Regency Centers Corporation (“Regency” or the “Company”) today announced
financial and operating results for the quarter ended September 30, 2014.
Financial Results
Regency reported Core Funds From Operations (“Core FFO”) for the Third
Quarter of $65.5 million, or $0.71 per diluted share, compared to $60.2
million, or $0.65 per diluted share, for the same period in 2013. For
the nine months ended September 30, 2014 Core FFO was $195.5 million, or
$2.11 per diluted share, compared to $180.3 million, or $1.97 per
diluted share, for the same period in 2013.
Funds From Operations (“FFO”) for the Third Quarter was $64.8 million,
or $0.70 per diluted share. For the same period in 2013, the Company
reported FFO of $60.4 million, or $0.65 per diluted share. For the nine
months ended September 30, 2014 FFO was $196.1 million, or $2.12 per
diluted share, compared to $180.4 million, or $1.97 per diluted share,
for the same period in 2013.
Regency reported net income attributable to common stockholders (“Net
Income”) for the Third Quarter of $47.9 million, or $0.52 per diluted
share, compared to Net Income of $35.0 million, or $0.38 per diluted
share, for the same period in 2013. For the nine months ended September
30, 2014 Net Income was $92.8 million, or $1.00 per diluted share,
compared to $82.4 million, or $0.90 per diluted share for the same
period in 2013.
Operating Results
For the three months ended September 30, 2014, Regency’s results for
wholly owned properties plus its pro-rata share of co-investment
partnerships were as follows:
-
Percent leased, same properties only: 95.8%
-
Percent leased, all properties: 95.3%
-
Increase in same property net operating income (“NOI”) over the same
period last year, excluding termination fees: 4.1%
-
Same space rental rate growth on a cash basis for spaces vacant less
than 12 months: 22.8% on new leases and 9.9% on renewal leases for a
blended average of 12.3%
-
Leasing transactions, including in-process developments (partnerships
at 100%): 357 new and renewal lease transactions for a total of 1.3
million square feet
For the nine months ended September 30, 2014, Regency’s results for
wholly owned properties plus its pro-rata share of co-investment
partnerships were as follows:
-
Increase in same property NOI over the same period last year,
excluding termination fees: 3.6%
-
Same space rental rate growth on a cash basis for spaces vacant less
than 12 months: 35.3% on new leases and 8.1% on renewal leases for a
blended average of 13.1%
-
Leasing transactions, including in-process developments (partnerships
at 100%): 1,003 new and renewal lease transactions for a total of 4.1
million square feet
Portfolio Activity
Property Transactions
During the quarter, Regency sold one co-investment property for $9.3
million; Regency’s share of the gross sales price was $3.7 million. The
Company also sold four wholly-owned properties for $55.4 million.
Subsequent to quarter end, Regency sold two wholly-owned properties for
a gross sales price of $28.9 million.
During the quarter, Regency acquired one property, on a wholly-owned
basis, for a gross purchase price of $19.0 million. Located in Lincoln
Park, which is one of the most affluent and densely populated
neighborhoods of Chicago, Clybourn Commons boasts outstanding 3-mile
demographics, including a population of 500,000 people with average
household incomes of $113,000.
Developments and Redevelopments
At quarter end, the Company had eight projects in development with
estimated net development costs of $264.8 million. The in-process
developments were 52% funded and 86% leased and committed, including
retailer-owned square footage. Regency completed one project during the
quarter, representing $14.5 million in net development costs.
During the quarter, the Company started the development of two Whole
Foods-anchored projects. Belmont Shopping Center, located in the
Washington D.C. metro area, is a 91,000 square foot center with
estimated net development costs of $28.1 million. CityLine Market,
located in the Dallas metro area, is an 80,000 square foot center
expected to have development costs of $26.6 million.
Regency also had 18 redevelopment projects in process at quarter end,
representing a total estimated incremental investment upon completion of
$83.4 million with estimated incremental yields on investment ranging
from 8% to 10%.
Balance Sheet
During the quarter the Company accessed its at-the-market common equity
program, generating gross proceeds of $50.0 million at a weighted
average price of $57.35 per share. Fitch Ratings also affirmed the
Company’s corporate credit rating and senior unsecured ratings of BBB,
with a Stable outlook.
2014 Guidance
The Company updated certain components of its 2014 earnings guidance.
