Federal Realty Investment Trust FRT · USD

COMMITMENTS AND CONTINGENCIESWe are sometimes involved in lawsuits, warranty claims, and environmental matters arising in the ordinary course of business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.We are currently a party to various legal proceedings. We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued. Legal fees related to litigation are expensed as incurred. We do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. Also under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us (1) as owner of the properties due to certain matters relating to the operation of the properties by the tenant, and (2) where appropriate, due to certain matters relating to the ownership of the properties prior to their acquisition by us.We are self-insured for general liability costs up to predetermined retained amounts per claim, and we believe that we maintain adequate accruals to cover our retained liability. Our accrual for self-insurance liability is determined by management and is based on claims filed and an estimate of claims incurred but not yet reported. Management considers a number of factors, including third-party actuarial analysis, previous experience in our portfolio, and future increases in costs of claims, when making these determinations. If our liability costs exceed these accruals, it will reduce our net income.At December 31, 2025 and 2024, our reserves for general liability costs were $5.0 million and $4.4 million, respectively, and are included in “accounts payable and accrued expenses” in our consolidated balance sheets. Any potential losses which exceed our estimates would result in a decrease in our net income. During 2025 and 2024, we made payments from these reserves of $2.9 million and $2.1 million, respectively.

DEBTThe following is a summary of our total debt outstanding as of December 31, 2025 and 2024:Principal Balance as of December 31,Stated Interest Rate as ofStated Maturity Date as ofDescription of Debt20252024December 31, 2025December 31, 2025Mortgages payable(Dollars in thousands)Bell Gardens$10,885 $11,215 4.06 %August 1, 2026Bethesda Row (1)200,000 200,000 SOFR + 0.95%December 28, 2026Plaza El Segundo125,000 125,000 3.83 %June 5, 2027The Grove at Shrewsbury (East)43,600 43,600 3.77 %September 1, 2027Azalea (2)(3)55,000 40,000 SOFR + 0.85%October 30, 2028Brook 3511,500 11,500 4.65 %July 1, 2029Hoboken (24 Buildings) (4)50,568 52,123 SOFR + 1.95%December 15, 2029Various Hoboken (12 Buildings)(5)23,568 28,838 VariousVarious through 2029Chelsea3,091 3,568 5.36 %January 15, 2031Subtotal523,212 515,844 Net unamortized debt issuance costs and discount(1,453)(1,466)Total mortgages payable, net521,759 514,378 Notes payableRevolving credit facility (2)(6)310,000 — SOFR + 0.775%April 5, 2027$750 million term loan (2)(6)(7)750,000 600,000 SOFR + 0.85%March 20, 2028$250 million term loan (2)(6)— — SOFR + 0.85%January 31, 2031Various1,190 1,680 VariousVarious through 2059Subtotal1,061,190 601,680 Net unamortized debt issuance costs(3,859)(266)Total notes payable, net1,057,331 601,414 Senior notes and debentures (6)1.25% notes400,000 400,000 1.25 %February 15, 20267.48% debentures29,200 29,200 7.48 %August 15, 20263.25% notes475,000 475,000 3.25 %July 15, 20276.82% medium term notes40,000 40,000 6.82 %August 1, 20275.375% notes350,000 350,000 5.375 %May 1, 20283.25% exchangeable notes485,000 485,000 3.25 %January 15, 20293.20% notes400,000 400,000 3.20 %June 15, 20293.50% notes400,000 400,000 3.50 %June 1, 20304.50% notes550,000 550,000 4.50 %December 1, 20443.625% notes250,000 250,000 3.625 %August 1, 2046Subtotal3,379,200 3,379,200 Net unamortized debt issuance costs and premium(15,190)(21,360)Total senior notes and debentures, net3,364,010 3,357,840 Total debt$4,943,100 $4,473,632 _____________________(1)We have one one-year extension, at our option to extend the maturity date of this mortgage loan to December 28, 2027.(2)Our Azalea mortgage loan, revolving credit facility SOFR loans, and our term loans bear interest at Daily Simple SOFR, as defined in the respective credit agreements, plus a spread, based on our current credit rating.(3)The Operating Partnership is a co-borrower on this mortgage loan.

