Higher revenue growth kept
Regency Centers Corporation
) winning streak going, with a positive earnings surprise of around
6.0% in second-quarter 2014. In particular, the company's core
funds from operations (core FFO) per share of 71 cents exceeded
both the Zacks Consensus Estimate and the year-ago quarter figure
by 4 cents.
Encouragingly, this retail real estate investment trust (REIT)
raised its outlook for 2014. In addition, including non-core items,
reported FFO for the quarter was 71 cents per share, up from the
prior-year quarter figure of 68 cents.
Total revenue for the quarter rose 10.3% year over year to
$134.9 million and also exceeded the Zacks Consensus Estimate of
Quarter in Details
Same property net operating income (NOI), excluding termination
fees, climbed 3.8% on a year-over-year basis, with same-space
rental rate growth of 61.2% on new leases and 6.3% on renewal
leases (cash basis for spaces vacant for less than 12 months).
Regency executed a total of 380 new and renewal lease deals for
1.6 million square feet of space. At the end of second-quarter
2014, its same properties portfolio was 95.3% leased, up 40 basis
points (bps) sequentially. On the other hand, all of its properties
were 95.0% leased, up 50 bps sequentially.
Regency disposed four co-investment assets for $66.7 million
($21.2 million being the company's share of sales price) and a
wholly-owned drug store for $2.4 million. Also, the company
completed one development project in the quarter for a net
development cost of $17.3 million.
Moreover, as of Jun 30, 2014, the company had seven projects in
its development pipeline, with estimated costs of $223.2 million
and 19 redevelopment projects in process reflecting a total
projected incremental investment of $93.1 million.
Also, in the quarter under review, Moody's Corporation (
) affirmed Regency's corporate credit and senior unsecured ratings
of Baa2, with a positive outlook.
Regency exited second-quarter 2014 with cash and cash
equivalents of nearly $45.6 million, up from $44.4 million at the
prior-quarter end. The company's total outstanding debt came in at
$2.03 billion, up from $2.00 billion at the end of Mar 2014.
Regency has raised its outlook for 2014 core FFO per share and
now expects it in the range of $2.75 - $2.80, up from $2.68 - $2.74
guided earlier. This new range is higher than the Zacks Consensus
Estimate of $2.72 per share of the same.
AmREIT Acquisition Offer
On July 29, Regency stated that AmREIT Inc. (
) received its acquisition proposal and is seeking strategic
alternatives. Notably, on Jul 10, Regency made an unsolicited offer
to buy AmREIT for $22 per share, which is payable in either cash or
stock or a blend of both (Read:
Regency Centers Bids for AmREIT for $22 per
Regency came up with another encouraging quarterly performance
this season. The company primarily focuses on building a premium
portfolio of grocery-anchored shopping centers. Such centers are
usually necessity driven and bring in dependable traffic.
Additionally, the outlook raise for the second time this year
boosts investors' confidence in the stock. Moreover, the AmREIT
acquisition, if materializes, would help Regency's Texas shopping
center portfolio to significantly increase in size and will pave
way for significant opportunities to fuel its same property
Regency currently carries a Zacks Rank #3 (Hold). Investors
interested in the retail REIT industry may consider General Growth
Properties, Inc. (
), having 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.
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