Bill Cox & Ethan Brown Attend Federal Realty’s Investor Day

Chief Investment Officer Bill Cox and Portfolio Manager Ethan Brown pictured with Federal Realty’s General Counsel Dawn Becker.

For those of you that know us well, you know that meeting with companies and doing comprehensive research is embedded in the DNA of our firm. It’s how the business was built over 20 years ago. As part of our ongoing due diligence, we frequently meet with and check-in with the management teams of the companies in our portfolios. We have been investors in Federal Realty (FRT) for many years now, and we recently had the opportunity to attend their Investor Day. We were greeted by Dawn Becker (shown above) who gave us the lay of the land and told us about some upcoming projects that Federal Realty is working on. You may or may not be familiar with Federal Realty, but you are probably more familiar with Assembly Row – Somerville’s premier retail center which includes retail outlets, restaurants, a movie theater and apartments (and will also be PUMA’s new North American headquarters) – only a stone’s throw away from downtown Boston. Federal Realty is the mastermind behind this giant project, and they have several more high-profile office and retail centers located in urban areas around the U.S.

The highlight of the day was seeing FRT’s charismatic CEO Don Wood speak. Don is
extremely energetic and definitely has a sense of humor, but we also got the sense that he has very high standards and demands a lot from his employees. Don has helped Federal Realty pioneer the “multi-use” concept. This refers to the fact that traditional retail stores, strip malls, and outlet centers are on the decline, but urban, mixed-use centers seem to be thriving. When you couple traditional retail locations with high-end restaurants, apartments and office buildings, it drives the value of the real-estate and attracts a more premium consumer. FRT calls this the “Work, Live, Play” concept. Since these multi-use centers are built in urban, densely populated locations, they are somewhat shielded from competition simply because there’s physically no room for competitors to build nearby. This is one of the qualities we like about FRT – they have a competitive moat that shields them!

FRT CEO Don Wood with the rest of his team.

Over the years FRT has been a very “steady-Eddy” investment, which is something we like. They pay a growing dividend, the company trades at a premium valuation to its peers, and they have a number of growth projects currently in their pipeline. During the Investor Day, CFO Dan Guglielmone laid out their 5-year outlook, which pointed to steady growth ahead. FRT is definitely a “get rich slowly” company. This isn’t a stock you’ll hear being shouted about by the commentators on CNBC. But their conservatism and history of success is something that helps us sleep well at night and is the reason we are investors in the stock. Overall, we left the day feeling like things were on track. The company has a process and plan and they’re sticking to it – something that resonates with us.

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