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 March 31, 2018
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=12234222&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 169,410,491 as of May 4, 2018.
 




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2018, 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 March 31, 2018, 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 hold any indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the $500 million of debt of the Parent Company assumed in the Equity One merger. 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. 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 March 31, 2018 and December 31, 2017
 
 
 
 
Consolidated Statements of Operations for the periods ended March 31, 2018 and 2017
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended March 31, 2018 and 2017
 
 
 
 
Consolidated Statements of Equity for the periods ended March 31, 2018 and 2017
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended March 31, 2018 and 2017
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017
 
 
 
 
Consolidated Statements of Operations for the periods ended March 31, 2018 and 2017
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended March 31, 2018 and 2017
 
 
 
 
Consolidated Statements of Capital for the periods ended March 31, 2018 and 2017
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended March 31, 2018 and 2017
 
 
 
 
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
March 31, 2018 and December 31, 2017
(in thousands, except share data)
 
 
2018
 
2017
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land, building and improvements
$
10,768,379

 
10,578,430

Properties in development
 
179,123

 
314,391

 
 
10,947,502

 
10,892,821

Less: accumulated depreciation
 
1,394,276

 
1,339,771

 
 
9,553,226

 
9,553,050

Properties held for sale
 
8,742

 

Investments in real estate partnerships
 
448,257

 
386,304

Net real estate investments
 
10,010,225

 
9,939,354

Cash and cash equivalents
 
87,904

 
45,370

Restricted cash
 
5,732

 
4,011

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $13,945 and $12,728 at March 31, 2018 and December 31, 2017, respectively
 
159,587

 
170,985

Deferred leasing costs, less accumulated amortization of $96,192 and $93,291 at March 31, 2018 and December 31, 2017, respectively
 
83,638

 
80,044

Acquired lease intangible assets, less accumulated amortization of $171,114 and $148,280 at March 31, 2018 and December 31, 2017, respectively
 
455,589

 
478,826

Other assets
 
431,181

 
427,127

Total assets
$
11,233,856

 
11,145,717

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
3,276,888

 
2,971,715

Unsecured credit facilities
 
563,380

 
623,262

Accounts payable and other liabilities
 
212,515

 
234,272

Acquired lease intangible liabilities, less accumulated amortization of $68,123 and $56,550 at March 31, 2018 and December 31, 2017, respectively
 
527,264

 
537,401

Tenants’ security, escrow deposits and prepaid rent
 
48,428

 
46,013

Total liabilities
 
4,628,475

 
4,412,663

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock, $0.01 par value per share, 220,000,000 shares authorized; 169,408,781 and 171,364,908 shares issued at March 31, 2018 and December 31, 2017, respectively
 
1,694

 
1,714

Treasury stock at cost, 372,712 and 366,628 shares held at March 31, 2018 and December 31, 2017, respectively
 
(18,756
)
 
(18,307
)
Additional paid in capital
 
7,746,427

 
7,873,104

Accumulated other comprehensive income (loss)
 
4,764

 
(6,289
)
Distributions in excess of net income
 
(1,169,828
)
 
(1,158,170
)
Total stockholders’ equity
 
6,564,301

 
6,692,052

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $20,637 and $24,206 at March 31, 2018 and December 31, 2017, respectively
 
10,847

 
10,907

Limited partners’ interests in consolidated partnerships
 
30,233

 
30,095

Total noncontrolling interests
 
41,080

 
41,002

Total equity
 
6,605,381

 
6,733,054

Total liabilities and equity
$
11,233,856

 
11,145,717

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 March 31,
 
 
2018
 
2017
Revenues:
 
 
 
 
Minimum rent
$
201,392

 
141,240

Percentage rent
 
3,873

 
2,906

Recoveries from tenants and other income
 
64,270

 
45,279

Management, transaction, and other fees
 
7,158

 
6,706

Total revenues
 
276,693

 
196,131

Operating expenses:
 
 
 
 
Depreciation and amortization
 
88,525

 
60,053

Operating and maintenance
 
42,516

 
29,763

General and administrative
 
17,606

 
17,673

Real estate taxes
 
30,425

 
21,450

Other operating expenses (note 2)
 
1,632

 
71,512

Total operating expenses
 
180,704

 
200,451

Other expense (income):
 
 
 
 
Interest expense, net
 
36,785

 
27,199

Provision for impairment
 
16,054

 

Early extinguishment of debt
 
162

 

Net investment (income) loss, including unrealized losses (gains) of $384 and ($852) for the three months ended March 31, 2018 and 2017, respectively
 
(32
)
 
(1,097
)
Total other expense (income)
 
52,969

 
26,102

Income (loss) from operations before equity in income of investments in real estate partnerships
 
43,020

 
(30,422
)
Equity in income of investments in real estate partnerships
 
10,349

 
9,342

Income tax expense of taxable REIT subsidiary
 

 
50

Income (loss) from operations
 
53,369

 
(21,130
)
Gain on sale of real estate, net of tax
 
96

 
415

Net income (loss)
 
53,465

 
(20,715
)
Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units
 
(111
)
 
19

Limited partners’ interests in consolidated partnerships
 
(694
)
 
(671
)
Income attributable to noncontrolling interests
 
(805
)
 
(652
)
Net income (loss) attributable to the Company
 
52,660

 
(21,367
)
Preferred stock dividends and issuance costs
 

 
(11,856
)
Net income (loss) attributable to common stockholders
$
52,660

 
(33,223
)

 
 
 
 
Income (loss) per common share - basic
$
0.31

 
(0.26
)
Income (loss) per common share - diluted
$
0.31

 
(0.26
)
See accompanying notes to consolidated financial statements.

