Regency Centers(US:REG)2023-05-05 20:04Financial Data and Key Metrics Changes - The company reported same-property NOI growth of 6.3% in Q1 2023, driven primarily by base rent growth, which contributed 430 basis points [23][24] - The guidance for same-property NOI growth was revised upward to a range of 2.5% to 3.5%, excluding COVID period reserve collections [25] - The company repurchased approximately 350,000 shares for $20 million at an average price just over $57 per share [26] Business Line Data and Key Metrics Changes - Tenant demand for space remains strong, with new leasing volume 20% above the historical first quarter average [42] - Cash rent spreads were reported in the mid-teens, reflecting the quality of shopping centers and locations [9] - Nearly 90% of all leasing activity had embedded rent escalators, indicating a strong ability to drive rent growth [17] Market Data and Key Metrics Changes - The transaction market has seen thin volumes due to uncertainty and instability in financing markets [7] - The company has limited exposure to bankruptcies, with proactive asset management contributing to a strong tenant roster [14] - Demand is coming from various categories, including grocers and off-price retailers, with an anticipated average mark-to-market of approximately 20% [19] Company Strategy and Development Direction - The company is focused on continuing to build its development and redevelopment pipelines, targeting over $200 million of annual starts [23] - The company is actively managing at-risk tenant exposure and is prepared to backfill spaces as needed [45] - The company aims to leverage its strong balance sheet and liquidity to be opportunistic in the current environment [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the retail operating environment, noting strong demand across various categories [55] - The company remains vigilant regarding potential economic impacts but has not yet seen signs of softening in business [5] - Management highlighted the importance of their balance sheet strength during times of capital market turmoil [53] Other Important Information - The company has access to a $1.25 billion line of credit with no significant debt maturities for over a year [27] - The company is evaluating opportunities to create value within its current portfolio, including redevelopment projects [22] Q&A Session Summary Question: What have you seen regarding leasing volumes post-Silicon Valley Bank disruption? - Management noted that March new activity exceeded both January and February, indicating sustained demand [29] Question: What is the sustainability of the recent leasing demand? - Management expressed confidence in the quality of retailers and the depth of the leasing pipeline, with plenty of activity remaining [30] Question: How are you managing tenant watch lists? - The company is proactively evaluating tenants on the watch list, focusing on sales volumes and lease expirations [35] Question: What is the outlook for occupancy by year-end? - Management indicated that occupancy is expected to be flat to slightly down, but strong demand will help mitigate losses from bankruptcies [60] Question: What pushback are you seeing on rent increases? - Management reported minimal pushback on rent escalators, with a high percentage of leases including embedded rent steps [65] Question: How are you thinking about capital allocation and share repurchases? - The share repurchase was tactical, aimed at hedging a development opportunity, with a focus on accretive opportunities [92][93] Question: What are the characteristics of leases without rent escalators? - The leases without escalators are primarily options being exercised that do not include embedded rent steps [140]