UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
toCommission 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) | 
| 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, Florida32202 | (904) 598-7000 | |
(Address of principal executive offices) (zip code) | (Registrant's telephone number, including area code) | |
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 | ||
Regency Centers, L.P.
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
None | N/A | N/A | ||
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
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
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“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer | ☒ | Accelerated filer | ☐ | Emerging growth company | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||
Regency Centers, L.P.:
Large accelerated filer | ☐ | Accelerated filer | ☐ | Emerging growth company | ☐ |
Non-accelerated filer | ☒ | Smaller reporting 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.
Regency Centers Corporation YES
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
The number of shares outstanding of the Regency Centers Corporation’s common stock was 170,110,464 172,362,333as of November 2, 2017.
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2017,March 31, 2022, 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" “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'sPartnership’s capital includes general and limited common Partnership Units (“Units”). As of September 30, 2017,March 31, 2022, the Parent Company owned approximately 99.8%99.6% of the Units in the Operating Partnership. The remaining limited Units are owned by third party investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership'sPartnership’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:
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$200 million of unsecured public and private placement debt, assumed with the Equity One merger on March 1, 2017, the Parent Company does not havehold 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$200 million of the Parent Company.Company debt. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company'sCompany’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'sCompany’s business. These sources include the Operating Partnership'sPartnership’s operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders’ equity, partners'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'sPartnership’s capital includes general and limited common Partnership Units. The limited partners'partners’ units in the Operating Partnership owned by third parties are accounted for in partners'partners’ capital in the Operating Partnership'sPartnership’s financial statements and outside of stockholders'stockholders’ equity in noncontrolling interests in the Parent Company'sCompany’s financial statements.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company.
As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Although the Parent Company is the issuer of the combined $500 million of unsecured public and private notes, the Operating Partnership is a co-issuer and guarantor of these notes. Therefore, while stockholders'stockholders’ equity and partners'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 | ||||
Item 1. | ||||
Regency Centers Corporation: | ||||
Consolidated Balance Sheets as of | ||||
Regency Centers, L.P.: | ||||
Consolidated Balance Sheets as of | ||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 24 | ||
Item 3. | 43 | |||
Item 4. | 43 | |||
Item 1. | 44 | |||
Item 1A. | 44 | |||
Item 2. | 44 | |||
Item 3. | 44 | |||
Item 4. | 44 | |||
Item 5. | 44 | |||
Item 6. | 45 | |||
46 | ||||
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
March 31, 2022 andDecember 31, 2016
(in thousands, except share data)
| 2017 | 2016 | |||||
| Assets | (unaudited) | |||||
| Real estate investments at cost: | ||||||
| Land | $ | 4,578,145 | 1,660,424 | |||
| Buildings and improvements | 5,834,405 | 3,092,197 | ||||
| Properties in development | 433,707 | 180,878 | ||||
| 10,846,257 | 4,933,499 | |||||
| Less: accumulated depreciation | 1,281,510 | 1,124,391 | ||||
| 9,564,747 | 3,809,108 | |||||
| Properties held for sale | 27,802 | — | ||||
| Investments in real estate partnerships | 380,930 | 296,699 | ||||
| Net real estate investments | 9,973,479 | 4,105,807 | ||||
| Cash and cash equivalents | 23,543 | 13,256 | ||||
| Restricted cash | 7,098 | 4,623 | ||||
| Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $12,279 and $9,021 at September 30, 2017 and December 31, 2016, respectively | 143,153 | 111,722 | ||||
| Deferred leasing costs, less accumulated amortization of $91,213 and $83,529 at September 30, 2017 and December 31, 2016, respectively | 71,826 | 69,000 | ||||
| Acquired lease intangible assets, less accumulated amortization of $123,662 and $56,695 at September 30, 2017 and December 31, 2016, respectively | 508,868 | 118,831 | ||||
| Other assets | 390,778 | 65,667 | ||||
| Total assets | $ | 11,118,745 | 4,488,906 | |||
| Liabilities and Equity | ||||||
| Liabilities: | ||||||
| Notes payable | $ | 2,943,986 | 1,363,925 | |||
| Unsecured credit facilities | 578,144 | 278,495 | ||||
| Accounts payable and other liabilities | 276,363 | 138,936 | ||||
| Acquired lease intangible liabilities, less accumulated amortization of $49,968 and $23,538 at September 30, 2017 and December 31, 2016, respectively | 637,217 | 54,180 | ||||
| Tenants’ security, escrow deposits and prepaid rent | 46,351 | 28,868 | ||||
| Total liabilities | 4,482,061 | 1,864,404 | ||||
| Commitments and contingencies | — | — | ||||
| Equity: | ||||||
| Stockholders’ equity: | ||||||
| Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 13,000,000 Series 6 and 7 shares issued and outstanding at December 31, 2016, with liquidation preferences of $25 per share | — | 325,000 | ||||
| Common stock, $0.01 par value per share, 220,000,000 and 150,000,000 shares authorized; 170,109,043 and 104,497,286 shares issued at September 30, 2017 and December 31, 2016, respectively | 1,701 | 1,045 | ||||
| Treasury stock at cost, 362,764 and 347,903 shares held at September 30, 2017 and December 31, 2016, respectively | (18,048 | ) | (17,062 | ) | ||
| Additional paid in capital | 7,779,103 | 3,294,923 | ||||
| Accumulated other comprehensive loss | (14,141 | ) | (18,346 | ) | ||
| Distributions in excess of net income | (1,153,153 | ) | (994,259 | ) | ||
| Total stockholders’ equity | 6,595,462 | 2,591,301 | ||||
| Noncontrolling interests: | ||||||
| Exchangeable operating partnership units, aggregate redemption value of $21,708 and $10,630 at September 30, 2017 and December 31, 2016, respectively | 10,906 | (1,967 | ) | |||
| Limited partners’ interests in consolidated partnerships | 30,316 | 35,168 | ||||
| Total noncontrolling interests | 41,222 | 33,201 | ||||
| Total equity | 6,636,684 | 2,624,502 | ||||
| Total liabilities and equity | $ | 11,118,745 | 4,488,906 | |||
|
| 2022 |
|
| 2021 |
| ||
Assets |
| (unaudited) |
|
|
|
| ||
Real estate assets, at cost |
| $ | 11,567,492 |
|
|
| 11,495,581 |
|
Less: accumulated depreciation |
|
| 2,235,869 |
|
|
| 2,174,963 |
|
Real estate assets, net |
|
| 9,331,623 |
|
|
| 9,320,618 |
|
Investments in real estate partnerships |
|
| 357,998 |
|
|
| 372,591 |
|
Properties held for sale |
|
| 2,354 |
|
|
| 25,574 |
|
Cash, cash equivalents, and restricted cash, including $2,749 and $1,930 of restricted cash at March 31, 2022 and December 31, 2021, respectively |
|
| 178,730 |
|
|
| 95,027 |
|
Tenant and other receivables |
|
| 151,852 |
|
|
| 153,091 |
|
Deferred leasing costs, less accumulated amortization of $118,572 and $117,878 at March 31, 2022 and December 31, 2021, respectively |
|
| 64,954 |
|
|
| 65,741 |
|
Acquired lease intangible assets, less accumulated amortization of $316,632 and $312,186 at March 31, 2022 and December 31, 2021, respectively |
|
| 205,333 |
|
|
| 212,707 |
|
Right of use assets, net |
|
| 279,892 |
|
|
| 280,783 |
|
Other assets |
|
| 267,428 |
|
|
| 266,431 |
|
Total assets |
| $ | 10,840,164 |
|
|
| 10,792,563 |
|
Liabilities and Equity |
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
|
| ||
Notes payable |
| $ | 3,716,717 |
|
|
| 3,718,944 |
|
Accounts payable and other liabilities |
|
| 278,265 |
|
|
| 322,271 |
|
Acquired lease intangible liabilities, less accumulated amortization of $173,281 and $172,293 at March 31, 2022 and December 31, 2021, respectively |
|
| 362,890 |
|
|
| 363,276 |
|
Lease liabilities |
|
| 215,705 |
|
|
| 215,788 |
|
Tenants’ security, escrow deposits and prepaid rent |
|
| 60,895 |
|
|
| 62,352 |
|
Total liabilities |
|
| 4,634,472 |
|
|
| 4,682,631 |
|
Commitments and contingencies |
|
| — |
|
|
| — |
|
Equity: |
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
|
| ||
Common stock, $0.01 par value per share, 220,000,000 shares authorized; 171,372,557 and 171,213,008 shares issued at March 31, 2022 and December 31, 2021, respectively |
|
| 1,714 |
|
|
| 1,712 |
|
Treasury stock at cost, 436,924 and 427,901 shares held at March 31, 2022 and December 31, 2021, respectively |
|
| (23,831 | ) |
|
| (22,758 | ) |
Additional paid-in-capital |
|
| 7,882,764 |
|
|
| 7,883,458 |
|
Accumulated other comprehensive loss |
|
| (1,764 | ) |
|
| (10,227 | ) |
Distributions in excess of net income |
|
| (1,726,556 | ) |
|
| (1,814,814 | ) |
Total stockholders’ equity |
|
| 6,132,327 |
|
|
| 6,037,371 |
|
Noncontrolling interests: |
|
|
|
|
|
| ||
Exchangeable operating partnership units, aggregate redemption value of $54,222 and $56,844 at March 31, 2022 and December 31, 2021, respectively |
|
| 35,876 |
|
|
| 35,447 |
|
Limited partners’ interests in consolidated partnerships |
|
| 37,489 |
|
|
| 37,114 |
|
Total noncontrolling interests |
|
| 73,365 |
|
|
| 72,561 |
|
Total equity |
|
| 6,205,692 |
|
|
| 6,109,932 |
|
Total liabilities and equity |
| $ | 10,840,164 |
|
|
| 10,792,563 |
|
See accompanying notes to consolidated financial statements.
1
REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| Revenues: | ||||||||||||
| Minimum rent | $ | 195,393 | 111,886 | $ | 532,625 | 329,506 | ||||||
| Percentage rent | 1,147 | 495 | 5,509 | 2,651 | ||||||||
| Recoveries from tenants and other income | 59,554 | 34,532 | 162,089 | 103,894 | ||||||||
| Management, transaction, and other fees | 6,047 | 5,855 | 19,353 | 18,759 | ||||||||
| Total revenues | 262,141 | 152,768 | 719,576 | 454,810 | ||||||||
| Operating expenses: | ||||||||||||
| Depreciation and amortization | 91,474 | 40,705 | 243,757 | 119,721 | ||||||||
| Operating and maintenance | 38,020 | 23,373 | 103,888 | 69,767 | ||||||||
| General and administrative | 15,199 | 16,046 | 49,618 | 48,695 | ||||||||
| Real estate taxes | 29,315 | 17,058 | 79,636 | 49,697 | ||||||||
| Other operating expenses (note 2) | 3,195 | 1,046 | 81,621 | 5,795 | ||||||||
| Total operating expenses | 177,203 | 98,228 | 558,520 | 293,675 | ||||||||
| Other expense (income): | ||||||||||||
| Interest expense, net | 34,679 | 21,945 | 97,285 | 70,489 | ||||||||
| Provision for impairment | — | — | — | 1,666 | ||||||||
| Early extinguishment of debt | — | 13,943 | 12,404 | 13,943 | ||||||||
| Net investment (income) loss, including unrealized (gains) losses of ($842) and ($383), and ($1,705) and ($888) for the three and nine months ended September 30, 2017 and 2016, respectively | (971 | ) | (821 | ) | (2,955 | ) | (1,268 | ) | ||||
| Loss on derivative instruments | — | 40,586 | — | 40,586 | ||||||||
| Total other expense (income) | 33,708 | 75,653 | 106,734 | 125,416 | ||||||||
| Income from operations before equity in income of investments in real estate partnerships | 51,230 | (21,113 | ) | 54,322 | 35,719 | |||||||
| Equity in income of investments in real estate partnerships | 12,221 | 22,647 | 33,804 | 46,618 | ||||||||
| Income from operations | 63,451 | 1,534 | 88,126 | 82,337 | ||||||||
| Gain on sale of real estate, net of tax | 131 | 9,580 | 4,913 | 22,997 | ||||||||
| Net income | 63,582 | 11,114 | 93,039 | 105,334 | ||||||||
| Noncontrolling interests: | ||||||||||||
| Exchangeable operating partnership units | (132 | ) | (16 | ) | (217 | ) | (165 | ) | ||||
| Limited partners’ interests in consolidated partnerships | (637 | ) | (527 | ) | (1,884 | ) | (1,380 | ) | ||||
| Income attributable to noncontrolling interests | (769 | ) | (543 | ) | (2,101 | ) | (1,545 | ) | ||||
| Net income attributable to the Company | 62,813 | 10,571 | 90,938 | 103,789 | ||||||||
| Preferred stock dividends and issuance costs | (3,147 | ) | (5,266 | ) | (16,128 | ) | (15,797 | ) | ||||
| Net income attributable to common stockholders | $ | 59,666 | 5,305 | $ | 74,810 | 87,992 | ||||||
| Income per common share - basic | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||
| Income per common share - diluted | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||
|
| Three months ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Revenues: |
|
|
|
|
|
| ||
Lease income |
| $ | 293,645 |
|
|
| 266,357 |
|
Other property income |
|
| 3,104 |
|
|
| 1,953 |
|
Management, transaction, and other fees |
|
| 6,684 |
|
|
| 6,393 |
|
Total revenues |
|
| 303,433 |
|
|
| 274,703 |
|
Operating expenses: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 77,842 |
|
|
| 77,259 |
|
Operating and maintenance |
|
| 46,461 |
|
|
| 45,582 |
|
General and administrative |
|
| 18,792 |
|
|
| 21,287 |
|
Real estate taxes |
|
| 36,869 |
|
|
| 36,166 |
|
Other operating expenses |
|
| 2,173 |
|
|
| 698 |
|
Total operating expenses |
|
| 182,137 |
|
|
| 180,992 |
|
Other expense (income): |
|
|
|
|
|
| ||
Interest expense, net |
|
| 36,738 |
|
|
| 36,936 |
|
Gain on sale of real estate, net of tax |
|
| (101,948 | ) |
|
| (11,698 | ) |
Net investment loss (income) |
|
| 2,494 |
|
|
| (1,486 | ) |
Total other (income) expense |
|
| (62,716 | ) |
|
| 23,752 |
|
Income from operations before equity in income of investments in real estate partnerships |
|
| 184,012 |
|
|
| 69,959 |
|
Equity in income of investments in real estate partnerships |
|
| 12,804 |
|
|
| 11,666 |
|
Net income |
|
| 196,816 |
|
|
| 81,625 |
|
Noncontrolling interests: |
|
|
|
|
|
| ||
Exchangeable operating partnership units |
|
| (863 | ) |
|
| (364 | ) |
Limited partners’ interests in consolidated partnerships |
|
| (725 | ) |
|
| (605 | ) |
Income attributable to noncontrolling interests |
|
| (1,588 | ) |
|
| (969 | ) |
Net income attributable to common stockholders |
| $ | 195,228 |
|
|
| 80,656 |
|
|
|
|
|
|
|
| ||
Income per common share - basic |
| $ | 1.14 |
|
|
| 0.48 |
|
Income per common share - diluted |
| $ | 1.14 |
|
|
| 0.47 |
|
See accompanying notes to consolidated financial statements.
2
REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| Net income | $ | 63,582 | 11,114 | $ | 93,039 | 105,334 | ||||||
| Other comprehensive income: | ||||||||||||
| Effective portion of change in fair value of derivative instruments: | ||||||||||||
| Effective portion of change in fair value of derivative instruments | (39 | ) | 1,294 | (3,911 | ) | (25,338 | ) | |||||
| Reclassification adjustment of derivative instruments included in net income | 2,329 | 43,111 | 8,054 | 48,063 | ||||||||
| Unrealized gain on available-for-sale securities | 8 | 53 | 51 | 90 | ||||||||
| Other comprehensive income | 2,298 | 44,458 | 4,194 | 22,815 | ||||||||
| Comprehensive income | 65,880 | 55,572 | 97,233 | 128,149 | ||||||||
| Less: comprehensive income (loss) attributable to noncontrolling interests: | ||||||||||||
| Net income attributable to noncontrolling interests | 769 | 543 | 2,101 | 1,545 | ||||||||
| Other comprehensive income (loss) attributable to noncontrolling interests | 5 | 158 | (11 | ) | (139 | ) | ||||||
| Comprehensive income attributable to noncontrolling interests | 774 | 701 | 2,090 | 1,406 | ||||||||
| Comprehensive income attributable to the Company | $ | 65,106 | 54,871 | $ | 95,143 | 126,743 | ||||||
|
| Three months ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net income |
| $ | 196,816 |
|
|
| 81,625 |
|
Other comprehensive income (loss): |
|
|
|
|
|
| ||
Effective portion of change in fair value of derivative instruments: |
|
|
|
|
|
| ||
Effective portion of change in fair value of derivative instruments |
|
| 8,968 |
|
|
| 5,810 |
|
Reclassification adjustment of derivative instruments included in net income |
|
| 1,010 |
|
|
| 1,035 |
|
Unrealized loss on available-for-sale debt securities |
|
| (754 | ) |
|
| (285 | ) |
Other comprehensive income |
|
| 9,224 |
|
|
| 6,560 |
|
Comprehensive income |
|
| 206,040 |
|
|
| 88,185 |
|
Less: comprehensive income attributable to noncontrolling interests: |
|
|
|
|
|
| ||
Net income attributable to noncontrolling interests |
|
| 1,588 |
|
|
| 969 |
|
Other comprehensive income attributable to noncontrolling interests |
|
| 761 |
|
|
| 447 |
|
Comprehensive income attributable to noncontrolling interests |
|
| 2,349 |
|
|
| 1,416 |
|
Comprehensive income attributable to the Company |
| $ | 203,691 |
|
|
| 86,769 |
|
See accompanying notes to consolidated financial statements.
3
REGENCY CENTERS CORPORATION Consolidated Statements of Equity For the nine months ended September 30, 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 | — | — | — | — | — | 103,789 | 103,789 | 165 | 1,380 | 1,545 | 105,334 | |||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | 22,954 | — | 22,954 | 33 | (172 | ) | (139 | ) | 22,815 | |||||||||||||||||||||
| Deferred compensation plan, net | — | — | 2,776 | (2,776 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||
| Restricted stock issued, net of amortization | — | 2 | — | 9,965 | — | — | 9,967 | — | — | — | 9,967 | |||||||||||||||||||||||
| Common stock redeemed for taxes withheld for stock based compensation, net | — | — | — | (7,835 | ) | — | — | (7,835 | ) | — | — | — | (7,835 | ) | ||||||||||||||||||||
| Common stock issued under dividend reinvestment plan | — | — | — | 804 | — | — | 804 | — | — | — | 804 | |||||||||||||||||||||||
| Common stock issued, net of issuance costs | — | 71 | — | 549,474 | — | — | 549,545 | — | — | — | 549,545 | |||||||||||||||||||||||
| Contributions from partners | — | — | — | — | — | — | — | — | 8,675 | 8,675 | 8,675 | |||||||||||||||||||||||
| Distributions to partners | — | — | — | (538 | ) | — | — | (538 | ) | — | (5,224 | ) | (5,224 | ) | (5,762 | ) | ||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | (15,797 | ) | (15,797 | ) | — | — | — | (15,797 | ) | ||||||||||||||||||||
| Common stock/unit ($1.50 per share) | — | — | — | — | — | (149,853 | ) | (149,853 | ) | (229 | ) | — | (229 | ) | (150,082 | ) | ||||||||||||||||||
| Balance at September 30, 2016 | $ | 325,000 | 1,045 | (16,882 | ) | 3,291,602 | (35,739 | ) | (997,881 | ) | 2,567,145 | (2,006 | ) | 35,145 | 33,139 | 2,600,284 | ||||||||||||||||||
| Balance at December 31, 2016 | $ | 325,000 | 1,045 | (17,062 | ) | 3,294,923 | (18,346 | ) | (994,259 | ) | 2,591,301 | (1,967 | ) | 35,168 | 33,201 | 2,624,502 | ||||||||||||||||||
| Net income | — | — | — | — | — | 90,938 | 90,938 | 217 | 1,884 | 2,101 | 93,039 | |||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 4,205 | — | 4,205 | 6 | (17 | ) | (11 | ) | 4,194 | |||||||||||||||||||||
| Deferred compensation plan, net | — | — | (986 | ) | 977 | — | — | (9 | ) | — | — | — | (9 | ) | ||||||||||||||||||||
| Restricted stock issued, net of amortization | — | 2 | — | 10,918 | — | — | 10,920 | — | — | — | 10,920 | |||||||||||||||||||||||
| Common stock redeemed for taxes withheld for stock based compensation, net | — | (1 | ) | — | (18,431 | ) | — | — | (18,432 | ) | — | — | — | (18,432 | ) | |||||||||||||||||||
| Common stock issued under dividend reinvestment plan | — | — | — | 908 | — | — | 908 | — | — | — | 908 | |||||||||||||||||||||||
| Common stock issued, net of issuance costs | — | 654 | — | 4,470,759 | — | — | 4,471,413 | — | — | — | 4,471,413 | |||||||||||||||||||||||
| Restricted stock issued upon Equity One merger | — | 1 | — | 7,950 | — | — | 7,951 | — | — | — | 7,951 | |||||||||||||||||||||||
| Redemption of preferred stock | (325,000 | ) | — | — | 11,099 | — | (11,099 | ) | (325,000 | ) | — | — | — | (325,000 | ) | |||||||||||||||||||
| Contributions from partners | — | — | — | — | — | — | — | 13,100 | 367 | 13,467 | 13,467 | |||||||||||||||||||||||
| Distributions to partners | — | — | — | — | — | — | — | — | (7,086 | ) | (7,086 | ) | (7,086 | ) | ||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | (5,029 | ) | (5,029 | ) | — | — | — | (5,029 | ) | ||||||||||||||||||||
| Common stock/unit ($1.57 per share) | — | — | — | — | — | (233,704 | ) | (233,704 | ) | (450 | ) | — | (450 | ) | (234,154 | ) | ||||||||||||||||||
| Balance at September 30, 2017 | $ | — | 1,701 | (18,048 | ) | 7,779,103 | (14,141 | ) | (1,153,153 | ) | 6,595,462 | 10,906 | 30,316 | 41,222 | 6,636,684 | |||||||||||||||||||
REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the three months ended March 31, 2022 and 2021
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncontrolling Interests |
|
|
|
| ||||||||||||||||
|
| Common |
|
| Treasury |
|
| Additional |
|
| Accumulated |
|
| Distributions |
|
| Total |
|
| Exchangeable |
|
| Limited |
|
| Total |
|
| Total |
| ||||||||||
Balance at December 31, 2020 |
| $ | 1,697 |
|
|
| (24,436 | ) |
|
| 7,792,082 |
|
|
| (18,625 | ) |
|
| (1,765,806 | ) |
|
| 5,984,912 |
|
|
| 35,727 |
|
|
| 37,508 |
|
|
| 73,235 |
|
|
| 6,058,147 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 80,656 |
|
|
| 80,656 |
|
|
| 364 |
|
|
| 605 |
|
|
| 969 |
|
|
| 81,625 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Other comprehensive income before reclassification |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5,162 |
|
|
| — |
|
|
| 5,162 |
|
|
| 25 |
|
|
| 338 |
|
|
| 363 |
|
|
| 5,525 |
|
Amounts reclassified from accumulated other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 951 |
|
|
| — |
|
|
| 951 |
|
|
| 4 |
|
|
| 80 |
|
|
| 84 |
|
|
| 1,035 |
|
Deferred compensation plan, net |
|
| — |
|
|
| (339 | ) |
|
| 339 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Restricted stock issued, net of amortization |
|
| 1 |
|
|
| — |
|
|
| 2,478 |
|
|
| — |
|
|
| — |
|
|
| 2,479 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,479 |
|
Common stock repurchased for taxes withheld for stock based compensation, net |
|
| — |
|
|
| — |
|
|
| (3,859 | ) |
|
| — |
|
|
| — |
|
|
| (3,859 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,859 | ) |
Common stock issued under dividend reinvestment plan |
|
| — |
|
|
| — |
|
|
| 376 |
|
|
| — |
|
|
| — |
|
|
| 376 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 376 |
|
Distributions to partners |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (785 | ) |
|
| (785 | ) |
|
| (785 | ) |
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Common stock/unit ($0.595 per share) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (101,046 | ) |
|
| (101,046 | ) |
|
| (453 | ) |
|
| — |
|
|
| (453 | ) |
|
| (101,499 | ) |
Balance at March 31, 2021 |
| $ | 1,698 |
|
|
| (24,775 | ) |
|
| 7,791,416 |
|
|
| (12,512 | ) |
|
| (1,786,196 | ) |
|
| 5,969,631 |
|
|
| 35,667 |
|
|
| 37,746 |
|
|
| 73,413 |
|
|
| 6,043,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance at December 31, 2021 |
| $ | 1,712 |
|
|
| (22,758 | ) |
|
| 7,883,458 |
|
|
| (10,227 | ) |
|
| (1,814,814 | ) |
|
| 6,037,371 |
|
|
| 35,447 |
|
|
| 37,114 |
|
|
| 72,561 |
|
|
| 6,109,932 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 195,228 |
|
|
| 195,228 |
|
|
| 863 |
|
|
| 725 |
|
|
| 1,588 |
|
|
| 196,816 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Other comprehensive income before reclassification |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,537 |
|
|
| — |
|
|
| 7,537 |
|
|
| 37 |
|
|
| 640 |
|
|
| 677 |
|
|
| 8,214 |
|
Amounts reclassified from accumulated other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 926 |
|
|
| — |
|
|
| 926 |
|
|
| 4 |
|
|
| 80 |
|
|
| 84 |
|
|
| 1,010 |
|
Deferred compensation plan, net |
|
| — |
|
|
| (1,073 | ) |
|
| 1,073 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Restricted stock issued, net of amortization |
|
| 2 |
|
|
| — |
|
|
| 4,206 |
|
|
| — |
|
|
| — |
|
|
| 4,208 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,208 |
|
Common stock repurchased for taxes withheld for stock based compensation, net |
|
| — |
|
|
| — |
|
|
| (6,091 | ) |
|
| — |
|
|
| — |
|
|
| (6,091 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6,091 | ) |
Common stock issued under dividend reinvestment plan |
|
| — |
|
|
| — |
|
|
| 118 |
|
|
| — |
|
|
| — |
|
|
| 118 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 118 |
|
Distributions to partners |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,070 | ) |
|
| (1,070 | ) |
|
| (1,070 | ) |
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Common stock/unit ($0.625 per share) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (106,970 | ) |
|
| (106,970 | ) |
|
| (475 | ) |
|
| — |
|
|
| (475 | ) |
|
| (107,445 | ) |
Balance at March 31, 2022 |
| $ | 1,714 |
|
|
| (23,831 | ) |
|
| 7,882,764 |
|
|
| (1,764 | ) |
|
| (1,726,556 | ) |
|
| 6,132,327 |
|
|
| 35,876 |
|
|
| 37,489 |
|
|
| 73,365 |
|
|
| 6,205,692 |
|
See accompanying notes to consolidated financial statements.
4
REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the ninethree months ended September 30, 2017March 31, 2022 and 2016
(in thousands)
(unaudited)
| 2017 | 2016 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 93,039 | 105,334 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 243,757 | 119,721 | ||||
| Amortization of deferred loan cost and debt premium | 7,144 | 7,242 | ||||
| (Accretion) and amortization of above and below market lease intangibles, net | (18,784 | ) | (2,296 | ) | ||
| Stock-based compensation, net of capitalization | 16,836 | 7,554 | ||||
| Equity in income of investments in real estate partnerships | (33,804 | ) | (46,618 | ) | ||
| Gain on sale of real estate, net of tax | (4,913 | ) | (22,997 | ) | ||
| Provision for impairment | — | 1,666 | ||||
| Early extinguishment of debt | 12,404 | 13,943 | ||||
| Distribution of earnings from operations of investments in real estate partnerships | 40,817 | 39,765 | ||||
| Loss on derivative instruments | 51 | — | ||||
| Deferred compensation expense | 2,885 | 1,249 | ||||
| Realized and unrealized (gain) loss on investments | (2,878 | ) | (1,268 | ) | ||
| Changes in assets and liabilities: | ||||||
| Restricted cash | (1,569 | ) | (84 | ) | ||
| Accounts receivable, net | 2,574 | 3,715 | ||||
| Straight-line rent receivables, net | (13,901 | ) | (4,894 | ) | ||
| Deferred leasing costs | (10,294 | ) | (7,841 | ) | ||
| Other assets | 8,075 | (59 | ) | |||
| Accounts payable and other liabilities | 4,908 | 12,607 | ||||
| Tenants’ security, escrow deposits and prepaid rent | (2,490 | ) | (1,406 | ) | ||
| Net cash provided by operating activities | 343,857 | 225,333 | ||||
| Cash flows from investing activities: | ||||||
| Acquisition of operating real estate | (2,109 | ) | (333,220 | ) | ||
| Advance deposits paid on acquisition of operating real estate | (350 | ) | 1,250 | |||
| Acquisition of Equity One, net of cash acquired of $72,534 | (648,763 | ) | — | |||
| Real estate development and capital improvements | (241,834 | ) | (146,773 | ) | ||
| Proceeds from sale of real estate investments | 15,397 | 83,675 | ||||
| Issuance of notes receivable | (3,460 | ) | — | |||
| Investments in real estate partnerships | (12,296 | ) | (13,127 | ) | ||
| Distributions received from investments in real estate partnerships | 36,603 | 52,536 | ||||
| Dividends on investment securities | 200 | 189 | ||||
| Acquisition of securities | (14,011 | ) | (53,290 | ) | ||
| Proceeds from sale of securities | 11,974 | 54,176 | ||||
| Net cash used in investing activities | (858,649 | ) | (354,584 | ) | ||
| Cash flows from financing activities: | ||||||
| Net proceeds from common stock issuance | — | 549,545 | ||||
| Repurchase of common shares in conjunction with equity award plans | (19,251 | ) | (8,013 | ) | ||
| Proceeds from sale of treasury stock | 100 | 957 | ||||
| Redemption of preferred stock and partnership units | (325,000 | ) | — | |||
| Distributions to limited partners in consolidated partnerships, net | (7,031 | ) | (3,126 | ) | ||
| Distributions to exchangeable operating partnership unit holders | (450 | ) | (229 | ) | ||
| Dividends paid to common stockholders | (232,796 | ) | (149,049 | ) | ||
| Dividends paid to preferred stockholders | (5,029 | ) | (15,797 | ) | ||
| Repayment of fixed rate unsecured notes | — | (300,000 | ) | |||
| Proceeds from issuance of fixed rate unsecured notes, net | 953,115 | — | ||||
| Proceeds from unsecured credit facilities | 950,000 | 395,000 | ||||
| Repayment of unsecured credit facilities | (650,000 | ) | (295,000 | ) | ||
| Proceeds from notes payable | 126,999 | 20,223 | ||||
| Repayment of notes payable | (232,839 | ) | (41,584 | ) | ||
| Scheduled principal payments | (7,452 | ) | (4,462 | ) | ||
| Payment of loan costs | (12,868 | ) | (1,954 | ) | ||
| Early redemption costs | (12,419 | ) | (13,214 | ) | ||
| Net cash provided by financing activities | 525,079 | 133,297 | ||||
| Net increase in cash and cash equivalents | 10,287 | 4,046 | ||||
| Cash and cash equivalents at beginning of the period | 13,256 | 36,856 | ||||
| Cash and cash equivalents at end of the period | $ | 23,543 | 40,902 | |||
| 2017 | 2016 | |||||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for interest (net of capitalized interest of $5,778 and $2,622 in 2017 and 2016, respectively) | $ | 73,273 | 54,904 | |||
| Cash received for income tax refunds, net of payments | $ | 670 | — | |||
| Supplemental disclosure of non-cash transactions: | ||||||
| Exchangeable operating partnership units issued for acquisition of real estate | $ | 13,100 | — | |||
| Common stock issued under dividend reinvestment plan | $ | 908 | 804 | |||
| Stock-based compensation capitalized | $ | 2,459 | 2,561 | |||
| Contributions from limited partners in consolidated partnerships, net | $ | 311 | 8,674 | |||
| Common stock issued for dividend reinvestment in trust | $ | 557 | 556 | |||
| Contribution of stock awards into trust | $ | 1,372 | 1,513 | |||
| Distribution of stock held in trust | $ | 677 | 4,096 | |||
| Change in fair value of securities available-for-sale | $ | 51 | 90 | |||
| Equity One Merger: | ||||||
| Notes payable assumed in Equity One merger, at fair value | $ | 757,399 | — | |||
| Common stock exchanged for Equity One shares | $ | (4,471,808 | ) | — | ||
| Deconsolidation of previously consolidated partnership: | ||||||
| Real estate, net | $ | — | 14,075 | |||
| Investments in real estate partnerships | $ | — | (3,355 | ) | ||
| Notes payable | $ | — | (9,415 | ) | ||
| Other assets and liabilities | $ | — | 640 | |||
| Limited partners' interest in consolidated partnerships | $ | — | (2,099 | ) | ||
|
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net income |
| $ | 196,816 |
|
|
| 81,625 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 77,842 |
|
|
| 77,259 |
|
Amortization of deferred loan costs and debt premiums |
|
| 1,379 |
|
|
| 2,167 |
|
(Accretion) and amortization of above and below market lease intangibles, net |
|
| (5,302 | ) |
|
| (5,576 | ) |
Stock-based compensation, net of capitalization |
|
| 4,164 |
|
|
| 2,420 |
|
Equity in income of investments in real estate partnerships |
|
| (12,804 | ) |
|
| (11,666 | ) |
Gain on sale of real estate, net of tax |
|
| (101,948 | ) |
|
| (11,698 | ) |
Distribution of earnings from investments in real estate partnerships |
|
| 16,736 |
|
|
| 16,491 |
|
Settlement of derivative instruments |
|
| — |
|
|
| (2,472 | ) |
Deferred compensation expense |
|
| (2,256 | ) |
|
| 1,139 |
|
Realized and unrealized loss (gain) on investments |
|
| 2,533 |
|
|
| (1,354 | ) |
Changes in assets and liabilities: |
|
|
|
|
|
| ||
Tenant and other receivables |
|
| 3,396 |
|
|
| 15,760 |
|
Deferred leasing costs |
|
| (2,014 | ) |
|
| (1,907 | ) |
Other assets |
|
| (4,724 | ) |
|
| (9,801 | ) |
Accounts payable and other liabilities |
|
| (29,387 | ) |
|
| (14,716 | ) |
Tenants’ security, escrow deposits and prepaid rent |
|
| (1,539 | ) |
|
| 1,691 |
|
Net cash provided by operating activities |
|
| 142,892 |
|
|
| 139,362 |
|
Cash flows from investing activities: |
|
|
|
|
|
| ||
Acquisition of operating real estate |
|
| (30,166 | ) |
|
| 500 |
|
Real estate development and capital improvements |
|
| (53,605 | ) |
|
| (31,378 | ) |
Proceeds from sale of real estate |
|
| 124,924 |
|
|
| 53,859 |
|
Issuance of notes receivable |
|
| — |
|
|
| (20 | ) |
Investments in real estate partnerships |
|
| (7,173 | ) |
|
| (20,223 | ) |
Return of capital from investments in real estate partnerships |
|
| 23,892 |
|
|
| 3,283 |
|
Dividends on investment securities |
|
| 109 |
|
|
| 51 |
|
Acquisition of investment securities |
|
| (5,554 | ) |
|
| (8,136 | ) |
Proceeds from sale of investment securities |
|
| 5,927 |
|
|
| 8,834 |
|
Net provided by investing activities |
|
| 58,354 |
|
|
| 6,770 |
|
Cash flows from financing activities: |
|
|
|
|
|
| ||
Repurchase of common shares in conjunction with equity award plans |
|
| (6,246 | ) |
|
| (3,996 | ) |
Proceeds from sale of treasury stock |
|
| 63 |
|
|
| 96 |
|
Distributions to limited partners in consolidated partnerships, net |
|
| (1,070 | ) |
|
| (785 | ) |
Distributions to exchangeable operating partnership unit holders |
|
| (475 | ) |
|
| (453 | ) |
Dividends paid to common stockholders |
|
| (106,887 | ) |
|
| (100,580 | ) |
Proceeds from unsecured credit facilities |
|
| 40,000 |
|
|
| — |
|
Repayment of unsecured credit facilities |
|
| (40,000 | ) |
|
| (265,000 | ) |
Repayment of notes payable |
|
| — |
|
|
| (3,962 | ) |
Scheduled principal payments |
|
| (2,846 | ) |
|
| (3,114 | ) |
Payment of loan costs |
|
| (82 | ) |
|
| (7,468 | ) |
Net cash used in financing activities |
|
| (117,543 | ) |
|
| (385,262 | ) |
Net increase (decrease) in cash and cash equivalents and restricted cash |
|
| 83,703 |
|
|
| (239,130 | ) |
Cash and cash equivalents and restricted cash at beginning of the period |
|
| 95,027 |
|
|
| 378,450 |
|
Cash and cash equivalents and restricted cash at end of the period |
| $ | 178,730 |
|
|
| 139,320 |
|
See accompanying notes to consolidated financial statements.
5
REGENCY CENTERS L.P.
Consolidated Balance Sheets
For the three months ended March 31, 2022 and December 31, 2016
(in thousands, except unit data)
| 2017 | 2016 | |||||
| Assets | (unaudited) | |||||
| Real estate investments at cost: | ||||||
| Land | $ | 4,578,145 | 1,660,424 | |||
| Buildings and improvements | 5,834,405 | 3,092,197 | ||||
| Properties in development | 433,707 | 180,878 | ||||
| 10,846,257 | 4,933,499 | |||||
| Less: accumulated depreciation | 1,281,510 | 1,124,391 | ||||
| 9,564,747 | 3,809,108 | |||||
| Properties held for sale | 27,802 | — | ||||
| Investments in real estate partnerships | 380,930 | 296,699 | ||||
| Net real estate investments | 9,973,479 | 4,105,807 | ||||
| Cash and cash equivalents | 23,543 | 13,256 | ||||
| Restricted cash | 7,098 | 4,623 | ||||
| Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $12,279 and $9,021 at September 30, 2017 and December 31, 2016, respectively | 143,153 | 111,722 | ||||
| Deferred leasing costs, less accumulated amortization of $91,213 and $83,529 at September 30, 2017 and December 31, 2016, respectively | 71,826 | 69,000 | ||||
| Acquired lease intangible assets, less accumulated amortization of $123,662 and $56,695 at September 30, 2017 and December 31, 2016, respectively | 508,868 | 118,831 | ||||
| Trading securities held in trust | — | — | ||||
| Other assets | 390,778 | 65,667 | ||||
| Total assets | $ | 11,118,745 | 4,488,906 | |||
| Liabilities and Capital | ||||||
| Liabilities: | ||||||
| Notes payable | $ | 2,943,986 | 1,363,925 | |||
| Unsecured credit facilities | 578,144 | 278,495 | ||||
| Accounts payable and other liabilities | 276,363 | 138,936 | ||||
| Acquired lease intangible liabilities, less accumulated amortization of $49,968 and $23,538 at September 30, 2017 and December 31, 2016, respectively | 637,217 | 54,180 | ||||
| Tenants’ security, escrow deposits and prepaid rent | 46,351 | 28,868 | ||||
| Total liabilities | 4,482,061 | 1,864,404 | ||||
| Commitments and contingencies | — | — | ||||
| Capital: | ||||||
| Partners’ capital: | ||||||
| Preferred units of general partner, $0.01 par value per unit, 13,000,000 units issued and outstanding at December 31, 2016, liquidation preference of $25 per unit | — | 325,000 | ||||
| General partner; 170,109,043 and 104,497,286 units outstanding at September 30, 2017 and December 31, 2016, respectively | 6,609,603 | 2,284,647 | ||||
| Limited partners; 349,902 and 154,170 units outstanding at September 30, 2017 and December 31, 2016, respectively | 10,906 | (1,967 | ) | |||
| Accumulated other comprehensive loss | (14,141 | ) | (18,346 | ) | ||
| Total partners’ capital | 6,606,368 | 2,589,334 | ||||
| Noncontrolling interests: | ||||||
| Limited partners’ interests in consolidated partnerships | 30,316 | 35,168 | ||||
| Total noncontrolling interests | 30,316 | 35,168 | ||||
| Total capital | 6,636,684 | 2,624,502 | ||||
| Total liabilities and capital | $ | 11,118,745 | 4,488,906 | |||
(unaudited)
|
| 2022 |
|
| 2021 |
| ||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
| ||
Cash paid for interest (net of capitalized interest of $796 and $849 in 2022 and 2021, respectively) |
| $ | 44,317 |
|
|
| 44,276 |
|
Cash paid (refunded) for income taxes |
| $ | 165 |
|
|
| (101 | ) |
Supplemental disclosure of non-cash transactions: |
|
|
|
|
|
| ||
Common stock and exchangeable operating partnership dividends declared |
| $ | 107,445 |
|
|
| 101,500 |
|
Change in accrued capital expenditures |
| $ | 11,603 |
|
|
| 874 |
|
Common stock issued under dividend reinvestment plan |
| $ | 118 |
|
|
| 376 |
|
Stock-based compensation capitalized |
| $ | 199 |
|
|
| 196 |
|
Common stock issued for dividend reinvestment in trust |
| $ | 267 |
|
|
| 274 |
|
Contribution of stock awards into trust |
| $ | 1,177 |
|
|
| 571 |
|
Distribution of stock held in trust |
| $ | 329 |
|
|
| 415 |
|
Change in fair value of securities |
| $ | 754 |
|
|
| 361 |
|
See accompanying notes to consolidated financial statements.
6
REGENCY CENTERS, L.P.
Consolidated Statements of Operations
March 31, 2022andDecember 31, 2021
(in thousands, except per unit data)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| Revenues: | ||||||||||||
| Minimum rent | $ | 195,393 | 111,886 | $ | 532,625 | 329,506 | ||||||
| Percentage rent | 1,147 | 495 | 5,509 | 2,651 | ||||||||
| Recoveries from tenants and other income | 59,554 | 34,532 | 162,089 | 103,894 | ||||||||
| Management, transaction, and other fees | 6,047 | 5,855 | 19,353 | 18,759 | ||||||||
| Total revenues | 262,141 | 152,768 | 719,576 | 454,810 | ||||||||
| Operating expenses: | ||||||||||||
| Depreciation and amortization | 91,474 | 40,705 | 243,757 | 119,721 | ||||||||
| Operating and maintenance | 38,020 | 23,373 | 103,888 | 69,767 | ||||||||
| General and administrative | 15,199 | 16,046 | 49,618 | 48,695 | ||||||||
| Real estate taxes | 29,315 | 17,058 | 79,636 | 49,697 | ||||||||
| Other operating expenses (note 2) | 3,195 | 1,046 | 81,621 | 5,795 | ||||||||
| Total operating expenses | 177,203 | 98,228 | 558,520 | 293,675 | ||||||||
| Other expense (income): | ||||||||||||
| Interest expense, net | 34,679 | 21,945 | 97,285 | 70,489 | ||||||||
| Provision for impairment | — | — | — | 1,666 | ||||||||
| Early extinguishment of debt | — | 13,943 | 12,404 | 13,943 | ||||||||
| Net investment (income) loss, including unrealized (gains) losses of ($842) and ($383), and ($1,705) and ($888) for the three and nine months ended September 30, 2017 and 2016, respectively | (971 | ) | (821 | ) | (2,955 | ) | (1,268 | ) | ||||
| Loss on derivative instruments | — | 40,586 | — | 40,586 | ||||||||
| Total other expense (income) | 33,708 | 75,653 | 106,734 | 125,416 | ||||||||
| Income from operations before equity in income of investments in real estate partnerships | 51,230 | (21,113 | ) | 54,322 | 35,719 | |||||||
| Equity in income of investments in real estate partnerships | 12,221 | 22,647 | 33,804 | 46,618 | ||||||||
| Income from operations | 63,451 | 1,534 | 88,126 | 82,337 | ||||||||
| Gain on sale of real estate, net of tax | 131 | 9,580 | 4,913 | 22,997 | ||||||||
| Net income | 63,582 | 11,114 | 93,039 | 105,334 | ||||||||
| Limited partners’ interests in consolidated partnerships | (637 | ) | (527 | ) | (1,884 | ) | (1,380 | ) | ||||
| Net income attributable to the Partnership | 62,945 | 10,587 | 91,155 | 103,954 | ||||||||
| Preferred unit distributions and issuance costs | (3,147 | ) | (5,266 | ) | (16,128 | ) | (15,797 | ) | ||||
| Net income attributable to common unit holders | $ | 59,798 | 5,321 | $ | 75,027 | 88,157 | ||||||
| Income per common unit - basic | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||
| Income per common unit - diluted | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||
|
| 2022 |
|
| 2021 |
| ||
Assets |
| (unaudited) |
|
|
|
| ||
Real estate assets, at cost |
| $ | 11,567,492 |
|
|
| 11,495,581 |
|
Less: accumulated depreciation |
|
| 2,235,869 |
|
|
| 2,174,963 |
|
Real estate assets, net |
|
| 9,331,623 |
|
|
| 9,320,618 |
|
Investments in real estate partnerships |
|
| 357,998 |
|
|
| 372,591 |
|
Properties held for sale |
|
| 2,354 |
|
|
| 25,574 |
|
Cash, cash equivalents, and restricted cash, including $2,749 and $1,930 of restricted cash at March 31, 2022 and December 31, 2021, respectively |
|
| 178,730 |
|
|
| 95,027 |
|
Tenant and other receivables |
|
| 151,852 |
|
|
| 153,091 |
|
Deferred leasing costs, less accumulated amortization of $118,572 and $117,878 at March 31, 2022 and December 31, 2021, respectively |
|
| 64,954 |
|
|
| 65,741 |
|
Acquired lease intangible assets, less accumulated amortization of $316,632 and $312,186 at March 31, 2022 and December 31, 2021, respectively |
|
| 205,333 |
|
|
| 212,707 |
|
Right of use assets, net |
|
| 279,892 |
|
|
| 280,783 |
|
Other assets |
|
| 267,428 |
|
|
| 266,431 |
|
Total assets |
| $ | 10,840,164 |
|
|
| 10,792,563 |
|
Liabilities and Capital |
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
|
| ||
Notes payable |
| $ | 3,716,717 |
|
|
| 3,718,944 |
|
Accounts payable and other liabilities |
|
| 278,265 |
|
|
| 322,271 |
|
Acquired lease intangible liabilities, less accumulated amortization of $173,281 and $172,293 at March 31, 2022 and December 31, 2021, respectively |
|
| 362,890 |
|
|
| 363,276 |
|
Lease liabilities |
|
| 215,705 |
|
|
| 215,788 |
|
Tenants’ security, escrow deposits and prepaid rent |
|
| 60,895 |
|
|
| 62,352 |
|
Total liabilities |
|
| 4,634,472 |
|
|
| 4,682,631 |
|
Commitments and contingencies |
|
| — |
|
|
| — |
|
Capital: |
|
|
|
|
|
| ||
Partners’ capital: |
|
|
|
|
|
| ||
General partner; 171,372,557 and 171,213,008 units outstanding at March 31, 2022 and December 31, 2021, respectively |
|
| 6,134,091 |
|
|
| 6,047,598 |
|
Limited partners; 760,046 units outstanding at March 31, 2022 and December 31, 2021 |
|
| 35,876 |
|
|
| 35,447 |
|
Accumulated other comprehensive (loss) |
|
| (1,764 | ) |
|
| (10,227 | ) |
Total partners’ capital |
|
| 6,168,203 |
|
|
| 6,072,818 |
|
Noncontrolling interest: Limited partners’ interests in consolidated partnerships |
|
| 37,489 |
|
|
| 37,114 |
|
Total capital |
|
| 6,205,692 |
|
|
| 6,109,932 |
|
Total liabilities and capital |
| $ | 10,840,164 |
|
|
| 10,792,563 |
|
See accompanying notes to consolidated financial statements.
