Regency Centers Reports First Quarter 2018 Results
First Quarter 2018 Highlights
- First quarter Net Income Attributable to Common Stockholders (“Net Income”) of
$0.31 per diluted share. - First quarter NAREIT Funds From Operations (“NAREIT FFO”) of
$0.96 per diluted share. - Same property Net Operating Income (“NOI”) as adjusted, excluding termination fees, increased 4.0% as compared to the same period in the prior year, which reflects adjustments for the
Equity One merger. - As of
March 31, 2018 , the same property portfolio was 95.7% leased. - As of
March 31, 2018 , a total of 19 properties were in development or redevelopment representing a total investment of approximately$454 million . - Acquired three shopping centers during the quarter and one subsequent to quarter end for approximately
$134 million . - Repurchased 2.145 million shares of common stock at an average price of
$58.24 per share for$125 million as part of the Company’s previously announced stock repurchase program. - Completed a public offering of
$300 million 4.125% notes due 2028 (the “Notes”) and increased the size of its unsecured revolving credit facility (the “Facility”) to$1.25 billion while extending the maturity date of the Facility to 2023. - On
April 26, 2018 ,Lisa Palmer andDeirdre J. Evens were elected to Regency’s Board of Directors (the “Board”) along with nine returning directors.
“Well conceived and well merchandised shopping centers, located in affluent and dense infill communities and neighborhoods, remain a critical component to a retailers success, as demonstrated by another quarter of solid results from Regency’s preeminent portfolio” stated Martin E. “Hap” Stein, Jr., Chairman and Chief Executive Officer. “Regency’s unequaled combination of strategic advantages will continue to enable us to meet the challenges of the ever-changing retail environment and further position us to attract winning retailers and grow shareholder value.”
Financial Results
Regency reported Net Income for the first quarter of
The Company reported NAREIT FFO for the first quarter of
The Company reported Operating FFO for the first quarter of
Operating Results
First quarter same property NOI as adjusted, excluding termination fees, increased 4.0% compared to the same period in 2017 driven primarily by base rent growth. In light of the merger with
As of
For the three months ended
Investments
Property Transactions
During the quarter the Company closed on
- Ballard Blocks I (
Seattle, WA ) – The Company acquired a 49.9% equity interest in Ballard Blocks I, an operating 132,000 square foot shopping center, anchored by Trader Joe’s, for$27.2 million . Regency also acquired a 49.9% interest in adjacent land, and concurrently announced the development start of Ballard Blocks II (description below). - District at
Metuchen (Metuchen, NJ ) – Regency and a co-investment partner acquired District atMetuchen , a 67,000 square footWhole Foods Market anchored shopping center located in theNew York metro area for a gross purchase price of$33.8 million . The Company’s share of the purchase price was$6.8 million . - Hewlett Crossing I & II (
Hewlett, NY ) – The Company acquiredHewlett Crossing I, a 32,000 square foot retail center anchored by Petco, for a gross purchase price of$19.5 million . A secured mortgage of$9.7 million was assumed at closing. Regency also acquired the adjacent Hewlett Crossing II, a 20,000 square foot neighborhood retail center anchored byDuane Reade , for a gross purchase price of$11.4 million . Regency will operate the two centers as a single center known as Hewlett Crossing. - Regency sold one Winn-Dixie anchored operating property for a gross purchase price of
$3.5 million located inJacksonville, FL.
Subsequent to quarter end, Regency closed on a
Rivertowns Square (Dobbs Ferry, NY ) – Regency acquiredRivertowns Square , a 116,000 square foot retail shopping center, anchored by Brooklyn Harvest Market, a specialty grocer with seven existing locations in theNew York metro area, for a gross purchase price of$68.9 million .- Regency sold one operating property for a gross purchase price of
$10.6 million located inPalm Coast, FL.
Developments and Redevelopments
As previously disclosed, during the quarter the Company started one ground up development project.
- Ballard Blocks II (
Seattle, WA ) – Ballard Blocks II is an 114,000 square foot joint venture development anchored byPCC Community Markets. Regency’s pro-rata share of estimated development cost is$31.1 million with a projected 6.3% stabilized yield.
