Federal Realty Investment Trust

Good evening and welcome to the Federal Realty Investment Trust fourth quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Leah Brady. Please go ahead.

Good afternoon. Thank you for joining us today for Federal Realty's Fourth Quarter 2024 Earnings Conference Call. Joining me on the call are Don Wood, Federal's Chief Executive Officer, Dan Gee, Executive Vice President, Chief Financial Officer and Treasurer, Jan Sweetnam, Executive Vice President, Chief Investment Officer, and Wendy Cyr, Executive Vice President, Eastern Region President and Chief Operating Officer. as well as other members of our executive team that are available to take your questions to the conclusion of our prepared remarks. A reminder that certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results, including guidance. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information in our forward-looking statements, and we can give no assurance that these expectations can be attained. The earnings release and supplemental reporting package that we issued tonight, our annual report filed on Form 10-K, and our other financial disclosure documents provide a more in-depth discussion of risk factors that may affect our financial condition and results of operations. Given the number of participants on the call, we kindly ask that you limit yourself to one question during the Q&A portion of the call. If you have additional questions, please re-queue. And with that, I will turn the call over to Don Wood to begin our discussion of our fourth quarter results. Don?

Thank you, Leigh Ann. Good afternoon, everyone. Lots of records were shattered in both the fourth quarter and 2024 that bode well for 2025 and beyond. Let's start with leasing. 100 comparable deals in the quarter for 649,000 square feet at 10% more cash rent, 21% more straight line rent than the previous lease. Nearly 2.4 million square feet of comparable space for calendar 2024 at 11% more cash rent, 22% more straight line rent than the previous lease. Both the quarter and the full year set all time records for us and not by a little bit. Volume in the fourth quarter and total year beat the previous high-order mark set in COVID-boosted 2021 by 9% and 14% respectively. Occupancy touched 96.2% on a lease basis and 94.1% on an occupied basis year-end, the strongest in nearly a decade. Dividends per share were raised to $4.40 per share for the record-setting 50%. Total revenues surpassed $300 million in the quarter and $1.2 billion for the year for the first time ever and grew at 7% and 6% over their respective prior periods. And FFO per share at $1.73 in the quarter and $6.77 for the year set all-time records even with the one-time 4 cent charge for Jeff Berkus leaving the company. Without it, FFO per share of $1.77 in the quarter and $6.81 for the year grew at 7.9% and 4% respectively. 2024 was a very good year. The retail real estate market remained strong, driven by favorable supply-demand dynamics and continued consumer spending. Our diverse portfolio, spanning various property types and anchored by strong, resilient operators, positions us well for sustained success. The struggling retailers making headlines today have minimal impact on our portfolio. Nowhere is the quality of this portfolio more evident than in the continued improvement in occupancy that you see in the fourth quarter over the third quarter and the expectation for even higher occupancy by the end of next year. While a new administration in Washington is certainly shaking things up on so many fronts across the broader economy, our outlook remains positive. The bottom line is that we expect to grow faster at both the comparable property level and the bottom line earnings level in 2025 than we did in 2024. Our product is very much in demand, and that includes the office component of our mixed-use communities in San Jose, Boston, and Bethesda. After years of uncertainty on the part of employers as to their future office space requirements, the back-to-office movement in the country is real, and it's fully underway. The recognition on the part of many employers that they need more and better space, coupled with our Class A offering of modern and fully amenitized, and I do mean fully amenitized, office environments, it's no surprise that we're seeing a significant uptick in interest in tours, in LOIs, and in executed leases. We're especially seeing it at Santana West and 915 Meeting Street at Pike and Rose and where nearly 150,000 square feet of deals have been executed or put under heavily negotiated LOIs in the last 90 days. Santana West and 915 Meeting Street are currently 82% and 91% committed under such arrangements at this point, respectively. And we're optimistic that both buildings will be nearly fully leased in this calendar year. It's really good news, and while the 2025 P&L won't be the beneficiary since rent hasn't commenced from the majority of those tenants, that's just timing and should provide a nice bump to 26 and 27. On the development front, things are picking up too. Not only is our $90 million residential over retail project at Ballot Kinwood Shopping Center firing along on budget and a bit ahead of schedule, but we've approved two other developments, as you can see in our Form 8K this quarter. The first is the new build of 45 residential units atop 10,000 feet of ground floor retail in Hoboken, New Jersey. 301 Washington Street, Hoboken's main commercial thoroughfare, houses a vacant Capital One bank pad and commensurate surface parking. The opportunity to densify this amazing piece of corner real estate works economically to a 6% to 7% unlevered yield, on $45 million and a 9% IRR, thanks to more favorable construction pricing, strong retail rents, and growing residential rents in this densely populated New York City suburb. We expect to break ground in a few months. Secondly, Endura Shopping Center in Philadelphia is gearing up for a transformational redevelopment that will include a state-of-the-art giant supermarket along with a fully renovated LA Fitness health club. New shop space with upgraded service and restaurant tenants and greatly improved placemaking and parking. This $32 million investment will kick off this spring and yield an incremental 7% to 8% on levered yield. More to come on the development front later in this year, too. We remain very active on the acquisition front, with prospects being studied and negotiated in both our existing markets, along with a few new ones. And we expect to close on a great shopping center in Northern California in a few weeks. That $123.5 million purchase with a very productive Whole Foods anchor and a cadre of lifestyle-oriented tenants will complement our West Coast portfolio beautifully and will be managed from our Santana Row headquarters. We expect to be able to talk more about that one by the end of the month. I also wanted to use the opportunity to introduce three newly promoted vice presidents to our executive ranks, underscoring our focus on continually developing a deep bench of professionals all of whom are expected to play a key strategic role in our long-term future. Congratulations to Sarah Ford Rogers, as VP of Development, working out of our Assembly Row office, to Bob Franz, as VP of Acquisitions, representing our West Coast and Arizona territories, and to Vanessa Mendoza, as VP of Leasing, working out of our headquarters in North Bethesda. Congratulations also to Mr. Porter Ballou, who has been promoted to Senior Vice President of our Information Technologies. Each of these executives have been highly respected members of our team for years, and it brings me great pleasure to be able to recognize their real estate talents with promotions that expand their influence and responsibility within our organization. I love being able to do that. That's all I wanted to cover in prepared marks this afternoon, and so I'll turn it over to Dan to provide more granularity before opening it up to your questions.