FRT
FRT
Hold 2026-03-25
Model
DDM
Price at Report
$103.12
Base IV
$108.78
Bear IV
$90.19
Bull IV
$127.28
Entry Zone: 95-100 · Sell Above: 108
Bore Family Office
Valuation Report — Federal Realty Investment Trust (FRT) • March 25, 2026
3-Stage DDM (Ke) • Discount Rate: 9.75% • Current Price: $103.12
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Federal Realty Investment Trust is a premium mixed-use retail REIT focused on high-barrier-to-entry, densely populated, affluent coastal markets. Founded in 1962, FRT owns approximately 100 properties comprising 26 million square feet across the Northeast, Mid-Atlantic, and Northern California. The company is the only REIT to achieve Dividend King status with 59 consecutive years of dividend increases — a record unmatched in the REIT industry.
FY2025 revenue reached $1.28B (+6.4% YoY) with an exceptional EBITDA margin of 75.9%. FRT's competitive moat lies in its irreplaceable portfolio of mixed-use properties in markets with median household incomes exceeding $100K, creating natural barriers to new competition. Flagship properties include Santana Row (San Jose), Assembly Row (Boston), Pike & Rose (Bethesda), and Bethesda Row. The company competes with Simon Property Group (SPG), Regency Centers (REG), and Kimco Realty (KIM).
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Retail / Mixed-Use Properties | $1,150M | 90% | +6.0% | — | Core stabilized portfolio; grocery-anchored + street retail; 94% occupancy |
| Development / Redevelopment | $90M | 7% | +15.0% | — | Active mixed-use pipeline (Santana Row expansion, Assembly Row Phase 3) |
| Other Revenue | $39M | 3% | +3.0% | — | Parking, management fees, ancillary income |
| Blended Growth Rate | — | 100% | +6.5% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 12.7% | ≥12% strong |
| FCF Margin | 75.9% | ≥10% strong |
| Debt / EBITDA | 5.2x | >5x elevated |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $951 | $1,074 | $1,132 | $1,202 | $1,279 |
| Rev YoY Growth | — | +12.9% | +5.4% | +6.2% | +6.4% |
| Gross Margin | 66.8% | 66.9% | 67.9% | 67.5% | 67.2% |
| EBITDA ($M) | $675 | $829 | $728 | $815 | $970 |
| EBITDA Margin | 71.0% | 77.2% | 64.3% | 67.8% | 75.8% |
| Operating Income ($M) | $395 | $526 | $406 | $472 | $602 |
| Operating Margin | 41.5% | 49.0% | 35.9% | 39.3% | 47.1% |
| Net Income ($M) | $253 | $377 | $229 | $287 | $403 |
| Net Margin | 26.6% | 35.1% | 20.2% | 23.9% | 31.5% |
| EPS (diluted) | $3.26 | $4.71 | $2.80 | $3.42 | $4.68 |
| Free Cash Flow ($M) | $-200 | $-100 | $50 | $-50 | $-404 |
| Annual DPS | $4.240 | $4.280 | $4.340 | $4.380 | $4.460 |
| Total Debt ($M) | $4,192 | $4,475 | $4,688 | $4,561 | $5,028 |
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.990 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 9.75% | Ke = Rf + β × ERP |
📈 DDM Scenarios
$90
🔴 Bear
$109
📊 Base
$127
🚀 Bull
$103.12
Current Price
$112
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 1.5% | 2.0% | 2.0% | 9.75% | $90 | ▼12.5% |
| 📊 Base | 4.0% | 3.5% | 2.5% | 9.75% | $109 | ▲5.5% |
| 🚀 Bull | 6.0% | 4.5% | 3.0% | 9.75% | $127 | ▲23.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 1.5% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.105 | $6.474 | $6.47 |
| Year 2 | Stage 1 | $7.212 | $5.987 | $12.46 |
| Year 3 | Stage 1 | $7.320 | $5.537 | $18.00 |
| Year 4 | Stage 1 | $7.430 | $5.121 | $23.12 |
| Year 5 | Stage 1 | $7.541 | $4.736 | $27.85 |
| Year 6 | Stage 2 | $7.692 | $4.402 | $32.26 |
| Year 7 | Stage 2 | $7.846 | $4.091 | $36.35 |
| Year 8 | Stage 2 | $8.003 | $3.802 | $40.15 |
| Year 9 | Stage 2 | $8.163 | $3.533 | $43.68 |
| Year 10 | Stage 2 | $8.326 | $3.284 | $46.97 |
| Terminal | — | TV=$109.58 | PV(TV)=$43.22 (48% of IV) | $90.19 |
| Intrinsic Value | — | — | PV(Divs) $46.97 + PV(TV) $43.22 | $90.19 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (9.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $109.58. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $43.22). Intrinsic value = PV of all dividends ($46.97) + PV of terminal value ($43.22) = $90.19 per share.
