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, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission 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, Florida 32202
(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
6.250% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share
REGCP
5.875% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share
REGCO
Regency Centers, L.P.
None
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 ☒ No ☐ Regency Centers, L.P. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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 growth 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.:
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 ☐ No ☐ Regency Centers, L.P. Yes ☐ No ☐
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 ☐ No ☒ Regency Centers, L.P. Yes ☐ No ☒
The number of shares outstanding of Regency Centers Corporation's common stock was 184,580,981 as of November 3, 2023.
EXPLANATORY NOTE
This Quarterly Report on Form 10-Q (this "Report") combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2023, 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 terms "the Company," "Regency Centers," "Regency," "we," "our," and "us" as used in this Report mean 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. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management. The Operating Partnership's capital includes general and limited common partnership units ("Common Units"). As of September 30, 2023, the Parent Company owned approximately 99.4% of the Common Units in the Operating Partnership. The remaining Common Units, which are all limited Common Units, are owned by third party investors. In addition to the Common Units, the Operating Partnership has also issued two series of preferred units: the 6.250% Series A Cumulative Redeemable Preferred Units (the “Series A Preferred Units”) and the 5.875% Series B Cumulative Redeemable Preferred Units (the “Series B Preferred Units”). The Parent Company currently owns all of the Series A Preferred Units and Series B Preferred Units. The Series A Preferred Units and Series B Preferred Units are sometimes referred to collectively as the “Preferred Units".
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 Common Units 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 $200 million of unsecured private placement debt, the Parent Company does not hold any indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the, directly or indirectly, co-issuer and guarantor of the $200 million of the above mentioned Parent Company unsecured private placement debt. The Operating Partnership holds all the assets of the Company and ownership interests in the Company'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's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of Common Units and Preferred Units.
Shareholders' equity, 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, as well as the Preferred Units owned by the Parent Company. The Operating Partnership's capital includes the Common Units and the Preferred Units. The limited partners' Common Units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of shareholders' equity in noncontrolling interests in the Parent Company's financial statements. The Preferred Units owned by the Parent Company are eliminated in consolidation in the accompanying consolidated financial statements of the Parent Company and are classified as preferred units of general partner in the accompanying consolidated financial statements of the Operating Partnership.
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. Therefore, while shareholders' equity and 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
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022
1
Consolidated Statements of Operations for the periods ended September 30, 2023 and 2022
2
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2023 and 2022
3
Consolidated Statements of Equity for the periods ended September 30, 2023 and 2022
4
Consolidated Statements of Cash Flows for the periods ended September 30, 2023 and 2022
6
8
9
10
Consolidated Statements of Capital for the periods ended September 30, 2023 and 2022
11
13
Notes to Consolidated Financial Statements
15
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
30
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
53
Item 4.
Controls and Procedures
54
PART II - OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
55
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
56
SIGNATURES
59
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 2023 and December 31, 2022
(in thousands, except share data)
2023
2022
Assets
(unaudited)
Net real estate investments:
Real estate assets, at cost
$
13,361,194
11,858,064
Less: accumulated depreciation
2,619,345
2,415,860
Real estate assets, net
10,741,849
9,442,204
Investments in sales-type lease, net
8,558
—
Investments in real estate partnerships
382,300
350,377
Net real estate investments
11,132,707
9,792,581
Cash, cash equivalents, and restricted cash, including $6,710 and $2,310 of restricted cash at September 30, 2023 and December 31, 2022, respectively
81,070
68,776
Tenant and other receivables
199,439
188,863
Deferred leasing costs, less accumulated amortization of $122,530 and $117,137 at September 30, 2023 and December 31, 2022, respectively
71,551
68,945
Acquired lease intangible assets, less accumulated amortization of $351,118 and $338,053 at September 30, 2023 and December 31, 2022, respectively
295,347
197,745
Right of use assets, net
301,821
275,513
Other assets
299,479
267,797
Total assets
12,381,414
10,860,220
Liabilities and Equity
Liabilities:
Notes payable, net
3,992,093
3,726,754
Unsecured credit facility
77,000
Accounts payable and other liabilities
360,102
317,259
Acquired lease intangible liabilities, less accumulated amortization of $205,096 and $193,315 at September 30, 2023 and December 31, 2022, respectively
396,423
354,204
Lease liabilities
242,394
213,722
Tenants' security, escrow deposits and prepaid rent
81,875
70,242
Total liabilities
5,149,887
4,682,181
Equity:
Shareholders' equity:
Series A and Series B preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 9,000,000 shares issued at September 30, 2023 with liquidation preferences of $25 per share and no shares authorized or issued at December 30, 2022
225,000
Common stock; $0.01 par value per share, 220,000,000 shares authorized; 184,576,090 and 171,124,593 shares issued at September 30, 2023 and December 31, 2022, respectively
1,846
1,711
Treasury stock at cost; 443,809 and 465,415 shares held at September 30, 2023 and December 31, 2022, respectively
(25,081
)
(24,461
Additional paid-in-capital
8,684,012
7,877,152
Accumulated other comprehensive income
9,435
7,560
Distributions in excess of net income
(1,834,298
(1,764,977
Total shareholders' equity
7,060,914
6,096,985
Noncontrolling interests:
Exchangeable operating partnership units, aggregate redemption value of $64,005 and $46,340 at September 30, 2023 and December 31, 2022, respectively
53,914
34,489
Limited partners' interests in consolidated partnerships
116,699
46,565
Total noncontrolling interests
170,613
81,054
Total equity
7,231,527
6,178,039
Total liabilities and equity
See accompanying notes to consolidated financial statements.
Consolidated Statements of Operations
(in thousands, except per share data)
Three months ended September 30,
Nine months ended September 30,
Revenues:
Lease income
320,921
295,756
934,180
882,265
Other property income
2,638
2,466
8,459
8,290
Management, transaction, and other fees
7,079
5,767
20,223
18,950
Total revenues
330,638
303,989
962,862
909,505
Operating expenses:
Depreciation and amortization
87,505
80,270
253,373
237,462
Property operating expense
59,227
49,577
164,643
143,788
Real estate taxes
40,171
37,926
117,157
111,495
General and administrative
20,903
20,273
71,248
56,710
Other operating expenses
3,533
949
4,718
3,739
Total operating expenses
211,339
188,995
611,139
553,194
Other expense (income):
Interest expense, net
38,807
36,361
112,156
109,798
Gain on sale of real estate, net of tax
(184
(220
(515
(106,459
Net investment loss (income)
1,020
1,215
(2,449
9,177
Total other expense
39,643
37,356
109,192
12,516
Income from operations before equity in income of investments in real estate partnerships
79,656
77,638
242,531
343,795
Equity in income of investments in real estate partnerships
12,517
11,209
36,302
47,855
Net income
92,173
88,847
278,833
391,650
Exchangeable operating partnership units
(520
(379
(1,490
(1,694
(933
(890
(2,560
(2,354
Income attributable to noncontrolling interests
(1,453
(1,269
(4,050
(4,048
Net income attributable to the Company
90,720
87,578
274,783
387,602
Preferred stock dividends
(1,644
Net income attributable to common shareholders
89,076
273,139
Income per common share - basic
0.50
0.51
1.58
2.26
Income per common share - diluted
1.57
Consolidated Statements of Comprehensive Income
(in thousands)
Other comprehensive income:
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments
4,606
7,069
7,327
20,473
Reclassification adjustment of derivative instruments included in net income
(2,161
72
(5,302
1,563
Unrealized loss on available-for-sale debt securities
(292
(659
(215
(1,636
Other comprehensive income
2,153
6,482
1,810
20,400
Comprehensive income
94,326
95,329
280,643
412,050
Less: comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests
1,453
1,269
4,050
4,048
Other comprehensive income (loss) attributable to noncontrolling interests
617
(65
1,920
Comprehensive income attributable to noncontrolling interests
1,507
1,886
3,985
5,968
Comprehensive income attributable to the Company
92,819
93,443
276,658
406,082
Consolidated Statements of Equity
For the three months ended September 30, 2023 and 2022
Noncontrolling Interests
PreferredStock
CommonStock
TreasuryStock
AdditionalPaid InCapital
AccumulatedOtherComprehensiveIncome
Distributionsin Excess ofNet Income
TotalShareholders'Equity
ExchangeableOperatingPartnershipUnits
LimitedPartners'Interest inConsolidatedPartnerships
TotalNoncontrollingInterests
TotalEquity
Balance at June 30, 2022
(23,882
7,874,461
2,388
(1,729,645
6,125,033
34,611
46,491
81,102
6,206,135
379
890
Other comprehensive income before reclassification
5,787
27
596
623
6,410
Amounts reclassified from accumulated other comprehensive income
78
(7
(6
Deferred compensation plan, net
(179
179
Restricted stock issued, net of amortization
4,125
Common stock repurchased for taxes withheld for stock based compensation, net
92
Common stock issued under dividend reinvestment plan
136
Contributions from partners
1,457
Distributions to partners
(1,124
Cash dividends declared:
Common stock/unit ($0.625 per share)
(106,946
(464
(107,410
Balance at September 30, 2022
(24,061
7,878,993
8,253
(1,749,013
6,115,883
34,554
48,303
82,857
6,198,740
Balance at June 30, 2023
