2017 Annual Report
To Our Fellow Shareholders:
In the ever-changing world of retail real estate, at Regency Centers we know we must
distinguish ourselves by effectively employing our unequaled combination of strategic
advantages to produce superior performance. This means we must strive to execute all aspects
of our strategy at best-in-class levels. In 2017, I believe we delivered on that mandate.
Again in 2017—An Unequaled Combination of Excellence
Here are some of the key areas in which we excelled:
(cid:120) To begin, the operations team attained 96.3% percent leased and NOI growth of 3.6%.
This represents the sixth consecutive year above 3.5%. And our overall shop occupancy
and NOI growth levels are the highest among the larger shopping center REITs.
(cid:120) During the year our team created substantial value from the over half a billion dollars of
well-conceived developments and redevelopments that are in process.
(cid:120) To further enhance the quality and NOI growth profile of our portfolio we sold lower
growth assets and purchased two exceptional centers with excellent growth prospects.
(cid:120) We further fortified Regency’s strong balance sheet by issuing nearly $1 billion of bonds
at favorable rates. This includes 30-year bonds, which places Regency among the few
REITS capable of issuing bonds with that length of maturity.
(cid:120) Significant progress continued to be made on Regency’s environmental, social, and
governance practices with many being recognized as better-in-class.
(cid:120) Our deep and experienced team guided by Regency’s special culture remained highly
engaged, while substantially improving our operating efficiency.
(cid:120) NAREIT Funds from Operations (NAREIT FFO) before one-time costs related to the
merger totaled approximately $576 million or $3.59 per diluted share, up 32% from $2.73
per share in 2016. This represented compound annual growth of over 7% over the last 3
and 5 years.
Investors rewarded Regency’s unequaled combination of excellence with shopping center
sector-leading stock performance over the past one, three and five year periods.
A Better Company through a Strategic Merger
In 2017, we marked an important milestone - the completion of our merger with Equity One and
the successful integration of our two companies. This business combination has met or
exceeded all our high expectations. After closing in March, Regency joined the S&P 500 Index
and is now the largest shopping center REIT. More importantly, as a result of the merger we
are an even better company.
(cid:120) The merger was accretive to earnings and NOI growth, while preserving Regency’s
strong balance sheet.
(cid:120) The shopping centers we acquired enhanced the demographics of our high quality
portfolio and our platform in several priority markets.
(cid:120) We added significant compelling redevelopment opportunities.
(cid:120) We positioned Regency to realize $27 million of synergies this year.
Thoughtful Approach and Key Strategic Advantages: A Combination for Success
Our successes in 2017 and over the almost 25 years as a public company have been extremely
gratifying. At the same time, resting on our laurels is not part of Regency’s character. Our
commitment to making sure that our approach to the business remains relevant has never been
more imperative especially as the pace of changes in the environment for retail real estate has
accelerated. Accelerated shifts in the role of technology and ecommerce, consumer shopping
preferences and behavior and heightened levels of competition continue to shape an ultra-
competitive business landscape. Though Regency will not be immune to disruptors, our
dedication to being best-in-class will better position us to fully capitalize on our unequalled
combination of strategic advantages and to grow shareholder value in all conditions we may
face in the future.
Preeminent Portfolio, Superior Merchandising, and Operating Expertise
The foundation of Regency’s plan is a proven strategy that will enable us to sustain superior
growth in same property NOI. With over 400 shopping centers totaling nearly 60 million square
feet located in top markets throughout the country including gateway, 18-hour, STEM, and
growth markets, our premier national portfolio is differentiated by its breadth and scale. The
portfolio is further distinguished by its outstanding quality. The purchasing power of our trade
areas is exhibited by the three-mile metrics for average household income of $110,000,
population of 140,000, and higher educational attainment of almost 50%, which are equally
impressive on both an absolute and relative basis.
The attractive demographics of our neighborhoods and communities has attracted the industry’s
highest concentration of best-in-class grocers, including Whole Foods, Kroger, Publix, Safeway,
Wegmans, Trader Joe’s, and H.E.B. These, along with the other grocers in Regency’s portfolio,
drive consumer traffic generating an average of $650 per square foot in sales, versus the
national average of $400 per square foot.
The combination of highly productive grocers and purchasing power are essential to
merchandising to a complementary mix of convenience, necessity, value, and service focused
retailers which comprise the vast majority of our annual base rent.
Our national platform that spans 21 market offices allowing us to have unequaled boots-on-the-
ground and local expertise is another key ingredient to our strategy to drive NOI growth. The
market teams utilize Regency’s proprietary Fresh Look philosophy to distinguish the
merchandising, place-making, and community connection of each shopping center. Intense and
creative asset management by empowered local teams with long standing retailer relationships
will enable them to execute on the key components for sector leading NOI growth: high rent
paying occupancy, contractual rent steps, mark-to-market lease pricing, and value creating
redevelopments. The fact that the portfolio is over 96% leased and has experienced 3.5% same
property NOI growth for six consecutive years is not an accident, but is the result of our well-
considered approach and the competitive advantages of the portfolio.
