Regency Centers Reports Second Quarter 2018 Results
Second Quarter 2018 Highlights
- Net Income Attributable to Common Stockholders (“Net Income”) of
$0.28 per diluted share. - NAREIT Funds From Operations (“NAREIT FFO”) of
$0.93 per diluted share. - Same property Net Operating Income (“NOI”), excluding termination fees, increased 4.2% as compared to the same period in the prior year.
- As of
June 30, 2018 , the same property portfolio was 95.5% leased. Spaces less than 10,000 square feet (“Small Shops”) were 92.2% leased. - Acquisition and disposition activity of
$71.0 million and$32.5 million , respectively. - On a year-to-date basis, including the property sales subsequent to quarter end, the Company has sold properties for a combined gross sales price of
$142.9 million at a weighted average cap rate of 7.9%. - Completed two developments with a combined net development cost of
$110.9 million at an average return of 7.0%. - As of
June 30, 2018 , a total of 21 properties were in development or redevelopment representing a total investment of$348.5 million .
“Regency’s unequaled combination of strategic advantages produced another quarter of gratifying results. Our best-in-class national portfolio of high quality shopping centers, located in densely populated and affluent trade areas, continues to attract market leading grocers and retailers allowing for consistent and impressive NOI growth,” said Martin E. “Hap” Stein, Jr., Chairman and Chief Executive Officer. “Led by a dedicated and experienced team, Regency is well positioned to compound growth in earnings, cash flow, and dividends.”
Financial Results
Regency reported Net Income for the second quarter of
The Company reported NAREIT FFO for the second quarter of
The Company reported Operating FFO, an additional performance measure used by Regency that excludes certain non-comparable items as well as non-cash components of earnings derived from above and below market rent amortization, straight-line rents, and amortization of mark-to-market of debt adjustments, for the second quarter of
Operating Results
Second quarter same property NOI, excluding termination fees, increased 4.2% compared to the same period in 2017, with base rent growth contributing 3.5%.
As of
For the three months ended
Investments
Property Transactions
During the quarter the Company closed on
Rivertowns Square (Dobbs Ferry, NY ) – As previously disclosed, the Company acquiredRivertowns Square , a 116,000 square foot retail shopping center, anchored by Brooklyn Market, for a gross purchase price of$68.9 million .- Crossroads Commons II (
Boulder, CO ) – Regency and a co-investment partner acquired Crossroads Commons II, a 20,000 square foot retail shops building adjacent to the Company’s existing co-investment property,Crossroads Commons , anchored byWhole Foods . Regency’s pro-rata share of the purchase price is$2.1 million . - Regency sold three shopping centers during the quarter. The properties were all located in
Florida in the markets ofPalm Coast ,Fort Myers , andOrlando .
Subsequent to quarter end, Regency sold three wholly-owned properties for a combined gross sales price of
Developments and Redevelopments
During the second quarter, the Company started four redevelopment projects and completed two development projects. The completed development projects have a combined cost of
At quarter end, the Company had 21 properties in development or redevelopment with combined, estimated net development costs of
Capital Markets
On
Dividend
On
2018 Guidance
The Company has updated certain components of its 2018 earnings guidance. Please refer to the Company’s second quarter 2018 supplemental information package for a complete list of updates.
2018 Guidance | |||||
Previous Guidance | Updated Guidance | ||||
Net Income Attributable to Common Stockholders (“Net Income”) | $1.33 - $1.38 | $1.32 - $1.36 | |||
NAREIT Funds From Operations (“NAREIT FFO”) per diluted share | $3.74 - $3.79 | $3.75 - $3.79 | |||
Operating Funds from Operations ("Operating FFO") per diluted share | $3.49 - $3.54 | $3.50 - $3.54 | |||
Same Property Net Operating Income (“SPNOI”) Growth excluding termination fees (pro-rata) | 2.40% - 3.25% | 2.75% - 3.25% |
Conference Call Information
To discuss Regency’s second quarter results, the Company will host a conference call on
Second Quarter Earnings Conference Call | ||||
Date: | Friday, August 3, 2018 | |||
Time: | 11:00 a.m. EDT | |||
Dial#: | 877-407-0789 or 201-689-8562 | |||
Webcast: |
Replay
Webcast Archive: Investor Relations page under Events & Webcasts
Non-GAAP Disclosure
The Company uses certain non-GAAP performance measures, in addition to the required GAAP presentations, as it believes these measures improve the understanding of the Company's operational results. Regency manages its entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, the Company believes presenting its pro-rata share of operating results regardless of ownership structure, along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more meaningful. Management continually evaluates the usefulness, relevance, limitations, and calculation of the Company’s reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
NAREIT FFO is a commonly used measure of REIT performance, which the
Operating FFO is an additional performance measure that excludes from NAREIT FFO: (i) transaction related income or expenses; (ii) impairments on land; (iii) gains or losses from the early extinguishment of debt; (iv) certain non-cash components of earnings derived from above and below market rent amortization, straight-line rents, and amortization of mark-to-market of debt adjustments; and (v) other amounts as they occur. The Company believes Operating FFO, which excludes certain non-cash and non-comparable items from the computation of NAREIT FFO that affect the Company’s period-over-period performance, is useful to investors because it is more reflective of the core operating performance of its portfolio of properties. The Company provides a reconciliation of Net Income to NAREIT FFO and Operating FFO for actual results.
