Shares of Federal Realty Investment Trust FRT have rallied 18.2% in the past three months, outperforming the industry's growth of 14.4%.

Last month, the retail real estate investment trust (REIT) reported second-quarter 2024 funds from operations (FFO) per share of $1.69, surpassing the Zacks Consensus Estimate of $1.68. Results reflected healthy leasing activity and better-than-expected growth in revenues.

This Zacks Rank #3 (Hold) company also raised its guidance for 2024. It projected FFO per share in the range of $6.70-$6.88 from the $6.67-$6.87 range guided earlier. The Zacks Consensus Estimate for the same is presently pegged at $6.81, within expectations.

Image Source: Zacks Investment Research

Factors Behind FRT's Stock Price Surge: Will This Trend Last?

Federal Realty’s portfolio of premium retail assets — situated in the major coastal markets from Washington, D.C. to Boston, San Francisco and Los Angeles — along with a diverse tenant base, both national and local, positions it well for decent growth.The company is experiencing decent leasing activity, aiding occupancy growth. For the second quarter of 2024, Federal Realty signed 124 leases for 600,669 square feet of retail space.

Federal Realty has been capitalizing on expansion opportunities in premium markets, which leads to income growth and creates long-term value. Since the beginning of the second quarter of 2024 through Aug. 1, 2024, the company has acquired two assets totaling 880,000 square feet on 129 acres for $275 million. Moreover, to optimize its portfolio and strengthen its balance sheet, the company sold off its remaining assets on Third Street Promenade in Santa Monica, CA, for $103 million during the same period.

Federal Realty is also focused on diversifying its portfolio with residential and office properties. The company is exploring the mixed-use development option, which has gained immense popularity in recent years as it helps catch the attention of people who prefer to live, work and play in the same area.

Federal Realty focuses on maintaining a decent balance sheet position with ample liquidity. The company exited the second quarter of 2024 with $1.3 billion of total liquidity in cash and credit facility. FRT has no debt maturities remaining in 2024 and no material maturities until 2026.

Solid dividend payouts are arguably the biggest enticement for REIT shareholders, and Federal Realty remains committed to that. The company has paid out uninterrupted dividends since its inception in 1962, and the latest hike on Aug. 1, 2024, marked the 57th consecutive year of common dividend increases by the company. Given FRT’s solid operating platform, our FFO growth projections and balance sheet strength compared with industry counterparts, this dividend rate is expected to be sustainable in the upcoming period.