Federal Realty to Report Q3 Earnings: What to Expect From the Stock?

Federal Realty Investment Trust FRT, a leading real estate investment trust (REIT) focused on retail properties, is set to report its third-quarter 2025 results on Oct. 31, before market open. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.In the last reported quarter, this retail REIT’s funds from operations (FFO) per share of $1.91 surpassed the Zacks Consensus Estimate of $1.73. Results reflected healthy leasing activity, higher occupancy levels and rental rates at its properties.Over the last four quarters, Federal Realty surpassed estimates on two occasions, met on another and missed in the remaining, the average beat being 2.60%. The graph below depicts the surprise history of the company:Federal Realty Investment Trust Price and EPS Surprise Federal Realty Investment Trust price-eps-surprise | Federal Realty Investment Trust QuoteIn this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its third-quarter 2025 performance.US Retail Real Estate Market in Q3 2025Per a Cushman & Wakefield CWK report, there has been a positive shift in net absorption for the U.S. shopping center market in the third quarter of 2025. Asking rents for the U.S. shopping center market grew from the year-ago quarter. While the national vacancy rate increased year over year, it remained flat compared to the previous quarter.Demand for retail space improved in the third quarter of 2025, with the overall U.S. shopping center market witnessing positive net absorption totaling 323,000 square feet against the negative 6.5 million square feet (msf) reported in the previous quarter. The increase was due to positive net absorption observed in the southern region of the country.Asking rents for the U.S. shopping centers came in at $25.01 per square foot in the third quarter, up 1.8% from a year ago. However, the pace of rent growth slowed from early 2024, when it was trending at 4%.The national vacancy rate for the U.S. shopping center markets remained at 5.8% in the third quarter, unchanged from the previous quarter but up by 50 basis points compared to a year before. The rate held steady due to the market rebounding from negative absorption earlier in the year, although the risk of more store closures and hesitancy among both consumers and retailers looms.The lack of new construction is also contributing to the scarcity, as only 7.9 million square feet (msf) of new shopping center space was delivered from the beginning of the year through Oct. 14, 2025. As of the third quarter of 2025, there are only 11.7 msf under construction with an inventory of 4.28 billion square feet.Factors at Play & Projections for FRTIn this retail market environment, in the third quarter, Federal Realty is likely to have gained from improving demand for its premium retail assets in upscale geographic locations, along with a diverse tenant base. In addition, the falling supply levels have positively impacted its occupancy and rent growth.Moreover, FRT’s focus on adding value accretive acquisitions to its portfolio and development of urban mixed-use assets is likely to have given it an edge, contributing to its revenue growth.Our estimate places FRT's leased occupancy rate at 96%, up 60 basis points sequentially, while the rent per square foot is projected to grow 0.6% year over year.The Zacks Consensus Estimate for quarterly revenues is pegged at $313.89 million, which indicates a 3.38% increase from the year-ago period. The consensus mark for rental revenues stands at $309.51 million, which suggests a rise from the year-ago period’s $303.35 million. Rental income from minimum rents — commercial — is pegged at $204.54 million, up from $198.56 million in the year-ago period. Rental income from cost reimbursements is projected at $62.89 million, up from $58.19 million in the prior-year period.However, high interest expenses are anticipated to have affected FRT’s performance to some extent during the quarter. Our estimate suggests a 7.4% increase year over year in the company's third-quarter 2025 interest expenses.Federal Realty’s activities during the soon-to-be-reported quarter were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the third-quarter FFO per share has been revised southward to $1.76 over the past month. However, it suggests a 2.92% increase year over year.What Our Quantitative Model Predicts for FRTOur proven model predicts a surprise in terms of FFO per share for Federal Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.Federal Realty has an Earnings ESP of +0.26% and currently carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Other Stocks That Warrant a LookHere are two more stocks from the broader REIT sector — Ventas VTR and Essex Property Trust ESS— that you may want to consider, as our model shows that these also have the right combination of elements to report a surprise this quarter.Ventas, scheduled to report quarterly numbers on Oct. 29, has an Earnings ESP of +0.84% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Essex property, slated to release quarterly numbers on Oct. 29, has an Earnings ESP of +0.04% and carries a Zacks Rank of 3 at present.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ventas, Inc. (VTR): Free Stock Analysis Report Federal Realty Investment Trust (FRT): Free Stock Analysis Report Essex Property Trust, Inc. (ESS): Free Stock Analysis Report Cushman & Wakefield PLC (CWK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks