Federal Realty Trust: Still Offering Attractive Total Returns, But Don't Aggressively Chase Here

Federal Realty Trust delivered record leasing activity and raised full-year guidance, demonstrating resilience amid higher-for-longer interest rates. FRT's Q2 revenue rose 7% to $335.71 million, core FFO grew 7% to $1.88, and occupancy remains near pre-GFC highs. Management increased 2026 core FFO guidance to $7.48–$7.56, expects mid-94% occupancy, and raised the dividend for the 59th consecutive year. Despite a strong rally and premium valuation, FRT offers 10%+ total return potential and remains a compelling long-term buy, though near-term volatility is possible.

The REIT ( XLRE ) sector has performed quite well despite higher for longer interest rates. Viewed as a headwind due to higher financing costs, some REITs have even managed to outperform the S&P.