Federal Realty Investment Trust BofA NY Global Real Estate Conference 2026

Sure. Well, first of all, great to give us the opportunity to speak today. This is Dan Guglielmone. Dan's the CFO of the company. He's been the CFO for the past 10 plus years. He reminds me of that often. To my left is Stu Biel. Stu is here as basically the head of leasing for- the East Coast.

most of the company. East and central region, which is where we've been embarking lately. Retailer questions, Q&A, this guy's a great guy to tap, whether it's in this meeting or afterwards. I think you know Jill Sawyer, our head of investor relations. Away we go. I was looking at the questions that Samir and BofA sends ahead of time, and there's a lot of generic stuff in there. There's a lot of stuff in those questions. How is the consumer? What is tenant demand like? All this stuff that, as I was thinking about, and what I'll answer for you, all is going to sound just like every other shopping center company. Demand continues to be very strong. We don't see signs of a weakening consumer.

All of the stuff that you would expect to hear in one of these meetings, I do not like that. I would prefer to do things that kind of differentiate us from what is happening, the general. What it is that we think makes this something that is compelling for you guys to dig in a little bit deeper. I see in this room people that I have known for many years, frankly, and some that I do not know at all. Hi, Jamie. I am dealing with an audience here and on the webcast that is both. I do want to refer everybody here to a new product that we put out from a communication standpoint. It is our second quarter investor deck that on my way up on the train a couple of days ago, my final review in preparation for all the meetings of each of those things.

I found myself sitting there saying, "Man, this is a really good company. Man, this is a company that is different. Man, this is a company that not only are the general demand and supply characteristics of the retail business good, but I think we are in a unique position, to be able to be better than good." I kind of wanted to give you some of the reasons why. A lot of this is post-COVID, the status of retail, status of geography to some extent, something that I thought you might find interesting. Federal Realty has been around for a very long time, and we have always been a very high quality company, and high quality defined really by income. Income is, from my perspective, the most important thing in the success of a shopping center company.

I never want to be in a business where the best way I am selling you a product, whatever that product is by saying, "Hey, I am the cheapest, and I can beat you on price," because that is commodity stuff. I want you to pay more for me. I want you to pay more rent if you are a tenant. I want you to pay more for the earnings multiple if you are an investor, because I want you to think that it is worth it. The way that I get there is not only with high quality assets, but the ability to have as many arrows in the quiver as possible to create additional value on these pieces of land. We have historically been a coastal company from Boston down through Washington, D.C., then Florida, Northern and Southern California.

What we have decided and what we did, because we own our assets and have held our assets on average 20 plus years. Over a 20-year period of time, we have built them up, we have leased them better, we have created better environments effectively to create higher earnings growth, which we believe we can continue. Post-COVID, we said, "It feels like we ought to be able to do that in other markets." Work habits have changed. Geographic migration has changed. There are other markets. The first one that we entered was last year, Kansas City. Not Kansas City, Missouri, but the Kansas side, where we thought that we could take what we do as a business on the coasts and effectively provide a better product if we owned the most dominant assets in the market.

We bought, and it was the Washington Prime Group sale, which was Oklahoma City, Kansas City, and an asset in Phoenix, that we looked hard at all of them. Really looked at Kansas City, Kansas, and those assets and said, "There's a big mark to market here to the extent we could bring in our tenants from some of the coastal relationships that we have into the centers themselves." It's made a big difference.

We followed up with Omaha, and while it's not completely done yet, and I can't give you all the details, there's now a large acquisition that we expect to close over the next 60 or 90 days or so, in a central time zone marketplace that really will have created a big one, nearly a half a billion dollars in investment side, that will really create a central region for us that is expected, in total, to be about 3 million square feet of retail space and grow at better than 5% NOI annually for the next five years. Then we still acquire on the coasts in key markets. We fund these with sales of assets that we have created a lot of value in over the past 15 or 20 years.

The ability, if you think about it, the ability to really be able to have a competitive advantage in this business of ours is twofold. One, you want to have the best cost of capital. There's nothing more important in our business, in retail, in anywhere in real estate than cost of capital, as you know. If the common stock is not trading at a place that you can effectively feel comfortable using it, what are your other choices? You'll hear there being more joint venture use in the world of shopping centers and some other things. What's better than that is if you can tax efficiently sell off assets that you have created a lot of value in, but for which have limited future upside to, at cap rates that are inside what you're investing in, to the tune of 150 to 200 basis points.

We are funding, if you will, this expansion into not only the center of the country, but into faster growing assets with the sale of other assets, and here's the most important thing, in a non-dilutive way. That's a differentiator from anybody. The ability to sell because of what our business plan has been, because of the quality of the asset, because of the growth that they've created, the ability to sell in the low fives, and reinvest in the high sixes overall makes an awful lot of sense to us. It's a competitive advantage because we have the ability to do that non-dilutively. It's not like we're saying, "Hey, we're going to sell stuff we should have never owned in the first place.

It's going to be dilutive for the next few years, but don't worry, we're going to produce great income. It's not that at all. It is harvesting really good stuff and reinvesting in new raw material that people like that, and throughout the company, can use our relationships, our magic, effectively, what we do well, to be able to create outsized growth. That's what we're trying to do on the external front. On the internal front, in a couple of ways, we also have a full-blown residential development team effectively in-house that we've employed for the last 25 years because we do mixed-use. And that mixed-use stuff that we do, some of our best assets, some of the best relationships, but can also greatly benefit the average shopping center.

When I say average shopping center, the ones that you're thinking of, that happen to be in better markets with the ability to have unutilized parking lots to be able to go north on. Again, this investor deck shows all of this, goes through this in detail. But when you think about the ability to harvest assets at a lower cost of capital, a development group that can intensify existing assets with low bases land, and a team that's got relationships on the coasts in some of the best-known assets in America, Santana Row on the West Coast, Assembly Row, Pike & Rose, Bethesda Row on the East Coast. Imagine, there's not a retailer in America that doesn't know those assets, know them extremely well, and, one, and because of the performance of those, want to expand relationships into places that we haven't necessarily been before.

We're not going everywhere. It's got to be in a metro area of at least 1 million people. It's got to be a big asset. I've said this to everybody as many times as I can. The average shopping center in America is 125,000 sq ft. It's got a grocer, it's got a drugstore, it's got a dry cleaner. You know it well wherever you are. Nothing wrong with that business. Terrific. We would prefer to do bigger things. Our average assets are more than double the size of that. The reason we like that is that there are more opportunities that you can do on that land over time. And that's proven to be a very good effect for us.