UPDATE 1-Federal Realty Q3 FFO beats, sees FY10 above Street

* Q3 FFO/shr $0.92 vs est $0.90

* Initiates FY10 FFO outlook above estimates

* Raises lower end of FY09 FFO view

Nov 4 (Reuters) - Real estate investment trust Federal Realty Investment Trust (FRT.N) posted quarterly funds from operations that topped market estimates, helped by lower operating costs, and forecast 2010 FFO above Wall Street expectations.

For 2010, the retail-focused REIT expects FFO of $3.80 to $3.88 a share, above analysts average FFO view of $3.72 a share.

It also raised the lower end of its 2009 FFO outlook range by 3 cents to $3.75 a share.

For the third quarter ended Sept. 30, Federal Realty reported FFO of $55.6 million, or 92 cents a share, compared with $58.1 million, or 98 cents a share a year earlier.

Operating expenses for the quarter dropped almost 4 percent to $73.3 million.

Analysts on average, were expecting the REIT to post FFO of 90 cents a share, according to Thomson Reuters I/B/E/S.

Overall leased portfolio rose to 94.2 percent, compared with 94 percent in the second quarter.

Shares of the Rockville, Maryland-based REIT closed at $60.68 Wednesday on the New York Stock Exchange. (Reporting by Biswarup Gooptu in Bangalore; Editing by Pradeep Kurup)