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Investing.com - Barclays (LON:BARC) initiated coverage on Federal Realty Investment Trust (NYSE:FRT) with an Overweight rating and a price target of $106.00 on Wednesday. The REIT, currently valued at $8.2 billion, trades at a P/E ratio of 27.2x and offers a substantial dividend yield of 4.67%.
The investment bank highlighted that Federal Realty owns "some of the most productive retail and mixed-use real estate in all of REITs" despite experiencing a de-rating relative to peers in recent years.
Barclays attributed the previous underperformance to COVID-era challenges in Coastal U.S. markets and disappointing returns on several high-profile, high-cost development and redevelopment projects.
The firm believes Federal Realty’s capital allocation priorities are shifting toward lower-risk acquisitions and more modest redevelopments within its existing portfolio, along with potentially accretive share repurchases. Notably, InvestingPro data shows the company has maintained dividend payments for an impressive 53 consecutive years, demonstrating strong commitment to shareholder returns.
Barclays projects Federal Realty will generate above-average FFO (funds from operations) per share growth of approximately 4% to 5% over the next two years compared to its peer set, creating potential for positive re-rating against the sector over the next 12 months. Analyst price targets currently range from $100 to $137, suggesting potential upside from current levels.
In other recent news, Federal Realty Investment Trust reported solid financial results for the first quarter of 2025. The company achieved earnings per share (EPS) of $0.72, slightly surpassing the forecast of $0.71, and posted revenue of $309.15 million, which exceeded the expected $307.59 million. Additionally, Federal Realty raised its full-year Funds From Operations (FFO) per share guidance to a range of $7.11 to $7.23, reflecting confidence in its operational strategy. Meanwhile, UBS lowered its price target for Federal Realty to $103.00 from $118.00, maintaining a Neutral rating due to concerns over growth projections and market exposure. Similarly, JPMorgan downgraded the company from Overweight to Neutral, citing a reduced focus on development as a factor. In executive news, Federal Realty amended the severance agreement for its Chief Financial Officer, Daniel Guglielmone, granting him one year of base salary and annual bonus if terminated without cause. At the company’s recent annual meeting, shareholders approved all proposals, including the election of trustees and the ratification of Grant Thornton LLP as the independent auditor for 2025. These developments underscore the company’s strategic adjustments and ongoing shareholder engagement.
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