Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
 
Commission File Number 1-12298 (Regency Centers Corporation)
Commission File Number 0-24763 (Regency Centers, L.P.)
 
REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
FLORIDA (REGENCY CENTERS CORPORATION)
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=11873988&doc=16
59-3191743
DELAWARE (REGENCY CENTERS, L.P)
59-3429602
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
One Independent Drive, Suite 114
Jacksonville, Florida 32202
(904) 598-7000
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Regency Centers Corporation              YES  x    NO  o                     Regency Centers, L.P.              YES  x    NO  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Regency Centers Corporation              YES  x    NO  o                     Regency Centers, L.P.              YES  x    NO  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
x
Accelerated filer
o
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 

Regency Centers, L.P.:
Large accelerated filer
o
Accelerated filer
x
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Regency Centers Corporation              YES  o    NO   o                    Regency Centers, L.P.              YES  o    NO  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Regency Centers Corporation              YES  o    NO   x                    Regency Centers, L.P.              YES  o    NO  x
The number of shares outstanding of the Regency Centers Corporation’s common stock was 170,110,464 as of November 2, 2017.
 




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2017, of Regency Centers Corporation and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to “Regency Centers Corporation” or the “Parent Company” mean Regency Centers Corporation and its controlled subsidiaries; and references to “Regency Centers, L.P.” or the “Operating Partnership” mean Regency Centers, L.P. and its controlled subsidiaries. The term “the Company”,"Regency Centers" or “Regency” means the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust (“REIT”) and the general partner of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units (“Units”). As of September 30, 2017, the Parent Company owned approximately 99.8% of the Units in the Operating Partnership. The remaining limited Units are owned by investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.
The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:
Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
Eliminates duplicative disclosure and provides a more streamlined and readable presentation; and
Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent Company consists of the same individuals as the management of the Operating Partnership. These individuals are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the key differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, the Parent Company does not have any other indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the debt of the Parent Company. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units. The limited partners' units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of stockholders' equity in noncontrolling interests in the Parent Company's financial statements.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company.
As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Although the Parent Company is the issuer of the combined $500 million of unsecured public and private notes, the Operating Partnership is a co-issuer and guarantor of these notes. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.




TABLE OF CONTENTS
 
 
Form 10-Q
Report Page
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements (Unaudited)
 
 
 
 
Regency Centers Corporation:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Equity for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2017 and 2016
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Capital for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2017 and 2016
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
SIGNATURES
 
 
 
 
 
 





PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
September 30, 2017 and December 31, 2016
(in thousands, except share data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,578,145

 
1,660,424

Buildings and improvements
 
5,834,405

 
3,092,197

Properties in development
 
433,707

 
180,878

 
 
10,846,257

 
4,933,499

Less: accumulated depreciation
 
1,281,510

 
1,124,391

 
 
9,564,747

 
3,809,108

Properties held for sale
 
27,802

 

Investments in real estate partnerships
 
380,930

 
296,699

Net real estate investments
 
9,973,479

 
4,105,807

Cash and cash equivalents
 
23,543

 
13,256

Restricted cash
 
7,098

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $12,279 and $9,021 at September 30, 2017 and December 31, 2016, respectively
 
143,153

 
111,722

Deferred leasing costs, less accumulated amortization of $91,213 and $83,529 at September 30, 2017 and December 31, 2016, respectively
 
71,826

 
69,000

Acquired lease intangible assets, less accumulated amortization of $123,662 and $56,695 at September 30, 2017 and December 31, 2016, respectively
 
508,868

 
118,831

Other assets
 
390,778

 
65,667

Total assets
$
11,118,745

 
4,488,906

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,943,986

 
1,363,925

Unsecured credit facilities
 
578,144

 
278,495

Accounts payable and other liabilities
 
276,363

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $49,968 and $23,538 at September 30, 2017 and December 31, 2016, respectively
 
637,217

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
46,351

 
28,868

Total liabilities
 
4,482,061

 
1,864,404

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 13,000,000 Series 6 and 7 shares issued and outstanding at December 31, 2016, with liquidation preferences of $25 per share
 

 
325,000

Common stock, $0.01 par value per share, 220,000,000 and 150,000,000 shares authorized; 170,109,043 and 104,497,286 shares issued at September 30, 2017 and December 31, 2016, respectively
 
