Federal Realty Investment Trust (NYSE:FRT) executives highlighted what they described as a “strong quarter” and “strong year” in their fourth-quarter 2025 earnings call, pointing to solid leasing performance, active investment and disposition activity, and 2026 guidance that management said reflects continued momentum despite a meaningful refinancing headwind.
Fourth-quarter and full-year performance
Chief Executive Officer Don Wood said the company delivered 6.4% bottom-line FFO growth in the fourth quarter and 4.3% for the full year. Chief Financial Officer Dan Guglielmone reported FFO per share of $1.84 for the quarter, up 6.4% from the prior year. He said the result landed slightly below the midpoint of the company’s guidance range “solely due to a non-cash charge related to Saks filing for bankruptcy post-year-end.” Later in the Q&A, management quantified that charge as a write-off of straight-line rent of roughly $0.03 per share.
Leasing: rent spreads and pipeline
Eastern Region President and Chief Operating Officer Wendy Seher said 2025 represented record leasing volume for the company, with the highest annual square footage leased in its history and the strongest comparable rent spreads in more than a decade. In the fourth quarter, Seher said the company signed 105 comparable deals, producing 12% rollover, including 15 anchor leases and 90 small-shop deals.
Wood provided additional detail on full-year leasing. He said Federal Realty completed 601,000 square feet of comparable leasing in the fourth quarter at 12% rollover and 2.3 million square feet of comparable deals for the year at 15% rollover, resulting in an incremental $11 million of new rent under contract. He also cited 20 non-comparable deals in 2025 at an average rate of $48.18, generating an incremental $6.3 million of new rent under contract.
- Management said starting rent on 2025 leases averaged $37.98, compared with ending rent of $33.12 on the same spaces after contractual bumps.
- Fourth-quarter leases signed included weighted average contractual rent bumps of 2.6%, according to Wood.
- Seher said small shops were 93.8% leased, up 50 basis points, providing “mark-to-market opportunities” and flexibility to refine the merchandising mix.
Seher also said leasing production at centers acquired in recent years continued to exceed expectations. She said the company executed 49 deals in 2025 across nearly 200,000 square feet at a 34% increase from prior rents, and highlighted examples of new tenants including Solidcore, Alo, Design Within Reach, Lovesac, Free People Movement, and State & Liberty.
Acquisitions, dispositions, and asset recycling
Management described transaction activity as “equally robust” alongside operating results. Wood said Federal Realty closed on Annapolis Town Center in Maryland and Village Pointe in Omaha, adding nearly 1 million square feet to the portfolio for $340 million at an initial cash-on-cash yield in the low-7% range. He said the company is focused on re-merchandising and rent growth at the properties, targeting unlevered IRRs approaching 9% over the next five years, and that both assets “have started out as we’ve underwritten.”
Wood also pointed to earlier 2025 acquisitions including Del Monte Center and two Leawood, Kansas properties, saying tenant demand and expected rents in Leawood were exceeding underwriting assumptions.
On the disposition side, Wood said Federal Realty sold Bristol Plaza in Connecticut and Pallas, described as a peripheral residential building at Pike & Rose, for a combined $169 million in the quarter. He added that subsequent to year-end the company closed on Misora, a peripheral residential building at Santana Row, for nearly $150 million, plus another small asset sale for $10 million. Wood said the combined cap rate on these dispositions was in the low-5% range. Guglielmone said another $170 million of sales were in process with expected closings in the first half of 2026, targeting cap rates in the low-5% range.
Residential development and monetization strategy
Executives emphasized a strategy of intensifying existing properties, often through residential development adjacent to retail, where land costs are minimal. Wood said the company had previously disclosed $280 million allocated for new residential development projects: The Blair at Ballston (nearly complete and ready for lease-up beginning in the current quarter), 301 Washington Street in Hoboken, and lot 12 at Santana Row, which together will add more than 500 units.
