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, 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=12530790&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 169,443,126 as of October 31, 2018.
 




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 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 September 30, 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 September 30, 2018 and December 31, 2017
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2018 and 2017
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2018 and 2017
 
 
 
 
Consolidated Statements of Equity for the periods ended September 30, 2018 and 2017
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2018 and 2017
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2018 and 2017
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2018 and 2017
 
 
 
 
Consolidated Statements of Capital for the periods ended September 30, 2018 and 2017
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 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
September 30, 2018 and December 31, 2017
(in thousands, except share data)
 
 
2018
 
2017
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land, building and improvements
$
10,854,283

 
10,578,430

Properties in development
 
36,707

 
314,391

 
 
10,890,990

 
10,892,821

Less: accumulated depreciation
 
1,474,769

 
1,339,771

 
 
9,416,221

 
9,553,050

Investments in real estate partnerships
 
458,051

 
386,304

Net real estate investments
 
9,874,272

 
9,939,354

Properties held for sale
 
51,892

 

Cash and cash equivalents
 
40,365

 
45,370

Restricted cash
 
4,121

 
4,011

Tenant and other receivables, net of uncollectible reserves of $14,332 and $12,728 at September 30, 2018 and December 31, 2017, respectively
 
160,709

 
170,985

Deferred leasing costs, less accumulated amortization of $98,829 and $93,291 at September 30, 2018 and December 31, 2017, respectively
 
85,292

 
80,044

Acquired lease intangible assets, less accumulated amortization of $206,378 and $148,280 at September 30, 2018 and December 31, 2017, respectively
 
412,653

 
478,826

Other assets
 
427,726

 
427,127

Total assets
$
11,057,030

 
11,145,717

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
3,008,592

 
2,971,715

Unsecured credit facilities
 
708,616

 
623,262

Accounts payable and other liabilities
 
236,250

 
234,272

Acquired lease intangible liabilities, less accumulated amortization of $84,435 and $56,550 at September 30, 2018 and December 31, 2017, respectively
 
507,341

 
537,401

Tenants’ security, escrow deposits and prepaid rent
 
43,988

 
46,013

Total liabilities
 
4,504,787

 
4,412,663

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock, $0.01 par value per share, 220,000,000 shares authorized; 169,441,714 and 171,364,908 shares issued at September 30, 2018 and December 31, 2017, respectively
 
1,694

 
1,714

Treasury stock at cost, 385,652 and 366,628 shares held at September 30, 2018 and December 31, 2017, respectively
 
(19,550
)
 
(18,307
)
Additional paid in capital
 
7,756,215

 
7,873,104

Accumulated other comprehensive income (loss)
 
14,066

 
(6,289
)
Distributions in excess of net income
 
(1,240,331
)
 
(1,158,170
)
Total stockholders’ equity
 
6,512,094

 
6,692,052

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $22,628 and $24,206 at September 30, 2018 and December 31, 2017, respectively
 
10,726

 
10,907

Limited partners’ interests in consolidated partnerships
 
29,423

 
30,095

Total noncontrolling interests
 
40,149

 
41,002

Total equity
 
6,552,243

 
6,733,054

Total liabilities and equity
$
11,057,030

 
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 September 30,
 
Nine months ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
204,005

 
195,393

$
614,224

 
532,625

Percentage rent
 
1,224

 
1,147

 
6,292

 
5,509

Recoveries from tenants and other income
 
66,127

 
59,554

 
194,900

 
162,089

Management, transaction, and other fees
 
6,954

 
6,047

 
20,999

 
19,353

Total revenues
 
278,310

 
262,141

 
836,415

 
719,576

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
89,183

 
91,474

 
266,812

 
243,757

Operating and maintenance
 
40,557

 
38,020

 
124,924

 
103,888

General and administrative
 
17,564

 
15,199

 
51,947

 
49,618

Real estate taxes
 
35,129

 
29,315

 
97,096

 
79,636

Other operating expenses (note 2)
 