1,701

 
1,045

Treasury stock at cost, 362,764 and 347,903 shares held at September 30, 2017 and December 31, 2016, respectively
 
(18,048
)
 
(17,062
)
Additional paid in capital
 
7,779,103

 
3,294,923

Accumulated other comprehensive loss
 
(14,141
)
 
(18,346
)
Distributions in excess of net income
 
(1,153,153
)
 
(994,259
)
Total stockholders’ equity
 
6,595,462

 
2,591,301

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $21,708 and $10,630 at September 30, 2017 and December 31, 2016, respectively
 
10,906

 
(1,967
)
Limited partners’ interests in consolidated partnerships
 
30,316

 
35,168

Total noncontrolling interests
 
41,222

 
33,201

Total equity
 
6,636,684

 
2,624,502

Total liabilities and equity
$
11,118,745

 
4,488,906

See accompanying notes to consolidated financial statements.

1





REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
195,393

 
111,886

$
532,625

 
329,506

Percentage rent
 
1,147

 
495

 
5,509

 
2,651

Recoveries from tenants and other income
 
59,554

 
34,532

 
162,089

 
103,894

Management, transaction, and other fees
 
6,047

 
5,855

 
19,353

 
18,759

Total revenues
 
262,141

 
152,768

 
719,576

 
454,810

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
91,474

 
40,705

 
243,757

 
119,721

Operating and maintenance
 
38,020

 
23,373

 
103,888

 
69,767

General and administrative
 
15,199

 
16,046

 
49,618

 
48,695

Real estate taxes
 
29,315

 
17,058

 
79,636

 
49,697

Other operating expenses (note 2)
 
3,195

 
1,046

 
81,621

 
5,795

Total operating expenses
 
177,203

 
98,228

 
558,520

 
293,675

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
34,679

 
21,945

 
97,285

 
70,489

Provision for impairment
 

 

 

 
1,666

Early extinguishment of debt
 

 
13,943

 
12,404

 
13,943

Net investment (income) loss, including unrealized (gains) losses of ($842) and ($383), and ($1,705) and ($888) for the three and nine months ended September 30, 2017 and 2016, respectively
 
(971
)
 
(821
)
 
(2,955
)
 
(1,268
)
Loss on derivative instruments
 

 
40,586

 

 
40,586

Total other expense (income)
 
33,708

 
75,653

 
106,734

 
125,416

Income from operations before equity in income of investments in real estate partnerships
 
51,230

 
(21,113
)
 
54,322

 
35,719

Equity in income of investments in real estate partnerships
 
12,221

 
22,647

 
33,804

 
46,618

Income from operations
 
63,451

 
1,534

 
88,126

 
82,337

Gain on sale of real estate, net of tax
 
131

 
9,580

 
4,913

 
22,997

Net income
 
63,582

 
11,114

 
93,039

 
105,334

Noncontrolling interests:
 
 
 
 
 
 
 
 
Exchangeable operating partnership units
 
(132
)
 
(16
)
 
(217
)
 
(165
)
Limited partners’ interests in consolidated partnerships
 
(637
)
 
(527
)
 
(1,884
)
 
(1,380
)
Income attributable to noncontrolling interests
 
(769
)
 
(543
)
 
(2,101
)
 
(1,545
)
Net income attributable to the Company
 
62,813

 
10,571

 
90,938

 
103,789

Preferred stock dividends and issuance costs
 
(3,147
)
 
(5,266
)
 
(16,128
)
 
(15,797
)
Net income attributable to common stockholders
$
59,666

 
5,305

$
74,810

 
87,992


 
 
 
 
 
 
 
 
Income per common share - basic
$
0.35

 
0.05

$
0.48

 
0.88

Income per common share - diluted
$
0.35

 
0.05

$
0.48

 
0.88

See accompanying notes to consolidated financial statements.

2




REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
$
63,582

 
11,114

$
93,039

 
105,334

Other comprehensive income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(39
)
 
1,294

 
(3,911
)
 
(25,338
)
Reclassification adjustment of derivative instruments included in net income
 
2,329

 
43,111

 
8,054

 
48,063

Unrealized gain on available-for-sale securities
 
8

 
53

 
51

 
90

Other comprehensive income
 
2,298

 
44,458

 
4,194

 
22,815

Comprehensive income
 
65,880

 
55,572

 
97,233

 
128,149

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
769

 
543

 
2,101

 
1,545

Other comprehensive income (loss) attributable to noncontrolling interests
 
5

 
158

 
(11
)
 
(139
)
Comprehensive income attributable to noncontrolling interests
 
774

 
701

 
2,090

 
1,406

Comprehensive income attributable to the Company
$
65,106

 
54,871

$
95,143

 
126,743

See accompanying notes to consolidated financial statements.

