the same period of 2025, the company recorded net income of $59.6 million and diluted earnings per share of $0.69. Comparable property operating income grew 2.5% during the quarter. Growth was 4.0% excluding straight-line rent and amortization of above- and below-market leases. These measures provided operating context for the company's higher full-year guidance, alongside lease and occupancy data included in its results statement.
The company signed 117 leases for a combined 532,220 square feet of comparable retail space during the quarter. The average rent on new leases was $40.01 per square foot, compared with $35.07 on the previous leases for the same space. Federal Realty said this represented rent increases of 14% on a cash basis and 25% on a straight-line basis. As of September 30, the retail portfolio's occupancy was 93.8%, unchanged from the previous period and the same period a year earlier. The leased rate was 96.5%, up 40 basis points from the previous quarter and 110 basis points year over year.
Chief Executive Donald Wood said the company delivered “strong leasing with significantly higher rents on new leases, greater leased occupancy and healthy growth in cash property operating income.” In its second-quarter results, Federal Realty reported Core FFO of $1.88 per diluted share, up 6.8% year over year, and signed 124 leases covering 819,273 square feet of comparable space. After those results, full-year Core FFO guidance was raised to $7.48–$7.56 a share, with midpoint growth of 6.5% expected from the prior year. The company then widened its guidance range in the third quarter to $7.54–$7.58 a share. The new range represents expected Core FFO growth of 6.8% to 7.4% from the prior year, compared with 5.9%–7.1% under the previous guidance.
After the quarter ended, Federal Realty acquired The Summit shopping center in Birmingham, Alabama, for $508 million. The center spans 870,000 square feet and has a diverse mix of about 120 tenants. The company also declared a regular quarterly cash dividend of $1.16 per share, equivalent to an indicated annual rate of $4.64 per share. The dividend is payable on January 15, 2027, to shareholders of record on January 4, 2027. The company said its quarterly dividends have increased for 59 consecutive years, the longest record of its kind in the real estate investment trust sector, according to its statement.