Friday was a day to forget for Federal Realty Investment Trust (FRT -6.07%) and its investors. The real estate investment trust (REIT) posted its fourth-quarter and full-year results, and the market clearly wasn’t impressed by the performance. It sent the stock to a 6% loss on a day when the S&P 500 index basically traded sideways.
A decent if unspectacular quarter
After market close on Thursday, Federal divulged that it earned $311 million during the quarter, representing improvement of almost 7% on a year-over-year basis. Net income, a line item that directly affects the size of the dividend a REIT can pay investors, inched up by 2% to nearly $66 million ($0.75 per share).
Funds from operations (FFO), considered a more accurate measure of a REIT’s profitability, was 9% higher at almost $148 million.
Q4 revenue and net-income figures were essentially in line with analyst estimates.
A near miss with profitability guidance
In its earnings release, Federal also proffered its initial guidance for full-year 2025. It’s modeling net income of $3.00 to $3.12 per share for the year, which is a key reason for the investor sell-off (the consensus pundit projection is a bit higher, at $3.13). Management also forecast annual FFO of $7.10 to $7.22.
I’ve been a fan of Federal’s portfolio for some time, as the company has cleverly positioned itself as a landlord of durable properties in the retail sector located in relatively affluent areas. Yes, guidance could have been more encouraging, but this REIT is a stable operator and in my view one of the better retail REITs. It probably didn’t deserve the market’s punishment on Friday.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