3





REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the nine months ended September 30, 2017 and 2016
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling Interests
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Treasury
Stock
 
Additional
Paid In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Distributions
in Excess of
Net Income
 
Total
Stockholders’
Equity
 
Exchangeable
Operating
Partnership
Units
 
Limited
Partners’
Interest  in
Consolidated
Partnerships
 
Total
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2015
 
$
325,000

 
972

 
(19,658
)
 
2,742,508

 
(58,693
)
 
(936,020
)
 
2,054,109

 
(1,975
)
 
30,486

 
28,511

 
2,082,620

Net income
 

 

 

 

 

 
103,789

 
103,789

 
165

 
1,380

 
1,545

 
105,334

Other comprehensive loss
 

 

 

 

 
22,954

 

 
22,954

 
33

 
(172
)
 
(139
)
 
22,815

Deferred compensation plan, net
 

 

 
2,776

 
(2,776
)
 

 

 

 

 

 

 

Restricted stock issued, net of amortization
 

 
2

 

 
9,965

 

 

 
9,967

 

 

 

 
9,967

Common stock redeemed for taxes withheld for stock based compensation, net
 

 

 

 
(7,835
)
 

 

 
(7,835
)
 

 

 

 
(7,835
)
Common stock issued under dividend reinvestment plan
 

 

 

 
804

 

 

 
804

 

 

 

 
804

Common stock issued, net of issuance costs
 

 
71

 

 
549,474

 

 

 
549,545

 

 

 

 
549,545

Contributions from partners
 

 

 

 

 

 

 

 

 
8,675

 
8,675

 
8,675

Distributions to partners
 

 

 

 
(538
)
 

 

 
(538
)
 

 
(5,224
)
 
(5,224
)
 
(5,762
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(15,797
)
 
(15,797
)
 

 

 

 
(15,797
)
Common stock/unit ($1.50 per share)
 

 

 

 

 

 
(149,853
)
 
(149,853
)
 
(229
)
 

 
(229
)
 
(150,082
)
Balance at September 30, 2016
 
$
325,000

 
1,045

 
(16,882
)
 
3,291,602

 
(35,739
)
 
(997,881
)
 
2,567,145

 
(2,006
)
 
35,145

 
33,139

 
2,600,284

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
$
325,000

 
1,045

 
(17,062
)
 
3,294,923

 
(18,346
)
 
(994,259
)
 
2,591,301

 
(1,967
)
 
35,168

 
33,201

 
2,624,502

Net income
 

 

 

 

 

 
90,938

 
90,938

 
217

 
1,884

 
2,101

 
93,039

Other comprehensive income
 

 

 

 

 
4,205

 

 
4,205

 
6

 
(17
)
 
(11
)
 
4,194

Deferred compensation plan, net
 

 

 
(986
)
 
977

 

 

 
(9
)
 

 

 

 
(9
)
Restricted stock issued, net of amortization
 

 
2

 

 
10,918

 

 

 
10,920

 

 

 

 
10,920

Common stock redeemed for taxes withheld for stock based compensation, net
 

 
(1
)
 

 
(18,431
)
 

 

 
(18,432
)
 

 

 

 
(18,432
)
Common stock issued under dividend reinvestment plan
 

 

 

 
908

 

 

 
908

 

 

 

 
908

Common stock issued, net of issuance costs
 

 
654

 

 
4,470,759

 

 

 
4,471,413

 

 

 

 
4,471,413

Restricted stock issued upon Equity One merger
 

 
1

 

 
7,950

 

 

 
7,951

 

 

 

 
7,951

Redemption of preferred stock
 
(325,000
)
 

 

 
11,099

 

 
(11,099
)
 
(325,000
)
 

 

 

 
(325,000
)
Contributions from partners
 

 

 

 

 

 

 

 
13,100

 
367

 
13,467

 
13,467

Distributions to partners
 

 

 

 

 

 

 

 

 
(7,086
)
 
(7,086
)
 
(7,086
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(5,029
)
 
(5,029
)
 

 

 

