Regency Centers Reports Third Quarter 2017 Results
Third Quarter 2017 Highlights
- Net Income Attributable to Common Stockholders (“Net Income”) of
$0.35 per diluted share. - NAREIT Funds From Operations (“NAREIT FFO”) of
$0.91 per diluted share and Core Funds From Operations (“Core FFO”) of$0.95 per diluted share. - Same property Net Operating Income (“NOI”) as adjusted, which reflects adjustments for the
Equity One merger, excluding termination fees, increased 5.0% as compared to the same period in the prior year. - As of
September 30, 2017 , the same property portfolio was 96.1% leased, a 20 basis point increase sequentially. - Spaces less than 10,000 square feet (“Small Shops”) were 92.5% leased, a 40 basis point increase sequentially.
- Executed 1.8 million square feet of new and renewal leases on a comparable basis, resulting in 17.4% blended rent spreads on new leases.
- As of
September 30, 2017 , a total of 30 properties were in development or redevelopment representing a combined investment of approximately$600 million .
“Our experienced and deep team, unequaled high quality portfolio, value add asset management and development capabilities and opportunities, and strong balance sheet continue to drive solid performance even in today’s challenging environment,” stated Martin E. “Hap” Stein, Jr., Chairman and Chief Executive Officer. “Regency is well positioned to grow NOI, NAV, earnings and shareholder value at levels that are at or near the top of our shopping center peers.”
Financial Results
Regency reported Net Income for the third quarter of
The Company reported NAREIT FFO for the third quarter of
Core FFO for the third quarter was
Operating Results
Third quarter same property NOI as adjusted, excluding termination fees, increased 5.0% compared to the same period in 2016. This growth included an 80 basis point positive impact from redevelopments. The
As of
Regency executed 1.8 million square feet of comparable new and renewal leases during the quarter at blended rent spreads of 7.8%. Rent spreads on new and renewal leases were 17.4% and 5.7%, respectively.
Investments
Property Transactions
During the quarter, the Company sold one co-investment property for a gross sales price of
Developments and Redevelopments
At quarter end, the Company had 30 properties in development or redevelopment with combined, estimated net development costs of approximately
Subsequent to the third quarter, the Company started a ground up development project in the Midtown neighborhood of
Balance Sheet
Preferred Redemption
As previously announced, Regency redeemed all of its issued and outstanding 6.0% Series 7 cumulative redeemable preferred shares (the “Preferred Stock”). The 3,000,000 shares of Preferred Stock were 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 third quarter 2017 supplemental information package for a complete list of updates.
Full Year 2017 Guidance | ||||
Previous Guidance | Updated Guidance | |||
Net Income per diluted share | $0.68 - $0.74 | $0.76 - $0.81 | ||
NAREIT FFO per diluted share | $2.97 - $3.03 | $3.00- $3.05 | ||
Core FFO per diluted share | $3.62 - $3.68 | $3.66- $3.70 | ||
Acquisitions ($ thousands)
Cap Rate (weighted average) |
$0 - $80,000
+/- 5.0% |
+/- $225,000
+/- 5.0% |
||
Dispositions ($ thousands)
Cap Rate (weighted average) |
$100,000 - $200,000
6.25% - 7.25% |
+/- $225,000
+/- 7.0% |
Dividend
On
Conference Call Information
To discuss Regency’s third quarter results, the Company will host a conference call on
Third Quarter Conference Call |
||
Date: | Thursday, November 2, 2017 | |
Time: | 9:00 a.m. ET | |
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 Core FFO - Actual (in thousands)
For the Periods Ended September 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 | $ | 59,666 | 5,305 | $ | 74,810 | 87,992 | ||||||||
Adjustments to reconcile to NAREIT Funds From Operations(1): | ||||||||||||||
Depreciation and amortization (excluding FF&E) | 99,284 | 47,826 | 266,873 | 143,373 | ||||||||||
Provision for impairment to operating properties | - | - | - | 659 | ||||||||||
Gain on sale of operating properties | (3,349 | ) | (23,067 | ) | (8,415 | ) | (38,016 | ) | ||||||
Exchangeable operating partnership units | 132 | 16 | 217 | 165 | ||||||||||
