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, 2017
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
 
Commission File Number 1-12298 (Regency Centers Corporation)
Commission File Number 0-24763 (Regency Centers, L.P.)
 
REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
FLORIDA (REGENCY CENTERS CORPORATION)
https://cdn.kscope.io/ceb07687662c0695e2734c2ba713cca9-regencylogocolora02.jpg
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   x                    Regency Centers, L.P.              YES  o    NO  x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Regency Centers Corporation              YES  o    NO   x                    Regency Centers, L.P.              YES  o    NO  x
The number of shares outstanding of the Regency Centers Corporation’s common stock was 170,077,581 as of May 9, 2017.
 




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2017 of Regency Centers Corporation and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to “Regency Centers Corporation” or the “Parent Company” mean Regency Centers Corporation and its controlled subsidiaries; and references to “Regency Centers, L.P.” or the “Operating Partnership” mean Regency Centers, L.P. and its controlled subsidiaries. The term “the Company”,"Regency Centers" or “Regency” means the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust (“REIT”) and the general partner of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units (“Units”). As of March 31, 2017, the Parent Company owned all of the Preferred Units of the Operating Partnership and approximately 99.9% of the Units in the Operating Partnership. The remaining limited Units are owned by investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.
The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:
 
Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;  

Eliminates duplicative disclosure and provides a more streamlined and readable presentation; and  

Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. 
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent Company consists of the same individuals as the management of the Operating Partnership. These individuals are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the key differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, the Parent Company does not have any other indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the debt of the Parent Company. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units, and Preferred Units owned by the Parent Company. 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. The Preferred Units owned by the Parent Company are eliminated in consolidation in the accompanying consolidated financial statements of the Parent Company and are classified as preferred units of the general partner in the accompanying consolidated financial statements of the Operating Partnership.
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
 
 
 
 
Regency Centers Corporation:
 
 
 
 
 
Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended March 31, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended March 31, 2017 and 2016
 
 
 
 
Consolidated Statements of Equity for the periods ended March 31, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended March 31, 2017 and 2016
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended March 31, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended March 31, 2017 and 2016
 
 
 
 
Consolidated Statements of Capital for the periods ended March 31, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended March 31, 2017 and 2016
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
SIGNATURES
 
 
 
 
 
 





PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
March 31, 2017 and December 31, 2016
(in thousands, except share data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,760,963

 
1,660,424

Buildings and improvements
 
5,908,653

 
3,092,197

Properties in development
 
292,480

 
180,878

 
 
10,962,096

 
4,933,499

Less: accumulated depreciation
 
1,166,657

 
1,124,391

 
 
9,795,439

 
3,809,108

Properties held for sale
 
19,600

 

Investments in real estate partnerships
 
381,691

 
296,699

Net real estate investments
 
10,196,730

 
4,105,807

Cash and cash equivalents
 
36,855

 
13,256

Restricted cash
 
7,987

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $9,577 and $9,021 at March 31, 2017 and December 31, 2016, respectively
 
119,843

 
111,722

Deferred leasing costs, less accumulated amortization of $85,971 and $83,529 at March 31, 2017 and December 31, 2016, respectively
 
68,299

 
69,000

Acquired lease intangible assets, less accumulated amortization of $69,324 and $56,695 at March 31, 2017 and December 31, 2016, respectively
 
606,707

 
118,831

Trading securities held in trust
 
29,025

 
28,588

Other assets
 
70,526

 
37,079

Total assets
$
11,135,972

 
4,488,906

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,749,202

 
1,363,925

Unsecured credit facilities
 
658,024

 
278,495

Accounts payable and other liabilities
 
242,638

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $28,689 and $23,538 at March 31, 2017 and December 31, 2016, respectively
 
680,469

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
41,136

 
28,868

Total liabilities
 
4,371,469

 
1,864,404

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 3,000,000 Series 7 shares issued and outstanding at March 31, 2017, and 13,000,000 Series 6 and 7 shares issued and outstanding at December 31, 2016, with liquidation preferences of $25 per share
 
75,000

 
325,000

Common stock, $0.01 par value per share, 220,000,000 and 150,000,000 shares authorized; 170,076,671 and 104,497,286 shares issued at March 31, 2017 and December 31, 2016, respectively
 
1,701

 
1,045

Treasury stock at cost, 349,660 and 347,903 shares held at March 31, 2017 and December 31, 2016, respectively
 
(17,473
)
 
(17,062
)
Additional paid in capital
 
7,768,794

 
3,294,923

Accumulated other comprehensive loss
 
(15,791
)
 
(18,346
)
Distributions in excess of net income
 
(1,080,882
)
 
(994,259
)
Total stockholders’ equity
 
6,731,349

 
2,591,301

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $10,235 and $10,630 at March 31, 2017 and December 31, 2016, respectively
 
(2,063
)
 
(1,967
)
Limited partners’ interests in consolidated partnerships
 
35,217

 
35,168

Total noncontrolling interests
 
33,154

 
33,201

Total equity
 
6,764,503

 
2,624,502

Total liabilities and equity
$
11,135,972

 
4,488,906

See accompanying notes to consolidated financial statements.

1





REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 
Three months ended March 31,
 
 
2017
 
2016
Revenues:
 
 
 
 
Minimum rent
$
141,240

 
107,674

Percentage rent
 
2,906

 
1,703

Recoveries from tenants and other income
 
45,279

 
33,487

Management, transaction, and other fees
 
6,706

 
6,764

Total revenues
 
196,131

 
149,628

Operating expenses:
 
 
 
 
Depreciation and amortization
 
60,053

 
38,716

Operating and maintenance
 
29,763

 
22,685

General and administrative
 
17,673

 
16,299

Real estate taxes
 
21,450

 
15,870

Other operating expenses (note 2)
 
71,512

 
2,306

Total operating expenses
 
200,451

 
95,876

Other expense (income):
 
 
 
 
Interest expense, net
 
27,199

 
24,142

Provision for impairment
 

 
1,666

Net investment (income) loss, including unrealized (gains) losses of ($852) and ($230) for the three months ended March 31, 2017 and 2016, respectively
 
(1,097
)
 
155

Total other expense (income)
 
26,102

 
25,963

(Loss) income from operations before equity in income of investments in real estate partnerships
 
(30,422
)
 
27,789

Equity in income of investments in real estate partnerships
 
9,342

 
12,920

Income tax expense of taxable REIT subsidiary
 
50

 

(Loss) income from operations
 
(21,130
)
 
40,709

Gain on sale of real estate, net of tax
 
415

 
12,868

Net (loss) income
 
(20,715
)
 
53,577

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units
 
19

 
(85
)
Limited partners’ interests in consolidated partnerships
 
(671
)
 
(349
)
Loss attributable to noncontrolling interests
 
(652
)
 
(434
)
Net (loss) income attributable to the Company
 
(21,367
)
 
53,143

Preferred stock dividends and issuance costs
 
(11,856
)
 
(5,266
)
Net (loss) income attributable to common stockholders
$
(33,223
)
 
47,877


 
 
 
 
(Loss) income per common share - basic
$
(0.26
)
 
0.49

(Loss) income per common share - diluted
$
(0.26
)
 
0.49

See accompanying notes to consolidated financial statements.

2




REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended March 31,
 
 
2017
 
2016
Net (loss) income
$
(20,715
)
 
53,577

Other comprehensive (loss) income:
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(68
)
 
(16,785
)
Reclassification adjustment of derivative instruments included in net income
 
2,654

 
2,453

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

 
(36
)
Other comprehensive income (loss)
 
2,618

 
(14,368
)
Comprehensive (loss) income
 
(18,097
)
 
39,209

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
Net income attributable to noncontrolling interests
 
652

 
434

Other comprehensive income (loss) attributable to noncontrolling interests
 
65

 
(168
)
Comprehensive income attributable to noncontrolling interests
 
717

 
266

Comprehensive (loss) income attributable to the Company
$
(18,814
)
 
38,943

See accompanying notes to consolidated financial statements.


3





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

 
972

 
(19,658
)
 
2,742,508

 
(58,693
)
 
(936,020
)
 
2,054,109

 
(1,975
)
 
30,486

 
28,511

 
2,082,620

Net income
 

 

 

 

 

 
53,143

 
53,143

 
85

 
349

 
434

 
53,577

Other comprehensive loss
 

 

 

 

 
(14,200
)
 

 
(14,200
)
 
(22
)
 
(146
)
 
(168
)
 
(14,368
)
Deferred compensation plan, net
 

 

 
1,287

 
(1,287
)
 

 

 

 

 

 

 

Restricted stock issued, net of amortization
 

 
2

 

 
3,400

 

 

 
3,402

 

 

 

 
3,402

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

 

 

 
(7,950
)
 

 

 
(7,950
)
 

 

 

 
(7,950
)
Common stock issued under dividend reinvestment plan
 

 

 

 
292

 

 

 
292

 

 

 

 
292

Common stock issued, net of issuance costs
 

 
2

 

 
12,291

 

 

 
12,293

 

 

 

 
12,293

Contributions from partners
 

 

 

 

 

 

 

 

 
8,389

 
8,389

 
8,389

Distributions to partners
 

 

 

 
(350
)
 

 

 
(350
)
 

 
(1,387
)
 
(1,387
)
 
(1,737
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(5,266
)
 
(5,266
)
 

 

 

 
(5,266
)
Common stock/unit ($0.50 per share)
 

 

 

 

 

 
(48,802
)
 
(48,802
)
 
(77
)
 

 
(77
)
 
(48,879
)
Balance at March 31, 2016
 
$
325,000

 
976

 
(18,371
)
 
2,748,904

 
(72,893
)
 
(936,945
)
 
2,046,671

 
(1,989
)
 
37,691

 
35,702

 
2,082,373

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 income
 

 

 

 

 
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 ($0.51 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

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the three months ended March 31, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net (loss) income
$
(20,715
)
 
53,577

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
60,053

 
38,716

Amortization of deferred loan cost and debt premium
 
2,459

 
2,353

(Accretion) and amortization of above and below market lease intangibles, net
 
(3,484
)
 
(351
)
Stock-based compensation, net of capitalization
 
12,131

 
2,621

Equity in income of investments in real estate partnerships
 
(9,342
)
 
(12,920
)
Gain on sale of real estate, net of tax
 
(415
)
 
(12,868
)
Provision for impairment
 

 
1,666

Distribution of earnings from operations of investments in real estate partnerships
 
12,784

 
13,840

Deferred income tax benefit
 
(87
)
 

Deferred compensation expense
 
1,062

 
(148
)
Realized and unrealized (gain) loss on investments
 
(1,064
)
 
155

Changes in assets and liabilities:
 
 
 
 
Restricted cash
 
67

 
(109
)
Accounts receivable, net
 
8,974

 
4,371

Straight-line rent receivables, net
 
(3,439
)
 
(1,848
)
Deferred leasing costs
 
(1,355
)
 
(2,903
)
Other assets
 
(2,657
)
 
(746
)
Accounts payable and other liabilities
 
(24,370
)
 
(7,286
)
Tenants’ security, escrow deposits and prepaid rent
 
2,121

 
(1,301
)
Net cash provided by operating activities
 
32,723

 
76,819

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 

 
(16,483
)
Acquisition of Equity One, net of cash acquired of $72,534
 
(648,957
)
 

Real estate development and capital improvements
 
(66,504
)
 
(38,289
)
Proceeds from sale of real estate investments
 
1,749

 
32,261

Issuance of notes receivable
 
(510
)
 

Investments in real estate partnerships
 
(1,688
)
 
(2,438
)
Distributions received from investments in real estate partnerships
 
25,428

 
18,296

Dividends on investment securities
 
55

 
59

Acquisition of securities
 
(3,334
)
 
(41,946
)
Proceeds from sale of securities
 
3,815

 
41,207

Net cash used in investing activities
 
(689,946
)
 
(7,333
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common stock issuance
 

 
12,293

Repurchase of common shares in conjunction with equity award plans
 
(18,275
)
 
(7,984
)
Proceeds from sale of treasury stock
 
76

 
904

Redemption of preferred stock and partnership units
 
(250,000
)
 

Distributions to limited partners in consolidated partnerships, net
 
(786
)
 
(1,707
)
Distributions to exchangeable operating partnership unit holders
 
(79
)
 
(77
)
Dividends paid to common stockholders
 
(53,289
)
 
(48,510
)
Dividends paid to preferred stockholders
 
(3,241
)
 
(5,266
)
Proceeds from issuance of fixed rate unsecured notes, net
 
646,424

 

Proceeds from unsecured credit facilities
 
740,000

 
10,000

Repayment of unsecured credit facilities
 
(360,000
)
 
(10,000
)
Proceeds from notes payable
 
1,577

 

Repayment of notes payable
 
(11,422
)
 
(27,281
)
Scheduled principal payments
 
(1,367
)
 
(1,572
)
Payment of loan costs
 
(8,796
)
 
(5
)
Net cash provided by (used in) financing activities
 
680,822

 
(79,205
)
Net increase (decrease) in cash and cash equivalents
 
23,599

 
(9,719
)
Cash and cash equivalents at beginning of the period
 
13,256

 
36,856

Cash and cash equivalents at end of the period
$
36,855

 
27,137


5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the three months ended March 31, 2017, and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $1,061 and $973 in 2017 and 2016, respectively)
$
7,687

 
7,611

Supplemental disclosure of non-cash transactions:
 
 
 
 
Common stock issued under dividend reinvestment plan
$
301

 
292

Stock-based compensation capitalized
$
778

 
814

Contributions from limited partners in consolidated partnerships, net
$
100

 
8,362

Common stock issued for dividend reinvestment in trust
$
177

 
190

Contribution of stock awards into trust
$
929

 
958

Distribution of stock held in trust
$
4,114

 
1,807

Change in fair value of securities available-for-sale
$
32

 
(36
)
Equity One Merger:
 
 
 
 
Real estate, net
$
5,985,895

 

Investments in real estate partnerships
$
103,566

 

Notes payable
$
(757,399
)
 

Other assets and liabilities, net
$
(80,693
)
 

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

See accompanying notes to consolidated financial statements.


REGENCY CENTERS, L.P.
Consolidated Balance Sheets
March 31, 2017 and December 31, 2016
(in thousands, except unit data)
    
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,760,963

 
1,660,424

Buildings and improvements
 
5,908,653

 
3,092,197

Properties in development
 
292,480

 
180,878

 
 
10,962,096

 
4,933,499

Less: accumulated depreciation
 
1,166,657

 
1,124,391

 
 
9,795,439

 
3,809,108

Properties held for sale
 
19,600

 

Investments in real estate partnerships
 
381,691

 
296,699

Net real estate investments
 
10,196,730

 
4,105,807

Cash and cash equivalents
 
36,855

 
13,256

Restricted cash
 
7,987

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $9,577 and $9,021 at March 31, 2017 and December 31, 2016, respectively
 
119,843

 
111,722

Deferred leasing costs, less accumulated amortization of $85,971 and $83,529 at March 31, 2017 and December 31, 2016, respectively
 
68,299

 
69,000

Acquired lease intangible assets, less accumulated amortization of $69,324 and $56,695 at March 31, 2017 and December 31, 2016, respectively
 
606,707

 
118,831

Trading securities held in trust
 
29,025

 
28,588

Other assets
 
70,526

 
37,079

Total assets
$
11,135,972

 
4,488,906

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,749,202

 
1,363,925

Unsecured credit facilities
 
658,024

 
278,495

Accounts payable and other liabilities
 
242,638

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $28,689 and $23,538 at March 31, 2017 and December 31, 2016, respectively
 
680,469

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
41,136

 
28,868

Total liabilities
 
4,371,469

 
1,864,404

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
Preferred units of general partner, $0.01 par value per unit, 3,000,000 and 13,000,000 units issued and outstanding at March 31, 2017 and December 31, 2016, liquidation preference of $25 per unit
 
75,000

 
325,000

General partner; 170,076,671 and 104,497,286 units outstanding at March 31, 2017 and December 31, 2016, respectively
 
6,672,140

 
2,284,647

Limited partners; 154,170 units outstanding at March 31, 2017 and December 31, 2016
 
(2,063
)
 
(1,967
)
Accumulated other comprehensive loss
 
(15,791
)
 
(18,346
)
Total partners’ capital
 
6,729,286

 
2,589,334

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
35,217

 
35,168

Total noncontrolling interests
 
35,217

 
35,168

Total capital
 
6,764,503

 
2,624,502

Total liabilities and capital
$
11,135,972

 
4,488,906

See accompanying notes to consolidated financial statements.

6





REGENCY CENTERS, L.P.
Consolidated Statements of Operations
(in thousands, except per unit data)
(unaudited)
 
 
Three months ended March 31,
 
 
2017
 
2016
Revenues:
 
 
 
 
Minimum rent
$
141,240

 
107,674

Percentage rent
 
2,906

 
1,703

Recoveries from tenants and other income
 
45,279

 
33,487

Management, transaction, and other fees
 
6,706

 
6,764

Total revenues
 
196,131

 
149,628

Operating expenses:
 
 
 
 
Depreciation and amortization
 
60,053

 
38,716

Operating and maintenance
 
29,763

 
22,685

General and administrative
 
17,673

 
16,299

Real estate taxes
 
21,450

 
15,870

Other operating expenses (note 2)
 
71,512

 
2,306

Total operating expenses
 
200,451

 
95,876

Other expense (income):
 
 
 
 
Interest expense, net
 
27,199

 
24,142

Provision for impairment
 

 
1,666

Net investment (income) loss, including unrealized (gains) losses of ($852) and ($230) for the three months ended March 31, 2017 and 2016, respectively
 
(1,097
)
 
155

Total other expense (income)
 
26,102

 
25,963

(Loss) income from operations before equity in income of investments in real estate partnerships
 
(30,422
)
 
27,789

Equity in income of investments in real estate partnerships
 
9,342

 
12,920

Income tax expense of taxable REIT subsidiary
 
50

 

(Loss) income from operations
 
(21,130
)
 
40,709

Gain on sale of real estate, net of tax
 
415

 
12,868

Net (loss) income
 
(20,715
)
 
53,577

Limited partners’ interests in consolidated partnerships
 
(671
)
 
(349
)
Net (loss) income attributable to the Partnership
 
(21,386
)
 
53,228

Preferred unit distributions and issuance costs
 
(11,856
)
 
(5,266
)
Net (loss) income attributable to common unit holders
$
(33,242
)
 
47,962


 
 
 
 
(Loss) income per common unit - basic
$
(0.26
)
 
0.49

(Loss) income per common unit - diluted
$
(0.26
)
 
0.49

See accompanying notes to consolidated financial statements.

7




REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended March 31,
 
 
2017
 
2016
Net (loss) income
$
(20,715
)
 
53,577

Other comprehensive (loss) income:
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(68
)
 
(16,785
)
Reclassification adjustment of derivative instruments included in net income
 
2,654

 
2,453

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

 
(36
)
Other comprehensive income (loss)
 
2,618

 
(14,368
)
Comprehensive (loss) income
 
(18,097
)
 
39,209

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
Net income attributable to noncontrolling interests
 
671

 
349

Other comprehensive income (loss) attributable to noncontrolling interests
 
63

 
(146
)
Comprehensive income attributable to noncontrolling interests
 
734

 
203

Comprehensive (loss) income attributable to the Partnership
$
(18,831
)
 
39,006

See accompanying notes to consolidated financial statements.