2




REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
 
 
Three months ended March 31,
 
 
2018
 
2017
Net income (loss)
$
53,465

 
(20,715
)
Other comprehensive income:
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
9,505

 
(68
)
Reclassification adjustment of derivative instruments included in net income
 
2,138

 
2,654

Unrealized (loss) gain on available-for-sale debt securities
 
(119
)
 
32

Other comprehensive income
 
11,524

 
2,618

Comprehensive income (loss)
 
64,989

 
(18,097
)
Less: comprehensive income attributable to noncontrolling interests:
 
 
 
 
Net income attributable to noncontrolling interests
 
805

 
652

Other comprehensive income attributable to noncontrolling interests
 
483

 
65

Comprehensive income attributable to noncontrolling interests
 
1,288

 
717

Comprehensive income (loss) attributable to the Company
$
63,701

 
(18,814
)
See accompanying notes to consolidated financial statements.

3





REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the three months ended March 31, 2018 and 2017
(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, 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 loss
 

 

 

 

 

 
(21,367
)
 
(21,367
)
 
(19
)
 
671

 
652

 
(20,715
)
Other comprehensive loss
 

 

 

 

 
2,555

 

 
2,555

 
2

 
63

 
65

 
2,620

Deferred compensation plan, net
 

 

 
(411
)
 
412

 

 

 
1

 

 

 

 
1

Restricted stock issued, net of amortization
 

 
2

 

 
3,731

 

 

 
3,733

 

 

 

 
3,733

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

 
(1
)
 

 
(18,219
)
 

 

 
(18,220
)
 

 

 

 
(18,220
)
Common stock issued under dividend reinvestment plan
 

 

 

 
301

 

 

 
301

 

 

 

 
301

Common stock issued, net of issuance costs
 

 
655

 

 
4,479,031

 

 

 
4,479,686

 

 

 

 
4,479,686

Redemption of preferred stock
 
(250,000
)
 

 

 
8,615

 

 
(8,615
)
 
(250,000
)
 

 

 

 
(250,000
)
Contributions from partners
 

 

 

 

 

 

 

 

 
153

 
153

 
153

Distributions to partners
 

 

 

 

 

 

 

 

 
(838
)
 
(838
)
 
(838
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(3,241
)
 
(3,241
)
 

 

 

 
(3,241
)
Common stock/unit ($0.510 per share)
 

 

 

 

 

 
(53,400
)
 
(53,400
)
 
(79
)
 

 
(79
)
 
(53,479
)
Balance at March 31, 2017
 
$
75,000

 
1,701

 
(17,473
)
 
7,768,794

 
(15,791
)
 
(1,080,882
)
 
6,731,349

 
(2,063
)
 
35,217

 
33,154

 
6,764,503

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
 
$

 
1,714

 
(18,307
)
 
7,873,104

 
(6,289
)
 
(1,158,170
)
 
6,692,052

 
10,907

 
30,095

 
41,002

 
6,733,054

Adjustment due to change in accounting policy (note 1)
 

 

 

 

 
12

 
30,889

 
30,901

 

 
2

 
2

 
30,903

Adjusted balance at December 31, 2017
 

 
1,714

 
(18,307
)
 
7,873,104

 
(6,277
)
 
(1,127,281
)
 
6,722,953

 
10,907

 
30,097

 
41,004

 
6,763,957

Net income
 

 

 

 

 

 
52,660

 
52,660

 
111

 
694

 
805

 
53,465

Other comprehensive income
 

 

 

 

 
11,041

 

 
11,041

 
23

 
460

 
483

 
11,524

Deferred compensation plan, net
 

 

 
(449
)
 
446

 

 

 
(3
)
 

 

 

 
(3
)
Restricted stock issued, net of amortization
 

 
1

 

 
4,120

 

 

 
4,121

 

 

 

 
4,121

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

 

 

 
(6,643
)
 

 

 
(6,643
)
 

 

 

 
(6,643
)
Common stock repurchased and retired
 

 
(21
)
 

 
(124,968
)
 

 

 
(124,989
)
 

 

 

 
(124,989
)
Common stock issued under dividend reinvestment plan
 

 

 

 
358

 

 

 
358

 

 

 

 
358

Common stock issued, net of issuance costs
 

 

 

 
10

 

 

 
10

 

 

 

 
10

Distributions to partners
 

 

 

 

 

 

 

 

 
(1,018
)
 
(1,018
)
 
(1,018
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock/unit ($0.555 per share)
 

 

 

 

 

 
(95,207
)
 
(95,207
)
 
(194
)
 

 
(194
)
 
(95,401
)
Balance at March 31, 2018
 
$

 
1,694

 
(18,756
)
 
7,746,427

 
4,764

 
(1,169,828
)
 
6,564,301

 
10,847

 
30,233

 
41,080

 
6,605,381

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the three months ended March 31, 2018 and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net income (loss)
$
53,465

 
(20,715
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
88,525

 
60,053

Amortization of deferred loan cost and debt premium
 
2,471

 
2,459

(Accretion) and amortization of above and below market lease intangibles, net
 
(8,181
)
 
