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Regency (REG) Buys Indigo Square, To Develop Retail Project

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Regency Centers Corporation (REG - Free Report) recently announced the acquisition of Indigo Square in Mt. Pleasant, S.C. The company will develop a 51,000 square-foot retail project on this prime retail land, which will be anchored by GreenWise Market — a Publix Super Markets concept. It will be the second newly restyled GreenWise Market in the Southeast.

The move is a strategic fit for Regency as the retail property, when developed, will likely enjoy decent footfall. In fact, purchased from Johnson Development Group, Indigo Square is the retail component of a master development.

This development consists of 456 premier multi-family units branded as The Haven at Indigo Square, as well as a Home2Suites select service hotel of the Hilton Worldwide Holdings (HLT - Free Report) . It also houses a CubeSmart (CUBE - Free Report) self-storage facility. These are already operating, while the Regency’s retail development is likely to be unveiled in the fourth quarter next year.

This site, along US-17, between I-526 and the Isle of Palms Connector, enjoys easy access to Mt. Pleasant, Daniel Island, Sullivan’s Island, Isle of Palms, and the Charleston Peninsula. In fact, with solid demographics in its surrounding, the property is likely to offer tenants decent scope to enjoy high sales activity.

Notably, mall traffic continues to suffer amid rapid shift in consumers’ shopping preferences toward online channels, resulting in an increasing number of retailers jumping on the dot-com bandwagon. These have made retailers reconsider their footprint and eventually opt for store closures in recent times. In fact, the decision to close stores by a number of reputable retailers like Macy's, Inc. (M - Free Report) and J. C. Penney Company, Inc. , have raised concerns over cash flows of mall landlords.

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 have made efforts to penetrate deeper into the grocery business, only a minimal percentage of U.S. grocery shopping takes place online.

The company 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 more than 400 properties, mainly grocery anchored, for Regency. Such strategic acquisitions are anticipated to boost the company’s long-term growth.

Regency currently carries a Zacks Rank #3 (Hold). Also, shares of the company have rallied 8.3% in a month’s time and outperformed its industry that ascended 4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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