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Regency Centers (REG) to Post Q3 Earnings: What's in Store?
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Regency Centers Corp. (REG - Free Report) is slated to report third-quarter 2023 results on Nov 2, after the closing bell. The company’s quarterly results are likely to display year-over-year revenue growth 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 1.98% in terms of NAREIT FFO per share. The results reflected a better-than-anticipated top line, aided by healthy leasing activity and a year-over-year improvement in the base rent.
Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on two occasions, met once and missed in the remaining one, with the average beat being 1.70%. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
Per a report from CBRE Group (CBRE - Free Report) , retail space demand in the third quarter increased, with net absorption rising 34% quarter over quarter to 9.8 million square feet. Specifically, street retail, freestanding & other segment observed the most net absorption of 4.3 million square feet. While net absorption for neighborhood, community and strip centers fell 29% quarter over quarter, power center and lifestyle and mall segments turned positive after recording negative absorption in the second quarter.
In addition, owing to elevated construction costs and tight lending conditions, total new retail space delivered fell 28% sequentially to just under 5.6 million square feet. This represented the second-lowest total on record.
The overall availability rate in the third quarter fell 10 basis points (bps) to 4.8%, marking at least an 18-year low per the CBRE report. Neighborhood, community and strip centers witnessed the largest year-over-year decline of 50 bps and recorded availability of 6.6%.
However, the asking rent growth fell to just more than 2.1% on a year-over-year basis, with the overall average asking rent touching $23.42 per square foot in the quarter. This was mainly an indication that landlords are expecting demand to ease in the forthcoming quarters amid the likelihood of the U.S. economy slowing down.
REG’s Portfolio & Q3 Projections
Regency owns a portfolio of high-quality open-air shopping centers in affluent suburban areas and near urban trade areas of the United States with compelling demographics. With more people continuing to move to the suburbs due to post-pandemic migration and the hybrid work setup, Regency’s suburban shopping center portfolio is expected to have benefited.
Given a robust retail real estate environment in the third quarter, we expect the company to have witnessed healthy leasing activity, aiding occupancy rates at its properties.
Additionally, 80% of REG’s portfolio comprises grocery-anchored neighborhood and community centers, which are necessity-driven by nature. The company also has a good tenant mix, with several industry-leading grocers. This is likely to have helped the company generate stable rental revenues during the third quarter.
The Zacks Consensus Estimate for REG’s third-quarter revenues is pegged at $331.75 million, indicating an increase of 9.1% from the year-ago quarter’s reported figure.
Furthermore, Regency, continuing with its asset-base expansion, closed the earlier announced acquisition of Urstadt Biddle Properties Inc. in an all-stock transaction this August. This created a combined company with a total equity market capitalization of more than $11 billion and an enterprise value of more than $16 billion.
The buyout, which expands Regency’s footprint of high-quality, grocery-anchored shopping centers in premier suburban trade areas, is projected to be immediately accretive to core operating earnings.
Nonetheless, higher e-commerce adoption and subdued consumer sentiments amid persistent macroeconomic uncertainty and a high interest rate environment are expected to have cast a pall on the company’s quarterly performance to some extent. Also, higher interest expenses during the quarter are likely to have been a spoilsport.
The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised nearly 1% downward to $1.01 over the past month. However, the figure implies growth of 7.5% from the prior-year quarter’s reported number.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Regency this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: REG has an Earnings ESP of -0.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Nov 2. VTR has an Earnings ESP of +0.08% and a Zacks Rank of 3 currently.
Tanger Factory Outlet Centers (SKT - Free Report) is slated to report quarterly numbers on Nov 6. SKT has an Earnings ESP of +1.41% and carries a Zacks Rank #2 (Buy) presently.
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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Regency Centers (REG) to Post Q3 Earnings: What's in Store?
Regency Centers Corp. (REG - Free Report) is slated to report third-quarter 2023 results on Nov 2, after the closing bell. The company’s quarterly results are likely to display year-over-year revenue growth 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 1.98% in terms of NAREIT FFO per share. The results reflected a better-than-anticipated top line, aided by healthy leasing activity and a year-over-year improvement in the base rent.
Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on two occasions, met once and missed in the remaining one, with the average beat being 1.70%. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
Regency Centers Corporation price-eps-surprise | Regency Centers Corporation Quote
Factors at Play
U.S. Retail Market in Q3
Per a report from CBRE Group (CBRE - Free Report) , retail space demand in the third quarter increased, with net absorption rising 34% quarter over quarter to 9.8 million square feet. Specifically, street retail, freestanding & other segment observed the most net absorption of 4.3 million square feet. While net absorption for neighborhood, community and strip centers fell 29% quarter over quarter, power center and lifestyle and mall segments turned positive after recording negative absorption in the second quarter.
In addition, owing to elevated construction costs and tight lending conditions, total new retail space delivered fell 28% sequentially to just under 5.6 million square feet. This represented the second-lowest total on record.
The overall availability rate in the third quarter fell 10 basis points (bps) to 4.8%, marking at least an 18-year low per the CBRE report. Neighborhood, community and strip centers witnessed the largest year-over-year decline of 50 bps and recorded availability of 6.6%.
However, the asking rent growth fell to just more than 2.1% on a year-over-year basis, with the overall average asking rent touching $23.42 per square foot in the quarter. This was mainly an indication that landlords are expecting demand to ease in the forthcoming quarters amid the likelihood of the U.S. economy slowing down.
REG’s Portfolio & Q3 Projections
Regency owns a portfolio of high-quality open-air shopping centers in affluent suburban areas and near urban trade areas of the United States with compelling demographics. With more people continuing to move to the suburbs due to post-pandemic migration and the hybrid work setup, Regency’s suburban shopping center portfolio is expected to have benefited.
Given a robust retail real estate environment in the third quarter, we expect the company to have witnessed healthy leasing activity, aiding occupancy rates at its properties.
Additionally, 80% of REG’s portfolio comprises grocery-anchored neighborhood and community centers, which are necessity-driven by nature. The company also has a good tenant mix, with several industry-leading grocers. This is likely to have helped the company generate stable rental revenues during the third quarter.
The Zacks Consensus Estimate for REG’s third-quarter revenues is pegged at $331.75 million, indicating an increase of 9.1% from the year-ago quarter’s reported figure.
Furthermore, Regency, continuing with its asset-base expansion, closed the earlier announced acquisition of Urstadt Biddle Properties Inc. in an all-stock transaction this August. This created a combined company with a total equity market capitalization of more than $11 billion and an enterprise value of more than $16 billion.
The buyout, which expands Regency’s footprint of high-quality, grocery-anchored shopping centers in premier suburban trade areas, is projected to be immediately accretive to core operating earnings.
Nonetheless, higher e-commerce adoption and subdued consumer sentiments amid persistent macroeconomic uncertainty and a high interest rate environment are expected to have cast a pall on the company’s quarterly performance to some extent. Also, higher interest expenses during the quarter are likely to have been a spoilsport.
The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised nearly 1% downward to $1.01 over the past month. However, the figure implies growth of 7.5% from the prior-year quarter’s reported number.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Regency this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: REG has an Earnings ESP of -0.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: REG currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Nov 2. VTR has an Earnings ESP of +0.08% and a Zacks Rank of 3 currently.
Tanger Factory Outlet Centers (SKT - Free Report) is slated to report quarterly numbers on Nov 6. SKT has an Earnings ESP of +1.41% and carries a Zacks Rank #2 (Buy) presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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.