Federal Realty Investment Trust (NYSE:FRT) Q2 2017 Earnings Conference Call - Final Transcript

Aug 03, 2017 • 11:00 am ET

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Federal Realty Investment Trust (NYSE:FRT) Q2 2017 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you, sir. [Operator Instructions] Our first question comes from the line of Craig Schmidt of Bank of America. Your question please.

Analyst
Craig Schmidt

Okay. Thank you. I guess just big picture. Given many of the changes in the retail real estate environment a concern I often hear is that it can be expensive to accommodate these changes, and I guess, the question is are you seeing the revenues or the rents paid in the position to make these shifts profitable?

Executive
Donald C. Wood

Yes. That's a good question, Craig, and it's something we're on all the time. There is no doubt that that leverage has moved to tenants as we talked to before from landlords. There is also no doubt that we don't do deals -- we don't need to do deals effectively that are -- that don't make sense in and of themselves, and that's a really important part. When you look at the value creation that we've got, there is no doubt that even though there is more capital going out selectively, because we're not going to invest capital where we don't believe that income stream is going to be sustainable or be maintained.

And I will tell you -- let me give you one great example. When you look at our numbers this quarter, you will see that -- you'll see a renewal that has a lot of capital in it. That is one specific deal on Greenwich Avenue and Greenwich Connecticut for our completely redone and extended lease term with better credit that we were able to enhance in terms of the deal that allowed us to put capital in a completely redone facts or looking to do that. We won't do that until all obviously it's been supported and it works in terms of the agreement that we have.

But would we invest on Greenwich Avenue and Connecticut to be able to lockdown that location for the next 20 years, you bet we will. That's different than just say an overall comment of you're going to throw capital at deals -- to make deals, because if you do that those deals often don't work. So the selectivity in terms of where it's being spent during this comes -- certainly a change in the -- in consumer buying habit has to be selectively applied. With great real estate you've got more choices to do or not do it. Without that great real estate it's harder and I believe that's really true. I'm sorry for the long winded answer but I hope that helps.

Analyst
Craig Schmidt

And just to change it a little on the Primestor operations, the densities that you're going to be dealing with will they be in line or even higher than your portfolio today?

Executive
Donald C. Wood

They'll be higher than the portfolio today.

Analyst
Craig Schmidt

Fantastic. Thank you.

Operator
Operator

Thank you. Our next question comes from Alexander Goldfarb of Sandler O'Neill. Your question please.

Analyst
Alexander Goldfarb

Good morning. So first question is just going to be the Primestor. Can you just walk us through bit on the