reg-8k_20200212.htm
false REGENCY CENTERS CORP 0000910606 0000910606 2020-02-12 2020-02-12

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

February 12, 2020

Date of Report (Date of earliest event reported)

 

REGENCY CENTERS CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Florida

 

 

 

59-3191743

(State or other jurisdiction

of incorporation)

 

001-12298

 

(IRS Employer

Identification No.)

 

 

(Commission File Number)

 

 

 

One Independent Drive, Suite 114

Jacksonville, Florida 32202

(Address of principal executive offices) (Zip Code)

 

(904) 598-7000

(Registrant's telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Regency Centers Corporation

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $.01 par value

 

REG

 

The Nasdaq Stock Market LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230 .425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    

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.   

 


Item 2.02    Disclosure of Results of Operations and Financial Condition

On February 12, 2020, Regency issued an earnings release for the year ended December 31, 2019, which is attached as Exhibit 99.1.

On February 12, 2020, Regency posted on its website, at www.regencycenters.com, the supplemental information for the year ended December 31, 2019, which is attached as Exhibit 99.2 and Exhibit 99.3.

Item 7.01    Regulation FD Disclosures

On February 12, 2020, Regency posted on its website, at www.regencycenters.com, its 2020 Earnings and Valuation Guidance, which is attached as Exhibit 99.4.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits

 

Exhibit 99.1

 

Earnings release issued by Regency on February 12, 2020, for the year ended December 31, 2019.

 

 

 

Exhibit 99.2

 

Supplemental information posted on its website on February 12, 2020, for the year ended December 31, 2019.

 

 

 

Exhibit 99.3

 

Supplemental information posted on its website on February 12, 2020, for the year ended December 31, 2019.

 

 

 

Exhibit 99.4

 

2020 Earnings and Valuation Guidance information posted on its website on February 12, 2020.

 

 

 

104

 

Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

REGENCY CENTERS CORPORATION

 

 

 

 

 

February 12, 2020

 

By:

 

/s/ J. Christian Leavitt

 

 

 

 

J. Christian Leavitt, Senior Vice President and Treasurer

(Principal Accounting Officer)

 

reg-ex991_85.htm

Exhibit 99.1

 

 

NEWS RELEASE

For immediate release

 

Laure Clark

904 598 7831

LauraClark@RegencyCenters.com

 

Regency Centers Reports Fourth Quarter and Full Year 2019 Results

JACKSONVILLE, FL. (February 12, 2020) – Regency Centers Corporation (“Regency” or the “Company”) today reported financial and operating results for the period ended December 31, 2019.

Fourth Quarter and Full Year 2019 Highlights

 

 

For the three months ended December 31, 2019, Net Income Attributable to Common Stockholders (“Net Income”) of $0.24 per diluted share.

 

Fourth quarter NAREIT Funds From Operations (“NAREIT FFO”) of $1.00 per diluted share.

 

Year-to-date same property Net Operating Income (“NOI”), excluding termination fees, increased 2.1%, as compared to the same period in 2018.

 

As of December 31, 2019, the same property portfolio was 95.1% leased.

 

Fourth quarter total comparable leasing volume of 1.8 million square feet of new and renewal leases, with total rent spreads of 11.3%.

 

On a trailing twelve months basis, rent spreads on comparable new and renewal leases were 13.1% and 7.4%, respectively, with total rent spreads of 8.5%.

 

During the fourth quarter, Regency sold three shopping centers for a combined sales price of $58.8 million.

 

For the full year 2019, the Company started nearly $265 million of developments and redevelopments and completed $230 million at a projected stabilized yield of 7.2%.

 

During the quarter, Regency was included in Newsweek’s inaugural America’s Most Responsible Companies 2020 list. The Company was named as one of the Top 10 companies in the Real Estate and Housing sector.

 

On February 4, 2020, Regency’s Board of Directors (the “Board”) declared a quarterly cash dividend on the Company’s common stock of $0.595 per share, representing an annualized increase of 1.7%.

“Regency’s  team delivered another year of good results. We finished the year with solid earnings growth and healthy leasing volumes as retailers and service providers remain focused on the importance and value of high quality physical locations to provide customers with the best possible combination of convenience, service and experience” said Lisa Palmer, President and Chief Executive Officer.

Financial Results

Regency reported Net Income for the fourth quarter of $40.3 million, or $0.24 per diluted share, compared to Net Income of $78.9 million, or $0.46 per diluted share, for the same period in 2018. For the twelve months ended December 31, 2019, Net Income was $239.4 million, or $1.43 per diluted share, compared to $249.1 million, or $1.46 per diluted share, for the same period in 2018.  Net Income in the fourth quarter of 2019 included an impairment charge of $40.3 million, or $0.24 per diluted share, recognized on the 101 7th Avenue asset, which is occupied by a single retail tenant, Barneys New York, that filed bankruptcy and is expected to terminate its lease in February 2020. As a result, the Company reassessed the expected hold period of the property as well as its highest and best use, resulting in a reduction of the carrying value to its estimated fair value.

The Company reported NAREIT FFO for the fourth quarter of $168.5 million, or $1.00 per diluted share, compared to $167.2 million, or $0.98 per diluted share, for the same period in 2018. For the twelve months ended December 31, 2019, NAREIT FFO was $654.4 million, or $3.89 per diluted share, compared to $652.9 million, or $3.83 per diluted share, for the same period in 2018.  For the twelve months ended December 31, 2019, results include a charge of $12.0 million, or

 

1


$0.07 per share, related to an early extinguishment of debt. For the twelve months ended December 31, 2018, results include a charge of $11.2 million, or $0.07 per share, related to an early extinguishment of debt and income of $6.7 million, or $0.04 per share, related to gains on land sales.

The Company reported Core Operating Earnings for the fourth quarter of $152.9 million, or $0.91 per diluted share, compared to $149.9 million, or $0.88 per diluted share, for the same period in 2018. Core Operating Earnings per share growth was 3.4% for the fourth quarter and 4.3% year-to-date when adjusted for the adoption of Accounting Standard Codification 842, Leases. The Company views Core Operating Earnings, which excludes from NAREIT FFO certain non-recurring items as well as non-cash components of earnings derived from above and below market rent amortization, straight-line rents, and amortization of debt mark-to-market, as a better measure of business performance as it more closely reflects cash earnings and the Company’s ability to grow the dividend.