Proven Development and Redevelopment Capabilities
Another critical strategic advantage is Regency’s development capabilities. Our unrivaled
combination of in process and pipeline projects and key tenant and local relationships create
significant value through development and redevelopment of high quality shopping centers. Our
track record is impressive. During the last five years we’ve started over one billion dollars of
projects at very compelling risk adjusted returns that are projected to create more than $500
million in value.
Underlying Regency’s approach is the discipline to develop premier shopping centers designed
for long-term growth. As a result, we focus on developments in dense infill and affluent trade
areas with best-in-class anchors, such as leading specialty grocers like Whole Foods and
Wegman’s, and market-dominant traditional grocers like Publix and Kroger. Nearly all of our
projects are sourced by our local market officers, who provide us access to unique, and often
off-market, opportunities.
The Field at Commonwealth – Metro D.C., is anchored by a highly desirable Wegman’s and situated in an affluent,
highly educated trade area. The project was sourced by our local team and includes innovative place making
feature that, along with best-in-class restaurants and merchants should connect with the community and increase
shopper dwell time.
A solid pipeline of redevelopments is integral to our development program. Many of these
redevelopments, including several acquired through the merger with Equity One, involve
opportunities for mixed-use and densification. In these projects we will adhere to our core
competency and sell or partner with experienced residential, hotel and office operators. Our
strategy is to develop and own a compelling retail center within a dynamic mixed use setting.
A Proven Track Record of Disciplined Financial Management and Capital Allocation
Owning premier assets, partnering with best-in-class retailers and applying industry leading
operating expertise, while adding value through an exceptional development and redevelopment
program are each essential to Regency’s unequaled position. These advantages are supported
by our fortress balance sheet and prudent funding strategy. With a balance sheet as strong as
other “Blue Chip” REITs, we have the scale and flexibility to cost effectively finance investment
opportunities and weather difficult financial markets.
Our self-funding capital allocation strategy preserves our pristine balance sheet, while
enhancing the quality of our portfolio. Free cash flow after dividends and capital expenditures of
approximately $160 million together with 1% to 2% of asset sales of low-growth assets fund
value add developments and the acquisition of premier centers with superior growth prospects.
Roosevelt Square - Seattle, WA, is anchored by Whole Foods and 100% leased. Located in the dense, urban infill
neighborhood of Roosevelt in metro-Seattle with a population of 237,000 and 69% higher-educational attainment,
the property is the only grocery-anchored asset within the immediate trade area.
Scripps Ranch Marketplace - San Diego, CA, the 132,000 square foot center anchored by Vons is in an affluent and
growing corridor with 136,000 people within the three mile trade area at an average household income of
$119,000. This acquisition brings Regency’s footprint in the San Diego area to more than two million square feet of
premier retail space.
These incremental steps have proven over the years that this disciplined approach to funding
new investments fortifies our sector-leading NOI growth rate and meaningfully improves overall
portfolio quality over time with a minimal impact to our earnings growth rate.
Continuing Our Unequaled Combination of Accomplishments
Looking forward, we believe our unequaled combination of strategic advantages and a
thoughtful approach to the business will further distinguish Regency and grow future
shareholder value. Even in the ever-changing retail environment, we believe a bricks and mortar
presence will remain a critical component for “winning” grocers, value retailers, restaurants, and
service providers. These successful operators will want to locate in well-designed and
merchandised centers conveniently located in trade areas with strong purchasing power that
abound in Regency’s portfolio.
We are confident we can continue to meet the challenges that we will face in the future to
produce earnings, NAV, and dividend growth of 5% to 7%, and shareholder returns at or near
the top of the shopping center sector.
(cid:120) Our premier national portfolio together with our local market expertise, and leading-edge
operating systems for asset management, merchandising, and place-making, will
continue to be the building blocks for consistent 3%+ same-property NOI growth.
(cid:120) Our unrivaled development capabilities, anchor and local relationships, and growing
pipeline, including a several major redevelopments, should enable us to meet our
objective to start and deliver an average of $300 million of outstanding value add
projects.
(cid:120) We will target Debt to EBITDA of 5X and take other steps necessary to preserve and
enhance a strong balance sheet that will provide financial flexibility and availability of
capital through cycles.
In closing, I can’t say enough about the people at our company who make all this happen. We
have a special culture here at Regency—a highly engaged team of professionals, good people
who are both dedicated to our business and also to the communities in which they live and
work. We consider our team and the Regency culture a top competitive advantage.
On behalf of our Board and entire team, I want to thank our shareholders, tenants, partners and
communities for their trust and support, and look forward to many years of future success.
Sincerely,
Martin E. (Hap) Stein
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission File Number 1-12298 (Regency Centers Corporation)
Commission File Number 0-24763 (Regency Centers, L.P.)
REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
FLORIDA (REGENCY CENTERS CORPORATION)
DELAWARE (REGENCY CENTERS, L.P.)