7
REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| Net income | $ | 63,582 | 11,114 | $ | 93,039 | 105,334 | ||||||
| Other comprehensive income: | ||||||||||||
| Effective portion of change in fair value of derivative instruments: | ||||||||||||
| Effective portion of change in fair value of derivative instruments | (39 | ) | 1,294 | (3,911 | ) | (25,338 | ) | |||||
| Reclassification adjustment of derivative instruments included in net income | 2,329 | 43,111 | 8,054 | 48,063 | ||||||||
| Unrealized gain on available-for-sale securities | 8 | 53 | 51 | 90 | ||||||||
| Other comprehensive income | 2,298 | 44,458 | 4,194 | 22,815 | ||||||||
| Comprehensive income | 65,880 | 55,572 | 97,233 | 128,149 | ||||||||
| Less: comprehensive income (loss) attributable to noncontrolling interests: | ||||||||||||
| Net income attributable to noncontrolling interests | 637 | 527 | 1,884 | 1,380 | ||||||||
| Other comprehensive income (loss) attributable to noncontrolling interests | — | 91 | (17 | ) | (172 | ) | ||||||
| Comprehensive income attributable to noncontrolling interests | 637 | 618 | 1,867 | 1,208 | ||||||||
| Comprehensive income attributable to the Partnership | $ | 65,243 | 54,954 | $ | 95,366 | 126,941 | ||||||
|
| Three months ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Revenues: |
|
|
|
|
|
| ||
Lease income |
| $ | 293,645 |
|
|
| 266,357 |
|
Other property income |
|
| 3,104 |
|
|
| 1,953 |
|
Management, transaction, and other fees |
|
| 6,684 |
|
|
| 6,393 |
|
Total revenues |
|
| 303,433 |
|
|
| 274,703 |
|
Operating expenses: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 77,842 |
|
|
| 77,259 |
|
Operating and maintenance |
|
| 46,461 |
|
|
| 45,582 |
|
General and administrative |
|
| 18,792 |
|
|
| 21,287 |
|
Real estate taxes |
|
| 36,869 |
|
|
| 36,166 |
|
Other operating expenses |
|
| 2,173 |
|
|
| 698 |
|
Total operating expenses |
|
| 182,137 |
|
|
| 180,992 |
|
Other expense (income): |
|
|
|
|
|
| ||
Interest expense, net |
|
| 36,738 |
|
|
| 36,936 |
|
Gain on sale of real estate, net of tax |
|
| (101,948 | ) |
|
| (11,698 | ) |
Net investment loss (income) |
|
| 2,494 |
|
|
| (1,486 | ) |
Total other (income) expense |
|
| (62,716 | ) |
|
| 23,752 |
|
Income from operations before equity in income of investments in real estate partnerships |
|
| 184,012 |
|
|
| 69,959 |
|
Equity in income of investments in real estate partnerships |
|
| 12,804 |
|
|
| 11,666 |
|
Net income |
|
| 196,816 |
|
|
| 81,625 |
|
Limited partners’ interests in consolidated partnerships |
|
| (725 | ) |
|
| (605 | ) |
Net income attributable to common unit holders |
| $ | 196,091 |
|
|
| 81,020 |
|
|
|
|
|
|
|
| ||
Income per common share - basic |
| $ | 1.14 |
|
|
| 0.48 |
|
Income per common share - diluted |
| $ | 1.14 |
|
|
| 0.47 |
|
See accompanying notes to consolidated financial statements.
8
REGENCY CENTERS, L.P. Consolidated Statements of Capital For the nine months ended September 30, 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 | 103,789 | 165 | — | 103,954 | 1,380 | 105,334 | ||||||||||||
| Other comprehensive loss | — | 33 | 22,954 | 22,987 | (172 | ) | 22,815 | |||||||||||
| Contributions from partners | — | — | — | — | 8,675 | 8,675 | ||||||||||||
| Distributions to partners | (150,391 | ) | (229 | ) | — | (150,620 | ) | (5,224 | ) | (155,844 | ) | |||||||
| Preferred unit distributions | (15,797 | ) | — | — | (15,797 | ) | — | (15,797 | ) | |||||||||
| Restricted units issued as a result of amortization of restricted stock issued by Parent Company | 9,967 | — | — | 9,967 | — | 9,967 | ||||||||||||
| Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances | 542,514 | — | — | 542,514 | — | 542,514 | ||||||||||||
| Balance at September 30, 2016 | 2,602,884 | (2,006 | ) | (35,739 | ) | 2,565,139 | 35,145 | 2,600,284 | ||||||||||
| Balance at December 31, 2016 | 2,609,647 | (1,967 | ) | (18,346 | ) | 2,589,334 | 35,168 | 2,624,502 | ||||||||||
| Net income | 90,938 | 217 | — | 91,155 | 1,884 | 93,039 | ||||||||||||
| Other comprehensive income | — | 6 | 4,205 | 4,211 | (17 | ) | 4,194 | |||||||||||
| Deferred compensation plan, net | (9 | ) | — | — | (9 | ) | — | (9 | ) | |||||||||
| Contributions from partners | — | 13,100 | — | 13,100 | 367 | 13,467 | ||||||||||||
| Distributions to partners | (233,704 | ) | (450 | ) | — | (234,154 | ) | (7,086 | ) | (241,240 | ) | |||||||
| Preferred unit distributions | (5,029 | ) | — | — | (5,029 | ) | — | (5,029 | ) | |||||||||
| Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization | 10,920 | — | — | 10,920 | — | 10,920 | ||||||||||||
| Preferred stock redemptions | (325,000 | ) | — | — | (325,000 | ) | — | (325,000 | ) | |||||||||
| Common units issued as a result of common stock issued by Parent Company, net of repurchases | 4,453,889 | — | — | 4,453,889 | — | 4,453,889 | ||||||||||||
| Restricted units issued as a result of restricted stock issued by Parent Company upon Equity One merger | 7,951 | — | — | 7,951 | — | 7,951 | ||||||||||||
| Balance at September 30, 2017 | $ | 6,609,603 | 10,906 | (14,141 | ) | 6,606,368 | 30,316 | 6,636,684 | ||||||||||
REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
|
| Three months ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net income |
| $ | 196,816 |
|
|
| 81,625 |
|
Other comprehensive income (loss): |
|
|
|
|
|
| ||
Effective portion of change in fair value of derivative instruments: |
|
|
|
|
|
| ||
Effective portion of change in fair value of derivative instruments |
|
| 8,968 |
|
|
| 5,810 |
|
Reclassification adjustment of derivative instruments included in net income |
|
| 1,010 |
|
|
| 1,035 |
|
Unrealized loss on available-for-sale debt securities |
|
| (754 | ) |
|
| (285 | ) |
Other comprehensive income |
|
| 9,224 |
|
|
| 6,560 |
|
Comprehensive income |
|
| 206,040 |
|
|
| 88,185 |
|
Less: comprehensive income attributable to noncontrolling interests: |
|
|
|
|
|
| ||
Net income attributable to noncontrolling interests |
|
| 725 |
|
|
| 605 |
|
Other comprehensive income attributable to noncontrolling interests |
|
| 720 |
|
|
| 418 |
|
Comprehensive income attributable to noncontrolling interests |
|
| 1,445 |
|
|
| 1,023 |
|
Comprehensive income attributable to the Partnership |
| $ | 204,595 |
|
|
| 87,162 |
|
See accompanying notes to consolidated financial statements.
9
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the ninethree months ended September 30, 2017March 31, 2022 and 2016
(in thousands)
(unaudited)
| 2017 | 2016 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 93,039 | 105,334 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 243,757 | 119,721 | ||||
| Amortization of deferred loan cost and debt premium | 7,144 | 7,242 | ||||
| (Accretion) and amortization of above and below market lease intangibles, net | (18,784 | ) | (2,296 | ) | ||
| Stock-based compensation, net of capitalization | 16,836 | 7,554 | ||||
| Equity in income of investments in real estate partnerships | (33,804 | ) | (46,618 | ) | ||
| Gain on sale of real estate, net of tax | (4,913 | ) | (22,997 | ) | ||
| Provision for impairment | — | 1,666 | ||||
| Early extinguishment of debt | 12,404 | 13,943 | ||||
| Distribution of earnings from operations of investments in real estate partnerships | 40,817 | 39,765 | ||||
| Loss on derivative instruments | 51 | — | ||||
| Deferred compensation expense | 2,885 | 1,249 | ||||
| Realized and unrealized (gain) loss on investments | (2,878 | ) | (1,268 | ) | ||
| Changes in assets and liabilities: | ||||||
| Restricted cash | (1,569 | ) | (84 | ) | ||
| Accounts receivable, net | 2,574 | 3,715 | ||||
| Straight-line rent receivables, net | (13,901 | ) | (4,894 | ) | ||
| Deferred leasing costs | (10,294 | ) | (7,841 | ) | ||
| Other assets | 8,075 | (59 | ) | |||
| Accounts payable and other liabilities | 4,908 | 12,607 | ||||
| Tenants’ security, escrow deposits and prepaid rent | (2,490 | ) | (1,406 | ) | ||
| Net cash provided by operating activities | 343,857 | 225,333 | ||||
| Cash flows from investing activities: | ||||||
| Acquisition of operating real estate | (2,109 | ) | (333,220 | ) | ||
| Advance deposits paid on acquisition of operating real estate | (350 | ) | 1,250 | |||
| Acquisition of Equity One, net of cash acquired of $72,534 | (648,763 | ) | — | |||
| Real estate development and capital improvements | (241,834 | ) | (146,773 | ) | ||
| Proceeds from sale of real estate investments | 15,397 | 83,675 | ||||
| Issuance of notes receivable | (3,460 | ) | — | |||
| Investments in real estate partnerships | (12,296 | ) | (13,127 | ) | ||
| Distributions received from investments in real estate partnerships | 36,603 | 52,536 | ||||
| Dividends on investment securities | 200 | 189 | ||||
| Acquisition of securities | (14,011 | ) | (53,290 | ) | ||
| Proceeds from sale of securities | 11,974 | 54,176 | ||||
| Net cash used in investing activities | (858,649 | ) | (354,584 | ) | ||
| Cash flows from financing activities: | ||||||
| Net proceeds from common units issued as a result of common stock issued by Parent Company | — | 549,545 | ||||
| Repurchase of common shares in conjunction with equity award plans | (19,251 | ) | (8,013 | ) | ||
| Proceeds from sale of treasury stock | 100 | 957 | ||||
| Redemption of preferred partnership units | (325,000 | ) | — | |||
| Distributions (to) from limited partners in consolidated partnerships, net | (7,031 | ) | (3,126 | ) | ||
| Distributions to partners | (233,246 | ) | (149,278 | ) | ||
| Distributions to preferred unit holders | (5,029 | ) | (15,797 | ) | ||
| Repayment of fixed rate unsecured notes | — | (300,000 | ) | |||
| Proceeds from issuance of fixed rate unsecured notes, net | 953,115 | — | ||||
| Proceeds from unsecured credit facilities | 950,000 | 395,000 | ||||
| Repayment of unsecured credit facilities | (650,000 | ) | (295,000 | ) | ||
| Proceeds from notes payable | 126,999 | 20,223 | ||||
| Repayment of notes payable | (232,839 | ) | (41,584 | ) | ||
| Scheduled principal payments | (7,452 | ) | (4,462 | ) | ||
| Payment of loan costs | (12,868 | ) | (1,954 | ) | ||
| Early redemption costs | (12,419 | ) | (13,214 | ) | ||
| Net cash provided by financing activities | 525,079 | 133,297 | ||||
| Net increase in cash and cash equivalents | 10,287 | 4,046 | ||||
| Cash and cash equivalents at beginning of the period | 13,256 | 36,856 | ||||
| Cash and cash equivalents at end of the period | $ | 23,543 | 40,902 | |||
| 2017 | 2016 | |||||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for interest (net of capitalized interest of $5,778 and $2,622 in 2017 and 2016, respectively) | $ | 73,273 | 54,904 | |||
| Cash received for income tax refunds, net of payments | $ | 670 | — | |||
| Supplemental disclosure of non-cash transactions: | ||||||
| Limited partner units issued in exchange for acquisition of real estate | $ | 13,100 | — | |||
| Common stock issued by Parent Company for dividend reinvestment plan | $ | 908 | 804 | |||
| Stock-based compensation capitalized | $ | 2,459 | 2,561 | |||
| Contributions from limited partners in consolidated partnerships, net | $ | 311 | 8,674 | |||
| Common stock issued for dividend reinvestment in trust | $ | 557 | 556 | |||
| Contribution of stock awards into trust | $ | 1,372 | 1,513 | |||
| Distribution of stock held in trust | $ | 677 | 4,096 | |||
| Change in fair value of securities available-for-sale | $ | 51 | 90 | |||
| Equity One Merger: | ||||||
| Notes payable assumed in Equity One merger, at fair value | $ | 757,399 | — | |||
| General partner units issued to Parent Company for common stock exchanged for Equity One shares | $ | (4,471,808 | ) | — | ||
| Deconsolidation of previously consolidated partnership: | ||||||
| Real estate, net | $ | — | 14,075 | |||
| Investments in real estate partnerships | $ | — | (3,355 | ) | ||
| Notes payable | $ | — | (9,415 | ) | ||
| Other assets and liabilities | $ | — | 640 | |||
| Limited partners' interest in consolidated partnerships | $ | — | (2,099 | ) | ||
|
| General Partner Preferred |
|
| Limited |
|
| Accumulated |
|
| Total |
|
| Noncontrolling Interests in |
|
| Total |
| ||||||
Balance at December 31, 2020 |
| $ | 6,003,537 |
|
|
| 35,727 |
|
|
| (18,625 | ) |
|
| 6,020,639 |
|
|
| 37,508 |
|
|
| 6,058,147 |
|
Net income |
|
| 80,656 |
|
|
| 364 |
|
|
| — |
|
|
| 81,020 |
|
|
| 605 |
|
|
| 81,625 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other comprehensive income before reclassification |
|
| — |
|
|
| 25 |
|
|
| 5,162 |
|
|
| 5,187 |
|
|
| 338 |
|
|
| 5,525 |
|
Amounts reclassified from accumulated other comprehensive loss |
|
| — |
|
|
| 4 |
|
|
| 951 |
|
|
| 955 |
|
|
| 80 |
|
|
| 1,035 |
|
Distributions to partners |
|
| (101,046 | ) |
|
| (453 | ) |
|
| — |
|
|
| (101,499 | ) |
|
| (785 | ) |
|
| (102,284 | ) |
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization |
|
| 2,479 |
|
|
| — |
|
|
| — |
|
|
| 2,479 |
|
|
| — |
|
|
| 2,479 |
|
Common units repurchased as a result of common stock repurchased by Parent Company, net of issuances |
|
| (3,483 | ) |
|
| — |
|
|
| — |
|
|
| (3,483 | ) |
|
| — |
|
|
| (3,483 | ) |
Balance at March 31, 2021 |
| $ | 5,982,143 |
|
|
| 35,667 |
|
|
| (12,512 | ) |
|
| 6,005,298 |
|
|
| 37,746 |
|
|
| 6,043,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at December 31, 2021 |
| $ | 6,047,598 |
|
|
| 35,447 |
|
|
| (10,227 | ) |
|
| 6,072,818 |
|
|
| 37,114 |
|
|
| 6,109,932 |
|
Net income |
|
| 195,228 |
|
|
| 863 |
|
|
| — |
|
|
| 196,091 |
|
|
| 725 |
|
|
| 196,816 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other comprehensive income before reclassification |
|
| — |
|
|
| 37 |
|
|
| 7,537 |
|
|
| 7,574 |
|
|
| 640 |
|
|
| 8,214 |
|
Amounts reclassified from accumulated other comprehensive loss |
|
| — |
|
|
| 4 |
|
|
| 926 |
|
|
| 930 |
|
|
| 80 |
|
|
| 1,010 |
|
Distributions to partners |
|
| (106,970 | ) |
|
| (475 | ) |
|
| — |
|
|
| (107,445 | ) |
|
| (1,070 | ) |
|
| (108,515 | ) |
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization |
|
| 4,208 |
|
|
| — |
|
|
| — |
|
|
| 4,208 |
|
|
| — |
|
|
| 4,208 |
|
Common units repurchased as a result of common stock repurchased by Parent Company, net of issuances |
|
| (5,973 | ) |
|
| — |
|
|
| — |
|
|
| (5,973 | ) |
|
| — |
|
|
| (5,973 | ) |
Balance at March 31, 2022 |
| $ | 6,134,091 |
|
|
| 35,876 |
|
|
| (1,764 | ) |
|
| 6,168,203 |
|
|
| 37,489 |
|
|
| 6,205,692 |
|
See accompanying notes to consolidated financial statements.
10
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2022 and 2021
(in thousands)
(unaudited)
|
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net income |
| $ | 196,816 |
|
|
| 81,625 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 77,842 |
|
|
| 77,259 |
|
Amortization of deferred loan costs and debt premiums |
|
| 1,379 |
|
|
| 2,167 |
|
(Accretion) and amortization of above and below market lease intangibles, net |
|
| (5,302 | ) |
|
| (5,576 | ) |
Stock-based compensation, net of capitalization |
|
| 4,164 |
|
|
| 2,420 |
|
Equity in income of investments in real estate partnerships |
|
| (12,804 | ) |
|
| (11,666 | ) |
Gain on sale of real estate, net of tax |
|
| (101,948 | ) |
|
| (11,698 | ) |
Distribution of earnings from investments in real estate partnerships |
|
| 16,736 |
|
|
| 16,491 |
|
Settlement of derivative instruments |
|
| — |
|
|
| (2,472 | ) |
Deferred compensation expense |
|
| (2,256 | ) |
|
| 1,139 |
|
Realized and unrealized loss (gain) on investments |
|
| 2,533 |
|
|
| (1,354 | ) |
Changes in assets and liabilities: |
|
|
|
|
|
| ||
Tenant and other receivables |
|
| 3,396 |
|
|
| 15,760 |
|
Deferred leasing costs |
|
| (2,014 | ) |
|
| (1,907 | ) |
Other assets |
|
| (4,724 | ) |
|
| (9,801 | ) |
Accounts payable and other liabilities |
|
| (29,387 | ) |
|
| (14,716 | ) |
Tenants’ security, escrow deposits and prepaid rent |
|
| (1,539 | ) |
|
| 1,691 |
|
Net cash provided by operating activities |
|
| 142,892 |
|
|
| 139,362 |
|
Cash flows from investing activities: |
|
|
|
|
|
| ||
Acquisition of operating real estate |
|
| (30,166 | ) |
|
| 500 |
|
Real estate development and capital improvements |
|
| (53,605 | ) |
|
| (31,378 | ) |
Proceeds from sale of real estate |
|
| 124,924 |
|
|
| 53,859 |
|
Issuance of notes receivable |
|
| — |
|
|
| (20 | ) |
Investments in real estate partnerships |
|
| (7,173 | ) |
|
| (20,223 | ) |
Return of capital from investments in real estate partnerships |
|
| 23,892 |
|
|
| 3,283 |
|
Dividends on investment securities |
|
| 109 |
|
|
| 51 |
|
Acquisition of investment securities |
|
| (5,554 | ) |
|
| (8,136 | ) |
Proceeds from sale of investment securities |
|
| 5,927 |
|
|
| 8,834 |
|
Net provided by investing activities |
|
| 58,354 |
|
|
| 6,770 |
|
Cash flows from financing activities: |
|
|
|
|
|
| ||
Repurchase of common shares in conjunction with equity award plans |
|
| (6,246 | ) |
|
| (3,996 | ) |
Proceeds from sale of treasury stock |
|
| 63 |
|
|
| 96 |
|
Distributions to limited partners in consolidated partnerships, net |
|
| (1,070 | ) |
|
| (785 | ) |
Distributions to partners |
|
| (107,362 | ) |
|
| (101,033 | ) |
Proceeds from unsecured credit facilities |
|
| 40,000 |
|
|
| — |
|
Repayment of unsecured credit facilities |
|
| (40,000 | ) |
|
| (265,000 | ) |
Repayment of notes payable |
|
| — |
|
|
| (3,962 | ) |
Scheduled principal payments |
|
| (2,846 | ) |
|
| (3,114 | ) |
Payment of loan costs |
|
| (82 | ) |
|
| (7,468 | ) |
Net cash used in financing activities |
|
| (117,543 | ) |
|
| (385,262 | ) |
Net increase (decrease) in cash and cash equivalents and restricted cash |
|
| 83,703 |
|
|
| (239,130 | ) |
Cash and cash equivalents and restricted cash at beginning of the period |
|
| 95,027 |
|
|
| 378,450 |
|
Cash and cash equivalents and restricted cash at end of the period |
| $ | 178,730 |
|
|
| 139,320 |
|
See accompanying notes to consolidated financial statements.
11
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2022 and 2021
(in thousands)
(unaudited)
|
| 2022 |
|
| 2021 |
| ||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
| ||
Cash paid for interest (net of capitalized interest of $796 and $849 in 2022 and 2021, respectively) |
| $ | 44,317 |
|
|
| 44,276 |
|
Cash paid (refunded) for income taxes |
| $ | 165 |
|
|
| (101 | ) |
Supplemental disclosure of non-cash transactions: |
|
|
|
|
|
| ||
Common stock and exchangeable operating partnership dividends declared |
| $ | 107,445 |
|
|
| 101,500 |
|
Change in accrued capital expenditures |
| $ | 11,603 |
|
|
| 874 |
|
Common stock issued by Parent Company for dividend reinvestment plan |
| $ | 118 |
|
|
| 376 |
|
Stock-based compensation capitalized |
| $ | 199 |
|
|
| 196 |
|
Common stock issued for dividend reinvestment in trust |
| $ | 267 |
|
|
| 274 |
|
Contribution of stock awards into trust |
| $ | 1,177 |
|
|
| 571 |
|
Distribution of stock held in trust |
| $ | 329 |
|
|
| 415 |
|
Change in fair value of securities |
| $ | 754 |
|
|
| 361 |
|
See accompanying notes to consolidated financial statements.