Portfolio Performance

Regency’s portfolio is differentiated in its overall outstanding quality, breadth and scale. The strength of the Company’s merchandising mix, combined with placemaking elements and connection to its communities further differentiates Regency’s high quality portfolio. Regency’s preeminent portfolio along with its national platform and 22 local market offices offers critical strategic advantages and positions the Company to achieve its strategic objective of 3% same property NOI growth over the long-term.

Fourth quarter same property NOI, excluding termination fees, increased 1.9% compared to the same period in 2018. Year-to-date same property NOI, excluding termination fees, increased 2.1%, as compared to the same period in 2018.

As of December 31, 2019, Regency’s wholly-owned portfolio plus its pro-rata share of co-investment partnerships was 94.8% leased. The same property portfolio was 95.1% leased. Within the same property portfolio, anchor occupancy, which includes spaces greater than 10,000 square feet, was 97.4%, an increase of 10 basis points sequentially.  Same property shop occupancy, which includes spaces less than 10,000 square feet, was 91.3%, a decline of 30 basis points sequentially, primarly driven by Dress Barn moveouts.  

For the three months ended December 31, 2019, Regency executed 1.8 million square feet of comparable new and renewal leases at blended rent spreads of 11.3%. Rent spreads on new and renewal leases were 19.6% and 8.8%, respectively. For the trailing twelve months, the Company executed 6.4 million square feet of comparable new and renewal leases at blended rent spreads of 8.5%.

Portfolio Enhancement and Capital Allocation

Regency’s self-funding model enables the Company to benefit from its capital allocation strategy. Free cash flow supports the development and redevelopment program on a leverage neutral basis. Regency’s development and redevelopment platform is a critical strategic advantage for creating significant value for shareholders. Together with the sales of lower growth assets and equity when priced attractively, free cash flow also enables the Company to invest in high-growth acquisitions and share repurchases when pricing is compelling. This capital allocation strategy preserves Regency’s pristine balance sheet and allows the Company to add value and enhance the quality of the portfolio on a net accretive basis.

Developments and Redevelopments

For the full year 2019, the Company started nearly $265 million of developments and redevelopments contributing towards its five year goal of $1.25 to $1.50 billion. At year-end, the Company had 22 properties in development or redevelopment with estimated net project costs of $350.8 million. In-process developments and redevelopments were 90% leased as of December 31, 2019, and are expected to yield an average return of 7.3%.

In the fourth quarter, Regency started on the first of a three-phase redevelopment at Serramonte Center, located just south of San Francisco. Phase I consists of relocating Crunch Fitness to a new outparcel building, the addition of a new Regal theater, and adding several new outparcel restaurants and a new hotel. Phase II of the project commenced in January of 2020 and includes an extensive renovation and modernization of the interior portions of the project. Phase III of the project is expected to commence in 2021 and encompasses the redevelopment of the space occupied by JCPenney, which will vacate in June 2020.

 

2


For the full year 2019, the Company completed six ground up development projects and three redevelopment projects with combined pro-rata costs of $230.7 million and a projected stabilized yield of 7.2%.

Property Transactions

During the quarter, the Company sold three shopping centers for a combined gross sales price of $58.8 million. For the full year 2019, Regency sold 11 properties for a combined gross sales price of $209.5 million at a weighted average cap rate of 7.5%. Subsequent to year-end, the Company sold Young Circle Shopping Center, a 65,000 square feet center located in Hollywood, FL anchored by Walgreens, and Stonewall Shopping Center, a 315,000 square feet center located in Gainesville, VA anchored by Wegmans. The combined gross sales price totaled $98.4 million.

For the full year 2019, the Company acquired four properties for a total purchase price of $281.6 million at Regency’s share. Subsequent to year-end, the Company acquired an additional 16.6% interest in Town & Country Center, located in Los Angeles, for $32.8 million bringing Regency’s total interest to 35%. Also subsequent to year-end, Regency closed on the purchase of New York Common Retirement Fund’s 70% interest in Country Walk Plaza for $27.7 million, bringing Regency’s total interest to 100%. The center is a 100,000 square foot neighborhood shopping center, anchored by Publix and CVS, located in Miami.

Share Repurchase Program

Regency’s Board authorized a refreshed $250 million share repurchase plan of the Company’s common stock. This plan is scheduled to expire on February 5, 2021. The timing of share repurchases is dependent upon marketplace conditions and other factors, and the plan remains subject to the discretion of the Board of Directors.

Balance Sheet

Regency benefits from favorable access to capital through the strength of its balance sheet, supported by conservative leverage levels with a Net Debt to EBITDAre ratio of 5.4x. This positions Regency to weather potential challenges and potentially profit from investment opportunities in the future. Regency has a BBB+ rating with a positive outlook from S&P Global Rating and Baa1 with a positive outlook from Moody’s Investors Service.

As previously disclosed, during 2019 the Company further enhanced its already strong balance sheet through the issuance of $725 million of 30-year and 10-year unsecured notes, and a forward equity sale of approximately $130 million at nearly $68.00 per share.  

Dividend

On February 4, 2020, Regency’s Board declared a quarterly cash dividend on the Company’s common stock of $0.595 per share, representing an annualized increase of 1.7%. The dividend is payable on March 5, 2020, to shareholders of record as of February 24, 2020.  

Board of Director Changes

As previously announced, on January 24, 2020, John C. Schweitzer resigned from the Board of Directors. On February 4, 2020, Deirdre J. Evens was elected as chair of the Compensation Committee. Ms. Evens has been a member of the Compensation Committee of the Board since 2018.

Full Year 2020 Guidance

Regency Centers issued initial 2020 guidance concurrently with the fourth quarter 2019 earnings release. Please refer to the Company’s fourth quarter 2019 Supplemental for a complete list of guidance. A 2020 Earnings and Valuation Guidance package with additional details can be found in the presentation section of the investor relations website at Investors.RegencyCenters.com.