Base Scenario
Stage 1: 4.0% | Stage 2: 3.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.280 | $6.633 | $6.63 |
| Year 2 | Stage 1 | $7.571 | $6.286 | $12.92 |
| Year 3 | Stage 1 | $7.874 | $5.956 | $18.88 |
| Year 4 | Stage 1 | $8.189 | $5.644 | $24.52 |
| Year 5 | Stage 1 | $8.517 | $5.349 | $29.87 |
| Year 6 | Stage 2 | $8.815 | $5.044 | $34.91 |
| Year 7 | Stage 2 | $9.123 | $4.757 | $39.67 |
| Year 8 | Stage 2 | $9.442 | $4.486 | $44.16 |
| Year 9 | Stage 2 | $9.773 | $4.230 | $48.39 |
| Year 10 | Stage 2 | $10.115 | $3.990 | $52.38 |
| Terminal | — | TV=$143.01 | PV(TV)=$56.40 (52% of IV) | $108.78 |
| Intrinsic Value | — | — | PV(Divs) $52.38 + PV(TV) $56.40 | $108.78 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (9.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $143.01. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $56.40). Intrinsic value = PV of all dividends ($52.38) + PV of terminal value ($56.40) = $108.78 per share.
Bull Scenario
Stage 1: 6.0% | Stage 2: 4.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.420 | $6.761 | $6.76 |
| Year 2 | Stage 1 | $7.865 | $6.530 | $13.29 |
| Year 3 | Stage 1 | $8.337 | $6.307 | $19.60 |
| Year 4 | Stage 1 | $8.837 | $6.091 | $25.69 |
| Year 5 | Stage 1 | $9.368 | $5.883 | $31.57 |
| Year 6 | Stage 2 | $9.789 | $5.602 | $37.17 |
| Year 7 | Stage 2 | $10.230 | $5.334 | $42.51 |
| Year 8 | Stage 2 | $10.690 | $5.079 | $47.59 |
| Year 9 | Stage 2 | $11.171 | $4.836 | $52.42 |
| Year 10 | Stage 2 | $11.674 | $4.604 | $57.03 |
| Terminal | — | TV=$178.13 | PV(TV)=$70.26 (55% of IV) | $127.28 |
| Intrinsic Value | — | — | PV(Divs) $57.03 + PV(TV) $70.26 | $127.28 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (9.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $178.13. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $70.26). Intrinsic value = PV of all dividends ($57.03) + PV of terminal value ($70.26) = $127.28 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.7% | $137 | $144 | $153 | $163 | $176 |
| 8.3% | $124 | $130 | $137 | $145 | $154 |
| 8.8% | $115 | $120 | $126 | $132 | $140 |
| 9.2% | $109 | $113 | $118 | $123 | $130 |
| 9.8% | $101 | $104 | $108 | $112 | $117 |
| 10.3% | $95 | $98 | $101 | $105 | $109 |
| 10.7% | $91 | $93 | $96 | $99 | $103 |
| 11.3% | $85 | $87 | $89 | $92 | $95 |
| 11.8% | $80 | $82 | $84 | $87 | $89 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/FFO | Div Yield | FFO Payout | D/EBITDA | Note |
|---|---|---|---|---|---|
| FRT (current) | 14.7x | 4.36% | 65% | 5.2x | Dividend King; coastal mixed-use; premium portfolio |
| REG (Regency Centers) | 16.5x | 3.8% | 68% | 4.5x | Grocery-anchored retail; similar quality |
| KIM (Kimco Realty) | 14.0x | 4.5% | 72% | 5.0x | Open-air retail; suburban focus |
| SPG (Simon Property) | 11.5x | 5.2% | 65% | 5.8x | Largest retail REIT; malls + outlets |
| BRX (Brixmor) | 12.8x | 4.8% | 70% | 5.5x | Value-add open-air retail |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $4.520 |
| Current Yield | 4.36% |
| Consecutive Growth Years | 59 |
| 1-yr DPS CAGR | +2.3% |
| 3-yr DPS CAGR | +2.2% |
| 5-yr DPS CAGR | +2.1% |
| 10-yr DPS CAGR | +3.0% |
| Payout Ratio (DPS/EPS) | 96.0% ⚠️ |
| FCF Payout Ratio | 64.6% |
| Sustainability Verdict | Safe |
FRT's dividend is safe and iconic — 59 consecutive years of growth makes it the only REIT Dividend King. On an FFO basis, the 65% payout ratio ($4.52 DPS / $7.00 FFO/share) is comfortably within the sustainable range for premium retail REITs.
DPS growth has been modest (2-3%/yr) reflecting management's preference for retaining FFO to fund development and delever. This conservative approach has sustained the streak through every cycle. The GAAP payout ratio of 96% is cosmetically high due to REIT depreciation — the FFO payout tells the real story. At current FFO coverage of 1.55x, the dividend has ample headroom.