1,710
(24,676
7,859,249
7,336
(1,803,406
6,040,213
54,281
49,292
103,573
6,143,786
520
933
4,026
25
263
288
4,314
(1,927
(11
(223
(234
(405
405
5,465
125
162
Common stock issued for partnership units exchanged
198
(198
Common stock issued, net of issuance costs
818,408
818,544
Issuance of preferred stock
69,625
(3,191
Preferred stock/unit
Common stock/unit ($0.650 per share)
(119,968
(703
(120,671
Balance at September 30, 2023
For the nine months ended September 30, 2023 and 2022
AccumulatedOtherComprehensiveIncome (Loss)
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
1,694
2,354
17,067
81
1,689
1,770
18,837
1,413
142
150
(1,303
1,303
12,697
12,699
(5,996
Common stock repurchased and retired
(13
(75,406
(75,419
388
1,275
(1,275
61,274
61,284
11,903
(4,899
Common stock/unit ($1.875 per share)
(321,801
(1,401
(323,202
Balance at December 31, 2022
1,490
2,560
6,596
46
470
516
7,112
(4,721
(26
(555
(581
(620
620
14,387
14,389
(7,201
(3
(20,003
(20,006
461
818,398
818,534
Issuance of exchangeable operating partnership units
20,000
72,830
(5,171
Common stock/unit ($1.950 per share)
(342,460
(1,887
(344,347
5
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan costs and debt premiums
5,124
4,297
(Accretion) and amortization of above and below market lease intangibles, net
(21,573
(15,625
Stock-based compensation, net of capitalization
14,203
12,592
(36,302
(47,855
Distribution of earnings from investments in real estate partnerships
48,451
45,238
Deferred compensation expense (income)
2,148
(8,016
Realized and unrealized (gain) loss on investments
(2,252
9,253
Changes in assets and liabilities:
(3,094
(18,544
Deferred leasing costs
(7,705
(7,022
(7,577
(4,312
20,875
21,656
3,696
13,927
Net cash provided by operating activities
547,685
528,242
Cash flows from investing activities:
Acquisition of operating real estate, net of cash acquired of $3,061 in 2022
(2,033
(141,275
Acquisition of UBP, net of cash acquired of $14,143
(80,488
Real estate development and capital improvements
(158,982
(143,724
Proceeds from sale of real estate and FF&E
10,338
137,280
Issuance of notes receivable
(4,000
(9,118
(13,573
Return of capital from investments in real estate partnerships
3,644
48,473
Dividends on investment securities
571
336
Acquisition of investment securities
(5,206
(15,205
Proceeds from sale of investment securities
13,747
15,821
Net cash used in investing activities
(231,527
(111,867
Cash flows from financing activities:
Net proceeds from common stock issuance
Repurchase of common shares in conjunction with equity award plans
(7,653
(6,438
Common shares repurchased through share repurchase program
Proceeds from sale of treasury stock
62
64
Contributions from limited partners in consolidated partnerships, net
3,167
1,568
Distributions to exchangeable operating partnership unit holders
(1,666
(1,413
Dividends paid to common shareholders
(332,627
(321,484
Proceeds from unsecured credit facilities
442,000
95,000
Repayment of unsecured credit facilities
(365,000
(95,000
Proceeds from notes payable
46,500
Repayment of notes payable
(60,257
(5,995
Scheduled principal payments
(7,977
(8,503
Payment of loan costs
(411
(82
Net cash used in financing activities
(303,864
(356,418
Net increase in cash and cash equivalents and restricted cash
12,294
59,957
Cash and cash equivalents and restricted cash at beginning of the period
95,027
Cash and cash equivalents and restricted cash at end of the period
154,984
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $4,026 and $2,985 in 2023 and 2022, respectively)
116,686
115,011
Cash paid for income taxes, net of refunds
728
488
Supplemental disclosure of non-cash transactions:
Common and Preferred stock, and exchangeable operating partnership dividends declaredbut not paid
122,946
107,410
Acquisition of real estate previously held within investments in real estate partnerships
17,179
Mortgage loans assumed by Company with the acquisition of real estate
22,779
Right of use assets obtained in exchange for new operating lease liabilities
32,002
Sale of leased asset in exchange for net investment in sales-type lease
8,510
UBP Acquisition:
Notes payable assumed in acquisition, at fair value
284,706
Non-controlling interest assumed in acquisition, at fair value
64,492
Common stock exchanged for UBP shares
818,530
Preferred stock exchanged for UBP shares
199
Exchangeable operating partnership units issued for acquisition of real estate
Change in accrued capital expenditures
20,967
10,230
Stock-based compensation capitalized
638
550
Contributions from limited partners in consolidated partnerships
5,434
Common stock issued for dividend reinvestment in trust
905
840
Contribution of stock awards into trust
1,961
2,136
Distribution of stock held in trust
2,245
786
Change in fair value of securities
215
1,896
7
(in thousands, except unit data)
Liabilities and Capital
Capital:
Partners' capital:
Series A and Series B preferred units, $0.01 par value per unit, 30,000,000 units authorized; 9,000,000 units issued as September 30, 2023 with liquidation preferences of $25 per unit and no units authorized or issued at December 30, 2022
General partner; 184,576,090 and 171,124,593 units outstanding at September 30, 2023 and December 31, 2022, respectively
6,826,479
6,089,425
Limited partners; 1,076,797 and 741,433 units outstanding at September 30, 2023 and December 31, 2022 respectively
Total partners' capital
7,114,828
6,131,474
Noncontrolling interest: Limited partners' interests in consolidated partnerships
Total capital
Total liabilities and capital
(in thousands, except per unit data)
Net income attributable to the Partnership
91,240
87,957
276,273
389,296
Preferred unit distributions
Net income attributable to common unit holders
89,596
274,629
40
589
(85
1,831
973
1,479
2,475
4,185
Comprehensive income attributable to the Partnership
93,353
93,850
278,168
407,865
Consolidated Statements of Capital
General Partner Preferredand Common Units
LimitedPartners
TotalPartners’Capital
Noncontrolling Interests inLimited Partners’ Interest inConsolidated Partnerships
TotalCapital
6,122,645
6,159,644
5,814
79
(108,534
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
Common units repurchased as a result of common stock repurchased by Parent Company, net of issuances
228
6,107,630
6,150,437
6,032,877
6,094,494
4,051
Amounts reclassified from accumulated other comprehensive loss
(1,938
(123,862
Preferred units issued as a result of preferred stock issued by Parent Company, net of issuance costs
Common units issued as a result of common stock issued by Parent Company, net of issuance costs
287
Common units exchanged for common stock of Parent Company
7,051,479
TotalPartners'Capital
Noncontrolling Interests inLimited Partners' Interest inConsolidated Partnerships
6,047,598
6,072,818
17,148
1,421
(328,101
Common units repurchased and retired as a result of common stock repurchased and retired by Parent Company
(5,608
6,642
(4,747
(349,518
(6,740
Common unit exchanged for common stock of Parent Company
12
Common units repurchased through share repurchase program
(334,293
(322,897
Common stock issued by Parent Company for partnership units exchanged
Common stock issued by Parent Company for dividend reinvestment plan
14
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2023
1.
Organization and Significant Accounting Policies
General
Regency Centers Corporation (the "Parent Company") began its operations as a 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, development, and redevelopment of shopping centers through the Operating Partnership, and has no other assets other than through its investment in the Operating Partnership, and its only liabilities are $200 million of unsecured private placement notes, 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, 2023, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 379 properties and held partial interests in an additional 102 properties through unconsolidated Investments in real estate partnerships (also referred to as "joint ventures" or "investment partnerships").
The information included in this Report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022, as certain disclosures in this Report that would duplicate those included in such Annual Report on Form 10-K are not included in these consolidated financial statements. 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.
Acquisition of Urstadt Biddle Properties Inc.
On May 17, 2023, the Parent Company entered into an Agreement and Plan of Merger (the “merger agreement”) by and among the Parent Company, Hercules Merger Sub, LLC, a wholly owned subsidiary of the Parent Company (“Merger Sub”), Urstadt Biddle Properties Inc. (“UBP” or “Urstadt Biddle”), UB Maryland I, Inc., a wholly owned subsidiary of Urstadt Biddle (“UB Sub I”), and UB Maryland II, Inc., a wholly owned subsidiary of UB Sub I (“UB Sub II”), pursuant to which, (a) UB Sub II merged with and into Urstadt Biddle (the “first merger”), with Urstadt Biddle surviving the first merger as a wholly owned subsidiary of UB Sub I, and (b) following the first merger, UB Sub I merged with and into Merger Sub (the “second merger” and together with the first merger, the “mergers”), with Merger Sub being the surviving entity in the second merger. The combined company continues to trade under the ticker symbol “REG” on the National Association of Securities Dealers Automated Quotations (the “NASDAQ”).
The closing of the mergers completed on August 18, 2023 and each share of Urstadt Biddle’s common stock, par value $0.01 per share (“Urstadt Biddle common stock”), class A common stock, par value $0.01 per share (“Urstadt Biddle Class A common stock” and, together with Urstadt Biddle common stock, the “Urstadt Biddle common shares”), 6.25% Series H Cumulative Redeemable Preferred Stock and 5.875% Series K Cumulative Redeemable Preferred Stock converted into one equivalent share in UB Sub I, with respect to each class, subject to limited exceptions set forth in the merger agreement. Immediately thereafter, on August 18, 2023, each share of UB Sub I’s common stock, par value $0.01 per share, and class A common stock, par value $0.01 per share, converted into 0.347 of a share of common stock, par value $0.01 per share, of common stock of the Parent Company, without interest and subject to certain adjustments, subject to limited exceptions set forth in the merger agreement, and each share of UB Sub I’s 6.25% Series H Cumulative Redeemable Preferred Stock and 5.875% Series K Cumulative Redeemable Preferred Stock converted into one share of newly issued Parent Company 6.25% Series A Cumulative Redeemable Preferred Stock (“Parent Company Series A preferred stock”) and 5.875% Series B Cumulative Redeemable Preferred Stock (“Parent Company Series B preferred stock”), respectively (collectively referred to as the “Preferred Stock”).
