Regency Centers(REG) - 2023 Q4 - Annual Report

FORM 10-K Filing Information This section provides basic identification, filing status, and market value for Regency Centers Corporation and Regency Centers, L.P Registrant Information This section provides the basic identification details for Regency Centers Corporation and Regency Centers, L.P., including their filing status, incorporation details, principal executive offices, and securities registered on The Nasdaq Stock Market LLC - Regency Centers Corporation and Regency Centers, L.P. are filing an annual report on Form 10-K for the fiscal year ended December 31, 2023[2] - Both Regency Centers Corporation and Regency Centers, L.P. are well-known seasoned issuers and are required to file reports under the Securities Exchange Act of 1934[5][6] Registered Securities | Registrant | Trading Symbol | Exchange | | :-------------------------- | :------------- | :--------------- | | Common Stock, $0.01 par value | REG | The Nasdaq Stock Market LLC | | 6.250% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share | REGCP | The Nasdaq Stock Market LLC | | 5.875% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share | REGCO | The Nasdaq Stock Market LLC | Filer Status and Market Value Regency Centers Corporation is classified as a large accelerated filer with an aggregate market value of voting and non-voting common equity held by non-affiliates at $10.5 billion as of the last business day of its most recently completed second fiscal quarter. Regency Centers, L.P. is a non-accelerated filer - The aggregate market value of voting and non-voting common equity held by non-affiliates for Regency Centers Corporation was $10.5 billion[13] - As of February 15, 2024, Regency Centers Corporation had 184,578,554 shares of common stock outstanding[14] Filer Status | Registrant | Filer Status | | :-------------------------- | :-------------------- | | Regency Centers Corporation | Large accelerated filer | | Regency Centers, L.P. | Non-accelerated filer | Explanatory Note This note clarifies the combined reporting of Regency Centers Corporation and Regency Centers, L.P., detailing their structural relationship and the benefits of this approach Report Combination and Company Structure This report combines the annual reports of Regency Centers Corporation (Parent Company) and Regency Centers, L.P. (Operating Partnership) for the year ended December 31, 2023. The Parent Company, a REIT, acts as the sole general partner of the Operating Partnership, owning approximately 99.4% of its Common Units and all Preferred Units as of December 31, 2023. The Operating Partnership holds all company assets and conducts substantially all operations - This Annual Report on Form 10-K combines the reports for Regency Centers Corporation (Parent Company) and Regency Centers, L.P. (Operating Partnership)[18] - The Parent Company is a REIT and the sole general partner of the Operating Partnership, controlling its day-to-day management[19] Ownership in Operating Partnership (as of Dec 31, 2023) | Entity | Ownership in Operating Partnership (as of Dec 31, 2023) | | :------------- | :------------------------------------------------- | | Parent Company | ~99.4% of Common Units, 100% of Series A and B Preferred Units | Benefits of Combined Reporting Combining the reports enhances investor understanding by presenting the business as a single entity, eliminates duplicative disclosure for a more streamlined presentation, and creates time and cost efficiencies - Enhances investors' understanding by viewing the business as a whole, consistent with management's operation[23] - Eliminates duplicative disclosure, providing a more streamlined and readable presentation[23] - Creates time and cost efficiencies by preparing one combined report instead of two separate ones[23] Table of Contents This section provides an organized listing of all chapters and sub-sections within the report for easy navigation Forward-Looking Statements This section cautions that certain statements about future financial, business, or market outcomes are forward-looking and subject to risks and uncertainties Nature of Forward-Looking Statements This section clarifies that certain statements in the document regarding future financial, business, legal, or market outcomes are 'forward-looking statements' made under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and are subject to various risks and uncertainties - Statements about anticipated financial, business, legal, or other outcomes, including market conditions and outlook, are considered 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995[26] - Forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, as detailed in 'Item 1A. Risk Factors'[26][27] PART I This part covers the company's business overview, risk factors, cybersecurity, properties, and legal proceedings Item 1. Business This section details Regency's core operations as a REIT, its mission, strategies, competitive landscape, corporate responsibility, and compliance with regulations Company Overview and Operations Regency Centers Corporation is a fully integrated REIT focused on acquiring, developing, owning, and operating income-producing retail real estate, primarily grocery-anchored neighborhood and community shopping centers in suburban areas across the USA. As of December 31, 2023, the company had interests in 482 properties, totaling 56.8 million square feet of GLA, with a pro-rata share of 48.6 million square feet. The business experienced material growth in 2023 due to the acquisition of Urstadt Biddle Properties Inc. (UBP) - Regency Centers Corporation is a fully integrated real estate company and self-administered and self-managed REIT, operating since 1993[29] - The company's business involves acquiring, developing, owning, and operating income-producing retail real estate, primarily grocery-anchored neighborhood and community shopping centers in suburban areas of the USA[29][30] Key Metrics (as of Dec 31, 2023) | Metric | Value (as of Dec 31, 2023) | | :--------------------- | :-------------------------- | | Total Properties | 482 (full or partial ownership) | | Total GLA | 56.8 million square feet | | Pro-rata GLA | 48.6 million square feet | Mission, Vision, and Values Regency's mission is to create thriving environments for retailers and service providers to connect with surrounding neighborhoods and communities, with a vision to elevate quality of life. The company's values emphasize its people, integrity, community connection, responsibility, excellence, and collaboration - Mission: Create thriving environments for retailers and service providers to connect with surrounding neighborhoods and communities[30] - Vision: Elevate quality of life as an integral thread in the fabric of communities[30] - Values: Our people are our greatest asset; act with unwavering