Regency Centers Corp. REG is slated to report fourth-quarter and full-year 2024 results on Feb. 6, after the closing bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.

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In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) reported NAREIT FFO per share of $1.07, outpacing the Zacks Consensus Estimate of $1.04. Results reflected healthy leasing activity and a year-over-year improvement in the same property's net operating income and base rent.

Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on three occasions and met in the remaining quarter, with the average beat being 2.66%. This is depicted in the graph below:

Regency Centers Corporation Price and EPS Surprise

Regency Centers Corporation price-eps-surprise | Regency Centers Corporation Quote

In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its fourth-quarter 2024 performance.

US Retail Real Estate Market in Q4

Per a Cushman & Wakefield CWK report, there has been a pullback in net absorption for the U.S. shopping center market, resulting in a positive shift in the fourth quarter. Asking rents for the U.S. shopping center market grew from the year-ago quarter. However, with new constructions remaining subdued, the national vacancy rate remained unchanged sequentially, near a historic low of 5.4%.

The fourth quarter witnessed the strongest net absorption of 2024 in the U.S. shopping center market, totaling 1.43 million square feet (msf). The increase was due to positive net absorption observed in almost all the country’s regions except for the northeast region. With 89% of the annual net absorption total occurring in the fourth quarter, the retail market appears to be in good shape. The asking rents for U.S. shopping centers increased 2.8% year over year to $24.59 per square foot in the fourth quarter.

The lack of new construction is also contributing to the scarcity, as a record low 8.3 msf of new shopping center space was delivered in 2024. As of the fourth quarter of 2024, there are only 10.6 msf under construction with an inventory of 4.32 billion square feet.

Factors at Play for Regency

Regency’s premium portfolio is situated in affluent suburban areas and near urban trade areas of the United States. With more people continuing to move to the suburbs due to post-pandemic migration and the hybrid work setup, Regency’s suburban shopping center portfolio is expected to have benefited.

Regency has a high-quality open-air shopping center portfolio, with more than 80% grocery-anchored neighborhood and community centers, which are necessity-driven by nature. The company has a good tenant mix, with several industry-leading grocers. These factors are likely to have helped it generate stable rental revenues during the fourth quarter.

The Zacks Consensus Estimate for REG’s fourth-quarter revenues is pegged at $386 million, which indicates an increase of 7.3% from the year-ago quarter’s reported figure.

The company’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised a cent upward to $1.07 in the past two months. The figure implies growth of nearly 4.9% from the prior-year quarter’s reported number.

However, higher e-commerce adoption and elevated interest expenses are expected to cast a pall on its quarterly performance to some extent.

What Our Quantitative Model Predicts for Regency

Our proven model does not conclusively predict a surprise in terms of FFO per share for Regency this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Regency currently has an Earnings ESP of 0.00% and carries a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Kimco Realty KIM and Host Hotels & Resorts HST — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Kimco Realty, slated to release quarterly numbers on Feb. 7, has an Earnings ESP of +2.11% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Host Hotels, scheduled to report quarterly numbers on Feb. 19, has an Earnings ESP of +2.79% and carries a Zacks Rank of 3.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report

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