(3,484
)
Stock-based compensation, net of capitalization
 
3,397

 
12,131

Equity in income of investments in real estate partnerships
 
(10,349
)
 
(9,342
)
Gain on sale of real estate, net of tax
 
(96
)
 
(415
)
Provision for impairment
 
16,054

 

Early extinguishment of debt
 
162

 

Distribution of earnings from operations of investments in real estate partnerships
 
13,319

 
12,784

Deferred income tax benefit
 

 
(87
)
Loss on derivative instruments
 

 

Deferred compensation expense
 
40

 
1,062

Realized and unrealized gain on investments
 
(30
)
 
(1,064
)
Changes in assets and liabilities:
 
 
 
 
Accounts receivable, net
 
8,955

 
8,974

Straight-line rent receivables, net
 
(4,659
)
 
(3,439
)
Deferred leasing costs
 
(1,189
)
 
(1,355
)
Other assets
 
(476
)
 
(2,657
)
Accounts payable and other liabilities
 
(13,793
)
 
(24,370
)
Tenants’ security, escrow deposits and prepaid rent
 
2,253

 
2,121

Net cash provided by operating activities
 
149,868

 
32,656

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(20,071
)
 

Acquisition of Equity One, net of cash and restricted cash acquired of $72,784
 

 
(648,707
)
Real estate development and capital improvements
 
(51,968
)
 
(63,257
)
Proceeds from sale of real estate investments
 
3,227

 
1,683

Issuance of notes receivable
 
(462
)
 
(510
)
Investments in real estate partnerships
 
(39,330
)
 
(1,688
)
Distributions received from investments in real estate partnerships
 
2,328

 
25,428

Dividends on investment securities
 
71

 
55

Acquisition of securities
 
(7,543
)
 
(3,334
)
Proceeds from sale of securities
 
6,542

 
3,815

Net cash used in investing activities
 
(107,206
)
 
(686,515
)
Cash flows from financing activities:
 
 
 
 
Repurchase of common shares in conjunction with equity award plans
 
(6,755
)
 
(18,275
)
Common shares repurchased through share repurchase program
 
(124,989
)
 

Proceeds from sale of treasury stock
 
99

 
76

Redemption of preferred stock and partnership units
 

 
(250,000
)
Distributions to limited partners in consolidated partnerships, net
 
(1,018
)
 
(786
)
Distributions to exchangeable operating partnership unit holders
 
(194
)
 
(79
)
Dividends paid to common stockholders
 
(94,849
)
 
(53,289
)
Dividends paid to preferred stockholders
 

 
(3,241
)
Proceeds from issuance of fixed rate unsecured notes, net
 
299,511

 
646,424

Proceeds from unsecured credit facilities
 
185,000

 
740,000

Repayment of unsecured credit facilities
 
(245,000
)
 
(360,000
)
Proceeds from notes payable
 
1,740

 
1,577

Repayment of notes payable
 

 
(11,422
)
Scheduled principal payments
 
(2,773
)
 
(1,367
)
Payment of loan costs
 
(9,179
)
 
(8,796
)
Net cash provided by financing activities
 
1,593

 
680,822

Net increase in cash and cash equivalents and restricted cash
 
44,255

 
26,963

Cash and cash equivalents and restricted cash at beginning of the period
 
49,381

 
17,879

Cash and cash equivalents and restricted cash at end of the period
$
93,636

 
44,842



5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the three months ended March 31, 2018, and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $2,179 and $1,061 in 2018 and 2017, respectively)
$
30,467

 
7,687

Cash received for income tax refunds, net of payments
$
407

 

Supplemental disclosure of non-cash transactions:
 
 
 
 
Mortgage loans assumed for the acquisition of real estate
$
9,700

 

Common stock issued under dividend reinvestment plan
$
358

 
301

Stock-based compensation capitalized
$
837

 
778

Contributions from limited partners in consolidated partnerships, net
$

 
100

Common stock issued for dividend reinvestment in trust
$
205

 
177

Contribution of stock awards into trust
$
637

 
929

Distribution of stock held in trust
$
317

 
4,114

Change in fair value of debt securities available-for-sale
$
(128
)
 
32

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

See accompanying notes to consolidated financial statements.

6





REGENCY CENTERS, L.P.
Consolidated Balance Sheets
March 31, 2018 and December 31, 2017
(in thousands, except unit data)
 
 
2018
 
2017
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land, building and improvements
$
10,768,379

 
10,578,430

Properties in development
 
179,123

 
314,391

 
 
10,947,502

 
10,892,821

Less: accumulated depreciation
 
1,394,276

 
1,339,771

 
 
9,553,226

 
9,553,050

Properties held for sale
 
8,742

 

Investments in real estate partnerships
 
448,257

 
386,304

Net real estate investments
 
10,010,225

 
9,939,354

Cash and cash equivalents
 
87,904

 
45,370

Restricted cash
 
5,732

 
4,011

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $13,945 and $12,728 at March 31, 2018 and December 31, 2017, respectively
 
159,587

 
170,985

Deferred leasing costs, less accumulated amortization of $96,192 and $93,291 at March 31, 2018 and December 31, 2017, respectively
 
83,638

 
80,044

Acquired lease intangible assets, less accumulated amortization of $171,114 and $148,280 at March 31, 2018 and December 31, 2017, respectively
 