8





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

 
(1,975
)
 
(58,693
)
 
2,052,134

 
30,486

 
2,082,620

Net income
 
53,143

 
85

 

 
53,228

 
349

 
53,577

Other comprehensive loss
 

 
(22
)
 
(14,200
)
 
(14,222
)
 
(146
)
 
(14,368
)
Contributions from partners
 

 

 

 

 
8,389

 
8,389

Distributions to partners
 
(49,152
)
 
(77
)
 

 
(49,229
)
 
(1,387
)
 
(50,616
)
Preferred unit distributions
 
(5,266
)
 

 

 
(5,266
)
 

 
(5,266
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
3,402

 

 

 
3,402

 

 
3,402

Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
4,635

 

 

 
4,635

 

 
4,635

Balance at March 31, 2016
 
2,119,564

 
(1,989
)
 
(72,893
)
 
2,044,682

 
37,691

 
2,082,373

 
 
 
 
 
 
 
 
 
 
 
 
 
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 income
 

 
2

 
2,555

 
2,557

 
63

 
2,620

Deferred compensation plan, net
 

 

 

 

 

 

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

Preferred stock redemptions
 
(250,000
)
 

 

 
(250,000
)
 

 
(250,000
)
Common units issued as a result of common stock issued by Parent Company, net of repurchases
 
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

See accompanying notes to consolidated financial statements.


9





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net (loss) income
$
(20,715
)
 
53,577

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

 

Depreciation and amortization
 
60,053

 
38,716

Amortization of deferred loan cost and debt premium
 
2,459

 
2,353

(Accretion) and amortization of above and below market lease intangibles, net
 
(3,484
)
 
(351
)
Stock-based compensation, net of capitalization
 
12,131

 
2,621

Equity in income of investments in real estate partnerships
 
(9,342
)
 
(12,920
)
Gain on sale of real estate, net of tax
 
(415
)
 
(12,868
)
Provision for impairment
 

 
1,666

Distribution of earnings from operations of investments in real estate partnerships
 
12,784

 
13,840

Deferred income tax benefit
 
(87
)
 

Deferred compensation expense
 
1,062

 
(148
)
Realized and unrealized (gain) loss on investments
 
(1,064
)
 
155

Changes in assets and liabilities:
 

 

Restricted cash
 
67

 
(109
)
Accounts receivable, net
 
8,974

 
4,371

Straight-line rent receivables, net
 
(3,439
)
 
(1,848
)
Deferred leasing costs
 
(1,355
)
 
(2,903
)
Other assets
 
(2,657
)
 
(746
)
Accounts payable and other liabilities
 
(24,370
)
 
(7,286
)
Tenants’ security, escrow deposits and prepaid rent
 
2,121

 
(1,301
)
Net cash provided by operating activities
 
32,723

 
76,819

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 

 
(16,483
)
Acquisition of Equity One, net of cash acquired of $72,534
 
(648,957
)
 

Real estate development and capital improvements
 
(66,504
)
 
(38,289
)
Proceeds from sale of real estate investments
 
1,749

 
32,261

Issuance of notes receivable
 
(510
)
 

Investments in real estate partnerships
 
(1,688
)
 
(2,438
)
Distributions received from investments in real estate partnerships
 
25,428

 
18,296

Dividends on investment securities
 
55

 
59

Acquisition of securities
 
(3,334
)
 
(41,946
)
Proceeds from sale of securities
 
3,815

 
41,207

Net cash used in investing activities
 
(689,946
)
 
(7,333
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common units issued as a result of common stock issued by Parent Company
 

 
12,293

Repurchase of common shares in conjunction with equity award plans
 
(18,275
)
 
(7,984
)
Proceeds from sale of treasury stock
 
76

 
904

Redemption of preferred partnership units
 
(250,000
)
 

Distributions (to) from limited partners in consolidated partnerships, net
 
(786
)
 
(1,707
)
Distributions to partners
 
(53,368
)
 
(48,587
)
Distributions to preferred unit holders
 
(3,241
)
 
(5,266
)
Proceeds from issuance of fixed rate unsecured notes, net
 
646,424

 

Proceeds from unsecured credit facilities
 
740,000

 
10,000

Repayment of unsecured credit facilities
 
(360,000
)
 
(10,000
)
Proceeds from notes payable
 
1,577

 

Repayment of notes payable
 
(11,422
)
 
(27,281
)
Scheduled principal payments
 
(1,367
)
 
(1,572
)
Payment of loan costs
 
(8,796
)
 
(5
)
Net cash provided by (used in) financing activities
 
680,822

 
(79,205
)
Net increase (decrease) in cash and cash equivalents
 
23,599

 
(9,719
)
Cash and cash equivalents at beginning of the period
 
13,256

 
36,856

Cash and cash equivalents at end of the period
$
36,855

 
27,137




10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2017, and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $1,061 and $973 in 2017 and 2016, respectively)
$
7,687

 
7,611

Supplemental disclosure of non-cash transactions:
 
 
 
 
Common stock issued by Parent Company for dividend reinvestment plan
$
301

 
292

Stock-based compensation capitalized
$
778

 
814

Contributions from limited partners in consolidated partnerships, net
$
100

 
8,362

Common stock issued for dividend reinvestment in trust
$
177

 
190

Contribution of stock awards into trust
$
929

 
958

Distribution of stock held in trust
$
4,114

 
1,807

Change in fair value of securities available-for-sale
$
32

 
(36
)
Equity One Merger:
 


 


Real estate, net
$
5,985,895

 

Investments in real estate partnerships
$
103,566

 

Notes payable
$
(757,399
)
 

Other assets and liabilities, net
$
(80,693
)
 

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

See accompanying notes to consolidated financial statements.



11




REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

1.
Organization and Principles of Consolidation
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. The Parent Company has no other assets other than through its investment in the Operating Partnership, and its only liabilities are the unsecured notes assumed from the Equity One merger, which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership.
On March 1, 2017, Regency completed its merger with Equity One, Inc., whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock owned immediately prior to the effective time of the Merger, resulting in the issuance of approximately 65.5 million shares of common stock to effect the merger.
As of March 31, 2017, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis (the "Company” or “Regency”) owned 313 retail shopping centers and held partial interests in an additional 116 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 a fair statement of 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 or 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, 2017, the Parent Company owned approximately 99.9% of the outstanding common Partnership Units of the Operating Partnership with the remaining limited 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 variable interest entity, 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.
Segment Reporting 

The Company's business is investing in retail shopping centers through direct ownership or through joint ventures. The Company actively manages its portfolio of retail shopping centers and may from time to time make decisions to sell lower performing properties or developments not meeting its long-term investment

12



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

objectives. The proceeds from sales are reinvested into higher quality retail shopping centers, through acquisitions or new developments, which management believes will generate sustainable revenue growth and attractive returns. It is management's intent that all retail shopping centers will be owned or developed for investment purposes. The Company's revenues and net income are generated from the operation of its investment portfolio. The Company also earns fees for services provided to manage and lease retail shopping centers owned through joint ventures. 

The Company's portfolio is located throughout the United States. Management does not distinguish or group its operations on a geographical basis for purposes of allocating resources or capital. The Company reviews operating and financial data for each property on an individual basis; therefore, the Company defines an operating segment as its individual properties. The individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the centers, tenants and operational processes, as well as long-term average financial performance.

Real Estate Partnerships
Regency has an ownership interest in 127 properties through partnerships, of which 11 are consolidated. Our partners in these ventures include institutional investors, other real estate developers and/or operators, and individual parties who help Regency source 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 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 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 beyond the terms stipulated in the partnership operating agreements.
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 Sheet, and Equity in income of investments in real estate partnerships in the Consolidated Statements of Operations. Cash distributions of earnings from operations of 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. The net difference in the carrying amount of investments in real estate partnerships and the underlying equity in net assets is either (1) 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, or (2) recognized upon

13



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

sale of the underlying asset(s) or settlement of underlying liabilities, or (3) recognized at liquidation if the joint venture agreement includes a unilateral right to elect to dissolve the real estate partnership and, upon such an election, receive a distribution in-kind.

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 these 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, 2017
December 31, 2016
Assets
 
 
Real estate assets, net
$
89,682

86,440

Cash and cash equivalents
3,516

3,444

Liabilities
 
 
Notes payable
9,757

8,175

Equity
 
 
Limited partners’ interests in consolidated partnerships
17,709

17,565



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 2016-09, March 2016, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
 
This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities, an option to recognize stock compensation forfeitures as they occur, and changes to classification on the statement of cash flows.
 
January 2017
 
The adoption of this standard resulted in the reclassification of income taxes withheld on share-based awards out of operating activities into financing activities on the Statement of Cash Flows. As retrospective application was required for this component of the ASU, $8.0 million was reclassified on the Statements of Cash Flows for the three months ended March 31, 2016.

Not yet adopted:
 
 
 
 
 
 
ASU 2016-01, January 2016, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
 
The standard 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. Early adoption of this amendment is not permitted.

 
January 2018
 
The Company does not expect the adoption and implementation of this standard to have a material impact on its results of operations, financial condition or cash flows.

 
 
 
 
 
 
 

14



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
ASU 2016-15, August 2016, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
 
The standard will make 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 ASU is consistent with the Company's current treatment and the Company does not expect the adoption and implementation of this standard to have an impact on its cash flow statement.

 
 
 
 
 
 
 
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. Early adoption is permitted on a retrospective basis.
 
January 2018
 
The Company is evaluating the alternative methods of adoption and does not expect the adoption to have a material impact on its Statements of Cash Flows.
 
 
 
 
 
 
 
ASU 2017-01
January 2017, Business Combinations (Topic 805): Clarifying the Definition of a Business
 
The amendments in this update provide a screen to determine when an integrated set of assets and activities, collectively referred to as a "set", is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated.

If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. Early adoption is permitted.

 
January 2018
 
The Company is evaluating the amendments from this update, but expects it to change the treatment of individual operating properties from being considered a business to being considered an asset.

This change will result in acquisition costs being capitalized as part of the asset acquisition, whereas current treatment has them recognized in earnings in the period incurred.

Additional changes from the update are being evaluated to identify their impact to the Company's financial statements and related disclosures.
 
 
 
 
 
 
 

15



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

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

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

ASU 2017-05, February 2017, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets
 
The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date.














 
January 2018
 
The Company is completing its evaluation of the new ASU's as applied to its revenue streams and contracts within the scope of Topic 606. The Company currently does not expect the adoption of these new ASU's to result in a material change to its revenue recognition policies or practices, including timing or presentation.

The Company is evaluating the adoption method to apply, which is dependent on final determination of the nature of any changes resulting from the new standard.


 
 
 
 
 
 
 

16



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
ASU 2016-02, February 2016, Leases (Topic 842)
 
The standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. It also makes targeted changes to lessor accounting, including a change to the treatment of initial direct leasing costs, which no longer considers fixed internal leasing salaries as capitalizable costs.

Early adoption of this standard is permitted to coincide with adoption of ASU 2014-09. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.
 
January 2019
 
The Company is evaluating the impact this standard will have on its financial statements and related disclosures.
Capitalization of internal leasing salaries and legal costs will no longer be permitted upon the adoption of this standard, which will result in an increase in Total operating expenses in the Consolidated Statements of Operations in the period of adoption and prospectively.
 
 
 
 
 
 
 
ASU 2016-13, June 2016, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
 
The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

This ASU applies to how the Company determines its allowance for doubtful accounts on tenant receivables.
 
January 2020
 
The Company is evaluating the alternative methods of adoption and the impact it will have on its financial statements and related disclosures.
 
 
 
 
 
 
 



17



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017


2.
Real Estate Investments

Acquisitions

The following table details the shopping centers acquired or land acquired or leased for development:
(in thousands)
 
Three months ended March 31, 2017
Date Purchased
 
Property Name
 
City/State
 
Property Type
 
Ownership
 
Purchase Price
 
Debt Assumed, Net of Premiums
 
Intangible Assets
 
Intangible Liabilities
3/6/17
 
The Field at Commonwealth
 
Chantilly, VA
 
Development
 
100%
 
$9,500
 
 
 
3/8/17
 
Pinecrest Place (1)
 
Miami, FL
 
Development
 
100%
 
 
 
 

 
 
 
 
 
$9,500
 
 
 
(1)  The Company leased 10.67 acres for a ground up development.
(in thousands)
 
Three months ended March 31, 2016
Date Purchased
 
Property Name
 
City/State
 
Property Type
 
Ownership
 
Purchase Price
 
Debt Assumed, Net of Premiums
 
Intangible Assets
 
Intangible Liabilities
2/22/16
 
Garden City Park
 
Garden City Park, NY
 
Operating
 
100%
 
$17,300
 
 
10,171
 
2,940
3/4/16
 
The Market at Springwoods Village (1)
 
Houston, TX
 
Development
 
53%
 
$17,994
 
 
 
Total property acquisitions
 
 
 
 
 
$35,294
 
 
10,171
 
2,940
(1)  Regency acquired a 53% controlling interest in the Market at Springwoods Village partnership to develop a shopping center on land contributed by the partner. As a result of consolidation, the Company recorded the partner's non-controlling interest of $8.4 million in Limited partners' interests in consolidated partnerships in the accompanying Consolidated Balance Sheets.

Equity One Merger

General

On March 1, 2017, Regency completed its merger with Equity One, Inc., an NYSE shopping center company, whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock owned immediately prior to the effective time of the Merger resulting in approximately 65.5 million shares being issued to effect the merger. The following table provides the components that make up the total purchase price for the Equity One merger:

(in thousands, except stock price)
Purchase Price
Shares of common stock issued for merger
65,495

Closing stock price on March 1, 2017
$
68.40

Value of common stock issued for merger
$
4,471,808

Debt repaid
716,278

Other cash payments
5,019

Total purchase price
$
5,193,105

 
 



18



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

As part of the Merger, Regency acquired 121 properties, including 8 properties held through co-investment partnerships. The consolidated net assets and results of operations of Equity One are included in the consolidated financial statements from the closing date, March 1, 2017, going forward and resulted in the following impact to Revenues and Net income attributable to common stockholders for the three months ended March 31, 2017:
 
 
March 31, 2017
(in thousands)
 
Three months ended
Increase in total revenues
$
34,936

Increase (decrease) in net income attributable to common stockholders (1)
 
(22,296
)

(1) Includes $69.8 million of transaction costs during the three months ended March 31, 2017, which are recorded in Other operating expenses in the accompanying Consolidated Statements of Operations.

Provisional Purchase Price Allocation of Merger

The Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values. The following table summarizes the provisional purchase price allocation based on the Company's initial valuation, including estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed:
(in thousands)
 
Preliminary Purchase Price Allocation
Land
 
$
3,093,797

Building and improvements
 
2,802,319

Properties in development
 
70,179

Properties held for sale
 
19,600

Investments in unconsolidated real estate partnerships
 
103,566

Real estate assets
 
6,089,461

Cash, accounts receivable and other assets
 
112,211

Intangible assets
 
500,645

Total assets acquired
 
6,702,317

 
 
 
Notes payable
 
757,399

Accounts payable, accrued expenses, and other liabilities
 
120,370

Lease intangible liabilities
 
631,443

Total liabilities assumed
 
1,509,212

 
 
 
Total purchase price
 
$
5,193,105


The acquired assets and assumed liabilities for an acquired operating property generally include, but are not limited to: land, buildings and improvements, identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of acquired in-place leases. This methodology includes estimating an “as-if vacant” fair value of the physical property, which includes land, building, and improvements and also determines the estimated fair value of identifiable intangible assets and liabilities, considering the following categories: (i) value of in-place leases, and (ii) above and below-market value of in-place leases.
 
The provisional fair market value of the acquired operating properties is based on a valuation prepared by Regency with assistance of a third party valuation specialist. The third party uses stabilized NOI and market specific capitalization and discount rates as the primary inputs in determining the fair value of the real estate assets. Management reviews the inputs used by the third party specialist as well as the allocation of the purchase price to ensure reasonableness and that the procedures are performed in accordance with management's policy. Management and the third party valuation specialist have prepared their provisional fair value estimates for each of the operating

19



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

properties acquired, but are still in process of reviewing all of the underlying inputs and assumptions; therefore, the purchase price and its allocation are not yet complete as of the date of this filing. Once the purchase price and allocation are complete, an adjustment to the purchase price or allocation may occur. Additionally, any excess purchase price may result in the recognition of goodwill, the amount of which may be significant.

The allocation of the purchase price is based on management’s assessment, which may change in the future as more information becomes available. Subsequent adjustments made to the purchase price allocation upon completion of the Company's fair value assessment process will not exceed one year. The allocation of the purchase price described above requires a significant amount of judgment and represents management's best estimate of the fair value as of the acquisition date.

The following table details the provisional weighted average amortization and net accretion periods, in years, of the major classes of intangible assets and intangible liabilities arising from the Equity One merger:

(in years)
 
Weighted Average Amortization Period
Assets:
 
 
In-place leases
 
10.6
Above-market leases
 
9.5
Below-market ground leases
 
44.9
Liabilities:
 
 
Acquired lease intangible liabilities
 
22.3


Pro forma Information

The following unaudited pro forma financial data includes the incremental revenues, operating expenses, depreciation and amortization, and costs of the Equity One acquisition as if it had occurred on January 1, 2016:
 
 
Pro forma (Unaudited)
 
 
Three months ended March 31,
(in thousands, except per share data)
 
2017
 
2016
Total revenues
 
265,174

 
250,042

Income (loss) from operations
(1) 
67,397

 
(51,437
)
Net income (loss) attributable to common stockholders
(1) 
54,809

 
(57,012
)
Income (loss) per common share - basic
 
0.32

 
(0.35
)
Income (loss) per common share - diluted
 
0.32

 
(0.35
)

(1) The pro forma earnings for the three months ended March 31, 2017 were adjusted to exclude $69.8 million of merger costs, while 2016 pro forma earnings were adjusted to include all merger costs during the first quarter of 2016.

The pro forma financial data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor does it purport to represent the results of operations for future periods.


3.    Property Dispositions

Dispositions

The following table provides a summary of shopping centers and land parcels disposed of:

20



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

 
 
Three months ended March 31,
 
(in thousands)
 
2017
 
2016
 
Net proceeds from sale of real estate investments
 
$
1,749

 
$
34,321

(1) 
Gain on sale of real estate, net of tax
 
$
415

 
$
12,868

 
Provision for impairment of real estate sold
 
$

 
$
(866
)
 
Number of operating properties sold
 

 
3

 
Number of land parcels sold
 
2

 
5

 
Percent interest sold
 
100
%
 
100
%
 
(1) Includes cash deposits received in the previous year.
4.    Notes Payable and Unsecured Credit Facilities
The Company’s outstanding debt consisted of the following: 
(in thousands)
Weighted Average Contractual Rate
Weighted Average Effective Rate
March 31, 2017
 
December 31, 2016
Notes payable:
 
 
 
 
 
Fixed rate mortgage loans
5.6%
5.7%
$
607,173

 
384,786

Variable rate mortgage loans
2.1%
2.3%
116,324

(1) 
86,969

Fixed rate unsecured public debt
4.1%
4.6%
2,025,705

 
892,170

Total notes payable
 
 
2,749,202

 
1,363,925

Unsecured credit facilities:
 
 
 
 
 
Line of Credit (the "Line") (2)
1.8%
1.9%
95,000

 
15,000

Term loans
2.4%
2.4%
563,024

 
263,495

Total unsecured credit facilities
 
658,024

 
278,495

Total debt outstanding
 
 
$
3,407,226

 
1,642,420


(1) Includes five mortgages, whose interest rates vary on LIBOR based formulas. Three of these variable rate loans have interest rate swaps in place to fix the interest rates at a range of 2.8% to 3.7%.
(2) Weighted average effective and contractual rate for the Line is calculated based on a fully drawn Line balance.