12
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
1. | Organization and Significant Accounting Policies |
General
Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the general partner of Regency Centers, L.P. (the “Operating Partnership”). The Parent Company primarily engages in the ownership, management, leasing, acquisition, and development and redevelopment of retail shopping centers through the Operating Partnership. The Parent CompanyPartnership, and has no other assets other than through its investment in the Operating Partnership, and its only liabilities are the$200 million of unsecured private placement notes, assumed from the merger with Equity One, Inc. ("Equity One"), which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership.
As of September 30, 2017,March 31, 2022, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 313 retail shopping centers303 properties and held partial interests in an additional 114 retail shopping centers103 properties through unconsolidated investmentsInvestments in real estate partnerships (also referred to as "joint ventures"“joint ventures” or "investment partnerships"“investment partnerships”).
The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. These adjustments are considered to be of a normal recurring nature.
Risks and Uncertainties
The success of the Company's tenants in operating their businesses and their ability to pay rent continue to be significantly influenced by many challenges including the impact of inflation, labor shortages, and supply chain constraints on their cost of doing business. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the United States. The policies utilized to address these issues, including raising interest rates, could result in adverse impacts on the U.S. economy, including a slowing of growth or potentially a recession, thereby impacting tenants' businesses and/or decreasing future demand for space in shopping centers. The potential impact of current economic challenges on the Company’s financial condition, results of operations, and cash flows is subject to change and continues to depend on the extent and duration of these risks and uncertainties.
Consolidation
The Company consolidates properties that are wholly ownedwholly-owned and properties where it owns less than 100%, but which it controls.has control over the activities most important to the overall success of the partnership. Control is determined using an evaluation based on accounting standards related to the consolidation of Variable Interest Entities (“VIEs”) and 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 September 30, 2017,March 31, 2022, the Parent Company owned approximately 99.8%99.6% of the outstanding common Partnership Units of the Operating Partnership, with the remaining limited common Partnership Units held by third parties (“Exchangeable operating partnership units” or “EOP units”). Each EOP unit is exchangeable for cash or one share of common stock of the Parent Company, at the discretion of the Parent Company, and the unit holder cannot require redemption in cash or other assets. The Parent Company has evaluated the conditions as specified under Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity as it relates to exchangeable operating partnership units outstanding and concluded that it has the right to satisfy the redemption requirements of the units by delivering shares of unregistered common stock. Accordingly, the Parent Company classifies EOP units as permanent equity in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity and Comprehensive Income. The Parent Company serves as general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating Partnership such that they do not have the power to direct the activities of the Operating Partnership. As such, the Operating Partnership is considered a VIE, and the Parent Company, which consolidates it, is the primary beneficiary. The Parent Company’s only investment is the Operating Partnership. Net income and distributions of the Operating Partnership are allocable to the general and limited common Partnership Units in accordance with their ownership percentages.
13
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
Real Estate Partnerships
As of September 30, 2017,March 31, 2022, Regency has anhad a partial ownership interest in 125113 properties through partnerships, of which 1110 are consolidated. Ourconsolidated into the Company's financial statements. Regency’s partners in these ventures include institutional investors and other real estate developers and/or operators and individual parties who help Regency source transactions for development and investment (the "Partners"“Partners” or "limited partners"“limited partners”). Regency has a variable interest in these entities through its equity interests.interests, with Regency the primary beneficiary in certain of these real estate partnerships. As managing member,such, Regency maintainsconsolidates 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.
The assets of thethese partnerships are restricted to the use of the partnerships and cannot be used as security by general creditors of the Company. And similarly,Similarly, the obligations of the partnerships can only be settled by the assets of these partnerships or additional contributions by the partnerships.
The major classes of assets, liabilities, and non-controlling equity interests held by the Company's consolidated VIEs, exclusive of the Operating Partnership, as a whole, are as follows:
(in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Assets |
|
|
|
|
|
| ||
Net real estate investments |
| $ | 216,131 |
|
|
| 379,075 |
|
Cash, cash equivalents and restricted cash |
|
| 2,868 |
|
|
| 5,202 |
|
Liabilities |
|
|
|
|
|
| ||
Notes payable |
|
| 4,918 |
|
|
| 5,000 |
|
Equity |
|
|
|
|
|
| ||
Limited partners’ interests in consolidated partnerships |
|
| 27,714 |
|
|
| 27,950 |
|
| (in thousands) | September 30, 2017 | December 31, 2016 | |||
| Assets | |||||
| Real estate assets, net | $ | 93,821 | 86,440 | ||
| Cash and cash equivalents | 4,053 | 3,444 | |||
| Liabilities | |||||
| Notes payable | 12,691 | 8,175 | |||
| Equity | |||||
| Limited partners’ interests in consolidated partnerships | 17,604 | 17,565 | |||
Revenues and Other Receivables
Other property income includes parking fees and other incidental income from the properties and is generally recognized at the point in time that the performance obligation is met. All income from contracts with the Company's real estate partnerships is included within Management, transaction and other fees on the Consolidated Statements of Operations. The primary components of these revenue streams, the timing of satisfying the performance obligations, and amounts are as follows:
|
|
|
| Three months ended March 31, |
| |||||
(in thousands) |
| Timing of satisfaction of performance obligations |
| 2022 |
|
| 2021 |
| ||
Management, transaction and other fees: |
|
|
|
|
|
|
|
| ||
Property management services |
| Over time |
| $ | 3,618 |
|
|
| 3,771 |
|
Asset management services |
| Over time |
|
| 1,755 |
|
|
| 1,715 |
|
Leasing services |
| Point in time |
|
| 996 |
|
|
| 851 |
|
Other transaction fees |
| Point in time |
|
| 315 |
|
|
| 56 |
|
Total management, transaction, and other fees |
|
|
| $ | 6,684 |
|
|
| 6,393 |
|
The accounts receivable for management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $13.8 million and $13.2 million, as of March 31, 2022 and December 31, 2021, respectively.
14
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
Recent Accounting Pronouncements
The following table provides a brief description of recentrecently adopted accounting pronouncements and expected impact on our financial statements:
Standard | Description | Date of adoption | Effect on the financial statements or other significant matters | |||
Recently | ||||||
ASU | The amendments in this update affect lessor lease classification. Lessors should classify and account for a lease as an operating lease if both of the following criteria are met: (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. This | January | The adoption of this standard | |||
15
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
2. | Real Estate Investments |
The following table details the shopping centers acquired or land acquired or leased for development:
| (in thousands) | Nine months ended September 30, 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% | — | — | — | — | ||||||||
| 4/13/17 | Mellody Farm (2) | Chicago, IL | Development | 100% | 26,200 | — | — | |||||||||
| 6/28/17 | Concord outparcel (3) | Miami, FL | Operating | 100% | 350 | — | — | — | ||||||||
| 7/20/17 | Aventura Square outparcel (4) | Miami, FL | Operating | 100% | 1,750 | — | 90 | 9 | ||||||||
| Total property acquisitions | $37,800 | — | 90 | 9 | ||||||||||||
(1) The Company leased 10.67 acres for a ground up development. | ||||||||||||||||
(2) The Operating Partnership issued 195,732 partnership units valued at $13.1 million as partial consideration for the purchase price. | ||||||||||||||||
(3) The Company purchased a 0.67 acre vacant outparcel adjacent to the Company's existing operating Concord Shopping Plaza. | ||||||||||||||||
(4) The Company purchased a 0.06 acre outparcel improved with a leased building adjacent to the Company's existing operating Aventura Square. | ||||||||||||||||
| (in thousands) | Nine months ended September 30, 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 | — | — | — | ||||||||
| 5/16/16 | Market Common Clarendon | Arlington, VA | Operating | 100% | $280,500 | — | 15,428 | 15,662 | ||||||||
| 7/15/16 | Klahanie Shopping Center | Sammamish, WA | Operating | 100% | $35,988 | — | 2,264 | 539 | ||||||||
| 8/4/16 | The Village at Tustin Legacy | Tustin, CA | Development | 100% | $18,800 | — | — | — | ||||||||
| Total property acquisitions | $370,582 | — | 27,863 | 19,141 | ||||||||||||
(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. | ||||||||||||||||
| (in thousands, except stock price) | Purchase Price | ||
| Shares of common stock issued for merger | 65,379 | ||
| 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 | |
| September 30, 2017 | |||||
| (in thousands) | Three months ended | Nine months ended | |||
| Increase in total revenues | $ | 102,437 | 238,250 | ||
| Increase in net income attributable to common stockholders | 23,517 | 52,981 | |||
| (in thousands) | Provisional Purchase Price Allocation | |||
| Land | $ | 2,914,790 | ||
| Building and improvements | 2,699,937 | |||
| Properties in development | 68,744 | |||
| Properties held for sale | 19,600 | |||
| Investments in unconsolidated real estate partnerships | 103,566 | |||
| Real estate assets | 5,806,637 | |||
| Cash, accounts receivable and other assets | 112,271 | |||
| Intangible assets | 460,541 | |||
| Goodwill | 302,303 | |||
| Total assets acquired | 6,681,752 | |||
| Notes payable | 757,399 | |||
| Accounts payable, accrued expenses, and other liabilities | 121,441 | |||
| Lease intangible liabilities | 609,807 | |||
| Total liabilities assumed | 1,488,647 | |||
| Total purchase price | $ | 5,193,105 | ||
(in thousands) |
| Three months ended March 31, 2022 |
| |||||||||||||||||||||
Date Purchased |
| Property Name |
| City/State |
| Property Type |
| Ownership |
| Purchase |
|
| Debt |
|
| Intangible |
|
| Intangible |
| ||||
3/1/2022 |
| Glenwood Green |
| Old Bridge, NJ |
| Development |
| 100% |
| $ | 11,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
3/25/2022 |
| Naperville Plaza (1) |
| Naperville, IL |
| Operating |
| 20% |
|
| 52,380 |
|
|
| 22,074 |
|
|
| 4,336 |
|
|
| 814 |
|
3/31/2022 |
| Island Village |
| Bainbridge Island, WA |
| Operating |
| 100% |
|
| 30,650 |
|
|
| — |
|
|
| 2,900 |
|
|
| 6,839 |
|
Total property acquisitions |
|
|
|
|
|
|
| $ | 94,030 |
|
|
| 22,074 |
|
|
| 7,236 |
|
|
| 7,653 |
| ||
Subsequent to provisional amounts were recognized asMarch 31, 2022, the Company completed the acquisition of the partner's 75% interest in four properties held in the RegCal partnership for $88.5 million, increasing the Company's ownership in such properties to 100%. Prior to the completion of the acquisition, date:
| (in thousands) | Three months ended September 30, 2017 | ||
| decrease in Minimum rent | $ | (567 | ) |
| decrease in Depreciation and amortization | 1,645 | ||
| decrease in Operating and maintenance | 142 | ||
| Net increase to earnings of provisional purchase price allocation adjustments | $ | 1,220 | |
3. | ||
Property Dispositions | ||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| (in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||
| Total revenues | $ | 262,708 | 251,823 | 788,345 | 752,121 | ||||||||
| Income (loss) from operations | (1) | 63,537 | 3,358 | 190,112 | (4,560 | ) | |||||||
| Net income (loss) attributable to common stockholders | (1) | 59,621 | (1,907 | ) | 171,795 | (21,744 | ) | ||||||
| Income (loss) per common share - basic | $ | 0.35 | (0.01 | ) | 1.01 | (0.13 | ) | ||||||
| Income (loss) per common share - diluted | 0.35 | (0.01 | ) | 1.01 | (0.13 | ) | |||||||
(1) The pro forma earnings for the three and nine months ended September 30, 2017, were adjusted to exclude $1.2 million and $98.5 million of merger costs, respectively, while 2016 pro forma earnings were adjusted to include all merger costs during the first quarter of 2016. | |||||||||||||
The following table provides a summary of consolidated shopping centers and land parcels disposed of:sold during the periods set forth below:
|
| Three months ended March 31, | |||||||
(in thousands, except number sold data) |
| 2022 |
|
| 2021 | ||||
Net proceeds from sale of real estate investments |
| $ | 124,924 |
|
|
| 53,859 |
|
|
Gain on sale of real estate, net of tax |
|
| 101,948 |
|
|
| 11,698 |
|
|
Number of operating properties sold |
|
| 1 |
|
|
| 4 |
|
|
Number of land parcels sold |
|
| 1 |
|
|
| 1 |
|
|
Percent interest sold |
| 100% |
|
| 100% |
|
| ||
At March 31, 2022, the Company also had 1 land parcel classified within Properties held for sale on the Consolidated Balance Sheets.
4. | Other Assets |
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| (in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net proceeds from sale of real estate investments | $ | 167 | $ | 47,180 | $ | 15,397 | $ | 85,885 | (1) | ||||||||
| Gain on sale of real estate, net of tax | $ | 131 | $ | 9,580 | $ | 4,913 | $ | 22,997 | |||||||||
| Provision for impairment of real estate sold | $ | — | $ | — | $ | — | $ | (1,666 | ) | ||||||||
| Number of operating properties sold | — | 3 | 1 | 7 | |||||||||||||
| Number of land parcels sold | — | 2 | 7 | 12 | |||||||||||||
| Percent interest sold | — | % | 100 | % | 100 | % | 100 | % | |||||||||
(1) Includes cash deposits received in the previous year. | |||||||||||||||||
The following table represents the components of Other assets in the accompanying Consolidated Balance Sheets as of the dates set forth below:
(in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Goodwill, net |
| $ | 167,095 |
|
|
| 167,095 |
|
Investments |
|
| 61,332 |
|
|
| 65,112 |
|
Prepaid and other |
|
| 25,636 |
|
|
| 21,332 |
|
Deferred financing costs, net |
|
| 6,875 |
|
|
| 7,448 |
|
Furniture, fixtures, and equipment, net |
|
| 5,248 |
|
|
| 5,444 |
|
Derivative assets |
|
| 1,242 |
|
|
| — |
|
Total other assets |
| $ | 267,428 |
|
|
| 266,431 |
|
16
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
The following table presents the goodwill balances and Unsecured Credit Facilitiesactivity during the year to date periods ended:
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||||||||||||||||
(in thousands) |
| Goodwill |
|
| Accumulated |
|
| Total |
|
| Goodwill |
|
| Accumulated |
|
| Total |
| ||||||
Beginning of year balance |
| $ | 300,529 |
|
|
| (133,434 | ) |
|
| 167,095 |
|
|
| 307,413 |
|
|
| (133,545 | ) |
|
| 173,868 |
|
Goodwill allocated to Properties held for sale |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,465 | ) |
|
| — |
|
|
| (2,465 | ) |
Goodwill associated with disposed reporting units: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Goodwill allocated to Provision for impairment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (111 | ) |
|
| 111 |
|
|
| — |
|
Goodwill allocated to Gain on sale of real estate |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,308 | ) |
|
| — |
|
|
| (4,308 | ) |
End of period balance |
| $ | 300,529 |
|
|
| (133,434 | ) |
|
| 167,095 |
|
|
| 300,529 |
|
|
| (133,434 | ) |
|
| 167,095 |
|
As the Company identifies properties (“reporting units”) that no longer meet its investment criteria, it will evaluate the property for potential sale. A decision to sell a reporting unit results in the need to evaluate its goodwill for recoverability and may result in impairment. Additionally, other changes impacting a reporting unit may be considered a triggering event. If events occur that trigger an impairment evaluation at multiple reporting units, a goodwill impairment may be significant.
5. | Notes Payable and Unsecured Credit Facilities |
The Company’s outstanding debt, net of unamortized debt premium (discount) and debt issuance costs, consisted of the following:
| (in thousands) | Weighted Average Contractual Rate | Weighted Average Effective Rate | September 30, 2017 | December 31, 2016 | ||||
| Notes payable: | ||||||||
| Fixed rate mortgage loans | 5.0% | 4.3% | $ | 496,869 | 384,786 | |||
| Variable rate mortgage loans | 2.4% | 2.6% | 122,036 | (1) | 86,969 | |||
| Fixed rate unsecured public and private debt | 3.8% | 4.2% | 2,325,081 | 892,170 | ||||
| Total notes payable | 2,943,986 | 1,363,925 | ||||||
| Unsecured credit facilities: | ||||||||
Line of Credit (the "Line") (2) | 2.1% | 2.2% | 15,000 | 15,000 | ||||
| Term loans | 2.4% | 2.5% | 563,144 | 263,495 | ||||
| Total unsecured credit facilities | 578,144 | 278,495 | ||||||
| Total debt outstanding | $ | 3,522,130 | 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 4.07% | ||||||||
(2) Weighted average effective and contractual rate for the Line is calculated based on a fully drawn Line balance. | ||||||||
(in thousands) |
| Weighted |
| Weighted |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Notes payable: |
|
|
|
|
|
|
|
|
|
| ||
Fixed rate mortgage loans |
| 4.0% |
| 3.5% |
| $ | 356,541 |
|
|
| 359,414 |
|
Variable rate mortgage loans (1) |
| 3.2% |
| 3.3% |
|
| 115,089 |
|
|
| 115,539 |
|
Fixed rate unsecured debt |
| 3.8% |
| 4.0% |
|
| 3,245,087 |
|
|
| 3,243,991 |
|
Total notes payable |
|
|
|
|
|
| 3,716,717 |
|
|
| 3,718,944 |
|
Unsecured credit facilities: |
|
|
|
|
|
|
|
|
|
| ||
Line of Credit (the "Line") (2) |
| 1.1% |
| 1.4% |
|
| — |
|
|
| — |
|
Total debt outstanding |
|
|
|
|
| $ | 3,716,717 |
|
|
| 3,718,944 |
|
Scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:
(in thousands) |
| March 31, 2022 |
| |||||||||||||
Scheduled Principal Payments and Maturities by Year: |
| Scheduled |
|
| Mortgage |
|
| Unsecured |
|
| Total |
| ||||
2022 (2) |
| $ | 8,542 |
|
|
| 5,848 |
|
|
| — |
|
|
| 14,390 |
|
2023 |
|
| 9,695 |
|
|
| 59,376 |
|
|
| — |
|
|
| 69,071 |
|
2024 |
|
| 4,849 |
|
|
| 90,742 |
|
|
| 250,000 |
|
|
| 345,591 |
|
2025 |
|
| 3,732 |
|
|
| 45,000 |
|
|
| 250,000 |
|
|
| 298,732 |
|
2026 |
|
| 3,922 |
|
|
| 88,000 |
|
|
| 200,000 |
|
|
| 291,922 |
|
Beyond 5 Years |
|
| 6,661 |
|
|
| 138,234 |
|
|
| 2,575,000 |
|
|
| 2,719,895 |
|
Unamortized debt premium/(discount) and issuance costs |
|
| — |
|
|
| 7,029 |
|
|
| (29,913 | ) |
|
| (22,884 | ) |
Total |
| $ | 37,401 |
|
|
| 434,229 |
|
|
| 3,245,087 |
|
|
| 3,716,717 |
|
| (in thousands) | September 30, 2017 | |||||||||||
| Scheduled Principal Payments and Maturities by Year: | Scheduled Principal Payments | Mortgage Loan Maturities | Unsecured Maturities (1) | Total | ||||||||
| 2017 | $ | 2,708 | — | — | 2,708 | |||||||
| 2018 | 10,641 | 139,976 | — | 150,617 | ||||||||
| 2019 | 13,860 | 13,216 | 15,000 | 42,076 | ||||||||
| 2020 | 11,122 | 51,580 | 450,000 | 512,702 | ||||||||
| 2021 | 11,426 | 39,001 | 250,000 | 300,427 | ||||||||
| Beyond 5 Years | 48,674 | 266,179 | 2,215,000 | 2,529,853 | ||||||||
| Unamortized debt premium/(discount) and issuance costs | — | 10,522 | (26,775 | ) | (16,253 | ) | ||||||
| Total | $ | 98,431 | 520,474 | 2,903,225 | 3,522,130 | |||||||
(1) Includes unsecured public debt and unsecured credit facilities. | ||||||||||||
The Company was in compliance as of September 30, 2017March 31, 2022, with theall financial and other covenants under its unsecured public and private placement debt and unsecured credit facilities.facilities, and expects to remain in compliance thereafter.
17
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Instruments
March 31, 2022
6. | Derivative Financial Instruments |
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors, and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative transactions or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
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 |
| Maturity |
| Notional |
|
| Receive |
| Pay |
| March 31, 2022 |
|
| December 31, 2021 |
| |||
4/7/16 |
| 4/1/23 |
| $ | 18,932 |
|
| 1 Month LIBOR |
| 1.303% |
| $ | 90 |
|
|
| (175 | ) |
12/1/16 |
| 11/1/23 |
|
| 31,607 |
|
| 1 Month LIBOR |
| 1.490% |
|
| 357 |
|
|
| (412 | ) |
9/17/19 |
| 3/17/25 |
|
| 24,000 |
|
| 1 Month LIBOR |
| 1.542% |
|
| 633 |
|
|
| (364 | ) |
6/2/17 |
| 6/2/27 |
|
| 35,876 |
|
| 1 Month LIBOR with Floor |
| 2.366% |
|
| 162 |
|
|
| (1,907 | ) |
|
|
|
|
|
|
|
|
|
|
| $ | 1,242 |
|
|
| (2,858 | ) | |
| Fair Value | ||||||||||||||||||
| (in thousands) | Assets (Liabilities)(1) | |||||||||||||||||
| Effective Date | Maturity Date | Notional Amount | Bank Pays Variable Rate of | Regency Pays Fixed Rate of | September 30, 2017 | December 31, 2016 | ||||||||||||
| 4/3/17 | 12/2/20 | $ | 300,000 | 1 Month LIBOR with Floor | 1.824% | $ | (687 | ) | — | |||||||||
| 8/1/16 | 1/5/22 | 265,000 | 1 Month LIBOR with Floor | 1.053% | 8,722 | 9,889 | ||||||||||||
| 4/7/16 | 4/1/23 | 20,000 | 1 Month LIBOR | 1.303% | 622 | 720 | ||||||||||||
| 12/1/16 | 11/1/23 | 33,000 | 1 Month LIBOR | 1.490% | 857 | 1,013 | ||||||||||||
| 6/2/17 | 6/2/27 | 37,500 | 1 Month LIBOR with Floor | 2.366% | (495 | ) | (580 | ) | ||||||||||
| Total derivative financial instruments | $ | 9,019 | 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 September 30, 2017,March 31, 2022, does not have any derivatives that are not designated as hedges.