 

3


Full Year 2020 Guidance

All figures pro-rata and in thousands, except per share data

 

 

Current Guidance

 

 

Net Income Attributable to Common Stockholders (“Net Income”)

$1.47 - $1.50

 

 

 

 

NAREIT Funds From Operations (“NAREIT FFO”) per diluted share

$3.90 - $3.93

 

 

 

 

Same Property Net Operating Income (“SPNOI”) Growth excluding termination fees (pro-rata)

0%+

 

 

Development and Redevelopment starts

Estimated yield (weighted average)

Development and Redevelopment spend

+/- $200,000

+/- 7.0%

+/- $300,000

 

 

Acquisitions

Cap rate (weighted average)

+/- $75,000

+/- 4.5%

 

 

 

 

Dispositions

Cap rate (weighted average)

+/- $200,000

+/- 5.5%

 

 

 

Conference Call Information

To discuss Regency’s fourth quarter results and initial 2020 guidance, Management will host a conference call and presentation on Thursday, February 13, 2020, at 11:00 a.m. ET. Dial-in and webcast information is listed below.

Fourth Quarter 2019 Earnings Conference Call and 2020 Guidance Presentation

Date:Thursday, February 13, 2020

Time:11:00 a.m. ET

Dial#:877-407-0789 or 201-689-8563

Webcast:investors.regencycenters.com

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 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 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. 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.

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 on sale and

 

4


impairments of real estate, net of tax, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Regency computes NAREIT FFO for all periods presented in accordance with NAREIT's definition in effect during that period.  Effective January 1, 2019, the Company prospectively adopted the NAREIT FFO White Paper – 2018 Restatement (“2018 FFO White Paper”), and elected the option of excluding gains on sale and impairments of land, which are considered incidental to the Company’s main business. Prior period amounts were not restated to conform to the current year presentation, and therefore are calculated as described above, but also include gains on sales and impairments of land. 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 on sales and impairments of real estate, 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 the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP financial measure of the Company's 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 Attributable to Common Stockholders to NAREIT FFO.

Core Operating Earnings is an additional performance measure that excludes from NAREIT FFO: (i) transaction related income or expenses; (ii) gains or losses from the early extinguishment of debt; (iii) 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 (iv) other amounts as they occur. The Company provides a reconciliation of Net Income to NAREIT FFO to Core Operating Earnings. Core Operating Earnings for the fourth quarter and year-to-date periods ending December 31, 2018 included $1.9 million and $8.1 million, respectively, of capitalized leasing costs which, upon the adoption of the new lease accounting standard ASC 842 on January 1, 2019, are expensed.  

NAREIT EBITDAre is a measure of REIT performance, which NAREIT defines as net income, computed in accordance with GAAP, excluding (i) interest expense; (ii) income tax expense; (iii) depreciation and amortization; (iv) gains on sales of real estate; (v) impairments of real estate; and (vi) adjustments to reflect the Company’s share of unconsolidated partnerships and joint ventures.  

 

5


Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO and Core Operating

Earnings - Actual (in thousands)

 

For the Periods Ended December 31, 2019 and 2018

 

Three Months Ended

 

 

Year to Date

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Reconciliation of Net Income to NAREIT FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Common Stockholders

 

$

40,291

 

 

 

78,905

 

 

$

239,430

 

 

 

249,127

 

Adjustments to reconcile to NAREIT Funds From Operations (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (excluding FF&E)

 

 

99,270

 

 

 

100,422

 

 

 

402,888

 

 

 

390,603

 

Gain on sale of operating properties

 

 

(13,087

)

 

 

(21,335

)

 

 

(52,958

)

 

 

(25,293

)

Provision for impairment to operating properties

 

 

42,076

 

 

 

8,994

 

 

 

65,074

 

 

 

37,895

 

Gain (loss) on sale of land (2)

 

 

(246

)

 

 

-

 

 

 

(706

)

 

 

-

 

Exchangeable operating partnership units

 

 

178

 

 

 

166

 

 

 

634

 

 

 

525

 

NAREIT Funds From Operations

 

$

168,482

 

 

 

167,152

 

 

$

654,362

 

 

 

652,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of NAREIT FFO to Core Operating Earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAREIT Funds From Operations

 

$

168,482

 

 

 

167,152

 

 

$

654,362

 

 

 

652,857

 

Adjustments to reconcile to Core Operating Earnings (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of land (2)

 

 

-

 

 

 

(5,628

)

 

 

-

 

 

 

(6,659

)

Provision for impairment to land

 

 

-

 

 

 

 

 

 

-

 

 

 

542

 

Early extinguishment of debt

 

 

 

 

 

-

 

 

 

11,982

 

 

 

11,172

 

Interest on bonds for period from notice to redemption

 

 

-

 

 

 

-

 

 

 

367

 

 

 

600

 

Straight line rent, net

 

 

(1,384

)

 

 

(3,652

)

 

 

(8,524

)

 

 

(17,292

)

Above/below market rent amortization, net

 

 

(13,833

)

 

 

(7,440

)

 

 

(44,666

)

 

 

(34,171

)

Debt premium/discount amortization

 

 

(395

)

 

 

(536

)

 

 

(1,776

)

 

 

(3,263

)

Core Operating Earnings

 

$

152,870

 

 

 

149,896

 

 

$

611,745

 

 

 

603,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares For Diluted Earnings per Share

 

 

167,892

 

 

 

169,842

 

 

 

167,771

 

 

 

170,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares For Diluted FFO and Core Operating Earnings per Share

 

 

168,638

 

 

 

170,192

 

 

 

168,235

 

 

 

170,450

 

(1)

Includes Regency's consolidated entities and its pro-rata share of unconsolidated co-investment partnerships, net of pro-rata share attributable to noncontrolling interests.

(2)

Effective January 1, 2019, Regency prospectively adopted the NAREIT FFO White Paper - 2018 Restatement, and elected the option of excluding gains on sales and impairments of land, which are considered incidental to the Company's main business. Prior period amounts were not restated to conform to the current year presentation of NAREIT FFO, and therefore include gains on sales and impairments of land.

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.

