Regency Centers Q2 FFO Beat Estimates, '24 View Raised

Regency Centers Corporation REG reported second-quarter 2024 NAREIT funds from operations (FFO) per share of $1.06, outpacing the Zacks Consensus Estimate of $1.02. The figure increased 2.9% from the prior-year quarter.

Results reflect healthy leasing activity and a year-over-year improvement in the base rent. However, high interest expenses during the quarter acted as a dampener. The company also raised its 2024 outlook.

Total revenues of $357.3 million increased 13.7% from the year-ago period. However, the figure lagged the Zacks Consensus Estimate of $361.6 million.

Behind the Headlines

In the second quarter, Regency Centers executed approximately 2.2 million square feet of comparable new and renewal leases at a blended cash rent spread of 9.2%.

As of Jun 30, 2024, REG's Same Property portfolio was 95.8% leased, remaining unchanged sequentially and reflecting an expansion of 80 basis points (bps) year over year.

The Same Property anchor percent leased (includes spaces greater than or equal to 10,000 square feet) was 97.2%, remaining unchanged sequentially and increasing 80 bps year over year.

The Same Property shop percent leased (includes spaces less than 10,000 square feet) was 93.5%, remaining unchanged sequentially and increasing 80 bps year over year.

The Same Property net operating income (NOI), excluding lease termination fees or the collection of receivables reserved during 2020 and 2021, increased 3.3% on a year-over-year basis to $230.7 million. The Same Property base rents contributed 2.9% to same-property NOI growth in the quarter.

As of Jun 30, 2024, Regency Centers' in-process development and redevelopment projects estimated net project costs of around $578 million at the company's share. So far, it has incurred 49% of the cost.

Net interest expense was up 16.8% year over year to $43.2 million in the reported quarter.

Balance Sheet

The company ended the second quarter of 2024 with cash, cash equivalents and restricted cash of $79.2 million, down from $230.1 million as of Mar 31, 2024.

As of Jun 30, 2024, this retail REIT had nearly $1.2 billion of capacity under its revolving credit facility. As of the same date, its pro-rata net debt-to-operating EBITDAre was 5.3X on a trailing 12-month basis.

Dividend Update

On Jul 31, Regency Centers' board of directors declared a quarterly cash dividend payment on its common stock of 67 cents. The dividend will be paid out on Oct 3, 2024, to its shareholders of record as of Sep 12, 2024.

2024 Outlook Raised

Regency Centers raised the 2024 NAREIT FFO per share guidance to the range of $4.21-$4.25 from the prior-guided range of $4.15-$4.21. The Zacks Consensus Estimate is presently pegged at $4.19, which is below the guided range.

The Same Property NOI (excluding termination fees or collection of 2020/2021 reserves) is expected to be between 2.25% and 2.75%, up from the previous estimation of 2% and 2.5%.

Regency Centers currently carries a Zacks Rank #2 (Buy).

Performance of Other Retail REITs

SITE Centers Corp. SITC reported second-quarter 2024 operating funds from operations per share of 27 cents, which beat the Zacks Consensus Estimate of 24 cents. The figure fell 6.9% year over year.

Results reflected a rise in base rent per square foot and same-store NOI.

Federal Realty Investment Trust's FRT second-quarter 2024 FFO per share of $1.69 surpassed the Zacks Consensus Estimate of $1.68. The figure marked a rise of 1.2% from the year-ago quarter's tally of $1.67.

Results reflected a healthy leasing activity and better-than-expected growth in revenues. The retail REIT also tightened and raised its guidance for 2024 FFO per share and announced a hike in dividend.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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