(State or other jurisdiction of incorporation or organization)
One Independent Drive, Suite 114
Jacksonville, Florida 32202
(Address of principal executive offices) (zip code)
59-3191743
59-3429602
(I.R.S. Employer Identification No.)
(904) 598-7000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Regency Centers Corporation
Title of each class
Common Stock, $.01 par value
Name of each exchange on which registered
New York Stock Exchange
Regency Centers, L.P.
Title of each class
None
Name of each exchange on which registered
N/A
________________________________
Securities registered pursuant to Section 12(g) of the Act:
Regency Centers Corporation: None
Regency Centers, L.P.: Units of Partnership Interest
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Regency Centers Corporation
YES
NO
Regency Centers, L.P.
YES
NO
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
Regency Centers Corporation
YES
NO
Regency Centers, L.P.
YES
NO
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Regency Centers Corporation
YES
NO
Regency Centers, L.P.
YES
NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Regency Centers Corporation
YES
NO
Regency Centers, L.P.
YES
NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Regency Centers Corporation
Regency Centers, L.P
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
Non-accelerated filer
Regency Centers, L.P.:
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Accelerated filer
Smaller reporting company
Emerging growth company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Regency Centers Corporation
YES
NO
Regency Centers, L.P.
YES
NO
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Regency Centers Corporation
YES
NO
Regency Centers, L.P.
YES
NO
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the
registrants' most recently completed second fiscal quarter.
Regency Centers Corporation
$9.3 billion
Regency Centers, L.P.
N/A
The number of shares outstanding of the Regency Centers Corporation’s common stock was 170,794,466 as of February 23, 2018.
Documents Incorporated by Reference
Portions of Regency Centers Corporation's proxy statement in connection with its 2018 Annual Meeting of Stockholders are incorporated by
reference in Part III.
EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2017 of Regency Centers Corporation
and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to “Regency Centers
Corporation” or the “Parent Company” mean Regency Centers Corporation and its controlled subsidiaries; and references to
“Regency Centers, L.P.” or the “Operating Partnership” mean Regency Centers, L.P. and its controlled subsidiaries. The term
“the Company”, "Regency Centers" or “Regency” means the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust (“REIT”) and the general partner of the Operating Partnership. The
Operating Partnership's capital includes general and limited common Partnership Units (“Units”). As of December 31, 2017,
the Parent Company owned approximately 99.8% of the Units in the Operating Partnership. The remaining limited Units are
owned by investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the
Operating Partnership's day-to-day management.
The Company believes combining the annual reports on Form 10-K of the Parent Company and the Operating Partnership into
this single report provides the following benefits:
• Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view
the business as a whole in the same manner as management views and operates the business;
• Eliminates duplicative disclosure and provides a more streamlined and readable presentation; and
• Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent
Company consists of the same individuals as the management of the Operating Partnership. These individuals are officers of
the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the key differences between the Parent Company and the Operating
Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The
Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As
a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating
Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. Except for the
$500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, the
Parent Company does not hold any indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The
Operating Partnership is also the co-issuer and guarantees the $500 million of debt of the Parent Company assumed in the
Equity One merger. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the
Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed
to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital
required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect
incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated
financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital
includes general and limited common Partnership Units. The limited partners' units in the Operating Partnership owned by
third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of
stockholders' equity in noncontrolling interests in the Parent Company's financial statements.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report
that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and
procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent
Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company.
As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for
financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating
Partnership. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the
Parent Company and the Operating Partnership are the same on their respective financial statements.
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TABLE OF CONTENTS
Item No.
Form 10-K
Report Page
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
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12.
13.
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15.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of
Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers, and Corporate Governance
Executive Compensation
PART III
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
PART IV
SIGNATURES
16.
Signatures
1
5
15
16
33
33
33
36
40
62
65
139
139
140
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141
141
142
148
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Forward-Looking Statements
In addition to historical information, information in this Form 10-K contains forward-looking statements as defined
under federal securities laws. These forward-looking statements include statements about anticipated changes in our revenues,
the size of our development and redevelopment program, earnings per share and unit, returns and portfolio value, and
expectations about our liquidity. These statements are based on current expectations, estimates and projections about the real
estate industry and markets in which the Company operates, and management's beliefs and assumptions. Forward-looking
statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by such statements. Known risks and uncertainties are
described further in the Item 1A. Risk Factors below. The following discussion should be read in conjunction with the
accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporation and Regency Centers, L.P.
appearing elsewhere herein. We do not undertake any obligation to release publicly any revisions to such forward-looking
statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of uncertain events.
Item 1. Business
PART I
Regency Centers began its operations as a publicly-traded REIT in 1993, and, as of December 31, 2017, had full or
partial ownership interests in 426 retail properties primarily anchored by market leading grocery stores. Our properties are
principally located in affluent and infill trade areas of the United States, and contain 53.9 million square feet ("SF") of gross
leasable area ("GLA"). Our pro-rata ownership share of this GLA is 44.0 million square feet. All of our operating, investing,
and financing activities are performed through the Operating Partnership, our wholly-owned subsidiaries, and through our co-
investment partnerships.