 

6


Reconciliation of Net Income Attributable to Common Stockholders to Pro-Rata Same

Property NOI – Actual (in thousands)

 

For the Periods Ended December 31, 2019 and 2018

 

Three Months Ended

 

 

Year to Date

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net Income Attributable to Common Stockholders

 

$

40,291

 

 

 

78,905

 

 

$

239,430

 

 

 

249,127

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management, transaction, and other fees

 

 

(7,868

)

 

 

(7,495

)

 

 

(29,636

)

 

 

(28,494

)

Other(1)

 

 

(16,811

)

 

 

(12,084

)

 

 

(58,904

)

 

 

(56,906

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

91,644

 

 

 

92,876

 

 

 

374,283

 

 

 

359,688

 

General and administrative

 

 

18,262

 

 

 

13,544

 

 

 

74,984

 

 

 

65,491

 

Other operating expense, excluding provision for doubtful accounts

 

 

3,328

 

 

 

1,919

 

 

 

7,814

 

 

 

4,744

 

Other expense (income)

 

 

71,860

 

 

 

24,699

 

 

 

187,610

 

 

 

170,818

 

Equity in income of investments in real estate excluded from NOI (2)

 

 

8,109

 

 

 

11,597

 

 

 

39,807

 

 

 

56,680

 

Net income attributable to noncontrolling interests

 

 

840

 

 

 

831

 

 

 

3,828

 

 

 

3,198

 

NOI

 

 

209,655

 

 

 

204,792

 

 

 

839,216

 

 

 

824,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less non-same property NOI (3)

 

 

(8,736

)

 

 

(8,190

)

 

 

(31,073

)

 

 

(34,112

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property NOI

 

$

200,919

 

 

 

196,602

 

 

$

808,143

 

 

 

790,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property NOI without Termination Fees

 

$

199,848

 

 

 

196,045

 

 

$

805,247

 

 

 

788,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property NOI without Termination Fees or Redevelopments

 

$

189,601

 

 

 

185,999

 

 

$

764,627

 

 

 

749,425

 

(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, interest expense, and real estate gains and impairments.

(3)

Includes revenues and expenses attributable to Non-Same Property, Projects in Development, corporate activities, and noncontrolling interests.

Reported results are preliminary and not final until the filing of the Company’s Form 10-K with the SEC and, therefore, remain subject to adjustment.

 

7


Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO - Guidance (per diluted share)

 

NAREIT FFO Guidance:

 

Full Year

2020

 

 

 

Low

 

 

High

 

Net income attributable to common stockholders

 

$

1.47

 

 

 

1.50

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to NAREIT FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2.43

 

 

 

2.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAREIT Funds From Operations

 

$

3.90

 

 

 

3.93

 

The Company has published forward-looking statements and additional financial information in its fourth quarter 2019 supplemental information package that may help investors estimate earnings for 2020. A copy of the Company’s fourth quarter 2019 supplemental information will be available on the Company's website at www.RegencyCenters.com or by written request to: Investor Relations, Regency Centers Corporation, One Independent Drive, Suite 114, Jacksonville, Florida, 32202. The supplemental information package contains more detailed financial and property results including financial statements, an outstanding debt summary, acquisition and development activity, investments in partnerships, information pertaining to securities issued other than common stock, property details, a significant tenant rent report and a lease expiration table in addition to earnings and valuation guidance assumptions. The information provided in the supplemental package is unaudited and there can be no assurance that the information will not vary from the final information in the Company’s Form 10-K for the year-ended December 31, 2019. Regency may, but assumes no obligation to, update information in the supplemental package from time to time.

About Regency Centers Corporation (NASDAQ: REG)

Regency Centers is the preeminent national owner, operator, and developer of shopping centers located in affluent and densely populated trade areas. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and best-in-class retailers that connect to our neighborhoods, communities, and customers. Operating as a fully integrated real estate company, Regency Centers is a qualified real estate investment trust (REIT) that is self-administered, self-managed, and an S&P 500 Index member. For more information, please visit RegencyCenters.com.

###

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 Regency Centers Corporation with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements.

 

8

reg-ex992_7.htm

 

Exhibit 99.2

 


 

Table of Contents

December 31, 2019

 

Disclosures

i

 

 

Earnings Press Release

iii

 

 

Summary Information:

 

 

 

Summary Financial Information

1

 

 

Summary Real Estate Information

2

 

 

Financial Information:

 

 

 

Consolidated Balance Sheets

3

 

 

Consolidated Statements of Operations

4

 

 

Supplemental Details of Operations (Consolidated Only)

5

 

 

Supplemental Details of Assets and Liabilities (Real Estate Partnerships Only)

6

 

 

Supplemental Details of Operations (Real Estate Partnerships Only)

7

 

 

Supplemental Details of Same Property NOI (Pro-Rata)

8

 

 

Reconciliations of Non-GAAP Financial Measures and Additional Disclosures

9

 

 

Summary of Consolidated Debt

11

 

 

Summary of Consolidated Debt Detail

12

 

 

Summary of Unsecured Debt Covenants and Leverage Ratios

13

 

 

Summary of Unconsolidated Debt

14

 

 

Unconsolidated Investments

15

 

 

Investment Activity:

 

 

 

Property Transactions

16

 

 

Summary of Development and Redevelopment

17

 

 

Major Redevelopment Pipeline

21

 

 

Real Estate Information:

 

 

 

Leasing Statistics

22

 

 

Average Base Rent by CBSA

23

 

 

Significant Tenant Rents

24

 

 

Tenant Lease Expirations

25

 

 

Portfolio Summary Report by State

26

 

 

Components of NAV and Forward-Looking Information:

 

 

 

Components of NAV

42

 

 

Earnings Guidance

44

 

 

Reconciliation of Net Income to NAREFT FFO

45

 

 

Glossary of Terms

46

 

 


 

Disclosures

December 31, 2019

 

Accounting and Disclosure Changes

 

FASB Accounting Standards Codification – Topic 842 (Leases) (“Leases Standard”)

 

Effective January 1, 2019, Regency adopted Accounting Standards Codification (ASC) Topic 842, Leases, under the modified retrospective transition approach allowing for initial application at the date of adoption.  The Company also elected to reclassify the prior period amounts to conform to the current year presentation. The financial statements have been impacted as follows:

 

Consolidated Statements of Operations

 

All lease income earned pursuant to tenant leases in 2019, and as reclassified for 2018, which includes but is not limited to Base rent, Recoveries from tenants and Percentage rent, is reflected in Lease income.

 

Lease income is presented net of revenues deemed uncollectible for the current period. Prior period presentation of this line item was included in Operating expenses as Provision for doubtful accounts.

 

Real estate revenues earned not specific to tenant leases in 2019 have been reclassified from Recoveries from tenants and other income to Other property income.

 

Indirect internal leasing and legal costs associated with the execution of lease agreements that were previously capitalized are expensed in General and administrative in Operating expenses in the current period.