The Company has master netting agreements;
The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements:
Location and Amount of Gain (Loss) Recognized in OCI on Derivative |
|
| Location and Amount of Gain (Loss) Reclassified from AOCI into Income |
|
| Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded |
| |||||||||||||||||||||
|
| Three months ended March 31, |
|
|
|
| Three months ended March 31, |
|
|
|
| Three months ended March 31, |
| |||||||||||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
|
|
| 2022 |
|
| 2021 |
|
|
|
| 2022 |
|
| 2021 |
| ||||||
Interest rate swaps |
| $ | 8,968 |
|
|
| 5,810 |
|
| Interest expense |
| $ | 1,010 |
|
|
| 1,035 |
|
| Interest expense, net |
| $ | 36,738 |
|
|
| 36,936 |
|
| 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) | ||||||||||||||
| Three months ended September 30, | Three months ended September 30, | |||||||||||||||
| (in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Interest rate swaps | $ | (39 | ) | 1,294 | Interest expense | $ | (2,329 | ) | (43,111 | ) | ||||||
| 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) | ||||||||||||||
| Nine months ended September 30, | Nine months ended September 30, | |||||||||||||||
| (in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Interest rate swaps | $ | (3,911 | ) | (25,338 | ) | Interest expense | $ | (8,054 | ) | (48,063 | ) | |||||
As of September 30, 2017,March 31, 2022, the Company expects $9.1 millionapproximately $456,000 of net deferredaccumulated comprehensive losses on derivative instruments in Accumulated other comprehensive loss,AOCI, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months. Included
18
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
7. | Leases |
All of the Company’s leases are classified as operating leases. The Company's Lease income is comprised of both fixed and variable income. Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent, and in some cases stated amounts for common area maintenance (“CAM”), real estate taxes, and insurance (“Recoverable Costs”). Income for these amounts is recognized on a straight-line basis.
Variable lease income includes the following two main items in the reclassification is $8.4 million which is relatedlease contracts:
(i) Recoveries from tenants represents the tenants’ contractual obligations to previously settled swapsreimburse the Company for their portion of Recoverable Costs incurred. Generally the Company’s leases provide for the tenants to reimburse the Company based on the Company's ten yeartenants’ share of the actual costs incurred in proportion to the tenants’ share of leased space in the property.
(ii) Percentage rent represents amounts billable to tenants based on the tenants’ actual sales volume in excess of levels specified in the lease contract.
The following table provides a disaggregation of lease income recognized as either fixed rate unsecured loans.or variable lease income based on the criteria specified in ASC Topic 842:
(in thousands) |
| Three months ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating lease income |
|
|
|
|
|
| ||
Fixed and in-substance fixed lease income |
| $ | 207,502 |
|
|
| 196,054 |
|
Variable lease income |
|
| 72,026 |
|
|
| 64,067 |
|
Other lease related income, net: |
|
|
|
|
|
| ||
Above/below market rent and tenant rent inducement amortization, net |
|
| 5,689 |
|
|
| 5,996 |
|
Uncollectible straight-line rent |
|
| 2,282 |
|
|
| (2,035 | ) |
Uncollectible amounts billable in lease income |
|
| 6,146 |
|
|
| 2,275 |
|
Total lease income |
| $ | 293,645 |
|
|
| 266,357 |
|
Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases in which collectibility is considered probable. At lease commencement, the Company generally expects that collectibility of substantially all payments due under the lease is probable due to the Company’s credit checks on tenants and other credit analysis undertaken before entering into a new lease; therefore, income from most operating leases is initially recognized on a straight-line basis. For operating leases in which collectibility of Lease income is not considered probable, Lease income is recognized on a cash basis and all previously recognized straight-line rent receivables are reversed in the period in which the Lease income is determined no longer to be probable of collection. Should collectibility of Lease income become probable again, through evaluation of qualitative and quantitative measures on a tenant by tenant basis, accrual basis accounting resumes and all commencement-to-date straight-line rent is recognized in that period. In addition to the lease-specific collectibility assessment performed under Topic 842, the Company may also recognize a general reserve, as a reduction to Lease income, for its portfolio of operating lease receivables which are not expected to be fully collectible based on the Company’s historical collection experience.
The following table represents the components of Tenant and other receivables in the accompanying Consolidated Balance Sheets:
(in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Tenant receivables |
| $ | 17,756 |
|
| $ | 27,354 |
|
Straight-line rent receivables |
|
| 109,953 |
|
|
| 103,942 |
|
Other receivables (1) |
|
| 24,143 |
|
|
| 21,795 |
|
Total tenant and other receivables |
| $ | 151,852 |
|
| $ | 153,091 |
|
19
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
8. | 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, 2022 |
|
| December 31, 2021 |
| ||||||||||
(in thousands) |
| Carrying |
|
| Fair Value |
|
| Carrying |
|
| Fair Value |
| ||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Notes payable |
| $ | 3,716,717 |
|
|
| 3,782,877 |
|
|
| 3,718,944 |
|
|
| 4,103,533 |
|
| September 30, 2017 | December 31, 2016 | ||||||||||||
| (in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||
| Financial assets: | |||||||||||||
| Notes receivable | $ | 13,984 | 13,869 | $ | 10,481 | 10,380 | |||||||
| Financial liabilities: | |||||||||||||
| Notes payable | $ | 2,943,986 | 3,027,557 | $ | 1,363,925 | 1,435,000 | |||||||
| Unsecured credit facilities | $ | 578,144 | 580,000 | $ | 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 September 30, 2017March 31, 2022, and December 31, 2016,2021, respectively. These fair value measurements maximize the use of observable inputs.inputs which are classified within Level 2 of the fair value hierarchy. 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.
| September 30, 2017 | December 31, 2016 | |||||||
| Low | High | Low | High | |||||
| Notes receivable | 3.5% | 7.4% | 7.2% | 7.2% | ||||
| Notes payable | 3.1% | 3.7% | 2.9% | 3.9% | ||||
| Unsecured credit facilities | 1.7% | 2.2% | 1.5% | 1.6% | ||||
(b) Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis:
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 and included within Other assets 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 netNet investment (income) loss from deferred compensation plan(income) in the accompanying Consolidated Statements of Operations.
Available-for-Sale Debt Securities
Available-for-sale debt 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
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.
20
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
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, 2022 |
| |||||||||||||
|
|
|
| Quoted Prices in Active Markets for Identical Assets |
|
| Significant Other Observable Inputs |
|
| Significant Unobservable Inputs |
| ||||
(in thousands) | Balance |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
| ||||
Securities | $ | 46,358 |
|
|
| 46,358 |
|
|
| — |
|
|
| — |
|
Available-for-sale debt securities |
| 14,974 |
|
|
| — |
|
|
| 14,974 |
|
|
| — |
|
Interest rate derivatives |
| 1,242 |
|
|
| — |
|
|
| 1,242 |
|
|
| — |
|
Total | $ | 62,574 |
|
|
| 46,358 |
|
|
| 16,216 |
|
|
| — |
|
| Fair Value Measurements as of December 31, 2021 |
| |||||||||||||
|
|
|
| Quoted Prices in Active Markets for Identical Assets |
|
| Significant Other Observable Inputs |
|
| Significant Unobservable Inputs |
| ||||
(in thousands) | Balance |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
| ||||
Securities | $ | 49,513 |
|
|
| 49,513 |
|
|
| — |
|
|
| — |
|
Available-for-sale debt securities |
| 15,599 |
|
|
| — |
|
|
| 15,599 |
|
|
| — |
|
Interest rate derivatives |
| — |
|
|
| — |
|
|
| - |
|
|
| — |
|
Total | $ | 65,112 |
|
|
| 49,513 |
|
|
| 15,599 |
|
|
| — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate derivatives | $ | (2,858 | ) |
|
| — |
|
|
| (2,858 | ) |
|
| — |
|
The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a nonrecurring basis:
| Fair Value Measurements as of December 31, 2021 |
| |||||||||||||||||
|
|
|
| Quoted Prices in Active Markets for Identical Assets |
|
| Significant Other Observable Inputs |
|
| Significant Unobservable Inputs |
|
| Total Gains |
| |||||
(in thousands) | Balance |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
|
| (Losses) |
| |||||
Operating properties | $ | 140,500 |
|
|
| — |
|
|
| — |
|
|
| 140,500 |
|
|
| (84,277 | ) |
| Fair Value Measurements as of September 30, 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 | $ | 30,720 | 30,720 | — | — | |||||||
| Available-for-sale securities | 10,054 | — | 10,054 | — | ||||||||
| Interest rate derivatives | 10,201 | — | 10,201 | — | ||||||||
| Total | $ | 50,975 | 30,720 | 20,255 | — | |||||||
| Liabilities: | ||||||||||||
| Interest rate derivatives | $ | (1,182 | ) | — | (1,182 | ) | — | |||||
| 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 | ) | — | |||||
During the year ended December 31, 2021, the Company revalued two shopping centers to Unaudited Consolidated Financial Statements
9. | Equity and Capital |
Common Stock of the Parent Company
Dividends Declared
On April 29, 2022, our Board of Directors declared a common stock dividend of $0.625 per share, payable on July 6, 2022, to shareholders of record as of June 15, 2022.
At the Market ("ATM"(“ATM”) Program
Under the Parent Company's ATM equity offering program, authorizes the Parent Company tomay sell up to $500$500 million of common stock at prices determined by the market at the time of sale.
21
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
During 2021, the Company entered into forward sale agreements under its ATM program to issue shares of its common stock at a weighted average offering price of $64.59 before any underwriting discount and offering expenses. Subsequent to March 31, 2022, the Company settled 984,618 shares subject to forward sales agreements and received proceeds of approximately $61.3 million, after approximately $3.3 million in underwriting discounts and offering expenses. The proceeds were used to fund acquisitions. All shares are now settled under the forward sales agreements.
As of September 30, 2017, $500March 31, 2022, $350.4 million of common stock remained available for issuance under this ATM equity program.
Share Repurchase Program
On February 3, 2021, the Company's Board authorized a common share repurchase program under which the Company may purchase, from time to time, up to a maximum of $250 million of its outstanding common stock through open market purchases or in privately negotiated transactions. Any shares issuedpurchased, if not retired, will be treated as treasury shares. Under the current authorization, the program is set to expire on February 3, 2023, but may be modified or terminated at any time at the discretion of the Board. The timing and actual number of shares purchased under the ATM equity program during the three months ended September 30, 2017 or 2016, or during the nine months ended September 30, 2017. The following table presents thedepend upon marketplace conditions, liquidity needs, and other factors. Through March 31, 2022, 0 shares that were issuedhave been repurchased under the ATM equity program during the nine months ended September 30, 2016:
| Nine months ended September 30, | |||||||
| (dollar amounts are in thousands, except price per share data) | 2017 | 2016 | |||||
Shares issued (1) | — | 182,787 | |||||
| Weighted average price per share | $ | — | $ | 68.85 | |||
| Gross proceeds | $ | — | $ | 12,584 | |||
| Commissions | $ | — | $ | 157 | |||
Issuance costs (2) | $ | 349 | $ | 80 | |||
(1) Reflects shares traded in December and settled in January. | |||||||
(2) Includes legal and accounting costs associated with maintaining the ATM program. | |||||||
Common Units of the Operating Partnership
Common units wereof the operating partnership are issued toor redeemed and retired for each of the shares of Parent Company in relation to the Parent Company's issuance of common stock issued or repurchased and retired, as discusseddescribed above.
| 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 | (25,015 | ) | 89 | (24,926 | ) | (322 | ) | — | (322 | ) | (25,248 | ) | |||||||||
| Amounts reclassified from accumulated other comprehensive income | 47,880 | — | 47,880 | 183 | — | 183 | 48,063 | ||||||||||||||
| Current period other comprehensive income, net | 22,865 | 89 | 22,954 | (139 | ) | — | (139 | ) | 22,815 | ||||||||||||
| Balance as of September 30, 2016 | $ | (35,785 | ) | 46 | (35,739 | ) | (924 | ) | — | (924 | ) | (36,663 | ) | ||||||||
| 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 | (3,768 | ) | 51 | (3,717 | ) | (143 | ) | — | (143 | ) | (3,860 | ) | |||||||||
| Amounts reclassified from accumulated other comprehensive income | 7,922 | — | 7,922 | 132 | — | 132 | 8,054 | ||||||||||||||
| Current period other comprehensive income, net | 4,154 | 51 | 4,205 | (11 | ) | — | (11 | ) | 4,194 | ||||||||||||
| Balance as of September 30, 2017 | $ | (14,173 | ) | 32 | (14,141 | ) | (312 | ) | — | (312 | ) | (14,453 | ) | ||||||||
| AOCI Component | Amount Reclassified from AOCI into income | Affected Line Item(s) Where Net Income is Presented | ||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| Interest rate swaps | $ | 2,329 | 43,111 | $ | 8,054 | 48,063 | Interest expense and Loss on derivative instruments | |||||||
10. | Stock-Based Compensation |
During the three months ended March 31, 2022, the Company granted 231,065255,505 shares of restricted stock with a weighted-average grant-date fair value of $71.93$73.14 per share. The Company records stock-based compensation expense within General and administrative expenses in the accompanying Consolidated Statements of Operations.
| (in thousands) | September 30, 2017 | December 31, 2016 | ||||
| Assets: | ||||||
Trading securities held in trust (1) | $ | 30,720 | 28,588 | |||
| Liabilities: | ||||||
| Accounts payable and other liabilities | $ | 30,423 | 28,214 | |||
(1) Included within Other assets in the accompanying Consolidated Balance Sheets. | ||||||
11. | 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) |
| 2022 |
|
| 2021 |
| ||
Numerator: |
|
|
|
|
|
| ||
Income attributable to common stockholders - basic |
| $ | 195,228 |
|
|
| 80,656 |
|
Income attributable to common stockholders - diluted |
| $ | 195,228 |
|
|
| 80,656 |
|
Denominator: |
|
|
|
|
|
| ||
Weighted average common shares outstanding for basic EPS |
|
| 171,312 |
|
|
| 169,768 |
|
Weighted average common shares outstanding for diluted EPS |
|
| 171,671 |
|
|
| 170,006 |
|
Income per common share – basic |
| $ | 1.14 |
|
|
| 0.48 |
|
Income per common share – diluted |
| $ | 1.14 |
|
|
| 0.47 |
|
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| Numerator: | ||||||||||||||
| Income from operations attributable to common stockholders - basic | $ | 59,666 | 5,305 | $ | 74,810 | 87,992 | ||||||||
| Income from operations attributable to common stockholders - diluted | $ | 59,666 | 5,305 | $ | 74,810 | 87,992 | ||||||||
| Denominator: | ||||||||||||||
| Weighted average common shares outstanding for basic EPS | 170,105 | 103,675 | 155,881 | 99,639 | ||||||||||
Weighted average common shares outstanding for diluted EPS (1) | 170,466 | 104,255 | 156,190 | 100,128 | ||||||||||
| Income per common share – basic | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||||
| Income per common share – diluted | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||||
(1) 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.be anti-dilutive. Weighted average exchangeable Operating Partnership units outstanding for the three and nine months ended September 30, 2017March 31, 2022 and 2021, were 349,902760,046 and 276,503, respectively, while they were 154,170 during the same periods of 2016.
22
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
March 31, 2022
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) |
| 2022 |
|
| 2021 |
| ||
Numerator: |
|
|
|
|
|
| ||
Income attributable to common unit holders - basic |
| $ | 196,091 |
|
|
| 81,020 |
|
Income attributable to common unit holders - diluted |
| $ | 196,091 |
|
|
| 81,020 |
|
Denominator: |
|
|
|
|
|
| ||
Weighted average common units outstanding for basic EPU |
|
| 172,072 |
|
|
| 170,533 |
|
Weighted average common units outstanding for diluted EPU |
|
| 172,431 |
|
|
| 170,771 |
|
Income per common unit – basic |
| $ | 1.14 |
|
|
| 0.48 |
|
Income per common unit – diluted |
| $ | 1.14 |
|
|
| 0.47 |
|
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| Numerator: | ||||||||||||||
| Income from operations attributable to common unit holders - basic | $ | 59,798 | 5,321 | $ | 75,027 | 88,157 | ||||||||
| Income from operations attributable to common unit holders - diluted | $ | 59,798 | 5,321 | $ | 75,027 | 88,157 | ||||||||
| Denominator: | ||||||||||||||
| Weighted average common units outstanding for basic EPU | 170,455 | 103,829 | 156,158 | 99,793 | ||||||||||
Weighted average common units outstanding for diluted EPU (1) | 170,816 | 104,409 | 156,467 | 100,282 | ||||||||||
| Income per common unit – basic | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||||
| Income per common unit – diluted | $ | 0.35 | 0.05 | $ | 0.48 | 0.88 | ||||||||
(1) Includes the dilutive impact of unvested restricted stock and the forward equity offering using the treasury stock method. | ||||||||||||||
12. | Commitments and Contingencies |
Litigation
The Company is involved in litigation on a number of matters, and is subject to certain claims, whichother disputes that arise in the normalordinary course of business, nonebusiness. While the outcome of which,any particular lawsuit or dispute cannot be predicted with certainty, in the opinion of management, isthe Company's currently pending litigation and disputes are not 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.
Environmental
The Company is also subject to numerous environmental laws and regulations as they apply to real estate pertaining primarily to chemicals historically used by thecertain current and former dry cleaning industry,tenants, the existence of asbestos in older shopping centers, andolder underground petroleum storage tanks.tanks and other historic land use. 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 theits shopping centers have revealed all potential environmental contaminants orcontaminants; that its estimate of liabilities will not change as more information becomes available; that any previous owner, occupant or tenant did not create any material environmental condition not known to it,the Company; 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, orparties; and that changes
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$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 September 30, 2017March 31, 2022 and December 31, 2016,2021, the Company had $5.9$9.4 million and $5.8 million, respectively, in letters of credit outstanding.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to historical information,Regency’s future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the following information contains forward-looking statements as defined undersafe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements include statements about anticipated changes in our revenues,are identified by the sizeuse of our developmentwords such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance,” and redevelopment program, earnings per share and unit, returns and portfolio value, and expectations about our liquidity. Theseother similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking 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-lookingreasonable when made, forward-looking statements are not guarantees of future performance or events and involve certain knownundue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained, and unknown risks and uncertainties that could causeit is possible actual results tomay differ materially from those expressed or impliedindicated by such statements. Suchthese forward-looking statements due to a variety of risks and uncertainties.
Our operations are subject to a number of risks and uncertainties include,including, 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 here in andrisk factors described in our SEC filings. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our most recent Annual Report on Form 10-K for, subsequent Quarterly Reports on Form 10-Q and our other filings with and submissions to the year ended December 31, 2016. The following discussion shouldSEC. If any of the events described in the risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be read in conjunction withmaterially adversely affected. Forward-looking statements are only as of the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporationdate they are made, and Regency Centers, L.P. appearing elsewhere herein. We do not undertake any obligationundertakes no duty to release publicly any revisions to suchupdate its forward-looking statements except as and to reflect events or uncertainties after the date hereof orextent required by law.
Non-GAAP Measures
In addition to reflect the occurrence of uncertain events.
We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP, rather they supplement GAAP measures by providing additional information we believe to be useful to our shareholders. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations or future prospects of the Company.
Defined Terms
The following terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results:
24
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 sale and impairments of real estate, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in percent leased, rental rates, operating property.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. We provide a reconciliation of Net Income Attributable to Common Stockholders to Nareit FFO.
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 our reported results under GAAP. We believe presenting our Pro-rata share of assets, liabilities, operating results, and other metrics, along with certain other non-GAAP measures, makes comparisons of other REITs’ operating results to ours more meaningful. The pro-rataPro-rata information provided is not, nor is it 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 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 assets, liabilities, and operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the pro-rataPro-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 generally provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our pro-rataPro-rata share.
The presentation of pro-rataPro-rata information has limitations which include, but are not limited to, the following:
25
Because of these limitations, the pro-rataPro-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-rataPro-rata information as a supplement.
Overview of Our Strategy
Regency Centers Corporation began its operations as a publicly-traded REIT in 1993, and as of September 30, 2017,March 31, 2022, had full or partial ownership interests in 427406 retail properties. Our properties are high-quality neighborhood and community shopping centers primarily anchored by market leading grocery stores. Our properties aregrocers and principally located in affluent and infill tradesuburban markets within the country's most desirable metro areas of the United States, and contain 54.151.3 million square feet ("SF"(“SF”) of gross leasable area ("GLA"(“GLA”). All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P., our and its wholly-owned subsidiaries, and through our co-investment partnerships; however, $500 million of unsecured public and private placement debt is held by the Parent Company, which it assumed through the merger with Equity One.
Our mission is to becreate thriving environments for retailers and service providers to connect with surrounding neighborhoods and communities. Our vision is to elevate quality of life as an integral thread in the preeminent national shopping center owner, operatorfabric of our communities. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and developer. best-in-class retailers that connect to their neighborhoods, communities, and customers.
Our strategyvalues:
26
Our goals are to:
Risks and Uncertainties
Changes in economic conditions and supply chain constraints have spurred a rise in wages and increased costs for materials. Current high levels of inflation may be negatively impacting some of our tenants while increasing our operating costs and construction costs. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the United States. The policies utilized to achieveaddress these issues, including raising interest rates, could result in adverse impacts on the U.S. economy, including a slowing of growth or potentially a recession. Refer to Item 1, Note 1 to Unaudited Consolidated Financial Statements.
Please also refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for additional discussion of the impact of the COVID-19 pandemic on the Company’s business including, without limitation, refer to the Risk Factors discussed in Item 1A of Part I thereof.
Executing on our strategy are to:
During the three months ended March 31, 2022, we had Net income attributable to common stockholders of $195.2 million, which includes gains on sale of real estate of $101.9 million, as compared to $80.7 million during the three months ended March 31, 2021.