On March 1, 2017, Regency completed its merger with Equity One Inc. ("Equity One"), whereby Equity One merged
with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement,
each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One
common stock owned immediately prior to the effective time of the merger resulting in approximately 65.5 million shares being
issued to effect the merger. As part of the merger, Regency acquired 121 properties representing 16.0 million SF of GLA,
including 8 properties held through co-investment partnerships.
Our mission is to be the preeminent national shopping center owner, operator, and developer. Our strategy is to:
• Own and manage an unequaled portfolio of high-quality neighborhood and community shopping centers anchored by
market leading grocers and located in affluent suburban and near urban trade areas in the country’s most desirable
metro areas. We expect that this combination will produce highly desirable and attractive centers with best-in-class
retailers. These centers should command higher rental and occupancy rates resulting in excellent prospects to grow net
operating income ("NOI");
• Maintain an industry leading and disciplined development and redevelopment platform to deliver exceptional retail
centers at higher returns as compared to acquisitions;
Support our business activities with a strong balance sheet; and
•
• Engage a talented, dedicated team of employees, who are guided by Regency’s strong values and special culture,
which are aligned with shareholder interests.
Key goals to achieve our strategy are to:
•
Sustain superior same property NOI growth compared to our shopping center peers;
• Develop and redevelop high quality shopping centers at attractive returns on investment;
• Maintain a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities
and debt maturities on a favorable basis, and to weather economic downturns;
• Attract and motivate an exceptional team of employees who operate efficiently and are recognized as industry leaders;
and
• Generate reliable growth in earnings per share, funds from operations per share, and most importantly total
shareholder returns that consistently rank at or near the top of shopping center REITS.
Sustainability
We believe sustainability is in the best interest of our tenants, investors, employees, and the communities in which we
operate and are committed to reducing our environmental impact, including energy and water use, greenhouse gas emissions,
and waste. We believe this commitment is not only the right thing to do, but also assists the Company in achieving key
strategic objectives in operations and development. We are committed to transparency with regard to our sustainability
performance, risks and opportunities, and will continue to increase disclosure using industry accepted reporting frameworks.
We currently have a Green Star rating from the Global Real Estate Sustainability Benchmark, or GRESB, for the third
1 consecutive year. More information about our sustainability strategy, goals, performance, and formal disclosures are available
on our website at www.regencycenters.com.
Competition
We are among the largest owners of shopping centers in the nation based on revenues, number of properties, GLA, and
market capitalization. There are numerous companies and individuals engaged in the ownership, development, acquisition, and
operation of shopping centers that compete with us in our targeted markets, including grocery store chains that also anchor
some of our shopping centers. This results in competition for attracting anchor tenants, as well as the acquisition of existing
shopping centers and new development sites. We believe that our competitive advantages are driven by:
•
•
•
•
•
•
our locations within our market areas;
the design and high quality of our shopping centers;
the strong demographics surrounding our shopping centers;
our relationships with our anchor tenants and our side-shop and out-parcel retailers;
our practice of maintaining and renovating our shopping centers; and
our ability to source and develop new shopping centers.
Employees
Our corporate headquarters are located at One Independent Drive, Suite 114, Jacksonville, Florida. We presently
maintain 21 market offices nationwide, including our corporate headquarters, where we conduct management, leasing,
construction, and investment activities. We have 446 employees throughout the United States and we believe that our relations
with our employees are good.
Compliance with Governmental Regulations
Under various federal, state and local laws, ordinances and regulations, we may be liable for the cost to remove or
remediate certain hazardous or toxic substances at our shopping centers. These laws often impose liability without regard to
whether the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. The cost of required
remediation and the owner's liability for remediation could exceed the value of the property and/or the aggregate assets of the
owner. The presence of such substances, or the failure to properly remediate such substances, may adversely affect our ability
to sell or lease the property or borrow using the property as collateral. Although we have a number of properties that could
require or are currently undergoing varying levels of environmental remediation, known environmental remediation is not
currently expected to have a material financial impact on us due to insurance programs designed to mitigate the cost of
remediation, various state-regulated programs that shift the responsibility and cost to the state, and existing accrued liabilities
for remediation.
Executive Officers
Our executive officers are appointed each year by our Board of Directors. Each of our executive officers has been
employed by us for more than five years.
Name
Martin E. Stein, Jr.
Lisa Palmer
Dan M. Chandler, III
James D. Thompson
Age
65
50
50
62
Title
Executive Officer in
Position Shown Since
Chairman and Chief Executive Officer
President and Chief Financial Officer
Executive Vice President of Investments
Executive Vice President of Operations
1993
2016 (1)
2016 (2)
2016 (3)
(1) Ms. Palmer assumed the responsibilities of President, effective January 1, 2016 in addition to her responsibilities as Chief
Financial Officer, which she has held since January 2013. Prior to that, Ms. Palmer served as Senior Vice President of Capital
Markets since 2003 and has been with the Company since 1996.