SHARE-BASED COMPENSATION PLANS A summary of share-based compensation expense included in net income is as follows:Year Ended December 31, 202520242023 (In thousands)Grants of common shares, restricted stock units, and options$15,561 $17,379 $15,427 Capitalized share-based compensation(953)(1,022)(1,119)Share-based compensation expense$14,608 $16,357 $14,308 As of December 31, 2025, we have grants outstanding under two share-based compensation plans. In May 2020, our shareholders approved the 2020 Performance Incentive Plan ("the 2020 Plan"), which authorized the grant of share options, common shares, and other share-based awards for up to 1,750,000 common shares of beneficial interest. Our 2010 Long Term Incentive Plan, as amended (the "2010 Plan”), which expired in May 2020, authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest.Option awards under the plans are required to have an exercise price at least equal to the closing trading price of our common shares on the date of grant. Options and restricted share awards under the plan generally vest over three to seven years and option awards typically have a ten-year contractual term. We pay dividends on unvested shares. Certain options and share awards provide for accelerated vesting if there is a change in control. Additionally, the vesting on certain option and share awards can accelerate in part or in full upon termination without cause.The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities, term, dividend yields, employee exercises and estimated forfeitures are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each share award is determined based on the closing trading price of our common shares on the grant date. No options were granted in 2025 and 2023. The following table provides a summary of the assumptions used to value options granted in 2024: Year Ended December 31,2024Volatility31.9 %Expected dividend yield4.3 %Expected term (in years)7.5Risk free interest rate4.1 %The weighted-average grant-date fair value of options granted in 2024 was $24.59 per share.

The following table provides a summary of option activity for 2025: SharesUnderOptionWeighted-AverageExercisePriceWeighted-AverageRemainingContractual TermAggregateIntrinsicValue (In years)(In thousands)Outstanding at December 31, 20243,019 $98.09 Granted— — Exercised— — Forfeited or expired— — Outstanding at December 31, 20253,019 $98.09 6.3$9 Exercisable at December 31, 20251,701 $96.59 5.

LEASESAt December 31, 2025, our 104 predominantly retail shopping center and mixed-use properties are located in 14 states and the District of Columbia. There are approximately 3,700 commercial leases and 2,700 residential leases. Our commercial tenants range from sole proprietorships to national retailers and corporations. At December 31, 2025, no one tenant or corporate group of tenants accounted for more than 2.4% of annualized base rent.Our leases with commercial property and residential tenants are classified as operating leases. Commercial property leases generally range from three to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, may provide for percentage rents based on the tenant’s level of sales achieved and cost recoveries for the tenant’s share of certain operating costs. Leases on apartments are generally for a period of 1 year or less. As of December 31, 2025, future minimum rentals from noncancelable commercial operating leases (excluding both tenant reimbursements of operating expenses and percentage rent based on tenants' sales) are as follows: (In thousands)Year ending December 31,2026$849,788 2027809,503 2028714,912 2029618,592 2030514,022 Thereafter1,938,559 $5,445,376 The following table provides additional information on our operating and finance leases where we are the lessee:Year Ended December 31,202520242023(In thousands)LEASE COST:Finance lease cost: Amortization of right-of-use assets$220 $220 $998 Interest on lease liabilities833 825 4,332 Operating lease cost5,914 6,048 6,232 Variable lease cost401 413 348 Total lease cost$7,368 $7,506 $11,910 OTHER INFORMATION:Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for finance leases$713 $713 $4,227 Operating cash flows for operating leases$6,214 $6,276 $6,146 Financing cash flows for finance leases$— $— $55,228 December 31,20252024Weighted-average remaining term - finance leases68.7 years69.7 yearsWeighted-average remaining term - operating leases53.7 years53.2 yearsWeighted-average discount rate - finance leases6.5 %6.5 %Weighted-average discount rate - operating leases4.8 %4.