 

Consolidated Balance Sheets

 

Addition of Lease liabilities and corresponding Right of use assets, net of or including the opening balance for straight line rent and above/below market intangibles, for its ground and office leases where Regency is the lessee.

 

NAREIT Funds from Operations

 

Regency prospectively adopted the NAREIT FFO White Paper – 2018 Restatement (“2018 FFO Whitepaper”), and elected the option of excluding gains on the sale and impairments of land from NAREIT FFO, which are considered incidental to the Company’s main business.  Prior period amounts were not restated to conform to the current year presentation of NAREIT FFO, and therefore include gains on sales and impairments of land.

 

Non-GAAP Disclosures

 

We use certain non-GAAP performance measures, in addition to the required GAAP presentations, as we believe these measures improve the understanding of the Company's operational results. We provide pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with the Company’s reported results under GAAP. We believe presenting our pro-rata share of assets, liabilities, and operating results, 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 pro-rata information provided is not, and is not intended to be, presented in accordance with GAAP.  The pro-rata supplemental details of assets and liabilities and supplemental details of operations reflect our proportionate economic ownership of the assets, liabilities and operating results of the properties in our portfolio.

 

 

The items labeled as "Consolidated" are prepared on a basis consistent with the Company's consolidated financial statements as filed with the SEC on the most recent Form 10-Q or 10-K, as applicable.

 

 

The columns labeled "Share of JVs" represent our ownership interest in our unconsolidated (equity method) investments in real estate partnerships, and was derived on a partnership by partnership basis by applying to each financial statement line item our ownership percentage interest used to arrive at our share of investments in real estate partnerships and equity in income or loss of investments in real estate partnerships during the period when applying the equity method of accounting to each of our unconsolidated partnerships.

 

 

Supplemental Information

i

 


 

 

A similar calculation was performed for the amounts in columns labeled ''Noncontrolling Interests”, which represent the limited partners’ interests in consolidated partnerships attributable to each financial statement line item.  

 

We do not control the unconsolidated partnerships, and the presentations of the assets and liabilities and revenues and expenses do not necessarily 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 generally provide for such allocations according to their invested capital.  Our share of invested capital establishes the ownership interest we use to prepare our pro-rata share.  

 

The presentation of pro-rata financial information has limitations as an analytical tool. Some of these limitations 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 interests differently, limiting the comparability of pro-rata information.

 

Because of these limitations, the supplemental details of assets and liabilities and supplemental details of operations 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 results and using the pro-rata details as a supplement.

 

The following non-GAAP measures, as defined in the Glossary of Terms, are commonly used by management and the investing public to understand and evaluate our operating results and performance:

 

NAREIT Funds From Operations (NAREIT FFO):  The Company believes NAREIT FFO 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.  The Company provides a reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO.

 

Net Operating Income (NOI):  The Company believes NOI provides useful information to investors to measure the operating performance of its portfolio of properties.  The Company provides a reconciliation of Net Income Attributable to Common Stockholders to pro-rata NOI.

 

Core Operating Earnings (previously Operating FFO):  The Company believes Core Operating Earnings, 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 NAREIT FFO to Core Operating Earnings.

 

Same Property NOI:  The Company provides disclosure of NOI on a same property basis because it believes the measure provides investors with additional information regarding the operating performances of comparable assets.  Same Property NOI excludes all development, non-same property and corporate level revenue and expenses.  The Company also provides disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.  

 

 

 

Supplemental Information

ii

 


 

 

 

NEWS RELEASE

For immediate release

 

Laure Clark

904 598 7831

LauraClark@RegencyCenters.com

 

Regency Centers Reports Fourth Quarter and Full Year 2019 Results

JACKSONVILLE, FL. (February 12, 2020) – Regency Centers Corporation (“Regency” or the “Company”) today reported financial and operating results for the period ended December 31, 2019.

Fourth Quarter and Full Year 2019 Highlights

 

 

For the three months ended December 31, 2019, Net Income Attributable to Common Stockholders (“Net Income”) of $0.24 per diluted share.

 

Fourth quarter NAREIT Funds From Operations (“NAREIT FFO”) of $1.00 per diluted share.

 

Year-to-date same property Net Operating Income (“NOI”), excluding termination fees, increased 2.1%, as compared to the same period in 2018.

 

As of December 31, 2019, the same property portfolio was 95.1% leased.

 

Fourth quarter total comparable leasing volume of 1.8 million square feet of new and renewal leases, with total rent spreads of 11.3%.

 

On a trailing twelve months basis, rent spreads on comparable new and renewal leases were 13.1% and 7.4%, respectively, with total rent spreads of 8.5%.

 

During the fourth quarter, Regency sold three shopping centers for a combined sales price of $58.8 million.

 

For the full year 2019, the Company started nearly $265 million of developments and redevelopments and completed $230 million at a projected stabilized yield of 7.2%.

 

During the quarter, Regency was included in Newsweek’s inaugural America’s Most Responsible Companies 2020 list. The Company was named as one of the Top 10 companies in the Real Estate and Housing sector.

 

On February 4, 2020, Regency’s Board of Directors (the “Board”) declared a quarterly cash dividend on the Company’s common stock of $0.595 per share, representing an annualized increase of 1.7%.

“Regency’s  team delivered another year of good results. We finished the year with solid earnings growth and healthy leasing volumes as retailers and service providers remain focused on the importance and value of high quality physical locations to provide customers with the best possible combination of convenience, service and experience” said Lisa Palmer, President and Chief Executive Officer.

Financial Results

Regency reported Net Income for the fourth quarter of $40.3 million, or $0.24 per diluted share, compared to Net Income of $78.9 million, or $0.46 per diluted share, for the same period in 2018. For the twelve months ended December 31, 2019, Net Income was $239.4 million, or $1.43 per diluted share, compared to $249.1 million, or $1.46 per diluted share, for the same period in 2018.  Net Income in the fourth quarter of 2019 included an impairment charge of $40.3 million, or $0.24 per diluted share, recognized on the 101 7th Avenue asset, which is occupied by a single retail tenant, Barneys New York, that filed bankruptcy and is expected to terminate its lease in February 2020. As a result, the Company reassessed the expected hold period of the property as well as its highest and best use, resulting in a reduction of the carrying value to its estimated fair value.