Risks and Uncertainties
The success of the Company's tenants in operating their businesses and their corresponding ability to pay rent continue to be influenced by current economic challenges, which impact their cost of doing business, including but not limited to the impact of inflation, the cost and availability of labor, increasing energy prices and interest rates, and access to credit. Additionally, macroeconomic and geopolitical risks, including the current wars in Ukraine, and involving Israel and Gaza, create challenges that may exacerbate current market conditions in the United States of America ("U.S.", "USA" or "United States"). The policies implemented by the U.S. government to address these issues, including raising interest rates, could result in adverse impacts on the U.S. economy, including a slowing of growth and potentially a recession, thereby impacting consumer spending, 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-owned, and properties where it owns less than 100% but 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.
Ownership of the Parent Company
The Parent Company has a single class of common stock outstanding and two series of preferred stock outstanding.
Ownership of the Operating Partnership
The Operating Partnership's capital includes the Common Units and the Preferred Units. As of September 30, 2023, the Parent Company owned approximately 99.4% of the outstanding Common Units, with the remaining limited Common Units held by third parties ("Exchangeable operating partnership units" or "EOP units"). The Parent Company currently owns all of the Preferred 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 common stock (i.e., registered shares of the Parent). The Parent Company has evaluated the conditions as specified under Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity, as it relates to EOP units outstanding and concluded that the Parent Company 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 that most significantly impact the Operating Partnership’s economic performance. 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.
Real Estate Partnerships
As of September 30, 2023, Regency held partial ownership interests in 120 properties through partnerships, of which 18 are consolidated. Regency's partners include institutional investors and real estate developers and/or operators (the "Partners" or "Limited Partners"). Regency has a variable interest in these entities through its equity interests, with Regency being the primary beneficiary in certain of these real estate partnerships. As such, Regency consolidates the partnerships into its financial statements for which it is the primary beneficiary and reports the limited partners' interests as noncontrolling interests. For those partnerships which Regency is not the primary beneficiary and does not control, but has significant influence, Regency recognizes its investment in them using the equity method of accounting.
The assets of these partnerships are restricted to the use of the partnerships and cannot be reached by general creditors of the Company. Similarly, the obligations of the partnerships can only be settled by the assets of these partnerships or additional contributions by the partners.
The major classes of assets, liabilities, and non-controlling equity interests held by the Company's consolidated VIEs, exclusive of the Operating Partnership, are as follows:
December 31, 2022
256,750
107,725
Cash, cash equivalents and restricted cash
7,240
2,420
Liabilities
Notes payable
33,733
4,188
Equity
89,594
24,364
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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. Income within Management, transaction, and other fees on the Consolidated Statements of Operations is primarily from contracts with the Company's real estate partnerships. The primary components of these revenue streams, the timing of satisfying the performance obligations, and amounts are as follows:
Timing of satisfaction of performance obligations
Management, transaction, and other fees:
Property management services
Over time
3,591
3,224
10,536
10,152
Asset management services
1,623
1,680
4,900
5,105
Leasing services
Point in time
889
729
2,703
2,895
Other fees
976
134
2,084
798
Total management, transaction, and other fees
The accounts receivable for management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $15.9 million and $16.4 million, as of September 30, 2023 and December 31, 2022, respectively.
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Recent Accounting Pronouncements
The following table provides a brief description of recently adopted accounting pronouncements and impact on our financial statements:
Standard
Description
Date of adoption
Effect on the financial statements or other significant matters
Recently adopted:
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related to activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.
The amendments in this update provide exceptions to the guidance in Topic 815 related to changes to the critical terms of a hedging relationship due to reference rate reform, which if criteria are met, provide such changes should not result in the dedesignation and redesignation of the hedging relationship.
March 2020 through March 31, 2023
The Company has elected to apply the hedge accounting expedients and exceptions related to changes to the reference rate from LIBOR to SOFR in the Company's interest rate swaps, which it completed during the three months ended March 31, 2023. Application of these exceptions preserves the hedge designation of interest rate swaps and the related accounting and presentation consistent with past presentation.
ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
The amendments in this update require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination rather than at fair value on the acquisition date required by Topic 805.
January 1, 2023
The adoption of this ASU did not have a material impact on the Company’s financial position and/or results of operations.
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2.
Real Estate Investments
UBP Acquisition
With respect to the acquisition of UBP discussed in Note 1 - Acquisition of Urstadt Biddle Properties Inc, the following table provides the components that make up the total purchase price for the UBP acquisition:
(in thousands, except stock price)
Purchase Price
Shares of common stock issued for acquisition
13,568
Closing stock price on August 17, 2023
61.03
Value of common stock issued for acquisition
828,025
Other adjustments
(9,495
Total value of common stock issued
Debt repaid
39,266
Preferred stock issuance
Transaction costs
57,197
Other cash payments
68
Total purchase price
1,140,061
Purchase Price Allocation
The acquisition has been accounted for using the asset acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires, among other things, that the total cost or total consideration exchanged be allocated to the real estate properties and related lease intangibles on a relative fair value basis. All the other assets acquired, and liabilities assumed, including notes payable, are recorded at fair value. The total purchase price, including direct transaction costs capitalized, was allocated as follows:
Real estate assets
1,379,835
Investments in unconsolidated real estate partnerships
35,942
1,415,777
Cash, accounts receivable and other assets
51,902
Lease intangible assets
128,663
Total assets acquired
1,596,342
Accounts payable, accrued expenses, and other liabilities
37,500
Lease intangible liabilities
69,583
Total liabilities assumed
391,789
Non-controlling interest
The acquired assets and assumed liabilities for an acquired operating property generally include, but are not limited to: land, buildings and improvements, identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of acquired in-place leases. This methodology includes estimating an “as-if vacant” fair value of the physical property, which includes land, building, and improvements and also determines the estimated fair value of identifiable intangible assets and liabilities, considering the following categories: (i) value of in-place leases, and (ii) above and below-market value of in-place leases. The fair market value of the acquired operating properties is based on a valuation prepared by Regency with assistance of a third party valuation specialist. The third-party specialist utilized stabilized NOI and market specific capitalization rates as the primary valuation inputs in determining the fair value of the real estate assets. Management reviews the inputs used by the third-party specialist as well as the allocation of the purchase price to ensure reasonableness and that the procedures are performed in accordance with management's policy. Management and the third-party valuation specialist prepared their fair value estimates for each of the operating properties acquired. The allocation of the purchase price described above requires a significant amount of judgment
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and represents management's best estimate of the fair value as of the acquisition date. The following table details the weighted average amortization and net accretion periods, in years, of the major classes of intangible assets and intangible liabilities arising from the UBP acquisition:
(in years)
Weighted Average Amortization Period
Assets:
In-place leases
8.0
Above-market leases
7.0
Below-market leases
18.5
Other Acquisitions
The following tables detail the other properties acquired for the periods set forth below:
Nine months ended September 30, 2023
Date Purchased
Property Name
City/State
PropertyType
Regency Ownership
PurchasePrice (1)
DebtAssumed,Net ofDiscounts (1)
IntangibleAssets (1)
IntangibleLiabilities (1)
Consolidated
5/1/2023
Sienna Phase 1
Houston, TX
Development
75%
2,695
5/18/2023
SunVet
Holbrook, NY
99%
24,140
Total consolidated
26,835
Unconsolidated
9/19/2023
Old Town Square
Chicago, IL
Operating
20%
27,510
3,625
503
Total unconsolidated
Total property acquisitions
54,345
Nine months ended September 30, 2022
3/1/2022
Glenwood Green
Old Bridge, NJ
70%
11,000
3/31/2022
Island Village
Bainbridge Island, WA
100%
30,650
2,900
6,839
4/1/2022
Apple Valley (2)
Apple Valley, MN
34,070
4,773
490
Cedar Commons (2)
Minneapolis, MN
29,330
4,369
58
Corral Hollow (2)
Tracy, CA
40,600
3,410
74
Shops at the Columbia (2)
Washington, DC
14,000
181
5/6/2022
Baederwood Shoppes
Jenkintown, PA
80%
51,603
5,796
1,062
211,253
22,137
8,704
3/25/2022
Naperville Plaza
Naperville, IL
52,380
22,074
4,336
814
6/24/2022
Baybrook East 1B
50%
5,540
57,920
269,173
44,853
26,473
9,518
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3.
Property Dispositions
The following table provides a summary of consolidated shopping centers and land parcels sold during the periods set forth below:
(in thousands, except number sold data)
Net proceeds from sale of real estate investments
6,593
859
9,658
184
220
515
106,459
Number of operating properties sold
Number of land parcels sold
Percent interest sold
4.
Other Assets
The following table represents the components of Other assets in the accompanying Consolidated Balance Sheets as of the dates set forth below:
Goodwill
167,062
Investments
48,304
54,581
Prepaid and other
54,476
28,615
Derivative assets
21,328
6,575
Furniture, fixtures, and equipment, net ("FF&E")
4,871
5,808
Deferred financing costs, net
3,438
5,156
Total other assets
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 as of the dates set forth below:
WeightedAverageContractualRate
WeightedAverageEffectiveRate
Notes payable:
Fixed rate mortgage loans
3.9%
4.1%
452,512
342,135
Variable rate mortgage loans (1)
287,922
136,246
Fixed rate unsecured debt
3.8%
4.0%
3,251,659
3,248,373
Total notes payable, net
Unsecured credit facilities:
$1.25 Billion Line of Credit (the "Line") (2)
6.3%
6.6%
Total unsecured credit facilities
Total debt outstanding
4,069,093
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Scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:
Scheduled Principal Payments and Maturities by Year:
ScheduledPrincipalPayments
MortgageLoanMaturities
UnsecuredMaturities (1)
Total
2023 (2)
4,154
2024
12,934
133,809
250,000
396,743
2025
11,094
52,369
327,000
390,463
2026
11,426
134,850
200,000
346,276
2027
8,612
222,429
525,000
756,041
Beyond 5 Years
14,762
142,893
2,050,000
2,207,655
Unamortized debt premium/(discount) and issuance costs
(8,898
(23,341
(32,239
62,982
677,452
3,328,659
In connection with the acquisition of UBP on August 18, 2023, the Company completed the following debt transactions:
The Company was in compliance as of September 30, 2023, with all financial and other covenants under its unsecured public and private placement debt and unsecured credit facilities and expects to remain in compliance thereafter.