honesty and integrity; promote philanthropic ideas and support neighborhoods; balance purpose and profit; strive for excellence; succeed together through listening[31] Goals and Strategies Regency's goals include owning and managing high-quality, grocery-anchored shopping centers in desirable metro areas, increasing shareholder value through earnings and dividends, and achieving top-tier same property NOI growth. Key strategies involve disciplined development and redevelopment, maintaining a conservative capital structure, implementing leading ESG practices, and fostering an exceptional and diverse team - Goals: Own and manage high-quality, grocery-anchored shopping centers in desirable metro areas; create shareholder value by increasing earnings and dividends per share; maintain an industry-leading development and redevelopment platform; support business with a conservative capital structure; implement leading ESG practices; engage and retain an exceptional and diverse team[34] - Strategies: Generate same property NOI growth at or near the top of peers; reinvest free cash flow and disposition proceeds into high-quality developments, redevelopments, and acquisitions; maintain a conservative balance sheet for liquidity and cost-effective funding; pursue best-in-class ESG programs; attract, retain, and engage a diverse team guided by values[34] Competition and Competitive Advantages Regency is among the largest shopping center owners in the USA but faces competition from numerous companies, individuals, and alternative shopping methods like e-commerce. The company's competitive advantages stem from its market areas, property quality, compelling demographics, tenant relationships, experienced leadership, and development capabilities - Regency is among the largest owners of shopping centers in the USA but faces competition from other companies, individuals, and alternative shopping/delivery methods[32] - Competitive Advantages: Market areas and shopping center locations; quality of shopping centers (maintenance and renovation standards); compelling demographics; relationships with anchor, shop, and out-parcel tenants; experienced leadership team; ability to successfully develop, redevelop, and acquire shopping centers[35] Corporate Responsibility and Human Capital Corporate responsibility, including ESG practices, is a foundational strategy for Regency, built on four pillars: Our People, Our Communities, Ethics and Governance, and Environmental Stewardship. The company emphasizes attracting and retaining diverse talent, promoting employee well-being, engaging with communities through philanthropy, maintaining strong governance, and integrating sustainable practices to minimize environmental impact and reduce GHG emissions - Corporate responsibility (ESG) is a foundational strategy built on four pillars: Our People, Our Communities, Ethics and Governance, and Environmental Stewardship[36][43] - These practices are guided by long-term value creation, brand reputation, and culture maintenance[36][43] - As of December 31, 2023, Regency had 497 employees across 24 market offices nationwide, with no employees represented by a collective bargaining unit[39] - Human Capital Focus: Attracting and retaining diverse talent, promoting employee well-being, personal and professional development, and maintaining a workplace free from discrimination and harassment[38][40][41][42] - Community Engagement: Investing in and engaging with communities through property enhancements, placemaking, and employee volunteer/financial support[43][44][45] - Environmental Stewardship: Identified eight strategic priorities including green building, energy efficiency, renewable energy, and GHG reduction. Target to reduce absolute Scope 1 and 2 GHG emissions by 28% by 2030 (2019 baseline) and achieve net-zero by 2050[46][47][50][51][52] Compliance with Governmental Regulations Regency is subject to various regulatory and tax requirements, including REIT laws, which mandate distributing at least 90% of taxable income to avoid federal income tax. The company also has taxable REIT subsidiaries (TRS) subject to federal and state income taxes. Environmental laws impose potential liability for hazardous substances, though known liabilities are not expected to materially impact financial condition - Regency has elected to be taxed as a REIT, requiring distribution of at least 90% of taxable income annually to avoid federal income tax[55] - Certain subsidiaries are designated as Taxable REIT Subsidiaries (TRS), which are subject to federal and state income taxes but have not been material to the company[56] - The company is subject to environmental laws regarding hazardous substances, primarily from historic dry cleaners and gas stations. Known environmental liabilities are not expected to have a material financial impact[57] Information About Our Executive Officers This section lists Regency's executive officers, their ages, titles, and the effective dates of their current positions. The executive team includes Martin E. Stein, Jr. as Executive Chairman, Lisa Palmer as President and CEO, Michael J. Mas as EVP and CFO, Alan T. Roth as East Region President & COO, and Nicholas A. Wibbenmeyer as West Region President & CIO Executive Officers | Name | Age | Title | Executive Officer in Position Shown Since | | :-------------------- | :-- | :-------------------------------------- | :---------------------------------------- | | Martin E. Stein, Jr. | 71 | Executive Chairman of the Board of Directors | 2020 | | Lisa Palmer | 56 | President and Chief Executive Officer | 2020 | | Michael J. Mas | 48 | Executive Vice President, Chief Financial Officer | 2019 | | Alan T. Roth | 48 | East Region President & Chief Operating Officer | 2023 | | Nicholas A. Wibbenmeyer | 43 | West Region President & Chief Investment Officer | 2023 | General Information Regency's common stock and preferred stocks are listed on the NASDAQ Global Select Market under symbols REG, REGCP, and REGCO, respectively. The company offers a dividend reinvestment plan (DRIP) and its independent registered public accounting firm is KPMG LLP. The 2024 annual meeting of shareholders is scheduled for May 1, 2024, in a virtual-only format - Regency's common stock trades under 'REG', and its preferred stocks trade under 'REGCP' and 'REGCO' on the NASDAQ Global Select Market[63] - The company offers a dividend reinvestment plan (DRIP) for shareholders[62] - The 2024 annual meeting of shareholders is expected to be held virtually on Wednesday, May 1, 2024[64] Non-GAAP Measures and Defined Terms Regency utilizes non-GAAP measures like Core Operating Earnings, Nareit EBITDAre, Nareit FFO, NOI, and Pro-rata financial information to supplement GAAP presentations, believing they enhance understanding of operational results and facilitate comparisons with peers. These measures