Federal Realty Investment Trust

Good afternoon and welcome to the Federal Realty Investment Trust First Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance with signal or conference specialists, you're 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 store your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Gail Sawyer, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Amy. Good evening. Thank you for joining us today for Federal Realty's first quarter 2025 earnings conference call. Joining me on the call are Don Wood, Federal's Chief Executive Officer, Dan Gugliamone, Chief Financial Officer, Wendy Sear, Eastern Region President and Chief Operating Officer, and Jan Sweetenum, Chief Investment Officer. as well as other members of our executive team that are available to take your questions at the conclusion of our prepared remarks. A reminder that certain matters discussed on this call may be deemed to be forward-looking statements. 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 operational results. Given the number of participants on the call, we kindly ask that you limit yourselves to one question during the Q&A portion of our call. If you have additional questions, please recuse. And with that, I will turn the call over to Don Witt.

Thank you, Jill, and welcome to your first Federal Realty Conference call. We are excited that you're here. At $1.70 per share, the first quarter was another strong one for the trust. It was ahead of our consensus, our internal expectations, and the prior year. This was probably a good time to remind everybody of the historical correlation between uncertain economic times and the performance of real estate surrounded by an affluent customer base and lots of density. More uncertain the economy, better we tend to do. Wendy Sear, our president of the East Coast, along with Dan Gee, are going to go through the details of those results this evening. It'll be her first foray into prepared remarks on the earnings call, so be kind. They'll center on operations, so mine will focus on the broader economic and capital allocation landscape. that we're operating in since the new administration took over in January. The headlines and the stock market performance seem to settle down a bit over the past week or so, at least until today, up until an hour ago, in sharp contrast to the first few weeks of April, but we're clearly in a really unpredictable time. The bottom line, though, is that we have not seen any negative impact to our property leasing or consumer behavior as a result of the administration's actions and policies as we sit here on May 8th. In fact, April saw year-over-year foot traffic at Federalist properties in the Washington, D.C. MSA up 6% year-over-year, up 3% at Santana Row, up 11% at Federalist properties in Boston. Consumers in our markets, including Washington, D.C., have been remarkably resilient. Obviously, ongoing government layoff announcements combined with a whipsaw terror policy can possibly be a good thing for business investment and consumer confidence and will likely lead to broader inflationary pressure later this year and next. But we haven't seen or felt it yet. It's also why the high household incomes are so important to the future. First of all, it has always been our job to insulate our company as best we can against changing economic conditions and other disruptive forces. After all, this is and always has been a cyclical business. The way we've done this is by having an extremely diverse tenant base. Our largest tenant by ADR is TJX, which makes up 2.6% of our base rent, and it's considered a likely net beneficiary amid the economic uncertainty triggered by the tariffs. Our number two is Grosser Ahold, who makes up another 1.9%. Don't underestimate how important tenant diversity is. In addition, we've set ourselves up well by being very selective in choosing the best operator in each category with strong credit, whether that be restaurants, fashion, services, or other. We get sales reporting from about 50% of our tenants, strong representative sample, and their overall cost of occupancy is about 9% of sales, only 10% when excluding grocers, making rent obligations affordable and with room to spare. Tenants can, by and large, still pay the rent and continue to pursue further growth for the best real estate. We're here to partner with our retailers to help them grow and as the landlord, strength of our leases and tenant quality and credit quality protect us on the downside. And yes, perhaps most importantly, we work to insulate our company by owning real estate that leans in heavily towards strong household income. Quality metric that is fundamental to our core as cycle after cycle favors affluence when considering the ability to power through. Bottom line, We are well set up to continue to grow, even if the landscape continues to evolve unpredictably. We closely monitor the political and economic policy environment throughout the week and sometimes daily changes, as well as to continually dialogue with our retail partners. In the meantime, continue to run our business aggressively and with purpose. Before turning it over to Wendy, I also wanted to make a few comments about capital allocation choices and how we're considering them in this environment. In terms of the transaction market, it should come as no surprise that the April 2nd tariff announcements, including the changes made every week since, along with the related capital markets uncertainties, have had a profound effect on buyers' ability to underwrite and evaluate opportunities with the level of confidence that they've become accustomed to. In our view, while the volatility of the last five weeks shouldn't in and of themselves kill deals that make sense for the organization in the medium and long term, They do require underwriting and capital allocation decisions that take into account the different risk profile that reduced predictability brings. Ten-year IRRs are disproportionately hit by disruptions in the first couple of years. As the year progresses, we'll continue to look for and aggressively pursue opportunities that fit that risk-adjusted criteria. I think we'll be successful in finding them. And while our clear bias is to grow our company through the acquisition and development of great retail real estate, buying back our own stock wins out when the spread between that investment and other alternatives gets too wide. It's important for our investors to know that we consider prudent capital allocation decisions to be at the very top of our list of responsibilities. That's all I wanted to cover in prepared remarks this afternoon, so I'll turn it over to Wendy Sear for her prepared remarks on the quarter and expectations for the rest of the year. Wendy?