(2) Mr. Chandler assumed the role of Executive Vice President of Investments on January 1, 2016 and previously served as
Managing Director since 2006. Prior to that, Mr. Chandler served in various investment officer positions since the merger
with Pacific Retail Trust in 1999.
(3) Mr. Thompson assumed the role of Executive Vice President of Operations on January 1, 2016 and previously served as our
Managing Director - East since our initial public offering in 1993. Prior to that time, Mr. Thompson served as Executive Vice
President of our predecessor real estate division beginning in 1981.
2 Company Website Access and SEC Filings
Our website may be accessed at www.regencycenters.com. All of our filings with the Securities and Exchange
Commission can be accessed free of charge through our website promptly after filing; however, in the event that the website is
inaccessible, we will provide paper copies of our most recent annual report on Form 10-K, the most recent quarterly report on
Form 10-Q, current reports filed or furnished on Form 8-K, and all related amendments, excluding exhibits, free of charge upon
request. These filings are also accessible on the SEC's website at www.sec.gov.
General Information
Our registrar and stock transfer agent is Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), Philadelphia, PA.
We offer a dividend reinvestment plan (“DRIP”) that enables our shareholders to reinvest dividends automatically, as well as to
make voluntary cash payments toward the purchase of additional shares. For more information, contact Broadridge toll free at
(855) 449-0975 or our Shareholder Relations Department at (904) 598-7000.
Our independent registered public accounting firm is KPMG LLP, Jacksonville, Florida. Our legal counsel is Foley &
Lardner LLP, Jacksonville, Florida.
Annual Meeting of Shareholders
Our 2018 annual meeting of shareholders will be held at the Ponte Vedra Inn and Club, 200 Ponte Vedra Blvd., Ponte
Vedra Beach, Florida, at 10:30 a.m. on Thursday, April 26, 2018.
Defined Terms
We use certain non-GAAP performance measures, in addition to the required GAAP presentations, as we believe these
measures improve the understanding of the Company's operational results. We manage our entire real estate portfolio without
regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner
approval. Therefore, we believe presenting our pro-rata share of certain operating metrics regardless of ownership structure,
along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more
meaningful. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP
performance measures to determine how best to provide relevant information to the public, and thus such reported measures
could change.
The following terms, as defined, are commonly used by management and the investing public to understand and
evaluate our operational results:
•
Same Property information is provided for retail operating properties that were owned and operated for the entirety of
both calendar year periods being compared and excludes Non-Same Properties and Properties in Development.
• A Non-Same Property is a property acquired, sold, or a Development Completion during either calendar year period
being compared. Non-retail properties and corporate activities, including activities of our captive insurance company,
are part of Non-Same Property.
• A Retail Operating Property is any property where the majority of the income is generated from retail uses, and is not
termed a Property in Development.
• Property In Development includes land or Retail Operating Properties in various stages of development and
redevelopment including active pre-development activities.
• Development Completion is a development project that is deemed complete upon the earliest of: (i) 90% of total
estimated net development costs have been incurred and percent leased equals or exceeds 95%, or (ii) the project
features at least two years of anchor operations, or (iii) three years have passed since the start of construction. Once
deemed complete, the property is termed a Retail Operating Property.
• Pro-Rata information includes 100% of our consolidated properties plus our economic share (based on our ownership
interest) in our unconsolidated real estate investment partnerships.
The pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended
to more accurately reflect our proportionate economic interest in the operating results of properties in our portfolio.
We do not control the unconsolidated investment partnerships, and the pro-rata presentations of the assets and
liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit
or loss allocations and distributions of cash flows according to the operating agreements, which provide for such
allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use
to prepare our pro-rata share.
3 The presentation of pro-rata information has limitations which include, but are not limited to, the following:
• The amounts shown on the individual line items were derived by applying our overall economic ownership
interest percentage determined when applying the equity method of accounting or allocating noncontrolling
interests, and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and
expenses; and
• Other companies in our industry may calculate their pro-rata interest differently, limiting the comparability of
pro-rata information.
Because of these limitations, the pro-rata financial information should not be considered independently or as a
substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying
primarily on our GAAP financial statements, using the pro-rata information as a supplement.
• Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, real estate gains and
losses, development and acquisition pursuit costs, straight line rental income, and above and below market rent
amortization.
• Fixed Charge Coverage Ratio is defined as Adjusted EBITDA divided by the sum of the gross interest and scheduled
mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.
• Net Operating Income ("NOI") is the sum of minimum rent, percentage rent and recoveries from tenants and other
income, less operating and maintenance, real estate taxes, and provision for doubtful accounts. NOI excludes straight-
line rental income and expense, above and below market rent and ground rent amortization and other fees. The
Company also provides disclosure of NOI excluding termination fees, which excludes both termination fee income
and expenses.
