Regency Centers Reports Second Quarter 2017 Results
Second Quarter 2017 Highlights
- Net Income Attributable to Common Stockholders (“Net Income”) of
$0.28 per diluted share. - NAREIT Funds From Operations (“NAREIT FFO”) of
$0.84 per diluted share and Core Funds From Operations (“Core FFO”) of$0.93 per diluted share. - Same property Net Operating Income (“NOI”) as adjusted, which reflects adjustments for the
Equity One merger, excluding termination fees, increased 3.2% as compared to the same period in the prior year. - As of
June 30, 2017 , the total portfolio was 95.0% leased while the same property portfolio was 95.9% leased. - Spaces less than 10,000 square feet (“Small Shops”) were 92.1% leased, a 30 basis point increase sequentially.
- Executed 1.7 million square feet of new and renewal leases on a comparable basis, resulting in 9.4% blended rent spreads.
- Started one ground-up development project and three redevelopment projects representing a total investment of approximately
$105 million . - As of
June 30, 2017 , a total of 29 properties were in development or redevelopment representing a combined investment of more than$600 million . - Completed the re-opening of two tranches of senior unsecured notes:
$175 million 3.6% notes due 2027 and$125 million 4.4% notes due 2047. - Retired approximately
$112 million of loans secured by mortgages with interest rates ranging from 7.0% to 7.8%.
”Our exceptional portfolio of best-in-class shopping centers continues to thrive, as evidenced by our year-to-date same property NOI growth of 3.5% and occupancy levels at nearly 96%,” said Martin E. “Hap” Stein, Jr., Chairman and Chief Executive Officer. “Located in the country’s most desirable markets, leasing demand for conveniently located, well merchandised centers, such as ours, remains solid allowing us to continue to execute on operating fundamentals and drive sustainable long term growth.”
Financial Results
Regency reported Net Income for the second quarter of
The Company reported NAREIT Funds From Operations (“NAREIT FFO”) for the second quarter of
Core Funds From Operations (“Core FFO”) for the second quarter was
Operating Results
Second quarter Same property NOI as adjusted, excluding termination fees, increased 3.2% compared to the same period in 2016. This growth included a 70 basis point positive impact from redevelopments. Please note that for purposes of evaluating Same Property NOI on a comparative basis, and in light of the merger with
As of
Regency executed 1.7 million square feet of comparable new and renewal leases during the quarter at blended rent spreads of 9.4%. Rent spreads on new and renewal leases were 13.5% and 8.7%, respectively.
Investments
Property Transactions
During the quarter, the Company sold one wholly owned property and one co-investment property, for a combined gross sales price of
Developments and Redevelopments
During the quarter, the Company started the development of
At quarter end, the Company had 29 properties in development or redevelopment with combined, estimated net development costs of more than
Balance Sheet
Debt Offering
During the quarter and as previously announced, Regency completed the sale of two tranches of senior unsecured notes:
Proceeds from the
Preferred Redemption
As previously announced, Regency will redeem all of the issued and outstanding 6.0% Series 7 cumulative redeemable preferred shares (the “Preferred Stock”). The 3,000,000 shares of Preferred Stock will be redeemed on
2017 Guidance
The Company has updated certain components of its 2017 earnings guidance. These changes are summarized below. Please refer to the Company’s second quarter 2017 supplemental information package for a complete list of updates.
Full Year 2017 Guidance | ||||||
Previous Guidance | Updated Guidance | |||||
Net Income per diluted share | $0.67 - $0.77 | $0.68 - $0.74 | ||||
NAREIT FFO per diluted share | $3.00 - $3.10 | $2.97 - $3.03 | ||||
Core FFO per diluted share | $3.60 - $3.68 | $3.62 - $3.68 |
Dividend
On
Conference Call Information
To discuss Regency’s second quarter results, the Company will host a conference call on
Second Quarter Conference Call |
|||
Date: | Friday, August 4, 2017 | ||
Time: | 11:00 a.m. ET | ||
Dial#: | 877-407-0789 or 201-689-8562 | ||
Webcast: |
Replay
Webcast Archive: Investor Relations page under 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 to NAREIT FFO and Core FFO — Actual (in thousands)
For the Periods Ended June 30, 2017 and 2016 |
Three Months Ended |
Year to Date |
||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||
Reconciliation of Net Income to NAREIT FFO: | ||||||||||||||
Net Income Attributable to Common Stockholders | $ | 48,368 | 34,810 | $ | 15,144 | 82,687 | ||||||||
Adjustments to reconcile to NAREIT Funds From Operations(1): | ||||||||||||||
Depreciation and amortization (excluding FF&E) | 100,144 | 48,130 | 167,589 | 95,546 | ||||||||||
Provision for impairment to operating properties | - | - | - | 659 | ||||||||||
Gain on sale of operating properties | (5,054 | ) | (3,308 | ) | (5,065 | ) | (14,949 | ) | ||||||
Exchangeable operating partnership units | 104 | 64 | 85 | 150 | ||||||||||
NAREIT Funds From Operations | $ | 143,562 | 79,696 | $ | 177,753 | 164,093 | ||||||||
Reconciliation of NAREIT FFO to Core FFO: | ||||||||||||||
NAREIT Funds From Operations | $ | 143,562 | 79,696 | $ | 177,753 | 164,093 | ||||||||
Adjustments to reconcile to Core Funds From Operations(1): | ||||||||||||||
Acquisition pursuit and closing costs | 110 | 1,056 | 137 | 1,813 | ||||||||||
Development pursuit costs | (74 | ) | 395 | 318 | 620 | |||||||||
Gain on sale of land | (2,446 | ) | (148 | ) | (2,850 | ) | (7,258 | ) | ||||||
Provision for impairment to land | - | - | - | 512 | ||||||||||
(Gain) loss on derivative instruments and hedge ineffectiveness | (6 | ) | 1 | (14 | ) | 3 | ||||||||
Early extinguishment of debt | 12,404 | 14 | 12,404 | 14 | ||||||||||
Merger related costs | 4,676 | - | 74,408 | - | ||||||||||
Merger related debt offering interest | - | - | 975 | - | ||||||||||
Preferred redemption costs | - | - | 9,369 | - | ||||||||||
Core Funds From Operations | $ | 158,226 | 81,014 | $ | 272,500 | 159,797 | ||||||||
Weighted Average Shares For Diluted Earnings per Share | 170,421 | 98,218 | 148,931 | 98,075 | ||||||||||
Weighted Average Shares For Diluted FFO and Core FFO per Share | 170,743 | 98,372 | 149,170 | 98,229 | ||||||||||
(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 income from operations to pro-rata same property NOI.