These changes are summarized below. Please refer to the Company’s Third
Quarter 2014 supplemental information package for the complete list of
updates.
|
|
Full Year 2014 Guidance
|
|
|
Previous Guidance
|
|
Updated Guidance
|
Core FFO per diluted share
|
|
$2.75 – $2.80
|
|
$2.80 – $2.83
|
FFO per diluted share
|
|
$2.75 – $2.80
|
|
$2.80 – $2.83
|
Same property percent leased at period end (pro-rata)
|
|
95.0% - 96.0%
|
|
95.5% - 96.0%
|
Same property NOI growth without termination fees (pro-rata)
|
|
3.0% - 3.7%
|
|
3.5% - 3.8%
|
Dispositions (pro-rata)
|
|
$135,000 - $185,000
|
|
$135,000 - $150,000
|
Development and Redevelopment starts
|
|
$175,000 - $240,000
|
|
$200,000 - $240,000
|
Note: Data in thousands, except per share information
Dividend
On October 29, 2014, Regency’s Board of Directors declared a quarterly
cash dividend on the Company’s common stock of $0.47 per share. The
dividend is payable on December 3, 2014 to shareholders of record as of
November 19, 2014.
Conference Call Information
In conjunction with Regency’s Third Quarter results, the Company will
host a conference call on Tuesday, November 4, 2014 at 11:00 a.m. EST.
Dial-in and webcast information is listed below.
Replay
Webcast Archive: Investor
Relations page under Webcasts
& Presentations
Non-GAAP Disclosure
FFO is a commonly used measure of REIT performance, which the National
Association of Real Estate Investment Trusts (“NAREIT”) defines as net
income, computed in accordance with GAAP, excluding gains and losses
from dispositions of depreciable property, net of tax, excluding
operating real estate impairments, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures. Regency computes FFO for all periods presented in accordance
with NAREIT's definition. Many companies use different depreciable lives
and methods, and real estate values historically fluctuate with market
conditions. Since FFO excludes depreciation and amortization and gains
and losses from depreciable property dispositions, and impairments, it
can provide a performance measure that, when compared year over year,
reflects the impact on operations from trends in occupancy rates, rental
rates, operating costs, acquisition and development activities, and
financing costs. This provides a perspective of the Company’s financial
performance not immediately apparent from net income determined in
accordance with GAAP. Thus, FFO is a supplemental non-GAAP financial
measure of the Company's operating performance, which does not represent
cash generated from operating activities in accordance with GAAP and
therefore, should not be considered an alternative for net income or as
a measure of liquidity. Core FFO is an additional performance measure
used by Regency as the computation of FFO includes certain non-cash and
non-comparable items that affect the Company's period-over-period
performance. Core FFO excludes from FFO, but is not limited to: (a)
transaction related gains, income or expense; (b) impairments on land;
(c) gains or losses from the early extinguishment of debt; and (d) other
non-core amounts as they occur. The Company provides a reconciliation of
FFO to Core FFO.
Reconciliation of Net Income Attributable to Common Stockholders to
FFO and Core FFO — Actual (in thousands)
For the Periods Ended September 30, 2014 and 2013
|
|
Three Months Ended
|
|
Year to Date
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Common Stockholders
|
|
$
|
47,942
|
|
$
|
34,998
|
|
|
$
|
92,814
|
|
|
82,416
|
|
Adjustments to reconcile to Funds From Operations:
|
|
|
|
|
|
|
|
Depreciation and amortization (1)
|
|
|
45,244
|
|
|
42,746
|
|
|
|
138,627
|
|
|
127,313
|
|
Provision for impairment (2)
|
|
|
2
|
|
|
6,000
|
|
|
|
426
|
|
|
6,000
|
|
Gain on sale of operating properties, net of tax (2)
|
|
|
(28,488
|
)
|
|
(23,407
|
)
|
|
|
(35,907
|
)
|
|
(35,506
|
)
|
Exchangeable operating partnership units
|
|
|
90
|
|
|
73
|
|
|
|
185
|
|
|
183
|
|
|
|
|
|
|
|
|
|
Funds From Operations
|
|
|
64,790
|
|
|
60,410
|
|
|
|
196,145
|
|
|
180,406
|
|
|
|
|
|
|
|
|
|
Dilutive effect of share-based awards
|
|
|
(125
|
)
|
|
(133
|
)
|
|
|
(397
|
)
|
|
(390
|
)
|
Funds From Operations for calculating Diluted FFO per Share
|
|
$
|
64,665
|
|
|
60,277
|
|
|
$
|
195,748
|
|
|
180,016
|
|
|
|
|
|
|
|
|
|
Funds From Operations
|
|
$
|
64,790
|
|
|
60,410
|
|
|
$
|
196,145
|
|
|
180,406
|
|
Adjustments to reconcile to Core Funds From Operations:
|
|
|
|
|
|
|
|
Development and acquisition pursuit costs (2)
|
|
|
1,051
|
|
|
365
|
|
|
|
2,762
|
|
|
1,591
|
|
Gain on sale of land (2)
|
|
|
(19
|
)
|
|
(56
|
)
|