2,045

 
3,195

 
6,476

 
81,621

Total operating expenses
 
184,478

 
177,203

 
547,255

 
558,520

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
36,618

 
34,679

 
111,477

 
97,285

Provision for impairment, net of tax
 
855

 

 
29,443

 

Early extinguishment of debt
 

 

 
11,172

 
12,404

Net investment (income) loss, including unrealized (gains) losses of ($484) and ($400), and ($842) and ($1,705) for the three and nine months ended September 30, 2018 and 2017, respectively
 
(923
)
 
(971
)
 
(1,524
)
 
(2,955
)
Total other expense (income)
 
36,550

 
33,708

 
150,568

 
106,734

Income from operations before equity in income of investments in real estate partnerships
 
57,282

 
51,230

 
138,592

 
54,322

Equity in income of investments in real estate partnerships
 
10,024

 
12,221

 
29,548

 
33,804

Income from operations
 
67,306

 
63,451

 
168,140

 
88,126

Gain on sale of real estate, net of tax
 
3,228

 
131

 
4,448

 
4,913

Net income
 
70,534

 
63,582

 
172,588

 
93,039

Noncontrolling interests:
 
 
 
 
 
 
 
 
Exchangeable operating partnership units
 
(147
)
 
(132
)
 
(358
)
 
(217
)
Limited partners’ interests in consolidated partnerships
 
(665
)
 
(637
)
 
(2,008
)
 
(1,884
)
Income attributable to noncontrolling interests
 
(812
)
 
(769
)
 
(2,366
)
 
(2,101
)
Net income attributable to the Company
 
69,722

 
62,813

 
170,222

 
90,938

Preferred stock dividends and issuance costs
 

 
(3,147
)
 

 
(16,128
)
Net income attributable to common stockholders
$
69,722

 
59,666

$
170,222

 
74,810


 
 
 
 
 
 
 
 
Income per common share - basic
$
0.41

 
0.35

$
1.00

 
0.48

Income per common share - diluted
$
0.41

 
0.35

$
1.00

 
0.48

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,
 
 
2018
 
2017
 
2018
 
2017
Net income
$
70,534

 
63,582

$
172,588

 
93,039

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
2,717

 
(39
)
 
16,511

 
(3,911
)
Reclassification adjustment of derivative instruments included in net income
 
1,148

 
2,329

 
4,701

 
8,054

Unrealized gain (loss) on available-for-sale debt securities
 
24

 
8

 
(51
)
 
51

Other comprehensive income
 
3,889

 
2,298

 
21,161

 
4,194

Comprehensive income
 
74,423

 
65,880

 
193,749

 
97,233

Less: comprehensive income attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
812

 
769

 
2,366

 
2,101

Other comprehensive income (loss) attributable to noncontrolling interests
 
140

 
5

 
818

 
(11
)
Comprehensive income attributable to noncontrolling interests
 
952

 
774

 
3,184

 
2,090

Comprehensive income attributable to the Company
$
73,471

 
65,106

$
190,565

 
95,143

See accompanying notes to consolidated financial statements.

3





REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the nine months ended September 30, 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 income
 

 

 

 

 

 
90,938

 
90,938

 
217

 
1,884

 
2,101

 
93,039

Other comprehensive income (loss)
 

 

 

 

 
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 January 1, 2018
 

 
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
 

 

 

 

 

 
170,222

 
170,222

 
358

 
2,008

 
2,366

 
172,588

Other comprehensive income
 

 

 

 

 
20,343

 

 
20,343

 
43

 
775

 
818

 
21,161

Deferred compensation plan, net
 

 

 
(1,243
)
 
1,229

 

 

 
(14
)
 

 

 

 
(14
)
Restricted stock issued, net of amortization
 

 
1

 

 
12,307

 

 

 
12,308

 

 

 

 
12,308

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

 

 

 
(6,463
)
 

 

 
(6,463
)
 

 

 

 
(6,463
)
Common stock repurchased and retired
 

 
(21
)
 

 
(124,968
)
 

 

 
(124,989
)
 

 

 

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

 

 

 
996

 

 

 
996

 

