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Regency Buys Land in Raleigh, Announces Midtown East Project

Zacks Equity Research

Regency Centers Corporation REG recently acquired around 22 acres in the Midtown neighborhood of Raleigh, NC, and announced a project — Midtown East — in the area. The project is slated to open in the summer of 2019.

The project will comprise a 170,000 square-feet shopping center, which will include a Wegmans grocery store, as well as 54,000 square feet of additional retail. This will also mark Wegmans’ first store to open doors in the state of North Carolina.

This project, which is a joint venture between Regency and ITB Holdings, LLC, a group of local investors, is likely to grab much attention. Its location at the regional intersection of the Wake Forest Road and I-440 and sound accessibility to North Raleigh, Midtown, and Downtown, is anticipated to drive solid footfall. Also, Costco Wholesale Corporation COST and Trader Joe’s are already present in this regional sub-market.

In fact, Regency has considerable experience in the retail real estate industry and has developed several retail real estate projects over the years. Also, on Mar 1, Regency announced closing the Equity One merger deal, a move which created a high-quality portfolio of over 400 properties, mainly grocery anchored, for Regency. Such strategic acquisitions are projected to boost the company’s long-term growth.

Notably, mall traffic has been severely affected and retail landlords, including GGP Inc. GGP and Taubman Centers, Inc. TCO, felt the heat due to consumers’ preferences inclining more and more toward online retail. However, at such a time, Regency’s focus on building a premium portfolio of grocery-anchored shopping centers, which are usually necessity driven, augurs well. Such centers are usually necessity driven and drive a dependable traffic.

Moreover, groceries mark one of the major categories of U.S. consumer spending. Although online retailers like Amazon.com, Inc. AMZN have made efforts to penetrate deeper into the grocery business, only a minimal percentage of U.S. grocery shopping takes place online.

In addition, Regency reported better-than-expected results in the third quarter with respect to funds from operations (FFO) per share. Results were driven by robust growth in revenues and same-property net operating income (NOI). The company witnessed stronger leasing activity in its same-property portfolio and small-shops portfolio.

Regency currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In addition, the stock has gained 3.4% in the past one month, outperforming the 0.6% loss incurred by the industry it belongs to.

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