FEDERAL REALTY INVESTMENT TRUSTFRT
FEDERAL REALTY INVESTMENT TRUST Fair Value Disclosure
FAIR VALUE OF FINANCIAL INSTRUMENTS
A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows:
| 1. | Level 1 Inputs—quoted prices in active markets for identical assets or liabilities | ||||
| 2. | Level 2 Inputs—observable inputs other than quoted prices in active markets for identical assets and liabilities | ||||
| 3. | Level 3 Inputs—prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable | ||||
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices (Level 1) were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis (Level 2) is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Mortgages and notes payable | $ | 1,579,090 | $ | 1,572,977 | $ | 1,115,792 | $ | 1,098,271 | |||||||||||||||
| Senior notes and debentures | $ | 2,887,190 | $ | 2,743,096 | $ | 2,883,713 | $ | 2,645,097 | |||||||||||||||
| Exchangeable senior notes | $ | 476,820 | $ | 492,912 | $ | 474,127 | $ | 495,510 | |||||||||||||||
The following table is a summary of our outstanding interest rate swap agreements on consolidated debt as of December 31, 2025:
| Interest Rate Swap | Notional Amount | Maturity Date of Related Swap Agreements | Weighted Average Interest Rate | Balance Sheet Location | Fair Value | |||||||||||||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||||||||||||||
| $750 million term loan (1) | $ | 450.0 | March 1, 2028 | 4.17 | % | Other liabilities and deferred credits | $ | (0.5) | ||||||||||||||||||||||||
| Hoboken | 50.6 | December 15, 2029 | 3.67 | % | Prepaid expenses and other assets | 3.1 | ||||||||||||||||||||||||||
| $ | 500.6 | $ | 2.6 | |||||||||||||||||||||||||||||
(1) These interest rate swaps were entered into during the year ended December 31, 2025, and fix the interest rate on $450.0 million of our unsecured term loan. | ||||||||||||||||||||||||||||||||
The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. During 2025, the value of our interest rate swaps decreased $2.6 million (including $2.5 million reclassified from other comprehensive income as a decrease to interest expense). A summary of our net financial assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | 2,601 | $ | — | $ | 2,601 | $ | — | $ | 5,208 | $ | — | $ | 5,208 | |||||||||||||||||||||||||||||||
During the year ended December 31, 2025, we entered into interest rate swap agreements for two of our equity method investees. Therefore, as of December 31, 2025, three of our equity method investees have interest rate swaps which qualify as cash flow hedges. At December 31, 2025 and December 31, 2024, our share of the change in fair value of the related swaps included in "accumulated other comprehensive (loss) income" was a loss of $0.3 million and income of $0.2 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 12, 2024 | |
| 2022 | Feb 8, 2023 | |
| 2021 | Feb 10, 2022 | |
| 2020 | Feb 11, 2021 | |
| 2019 | Feb 10, 2020 | |
| 2018 | Feb 13, 2019 | |
| 2017 | Feb 13, 2018 | |
| 2016 | Feb 13, 2017 | |
| 2015 | Feb 9, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.