 

 

 
996

Common stock issued, net of issuance costs
 

 

 

 
10

 

 

 
10

 

 

 

 
10

Distributions to partners
 

 

 

 

 

 

 

 

 
(3,457
)
 
(3,457
)
 
(3,457
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock/unit ($1.665 per share)
 

 

 

 

 

 
(283,272
)
 
(283,272
)
 
(582
)
 

 
(582
)
 
(283,854
)
Balance at September 30, 2018
 
$

 
1,694

 
(19,550
)
 
7,756,215

 
14,066

 
(1,240,331
)
 
6,512,094

 
10,726

 
29,423

 
40,149

 
6,552,243

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2018 and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net income
$
172,588

 
93,039

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
266,812

 
243,757

Amortization of deferred loan costs and debt premiums
 
7,599

 
7,144

(Accretion) and amortization of above and below market lease intangibles, net
 
(26,031
)
 
(18,784
)
Stock-based compensation, net of capitalization
 
10,012

 
16,836

Equity in income of investments in real estate partnerships
 
(29,548
)
 
(33,804
)
Gain on sale of real estate, net of tax
 
(4,448
)
 
(4,913
)
Provision for impairment, net of tax
 
29,443

 

Early extinguishment of debt
 
11,172

 
12,404

Distribution of earnings from operations of investments in real estate partnerships
 
40,366

 
40,817

Loss on derivative instruments
 

 
51

Deferred compensation expense
 
1,475

 
2,885

Realized and unrealized gain on investments
 
(1,524
)
 
(2,878
)
Changes in assets and liabilities:
 
 
 
 
Tenant and other receivables, net
 
(13,326
)
 
(11,327
)
Deferred leasing costs
 
(6,259
)
 
(10,294
)
Other assets
 
(6,565
)
 
8,075

Accounts payable and other liabilities
 
15,100

 
4,908

Tenants’ security, escrow deposits and prepaid rent
 
(2,111
)
 
(2,490
)
Net cash provided by operating activities
 
464,755

 
345,426

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(85,766
)
 
(2,109
)
Advance deposits paid on acquisition of operating real estate
 
(150
)
 
(350
)
Acquisition of Equity One, net of cash and restricted cash acquired of $74,507
 

 
(646,790
)
Real estate development and capital improvements
 
(174,145
)
 
(240,827
)
Proceeds from sale of real estate investments
 
151,142

 
13,323

Proceeds from (issuance of) notes receivable
 
15,648

 
(3,460
)
Investments in real estate partnerships
 
(58,372
)
 
(12,296
)
Distributions received from investments in real estate partnerships
 
5,488

 
36,603

Dividends on investment securities
 
281

 
200

Acquisition of investment securities
 
(16,946
)
 
(14,011
)
Proceeds from sale of investment securities
 
15,639

 
11,974

Net cash used in investing activities
 
(147,181
)
 
(857,743
)
Cash flows from financing activities:
 
 
 
 
Repurchase of common shares in conjunction with equity award plans
 
(6,772
)
 
(19,251
)
Common shares repurchased through share repurchase program
 
(124,989
)
 

Proceeds from sale of treasury stock
 
99

 
100

Redemption of preferred stock and partnership units
 

 
(325,000
)
Distributions to limited partners in consolidated partnerships, net
 
(3,457
)
 
(7,031
)
Distributions to exchangeable operating partnership unit holders
 
(582
)
 
(450
)
Dividends paid to common stockholders
 
(282,276
)
 
(232,796
)
Dividends paid to preferred stockholders
 

 
(5,029
)
Repayment of fixed rate unsecured notes
 
(150,000
)
 

Proceeds from issuance of fixed rate unsecured notes, net
 
299,511

 
953,115

Proceeds from unsecured credit facilities
 
455,000

 
950,000

Repayment of unsecured credit facilities
 
(370,000
)
 
(650,000
)
Proceeds from notes payable
 
1,740

 
126,999

Repayment of notes payable
 
(113,037
)
 
(232,839
)
Scheduled principal payments
 
(7,767
)
 
