Regency Centers Corp. ( REG Quick Quote REG - Free Report) primarily focuses on building a premium portfolio of grocery-anchored shopping centers. Such centers are usually necessity driven and drive a dependable traffic. The company’s premium shopping centers are situated in affluent sub-urban and near urban trade areas, where consumers have high spending power, enabling it to attract top grocers and retailers. In addition, as more people are moving into the suburbs, Regency is likely to offer a long-term benefit to its sub-urban shopping center portfolio. Further, in these uncertain times, having a grocery component has been the saving grace of retail REITs, and Regency has numerous industry-leading grocers as tenants. It has a high quality open-air shopping center portfolio with 80% grocery-anchored neighborhood and community centers. In addition, with a focus on necessity, service, convenience, and value retailers, Regency’s portfolio comprised 46% of pro-rate annual base rent from essential retail and services tenancy as of Mar 31, 2021. Significant essential retail businesses at the company’s centers have enabled its properties to remain open, operating for the entirety of the pandemic. Regency is focused on strengthening its balance sheet. As of Mar 31, 2021, the retail REIT had full capacity under its $1.2-billion revolving credit facility. Additionally, the company has no meaningful unsecured debt maturities until 2024. This low leverage with limited near-term maturities offers flexibility to the company. Moreover, the company enjoys a large pool of unencumbered assets and good relationships with lenders. As of Mar 31, 2021, 89.7% of its wholly-owned real estate assets were unencumbered. With a high percentage of such assets, the company can enjoy accessibility to secured and unsecured debt markets, and maintain availability on the line. Also, shares of this Zacks Rank #3 (Hold) company have gained 19.3% in the past three months compared with the industry's 12.8% rally. Also, the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company as the estimates have been revised nearly 1% upward over the past week. Therefore, given the progress on fundamentals and upward estimate revisions, the stock has decent upside potential in the upcoming period. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Image Source: Zacks Investment Research
Nonetheless, move-outs, store closures and retailer bankruptcies are likely to affect the performance of the retail real estate market in the near term. This, in turn, will likely affect the performance of retail REITs, including Macerich Company (
MAC Quick Quote MAC - Free Report) , Simon Property ( SPG Quick Quote SPG - Free Report) , Kimco Realty Corporation ( KIM Quick Quote KIM - Free Report) and Regency Centers. Recent efforts of online retailers to go deeper into the grocery business has also emerged as a concern for Regency, which focuses on building a premium portfolio of grocery-anchored shopping centers. Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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