On Jan 20, 2014, we reaffirmed our long-term recommendation on
Regency Centers Corp.
) - a retail real estate investment trust (REIT) - at Neutral.
The decision reflects increased guidance for 2013, an optimistic
outlook for 2014, successful execution of the company's strategic
initiatives and strong third-quarter 2013 performance. Yet, stiff
competition, rise in internet sales and a huge development and
redevelopment pipeline remain our plausible concerns.
Regency's portfolio of shopping centers, located in
high-income, high-barrier markets is among the best in the
sector. Moreover, with a focus on best-in-class retailers such as
The Kroger Co.
), the portfolio drives value and mitigates operating risks.
Ushering good news for its shareholders, in Dec 2013, Regency
increased the lower end of its 2013 core FFO per share outlook to
$2.61-$2.63 from $2.60-$2.63 forecasted earlier. Also, the
company provided a positive guidance for 2014.
Notably, aided by growth in same property net operating income
and a better-than-expected increase in revenues, this retail
REIT's third-quarter 2013 core funds from operations (core FFO)
per share of 65 cents exceeded the Zacks Consensus Estimate by 2
cents and the year-ago figure by 3 cents. In addition, strategic
acquisitions and the inclusion of premium development and
redevelopment projects boost Regency's portfolio in infill
locations with high occupancy levels and strong tenant sales and
offer ample room for top-line growth going forward.
Yet, rise in online shopping through the Internet, mobile
phones and tablets have intensified competition and continue to
adversely affect the demand for physical stores. Moreover,
although Regency's growing development and redevelopment pipeline
is encouraging, it exposes the company to various risks such as
rising construction costs, entitlement delays and lease-ups.
Nevertheless, the Zacks Consensus Estimate for 2013 FFO per
share remained flat at $2.61. On the other hand, for 2014, it
moved up by a penny to $2.68, over the last 60 days.
Consequently, the stock now carries a Zacks Rank #3 (Hold).
Regency is scheduled to release its fourth-quarter 2013
earnings results after the closing bell on Feb 12. The Zacks
Consensus Estimate for FFO per share for the quarter is pegged at
64 cents per share, depicting a year-over-year growth of
Other Stock to Consider
Cedar Realty Trust, Inc.
) carrying a Zacks Rank #2 (Buy) is a better-ranked stock in the
REIT-Equity Trust - Retail industry.
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization
and other non-cash expenses to net income.
CEDAR SHOPN CTR (CDR): Free Stock Analysis
KROGER CO (KR): Free Stock Analysis Report
REGENCY CTRS CP (REG): Free Stock Analysis
SAFEWAY INC (SWY): Free Stock Analysis Report
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