Federal Realty Investment Trust

This one's 45 acres and densely populated in affluent first-ring suburbs. As I assume you read in our press release a couple of weeks back, we closed on the first half of that parcel in late April and expect to close on the second half in late July. Northern Virginia is an important and a growing market for us. Our stepped-up post-COVID redevelopment effort is another critical component of future growth. It's no news to anyone on this call that the traditional, generic, and homogenous shopping center business is cyclical in nature and not a high-growth business. So you have to stand out to outperform over cycles. You do that by picking the right markets and positioning and merchandising in those markets, but you also have to reinvest in those assets to continually find the edge. Reinvesting is more important post-COVID than ever before. That's why we have nearly two dozen active and meaningful development projects in planning are underway, totaling over $100 million this year and next, which will likely yield double-digit unlevered yields over the ensuing years through higher customer traffic and rents, in line with our historically observed results following redevelopments. That reinvestment is one of the primary reasons we can continue to push rents. Now, that's our development business. At the Citi Conference in March, we were able to tour live and in person Cocoa Walk, our fully leased mixed-use development. We had an impressive group of investors attend, and our team was proud to showcase the unique approach that we take to real estate development and value creation. Consider that in its first stabilized year, the project will generate in excess of $11 million of NOI on $190 million investment with rents that are already undermarked. Our unlevered IRR is over 8%. Oklahoma's pretty special. That's Santana West. While I don't have any specific announcement to make on this call as to the leasing of our newly constructed office building, interest in the project and negotiations are more active than they've been at any time during the COVID era. I'm hopeful that we'll be able to provide a positive update in the coming months. Office demand is back in earnest in Silicon Valley, given the Google and Apple back-to-office announcements in the past month or two. and we have the only new fully amenitized state-of-the-art project in the market. We've updated costs and returns in the accompanying 8K based on real negotiations and market conditions. In short, higher costs along with higher rents, thus maintaining yield expectations. With residential-based rents comprising 11% of our total revenue base, the upward pressure on apartment rents in many U.S. markets is also benefiting our bottom line. A meaningful residential income stream in our fully amenitized properties is such a unique incremental benefit to federal. At Assembly Row, lease up of Masella, our 500-unit apartment building, continues faster than forecast and at higher net effective rents. We're currently 70% leased at 10% higher rents than forecast. Our office building, affectionately known as the PUMA building, as you can see the PUMA sign from New Hampshire, is now 88% leased with another 5% at-lease. Assembly Row has really outperformed all of our expectations coming out of COVID. Nothing yet to announce with respect to the next phase of expansion here as we get to lockdown costs, but we are getting close to a go-no-go decision on a life science project here to complement the growing life science demand and adjacent Somerville projects. More to come. Mike and Rose, Gary and construction both continue on time and on budget. You know, one thing that always strikes me about our mixed-use development pipeline is the extent to which we incorporate what we've learned over the years into our core portfolio. While mixed-use development is certainly a different business than operating core shopping centers, much of what makes our big development special can be seen throughout our portfolio. From a broader array of tenant relationships to state-of-the-art construction techniques relative to placemaking, storefronts, anti-coordination, and environmental considerations, to unseen but impactful operational efficiencies. Our 25-year experience building mixed-use communities has and continues to benefit our core shopping centers far greater than most people realize. Expect to see more of our showcasing that in the coming quarters and years. When you think federal realty, think about the multifaceted ways that we've got to grow. just as we did between 2010 and 2019, and just as we plan to do from 2021 on with assets and a team whose competence is proven and time-tested. Dan?

Thank you, Don, and good morning, everyone.

As Don outlined, our $1.50 per share of reported FFO for the first quarter outperformed against every one of our benchmarks. Last quarter, year over year, versus consensus and versus our own forecast. That outperformance was broad-based. All aspects of our business model played a role in the results for drivers, such as better than expected small shop occupancy, stronger residential performance, particularly in Boston and San Jose, better improvement in collections than forecast both in the current and prior periods, growing parking revenues and percentage rent, underscoring accelerating traffic and tenant sales, particularly at our large mixed-use assets, However, this was offset by higher than forecasted property expenses. Our gap-based comparable portfolio growth metric was exceptionally strong at 14.5% for the quarter, more than 3% above forecast. Comparable growth excluding prior period rent and term fees was 18.5%. To emphasize the strength of these metrics relative to the broader sector, Our cash basis same-store metric, as calculated in line with our peers, would have been 18% on an Apple-to-Apple basis and 18-plus percent excluding prior period rent and term fees. Term fees this quarter were $1.5 million versus $2.8 million in 1Q21. Prior period rent this quarter was $5 million versus $8 million in 21. with our overall occupied metric growing 170 basis points year-over-year from 89.5 to 91.2, and our leased percentage increasing 190 basis points from 91.8 to 93.7. More upside to come on both of those metrics in the coming years as we realistically target 94 to 95 percent for occupied and 95 to 96 percent for leased. Our signed, not occupied spread in the comparable pool held steady at 250 basis points, representing over $24 million of incremental total rent, which should come online over the balance of this year and into 2023. In our non-comparable pool, our signed, not occupied upside stands at $19 million of total rent. New lease deals and our leasing pipeline for currently unoccupied spaces will drive another $12 million of incremental total rent, primarily in 2023 and 2024. This totals roughly $55 million of cumulative incremental rent, which will very visibly drive bottom-line results over the next two-plus years, highlighting the diversity and strength of our multifaceted business plan. As a testament to our asset management and tenant coordination teams, we have not seen any material delays in getting tenants open.