During the three months ended March 31, 2022:
27
We continued our development and redevelopment of high quality shopping centerscenters:
We maintain a conservative balance sheet providing liquidity and financial flexibility to cost effectively fund investment opportunities and debt maturities:
| (in thousands, except stock price) | Purchase Price | ||
| Shares of common stock issued for merger | 65,379 | ||
| 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 | |
Property Portfolio
The following table summarizes general information related to the Consolidated Properties in our shopping center portfolio:
| (GLA in thousands) | September 30, 2017 | December 31, 2016 | ||
| Number of Properties | 313 | 198 | ||
| Properties in Development | 8 | 6 | ||
| GLA | 39,090 | 23,931 | ||
| % Leased – Operating and Development | 95.1% | 94.8% | ||
| % Leased – Operating | 95.7% | 96.0% | ||
| Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions. | $20.70 | $19.70 | ||
(GLA in thousands) | March 31, 2022 |
| December 31, 2021 |
Number of Properties | 303 |
| 302 |
GLA | 38,087 |
| 37,864 |
% Leased – Operating and Development | 94.0% |
| 94.0% |
% Leased – Operating | 94.4% |
| 94.1% |
Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions. | $23.32 |
| $23.17 |
The following table summarizes general information related to the Unconsolidated Properties owned in co-investment partnerships in our shopping center portfolio:
| (GLA in thousands) | September 30, 2017 | December 31, 2016 | ||
| Number of Properties | 114 | 109 | ||
| GLA | 14,977 | 13,899 | ||
| % Leased –Operating | 96.2% | 96.3% | ||
| Weighted average annual effective rent PSF, net of tenant concessions | $20.33 | $19.25 | ||
(GLA in thousands) | March 31, 2022 |
| December 31, 2021 |
Number of Properties | 103 |
| 103 |
GLA | 13,196 |
| 13,300 |
% Leased – Operating and Development | 93.5% |
| 93.9% |
% Leased –Operating | 93.5% |
| 93.9% |
Weighted average annual effective rent PSF, net of tenant concessions | $22.47 |
| $22.37 |
For the purpose of the following disclosures of occupancy and leasing activity, "anchor space"“anchor space” is considered space greater than or equal to 10,000 SF and "shop space"“shop space” is less than 10,000 SF. The following table summarizes pro-rataPro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping center portfolio:
| September 30, 2017 | December 31, 2016 | |||
| % Leased – Operating | 95.7% | 96.0% | ||
| Anchor space | 97.7% | 97.8% | ||
| Shop space | 92.3% | 93.1% | ||
| March 31, 2022 |
| December 31, 2021 |
% Leased – All Properties | 93.9% |
| 94.1% |
Anchor space | 96.5% |
| 97.0% |
Shop space | 89.7% |
| 89.2% |
28
The following table summarizes leasing activity, including our pro-rataPro-rata share of activity within the portfolio of our co-investment partnerships:
| Nine months ended September 30, 2017 | ||||||||||||||||
Leasing Transactions (1,3) | SF (in thousands) | Base Rent PSF (2) | Tenant Improvements PSF (2) | Leasing Commissions PSF (2) | ||||||||||||
| Anchor Leases | ||||||||||||||||
| New | 27 | 628 | $ | 18.80 | $ | 8.48 | $ | 5.06 | ||||||||
| Renewal | 64 | 1,946 | $ | 15.01 | $ | — | $ | 0.45 | ||||||||
Total Anchor Leases (1) | 91 | 2,574 | $ | 15.94 | $ | 2.07 | $ | 1.57 | ||||||||
| Shop Space | ||||||||||||||||
| New | 383 | 660 | $ | 31.77 | $ | 12.20 | $ | 12.21 | ||||||||
| Renewal | 834 | 1,392 | $ | 31.42 | $ | 1.07 | $ | 2.64 | ||||||||
Total Shop Space Leases (1) | 1,217 | 2,052 | $ | 31.53 | $ | 4.65 | $ | 5.71 | ||||||||
| Total Leases | 1,308 | 4,626 | $ | 22.86 | $ | 3.21 | $ | 3.41 | ||||||||
(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 September 30, 2107, amounts include leasing activity of properties acquired from Equity One beginning March 1, 2017. | ||||||||||||||||
| Nine months ended September 30, 2016 | ||||||||||||||||
Leasing Transactions (1) | SF (in thousands) | Base Rent PSF (2) | Tenant Improvements PSF (2) | Leasing Commissions PSF (2) | ||||||||||||
| Anchor Leases | ||||||||||||||||
| New | 11 | 312 | $ | 13.92 | $ | 4.98 | $ | 3.75 | ||||||||
| Renewal | 64 | 1,302 | $ | 13.29 | $ | 0.35 | $ | 0.83 | ||||||||
Total Anchor Leases (1) | 75 | 1,614 | $ | 13.41 | $ | 1.24 | $ | 1.39 | ||||||||
| Shop Space | ||||||||||||||||
| New | 313 | 561 | $ | 29.93 | $ | 12.00 | $ | 13.83 | ||||||||
| Renewal | 696 | 1,066 | $ | 31.57 | $ | 1.48 | $ | 4.18 | ||||||||
Total Shop Space Leases (1) | 1,009 | 1,627 | $ | 31.00 | $ | 5.11 | $ | 7.51 | ||||||||
| Total Leases | 1,084 | 3,241 | $ | 22.24 | $ | 3.18 | $ | 4.46 | ||||||||
(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. | ||||||||||||||||
|
| Three months ended March 31, 2022 |
| |||||||||||||||||
|
| Leasing |
|
| SF (in |
|
| Base Rent |
|
| Tenant |
|
| Leasing |
| |||||
Anchor Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New |
|
| 6 |
|
|
| 280 |
|
| $ | 9.50 |
|
| $ | 8.76 |
|
| $ | 6.70 |
|
Renewal |
|
| 34 |
|
|
| 851 |
|
|
| 16.18 |
|
|
| 0.54 |
|
|
| 0.08 |
|
Total Anchor Leases |
|
| 40 |
|
|
| 1,131 |
|
| $ | 14.53 |
|
| $ | 2.57 |
|
| $ | 1.71 |
|
Shop Space |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New |
|
| 133 |
|
|
| 243 |
|
| $ | 38.90 |
|
| $ | 39.24 |
|
| $ | 11.51 |
|
Renewal |
|
| 286 |
|
|
| 537 |
|
|
| 36.52 |
|
|
| 2.34 |
|
|
| 0.73 |
|
Total Shop Space Leases |
|
| 419 |
|
|
| 780 |
|
| $ | 37.26 |
|
| $ | 13.85 |
|
| $ | 4.09 |
|
Total Leases |
|
| 459 |
|
|
| 1,911 |
|
| $ | 23.81 |
|
| $ | 7.17 |
|
| $ | 2.68 |
|
|
| Three months ended March 31, 2021 |
| |||||||||||||||||
|
| Leasing |
|
| SF (in |
|
| Base Rent |
|
| Tenant |
|
| Leasing |
| |||||
Anchor Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New |
|
| 6 |
|
|
| 95 |
|
| $ | 12.12 |
|
| $ | 45.66 |
|
| $ | 5.09 |
|
Renewal |
|
| 27 |
|
|
| 589 |
|
|
| 13.44 |
|
|
| 0.29 |
|
|
| 0.10 |
|
Total Anchor Leases |
|
| 33 |
|
|
| 684 |
|
| $ | 13.25 |
|
| $ | 6.59 |
|
| $ | 0.79 |
|
Shop Space |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
New |
|
| 107 |
|
|
| 158 |
|
| $ | 31.19 |
|
| $ | 21.04 |
|
| $ | 7.90 |
|
Renewal |
|
| 310 |
|
|
| 570 |
|
|
| 32.78 |
|
|
| 1.86 |
|
|
| 0.42 |
|
Total Shop Space Leases |
|
| 417 |
|
|
| 728 |
|
| $ | 32.44 |
|
| $ | 6.02 |
|
| $ | 2.04 |
|
Total Leases |
|
| 450 |
|
|
| 1,412 |
|
| $ | 23.14 |
|
| $ | 6.30 |
|
| $ | 1.44 |
|
The weighted average annual base rent ("ABR") per square foot on signed shop space leases during 20172022 was $31.53 and exceeds$37.26 PSF, which is higher than the average annual baseABR rent per square foot of all shop space leases due to expire during the next 12 months of $29.59 PSF,$32.86 PSF. While new and renewal rent spreads were positive at 6.8% as compared to prior rents on those same spaces, future rent spreads could be negatively impacted by 6.6%.
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. TheBased on percentage of annualized base rent, the following table summarizes our most significant tenants, based on their percentage of annualized base rent:
|
| March 31, 2022 | ||||||
Tenant |
| Number of |
|
| Percentage of |
| Percentage of | |
Publix |
|
| 68 |
|
| 7.2% |
| 3.4% |
Kroger Co. |
|
| 54 |
|
| 7.4% |
| 3.2% |
Albertsons Companies, Inc. |
|
| 46 |
|
| 4.7% |
| 3.0% |
TJX Companies, Inc. |
|
| 63 |
|
| 3.6% |
| 2.6% |
Amazon/Whole Foods |
|
| 35 |
|
| 2.7% |
| 2.6% |
| September 30, 2017 | ||||||
| Grocery Anchor | Number of Stores | Percentage of Company- owned GLA (1) | Percentage of Annualized Base Rent (1) | |||
| Kroger | 59 | 6.6% | 3.2% | |||
| Publix | 68 | 6.2% | 3.1% | |||
| Albertsons/Safeway | 46 | 4.0% | 2.8% | |||
| TJX Companies | 57 | 3.2% | 2.4% | |||
| Whole Foods | 26 | 2.1% | 2.2% | |||
(1) Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors. | ||||||
29
Bankruptcies and Credit Concerns
Our management team devotes significant time to researching and monitoring retail trends, consumer preferences and trends, customer shopping behaviors, changes in retail delivery methods, shifts to e-commerce, and changing demographics in order to anticipate the challenges and opportunities impacting our industry. The success of our tenants in operating their businesses and their ability to pay rent continue to be significantly influenced by many challenges, including the retail industry. Certain segmentsimpact of inflation, labor shortages, and supply chain constraints on their cost of doing business. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the retail industry face reductionsUnited States. The policies utilized to address these issues, including raising interest rates, could result 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 effectimpacts on the U.S. economy, including a slowing of growth or potentially a recession, thereby impacting our results of operations.tenants' businesses and/or decreasing future demand for space in our shopping centers. We seek to mitigate these potential impacts through maintaining a high quality portfolio, tenant diversification, re-tenantingreplacing weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive footcustomer traffic, and maintaining a presence in affluent suburbs and dense infillsuburban trade areas. As a resultareas with compelling demographic populations benefiting from high levels 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.
Although base rent is supported byset forth in 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. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to adjudicate our claim and to re-lease the vacated space. 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. Tenants who have filed for bankruptcy and continue to occupy space in our shopping centers represent an aggregate of 0.5% of our annual base rent on a pro-rata basis.
Results from Operations
Comparison of the three months ended September 30, 2017 to 2016:
Our revenues increasedchanged as summarized in the following table:
| Three months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Minimum rent | $ | 195,393 | 111,886 | 83,507 | ||||||
| Percentage rent | 1,147 | 495 | 652 | |||||||
| Recoveries from tenants | 54,483 | 31,443 | 23,040 | |||||||
| Other income | 5,071 | 3,089 | 1,982 | |||||||
| Management, transaction, and other fees | 6,047 | 5,855 | 192 | |||||||
| Total revenues | $ | 262,141 | 152,768 | 109,373 | ||||||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Lease income |
|
|
|
|
|
|
|
|
| |||
Base rent |
| $ | 199,252 |
|
|
| 188,480 |
|
|
| 10,772 |
|
Recoveries from tenants |
|
| 67,774 |
|
|
| 62,597 |
|
|
| 5,177 |
|
Percentage rent |
|
| 4,948 |
|
|
| 3,366 |
|
|
| 1,582 |
|
Uncollectible lease income |
|
| 6,146 |
|
|
| 2,275 |
|
|
| 3,871 |
|
Other lease income |
|
| 3,825 |
|
|
| 2,762 |
|
|
| 1,063 |
|
Straight line rent |
|
| 6,011 |
|
|
| 881 |
|
|
| 5,130 |
|
Above / below market rent amortization |
|
| 5,689 |
|
|
| 5,996 |
|
|
| (307 | ) |
Total lease income |
| $ | 293,645 |
|
|
| 266,357 |
|
|
| 27,288 |
|
Other property income |
|
| 3,104 |
|
|
| 1,953 |
|
|
| 1,151 |
|
Management, transaction, and other fees |
|
| 6,684 |
|
|
| 6,393 |
|
|
| 291 |
|
Total revenues |
| $ | 303,433 |
|
|
| 274,703 |
|
|
| 28,730 |
|
Lease income increased $27.3 million, on a net basis, driven by the following contractually billable components of rent increased as follows:
30
Other property income increased $1.2 million primarily due to an increase in tenant settlements and parking income.
Changes in our operating expenses are summarized in the following table:
| Three months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Depreciation and amortization | $ | 91,474 | 40,705 | 50,769 | ||||||
| Operating and maintenance | 38,020 | 23,373 | 14,647 | |||||||
| General and administrative | 15,199 | 16,046 | (847 | ) | ||||||
| Real estate taxes | 29,315 | 17,058 | 12,257 | |||||||
| Other operating expenses | 3,195 | 1,046 | 2,149 | |||||||
| Total operating expenses | $ | 177,203 | 98,228 | 78,975 | ||||||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Depreciation and amortization |
| $ | 77,842 |
|
|
| 77,259 |
|
|
| 583 |
|
Operating and maintenance |
|
| 46,461 |
|
|
| 45,582 |
|
|
| 879 |
|
General and administrative |
|
| 18,792 |
|
|
| 21,287 |
|
|
| (2,495 | ) |
Real estate taxes |
|
| 36,869 |
|
|
| 36,166 |
|
|
| 703 |
|
Other operating expenses |
|
| 2,173 |
|
|
| 698 |
|
|
| 1,475 |
|
Total operating expenses |
| $ | 182,137 |
|
|
| 180,992 |
|
|
| 1,145 |
|
Depreciation and amortization costs increased $583,000, on a net basis, as follows:
Operating and maintenance costs increased $879,000, on a net basis, as follows:
31
General and administrative
Real estate taxes increased $703,000, on a net basis, as follows:
Other operating expenses increased as follows:
The following table presents the components of other expense (income):
| Three months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Interest expense, net | ||||||||||
| Interest on notes payable | $ | 31,577 | 19,828 | 11,749 | ||||||
| Interest on unsecured credit facilities | 3,974 | 1,556 | 2,418 | |||||||
| Capitalized interest | (2,488 | ) | (857 | ) | (1,631 | ) | ||||
| Hedge expense | 2,102 | 1,807 | 295 | |||||||
| Interest income | (486 | ) | (389 | ) | (97 | ) | ||||
| Interest expense, net | 34,679 | 21,945 | 12,734 | |||||||
| Early extinguishment of debt | — | 13,943 | (13,943 | ) | ||||||
| Net investment income | (971 | ) | (821 | ) | (150 | ) | ||||
| Loss on derivative instruments | — | 40,586 | (40,586 | ) | ||||||
| Total other expense (income) | $ | 33,708 | 75,653 | (41,945 | ) | |||||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Interest expense, net |
|
|
|
|
|
|
|
|
| |||
Interest on notes payable |
| $ | 37,087 |
|
|
| 37,235 |
|
|
| (148 | ) |
Interest on unsecured credit facilities |
|
| 480 |
|
|
| 599 |
|
|
| (119 | ) |
Capitalized interest |
|
| (795 | ) |
|
| (849 | ) |
|
| 54 |
|
Hedge expense |
|
| 109 |
|
|
| 109 |
|
|
| — |
|
Interest income |
|
| (143 | ) |
|
| (158 | ) |
|
| 15 |
|
Interest expense, net |
| $ | 36,738 |
|
|
| 36,936 |
|
|
| (198 | ) |
Gain on sale of real estate, net of tax |
|
| (101,948 | ) |
|
| (11,698 | ) |
|
| (90,250 | ) |
Net investment income |
|
| 2,494 |
|
|
| (1,486 | ) |
|
| 3,980 |
|
Total other expense (income) |
| $ | (62,716 | ) |
|
| 23,752 |
|
|
| (86,468 | ) |
During the three months ended September 30, 2016,March 31, 2022, we recognized gains on sale of $101.9 million for one land parcel and one operating property. During the three months ended March 31, 2021, we recognized gains on sale of $11.7 million from one land parcel, four operating properties, and additional receipts from prior year sales.
Net investment income decreased $4.0 million primarily driven by a $40.6$3.4 million change in unrealized gains and losses of plan assets held in the non-qualified deferred compensation plan. There is an offsetting charge to settle $220 million of forward starting interest rate swapsin General and administrative costs related to debt previously expected to be issued in 2017 to repay our $300 million notes due June 2017.
Our equity in income of investments in real estate partnerships increased as follows:
|
|
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| Regency's |
| 2022 |
|
| 2021 |
|
| Change |
| |||
GRI - Regency, LLC (GRIR) |
| 40.00% |
| $ | 9,373 |
|
|
| 7,620 |
|
|
| 1,753 |
|
New York Common Retirement Fund (NYC) |
| 30.00% |
|
| 266 |
|
|
| 784 |
|
|
| (518 | ) |
Columbia Regency Retail Partners, LLC (Columbia I) |
| 20.00% |
|
| 521 |
|
|
| 432 |
|
|
| 89 |
|
Columbia Regency Partners II, LLC (Columbia II) |
| 20.00% |
|
| 557 |
|
|
| 510 |
|
|
| 47 |
|
Columbia Village District, LLC |
| 30.00% |
|
| 266 |
|
|
| 304 |
|
|
| (38 | ) |
RegCal, LLC (RegCal) (1) |
| 25.00% |
|
| 626 |
|
|
| 525 |
|
|
| 101 |
|
US Regency Retail I, LLC (USAA) (2) |
| 20.01% |
|
| — |
|
|
| 234 |
|
|
| (234 | ) |
Other investments in real estate partnerships |
| 31.00% - 50.00% |
|
| 1,195 |
|
|
| 1,257 |
|
|
| (62 | ) |
Total equity in income of investments in real estate partnerships |
| $ | 12,804 |
|
|
| 11,666 |
|
|
| 1,138 |
| ||
| Three months ended September 30, | |||||||||||
| (in thousands) | Regency's Ownership | 2017 | 2016 | Change | |||||||
| GRI - Regency, LLC (GRIR) | 40.00% | $ | 6,917 | 6,862 | 55 | ||||||
| New York Common Retirement Fund (NYC) | 30.00% | 183 | — | 183 | |||||||
| Columbia Regency Retail Partners, LLC (Columbia I) | 20.00% | 284 | 314 | (30 | ) | ||||||
| Columbia Regency Partners II, LLC (Columbia II) | 20.00% | 332 | 366 | (34 | ) | ||||||
| Cameron Village, LLC (Cameron) | 30.00% | 174 | 150 | 24 | |||||||
| RegCal, LLC (RegCal) | 25.00% | 331 | 205 | 126 | |||||||
| US Regency Retail I, LLC (USAA) | 20.01% | 3,599 | 227 | 3,372 | |||||||
| Other investments in real estate partnerships | 20.00% - 50.00% | 400 | 14,523 | (14,123 | ) | ||||||
| Total equity in income of investments in real estate partnerships | $ | 12,220 | 22,647 | (10,427 | ) | ||||||
32
The $10.4$1.1 million decreaseincrease in our equity in income of investments in real estate partnerships is largely attributedattributable to the following changes:
The following represents the remaining components that comprised net income attributable to the common stockholders and unit holders:
| Three months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Income from operations | $ | 63,451 | 1,534 | 61,917 | ||||||
| Gain on sale of real estate, net of tax | 131 | 9,580 | (9,449 | ) | ||||||
| Income attributable to noncontrolling interests | (769 | ) | (543 | ) | (226 | ) | ||||
| Preferred stock dividends and issuance costs | (3,147 | ) | (5,266 | ) | 2,119 | |||||
| Net income attributable to common stockholders | $ | 59,666 | 5,305 | 54,361 | ||||||
| Net income attributable to exchangeable operating partnership units | 132 | 16 | 116 | |||||||
| Net income attributable to common unit holders | $ | 59,798 | 5,321 | 54,477 | ||||||
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Minimum rent | $ | 532,625 | 329,506 | 203,119 | ||||||
| Percentage rent | 5,509 | 2,651 | 2,858 | |||||||
| Recoveries from tenants | 149,811 | 94,684 | 55,127 | |||||||
| Other income | 12,278 | 9,210 | 3,068 | |||||||
| Management, transaction, and other fees | 19,353 | 18,759 | 594 | |||||||
| Total revenues | $ | 719,576 | 454,810 | 264,766 | ||||||
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Depreciation and amortization | $ | 243,757 | 119,721 | 124,036 | ||||||
| Operating and maintenance | 103,888 | 69,767 | 34,121 | |||||||
| General and administrative | 49,618 | 48,695 | 923 | |||||||
| Real estate taxes | 79,636 | 49,697 | 29,939 | |||||||
| Other operating expenses | 81,621 | 5,795 | 75,826 | |||||||
| Total operating expenses | $ | 558,520 | 293,675 | 264,845 | ||||||
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Interest expense, net | ||||||||||
| Interest on notes payable | $ | 87,492 | 63,899 | 23,593 | ||||||
| Interest on unsecured credit facilities | 10,718 | 3,829 | 6,889 | |||||||
| Capitalized interest | (5,778 | ) | (2,622 | ) | (3,156 | ) | ||||
| Hedge expense | 6,305 | 6,306 | (1 | ) | ||||||
| Interest income | (1,452 | ) | (923 | ) | (529 | ) | ||||
| Interest expense, net | 97,285 | 70,489 | 26,796 | |||||||
| Provision for impairment | — | 1,666 | (1,666 | ) | ||||||
| Early extinguishment of debt | 12,404 | 13,943 | (1,539 | ) | ||||||
| Net investment income | (2,955 | ) | (1,268 | ) | (1,687 | ) | ||||
| Loss on derivative instruments | — | 40,586 | (40,586 | ) | ||||||
| Total other expense (income) | $ | 106,734 | 125,416 | (18,682 | ) | |||||
| Nine months ended September 30, | |||||||||||
| (in thousands) | Ownership | 2017 | 2016 | Change | |||||||
| GRI - Regency, LLC (GRIR) | 40.00% | $ | 20,791 | 23,975 | (3,184 | ) | |||||
| New York Common Retirement Fund (NYC) | 30.00% | 417 | — | 417 | |||||||
| Columbia Regency Retail Partners, LLC (Columbia I) | 20.00% | 3,344 | 2,557 | 787 | |||||||
| Columbia Regency Partners II, LLC (Columbia II) | 20.00% | 1,072 | 2,236 | (1,164 | ) | ||||||
| Cameron Village, LLC (Cameron) | 30.00% | 636 | 487 | 149 | |||||||
| RegCal, LLC (RegCal) | 25.00% | 1,010 | 684 | 326 | |||||||
| US Regency Retail I, LLC (USAA) | 20.01% | 4,251 | 739 | 3,512 | |||||||
| Other investments in real estate partnerships | 20.00% - 50.00% | 2,283 | 15,940 | (13,657 | ) | ||||||
| Total equity in income of investments in real estate partnerships | $ | 33,804 | 46,618 | (12,814 | ) | ||||||
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Income from operations | $ | 88,126 | 82,337 | 5,789 | ||||||
| Gain on sale of real estate, net of tax | 4,913 | 22,997 | (18,084 | ) | ||||||
| Income attributable to noncontrolling interests | (2,101 | ) | (1,545 | ) | (556 | ) | ||||
| Preferred stock dividends and issuance costs | (16,128 | ) | (15,797 | ) | (331 | ) | ||||
| Net income attributable to common stockholders | $ | 74,810 | 87,992 | (13,182 | ) | |||||
| Net income attributable to exchangeable operating partnership units | 217 | 165 | 52 | |||||||
| Net income attributable to common unit holders | $ | 75,027 | 88,157 | (13,130 | ) | |||||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Net income |
| $ | 196,816 |
|
|
| 81,625 |
|
|
| 115,191 |
|
Income attributable to noncontrolling interests |
|
| (1,588 | ) |
|
| (969 | ) |
|
| (619 | ) |
Net income attributable to common stockholders |
| $ | 195,228 |
|
|
| 80,656 |
|
|
| 114,572 |
|
Net income attributable to exchangeable operating partnership units |
|
| (863 | ) |
|
| (364 | ) |
|
| (499 | ) |
Net income attributable to common unit holders |
| $ | 196,091 |
|
|
| 81,020 |
|
|
| 115,071 |
|
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'sour operating results. We managebelieve these non-GAAP measures provide useful information to our entire real estate portfolio without regardBoard of Directors, management and investors regarding certain trends relating to ownership structure, although certain decisions impacting properties owned throughour financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. 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, require partner approval. Therefore, wewhen read in conjunction with our reported results under GAAP. We believe presenting our pro-rataPro-rata share of operating results, regardless of ownership structure, along with other non-GAAP measures, may assist in comparing the Company'sour operating results to other REITs'.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. See "Defined Terms"“Non-GAAP Measures” at the beginning of this Management's Discussion and Analysis.