The Company reported NAREIT FFO for the fourth quarter of $168.5 million, or $1.00 per diluted share, compared to $167.2 million, or $0.98 per diluted share, for the same period in 2018. For the twelve months ended December 31, 2019,

 

Supplemental Information

iii

 


 

NAREIT FFO was $654.4 million, or $3.89 per diluted share, compared to $652.9 million, or $3.83 per diluted share, for the same period in 2018.  For the twelve months ended December 31, 2019, results include a charge of $12.0 million, or $0.07 per share, related to an early extinguishment of debt. For the twelve months ended December 31, 2018, results include a charge of $11.2 million, or $0.07 per share, related to an early extinguishment of debt and income of $6.7 million, or $0.04 per share, related to gains on land sales.

The Company reported Core Operating Earnings for the fourth quarter of $152.9 million, or $0.91 per diluted share, compared to $149.9 million, or $0.88 per diluted share, for the same period in 2018. Core Operating Earnings per share growth was 3.4% for the fourth quarter and 4.3% year-to-date when adjusted for the adoption of Accounting Standard Codification 842, Leases. The Company views Core Operating Earnings, which excludes from NAREIT FFO certain non-recurring items as well as non-cash components of earnings derived from above and below market rent amortization, straight-line rents, and amortization of debt mark-to-market, as a better measure of business performance as it more closely reflects cash earnings and the Company’s ability to grow the dividend.

Portfolio Performance

Regency’s portfolio is differentiated in its overall outstanding quality, breadth and scale. The strength of the Company’s merchandising mix, combined with placemaking elements and connection to its communities further differentiates Regency’s high quality portfolio. Regency’s preeminent portfolio along with its national platform and 22 local market offices offers critical strategic advantages and positions the Company to achieve its strategic objective of 3% same property NOI growth over the long-term.

Fourth quarter same property NOI, excluding termination fees, increased 1.9% compared to the same period in 2018. Year-to-date same property NOI, excluding termination fees, increased 2.1%, as compared to the same period in 2018.

As of December 31, 2019, Regency’s wholly-owned portfolio plus its pro-rata share of co-investment partnerships was 94.8% leased. The same property portfolio was 95.1% leased. Within the same property portfolio, anchor occupancy, which includes spaces greater than 10,000 square feet, was 97.4%, an increase of 10 basis points sequentially.  Same property shop occupancy, which includes spaces less than 10,000 square feet, was 91.3%, a decline of 30 basis points sequentially, primarly driven by Dress Barn moveouts.  

For the three months ended December 31, 2019, Regency executed 1.8 million square feet of comparable new and renewal leases at blended rent spreads of 11.3%. Rent spreads on new and renewal leases were 19.6% and 8.8%, respectively. For the trailing twelve months, the Company executed 6.4 million square feet of comparable new and renewal leases at blended rent spreads of 8.5%.

Portfolio Enhancement and Capital Allocation

Regency’s self-funding model enables the Company to benefit from its capital allocation strategy. Free cash flow supports the development and redevelopment program on a leverage neutral basis. Regency’s development and redevelopment platform is a critical strategic advantage for creating significant value for shareholders. Together with the sales of lower growth assets and equity when priced attractively, free cash flow also enables the Company to invest in high-growth acquisitions and share repurchases when pricing is compelling. This capital allocation strategy preserves Regency’s pristine balance sheet and allows the Company to add value and enhance the quality of the portfolio on a net accretive basis.

Developments and Redevelopments

For the full year 2019, the Company started nearly $265 million of developments and redevelopments contributing towards its five year goal of $1.25 to $1.50 billion. At year-end, the Company had 22 properties in development or redevelopment with estimated net project costs of $350.8 million. In-process developments and redevelopments were 90% leased as of December 31, 2019, and are expected to yield an average return of 7.3%.

In the fourth quarter, Regency started on the first of a three-phase redevelopment at Serramonte Center, located just south of San Francisco. Phase I consists of relocating Crunch Fitness to a new outparcel building, the addition of a new Regal theater, and adding several new outparcel restaurants and a new hotel. Phase II of the project commenced in January of 2020 and includes an extensive renovation and modernization of the interior portions of the project. Phase III

 

Supplemental Information

iv

 


 

of the project is expected to commence in 2021 and encompasses the redevelopment of the space occupied by JCPenney, which will vacate in June 2020.

For the full year 2019, the Company completed six ground up development projects and three redevelopment projects with combined pro-rata costs of $230.7 million and a projected stabilized yield of 7.2%.

Property Transactions

During the quarter, the Company sold three shopping centers for a combined gross sales price of $58.8 million. For the full year 2019, Regency sold 11 properties for a combined gross sales price of $209.5 million at a weighted average cap rate of 7.5%. Subsequent to year-end, the Company sold Young Circle Shopping Center, a 65,000 square feet center located in Hollywood, FL anchored by Walgreens, and Stonewall Shopping Center, a 315,000 square feet center located in Gainesville, VA anchored by Wegmans. The combined gross sales price totaled $98.4 million.

For the full year 2019, the Company acquired four properties for a total purchase price of $281.6 million at Regency’s share. Subsequent to year-end, the Company acquired an additional 16.6% interest in Town & Country Center, located in Los Angeles, for $32.8 million bringing Regency’s total interest to 35%. Also subsequent to year-end, Regency closed on the purchase of New York Common Retirement Fund’s 70% interest in Country Walk Plaza for $27.7 million, bringing Regency’s total interest to 100%. The center is a 100,000 square foot neighborhood shopping center, anchored by Publix and CVS, located in Miami.

Share Repurchase Program

Regency’s Board authorized a refreshed $250 million share repurchase plan of the Company’s common stock. This plan is scheduled to expire on February 5, 2021. The timing of share repurchases is dependent upon marketplace conditions and other factors, and the plan remains subject to the discretion of the Board of Directors.

Balance Sheet

Regency benefits from favorable access to capital through the strength of its balance sheet, supported by conservative leverage levels with a Net Debt to EBITDAre ratio of 5.4x. This positions Regency to weather potential challenges and potentially profit from investment opportunities in the future. Regency has a BBB+ rating with a positive outlook from S&P Global Rating and Baa1 with a positive outlook from Moody’s Investors Service.

As previously disclosed, during 2019 the Company further enhanced its already strong balance sheet through the issuance of $725 million of 30-year and 10-year unsecured notes, and a forward equity sale of approximately $130 million at nearly $68.00 per share.  