21



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

During January 2017, the Company issued $300.0 million of 4.4% senior unsecured public notes due February 1, 2047, which priced at 99.110%. The Company used the net proceeds to redeem all of the outstanding shares of its $250 million 6.625% Series 6 preferred stock on February 16, 2017 and to pay down the balance of the Company's Line.
In connection with the merger with Equity One on March 1, 2017, the Company completed the following debt transactions:
During January 2017, issued $350.0 million of senior unsecured public notes with an interest rate of 3.6% maturing in 2027, which priced at 99.741%. The Company used the net proceeds to repay a $250 million Equity One term loan that became due as a result of the merger and to pay merger related transaction costs.
During March 2017, increased the size of its Line commitment to $1.0 billion with an accordion feature permitting the Company to request an additional increase in the facility of up to $500 million.
Completed a $300 million unsecured term loan that matures on December 2, 2020 with the option to prepay at par anytime prior to maturity without penalty. The interest rate on the term loan is equal to LIBOR plus a ratings based margin; however, the Company entered into interest rate swaps to fix the interest rate on the the entire $300 million with a weighted average interest rate of 1.824% (see note 5). The proceeds of the term loan were used to repay a $300 million Equity One term loan that came due as a result of the merger.
Assumed $300 million of senior unsecured public notes with an interest rate of 3.75% maturing in 2022.
Assumed $200 million of the senior unsecured private placement notes issued in two $100 million tranches with interest rates of 3.81% and 3.91%, respectively, maturing in 2026.
Assumed $226.3 million of fixed rate mortgage loans with interest rates ranging from 3.76% to 7.94%, and assumed a $27.8 million variable rate mortgage loan whose interest rate varies with LIBOR.
The public and private unsecured notes assumed from Equity One have covenants that are similar to the Company's existing debt covenants described in Regency's latest Form 10-K.

As of March 31, 2017, scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows: 
(in thousands)
March 31, 2017
Scheduled Principal Payments and Maturities by Year:
Scheduled
Principal
Payments
 
Mortgage Loan
Maturities
 
Unsecured
Maturities (1)
 
Total
2017
$
8,824

 
75,511

 

 
84,335

2018
11,481

 
139,976

 

 
151,457

2019
11,251

 
124,402

 
95,000


230,653

2020
10,107

 
84,411

 
450,000

 
544,518

2021
9,193

 
39,001

 
250,000

 
298,194

Beyond 5 Years
41,308

 
154,998

 
1,915,000

 
2,111,306

Unamortized debt premium/(discount) and issuance costs

 
13,035

 
(26,272
)
 
(13,237
)
Total
$
92,164

 
631,334

 
2,683,728

 
3,407,226

(1) Includes unsecured public debt and unsecured credit facilities.

The Company has $75.5 million of mortgage loans maturing through 2017, which it currently intends to refinance if held with a co-investment partner or pay off if wholly owned. The Company has sufficient capacity on its Line to repay maturing debt, all of which is in the form of non-recourse mortgage loans.

The Company was in compliance as of March 31, 2017 with the financial and other covenants under its unsecured public and private placement debt and unsecured credit facilities.


5.    Derivative Financial Instruments

22



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets: 
 
 
 
 
 
 
 
 
 
 
 
Fair Value
 
(in thousands)
 
 
 
 
 
 
 
Assets (Liabilities)(1)
 
Effective Date
 
Maturity Date
 
Notional Amount
 
Bank Pays Variable Rate of
 
Regency Pays Fixed Rate of
 
March 31, 2017
 
December 31, 2016
 
10/16/13
 
10/16/20
 
$
28,100

 
1 Month LIBOR
 
2.196%
 
$
(440
)
 
(580
)
 
4/3/17
 
12/2/20
 
300,000

 
1 Month LIBOR with Floor
 
1.824%
 
(593
)
 

 
8/1/16
 
1/5/22
 
265,000

 
1 Month LIBOR with Floor
 
1.053%
 
10,469

 
9,889

 
4/7/16
 
4/1/23
 
20,000

 
1 Month LIBOR
 
1.303%
 
770

 
720

 
12/1/16
 
11/1/23
 
33,000

 
1 Month LIBOR
 
1.490%
 
1,101

 
1,013

Total derivative financial instruments
 
$
11,307

 
11,042

(1) Derivatives in an asset position are included within Other assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts payable and other liabilities.
These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and, as of March 31, 2017, does not have any derivatives that are not designated as hedges. The Company has master netting agreements; however, the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore, none are offset in the accompanying Consolidated Balance Sheets.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within Interest expense, in the accompanying Consolidated Statements of Operations.

The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements:
Derivatives in FASB
ASC Topic 815 Cash
Flow Hedging
Relationships:
Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective
Portion)
 
Location and Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Location and Amount of Gain or
(Loss) Recognized in
Income on  Derivative
(Ineffective Portion and
Missed Forecast)
 
Three months ended March 31,
 
 
 
Three months ended March 31,
 
 
 
Three months ended March 31,
(in thousands)
2017
 
2016
 
 
 
2017
 
2016
 
 
 
2017
 
2016
Interest rate swaps
$
(68
)
 
(16,785
)
 
Interest
expense
 
$
(2,654
)
 
(2,453
)
 
Loss on derivative instruments
 
$

 


As of March 31, 2017, the Company expects $10.5 million of net deferred losses on derivative instruments in Accumulated other comprehensive loss, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months. Included in the reclassification is $8.4 million which is related to previously settled swaps on the Company's ten year fixed rate unsecured loans.




23



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

6.    Fair Value Measurements

(a) Disclosure of Fair Value of Financial Instruments

All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation, reasonably approximate their fair values, except for the following:
 
March 31, 2017
 
December 31, 2016
(in thousands)
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Financial assets:
 
 
 
 
 
 
 
Notes receivable
$
10,992

 
10,877

 
$
10,481

 
10,380

Financial liabilities:
 
 
 
 
 
 
 
Notes payable
$
2,749,202

 
2,832,355

 
$
1,363,925

 
1,435,000

Unsecured credit facilities
$
658,024

 
660,000

 
$
278,495

 
279,700


The above fair values represent management's estimate of the amounts that would be received from selling those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants as of March 31, 2017 and December 31, 2016. These fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments about the assumptions that market participants would use in pricing the asset or liability.

The Company develops its judgments based on the best information available at the measurement date, including expected cash flows, appropriate risk-adjusted discount rates, and available observable and unobservable inputs. Service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value of these financial instruments, the fair values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.

The following methods and assumptions were used to estimate the fair value of these financial instruments:

Notes Receivable

The fair value of the Company's Notes receivable is estimated by calculating the present value of future contractual cash flows discounted at interest rates available for notes of the same terms and maturities, adjusted for counter-party specific credit risk. The fair value of Notes receivable was determined primarily using Level 3 inputs of the fair value hierarchy, which considered counter-party credit risk and collateral risk of the underlying property securing the note receivable.

Notes Payable

The fair value of the Company's unsecured debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the unsecured debt was determined using Level 2 inputs of the fair value hierarchy.

The fair value of the Company's mortgage notes payable is estimated by discounting future cash flows of each instrument at rates that reflect the current market rates available to the Company for debt of the same terms and maturities. Fixed rate loans assumed in connection with real estate acquisitions are recorded in the accompanying consolidated financial statements at fair value at the time the property is acquired. The fair value of the mortgage notes payable was determined using Level 2 inputs of the fair value hierarchy.

Unsecured Credit Facilities

The fair value of the Company's Unsecured credit facilities is estimated based on the interest rates currently offered to the Company by financial institutions. The fair value of the credit facilities was determined using Level 2 inputs of the fair value hierarchy.


24



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

The following interest rate ranges were used by the Company to estimate the fair value of its financial instruments:
 
 
March 31, 2017
 
December 31, 2016
 
 
Low
 
High
 
Low
 
High
Notes receivable
 
7.3%
 
7.3%
 
7.2%
 
7.2%
Notes payable
 
3.0%
 
3.8%
 
2.9%
 
3.9%
Unsecured credit facilities
 
1.7%
 
1.7%
 
1.5%
 
1.6%

(b) Fair Value Measurements

The following financial instruments are measured at fair value on a recurring basis:

Trading Securities Held in Trust

The Company has investments in marketable securities, which are assets of the non-qualified deferred compensation plan ("NQDCP"), that are classified as trading securities held in trust on the accompanying Consolidated Balance Sheets. The fair value of the Trading securities held in trust was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of trading securities are recorded within net investment (income) loss from deferred compensation plan in the accompanying Consolidated Statements of Operations.

Available-for-Sale Securities

Available-for-sale securities consist of investments in certificates of deposit and corporate bonds, and are recorded at fair value using matrix pricing methods to estimate fair value, which are considered Level 2 inputs of the fair value hierarchy. Unrealized gains or losses on these securities are recognized through Other comprehensive income.

Interest Rate Derivatives

The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.

25



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis:
 
Fair Value Measurements as of March 31, 2017
(in thousands)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Assets:
Balance
 
(Level 1)
 
(Level 2)
 
(Level 3)
Trading securities held in trust
$
29,025

 
29,025

 

 

Available-for-sale securities
7,543

 

 
7,543

 

Interest rate derivatives
12,340

 

 
12,340

 

Total
$
48,908

 
29,025

 
19,883

 

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest rate derivatives
$
(1,033
)
 

 
(1,033
)
 

 
Fair Value Measurements as of December 31, 2016
(in thousands)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Assets:
Balance
 
(Level 1)
 
(Level 2)
 
(Level 3)
Trading securities held in trust
$
28,588

 
28,588

 

 

Available-for-sale securities
7,420

 

 
7,420

 

Interest rate derivatives
11,622

 

 
11,622

 

Total
$
47,630

 
28,588

 
19,042

 

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest rate derivatives
$
(580
)
 

 
(580
)
 




7.    Equity and Capital

Preferred Stock of the Parent Company

Redemption:

The Parent Company redeemed all of the issued and outstanding shares of its $250 million 6.625% Series 6 cumulative redeemable preferred stock on February 16, 2017. The redemption price of $25.21 per share includes accrued and unpaid dividends, resulting in an aggregate amount being paid of $252.0 million. The funds used to redeem the Series 6 preferred stock were provided by the $300 million 30 year senior unsecured debt offering completed in January 2017 as discussed in note 4.

Common Stock of the Parent Company

Issuances:

At the Market ("ATM") Program

The Company's ATM equity offering program, which expired on March 4, 2017, authorized the Parent Company to sell up to $200 million of common stock at prices determined by the market at the time of sale. As of March 31, 2017, the Company has not reinstituted an ATM equity offering program.


26



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

There were no shares issued under the ATM equity program during the three months ended March 31, 2017. The following table presents the shares that were issued under the ATM equity program during the three months ended March 31, 2016:
 
Three months ended March 31,
(dollar amounts are in thousands, except price per share data)
 
2016
Shares issued (1)
 
182,787

Weighted average price per share
 
68.85

Gross proceeds
 
12,584

Commissions
 
157

(1) Reflects shares traded in December and settled in January.

Forward Equity Offering

In March 2016, the Parent Company entered into a forward sale agreement (the "Forward Equity Offering") to issue 3.10 million shares of its common stock at an offering price of $75.25 per share before any underwriting discount and offering expenses.

In June 2016, the Parent Company partially settled its forward equity offering by delivering 1.85 million shares of newly issued common stock thereby receiving $137.5 million of net proceeds which were used to repay the Line. The remaining 1.25 million shares must be settled under the forward sale agreement prior to June 23, 2017.

Equity One merger

On March 1, 2017, Regency completed its merger with Equity One, Inc., whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock that they owned immediately prior to the effective time of the Merger resulting in approximately 65.5 million shares being issued to effect the merger.


Common Units of the Operating Partnership

Issuances:
Common units were issued to the Parent Company in relation to the Parent Company's issuance of common stock, as discussed above.


27



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

Accumulated Other Comprehensive Loss

The following tables present changes in the balances of each component of AOCI:
 
Controlling Interest
 
Noncontrolling Interest
 
Total
(in thousands)
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
AOCI
Balance as of December 31, 2015
$
(58,650
)
 
(43
)
 
(58,693
)
 
(785
)
 

 
(785
)
 
(59,478
)
Other comprehensive income before reclassifications
(16,581
)
 
(36
)
 
(16,617
)
 
(204
)
 

 
(204
)
 
(16,821
)
Amounts reclassified from accumulated other comprehensive income
2,417

 

 
2,417

 
36

 

 
36

 
2,453

Current period other comprehensive income, net
(14,164
)
 
(36
)
 
(14,200
)
 
(168
)
 

 
(168
)
 
(14,368
)
Balance as of March 31, 2016
$
(72,814
)
 
(79
)
 
(72,893
)
 
(953
)
 

 
(953
)
 
(73,846
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Controlling Interest
 
Noncontrolling Interest
 
Total
(in thousands)
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
AOCI
Balance as of December 31, 2016
$
(18,327
)
 
(19
)
 
(18,346
)
 
(301
)
 

 
(301
)
 
(18,647
)
Other comprehensive income before reclassifications
(88
)
 
32

 
(56
)
 
21

 

 
21

 
(35
)
Amounts reclassified from accumulated other comprehensive income
2,610

 

 
2,610

 
44

 

 
44

 
2,654

Current period other comprehensive income, net
2,522

 
32

 
2,554

 
65

 

 
65

 
2,619

Balance as of March 31, 2017
$
(15,805
)
 
13

 
(15,792
)
 
(236
)
 

 
(236
)
 
(16,028
)

The following represents amounts reclassified out of AOCI into income:
AOCI Component
Amount Reclassified from AOCI into income
 
Affected Line Item(s) Where Net Income is Presented
 
Three months ended March 31,
 
 
(in thousands)
2017
 
2016
 
 
Interest rate swaps
$
2,654

 
2,453

 
Interest expense and Loss on derivative instruments



8.    Stock-Based Compensation

During three months ended March 31, 2017, the Company granted 211,065 shares of restricted stock with a weighted-average grant-date fair value of $71.92 per share. The Company records stock-based compensation expense within General and administrative expenses in the accompanying Consolidated Statements of Operations.




28



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

9.    Non-Qualified Deferred Compensation Plan ("NQDCP")

The Company maintains a NQDCP which allows select employees and directors to defer part or all of their cash bonus, director fees, and vested restricted stock awards. All contributions into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited in a Rabbi trust.

The following table reflects the balances of the assets held in the Rabbi trust and related participant account obligations in the accompanying Consolidated Balance Sheets, excluding Regency stock:
(in thousands)
March 31, 2017
 
December 31, 2016
Assets:
 
 
 
Trading securities held in trust
$
29,025

 
28,588

Liabilities:
 
 
 
Accounts payable and other liabilities
$
28,672

 
28,214





29



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

10.    Earnings per Share and Unit
Parent Company Earnings per Share
The following summarizes the calculation of basic and diluted earnings per share: 
 
 
Three months ended March 31,
(in thousands, except per share data)
 
2017
 
2016
Numerator:
 
 
 
 
(Loss) income from operations attributable to common stockholders - basic
 
$
(33,223
)
 
47,877

(Loss) income from operations attributable to common stockholders - diluted
 
$
(33,223
)
 
47,877

Denominator:
 
 
 
 
Weighted average common shares outstanding for basic EPS
 
126,649

 
97,518

Weighted average common shares outstanding for diluted EPS (1)
 
126,649

 
97,891


 
 
 
 
(Loss) income per common share – basic
 
$
(0.26
)
 
0.49

(Loss) income per common share – diluted
 
$
(0.26
)
 
0.49

(1) 2016 includes the dilutive impact of unvested restricted stock and shares issuable under the forward equity offering using the treasury stock method.
Income allocated to noncontrolling interests of the Operating Partnership has been excluded from the numerator and exchangeable Operating Partnership units have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact. Weighted average exchangeable Operating Partnership units outstanding for the three months ended March 31, 2017 and 2016 were 154,170.

Operating Partnership Earnings per Unit
The following summarizes the calculation of basic and diluted earnings per unit: 
 
 
Three months ended March 31,
(in thousands, except per share data)
 
2017
 
2016
Numerator:
 
 
 
 
(Loss) income from operations attributable to common unit holders - basic
 
$
(33,242
)
 
47,962

(Loss) income from operations attributable to common unit holders - diluted
 
$
(33,242
)
 
47,962

Denominator:
 
 
 
 
Weighted average common units outstanding for basic EPU
 
126,803

 
97,672

Weighted average common units outstanding for diluted EPU (1)
 
126,803

 
98,045


 
 
 
 
(Loss) income per common unit – basic
 
$
(0.26
)
 
0.49

(Loss) income per common unit – diluted
 
$
(0.26
)
 
0.49

(1) 2016 includes the dilutive impact of unvested restricted stock and the forward equity offering using the treasury stock method.



30



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

11.    Commitments and Contingencies

Litigation

The Company is involved in litigation on a number of matters and is subject to certain claims, which arise in the normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity. Legal fees are expensed as incurred.

After the announcement of the merger agreement on November 14, 2016, a putative class action was filed on behalf of a purported stockholder in the Circuit Court for Duval County, Florida, under the following caption: Robert Garfield on Behalf of Himself and All Others Similarly Situated vs. Regency Centers Corporation, Martin E. Stein, Jr., John C. Schweitzer, Raymond L. Bank, Bryce Blair, C. Ronald Blankenship, J. Dix Druce, Jr., Mary Lou Fiala, David P. O'Connor, and Thomas G. Wattles, No. 16-2017-CA-000688-XXXX-MA, filed February 3, 2017.

The class action alleged, among other matters, that the definitive joint proxy statement/prospectus filed by Regency and Equity One with the Securities and Exchange Commission (the “SEC”) on January 24, 2017 (the “Joint Proxy Statement/Prospectus”) omitted certain material information in connection with the Merger. The complainant sought various remedies, including injunctive relief to prevent the consummation of the Merger unless certain allegedly material information was disclosed and sought compensatory and rescissory damages in the event the Merger was consummated without such disclosures.

On February 17, 2017, the defendants entered into a stipulation of settlement with respect to the class action, pursuant to which the parties agreed, among other things, that Regency would make certain supplemental disclosures. The supplemental disclosures were made by Regency in the Current Report on Form 8-K filed by Regency with the SEC on February 17, 2017. The supplemental disclosures should be read in conjunction with the Joint Proxy Statement/Prospectus, which should be read in its entirety.

Environmental

The Company is also subject to numerous environmental laws and regulations as they apply to real estate pertaining to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground petroleum storage tanks. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that existing environmental studies with respect to the shopping centers have revealed all potential environmental contaminants or liabilities, that any previous owner, occupant or tenant did not create any material environmental condition not known to it, that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties, or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.

Letters of Credit

The Company has the right to issue letters of credit under the Line up to an amount not to exceed $50.0 million, which reduces the credit availability under the Line. These letters of credit are primarily issued as collateral on behalf of its captive insurance program and to facilitate the construction of development projects. As of March 31, 2017 and December 31, 2016, the Company had $7.3 million and $5.8 million, respectively, in letters of credit outstanding. 