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 mitigation of interest rate risk. 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 quality credit ratings. 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 attempt to stabilize interest expense where possible 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.
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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
Assets (Liabilities) (1)
EffectiveDate
MaturityDate
NotionalAmount
Bank PaysVariable Rate of
Regency PaysFixed Rate of
12/1/22
3/17/25
24,000
SOFR
1.443%
1,250
1,443
12/16/22
6/2/27
35,016
2.261%
2,485
2,158
1/17/23(2)
8/15/24
13,134
3.995%
316
-
7/17/17(2)
7/1/27
43,446
1.498%
4,341
9/21/16(2)
10/1/26
8,856
1.475%
752
8/16/18(2)
8/15/28
8,830
4.830%
505
3/18/19(2)
4/1/29
23,193
3.165%
1,325
2/1/22(2)
2/1/32
33,854
3.053%
6,508
1/3/23(2)
7/1/29
11,008
3.633%
1,289
11/1/24
5,000
3.705%
163
2/24/23
12/31/26
15,390
4.229%
131
152
2/21/23
12/21/26
24,365
1.684%
2,061
1,939
9/19/23
9/19/28
31,000
4.314%
883
10/31/17(2)
10/1/24
6,025
2.334%
187
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, 2023, does not have any derivatives that are not designated as hedges.
The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in Accumulated other comprehensive income ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
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
Interest rate swaps
Interest expense
As of September 30, 2023, the Company expects approximately $7.8 million of accumulated comprehensive income on derivative instruments in AOCI, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months.
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7.
Leases
Substantially 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 (collectively, "Recoverable Costs"). Income for these amounts is recognized on a straight-line basis.
Variable lease income includes the following two main items in the lease contracts:
The following table provides a disaggregation of lease income recognized as either fixed or variable lease income based on the criteria specified in ASC Topic 842:
Operating lease income
Fixed and in-substance fixed lease income
235,489
215,077
675,320
634,416
Variable lease income
77,901
70,473
233,019
210,390
Other lease related income, net:
Above/below market rent and tenant rent inducement amortization, net
8,118
5,484
22,734
16,786
Uncollectible straight-line rent (1)
49
3,612
2,149
8,517
Uncollectible amounts billable in lease income
(636
1,110
958
12,156
Total lease income
The following table represents the components of Tenant and other receivables, net of amounts considered uncollectible, in the accompanying Consolidated Balance Sheets:
Tenant receivables
28,792
31,486
Straight-line rent receivables
136,334
128,214
Other receivables (1)
34,313
29,163
Total tenant and other receivables
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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:
CarryingAmount
Financial liabilities:
3,588,977
3,333,378
Unsecured credit facilities
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, 2023, and December 31, 2022, respectively. These fair value measurements maximize the use of observable 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.
(b) Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis:
Securities
The Company has investments in marketable securities that are included within Other assets on the accompanying Consolidated Balance Sheets. The fair value of the securities was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of securities are recorded within Net investment loss (income) in the accompanying Consolidated Statements of Operations, and include unrealized losses of $1.0 million during the three months ended September 30, 2023 and 2022, and unrealized gains of $2.4 million and unrealized losses of $9.5 million during the nine months ended September 30, 2023 and 2022, respectively.
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 either recent trade prices for the identical debt instrument or comparable instruments by issuers of similar industry sector, issuer rating, and size, to estimate fair value, which are considered Level 2 inputs of the fair value hierarchy. Unrealized gains or losses on these debt securities are recognized through Other comprehensive income.
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.
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 September 30, 2023
Quoted Prices in Active Markets for Identical Assets
Significant Other Observable Inputs
Significant Unobservable Inputs
Balance
(Level 1)
(Level 2)
(Level 3)
33,881
Available-for-sale debt securities
14,423
Interest rate derivatives
69,632
35,751
Fair Value Measurements as of December 31, 2022
40,089
14,492
61,156
21,067
9.
Equity and Capital
See Note 1 — Acquisition of Urstadt Biddle Properties Inc, for discussion regarding UBP acquisition.
Preferred Stock of the Parent Company
Terms and conditions of the preferred stock outstanding are summarized as follows:
Preferred Stock Outstanding as of September 30, 2023
Date of Issuance
Shares Issued and Outstanding
Liquidation Preference
Distribution Rate
Callable By Company
Series A
8/18/2023
4,600,000
115,000,000
6.250%
On demand
Series B
4,400,000
110,000,000
5.875%
On or after 10/1/2024
9,000,000
225,000,000
Both series of Preferred Stock are non-voting, have no stated maturity and are redeemable for cash at $25.00 per share at the Company's option, except that the Parent Company Series B preferred stock is not redeemable until on or after October 1, 2024. The holders of the Preferred Stock have general preference rights with respect to liquidation and quarterly distributions. Except under certain conditions, holders of the Preferred Stock will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of the Preferred Stock (voting as a single class without regard to series) will have the right to elect two additional members to serve on the Company's Board of Directors until the arrearage has been cured. Upon the occurrence of a Change of Control, as defined in the Company's Articles of Incorporation, the holders of the Preferred
26
Stock will have the right to convert all or part of the shares of the Preferred Stock held by such holders on the applicable conversion date into a number of shares of Common Stock.
Dividends Declared
On September 25, 2023, the Board of Directors (the “Board”) of the Company:
On November 2, 2023, the Board:
Common Stock of the Parent Company
On November 2, 2023, the Board declared a common stock dividend of $0.67 per share, payable on January 3, 2024, to shareholders of record as of December 14, 2023.
At the Market ("ATM") Program
Under the Parent Company's ATM program, as authorized by the Board, the Parent Company may sell up to $500 million of common stock at prices determined by the market at the time of sale. The timing of sales, if any, will be dependent on market conditions and other factors. No sales occurred under the ATM program during 2023. As of September 30, 2023, $500 million of common stock remained available for issuance under this ATM program.
Stock Repurchase Program
The Board has authorized a common stock 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, and/or in privately negotiated transactions (referred to as the "Repurchase Program"). The timing and price of stock repurchases, if any will be dependent upon market conditions and other factors. The stock repurchased, if not retired, would be treated as treasury stock. The Board's authorization for this repurchase program will expire on February 7, 2025, unless modified, extended or earlier terminated by the Board.
During the nine months ended September 30, 2023, the Company executed multiple trades to repurchase 349,519 common shares under the Repurchase Program for a total of $20.0 million at a weighted average price of $57.22 per share. All repurchased shares were retired on the respective settlement dates. At September 30, 2023, $230.0 million remained available under the Repurchase Program.
Preferred Units of the Operating Partnership
The number of Series A Preferred Units and Series B Preferred Units, respectively, issued by RCLP is equal to the number of Series A Preferred Stock and Series B Preferred Stock, respectively, issued by the Company.
Common Units of the Operating Partnership
Common Units are issued, or redeemed and retired, for each share of Parent Company stock issued or redeemed, or retired, as described above. During the nine months ended September 30, 2023, the Operating Partnership issued 338,704 exchangeable operating partnership units, valued at $20.0 million, as partial purchase price consideration for the acquisition of a property to be developed. In addition, 3,340 Partnership Units were converted to Parent Company common stock.
10.
Stock-Based Compensation
During the nine months ended September 30, 2023, the Company granted 301,099 shares of restricted stock with a weighted-average grant-date fair value of $68.29 per share. The Company records stock-based compensation expense within General and administrative expenses in the accompanying Consolidated Statements of Operations, and recognizes forfeitures as they occur.
11.
Earnings per Share and Unit
Parent Company Earnings per Share
The following summarizes the calculation of basic and diluted earnings per share:
Numerator:
Income attributable to common shareholders - basic
Income attributable to common shareholders - diluted
Denominator:
Weighted average common shares outstanding for basic EPS
177,344
171,121
173,212
171,499
Weighted average common shares outstanding for diluted EPS (1)
178,231
171,525
173,711
171,870
Income per common share – basic
Income per common share – diluted
Income attributable to noncontrolling interests of the Operating Partnership has been excluded from the numerator and EOP 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 be anti-dilutive. Weighted average EOP units outstanding were 1,080,101 and 741,433 for the three months ended September 30, 2023 and 2022, respectively, and were 909,527 and 750,671 for the nine months ended September 30, 2023 and 2022, respectively.
Operating Partnership Earnings per Unit
The following summarizes the calculation of basic and diluted earnings per unit ("EPU"):
Income attributable to common unit holders - basic
Income attributable to common unit holders - diluted
Weighted average common units outstanding for basic EPU
178,424
171,862
174,121
172,249
Weighted average common units outstanding for diluted EPU (1)
179,311
172,267
174,621
172,620
Income per common unit – basic
Income per common unit – diluted
28
12.
Commitments and Contingencies
Litigation
The Company is a party to litigation and is subject to other disputes, in each case that arise in the ordinary course of business. While the outcome of any particular lawsuit or dispute cannot be predicted with certainty, in the opinion of management, the 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.
On May 17, 2023, the Company announced its entry into an agreement to acquire UBP and shortly thereafter filed a registration statement (the “Registration Statement”) with the SEC containing a proxy statement/prospectus in connection with obtaining approval of the proposed acquisition by UBP stockholders. As previously disclosed in the Company's Form 10-Q for the second quarter of 2023, a complaint was filed in Connecticut state court in connection with the proposed acquisition by a purported UBP stockholder, which alleged that, in connection with the proposed acquisition, the UBP board of directors breached its fiduciary duties under applicable law and that the Registration Statement failed to disclose allegedly material information. The Complaint also alleged that Regency aided and abetted the alleged breaches of fiduciary duty, and that all defendants engaged in negligent misrepresentation and concealment in connection with the Registration Statement. The complaint sought various remedies, including, among other things, injunctive relief, damages and attorneys’ fees. In addition to the Complaint, certain other purported stockholders of UBP sent demand letters (the “Demands,” and together with the Complaint, the “Matters”) alleging deficiencies and/or omissions regarding the disclosures made in the Registration Statement. The Matters were resolved during the quarter to avoid additional litigation and associated costs. The resolution involved the claimants’ acknowledgment that their claims were mooted by additional information disclosed in a Form 8-K filed by UBP with the SEC on August 8, 2023. In exchange for appropriate releases and the dismissal of the Complaint, we also made payments to the claimants and their attorneys, in the aggregate, totaling an immaterial amount.
