Regency Centers(US:REG)2021-05-07 21:30Financial Data and Key Metrics Changes - First quarter NAREIT FFO was $0.90 per share, with uncollectible lease income being positive due to collections exceeding reserves [33][34] - Same property NOI excluding lease termination fees declined 1.6% compared to the prior year, marking the last quarter against more difficult pre-COVID comparisons [36] - The balance sheet remains strong with net debt to EBITDA at 5.9 times, indicating a clear path back to the low-to-mid 5 times range as NOI recovers [39][40] Business Line Data and Key Metrics Changes - New leasing volume in Q1 was the highest in five years, driven by economic optimism and pent-up demand [26] - Active new leasing categories include grocers, medical, QSRs, health and beauty, and fitness, indicating a diverse interest in leasing [25] - Renewal leasing volumes remained consistent throughout the pandemic, with the first quarter pace ahead of historical trends [27] Market Data and Key Metrics Changes - Foot traffic across the portfolio recovered to 90% of 2019 levels in April, with some regions nearing 100% [22] - Rent collections improved to 93% for the first quarter and 94% for April, with the West Region still lagging but gradually catching up [22][21] - The company has seen a trend of easing tenant restrictions, particularly in California, positively impacting foot traffic and tenant sales [11][10] Company Strategy and Development Direction - The company is pivoting from defense to offense, focusing on growth and capitalizing on opportunities, with a commitment to spend $175 million annually on development for the next five years [16][104] - There is a renewed focus on value creation within the development and redevelopment pipeline, with plans to move forward with multiple projects [17][107] - The company remains bullish on open-air grocery-anchored neighborhood and community centers, emphasizing their critical role in the retail ecosystem [19][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, noting improved visibility and confidence in cash flow recovery [46][31] - The company acknowledges ongoing challenges in brick-and-mortar retail but believes well-located centers will continue to meet consumer demands [14][19] - Management highlighted the importance of converting non-paying cash basis tenants back to rent-paying status as a priority for future growth [46][44] Other Important Information - The company has maintained its dividend throughout the pandemic while generating solid free cash flow, which is expected to grow with the revised outlook [16][39] - The secured mortgage lending markets have shown demand for high-quality grocery-anchored shopping centers, with a recent refinancing at a compelling rate of 2.9% [38] Q&A Session Summary Question: Can you talk about cash basis collection levels and what's driving the improvement? - The company reported a collection rate of 78% from cash basis tenants in Q1, up from 75% in the previous quarter, with a positive trend observed in March and April [50][52] Question: What's your appetite to issue equity at this point? - Management indicated that there is nothing embedded in guidance for an equity raise, viewing equity as a capital source for growth when opportunities arise [56] Question: Are you seeing more curbside BOPIS activity? - Management confirmed an increase in curbside BOPIS activity, with major brands reporting significant growth in their click-and-collect programs [58][59] Question: Are there changes in lease structures due to the pandemic? - Management noted no significant changes in lease structures, although the time from negotiation to RCD has increased [64] Question: What is the outlook for the Serramonte project? - The company expects to deliver the first phase of the Serramonte project in 2021, with ongoing leasing activity and interest from high-quality tenants [69][70] Question: How is the leasing environment looking? - The leasing environment is showing strong activity, with essential and non-essential tenants returning to the market, indicating a positive outlook for future leasing [76][78]