• NAREIT Funds from Operations ("NAREIT FFO") is a commonly used measure of REIT performance, which the
National Association of Real Estate Investment Trusts ("NAREIT") defines as net income, computed in accordance
with GAAP, excluding gains and losses from sales of depreciable property, net of tax, excluding operating real estate
impairments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint
ventures. We compute NAREIT FFO for all periods presented in accordance with NAREIT's definition. Many
companies use different depreciable lives and methods, and real estate values historically fluctuate with market
conditions. Since NAREIT FFO excludes depreciation and amortization and gains and losses from depreciable
property dispositions, and impairments, it provides a performance measure that, when compared year over year,
reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and
development activities, and financing costs. This provides a perspective of our financial performance not immediately
apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP
financial measure of our operating performance, which does not represent cash generated from operating activities in
accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations.
The Company provides a reconciliation of Net Income (Loss) Attributable to Common Stockholders to NAREIT FFO.
• Core FFO is an additional performance measure used by Regency as the computation of NAREIT FFO includes
certain non-comparable items that affect the Company's period-over-period performance. Core FFO excludes from
NAREIT FFO: (a) transaction related income or expense; (b) impairments on land; (c) gains or losses from the early
extinguishment of debt; and (d) other amounts as they occur. The Company provides a reconciliation of NAREIT FFO
to Core FFO.
4 Item 1A. Risk Factors
Risk Factors Related to the Retail Industry
Economic and market conditions may adversely affect the retail industry and consequently reduce our revenues and
cash flow, and increase our operating expenses.
Our properties are leased primarily to retail tenants from whom we derive most of our revenue in the form of
minimum rent, expense recoveries and other income. Therefore, our performance and operating results are directly linked to
the economic and market conditions occurring in the retail industry. We are subject to the risks, that upon expiration, leases for
space in our properties are not renewed by existing tenants, vacant space is not leased to new tenants, or demand new lease
terms, including costs for renovations or concessions. The market for leasing retail space in our properties may be adversely
affected by any of the following:
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changes in national, regional and local economic conditions;
deterioration in the competitiveness and creditworthiness of our retail tenants;
increased competition from the use of e-commerce by retailers and consumers as well as other concepts such as super-
stores and warehouse clubs;
tenant bankruptcies and subsequent rejections of our leases;
reductions in consumer spending and retail sales;
reduced tenant demand for retail space;
oversupply of retail space;
reduced consumer demand for certain retail categories;
consolidation within the retail sector;
increased operating costs;
perceptions by retailers and shoppers of the safety, convenience and attractiveness of our properties;
casualties, natural disasters and terrorist attacks; and
armed conflicts against the United States.
To the extent that any of these conditions occur they are likely to impact the retail industry, our retail tenants, the
demand and market rents for retail space, the occupancy levels of our properties, our ability to sell, acquire or develop
properties, our operating results and our cash available for distributions to stock and unit holders.
The integration of bricks and mortar stores and e-commerce by retailers and a continued shift in retail sales towards e-
commerce may adversely impact our revenues and cash flows.
The recent merger of Amazon.com with Whole Foods Market, Inc. highlights the increasing impact of e-commerce on
retailers and changes in customer buying habits, including curbside pick-up of items ordered on line and home delivery of food
kits, such as Blue Apron and HelloFresh. Retailers are considering these e-commerce trends when making decisions regarding
their bricks and mortar stores and how they will compete and innovate in a rapidly changing e-commerce environment. Many
retailers in our shopping centers provide services or sell goods, which have historically been less likely to be purchased online;
however, the continuing increase in e-commerce sales in all retail categories may cause retailers to adjust the size or number of
retail locations in the future or close stores. This shift may adversely impact our occupancy and rental rates, which would
impact our revenues and cash flows. Changes in shopping trends as a result of the growth in e-commerce may also impact the
profitability of retailers that do not adapt to changes in market conditions. These conditions may adversely impact our results
of operations and cash flows if we are unable to meet the needs of our tenants or if our tenants encounter financial difficulties as
a result of changing market conditions.
Our business is dependent on perceptions by retailers and shoppers of the safety, convenience and attractiveness of our
retail properties.
We are dependent on perceptions by retailers or shoppers of the safety, convenience and attractiveness of our retail
properties. If retailers and shoppers perceive competing retail properties and other retailing options to be safer, more
convenient, or of a higher quality, our revenues may be adversely affected.
Changing economic and retail market conditions in geographic areas where our properties are concentrated may reduce
our revenues and cash flow.
Economic conditions in markets where our properties are concentrated can greatly influence our financial
performance. During the year ended December 31, 2017, our properties in California, Florida, and Texas accounted for 30.1%,
17.3%, and 7.8%, respectively, of our NOI from Consolidated Properties plus our pro-rata share from Unconsolidated
Properties ("pro-rata basis"). Our revenues and cash flow may be adversely affected by this geographic concentration if market
conditions, such as supply of or demand for retail space, deteriorate more significantly in California, Florida, or Texas
compared to other geographic areas.
