Regency Centers Corporation (REG) Q1 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary and Q&A reflect a positive outlook, with strong financial metrics, an acquisition expected to drive growth, and an upgraded credit rating. While there are uncertainties regarding tariffs and their impact on costs, the company's focus on essential services and strategic growth in high-quality markets mitigates these concerns. The strong dividend growth and free cash flow generation further support a positive sentiment. Despite some unclear responses from management, the overall sentiment suggests a positive stock price reaction.

Key Financial Performance

Same Property NOI Growth 4.3%, up from previous year, primarily driven by growth in base rent.

Cash Rent Spreads 8% in Q1, positively impacted by achieving higher average embedded rent steps in executed leases.

GAAP Rent Spreads Nearly 19%, due to a greater mix of shop space in the quarter.

Acquisition of Brentwood Place Acquired for $500 million, expected to provide significant growth opportunities.

NAREIT FFO Growth Nearly 6% growth expected for 2025.

Same Property NOI Growth Guidance 3.6% growth expected for 2025.

Credit Loss Guidance 75 to 100 basis points, combining expected uncollectible lease income and lost revenues from bankruptcies.

Balance Sheet Strength S&P upgraded credit rating to A-, reflecting strength of business and balance sheet strategy.

Leverage Ratio Well within target range of 5x to 5.5x.

Annual Free Cash Flow Generation Strong annual free cash flow generation, supporting investment opportunities.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

Acquisition of Brentwood Place: Regency Centers acquired Brentwood Place in Brentwood, Tennessee, a 320,000 square foot community center with high-quality retailers, providing significant future leasing opportunities.

Joint Venture Acquisition: A high-quality grocery-anchored shopping center is under contract within the joint venture platform, expected to close in Q2 2025.

Same Property NOI Growth: Regency reported a same property NOI growth of 4.3% in Q1 2025, driven by base rent growth.

Leasing Activity: The company achieved a 10 basis points increase in leased occupancy and commenced new leases representing approximately $10 million of annual base rent (ABR).

Cash Rent Spreads: Cash rent spreads were 8% in Q1, while GAAP rent spreads were nearly 19%, positively impacted by higher average embedded rent steps.

Development Projects: Regency is managing $500 million in in-process development and redevelopment projects, with a plan to maintain an annual pace of $250 million in project starts.

Credit Rating Upgrade: S&P upgraded Regency's credit rating to A-, following a previous upgrade to A3 by Moody's, making Regency the only shopping center REIT with A credit ratings from both agencies.

Long-term Strategy: Regency is focused on driving growth through opportunistic investments and maintaining a strong balance sheet to navigate economic cycles.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Macro Economic Uncertainty: Acknowledgment of elevated volatility and macro uncertainty in the economy today, which could impact business performance.

Credit Loss Guidance: Maintaining credit loss guidance of 75 to 100 basis points, which combines expected impacts of uncollectible lease income and lost revenues from bankruptcy-related move outs.

Supply Chain Challenges: Potential challenges related to supply chain constraints for other developers, impacting the availability of new retail supply.

Competitive Pressures: The company faces competitive pressures in the retail sector, particularly in securing high-quality tenants and managing occupancy rates.

Regulatory Issues: Risks associated with regulatory changes that could affect business operations and financial performance.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Acquisition of Brentwood Place: Acquired Brentwood Place in Brentwood, Tennessee, a 320,000 square foot community center with high-quality retailers, providing significant future growth opportunities.

Development Projects: Managing $500 million in in-process development and redevelopment projects, with a focus on partnering with leading grocers to meet demand.

Leasing Activity: Strong leasing activity with a focus on grocery-anchored centers, resulting in a 10 basis point increase in leased occupancy.

Strategic Positioning: Regency's grocery-anchored centers cater to essential non-discretionary needs, supported by strong demographics and a healthy tenant base.

2025 NAREIT FFO Growth: Reaffirming 2025 earnings outlook with nearly 6% growth in NAREIT FFO.

2025 Same Property NOI Growth: Expecting 3.6% growth in same property NOI at the midpoint of guidance.

Credit Loss Guidance: Maintaining credit loss guidance of 75 to 100 basis points.

Balance Sheet Strength: S&P upgraded credit rating to A- and Moody's to A3, reflecting strong balance sheet strategy.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Shareholder Return Plan: Regency Centers Corporation is committed to driving shareholder value through a combination of strong operational performance and strategic capital allocation. The company has reaffirmed its 2025 earnings outlook, which implies a growth in NAREIT FFO of nearly 6% and growth in same property NOI of 3.6%. Additionally, the company maintains a strong balance sheet with an A- credit rating from S&P, allowing for opportunistic investments that enhance shareholder returns.

Share Repurchase Program: None

Dividend Program: None

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:Have you made any changes to the watch list or has there been anything noticeable from your perspective in terms of accounts receivable or in the small shop? Are you expecting anything? And with that, can you remind us of your Rite Aid exposure?