Environmental
The Company is subject to numerous environmental laws and regulations. With respect to impact on the Company, these pertain primarily to chemicals historically used by certain current and former dry cleaning tenants, the existence of asbestos in older shopping centers, older underground petroleum storage tanks and other historic land uses. 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 its shopping centers have revealed all potential environmental contaminants; 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 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; and that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.
Letters of Credit
The Company has the right to issue letters of credit under the Line up to an aggregate amount not to exceed $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 subsidiary and to facilitate the construction of development projects. The Company had $9.1 million and $9.4 million in letters of credit outstanding as of September 30, 2023 and December 31, 2022, respectively.
29
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 Regency's future events, developments, or financial or operational performance or results, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as "may," "will," "could," "should," "would," "expect," "estimate," "believe," "intend," "forecast," "project," "plan," "anticipate," "guidance," and other 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 reasonable when made, forward-looking statements are not guarantees of future performance or events and undue 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 it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.
Our operations are subject to a number of risks and uncertainties including, but not limited to, risk factors described in our Securities and Exchange Commission ("SEC") filings, our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Form 10-K") under Item 1A. "Risk Factors" and in Part II, Item 1A. "Risk Factors" in this Report. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our most recent 2022 Form 10-K, subsequent Quarterly Reports on Form 10-Q and our other filings with and submissions to the SEC, including those made in connection with the Company’s acquisition of UBP. 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 materially adversely affected. Forward-looking statements are only as of the date they are made, and Regency undertakes no duty to update its forward-looking statements, whether as a result of new information, future events, or developments otherwise, except as and to the extent required by law.
Non-GAAP Measures
In addition to the required Generally Accepted Accounting Principles ("GAAP") presentations, we use and report certain non-GAAP measures as we believe these measures improve the understanding of our operational results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our 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 continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
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 measures is that 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 measures. In order to compensate for these limitations, reconciliations of the non-GAAP measures we use to their most directly comparable GAAP measures are provided. Non-GAAP 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, and are included in this document:
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 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 Shareholders 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 our operating results to those of other REITs more meaningful. The Pro-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-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-rata share.
31
The presentation of Pro-rata information has limitations which include, but are not limited to, the following:
Because of these limitations, the Pro-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-rata information as a supplement.
Overview of Our Strategy
Regency Centers Corporation began operations as a publicly-traded REIT in 1993. All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P. and its wholly-owned subsidiaries, and through our real estate partnerships. As of September 30, 2023, the Parent Company owned approximately 99.4% of the outstanding Common Units and 100% of the Preferred Units of the Operating Partnership.
We are a preeminent national owner, operator, and developer of shopping centers located in suburban trade areas with compelling demographics. As of September 30, 2023, we had full or partial ownership interests in 481 retail properties. Our properties are high-quality neighborhood and community shopping centers primarily anchored by market leading grocers and principally located in suburban markets within the country's most desirable metro areas and contain approximately 56.7 million square feet ("SF") of gross leasable area ("GLA"). Our mission is to create 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 fabric of our communities. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and best-in-class retailers that connect to their neighborhoods, communities, and customers.
Our values:
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Our goals are to:
Refer to Item 1, Note 1 to Unaudited Consolidated Financial Statements.
Please also refer to the Risk Factors discussed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022, and the Risk Factors described in Part II, Item 1A the Form 10-Q reports filed for the quarters ended March 31 and June 30, 2023, respectively, and this Form 10-Q. In addition, please also refer to the risk factors discussed in connection with the Company’s acquisition of UBP, including, without limitation, those described in Amendment No. 1 to the Company’s Form S-4 Registration Statement, which was filed with the SEC on July 10, 2023.
Executing on our Strategy
During the nine months ended September 30, 2023, we had Net income attributable to common shareholders of $273.1 million as compared to $387.6 million during the nine months ended September 30, 2022, which included gains on sale of real estate of $106.5 million.
During the nine months ended September 30, 2023:
33
We continued our development and redevelopment of high quality shopping centers:
We maintained liquidity and financial flexibility to cost effectively fund investment opportunities and debt maturities:
On August 18, 2023, we completed the acquisition of UBP which was structured as multiple mergers. Under the terms of the merger agreement, each share of Urstadt Biddle common stock, and Urstadt Biddle Class A common stock was converted into 0.347 of a share of common stock of the Parent Company. Additionally, each share of UBP’s 6.25% Series H Cumulative Redeemable Preferred Stock and 5.875% Series K Cumulative Redeemable Preferred Stock was converted into one share of Parent Company Series A preferred stock and Parent Company Series B preferred stock, respectively.
The following table provides the components that make up the total purchase price for the UBP acquisition:
As part of the acquisition, Regency acquired 74 properties, all considered Non-Same Property, representing 5.3 million square feet of GLA, including 10 properties held through real estate partnerships. The consolidated results of operations of UBP are included in the consolidated financial statements from the closing date, August 18, 2023 through September 30, 2023.
Property Portfolio
The following table summarizes general information related to the consolidated properties in our portfolio:
(GLA in thousands)
Number of Properties
308
GLA
43,559
38,834
% Leased – Operating and Development
94.6
%
94.8
% Leased – Operating
94.9
Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions.
$24.55
$23.95
34
The following table summarizes general information related to the unconsolidated properties owned in real estate partnerships in our portfolio:
102
96
13,176
12,311
95.4
% Leased –Operating
Weighted average annual effective rent PSF, net of tenant concessions
$23.85
$23.15
The following table summarizes Pro-rata occupancy rates of our combined consolidated and unconsolidated shopping center portfolio:
Percent Leased – All Properties
Anchor Space (spaces ≥ 10,000 SF)
96.0
96.8
Shop Space (spaces < 10,000 SF)
92.3
91.5
The following table summarizes leasing activity, including our Pro-rata share of activity within the portfolio of our real estate partnerships which, for the period ended September 30, 2023, include amounts for leasing activity of properties acquired from UBP beginning August 18, 2023 (totals as a weighted average PSF):
LeasingTransactions
SF (inthousands)
Base RentPSF
TenantAllowanceand LandlordWork PSF
LeasingCommissionsPSF
Anchor Space Leases
New
513
19.96
46.57
4.33
Renewal
2,090
16.90
0.45
0.10
Total Anchor Space Leases
2,603
17.50
9.54
0.93
Shop Space Leases
417
830
37.83
38.90
12.13
791
1,386
37.37
1.49
0.64
Total Shop Space Leases
1,208
2,216
37.54
15.50
4.94
Total Leases
1,310
4,819
26.71
12.28
2.78
498
14.74
15.12
5.57
88
2,592
16.39
0.87
0.17
105
3,090
16.12
3.17
1.04
419
802
37.62
36.41
11.93
950
1,737
35.98
1.69
0.89
1,369
2,539
36.50
12.66
4.37
1,474
5,629
25.31
7.45
2.55
The weighted-average base rent on signed Shop Space leases during 2023 was $37.54 PSF, which is higher than the $34.89 PSF weighted average annual base rent of all Shop Space leases due to expire during the next 12 months. New and renewal rent spreads, compared to prior rents on these same spaces leased, were positive at 9.2% for the nine months ended September 30, 2023, compared to 7.5% for the nine months ended September 30, 2022.
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The success of our tenants in operating their businesses and their corresponding ability to pay us rent continue to be influenced by current economic challenges, which increase their cost of doing business, including, but not limited to, inflation, the cost and availability of labor, increasing energy prices and interest rates. Additionally, macroeconomic and geopolitical risks, including the current wars in Ukraine, and involving Israel and Gaza, create challenges that may exacerbate current market conditions in the United States. The policies implemented by the U.S. government to address these issues, including raising interest rates, could result in adverse impacts on the U.S. economy, including a slowing of growth and potentially a recession, thereby impacting consumer spending, tenants' businesses, and/or decreasing future demand for space in shopping centers.
These economic conditions could adversely impact our volume of leasing activity, leasing spreads, and financial results generally, as well as adversely affect the business and financial results of our tenants. The aggregate impacts of these current economic challenges may also negatively affect the overall market for retail space, resulting in decreased demand for space in our centers. This, in turn, could result in downward pressure on rents that we are able to charge to new or renewing tenants, such that future new and renewal rent spreads could be adversely impacted as tenants look to manage total occupancy costs. Further, we may experience higher costs for tenant buildouts, as costs of materials and labor may continue to increase and supply and availability of both may become more limited.
Significant Tenants and Concentrations of Risk
We seek to reduce our operating and leasing risks through geographic diversification of our properties and by avoiding dependence on any single property, market, or tenant. Based on percentage of annualized base rent, the following table summarizes our most significant tenants, of which four of the top five are grocers:
Tenant
Number ofStores
Percentage ofCompany-owned GLA (1)
Percentage ofAnnual Base Rent (1)
Publix
6.5%
3.0%
Albertsons Companies, Inc.
52
4.7%
2.9%
Kroger Co.
6.4%
2.7%
Amazon/Whole Foods
39
2.8%
TJX Companies, Inc.