are used for trend analyses, incentive compensation, budgeting, and planning, with reconciliations to GAAP provided to address their inherent limitations - Regency uses non-GAAP measures such as Core Operating Earnings, Nareit EBITDAre, Nareit FFO, NOI, and Pro-rata financial information to improve understanding of operational results and for internal management purposes[65][67][68][70] - Non-GAAP measures are not alternatives to GAAP but supplement them, with reconciliations provided to compensate for their limitations, such as excluding significant expense/income items[66][68][69] - Core Operating Earnings: Excludes certain non-comparable items and non-cash components from Nareit FFO[67] - Nareit FFO: Excludes gains/impairments of real estate, plus depreciation/amortization, adjusted for unconsolidated partnerships[68] - NOI: Sum of base rent, percentage rent, recoveries, other lease/property income, less operating/maintenance, real estate taxes, ground rent, and uncollectible lease income[70] - Pro-rata information: Includes 100% of consolidated properties plus economic share in unconsolidated partnerships, to reflect proportionate economic interest[70] Item 1A. Risk Factors This section outlines various risks impacting Regency, including economic, operational, real estate, environmental, corporate, funding, technology, market, and tax-related factors Risk Factors Related to the Current Economic and Geopolitical Environments Regency's operations are exposed to risks from current economic and geopolitical conditions, including rising interest rates impacting borrowing costs, real estate valuation, and stock price. Economic challenges like inflation, labor shortages, and potential recession could adversely affect tenant businesses, leasing activity, and rental rates. Instability in the banking and financial services industry could impair access to capital, and geopolitical conflicts may impact the U.S. economy and consumer spending - Higher interest rates may negatively impact borrowing costs, real estate valuation, and stock price, potentially affecting future business plans and equity capital raising[74][75] - Current economic challenges (inflation, labor shortages, supply chain constraints, decreasing consumer confidence, increasing energy prices) and potential recession may adversely impact tenants' ability to pay rent, leasing activity, and rental rates[76][77][78] - Disruption or instability in the banking and financial services industry could impair access to capital, delay access to funds, or result in less favorable financing terms[79][80] - Geopolitical challenges (e.g., Russia-Ukraine war, Middle East conflicts, China's economy) could impact the U.S. economy and consumer spending, leading to rising inflation, interest rates, and supply chain issues[81] Risks Relating to Regency's Financial Performance Relating to the Urstadt Biddle Merger The successful integration of Urstadt Biddle Properties Inc. (UBP) following its acquisition on August 18, 2023, is crucial for realizing anticipated benefits and synergies. Potential difficulties include combining business practices, integrating operations, realizing value from UBP assets, retaining key employees, and managing unforeseen liabilities or increased expenses, which could adversely affect Regency's financial performance and growth - The success of the UBP merger depends on Regency's ability to successfully combine the businesses and realize anticipated benefits and synergies[82] - Potential integration difficulties include: inability to achieve cost savings, failure to integrate operations and internal systems, inability to realize anticipated value from UBP assets, loss of tenants and commercial relationships, complexities of managing the combined company, failure to retain key employees, disruption of ongoing businesses, and unforeseen liabilities or increased expenses[83] Risk Factors Related to Pandemics or other Health Crises Future pandemics or health crises, similar to COVID-19, could negatively impact tenant financial conditions, property profitability, and access to capital markets. Such events may lead to requests for rent concessions, lease renegotiations, increased online shopping, decreased demand for retail space, and delays in construction due to supply chain and labor constraints, all of which could materially affect Regency's business and financial results - Future pandemics could lead to rent concessions, renegotiations, or tenant failures[85] - Increased online purchases and reduced demand for physical retail space could result in lower occupancy, higher uncollectible lease income, and downward pressure on rents[86] - Construction delays due to supply chain and labor constraints could delay rent commencement for new tenants[87] Risk Factors Related to Operating Retail-Based Shopping Centers Regency's revenues and cash flow are highly dependent on the retail industry's economic and market conditions. Risks include non-renewal of leases, vacant spaces, modified lease terms, increased e-commerce competition, tenant bankruptcies, and reduced consumer spending. Geographic concentration in California and Florida (23.4% and 19.3% of annualized base rent, respectively) makes the company vulnerable to regional downturns. Dependence on 'anchor' tenants (10,000+ SF) and 'local' tenants (less than 3 locations, 22% of ABR) poses risks if these tenants fail or vacate, potentially triggering co-tenancy clauses or reducing foot traffic. Operating costs may remain constant or increase even with reduced income - Performance is directly linked to retail industry conditions, including lease renewals, new tenant leasing, and lease term modifications[88][89] - Competition from e-commerce and changing consumer habits may reduce demand for physical retail space and impact tenant profitability[90][91] - Geographic concentration in California (23.4% of ABR) and Florida (19.3% of ABR) makes the company vulnerable to regional economic downturns[92][93] - Loss of 'Anchor Tenants' (≥10,000 SF) can reduce rental revenues and trigger co-tenancy clauses for other tenants[95][96] - 'Local Tenants' (<3 locations, ~22% of ABR) are more vulnerable to economic conditions and changing trends, increasing default risk[97] - Operating costs (taxes, insurance, utilities) may remain constant or increase even if lease income decreases, impacting cash flows[98] Risk Factors Related to Real Estate Investments Real estate assets may decline in value and be subject to impairment losses due to changes in operating performance, market conditions, or holding periods, impacting net income. Development, redevelopment, and expansion projects face risks such as delays in approvals, cost overruns, and inability to achieve projected occupancy or returns. Mixed-use developments introduce additional risks due to less experience in non-retail real estate. Property acquisitions carry risks of failing to meet projected occupancy/rental rates, unforeseen liabilities, and underestimating improvement costs. The ability to sell properties when desired is subject to market conditions, and changes in tax laws (e.g., Section 1031 exchanges) could impact acquisition/disposition strategies - Real estate assets may decline in value and incur impairment losses if carrying value exceeds estimated undiscounted cash flows, impacting net income[100][101] - Development and redevelopment projects face risks including delays in government approvals, cost overruns, and failure to achieve projected occupancy or returns[102][103] - Mixed-use commercial properties introduce unique risks due to less experience in non-retail real estate components[104] - Property acquisitions may fail to achieve projected occupancy/rental rates, reveal unknown liabilities, or incur higher-than-estimated improvement costs[105][106] - Market conditions can limit the ability to sell properties on desired timing or at acceptable prices, impacting liquidity[107] - Changes in tax laws, particularly regarding Section 1031 like-kind exchanges, could impact tax-efficient property acquisitions and dispositions[108] Risk Factors Related to the Environment Affecting Our Properties Climate change poses direct risks to properties, particularly those near coasts, through increased storm frequency, rising sea levels, and potential population migration, which could reduce demand for retail space and increase insurance costs. Geographic concentration of properties in areas like California, Florida, and Texas makes the business more vulnerable to natural disasters and severe weather. Environmental remediation costs for hazardous substances, often from historical tenant practices, may adversely impact financial performance and cash flow, with potential for unknown liabilities or changes in regulations - Climate change may directly impact properties through adverse weather patterns (storms, sea-level rise) and population migration, potentially reducing demand for retail space and increasing compliance costs/taxes[109] - Geographic concentration in California (18.7% of GLA), Florida (20.1%), and Texas (7.1%) makes the portfolio vulnerable to natural disasters and severe weather, leading to higher insurance costs and business disruptions[110] - Environmental remediation costs for hazardous substances (e.g., from dry cleaners, gas stations, asbestos) may adversely impact financial performance and cash flow, with potential for unknown liabilities or changes in environmental laws[111] Risk Factors Related to Corporate Matters An increasing focus on ESG metrics and reporting may impose additional costs and risks, including potential negative impacts on stock price and capital raising if the company fails to score well in ratings or comply with new disclosure laws. Uninsured losses or losses exceeding insurance coverage from events like natural disasters or terrorism could lead to significant capital and revenue loss. The inability to attract and retain key personnel may adversely affect business operations due to intense competition for talent - Increased focus on ESG factors may impose additional costs, expose the company to new risks, and potentially impact stock price and ability to raise capital if ESG ratings or disclosures are unfavorable[112][113] - Uninsured losses or losses exceeding insurance coverage (e.g., from named windstorms, earthquakes, terrorism) could result in significant loss of capital and revenue[114] - Failure to attract and retain key personnel, including executive management, may adversely affect business and operations due to intense competition for talent[115] Risk Factors Related to Our Partnerships and Joint Ventures Regency's investments in real estate partnerships and joint ventures carry risks due to a lack of full voting control, potentially leading to inconsistent objectives, impasses on decisions, or liability for partners' actions. The termination of significant partnerships could adversely affect cash flow and operating results by eliminating asset, property, leasing, and construction management fees, as well as operating income from properties - Lack of voting control in partnerships/joint ventures means objectives may not be pursued, and partners may have inconsistent interests or fail to fund capital contributions[116] - Disputes with partners could lead to premature termination, litigation, increased costs, and management distraction[117] - Termination of partnerships owning significant properties could adversely affect cash flow and operating results by eliminating fees and operating income[118] Risk Factors Related to Funding Strategies and Capital Structure Regency's funding strategy, which includes property sales to finance acquisitions and developments, may be adversely impacted by higher market capitalization rates or lower Net Operating Income (NOI), potentially diluting earnings. The company relies on external capital sources, which may not always be available on favorable terms, and existing debt covenants can restrict financing flexibility. Increases in interest rates would raise borrowing costs, negatively impacting results, and hedging activities carry risks of counterparty non-performance or ineffectiveness - Higher market capitalization rates or lower NOI may reduce the value of properties for sale, impacting cash generation for acquisitions and developments[119][120] - Dependence on external capital sources means financing may not be available on favorable terms, and existing debt covenants limit flexibility[121][122] - Inability to refinance debt on acceptable terms could force property dispositions or unfavorable financing, reducing cash flow for distributions[123][124] - Increases in interest rates would raise borrowing costs on variable-rate debt and refinancing, negatively impacting earnings and cash flows[125][126] - Hedging activities carry risks of counterparty failure or ineffectiveness in mitigating interest rate changes[127] Risk Factors Related to Information Management and Technology Unauthorized access, theft, or destruction of sensitive data in information systems, including through cyber-attacks, could damage Regency's reputation, lead to tenant/employee loss, financial impact, and legal liabilities. Despite cybersecurity investments, such breaches may occur. The use of artificial intelligence (AI) presents risks related to confidentiality, inaccurate outputs leading to flawed decisions, and emerging regulatory challenges, which could adversely affect business efficiency and results of operations - Unauthorized access, theft, or destruction of tenant/employee personal data or proprietary information due to cybersecurity incidents (e.g., ransomware) could damage reputation, lead to financial impact, and legal