Citi Initiates Coverage On Federal Realty

Citi initiates coverage on Federal Realty FRT with a Hold rating. Federal is unique in the US REIT space with infill shopping centre assets in solid demographics. This asset exposure has enabled FRT to outperform both shopping centre and mall REIT peers on a SSNOI and occupancy basis. Combined with a conservatively leveraged balance sheet, FRT is a lower risk stock relative to peers. Citi believes portfolio performance will continue to be at the high end of peers and view favorably some of the large re-development opportunities in the portfolio. It's positive view is tempered by FRT's relatively rich valuation and already favorable consensus ratings. FRT has a history of working on high density mixed use developments such as Santana Row and Bethesda Row. Federal has several large redevelopment opportunities that could further enhance the quality of the portfolio over time and potentially create additional value. Citi has a PT of $83 on Federal Realty FRT closed Monday at $84.32