5 Our success depends on the success and continued presence of our “anchor” tenants.
Anchor Tenants ("Anchor Tenants" or "Anchors" occupying 10,000 square feet or more) occupy large stores in our
shopping centers, pay a significant portion of the total rent at a property and contribute to the success of other tenants by
attracting shoppers to the property. We derive significant revenues from anchor tenants such as Publix, Kroger, Albertsons/
Safeway, TJX Companies, and Whole Foods who accounted for 3.1%, 3.1%, 2.9%, 2.4%, and 2.3%, respectively, of our total
annualized base rent on a pro-rata basis, for the year ended December 31, 2017. Our net income and cash flow may be
adversely affected by the loss of revenues and additional costs in the event a significant anchor tenant:
becomes bankrupt or insolvent;
experiences a downturn in its business;
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• materially defaults on its leases;
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does not renew its leases as they expire;
renews at lower rental rates and/or requires a tenant improvement allowance; or
renews, but reduces its store size, which results in down-time and additional tenant improvement costs to the landlord
to release the vacated space.
Some anchors have the right to vacate their space and may prevent us from re-tenanting by continuing to comply and
pay rent in accordance with their lease agreement. Vacated anchor space, including space owned by the anchor, can reduce
rental revenues generated by the shopping center in other spaces because of the loss of the departed anchor's customer drawing
power. If a significant tenant vacates a property, co-tenancy clauses in select centers may allow other tenants to modify or
terminate their rent or lease obligations. Co-tenancy clauses have several variants: they may allow a tenant to postpone a store
opening if certain other tenants fail to open their stores; they may allow a tenant to close its store prior to lease expiration if
another tenant closes its store prior to lease expiration; or more commonly, they may allow a tenant to pay reduced levels of
rent until a certain number of tenants open their stores within the same shopping center.
A significant percentage of our revenues are derived from smaller shop space tenants and our net income may be
adversely impacted if our smaller shop tenants are not successful.
A significant percentage of our revenues are derived from smaller shop space tenants ("Shop Space Tenants"
occupying less than 10,000 square feet). Shop Space Tenants may be more vulnerable to negative economic conditions as they
have more limited resources than Anchor Tenants. Shop Space Tenants are facing reductions in sales as a result of an increase
in competition including from e-commerce retailers. Certain Shop Space Tenants are incorporating e-commerce into their
business strategies and may seek to reduce their store sizes upon lease expiration as they adjust to and implement alternative
distribution channels. The types of Shop Space Tenants vary from retail shops and restaurants to service providers. If we are
unable to attract the right type or mix of Shop Space Tenants into our centers, our revenues and cash flow may be adversely
impacted.
At December 31, 2017, Shop Space Tenants represent approximately 36% of our GLA leased at average base rents of
$32 PSF. A one-percent decline in our shop space occupancy may result in a reduction to minimum rent of approximately $4.7
million.
We may be unable to collect balances due from tenants in bankruptcy.
Although minimum rent and recoveries from tenants are supported by long-term lease contracts, tenants who file
bankruptcy have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against
a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is
paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value
of any unsecured claims we hold. Additionally, we may incur significant expense to recover our claim and to release the
vacated space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and rejects
its leases, we may experience a significant reduction in our revenues and may not be able to collect all pre-petition amounts
owed by the bankrupt tenant.
Risk Factors Related to Real Estate Investments and Operations
We are subject to numerous laws and regulations that may adversely affect our operations or expose us to liability.
Our properties are subject to numerous federal, state, and local laws and regulations, some of which may conflict with
one another or be subject to varying judicial or regulatory interpretations. These laws and regulations may include zoning laws,
building codes, competition laws, rules and agreements, landlord-tenant laws, property tax regulations, changes in real estate
assessments and other laws and regulations generally applicable to business operations. Noncompliance with such laws and
regulations, and any associated litigation may expose us to liability.
6 Our real estate assets may decline in value and be subject to impairment losses which may reduce our net income.
Our real estate properties are carried at cost unless circumstances indicate that the carrying value of these assets may
not be recoverable. We evaluate whether there are any indicators, including property operating performance and general market
conditions, such that the value of the real estate properties (including any related tangible or intangible assets or liabilities and
goodwill) may not be recoverable. Through the evaluation, we compare the current carrying value of the asset to the estimated
undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Our estimated cash flows
are based on several key assumptions, including rental rates, costs of tenant improvements, leasing commissions, anticipated
holding periods, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These
key assumptions are subjective in nature and may differ materially from actual results. Changes in our disposition strategy or
changes in the marketplace may alter the holding period of an asset or asset group, which may result in an impairment loss and
such loss may be material to the Company's financial condition or operating performance. To the extent that the carrying value
of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of carrying
value over fair value.
The fair value of real estate assets is subjective and is determined through the use of comparable sales information and
other market data if available, or through use of an income approach such as the direct capitalization method or the traditional
discounted cash flow approach. Such cash flow projections take into account expected future operating income, trends and
prospects, as well as the effects of demand, competition and other relevant criteria, and therefore are subject to management
judgment. Changes in these factors may impact the determination of fair value. In estimating the fair value of undeveloped
land, we generally use market data and comparable sales information.
These subjective assessments have a direct impact on our net income because recording an impairment charge results
in an immediate negative adjustment to net income, which may be material. There can be no assurance that we will not record
impairment charges in the future related to our assets.