liabilities[128][129] - Information systems are vulnerable to damage from computer viruses, natural disasters, and telecommunication failures[130] - Use of artificial intelligence (AI) presents risks including leakage of sensitive information, creation of inaccurate outputs leading to flawed decisions, and emerging regulatory risks that could limit AI use or incur penalties[131][132] Risk Factors Related to the Market Price for Our Securities The market price of Regency's debt and equity securities can fluctuate significantly due to various factors beyond its control, including operating results, earnings estimates, analyst reports, interest rate changes, market valuations, and strategic actions. A decline in stock price could hinder the ability to raise additional equity capital. There is no assurance that current or historical dividend rates will be maintained, and changes in dividend payments could adversely affect stock price - Market price of securities can fluctuate due to operating results, earnings estimates, analyst reports, interest rates, market valuations, and strategic actions[133] - A decrease in common stock market price may reduce the ability to raise additional equity capital and dilute existing stockholders[134] - No assurance that dividends will continue at current or historical rates; changes could adversely affect the market price of common stock[135] Risk Factors Related to Taxes and the Parent Company's Qualification as a REIT Failure to qualify as a REIT would subject the Parent Company to federal income tax at corporate rates, significantly reducing cash for dividends and adversely affecting security value. REIT qualification is complex, with strict requirements (e.g., 95% gross income from passive sources, 90% taxable income distribution), and changes in tax laws or interpretations could make qualification more difficult. Dividends paid by REITs generally do not qualify for reduced tax rates for individuals, potentially making REIT investments less attractive. Failure to qualify as a 'domestically controlled' REIT could subject foreign stockholders to U.S. federal income tax on stock dispositions. Complying with REIT requirements may also limit effective hedging and expose the company to partnership tax audit rules - Failure to qualify as a REIT would subject the Parent Company to federal income tax at regular corporate rates, significantly reducing cash for dividends and adversely affecting security value[136][137] - REIT qualification is complex, requiring adherence to technical rules (e.g., 95% gross income from passive sources, 90% taxable income distribution), and is subject to IRS/court interpretations and potential legislative changes[138][139][140][141] - Dividends paid by REITs generally do not qualify for reduced tax rates for individuals, potentially making REITs less attractive compared to C corporations[142] - Failure to qualify as a 'domestically controlled' REIT could subject foreign stockholders to U.S. federal income tax on stock dispositions[143] - REIT requirements may limit effective hedging strategies and expose the company to partnership tax audit rules, potentially incurring additional taxes at the partnership level[144][145][146][147] Risk Factors Related to the Company's Common Stock Restrictions on common stock ownership (e.g., 7% limit to preserve REIT status) may delay or prevent a change in control. Future equity issuances for acquisitions, capital market transactions, or employee awards could dilute existing stockholders' ownership. The Board's authority to issue preferred or special common stock with superior rights could further dilute voting power or reduce common stock value - Ownership restrictions (e.g., 7% limit) to preserve REIT status may delay or prevent a change in control[148] - Future equity issuances for acquisitions, capital market transactions, or equity awards could dilute stockholders' percentage ownership[150][151] - The Board's authority to issue preferred or special common stock with preferences over common stock could dilute voting power or reduce common stock value[152] Item 1B. Unresolved Staff Comments This section indicates there are no unresolved comments from the SEC staff regarding the company's prior filings Item 1C. Cybersecurity This section describes Regency's cybersecurity risk management, strategy, and governance framework Cybersecurity Risk Management and Strategy Regency employs a tiered cybersecurity management and oversight structure, integrating it into its overall risk management program. The strategy focuses on five pillars: identification, protection, detection, response, and recovery, aiming to safeguard information confidentiality, security, and availability. The company also manages third-party cybersecurity risks based on likelihood and potential impact. No material cybersecurity incidents have occurred since January 1, 2021, and no material impact is reasonably likely in the near term - Regency's cybersecurity strategy is integrated into its overall risk management program, with a tiered management and oversight structure[154][155] - Core strategy pillars: identification, protection, detection, response, and recovery, tailored to business needs[156] - Primary goal: Proactively safeguard confidentiality, security, and availability of collected and stored information[157] - Third-party risk management: Risk-based approach, prioritizing efforts based on likelihood and potential impact of threats[157] - No material cybersecurity incidents have affected the company since January 1, 2021, and no material impact is reasonably likely in the near term[159] Cybersecurity Governance The Audit Committee of the Board of Directors oversees Regency's cybersecurity risk management program, receiving quarterly updates from the Cyber Risk Committee (CRC) and Chief Information Security Officer (CISO). The CRC, comprising diverse management leadership, leads the program, including risk identification, assessment, management, and reporting to the Executive Committee and Audit Committee - The Audit Committee of the Board of Directors oversees the cybersecurity risk management program, receiving quarterly updates from the Cyber Risk Committee (CRC) and CISO[161] - The CRC, designated by the Executive Committee and Audit Committee, leads the cybersecurity program, covering risk identification, assessment, management, prevention, mitigation, and resource allocation[162] - CRC membership includes management with diverse expertise in IT, network security, governance, accounting, financial controls, and legal matters[163] Item 2. Properties This section provides an overview of Regency's consolidated and unconsolidated property portfolios, top tenants, lease expirations, and detailed property listings Consolidated Properties Overview As of December 31, 2023, Regency's consolidated portfolio comprised 381 shopping