He added that the company recently added another residential project: Willow Grove Shopping Center in suburban Philadelphia, which will be redeveloped to include 261 apartments alongside a modernized and re-merchandised shopping center.
In the Q&A, management said it believes there may be another $400 million to $500 million of peripheral residential product that could potentially be monetized, though Wood said the assets were not yet in the market. He added he was pushing to begin that process in the second through fourth quarters of 2026 “to the extent we find the assets” the company wants to buy. On development yields, Wood said the company underwrites new residential development projects at roughly 6.5% to 7% yields and characterized comparable assets as “low fives cap rate assets today.”
Balance sheet, core FFO metric, and 2026 guidance
Guglielmone said liquidity at year-end was $1.3 billion, including available bank facilities and cash on hand. He said Federal Realty closed on a $250 million delayed draw term loan in the fourth quarter with a five-year maturity into 2031 and an interest rate of SOFR plus 85 basis points. For a $400 million bond maturity, he said the company planned to use the term loan and revolving credit capacity to refinance on a near-term basis, while noting the company was considering a possible unsecured note or convertible bond offering later in 2026.
On leverage, Guglielmone said annualized adjusted net debt to EBITDA was 5.7x at year-end and was inside 5.6x on a pro forma basis for the most recent asset sales, with expectations to trend toward the low- to mid-5x range over the year. He said fixed charge coverage stood at 3.9x and should eclipse the company’s 4x target over the course of the year.
The company also introduced what it calls a “core FFO” metric alongside NAREIT FFO. Guglielmone said core FFO will adjust NAREIT FFO for non-recurring one-time items to improve comparability, citing examples including New Markets Tax Credit (NMTC) income, transaction income, executive transition costs, collections of COVID-era deferred rent, and gains or losses on early extinguishment of debt. Wood said the addition of core FFO is intended to help investors analyze results and is not meant to “nickel and diming” performance.
For 2026, Guglielmone guided both NAREIT and core FFO to $7.42 to $7.52 per share, with no one-time adjustments assumed. At the midpoint of $7.47, he said that represents about 5.8% growth for core FFO compared with 2025 and 3.5% growth for NAREIT-defined FFO. He reported 2025 core FFO of $7.06 per share and 2025 NAREIT FFO of $7.22 per share, with the difference largely due to $0.15 of NMTC income.
Guidance assumptions discussed on the call included:
- Comparable POI growth of 3% to 3.5%, with management attributing a deceleration versus 2025 primarily to downtime from anchor space turnover (described as about a 75 basis point drag).
- Comparable lease rollover forecast in the low- to mid-teens.
- Incremental POI from the development and expansion pipeline forecast at $13 million to $15 million.
- A full-year contribution from $750 million of assets acquired in 2025 at roughly a 7% blended cash cap rate and 7.5% GAAP cap rate.
- Refinancing of 1.25% unsecured notes assumed at a 4.25% to 4.5% interest rate, which management described as a 170 to 180 basis point financing headwind; Guglielmone said without that, midpoint 2026 core FFO growth would be roughly 7.5%.
- A total credit reserve assumption of roughly 60 to 85 basis points of rental income in 2026.
Management also outlined expected quarterly cadence for 2026 FFO per share, with first-quarter guidance of $1.80 to $1.83, the second and third quarters in the mid-$1.80s, and the fourth quarter in the mid-$1.90s.
About Federal Realty Investment Trust (NYSE:FRT)
Federal Realty Investment Trust (NYSE: FRT) is a real estate investment trust specializing in the ownership, management, and redevelopment of high-quality retail, restaurant, and mixed-use properties. With a strategic focus on open-air shopping centers and lifestyle-oriented urban destinations, the company partners with leading national and regional retailers to curate environments that blend shopping, dining, entertainment, office, and residential uses. Its asset management capabilities extend from initial site selection and development through ongoing property operations and tenant relations.
Federal Realty’s portfolio comprises approximately 100 properties totaling more than 25 million square feet of gross leasable area.