ACQUIRED LEASESAcquired lease assets comprise of above market leases where we are the lessor and below market leases where we are the lessee. Acquired lease liabilities comprise below market leases where we are the lessor and above market leases where we are the lessee. As a lessor, acquired above market leases are included in prepaid expenses and other assets, and acquired below market leases are included in other liabilities and deferred credits. In accordance with our adoption of ASC Topic 842, acquired below market leases and acquired above market leases where we are the lessee are included in right of use assets. The following is a summary of our acquired lease assets and liabilities:December 31, 2025December 31, 2024CostAccumulated AmortizationCostAccumulated Amortization(in thousands)Above market leases, lessor$52,219 $(35,922)$42,171 $(34,046)Below market leases, lessee28,101 (6,879)28,101 (6,145) Total$80,320 $(42,801)$70,272 $(40,191)Below market leases, lessor$(325,025)$122,359 $(277,883)$111,719 Above market leases, lessee(11,127)4,896 (11,127)4,333 Total$(336,152)$127,255 $(289,010)$116,052 The value allocated to acquired leases where we are the lessor is amortized over the related lease term and reflected as additional rental income for below market leases or a reduction of rental income for above market leases in the consolidated statements of comprehensive income. The related amortization of acquired leases where we are the lessee is reflected as additional rental expense for below market leases or a reduction of rental expenses for above market leases in the consolidated statements of comprehensive income. The following is a summary of acquired lease amortization:Year Ended December 31,202520242023(in thousands)Amortization of above market leases, lessor$(3,106)$(2,799)$(3,254)Amortization of below market leases, lessor17,862 16,290 15,864 Net increase in rental income$14,756 $13,491 $12,610 Amortization of below market leases, lessee$734 $734 $742 Amortization of above market leases, lessee(563)(562)(563) Net increase in rental expense$171 $172 $179 The following is a summary of the remaining weighted average amortization period for our acquired lease assets and acquired lease liabilities:December 31, 2025Above market leases, lessor2.8 yearsBelow market leases, lessee29.0 yearsBelow market leases, lessor16.6 yearsAbove market leases, lessee16.

Our chief information officer, who has over 30 years of experience in managing information systems for real estate companies, heads our internal team of technology professionals who are responsible for managing our cybersecurity risks, which includes identifying our primary areas of risk, establishing processes, procedures, and systems to mitigate those risks and identifying and remediating any breaches that may occur.

DIVIDENDSThe following table provides a summary of dividends declared and paid per share: Year Ended December 31, 202520242023 DeclaredPaidDeclaredPaidDeclaredPaidCommon shares$4.460 $4.430 $4.380 $4.370 $4.340 $4.330 5.417% Series 1 Cumulative Convertible Preferred shares$1.354 $1.354 $1.354 $1.354 $1.354 $1.354 5.0% Series C Cumulative Redeemable Preferred shares (1)$1.250 $1.250 $1.250 $1.250 $1.250 $1.250 (1) Amount represents dividends per depositary share, each representing 1/1000th of a share.A summary of the income tax status of dividends per share paid is as follows: Year Ended December 31,202520242023Common sharesOrdinary dividend$3.810 $3.583 $3.551 Capital gain0.620 0.656 0.130 Return of capital— 0.131 0.649 $4.430 $4.370 $4.330 5.417% Series 1 Cumulative Convertible Preferred sharesOrdinary dividend$1.164 $1.151 $1.313 Capital gain0.190 0.203 0.041 $1.354 $1.354 $1.354 5.0% Series C Cumulative Redeemable Preferred sharesOrdinary dividend$1.075 $1.063 1.213 Capital gain0.175 0.187 0.037 $1.250 $1.250 $1.250 On October 31, 2025, the Trustees declared a quarterly cash dividend of $1.13 per common share, payable January 15, 2026 to common shareholders of record on January 2, 2026.