DPS growth has been modest (2-3%/yr) reflecting management's preference for retaining FFO to fund development and delever. This conservative approach has sustained the streak through every cycle. The GAAP payout ratio of 96% is cosmetically high due to REIT depreciation — the FFO payout tells the real story. At current FFO coverage of 1.55x, the dividend has ample headroom.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $3.26 | — | — | — | Actual |
| 2022 | $4.71 | — | — | — | Actual |
| 2023 | $2.80 | — | — | — | Actual |
| 2024 | $3.42 | — | — | — | Actual |
| 2025 | $4.68 | — | — | — | Actual |
| 2026 | $2.64 | $3.07 | $3.49 | 10 | Estimate |
| 2027 | $2.79 | $3.27 | $3.77 | 10 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $1.0B | — | — | — | Actual |
| 2022 | $1.1B | — | — | — | Actual |
| 2023 | $1.1B | — | — | — | Actual |
| 2024 | $1.2B | — | — | — | Actual |
| 2025 | $1.3B | — | — | — | Actual |
| 2026 | $1.2B | $1.4B | $1.5B | 15 | Estimate |
| 2027 | $1.2B | $1.4B | $1.6B | 15 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Cooper Clark | Wells Fargo | Buy | $120 | +16.4% |
| Nicholas Yulico | Scotiabank | Buy | $118 | +14.4% |
| Ki Bin Kim | Truist Securities | Hold | $112 | +8.6% |
| Richard Hightower | Barclays | Hold | $109 | +5.7% |
| Steve Sakwa | Evercore ISI | Hold | $107 | +3.8% |
💡 Investment Thesis
- Dividend King — 59 Consecutive Years: FRT is the only REIT with Dividend King status. This 59-year dividend growth streak through recessions, rate spikes, the GFC, and COVID demonstrates extraordinary management discipline and business model durability. The streak is a proxy for portfolio quality.
- Irreplaceable Mixed-Use Portfolio: FRT's properties sit in affluent, supply-constrained coastal markets (median HHI $100K+). These locations are virtually impossible to replicate — zoning, land costs, and NIMBYism create permanent barriers to entry. This drives superior rent growth and lower tenant turnover.
- Mixed-Use Densification Upside: FRT's signature developments (Santana Row, Assembly Row, Pike & Rose) transform single-use retail into high-value mixed-use destinations with residential, office, hotel, and retail. These projects generate 15-20%+ unlevered IRRs and create embedded NAV growth.
- Attractive Valuation Near 52-Week Lows: At $103, FRT trades at ~14.7x FFO with a 4.4% yield — historically cheap for a Dividend King REIT. The discount reflects rate anxiety, not fundamental deterioration.
- Key Risk — Leverage & Rate Exposure: With $5.0B in debt (5.2x D/EBITDA), FRT is sensitive to refinancing costs. A sustained higher-rate environment would compress cap rates and increase interest expense, pressuring FFO and limiting development activity. Additionally, any systemic retail weakness in high-rent markets could impact occupancy.
⚖️ DDM Verdict: Hold — Federal Realty Investment Trust (FRT)
Current price: $103.12 | Analyst Avg PT: $111.87
$90
🔴 Bear
$109
📊 Base
$127
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$100 | Begin position |
| Tier 2 — Add | ≤$99 | Add on weakness |
| Tier 3 — Full | ≤$95 | Full allocation |
| Sell Alert | ≥$108 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
FRT at $103 is an Accumulate with a Base DDM target of ~$112. The stock offers a 4.4% yield from the only REIT Dividend King — 59 consecutive years of dividend growth is a powerful signal of portfolio quality and management discipline. At ~14.7x FFO, the valuation embeds significant rate pessimism.
FRT's mixed-use properties in affluent coastal markets are positioned to benefit from the experiential retail trend and the "15-minute city" urbanization thesis. The development pipeline provides multi-year FFO growth visibility. For income-oriented portfolios, FRT is a cornerstone holding.
Action: Accumulate below $108. Add on pullbacks to $95-100 (Bear case territory). Full position below $90 for long-term income investors. Trim above $120 (approaching Bull case).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FFO/Share as DDM Base (REIT Methodology) | Used estimated Core FFO/share of $7.00 as the distributable cash flow base. GAAP NI ($403M) + D&A ($368M) - estimated gains on property sales (~$169M) = Core FFO ~$602M. FFO/share = $602M / 86M = $7.00. This is consistent with FRT's Q4 2025 guidance of $7.12-$7.32 Core FFO for FY2026, suggesting FY2025 run-rate was approximately $6.90-7.00. |
| Ke | Beta 0.99 (Finnhub) — near market average, reflecting retail REIT cyclicality. Rf=4.30%, ERP=5.5%. Ke=4.30% + 0.99 × 5.5% = 9.75%. REIT — use Ke, not WACC. |
| Dividend King Premium | FRT's 59-year consecutive dividend growth streak — the only REIT to achieve this milestone — justifies a modest premium to retail REIT peers. The streak itself is evidence of portfolio quality, management discipline, and business model resilience. However, recent DPS growth (2-3%/yr) is below inflation, which tempers the premium somewhat. The model reflects this with moderate Stage 1 growth (4%) anchored to FFO growth, not the dividend growth rate. |
| Sanity Check | Analyst consensus PT $111.87. Base IV target ~$112 — within ±20% ($89.50-$134.24). Cross-check: at $112, implied P/FFO = 16x (vs. current 14.7x) — reasonable for the only REIT Dividend King with 67% gross margins and irreplaceable assets. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.