(7,452
)
Payment of loan costs
 
(9,448
)
 
(12,868
)
Early redemption costs
 
(10,491
)
 
(12,419
)
Net cash (used in) provided by financing activities
 
(322,469
)
 
525,079

Net (decrease) increase in cash and cash equivalents and restricted cash
 
(4,895
)
 
12,762

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
$
44,486

 
30,641



5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2018, and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $5,820 and $5,778 in 2018 and 2017, respectively)
$
104,210

 
73,273

Cash paid (received) for income taxes, net
$
4,771

 
(670
)
Supplemental disclosure of non-cash transactions:
 
 
 
 
Exchangeable operating partnership units issued for acquisition of real estate
$

 
13,100

Mortgage loans assumed for the acquisition of real estate
$
9,700

 

Common stock issued under dividend reinvestment plan
$
996

 
908

Stock-based compensation capitalized
$
2,606

 
2,459

Contributions from limited partners in consolidated partnerships, net
$

 
311

Common stock issued for dividend reinvestment in trust
$
627

 
557

Contribution of stock awards into trust
$
1,244

 
1,372

Distribution of stock held in trust
$
524

 
677

Change in fair value of debt securities available-for-sale
$
5

 
51

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
September 30, 2018 and December 31, 2017
(in thousands, except unit data)
 
 
2018
 
2017
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land, building and improvements
$
10,854,283

 
10,578,430

Properties in development
 
36,707

 
314,391

 
 
10,890,990

 
10,892,821

Less: accumulated depreciation
 
1,474,769

 
1,339,771

 
 
9,416,221

 
9,553,050

Investments in real estate partnerships
 
458,051

 
386,304

Net real estate investments
 
9,874,272

 
9,939,354

Properties held for sale
 
51,892

 

Cash and cash equivalents
 
40,365

 
45,370

Restricted cash
 
4,121

 
4,011

Tenant and other receivables, net of uncollectible reserves of $14,332 and $12,728 at September 30, 2018 and December 31, 2017, respectively
 
160,709

 
170,985

Deferred leasing costs, less accumulated amortization of $98,829 and $93,291 at September 30, 2018 and December 31, 2017, respectively
 
85,292

 
80,044

Acquired lease intangible assets, less accumulated amortization of $206,378 and $148,280 at September 30, 2018 and December 31, 2017, respectively
 
412,653

 
478,826

Other assets
 
427,726

 
427,127

Total assets
$
11,057,030

 
11,145,717

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
3,008,592

 
2,971,715

Unsecured credit facilities
 
708,616

 
623,262

Accounts payable and other liabilities
 
236,250

 
234,272

Acquired lease intangible liabilities, less accumulated amortization of $84,435 and $56,550 at September 30, 2018 and December 31, 2017, respectively
 
507,341

 
537,401

Tenants’ security, escrow deposits and prepaid rent
 
43,988

 
46,013

Total liabilities
 
4,504,787

 
4,412,663

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
General partner; 169,441,714 and 171,364,908 units outstanding at September 30, 2018 and December 31, 2017, respectively
 
6,498,028

 
6,698,341

Limited partners; 349,902 units outstanding at September 30, 2018 and December 31, 2017
 
10,726

 
10,907

Accumulated other comprehensive income (loss)
 
14,066

 
(6,289
)
Total partners’ capital
 
6,522,820

 
6,702,959

Noncontrolling interest: Limited partners’ interests in consolidated partnerships
 
29,423

 
30,095

Total capital
 
6,552,243

 
6,733,054

Total liabilities and capital
$
11,057,030

 
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 September 30,
 
Nine months ended September 30,
 
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
204,005

 
195,393

$
614,224

 
532,625

Percentage rent
 
1,224

 
1,147

 
6,292

 
5,509

Recoveries from tenants and other income
 
66,127

 
59,554

 
194,900

 
162,089

Management, transaction, and other fees
 
6,954

 
6,047

 
20,999

 
19,353

Total revenues
 
278,310

 
262,141

 
836,415

 
719,576

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
89,183

 
91,474

 
266,812

 
243,757

Operating and maintenance
 
40,557

 
38,020

 
124,924

 
103,888

General and administrative
 
17,564

 
15,199

 
51,947

 
49,618

Real estate taxes
 
35,129

 
29,315

 
97,096

 
79,636

Other operating expenses (note 2)
 
2,045

 
3,195

 
6,476

 
81,621

Total operating expenses
 
184,478

 
177,203

 
547,255

 
558,520

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
36,618

 
34,679

 
111,477

 
97,285

Provision for impairment, net of tax
 
855

 

 
29,443

 

Early extinguishment of debt
 

 

 
11,172

 
12,404

Net investment (income) loss, including unrealized (gains) losses of ($484) and ($400), and ($842) and ($1,705) for the three and nine months ended September 30, 2018 and 2017, respectively
 
(923
)
 
(971
)
 
(1,524
)
 
(2,955
)
Total other expense (income)
 
36,550

 
33,708

 
150,568

 
106,734

Income from operations before equity in income of investments in real estate partnerships
 
57,282

 
51,230

 
138,592

 
54,322

Equity in income of investments in real estate partnerships
 
10,024

 
12,221

 
29,548

 
33,804

Income from operations
 
67,306

 
63,451

 
168,140

 
88,126

Gain on sale of real estate, net of tax
 
3,228

 
131

 
4,448

 
4,913

Net income
 
70,534

 
63,582

 
172,588

 
93,039

Limited partners’ interests in consolidated partnerships
 
(665
)
 
(637
)
 
(2,008
)
 
(1,884
)
Net income attributable to the Partnership
 
69,869

 
62,945

 
170,580

 
91,155

Preferred unit distributions and issuance costs
 

 
(3,147
)
 

 
(16,128
)
Net income attributable to common unit holders
$
69,869

 
59,798

$
170,580

 
75,027


 
 
 
 
 
 
 
 
Income per common unit - basic
$
0.41

 
0.35

$
1.00

 
0.48

Income per common unit - diluted
$
0.41

 
0.35

$
1.00

 
0.48

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,
 
 
2018
 
2017
 
2018
 
2017
Net income
$
70,534

 
63,582

$
172,588

 
93,039

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
2,717

 
(39
)
 
16,511

 
(3,911
)
Reclassification adjustment of derivative instruments included in net income
 
1,148

 
2,329

 
4,701

 
8,054

Unrealized gain (loss) on available-for-sale debt securities
 
24

 
8

 
(51
)
 
51

Other comprehensive income
 
3,889

 
2,298

 
21,161

 
4,194

Comprehensive income
 
74,423

 
65,880

 
193,749

 
97,233

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
665

 
637

 
2,008

 
1,884

Other comprehensive income (loss) attributable to noncontrolling interests
 
132

 

 
775

 
(17
)
Comprehensive income attributable to noncontrolling interests
 
797

 
637

 
2,783

 
1,867

Comprehensive income attributable to the Partnership
$
73,626

 
65,243

$
190,966

 
95,366

See accompanying notes to consolidated financial statements.

9





REGENCY CENTERS, L.P.
Consolidated Statements of Capital
For the nine months ended September 30, 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 income
 
90,938

 
217

 

 
91,155

 
1,884

 
93,039

Other comprehensive loss
 

 
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 amortization of restricted stock issued by Parent Company
 
10,920

 

 

 
10,920

 

 
10,920

Redemption of preferred stock
 
(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

 
 
 
 
 
 
 
 
 
 
 
 
 
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 January 1, 2018
 
6,729,230

 
10,907

 
(6,277
)
 
6,733,860

 
30,097

 
6,763,957

Net income
 
170,222

 
358

 

 
170,580

 
2,008

 
172,588

Other comprehensive income
 

 
43

 
20,343

 
20,386

 
775

 
21,161

Deferred compensation plan, net
 
(14
)
 

 

 
(14
)
 

 
(14
)
Distributions to partners
 
(283,272
)
 
(582
)
 

 
(283,854
)
 
(3,457
)
 
(287,311
)
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
 
12,308

 

 

 
12,308

 

 
12,308

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 redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
(5,457
)
 

 

 
(5,457
)
 

 
(5,457
)
Balance at September 30, 2018
$
6,498,028

 
10,726

 
14,066

 
6,522,820

 
29,423

 
6,552,243

See accompanying notes to consolidated financial statements.