At quarter end, the Company had 19 properties in development or redevelopment with combined, estimated net development costs of approximately
During the quarter, Regency completed five redevelopment projects with combined costs of approximately
Capital Markets
Stock Repurchase Program
During the quarter, Regency purchased 2.145 million shares of common stock at an average price of
Debt Offering
As previously disclosed on
Unsecured Revolving Credit Facility
As previously disclosed on
Dividend
On
Board Changes
At the Annual Shareholders meeting on
2018 Guidance
The Company has updated certain components of its 2018 earnings guidance. Please refer to the Company’s first quarter 2018 supplemental information package for a complete list of updates. Updated guidance for NAREIT FFO includes a one-time charge of
2018 Guidance |
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Previous Guidance |
Updated Guidance |
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Net Income Attributable to Common Stockholders (“Net Income”) | $1.47 - $1.56 | $1.33 - $1.38 | |||
NAREIT Funds From Operations (“NAREIT FFO”) per diluted share | $3.73 - $3.82 | $3.74 - $3.79 | |||
Operating Funds From Operations ("Operating FFO") per diluted share | $3.48 - $3.54 | $3.49 - $3.54 | |||
Same Property Net Operating Income (“SPNOI”) Growth excluding termination fees (pro-rata) |
2.25% - 3.25% | 2.40% - 3.25% | |||
Conference Call Information
To discuss Regency’s first quarter results, the Company will host a conference call on
First Quarter Earnings Conference Call | ||
Date: | Tuesday, May 1, 2018 | |
Time: | 11:00 a.m. EDT | |
Dial#: | 877-407-0789 or 201-689-8562 | |
Webcast: |
Replay
Webcast Archive: Investor Relations page under Events & Webcasts
Non-GAAP Disclosure
The Company uses certain non-GAAP performance measures, in addition to the required GAAP presentations, as it believes these measures improve the understanding of the Company's operational results. Regency manages its entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, the Company believes presenting its pro-rata share of operating results regardless of ownership structure, along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more meaningful. Management continually evaluates the usefulness, relevance, limitations, and calculation of the Company’s reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
NAREIT FFO is a commonly used measure of REIT performance, which the
Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO and Operating FFO - Actual (in thousands) |
|||||||||||||
For the Periods Ended March 31, 2018 and 2017 |
Three Months Ended |
Year to Date |
|||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||
Reconciliation of Net Income (Loss) to NAREIT FFO: | |||||||||||||
Net Income (Loss) Attributable to Common Stockholders | $ | 52,660 |
(33,223) |
$ | 52,660 | (33,223 | ) | ||||||
Adjustments to reconcile to NAREIT Funds From Operations(1): | |||||||||||||
Depreciation and amortization (excluding FF&E) | 96,197 | 67,444 | 96,197 | 67,444 | |||||||||
Provision for impairment to operating properties | 16,054 | - | 16,054 | - | |||||||||
Gain on sale of operating properties | (102 | ) | (12 | ) | (102 | ) | (12 | ) | |||||
Gain on remeasurement of investment in real estate partnership | - | - | - | - | |||||||||
Exchangeable operating partnership units | 111 | (19 | ) | 111 | (19 | ) | |||||||
NAREIT Funds From Operations | $ | 164,920 | 34,190 | $ | 164,920 | 34,190 | |||||||
Reconciliation of NAREIT FFO to Operating FFO: | |||||||||||||
NAREIT Funds From Operations | $ | 164,920 | 34,190 | $ | 164,920 | 34,190 | |||||||
Adjustments to reconcile to Operating Funds From Operations(1): | |||||||||||||
Acquisition pursuit and closing costs | - | 27 | - | 27 | |||||||||
Income tax benefit | - | - | - | - | |||||||||
Gain on sale of land | (107 | ) | (404 | ) | (107 | ) | (404 | ) | |||||
Provision for impairment to land | - | - | - | - | |||||||||
Loss on derivative instruments and hedge ineffectiveness | - | (8 | ) | - | (8 | ) | |||||||
Early extinguishment of debt | 162 | - | 162 | - | |||||||||
Interest on bonds for period from notice to redemption | 600 | - | 600 | - | |||||||||
Merger related costs | - | 69,732 | - | 69,732 | |||||||||
Merger related debt offering interest | - | 975 | - | 975 | |||||||||
Preferred redemption costs | - | 9,368 | - | 9,368 | |||||||||
Hurricane losses | - | - | - | - | |||||||||
Straight line rent, net | (4,081 | ) | (3,365 | ) | (4,081 | ) | (3,365 | ) | |||||
Above/below market rent amortization, net | (8,422 | ) | (3,719 | ) | (8,422 | ) | (3,719 | ) | |||||
Debt premium/discount amortization | (899 | ) | (641 | ) | (899 | ) | (641 | ) | |||||
Operating Funds From Operations | $ | 152,173 | 106,155 | $ | 152,173 | 106,155 | |||||||
Weighted Average Shares For Diluted Earnings per Share | 170,959 |
126,649 |
170,959 | 126,649 | |||||||||
Weighted Average Shares For Diluted FFO and Operating FFO per Share | 171,309 |
127,051 |
171,309 | 127,051 | |||||||||
(1) Includes pro-rata share of unconsolidated co-investment partnerships, net of pro-rata share attributable to noncontrolling interests. |
Same property NOI is a key non-GAAP measure used by management in evaluating the operating performance of Regency’s properties. The Company provides a reconciliation of net income to pro-rata same property NOI.