Reconciliation of Net (Loss) Income Attributable to Common Stockholders to NAREIT FFO and Operating FFO - Actual (in thousands)
For the Periods Ended June 30, 2018 and 2017 |
Three Months Ended |
Year to Date |
|||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Reconciliation of Net Income (Loss) to NAREIT FFO: | |||||||||||||||
Net Income (Loss) Attributable to Common Stockholders | $ | 47,841 | 48,368 | $ | 100,500 | 15,144 | |||||||||
Adjustments to reconcile to NAREIT Funds From Operations(1): | |||||||||||||||
Depreciation and amortization (excluding FF&E) | 97,189 | 100,144 | 193,386 | 167,589 | |||||||||||
Provision for impairment to operating properties | 12,440 | - | 28,494 | - | |||||||||||
Gain on sale of operating properties | (246 | ) | (5,054 | ) | (348 | ) | (5,065 | ) | |||||||
Exchangeable operating partnership units |
100 | 104 | 212 | 85 | |||||||||||
|
|||||||||||||||
NAREIT Funds From Operations |
$ | 157,324 | 143,562 | $ | 322,244 | 177,753 | |||||||||
|
|||||||||||||||
Reconciliation of NAREIT FFO to Operating FFO: |
|||||||||||||||
NAREIT Funds From Operations |
$ | 157,324 | 143,562 | $ | 322,244 | 177,753 | |||||||||
Adjustments to reconcile to Operating Funds From Operations(1): |
|||||||||||||||
Acquisition pursuit and closing costs |
- |
111 |
- |
137 | |||||||||||
Gain on sale of land |
(869 | ) | (2,446 | ) | (976 | ) | (2,850 | ) | |||||||
Provision for impairment to land |
93 | - | 93 | - | |||||||||||
Loss on derivative instruments and hedge ineffectiveness |
- |
(6 | ) |
- |
(14 | ) | |||||||||
Early extinguishment of debt |
11,010 | 12,404 | 11,172 | 12,404 | |||||||||||
Interest on bonds for period from notice to redemption |
- | - | 600 | - | |||||||||||
Merger related costs |
- | 4,676 | - | 74,408 | |||||||||||
Merger related debt offering interest |
- | - | - | 975 | |||||||||||
Preferred redemption costs |
- | - | - | 9,369 | |||||||||||
Straight line rent, net | (4,749 | ) | (5,403 | ) | (8,830 | ) | (8,768 | ) | |||||||
Above/below market rent amortization, net | (11,378 | ) | (8,593 | ) | (19,801 | ) | (12,313 | ) | |||||||
Debt premium/discount amortization | (897 | ) | (1,012 | ) | (1,795 | ) | (1,653 | ) | |||||||
Operating Funds From Operations |
$ | 150,534 | 143,293 | $ | 302,707 | 249,448 | |||||||||
Weighted Average Shares For Diluted Earnings per Share | 169,682 | 170,421 | 170,291 | 148,931 | |||||||||||
Weighted Average Shares For Diluted FFO and Operating FFO per Share | 170,032 | 170,743 | 170,641 | 149,170 | |||||||||||
(1) Includes pro-rata share of unconsolidated co-investment partnerships, net of pro-rata share attributable to noncontrolling interests. | |||||||||||||||
Same property NOI is a key non-GAAP measure used by management in evaluating the operating performance of Regency’s properties. The Company provides a reconciliation of net income to pro-rata same property NOI.
