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Here's Why You Should Hold Regency Centers (REG) Stock Now
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Regency Centers Corporation’s (REG - Free Report) premium portfolio of grocery-anchored shopping centers augurs well for steady cash flows and long-term growth. Nonetheless, the company is not immune to the recent efforts of online retailers to penetrate deeper into the grocery business.
For second-quarter 2018, Regency reported NAREIT funds from operation (FFO) per share of 93 cents which surpassed the Zacks Consensus Estimate by a whisker. The reported figure also compared favorably with the year-ago tally of 84 cents. Further, adjusted revenues for the quarter of $274.5 million outpaced the Zacks Consensus Estimate of $269.2 million. The figure came in higher than the year-ago tally of $240.4 million.
Notably, this retail real estate investment trust (REIT) has a significant national footprint, with 428 properties located in desirable trade areas. 80% of these properties are primarily anchored by top grocers. This enables the company to drive dependable mall traffic at its properties and superior net operating income (NOI) growth.
In fact, during the recently-reported quarter, Regency witnessed same-property NOI growth (excluding termination fees) of 4.2% on a year-over-year basis. Furthermore, it closed on $71 million of acquisitions during the period. Accretive investments and continued NOI growth ensures consistent cash flow and dividend growth for the company.
Additionally, its financial position remains strong. Regency enjoys a large pool of unencumbered assets and good relationships with lenders. In addition, the company enjoys accessibility to secured and unsecured debt markets. Its debt-maturity profile is well laddered with limited near-term maturities. Also, it enjoys substantial liquidity and capacity, with $1.25 billion line of credit as of Jun 30, 2018.
However, the retail apocalypse has considerably curbed demand for retail real estate space in the United States. Mall traffic has been affected and retail landlords, including Macerich Company (MAC - Free Report) , Taubman Centers and Kimco Realty Corporation (KIM - Free Report) , are suffering due to consumers’ preferences increasingly shifting toward online retail. This has resulted in widespread store closures and bankruptcy filing by retailers. In fact, deeper penetration of online retailers into the grocery business has emerged as a pressing concern for this retail REIT.
In fact, as of Jun 30, 2018, Regency’s same-property portfolio was 95.5% leased, reflecting a contraction of 20 basis points (bps) sequentially and 10 bps year over year.
As the company continues to counter mall traffic blues, Regency is increasingly investing in development and redevelopment projects. It had 21 properties, with estimated cost of $348.5 million in development or redevelopment, at the end of the April-June quarter. With a huge outlay for refurbishments, growth in profit margins of the company in the near term will likely remain limited.
Additionally, rising interest rate is a concern for Regency. This is because the company’s ability to refinance existing debt would be restricted, while the interest cost on new debt would increase. This could adversely impact the company’s financial results and consequently dent its dividend payout.
The stock has gained 10.7% in three months’ time, while the industry rallied 11.2%. Also, the stock has seen the Zacks Consensus Estimate 2018 FFO per share remaining unchanged at $3.79 in the past month.
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Here's Why You Should Hold Regency Centers (REG) Stock Now
Regency Centers Corporation’s (REG - Free Report) premium portfolio of grocery-anchored shopping centers augurs well for steady cash flows and long-term growth. Nonetheless, the company is not immune to the recent efforts of online retailers to penetrate deeper into the grocery business.
For second-quarter 2018, Regency reported NAREIT funds from operation (FFO) per share of 93 cents which surpassed the Zacks Consensus Estimate by a whisker. The reported figure also compared favorably with the year-ago tally of 84 cents. Further, adjusted revenues for the quarter of $274.5 million outpaced the Zacks Consensus Estimate of $269.2 million. The figure came in higher than the year-ago tally of $240.4 million.
Notably, this retail real estate investment trust (REIT) has a significant national footprint, with 428 properties located in desirable trade areas. 80% of these properties are primarily anchored by top grocers. This enables the company to drive dependable mall traffic at its properties and superior net operating income (NOI) growth.
In fact, during the recently-reported quarter, Regency witnessed same-property NOI growth (excluding termination fees) of 4.2% on a year-over-year basis. Furthermore, it closed on $71 million of acquisitions during the period. Accretive investments and continued NOI growth ensures consistent cash flow and dividend growth for the company.
Additionally, its financial position remains strong. Regency enjoys a large pool of unencumbered assets and good relationships with lenders. In addition, the company enjoys accessibility to secured and unsecured debt markets. Its debt-maturity profile is well laddered with limited near-term maturities. Also, it enjoys substantial liquidity and capacity, with $1.25 billion line of credit as of Jun 30, 2018.
However, the retail apocalypse has considerably curbed demand for retail real estate space in the United States. Mall traffic has been affected and retail landlords, including Macerich Company (MAC - Free Report) , Taubman Centers and Kimco Realty Corporation (KIM - Free Report) , are suffering due to consumers’ preferences increasingly shifting toward online retail. This has resulted in widespread store closures and bankruptcy filing by retailers. In fact, deeper penetration of online retailers into the grocery business has emerged as a pressing concern for this retail REIT.
In fact, as of Jun 30, 2018, Regency’s same-property portfolio was 95.5% leased, reflecting a contraction of 20 basis points (bps) sequentially and 10 bps year over year.
As the company continues to counter mall traffic blues, Regency is increasingly investing in development and redevelopment projects. It had 21 properties, with estimated cost of $348.5 million in development or redevelopment, at the end of the April-June quarter. With a huge outlay for refurbishments, growth in profit margins of the company in the near term will likely remain limited.
Additionally, rising interest rate is a concern for Regency. This is because the company’s ability to refinance existing debt would be restricted, while the interest cost on new debt would increase. This could adversely impact the company’s financial results and consequently dent its dividend payout.
The stock has gained 10.7% in three months’ time, while the industry rallied 11.2%. Also, the stock has seen the Zacks Consensus Estimate 2018 FFO per share remaining unchanged at $3.79 in the past month.
Regency has a Zacks Rank #3 (Hold). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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