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Regency Centers (REG) to Post Q1 Earnings: What's in Store?
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Regency Centers Corp. (REG - Free Report) is slated to report first-quarter 2024 results on May 2 after the closing bell. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.
In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) reported NAREIT FFO per share of $1.02, in line with the Zacks Consensus Estimate. Results reflected a better-than-anticipated top line, aided by healthy leasing activity and a year-over-year improvement in the base rent. However, high interest expenses during the quarter were worrisome.
Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on three occasions and met in the remaining quarter, with the average beat being 2.21%. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2024 performance.
US Retail Real Estate Market in Q1
Per a report from CBRE Group (CBRE - Free Report) , the U.S. overall retail availability rate remained at 4.7%, even though supply additions surpassed net absorption in the first quarter. The quarter witnessed a significant decline in net absorption, which fell to 3.7 million square feet in the first quarter from 12.5 million square feet in the prior quarter and was also less than half of the 10-year quarterly average. Store closures mainly led to this substantial decline.
Amid high construction costs, new retail development was at a low level. Completions aggregated 5.8 million square feet, down 32% from the prior quarter. Across all retail formats, deliveries of new centers remained low in the first quarter, per the CBRE report.
Asking rent growth remained strong in the first quarter, with the average asking rent increasing 0.9% quarter over quarter and 2.7% year over year to $24.07 per square foot. The report noted that high-growth secondary and tertiary markets carried on performing well.
Factors at Play
Regency is poised to benefit from its 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 the post-pandemic migration and the adoption of hybrid work arrangements leading to increased suburban residency, Regency's suburban shopping center portfolio is anticipated to have experienced improved performance in the first quarter. We expect the company to have witnessed decent 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 first quarter.
The Zacks Consensus Estimate for REG’s first-quarter revenues is pegged at $367.21 million, which indicates an increase of 15.48% from the year-ago quarter’s reported figure.
However, higher e-commerce adoption and a high interest rate environment are expected to 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 remained unrevised at $1.04 over the past month. The figure also implies a decline of 3.70% from the prior-year quarter’s reported number.
Q1 Updates
During the first quarter, Regency Centers acquired land to develop Cheshire Crossing, a 152,000-square-foot shopping center anchored by Whole Foods Market in Cheshire, CT. This destination will be the retail component of a master-planned community known as Stone Bridge Crossing.
Upon completion, Stone Bridge Crossing will encompass 140 townhomes and carriage houses, 300 multi-family units and a 125-room Homewood Suites hotel alongside the shopping center. In addition to Whole Foods Market, the center will feature a 23,000-square-foot TJMaxx, an additional 18,000 square feet of junior anchor space, five outparcels and 38,000 square feet of inline shops.
Here Is What Our Quantitative Model Predicts:
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 #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Regency currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — Omega Healthcare Investors, Inc. (OHI - Free Report) and Medical Properties Trust (MPW - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
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 Q1 Earnings: What's in Store?
Regency Centers Corp. (REG - Free Report) is slated to report first-quarter 2024 results on May 2 after the closing bell. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.
In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) reported NAREIT FFO per share of $1.02, in line with the Zacks Consensus Estimate. Results reflected a better-than-anticipated top line, aided by healthy leasing activity and a year-over-year improvement in the base rent. However, high interest expenses during the quarter were worrisome.
Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on three occasions and met in the remaining quarter, with the average beat being 2.21%. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
Regency Centers Corporation price-eps-surprise | Regency Centers Corporation Quote
In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2024 performance.
US Retail Real Estate Market in Q1
Per a report from CBRE Group (CBRE - Free Report) , the U.S. overall retail availability rate remained at 4.7%, even though supply additions surpassed net absorption in the first quarter. The quarter witnessed a significant decline in net absorption, which fell to 3.7 million square feet in the first quarter from 12.5 million square feet in the prior quarter and was also less than half of the 10-year quarterly average. Store closures mainly led to this substantial decline.
Amid high construction costs, new retail development was at a low level. Completions aggregated 5.8 million square feet, down 32% from the prior quarter. Across all retail formats, deliveries of new centers remained low in the first quarter, per the CBRE report.
Asking rent growth remained strong in the first quarter, with the average asking rent increasing 0.9% quarter over quarter and 2.7% year over year to $24.07 per square foot. The report noted that high-growth secondary and tertiary markets carried on performing well.
Factors at Play
Regency is poised to benefit from its 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 the post-pandemic migration and the adoption of hybrid work arrangements leading to increased suburban residency, Regency's suburban shopping center portfolio is anticipated to have experienced improved performance in the first quarter. We expect the company to have witnessed decent 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 first quarter.
The Zacks Consensus Estimate for REG’s first-quarter revenues is pegged at $367.21 million, which indicates an increase of 15.48% from the year-ago quarter’s reported figure.
However, higher e-commerce adoption and a high interest rate environment are expected to 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 remained unrevised at $1.04 over the past month. The figure also implies a decline of 3.70% from the prior-year quarter’s reported number.
Q1 Updates
During the first quarter, Regency Centers acquired land to develop Cheshire Crossing, a 152,000-square-foot shopping center anchored by Whole Foods Market in Cheshire, CT. This destination will be the retail component of a master-planned community known as Stone Bridge Crossing.
Upon completion, Stone Bridge Crossing will encompass 140 townhomes and carriage houses, 300 multi-family units and a 125-room Homewood Suites hotel alongside the shopping center. In addition to Whole Foods Market, the center will feature a 23,000-square-foot TJMaxx, an additional 18,000 square feet of junior anchor space, five outparcels and 38,000 square feet of inline shops.
Here Is What Our Quantitative Model Predicts:
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 #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Regency currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two stocks from the broader REIT sector — Omega Healthcare Investors, Inc. (OHI - Free Report) and Medical Properties Trust (MPW - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Omega Healthcare Investors, scheduled to report quarterly numbers on May 2, has an Earnings ESP of +1.85% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medical Properties, slated to release quarterly numbers on May 9, has an Earnings ESP of +3.22% and carries a Zacks Rank of 3 at present.
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.