70
3.6%
Bankruptcies and Credit Concerns
Our management team devotes significant time to researching and monitoring consumer preferences and trends, customer shopping behaviors, changes in delivery methods, shifts to e-commerce, and changing demographics in order to anticipate the challenges and opportunities impacting our industry. We seek to mitigate these potential impacts through maintaining a high quality portfolio, diversifying our tenant mix, replacing less successful tenants with stronger operators, anchoring our centers with market leading grocery stores that drive customer traffic, and maintaining a presence in suburban trade areas with compelling demographic populations benefiting from high levels of disposal income. The potential for a recession and the severity and duration of any economic downturn could negatively impact our existing tenants and their ability to continue to meet their lease obligations.
Although base rent is derived from long-term lease contracts, tenants that 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 significant downtime 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 rejects its leases, we could experience a significant reduction in our revenues. Tenants who are currently in bankruptcy and continue to occupy space in our shopping centers represent an aggregate of 0.6% of our Pro-rata annual base rent, including 0.5% of our Pro-rata annual base rent related to Rite Aid.
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Results from Operations
Results from operations for the three and nine months ended September 30, 2023, include the results of our acquisition of UBP from August 18, 2023.
Comparison of the three months ended September 30, 2023 and 2022:
Our revenues changed as summarized in the following table:
Change
Base rent
227,347
207,555
19,792
Recoveries from tenants
76,973
69,376
7,597
Percentage rent
1,868
1,884
(16
Uncollectible lease income
(1,746
Other lease income
4,558
3,426
1,132
Straight-line rent
2,693
6,921
(4,228
Above / below market rent amortization
2,634
25,165
172
1,312
26,649
Lease income increased by $25.2 million, on a net basis, primarily driven by the following contractually billable components of rent to the tenants per the lease agreements:
37
Management, transaction, and other fees increased $1.3 million due to other income related to the UBP acquisition and increased property management and development fees from our real estate partnerships.
Changes in our operating expenses are summarized in the following table:
7,235
9,650
630
2,584
22,344
Depreciation and amortization costs increased by $7.2 million, as follows:
Property operating expense increased $9.7 million, as follows:
Real estate taxes increased $2.2 million, on a net basis, as follows:
General and administrative costs increased $0.6 million on a net basis, as follows:
Other operating expenses increased $2.6 million attributable to an increase primarily attributable to $1.5 million of transition costs related to the acquisition of UBP, and increase in development pursuit costs and other professional services.
38
The following table presents the components of other expense (income):
Interest on notes payable
39,000
37,187
1,813
Interest on unsecured credit facilities
1,574
524
1,050
Capitalized interest
(1,492
(1,171
(321
Hedge expense
109
Interest income
(384
(288
(96
2,446
Net investment loss
(195
Total other expense (income)
2,287
Interest expense increased $2.4 million primarily due to the following:
Our equity in income of investments in real estate partnerships changed as follows:
Regency'sOwnership
GRI - Regency, LLC (GRIR)
40.00%
8,877
8,876
New York Common Retirement Fund (NYC) (1)
30.00%
43
(49
Columbia Regency Retail Partners, LLC (Columbia I)
20.00%
339
452
(113
Columbia Regency Partners II, LLC (Columbia II)
387
(1
Columbia Village District, LLC
983
454
529
RegCal, LLC (RegCal) (2)
25.00%
127
124
Other investments in real estate partnerships
11.80% - 66.67%
1,761
964
797
Total equity in income of investments in real estate partnerships
1,308
The following represents the remaining components that comprised net income attributable to common stockholders and unit holders:
3,326
3,142
1,498
Net income attributable to exchangeable operating partnership units
(141
1,639
Comparison of the nine months ended September 30, 2023 and 2022:
654,254
611,160
43,094
222,947
205,614
17,333
10,278
7,583
(11,198
14,840
10,561
4,279
8,169
18,405
(10,236
5,948
51,915
169
1,273
53,357
Total lease income increased $51.9 million primarily driven by the following contractually billable components of rent to the tenants per the lease agreements:
Management, transaction, and other fees increased $1.3 million primarily due to other income related to the UBP acquisition and increased property management and development fees from our real estate partnerships.
15,911
20,855
5,662
14,538
979
57,945
Depreciation and amortization costs increased $15.9 million, as follows:
Property operating expense increased $20.9 million, on a net basis, as follows:
Real estate taxes increased $5.7 million, on a net basis, mainly due to the following:
General and administrative costs increased $14.5 million, on a net basis, mainly due to the following:
41
Other operating expenses increased $1.0 million, primarily due to due to $1.5 million increase for transition costs related to the acquisition of UBP.
The following table presents the components of Other expense (income):
113,087
111,547
1,540
3,903
1,500
2,403
(4,026
(2,985
(1,041
328
(1,136
(592
(544
2,358
105,944
Net investment (income) loss
(11,626
96,676
During the nine months ended September 30, 2023, we recognized gains on sale of $0.5 million from two land parcels. During the nine months ended September 30, 2022, we recognized gains on sale of $106.5 million from one operating property and four land parcels.
Net investment income increased $11.6 million primarily driven by $10.1 million gains on investments held in the non-qualified deferred compensation plan which have an offsetting expense in General and administrative costs noted above and $1.5 million gains on investments held in our captive insurance company.
Total equity in income of investments in real estate partnerships changed as follows:
27,118
27,280
(162
9,162
(9,094
1,217
1,396
1,300
1,307
1,740
1,154
586
369
4,374
(4,005
4,490
3,182
(11,553
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The $11.6 million decrease, on a net basis, in our equity in income of investments in real estate partnerships is largely attributable to the following changes:
The following represents the remaining components that comprise Net income attributable to common shareholders and unit holders:
(112,817
(2
(112,819
(114,463
204
(114,667
Supplemental Earnings Information
We use certain non-GAAP measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the our operating results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our 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, when read in conjunction with our reported results under GAAP. We believe presenting our Pro-rata share of operating results, along with other non-GAAP measures, may assist in comparing our operating results to other REITs. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP measures to determine how best to provide relevant information to the public, and thus such reported non-GAAP measures could change. See "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 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 measures. In order to compensate for these limitations, reconciliations of the non-GAAP measures we use to their most directly comparable GAAP are provided, including as set forth below. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations, or future prospects.
Pro-Rata Same Property NOI:
Pro-rata same property NOI, excluding termination fees/expenses, changed as follows:
235,876
228,761
7,115
702,995
677,917
25,078
80,327
75,942
4,385
240,872
227,497
13,375
2,208
2,244
(36
11,600
8,774
2,826
Termination fees
1,037
902
135
6,407
3,790
2,617
(392
1,214
(1,606
1,113
13,105
(11,992
3,276
3,081
195
9,056
8,606
450
2,023
1,930
93
6,803
6,680
123
Total real estate revenue
324,355
314,074
10,281
978,846
946,369
32,477
Operating and maintenance
55,747
49,544
6,203
162,586
147,725
14,861
40,695
41,543
(848
124,100
122,900
1,200
Ground rent
3,153
2,991
9,125
269
Total real estate operating expenses
99,595
94,078
5,517
295,811
279,481
16,330
Pro-rata same property NOI
224,760
219,996
4,764
683,035
666,888
16,147
Less: Termination fees
Pro-rata same property NOI, excluding termination fees
223,723
219,094
4,629
676,628
663,098
13,530
Pro-rata same property NOI growth, excluding termination fees
2.1
2.0
Real estate revenue increased $10.3 million and $32.5 million, on a net basis, during the three and nine months ended September 30, 2023 and 2022, respectively, as follows:
Base rent increased $7.1 million and $25.1 million during the three and nine months ended September 30, 2023, respectively, due to rent steps in existing leases, positive rental spreads on new and renewal leases, and increases in occupancy, as well as redevelopment projects completing and operating.
Recoveries from tenants increased $4.4 million and $13.4 million during the three and nine months ended September 30, 2023, respectively, due to increases in recoverable expenses.
Percentage rent increased $2.8 million during the nine months ended September 30, 2023, due to increases in tenant sales.
Termination fees increased $2.6 million during the nine months ended September 30, 2023, driven by two anchor terminations that were recognized in 2023.
Uncollectible lease income decreased $1.6 million and $12.0 million during the three and nine months ended September 30, 2023, respectively, primarily driven by the 2022 collection of previously reserved amounts, which have continued to be favorable in 2023, but to a lesser degree.
Total real estate operating expense increased $5.5 million and $16.3 million, on a net basis, during the three and nine months ended September 30, 2023, respectively, as follows:
Operating and maintenance increased $6.2 million and $14.9 million during the three and nine months ended September 30, 2023, respectively, primary due to increases in Recoverable Costs.
Real estate taxes increased $1.2 million during the nine months ended September 30, 2023, respectively, due to an increase in real estate assessments across the portfolio.
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Same Property Rollforward:
Our Same Property pool includes the following property count, Pro-rata GLA, and changes therein:
PropertyCount
Beginning same property count
395
42,143
390
41,446
SF adjustments (2)
Ending same property count
42,160
41,456
389
41,383
393
41,294
Acquired properties owned for entirety of comparable periods presented (1)
771
327
Developments that reached completion by the beginning of earliest comparable period presented
Disposed properties
(4
(191
(46
Change in intended property use
Nareit FFO and Core Operating Earnings:
Our reconciliation of net income attributable to common stock and unit holders to Nareit FFO and to Core Operating Earnings is as follows:
(in thousands, except share information)
Reconciliation of Net income to Nareit FFO
Adjustments to reconcile to Nareit FFO: (1)
Depreciation and amortization (excluding FF&E)
94,011
86,405
272,551
256,273
(827
(202
(1,132
(119,301
Nareit FFO attributable to common stock and unit holders
182,780
174,160
546,048
526,268
Reconciliation of Nareit FFO to Core Operating Earnings
Nareit Funds From Operations
Adjustments to reconcile to Core Operating Earnings (1):
Not Comparable Items
Merger transition costs
1,511
Early extinguishment of debt
176
Certain Non Cash Items
(3,142
(3,140
(7,315
(9,152
Uncollectible straight-line rent
(4,156
(2,298
(9,610
Above/below market rent amortization, net
(7,919
(5,191
(22,138
(15,906
Debt and derivative mark-to-market amortization
667
(28
(185
Core Operating Earnings
173,989
161,645
516,475
491,591
45
Reconciliation of Same Property NOI to Nearest GAAP Measure:
Our reconciliation of Net income attributable to common shareholders to Same Property NOI, on a Pro-rata basis, is as follows:
Less:
Other (1)
12,016
13,564
34,317
38,295
Plus:
Other operating expense
Other expense (income)
Equity in income of investments in real estate excluded from NOI (2)
11,668
11,754
35,266
23,767
Preferred stock dividends and issuance costs
1,644
Pro-rata NOI
236,330
220,118
698,090
668,599
Less non-same property NOI (3)
11,570
122
15,055
Liquidity and Capital Resources
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. A significant portion of our cash from operations is distributed to our common shareholders in the form of dividends in order to maintain our status as a REIT.