31



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017

12.    Guarantor Disclosure

The Parent Company and the Operating Partnership are co-issuers of the $300 million senior unsecured public notes due November, 2022 that was assumed from Equity One as a result of the merger. Certain wholly-owned subsidiaries of the Company provide full guarantees of these notes (the Guarantor Subsidiaries), which are joint and several, and unconditional. The following statements set forth the condensed consolidating financial information with respect to the guarantor subsidiaries:



Condensed Consolidating Balance Sheet


As of March 31, 2017
(in thousands)

Regency Centers Corporation

Regency Centers, L.P.

Guarantor Subsidiaries (1)

Non-Guarantor Subsidiaries (1)

Eliminating Entries

Consolidated
Assets


















Net real estate investments



381,691


2,848,920


6,973,201


(7,082
)

10,196,730

Investment in subsidiaries

6,764,503


8,899,971






(15,664,474
)


Other assets, net

501,581


278,521


281,315


561,104


(683,279
)

939,242

Total Assets

7,266,084


9,560,183


3,130,235


7,534,305


(16,354,835
)

11,135,972

Liabilities


















Total notes payable and unsecured credit facilities

500,000


2,683,728


93,153


799,463


(669,118
)

3,407,226

Other liabilities

1,581


111,952


284,717


587,236


(21,243
)

964,243

Total Liabilities

501,581


2,795,680


377,870


1,386,699


(690,361
)

4,371,469

Equity
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' Equity

6,731,349


6,729,286


2,752,365


6,147,606


(15,629,257
)

6,731,349

Non-controlling interest
 
33,154

 
35,217

 

 

 
(35,217
)
 
33,154

Total Equity
 
6,764,503

 
6,764,503

 
2,752,365

 
6,147,606

 
(15,664,474
)
 
6,764,503

Total Liabilities and Equity

7,266,084


9,560,183


3,130,235


7,534,305


(16,354,835
)

11,135,972


 
 
Condensed Consolidating Statement of Income
 
 
For the three months ended March 31, 2017
(in thousands)
 
Regency Centers Corporation
 
Regency Centers, L.P.
 
Guarantor Subsidiaries (1)
 
Non-Guarantor Subsidiaries (1)
 
Eliminating Entries
 
Consolidated
Total revenue
 

 
6,646

 
17,958

 
171,527

 

 
196,131

Equity in subsidiaries
 
(20,715
)
 
67,935

 

 

 
(47,220
)
 

Total costs and expenses
 

 
87,293

 
13,605

 
99,678

 
(125
)
 
200,451

Income before other income and expense and income taxes
 
(20,715
)
 
(12,712
)
 
4,353

 
71,849

 
(47,095
)
 
(4,320
)
Other income (expense)
 
(11,856
)
 
(19,859
)
 
(329
)
 
(7,938
)
 
11,731

 
(28,251
)
Noncontrolling interest
 
(652
)
 
(671
)
 

 

 
671

 
(652
)
Net income attributable to shareholders
 
(33,223
)
 
(33,242
)
 
4,024

 
63,911

 
(34,693
)
 
(33,223
)
(1) The fair value of the assets acquired and liabilities assumed from the Equity One merger, and resulting depreciation and amortization, are based on provisional purchase price allocations and are subject to change, as further discussed in note 2.

32



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
March 31, 2017


 
 
Condensed Consolidating Statement of Cash Flows
 
 
For the three months ended March 31, 2017
(in thousands)
 
Regency Centers Corporation
 
Regency Centers, L.P.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminating Entries
 
Consolidated
Net cash (used in) provided by operating activities
 
56,531

 
(41,028
)
 
11,837

 
99,153

 
(93,770
)
 
32,723

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Merger with Equity One
 

 
(648,957
)
 

 

 

 
(648,957
)
Real estate development and capital improvements
 

 
(5,117
)
 

 
(61,387
)
 

 
(66,504
)
Proceeds from sale of real estate investments
 

 
1,749

 

 

 

 
1,749

Issuance of notes receivable
 

 
(510
)
 

 

 

 
(510
)
Investments in real estate partnerships
 

 
(1,688
)
 

 

 

 
(1,688
)
Distributions received from investments in real estate partnerships
 

 
25,428

 

 

 

 
25,428

Dividends on investment securities
 

 
55

 

 

 

 
55

Acquisition of securities
 

 
(3,334
)
 

 

 

 
(3,334
)
Distributions received from subsidiaries
 
268,274

 

 

 

 
(268,274
)
 

Proceeds from sale of securities
 

 
3,815

 

 

 

 
3,815

Net cash used in investing activities
 
268,274

 
(628,559
)
 

 
(61,387
)
 
(268,274
)
 
(689,946
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from sale of treasury stock
 

 
76

 

 

 

 
76

Repurchase of common shares in conjunction with equity award plans
 
(18,275
)
 
(18,275
)
 

 

 
18,275

 
(18,275
)
Redemption of preferred stock and partnership units
 
(250,000
)
 
(250,000
)
 

 

 
250,000

 
(250,000
)
Distributions to limited partners in consolidated partnerships, net
 

 
(786
)
 

 

 

 
(786
)
Distributions to exchangeable operating partnership unit holders
 

 
(79
)
 

 

 

 
(79
)
Dividends paid to common stockholders
 
(53,289
)
 
(53,289
)
 
(11,640
)
 
(25,599
)
 
90,528

 
(53,289
)
Dividends paid to preferred stockholders
 
(3,241
)
 
(3,241
)
 

 

 
3,241

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

 
646,424

 

 

 

 
646,424

Proceeds from unsecured credit facilities
 

 
740,000

 

 

 

 
740,000

Repayment of unsecured credit facilities
 

 
(360,000
)
 

 

 

 
(360,000
)
Proceeds from notes payable
 

 

 

 
1,577

 

 
1,577

Repayment of notes payable
 

 

 
(197
)
 
(11,225
)
 

 
(11,422
)
Scheduled principal payments
 

 

 

 
(1,367
)
 

 
(1,367
)
Payment of loan costs
 

 
(7,644
)
 

 
(1,152
)
 

 
(8,796
)
Net cash provided by (used in) financing activities
 
(324,805
)
 
693,186

 
(11,837
)
 
(37,766
)
 
362,044

 
680,822

Net increase (decrease) in cash and cash equivalents
 

 
23,599

 

 

 

 
23,599

Cash and cash equivalents at beginning of the period
 

 
13,256

 

 

 

 
13,256

Cash and cash equivalents at end of the period
 

 
36,855

 

 

 

 
36,855






33





Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements    

In addition to historical information, the following information contains forward-looking statements as defined under federal securities laws. These forward-looking statements include statements about anticipated changes in our revenues, the size of our development and redevelopment program, earnings per share and unit, returns and portfolio value, and expectations about our liquidity. These statements are based on current expectations, estimates and projections about the real estate industry and markets in which the Company operates, and management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, our ability to successfully integrate the business of Equity One successfully and realize the anticipated synergies and related benefits of our merger with Equity One, changes in national and local economic conditions, financial difficulties of tenants, competitive market conditions, including timing and pricing of acquisitions and sales of properties and building pads ("out-parcels"), changes in leasing activity and market rents, timing of development starts, meeting development schedules, natural disasters in geographic areas in which we operate, cost of environmental remediation, our inability to exercise voting control over the co-investment partnerships through which we own many of our properties, and technology disruptions. For additional information, see “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2016. The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporation and Regency Centers, L.P. appearing elsewhere herein. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of uncertain events.

Defined Terms

We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP , as we believe these measures improve the understanding of the Company's operational results. We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of certain operating metrics regardless of ownership structure, along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more meaningful. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

The following terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results:

Same Property information is provided for retail operating properties that were owned and operated for the entirety of both calendar year periods being compared and excludes Non-Same Properties and Properties in Development.

A Non-Same Property is a property acquired, sold, or a development completion during either calendar year period being compared. Non-retail properties and corporate activities, including activities of our captive insurance company, are part of Non-Same Property.

Property In Development includes land or properties in various stages of development and redevelopment including active pre-development activities.

Development Completion is a project in development that is deemed complete upon the earliest of: (i) 90% of total estimated net development costs have been incurred and percent leased equals or exceeds 95%, or (ii) the project features at least two years of anchor operations, or (iii) three years have passed since the start of construction. Once deemed complete, the property is termed a retail operating property.

Pro-Rata information includes 100% of our consolidated properties plus our economic share (based on our ownership interest) in our unconsolidated real estate investment partnerships.

The pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use

34





to prepare our pro-rata share.
The presentation of pro-rata information has limitations which include, but are not limited to, the following:
The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting or allocating noncontrolling interests, and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and

Other companies in our industry may calculate their pro-rata interest differently, limiting the usefulness as a comparative measure.

Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata information as a supplement.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, real estate gains and losses, development and acquisition pursuit costs, straight line rental income, and above and below market rent amortization.

Fixed Charge Coverage Ratio is defined as Adjusted EBITDA divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.

Net Operating Income ("NOI") is the sum of minimum rent, percentage rent and recoveries from tenants and other income, less operating and maintenance, real estate taxes, and provision for doubtful accounts. NOI excludes straight-line rental income and expense, above and below market rent amortization and other fees. The Company also provides disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.

NAREIT Funds from Operations ("NAREIT FFO") is a commonly used measure of REIT performance, which the National Association of Real Estate Investment Trusts ("NAREIT") defines as net income, computed in accordance with GAAP, excluding gains and losses from sales of depreciable property, net of tax, excluding operating real estate impairments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute NAREIT FFO for all periods presented in accordance with NAREIT's definition. Many companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since NAREIT FFO excludes depreciation and amortization and gains and losses from depreciable property dispositions, and impairments, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations. The Company provides a reconciliation of Net Income (Loss) Attributable to Common Stockholders to NAREIT FFO.

Core FFO is an additional performance measure used by Regency as the computation of NAREIT FFO includes certain non-cash and non-comparable items that affect the Company's period-over-period performance.  Core FFO excludes from NAREIT FFO, but is not limited to: (a) transaction related gains, income or expense; (b) impairments on land; (c) gains or losses from the early extinguishment of debt; and (d) other non-core amounts as they occur.  The Company provides a reconciliation of NAREIT FFO to Core FFO.


    




35






Overview of Our Strategy


Regency Centers (the "Parent Company") began its operations as a publicly-traded REIT in 1993, and, as of March 31, 2017, had full or partial ownership interests in 429 retail properties primarily anchored by market leading grocery stores. Our properties are principally located in affluent and infill trade areas in the most attractive metro areas of the United States and the District of Columbia, and contain 54.0 million square feet ("SF") of gross leasable area ("GLA"). All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P., our wholly-owned subsidiaries, and through our co-investment partnerships. As of March 31, 2017, the Parent Company owns approximately 99.9% of the outstanding common partnership units of the Operating Partnership and has $500 million of unsecured public and private placement debt, which it assumed through the merger with Equity One.
Our mission is to be the preeminent national shopping center owner, operator and developer. Our strategy is to:
Own and manage an unequaled portfolio of high-quality neighborhood and community shopping centers anchored by market leading grocers and located in affluent suburban and near urban trade areas in the country’s most desirable metro areas. This combination produces highly desirable and attractive centers to best-in-class retailers. These centers command higher rental and occupancy rates resulting in excellent prospects to grow net operating income (NOI);
Maintain an industry leading and disciplined development platform to deliver exceptional retail centers at higher margins as compared to acquisitions;
Support our business activities with a strong balance sheet; and
Engage a talented, dedicated team of employees, who are guided by Regency’s special culture and aligned with shareholder interests.

Key goals to achieve our strategy are to:
Sustain superior same property NOI growth compared to our shopping center peers;
Develop and redevelop high quality shopping centers at attractive returns on investment;
Maintain a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and debt maturities on a favorable basis, and to weather economic downturns;
Attract and motivate an exceptional team of employees who operate efficiently and are recognized as industry leaders;
Generate reliable growth in earnings per share, funds from operations per share, and most importantly total shareholder returns that consistently rank among the leading shopping center REITS.


36





Executing on our Strategy


During the three months ended March 31, 2017:
We completed the merger with Equity One on March 1, 2017 and acquired 121 properties for $5.2 billion, further enhancing the quality of our operating portfolio of retail shopping centers.
We sustained superior same property NOI growth compared to the average of our shopping center peers:
We achieved pro-rata same property NOI growth, excluding termination fees, of 3.7% as compared to the same period in the prior year on the newly combined portfolio.
We executed 328 leasing transactions in our shopping centers representing 1.1 million SF of new and renewal leasing, and grew rental rates by 8.2% on comparable size spaces.
At March 31, 2017, our total property portfolio was 95.3% leased, while our same property portfolio was 96.0% leased.

We developed and redeveloped high quality shopping centers at attractive returns on investment:
We started two new developments representing a total investment of $61.0 million upon completion, with projected weighted average returns on investment of 7.4%.
Including these new projects, a total of 30 properties were in the process of development or redevelopment, representing a combined investment upon completion of $515 million.

We maintained a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and debt maturities:
In January 2017, we issued $300.0 million of 4.4% senior unsecured notes due February 1, 2047, the proceeds of which were used to redeem all of the $250.0 million 6.625% Series 6 preferred stock and reduce the balance of the Line.
On March 1, 2017 in conjunction with the merger with Equity One, we increased the commitment amount of our line of credit (the "Line") to $1.0 billion, of which $95.0 million was outstanding.
At March 31, 2017, our annualized net debt-to-adjusted EBITDA ratio on a pro-rata basis was 4.9x versus 4.5x at December 31, 2016.




37





Equity One Merger

On March 1, 2017, Regency completed its merger with Equity One, Inc., whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock owned immediately prior to the effective time of the Merger resulting in approximately 65.5 million shares being issued to effect the merger. The following table provides the components that make up the total purchase price for the Equity One merger:

(in thousands, except stock price)
Purchase Price
Shares of common stock issued for merger
65,495

Closing stock price on March 1, 2017
$
68.40

Value of common stock issued for merger
$
4,471,808

Debt repaid
716,278

Other cash payments
5,019

Total purchase price
$
5,193,105

 
 


As part of the Merger, Regency acquired 121 properties representing 16.0 million SF of GLA, including 8 properties held through co-investment partnerships. The consolidated net assets and results of operations of Equity One are included in the consolidated financial statements from the closing date, March 1, 2017 through March 31, 2017.

Shopping Center Portfolio

The following table summarizes general information related to the Consolidated Properties in our shopping center portfolio:
(GLA in thousands)
 
March 31, 2017
 
December 31, 2016
Number of Properties
 
313
 
198
Properties in Development
 
7
 
6
GLA
 
40,350
 
23,931
% Leased – Operating and Development
 
95.2%
 
94.8%
% Leased – Operating
 
95.6%
 
96.0%
Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions.
 
$20.33
 
$19.70

The following table summarizes general information related to the Unconsolidated Properties owned in co-investment partnerships in our shopping center portfolio:
(GLA in thousands)
 
March 31, 2017
 
December 31, 2016
Number of Properties
 
116
 
109
GLA
 
13,688
 
13,899
% Leased –Operating
 
96.0%
 
96.3%
Weighted average annual effective rent PSF, net of tenant concessions
 
$19.95
 
$19.25


For the purpose of the following disclosures of occupancy and leasing activity, "anchor space" is considered space greater than or equal to 10,000 SF and "shop space" is less than 10,000 SF. The following table summarizes pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping center portfolio:
 
 
March 31, 2017
 
December 31, 2016
% Leased – Operating (1) (2)
 
95.8%
 
96.0%
Anchor space
 
98.1%
 
97.8%
Shop space
 
91.7%
 
93.1%
(1) Excludes properties in development.

38





(2) For the period ending March 31, 2017, percent leased includes properties acquired from Equity One on March 1, 2017.

The decline in shop space percent leased is due to the merger with Equity One, which at the time of the merger had lower shop space occupancy than Regency.


39





The following table summarizes leasing activity, including our pro-rata share of activity within the portfolio of our co-investment partnerships:
 
 
Three months ended March 31, 2017
 
 
Leasing Transactions (1,3)
 
SF (in thousands)
 
Base Rent PSF
 (2)
 
Tenant Improvements PSF
 (2)
 
Leasing Commissions PSF
 (2)
Anchor Leases
 

 

 

 

 

New
 
9
 
301
 
$
19.21

 
$
3.58

 
$
3.04

Renewal
 
15
 
340
 
$
15.59

 
$

 
$
1.17

Total Anchor Leases (1)
 
24
 
641
 
$
17.29

 
$
1.68

 
$
2.05

Shop Space
 

 

 


 


 


New
 
99
 
143
 
$
32.46

 
$
8.51

 
$
13.46

Renewal
 
205
 
334
 
$
31.04

 
$
0.59

 
$
3.89

Total Shop Space Leases (1)
 
304
 
477
 
$
31.47

 
$
2.97

 
$
6.77

Total Leases
 
328
 
1,118
 
$
23.34

 
$
2.23

 
$
4.06

 
 
Three months ended March 31, 2016
 
 
Leasing Transactions (1)
 
SF (in thousands)
 
Base Rent PSF
 (2)
 
Tenant Improvements PSF
 (2)
 
Leasing Commissions PSF
 (2)
Anchor Leases
 
 
 
 
 
 
 
 
 
 
New
 
4
 
174
 
$
12.53

 
$
11.91

 
$
3.01

Renewal
 
15
 
302
 
$
14.83

 
$
1.02

 
$
2.13

Total Anchor Leases (1)
 
19
 
476
 
$
13.99

 
$
5.00

 
$
2.45

Shop Space
 
 
 
 
 
 
 
 
 
 
New
 
89
 
140
 
$
29.96

 
$
12.54

 
$
12.53

Renewal
 
201
 
295
 
$
29.92

 
$
0.86

 
$
4.49

Total Shop Space Leases (1)
 
290
 
435
 
$
29.93

 
$
4.62

 
$
7.08

Total Leases
 
309
 
911
 
$
21.60

 
$
4.82

 
$
4.66

(1) Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.     
(2) Totals for base rent, tenant improvements, and leasing commissions reflect the weighted average PSF.
(3) For the period ending March 31, 2017, amounts include leasing activity of properties acquired from Equity One beginning March 1, 2017.

Total average base rent on signed shop space leases during 2017 was $31.47 and exceeds the average annual base rent of all shop space leases due to expire during the remainder of 2017 of $28.39 PSF, by 10.9%.





40





Significant Tenants and Concentrations of Risk

We seek to reduce our operating and leasing risks through geographic diversification and by avoiding dependence on any single property, market, or tenant. The following table summarizes our most significant tenants, based on their percentage of annualized base rent: 

 
 
March 31, 2017
Grocery Anchor
 
Number of
Stores (1)
 
Percentage of
Company-
owned GLA (2)
 
Percentage  of
Annualized
Base Rent (2) 
Publix
 
68
 
6.2%
 
3.2%
Kroger
 
60
 
6.5%
 
3.1%
Albertsons/Safeway
 
46
 
3.8%
 
2.7%
Whole Foods
 
25
 
2.0%
 
2.1%
TJX Companies
 
50
 
2.5%
 
2.0%
 
 
 
 
 
 
 
(1) Includes stores owned by grocery anchors that are attached to our centers.
(2) Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors.

