Federal Realty Investment TrustFRTNYSE

Overview Intelligence Charts News Fundamentals

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $208.27 per share(market-calibrated)

+88.4%

Upside to Fair Value

Current

$110.57

Pure Model

$222.93

Fair Value

$208.27

Bull Case

$306.22

Bear Case

$156.73

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $222.93.

What's Driving This Ratingfor FRT

↓

CapEx normalizing toward maintenance

Historical CapEx is 26.69% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$552M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 47.96% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 5.64% revenue growth, fading to 2.50% by Year 10. Revenue reaches $2.3B (vs $1.3B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 82.50% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (60.40% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.01

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.05%

Cost of Debt

Pre-tax Cost of Debt3.14%

Tax Rate21.00%

After-tax Cost of Debt2.48%

Equity Weight (E/V)65.37%

Debt Weight (D/V)34.63%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (65.37% × 9.05%) + (34.63% × 2.48%)

= 6.77%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$1.4B	$1.3B	$1.8B	$2.0B	$2.3B
EBIT	$648M	$642M	$841M	$974M	$1.1B
Tax	$136M	$135M	$177M	$205M	$230M
NOPAT	$512M	$507M	$664M	$770M	$865M
+ Depreciation	$341M	$338M	$443M	$513M	$576M
- Capex	$361M	$285M	$279M	$215M	$57M
- Δ NWC	$7M	-$8M	$16M	$13M	$6M
Free Cash Flow	$485M	$568M	$812M	$1.1B	$1.4B
Discount Factor	0.937	0.821	0.721	0.632	0.519
Present Value	$454M	$466M	$585M	$667M	$716M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.4B

Terminal Growth Rate2.50%

WACC6.77%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$33.1B

PV of Terminal Value$17.2B

Exit Multiple Method

Year 10 EBITDA$1.7B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$36.8B

PV of Terminal Value$19.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$5.9B

PV of Terminal Value$17.2B

Enterprise Value$23.1B

(-) Net Debt$4.9B

Equity Value$18.2B

Shares Outstanding86M

Price per Share$211.72

Exit Multiple Method

PV of Projected FCFs$5.9B

PV of Terminal Value$19.1B

Enterprise Value$25.0B

(-) Net Debt$4.9B

Equity Value$20.1B

Shares Outstanding86M

Price per Share$234.14

Pure Model Fair Value

$222.93

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.77%	$310.59	$339.64	$381.46	$404.48	$385.60
5.77%	$246.71	$261.72	$281.32	$307.99	$346.38
6.77%	$203.18	$212.02	$222.93	$236.72	$254.73
7.77%	$170.78	$176.43	$183.15	$191.27	$201.30
8.77%	$145.28	$149.10	$153.53	$158.73	$164.91

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$156.73

41.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.26

Base Case

$222.93

101.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.01

Bull Case

$306.22

176.9% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.86

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.64%

Year 3 Revenue Growth-5.42%

Year 5 Revenue Growth9.87%

Year 7 Revenue Growth6.92%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin47.96%

Tax Rate21.00%

Historical Capex / Rev26.69%

Terminal Capex / Rev2.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance