Regency Centers Corporation Q1 FY2025 earnings call

• Performance: The company achieved strong same property NOI and earnings growth, with foot traffic accelerating in April. Leasing pipelines were strong with committed lease commencement plans, and tenants were healthy with long-term planning. - Leasing: There was significant leasing activity across various tenant categories, with commencing new leases representing approximately $10 million of ABR and cash and GAAP rent spreads positive. - Investment Activity: The company had active accretive investment, including closing a large high-quality acquisition, successful execution of in-process development projects, and progress on sourcing new projects. - Balance Sheet: S&P upgraded Regency's credit rating to A-, Moody's to A3, with leverage within the target range of 5x to 5.5x, strong free cash flow generation, and plentiful credit facility availability.

In the first quarter, Regency Centers saw strong leasing activity with same property NOI growth of 4.3%, primarily driven by base rent growth. Leased occupancy increased by 10 basis points, and the same property percent commenced rate rose by 20 basis points. Cash rent spreads were 8% in Q1, while GAAP rent spreads were nearly 19%. The S&O pipeline value stood at $46 million of incremental base rent. They acquired Brentwood Place in Tennessee, a 320,000 square foot community center with top retailers, and have a high-quality grocery anchored shopping center under contract in a joint venture platform in the Northeast. In-process development and redevelopment projects worth $500 million were executed on time and on budget, with strong leasing activity and cost management.

Regency reaffirmed its 2025 earnings outlook, with NAREIT FFO growth of nearly 6% and same property NOI growth of 3.6% at the midpoint of guidance ranges. Credit loss guidance is 75 to 100 basis points. There is a modestly elevated growth rate in the second quarter due to the timing of percentage rent and other income, but base rent growth is expected to remain consistent. Adjustments for non-cash items from the Brentwood Place acquisition were a wash for NAREIT FFO.

• Macro uncertainty, including the impact of tariffs on tenants and consumers. - Potential challenges from watch list retailers, though exposure is manageable and tenant health profile is strong. - Volatility in construction costs due to tariffs, but the team is monitoring and managing these costs.

Q: Concerns on watchlist, bad debt, and Rite Aid exposure A: Alan states the watchlist is constantly evaluated, Rite Aid exposure is 30 basis points of ABR, and accounts receivable remain below historic levels Q: Leasing discussions post-April and impact of tariffs A: Lisa and Alan mention no shift in leasing activity, foot traffic is up, and tenants are healthy with long-term focus Q: Balance sheet capacity and acquisition timing A: Lisa says the balance sheet is strong, and the company will act on compelling opportunities with development being the best use of free cash flow Q: Construction costs and yields in tariff environment A: Nick says construction costs are monitored, projects are derisked, and development returns target a 150 basis points spread Q: Transactions market, cap rates, and foreign investors A: Nick states cap rates are in the 5% to 6% range, private market is active, and public/international market has seen a pullback Q: Brentwood deal mark-to-market and stabilized cap rate A: Nick is excited about future growth, with an initial 10-year IRR being high single digit and long-term mark-to-market opportunities Q: Future acquisition plans and market focus A: Nick says the company is focused on high-quality markets, with Nashville a target, but not reliant on acquisitions Q: Tariffs impact on tenants and portfolio categories A: Lisa and Alan say the portfolio focuses on essential needs, with a small discretionary part, and has well-capitalized operators Q: Rent recognition and S&O pipeline A: Mike says 80% of the S&O pipeline is set to commence in 2025, with ~1/3 recognized in 2025, and there is visibility on the income stream Q: April leasing vs Q1 and impact of tariffs on tenants A: Alan and Lisa say there is no shift in leasing activity, foot traffic is up, and tenants are not materially impacted Q: Transactions market, JV platform, and institutional capital A: Nick says there is a JV with a long-term partner, and institutional capital is still interested in the private market Q: Brentwood traffic ranking and portfolio comparison A: Nick says Brentwood is high-traffic, with detailed data to follow Q: Development yields, competition, and project types A: Nick says development is the best use of capital, projects are derisked, and focus is on grocery-anchored developments Q: Bad debt guidance and first quarter results A: Mike says the first quarter was light due to tenant health, but the annual guidance remains unchanged Q: Foot traffic increase, pull forward demand, and regional variances A: Lisa and Alan say there is minimal pull forward demand, all regions are up, and there are no material regional variances Q: Impact of tariffs on retailers and high-quality real estate owners A: Lisa says the portfolio is well-positioned to manage, with tenants being able to navigate challenges and the limited new supply supporting growth