455,589

 
478,826

Other assets
 
431,181

 
427,127

Total assets
$
11,233,856

 
11,145,717

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
3,276,888

 
2,971,715

Unsecured credit facilities
 
563,380

 
623,262

Accounts payable and other liabilities
 
212,515

 
234,272

Acquired lease intangible liabilities, less accumulated amortization of $68,123 and $56,550 at March 31, 2018 and December 31, 2017, respectively
 
527,264

 
537,401

Tenants’ security, escrow deposits and prepaid rent
 
48,428

 
46,013

Total liabilities
 
4,628,475

 
4,412,663

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
General partner; 169,408,781 and 171,364,908 units outstanding at March 31, 2018 and December 31, 2017, respectively
 
6,559,537

 
6,698,341

Limited partners; 349,902 units outstanding at March 31, 2018 and December 31, 2017
 
10,847

 
10,907

Accumulated other comprehensive income (loss)
 
4,764

 
(6,289
)
Total partners’ capital
 
6,575,148

 
6,702,959

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
30,233

 
30,095

Total noncontrolling interests
 
30,233

 
30,095

Total capital
 
6,605,381

 
6,733,054

Total liabilities and capital
$
11,233,856

 
11,145,717

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 March 31,
 
 
2018
 
2017
Revenues:
 
 
 
 
Minimum rent
$
201,392

 
141,240

Percentage rent
 
3,873

 
2,906

Recoveries from tenants and other income
 
64,270

 
45,279

Management, transaction, and other fees
 
7,158

 
6,706

Total revenues
 
276,693

 
196,131

Operating expenses:
 
 
 
 
Depreciation and amortization
 
88,525

 
60,053

Operating and maintenance
 
42,516

 
29,763

General and administrative
 
17,606

 
17,673

Real estate taxes
 
30,425

 
21,450

Other operating expenses (note 2)
 
1,632

 
71,512

Total operating expenses
 
180,704

 
200,451

Other expense (income):
 
 
 
 
Interest expense, net
 
36,785

 
27,199

Provision for impairment
 
16,054

 

Early extinguishment of debt
 
162

 

Net investment (income) loss, including unrealized losses (gains) of $384 and ($852) for the three months ended March 31, 2018 and 2017, respectively
 
(32
)
 
(1,097
)
Total other expense (income)
 
52,969

 
26,102

Income (loss) from operations before equity in income of investments in real estate partnerships
 
43,020

 
(30,422
)
Equity in income of investments in real estate partnerships
 
10,349

 
9,342

Income tax expense of taxable REIT subsidiary
 

 
50

Income (loss) from operations
 
53,369

 
(21,130
)
Gain on sale of real estate, net of tax
 
96

 
415

Net income (loss)
 
53,465

 
(20,715
)
Limited partners’ interests in consolidated partnerships
 
(694
)
 
(671
)
Net income (loss) attributable to the Partnership
 
52,771

 
(21,386
)
Preferred unit distributions and issuance costs
 

 
(11,856
)
Net income (loss) attributable to common unit holders
$
52,771

 
(33,242
)

 
 
 
 
Income (loss) per common unit - basic
$
0.31

 
(0.26
)
Income (loss) per common unit - diluted
$
0.31

 
(0.26
)
See accompanying notes to consolidated financial statements.

8




REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
 
 
Three months ended March 31,
 
 
2018
 
2017
Net income (loss)
$
53,465

 
(20,715
)
Other comprehensive income:
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
9,505

 
(68
)
Reclassification adjustment of derivative instruments included in net income
 
2,138

 
2,654

Unrealized (loss) gain on available-for-sale debt securities
 
(119
)
 
32

Other comprehensive income
 
11,524

 
2,618

Comprehensive income (loss)
 
64,989

 
(18,097
)
Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
Net income attributable to noncontrolling interests
 
694

 
671

Other comprehensive income (loss) attributable to noncontrolling interests
 
459

 
63

Comprehensive income attributable to noncontrolling interests
 
1,153

 
734

Comprehensive income (loss) attributable to the Partnership
$
63,836

 
(18,831
)
See accompanying notes to consolidated financial statements.

9





REGENCY CENTERS, L.P.
Consolidated Statements of Capital
For the three months ended March 31, 2018 and 2017
 (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, 2016
$
2,609,647

 
(1,967
)
 
(18,346
)
 
2,589,334

 
35,168

 
2,624,502

Net loss
 
(21,367
)
 
(19
)
 

 
(21,386
)
 
671

 
(20,715
)
Other comprehensive loss
 

 
2

 
2,555

 
2,557

 
63

 
2,620

Contributions from partners
 

 

 

 

 
153

 
153

Distributions to partners
 
(53,400
)
 
(79
)
 

 
(53,479
)
 
(838
)
 
(54,317
)
Preferred unit distributions
 
(3,241
)
 

 

 
(3,241
)
 

 
(3,241
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
3,733

 

 

 
3,733

 

 
3,733

Redemption of preferred stock
 
(250,000
)
 

 

 
(250,000
)
 

 
(250,000
)
Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
4,461,767

 

 

 
4,461,767

 

 
4,461,767

Balance at March 31, 2017
 
6,747,139

 
(2,063
)
 
(15,791
)
 
6,729,285

 
35,217

 
6,764,502

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
 
6,698,341

 
10,907

 
(6,289
)
 
