REG - Earnings call transcript Q3 2017 | Regency Centers Corporation

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Operator

Greetings, and welcome to the Regency Centers Corporation Third Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Laura Clark, Vice President of Capital Markets. Thank you, you may begin.

Laura Clark

Good morning and welcome to Regency’s third quarter 2017 earnings conference call.

Operations; Hap and Chairman of Leavitt, CFO; Jim EVP are Palmer, CEO; Investments; SVP today Director Thompson, President Managing our Mac of and me Treasurer. Stein, and and our Lisa and of Joining Finance; Mas, Chris Mike Chandler, EVP I to stating begin that forward-looking may discuss would on this like statements call. by we Such statements involve risks and uncertainties. results those expressed statements. Actual from future in materially performance, may differ outcomes and forward-looking actual our filings factors with the to identify contained which those books cause to SEC, that important in could refer results statements. from differ Please forward-looking financial today’s will On we also call, reference certain non-GAAP measures. a these and GAAP financial provided website on to release measures can which their Relations be found We comparable reconciliation of supplements, our earnings in regencycenters.com. our Investor measures at

hosting New Investor XX call turn are be January over seeing forward details additional now Hap. an York. with and there. on in we forthcoming look the to you to Day Lastly, we will Invitations I will

Hap Stein

Good for Thanks, Laura. thank you us. joining morning, everyone, and

customers. even attract to will continue are and year-to-date of Regency’s to with of XX% and areas centers, In to over We located well-merchandised retailers, gratified the perform a levels physical presence with Regency’s retail, that property well-located leasing in with service see power, NOI that continues the are ever-changing it their be to bricks-and-mortar X%, substantial buying to positioned portfolio growth which actively world expanding same are retail better selectively footprint. remains shopping well environment, challenging more efficiently evidence trade that apparent critical

grocers, in conveniently strong retailer providers a validation power. restaurants purchasing We a with that be reengaged Amazon’s believe Whole critical preeminent operators in online is and again. located platform component expanding, success. Foods service by of winning Whole with world’s of is located close the acquisitions centers neighborhood to communities better other the and Following this and is And want to a retailers, bricks-and-mortar actively Foods,

closures, same growth of NAV store shareholder group are extremely as NOI, peer following. manner, benefit the to in sustain tenants a remain more immune top in expanding. value near not in accelerated earnings, We property from the our to certainly While confident ability or deliberate at we and Regency’s

by demographics to First, productive of with $XXX owning focus. a trade necessity and with and square areas making, merchandising value barriers distinguished average entry, grocers and superior and portfolio high-quality per highly foot, convenience relevant service a place sales

be us Second, financial most challenging endure either economic balance from will or exceptional that development by important And a coupled culture, and will opportunities asset all, capabilities. in important redevelopment investment conservative value a conditions. special with and important to our and be add of allowing team, sheet advantage critically -- our management profit critically compelling guided deep Regency’s

know to recover you how Hurricanes and Before I keep over we I especially Jim? properties Jim, fared that that Irma, to call want much let operating our so how turn fortunate us to efforts appreciate well enabled their and in Harvey we quickly. extraordinary and people and are to our the relatively

Jim Thompson

Thank you, morning. Hap, good and

point to our where that store XX.X% we same XX In tenants XX.X%. leased at healthy. a space to closures a headlines and leased. in are of quarter, points this new garnering shop experienced from increased more the indicated, Hap basis As store increase growth third deliberate top-quality percent sequentially remains basis portfolio as majority in property well pace openings, for came occupancy The of demand XX spite and retailer perform continues

prior years. averaging new improvements be percentage as annual were rent, we new over with XX% X.X%. quarter have average a rent work, include shop transactions. and success embedded to Tenant rent and during continue spreads negotiating steps continued to leasing great our rent all of steps the New in in Almost landlord line leases

low While aware closures health. the are we for performance remains potential certainly at and move-outs monitoring levels, tenant store historic and of future are

in retail we’ve for As a X nearly heightened been bankruptcy you years. environment know,

with During in this exceeding time, X.X% growth Regency’s XX%. levels portfolio has continued occupancy to property same outperform of excess posting NOI

bankruptcies when back, we And at store Our higher tenant received closures success has operators exposure had re-leasing been and we’ve rents. better to minimal. spaces to in have

from are We year we have following leased alone, past of X,XXX-plus tenants, negotiation of closures the all over or years. to have in XX for lease store returned out This the bankruptcy our us, BK nearly expected [ph]. spaces only X

in retail trends Mac. our now record challenging the ongoing have communication monitoring portfolio’s will top withstand turn our demonstrates and track call this succeed with closely we’re environment. retailers, and I While ever-evolving to to and the ability over

Mac Chandler

everyone. morning, Good

We enhancing the continue NOI and on portfolio. make NAV developments excellent progress redevelopments, quality growing and and were to our of which

projects attracting as well are demand by and evidenced percent and gains in-process strong Our leased. performing retailer

of For The is of and Orange including which brand majority strong The committed. are Tustin our open example, leased and Village Legacy both Starter Bros. in at reported County XX% openings. now CVS, tenants

ground-up continues Midtown of Raleigh. first starts redevelopments, development were store Serramonte and Foods as team X Wegmans in neighborhood is our East we the our compelling six to projects junior expansion opportunities Bay addition, Subsequent and a at first-class XX% anchors as Wegmans the are Whole traffic started with the in and committed. Carolina. the substantially Midtown Wegmans’ to complete. potential in All our Northeast opened, Area, of the North quarter DC in source new foot Metro Center square in And be project will expectations. affluent as overall well leased In have is center development Regency’s Midtown well. of approaching performing up mine anchored in is line East, end, our XXX,XXX state

development look positioned well our development Investor for landscape development our in the as detail value platform at redevelopment remains portfolio. our to is create Day. Although new both and within industry-leading forward well future redevelopment discussing as opportunities challenging, to more opportunities We

Moving to dispositions acquisitions. and

additional have only XXXX. closed Through approximately We $XXX we to an X% $XX sell October, our are anticipate and executing by on properties our of assets million million X% of plan closing on to annually.

Looking to and development successful the disruptors, recycling back, earnings by offering associated very This fortified capital redevelopment, plan further supplementing into exposure future our creation enhance in long-term and implementing impacts has from to the tax reduced reinvesting the value have with opportunities the a execute We the on as we of recycling dilution to greater continue our minimal a impact to bankruptcies. fund growth capital dispositions. to NOI superior quality been attractive cash evidenced recycling profile growth. acquisition and that gains have basis on portfolio by with we experienced our resulted tenant and from embedded mitigates initiatives flow

are from the centers we pricing valuations front, and buy. own, quality develop acquisition strong the On

have over centers I sharing These will Lisa. anchors mentioned now with more million I spread and several markets match As the valued these call details investments, strong you best-in-class premier our dispositions. dates opportunities in in $XXX look the target diligence, are anticipated have shop targeted productive our we guidance, the along our of of centers, benefit and we opportunity our compelling New with we can forward closed. Northeast quality next turn are closing increased York, timing tenants. will that due see in meet for our to from quarters San which months. in stages located at and to after the on Diego the sourced over have of standards subsequent The past, demographics, and growth, approximately various from Seattle, high recently all to

Lisa Palmer

the that Harvey property for approximately from $X.XX per events, nearly from million excluded Thank the Hurricanes really charges for sustained Consistent a also caused our And to property in following team same incurred $X.X damage. given gains to and with want the this are core their importantly, the I want thanks we FFO. amazing NOI efforts following our these same hurricanes. to Hap’s have back the and losses charges property quarter, quarter. In cleanup did members safe nature and reiterate our share Therefore, Irma take minimal are added our you, non-comparable our third so most posted related been that XX The charge of captive are quarter repair program years, team And onetime also by hurricanes. to of comments, Mac. another team I or and insurance and good work we practice echo to grateful the NOI. excluded

to guidance. Turning XXXX

are NOI maintaining and X.X% quarter to rate the in driven driven our expense for by tenants, growth debt bad the lower growth other The property of income an same tough fourth year. We anticipated a of comp. X% as by percentage the as is rent, full well handful in decline

averages. Although we have were current line a with to important and in remember below year-to-date, norms that expense it’s bad historical in projections long-term moderate more levels increase XXXX are far debt experienced

at million guidance have decreased the G&A net We by $X midpoint. for year also full approximately our the

little With initially took hire these positions, bit fill longer the expected. than to but new to a we merger, additions plan XX just

expect be $XX integration progressed net we in G&A year’s We have the G&A million realize in delay $XX extremely positions merger now and filled next million And of to hiring, XXXX, net in well. Despite $XX has range. in this million at will the the these synergies.

the our raised guidance, this year and our welcome have lower FFO our full than net we prepared later This and concludes questions. FFO timing year remarks the expected now expense. Lastly, dispositions G&A your reflecting of we NAREIT core and

Operator

question. McElroy with from of with Our is Christy question Instructions] proceed [Operator coming first the line your Please Citigroup.

