• Same-Property Leased Occupancy Rate: Above 96%, a record high for shop occupancy.
• Same-Property NOI Growth: 4.9% for the quarter, excluding term fees and COVID period reserve collections.
• Core Operating Earnings Per Share: $1.03 for the quarter.
• NAREIT FFO: $1.07 per share for the quarter.
• Blended Cash Rent Spreads: More than 9% in the third quarter.
• GAAP Rent Spreads: Exceeding 20% in the third quarter.
• Retention Rate: Above 85% in the quarter.
• Development and Redevelopment Projects: Over $220 million started year-to-date with blended yields exceeding 10%.
• Investment Activity: More than $500 million year-to-date, including shopping center acquisitions and share repurchases.
• Bond Issuance: $325 million at a 5.1% coupon in August.
• Free Cash Flow: Expected to exceed $160 million this year.

• Warning! GuruFocus has detected 5 Warning Sign with REG.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Regency Centers Corp (NASDAQ:REG) reported a record high shop occupancy rate of 93.7% and a same-property leased occupancy rate above 96%.
• The company raised its current year guidance, expecting same-property NOI growth of 3.5% and core operating earnings per share growth of nearly 5%.
• Regency Centers Corp (NASDAQ:REG) achieved strong blended cash rent spreads of more than 9% in the third quarter, with GAAP rent spreads exceeding 20%.
• The company has been active in its development and redevelopment projects, achieving its annual target of $200 million to $250 million of project starts for the second consecutive year.
• Regency Centers Corp (NASDAQ:REG) has deployed nearly $300 million of capital into accretive transactions, including shopping center acquisitions and share repurchases, driving strong organic growth and creating future value.

Negative Points

• The company faces potential risks from economic cycles and market conditions that could impact future performance.
• Regency Centers Corp (NASDAQ:REG) anticipates absorbing the full-year impact from this year's debt refinancing activity in 2025, which could affect financial performance.
• The company expects a credit loss range of 50 to 75 basis points this year, indicating some level of tenant credit risk.
• There are concerns about potential store closures and bankruptcies in the retail sector, which could impact Regency Centers Corp (NASDAQ:REG)'s tenant base.
• The company has a significant amount of debt maturing in 2025, which will need to be refinanced, potentially at higher interest rates.

Q & A Highlights

Q: Given the recent credit rating upgrade and low leverage, what is Regency Centers' appetite for leveraging up to fund growth, especially with the reversal in interest rates? A: Michael Mas, CFO, stated that Regency Centers is comfortable operating within a 5 to 5.5 times debt-to-EBITDA range. They will consider leveraging up if they see compelling opportunities, as demonstrated by their stock repurchase this year, which provided earnings accretion. They remain committed to maintaining their leverage range while pursuing accretive opportunities.

Q: Regency Centers raised its same-property NOI growth expectation for 2024 to 3.5% and anticipates similar growth for 2025. What factors are driving this acceleration? A: Michael Mas, CFO, explained that the acceleration is due to robust leasing activity, accelerated rent commencements, and higher retention rates. Alan Roth, COO, added that proactive measures like white boxing spaces and improved permitting processes have contributed to this growth. CEO Lisa Palmer emphasized the quality of their portfolio and team as key factors.

Q: With $300 million of debt maturing next year, what are Regency Centers' refinancing plans, and is this included in the 5% FFO growth outlook for 2025? A: Michael Mas, CFO, confirmed that the refinancing impact is included in the 5% FFO growth outlook. They plan to be tactical with their refinancing, using the favorable rate of the maturing debt as long as possible and refinancing in the public market at the right time.

Q: How does Regency Centers view the acquisition market, and is there potential for increased transaction activity in 2025? A: Nicholas Wibbenmeyer, CIO, stated that Regency Centers will continue to prioritize development and redevelopment but has the capacity to pursue one-off acquisitions that meet their criteria. Michael Mas, CFO, added that they will be disciplined in capital allocation, using various sources of capital, including partnerships like the one with Oregon.

Q: What is the outlook for Regency Centers' development pipeline, and how does it compare to historical stabilization timeframes? A: Nicholas Wibbenmeyer, CIO, noted that the development pipeline is robust, with over $600 million in projects. They expect to start over $200 million in projects annually. Stabilization timeframes are expected to be in the two- to three-year range, similar to pre-COVID periods, with improved permitting and supply chain conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.