 
(5,029
)
Common stock/unit ($1.57 per share)
 

 

 

 

 

 
(233,704
)
 
(233,704
)
 
(450
)
 

 
(450
)
 
(234,154
)
Balance at September 30, 2017
 
$

 
1,701

 
(18,048
)
 
7,779,103

 
(14,141
)
 
(1,153,153
)
 
6,595,462

 
10,906

 
30,316

 
41,222

 
6,636,684

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
$
93,039

 
105,334

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
243,757

 
119,721

Amortization of deferred loan cost and debt premium
 
7,144

 
7,242

(Accretion) and amortization of above and below market lease intangibles, net
 
(18,784
)
 
(2,296
)
Stock-based compensation, net of capitalization
 
16,836

 
7,554

Equity in income of investments in real estate partnerships
 
(33,804
)
 
(46,618
)
Gain on sale of real estate, net of tax
 
(4,913
)
 
(22,997
)
Provision for impairment
 

 
1,666

Early extinguishment of debt
 
12,404

 
13,943

Distribution of earnings from operations of investments in real estate partnerships
 
40,817

 
39,765

Loss on derivative instruments
 
51

 

Deferred compensation expense
 
2,885

 
1,249

Realized and unrealized (gain) loss on investments
 
(2,878
)
 
(1,268
)
Changes in assets and liabilities:
 
 
 
 
Restricted cash
 
(1,569
)
 
(84
)
Accounts receivable, net
 
2,574

 
3,715

Straight-line rent receivables, net
 
(13,901
)
 
(4,894
)
Deferred leasing costs
 
(10,294
)
 
(7,841
)
Other assets
 
8,075

 
(59
)
Accounts payable and other liabilities
 
4,908

 
12,607

Tenants’ security, escrow deposits and prepaid rent
 
(2,490
)
 
(1,406
)
Net cash provided by operating activities
 
343,857

 
225,333

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(2,109
)
 
(333,220
)
Advance deposits paid on acquisition of operating real estate
 
(350
)
 
1,250

Acquisition of Equity One, net of cash acquired of $72,534
 
(648,763
)
 

Real estate development and capital improvements
 
(241,834
)
 
(146,773
)
Proceeds from sale of real estate investments
 
15,397

 
83,675

Issuance of notes receivable
 
(3,460
)
 

Investments in real estate partnerships
 
(12,296
)
 
(13,127
)
Distributions received from investments in real estate partnerships
 
36,603

 
52,536

Dividends on investment securities
 
200

 
189

Acquisition of securities
 
(14,011
)
 
(53,290
)
Proceeds from sale of securities
 
11,974

 
54,176

Net cash used in investing activities
 
(858,649
)
 
(354,584
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common stock issuance
 

 
549,545

Repurchase of common shares in conjunction with equity award plans
 
(19,251
)
 
(8,013
)
Proceeds from sale of treasury stock
 
100

 
957

Redemption of preferred stock and partnership units
 
(325,000
)
 

Distributions to limited partners in consolidated partnerships, net
 
(7,031
)
 
(3,126
)
Distributions to exchangeable operating partnership unit holders
 
(450
)
 
(229
)
Dividends paid to common stockholders
 
(232,796
)
 
(149,049
)
Dividends paid to preferred stockholders
 
(5,029
)
 
(15,797
)
Repayment of fixed rate unsecured notes
 

 
(300,000
)
Proceeds from issuance of fixed rate unsecured notes, net
 
953,115

 

Proceeds from unsecured credit facilities
 
950,000

 
395,000

Repayment of unsecured credit facilities
 
(650,000
)
 
(295,000
)
Proceeds from notes payable
 
126,999

 
20,223

Repayment of notes payable
 
(232,839
)
 
(41,584
)
Scheduled principal payments
 
(7,452
)
 
(4,462
)
Payment of loan costs
 
(12,868
)
 
(1,954
)
Early redemption costs
 
(12,419
)
 
(13,214
)
Net cash provided by financing activities
 
525,079

 
133,297

Net increase in cash and cash equivalents
 
10,287

 
4,046

Cash and cash equivalents at beginning of the period
 
13,256

 
36,856

Cash and cash equivalents at end of the period
$
23,543

 
40,902



5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017, and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $5,778 and $2,622 in 2017 and 2016, respectively)
$
73,273

 
54,904

Cash received for income tax refunds, net of payments
$
670

 

