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Regency Centers Corporation ( REG - Analyst Report ) ,a real estate investment trust (REIT),reported second quarter 2012 FFO (funds from operations) of $61.3 million or 68 cents per share, compared with $55.1 million or 61 cents in the year-earlier quarter.
Reported FFO per share beat the Zacks Consensus Estimate by 6 cents. Excluding non-recurring items, recurring FFO for the reported quarter stood at $62.5 million or 69 cents per share versus $50.5 million or 56 cents in the year-ago period.
The company reported total revenue of $129.8 million in the second quarter of 2012, compared with $124.6 million in the year-ago quarter.
During the reported quarter, same-store net operating income (NOI) excluding termination fees increased 3.6% on a year-over-year basis, with rental rate growth of 2.1% (cash basis for spaces vacant less than 12 months). Regency executed a total of 542 new and renewal lease transactions during the quarter, spanning 1.6 million square feet. The same-store portfolio of the company was 94.0% leased at the end of the quarter.
Regency sold two wholly-owned and two co-investment operating properties during the quarter for $99.0 million at a weighted average cap rate of 7.8%. The company also sold three land parcels for $2.9 million. Subsequent to quarter-end, Regency sold two co-investment operating properties for $39.9 million at a cap rate of 8.1%. During the reported quarter, Regency and a co-investment partner purchased a property for $13.8 million at a cap rate of 8.3%.
Subsequent to the end of the reported quarter, Regency closed the sale of a 15-property portfolio to an affiliate of Blackstone Real Estate Partners VII for $321.0 million, at a weighted average cap rate of 8.1%. The company will maintain a $47.5 million preferred equity investment in the portfolio, which will earn an annual return of 10.5%.
As of June 30, 2012, Regency had 11 projects under development with estimated development cost of $282.3 million. Additionally, the company also had three redevelopment projects in the pipeline with development costs of $13.3 million.
Subsequent to the end of the quarter, Regency used proceeds from its asset sale to repay $150 million balance on the $250 million unsecured term loan and retained the option of drawing the remaining $100 million by January 2013 .
At the quarter end, Regency had cash and cash equivalents of about $23.0 million and total debt of $2.1 billion. For full year 2012, Regency revised its FFO guidance from the earlier range of $2.30 -$2.42 to $2.30 - $2.36 per share and recurring FFO from the previous range of $2.42- $2.54 to the range of $2.42 - $2.48 per share.
Regency currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We maintain our long-term Neutral recommendation on the stock. One of its competitors, DDR Corp ( DDR - Analyst Report ) also holds a Zacks #3 Rank.
Note: Fund from operations, 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.
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