centers, totaling 43.8 million square feet of Gross Leasable Area (GLA), with a 94.9% leased rate. Florida and California represent the largest holdings by GLA, with weighted average annual effective rent of $24.67 per square foot Consolidated Portfolio Summary (as of Dec 31, 2023) | Metric | December 31, 2023 | | :-------------------------------- | :------------------ | | Number of Properties | 381 | | GLA (in thousands) | 43,758 | | Percent of Total GLA | 100.0% | | Percent Leased | 94.9% | | Weighted Average Annual Effective Rent PSF | $24.67 | Consolidated Properties by Location (as of Dec 31, 2023) | Location | Number of Properties (2023) | GLA (in thousands, 2023) | Percent of Total GLA (2023) | Percent Leased (2023) | | :------------- | :-------------------------- | :----------------------- | :-------------------------- | :-------------------- | | Florida | 88 | 10,767 | 24.6 % | 95.1 % | | California | 54 | 8,300 | 19.0 % | 94.9 % | | Connecticut | 43 | 3,702 | 8.5 % | 92.5 % | | New York | 42 | 3,399 | 7.8 % | 88.7 % | | Texas | 26 | 3,288 | 7.5 % | 97.3 % | Unconsolidated Properties Overview Regency's unconsolidated portfolio, as of December 31, 2023, included 101 properties with a total GLA of 13.1 million square feet, 96.6% leased. California and Virginia represent the largest holdings by GLA in this segment, with a weighted average annual effective rent of $24.04 per square foot Unconsolidated Portfolio Summary (as of Dec 31, 2023) | Metric | December 31, 2023 | | :-------------------------------- | :------------------ | | Number of Properties | 101 | | GLA (in thousands) | 13,067 | | Percent of Total GLA | 100.0% | | Percent Leased | 96.6% | | Weighted Average Annual Effective Rent PSF | $24.04 | Unconsolidated Properties by Location (as of Dec 31, 2023) | Location | Number of Properties (2023) | GLA (in thousands, 2023) | Percent of Total GLA (2023) | Percent Leased (2023) | | :------------- | :-------------------------- | :----------------------- | :-------------------------- | :-------------------- | | California | 17 | 2,320 | 17.8 % | 98.4 % | | Virginia | 14 | 1,982 | 15.2 % | 92.7 % | | Maryland | 9 | 848 | 6.5 % | 96.0 % | | North Carolina | 7 | 1,237 | 9.5 % | 97.9 % | | Washington | 7 | 874 | 6.7 % | 98.0 % | Top Tenants and Lease Expirations Regency's top tenants, based on annualized base rent as of December 31, 2023, are predominantly grocers, including Publix, Albertsons, and Kroger, reflecting a strategy to anchor centers with market-leading grocery stores. The company has 1,081 leases expiring in 2024, representing 3.9 million square feet of GLA with an average base rent of $23.74 PSF. Demand for retail space in high-quality centers remains strong, but inflationary pressures could impact future rent growth - The average base rent of new leases signed during 2023 was $29.89 PSF, indicating positive rent spreads[171] Top Tenants by Annualized Base Rent (2023) | Tenant | Percent of Annualized Base Rent (2023) | Number of Leased Stores | | :-------------------------- | :------------------------------------- | :---------------------- | | Publix | 3.0 % | 68 | | Albertsons Companies, Inc. | 3.0 % | 53 | | Kroger Co. | 2.7 % | 52 | | Amazon/Whole Foods | 2.6 % | 38 | | TJX Companies, Inc. | 2.6 % | 70 | | Top Tenants (Total) | 31.6 % | 971 | Lease Expirations by Year (as of Dec 31, 2023) | Lease Expiration Year | Number of Tenants with Expiring Leases | Pro-rata Expiring GLA (in thousands) | Percent of Total Company GLA | In Place Annual Base Rent Expiring Under Leases (in thousands) | Percent of In Place Annual Base Rent | Average Annual Base Rent PSF | | :-------------------- | :------------------------------------- | :----------------------------------- | :--------------------------- | :----------------------------------------------------------- | :----------------------------------- | :--------------------------- | | 2024 | 1,081 | 3,902 | 8.6 % | $92,635 | 8.4 % | $23.74 | | 2025 | 1,358 | 5,552 | 12.3 % | $136,495 | 12.4 % | $24.58 | | 2026 | 1,256 | 5,648 | 12.5 % | $137,458 | 12.5 % | $24.34 | | 2027 | 1,316 | 6,280 | 13.9 % | $155,730 | 14.2 % | $24.80 | | 2028 | 1,272 | 5,915 | 13.1 % | $154,464 | 14.1 % | $26.11 | | Total | 9,324 | 45,195 | 100.0 % | $1,098,602 | 100.0 % | $24.31 | Detailed Property Listings This section provides detailed information for each consolidated and unconsolidated property, including its Core-Based Statistical Area (CBSA), state, ownership interest, acquisition year, last major renovation year, mortgages or encumbrances, Gross Leasable Area (GLA), percent leased, average base rent per square foot (PSF), and major tenants. It highlights the diverse portfolio across various states and metropolitan areas - The tables provide detailed information for each property, including ownership interest, year acquired, last major renovation, GLA, percent leased, average base rent PSF, and major tenants[175][177][179][181][182][184][186][188][190][192][194][196] - Properties are located across various states and CBSAs, with major tenants often including grocery stores and national retailers[175][177][179][181][182][184][186][188][190][192][194][196] Item 3. Legal Proceedings This section confirms Regency's involvement in ordinary course legal proceedings, with no expected material adverse effects Overview of Legal Proceedings Regency is involved in various legal proceedings in the ordinary course of business but is not currently engaged in any litigation that is expected to have a material adverse effect on its financial position or results of operations. Further details on commitments and contingencies are provided in Note 16 to the financial statements - Regency is a party to various legal proceedings arising in the ordinary course of business[198] - No current or threatened litigation is expected to have a material adverse effect on the company's financial position or results of operations[198] - Further discussion on material legal proceedings and contingencies can be found in Note 16 - Commitments and Contingencies[199] Item 4. Mine Safety Disclosures This section indicates that the company has no mine safety disclosures to report PART II This part covers market information for common equity, related stockholder matters, issuer purchases, and management's discussion and analysis Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities This section details the market for Regency's common stock, dividend policy, equity compensation plans, and share repurchase activities Common Stock Market and Dividends Regency's common stock is listed on the NASDAQ Global Select Market under the symbol "REG". As of February 5, 2024, there were 112,794 holders of common stock. The company intends to pay regular quarterly distributions to maintain its REIT status, with future dividends declared at the Board's discretion based on operating