6,702,959

 
30,095

 
6,733,054

Adjustment due to change in accounting policy (note 1)
 
30,889

 

 
12

 
30,901

 
2

 
30,903

Adjusted balance at December 31, 2017
 
6,729,230

 
10,907

 
(6,277
)
 
6,733,860

 
30,097

 
6,763,957

Net income
 
52,660

 
111

 

 
52,771

 
694

 
53,465

Other comprehensive income
 

 
23

 
11,041

 
11,064

 
460

 
11,524

Deferred compensation plan, net
 
(3
)
 

 

 
(3
)
 

 
(3
)
Distributions to partners
 
(95,207
)
 
(194
)
 

 
(95,401
)
 
(1,018
)
 
(96,419
)
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
 
4,121

 

 

 
4,121

 

 
4,121

Common units repurchased and retired as a result of common stock repurchased and retired by Parent Company
 
(124,989
)
 

 

 
(124,989
)
 

 
(124,989
)
Common units issued as a result of common stock issued by Parent Company, net of repurchases
 
(6,275
)
 

 

 
(6,275
)
 

 
(6,275
)
Balance at March 31, 2018
$
6,559,537

 
10,847

 
4,764

 
6,575,148

 
30,233

 
6,605,381

See accompanying notes to consolidated financial statements.

10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2018 and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net income (loss)
$
53,465

 
(20,715
)
Adjustments to reconcile net income to net cash provided by operating activities:
 

 

Depreciation and amortization
 
88,525

 
60,053

Amortization of deferred loan cost and debt premium
 
2,471

 
2,459

(Accretion) and amortization of above and below market lease intangibles, net
 
(8,181
)
 
(3,484
)
Stock-based compensation, net of capitalization
 
3,397

 
12,131

Equity in income of investments in real estate partnerships
 
(10,349
)
 
(9,342
)
Gain on sale of real estate, net of tax
 
(96
)
 
(415
)
Provision for impairment
 
16,054

 

Early extinguishment of debt
 
162

 

Distribution of earnings from operations of investments in real estate partnerships
 
13,319

 
12,784

Deferred income tax benefit
 

 
(87
)
Loss on derivative instruments
 

 

Deferred compensation expense
 
40

 
1,062

Realized and unrealized gain on investments
 
(30
)
 
(1,064
)
Changes in assets and liabilities:
 

 

Accounts receivable, net
 
8,955

 
8,974

Straight-line rent receivables, net
 
(4,659
)
 
(3,439
)
Deferred leasing costs
 
(1,189
)
 
(1,355
)
Other assets
 
(476
)
 
(2,657
)
Accounts payable and other liabilities
 
(13,793
)
 
(24,370
)
Tenants’ security, escrow deposits and prepaid rent
 
2,253

 
2,121

Net cash provided by operating activities
 
149,868

 
32,656

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(20,071
)
 

Acquisition of Equity One, net of cash and restricted cash acquired of $72,784
 

 
(648,707
)
Real estate development and capital improvements
 
(51,968
)
 
(63,257
)
Proceeds from sale of real estate investments
 
3,227

 
1,683

Issuance of notes receivable
 
(462
)
 
(510
)
Investments in real estate partnerships
 
(39,330
)
 
(1,688
)
Distributions received from investments in real estate partnerships
 
2,328

 
25,428

Dividends on investment securities
 
71

 
55

Acquisition of securities
 
(7,543
)
 
(3,334
)
Proceeds from sale of securities
 
6,542

 
3,815

Net cash used in investing activities
 
(107,206
)
 
(686,515
)
Cash flows from financing activities:
 
 
 
 
Repurchase of common shares in conjunction with equity award plans
 
(6,755
)
 
(18,275
)
Common units repurchased through share repurchase program
 
(124,989
)
 

Proceeds from sale of treasury stock
 
99

 
76

Redemption of preferred partnership units
 

 
(250,000
)
Distributions (to) from limited partners in consolidated partnerships, net
 
(1,018
)
 
(786
)
Distributions to partners
 
(95,043
)
 
(53,368
)
Distributions to preferred unit holders
 

 
(3,241
)
Proceeds from issuance of fixed rate unsecured notes, net
 
299,511

 
646,424

Proceeds from unsecured credit facilities
 
185,000

 
740,000

Repayment of unsecured credit facilities
 
(245,000
)
 
(360,000
)
Proceeds from notes payable
 
1,740

 
1,577

Repayment of notes payable
 

 
(11,422
)
Scheduled principal payments
 
(2,773
)
 
(1,367
)
Payment of loan costs
 
(9,179
)
 
(8,796
)
Net cash provided by financing activities
 
1,593

 
680,822

Net increase in cash and cash equivalents and restricted cash
 
44,255

 
26,963

Cash and cash equivalents and restricted cash at beginning of the period
 
49,381

 
17,879

Cash and cash equivalents and restricted cash at end of the period
$
93,636

 
44,842


11





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2018, and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $2,179 and $1,061 in 2018 and 2017, respectively)
$
30,467

 
7,687

Cash received for income tax refunds, net of payments
$
407

 

Supplemental disclosure of non-cash transactions:
 
 
 
 
Mortgage loans assumed for the acquisition of real estate
$
9,700

 

Common stock issued by Parent Company for dividend reinvestment plan
$
358

 
301

Stock-based compensation capitalized
$
837

 
778

Contributions from limited partners in consolidated partnerships, net
$

 
100

Common stock issued for dividend reinvestment in trust
$
205

 
177

Contribution of stock awards into trust
$
637

 
929

Distribution of stock held in trust
$
317

 
4,114

Change in fair value of debt securities available-for-sale
$
(128
)
 
32

Equity One Merger:
 


 


Notes payable assumed in Equity One merger, at fair value
$

 
757,399

General partner units issued to Parent Company for common stock exchanged for Equity One shares
$

 
4,471,808

See accompanying notes to consolidated financial statements.