Supplemental disclosure of non-cash transactions:
 
 
 
 
Exchangeable operating partnership units issued for acquisition of real estate
$
13,100

 

Common stock issued under dividend reinvestment plan
$
908

 
804

Stock-based compensation capitalized
$
2,459

 
2,561

Contributions from limited partners in consolidated partnerships, net
$
311

 
8,674

Common stock issued for dividend reinvestment in trust
$
557

 
556

Contribution of stock awards into trust
$
1,372

 
1,513

Distribution of stock held in trust
$
677

 
4,096

Change in fair value of securities available-for-sale
$
51

 
90

Equity One Merger:
 
 
 
 
Notes payable assumed in Equity One merger, at fair value
$
757,399

 

Common stock exchanged for Equity One shares
$
(4,471,808
)
 

Deconsolidation of previously consolidated partnership:
 
 
 
 
Real estate, net
$

 
14,075

Investments in real estate partnerships
$

 
(3,355
)
Notes payable
$

 
(9,415
)
Other assets and liabilities
$

 
640

Limited partners' interest in consolidated partnerships
$

 
(2,099
)
See accompanying notes to consolidated financial statements.

6





REGENCY CENTERS, L.P.
Consolidated Balance Sheets
September 30, 2017 and December 31, 2016
(in thousands, except unit data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,578,145

 
1,660,424

Buildings and improvements
 
5,834,405

 
3,092,197

Properties in development
 
433,707

 
180,878

 
 
10,846,257

 
4,933,499

Less: accumulated depreciation
 
1,281,510

 
1,124,391

 
 
9,564,747

 
3,809,108

Properties held for sale
 
27,802

 

Investments in real estate partnerships
 
380,930

 
296,699

Net real estate investments
 
9,973,479

 
4,105,807

Cash and cash equivalents
 
23,543

 
13,256

Restricted cash
 
7,098

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $12,279 and $9,021 at September 30, 2017 and December 31, 2016, respectively
 
143,153

 
111,722

Deferred leasing costs, less accumulated amortization of $91,213 and $83,529 at September 30, 2017 and December 31, 2016, respectively
 
71,826

 
69,000

Acquired lease intangible assets, less accumulated amortization of $123,662 and $56,695 at September 30, 2017 and December 31, 2016, respectively
 
508,868

 
118,831

Trading securities held in trust
 

 

Other assets
 
390,778

 
65,667

Total assets
$
11,118,745

 
4,488,906

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,943,986

 
1,363,925

Unsecured credit facilities
 
578,144

 
278,495

Accounts payable and other liabilities
 
276,363

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $49,968 and $23,538 at September 30, 2017 and December 31, 2016, respectively
 
637,217

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
46,351

 
28,868

Total liabilities
 
4,482,061

 
1,864,404

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
Preferred units of general partner, $0.01 par value per unit, 13,000,000 units issued and outstanding at December 31, 2016, liquidation preference of $25 per unit
 

 
325,000

General partner; 170,109,043 and 104,497,286 units outstanding at September 30, 2017 and December 31, 2016, respectively
 
6,609,603

 
2,284,647

Limited partners; 349,902 and 154,170 units outstanding at September 30, 2017 and December 31, 2016, respectively
 
10,906

 
(1,967
)
Accumulated other comprehensive loss
 
(14,141
)
 
(18,346
)
Total partners’ capital
 
6,606,368

 
2,589,334

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
30,316

 
35,168

Total noncontrolling interests
 
30,316

 
35,168

Total capital
 
6,636,684

 
2,624,502

Total liabilities and capital
$
11,118,745

 
4,488,906

See accompanying notes to consolidated financial statements.

7





REGENCY CENTERS, L.P.
Consolidated Statements of Operations
(in thousands, except per unit data)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
195,393

 
111,886

$
532,625

 
329,506

Percentage rent
 
1,147

 
495

 
5,509

 
2,651

Recoveries from tenants and other income
 
59,554

 
34,532

 
162,089

 
103,894

Management, transaction, and other fees
 
6,047

 
5,855

 
19,353

 
18,759

Total revenues
 
262,141

 
152,768

 
719,576

 
454,810

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
91,474

 
40,705

 
243,757

 
119,721

Operating and maintenance
 
38,020

 
23,373

 
103,888

 
69,767

General and administrative
 
15,199

 
16,046

 
49,618

 
48,695

Real estate taxes
 
29,315

 
17,058

 
79,636

 
49,697

Other operating expenses (note 2)
 