results, financial condition, and capital requirements. A dividend reinvestment plan (DRIP) is available to shareholders - Regency's common stock is listed on the NASDAQ Global Select Market under the symbol "REG"[202] - As of February 5, 2024, there were 112,794 holders of common stock[202] - The company intends to pay regular quarterly distributions to maintain its REIT status, generally requiring at least 90% of REIT taxable income to be distributed[203] Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, Regency did not make any open market purchases of its common stock under publicly announced plans or programs. However, the Operating Partnership issued 181,885 exchangeable operating partnership units to partially fund an acquisition. The Board has authorized a $250 million common stock repurchase program expiring February 7, 2025, with $230 million remaining available - The Operating Partnership issued 181,885 exchangeable operating partnership units in Q4 2023 to partially fund an acquisition[205] - A $250 million common stock repurchase program, authorized by the Board, expires on February 7, 2025, with $230 million remaining available[206] Issuer Purchases of Equity Securities (Q4 2023) | Period | Total number of shares purchased | Total number of shares purchased as part of publicly announced plans or programs | Average price paid per share | Maximum number or approximate dollar value of shares that may yet be purchased under the plans or programs | | :-------------------------------- | :------------------------------- | :----------------------------------------------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------------- | | October 1, 2023, through October 31, 2023 | — | — | — | $230,000,011 | | November 1, 2023, through November 30, 2023 | — | — | — | $230,000,011 | | December 1, 2023, through December 31, 2023 | — | — | — | $230,000,011 | Performance Graph The performance graph illustrates Regency's cumulative total shareholder return relative to the S&P 500 Index, the FTSE Nareit Equity REIT Index, and the FTSE Nareit Equity Shopping Centers index since December 31, 2018. As of December 31, 2023, Regency's return was 140.38, compared to 207.21 for the S&P 500, 142.83 for FTSE NAREIT Equity REITs, and 146.32 for FTSE NAREIT Equity Shopping Centers Cumulative Total Shareholder Return | Index | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | | :-------------------------------- | :------- | :------- | :------- | :------- | :------- | :------- | | Regency Centers Corporation | $100.00 | 111.42 | 84.78 | 145.30 | 125.60 | 140.38 | | S&P 500 | 100.00 | 131.49 | 155.68 | 200.37 | 164.08 | 207.21 | | FTSE NAREIT Equity REITs | 100.00 | 126.00 | 115.92 | 166.04 | 125.58 | 142.83 | | FTSE NAREIT Equity Shopping Centers | 100.00 | 125.03 | 90.47 | 149.32 | 130.60 | 146.32 | Item 6. Reserved This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Regency's financial condition, operational results, liquidity, capital resources, and critical accounting estimates for the reporting period Executing on our Strategy In 2023, Regency's net income attributable to common shareholders was $359.5 million, down from $482.9 million in 2022 (which included $109.0 million in gains on real estate sales). The company completed the UBP acquisition, grew Pro-rata same property NOI by 1.7%, executed 1,839 leasing transactions with positive rent spreads of 10.0%, and maintained high occupancy rates (95.1% total portfolio, 95.7% same property). Development and redevelopment projects in process totaled $468.1 million, with $87.4 million completed at an 8.7% stabilized yield. The company maintained a conservative capital structure with a Pro-rata net debt-to-operating EBITDAre ratio of 5.4x and secured $400 million in senior unsecured debt in January 2024 to manage upcoming maturities - Completed the acquisition of UBP, adding over 70 properties and growing the portfolio[209] - Pro-rata same property NOI, excluding termination fees, grew 1.7% YoY[210] - Executed 1,839 new and renewal leasing transactions (6.9 million Pro-rata SF) with positive rent spreads of 10.0% in 2023 (vs. 7.4% in 2022)[210] - Total property portfolio 95.1% leased; same property portfolio 95.7% leased (as of Dec 31, 2023)[210] - Estimated Pro-rata project costs for in-process development/redevelopment: $468.1 million (up from $300.9 million in 2022)[210] - Development/redevelopment projects completed in 2023: $87.4 million estimated net project costs, 8.7% average stabilized yield[210] - Pro-rata net debt-to-operating EBITDAre ratio (trailing 12 months): 5.4x (2023) vs. 5.0x (2022)[210] - Priced $400 million senior unsecured debt offering in January 2024 to reduce line of credit and repay $250 million unsecured debt maturing in June 2024[210] - Amended Line agreement in January 2024 to increase borrowing capacity to $1.5 billion and extend maturity to March 23, 2028[210] Net Income Attributable to Common Shareholders (in millions) | Metric | Year Ended December 31, 2023 | Year Ended December 31, 2022 | | :------------------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to common shareholders | $359.5 million | $482.9 million | | Gains on sale of real estate (included in Net income) | N/A | $109.0 million | UBP Acquisition Regency completed the all-stock acquisition of Urstadt Biddle Properties Inc. (UBP) on August 18, 2023. Each UBP common share converted into 0.347 of a Parent Company common share, and UBP preferred stock converted into Parent Company preferred stock. The acquisition totaled $1.14 billion, adding 74 properties (5.3 million SF of GLA) to Regency's portfolio, with UBP's consolidated results included from the closing date - Regency completed the acquisition of Urstadt Biddle Properties Inc. (UBP) on August 18, 2023, in an all-stock transaction[211] - The acquisition added 74 properties (5.3 million SF of GLA), including 10 properties held through real estate partnerships[212] UBP Acquisition Purchase Price (in thousands) | Component | Purchase Price (in thousands) | | :-------------------------------- | :---------------------------- | | Value of common stock issued for acquisition | $818,530 | | Debt repaid | $39,266 | | Preferred stock converted | $225,000 | | Transaction costs | $57,197 | | Other cash payments | $68 | | Total purchase price | $1,140,061 | Leasing Activity and Significant Tenants Regency's total property portfolio was 95.1% leased as of December 31, 2023, an increase from 94.8% in 2022, primarily driven by favorable leasing activity in Shop Space. The company executed 1,839 new and renewal leases in 2023, covering 6.9 million Pro-rata SF, with positive rent spreads of 10.0%. Top tenants are predominantly grocers, and the company actively manages risks through diversification and anchoring centers with market-leading grocery stores. Tenants in bankruptcy represent 