Katy McConnell

the McConnell, at timing Katy of is potential released anchor in Christy. maybe fallout Can for is for some backfilling into point, on we of space. how about commencements, about talk involved you which the you And largely then XXXX. if this further the update us as tenant could go and thinking you’re This CapEx that are on that

Lisa Palmer

the to Lisa. the is general you some base in more I’ll see, -- to which all same color. NOI see, first of growth, add when handle look mid-Xs at just our can can the the if Xs. detail, But to an half rank year high the from you that important if that in of contribution thing that’s accelerating we we growth he the in our year is this was a Katy, Jim back and property that about wants perspective, think let

driven And anchor by these commencements. of that rent some is

So that’s rent the factors. net one And growth. key mean, capitals, really I healthy think, effective I of that the we’re seeing from

it prepare healthy So we’re to rent capital some levels. is taking boxes, growth really, at even really seeing robust the though

Jim Thompson

is rent We have we this Sports would of only by the leased will one Authority. I them add will had the Katy, fourth all four of -- five and month. commence, Yes. the end thing commence

on our So we’re shape good relets. in

Operator

your Our of with line with next of Bank question from Please proceed question. is coming America. the Craig Schmidt

Craig Schmidt

change little in like to just willing more the number strike appetite terms the transaction looks general I wondered, of and terms of in you high-quality before Are feeling for deals year? market, you it of have transactions? end people soon. a markets Or are just cadence a seeing of the in closing the

Mac Chandler

Thanks, transactions Craig. versus Mac. a we’re big year. shift of the and transact certainly year appetite is is regard. by years. both that with This different to for see selling, where people There not end I on so don’t this being want a in transact goes to seasonality past is a that typical there steady the But people buying that seeing do that

that So to add no, a not whole lot color to of question.

Craig Schmidt

the deal are we when the with of same some relatively retailers? hearing you any that Are projections for seem And years. past of holiday of robust ‘XX that you to some seeing sentiment

Mac Chandler

retailer you’re about, Craig? of terms in Well, that talking is expansion,

Craig Schmidt

on and heard to that No. year just up sales? mean, estimate, I holiday better? anywhere which we’ve was from feeling -- X.X% X.X% they that I this depending are XXXX, Halloween

Hap Stein

It is tell. to early

in and look think, be continue growing for very to pace. the comfortable spaces. demand to operators are when are to the at are a more to business -- more selective. translates at to deliberate. me, doing are the They tenants active demand, to mean, their expand retailers are space robust. better -- I continues But you being business and our that, being they And successful do continuing I pretty

Craig Schmidt

ULI congratulations Hap, And the Okay. Award. Visionary on

Hap Stein

a Craig, case, really quite as thank it you you very much. team. -- know, does my take in It

Craig Schmidt

quarter. next Yes. you’ll means great such visionary, you’re that because provide just excellent Well, guidance it a

Hap Stein

I’ll Lisa me do. lets do whatever

Operator

is question Morgan. with of JP from Our Mueller coming the next Mike line

Mike Mueller

healthy. would like just on you’re it the behind several good, you’re comps? level be little but things -- we a Is there the moderation looks meaning and could question and that just some color Nice I on feel quick Does the tough it occurred any guess, wondering your just bumping see was bit against up and But spreads everything, really a moderation operating a that? more over positive there what’s or same-store level front? quarters, it your I are stats and just color helpful? trends, in mean, past the like in occupancy rent there. opposites

Lisa Palmer

line, Jim rent what appear the areas base I some then the my spreads the reiterate I’ll to Mike, are I’ll NOI other think Christy same is because let that -- noise property started that answer our two or I’ll be NOI on is and same those I good growth that’s year, morning. -- so we’re trend how that rent would moderating. to answer the line throughout that of some moderation growth the with Katy actually in accelerating in seeing items. property to growth address

as We’re for in expecting bad comps up well percentage tough debt we’re expense, income a against and decline other as rent.

