Regency Acquires Shopping Center - Analyst Blog

Regency Centers Corp. (REG), a leading operator and developer of grocery-anchored and community shopping centers across the U.S., has recently acquired Willow Festival, a 405,227 square foot neighborhood shopping center in the Chicago metro area. The company purchased the property for $64 million from Hamilton Partners, a privately-owned real estate development firm.

Willow Festival is anchored by leading retailers such as Lowe's Companies Inc. (LOW), Whole Foods Market, Inc. (WFMI) and Best Buy Co. Inc. (BBY). The property is currently 96% leased and is strategically located in the highly desirable and densely populated North Shore market.

The acquisition is part of the long-term strategy of the company to own high quality shopping centers with strong co-tenancy and superior market demographics. Regency Centers had earlier acquired Glen Oak Plaza, a 62,443 square foot neighborhood center in Illinois, in September 2010. The company presently has a portfolio of 17 retail centers in the Chicago metro area, totaling over 2.8 million square feet.

Regency Centers seeks to own assets in high-income in-fill markets that are tenanted by market-dominant grocers, category-leading anchors, specialty retailers and restaurants. As of September 30, 2010, Regency Centers owned 399 retail properties, including properties held in joint ventures, spanning 53.1 million square feet.
 
With properties in high-barrier markets, Regency Centers' retail strip center portfolio is among the best in the sector, which allows it to continually perform at the top-end of its peer group. The company's dominant anchor tenants are grocery stores, a segment that is comparatively less affected in a challenging economy. Consequently, Regency Centers has a relatively steady source of revenue.

We maintain our long-term Neutral recommendation on Regency Centers, which currently has a Zacks #3 Rank that translates into a short-term Hold rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.

 
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