Dividend

On February 4, 2020, Regency’s Board declared a quarterly cash dividend on the Company’s common stock of $0.595 per share, representing an annualized increase of 1.7%. The dividend is payable on March 5, 2020, to shareholders of record as of February 24, 2020.  

Board of Director Changes

As previously announced, on January 24, 2020, John C. Schweitzer resigned from the Board of Directors. On February 4, 2020, Deirdre J. Evens was elected as chair of the Compensation Committee. Ms. Evens has been a member of the Compensation Committee of the Board since 2018.

Full Year 2020 Guidance

Regency Centers issued initial 2020 guidance concurrently with the fourth quarter 2019 earnings release. Please refer to the Company’s fourth quarter 2019 Supplemental for a complete list of guidance. A 2020 Earnings and Valuation Guidance package with additional details can be found in the presentation section of the investor relations website at Investors.RegencyCenters.com.

 

Supplemental Information

v

 


 

Full Year 2020 Guidance

All figures pro-rata and in thousands, except per share data

 

 

Current Guidance

 

 

Net Income Attributable to Common Stockholders (“Net Income”)

$1.47 - $1.50

 

 

 

 

NAREIT Funds From Operations (“NAREIT FFO”) per diluted share

$3.90 - $3.93

 

 

 

 

Same Property Net Operating Income (“SPNOI”) Growth excluding termination fees (pro-rata)

0%+

 

 

Development and Redevelopment starts

Estimated yield (weighted average)

Development and Redevelopment spend

+/- $200,000

+/- 7.0%

+/- $300,000

 

 

Acquisitions

Cap rate (weighted average)

+/- $75,000

+/- 4.5%

 

 

 

 

Dispositions

Cap rate (weighted average)

+/- $200,000

+/- 5.5%

 

 

 

Conference Call Information

To discuss Regency’s fourth quarter results and initial 2020 guidance, Management will host a conference call and presentation on Thursday, February 13, 2020, at 11:00 a.m. ET. Dial-in and webcast information is listed below.

Fourth Quarter 2019 Earnings Conference Call and 2020 Guidance Presentation

Date:Thursday, February 13, 2020

Time:11:00 a.m. ET

Dial#:877-407-0789 or 201-689-8563

Webcast:investors.regencycenters.com

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 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 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. 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.

 

Supplemental Information

vi

 


 

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 on sale and impairments of real estate, net of tax, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Regency computes NAREIT FFO for all periods presented in accordance with NAREIT's definition in effect during that period.  Effective January 1, 2019, the Company prospectively adopted the NAREIT FFO White Paper – 2018 Restatement (“2018 FFO White Paper”), and elected the option of excluding gains on sale and impairments of land, which are considered incidental to the Company’s main business. Prior period amounts were not restated to conform to the current year presentation, and therefore are calculated as described above, but also include gains on sales and impairments of land. 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 on sales and impairments of real estate, 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 the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP financial measure of the Company's 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 Attributable to Common Stockholders to NAREIT FFO.

Core Operating Earnings is an additional performance measure that excludes from NAREIT FFO: (i) transaction related income or expenses; (ii) gains or losses from the early extinguishment of debt; (iii) 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 (iv) other amounts as they occur. The Company provides a reconciliation of Net Income to NAREIT FFO to Core Operating Earnings. Core Operating Earnings for the fourth quarter and year-to-date periods ending December 31, 2018 included $1.9 million and $8.1 million, respectively, of capitalized leasing costs which, upon the adoption of the new lease accounting standard ASC 842 on January 1, 2019, are expensed.  

NAREIT EBITDAre is a measure of REIT performance, which NAREIT defines as net income, computed in accordance with GAAP, excluding (i) interest expense; (ii) income tax expense; (iii) depreciation and amortization; (iv) gains on sales of real estate; (v) impairments of real estate; and (vi) adjustments to reflect the Company’s share of unconsolidated partnerships and joint ventures.  

 

Supplemental Information

vii

 


 

Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO and Core Operating

Earnings - Actual (in thousands)

 

For the Periods Ended December 31, 2019 and 2018

 

Three Months Ended

 

 

Year to Date

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Reconciliation of Net Income to NAREIT FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Common Stockholders

 

$

40,291

 

 

 

78,905

 

 

$

239,430

 

 

 

249,127

 

Adjustments to reconcile to NAREIT Funds From Operations (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (excluding FF&E)

 

 

99,270

 

 

 

100,422

 

 

 

402,888

 

 

 

390,603

 

Gain on sale of operating properties

 

 

(13,087

)

 

 

(21,335

)

 

 

(52,958

)

 

 

(25,293

)

Provision for impairment to operating properties

 

 

42,076

 

 

 

8,994

 

 

 

65,074

 

 

 

37,895

 

Gain (loss) on sale of land (2)

 

 

(246

)

 

 

-

 

 

 

(706

)

 

 

-

 

Exchangeable operating partnership units

 

 

178

 

 

 

166

 

 

 

634

 

 

 

525

 

NAREIT Funds From Operations

 

$

168,482

 

 

 

167,152

 

 

$

654,362

 

 

 

652,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of NAREIT FFO to Core Operating Earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAREIT Funds From Operations

 

$

168,482

 

 

 

167,152

 

 

$

654,362

 

 

 

652,857

 

Adjustments to reconcile to Core Operating Earnings (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of land (2)

 

 

-

 

 

 

(5,628

)

 

 

-

 

 

 

(6,659

)

Provision for impairment to land

 

 

-

 

 

 

-

 

 

 

-

 

 

 

542

 

Early extinguishment of debt

 

 

-

 

 

 

-

 

 

 

11,982

 

 

 

11,172

 

Interest on bonds for period from notice to redemption

 

 

-

 

 

 

-

 

 

 

367

 

 

 

600

 

Straight line rent, net

 

 

(1,384

)

 

 

(3,652

)

 

 

(8,524

)

 

 

(17,292

)

Above/below market rent amortization, net

 

 

(13,833

)

 

 

(7,440

)

 

 

(44,666

)

 

 

(34,171

)

Debt premium/discount amortization

 

 

(395

)

 

 

(536

)

 

 

(1,776

)

 

 

(3,263

)

Core Operating Earnings

 

$

152,870

 

 

 

149,896

 

 

$

611,745

 

 

 

603,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares For Diluted Earnings per Share

 

 

167,892

 

 

 

169,842

 

 

 

167,771

 

 

 

170,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares For Diluted FFO and Core Operating Earnings per Share

 

 

168,638

 

 

 

170,192

 

 

 

168,235

 

 

 

170,450

 

(1)

Includes Regency's consolidated entities and its pro-rata share of unconsolidated co-investment partnerships, net of pro-rata share attributable to noncontrolling interests.