Except for $200 million of private placement debt, 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, its subsidiaries, or by our real estate partnerships. The Operating Partnership is a co-issuer and a guarantor of 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, including monitoring our tenant rent collections. We have access to and draw on multiple financing sources to fund our operations and our long-term capital needs, including the requirements of our in process and planned developments, redevelopments, other 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 common stock and preferred stock dividends, borrowings from our Line, proceeds from the sale of real estate, mortgage loan and unsecured bank financing, distributions received from our real estate partnerships, and when the capital markets are favorable, proceeds from the sale of equity securities or the issuance of new unsecured debt. We continually evaluate alternative financing options, and we believe we can obtain new financing on reasonable terms, although likely at higher interest rates than that of our debt currently outstanding, due to the current interest rate environment.
We have no unsecured debt maturities in 2023, $250 million of unsecured debt maturing in 2024, and what we believe is 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 for the next year, and in the longer term, although we can give no assurances.
In addition to our $74.4 million of unrestricted cash, we have the following additional sources of capital available:
ATM program
Original offering amount
500,000
Available capacity
Line of credit
Total commitment amount
1,250,000
Available capacity (1)
1,164,720
Maturity (2)
March 23, 2025
The declaration of dividends is determined quarterly by our Board of Directors. On November 2, 2023, our Board of Directors:
While future dividends will be determined at the discretion of our Board of Directors, we plan to continue paying an aggregate amount of distributions to our stock and unit holders that, at a minimum, meet the requirements to allow the Company and Operating Partnerships to each continue qualifying as a REIT for federal income tax purposes. We have historically generated sufficient cash flow from operations to fund our dividend distributions. During the nine months ended September 30, 2023 and 2022, we generated cash flow from operations of $547.7 million and $528.2 million, respectively, and paid $334.3 million and $322.9 million in dividends to our common stock and unit holders, in the same respective periods.
We currently have development and redevelopment projects in various stages of construction, along with a pipeline of potential projects for future development or redevelopment. We estimate that we will require cash during the next 12 months of approximately $644.9 million related to leasing commissions, tenant improvements, in-process developments and redevelopments, capital contributions to our real estate partnerships, and repaying maturing debt. These capital requirements are being 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 permitting delays and labor shortages may extend the time to completion of these projects.
If we start new developments or redevelopments, commit to property 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.
We endeavor to maintain a high percentage of unencumbered assets. As of September 30, 2023, 85.7% of our wholly-owned real estate assets were unencumbered. Our low level of encumbered assets allow us to more readily access the secured and unsecured debt markets and to maintain availability on the Line. Our trailing 12 month fixed charge coverage ratio, including our Pro-rata share of our partnerships, was 5.0x and 4.7x for the periods ended September 30, 2023, and December 31, 2022, respectively, and our Pro-rata net debt and Preferred Stock-to-operating EBITDAre ratio on a trailing 12 month basis was 5.5x and 5.0x, respectively, for the same periods.
Our Line and unsecured debt require that we remain in compliance with various covenants, which are described in the Notes to Consolidated Financial Statements included in our 2022 Form 10-K. The debt assumed in conjunction with the UBP acquisition contain covenants that are consistent with our existing debt covenants. We were in compliance with these covenants at September 30, 2023, and expect to remain in compliance.
47
Summary of Cash Flow Activity
The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:
19,443
(119,660
52,554
(47,663
Total cash and cash equivalents and restricted cash
(73,914
Net cash provided by operating activities:
Net cash provided by operating activities increased $19.4 million due to:
Net cash used in investing activities:
Net cash used in investing activities changed by $119.7 million as follows:
139,242
(15,258
(126,942
4,455
(44,829
235
9,999
(2,074
Significant changes in investing activities include:
48
We plan to continue developing and redeveloping shopping centers for long-term investment. During 2023, we deployed capital of $159.0 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:
Capital expenditures:
Land acquisitions
2,580
11,545
(8,965
Building and tenant improvements
58,549
55,094
3,455
Redevelopment costs
57,384
48,641
8,743
Development costs
30,613
20,252
10,361
3,931
2,922
1,009
Capitalized direct compensation
5,925
5,270
655
158,982
143,724
15,258
The following table summarizes our development projects in-process and completed:
(in thousands, except cost PSF)
Market
Ownership (3)
StartDate
EstimatedStabilizationYear (1)
Estimated NetDevelopmentCosts (2) (3)
GLA (3)
Cost PSFof GLA (2) (3)
% of Costs Incurred
Developments In-Process
Metro NYC
Q1-22
46,172
247
69
Baybrook East - Phase 1B
Q2-22
10,384
133
Sienna - Phase 1
Q2-23
9,409
409
The Shops at SunVet
Long Island, NY
86,722
168
Total Developments In-Process
152,687
296
The following table summarizes our redevelopment projects in process and completed:
Start Date
Estimated Stabilization Year (1)
Estimated NetProject Costs (2) (3)
Redevelopments In-Process
The Abbot
Boston, MA
Q2-19
58,973
Westbard Square Phase I
Bethesda, MD
Q2-21
37,000
126
Buckhead Landing
Atlanta, GA
28,458
Bloom on Third (fka Town and Country Center)
Los Angeles, CA
35%
Q4-22
24,525
51
Mandarin Landing
Jacksonville, FL
16,422
140
Serramonte Center - Phase 3
San Francisco, CA
36,989
1,072
Circle Marina Center
Q3-23
14,986
118
Various Redevelopments
Various
20% - 100%
69,911
2,215
Total Redevelopments In-Process
287,264
3,938
Redevelopments Completed
The Crossing Clarendon
Metro DC
Q4-18
55,679
129
Various Properties
18,307
844
95
Total Redevelopments Completed
73,986
50
Net cash flows from financing activities changed by $52.6 million during 2023, as follows:
Net proceeds from common stock issuances
(61,280
(1,215
55,413
1,599
Dividend payments and operating partnership distributions
(11,396
Proceeds from unsecured credit facilities, net
Proceeds from debt issuance
Debt repayment, including early redemption costs
(68,234
(14,498
(53,736
(329
Proceeds from sale of treasury stock, net
Significant financing activities during the nine months ended September 30, 2023 and 2022, include the following:
Investments in Real Estate Partnerships
The following table is a summary of the unconsolidated combined assets and liabilities of our real estate partnerships and our Pro-rata share:
Combined
Regency's Share (1)
(dollars in thousands)
Number of real estate partnerships
Regency's ownership
12% - 67%
20% - 50%
Number of properties
2,739,604
2,608,005
1,000,709
943,699
1,604,587
1,497,630
570,053
530,915
1,135,017
1,110,375
430,656
412,784
Basis difference
(48,356
(62,407
Our equity method investments in real estate partnerships consist of the following:
Regency's Ownership
GRI-Regency, LLC (GRIR)
148,596
155,302
159
674
7,256
7,423
43,553
41,757
6,141
5,836
5,550
5,789
Individual Investors
Ballard Blocks
49.90%
62,000
62,624
35.00%
42,417
40,409
Others (3)
66,628
30,563
Total Investment in real estate partnerships
Notes Payable - Investments in Real Estate Partnerships
Scheduled principal repayments on notes payable held by our investments in real estate partnerships were as follows:
UnsecuredMaturities
Regency’sPro-RataShare
2023 (1)
941
284
3,718
33,690
37,408
14,678
6,094
146,221
152,315
48,005
7,393
225,589
39,800
272,782
86,475
7,576
32,800
40,376
13,669
10,956
986,042
1,487
998,485
373,113
Net unamortized loan costs, debt premium / (discount)
(11,235
(4,085
36,678
1,413,107
41,287
1,491,072
532,139
At September 30, 2023, our investments in real estate partnerships had notes payable of $1.5 billion maturing through 2034, of which 96.0% had a weighted average fixed interest rate of 3.8%. The remaining notes payable float with SOFR and had a weighted average variable interest rate of 7.2%, based on rates as of September 30, 2023. These fixed and variable rate notes payable are all non-recourse, and our Pro-rata share was $532.1 million as of September 30, 2023. As notes payable mature, they are expected to be repaid from proceeds from new borrowings and/or partner capital contributions. Refinancing debt at maturity in the current interest rate environment could result in higher interest expense in future periods if rates remain elevated.
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 is unable to fund its share of the capital requirements of the real estate partnership, we would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call which would be secured by the partner's membership interest.
Management fee income
In addition to earning our Pro-rata share of net income or loss in each of these real estate partnerships, we receive fees as shown below:
Asset management, property management, leasing, and other transaction fees
6,322
19,465
See Note 1 to Unaudited Financial Statements.