12




REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

1.
Organization and Significant Accounting Policies
General
Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the general partner of Regency Centers, L.P. (the “Operating Partnership”). The Parent Company engages in the ownership, management, leasing, acquisition, and development of retail shopping centers through the Operating Partnership, and has no other assets other than through its investment in the Operating Partnership, and its only liabilities are the unsecured notes assumed from the merger with Equity One, Inc. ("Equity One"), which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership.
As of March 31, 2018, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 311 retail shopping centers and held partial interests in an additional 118 retail shopping centers through unconsolidated investments in real estate partnerships (also referred to as "joint ventures" or "investment partnerships").
The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. These adjustments are considered to be of a normal recurring nature.
Consolidation
The Company consolidates properties that are wholly owned and properties where it owns less than 100%, but which it controls. Control is determined using an evaluation based on accounting standards related to the consolidation of voting interest entities and variable interest entities ("VIEs"). For joint ventures that are determined to be a VIE, the Company consolidates the entity where it is deemed to be the primary beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company's determination of the primary beneficiary considers all relationships between it and the VIE, including management agreements and other contractual arrangements.
Ownership of the Operating Partnership
The Operating Partnership’s capital includes general and limited common Partnership Units. As of March 31, 2018, the Parent Company owned approximately 99.8% of the outstanding common Partnership Units of the Operating Partnership with the remaining limited common Partnership Units held by third parties (“Exchangeable operating partnership units” or “EOP units”). The Parent Company serves as general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating Partnership such that they do not have the power to direct the activities of the Operating Partnership. As such, the Operating Partnership is considered a VIE, and the Parent Company, which consolidates it, is the primary beneficiary. The Parent Company’s only investment is the Operating Partnership. Net income and distributions of the Operating Partnership are allocable to the general and limited common Partnership Units in accordance with their ownership percentages.
Real Estate Partnerships
As of March 31, 2018, Regency had a partial ownership interest in 129 properties through partnerships, of which 11 are consolidated. Regency's partners include institutional investors, other real estate developers and/or operators, and individual parties who had a role in Regency sourcing transactions for development and investment (the "Partners" or "limited partners"). Regency has a variable interest in these entities through its equity interests. As managing member, Regency maintains the books and records and typically provides leasing and property management to the partnerships. The partners’ level of involvement varies from protective decisions (debt, bankruptcy, selling primary asset(s) of the business) to involvement in approving leases, operating budgets, and capital budgets.
Those partnerships for which the Partners only have protective rights are considered VIEs under ASC 810, Consolidation. Regency is the primary beneficiary of these VIEs as Regency has power

13



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

over these partnerships and they operate primarily for the benefit of Regency. As such, Regency consolidates these entities and reports the limited partners’ interest as noncontrolling interests.
The majority of the operations of the VIEs are funded with cash flows generated by the properties, or in the case of developments, with capital contributions or third party construction loans. Regency does not provide financial support to the VIEs.
Those partnerships for which the partners are involved in the day to day decisions and do not have any other aspects that would cause them to be considered VIEs, are evaluated for consolidation using the voting interest model.
Those partnerships in which Regency has a controlling financial interest are consolidated; and the limited partners’ ownership interest and share of net income is recorded as noncontrolling interest.
Those partnerships in which Regency does not have a controlling financial interest are accounted for using the equity method, and its ownership interest is recognized through single-line presentation as Investments in real estate partnerships in the Consolidated Balance Sheets, and Equity in income of investments in real estate partnerships in the Consolidated Statements of Operations. Cash distributions of earnings from operations from investments in real estate partnerships are presented in cash flows provided by operating activities in the accompanying Consolidated Statements of Cash Flows. Cash distributions from the sale of a property or loan proceeds received from the placement of debt on a property included in investments in real estate partnerships are presented in cash flows provided by investing activities in the accompanying Consolidated Statements of Cash Flows. Distributed proceeds from debt refinancing and real estate sales in excess of Regency's carrying value of its investment has resulted in a negative investment balance for one partnership, which is recorded within accounts payable and other liabilities in the Consolidated Balance Sheets.
The net difference in the carrying amount of investments in real estate partnerships and the underlying equity in net assets is accreted to income and recorded in equity in income of investments in real estate partnerships in the accompanying Consolidated Statements of Operations over the expected useful lives of the properties and other intangible assets, which range in lives from 10 to 40 years.
The assets of these partnerships are restricted to the use of the partnerships and cannot be used by general creditors of the Company. And similarly, the obligations of the partnerships can only be settled by the assets of these partnerships.
The major classes of assets, liabilities, and non-controlling equity interests held by the Company's VIEs, exclusive of the Operating Partnership as a whole, are as follows:
(in thousands)
March 31, 2018
December 31, 2017
Assets
 
 
Net real estate investments
$
185,118

172,736

Cash and cash equivalents
4,733

4,993

Liabilities
 
 
Notes payable
18,296

16,551

Equity
 
 
Limited partners’ interests in consolidated partnerships
17,658

17,572

Revenues and Tenant and Other Receivables
On January 1, 2018, the Company adopted the new accounting guidance for revenue recognition (Topic 606 Revenue from Contracts with Customers, “Topic 606”), as discussed further in the section below, Recent Accounting Pronouncements. Upon adoption of the new standard, certain of the Company's significant accounting policies subject to Topic 606 have been updated.