any we’ll base rent and rents, base -- translated of rent base transitioned the day. base but growth take that take -- And that that growth, we’ll over some rent of some once percentage driving so is rent

necessarily same the It’s NOI not seeing in property just timing moderation throughout growth. we’re So a year.

you not guidance good smooth. is going X%. We X.X% are feel There of be our as to about some think, numbers quarterly to lumpiness. know, range I really

Jim Thompson

Yes.

to as renewal. the as growth that and past a we things of think renewal obviously, our were in a couple on average large comfortable growth had with new -- growth this option with I’m rent were XX% renewals which, anchors is And drove We I for very very we rent new and XX%. the pool at pool, we consistent was XX% almost to When number, XX% of deals specifically, at were there’s I negotiate, expectation. were XX% that kind mentioned, had going embedded Several quarter. renewed you in at look which able renewals drove flat at deals obviously, down.

Lisa Palmer

same challenging we achieve if we the And a single-digit at spreads, rent we’re really environment. that. retail be can really with time, happy And know that we’ll in high

Hap Stein

take We’ll it.

Operator

line RBC is Our next Markets. of with Capital from the coming Golladay Wes question

Wes Golladay

quality selective right overall Are becoming demand years? is high at And prior versus you pretty Looking your of who center? occupancy, how now. allow the the it’s you more on into the

Jim Thompson

very Jim. Yes, is be selective -- pipeline This are are to Again, solid, merchandising. -- is think to continue I in so we our be demand. our good we the we robust, continues seeing

over I of in time. a something taken think lot we’ve pride that’s

in at So finding future given we folks in continue to for point. look relevant this and we we’re retailers good and the retail the environment, categories be will in best demand this believe, that, changing

Wes Golladay

commented you of to And Okay. some delayed this on Are then the any have peers tenant experiencing openings. degree?

Jim Thompson

think good are negotiations. and to process. and product, retailers a and negotiation good be deals retailers longer taking start what Hap to turns I good in A good into got finish. we’ve we As detailed mentioned, retailers feel from lot Good of -- that is product know the like know want we

Wes Golladay

next for of those roll big presentation that acquired, Okay. side? they slide on you where any One, And meaningful lease then, birthday be new the of year rents have Equity lastly, used their centers, in company to would seeing flat a called XXth Are or in get this will they XX grocery years. the the shopping anything past upticks

Lisa Palmer

is this Lisa. Wes,

And we and that recall, see very the key when some merger as the benefit would believe to growth, XXXX, Just the but has our of and strategic fact property is next embedded more those. that fact about to the a be more the result NOI same to which mark first of of market for you some if are And announced merger, that accretive we we the leases, in out. see items to that generally, the benefits it proven there one talked expect was year. of some come beginning we’ll Yes.

Operator

Advisors. question from Tibone Vince line with next [Operator from Street of is Green the Instructions] Our coming

Vince Tibone

to Authority it and tighten the It’s partly a spread wider continues physical earlier, The quarter occupancy past? by in kind mentioned when reason? the range recent the in expect some been to we only in this usually between the where widen that Sports that than spread is of you some of driven leased to norms. -- is leases but has And the

Lisa Palmer

at hasn’t quarter, But Authority a Again, specific those to like XXX he’d XXX leased. much. if points already would related to it let Jim give not because so Sports we’re add It currently, we’re only I’ll be basis color, that increased at after. were

to other if will recall, we’re boxes. you be it redevelopments underway our leased So XX% related because, that will new some are anchor in already

X the it’s Jim maybe that we’ve, anchor quarter and to we’re out norm. in -- or it’s -- deals, a in range, we’ve X XXX XXX. So had those. talk can typically the But range But XXX we’ve X been of XXX think once, about historically, of not so I

Jim Thompson

Right. Lisa it. hit on

basis a into the news part XXXX. that’s quarter, baked redevelopment So number. obviously, leasing in XX going that, done then, kind good being a that of new to obviously, adds it’s too, big predominantly The is, that the Serramonte we’ve of into good And tailwind points Serramonte. last with