Bankruptcies and Credit Concerns

Our management team devotes significant time to researching and monitoring retail trends, consumer preferences, customer shopping behaviors, changes in retail delivery methods, and changing demographics in order to anticipate the challenges and opportunities impacting the retail industry. Certain segments of the retail industry face reductions in sales and increased bankruptcies amid stronger competition from e-commerce. A greater shift to e-commerce, large-scale retail business failures, unemployment, and tight credit markets could negatively impact consumer spending and have an adverse effect on our results of operations. We pro-actively seek to mitigate these potential impacts through tenant diversification, re-tenanting weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive foot traffic, and maintaining a presence in affluent suburbs and dense infill trade areas. As a result of our research and findings, we may reduce new leasing, suspend leasing, or curtail allowances for construction of leasehold improvements within a certain retail category or to a specific retailer in order to reduce our risk from bankruptcies and store closings.

We closely monitor the operating performance and rent collections of tenants in our shopping centers as well as those retailers experiencing significant changes to their business models as a result of reduced customer traffic in their stores and increased competition from e-commerce sales.  Retailers who are unable to withstand these and other business pressures may approach us to modify their lease agreement or file for bankruptcy. Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally have the legal right to reject any or all of their leases and close related stores. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its leases, we could experience a significant reduction in our revenues. Currently, no tenant represents more than 5% of our annual base rent on a pro-rata basis. 

During 2016, Sears Holdings announced that it planned to accelerate the closing of a number of stores. Sears continues to report significant declines in operating revenues and performance, and its ability to continue operating stores in our shopping centers is uncertain. We have five Sears or Kmart leases in our portfolio, which currently represent $3.1 million, or 0.6%, of total annualized base rent on a pro-rata basis. None of the announced store closures are within our shopping centers at this time. However, we are currently working to opportunistically re-tenant the spaces as the lease terms permit.     

Of the current bankruptcies impacting our portfolio, none of the individual retailers exceed 0.1% of our annual base rent on a pro-rata basis.



41





Results from Operations

Results from operations for the three months ended March 31, 2017 reflect the results of our merger with Equity One on March 1, 2017. Accordingly, our results of operations will reflect the combined operations for the entire period for future quarters, unlike the quarter ended March 31, 2017, which only reflects the combined operations for one of the quarter's three months.

Comparison of the three months ended March 31, 2017 to 2016:

Our revenues increased as summarized in the following table: 
 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
Minimum rent
 
$
141,240

 
107,674

 
33,566

Percentage rent
 
2,906

 
1,703

 
1,203

Recoveries from tenants
 
42,087

 
30,825

 
11,262

Other income
 
3,192

 
2,662

 
530

Management, transaction, and other fees
 
6,706

 
6,764

 
(58
)
Total revenues
 
$
196,131

 
149,628

 
46,503


Minimum rent increased as follows:
$1.9 million increase from rent commencing at development properties;
$3.8 million increase from new acquisitions of operating properties;
$3.1 million increase in minimum rent from same properties related to redevelopment completions and rental rate growth on new and renewal leases; and
$26.4 million increase from properties acquired through the Equity One merger;
reduced by $1.6 million from the sale of operating properties.

Percentage rent increased $1.2 million primarily as a result of properties acquired through the Equity One merger.

Recoveries from tenants represent reimbursements to us for tenants' pro-rata share of the operating, maintenance, and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased as follows:
$456,000 increase from rent commencing at development properties;
$1.1 million increase from new acquisitions of operating properties;
$2.7 million increase from same properties associated with higher recoverable costs and improvements in recovery rates; and
$7.6 million increase from properties acquired through the Equity One merger;
reduced by $592,000 from the sale of operating properties.

Other income, which consists of incidental income earned at our centers, increased $530,000 primarily as a result of parking income related to the acquisition of Market Common Clarendon in May 2016.

    


42






Changes in our operating expenses are summarized in the following table: 
 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
Depreciation and amortization
 
$
60,053

 
38,716

 
21,337

Operating and maintenance
 
29,763

 
22,685

 
7,078

General and administrative
 
17,673

 
16,299

 
1,374

Real estate taxes
 
21,450

 
15,870

 
5,580

Other operating expenses
 
71,512

 
2,306

 
69,206

Total operating expenses
 
$
200,451

 
95,876

 
104,575


Depreciation and amortization costs increased as follows:
$732,000 increase as we began depreciating costs at development properties where tenant spaces were completed and became available for occupancy;
$2.3 million increase from new acquisitions of operating properties;
$1.4 million increase from same properties attributable to recent capital improvements and redevelopments; and
$17.8 million increase from properties acquired through the Equity One merger;
reduced by $890,000 from the sale of operating properties and other corporate asset disposals.

Operating and maintenance costs increased as follows:
$324,000 increase from operations commencing at development properties;
$1.4 million increase from new acquisitions of operating properties;
$976,000 increase from same properties primarily attributable to recoverable costs; and
$4.7 million increase from properties acquired through the Equity One merger;
reduced by $392,000 from the sale of operating properties.

General and administrative expenses increased as follows:
$1.2 million increase from the change in the value of participant obligations within the deferred compensation plan; and
$1.8 million increase from higher general overhead and compensations costs attributable to annual salary increases and additional staffing required for the Equity One merger;
reduced by $1.6 million of higher development overhead capitalization due to increased development and redevelopment activity.

Real estate taxes increased as follows:
$767,000 increase from new acquisitions of operating properties;
$1.1 million increase from same properties from increased tax assessments; and
$3.9 million increase from properties acquired through the Equity One merger;
reduced by $214,000 from sold properties.

Other operating expenses increased as follows:
$69.2 million increase attributable to Equity One merger costs.



43





The following table presents the components of other expense (income):
 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
Interest expense, net
 
 
 
 
 
 
Interest on notes payable
 
$
24,613

 
22,252

 
2,361

Interest on unsecured credit facilities
 
2,430

 
916

 
1,514

Capitalized interest
 
(1,257
)
 
(973
)
 
(284
)
Hedge expense
 
2,102

 
2,230

 
(128
)
Interest income
 
(689
)
 
(283
)
 
(406
)
Interest expense, net
 
27,199

 
24,142

 
3,057

Provision for impairment
 

 
1,666

 
(1,666
)
Net investment (income) loss
 
(1,097
)
 
155

 
(1,252
)
     Total other expense (income)
 
$
26,102

 
25,963

 
139


The $3.1 million increase in total interest expense is due to:
$2.4 million increase in interest on notes payable due to (1) $2.6 million of additional interest on notes payable assumed with the Equity One merger, (2) $300 million of new 30 year unsecured debt issued to redeem our $250 million Series 6 preferred stock, and (3) $350 million of new 10 year unsecured debt issued to repay Equity One's $250 million term loan that became due upon the effective date of the merger; and
$1.5 million increase in interest expense related to higher average balances on our unsecured credit facilities, including a new $300 million term loan closed on March 1, 2017 to repay Equity One's $300 million term loan that became due upon the effective date of the merger;
partially offset by lower interest expense from deleveraging activities that occurred during 2016.

We did not recognize any impairments during the three months ended March 31, 2017. During the three months ended March 31, 2016, we recognized a $1.7 million impairment loss on one operating property and one land parcel that have since been sold.

Net investment income increased $1.3 million driven by realized and unrealized gains on investments held within our non-qualified deferred compensation plan.

Our equity in income of investments in real estate partnerships decreased as follows: 
 
 
 
Three months ended March 31,
 
 
(in thousands)
Regency's Ownership
 
2017
 
2016
 
Change
GRI - Regency, LLC (GRIR)
40.00%
 
$
7,069

 
10,772

 
(3,703
)
Columbia Regency Retail Partners, LLC (Columbia I)
20.00%
 
317

 
362

 
(45
)
Columbia Regency Partners II, LLC (Columbia II)
20.00%
 
375

 
477

 
(102
)
Cameron Village, LLC (Cameron)
30.00%
 
258

 
164

 
94

RegCal, LLC (RegCal)
25.00%
 
350

 
229

 
121

New York Common Retirement Fund (NYC)
30.00%
 
65

 

 
65

US Regency Retail I, LLC (USAA)
20.01%
 
367

 
270

 
97

Other investments in real estate partnerships
20.00% - 50.00%
 
541

 
646

 
(105
)
Total equity in income of investments in real estate partnerships
 
$
9,342

 
12,920

 
(3,578
)

The $3.6 million decrease in our equity in income of investments in real estate partnerships is largely attributed to a $3.7 million decrease in the GRIR partnership due to gains of $5.8 million from the sale of two operating properties in 2016, partially offset by a decrease in depreciation expense.

The following represents the remaining components that comprised net income attributable to the common stockholders and unit holders:

44





 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
(Loss) income from operations
 
$
(21,130
)
 
40,709

 
(61,839
)
Gain on sale of real estate, net of tax
 
415

 
12,868

 
(12,453
)
Loss attributable to noncontrolling interests
 
(652
)
 
(434
)
 
(218
)
Preferred stock dividends and issuance costs
 
(11,856
)
 
(5,266
)
 
(6,590
)
Net (loss) income attributable to common stockholders
 
$
(33,223
)
 
47,877

 
(81,100
)
Net income attributable to exchangeable operating partnership units
 
(19
)
 
85

 
(104
)
Net (loss) income attributable to common unit holders
 
$
(33,242
)
 
47,962

 
(81,204
)

The loss from operations in 2017, as compared to income from operations for the same period in 2016, was primarily due to $69.8 million of transactions costs expensed related to the merger with Equity One.
During the three months ended March 31, 2017, we sold two land parcels for gains totaling $0.4 million, as compared to gains of $12.9 million from the sale of three operating properties and five land parcels during the three months ended March 31, 2016, and
During February 2017, we expensed $8.6 million of original issuance costs upon redemption of our $250 million Series 6 preferred stock.

45






Supplemental Earnings Information

We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the Company's operating results. We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of operating results regardless of ownership structure, along with other non-GAAP measures, may assist in comparing the Company's operating results to other REITs'. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

Pro-Rata Same Property NOI:    
For purposes of evaluating same property NOI on a comparative basis, and in light of the merger with Equity One on March 1, 2017, we are presenting our same property NOI on a pro forma basis as if the merger had occurred January 1, 2016. This perspective allows us to evaluate same property NOI growth over a comparable period. The pro forma same property NOI is not necessarily indicative of what the actual same property NOI and growth would have been if the merger had occurred on January 1, 2016, nor does it purport to represent the same property NOI and growth for future periods.
Our pro-rata same property NOI, excluding termination fees, grew from the following major components:
 
 
Three months ended March 31,
(in thousands)
 
2017
 
2016
 
Change
Base rent
 
$
194,701

 
188,381

 
6,320

Percentage rent
 
4,629

 
4,801

 
(172
)
Recovery revenue
 
61,173

 
57,492

 
3,681

Other income
 
3,347

 
3,699

 
(352
)
Operating expenses
 
74,402

 
71,031

 
3,371

Pro-rata same property NOI (1)
 
$
189,448

 
183,342

 
6,106

Less: Termination fees
 
235

 
798

 
(563
)
Pro-rata same property NOI excluding termination fees
 
$
189,213

 
182,544

 
6,669

Same property NOI growth
 
 
 
 
 
3.7
%
(1) See the end of the Supplemental Earnings Information section for a reconciliation to the nearest GAAP measure.


Base rent increased $6.3 million during the three months ended March 31, 2017 driven by increases in rental rate growth on new and renewal leases and contractual rent steps from anchor leases, minimally offset by a slight decrease in occupancy.

Recovery revenue increased $3.7 million during the three months ended March 31, 2017, as a result of increases in recoverable costs and improvements in recovery rates, as noted below.
    
Other income increased $0.4 million during the three months ended March 31, 2017, as a result of ancillary parking income earned at Market Common Clarendon, a center acquired in May, 2016.    

Operating expenses increased $3.4 million during the three months ended March 31, 2017, due to higher recoverable costs.


46





Same Property Rollforward:
Our same property pool includes the following property count, pro-rata GLA, and changes therein:
 
Three months ended March 31,
 
2017
 
2016
(GLA in thousands)
Property Count
GLA
 
Property Count
GLA
Beginning same property count
289

26,392

 
300

26,508

Acquired properties owned for entirety of comparable periods
1

180

 
6

443

Developments that reached completion by beginning of earliest comparable period presented
2

331

 
2

342

Disposed properties


 
(6
)
(260
)
SF adjustments (1)

36

 

24

Properties acquired through Equity One merger
110

14,181

 


Ending same property count
402

41,120

 
302

27,057

(1) SF adjustments arise from remeasurements or redevelopments.


NAREIT FFO and Core FFO:    
Our reconciliation of net income attributable to common stock and unit holders to NAREIT FFO and Core FFO is as follows:
 
 
Three months ended March 31,
(in thousands, except share information)
 
2017
 
2016
Reconciliation of Net income to NAREIT FFO
 
 
 
 
Net (loss) income attributable to common stockholders
 
$
(33,223
)
 
47,877

Adjustments to reconcile to NAREIT FFO:(1)
 
 
 
 
Depreciation and amortization (excluding FF&E)
 
67,444

 
47,416

Provision for impairment to operating properties
 

 
659

Gain on sale of operating properties, net of tax
 
(11
)
 
(11,641
)
Exchangeable operating partnership units
 
(19
)
 
85

NAREIT FFO attributable to common stock and unit holders
 
$
34,191

 
84,396

Reconciliation of NAREIT FFO to Core FFO
 
 
 
 
NAREIT FFO attributable to common stock and unit holders
 
$
34,191

 
84,396

Adjustments to reconcile to Core FFO:(1)
 
 
 
 
Development pursuit costs
 
393

 
225

Acquisition pursuit and closing costs
 
27

 
757

Merger related costs
 
69,732

 
 
Gain on sale of land
 
(404
)
 
(7,110
)
Provision for impairment to land
 

 
512

Loss on derivative instruments and hedge ineffectiveness
 
(8
)
 
3

Preferred redemption charge
 
8,614

 

Debt offering interest for merger
 
1,729

 

Core FFO attributable to common stock and unit holders
 
$
114,274

 
78,783

(1) Includes Regency's pro-rata share of unconsolidated investment partnerships, net of pro-rata share attributable to noncontrolling interests.








47






Reconciliation of Same Property NOI to Nearest GAAP Measure:

Our reconciliation of property revenues and property expenses to Same Property NOI, on a pro-rata basis, is as follows:
 
 
Three months ended March 31,
 
 
2017
 
2016
(in thousands)
 
Same Property
 
Other (1)
 
Total
 
Same Property
 
Other (1)
 
Total
Income from operations
 
$
72,282

 
(93,412
)
 
(21,130
)
 
$
69,099

 
(28,390
)
 
40,709

Less:
 
 
 
 
 
 
 
 
 
 
 
 
Management, transaction, and other fees
 

 
6,706

 
6,706

 

 
6,764

 
6,764

Other(2)
 
5,611

 
2,585

 
8,196

 
2,204

 
1,709

 
3,913

Plus:
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
55,476

 
4,577

 
60,053

 
36,291

 
2,425

 
38,716

General and administrative
 

 
17,673

 
17,673

 

 
16,299

 
16,299

Other operating expense, excluding provision for doubtful accounts
 
331

 
70,614

 
70,945

 
595

 
1,306

 
1,901

Other expense (income)
 
10,079

 
16,023

 
26,102

 
7,345

 
18,618

 
25,963

Equity in income (loss) of investments in real estate excluded from NOI (3)
 
13,886

 
448

 
14,334

 
9,038

 
753

 
9,791

NOI from Equity One prior to merger
 
43,005

 
3,369

 
46,374

 
63,178

 
3,489

 
66,667

Pro-rata NOI
 
$
189,448

 
10,001

 
199,449

 
$
183,342

 
6,027

 
189,369

(1) Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities. 
(2) Includes straight-line rental income, net of reserves, above and below market rent amortization, other fees, and noncontrolling interest.
(3) Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.





Liquidity and Capital Resources

General

We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. We continuously monitor the capital markets and evaluate our ability to issue new debt or equity to repay maturing debt or fund our capital commitments.

Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating Partnership is a co-issuer and guarantees the outstanding debt of our Parent Company. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units. Based upon our available sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs.

    

48





In addition to its $36.9 million cash balance, the Company has the following additional sources of capital available:

(in thousands)
 
March 31, 2017
Forward Equity Offering
 
 
Original offering amount
 
$
233,300

Available equity offering to settle (1)
 
$
94,063

 
 
 
Line of Credit
 
 
Total commitment amount
 
$
1,000,000

Available capacity (2)
 
$
897,700

Maturity (3)
 
May 13, 2019
 
 
 
(1) We have 1.25 million shares to settle prior to June 23, 2017 at an offering price of $75.25 per share before any underwriting discount and offering expenses.
(2) Net of letters of credit.
(3) The Company has the option to extend the maturity for two additional six-month periods.
    
We operate our business such that we expect net cash provided by operating activities will provide the necessary funds to pay our distributions to our common and preferred share and unit holders, which were $56.6 million and $53.9 million for the three months ended March 31, 2017 and 2016, respectively. Net cash provided by operating activities decreased $44.1 million for the three months ended March 31, 2017 due primarily to transaction costs incurred with the merger.  We expect our future cash flows from operating activities to be sufficient to fund our distribution requirements. Our dividend distribution policy is set by our Board of Directors, who monitors our financial position. Our Board of Directors recently declared our common stock dividend of $0.53 per share, payable on May 31, 2017. Future dividends will be declared at the discretion of our Board of Directors and will be subject to capital requirements and availability. We plan to continue paying an aggregate amount of distributions to our stock and unit holders that, at a minimum, meet the requirements to continue qualifying as a REIT for Federal income tax purposes.

During the next twelve months, we estimate that we will require approximately $345.3 million of cash, including $269.8 million to complete in-process developments and redevelopments and $75.5 million to repay maturing debt. If we start new developments, redevelop additional shopping centers, or commit to new acquisitions, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease. To meet our cash requirements, we may utilize cash generated from operations, proceeds from the sale of real estate, available borrowings from our Line, and when the capital markets are favorable, proceeds from the sale of equity and the issuance of new long-term debt.

We endeavor to maintain a high percentage of unencumbered assets. At March 31, 2017, 83.2% of our wholly-owned real estate assets were unencumbered. Such assets allow us to access the secured and unsecured debt markets and to maintain availability on the Line. Our annualized coverage ratio, including our pro-rata share of our partnerships, was 4.5 times and 3.2 times for the quarters ended March 31, 2017 and December 31, 2016, respectively.

Our Line, term loans, and unsecured notes require that we remain in compliance with various covenants, which are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. The debt assumed and issued in conjunction with the Equity One merger contain covenants that are consistent with our existing debt covenants. We are in compliance with these covenants at March 31, 2017 and expect to remain in compliance.


49





Summary of Cash Flow Activity

    
The following table summarizes net cash flows related to operating, investing, and financing activities of the Company: 
 
 
Three months ended March 31,
 
 
 (in thousands)
 
2017
 
2016
 
Change
Net cash provided by operating activities
 
$
32,723

 
76,819

 
(44,096
)
Net cash used in investing activities
 
(689,946
)
 
(7,333
)
 
(682,613
)
Net cash provided by (used in) financing activities
 
680,822

 
(79,205
)
 
760,027

Net increase (decrease) in cash and cash equivalents
 
$
23,599

 
(9,719
)
 
33,318

Total cash and cash equivalents
 
$
36,855

 
27,137

 
9,718

    
Net cash provided by operating activities:

Net cash provided by operating activities decreased $44.1 million due to:
$32.1 million decrease in cash from operating income largely attributable to merger related expenses;
$1.1 million decrease in operating cash flow distributions from our unconsolidated real estate partnerships; and,
$10.8 million net decrease in cash due to timing of cash receipts and payments related to operating activities.