Reconciliation of Net Income to Pro-Rata Same Property NOI as adjusted — Actual (in thousands)
For the Periods Ended June 30, 2017 and 2016 |
Three Months Ended |
Year to Date |
||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||
Net Income Attributable to Common Stockholders | $ | 48,368 | 34,810 | $ | 15,144 | 82,687 | ||||||||
Less: | ||||||||||||||
Management, transaction, and other fees | (6,601 | ) | (6,140 | ) | (13,307 | ) | (12,904 | ) | ||||||
Gain on sale of real estate | (4,366 | ) | (548 | ) | (4,781 | ) | (13,417 | ) | ||||||
Other(1) | (15,064 | ) | (3,584 | ) | (23,262 | ) | (7,492 | ) | ||||||
Plus: | ||||||||||||||
Depreciation and amortization | 92,230 | 40,299 | 152,284 | 79,015 | ||||||||||
General and administrative | 16,746 | 16,350 | 34,419 | 32,649 | ||||||||||
Other operating expense, excluding provision for doubtful accounts | 5,697 | 1,945 | 76,643 | 3,846 | ||||||||||
Other expense (income) | 46,924 | 23,799 | 73,026 | 49,764 | ||||||||||
Equity in income of investments in real estate excluded from NOI (2) | 12,377 | 12,008 | 26,710 | 21,797 | ||||||||||
Net income attributable to noncontrolling interests | 680 | 568 | 1,332 | 1,003 | ||||||||||
Preferred stock dividends and issuance costs | 1,125 | 5,266 | 12,981 | 10,531 | ||||||||||
NOI | 198,116 | 124,773 | 351,189 | 247,479 | ||||||||||
Less non-same property NOI (3) |
(9,279 | ) | (4,114 | ) | (16,007 | ) | (6,775 | ) | ||||||
Plus same property NOI for non-ownership periods of Equity One(4) | - | 62,330 | 43,005 | 125,508 | ||||||||||
Same Property NOI as adjusted | $ | 188,837 | 182,989 | $ | 378,187 | 366,212 | ||||||||
Same Property NOI as adjusted without Termination Fees | $ | 188,813 | 182,886 | $ | 377,928 | 365,311 | ||||||||
Same Property NOI as adjusted without Termination Fees or Redevelopments | $ | 167,703 | 163,538 | $ | 335,605 | 326,242 | ||||||||
(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 2 of the Company's second quarter 2017 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 Core FFO — Guidance
Full Year | |||||||
NAREIT FFO and Core FFO Guidance: | 2017 | ||||||
Net income attributable to common stockholders | $ | 0.68 | 0.74 | ||||
Adjustments to reconcile net income to NAREIT FFO: | |||||||
Depreciation and amortization | 2.32 | 2.32 | |||||
Gain on sale of operating properties | (0.03 | ) | (0.03 | ) | |||
NAREIT Funds From Operations | $ | 2.97 | 3.03 | ||||
Adjustments to reconcile NAREIT FFO to Core FFO: | |||||||
Acquisition pursuit and closing costs | 0.01 | 0.01 | |||||
Development pursuit costs | 0.01 | 0.01 | |||||
Gain on sale of land | (0.02 | ) | (0.02 | ) | |||
Early extinguishment of debt | 0.08 | 0.08 | |||||
Merger related costs | 0.49 | 0.49 | |||||
Preferred redemption costs | 0.08 | 0.08 | |||||
Core Funds From Operations | $ | 3.62 | 3.68 | ||||
The Company has published forward-looking statements and additional financial information in its second quarter 2017 supplemental information package that may help investors estimate earnings for 2017. A copy of the Company’s second quarter 2017 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