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Regency (REG) Declares Ground-up Development in Chantilly
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Retail REIT, Regency Centers Corporation (REG - Free Report) announced a new ground-up development in the greater D.C. metro area with estimated net development costs of $44.5 million. The project is likely to close in 2018.
The Chantilly, VA-based development project –The Field at Commonwealth – will encompass around 180,000 square feet of retail space. It will be anchored by a 120,000 square-foot Wegmans Food Market.
This development project is situated at the intersection of US-28 and Westfields Boulevard, and enjoys proximity to the Dulles Airport. It is expected to serve as a major retail destination, and benefit from the nearby class-A office market and prosperous residential neighborhoods.
Notably, Regency has considerable experience in the retail real estate industry, with 225 shopping centers’ development since 2000, denoting an investment at completion of over $3.5 billion.
Moreover, on Mar 1, Regency declared the closure of the Equity One merger deal. This transaction has created a combined entity with a total market capitalization of around $16 billion. Regency also became a member of the S&P 500 Index on Mar 2. The merger, which is expected to be accretive to core FFO per share, has created a high-quality portfolio of 429 properties, chiefly grocery-anchored, for Regency. These properties are located in several top markets and offer ample long-term growth opportunities. (Read more: Regency Closes Equity One Merger, Joins S&P 500)
Regency’s focus on building a premium portfolio of grocery-anchored shopping centers augurs well for the long term. These centers are usually necessity driven and attract huge traffic. The company’s inclusion in the S&P 500 Index is also encouraging. However, shift in retail shopping from the brick and mortar stores to internet sales, and rate hikes pose concerns for the company.
In spite of the upbeat consumer confidence and an improving economy, we note that mall traffic continues to decline owing to a change in shopping patterns. Online purchases have taken precedence over in-store purchase. These have made retailers reconsider their footprint and eventually opt for store closures in recent times. Further, retailers unable to cope with competition are filing bankruptcies. This comes as a pressing concern for retail REITs as it considerably curtails demand for the retail real estate space.
Amid these, Regency’s shares descended 3.0% over the past three months against the decline of 2.1% of the Zacks categorized REIT and Equity Trust – Retail industry.
Retail Properties of America delivered average positive surprise of 4.81% over the trailing four quarters. Moreover, the Zacks Consensus Estimate for Urban Edge Properties’ funds from operations (FFO) per share for 2017 of $1.37 reflects 7.9% growth from the prior year. Also, Urstadt Biddle Properties has a long-term growth rate of 8.0%.
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. All EPS numbers presented in this write up represent FFO per share.
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Regency (REG) Declares Ground-up Development in Chantilly
Retail REIT, Regency Centers Corporation (REG - Free Report) announced a new ground-up development in the greater D.C. metro area with estimated net development costs of $44.5 million. The project is likely to close in 2018.
The Chantilly, VA-based development project –The Field at Commonwealth – will encompass around 180,000 square feet of retail space. It will be anchored by a 120,000 square-foot Wegmans Food Market.
This development project is situated at the intersection of US-28 and Westfields Boulevard, and enjoys proximity to the Dulles Airport. It is expected to serve as a major retail destination, and benefit from the nearby class-A office market and prosperous residential neighborhoods.
Notably, Regency has considerable experience in the retail real estate industry, with 225 shopping centers’ development since 2000, denoting an investment at completion of over $3.5 billion.
Moreover, on Mar 1, Regency declared the closure of the Equity One merger deal. This transaction has created a combined entity with a total market capitalization of around $16 billion. Regency also became a member of the S&P 500 Index on Mar 2. The merger, which is expected to be accretive to core FFO per share, has created a high-quality portfolio of 429 properties, chiefly grocery-anchored, for Regency. These properties are located in several top markets and offer ample long-term growth opportunities. (Read more: Regency Closes Equity One Merger, Joins S&P 500)
Regency’s focus on building a premium portfolio of grocery-anchored shopping centers augurs well for the long term. These centers are usually necessity driven and attract huge traffic. The company’s inclusion in the S&P 500 Index is also encouraging. However, shift in retail shopping from the brick and mortar stores to internet sales, and rate hikes pose concerns for the company.
In spite of the upbeat consumer confidence and an improving economy, we note that mall traffic continues to decline owing to a change in shopping patterns. Online purchases have taken precedence over in-store purchase. These have made retailers reconsider their footprint and eventually opt for store closures in recent times. Further, retailers unable to cope with competition are filing bankruptcies. This comes as a pressing concern for retail REITs as it considerably curtails demand for the retail real estate space.
Amid these, Regency’s shares descended 3.0% over the past three months against the decline of 2.1% of the Zacks categorized REIT and Equity Trust – Retail industry.
Currently, Regency has a Zacks Rank #3 (Hold).
Key Picks
Investors interested in the REIT industry may consider stocks like Retail Properties of America, Inc. , Urban Edge Properties (UE - Free Report) and Urstadt Biddle Properties Inc. . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Retail Properties of America delivered average positive surprise of 4.81% over the trailing four quarters. Moreover, the Zacks Consensus Estimate for Urban Edge Properties’ funds from operations (FFO) per share for 2017 of $1.37 reflects 7.9% growth from the prior year. Also, Urstadt Biddle Properties has a long-term growth rate of 8.0%.
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. All EPS numbers presented in this write up represent FFO per share.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>