0.5% of Pro-rata annual base rent - Tenants currently in bankruptcy represent an aggregate of 0.5% of Pro-rata annual base rent, primarily related to Rite Aid[220] Percent Leased by Property Type | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------- | :---------------- | :---------------- | | Percent Leased – All properties | 95.1 % | 94.8 % | | Anchor Space (≥ 10,000 SF) | 96.7 % | 96.8 % | | Shop Space (< 10,000 SF) | 92.4 % | 91.5 % | Leasing Transaction Summary | Lease Type | Year Ended Dec 31, 2023 (SF in thousands) | Year Ended Dec 31, 2022 (SF in thousands) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | | Total Leases (Transactions) | 1,839 | 1,981 | | Total Leases (SF) | 6,906 | 7,337 | | New and Renewal Rent Spreads | +10.0% | +7.4% | | Weighted-average base rent PSF on signed Shop Space leases (2023) | $37.82 | N/A | | Weighted average annual base rent PSF of Shop Space leases due to expire in next 12 months | $34.73 | N/A | Top Anchor Tenants by Annual Base Rent (2023) | Anchor Tenant | Percentage of Annual Base Rent (2023) | | :-------------------------- | :------------------------------------ | | Publix | 3.0 % | | Albertsons Companies, Inc. | 3.0 % | | Kroger Co. | 2.7 % | | Amazon/Whole Foods | 2.6 % | | TJX Companies, Inc. | 2.6 % | Results from Operations Regency's total revenues increased by $98.4 million to $1.32 billion in 2023, primarily due to a $96.5 million increase in total lease income, driven by the UBP acquisition, higher occupancy, rent steps, and positive rent spreads. Operating expenses increased by $102.6 million to $854.3 million, mainly due to higher depreciation and amortization from the UBP acquisition and increased property operating expenses. Net income attributable to common shareholders decreased to $359.5 million in 2023 from $482.9 million in 2022, largely due to lower gains on real estate sales in 2023 - Total lease income increased $96.5 million, driven by: $36.5 million from UBP acquisition, $32.1 million net increase from same properties (occupancy, rent steps, positive spreads), $14.4 million decrease in uncollectible lease income (due to 2022 collections), and $8.3 million increase in above/below market rent amortization[221][222] - Depreciation and amortization increased $32.6 million, primarily from the UBP acquisition ($24.0 million) and redevelopment projects ($5.1 million)[223] - Property operating expense increased $33.1 million, mainly from UBP acquisition ($8.1 million) and same properties due to higher recoverable common area costs ($18.3 million)[225] - Real estate taxes increased $15.8 million, primarily from UBP acquisition ($8.9 million) and increased assessments across the portfolio ($4.8 million)[227] - General and administrative costs increased $17.9 million, mainly due to changes in deferred compensation plan participant obligations ($10.9 million) and higher compensation costs ($8.3 million)[227] - Net investment income increased $12.6 million, driven by $11.0 million gains on investments in the non-qualified deferred compensation plan and $1.6 million gains in the captive insurance company[227] Consolidated Financial Performance (in thousands) | Metric (in thousands) | 2023 | 2022 | Change | | :------------------------------------------ | :--------- | :--------- | :------- | | Total revenues | $1,322,466 | $1,224,022 | $98,444 | | Total operating expenses | $854,316 | $751,709 | $102,607 | | Net income attributable to common shareholders | $359,500 | $482,865 | $(123,365) | Equity in Income of Real Estate Partnerships (in thousands) | Partnership | 2023 Equity in Income (in thousands) | 2022 Equity in Income (in thousands) | Change (in thousands) | | :------------------------------------ | :----------------------------------- | :----------------------------------- | :-------------------- | | GRI - Regency, LLC | $35,901 | $35,819 | $82 | | Equity One JV Portfolio LLC ("NYC") | $84 | $9,173 | $(9,089) | | RegCal, LLC | $2,912 | $4,499 | $(1,587) | | Total equity in income of investments in real estate partnerships | $50,541 | $59,824 | $(9,283) | Supplemental Earnings Information Regency uses non-GAAP measures like Pro-rata Same Property NOI, Nareit FFO, and Core Operating Earnings to provide additional insights into its operational performance. In 2023, Pro-rata same property NOI, excluding termination fees, grew by 1.7% to $901.8 million, driven by increased base rent and tenant recoveries. Nareit FFO attributable to common stock and unit holders increased to $736.1 million in 2023 from $707.8 million in 2022, and Core Operating Earnings increased to $700.9 million from $660.8 million - Regency uses non-GAAP measures like Pro-rata Same Property NOI, Nareit FFO, and Core Operating Earnings to enhance understanding of operating results and for internal performance analysis[230][231] - Pro-rata same property NOI growth was primarily due to a $32.2 million increase in base rent (from rent steps, positive rental spreads, occupancy increases, and redevelopment completions) and a $19.4 million increase in tenant recoveries[233] - Uncollectible lease income decreased by $14.9 million, primarily due to 2022 collections of previously reserved amounts[233] Non-GAAP Earnings Metrics (in thousands) | Metric (in thousands) | 2023 | 2022 | Change | Growth Rate | | :------------------------------------------ | :--------- | :--------- | :------- | :---------- | | Pro-rata same property NOI, excluding termination fees / expense | $901,763 | $886,638 | $15,125 | 1.7 % | | Nareit FFO attributable to common stock and unit holders | $736,086 | $707,764 | $28,322 | 4.0 % | | Core Operating Earnings | $700,856 | $660,840 | $40,016 | 6.1 % | Liquidity and Capital Resources Regency manages its liquidity and capital resources through cash flows from operations, borrowings from its unsecured line of credit, property sales, and debt/equity issuances. The company expects to meet its capital needs for the next year, including $677.8 million for leasing commissions, tenant improvements, developments, redevelopments, and debt repayment, leveraging its $85.0 million unrestricted cash and $1.1 billion available on its line of credit. The company maintains a high percentage of unencumbered assets (87.1% of wholly-owned real estate) and was in compliance with all debt covenants as of December 31, 2023 - Regency uses cash flows from operations, unsecured line of credit, property sales, and debt/equity issuances to fund operations and capital needs[238][240] - 87.1% of wholly-owned real estate assets were unencumbered as of December 31, 2023[247] - Trailing 12-month fixed charge coverage ratio (including partnerships) was 4.7x (2023) vs. 4.6x (2022)[247] - Pro-rata net debt and Preferred Stock-to-operating EBITDAre adjusted ratio (trailing 12 months) was 5.4x (2023) vs. 5.0x (2022)[248] - The company was in compliance with all debt