Federal Realty Investment Trust CEO Don Wood in an appearance on CNBC Tuesday explained the shopping center operator’s decision to increase its dividend as the retail industry continues to grapple with the effects of the coronavirus pandemic.
Federal Realty, which boasts a shopping center portfolio of 104 open-air properties, announced that it increased its dividend payout by one penny last week after reporting worst-than-expected results from the second quarter.
“To me, it’s not about today. It’s about a number of things: whether we’ll be able to make our way through this,” Wood said, speaking of the downturn spurred by the pandemic, in a “Mad Money” interview with Jim Cramer. “I could not tell you how confident I am that that’s the case.”
The dividend is a key component of investors’ return projections and Federal Realty has a history of supporting that, he added. Federal Realty has improved its dividend for 53 straight years, the company said. Shareholders can now expect a quarterly cash payout of $1.06 per share, which adds up to $4.24 per share on an annual basis.
“We’re built for this and we’re built to power through this and it’s not just in terms of the balance sheet,” Wood continued.
The economic lockdown put in place to slow the spread of coronavirus created a massive financial stress for the retail industry and its suppliers. Federal Realty, Wood explained, is in a position to continue weathering the storm, should the pandemic worsen or the economic recovery take longer than expected.
The company reports having a total of about $2 billion of cash on hand and credit to draw down on. Additionally, Federal Realty said there is no outstanding balance on its $1 billion revolving credit facility.
As of the end of July, 92% of Federal Realty’s tenants were back in business, up from 47% in May, the company said.
“It’s all about our confidence and what happens on the other side of this [pandemic], and that’s all based on not just the real estate itself but, more importantly, every conversation that we’re having these days with tenants, prospective tenants, about where we’re trying to get to on the other side of this,” he said.
“It’s all about one premise: improving the locations that they are doing business in.”
Since reporting quarterly earnings Thursday morning, shares of Federal Realty are up nearly 8%. The stock rose another 2.4% Tuesday to close at $82.18.
The stock remains down more than 36% year to date.
