Key Reasons to Add Federal Realty Stock to Your Portfolio Now

Federal Realty FRT is well-poised to gain from the upscale geographic locations of its properties, a diversified tenant base, a focus on mixed-use assets and a healthy balance sheet.

Last month, this retail real estate investment trust (REIT) reported third-quarter 2025 funds from operations (FFO) per share of $1.77, surpassing the Zacks Consensus Estimate of $1.76. This compares favorably with the FFO of $1.71 a year ago. Results reflected a rise in comparable property operating income (POI), healthy leasing activity and growth in comparable portfolio occupancy. Federal Realty raised its 2025 FFO outlook.

Analysts seem bullish about this Zacks Rank #2 (Buy) company, with the Zacks Consensus Estimate for its 2025 FFO per share being raised marginally over the past month to $7.23.

Moreover, over the past six months, FRT shares have gained 2.7% against the industry’s fall of 1.7%.

Factors That Make Federal Realty Stock a Solid Pick

Upscale Geographic Locations: Federal Realty’s portfolio of premium retail assets, mainly situated in the major coastal markets from Washington, D.C. to Boston, San Francisco and Los Angeles, positions it well for decent growth.

The company has strategically selected the first-ring suburbs of nine major high-barrier markets. The sites enjoy an average population of 171,000, with a $166,000 average household income and $11-billion plus of average spending power (calculated on a weighted-average basis in a three-mile radius), ensuring resilience and growth. Due to the strong demographics and infill nature of its properties, the company has maintained a healthy occupancy level over the years. As of Sept. 30, 2025, the comparable portfolio occupancy rate was 94%, an increase of 20 basis points (bps) year over year.

Diverse Tenant Base: FRT has a diversified tenant base of retailers, including names like TJX Companies, Ahold Delhaize and CVS Corporation. This limits the company’s risk to any particular retail industry and positions it well for experiencing a stable source of rental revenues. As of Sept. 30, 2025, no single tenant accounted for more than 2.51% of the annualized base rent (ABR).

Focus on Mixed-Use Assets: Federal Realty is focusing 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. The company targets creating urban, mixed-use neighborhoods like Santana Row in San Jose, CA; Pike & Rose in North Bethesda, MD, and Assembly Row in Somerville, MA.

Expansionary Efforts: Federal Realty has been capitalizing on expansion opportunities in premium markets, which leads to income growth and creates long-term value by disposing of non-core assets and reinvesting the proceeds in such investments. In October 2025, Federal Realty acquired Annapolis Town Center, a premier open-air retail center in Annapolis, MD, totaling approximately 479,000 square feet, for $187 million.

Strong Balance Sheet: Federal Realty focuses on maintaining a decent balance sheet position with ample liquidity. The company exited the third quarter of 2025 with $111.3 million in cash and cash equivalents and $315.3 million drawn under its $1.25 billion total unsecured revolving credit facility. The annualized net debt-to-EBITDA ratio was 5.6 as of Sept. 30, 2025.  Federal Realty’s credit ratings of BBB+ (Stable) and Baa1 (Stable) from Standard & Poor's and Moody's, respectively, enable it to procure debt financing at a favorable cost.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Cousins Properties CUZ and W.P. Carey WPC, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CUZ’s 2025 FFO per share is pegged at $2.84, which indicates year-over-year growth of 5.6%.

The Zacks Consensus Estimate for WPC’s full-year FFO per share is pinned at $4.92, which calls for an increase of 4.7% from the year-ago period.

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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