Company: FRT-PC
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000034903-25-000063
Chunk: 92

Company: FEDERAL REALTY INVESTMENT TRUST
Filing Date: 2025-10-31
Form: 10-Q
Item: Item 2
Chunk 92
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 reported on the consolidated balance sheets due to the unamortized net debt issuance costs and premium/discount on mortgage loans, notes payable, and senior notes as of September 30, 2025.

Interest Rate Hedging

We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative instruments for speculative purposes.

Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recorded in other comprehensive income which is included in "accumulated other 

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comprehensive income (loss)" on the balance sheet and statement of shareholders' equity. Cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and SOFR rate. In addition, we evaluate the default risk of the counterparty by monitoring the credit-worthiness of the counterparty which includes reviewing debt ratings and financial performance. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recognized in earnings in the period affected.

As of September 30, 2025, we have interest rate swap agreements that effectively fix the rate on the following debt instruments:

Debt Notional Amount of Related Swap AgreementsWeighted Average Fixed RateMaturity Date of Related Swap Agreements(in millions)Term Loan$300.0 4.21 %March 1, 2028Bethesda Row mortgage loan$200.0 5.03 %December 28, 2025Hoboken mortgage loan$51.0 3.67 %December 15, 2029

Additionally, our Assembly Row hotel joint venture is a party to two interest rate swap agreements that effectively fix its outstanding $38.1 million of debt at an average rate of 6.11% through May 2028.

All swaps were designated and qualify as cash flow hedges. Hedge ineffectiveness has not impacted earnings as of September 30, 2025