14



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

The Company adopted Topic 606 on January 1, 2018, using a modified retrospective approach and applied the transition practical expedients allowed by the standard.  Additionally, the Company applied the practical expedient related to the remaining performance obligations, because all of its performance obligations are satisfied at a point in time, are part of a contract that has an original expected duration of one year or less, or are considered to be a series of performance obligations where variable consideration is allocated entirely to a wholly unsatisfied distinct day of service that forms part of the series, such that the Company does not need to estimate variable consideration to recognize revenue. 
Subsequent to the adoption of Topic 606, the Company recognizes revenue when or as control of the promised services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The following is a description of the Company's revenue from contracts with customers which is in the scope of Topic 606.
Property and Asset Management Services

The Company is engaged under agreements with its joint venture partnerships, which are generally perpetual in nature and cancellable through unanimous partner approval, absent an event of default. Under these agreements, the Company is to provide asset management, property management, and leasing services for the joint ventures' shopping centers. The fees are market-based, generally calculated as a percentage of either revenues earned or the estimated values of the properties managed or the proceeds received, and are recognized over the monthly or quarterly periods as services are rendered. Property management and asset management services represent a series of distinct daily services under the new revenue standard. Accordingly, the Company satisfies its performance obligation as service is rendered each day and the variability associated with that compensation is resolved each day. Amounts due from the partnerships for such services are paid during the month following the monthly or quarterly service periods.
Several of the Company’s partnership agreements provide for incentive payments, generally referred to as “promotes” or “earnouts,” to Regency for appreciation in property values in Regency's capacity as manager. The terms of these promotes are based on appreciation in real estate value over designated time intervals. The Company evaluates its expected promote payout at each reporting period, which generally does not result in revenue recognition until the measurement period has completed, when the amount can be reasonably determined and the amount is not probable of significant reversal.
Leasing Services

Leasing service fees are based on a percentage of the total rent due under the lease. The leasing service is considered performed upon successful execution of an acceptable tenant lease for the joint ventures’ shopping centers, at which time revenue is recognized. Payment of the first half of the fee is generally due upon lease execution and the second half is generally due upon tenant opening or rent payments commencing.
Transaction Services

The Company also receives transaction fees, as contractually agreed upon with each joint venture, which include acquisition fees, disposition fees, and financing service fees. Control of these services is generally transferred to the customer at the time the related transaction closes, which is the point in time when the Company recognizes the related fees. Any unpaid amounts related to transaction-based fees are included in Accounts receivable.

15



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

All income from contracts with the Company's real estate partnerships is included within Management, transaction and other fees on the Consolidated Statements of Operations, as follows for the three months ended March 31:
(in thousands)
 
Timing of satisfaction of performance obligations
 
2018
 
2017
Property management services
 
Over time
 
$
3,768

 
3,418

Asset management services
 
Over time
 
1,703

 
1,789

Leasing services
 
Point in time
 
685

 
829

Other transaction fees
 
Point in time
 
1,002

 
670

Total management, transaction, and other fees
 
$
7,158

 
6,706

The accounts receivable for management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $9.3 million and $8.7 million, as of March 31, 2018 and December 31, 2017, respectively.
Real Estate Sales
On January 1, 2018, the Company adopted the new accounting guidance for sales of nonfinancial assets (“Subtopic 610-20”), as discussed further in the section below, Recent Accounting Pronouncements. Upon adoption of the new standard, the Company's accounting policy for real estate sales subject to Subtopic 610-20 has been updated. The Company now derecognizes real estate and recognizes a gain or loss on sales of real estate when a contract exists and control of the property has transferred to the buyer. Control of the property, including controlling financial interest, is generally considered to transfer upon closing through transfer of the legal title and possession of the property. Any retained non-controlling interest is measured at fair value. This change in accounting policy resulted in the recognition, through opening retained earnings on January 1, 2018, of $30.9 million of previously deferred gains from property sales to the Company's Investments in real estate partnerships.
Goodwill
Goodwill represents the excess of the purchase price consideration for the Equity One merger over the fair value of the assets acquired and liabilities assumed, and reflects expected synergies from combining Regency's and Equity One's operations. The Company accounts for goodwill in accordance with the Intangibles - Goodwill and Other Topic of the FASB ASC 350, and allocates its goodwill to its reporting units, which have been determined to be at the individual property level. The Company performs an impairment evaluation of its goodwill at least annually, in November of each year, or more frequently as triggers occur.
The goodwill impairment evaluation may be completed through a qualitative or quantitative approach. Under a qualitative approach, the impairment review for goodwill consists of an assessment of whether it is more-likely-than-not that the reporting unit’s fair value is less than its carrying value, including goodwill. If a qualitative approach indicates it is more likely-than-not that the estimated carrying value of a reporting unit (including goodwill) exceeds its fair value, or if the Company chooses to bypass the qualitative approach for any reporting unit, the Company will perform the quantitative approach described below.
The quantitative approach consists of estimating the fair value of each reporting unit using discounted projected future cash flows and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, the Company would then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.


