FEDERAL REALTY INVESTMENT TRUST (FRT)

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion should be read in conjunction with the consolidated interim financial statements and notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on February 12, 2026.

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

•risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire or to fill existing vacancy;

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•risks that we may not be able to proceed with or obtain necessary approvals for any development, redevelopment or renovation project, and that completion of anticipated or ongoing property development, redevelopment, or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;

•risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, that environmental issues may develop at our properties and result in unanticipated costs, and, because real estate is illiquid, that we may not be able to sell properties when appropriate;

•risks that our growth will be limited if we cannot obtain additional capital, or if the costs of capital we obtain are significantly higher than historical levels;

•risks associated with general economic conditions, including inflation, tariffs, and local economic conditions in our geographic markets;

•risks of financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense;

•risks related to the Trust's status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to the Trust's status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT; and

•risks related to natural disasters, climate change and public health crises (such as worldwide pandemics), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. You should carefully review the risks and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2025 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.

Overview

Federal Realty Investment Trust is a leader in the ownership, operation, and redevelopment of high-quality retail-based properties located primarily in major coastal markets and select underserved regions that we believe have strong economic and demographic fundamentals. Founded in 1962, our mission is to deliver long-term, sustainable growth through investing in communities where we believe retail demand exceeds supply. This includes a portfolio of open-air shopping centers and mixed-use destinations, which we believe reflect our ability to create distinctive, high-performing environments that serve as vibrant destinations for their communities.

The Parent Company, which is a REIT, conducts substantially all of its operations and owns substantially all of its assets through the Operating Partnership. The Parent Company owns 100% of the limited liability company interests of, is the sole member of and exercises exclusive control over Federal Realty GP LLC, which is the sole general partner of the Operating Partnership. The Parent Company does not expect to have substantial assets or liabilities other than through its investment in the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership.

As of June 30, 2026, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 103 predominantly retail real estate projects comprising approximately 28.8 million commercial square feet. In total, the real estate projects were 96.1% leased and 93.8% occupied at June 30, 2026.

General Economic Conditions

Significant uncertainty continues within the macro-economic and political environment including inflation risk, changes in interest rates, geopolitical instability, changes in tariffs and their impact on trade and prices, increases or decreases in federal and state government spending, and potentially worsening economic conditions, which presents risks for our business and tenants. We continue to monitor and address risks related to the general state of the economy. We believe the actions we have taken to maintain a strong financial position and reinforce our liquidity will continue to mitigate the negative short term impacts of the current environment. The extent of the future effects on our business, results of operations, cash flows, and growth strategies is highly uncertain and will ultimately depend on future developments, none of which can be predicted.

See further discussion of the impact of current economic conditions on our business throughout Item 2.

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Critical Accounting Policies

There have been no significant changes to the critical accounting policies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report on Form 10-K.

Property Acquisitions and Dispositions

On January 6, 2026, we purchased the fee interest under one of our ground leases at Bethesda Row for $2.5 million.

On March 12, 2026, we acquired the fee interest in Congressional North Shopping Center, a 217,000 square foot, grocery-anchored shopping center in Rockville, Maryland for $72.3 million. This purchase was completed in a multi-step transaction, and was funded with a combination of cash and the issuance of 2,513 downREIT operating partnership units, net of the repayment of two mortgage notes receivable that were included on our consolidated balance sheets at December 31, 2025. Approximately $5.2 million and $0.1 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $1.5 million of net assets acquired were allocated to other liabilities for "below market leases."

On April 17, 2026 we acquired the fee interest in an 88,000 square foot retail building and a parking garage, which will be operated as part of Kingstowne Towne Center, for $19.7 million. Approximately $2.2 million and $0.2 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $2.8 million of net assets acquired were allocated to other liabilities for "below market leases."

During the six months ended June 30, 2026, we sold a residential building at our Santana Row property, our Barcroft Plaza property, our Courthouse Center property, and a building at our CocoWalk property for a combined sales price of $224.6 million, resulting in a net gain of $112.8 million.

Debt and Equity Transactions

On February 19, 2026 we borrowed $250.0 million under the unsecured term loan agreement that we entered into on November 17, 2025. See Note 5 of our Annual Report on Form 10-K for the year ended December 31, 2025 for additional details regarding this term loan.

During 2026, we repaid the following debt, at par:

On April 14, 2026, we amended and restated our revolving credit facility, increasing the borrowing capacity from $1.25 billion to $1.4 billion, lowering the spread over SOFR from 77.5 basis points to 72.5 basis points based on our current credit rating, and extending the maturity date to April 12, 2030, plus two six-month extensions at our option. In addition, we have an option to increase the credit facility through an accordion feature to $2.0 billion.The revolving credit facility requires an annual facility fee which is $2.1 million under the amended credit agreement, based on our current credit rating. For additional information about the amendment and restatement of our revolving credit facility, see the Current Report on Form 8-K we filed on April 15, 2026.

During the six months ended June 30, 2026, the maximum amount of borrowings outstanding under our revolving credit facility was $699.5 million. The weighted average amount of borrowings outstanding was $378.3 million and the weighted average interest rate, before amortization of debt fees, was 4.4% for the six months ended June 30, 2026. At June 30, 2026, our revolving credit facility had $286.2 million outstanding.

Our revolving credit facility, unsecured term loans, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of June 30, 2026, we were in compliance with all default related debt covenants.

Recently Issued Accounting Pronouncements

See Note 2 to the consolidated financial statements.

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Capitalized Costs

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capit

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission on February 13, 2025.