Reconciliation of Net Income Attributable to Common Stockholders to Pro-Rata Same Property NOI - as adjusted Actual (in thousands)
For the Periods Ended June 30, 2018 and 2017 |
Three Months Ended |
Year to Date |
|||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Net Income (Loss) Attributable to Common Stockholders | $ | 47,841 | 48,368 | $ | 100,500 | 15,144 | |||||||||
Less: | |||||||||||||||
Management, transaction, and other fees | (6,887 | ) | (6,601 | ) | (14,045 | ) | (13,307 | ) | |||||||
Gain on sale of real estate | (1,123 | ) | (4,366 | ) | (1,219 | ) | (4,781 | ) | |||||||
Other (1) | (17,634 | ) | (15,064 | ) | (31,807 | ) | (23,262 | ) | |||||||
Plus: | |||||||||||||||
Depreciation and amortization | 89,105 | 92,230 | 177,629 | 152,284 | |||||||||||
General and administrative | 16,776 | 16,746 | 34,382 | 34,419 | |||||||||||
Other operating expense, excluding provision for doubtful accounts | 1,480 | 5,697 | 1,917 | 76,643 | |||||||||||
Other expense (income) | 61,048 | 46,924 | 114,016 | 73,026 | |||||||||||
Equity in income of investments in real estate excluded from NOI (2) | 15,669 | 12,377 | 30,762 | 26,710 | |||||||||||
Net income attributable to noncontrolling interests | 748 | 680 | 1,554 | 1,332 | |||||||||||
Preferred stock dividends and issuance costs | - | 1,125 | - | 12,981 | |||||||||||
NOI | 207,023 | 198,116 | 413,689 | 351,189 | |||||||||||
Less non-same property NOI (3) | (5,599 | ) | (3,642 | ) | (8,751 | ) | (4,901 | ) | |||||||
Plus same property NOI for non-ownership periods of Equity One (4) | - | - | - | 43,323 | |||||||||||
Same Property NOI as adjusted | $ | 201,424 | 194,474 | $ | 404,938 | 389,611 | |||||||||
Same Property NOI as adjusted without Termination Fees | $ | 202,686 | 194,450 | $ | 405,148 | 389,107 | |||||||||
Same Property NOI as adjusted without Termination Fees or Redevelopments | $ | 179,769 | 175,675 | $ | 359,971 | 351,368 | |||||||||
|
(1) |
Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interests. | |
(2) |
Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, such as, but not limited to, straight-line rental income, above and below market rent amortization, depreciation and amortization, and interest expense. | |
(3) |
Includes revenues and expenses attributable to Non-Same Property, Projects in Development, corporate activities, and noncontrolling interests. | |
(4) |
Refer to page ii of the Company's second quarter 2018 supplemental package for Same Property NOI detail for the non-ownership periods of Equity One. | |
Reported results are preliminary and not final until the filing of the Company’s Form 10-Q with the
Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO and Operating FFO — Guidance(per diluted share)
Full Year | |||||||||
NAREIT FFO and Operating FFO Guidance: | 2018 | ||||||||
Low | High | ||||||||
Net income attributable to common stockholders | $ | 1.32 | 1.36 | ||||||
Adjustments to reconcile net income to NAREIT FFO: | |||||||||
Depreciation and amortization | 2.26 | 2.26 | |||||||
Provision for impairment | 0.17 | 0.17 | |||||||
NAREIT Funds From Operations | $ | 3.75 | 3.79 | ||||||
Adjustments to reconcile NAREIT FFO to Operating FFO: | |||||||||
Gain on sale of land | (0.01 | ) | (0.01 | ) | |||||
Early extinguishment of debt | 0.07 | 0.07 | |||||||
Other non-comparable costs | 0.01 | 0.01 | |||||||
Straight line rent, net | (0.10 | ) | (0.10 | ) | |||||
Market rent amortization, net | (0.20 | ) | (0.20 | ) | |||||
Debt mark-to-market | (0.02 | ) | (0.02 | ) | |||||
Operating Funds From Operations | $ | 3.50 | 3.54 | ||||||
The Company has published forward-looking statements and additional financial information in its second quarter 2018 supplemental information package that may help investors estimate earnings for 2018. A copy of the Company’s second quarter 2018 supplemental information will be available on the Company's website at www.RegencyCenters.com or by written request to: Investor Relations,
About
Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by
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Source:
Regency Centers Corporation
Laura Clark, 904-598-7831
LauraClark@RegencyCenters.com