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Regency Centers (REG) Down 2.2% Since Earnings Report: Can It Rebound?

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About a month has gone by since the last earnings report for Regency Centers Corporation (REG - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Regency Centers Q2 FFO Beats Estimates, NOI Climbs

Regency Centers’ second-quarter 2017 core funds from operations per share of 93 cents came ahead of the Zacks Consensus Estimate of 90 cents. Further, the results compared favorably with 82 cents reported in the year-ago quarter.

Results reflect growth in same property net operating income (“NOI”).

Total revenue for the quarter came in at $261.3 million, up from $152.4 million recorded in the prior-year quarter. Total real estate revenues of $240.4 million in the quarter compared favorably with the year-ago period tally of nearly $144.0 million.

Inside the Headlines

During the quarter, Regency executed 1.7 million square feet of new and renewal leases on a comparable basis, leading to 9.4% blended rent spreads. Rent spreads on new leases came in at 13.5%, while the same for renewal leases was 8.7%.

As of Jun 30, 2017, the total portfolio was 95.0% leased. Moreover, the same property portfolio was 95.9% leased, reflecting a contraction of 10 basis points (bps) sequentially and 20 bps year over year when adjusted for the present same property pool. In the same property asset portfolio, small shops were 92.1% leased, reflecting an uptick of 30 bps sequentially and 80 bps year over year.

In addition, Regency’s same property NOI as adjusted, excluding termination fees, climbed 3.2% on a year-over-year basis. It included a 70 bps positive impact from redevelopments.

Regency’s cash and cash equivalents were $104.7 million at the end of second-quarter 2017, up from $17.9 million at the end of 2016. The company’s total outstanding debt was $3.5 billion, up from $1.64 billion at the end of the previous year.

Notable Portfolio Activity

During the quarter under review, Regency started the development of Mellody Farm, a 252,000 square foot center in the Chicago metro area, with total estimated net development costs of $97.4 million.

On the other hand, during the quarter, the company sold one wholly owned property and one co-investment property, for a total gross price of $25.1 million, with Regency’s share being $7.1 million.

At second-quarter end, the company had 29 properties in development or under redevelopment with combined, estimated net development costs of over $600 million.

Outlook

Regency updated its guidance for 2017. The company now expects core FFO per share in the $3.62-$3.68 band, against the prior guided range of $3.60-$3.68. The Zacks Consensus Estimate for the same is currently pegged at $3.65.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.

Regency Centers Corporation Price and Consensus

VGM Scores

At this time, Regency Centers' stock has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

While estimates have been moving downward, the magnitude of the revision is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.




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