Forward-Looking Statements

Certain statements in this section or elsewhere in this report may be deemed “forward-looking statements”. See “Item 1A. Risk Factors” in this report for important information regarding these forward-looking statements and certain risk and uncertainties that may affect us. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing in “Item 8. Financial Statements and Supplementary Data” of this report.

Overview

Federal Realty Investment Trust (the "Parent Company" or the "Trust") is an equity real estate investment trust ("REIT"). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interest of, is sole member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. We specialize in the ownership, management, and redevelopment of high quality retail and mixed-use properties. These properties are located primarily in major coastal markets and select underserved markets that we believe have strong economic and demographic fundamentals.As of December 31, 2025, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104 predominantly retail real estate projects comprising approximately 28.8 million commercial square feet. In total, the real estate projects were 96.1% leased and 94.1% occupied at December 31, 2025. We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for 58 consecutive years.

General Economic Conditions

Significant uncertainty continues within the macro-economic environment including concerns over inflation, changing interest rates, new or higher tariffs and their impact on trade and prices, increases or decreases in federal government spending, and potentially worsening economic conditions, which presents risks for our business and tenants. We continue to monitor and address risks related to the general state of the economy. We believe the actions we have taken to maintain a strong financial position and reinforce our liquidity will continue to mitigate the negative short term impacts of the current economic environment. The extent of the future effects on our business, results of operations, cash flows, and growth strategies is highly uncertain and will ultimately depend on future developments, none of which can be predicted.

Additional discussion of the impact of current economic conditions on our results and long-term operations can be found throughout Item 7 and Item 1A. Risk Factors.

Corporate Responsibility

We actively endeavor to operate and develop our properties in a sustainable, responsible, and effective manner with the objective being to drive long-term growth and aid in value creation for our shareholders, tenants, employees, and local communities. We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described

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in our Sustainability Policy and our 2024 sustainability report, which are provided only for informational purposes on our website and not incorporated by reference herein.

We are committed to implementing sustainable business practices at our operating properties that focus on energy efficiency, water conservation and waste minimization and have established greenhouse gas (GHG) emissions reduction targets in accordance with the Science-Based Targets initiative. To achieve this target, we are actively addressing energy efficiency projects on site such as upgrading to LED lighting, procuring zero carbon energy, reducing electric consumption, and increasing our onsite solar generation capacity. We have installed on-site solar systems at 28 of our properties with a capacity of 15.3 MW. We also installed electric vehicle car charging stations in numerous properties throughout our portfolio. We currently have nearly 500 charging stations in operation with more planned.

We also understand that we face risks presented by climate change and are working to evaluate our risk exposure. In our 2024 sustainability report, we provided a disclosure pursuant to the Task Force on Climate Related Financial Disclosure and we intend to provide that disclosure annually.

We are also highly committed to our employees and fostering a work environment that promotes growth, development and personal well-being. Our four core values are accountability, excellence, innovation and integrity and we seek to attract and retain talented professionals who embrace those values. All of our efforts with respect to corporate responsibility are overseen by our Board of Trustees.

Our development activities have been heavily focused on owning, developing and operating properties that are certified under the U.S. Green Building Council’s® (“USGBC”) Leadership in Energy and Environmental Design™ (LEED®) rating system which serves as a third-party verification that a building or community was designed and built to mitigate its environmental footprint. We currently have 25 LEED certified buildings and our Pike & Rose project has achieved LEED for Neighborhood Development Stage 3 Gold certification.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP”, requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past and current events and economic conditions. In addition, information relied upon by management in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third party experts. Actual results could differ from these estimates. A discussion of possible risks which may affect these estimates is included in “Item 1A. Risk Factors” of this report. Management considers an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition.

Our significant accounting policies are more fully described in Note 2 to the consolidated financial statements; however, the most critical accounting policies, which are most important to the portrayal of our financial condition and results of operations, and involve the use of complex estimates and significant assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:

Collectibility of Lease Income

Our leases with our tenants are classified as operating leases. When collection of substantially all lease payments during the lease term is considered probable, the lease qualifies for accrual accounting. When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income. For example, in the event that our collectibility determinations were not accurate and we were required to write off additional receivables equaling 1% of rental income, our rental income and net income would decrease by $12.5 million. If leases currently classified as not probable are subsequently changed to probable, any lease receivables (including straight-line rent receivables) are re-instated with a corresponding increase to rental income.

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Real Estate Acquisitions

Upon acquisition of operating real estate properties, we estimate the fair value of assets and liabilities acquired including land, building, improvements, leasing costs, intangibles such as acquired leases, assumed debt, and current assets and liabilities, if any. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities. We utilize methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The value allocated to acquired leases is amortized over the related lease term and reflected as rental income in the statement of operations. We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place lease value when we consider these to be bargain renewal options. If the value of below market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of any acquired lease value is written off to rental income.

During 2025 and 2024, we acquired properties included in our consolidated financial statements with a total purchase price of $1.0 billion. $11.7 million, or 1% of the total purchase price was allocated to above market lease assets and $71.6 million, or 7% was allocated to below market lease liabilities. If the amounts allocated in 2025 and 2024 to below market lease liabilities and building assets were each reduced by 5% of the total purchase price, annual below market lease liability amortization increasing rental income would decrease by approximately $3.8 million (using the weighted average life of below market liabilities at each respective acquired property) and annual depreciation expense would decrease by approximately $1.5 million (using a depreciable life of 35 years).

Long-Lived Assets and Impairment

There are estimates and assumptions made by management in preparing the consolidated financial statements for which the actual results will be determined over long periods of time. This includes the recoverability of long-lived assets, including our properties that have been acquired or redeveloped and our investment in certain joint ventures.

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