Regency Centers (REG) Q2 FFO Misses Estimates, NOI Slips

Regency Centers Corporation’s REG second-quarter 2020 NAREIT funds from operations (FFO) per share of 61 cents missed the Zacks Consensus Estimate of 78 cents. The reported figure was also 35.8% lower than the prior-year quarter’s 95 cents.

Evidently, results reflect a decline in same property net operating income (NOI) because of a higher rate of uncollectible lease income in relation to the coronavirus pandemic. 

Further, total revenues of $231.1 million lagged the Zacks Consensus Estimate of $249.3 million. Further, the top line fell 16.2% year on year.

Notably, 415 properties of the company remained open and operational during the entire pandemic. Roughly 95% of Regency’s tenants were open, based on pro-rata Annual Base Rent (ABR) as of July-end.

Through Jul 31, 2020, the company collected 72% of second-quarter pro-rata base rent (77% when including executed rent deferral agreements) and 75% of July pro-rata base rent (79% when including executed rent deferral agreements).

Inside the Headlines

During the reported quarter, Regency Centers executed 1.3 million square feet of comparable new and renewal leases with blended rent spreads for the June quarter of 4.0%.

As of Jun 30, 2020, the company’s wholly-owned portfolio along with its pro-rata shares of co-investment partnerships was 93.9% leased. Its same-property portfolio was 94.5% leased. In its same property portfolio, anchor percent leased (includes spaces greater than or equal to 10,000 square feet) was 96.9%, denoting a slip of 20 basis points (bps) sequentially while same property shop percent leased (includes spaces less than 10,000 square feet) was 90.3%, marking a contraction of 110 bps.

Same-property NOI excluding termination fees plunged 20.1% on a year-over-year basis. Results reflect a higher rate of uncollectible lease income pertaining to the coronavirus pandemic.

Portfolio Activity

During the reported quarter, the company completed the sale of its joint venture interest in Kent Place in Denver, CO for $9.8 million.

As of Jun 30, 2020, the company had $192.3 million of in-process developments and redevelopments with roughly $70 million of remaining costs to complete.

Liquidity Update

As of Jun 30, 2020, Regency had a cash balance of nearly $590 million and no outstanding balance under its $1.25-billion revolving credit facility. Further, the company had a debt-to-EBITDAre ratio of 5.6X as of Jun 30, 2020. It has no unsecured maturities until 2022. During the quarter, the company closed a public offering of $600 million 3.70% unsecured notes due 2030.

Dividend Update

On Jul 29, 2020, Regency Centers’ board of directors announced a quarterly cash dividend of 59.5 cents per share on its common stock. The dividend will be paid out on Aug 24 to its shareholders of record as of Aug 14, 2020.

Regency Centers currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Regency Centers Corporation Price, Consensus and EPS Surprise

Regency Centers Corporation Price, Consensus and EPS Surprise

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

We now look forward to the earnings releases of other retail REITs like Federal Realty Investment Trust FRT and Kimco Realty Corporation KIM, which are scheduled to release their earnings this week while The Macerich Company MAC will report its quarterly numbers next week.

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

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