NAREIT Funds From Operations | $ | 155,733 | 30,080 | $ | 333,485 | 194,173 | ||||||||
Reconciliation of NAREIT FFO to Core FFO: | ||||||||||||||
NAREIT Funds From Operations | $ | 155,733 | 30,080 | $ | 333,485 | 194,173 | ||||||||
Adjustments to reconcile to Core Funds From Operations(1): | ||||||||||||||
Acquisition pursuit and closing costs | - | (47 | ) | 138 | 1,766 | |||||||||
Development pursuit costs | 202 | 287 | 521 | 907 | ||||||||||
Gain on sale of land | (119 | ) | (628 | ) | (2,969 | ) | (7,886 | ) | ||||||
Provision for impairment to land | - | 35 | - | 547 | ||||||||||
Loss on derivative instruments and hedge ineffectiveness | 2 | 40,586 | (12 | ) | 40,589 | |||||||||
Early extinguishment of debt | - | 13,943 | 12,404 | 13,957 | ||||||||||
Merger related costs | 1,175 | - | 75,584 | - | ||||||||||
Merger related debt offering interest | - | - | 975 | - | ||||||||||
Preferred redemption costs | 2,859 | - | 12,226 | - | ||||||||||
Hurricane losses | 1,852 | - | 1,852 | - | ||||||||||
Core Funds From Operations | $ | 161,704 | 84,256 | $ | 434,204 | 244,053 | ||||||||
Weighted Average Shares For Diluted Earnings per Share | 170,466 | 104,255 | 156,190 | 100,128 | ||||||||||
Weighted Average Shares For Diluted FFO and Core FFO per Share | 170,816 | 104,409 | 156,467 | 100,282 | ||||||||||
(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 Attributable to Common Stockholders to Pro-Rata Same Property NOI as adjusted - Actual (in thousands)
For the Periods Ended September 30, 2017 and 2016 |
Three Months Ended |
Year to Date |
||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||
Net Income Attributable to Common Stockholders | $ | 59,666 | 5,305 | $ | 74,810 | 87,992 | ||||||||
Less: | ||||||||||||||
Management, transaction, and other fees | (6,047 | ) | (5,855 | ) | (19,353 | ) | (18,759 | ) | ||||||
Gain on sale of real estate | (131 | ) | (9,580 | ) | (4,913 | ) | (22,997 | ) | ||||||
Other(1) | (13,273 | ) | (3,680 | ) | (36,534 | ) | (11,170 | ) | ||||||
Plus: | ||||||||||||||
Depreciation and amortization | 91,474 | 40,705 | 243,757 | 119,721 | ||||||||||
General and administrative | 15,199 | 16,046 | 49,618 | 48,695 | ||||||||||
Other operating expense, excluding provision for doubtful accounts | 2,130 | 498 | 78,774 | 4,346 | ||||||||||
Other expense (income) | 33,708 | 75,653 | 106,734 | 125,416 | ||||||||||
Equity in income of investments in real estate excluded from NOI (2) | 11,809 | (116 | ) | 38,519 | 21,681 | |||||||||
Net income attributable to noncontrolling interests | 769 | 543 | 2,101 | 1,545 | ||||||||||
Preferred stock dividends and issuance costs | 3,147 | 5,266 | 16,128 | 15,797 | ||||||||||
NOI |
198,451 | 124,785 | 549,641 | 372,267 | ||||||||||
Less non-same property NOI (3) | (7,626 | ) | (5,669 | ) | (23,824 | ) | (12,618 | ) | ||||||
Plus same property NOI for non-ownership periods of Equity One(4) | - | 62,555 | 43,005 | 188,063 | ||||||||||
Same Property NOI as adjusted | $ | 190,825 | 181,671 | $ | 568,822 | 547,712 | ||||||||
Same Property NOI as adjusted without Termination Fees | $ | 190,611 | 181,534 | $ | 568,350 | 546,674 | ||||||||
Same Property NOI as adjusted without Termination Fees or Redevelopments | $ | 166,742 | 159,950 | $ | 498,755 | 482,686 | ||||||||
(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 third 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 | $ | 0.76 | 0.81 | |||
Adjustments to reconcile net income to NAREIT FFO: | ||||||
Depreciation and amortization | 2.29 | 2.29 | ||||
Gain on sale of operating properties | (0.05 | ) | (0.05 | ) | ||
NAREIT Funds From Operations | $ | 3.00 | 3.05 | |||
Adjustments to reconcile NAREIT FFO to Core FFO: | ||||||
Acquisition pursuit and closing costs | 0.00 | 0.00 | ||||
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 | 0.50 | 0.49 | ||||
Preferred redemption costs | 0.08 | 0.08 | ||||
Hurricane losses | 0.01 | 0.01 | ||||
Core Funds From Operations | $ | 3.66 | 3.70 |
The Company has published forward-looking statements and additional financial information in its third quarter 2017 supplemental information package that may help investors estimate earnings for 2017. A copy of the Company’s third 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