Vince Tibone

And It high this Or year in do that would cap in Is coastal to them -- of is markets? external focusing between consider how growth? solely then appropriate market. one think and acquisitions spread sounds more acquisitions. major the your where are of on high-quality just rate you’re be markets? coastal what going like non-coastal assets all in Like you secondary about you

Hap Stein

invest. able coastal Denver We would a market. our markets markets standard we interested to the so XX And markets, buy would buy in would aware, and own, also a growth in the or Vince, throughout Raleigh canvas not invest in a coastal -- but and as as markets, So really, we -- include markets and terrific we the and certainly which really are operate, we gateway the only country. liked in you’re as target

of between from where most to And a a basis, which a we’re certain real -- negotiated opportunities is a cap anchor, to rate rate a we’re portray strong extent, and also anything we to strongly we’ve to which the on markets is with. to going there Just risk country, what’s there. difference been from negotiate if where embedded and looking return project pleased these standpoint, get add growth standpoint, market much return related in of that’s the the average every to a income area have quality you I development barriers trade pretty household development area and entry it be and population with know is and and density don’t depends trade you other have but a From want throughout from pretty at to above going issues strong involved the a Mac? able and standpoint. the when involved on to that that, you and a the

Mac Chandler

a than at basis. It’s about really really us It’s that And all served the job presence and more so the we’re growth, that’s it greater gives being metro a looking and almost different advantage. markets. case-by-case customers is these the trade having in by local -- And immediate these area. an really area the markets,

out five we’re four said. Some that acquisitions were of of off -- these market, Hap as targeting

these and real sourced think a we’ve we that’s directly So competitive advantage.

Lisa Palmer

market. you And of related then actually interact do And a and Mike and the to has quality it’s as house our has want we if the be we scores, any of guidelines don’t to we we very can’t of may, far and me. But I with project think it’s, that that important that Hap he material Investor mentioned plan internal center and of enough that share and have thresholds Day. DNA I to to call tabbed is the a what work really the lot Mac at would score. will. quality and to those on kick for both return away me one If have similar what thresholds street from the mentioned, our take done we like

when Day at will detail have look it we January. way and do are we share Investor in more we that So

Operator

from line Thank question. you. with of Barclays. is The coming next proceed question Linda Tsai Please the your with

Linda Tsai

stores different Do remarks owned Amazon stores on when opening any thoughts the you have you from the Amazon. color your influence, expanding is just Foods What’s how any were Whole In Whole you discussed if Foods? there? by how might acquisition post by these be have

Mac Chandler

in time it. cards pretty very confirmed early on by very this don’t I Well, is to you up They been Mac. tell design, good had they close have it. lease. the not They great of Linda, working What Virginia, think a color so and to it’s -- is redevelopment we’ve to quality It’s that they’re a suburban about play -- recently give location. to vest They lot their you. can stepped we

going So details body lot and we’re and brokers that, with seeing good language, their a throughout them positive relationship they teams we have and their markets, about at a lot of signs to the point. not good But get you’re but this close are engaged. of

if seen working dramatically. things, too actually we’re still their early to So on of physically. is going haven’t to say format change hear but little anything opportunities, lots but future We we

Hap Stein

still for is The Amazon acquisition very rational combination, expanding Foods. They’re of Whole robustly, really reengaged. a a They’re thing say, good Foods on I’d Whole but a basis.

retailers, So business about we with good to to future shops, attracting as and who restaurants feel grocer a terrific users. better continue far do very service very, is prospects as anchor a

Linda Tsai

length any average leases being then are changes signed? in that the And of

Mac Chandler

I’ve community cetera, industry with not friends retailers. mall the from in about, seen talking fashion, but heard to have neighborhood my date about on anything more discussion we that but et the and the

Operator

further at like Mr. pass additional no the to Stein I’d questions It comments. concluding are to for this time, so back there appears any over floor

Hap Stein

what your watching World late a the and enjoyed interest And up care. the Bye-bye. hopefully, rest stay you won didn’t your great the your We was you night Series. much. Series World or week. appreciate Take Thank of team involvement. very too and last Enjoy

Operator

Ladies Again, you your disconnect this today’s participation we and at may lines conclude for time. teleconference. does thank your and you gentlemen, this

Regency Centers (REG) 4 Nov 172017 Q3 Earnings call transcript