3,195

 
1,046

 
81,621

 
5,795

Total operating expenses
 
177,203

 
98,228

 
558,520

 
293,675

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
34,679

 
21,945

 
97,285

 
70,489

Provision for impairment
 

 

 

 
1,666

Early extinguishment of debt
 

 
13,943

 
12,404

 
13,943

Net investment (income) loss, including unrealized (gains) losses of ($842) and ($383), and ($1,705) and ($888) for the three and nine months ended September 30, 2017 and 2016, respectively
 
(971
)
 
(821
)
 
(2,955
)
 
(1,268
)
Loss on derivative instruments
 

 
40,586

 

 
40,586

Total other expense (income)
 
33,708

 
75,653

 
106,734

 
125,416

Income from operations before equity in income of investments in real estate partnerships
 
51,230

 
(21,113
)
 
54,322

 
35,719

Equity in income of investments in real estate partnerships
 
12,221

 
22,647

 
33,804

 
46,618

Income from operations
 
63,451

 
1,534

 
88,126

 
82,337

Gain on sale of real estate, net of tax
 
131

 
9,580

 
4,913

 
22,997

Net income
 
63,582

 
11,114

 
93,039

 
105,334

Limited partners’ interests in consolidated partnerships
 
(637
)
 
(527
)
 
(1,884
)
 
(1,380
)
Net income attributable to the Partnership
 
62,945

 
10,587

 
91,155

 
103,954

Preferred unit distributions and issuance costs
 
(3,147
)
 
(5,266
)
 
(16,128
)
 
(15,797
)
Net income attributable to common unit holders
$
59,798

 
5,321

$
75,027

 
88,157


 
 
 
 
 
 
 
 
Income per common unit - basic
$
0.35

 
0.05

$
0.48

 
0.88

Income per common unit - diluted
$
0.35

 
0.05

$
0.48

 
0.88

See accompanying notes to consolidated financial statements.

8




REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
$
63,582

 
11,114

$
93,039

 
105,334

Other comprehensive income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(39
)
 
1,294

 
(3,911
)
 
(25,338
)
Reclassification adjustment of derivative instruments included in net income
 
2,329

 
43,111

 
8,054

 
48,063

Unrealized gain on available-for-sale securities
 
8

 
53

 
51

 
90

Other comprehensive income
 
2,298

 
44,458

 
4,194

 
22,815

Comprehensive income
 
65,880

 
55,572

 
97,233

 
128,149

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
637

 
527

 
1,884

 
1,380

Other comprehensive income (loss) attributable to noncontrolling interests
 

 
91

 
(17
)
 
(172
)
Comprehensive income attributable to noncontrolling interests
 
637

 
618

 
1,867

 
1,208

Comprehensive income attributable to the Partnership
$
65,243

 
54,954

$
95,366

 
126,941

See accompanying notes to consolidated financial statements.

9





REGENCY CENTERS, L.P.
Consolidated Statements of Capital
For the nine months ended September 30, 2017 and 2016
 (in thousands)
(unaudited)
 
 
General Partner
Preferred and
Common Units
 
Limited
Partners
 
Accumulated
Other
Comprehensive Loss
 
Total
Partners’
Capital
 
Noncontrolling
Interests in
Limited Partners’
Interest in
Consolidated
Partnerships
 
Total
Capital
Balance at December 31, 2015
$
2,112,802

 
(1,975
)
 
(58,693
)
 
2,052,134

 
30,486

 
2,082,620

Net income
 
103,789

 
165

 

 
103,954

 
1,380

 
105,334

Other comprehensive loss
 

 
33

 
22,954

 
22,987

 
(172
)
 
22,815

Contributions from partners
 

 

 

 

 
8,675

 
8,675

Distributions to partners
 
(150,391
)
 
(229
)
 

 
(150,620
)
 
(5,224
)
 
(155,844
)
Preferred unit distributions
 
(15,797
)
 

 

 
(15,797
)
 

 
(15,797
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
9,967

 

 

 
9,967

 

 
9,967

Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
542,514

 

 

 
542,514

 

 
542,514

Balance at September 30, 2016
 
2,602,884

 
(2,006
)
 
(35,739
)
 
2,565,139

 
35,145

 
2,600,284

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
2,609,647

 
(1,967
)
 
