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Why Is Regency Centers (REG) Down 0.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Regency Centers (REG - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

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

Regency Centers' Q4 FFO, Revenues Beat Estimates

Regency Centers’ fourth-quarter 2018 NAREIT FFO per share came in at 98 cents, which beat the Zacks Consensus Estimate, as well as came ahead of the year-ago tally, both, by 4 cents. The company’s quarterly results reflect growth in revenues.

Total adjusted revenues for the quarter came in at $277.07 million, outpacing the Zacks Consensus Estimate of $269.96 million. In addition, the figure came in higher than the year-ago tally of $257.9 million.

Inside the Headlines

During the reported quarter, Regency executed around 2 million square feet of new and renewal leases, leading to rent spreads on comparable new leases and renewal leases of 22.5% and 7.2%, respectively, with blended rent spreads for the Dec-end quarter of 9.3 %.    

As of Dec 31, 2018, the company’s wholly-owned portfolio, along with its pro-rata shares of co-investment partnerships, was 95.6% leased. The company’s same-property portfolio was 96.1% leased, indicating an expansion of 20 basis points (bps) sequentially.

Spaces greater than or equal to 10,000 square feet — Anchors — in the same property portfolio were 98.5% leased as of Dec 31, 2018, denoting an expansion of 50 bps sequentially. In addition, Regency’s same-property NOI as adjusted, excluding termination fees, climbed 2.2% on a year-over-year basis.

Regency’s cash and cash equivalents were $45.2 million at the end of 2018, slightly down from $49.4 million recorded at the end of 2017. The company’s total outstanding debt was $3.7 billion, up from $3.6 billion witnessed at the end of the prior year.

The company repurchased around $122 million shares of common stock at an average price of $57.70 per share. This led to total share repurchase for full-year 2018 to approximately $247 million at average price of $57.97 per share.

Notable Portfolio Activity

During the quarter under review, the company acquired an interest in one shopping center for around $18.5 million and sold four shopping centers for nearly $82.2 million, at Regency’s share.

Also, at year-end 2018, the company had 19 properties in development or redevelopment, indicating a total investment worth $390 million. Moreover, in-process development projects were a combined 62% funded and 79% leased, and are projected to yield average return of 7.2%. Notably, for full-year 2018, the company commenced nearly $200 million of developments and redevelopments. This contributed toward a five-year goal of $1.25-$1.50 billion.

Outlook

Regency expects 2019 NAREIT FFO per share of $3.83-$3.89. The company’s full-year outlook is backed by same-property NOI growth, excluding termination fees of 2.0-2.5%, as well as development and redevelopment starts of $150.0-$250.0 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Regency Centers has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Regency Centers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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