Federal Realty to Report Q2 Earnings: What to Expect From the Stock?

Federal Realty Investment Trust FRT, a leading real estate investment trust (REIT) focused on retail properties, is set to report its second-quarter 2025 results on Aug. 6, after market close. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.

In the last reported quarter, this retail REIT’s funds from operations (FFO) per share of $1.70 surpassed the Zacks Consensus Estimate by a cent. This also marked a rise of 3.7% from the year-ago quarter’s tally of $1.64. Results reflected healthy leasing activity and occupancy levels at its properties.

Over the last four quarters, Federal Realty surpassed estimates on two occasions, met on another and missed in the remaining, the average beat being 0.15%. The graph below depicts the surprise history of the company:

Federal Realty Investment Trust Price and EPS Surprise

Federal Realty Investment Trust price-eps-surprise | Federal Realty Investment Trust Quote

In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its second-quarter 2025 performance.

U.S. Retail Real Estate Market in Q2 2025

Per a Cushman & Wakefield CWK report, there has been a slight pullback in net absorption for the U.S. shopping center market, resulting in a negative shift in the second quarter. The national vacancy rate increased year over year but remained low from 2017 to 2019. Asking rents for the U.S. shopping center market grew from the year-ago quarter.

The second quarter witnessed negative net absorption in the U.S. shopping center market, totaling 6.5 million square feet (msf), compared to negative 7.1 msf in the first quarter. Although this is a marginal improvement from the first quarter, it represents absorption being recorded as negative for the first time for two consecutive quarters in the post-pandemic era. The decrease was due to negative net absorption observed in all four regions of the country. According to Cushman & Wakefield Research, 56 of the 81 markets tracked experienced absorption declines.

The lack of new construction is also contributing to the scarcity, as only 4.6 msf of new shopping center space was delivered from the beginning of the year through July 14, 2025. As of the second quarter of 2025, there are only 10.9 msf under construction with an inventory of 4.30 billion square feet.

Although the national vacancy rate increased 50 basis points to 5.8% year over year, the vacancy rate remains low from the 6.4% level for the 2017-2019 period.

The reversal in net demand is leading to easing pressure on asking rents. The asking rents for U.S. shopping centers increased 2.3% year over year to $24.99 per square foot in the second quarter.

Factors At Play & Projections for FRT

In this retail market environment, in the second quarter, Federal Realty is likely to have gained from its premium retail assets in upscale geographic locations, along with a diverse tenant base.

With 80% of its centers having a grocery component offering essential goods and services, FRT is likely to have generated stable revenues during the to-be-reported quarter, driving top-line growth. Moreover, FRT’s focus on developing urban mixed-use assets is likely to have given it an edge, contributing to its revenue growth.

Our estimate places FRT's leased occupancy rate at 95.4%, down 30 basis points sequentially, while the rent per square foot is projected to grow 0.7% year over year.

The Zacks Consensus Estimate for quarterly revenues is pegged at $310.70 million, which indicates a 4.95% increase from the year-ago period. The consensus mark for rental revenues stands at $305.89 million, which suggests a rise from the year-ago period’s $295.78 million. Rental income from minimum rents — commercial — is pegged at $201.56 million, up from $194.55 million in the year-ago period. Rental income from cost reimbursements is projected at $60.46 million, up from $55.65 million in the prior-year period.

However, high interest expenses are anticipated to have affected FRT’s performance to some extent during the quarter. Our estimate suggests a year-over-year marginal increase in the company's second-quarter 2025 interest expenses.

Federal Realty’s activities during the soon-to-be-reported quarter were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the second-quarter FFO per share has remained unchanged at $1.73 for more than three months. However, it suggests a 2.4% increase year over year.

What Our Quantitative Model Predicts for FRT

Our proven model predicts a surprise in terms of FFO per share for Federal Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.

Federal Realty has an Earnings ESP of +2.37% and currently carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Another Stock That Warrants a Look

Here is another stock from the broader REIT sector — Lamar Advertising LAMR — that you may want to consider, as our model shows that it also has the right combination of elements to report a surprise this quarter.

Lamar Advertising, scheduled to report quarterly numbers on Aug. 8, has an Earnings ESP of +4.33% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Another Retail REIT

Kimco Realty Corp. KIM reported second-quarter 2025 FFO per share of 44 cents, which beat the Zacks Consensus Estimate of 43 cents. The metric grew 7.3% from the year-ago quarter.

Results reflected higher same-property net operating income due to a rise in minimum rents. However, lower occupancy owing to tenant bankruptcies and higher interest expenses acted as dampeners.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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