Regency Centers Corporation
) - a real estate investment trust (REIT) - reported
first-quarter 2013 core FFO (funds from operations) per share of
64 cents, 2 cents ahead of the both the Zacks Consensus Estimate
and the prior-year quarter figure. In addition, the company
raised its 2013 guidance slightly.
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The results were driven by better-than-expected revenues that
were supported by successful execution of strategic initiatives
and significant leasing activity.
Including non-core items, FFO for the quarter stood at $57.9
million, or 64 cents per share, ahead of $49.9 million, or 55
cents per share in the year-ago period.
Quarter in Detail
Total revenue for the first quarter reached $126.1 million,
nearly flat year over year and ahead of the Zacks Consensus
Estimate of $118 million.
During the quarter under review, same-store net operating income
(NOI), excluding termination fees, climbed 5.1% on a
year-over-year basis, with rental rate growth of 5.4% (cash basis
for spaces vacant less than 12 months).
Regency executed a total of 328 new and renewal lease deals,
spanning 1.0 million square feet, during the quarter under
review. At the end of the quarter, Regency's same-store portfolio
was 94.3% leased, whereas all of its properties were 94.2%
Portfolio Restructuring Activity
Regency and its co-investment partner - Charter Hall Retail REIT
- dissolved the residual co-investment partnership during the
reported quarter. Following this, the portfolio assets were
dispersed as 100% ownership interests between Charter Hall and
Regency, according to the terms of its original partnership
As a result, Regency gained full ownership interest in Hilltop
Village (a 100,030 square foot center in Denver, Colo.) that is
occupied by King Soopers of
The Kroger Co.
), while complete interest in 3 assets was conferred to Charter
Hall. The company also vended one outparcel at a gross sale price
At quarter end, Regency sold Deer Springs Town Center - a 331,000
square feet shopping center in Las Vegas, Nev., for $50.5
million. Notably, Deer Springs is occupied by
Home Depot Inc.
), Toys 'R Us, Michael's and
Ross Stores Inc.
As of Mar 31, 2013, Regency had 4 projects under development with
estimated net development costs of $193.6 million.
As of Mar 31, 2013, Regency owned 345 retail properties
(including those held in co-investment partnerships), spanning a
total of 46.0 million square feet located across top U.S.
At the end of the first quarter of 2013, Regency's cash and cash
equivalents stood at about $28.5 million compared with $28.8
million at the end of the prior quarter. Its total debt came in
at $1.93 billion, slightly below $1.94 billion as of the end of
the prior quarter.
During the reported quarter, the company generated gross proceeds
of $63.3 million from its at-the-market equity program. The
company is expected to use the funds to finance its new
investment activities. Notably, Regency issued around 1.2 million
new common shares at a weighted average price of $52.59 per
On May 6, 2013, Regency declared a common stock quarterly
dividend of 46.25 cents per share, payable on Jun 5 to
stockholders of record as of May 22, 2013.
Regency has slightly raised the guidance range for full-year
2013. The company now expects core FFO per share in the range of
$2.50 - $2.57, up from the prior range of $2.48 - $2.56, and FFO
per share (including non-core items) to $2.47-$2.54, ahead of the
prior range of $2.45-$2.53. This is based on expectations of same
property NOI growth w/o term fees ranging from 2.5%-3.2%, above
the prior range of 2.0%-3.0% and cap rate for dispositions
(average) of 7.0%-8.0%, compared with the prior guidance of
We are encouraged by Regency's first-quarter results. The company
is actively spreading its footprint in high-income and
high-barrier markets through the addition of upscale assets.
Moreover, the inclusion of premium development and redevelopment
projects as well as leading national retailers as tenants is
noteworthy. Thus, we expect these activities to provide Regency a
considerable up-market potential and boosts its top-line growth
Regency currently holds a Zacks Rank #2 (Buy).
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.