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Here's How Regency (REG) is Placed Ahead of Q3 Earnings
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Regency Centers Corp. (REG - Free Report) is slated to report third-quarter 2021 results on Nov 4, after the closing bell. The company’s quarterly results will likely display growth in both revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) delivered a surprise of 19.28% in terms of NAREIT FFO per share. Results reflected higher-than-anticipated revenue numbers.
In the last four quarters, the company’s earnings exceeded the Zacks Consensus Estimate on three occasions and missed the mark in the remaining quarter. It has a trailing four-quarter surprise of 9.21%, on average. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
Let’s see how things have shaped up prior to this announcement.
Factors to Note
Per a CBRE Group (CBRE - Free Report) report, total retail sales increased 15% year over year in the third quarter. The third quarter marked the fourth consecutive quarter of positive retail absorption (+36.7 million square feet) and each asset class depicted quarter-over-quarter gains. Also, the average asking rent improved for the third straight quarter, increasing 2.9% year over year to $21.31 per square feet in the third quarter.
The overall retail availability rate shrunk to a 10-year low of 5.9% in the September-end quarter from the June-end quarter’s 6.2%. New construction deliveries were 6.4 million square feet in the third quarter, down 29% year over year because of material cost increases and sourcing delays.
Regency is also anticipated to have benefited from the recovery in the retail real estate market. It has a high quality open-air shopping center portfolio with 80% grocery-anchored neighborhood and community centers. The properties are situated in affluent suburban areas and near urban trade areas where consumers have high spending power, enabling the company to attract top grocers and retailers. Further, during the pandemic so far, having a grocery component has been the saving grace for the retail REITs and Regency has numerous industry-leading grocers in its tenant roster.
With focus on necessity, service, convenience and value retailers, Regency’s portfolio comprised 45% of pro-rate annual base rent (ABR) from essential retail and services tenancy as of Jun 30, 2021. Significant essential retail businesses at the company’s centers enabled its properties to remain open, operating for the entirety of the pandemic.
The vaccination program acceleration and the government stimulus measures encouragingly brought relief to the retail sector. The economy is gaining strength and retail sales are improving. These in turn, are driving demand for the retail real estate space. Pressure on retail landlords is likely to have reduced and the company’s rent-collection figures are expected to have improved.
In its investor update, the retail REIT noted that through August 2021, foot traffic in its portfolio recovered to or above 100% of the 2019 foot traffic levels.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $279.1 million, suggesting an increase of 14.9% from the year-ago quarter’s reported figure.
Lastly, Regency’s activities during the July-September months were adequate to gain analyst confidence. The Zacks Consensus Estimate for the FFO per share has moved a cent north in the past week and is currently pegged at 98 cents. The figure also calls for 42% growth from the year-earlier period’s reported figure.
However, the market is witnessing a shift in retail shopping from the brick-and-mortar stores to Internet sales, which is only aggravated by the pandemic. The recent efforts of online retailers to go deeper into the grocery business raised a concern for this REIT that focuses on building a premium portfolio of grocery-anchored shopping centers, which might have hindered growth to some extent in the third quarter.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a beat in terms of FFO per share for Regency this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Regency currently has a Zacks Rank #2 and an Earnings ESP of -0.88%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider as our model shows that these have the right combination of elements to deliver a positive surprise this reporting cycle:
Simon Property Group (SPG - Free Report) , set to report quarterly results on Nov 1, has an Earnings ESP of +1.29% and a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Here's How Regency (REG) is Placed Ahead of Q3 Earnings
Regency Centers Corp. (REG - Free Report) is slated to report third-quarter 2021 results on Nov 4, after the closing bell. The company’s quarterly results will likely display growth in both revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) delivered a surprise of 19.28% in terms of NAREIT FFO per share. Results reflected higher-than-anticipated revenue numbers.
In the last four quarters, the company’s earnings exceeded the Zacks Consensus Estimate on three occasions and missed the mark in the remaining quarter. It has a trailing four-quarter surprise of 9.21%, on average. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
Regency Centers Corporation price-eps-surprise | Regency Centers Corporation Quote
Let’s see how things have shaped up prior to this announcement.
Factors to Note
Per a CBRE Group (CBRE - Free Report) report, total retail sales increased 15% year over year in the third quarter. The third quarter marked the fourth consecutive quarter of positive retail absorption (+36.7 million square feet) and each asset class depicted quarter-over-quarter gains. Also, the average asking rent improved for the third straight quarter, increasing 2.9% year over year to $21.31 per square feet in the third quarter.
The overall retail availability rate shrunk to a 10-year low of 5.9% in the September-end quarter from the June-end quarter’s 6.2%. New construction deliveries were 6.4 million square feet in the third quarter, down 29% year over year because of material cost increases and sourcing delays.
Regency is also anticipated to have benefited from the recovery in the retail real estate market. It has a high quality open-air shopping center portfolio with 80% grocery-anchored neighborhood and community centers. The properties are situated in affluent suburban areas and near urban trade areas where consumers have high spending power, enabling the company to attract top grocers and retailers. Further, during the pandemic so far, having a grocery component has been the saving grace for the retail REITs and Regency has numerous industry-leading grocers in its tenant roster.
With focus on necessity, service, convenience and value retailers, Regency’s portfolio comprised 45% of pro-rate annual base rent (ABR) from essential retail and services tenancy as of Jun 30, 2021. Significant essential retail businesses at the company’s centers enabled its properties to remain open, operating for the entirety of the pandemic.
The vaccination program acceleration and the government stimulus measures encouragingly brought relief to the retail sector. The economy is gaining strength and retail sales are improving. These in turn, are driving demand for the retail real estate space. Pressure on retail landlords is likely to have reduced and the company’s rent-collection figures are expected to have improved.
In its investor update, the retail REIT noted that through August 2021, foot traffic in its portfolio recovered to or above 100% of the 2019 foot traffic levels.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $279.1 million, suggesting an increase of 14.9% from the year-ago quarter’s reported figure.
Lastly, Regency’s activities during the July-September months were adequate to gain analyst confidence. The Zacks Consensus Estimate for the FFO per share has moved a cent north in the past week and is currently pegged at 98 cents. The figure also calls for 42% growth from the year-earlier period’s reported figure.
However, the market is witnessing a shift in retail shopping from the brick-and-mortar stores to Internet sales, which is only aggravated by the pandemic. The recent efforts of online retailers to go deeper into the grocery business raised a concern for this REIT that focuses on building a premium portfolio of grocery-anchored shopping centers, which might have hindered growth to some extent in the third quarter.
Here is what our quantitative model predicts:
Our proven model does not conclusively predict a beat in terms of FFO per share for Regency this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Regency currently has a Zacks Rank #2 and an Earnings ESP of -0.88%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider as our model shows that these have the right combination of elements to deliver a positive surprise this reporting cycle:
STORE Capital Corporation , scheduled to announce quarterly numbers on Nov 4, currently has an Earnings ESP of +1.02% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Simon Property Group (SPG - Free Report) , set to report quarterly results on Nov 1, has an Earnings ESP of +1.29% and a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.