(2)

Effective January 1, 2019, Regency prospectively adopted the NAREIT FFO White Paper - 2018 Restatement, and elected the option of excluding gains on sales and impairments of land, which are considered incidental to the Company's main business. Prior period amounts were not restated to conform to the current year presentation of NAREIT FFO, and therefore include gains on sales and impairments of land.

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.

 

Supplemental Information

viii

 


 

Reconciliation of Net Income Attributable to Common Stockholders to Pro-Rata Same

Property NOI – Actual (in thousands)

 

For the Periods Ended December 31, 2019 and 2018

 

Three Months Ended

 

 

Year to Date

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net Income Attributable to Common Stockholders

 

$

40,291

 

 

 

78,905

 

 

$

239,430

 

 

 

249,127

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management, transaction, and other fees

 

 

(7,868

)

 

 

(7,495

)

 

 

(29,636

)

 

 

(28,494

)

Other(1)

 

 

(16,811

)

 

 

(12,084

)

 

 

(58,904

)

 

 

(56,906

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

91,644

 

 

 

92,876

 

 

 

374,283

 

 

 

359,688

 

General and administrative

 

 

18,262

 

 

 

13,544

 

 

 

74,984

 

 

 

65,491

 

Other operating expense, excluding provision for doubtful accounts

 

 

3,328

 

 

 

1,919

 

 

 

7,814

 

 

 

4,744

 

Other expense (income)

 

 

71,860

 

 

 

24,699

 

 

 

187,610

 

 

 

170,818

 

Equity in income of investments in real estate excluded from NOI (2)

 

 

8,109

 

 

 

11,597

 

 

 

39,807

 

 

 

56,680

 

Net income attributable to noncontrolling interests

 

 

840

 

 

 

831

 

 

 

3,828

 

 

 

3,198

 

NOI

 

 

209,655

 

 

 

204,792

 

 

 

839,216

 

 

 

824,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less non-same property NOI (3)

 

 

(8,736

)

 

 

(8,190

)

 

 

(31,073

)

 

 

(34,112

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property NOI

 

$

200,919

 

 

 

196,602

 

 

$

808,143

 

 

 

790,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property NOI without Termination Fees

 

$

199,848

 

 

 

196,045

 

 

$

805,247

 

 

 

788,894

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property NOI without Termination Fees or Redevelopments

 

$

189,601

 

 

 

185,999

 

 

$

764,627

 

 

 

749,425

 

(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, interest expense, and real estate gains and impairments.

(3)

Includes revenues and expenses attributable to Non-Same Property, Projects in Development, corporate activities, and noncontrolling interests.

Reported results are preliminary and not final until the filing of the Company’s Form 10-K with the SEC and, therefore, remain subject to adjustment.

 

Supplemental Information

ix

 


 

Reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO - Guidance (per diluted share)

 

NAREIT FFO Guidance:

 

Full Year

2020

 

 

 

Low

 

 

High

 

Net income attributable to common stockholders

 

$

1.47

 

 

 

1.50

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to NAREIT FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2.43

 

 

 

2.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAREIT Funds From Operations

 

$

3.90

 

 

 

3.93

 

The Company has published forward-looking statements and additional financial information in its fourth quarter 2019 supplemental information package that may help investors estimate earnings for 2020. A copy of the Company’s fourth quarter 2019 supplemental information will be available on the Company's website at www.RegencyCenters.com or by written request to: Investor Relations, Regency Centers Corporation, One Independent Drive, Suite 114, Jacksonville, Florida, 32202. The supplemental information package contains more detailed financial and property results including financial statements, an outstanding debt summary, acquisition and development activity, investments in partnerships, information pertaining to securities issued other than common stock, property details, a significant tenant rent report and a lease expiration table in addition to earnings and valuation guidance assumptions. The information provided in the supplemental package is unaudited and there can be no assurance that the information will not vary from the final information in the Company’s Form 10-K for the year-ended December 31, 2019. Regency may, but assumes no obligation to, update information in the supplemental package from time to time.

About Regency Centers Corporation (NASDAQ: REG)

Regency Centers is the preeminent national owner, operator, and developer of shopping centers located in affluent and densely populated trade areas. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and best-in-class retailers that connect to our neighborhoods, communities, and customers. Operating as a fully integrated real estate company, Regency Centers is a qualified real estate investment trust (REIT) that is self-administered, self-managed, and an S&P 500 Index member. For more information, please visit RegencyCenters.com.

###

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 Regency Centers Corporation with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements.

 

 

 

Supplemental Information

x

 


 

Summary Financial Information

December 31, 2019

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Year to Date

 

 

2019

 

2018

 

2019

 

2018

Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders (page 4)

 

$40,291

 

$78,905

 

$239,430

 

$249,127

Net income per diluted share

 

$0.24

 

$0.46

 

$1.43

 

$1.46

 

 

 

 

 

 

 

 

 

NAREIT Funds From Operations (NAREIT FFO) (page 9)

 

$168,482

 

$167,152

 

$654,362

 

$652,857

NAREIT FFO per diluted share

 

$1.00

 

$0.98

 

$3.89

 

$3.83

 

 

 

 

 

 

 

 

 

Core Operating Earnings (previously Operating FFO) (page 9)

 

$152,870

 

$149,896

 

$611,745

 

$603,786

Core Operating Earnings per diluted share

 

$0.91

 

$0.88

 

$3.64

 

$3.54

 

 

 

 

 

 

 

 

 

Same Property NOI without termination fees (page 8)

 

$199,848

 

$196,045

 

$805,247

 

$788,894

% growth

 

1.9%

 

 

 

2.1%

 

 

 

 

 

 

 

 

 

 

 

Operating EBITDAre (page 10)

 

$199,613

 

$195,706

 

$798,568

 

$788,159

 

 

 

 

 

 

 

 

 

Dividends paid per share and unit

 

$0.585

 

$0.555

 

$2.340

 

$2.220

Payout ratio of Core Operating Earnings per share (diluted)

 

64.3%

 

63.1%

 

64.3%

 

62.7%