16



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

Recent Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements and expected impact on our financial statements:
Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
Recently adopted:
 
 
 
 
 
 
ASU 2017-12, August 2017, Targeted Improvements to Accounting for Hedging Activities
 
This ASU provides updated guidance to better align a company’s financial reporting for hedging activities with the economic objectives of those activities.

The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying the ASU as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the update.
 
January 2018
 
The Company adopted this ASU on January 1, 2018, using a modified retrospective transition method, which resulted in an immaterial adjustment to opening retained earnings and accumulated other comprehensive income for previously recognized hedge ineffectiveness from off-market hedges.

 
 
 
 
 
 
 
ASU 2016-01, January 2016, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
 
This ASU amends the guidance to classify equity securities with readily-determinable fair values into different categories and requires equity securities to be measured at fair value with changes in the fair value recognized through net income. Equity investments accounted for under the equity method are not included in the scope of this amendment.

 
January 2018
 
The Company's adoption of this standard did not have a material impact on its results of operations, financial condition or cash flows as the company has an immaterial amount of equity securities within the scope of this standard.
The adoption resulted in reduced disclosure requirements around methodology and significant assumptions used in fair value measurements.

 
 
 
 
 
 
 
ASU 2016-15, August 2016, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
 
This ASU makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. Early adoption is permitted on a retrospective basis.

 
January 2018
 
The adoption of this ASU did not result in a change to the Company's cash flow statement.

 
 
 
 
 
 
 

17



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
ASU 2016-18, November 2016, Statement of Cash Flows (Topic 230): Restricted Cash
 
This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. The amendments in this ASU should be applied using a retrospective transition method to each period presented.

 
January 2018
 
The adoption of this ASU resulted in a change to the classification and presentation of changes in restricted cash on its cash flow statement, which was not material. There was no change to the Company's financial condition or results of operations as a result of adopting this ASU.

Upon adoption, and for the three months ended March 31, 2017, net cash provided by operating activities decreased by $67,000 and net cash used in investing activities decreased by $3.4 million, with a corresponding increase in cash and cash equivalents, and restricted cash within the Consolidated Statements of Cash Flows.

 
 
 
 
 
 
 
ASU 2017-05, February 2017, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (Subtopic 610-20)

 
ASU 2017-05 clarifies that ASC 610-20 applies to all nonfinancial assets (including real estate) for which the counterparty is not a customer and requires an entity to derecognize a nonfinancial asset in a partial sale transaction when it ceases to have a controlling financial interest in the asset and has transferred control of the asset. Once an entity transfers control of the nonfinancial asset, the entity is required to measure any non-controlling interest it receives or retains at fair value.

Under the current guidance, a partial sale is recognized and carryover basis is used for the retained interest resulting in only partial gain recognition by the entity, however, the new guidance eliminates the use of carryover basis and generally requires the full gain be recognized.

The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most recent period presented in the financial statements.

 
January 2018
 
Sales of real estate assets are now accounted for under Subtopic 610-20, which provides for revenue recognition based on transfer of control.

For normal arms length property sales to unrelated parties, where Regency has no retained interest in the property, the Company will continue to recognize the full gain or loss upon transfer of control. For property sales in which Regency retains a noncontrolling interest in the property, fair value recognition for the retained noncontrolling interest is now required, which will result in full gain recognition upon loss of control.

The Company applied the modified retrospective adoption method, and recognized through opening retained earnings $30.9 million of previously deferred gains from property sales to entities in which Regency had continuing involvement, resulting in a corresponding increase to the value of the Company's investment in those partnerships.
 
 
 
 
 
 
 

18



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
Revenue from Contracts with Customers (Topic 606) and related updates:

ASU 2014-09, May 2014,
Revenue from Contracts with Customers (Topic 606)

ASU 2016-08, March 2016, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations

ASU 2016-10, April 2016, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

ASU 2016-12, May 2016, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients

ASU 2016-19, December 2016, Technical Corrections and Improvements

ASU 2016-20, December 2016, Technical Corrections and Improvements to Topic 606 Revenue from Contracts With Customers

 
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("Topic 606"). The objective of Topic 606 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. It supersedes most of the existing revenue guidance, including industry-specific guidance. The core principal of this new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying Topic 606, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized.

Topic 606 applies to all contracts with customers except those that are within the scope of other topics in the FASB's accounting standards codification. As a result, Topic 606 does not apply to revenue from lease contracts until the adoption of the new leases standard, Topic 842, in January 2019.

The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most recent period presented in the financial statements.
 
January 2018
 
 The Company utilized the modified retrospective method of adoption, applying the standard to only 2018, and not restating prior periods presented in future financial statements.

The majority of the Company's revenue originates from lease contracts and will be subject to Topic 842 to be adopted in January 2019.

Beyond revenue from lease contracts, the Company's primary revenue stream, subject to Topic 606 is Management, transaction, and other fees from the Company's real estate partnerships, primarily in the form of property management services, asset management services, and leasing services. The Company evaluated all partnership service relationships and did not identify any changes in the timing or amount of revenue recognition from these revenue streams.

The adoption of Topic 606 resulted in additional disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
 
 
 
 
 
 
 

19



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2018

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
Not yet adopted: