Federal Realty expands market

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Federal Realty Investment Trust, is making moves in the Mid-Atlantic market with the purchase of two regional shopping centers since March.

But the Rockville-based real estate investment trust is still feeling the effects of a 2002 fire that destroyed a portion of its Santana Row development in San Jose, Calif.

The company has 19.6 million square feet of real estate nationwide and controls more than 100 properties in the Northeast, Mid-Atlantic and California.

"Fundamentally, this is one of the best [real estate investment trusts] in the industry," said Philip Martin, an analyst at Cantor Fitzgerald LP, a financial services firm in New York.

"Historically, Federal has been able to outline a road map for growth and operating performance and their management team has shown that they can deliver it," Mr. Martin continued.

However,Federal Realty's history of development in California still bears the mark of an accidental fire that destroyed portions of its Santana Row development.

In August 2002, a fire broke out during the construction of the company's 40-acre development for mixed use.

The 11-alarm fire consumed large portions of property and spread to nearby homes.

In a recent Securities and Exchange Commission filing, Federal Realty said a court found the company liable for damages caused to a neighboring property as a result of the fire. The filing said that if the suit is not overturned, the company may have to pay the damages and its future profits could be affected.

But Matt Ostrower, an analyst at Morgan Stanley, a New York financial services firm said he is not concerned about Federal Realty's history catching up with them.