Company: FRT-PC
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000034903-25-000016
Chunk: 107

Company: FEDERAL REALTY INVESTMENT TRUST
Filing Date: 2025-02-13
Form: 10-K
Item: Item 16
Chunk 107
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 the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. 

Lease Collectibility Assessment 

In order to recognize rental income on an accrual basis, the Operating Partnership must determine whether substantially all the rents due under a lease arrangement are collectible. If the Operating Partnership reaches the conclusion that substantially all of the rents are not collectible for a specific lease, then rental income under that arrangement can only be recognized when cash payment from the tenant is received.

Significant judgment is exercised by the Operating Partnership when making a collectibility assessment and includes the following considerations which require challenging and subjective auditor judgment in the execution of our audit procedures:

•Creditworthiness of the tenant 

•Current economic conditions

•Historical experience with the tenant and other tenants operating in the same industry

Our audit procedures related to the collectibility assessment included the following:

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•We tested the design and tested the operating effectiveness of internal controls relating to the collectibility assessment process.

•We evaluated management’s accounting policies related to this assessment. 

•We verified the completeness of the population of tenants that management evaluated.

•We researched recent publicly available information, including information for the 10 tenants with the highest rental income recognized in the year ended December 31, 2024, such as bankruptcy filings, industry journals, and periodicals, and for any of the Operating Partnership’s tenants identified in our research, we evaluated whether such information was considered in management’s collectibility assessment. 

•We recalculated the aging for a selection of tenant receivable balances using supporting documentation.

•For a selection of tenants where collectibility was deemed as probable, we evaluated the collectibility assessment conclusion reached by management and performed the following procedures for each selection: 

◦Verified that management’s accounting policies related to the collectibility assessment were followed. 

◦Inspected documentation from management such as tenant collection history and any direct correspondence     and evaluated management’s considerations supporting the collectibility assessment conclusion reached. 

◦Researched publicly available information to independently verify the completeness and accuracy of management’s information used to make the collectibility assessment.

/s/ GRANT THORNTON LLP

We have served as the Operating Partnership's auditor since 2022. 

Jacksonville, Florida

February 13, 2025 

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Federal Realty Investment Trust

Consolidated Balance Sheets

December 31,202420