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Rent growth has been measured, but at least follows a positive trajectory as well. While the worst may now be over for retail properties, risks remain given the fragile state of the economy as a whole.
Still, there is reason to celebrate having moved past what could well be the worst downturn for retail real estate in at least three decades.
Many retail real estate investment trusts have already announced third-quarter earnings, with more to follow and thus far, most have reported falling vacancies and growing rents.
In the shopping center sector there are 18 REITs with a combined market capitalization of $41.5 billion (as of Sept. 28) with an average dividend yield of 3.55% and the year-to-date (as of Sept. 28) total return is 24.65%.
Federal Realty: The Gold Standard
In REIT investing, the "gold standard" is measured by dividends -- not just the quantity (highest yield) but the quality. Mortgage REITs are distinguished by higher yielding dividends known for their volatility and higher risk composition; conversely, the quality of the dividend is often diluted by higher leverage (borrowing money to magnify returns) that leads to high volatility and uncertainty.
Many mortgage REITs, including Annaly Capital Management (NLY) , Chimera Investments (CIM) , American Capital Agency (AGNC) and Armour Residential REIT (ARR) are connected to debt-laden deals with bumpier dividend performance.
This year Federal Realty (FRT) celebrates 50 years of being a proven leader in the ownership, operations, and redevelopment of high-quality retail real estate in the country's best markets. Federal Realty has a portfolio containing about 19.1 million square feet located in strategically selected metropolitan markets in the Northeast and Mid-Atlantic, as well as California.
Federal is considered the "gold standard" REIT as it has paid quarterly dividends to shareholders continuously since its founding in 1962, and has increased its dividend rate for 45 consecutive years, the longest in the REIT industry.
Federal: Proof is in the Latest Results
On the company's earnings call last week, Federal CEO, Don Wood, said:
"Like the first half of the year, third-quarter leasing volume was again off the chart in terms of our historical production.