A month has gone by since the last earnings report for Regency Centers (REG). Shares have lost about 2.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Regency Centers due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Regency Centers' Q1 FFO & Revenues Beat Estimates
Regency Centers’ first-quarter 2019 adjusted FFO per share came in at 98 cents, which beat the Zacks Consensus Estimate as well as improved from the year-ago tally, both being 2 cents. The quarterly results reflect growth in revenues.
Total adjusted revenues in the quarter came in at $286.3 million, outpacing the Zacks Consensus Estimate of $274.4 million. In addition, the figure was 3.5% higher than the year-ago tally of $276.7 million.
Inside the Headlines
During the reported quarter, Regency executed around 1.1 million square feet of comparable new and renewal leases, leading to rent spread on new leases and renewal leases of 13.2% and 7.9%, respectively, with blended rent spreads for the March-end quarter of 8.8%.
As of Mar 31, 2019, the company’s wholly-owned portfolio along with its pro-rata shares of co-investment partnerships, was 94.6% leased. The company’s same-property portfolio was 95.0% leased, indicating a contraction of 120 basis points (bps) sequentially and 70 bps year over year.
However, same property net operating income, excluding termination fees, climbed 2.9% on a year-over-year basis, backed by base rent growth.
Regency’s cash and cash equivalents were $42.8 million at Mar 31, 2019, slightly down from $45.2 million recorded at the end of 2018. The company has fixed charge coverage of 4.2x.
During the quarter under review, the company acquired a 21,000-square-foot center — Melrose Market — in the Capitol Hill neighborhood of Seattle for $15.5 million. Also, the company acquired an additional interest in the Town and Country Center, in Los Angeles, resulting in total current investment to $36.3 million. This took its total ownership stake to around 18.4%.
The company sold seven shopping centers for a combined pro-rata sales price of about $136.5 million, at a weighted average cap rate of 7.5%. Moreover, during the quarter, Regency commenced two redevelopment projects with combined costs of around $13.5 million.
Also, at the end of first-quarter 2019, the company had 21 properties in development or redevelopment, indicating a total investment of $403 million. Moreover, in-process development and redevelopment projects were 86% leased and projected to yield average return of 7.5%.
Regency has updated its 2019 NAREIT FFO per share outlook, incorporating a negative 3 cents per share impact from non-recurring items (6 cents per share charge related to the early repayment of debt and 3 cents per share benefit for accelerated write-off of below-market rent intangibles caused by recapture of two anchor spaces).
Particularly, the company now expects 2019 NAREIT FFO per share of $3.80-$3.86, compared with $3.83-$3.89 guided earlier.
The company’s full-year outlook is backed by same-property NOI growth, excluding termination fees of 2.0-2.5% as well as development and redevelopment starts of $150.0-$250.0 million.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
At this time, Regency Centers has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Regency Centers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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