Net cash used in investing activities:

Net cash used in investing activities increased by $682.6 million as follows:
 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
Cash flows from investing activities:
 
 
 
 
 
 
Acquisition of operating real estate
 
$

 
(16,483
)
 
16,483

Acquisition of Equity One, net of cash acquired of $72,534
 
(648,957
)


 
(648,957
)
Real estate development and capital improvements
 
(66,504
)
 
(38,289
)
 
(28,215
)
Proceeds from sale of real estate investments
 
1,749

 
32,261

 
(30,512
)
Issuance of notes receivable
 
(510
)
 

 
(510
)
Investments in real estate partnerships
 
(1,688
)
 
(2,438
)
 
750

Distributions received from investments in real estate partnerships
 
25,428

 
18,296

 
7,132

Dividends on investment securities
 
55

 
59

 
(4
)
Acquisition of securities
 
(3,334
)
 
(41,946
)
 
38,612

Proceeds from sale of securities
 
3,815

 
41,207

 
(37,392
)
Net cash used in investing activities
 
$
(689,946
)
 
(7,333
)
 
(682,613
)

Significant changes in investing activities include:

We did not acquire any operating properties, other than those included in the merger, during 2017 compared to $16.5 million for one operating property in the same period in 2016.

We issued 65.5 million common shares to the shareholders of Equity One valued at $4.5 billion in a stock for stock exchange and merged Equity One into the Company on March 1, 2017. As part of the merger, we paid $649.0 million, net of cash acquired, to repay Equity One credit facilities not assumed with the merger.

We invested $28.2 million more in 2017 than the same period in 2016 on real estate development and capital improvements, as further detailed in a table below.

We received proceeds of $1.7 million from the sale of two land parcels in 2017, compared to $32.3 million for three shopping centers and five land parcels in the same period in 2016.

50






We invested $1.7 million in our real estate partnerships during 2017 to fund our share of redevelopment activity, compared to $2.4 million for our share of maturing mortgage debt during the same period in 2016.

Distributions from our unconsolidated real estate partnerships include return of capital from sales or financing proceeds. The $25.4 million received in 2017 is driven by financing proceeds from encumbering certain operating properties within one partnership. During the same period in 2016, we received $18.3 million from the sale of three shopping centers within the partnerships.

Acquisition of securities and proceeds from sale of securities pertain to equity and debt securities held by our captive insurance company and our deferred compensation plan.

        
We plan to continue developing and redeveloping shopping centers for long-term investment. We deployed capital of $66.5 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:
 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
Capital expenditures:
 
 
 
 
 
 
Land acquisitions for development / redevelopment
 
$
9,555

 

 
9,555

Building and tenant improvements
 
8,105

 
9,077

 
(972
)
Redevelopment costs
 
22,407

 
10,624

 
11,783

Development costs
 
19,081

 
12,574

 
6,507

Capitalized interest
 
1,061

 
973

 
88

Capitalized direct compensation
 
6,295

 
5,041

 
1,254

Real estate development and capital improvements
 
$
66,504

 
38,289

 
28,215


During 2017 we acquired one land parcel for a new development project.

Redevelopment expenditures are higher in 2017 due to the timing, magnitude, and number of projects currently in process at existing centers and in process projects acquired from Equity One. We intend to continuously improve our portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing building expansion, new out-parcel building construction, and tenant improvement costs.  The size and magnitude of each redevelopment project varies with each redevelopment plan. 

Development expenditures are higher in 2017 due to the progress towards completion of our development projects currently in process. At March 31, 2017 and December 31, 2016, we had seven and six development projects, respectively, that were either under construction or in lease up. See the tables below for more details about our development projects.

Interest is capitalized on our development and redevelopment projects and is based on cumulative actual development costs expended. We cease interest capitalization when the property is no longer being developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor opens for business.

We have a staff of employees who directly support our development and redevelopment programs. Internal compensation costs directly attributable to these activities are capitalized as part of each project. Changes in the level of future development and redevelopment activity could adversely impact results of operations by reducing the amount of internal costs for development and redevelopment projects that may be capitalized. A 10% reduction in development and redevelopment activity without a corresponding reduction in development related compensation costs could result in an additional charge to net income of $1.6 million per year.


51





The following table summarizes our development projects (in thousands, except cost PSF):
 
 
 
 
 
 
March 31, 2017
Property Name
 
Market
 
Start Date
 
Estimated /Actual Anchor Opening
 
Estimated Net Development Costs (1)
 
% of Costs Incurred (1)
 
GLA
 
Cost PSF of GLA (1)
Northgate Marketplace Ph II
 
Medford, OR
 
Q4-15
 
Oct-16
 
40,700

 
94%
 
177
 
230

The Market at Springwoods Village (2)
 
Houston , TX
 
Q1-16
 
May-17
 
14,698

 
55%
 
89
 
165

The Village at Tustin Legacy
 
Los Angeles, CA
 
Q3-16
 
Oct-17
 
37,822

 
48%
 
112
 
338

Chimney Rock Crossing
 
New York, NY
 
Q4-16
 
May-18
 
71,175

 
37%
 
218
 
326

The Village at Riverstone
 
Houston, TX
 
Q4-16
 
Aug-18
 
30,638

 
43%
 
165
 
186

The Field at Commonwealth
 
Washington, DC
 
Q1-17
 
Aug-18
 
44,611

 
33%
 
187
 
239

Pinecrest Place (3)
 
Miami, FL
 
Q1-17
 
Mar-18
 
16,424

 
3%
 
70
 
235

Total
 
 
 
 
 
 
 
$
256,068

 
46%
 
1,018
 
$
252

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes leasing costs and is net of tenant reimbursements.
(2)  Estimated Net Development Costs are reported at full project cost. Our ownership interest in this consolidated property is 53%.
(3) Estimated Net Development Costs for Pinecrest Place excludes the cost of land, which the Company has leased long term.

The following table summarizes our completed development projects (in thousands, except cost PSF):
 
 
Three months ended March 31, 2017
Property Name
 
Location
 
Completion Date
 
Net Development
Costs (1)
 
GLA
 
Cost PSF
of GLA (1)
Willow Oaks Crossing
 
Charlotte, NC
 
Q1-17
 
$
13,991

 
69
 
$
203

 
 
 
 
 
 
$
13,991

 
69
 
$
203

(1) Includes leasing costs and is net of tenant reimbursements.


Net cash provided by (used in) financing activities:

Net cash flows generated from financing activities increased by $760.0 million during 2017 ,as follows:
 
 
Three months ended March 31,
 
 
(in thousands)
 
2017
 
2016
 
Change
Cash flows from financing activities:
 
 
 
 
 
 
Equity issuances
 
$

 
12,293

 
(12,293
)
Repurchase of common shares in conjunction with equity award plans
 
(18,275
)
 
(7,984
)
 
(10,291
)
Preferred stock redemption
 
(250,000
)
 

 
(250,000
)
Distributions to limited partners in consolidated partnerships, net
 
(786
)
 
(1,707
)
 
921

Dividend payments
 
(56,609
)
 
(53,853
)
 
(2,756
)
Unsecured credit facilities
 
380,000

 

 
380,000

Proceeds from debt issuance
 
648,001

 

 
648,001

Debt repayment
 
(12,789
)
 
(28,853
)
 
16,064

Payment of loan costs
 
(8,796
)
 
(5
)
 
(8,791
)
Proceeds from sale of treasury stock, net
 
76

 
904

 
(828
)
Net cash provided by (used in) financing activities
 
$
680,822

 
$
(79,205
)
 
$
760,027


Significant financing activities during the three months ended March 31, 2017 and 2016 include the following:

We raised $12.3 million during 2016 by issuing 182,787 shares of common stock through our ATM program at an average price of $68.85 per share resulting in net proceeds of $12.3 million.

52






We repurchased for cash a portion of the common stock related to stock based compensation to satisfy employee federal and state tax withholding requirements. The repurchases increased $10.3 million in 2017 due to the vesting of Equity One's stock based compensation program as a result of the merger.

We redeemed all of the issued and outstanding shares of $250.0 million 6.625% Series 6 cumulative redeemable preferred stock on February 16, 2017.

As a result of the common shares issued during 2016 and an increase in our quarterly dividend rate from $0.50 per share in 2016 to $0.51 per share in February 2017, our dividend payments increased $2.8 million.

We expanded our credit facilities by increasing our Line commitment to $1.0 billion and closing on a $300.0 million term loan. The combined funding from the term loan and borrowings on the Line, net of repayments provided $380.0 million to repay a $300.0 million Equity One term loan that became due upon merger and to pay merger related transaction costs.

During January 2017, we issued $650.0 million of senior unsecured public notes in two tranches of which $300.0 million is due in 2047 and $350.0 million is due in 2027. The proceeds of $648.0 million were used to redeem all of our $250.0 million Series 6 preferred stock and to repay Equity One's $250.0 million term loan and outstanding Line balance that came due upon closing the merger.

During 2017, we paid $12.8 million to repay maturing mortgage loans or pay scheduled principal payments as compared to $28.9 million in 2016.

In connection with the new debt issued above, including expanding our Line commitment, we incurred $8.8 million of loan costs.

Investments in Real Estate Partnerships

The following table is a summary of the unconsolidated combined assets and liabilities of these co-investment partnerships and our pro-rata share:
 
 
Combined
 
Regency's Share (1)
(dollars in thousands)
 
March 31, 2017
 
December 31, 2016
 
March 31, 2017
 
December 31, 2016
Number of Co-investment Partnerships
 
13

 
11

 
 
 
 
Regency’s Ownership
 
 20%-50%

 
 20%-50%

 
 
 
 
Number of Properties
 
116

 
109

 
 
 
 
Assets
 
$
2,924,922

 
2,608,742

 
$
1,008,579

 
878,977

Liabilities
 
1,669,116

 
1,404,588

 
569,004

 
473,255

Equity
 
1,255,806

 
1,204,154

 
439,575

 
405,722

less: Negative investment in US Regency Retail I, LLC (2)
 
 
 
$
8,183

 

add: Basis difference
 
 
 
 
 
44,338

 
1,382

add: Restricted Gain Method deferral
 
 
 
(30,902
)
 
(30,902
)
less: Impairment of investment in real estate partnerships
 
 
 
(1,300
)
 
(1,300
)
less: Net book equity in excess of purchase price
 
 
 
(78,203
)
 
(78,203
)
Investments in real estate partnerships
 
 
 
$
381,691

 
296,699

(1) Pro-rata financial information is not, and is not intended to be, a presentation in accordance with GAAP. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on our operations, which includes such items on a single line presentation under the equity method in our consolidated financial statements.
(2) During the first quarter of 2017, the USAA partnership distributed proceeds from debt refinancing in excess of Regency's carrying value of its investment resulting in a negative investment balance, which is recorded within Accounts payable and other liabilities in the Consolidated Balance Sheets.

53






Our equity method investments in real estate partnerships consist of the following: 
(in thousands)
Regency's Ownership
 
March 31, 2017
 
December 31, 2016
GRI - Regency, LLC (GRIR)
40.00%
 
$
200,603

 
201,240

New York Common Retirement Fund (NYC) (1)
30.00%
 
57,901

 

Columbia Regency Retail Partners, LLC (Columbia I)
20.00%
 
9,457

 
9,687

Columbia Regency Partners II, LLC (Columbia II)
20.00%
 
14,422

 
14,750

Cameron Village, LLC (Cameron)
30.00%
 
12,070

 
11,877

RegCal, LLC (RegCal)
25.00%
 
21,344

 
21,516

US Regency Retail I, LLC (USAA) (2)
20.01%
 

 
13,176

Other investments in real estate partnerships (1)
20.00% - 50.00%
 
65,894

 
24,453

    Total investment in real estate partnerships
 
 
$
381,691

 
296,699

(1) Includes investments in real estate partnerships acquired as part of the Equity One merger, which was effective on March 1, 2017.
(2) During the first quarter of 2017, the USAA partnership distributed proceeds from debt refinancing in excess of Regency's carrying value of its investment resulting in a negative investment balance, which is recorded within Accounts payable and other liabilities in the Consolidated Balance Sheets.

Notes Payable - Investments in Real Estate Partnerships

Scheduled principal repayments on notes payable held by our investments in real estate partnerships were as follows: 
(in thousands)
 
March 31, 2017
Scheduled Principal Payments and Maturities by Year:
 
Scheduled
Principal
Payments
 
Mortgage  Loan
Maturities
 
Unsecured
Maturities
 
Total
 
Regency’s
Pro-Rata
Share
2017
 
$
14,925

 

 
19,635

 
34,560

 
9,339

2018
 
21,059

 
67,022

 

 
88,081

 
28,422

2019
 
19,852

 
73,259

 

 
93,111

 
24,448

2020
 
16,823

 
222,199

 

 
239,022

 
86,167

2021
 
10,818

 
269,942

 

 
280,760

 
100,402

Beyond 5 Years
 
10,580

 
819,000

 

 
829,580

 
286,440

Net unamortized loan costs, debt premium / (discount)
 

 
(11,489
)
 

 
(11,489
)
 
(3,719
)
Total
 
$
94,057

 
1,439,933

 
19,635

 
1,553,625

 
531,499

 
 
 
 
 
 
 
 
 
 
 

At March 31, 2017, our investments in real estate partnerships had notes payable of $1.6 billion maturing through 2031, of which 98.7% had a weighted average fixed interest rate of 4.7%. The remaining notes payable float over LIBOR and had a weighted average variable interest rate of 2.5%. These notes payable are all non-recourse, and our pro-rata share was $531.5 million as of March 31, 2017. As notes payable mature, we expect they will be repaid from proceeds from new borrowings and/or partner capital contributions. We are obligated to contribute our pro-rata share to fund maturities if they are not refinanced. We believe that our partners are financially sound and have sufficient capital or access thereto to fund future capital requirements. In the event that a co-investment partner was unable to fund its share of the capital requirements of the co-investment partnership, we would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call. 

Management fee income

In addition to earning our pro-rata share of net income or loss in each of these co-investment partnerships, we receive fees, as shown below:
 
 
Three months ended March 31,
(in thousands)
 
2017
 
2016
Asset management, property management, leasing, and investment and financing services
 
6,539

 
6,612


54








Recent Accounting Pronouncements

See note 1 to Consolidated Financial Statements.


Environmental Matters

We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground petroleum storage tanks. We believe that the tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we use all legal means to cause tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems. Where available, we have applied and been accepted into state-sponsored environmental programs. We have a blanket environmental insurance policy for third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also placed environmental insurance, where possible, on specific properties with known contamination, in order to mitigate our environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.

As of March 31, 2017 we and our Investments in real estate partnerships had accrued liabilities of $11.5 million for our pro-rata share of environmental remediation. We believe that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity, or results of operations; however, we can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contaminants and liabilities; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to us.


Inflation/Deflation

Inflation has been historically low and has had a minimal impact on the operating performance of our shopping centers; however, inflation may become a greater concern in the near future. Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation. Most of our leases require tenants to pay their pro-rata share of operating expenses, including common-area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. However, during deflationary periods or periods of economic weakness, minimum rents and percentage rents typically decline as the supply of available retail space exceeds demand and consumer spending declines. Occupancy declines resulting from a weak economic period will also likely result in lower recovery rates of our operating expenses.


55






Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in item 7A of Part II of our Form 10-K for the year ended December 31, 2016.

Item 4. Controls and Procedures

Controls and Procedures (Regency Centers Corporation)

Under the supervision and with the participation of the Parent Company's management, including its chief executive officer and chief financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, the Parent Company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Parent Company in the reports it files or submits is accumulated and communicated to management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

On March 1, 2017, we completed the Merger with Equity One, whereby Equity One merged with and into the Parent Company with the Parent Company continuing as the surviving corporation. As permitted by SEC guidance for newly acquired businesses, we excluded Equity One from our assessment of internal control over financial reporting, which represented total assets acquired of $6.7 billion (approximately 60% of Company Total assets) as of March 31, 2017. We are in the process of integrating Equity One's operations into our internal control structure. None of these integration activities are expected to have a material impact on our system of internal control over financial reporting.

There have been no changes in the Parent Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the first quarter of 2017 and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Controls and Procedures (Regency Centers, L.P.)

Under the supervision and with the participation of the Operating Partnership's management, including the chief executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the chief executive officer and chief financial officer of its general partner concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Operating Partnership in the reports it files or submits is accumulated and communicated to management, including the chief executive officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure.

On March 1, 2017, we completed the Merger with Equity One, whereby Equity One merged with and into the Parent Company with the Parent Company continuing as the surviving corporation. As permitted by SEC guidance for newly acquired businesses, we excluded Equity One from our assessment of internal control over financial reporting, which represented total assets of $6.7 billion (approximately 60% of Company Total assets) as of March 31, 2017. We are in the process of integrating Equity One's operations into our internal control structure. None of these integration activities are expected to have a material impact on our system of internal control over financial reporting.

There have been no changes in the Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred during the first quarter of 2017 and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.


56





PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

We are a party to various legal proceedings that arise in the ordinary course of our business. We are not currently involved in any litigation nor to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations.

After the announcement of the merger agreement on November 14, 2016, a putative class action was filed on behalf of a purported stockholder in the Circuit Court for Duval County, Florida, under the following caption: Robert Garfield on Behalf of Himself and All Others Similarly Situated vs. Regency Centers Corporation, Martin E. Stein, Jr., John C. Schweitzer, Raymond L. Bank, Bryce Blair, C. Ronald Blankenship, J. Dix Druce, Jr., Mary Lou Fiala, David P. O'Connor, and Thomas G. Wattles, No. 16-2017-CA-000688-XXXX-MA, filed February 3, 2017.

The class action alleged, among other matters, that the definitive joint proxy statement/prospectus filed by Regency and Equity One with the Securities and Exchange Commission (the “SEC”) on January 24, 2017 (the “Joint Proxy Statement/Prospectus”) omitted certain material information in connection with the Merger. The complainant sought various remedies, including injunctive relief to prevent the consummation of the Merger unless certain allegedly material information was disclosed and sought compensatory and rescissory damages in the event the Merger was consummated without such disclosures.

On February 17, 2017, the defendants entered into a stipulation of settlement with respect to the class action, pursuant to which the parties agreed, among other things, that Regency would make certain supplemental disclosures. The supplemental disclosures were made by Regency in the Current Report on Form 8-K filed by Regency with the SEC on February 17, 2017. The supplemental disclosures should be read in conjunction with the Joint Proxy Statement/Prospectus, which should be read in its entirety.


Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in item 1A. of Part I of our Form 10-K for the year ended December 31, 2016.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter ended March 31, 2017.  

The following table represents information with respect to purchases by the Parent Company of its common stock during the months in the three month period ended March 31, 2017.

Period
Total number of shares purchased (1)
Average price paid per share
Total number of shares purchased as part of publicly announced plans or programs
Maximum number or approximate dollar value of shares that may yet be purchased under the plans or programs
January 1 through January 31, 2017




February 1 through February 28, 2017
137,305

69.76



March 1 through March 31, 2017
127,147

68.39




(1) Represents shares repurchased to cover payment of withholding taxes in connection with restricted stock vesting by participants under Regency's Long-Term Omnibus Plan.

Item 3.    Defaults Upon Senior Securities
    
None.


57





Item 4.    Mine Safety Disclosures
    
None.

Item 5.    Other Information
    
None.

58





Item 6. Exhibits

In reviewing any agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries or other parties to the agreements. Each agreement contains representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading. Additional information about the Company may be found elsewhere in this report and the Company's other public files, which are available without charge through the SEC's website at http://www.sec.gov. Unless otherwise indicated below, the Commission file number to the exhibit is No. 001-12298.
Ex #    Description
10.    Material Contracts (~ indicates management contract or compensatory plan)
~10.1    2017 Amended and Restated Severance and Change in Control Agreement
31.    Rule 13a-14(a)/15d-14(a) Certifications.
31.1    Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation.
31.2    Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation.
31.3    Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.
31.4    Rule 13a-14 Certification of Chief Financial Officer for Regency Centers, L.P.
32.    Section 1350 Certifications.
32.1*    18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers Corporation.
32.2*    18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers Corporation.
32.3*    18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers, L.P.
32.4*    18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers, L.P.
101.    Interactive Data Files
101.INS        XBRL Instance Document
101.SCH    XBRL Taxonomy Extension Schema Document
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF    XBRL Taxonomy Definition Linkbase Document
101.LAB    XBRL Taxonomy Extension Label Linkbase Document

59





101.PRE        XBRL Taxonomy Extension Presentation Linkbase Document
__________________________
*
Furnished, not filed.

60






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
May 10, 2017
REGENCY CENTERS CORPORATION
 
By:

/s/ Lisa Palmer
Lisa Palmer, President and Chief Financial Officer (Principal Financial Officer)
 
 
 
 
By:

/s/ J. Christian Leavitt
J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer)



May 10, 2017
REGENCY CENTERS, L.P.
 
By:
Regency Centers Corporation, General Partner
 
By:

/s/ Lisa Palmer
Lisa Palmer, President and Chief Financial Officer (Principal Financial Officer)
 
 
 
 
By:

/s/ J. Christian Leavitt
J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer)

61


Exhibit


Exhibit 10.1

2017 AMENDED AND RESTATED
SEVERANCE AND CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated April 27, 2017, and effective as of the 14th day of March, 2017, is by and between REGENCY CENTERS CORPORATION, a Florida corporation (the “Company”), Regency Centers, L.P., a Delaware limited partnership (the “Partnership”), and MARTIN E. STEIN, JR. (the “Employee”).
WHEREAS, the Company and the Employee previously entered into the 2015 Amended and Restated Severance and Change of Control Agreement, effective as of the 15th day of July, 2015 (the “Prior Agreement”); and
WHEREAS, to further induce the Employee to remain as an executive officer of the Company and a key employee of the Partnership, the Company, the Partnership, and the Employee desire to enter into this 2017 Amended and Restated Severance and Change Of Control Agreement (the “Agreement”) to replace and supersede the Prior Agreement; and
WHEREAS, the parties agree that the restrictive covenants underlying certain of the Employee’s obligations under this Agreement are necessary to protect the goodwill or other business interests of the Regency Entities and that such restrictive covenants do not impose a greater restraint than is necessary to protect such goodwill or other business interests.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, including the Employee’s agreement to continue as an executive officer of the Company and as an employee of the Partnership, the Employee’s agreement to provide consulting services following termination of employment pursuant to the terms hereof, and the restrictive covenants contained herein, the Employee, the Company, and the Partnership agree as follows:
1.Definitions. The following words, when capitalized in this Agreement, shall have the meanings ascribed below and shall supersede the meanings given to any such terms in any other award agreement or related plan document in effect prior to the date of this Agreement, including but not limited to the definitions of “Cause,” “Change of Control,” or “Good Reason”:
(a)Affiliate” shall have the meaning given to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.
(b)Average Annual Cash Bonus” means the average of the annual cash bonus, if any, paid to the Employee with respect to the three (3) calendar years prior to termination of employment (or the period of the Employee’s employment, if shorter).
(c)Base Performance Share Value” means the fair market value as of the date of the Change of Control of the number of unvested shares underlying the Employee’s outstanding performance share awards that would have been earned pursuant to the terms of the award if the performance period for each such award ended immediately prior to the Change of Control. For such purposes, the level of achievement of the performance goals established for each such award will be determined on the date immediately prior to the Change of Control as follows: (X) if the goal is a market-based goal, such as total shareholder return or stock price, then the actual performance to date shall be used, and (Y) if the goal is not a market-based goal, then the annualized forecasted number for such goal as most recently prepared by the Company prior to the date of the Change of Control shall be used and treated as if it were actual performance.
(d)Base Restricted Share Value” means the fair market value as of the date of the Change of Control of the shares underlying all of the Employee’s unvested time-vesting restricted stock awards or stock rights awards outstanding immediately prior to the Change of Control.
(e)Board” means the Board of Directors of the Company.
(f)Cause” means the termination of the Employee’s employment with the Partnership and all Regency Entities by action of the Board or its delegate for one or more of the following reasons:





(i)The Employee is convicted of committing a felony under any state, federal or local law. For the purposes of this Agreement, conviction includes any final disposition of the initial charge which does not result in the charges being completely dismissed or in the Employee being completely acquitted and absolved from all liability, either criminal or civil;
(ii)The Employee materially breaches (A) this Agreement or (B) the policies and procedures of the Company or the Partnership, and the Employee fails to cure the breach to the reasonable satisfaction of such entity, if capable of cure, within thirty (30) days after written notice by such entity of the breach;
(iii)The Employee engages in willful or gross misconduct or willful or gross negligence in performing the Employee’s duties, or fraud, misappropriation or embezzlement;
(iv)The Employee engages in conduct that, if known outside any of the Regency Entities, could reasonably be expected to cause harm to the reputation of the Company or the Partnership, and the Employee fails to cure the breach to the reasonable satisfaction of such entity, if capable of cure, within thirty (30) days after written notice by such entity of the breach; or
(v)The Employee fails to meet the reasonable expectations of management regarding performance of his or her duties, and the Employee fails to cure the breach to the reasonable satisfaction of the Company or the Partnership, as applicable, if capable of cure, within thirty (30) days after written notice by such entity of the breach.
(g)Change of Control” means the occurrence of an event or series of events which qualify as a change in control event for purposes of Code Section 409A and Treasury Regulation §1.409A-3(i)(5), including:
(i)A change in the ownership of the Company, which shall occur on the date that any one Person, or more than one Person Acting as a Group (as defined below), other than Excluded Person(s) (as defined below), acquires ownership of the stock of the Company that, together with the stock then held by such Person or group, constitutes more than fifty percent (50%) of the total fair market value of the stock of the Company. However, if any one Person or more than one Person Acting as a Group is considered to own more than fifty (50%) of the total fair market value of the stock of the Company, the acquisition of additional stock by the same Person or Persons is not considered to cause a Change of Control.
(ii)A change in the effective control of the Company, which shall occur on the date that:
(1)Any one Person, or more than one Person Acting as a Group, other than Excluded Person(s), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company. However, if any one Person or more than one Person Acting as a Group is considered to own more than thirty percent (30%) of the total voting power of the stock of the Company, the acquisition of additional voting stock by the same Person or Persons is not considered to cause a Change of Control; or
(2)A majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.
(iii)A change in the ownership of a substantial portion of the Company’s assets, which shall occur on the date that any one Person, or more than one Person Acting as a Group, other than Excluded Person(s), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total Gross Fair Market Value (as defined below) equal to more than fifty percent (50%) of the total Gross Fair Market Value of all the assets of the Company immediately prior to such acquisition or acquisitions, other than an Excluded Transaction (as defined below).
For purposes of this Subsection (g):





Gross Fair Market Value” means the value of the assets of the Company, or the value of the assets being disposed of, as applicable, determined without regard to any liabilities associated with such assets.
Persons will not be considered to be “Acting as a Group” solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, or solely because they purchase assets of the Company at the same time, or as a result of the same public offering, as the case may be. However, Persons will be considered to be Acting as a Group if they (i) are owners of an entity that enters into a merger, consolidation, purchase or acquisition of assets, or similar business transaction with the Company, or (ii) do so within the meaning of Section 13(d) of the Exchange Act, including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act).
The term “Excluded Transaction” means any transaction in which assets are transferred to: (A) a shareholder of the Company (determined immediately before the asset transfer) in exchange for or with respect to its stock; (B) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company (determined after the asset transfer); (C) a Person, or more than one Person Acting as a Group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company (determined after the asset transfer); or (D) an entity at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (C) (determined after the asset transfer).
The term “Excluded Person(s)” means (A) the Company or any Regency Entity; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Regency Entity; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company.
The term “Change of Control” as defined above shall be construed in accordance with Code Section 409A and the regulations promulgated thereunder. In no event shall a transaction described above constitute a “Change of Control” for purposes of this Agreement unless such transaction also satisfies the requirement to be a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as each of those terms are defined under Code Section 409A and the regulations promulgated thereunder.
(h)Code” means the Internal Revenue Code of 1986, as amended.
(i)Exchange Act” means the Securities Exchange Act of 1934, as amended.
(j)General Release” means (i) a release of the Regency Entities, in such form as the Partnership may reasonably request, of all claims against the Regency Entities relating to the Employee’s employment and termination thereof, and (ii) an agreement to continue to comply with, and be bound by, the provisions of Section 16 hereof.
(k)Good Reason” means any one or more of the following conditions:
(i)any material diminution of the Employee’s authority, duties or responsibilities;
(ii)a material diminution of the Employee’s total annual compensation opportunity (including base compensation, annual bonus opportunity, and value of annual equity award grants);
(iii)a material diminution in the budget over which the Employee retains authority;
(iv)a material change in the geographic location at which the Employee must perform the Employee’s duties and responsibilities; or
(v)any other action or inaction by the Company or the Partnership that constitutes a material breach of this Agreement or any other agreement pursuant to which the Employee provides services to the Company or the Partnership.
A termination of the Employee’s employment for Good Reason shall be effective only if (X) such condition was not consented to by the Employee in advance or subsequently ratified by the Employee in writing, (Y) such condition remains in effect thirty (30) days after the Employee gives written notice to the Board of the Employee’s intention to terminate his or her employment for Good Reason, which notice specifically identifies such condition, and (Z) the Employee gives the notice referred to in (Y) above within ninety (90) days of the initial existence of such condition.





If the Company or the Partnership, as applicable, does not cure the condition within the thirty (30) day cure period described in (Y) above, then the Employee’s termination will occur on the day immediately following the end of the cure period. If the Company or the Partnership, as applicable, cures the condition within such thirty (30) day cure period, then the Employee will be deemed to have withdrawn his notice of termination effective as of the date the cure is effected.
(l)Medical Benefits” shall mean the monthly fair market value of benefits provided to the Employee and the Employee’s dependents under the major medical, dental and vision benefit plans sponsored and maintained by the Partnership, at the level of coverage in effect for such persons immediately prior to the Employee’s termination of employment date. The “monthly fair market value” of such benefits shall be equal to the monthly cost as if such persons elected COBRA continuation coverage at such time at their own expense.
(m)Person” means a “person” as used in Sections 3(a)(9) and 13(d) of the Exchange Act or any group of Persons acting in concert that would be considered “persons acting as a group” within the meaning of Treasury Regulation § 1.409A-3(i)(5).
(n)Prime Rate” means an annual rate, compounding annually, equal to the prime rate, as reported in The Wall Street Journal on the date of the Change of Control, or if not reported on that date, the last preceding date on which so reported, which rate shall be adjusted on each January 1 to the prime rate then in effect and shall remain in effect for the year.
(o)Qualifying Retirement” means the Employee’s voluntary termination of employment after the Employee has (i) attained (X) age sixty-five (65), (Y) age fifty-five (55) with ten (10) Years of Service as a full-time employee of the Partnership or any of its Affiliates, or (Z) an age which, when added to such Years of Service of the Employee equals at least seventy-five (75), and (ii) previously delivered a written notice of retirement to the Partnership and on the date of retirement the Employee has satisfied the minimum applicable advance written notice requirement set forth below:
Age at
Voluntary Termination
Number of Years of
Advance Notice
58 or younger
59
60 or older
3 years
2 years
1 year
By way of illustration, and without limiting the foregoing, if (i) the Employee is eligible to retire at age fifty-nine (59) after ten (10) Years of Service, (ii) the Employee gives two (2) years notice at age fifty-eight (58) that the Employee intends to retire at age sixty (60), and (iii) the Employee later terminates employment at age fifty-nine (59), then the Employee’s retirement at age fifty-nine (59) would not constitute a Qualifying Retirement. However, if (i) the Employee is eligible to retire at age fifty-nine (59) after ten (10) Years of Service, (ii) the Employee gives two (2) years notice at age fifty-eight (58) that the Employee intends to retire at age sixty (60), and (iii) the Employee terminates employment upon reaching age sixty (60), then the Employee’s retirement at age sixty (60) would constitute a Qualifying Retirement.
(p)Regency Entity” or “Regency Entities” means the Company, the Partnership, any of their Affiliates, and any other entities that along with the Company or the Partnership is considered a single employer pursuant to Code Section 414(b) or (c) and the Treasury regulations promulgated thereunder, determined by applying the phrase “at least 50 percent” in place of the phrase “at least 80 percent” each place it appears in such Treasury regulations or Code Section 1563(a).
(q)Separation from Service” means the termination of the Employee’s employment with the Partnership and all Regency Entities, provided that, notwithstanding such termination of the employment relationship between the Employee and the Partnership and all Regency Entities, the Employee shall not be deemed to have had a Separation from Service where it is reasonably anticipated that the level of bona fide services that the Employee will perform (whether as an employee or independent contractor) following such termination from the Partnership and all Regency Entities would be twenty percent (20%) or more of the average level of bona fide services performed by the Employee (whether as an employee or independent contractor) for the Partnership and all Regency Entities over the immediately preceding thirty-six (36) month period (or such lesser period of actual service). In such event, Separation from Service shall mean the permanent





reduction of the level of bona fide services to be performed by the Employee (whether as an employee or independent contractor) to a level that is less than twenty percent (20%) of the average level of bona fide services performed by the Employee (whether as an employee or independent contractor) during the thirty-six (36) month period (or such lesser period of actual service) immediately prior to the termination of the Employee’s employment relationship. A Separation from Service shall not be deemed to have occurred if the Employee is absent from active employment due to military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed the greater of (i) six (6) months or (ii) the period during which the Employee’s right to reemployment by the Partnership or any Regency Entity is provided either by statute or contract.
(r)Specified Employee” means an employee of the Company or any Regency Entity who is a “specified employee” as defined in Code Section 409A(a)(2)(b)(i) and Treasury Regulation §1.409A-1(i). If the Employee is a key employee as of the applicable identification date, the Employee shall be treated as a Specified Employee for the twelve (12) month period beginning on the first day of the fourth month following such identification date. The applicable identification date for purposes of this Agreement shall be September 30 of each year.
(s)Unvested Equity Award” has the meaning given to such term in Section 6(a).
(t)Years of Service” means the Employee’s total years of employment with a Regency Entity, including years of employment with an entity that is acquired by a Regency Entity prior to such acquisition.
2.Term of the Agreement. The term of this Agreement shall begin on the date hereof and end at 11:59 p.m. on December 31, 2018, and thereafter shall automatically renew for successive three (3) year terms unless either party delivers written notice of non-renewal to the other party at least ninety (90) days prior to the end of the then current term; provided, however, that if a Change of Control has occurred during the original or any extended term (including any extension resulting from a prior Change of Control), the term of the Agreement shall end no earlier than twenty-four (24) calendar months after the end of the calendar month in which the Change of Control occurs.
3.No Change of Control - Severance. Except in circumstances in which the Employee would be entitled to payments and benefits in connection with a Change of Control as provided in Section 4 below, in the event that during the term of this Agreement the Employee has a Separation from Service as a result of the Partnership terminating the Employee’s employment without Cause or the Employee terminating the Employee’s employment for Good Reason, subject to Sections 11 and 15 below:
(a)The Partnership shall pay to the Employee an amount equal to the sum of (i) eighteen (18) months of the Employee’s base monthly salary in effect on the date the Employee’s employment terminates, (ii) one-hundred fifty percent (150%) of the Employee’s Average Annual Cash Bonus, and (iii) eighteen (18) months of the Employee’s Medical Benefits. Payment shall be made in a lump sum on the first business day after sixty (60) days following the Employee’s Separation from Service.
(b)All of the Employee’s outstanding unvested stock options, restricted stock awards, and stock rights awards that vest solely on the basis of time shall become vested on a pro-rated basis, based on the portion of the vesting period that has elapsed as of the date of the Employee’s Separation from Service; and
(c)All of the Employee’s outstanding performance share awards shall be earned as of the date of Separation from Service based on the level of achievement of the performance goals established for such awards as of such date, but then pro-rated based on the portion of the performance period that has elapsed as of the date of the Employee’s Separation from Service. For purposes hereof, the level of achievement of the performance goals established for each such award will be determined on the date immediately prior to the Separation from Service as follows: (i) if the goal is a market-based goal, such as total shareholder return or stock price, then the actual performance to date shall be used, and (ii) if the goal is not a market-based goal, then the level of achievement of such goal shall be (X) based on the most recently reported number(s) by the Company in its reports filed with the Securities and Exchange Commission or (Y) if such numbers are not so filed, based on the numbers as prepared internally by the Company for the quarter ending prior to the date of the Separation from Service.





Any shares issuable under awards that vest or are earned pursuant to subsections (b) and (c) shall be issued on the same date as the cash severance payment is made pursuant to subsection (a).
4.Change of Control - Severance. In the event that during the term of this Agreement the Partnership terminates the Employee’s employment without Cause or the Employee terminates the Employee’s employment for Good Reason, in each case within two (2) years following a Change of Control, the following provisions shall apply:
(a)The Partnership shall pay to the Employee an amount equal to the sum of (i) twenty-four (24) months of the Employee’s monthly base salary in effect on the date the Employee’s employment terminates, (ii) two-hundred percent (200%) of the Employee’s Average Annual Cash Bonus, and (iii) twenty-four (24) months of the Employee’s Medical Benefits. Subject to Sections 11 and 15 below, payment shall be made in a lump sum on the first business day after sixty (60) days following the Employee’s Separation from Service.
(b)All outstanding unvested stock options, restricted stock, stock rights awards and performance share awards granted to the Employee on or after a Change of Control will vest (at the greater of actual performance to-date or target, for any awards subject to performance goals), and all outstanding equity awards that have not vested at the time of the Change of Control or been converted to the right to receive a cash payment pursuant to Section 6(c) will vest on the date the General Release in Section 15 becomes effective, and, if applicable, will be paid on the tenth (10th) business day following such time. Notwithstanding the foregoing, all such awards which are subject to Code Section 409A will be paid on the first (1st) business day after sixty (60) days following the Employee’s Separation from Service, provided the General Release in Section 15 has become effective.
(c)With respect to those Unvested Equity Awards that have been exchanged pursuant to Sections 6(b) and 6(c) for the right to receive a contingent cash payment, subject to Section 11 below, the Employee shall receive a cash payment made in a lump sum on the first business day after sixty (60) days following the Employee’s Separation from Service equal to any portion of the unpaid Base Performance Share Value and Base Restricted Share Value that has not been paid pursuant to Sections 6(b) and 6(c), together with accrued but unpaid interest at the Prime Rate on such unpaid amount from the date of the Change of Control to the date of payment.
5.Entitlement to Severance.
(a)If the Employee becomes entitled to receive any severance payments or benefits described in Section 3 or Section 4 after the Employee has delivered written notice of what would otherwise have been a Qualifying Retirement to the Partnership had the Employee continued to be employed by the Partnership through the date of retirement set forth in the notice, then the amount of such payments and benefits shall be limited to (i) those that the Employee would have otherwise received had such employment continued through such date of retirement, and (ii) those provided by Section 9, if any.
(b)If the Employee dies after receiving notice from the Company that the Employee is being terminated without Cause, or after providing notice of termination for Good Reason, but prior to the date the Employee receives the payments and benefits described in Section 3 or Section 4, as the case may be, then the Employee’s estate, heirs and beneficiaries shall be entitled to the payments and benefits described in Section 3 or Section 4, as the case may be, at the same time such payments and benefits would have been paid or provided to the Employee had the Employee lived.
6.Change of Control - Effect on Stock Rights.
(a)Except as otherwise provided in Sections 6(b) and 6(c) below (or in Sections 4(b) or 4(c), if applicable), the occurrence of a Change of Control shall not impact any existing unvested stock options, restricted stock awards, stock rights awards or performance share awards (collectively, “Unvested Equity Awards”) unless such rights are cashed out pursuant to the terms of the applicable merger agreement or other agreement(s) pursuant to which such Change of Control is effected.
(b)With respect to Unvested Equity Awards that are performance share awards (“Performance Awards”), notwithstanding anything to the contrary contained in the related plan or award agreement, all of the Employee’s outstanding unvested Performance Awards shall be cancelled and, in consideration for the cancellation of such awards, the Employee shall receive a deferred contingent cash payment with respect to





each such cancelled award equal to (X) the Base Performance Share Value determined for such cancelled award, plus (Y) interest on such unpaid Base Performance Share Value from the date of the Change of Control to the date of payment at the Prime Rate, such cash payment to be made on the last day of the applicable performance period for such award, provided that the Employee remains employed by the Partnership, an Affiliate, or one of their successors through the last day of the applicable performance period.
(c)With respect to Unvested Equity Awards that are not Performance Awards, if the stock underlying such awards is not readily tradable on an established securities market immediately after the Change of Control (after giving effect to any conversion, exchange or replacement pursuant to the applicable plan or award agreement of the stock underlying Unvested Equity Awards as a result of a reorganization, merger, consolidation, combination or other similar corporate transaction or event), then notwithstanding anything to the contrary contained in the related plan or award agreement, all of the Employee’s outstanding Unvested Equity Awards shall be cancelled and, in consideration for the cancellation of such awards, the Employee shall receive:
(i)a cash payment equal to (X) the fair market value of the shares underlying all of the Employee’s unvested stock options as of the date of the Change of Control, less (Y) the aggregate exercise price of such stock options, such cash payment to be made within thirty (30) days after the Change of Control; and
(ii)a deferred contingent cash payment equal to (X) the Base Restricted Share Value, plus (Y) interest on the unpaid Base Restricted Share Value from the date of the Change of Control to the date of payment at the Prime Rate, such cash payment of the Base Restricted Share Value to be made in installments on the applicable vesting dates with respect to the number of shares that would have been issued on that vesting date, plus all accrued but unpaid interest on the unpaid Base Restricted Share Value through such vesting date, provided that the Employee remains employed by the Partnership, an Affiliate, or one of their successors through the applicable date of vesting.
7.Change of Control - Excise Tax.
(a)If in the opinion of Tax Counsel (as defined in Section 7(b)) the Employee will be subject to an excise tax under Code Section 4999 with respect to all or any portion of the payments and benefits to be made by the Company or any of its Affiliates to the Employee, whether upon a Change of Control or following a termination of the Employee’s employment, under this Agreement or otherwise (in the aggregate, “Total Payments”), then such parties agree that the Total Payments shall either be (i) delivered in full, or (ii) reduced to 299.99% of the Employee’s “base amount” for purposes of Code Section 280G (“Scaled Back Amount”), whichever of the foregoing results in the receipt by the Employee of the greatest benefit on an after-tax basis (taking into account the applicable federal, state and local income taxes and the excise tax). If the Employee is entitled to the Scaled Back Amount, then such payments and benefits shall be reduced or eliminated by applying the following principles, in order: (1) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (2) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (3) cash payments shall be reduced prior to non-cash benefits; provided that if the foregoing order of reduction or elimination would violate Code Section 409A, then the reduction shall be made pro rata among the payments or benefits to be received by the Employee (on the basis of the relative present value of the parachute payments).
(b)For purposes of this Section 7, within forty (40) days after delivery of a written notice of termination by the Employee or by the Company pursuant to this Agreement within two (2) years of a Change in Control with respect to the Company (or, if an event other than termination of employment results in payment of parachute payments under Code Section 280G and it is reasonably possible that such parachute payments could result in an excise tax, within forty (40) days after such other event), the Company shall obtain, at its expense, the opinion (which need not be unqualified) of nationally recognized tax counsel (“Tax Counsel”) selected by the Compensation Committee of the Board, which sets forth (i) the “base amount” within the meaning of Code Section 280G; (ii) the aggregate present value of the payments in the nature of compensation to the Employee as prescribed in Code Section 280G(b)(2)(A)(ii); (iii) the amount and present value of any “excess parachute payment” within the meaning of Code Section 280G(b)(1); and (iv) as applicable, (X) the





net after-tax proceeds to the Employee, taking into account the tax imposed by Code Section 4999 if the Total Payments were delivered in full, and (Y) the amount and nature of the parachute payments to be reduced or forfeited according to Section 7(a) in order for the total payments and benefits to equal the Scaled Back Amount. For purposes of such opinion, the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Code Section 280G and regulations thereunder, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Employee. Such opinion shall be addressed to the Company and the Employee and shall be binding upon the Company, its Affiliates, and the Employee.
8.Plan of Liquidation. If the shareholders of the Company approve a complete plan of liquidation or dissolution of the Company (“Approved Liquidation Plan”), all Unvested Equity Awards that are not Performance Awards will fully vest on the date of such approval and all such awards that are Performance Awards shall vest to the extent the performance goals established under such awards have been achieved on such date (as if the Employee had satisfied all employment conditions required to vest), with the corresponding performance period for such award(s) deemed completed as of the date immediately preceding the date of such approval. Shares of common stock that so vest will be deemed outstanding as of the close of business on the date of such approval, and certificates representing such shares shall be delivered to the Employee as promptly as practicable thereafter. Any Performance Awards not vesting on the date of such approval shall be immediately cancelled without consideration therefor. In addition, unless the Approved Liquidation Plan shall have been rescinded, if the Partnership terminates the Employee’s employment without Cause or the Employee terminates the Employee’s employment for Good Reason in each case following shareholder approval of the Approved Liquidation Plan, then the Employee shall receive the benefits provided in Sections 4(a), 4(b) and 4(c), as applicable.
9.Retirement and Performance Shares. If the Employee’s termination of employment constitutes a Qualifying Retirement, then the Employee’s unvested stock options, restricted stock and stock rights awards (other than performance shares) will vest on the date of retirement set forth in the notice thereof, and if the Qualifying Retirement occurs on or after a Change of Control, then the provision of Section 4(c) shall also apply. Notwithstanding anything to the contrary in any related plan or award agreement, the Employee shall be entitled to exercise all vested stock options until the earlier of (a) three years after the date of Qualifying Retirement, and (b) the original terms of the options. Unless an award agreement provides for more favorable treatment, upon a Qualifying Retirement, the Employee shall continue to have the right to earn unvested performance shares upon the achievement of the applicable performance goals over any remaining performance period, as if the Employee’s employment had not been terminated.
10.Death and Disability. In no event shall a termination of the Employee’s employment due to death or Disability constitute a termination by the Partnership without Cause or a termination by the Employee for Good Reason; however, upon termination of employment due to the Employee’s death or Disability, the Employee’s estate or the Employee, as applicable, shall receive the benefits provided in Section 4(b) or 4(c) with respect to unvested stock options, restricted stock and stock rights awards (other than performance shares), and the Employee’s estate or the Employee, as applicable, shall continue to have the right to earn unvested performance shares upon the achievement of the applicable performance goals over any remaining performance period, as if the Employee’s employment had not been terminated. Notwithstanding anything to the contrary in any related plan or award agreement, (a) the Employee’s estate shall be entitled to exercise all vested stock options until the earlier of (i) three years after termination of employment due to death, and (ii) the original term of the option, and (b) the Employee shall be entitled to exercise all vested stock options until the earlier of (i) one year after termination of employment due to Disability, and (ii) the original term of the option. For purposes of this Agreement, the Employee shall be deemed terminated for Disability if the Employee is (or would be if a participant) entitled to long-term disability benefits under the Partnership’s disability plan or policy or, if no such plan or policy is in place, if the Company determines that the Employee has been unable to substantially perform his or her duties, due to a medically-determinable physical or mental incapacity, for one-hundred eighty (180) consecutive days.
11.Payments to Specified Employees. Notwithstanding any other Section of this Agreement, if the Employee is a Specified Employee at the time of the Employee’s Separation from Service, payments or distribution of property to the Employee provided under this Agreement, to the extent considered amounts deferred under a non-qualified deferred compensation plan (as defined in Code Section 409A) shall be deferred until the six (6) month





anniversary of such Separation from Service to the extent required in order to comply with Code Section 409A and Treasury Regulation 1.409A-3(i)(2).
12.Reductions in Base Salary. For purposes of this Agreement, in the event there is a reduction in the Employee’s base salary that would constitute the basis for a termination for Good Reason, the base salary used for purposes of calculating the severance payable pursuant to Sections 3 or 4(a), as the case may be, shall be the amounts in effect immediately prior to such reduction.
13.Other Payments and Benefits. On any termination of employment, including, without limitation, termination due to the Employee’s death or Disability (as defined in Section 10) or for Cause, the Employee shall receive any accrued but unpaid salary, reimbursement of any business or other expenses incurred prior to termination of employment but for which the Employee had not received reimbursement, and any other rights, compensation and/or benefits as may be due the Employee in accordance with the terms and provisions of any agreements, plans or programs of the Company or the Partnership (but in no event shall the Employee be entitled to duplicative rights, compensation and/or benefits).
14.Set Off; Mitigation. The obligation of the Company or the Partnership to pay or provide the Employee the amounts or benefits under this Agreement shall be subject to set-off, counterclaim or recoupment of amounts owed by the Employee to the Company or the Partnership. In addition, except as provided in Section 7 with respect to the Scaled Back Amount, if applicable, the Employee shall not be required to mitigate the amount of any payments or benefits provided to the Employee hereunder by securing other employment or otherwise, nor will such payments and/or benefits be reduced by reason of the Employee securing other employment or for any other reason.
15.Release. Notwithstanding any provision herein to the contrary, neither the Company nor the Partnership shall have any obligation to pay any amount or provide any benefit, as the case may be, under this Agreement, unless the Employee executes, delivers to the Partnership, and does not revoke (to the extent the Employee is allowed to do so as set forth in the General Release), a General Release within sixty (60) days of the Employee’s termination of employment.
16.Restrictive Covenants and Consulting Arrangement.
(a)The Employee will not use or disclose any confidential information of any Regency Entity without the Company’s prior written consent, except in furtherance of the business of the Regency Entities or except as may be required by law. Additionally, and without limiting the foregoing, the Employee agrees not to participate in or facilitate the dissemination to the media or any other third party (i) of any confidential information concerning any Regency Entity or any employee of any Regency Entity, or (ii) of any damaging or defamatory information concerning any Regency Entity or the Employee’s experiences as an employee of any Regency Entity, without the Company’s prior written consent except as may be required by law. Notwithstanding the foregoing, this Section 16(a) does not apply to information which is already in the public domain through no fault of the Employee.
(b)During the Employee’s employment and during the one (1) year period after the Employee ceases to be employed by any of the Regency Entities, the Employee agrees that:
(i)the Employee shall not directly or knowingly and intentionally through another party recruit, induce, solicit or assist any other Person in recruiting, inducing or soliciting (A) any other employee of any Regency Entity to leave such employment or (B) any other Person with which any Regency Entity was actively conducting negotiations for employment on the date of termination of the Employee’s employment (the “Termination Date”); and
(ii)the Employee shall not personally solicit, induce or assist any other Person in soliciting or inducing (A) any tenant in a shopping center of any Regency Entity that was a tenant on the Termination Date to terminate a lease, or (B) any tenant, property owner, co-investment partner or build-to-suit customer with whom any Regency Entity had a lease, acquisition contract, business combination contract, co-investment partnership agreement or development contract on the Termination Date to terminate such lease or other contract, or (C) any prospective tenant, property owner, co-investor partner or build-to-suit customer with which any Regency Entity was actively





conducting negotiations on the Termination Date with respect to a lease, acquisition, business combination, co-investment partnership or development project to cease such negotiations.
(c)For a six (6) month period following any termination of employment, the Employee agrees to make himself available and, upon and as requested by the Company or the Partnership from time to time, to provide consulting services with respect to any projects the Employee was involved in prior to such termination and/or to provide such other consulting services as the Company or the Partnership may reasonably request. The Employee will be reimbursed for reasonable travel and miscellaneous expenses incurred in connection with the provision of requested consulting services hereunder. The Company or the Partnership will provide the Employee reasonable advance notice of any request to provide consulting services, and will make all reasonable accommodations necessary to prevent the Employee’s commitment hereunder from materially interfering with the Employee’s employment obligations, if any. In no event will the Employee be required to provide more than twenty (20) hours of consulting services in any one month to the Company and the Partnership pursuant to this provision.
(d)The parties agree that any breach of this Section 16 will result in irreparable harm to the non-breaching party which cannot be fully compensated by monetary damages and accordingly, in the event of any breach or threatened breach of this Section 16, the non-breaching party shall be entitled to injunctive relief. Should any provision of this Section 16 be determined by a court of law or equity to be unreasonable or unenforceable, the parties agree that to the extent it is valid and enforceable, they shall be bound by the same, the intention of the parties being that the parties be given the broadest protection allowed by law or equity with respect to such provision.
17.Survival. The provisions of Sections 3 through 22 shall survive the termination of this Agreement to the extent necessary to enforce the rights and obligations described therein.
18.Compliance with Code Section 409A. For purposes of applying the provisions of Code Section 409A to this Agreement, each separately identified amount to which the Employee is entitled under this Agreement shall be treated as a separate payment. In addition, to the extent permissible under Code Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company or the Partnership, as the case may be.
19.Withholding. The Company or the Partnership shall withhold from all payments to the Employee hereunder all amounts required to be withheld under applicable local, state or federal income and employment tax laws.
20.Clawbacks. All incentive-based compensation paid to the Employee hereunder will be subject to the policies of the Company and the Partnership regarding clawbacks of erroneously awarded incentive-based compensation triggered by an accounting restatement or misconduct, as required by law and/or approved by the Board in the case of the Company.
21.Dispute Resolution. Any dispute, controversy or claim between the Company or the Partnership and the Employee or other person arising out of or relating to this Agreement shall be settled by arbitration conducted in the City of Jacksonville, Florida, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in force and Florida law within thirty (30) days after written notice from one party to the other requesting that the matter be submitted to arbitration; provided that this Section 21 shall not apply to, and the Company and the Partnership shall be free to seek, injunctive or other equitable relief with respect to any actual or threatened violation by the Employee of his or her obligations under Section 16 hereof in any court of competent jurisdiction. The arbitration decision or award shall be binding and final upon the parties. The arbitration award shall be in writing and shall set forth the basis thereof. The parties hereto shall abide by all awards rendered in such arbitration proceedings, and all such awards may be enforced and executed upon in any court having jurisdiction over the party against whom enforcement of such award is sought. Each party shall be responsible for its own costs and expenses in any dispute or proceeding regarding the enforcement of this Agreement.
22.Miscellaneous. This Agreement shall be construed and enforced in accordance with the laws of the State of Florida (exclusive of conflict of law principles). In the event that any provision of this Agreement shall be invalid, illegal or unenforceable, the remainder shall not be affected thereby. This Agreement supersedes and terminates





any prior employment agreement, severance agreement, change of control agreement or non-competition agreement between the Company or the Partnership and the Employee. It is intended that the payments and benefits provided under this Agreement are in lieu of, and not in addition to, termination, severance or change of control payments and benefits provided under the other termination or severance plans, policies or agreements, if any, of the Company or the Partnership. This Agreement shall be binding upon and inure to the benefit of the Employee and the Employee’s heirs and personal representatives, the Company and the Partnership, and their successors, assigns and legal representatives. Headings herein are inserted for convenience and shall not affect the interpretation of any provision of the Agreement. References to sections of the Exchange Act or the Code, or rules or regulations related thereto, shall be deemed to refer to any successor provisions, as applicable. The Company and the Partnership will require any successors thereto (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to expressly assume and agree to perform under this Agreement in the same manner and to the same extent that the Company and the Partnership would be required to perform if no such succession had taken place. This Agreement may not be terminated, amended, or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives.
23.Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
(Signature pages to follow)






IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
 
REGENCY CENTERS CORPORATION
 
 
 
 
By:
/s/ John C. Schweitzer.

 
 
John C. Schweitzer
 
 
Lead Director
 
 
 
REGENCY CENTERS, L.P.
 
 
 
 
By:
REGENCY CENTERS CORPORATION
 
 
Its General Partner
 
 
 
 
By:
/s/ John C. Schweitzer.


 
 
John C. Schweitzer
 
 
Lead Director
 
 
 
EMPLOYEE
 
/s/ Martin E. Stein, Jr.

 
Martin E. Stein, Jr.




Exhibit


Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Martin E. Stein, Jr., certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Regency Centers Corporation (“registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: May 10, 2017
 
/s/ Martin E. Stein, Jr.
Martin E. Stein, Jr.
Chief Executive Officer


Exhibit


Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Lisa Palmer, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Regency Centers Corporation (“registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: May 10, 2017
 
/s/ Lisa Palmer
Lisa Palmer
President and Chief Financial Officer



Exhibit


Exhibit 31.3
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Martin E. Stein, Jr., certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Regency Centers, L.P. (“registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: May 10, 2017
 
/s/ Martin E. Stein, Jr.
Martin E. Stein, Jr.
Chief Executive Officer of Regency Centers Corporation, general partner of registrant



Exhibit


Exhibit 31.4
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Lisa Palmer, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Regency Centers, L.P. (“registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: May 10, 2017
 
/s/ Lisa Palmer
Lisa Palmer
President and Chief Financial Officer of Regency Centers Corporation, general partner of registrant



Exhibit


Exhibit 32.1
Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Chief Executive Officer of Regency Centers Corporation, hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of Regency Centers Corporation for the quarter ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Regency Centers Corporation.
Date: May 10, 2017
 
/s/ Martin E. Stein, Jr.
Martin E. Stein, Jr.
Chief Executive Officer
 



Exhibit


Exhibit 32.2
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Chief Financial Officer of Regency Centers Corporation, hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of Regency Centers Corporation for the quarter ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Regency Centers Corporation.
Date: May 10, 2017
 
/s/ Lisa Palmer
Lisa Palmer
President and Chief Financial Officer




Exhibit


Exhibit 32.3
Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Chief Executive Officer of Regency Centers, L.P., hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of Regency Centers, L.P. for the quarter ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Regency Centers, L.P.
Date: May 10, 2017
 
/s/ Martin E. Stein, Jr.
Martin E. Stein, Jr.
Chief Executive Officer of Regency Centers Corporation, general partner of registrant




Exhibit


Exhibit 32.4
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Chief Financial Officer of Regency Centers, L.P., hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of Regency Centers, L.P. for the quarter ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Regency Centers, L.P.
Date: May 10, 2017
 
/s/ Lisa Palmer
Lisa Palmer
President and Chief Financial Officer of Regency Centers Corporation, general partner of registrant