10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2018 and 2017
(in thousands)
(unaudited)
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net income
$
172,588

 
93,039

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
266,812

 
243,757

Amortization of deferred loan costs and debt premiums
 
7,599

 
7,144

(Accretion) and amortization of above and below market lease intangibles, net
 
(26,031
)
 
(18,784
)
Stock-based compensation, net of capitalization
 
10,012

 
16,836

Equity in income of investments in real estate partnerships
 
(29,548
)
 
(33,804
)
Gain on sale of real estate, net of tax
 
(4,448
)
 
(4,913
)
Provision for impairment, net of tax
 
29,443

 

Early extinguishment of debt
 
11,172

 
12,404

Distribution of earnings from operations of investments in real estate partnerships
 
40,366

 
40,817

Loss on derivative instruments
 

 
51

Deferred compensation expense
 
1,475

 
2,885

Realized and unrealized gain on investments
 
(1,524
)
 
(2,878
)
Changes in assets and liabilities:
 
 
 
 
Tenant and other receivables, net
 
(13,326
)
 
(11,327
)
Deferred leasing costs
 
(6,259
)
 
(10,294
)
Other assets
 
(6,565
)
 
8,075

Accounts payable and other liabilities
 
15,100

 
4,908

Tenants’ security, escrow deposits and prepaid rent
 
(2,111
)
 
(2,490
)
Net cash provided by operating activities
 
464,755

 
345,426

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(85,766
)
 
(2,109
)
Advance deposits paid on acquisition of operating real estate
 
(150
)
 
(350
)
Acquisition of Equity One, net of cash and restricted cash acquired of $74,507
 

 
(646,790
)
Real estate development and capital improvements
 
(174,145
)
 
(240,827
)
Proceeds from sale of real estate investments
 
151,142

 
13,323

Proceeds from (issuance of) notes receivable
 
15,648

 
(3,460
)
Investments in real estate partnerships
 
(58,372
)
 
(12,296
)
Distributions received from investments in real estate partnerships
 
5,488

 
36,603

Dividends on investment securities
 
281

 
200

Acquisition of investment securities
 
(16,946
)
 
(14,011
)
Proceeds from sale of investment securities
 
15,639

 
11,974

Net cash used in investing activities
 
(147,181
)
 
(857,743
)
Cash flows from financing activities:
 
 
 
 
Repurchase of common shares in conjunction with equity award plans
 
(6,772
)
 
(19,251
)
Common units repurchased through share repurchase program
 
(124,989
)
 

Proceeds from sale of treasury stock
 
99

 
100

Redemption of preferred partnership units
 

 
(325,000
)
Distributions to limited partners in consolidated partnerships, net
 
(3,457
)
 
(7,031
)
Distributions to partners
 
(282,858
)
 
(233,246
)
Distributions to preferred unit holders
 

 
(5,029
)
Repayment of fixed rate unsecured notes
 
(150,000
)
 

Proceeds from issuance of fixed rate unsecured notes, net
 
299,511

 
953,115

Proceeds from unsecured credit facilities
 
455,000

 
950,000

Repayment of unsecured credit facilities
 
(370,000
)
 
(650,000
)
Proceeds from notes payable
 
1,740

 
126,999

Repayment of notes payable
 
(113,037
)
 
(232,839
)
Scheduled principal payments
 
(7,767
)
 
(7,452
)
Payment of loan costs
 
(9,448
)
 
(12,868
)
Early redemption costs
 
(10,491
)
 
(12,419
)
Net cash (used in) provided by financing activities
 
(322,469
)
 
525,079

Net (decrease) increase in cash and cash equivalents and restricted cash
 
(4,895