Regency Centers Corporation Q4 FY2024 earnings call

• Strong performance and execution of strategy with robust same property NOI and earnings growth. - Record leasing activity with high lease rates, including 300 basis points of occupancy in the executed lease pipeline and $44 million of incremental base rent. - Development program with $250 million+ in starts for two straight years, nearly half in new ground-up developments, and nearly $500 million in projects in process. - Dividend increased by 5% in the fourth quarter. - Expense recovery rate improved, and credit loss forecast for 2025 is in line with historical averages. - Accretive investment activity totaled over $500 million in 2024, including acquisitions and share repurchases while maintaining a strong balance sheet.

Same property NOI and earnings growth were strong. Base rent growth was robust, with a leasing pipeline driving new record high lease rates. Same property NOI growth excluding term fees and COVID period reserve collections was 4% for the quarter and 3.6% for the full year. Leasing activity was record-breaking, with nearly 2,000 leases executed in 2024 covering over 9.4 million square feet. Same property leased rate ended at 96.7% and shop occupancy lease rate at 94.1%. Development activity was strong, with $260 million in development and redevelopment starts in 2024, including $35 million in the fourth quarter, and nearly $500 million in projects in process with blended returns over 9%.

• NAREIT FFO range of $4.52 to $4.58 per share, reflecting nearly 6% year-over-year growth at midpoint. - Same property NOI expected to grow in range of 3.2% to 4%. - Credit loss outlook remains 75 to 100 basis points of total revenues, in line with historical averages. - Raised $100 million of equity on a forward basis through ATM in Q4, with liquidity supported by strong free cash flow and access to debt capital. - Leverage remains within targeted range of 5 to 5.5 times debt to EBITDA.

• Tenant bankruptcies and move-outs, though exposure is manageable. - Economic cycles and their potential impact on retail demand. - Construction cost fluctuations and their effect on development returns. - Uncertainties related to immigration policies and tariffs and their potential impact on the business.

Q: $250 million of development and redevelopment spend this year. Could you share more detail on what's planned for 2025 and types of projects adding most value?

A: Nick Wibbenmeyer said they have visibility to the $250 million spend, expect another $250 million in opportunities in 2025. Ground-up development yields are 7% plus, redevelopment in low double digits, blended high single digit.

Q: Drivers of earnings guidance above previous?

A: Mike Mas said it's foundationally driven by same property NOI growth 3.2%-4%, accretive capital allocation including transactions and developments, and impact of share repurchases and G&A factors.

Q: Thought process around credit loss reserve of 75 to 100 basis points?

A: Mike Mas said it's a combination of uncollectible lease income (historical average 50 basis points) and lost base rent from bankruptcy filings (25-50 basis points). Alan Roth added limited and manageable exposure due to deliberate asset management.

Q: Same store NOI range wider than expected?

A: Mike Mas said it's slightly better than head down, within historical range, driven by move-outs and credit loss timing.

Q: View on transaction market and acquisitions?

A: Lisa Palmer and Nick Wibbenmeyer said investments playbook remains, active in transactions market when compelling opportunities arise, with grocery anchored centers in focus.

Q: Shadow pipeline of redevelopment and mixed-use?

A: Nick Wibbenmeyer said active in all geographic territory, mixed-use projects small component, hyper-focused on core retail redevelopment.

Q: Builder economic occupancy capture in 2025 and G&A growth?

A: Mike Mas said anticipating meaningful headway in rent paying occupancy, G&A growth rate topping out in 2025.

Q: Renewal spreads and tenant retention in 2025?

A: Alan Roth said strong sales and limited supply drive spreads, retention historically 70-75%.

Q: Competition in development?

A: Nick Wibbenmeyer said biggest competition from customers and local owners/operators, but Regency's platform and expertise give advantage.

Q: Pipeline growth over next 2-3 years?

A: Lisa Palmer said driven by opportunity set, aiming for sustainable $150 million/year development.

Q: Credit loss assumption specifics?

A: Mike Mas said it's a ground-up assumption process, space/tenant specific, out of control to some extent.

Q: Same store operating expenses growth?

A: Mike Mas said due to operations team's hard work and scale advantages.

Q: Sensitivity to immigration policies and tariffs?

A: Lisa Palmer said Regency not expecting material impact due to resilient consumer, quality centers, and adaptable tenants.

Q: Stability of development yields/spreads with rising costs?

A: Nick Wibbenmeyer said teams underwrite cost increases, have delivered results in face of past cost hikes, and will continue to do so.

Q: Squeezing more occupancy from small shops?

A: Alan Roth said records are meant to be broken, teams will keep pushing to increase occupancy.