We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP, rather they supplement GAAP measures by providing additional information we believe to be useful to shareholders. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations or future prospects of the Company.
33
Pro-Rata Same Property NOI:
Our Pro-rata 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.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||
| (in thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Base rent (1) | $ | 197,529 | 190,618 | 6,911 | $ | 588,465 | 568,979 | 19,486 | ||||||||||||
Percentage rent (1) | 1,270 | 1,764 | (494 | ) | 7,294 | 8,093 | (799 | ) | ||||||||||||
Recovery revenue (1) | 59,033 | 56,694 | 2,339 | 178,979 | 172,084 | 6,895 | ||||||||||||||
Other income (1) | 4,357 | 3,530 | 827 | 10,438 | 11,158 | (720 | ) | |||||||||||||
Operating expenses (1) | 71,364 | 70,935 | 429 | 216,354 | 212,602 | 3,752 | ||||||||||||||
| Pro-rata same property NOI, as adjusted | $ | 190,825 | 181,671 | 9,154 | $ | 568,822 | 547,712 | 21,110 | ||||||||||||
Less: Termination fees (1) | 214 | 137 | 77 | 472 | 1,038 | (566 | ) | |||||||||||||
| Pro-rata same property NOI, as adjusted, excluding termination fees | $ | 190,611 | 181,534 | 9,077 | $ | 568,350 | 546,674 | 21,676 | ||||||||||||
| Pro-rata same property NOI growth, as adjusted | 5.0 | % | 4.0 | % | ||||||||||||||||
(1) Adjusted for Equity One operating results prior to the merger for these periods. For additional information and details about the Equity One operating results included herein, refer to the Same Property NOI Reconciliation at the end of the Supplemental Earnings section. | ||||||||||||||||||||
|
| Three months ended |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Base rent |
| $ | 218,187 |
|
|
| 212,428 |
|
|
| 5,759 |
|
Recoveries from tenants |
|
| 74,257 |
|
|
| 70,757 |
|
|
| 3,500 |
|
Percentage rent |
|
| 5,498 |
|
|
| 3,814 |
|
|
| 1,684 |
|
Termination fees |
|
| 1,949 |
|
|
| 417 |
|
|
| 1,532 |
|
Uncollectible lease income |
|
| 6,757 |
|
|
| 1,731 |
|
|
| 5,026 |
|
Other lease income |
|
| 2,602 |
|
|
| 2,693 |
|
|
| (91 | ) |
Other property income |
|
| 2,396 |
|
|
| 1,293 |
|
|
| 1,103 |
|
Total real estate revenue |
|
| 311,646 |
|
|
| 293,133 |
|
|
| 18,513 |
|
Operating and maintenance |
|
| 47,520 |
|
|
| 46,015 |
|
|
| 1,505 |
|
Real estate taxes |
|
| 39,953 |
|
|
| 40,362 |
|
|
| (409 | ) |
Ground rent |
|
| 2,913 |
|
|
| 2,939 |
|
|
| (26 | ) |
Total real estate operating expenses |
|
| 90,386 |
|
|
| 89,316 |
|
|
| 1,070 |
|
Pro-rata same property NOI |
| $ | 221,260 |
|
|
| 203,817 |
|
|
| 17,443 |
|
Less: Termination fees |
|
| 1,949 |
|
|
| 417 |
|
|
| 1,532 |
|
Pro-rata same property NOI, excluding termination fees |
| $ | 219,311 |
|
|
| 203,400 |
|
|
| 15,911 |
|
Pro-rata same property NOI growth, excluding termination fees |
|
|
|
|
|
|
|
| 7.8 | % | ||
Billable Base rent increased $6.9 million and $19.5$5.8 million during the three and nine months ended September 30, 2017, respectively, driven by increasesMarch 31, 2022, due to rent steps in existing leases, positive rental rate growthspreads on new and renewal leases, and contractual rent steps from anchor leases, minimally offset by a slight decrease in the percentage of leases that have rent commenced.
Recoveries from tenants increased $0.8$3.5 million during the three months ended September 30, 2017March 31, 2022, due to higher operating expenses in the current year, higher recovery rates from our tenants, and decreased $0.7increases in occupancy.
Percentage rent increased $1.7 million during the ninethree months ended September 30, 2017,March 31, 2022, due to the timing of lease terminationimprovements in tenant sales.
Termination fees and other fee income.
Uncollectible lease income increased $5.0 million during the three months ended March 31, 2022, primarily driven by collection of previously reserved amounts and improvements in current period collection rates.
Other property income increased $1.1 million during the three months ended March 31, 2022, primarily due to higher real estate taxes.
Operating and maintenance increased $1.5 million during the three months ended March 31, 2022, due primarily to an increase in insurance premiums, property maintenance, and tenant reimbursable costs.
34
Same Property Rollforward:
Our same property pool includes the following property count, pro-rataPro-rata GLA, and changes therein:
|
| Three months ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||
(GLA in thousands) |
| Property |
|
| GLA |
|
| Property |
|
| GLA |
| ||||
Beginning same property count |
|
| 393 |
|
|
| 41,294 |
|
|
| 393 |
|
|
| 40,228 |
|
Acquired properties owned for entirety of comparable periods presented (1) |
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| 378 |
|
Developments that reached completion by the beginning of earliest comparable period presented |
|
| 1 |
|
|
| 72 |
|
|
| 6 |
|
|
| 683 |
|
Disposed properties |
|
| (1 | ) |
|
| (88 | ) |
|
| (4 | ) |
|
| (110 | ) |
SF adjustments (2) |
|
| — |
|
|
| (58 | ) |
|
| — |
|
|
| 33 |
|
Ending same property count |
|
| 393 |
|
|
| 41,220 |
|
|
| 397 |
|
|
| 41,212 |
|
| Three months ended September 30, | |||||||||
| 2017 | 2016 | ||||||||
| (GLA in thousands) | Property Count | GLA | Property Count | GLA | |||||
| Beginning same property count | 400 | 41,076 | 298 | 26,964 | |||||
| Disposed properties | (1 | ) | (24 | ) | (6 | ) | (295 | ) | |
SF adjustments (1) | — | 21 | — | (33 | ) | ||||
| Ending same property count | 399 | 41,073 | 292 | 26,636 | |||||
| Nine months ended September 30, | |||||||||
| 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 | (3 | ) | (82 | ) | (16 | ) | (660 | ) | |
SF adjustments (1) | — | 71 | — | 3 | |||||
| Properties acquired through Equity One merger | 110 | 14,181 | — | — | |||||
| Ending same property count | 399 | 41,073 | 292 | 26,636 | |||||
(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 NAREITNareit FFO and to Core FFOOperating Earnings is as follows:
|
| Three months ended March 31, |
| |||||
(in thousands, except share information) |
| 2022 |
|
| 2021 |
| ||
Reconciliation of Net income to Nareit FFO |
|
|
|
|
|
| ||
Net income attributable to common stockholders |
| $ | 195,228 |
|
|
| 80,656 |
|
Adjustments to reconcile to Nareit FFO: (1) |
|
|
|
|
|
| ||
Depreciation and amortization (excluding FF&E) |
|
| 84,130 |
|
|
| 84,494 |
|
Gain on sale of real estate, net of tax |
|
| (102,010 | ) |
|
| (12,070 | ) |
Exchangeable operating partnership units |
|
| 863 |
|
|
| 364 |
|
Nareit FFO attributable to common stock and unit holders |
| $ | 178,211 |
|
|
| 153,444 |
|
Reconciliation of Nareit FFO to Core Operating Earnings |
|
|
|
|
|
| ||
Nareit Funds From Operations |
|
| 178,211 |
|
|
| 153,444 |
|
Adjustments to reconcile to Core Operating Earnings (1): |
|
|
|
|
|
| ||
Certain Non Cash Items |
|
|
|
|
|
| ||
Straight line rent |
|
| (3,478 | ) |
|
| (3,429 | ) |
Uncollectible straight line rent |
|
| (2,383 | ) |
|
| 2,573 |
|
Above/below market rent amortization, net |
|
| (5,392 | ) |
|
| (5,980 | ) |
Debt premium/discount amortization |
|
| (106 | ) |
|
| 91 |
|
Core Operating Earnings |
| $ | 166,852 |
|
|
| 146,699 |
|
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands, except share information) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| Reconciliation of Net income to NAREIT FFO | ||||||||||||||
| Net income attributable to common stockholders | $ | 59,666 | 5,305 | $ | 74,810 | 87,992 | ||||||||
Adjustments to reconcile to NAREIT FFO:(1) | ||||||||||||||
| Depreciation and amortization (excluding FF&E) | 99,284 | 47,826 | 266,873 | 143,373 | ||||||||||
| Provision for impairment to operating properties | — | — | — | 659 | ||||||||||
| Gain on sale of operating properties, net of tax | (3,349 | ) | (23,067 | ) | (8,415 | ) | (38,016 | ) | ||||||
| Exchangeable operating partnership units | 132 | 16 | 217 | 165 | ||||||||||
| NAREIT FFO attributable to common stock and unit holders | $ | 155,733 | 30,080 | $ | 333,485 | 194,173 | ||||||||
| Reconciliation of NAREIT FFO to Core FFO | ||||||||||||||
| NAREIT FFO attributable to common stock and unit holders | $ | 155,733 | 30,080 | $ | 333,485 | 194,173 | ||||||||
Adjustments to reconcile to Core FFO:(1) | ||||||||||||||
| Development pursuit costs | 202 | (47 | ) | 521 | 1,766 | |||||||||
| Acquisition pursuit and closing costs | — | 287 | 138 | 907 | ||||||||||
| Merger related costs | 1,175 | — | 75,584 | — | ||||||||||
| Gain on sale of land | (119 | ) | (628 | ) | (2,969 | ) | (7,886 | ) | ||||||
| Provision for impairment to land | — | 35 | — | 547 | ||||||||||
| Loss on derivative instruments and hedge ineffectiveness | 2 | 40,586 | (12 | ) | 40,589 | |||||||||
| Early extinguishment of debt | — | 13,943 | 12,404 | 13,957 | ||||||||||
| Preferred redemption charge | 2,859 | — | 12,226 | — | ||||||||||
| Merger related debt offering interest | — | — | 975 | — | ||||||||||
| Hurricane losses | 1,852 | — | 1,852 | — | ||||||||||
| Core FFO attributable to common stock and unit holders | $ | 161,704 | 84,256 | $ | 434,204 | 244,053 | ||||||||
(1) Includes Regency's pro-rate share of unconsolidated investment partnerships, net of pro-rata share attributable to noncontrolling interest. | ||||||||||||||
35
Same Property NOI Reconciliation:
Our reconciliation of property revenues and property expensesNet income attributable to common stockholders to Same Property NOI, on a pro-rataPro-rata basis, is as follows:
|
| Three months ended March 31, |
| |||||
(in thousands) |
| 2022 |
|
| 2021 |
| ||
Net income attributable to common stockholders |
| $ | 195,228 |
|
|
| 80,656 |
|
Less: |
|
|
|
|
|
| ||
Management, transaction, and other fees |
|
| 6,684 |
|
|
| 6,393 |
|
Other (1) |
|
| 12,621 |
|
|
| 7,704 |
|
Plus: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 77,842 |
|
|
| 77,259 |
|
General and administrative |
|
| 18,792 |
|
|
| 21,287 |
|
Other operating expense |
|
| 2,173 |
|
|
| 698 |
|
Other (income) expense |
|
| (62,716 | ) |
|
| 23,752 |
|
Equity in income of investments in real estate excluded from NOI (2) |
|
| 12,388 |
|
|
| 13,301 |
|
Net income attributable to noncontrolling interests |
|
| 1,588 |
|
|
| 969 |
|
Pro-rata NOI |
| $ | 225,990 |
|
|
| 203,825 |
|
Less non-same property NOI (3) |
|
| 4,730 |
|
|
| 8 |
|
Pro-rata same property NOI |
| $ | 221,260 |
|
|
| 203,817 |
|
| Three months ended September 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| (in thousands) | Same Property | Other (1) | Total | Same Property | Other (1) | Total | ||||||||||||||
| Net income attributable to common stockholders | $ | 138,926 | (79,260 | ) | 59,666 | $ | 77,483 | (72,178 | ) | 5,305 | ||||||||||
| Less: | ||||||||||||||||||||
| Management, transaction, and other fees | — | 6,047 | 6,047 | — | 5,855 | 5,855 | ||||||||||||||
| Gain on sale of real estate, net of tax | — | 131 | 131 | — | 9,580 | 9,580 | ||||||||||||||
Other (2) | 3,977 | 9,296 | 13,273 | 2,429 | 1,253 | 3,682 | ||||||||||||||
| Plus: | ||||||||||||||||||||
| Depreciation and amortization | 37,246 | 54,228 | 91,474 | 36,189 | 4,517 | 40,706 | ||||||||||||||
| General and administrative | — | 15,199 | 15,199 | — | 16,046 | 16,046 | ||||||||||||||
| Other operating expense, excluding provision for doubtful accounts | 149 | 1,981 | 2,130 | 79 | 420 | 499 | ||||||||||||||
| Other expense (income) | 7,148 | 26,561 | 33,709 | 6,890 | 68,763 | 75,653 | ||||||||||||||
Equity in income (loss) of investments in real estate excluded from NOI (3) | 11,333 | 475 | 11,808 | 904 | (1,020 | ) | (116 | ) | ||||||||||||
| Net income attributable to noncontrolling interests | — | 769 | 769 | — | 543 | 543 | ||||||||||||||
| Preferred stock dividends and issuance costs | — | 3,147 | 3,147 | — | 5,266 | 5,266 | ||||||||||||||
NOI from Equity One prior to merger (4) | — | — | — | 62,555 | — | 62,555 | ||||||||||||||
| Pro-rata NOI, as adjusted | $ | 190,825 | 7,626 | 198,451 | $ | 181,671 | 5,669 | 187,340 | ||||||||||||
(1) Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities. | ||||||||||||||||||||
(2) Includes straight-line rental income and expense, 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. | ||||||||||||||||||||
(4) NOI from Equity One prior to the merger was derived from the accounting records of Equity One without adjustment. Equity One's financial information for the period ended February 28, 2017 and the period ended September 30, 2016 was subject to a limited internal review by Regency. The table below provides Same Property NOI detail for the non-ownership periods of Equity One. | ||||||||||||||||||||
| Nine months ended September 30, | ||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| (in thousands) | Same Property | Other (1) | Total | Same Property | Other (1) | Total | ||||||||||||||
| Net income attributable to common stockholders | $ | 350,221 | (275,411 | ) | 74,810 | $ | 212,329 | (124,337 | ) | 87,992 | ||||||||||
| Less: | ||||||||||||||||||||
| Management, transaction, and other fees | — | 19,353 | 19,353 | — | 18,759 | 18,759 | ||||||||||||||
| Gain on sale of real estate, net of tax | — | 4,913 | 4,913 | — | 22,997 | 22,997 | ||||||||||||||
Other(2) | 11,607 | 24,927 | 36,534 | 8,075 | 3,096 | 11,171 | ||||||||||||||
| Plus: | ||||||||||||||||||||
| Depreciation and amortization | 112,690 | 131,067 | 243,757 | 109,708 | 10,013 | 119,721 | ||||||||||||||
| General and administrative | — | 49,618 | 49,618 | — | 48,695 | 48,695 | ||||||||||||||
| Other operating expense, excluding provision for doubtful accounts | 514 | 78,260 | 78,774 | 975 | 3,371 | 4,346 | ||||||||||||||
| Other expense (income) | 37,209 | 69,525 | 106,734 | 21,212 | 104,204 | 125,416 | ||||||||||||||
Equity in income (loss) of investments in real estate excluded from NOI (3) | 36,790 | 1,729 | 38,519 | 23,500 | (1,819 | ) | 21,681 | |||||||||||||
| Net income attributable to noncontrolling interests | — | 2,101 | 2,101 | — | 1,546 | 1,546 | ||||||||||||||
| Preferred stock dividends and issuance costs | — | 16,128 | 16,128 | — | 15,797 | 15,797 | ||||||||||||||
| NOI from Equity One prior to merger | 43,005 | — | 43,005 | 188,063 | — | 188,063 | ||||||||||||||
| Pro-rata NOI, as adjusted | $ | 568,822 | 23,824 | 592,646 | $ | 547,712 | 12,618 | 560,330 | ||||||||||||
(1) Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities. | ||||||||||||||||||||
(2) Includes straight-line rental income and expense, 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. | ||||||||||||||||||||
(4) NOI from Equity One prior to the merger was derived from the accounting records of Equity One without adjustment. Equity One's financial information for the period ended February 28, 2017 and the period ended September 30, 2016 was subject to a limited internal review by Regency. The following is Same Property NOI detail for the non-ownership periods of Equity One: | ||||||||||||||||||||
| (in thousands) | Two Months Ended February 2017 | Three Months Ended September 2016 | Nine Months Ended September 2016 | ||||||||
| Base rent | $ | 44,593 | $ | 65,305 | 194,952 | ||||||
| Percentage rent | 1,151 | 1,128 | 4,331 | ||||||||
| Recovery revenue | 14,175 | 20,647 | 61,627 | ||||||||
| Other income | 615 | 918 | 2,736 | ||||||||
| Operating expenses | 17,529 | 25,443 | 75,583 | ||||||||
Pro-rata same property NOI, as adjusted (1) | $ | 43,005 | $ | 62,555 | 188,063 | ||||||
| Less: Termination fees | 30 | 21 | 93 | ||||||||
| Pro-rata same property NOI, as adjusted, excluding termination fees | $ | 42,975 | $ | 62,534 | 187,970 | ||||||
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 monitorA significant portion of our cash from operations is distributed to our common shareholders in the capital markets and evaluateform of dividends in order to maintain our ability to issue new debt or equity, to repay maturing debt, or fund our capital commitments.
Except for the $500$200 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 a guarantor onof the $200 million of 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.
We continually assess our available liquidity and our expected cash requirements, which includes monitoring our tenant rent collections. The success of our tenants in operating their businesses and their ability to pay rent continue to be significantly influenced by many challenges including the impact of inflation, labor shortages, and supply chain constraints on their cost of doing business. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the United States. The policies utilized to address these issues, including raising interest rates, could result in adverse impacts on the U.S. economy, including a slowing of growth or potentially a recession, thereby impacting our tenants' businesses and/or decreasing future demand for space in our shopping centers.
We draw on multiple financing sources to fund our long-term capital needs, including the capital requirements of our in process and planned developments, redevelopments, and capital expenditures, and the repayment of debt. We expect to meet these needs by using a combination of the following: cash flow from operations after funding our dividend, proceeds from the sale of real estate, mortgage loan and unsecured bank financing, distributions received from our co-investment partnerships, and when the capital markets are favorable, proceeds from the sale of equity or the issuance of new unsecured debt. We continually evaluate alternative financing options, and we believe we can obtain financing on reasonable terms, although likely at higher interest rates than that of debt currently outstanding.
We have no unsecured debt maturities until 2024 and a manageable level of secured mortgage maturities during the next 12 months, including those mortgages within our real estate partnerships. Based upon our available cash balance, 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.
36
In addition to its $23.5our $176.0 million of unrestricted cash, balance, the Company haswe have the following additional sources of capital available:
(in thousands) | March 31, 2022 |
| |
ATM equity program |
|
| |
Original offering amount | $ | 500,000 |
|
Available capacity (1) | $ | 350,363 |
|
Line of Credit |
|
| |
Total commitment amount | $ | 1,250,000 |
|
Available capacity (2) | $ | 1,240,619 |
|
Maturity (3) | March 23, 2025 |
| |
| (in thousands) | September 30, 2017 | |||
| ATM equity program | ||||
| Original offering amount | $ | 500,000 | ||
| Available capacity | $ | 500,000 | ||
| 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) | $ | 979,100 | ||
Maturity (3) | May 13, 2019 | |||
(1) We have 1.25 million shares to settle prior to December 27, 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. | ||||
The declaration of dividends is setdetermined quarterly by our Board of Directors, who monitorsDirectors. On April 29, 2022, our financial position. Our Board of Directors recently declared oura common stock dividend of $0.53$0.625 per share, payable on November 29, 2017. FutureJuly 6, 2022, to shareholders of record as of June 15, 2022. While future dividends will be declareddetermined at the discretion of our Board of Directors, and will be subject to capital requirements and availability. Wewe 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 Federalfederal income tax purposes.
We currently have development and redevelopment projects in various stages of construction, along with a pipeline of potential projects for future development or redevelopment. After funding our common stock dividend payment in April 2022, we estimate that we will require capital during the next twelve months of approximately $300$284.3 million of cash, including $261.9 million to complete. This required capital includes funding construction and related costs for leasing and committed tenant improvements, in-process developments and redevelopments, making capital contributions to our co-investment partnerships, and $38.1 million to repayrepaying maturing debt. These capital requirements may be impacted by current levels of high inflation resulting in increased costs of construction materials, labor, and services from third party contractors and suppliers. In response, we have implemented mitigation strategies such as entering into fixed cost construction contracts, pre-ordering materials, and other planning efforts. Further, continued challenges from labor shortages and supply chain disruptions may extend the time to completion of these projects.
If we start new developments redevelop additional shopping centers, or redevelopments, commit to newproperty acquisitions, repay debt prior to maturity, declare future dividends, or repurchase shares of our common stock, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease. To meetWe expect to generate the necessary cash to fund our long-term capital needs from cash requirements, we may utilize cash generatedflow from operations, borrowings from our Line, proceeds from the sale of real estate, available borrowings from our Line,mortgage loan and unsecured bank financing, and when the capital markets are favorable, proceeds from the sale of equity or the issuance of new long-termunsecured debt.
We endeavor to maintain a high percentage of unencumbered assets. At September 30, 2017, 86.6%As of March 31, 2022, 89.5% 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 annualizedtrailing twelve month Fixed charge coverage ratio, including our pro-rataPro-rata share of our partnerships, was 4.1 times4.6x and 3.3 times4.5x for the periods ended September 30, 2017March 31, 2022, and December 31, 2016, respectively.
Our Line term loans, and unsecured notesloans 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 in conjunction with the Equity One merger contain covenants that are consistent with our existing debt covenants.2021. We are in compliance with theseall covenants at September 30, 2017March 31, 2022, and expect to remain in compliance.
