Retail real estate investment trust (:REIT), Regency Centers Corporation (REG) is making concerted efforts to improve the quality of its properties in order to draw shoppers. Last month, Regency announced the addition of ULTA Salon, Cosmetics & Fragrance Inc. (ULTA) and 18|8 as tenants at 4S Commons Town Center in San Diego, CA.
Moreover, the company is well on its growth track, aided by a successful restructuring of its overall portfolio – a long-term strategic objective. Off late, Regency made an unsolicited offer to buy AmREIT Inc. (AMRE) for $22 per share. The amount is payable either in cash or stock or a blend of both. The deal, if it consummates, would help Regency expand its portfolio in Texas and Georgia. (Read: Regency Centers Bids for AmREIT for $22 per share).
Apart from this, keeping its winning streak alive, Regency reported a positive earnings surprise of 6.15% in first-quarter 2014. The company’s first-quarter core funds from operations (core FFO) per share of 69 cents outpaced the Zacks Consensus Estimate by 4 cents and the year-ago quarter figure by 5 cents. With higher revenue growth aiding the results, this retail REIT raised its outlook for 2014.
Regency, which has surprised in the last four quarters as well, primarily focuses on building a premium portfolio of grocery-anchored shopping centers. Such centers being usually necessity driven spur a dependable traffic. Additionally, the outlook boosts investors’ confidence in the stock.
Although these positives bode well for the company’s future, a significant amount of impending development and redevelopment pipeline increases its operational risk; while stiff competition limits robust demand for its properties.
To gain a deeper insight into Regency Centers, you can refer to our updated research report issued on Jul 23, 2014.
Echoing similar sentiments, over the last 30 days, the Zacks Consensus Estimate for 2014 FFO per share inched up 0.4% to $2.72 per share while that for 2015 climbed 0.3% to $2.87 per share. The stock currently has a Zacks Rank #2 (Buy).
Stocks That Warrant a Look
Investors interested in the retail REIT industry may also consider General Growth Properties, Inc. (GGP), carrying the same rank as Regency.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.