A:From the watch list perspective, we are constantly evaluating and updating that watch list. But from an exposure perspective, it stays consistent with where it's been in the past. We feel really good about how we are proactively approaching our watch list tenant. We have 30 basis points of ABR that is out there. AR remains below historic levels.

Q:How are leasing discussions going, especially with existing tenants, given the higher costs due to tariffs?

A:The impact from tariffs is unknown and uncertain. Our sector caters to essential nondiscretionary service convenience value, making us more resistant to economic uncertainty. Historically, severe economic downturns only impacted us by 200-250 basis points of occupancy.

Q:How are you thinking about keeping powder dry until things get better visibility on tariffs versus looking at opportunities today?

A:We intentionally keep balance sheet capacity to take advantage of opportunities. Our best use of free cash flow is our development program, which gives us the best return on invested capital.

Q:Has there been any change in the timeline to get lease deals done? Are you seeing any slowdown in decision-making processes?

A:We are not seeing any translation from volatility in our April results. Activity was solid in April, with new activity exceeding last year. Foot traffic was up 7% year-over-year.

Q:How much have construction costs increased, and how are you thinking about the evolution of yields in this post-tariff environment?

A:We are closely monitoring construction costs. While some line items may be impacted by tariffs, we have seen pullbacks in costs for steel and crude prices. We feel good about delivering projects at appropriate budgets and returns.

Q:How have higher tariffs changed the transactions market? Are there more or fewer players looking to acquire in the space?

A:Cap rates remain in the 5% to 6% range for high-quality assets. There seems to be a pullback in public and international markets compared to private markets, but private capital continues to show interest.

Q:Can you provide more color on the Brentwood deal and the expected mark-to-market opportunities?

A:We feel good about the mark-to-market opportunities and expect to achieve a high single-digit IRR. The asset has visibility for future material mark-to-market opportunities.

Q:What are your future plans for expanding your footprint in Tennessee or other markets?

A:We are focused on growing exposure in high-quality markets. Nashville is a priority, but we are also looking at other great markets across the country.

Q:Can you provide any color on the impact of tariffs on your tenants' cost of goods sold and credit coverage?

A:We are holding our strategy firm and feel good about the sustainability of cash flows. The impact of tariffs on discretionary retailers is small, and we have well-capitalized operators.

Q:How should we think about rent recognition in the current environment?

A:80% of our S&O pipeline is set to commence in 2025, with a third recognized as income this year. The variability in commencement dates is small, and we have visibility into the income stream.

Q:Is there any impact on foot traffic from pull forward demand?

A:We doubt there is much pull forward demand at our centers, as people do not grocery shop months in advance.

Q:What do you think the impact of margin pressure on retailers will be for store owners like yourselves?

A:Retailers have been feeling margin pressures for years. There is still a scarcity of quality space, and retailers will want to grow in the best locations, which will help them manage margin pressures.

Q:Review of Unclear Management Responses

A:Management appeared to avoid giving a direct answer to questions regarding the specific impact of tariffs on tenants' cost of goods sold and credit coverage, as well as the exact ranking of the Brentwood asset in terms of traffic compared to others in the portfolio.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

REG Transcript

Regency Centers Corporation (REG) Q3 2025 Earnings Call Transcript

Positive10-29

The earnings call summary and Q&A session reveal strong financial metrics, increased guidance, and strategic capital deployment, including a $357 million acquisition. Despite some management ambiguity, the overall outlook is optimistic, with raised growth outlooks and substantial leasing progress. The positive sentiment is further supported by a healthy tenant roster and derisked capital raising. These factors suggest a likely positive stock price movement over the next two weeks.

Regency Centers Corporation (REG) Presents At BofA Securities 2025 Global Real Estate Conference Transcript

Neutral9-9

Regency Centers Corporation (REG) Q2 2025 Earnings Call Transcript

Positive7-30

The earnings call highlights strong financial performance, strategic acquisitions, and positive growth outlooks, including a 6% NAREIT FFO growth. The Q&A reveals strong tenant health, high retention, and strategic positioning in grocery-anchored centers. Though some expense recovery rates may decelerate, overall financial health and strategic initiatives are robust. The reaffirmed guidance and credit rating upgrades further support a positive sentiment, likely leading to a 2-8% stock price increase in the near term.

Regency Centers Corporation (REG) Q1 2025 Earnings Call Transcript

Positive4-30

REG Report

REGENCY CENTERS CORP 10-K

10-K

2025-02-14

REGENCY CENTERS CORP 10-Q

10-Q

2024-11-01

REGENCY CENTERS CORP 10-Q

10-Q

2024-08-02

REGENCY CENTERS CORP 10-Q

10-Q

2024-05-03

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.