37
Summary of Cash Flow Activity
The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Net cash provided by operating activities | $ | 343,857 | 225,333 | 118,524 | ||||||
| Net cash used in investing activities | (858,649 | ) | (354,584 | ) | (504,065 | ) | ||||
| Net cash provided by financing activities | 525,079 | 133,297 | 391,782 | |||||||
| Net increase in cash and cash equivalents | $ | 10,287 | 4,046 | 6,241 | ||||||
| Total cash and cash equivalents | $ | 23,543 | 40,902 | (17,359 | ) | |||||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Net cash provided by operating activities |
| $ | 142,892 |
|
|
| 139,362 |
|
|
| 3,530 |
|
Net provided by investing activities |
|
| 58,354 |
|
|
| 6,770 |
|
|
| 51,584 |
|
Net cash used in financing activities |
|
| (117,543 | ) |
|
| (385,262 | ) |
|
| 267,719 |
|
Net increase (decrease) in cash and cash equivalents and restricted cash |
| $ | 83,703 |
|
|
| (239,130 | ) |
|
| 322,833 |
|
Total cash and cash equivalents and restricted cash |
| $ | 178,730 |
|
|
| 139,320 |
|
|
| 39,410 |
|
Net cash provided by operating activities:
Net cash provided by operating activities increased $118.5$3.5 million due to:
Net cash used in investing activities:
Net cash used in investing activities increasedchanged by $504.1$51.6 million as follows:
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Cash flows from investing activities: | ||||||||||
| Acquisition of operating real estate | $ | (2,109 | ) | (333,220 | ) | 331,111 | ||||
| Advance deposits paid on acquisition of operating real estate | (350 | ) | 1,250 | (1,600 | ) | |||||
| Acquisition of Equity One, net of cash acquired of $72,534 | (648,763 | ) | — | (648,763 | ) | |||||
| Real estate development and capital improvements | (241,834 | ) | (146,773 | ) | (95,061 | ) | ||||
| Proceeds from sale of real estate investments | 15,397 | 83,675 | (68,278 | ) | ||||||
| Issuance of notes receivable | (3,460 | ) | — | (3,460 | ) | |||||
| Investments in real estate partnerships | (12,296 | ) | (13,127 | ) | 831 | |||||
| Distributions received from investments in real estate partnerships | 36,603 | 52,536 | (15,933 | ) | ||||||
| Dividends on investment securities | 200 | 189 | 11 | |||||||
| Acquisition of securities | (14,011 | ) | (53,290 | ) | 39,279 | |||||
| Proceeds from sale of securities | 11,974 | 54,176 | (42,202 | ) | ||||||
| Net cash used in investing activities | $ | (858,649 | ) | (354,584 | ) | (504,065 | ) | |||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| |||
Acquisition of operating real estate |
| $ | (30,166 | ) |
|
| 500 |
|
|
| (30,666 | ) |
Real estate development and capital improvements |
|
| (53,605 | ) |
|
| (31,378 | ) |
|
| (22,227 | ) |
Proceeds from sale of real estate |
|
| 124,924 |
|
|
| 53,859 |
|
|
| 71,065 |
|
Issuance of notes receivable |
|
| — |
|
|
| (20 | ) |
|
| 20 |
|
Investments in real estate partnerships |
|
| (7,173 | ) |
|
| (20,223 | ) |
|
| 13,050 |
|
Return of capital from investments in real estate partnerships |
|
| 23,892 |
|
|
| 3,283 |
|
|
| 20,609 |
|
Dividends on investment securities |
|
| 109 |
|
|
| 51 |
|
|
| 58 |
|
Acquisition of investment securities |
|
| (5,554 | ) |
|
| (8,136 | ) |
|
| 2,582 |
|
Proceeds from sale of investment securities |
|
| 5,927 |
|
|
| 8,834 |
|
|
| (2,907 | ) |
Net provided by investing activities |
| $ | 58,354 |
|
|
| 6,770 |
|
|
| 51,584 |
|
Significant changes in investing activities include:
During the same period in 2016.2021, we invested $20.2 million, including:
38
We plan to continue developing and redeveloping shopping centers for long-term investment. WeDuring 2022, we deployed capital of $241.8$53.6 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Capital expenditures: |
|
|
|
|
|
|
|
|
| |||
Land acquisitions |
| $ | 11,545 |
|
|
| — |
|
|
| 11,545 |
|
Building and tenant improvements |
|
| 16,320 |
|
|
| 7,261 |
|
|
| 9,059 |
|
Redevelopment costs |
|
| 17,310 |
|
|
| 16,159 |
|
|
| 1,151 |
|
Development costs |
|
| 5,741 |
|
|
| 4,400 |
|
|
| 1,341 |
|
Capitalized interest |
|
| 776 |
|
|
| 843 |
|
|
| (67 | ) |
Capitalized direct compensation |
|
| 1,913 |
|
|
| 2,715 |
|
|
| (802 | ) |
Real estate development and capital improvements |
| $ | 53,605 |
|
|
| 31,378 |
|
|
| 22,227 |
|
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Capital expenditures: | ||||||||||
| Land acquisitions for development / redevelopment | $ | 22,748 | 8,654 | 14,094 | ||||||
| Building and tenant improvements | 31,130 | 19,393 | 11,737 | |||||||
| Redevelopment costs | 103,395 | 35,695 | 67,700 | |||||||
| Development costs | 65,688 | 71,067 | (5,379 | ) | ||||||
| Capitalized interest | 5,778 | 2,622 | 3,156 | |||||||
| Capitalized direct compensation | 13,095 | 9,342 | 3,753 | |||||||
| Real estate development and capital improvements | $ | 241,834 | 146,773 | 95,061 | ||||||
39
The following table summarizes our development projects (in thousands, except cost PSF):
(in thousands, except cost PSF) |
|
|
|
|
|
|
|
|
| March 31, 2022 |
| |||||||||||||
Property Name |
| Market |
| Ownership |
| Start |
| Estimated |
| Estimated / Actual Net |
|
| GLA (3) |
|
| Cost PSF |
|
| % of Costs Incurred |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Developments In-Process |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Carytown Exchange - Phase I & II |
| Richmond, VA |
| 64% |
| Q4-18 |
| 2023 |
| $ | 29,223 |
|
|
| 74 |
|
| $ | 395 |
|
|
| 77 | % |
East San Marco |
| Jacksonville, FL |
| 100% |
| Q4-20 |
| 2024 |
|
| 19,519 |
|
|
| 59 |
|
|
| 331 |
|
|
| 66 | % |
Glenwood Green |
| Old Bridge, NJ |
| 70% |
| Q1-22 |
| 2025 |
|
| 41,931 |
|
|
| 248 |
|
|
| 169 |
|
|
| 25 | % |
| September 30, 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 | 96% | 177 | 230 | |||||||||||
The Market at Springwoods Village (2) | Houston , TX | Q1-16 | May-17 | 27,492 | 75% | 89 | 309 | |||||||||||
| The Village at Tustin Legacy | Los Angeles, CA | Q3-16 | Oct-17 | 37,472 | 81% | 112 | 335 | |||||||||||
| Chimney Rock Crossing | New York, NY | Q4-16 | May-18 | 71,254 | 59% | 218 | 327 | |||||||||||
| The Village at Riverstone | Houston, TX | Q4-16 | Oct-18 | 30,638 | 45% | 165 | 186 | |||||||||||
| The Field at Commonwealth | Metro DC | Q1-17 | Aug-18 | 45,210 | 48% | 187 | 242 | |||||||||||
Pinecrest Place (3) | Miami, FL | Q1-17 | Mar-18 | 16,427 | 16% | 70 | 235 | |||||||||||
| Mellody Farm | Chicago, IL | Q2-17 | Oct-18 | 97,399 | 31% | 252 | 387 | |||||||||||
| Total | $ | 366,592 | 54% | 1,270 | $ | 289 | ||||||||||||
(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%. Anchor rent commencement date is May 2017. Expected Anchor opening date is October 2017. | ||||||||||||||||||
(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 developmentredevelopment projects (in thousands, except cost PSF):
(in thousands, except cost PSF) |
|
|
|
|
|
|
|
|
| March 31, 2022 |
| |||||||||
Property Name |
| Market |
| Ownership |
| Start Date |
| Estimated Stabilization Year (1) |
| Estimated Incremental |
|
| GLA (3) |
|
| % of Costs Incurred |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Redevelopments In-Process |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
The Crossing Clarendon |
| Metro DC |
| 100% |
| Q4-18 |
| 2024 |
| $ | 57,048 |
|
|
| 129 |
|
|
| 65 | % |
The Abbot |
| Boston, MA |
| 100% |
| Q2-19 |
| 2023 |
|
| 58,116 |
|
|
| 65 |
|
|
| 74 | % |
Sheridan Plaza |
| Hollywood, FL |
| 100% |
| Q3-19 |
| 2022 |
|
| 12,115 |
|
|
| 507 |
|
|
| 89 | % |
Preston Oaks |
| Dallas, TX |
| 100% |
| Q4-20 |
| 2023 |
|
| 22,327 |
|
|
| 102 |
|
|
| 69 | % |
Serramonte Center |
| San Francisco, CA |
| 100% |
| Q4-20 |
| 2026 |
|
| 55,000 |
|
|
| 1,075 |
|
|
| 57 | % |
Westbard Square Phase I |
| Bethesda, MD |
| 100% |
| Q2-21 |
| 2025 |
|
| 37,038 |
|
|
| 123 |
|
|
| 22 | % |
Various Redevelopments |
| Various |
| 30% - 100% |
| Various |
| Various |
|
| 15,948 |
|
|
| 1,227 |
|
|
| 34 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Redevelopments Completed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Various Properties |
| Various |
| 100% |
| Various |
| Various |
| $ | 8,916 |
|
|
| 243 |
|
|
| 90 | % |
| Nine months ended September 30, 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 | |||||||
(1) Includes leasing costs and is net of tenant reimbursements. | ||||||||||||||
40
Net cash provided byused in financing activities:
Net cash flows generated from financing activities increasedchanged by $391.8$267.7 million during 2017,2022, as follows:
| Nine months ended September 30, | ||||||||||
| (in thousands) | 2017 | 2016 | Change | |||||||
| Cash flows from financing activities: | ||||||||||
| Equity issuances | $ | — | 549,545 | (549,545 | ) | |||||
| Repurchase of common shares in conjunction with equity award plans | (19,251 | ) | (8,013 | ) | (11,238 | ) | ||||
| Preferred stock redemption | (325,000 | ) | — | (325,000 | ) | |||||
| Distributions to limited partners in consolidated partnerships, net | (7,031 | ) | (3,126 | ) | (3,905 | ) | ||||
| Dividend payments | (238,275 | ) | (165,075 | ) | (73,200 | ) | ||||
| Unsecured credit facilities | 300,000 | 100,000 | 200,000 | |||||||
| Proceeds from debt issuance | 1,080,114 | 20,223 | 1,059,891 | |||||||
| Debt repayment | (252,710 | ) | (359,260 | ) | 106,550 | |||||
| Payment of loan costs | (12,868 | ) | (1,954 | ) | (10,914 | ) | ||||
| Proceeds from sale of treasury stock | 100 | 957 | (857 | ) | ||||||
| Net cash provided by financing activities | $ | 525,079 | 133,297 | 391,782 | ||||||
|
| Three months ended March 31, |
|
|
|
| ||||||
(in thousands) |
| 2022 |
|
| 2021 |
|
| Change |
| |||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| |||
Repurchase of common shares in conjunction with equity award plans |
|
| (6,246 | ) |
|
| (3,996 | ) |
|
| (2,250 | ) |
Distributions to limited partners in consolidated partnerships, net |
|
| (1,070 | ) |
|
| (785 | ) |
|
| (285 | ) |
Dividend payments and operating partnership distributions |
|
| (107,362 | ) |
|
| (101,033 | ) |
|
| (6,329 | ) |
Debt repayment, including early redemption costs |
|
| (2,846 | ) |
|
| (272,076 | ) |
|
| 269,230 |
|
Payment of loan costs |
|
| (82 | ) |
|
| (7,468 | ) |
|
| 7,386 |
|
Proceeds from sale of treasury stock, net |
|
| 63 |
|
|
| 96 |
|
|
| (33 | ) |
Net cash used in financing activities |
| $ | (117,543 | ) |
|
| (385,262 | ) |
|
| 267,719 |
|
Significant financing activities during the ninethree months ended September 30, 2017March 31, 2022 and 20162021, include the following:
Investments in Real Estate Partnerships
The following table is a summary of the unconsolidated combined assets and liabilities of theseour co-investment partnerships and our pro-rataPro-rata share:
|
| Combined |
|
| Regency's Share (1) |
| ||||||||||
(dollars in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
Number of Co-investment Partnerships |
|
| 15 |
|
|
| 15 |
|
|
|
|
|
|
| ||
Regency’s Ownership |
| 20% - 50% |
|
| 20% - 50% |
|
|
|
|
|
|
| ||||
Number of Properties |
| 103 |
|
|
| 103 |
|
|
|
|
|
|
| |||
Assets |
| $ | 2,779,525 |
|
|
| 2,755,444 |
|
| $ | 989,221 |
|
|
| 992,060 |
|
Liabilities |
|
| 1,597,526 |
|
|
| 1,555,942 |
|
|
| 565,922 |
|
|
| 553,550 |
|
Equity |
|
| 1,181,999 |
|
|
| 1,199,502 |
|
|
| 423,299 |
|
|
| 438,510 |
|
Basis difference |
|
|
|
|
|
| (65,301 | ) |
|
| (65,919 | ) | ||||
Investments in real estate partnerships |
|
|
|
|
| $ | 357,998 |
|
|
| 372,591 |
| ||||
| Combined | Regency's Share (1) | |||||||||||||
| (dollars in thousands) | September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | ||||||||||
| Number of Co-investment Partnerships | 12 | 11 | ||||||||||||
| Regency’s Ownership | 20%-50% | 20%-50% | ||||||||||||
| Number of Properties | 114 | 109 | ||||||||||||
| Assets | $ | 2,880,390 | 2,608,742 | $ | 997,454 | 878,977 | ||||||||
| Liabilities | 1,638,510 | 1,404,588 | 561,203 | 473,255 | ||||||||||
| Equity | 1,241,880 | 1,204,154 | 436,251 | 405,722 | ||||||||||
Negative investment in US Regency Retail I, LLC (2) | 11,138 | — | ||||||||||||
| Basis difference | 43,946 | 1,382 | ||||||||||||
| Restricted Gain Method deferral | (30,902 | ) | (30,902 | ) | ||||||||||
| Impairment of investment in real estate partnerships | (1,300 | ) | (1,300 | ) | ||||||||||
| Net book equity in excess of purchase price | (78,203 | ) | (78,203 | ) | ||||||||||
| Investments in real estate partnerships | $ | 380,930 | 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 2017, the USAA partnership distributed proceeds from debt refinancing and real estate sales 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. | ||||||||||||||
41
Our equity method investments in real estate partnerships consist of the following:
(in thousands) |
| Regency's |
| March 31, |
|
| December 31, |
| ||
GRI-Regency, LLC (GRIR) |
| 40.00% |
| $ | 131,269 |
|
|
| 153,125 |
|
New York Common Retirement Fund (NYC) |
| 30.00% |
|
| 11,868 |
|
|
| 11,688 |
|
Columbia Regency Retail Partners, LLC (Columbia I) |
| 20.00% |
|
| 7,355 |
|
|
| 7,360 |
|
Columbia Regency Partners II, LLC (Columbia II) |
| 20.00% |
|
| 41,982 |
|
|
| 35,251 |
|
Columbia Village District, LLC |
| 30.00% |
|
| 5,546 |
|
|
| 5,554 |
|
RegCal, LLC (RegCal) (1) |
| 25.00% |
|
| 25,049 |
|
|
| 24,995 |
|
Individual Investors |
|
|
|
|
|
|
|
| ||
Ballard Blocks |
| 49.90% |
|
| 63,865 |
|
|
| 63,783 |
|
Town & Country Center |
| 35.00% |
|
| 39,373 |
|
|
| 39,021 |
|
Others |
| 31.00% - 50.00% |
|
| 31,691 |
|
|
| 31,814 |
|
Total Investment in real estate partnerships |
|
|
| $ | 357,998 |
|
|
| 372,591 |
|
| (in thousands) | Regency's Ownership | September 30, 2017 | December 31, 2016 | |||||
| GRI - Regency, LLC (GRIR) | 40.00% | $ | 198,106 | 201,240 | ||||
New York Common Retirement Fund (NYC) (1) | 30.00% | 57,448 | — | |||||
| Columbia Regency Retail Partners, LLC (Columbia I) | 20.00% | 7,183 | 9,687 | |||||
| Columbia Regency Partners II, LLC (Columbia II) | 20.00% | 13,706 | 14,750 | |||||
| Cameron Village, LLC (Cameron) | 30.00% | 11,929 | 11,877 | |||||
| RegCal, LLC (RegCal) | 25.00% | 27,806 | 21,516 | |||||
US Regency Retail I, LLC (USAA) (2) | 20.01% | — | 13,176 | |||||
Other investments in real estate partnerships (1) | 20.00% - 50.00% | 64,752 | 24,453 | |||||
| Total investment in real estate partnerships | $ | 380,930 | 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 2017, the USAA partnership distributed proceeds from debt refinancing and real estate sales 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) | September 30, 2017 | |||||||||||||||
| Scheduled Principal Payments and Maturities by Year: | Scheduled Principal Payments | Mortgage Loan Maturities | Unsecured Maturities | Total | Regency’s Pro-Rata Share | |||||||||||
| 2017 | $ | 5,043 | — | 19,635 | 24,678 | 5,755 | ||||||||||
| 2018 | 21,059 | 30,022 | — | 51,081 | 19,647 | |||||||||||
| 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 | 829,000 | — | 839,580 | 288,440 | |||||||||||
| Net unamortized loan costs, debt premium / (discount) | — | (10,503 | ) | — | (10,503 | ) | (3,355 | ) | ||||||||
| Total | $ | 84,175 | 1,413,919 | 19,635 | 1,517,729 | 521,504 | ||||||||||
(in thousands) |
| March 31, 2022 |
| |||||||||||||||||
Scheduled Principal Payments and Maturities by Year: |
| Scheduled |
|
| Mortgage |
|
| Unsecured |
|
| Total |
|
| Regency’s |
| |||||
2022 |
| $ | 5,106 |
|
|
| 64,843 |
|
|
| 7,300 |
|
|
| 77,249 |
|
|
| 26,473 |
|
2023 |
|
| 3,194 |
|
|
| 263,431 |
|
|
| — |
|
|
| 266,625 |
|
|
| 97,275 |
|
2024 |
|
| 2,205 |
|
|
| 33,690 |
|
|
| — |
|
|
| 35,895 |
|
|
| 14,298 |
|
2025 |
|
| 3,433 |
|
|
| 137,000 |
|
|
| — |
|
|
| 140,433 |
|
|
| 42,567 |
|
2026 |
|
| 3,807 |
|
|
| 125,255 |
|
|
| — |
|
|
| 129,062 |
|
|
| 42,211 |
|
Beyond 5 Years |
|
| 12,995 |
|
|
| 842,450 |
|
|
| — |
|
|
| 855,445 |
|
|
| 312,925 |
|
Net unamortized loan costs, debt premium / (discount) |
|
| — |
|
|
| (10,735 | ) |
|
| — |
|
|
| (10,735 | ) |
|
| (3,682 | ) |
Total |
| $ | 30,740 |
|
|
| 1,455,934 |
|
|
| 7,300 |
|
|
| 1,493,974 |
|
|
| 532,067 |
|
At September 30, 2017,March 31, 2022, our investments in real estate partnerships had notes payable of $1.5 billion maturing through 2031,2034, of which 98.7%93.4% had a weighted average fixed interest rate of 4.6%3.6%. The remaining notes payable float overwith LIBOR and had a weighted average variable interest rate of 2.7%2.6%. These fixed and variable rate notes payable are all non-recourse, and our pro-rataPro-rata share was $521.5$532.1 million as of September 30, 2017.March 31, 2022. As notes payable mature, we expect they will be repaid from proceeds from new borrowings and/or partner capital contributions.
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-rataPro-rata share of net income or loss in each of these co-investment partnerships, we receive fees, as shown below:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||
| (in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| Asset management, property management, leasing, and investment and financing services | $ | 5,884 | 5,821 | $ | 18,735 | 18,415 | ||||||||
|
| Three months ended March 31, |
| |||||
(in thousands) |
| 2022 |
|
| 2021 |
| ||
Asset management, property management, leasing, and other transaction fees |
| $ | 6,684 |
|
|
| 6,384 |
|
Recent Accounting Pronouncements
See noteNote 1 to ConsolidatedUnaudited Financial Statements.
42
Environmental Matters
We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining primarily to specific chemicals historically used by thecertain current and former dry cleaning industry,and gas station tenants and the existence of asbestos in older shopping centers, and underground petroleum storage tanks.centers. We believe that the few tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we use all legal meansendeavor to causerequire 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.systems, in accordance with the terms of our leases. 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 placedsecured environmental insurance policies, where possible,appropriate, on a relatively small number of 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 September 30, 2017March 31, 2022, we andhad accrued liabilities of $11.0 million for our Pro-rata share of environmental remediation, including our Investments in real estate partnerships had accrued liabilities of $9.7 million for our pro-rata share of environmental remediation.partnerships. We believe that the ultimate dispositionremediation of currently known environmental matters will not have a material effect on our financial position, liquidity, or results of operations; however, weoperations. We can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contaminants and liabilities;contamination; that our estimate of liabilities will not change as more information becomes available; 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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We continuously monitor the capital markets and evaluate our ability to issue new debt, to repay maturing debt, or fund our commitments. We continue to believe, in light of our credit ratings, the capacity under our unsecured credit facility, and the number of high quality, unencumbered properties that we own which could collateralize borrowings, we will be able to successfully issue new secured or unsecured debt to fund maturing debt obligations. It is uncertain the degree to which capital market volatility and rising interest rates will adversely impact the interest rates on any new debt that we may issue, which will impact future interest costs. Otherwise, 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"“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.
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 thirdfirst quarter of 2017 and that2022 which 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
43
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.
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 thirdfirst quarter of 2017 and that2022 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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.
Item 1A. Risk Factors
Please refer to the discussion of the potential risks of inflation and should be read together withrising interest rates on the Company and its tenants due to the challenges in the current macroenvironment and recent global events under note 1 in Item 1. Financial Statements and Item 2. Management's Discussion and Analysis for Financial Condition and Results of Operations, including but not limited to, “Risks and Uncertainties,” and “Bankruptcies and Credit Concerns." Other than these matters, 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
The following table represents information with respect to purchases by the Parent Company of its common stock, by month, during the three months ended March 31, 2022.
Period |
| Total number of shares purchased (1) |
|
| Average price paid per share (1) |
|
| Total number of shares purchased as part of publicly announced plans or programs (2) |
|
| Maximum number or approximate dollar value of shares that may yet be purchased under the plans or programs (2) |
| ||||
January 1 through January 31, 2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 250,000,000 |
|
February 1 through February 28, 2022 |
|
| 87,252 |
|
| $ | 71.58 |
|
|
| — |
|
| $ | 250,000,000 |
|
March 1 through March 31, 2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 250,000,000 |
|
| 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 | |||||
| July 1 through July 31, 2017 | 2,453 | $ | 63.55 | — | — | ||||
| August 1 through August 31, 2017 | 601 | $ | 65.53 | — | — | ||||
| September 1 through September 30, 2017 | — | $ | — | — | — | ||||
(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.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
44
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:
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
101. | Interactive Data Files | ||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | ||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
104. | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | ||
* | Furnished, not filed. |
45
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 6, | REGENCY CENTERS CORPORATION | |
By: | /s/ | |
Michael J. Mas, Executive Vice 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 6, | REGENCY CENTERS, L.P. | |
By: | Regency Centers Corporation, General Partner | |
By: | /s/ | |
Michael J. Mas, Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
By: | /s/ J. Christian Leavitt | |
J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer) | ||
46