Reconciliation of Net Income (Loss) Attributable to Common Stockholders to Pro-Rata Same Property NOI as adjusted - Actual (in thousands) |
|||||||||||||||||
For the Periods Ended March 31, 2018 and 2017 |
Three Months Ended |
Year to Date |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||||
Net Income (Loss) Attributable to Common Stockholders | $ | 52,660 | (33,223 | ) | $ | 52,660 | (33,223 | ) | |||||||||
Less: | |||||||||||||||||
Management, transaction, and other fees | (7,158 | ) | (6,706 | ) | (7,158 | ) | (6,706 | ) | |||||||||
Income tax benefit | - | - | - | - | |||||||||||||
Gain on sale of real estate | (96 | ) | (415 | ) | (96 | ) | (415 | ) | |||||||||
Other(1) | (14,173 | ) | (8,196 | ) | (14,173 | ) | (8,196 | ) | |||||||||
Plus: | |||||||||||||||||
Depreciation and amortization | 88,525 | 60,053 | 88,525 | 60,053 | |||||||||||||
General and administrative | 17,606 | 17,673 | 17,606 | 17,673 | |||||||||||||
Other operating expense, excluding provision for doubtful accounts | 437 | 70,945 | 437 | 70,945 | |||||||||||||
Other expense (income) | 52,969 | 26,102 | 52,969 | 26,102 | |||||||||||||
Equity in income of investments in real estate excluded from NOI (2) | 15,093 | 14,334 | 15,093 | 14,334 | |||||||||||||
Net income attributable to noncontrolling interests | 805 | 652 | 805 | 652 | |||||||||||||
Preferred stock dividends and issuance costs | - | 11,856 | - | 11,856 | |||||||||||||
NOI | 206,668 | 153,075 | 206,668 | 153,075 | |||||||||||||
Less non-same property NOI (3) | (2,496 | ) | (1,051 | ) | (2,496 | ) | (1,051 | ) | |||||||||
Plus same property NOI for non-ownership periods of Equity One(4) | - | 43,757 | - | 43,757 | |||||||||||||
Same Property NOI as adjusted | $ | 204,172 | 195,781 | $ | 204,172 | 195,781 | |||||||||||
Same Property NOI as adjusted without Termination Fees | $ | 203,110 | 195,301 | $ | 203,110 | 195,301 | |||||||||||
Same Property NOI as adjusted without Termination Fees or Redevelopments | $ | 180,401 | 175,831 | $ | 180,401 | 175,831 | |||||||||||
(1) Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interests. | |||||||||||||||||
(2) Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, such as, but not limited to, straight-line rental income, above and below market rent amortization, depreciation and amortization, and interest expense. | |||||||||||||||||
(3) Includes revenues and expenses attributable to Non-Same Property, Projects in Development, corporate activities, and noncontrolling interests. | |||||||||||||||||
(4) Refer to page ii of the Company's first quarter 2018 supplemental package for Same Property NOI detail for the non-ownership periods of Equity One. | |||||||||||||||||
Reported results are preliminary and not final until the filing of the Company’s Form 10-Q with the
Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO and Operating FFO — Guidance(per diluted share)
Full Year | ||||||||
NAREIT FFO and Operating FFO Guidance: | 2018 | |||||||
Net income attributable to common stockholders | $ 1.33 | 1.38 | ||||||
Adjustments to reconcile net income to NAREIT FFO: | ||||||||
Depreciation and amortization | 2.32 | 2.32 | ||||||
Provision for impairment | 0.09 | 0.09 | ||||||
NAREIT Funds From Operations | $ 3.74 | 3.79 | ||||||
Adjustments to reconcile NAREIT FFO to Operating FFO: | ||||||||
Early extinguishment of debt | 0.06 | 0.06 | ||||||
Other non-comparable costs | 0.01 | 0.01 | ||||||
Straight line rent, net | (0.10) | (0.10) | ||||||
Market rent amortization, net | (0.20) | (0.20) | ||||||
Debt mark-to-market | (0.02) | (0.02) | ||||||
Operating Funds From Operations | $ 3.49 | 3.54 |
The Company has published forward-looking statements and additional financial information in its first quarter 2018 supplemental information package that may help investors estimate earnings for 2018. A copy of the Company’s first quarter 2018 supplemental information will be available on the Company's website at www.RegencyCenters.com or by written request to: Investor Relations,
About
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
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Source:
Regency Centers Corporation
Laura Clark, 904-598-7831
LauraClark@RegencyCenters.com