Environmental Matters
We are subject to numerous environmental laws and regulations that apply to our shopping centers, which primarily pertain to chemicals historically used by certain current and former dry cleaning and gas station tenants and the existence of asbestos in older shopping 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 endeavor to require tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems, in accordance with the terms of our leases. We carry an environmental insurance policy for certain third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also secured environmental insurance policies, where 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, 2023, we had accrued liabilities of $19.9 million for our Pro-rata share of environmental remediation, including our Investments in real estate partnerships. We believe that the ultimate remediation of currently known environmental matters will not have a material effect on our financial position, cash flows, or results of operations. We can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental 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 available 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. Please also refer to the Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022, discussed in Item 1A of Part I thereof, and the Risk Factors described in Part II, Item 1A of this Form 10-Q.
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"). 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 periods 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 third quarter of 2023 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 periods 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 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 third quarter of 2023 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 1. Legal Proceedings
See Note 12 — Commitments and Contingencies in the Notes for discussion regarding material legal proceedings and contingencies. Except as set forth in such discussion, there have been no material developments in legal proceedings as reported in Item 3. “Legal Proceedings” of our 2022 Form 10-K.
Item 1A. Risk Factors
In addition to the information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report”), and the Risk Factors described in Part II, Item 1A of the Form 10-Q reports filed in the quarters ended March 31, and June 30, 2023, respectively, and this form 10Q. There have been no material changes in our risk factors from those described in our 2022 Annual Report except as disclosed in our Form S-4 Registration Statement, filed with the SEC on July 10, 2023, in connection with our acquisition of Urstadt Biddle, which contains, without limitation, additional risk factors in a section of the prospectus entitled “Risks Relating to Regency After Completion of the Mergers”. In addition, we note the risk factor identified during 2023 detailed below:
Unfavorable developments affecting the banking and financial services industry could adversely affect our business, liquidity and financial condition, and overall results of operations.
Actual events, concerns or speculation about disruption or instability in the banking and financial services industry, such as liquidity constraints, the failure of individual institutions, or the inability of individual institutions or the banking and financial service industry generally to meet their contractual obligations, could significantly impair our access to capital, delay access to deposits or other financial assets, or cause actual loss of funds subject to cash management arrangements. Similarly, these events, concerns or speculation could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and
operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Additionally, our tenants, critical vendors and business partners also could be adversely affected by these risks as described above, which in turn could result in their committing a breach or default under their contractual agreements with us, their insolvency or bankruptcy, or other adverse effects.
Any decline in available funding or access to our cash and liquidity resources, or non-compliance of banking and financial services counterparties with their contractual commitments to us could, among other risks, have material adverse impacts on our ability to meet our operating expenses and other financial needs, could result in breaches of our financial and/or contractual obligations, and could have material adverse impacts on our business, financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended September 30, 2023, we issued 3,340 shares of common stock of Regency Centers Corporation in connection with the redemption of common units of Regency Centers, L.P. in reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a) (2) thereof. There were no other unregistered sales of equity securities during the three months ended September 30, 2023.
The following table represents information with respect to purchases by the Parent Company of its common stock, by month, during the three months ended September 30, 2023:
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 (in thousands) (2)
July 1 through July 31, 2023
230,000
August 1 through August 31, 2023
341
65.01
September 1 through September 30, 2023
649
63.11
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
On September 13, 2023, Martin E. Stein Jr., the Company’s Executive Chairman of the Board of the Company, took the following actions:
(i) Mr. Stein terminated a trading arrangement he had previously adopted with respect to the sale of the Company’s common stock (a “Rule 10b5-1 Trading Plan”). Mr. Stein’s Rule 10b5-1 Trading Plan was adopted on February 23, 2023 and, prior to its termination by Mr. Stein, was to expire by its terms on March 31, 2024. This Rule 10b5-1 Trading Plan provided for the sale of up to 100,000 shares of common stock pursuant to multiple limit orders. As of the date of termination of this plan, Mr. Stein had not sold any shares of common stock under its terms.
(ii) Mr. Stein adopted a new Rule 10b5-1 Trading Plan that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). Mr. Stein’s Rule 10b5-1 Trading Plan, which expires on February 15, 2025, provides for the sale of up to 50,000 shares of common stock pursuant to multiple limit orders. Since adoption of this plan, Mr. Stein has not sold any shares of common stock under its terms.
Entry into Material Definitive Agreements
Indemnification Agreements
On November 2, 2023, the Company entered into an indemnification agreement (an “Indemnification Agreement”) with each current member of its Board of Directors and each of its executive officers (each being referred to as an “Indemnified Party” and collectively as the “Indemnified Parties”). These Indemnification Agreements require the Company, among other things, to indemnify and hold harmless its directors and executive officers against claims, lawsuits, proceedings and liabilities (collectively, “Claims”) that may arise by reason of their status or capacity with, or service to, the Company and its subsidiaries, to the fullest extent permitted by the Company’s Articles of Incorporation, Bylaws and the Florida Business Corporation Act. These Indemnification Agreements also require the Company to advance expenses incurred by the Indemnified Parties in investigating or defending any such Claims, and sets forth various procedures in respect of such advancement and indemnification. The Indemnification Agreements also require the Company to procure customary directors and officers liability insurance, subject to certain conditions. The Company believes that these agreements are appropriate and necessary to attract and retain qualified individuals to serve as directors and executive officers.
The foregoing summary of the terms of the Indemnification Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the “form of” Indemnification Agreement, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q, and is incorporated herein by reference.
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 provisions are required to make the statements in this Report not misleading. Additional information about the Company may be found elsewhere in this Report and the Company's other public filings, which are available without charge through the SEC's website at http://www.sec.gov. Unless otherwise indicated below, the Commission file number to the exhibit is No. 001-12298 (Regency Centers Corporation) and 000-24763 (Regency Centers, L.P.).
Ex #
Underwriting agreement
1.1
Equity Distribution Agreement, dated August 8, 2023, among Regency Centers Corporation, Regency Centers, L.P. and BNY Capital Markets, LLC
1.2
Equity Distribution Agreement, dated August 8, 2023, among Regency Centers Corporation, Regency Centers, L.P. and BTIG, LLC. The Equity Distribution Agreements listed below are substantially identical in all material respects to the Equity Distribution Agreement, dated August 8, 2023, among Regency Centers Corporation, Regency Centers, L.P. and BTIG, LLC except for the identities of the parties, and have not been filed as exhibits to the Company’s 1934 Act reports pursuant to Instruction 2 to Item 601 of Regulation S-K.
(i) Equity Distribution Agreement, dated August 8, 2023, among Regency Centers Corporation, Regency Centers, L.P. and Regions Securities LLC.
(ii) Equity Distribution Agreement, dated August 8, 2023, among Regency Centers Corporation, Regency Centers, L.P. and Truist Securities, Inc.
1.3
Forward Master Confirmation, dated August 8, 2023, by and between the Regency Centers Corporation and BNY Mellon Capital Markets LLC.
1.4
Forward Master Confirmation, dated August 8, 2023, among Regency Centers Corporation and Nomura Global Financial Products, Inc.
1.5
Forward Master Confirmation, dated August 8, 2023, among Regency Centers Corporation and Regions Securities LLC.
1.6
Forward Master Confirmation, dated August 8, 2023, among Regency Centers Corporation and Truist Bank.
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Agreement and Plan of Merger, dated as of May 17, 2023, by and among Regency Centers Corporation, Hercules Merger Sub, LLC, Urstadt Biddle Properties Inc., UB Maryland I, Inc. and UB Maryland II, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on May 18, 2023)
Articles of Incorporation and Bylaws
3.1
Restated Articles of Incorporation of Regency Centers Corporation (amendment is incorporated by reference to Exhibit 3.A to the Company’s Form 10-Q filed on August 8, 2017)
3.2
Articles of Amendment to the Company’s Restated Articles of Incorporation Designating the Preferences, Rights and Limitations of the Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.3 in Regency’s Form 8-A filed on August 17, 2023)
3.3
Articles of Amendment to the Company’s Restated Articles of Incorporation Designating the Preferences, Rights and Limitations of the Series B Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.4 in Regency’s Form 8-A filed on August 17, 2023)
3.4
Articles of Amendment to the Company’s Restated Articles of Incorporation Deleting the Series 6 and Series 7 Cumulative Redeemable Preferred Stock Designations (incorporated by reference to Exhibit 3.5 in Regency’s Form 8-A filed on August 17, 2023)
3.5
Fifth Amended and Restated Agreement of Limited Partnership of Regency Centers, L.P. , (incorporated by reference to Exhibit 3(d) to the Company's Form 10-K filed on February 19, 2014)
3.6
Amendment to the Fifth Amended and Restated Agreement of Limited Partnership Relating to the Series A Cumulative Redeemable Preferred Units, dated August 16, 2023 (incorporated by reference to Exhibit 3.4 in Regency’s Form 8-K filed on August 18, 2023)
3.7
Amendment to the Fifth Amended and Restated Agreement of Limited Partnership Relating to the Series B Cumulative Redeemable Preferred Units, dated August 16, 2023 (incorporated by reference to Exhibit 3.5 in Regency’s Form 8-K filed on August 18, 2023)
Material Contracts
10.1
Form of Indemnification Agreement, in each case dated as of November 2, 2023, between Regency Centers Corporation (the Company”) and (1) each member of its Board of Directors of the Company and (2) each of Martin E. Stein, Jr. and Lisa Palmer (who are each also members of the Board), Michael J. Mas, Alan T. Roth, Nicholas A. Wibbenmeyer and each of the other executive officers of the Company.
31.
Rule 13a-14(a)/15d-14(a) Certifications.
31.1
Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation.
31.2
Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation.
31.3
Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.
31.4
Rule 13a-14 Certification of Chief Financial Officer for Regency Centers, L.P.
57
32.
Section 1350 Certifications.
32.1 *
18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers Corporation.
32.2 *
18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers Corporation.
32.3 *
18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers, L.P.
32.4 *
18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers, L.P.
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.
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.
November 6, 2023
By:
/s/ Michael J. Mas
Michael J. Mas, Executive Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ Terah L. Devereaux
Terah L. Devereaux, Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)
Regency Centers Corporation, General Partner