(18,346
)
 
2,589,334

 
35,168

 
2,624,502

Net income
 
90,938

 
217

 

 
91,155

 
1,884

 
93,039

Other comprehensive income
 

 
6

 
4,205

 
4,211

 
(17
)
 
4,194

Deferred compensation plan, net
 
(9
)
 

 

 
(9
)
 

 
(9
)
Contributions from partners
 

 
13,100

 

 
13,100

 
367

 
13,467

Distributions to partners
 
(233,704
)
 
(450
)
 

 
(234,154
)
 
(7,086
)
 
(241,240
)
Preferred unit distributions
 
(5,029
)
 

 

 
(5,029
)
 

 
(5,029
)
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
 
10,920

 

 

 
10,920

 

 
10,920

Preferred stock redemptions
 
(325,000
)
 

 

 
(325,000
)
 

 
(325,000
)
Common units issued as a result of common stock issued by Parent Company, net of repurchases
 
4,453,889

 

 

 
4,453,889

 

 
4,453,889

Restricted units issued as a result of restricted stock issued by Parent Company upon Equity One merger
 
7,951

 

 

 
7,951

 

 
7,951

Balance at September 30, 2017
$
6,609,603

 
10,906

 
(14,141
)
 
6,606,368

 
30,316

 
6,636,684

See accompanying notes to consolidated financial statements.

10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
$
93,039

 
105,334

Adjustments to reconcile net income to net cash provided by operating activities:
 

 

Depreciation and amortization
 
243,757

 
119,721

Amortization of deferred loan cost and debt premium
 
7,144

 
7,242

(Accretion) and amortization of above and below market lease intangibles, net
 
(18,784
)
 
(2,296
)
Stock-based compensation, net of capitalization
 
16,836

 
7,554

Equity in income of investments in real estate partnerships
 
(33,804
)
 
(46,618
)
Gain on sale of real estate, net of tax
 
(4,913
)
 
(22,997
)
Provision for impairment
 

 
1,666

Early extinguishment of debt
 
12,404

 
13,943

Distribution of earnings from operations of investments in real estate partnerships
 
40,817

 
39,765

Loss on derivative instruments
 
51

 

Deferred compensation expense
 
2,885

 
1,249

Realized and unrealized (gain) loss on investments
 
(2,878
)
 
(1,268
)
Changes in assets and liabilities:
 

 

Restricted cash
 
(1,569
)
 
(84
)
Accounts receivable, net
 
2,574

 
3,715

Straight-line rent receivables, net
 
(13,901
)
 
(4,894
)
Deferred leasing costs
 
(10,294
)
 
(7,841
)
Other assets
 
8,075

 
(59
)
Accounts payable and other liabilities
 
4,908

 
12,607

Tenants’ security, escrow deposits and prepaid rent
 
(2,490
)
 
(1,406
)
Net cash provided by operating activities
 
343,857

 
225,333

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(2,109
)
 
(333,220
)
Advance deposits paid on acquisition of operating real estate
 
(350
)
 
1,250

Acquisition of Equity One, net of cash acquired of $72,534
 
(648,763
)
 

Real estate development and capital improvements
 
(241,834
)
 
(146,773
)
Proceeds from sale of real estate investments
 
15,397

 
83,675

Issuance of notes receivable
 
(3,460
)
 

Investments in real estate partnerships
 
(12,296
)
 
(13,127
)
Distributions received from investments in real estate partnerships
 
36,603

 
52,536

Dividends on investment securities
 
200

 
189

Acquisition of securities
 
(14,011
)
 
(53,290
)
Proceeds from sale of securities
 
11,974

 
54,176

Net cash used in investing activities
 
(858,649
)
 
(354,584
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common units issued as a result of common stock issued by Parent Company
 

 
549,545

Repurchase of common shares in conjunction with equity award plans
 
(19,251
)
 
(8,013
)
Proceeds from sale of treasury stock
 
100

 
957

Redemption of preferred partnership units
 
(325,000
)
 

Distributions (to) from limited partners in consolidated partnerships, net
 
(7,031
)
 
(3,126
)
Distributions to partners
 
(233,246
)
 
(149,278
)
Distributions to preferred unit holders
 
(5,029
)
 
(15,797
)
Repayment of fixed rate unsecured notes
 

 
(300,000
)
Proceeds from issuance of fixed rate unsecured notes, net
 
953,115