|
|
(3,347
|
)
|
|
(1,146
|
)
|
Provision for impairment to land
|
|
|
-
|
|
|
-
|
|
|
|
225
|
|
|
-
|
|
Interest rate swap ineffectiveness (2)
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
(20
|
)
|
Early extinguishment of debt (2)
|
|
|
1
|
|
|
(537
|
)
|
|
|
42
|
|
|
(537
|
)
|
Dividends from investments
|
|
|
(334
|
)
|
|
-
|
|
|
|
(334
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
Core Funds From Operations
|
|
|
65,489
|
|
|
60,182
|
|
|
|
195,493
|
|
|
180,294
|
|
|
|
|
|
|
|
|
|
Dilutive effect of share-based awards
|
|
|
(125
|
)
|
|
(133
|
)
|
|
|
(397
|
)
|
|
(390
|
)
|
Core Funds From Operations for calculating Diluted Core FFO per Share
|
|
$
|
65,364
|
|
|
60,049
|
|
|
$
|
195,096
|
|
|
179,904
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares For Diluted FFO per Share
|
|
|
92,556
|
|
|
92,186
|
|
|
|
92,267
|
|
|
91,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes pro-rata share of unconsolidated
co-investment partnerships, net of pro-rata share attributable to
noncontrolling interests
|
(2) Includes pro-rata share of unconsolidated
co-investment partnerships
|
Reported results are preliminary and not final until the filing of the
Company’s Form 10-Q with the SEC and, therefore, remain subject to
adjustment.
Reconciliation of Net Income Attributable to Common Stockholders to
FFO and Core FFO — Guidance
|
|
Full Year
|
FFO and Core FFO Guidance:
|
|
2014
|
|
|
|
|
Net income attributable to common stockholders
|
|
$
|
1.19
|
|
|
1.22
|
|
|
|
|
|
Adjustments to reconcile net income to FFO:
|
|
|
|
Depreciation and amortization
|
|
|
1.99
|
|
|
1.99
|
|
Gain on sale of operating properties
|
|
|
(0.40
|
)
|
|
(0.40
|
)
|
All other amounts
|
|
|
0.02
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Funds From Operations
|
|
$
|
2.80
|
|
$
|
2.83
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile FFO to Core FFO:
|
|
|
|
Development and acquisition pursuit costs
|
|
|
0.04
|
|
|
0.04
|
|
Gain on sale of land
|
|
|
(0.04
|
)
|
|
(0.04
|
)
|
All other non-core amounts
|
|
|
0.00
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Core Funds From Operations
|
|
$
|
2.80
|
|
$
|
2.83
|
|
The Company has published forward-looking statements and additional
financial information in its Third Quarter 2014 supplemental information
package that may help investors estimate earnings for 2014. A copy of
the Company’s Third Quarter 2014 supplemental information will be
available on the Company's website at www.RegencyCenters.com
or by written request to: Investor Relations, Regency Centers
Corporation, One Independent Drive, Suite 114, Jacksonville, Florida,
32202. The supplemental information package contains more detailed
financial and property results including financial statements, an
outstanding debt summary, acquisition and development activity,
investments in partnerships, information pertaining to securities issued
other than common stock, property details, a significant tenant rent
report and a lease expiration table in addition to earnings and
valuation guidance assumptions. The information provided in the
supplemental package is unaudited and there can be no assurance that the
information will not vary from the final information in the Company’s
Form 10-Q for the quarter ended September 30, 2014. Regency may, but
assumes no obligation to, update information in the supplemental package
from time to time.
About Regency Centers Corporation (NYSE: REG)
With more than 50 years of experience, Regency is the preeminent
national owner, operator and developer of high-quality, grocery-anchored
neighborhood and community shopping centers. The Company’s portfolio of
326 retail properties encompasses over 43.6 million square feet located
in top markets throughout the United States, including co-investment
partnerships. Regency has developed 218 shopping centers since 2000,
representing an investment at completion of more than $3 billion.
Operating as a fully integrated real estate company, Regency is a
qualified real estate investment trust that is self-administered and
self-managed.
Forward-looking statements involve risks and uncertainties. Actual
future performance, outcomes and results may differ materially from
those expressed in forward-looking statements. Please refer to the
documents filed by Regency Centers Corporation with the SEC,
specifically the most recent reports on Forms 10-K and 10-Q, which
identify important risk factors which could cause actual results to
differ from those contained in the forward-looking statements.
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