We face risks associated with development, redevelopment and expansion of properties.
We actively pursue opportunities for new retail development, or existing property redevelopment or expansion.
Development and redevelopment activities require various government and other approvals for entitlements and any delay in
such approvals may significantly delay this process. We may not recover our investment in development or redevelopment
projects for which approvals are not received. We are subject to other risks associated with these activities, including the
following risks:
the occupancy rates and rents of a completed project may not be sufficient to make the project profitable;
actual costs of a project may exceed original estimates, possibly making the project unprofitable;
delays in the development or construction process may increase our costs;
• we may be unable to lease developments to full occupancy on a timely basis;
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• we may abandon a development opportunity and lose our investment;
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the size of our development pipeline may strain our labor or capital capacity to complete developments within targeted
timelines and may reduce our investment returns;
a reduction in the demand for new retail space may reduce our future development activities, which in turn may reduce
our net operating income;
changes in the level of future development activity may adversely impact our results from operations by reducing the
amount of internal general overhead costs that may be capitalized;
a shift in our development and acquisition focus to mixed use properties in very dense urban locations (with or without
joint venture or development partners for residential or office components), with differing tenant profiles or mixes,
and/or multi-story buildings, all in select cases.
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We face risks associated with the acquisition of properties.
Our investment strategy includes investing in high-quality shopping centers that are leased to market-dominant
grocers, category-leading anchors, specialty retailers, or restaurants located in areas with high barriers to entry and above
average household incomes and population densities. The acquisition of properties and/or real estate entities entails risks that
include, but are not limited to, the following, any of which may adversely affect our results of operations and cash flows:
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properties we acquire may fail to achieve the occupancy or rental rates we project, within the time frames we estimate,
which may result in the properties' failure to achieve the investment returns we project;
our investigation of an entity, property or building prior to our acquisition, and any representation we may have
received from such seller, may fail to reveal various liabilities including defects and necessary repairs, which may
increase our costs;
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our estimate of the costs to improve, reposition or redevelop a property may prove to be too low, or the time we
estimate to complete the improvement, repositioning or redevelopment may be too short, either of which may result in
the property failing to achieve our projected return, either temporarily or permanently;
• we may not recover our costs from an unsuccessful acquisition;
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• we may not be able to successfully integrate an acquisition into our existing operations platform.
our acquisition activities may distract or strain our management capacity; and
We face risks if we expand into new markets.
If opportunities arise, we may acquire or develop properties in markets where we currently have no presence. Each of
the risks applicable to acquiring or developing properties in our current markets are applicable to acquiring, developing and
integrating properties in new markets. In addition, we may not possess the same level of familiarity with the dynamics and
conditions of the new markets we may enter, which may adversely affect our operating results and investment returns in those
markets.
We may be unable to sell properties when appropriate because real estate investments are illiquid.
Our properties, including their related tangible and intangible assets, represent the majority of our total consolidated
assets and they are relatively illiquid. As a result, our ability to sell one or more of our properties including properties held in
joint venture in response to changes in economic, industry, or other conditions may be limited. The real estate market is affected
by many factors, such as general economic conditions, availability and terms of financing, interest rates and other factors,
including supply and demand for space, that are beyond our control. There may be less demand for lower quality properties
that we have identified for ultimate disposition in markets with uncertain economic or retail environments, and where buyers
are more reliant on the availability of third party mortgage financing. If we want to sell a property, we can provide no
assurance that we will be able to dispose of it in the desired time period or at all or that the sales price of a property will be
attractive at the relevant time or even exceed the carrying value of our investment. Moreover, if a property is mortgaged, we
may not be able to obtain a release of the lien on that property without the payment of a substantial prepayment penalty, which
may restrict our ability to dispose of the property, even though the sale might otherwise be desirable.
Certain properties we own have a low tax basis, which may result in a taxable gain on sale. We intend to utilize 1031
exchanges to mitigate taxable income; however, there can be no assurance that we will identify properties that meet our
investment objectives for acquisitions. In the event that we do not utilize 1031 exchanges, we may be required to distribute the
gain proceeds to shareholders or pay income tax, which may reduce our cash flow available to fund our commitments.
Certain of the properties in our portfolio are subject to ground leases; if we are found to be in breach of a ground lease
or are unable to renew a ground lease, we may be materially and adversely affected.
We have 28 properties in our portfolio that are either partially or completely on land subject to ground leases with third
parties. Accordingly, we only own a long-term leasehold or similar interest in those properties. If we are found to be in breach
of a ground lease, we may lose our interest in the improvements and the right to operate the property that is subject to the
ground lease. In addition, unless we can purchase a fee interest in the underlying land or extend the terms of these leases before
or upon their expiration, as to which no assurance can be given, we will lose our interest in the improvements and the right to
operate such properties. The existing lease terms, including renewal options, were taken into consideration when making our
investment decisions. The purchase price and subsequent improvements are being depreciated over the shorter of the remaining
life of the ground leases or the useful life of the underlying assets. If we were to lose the right to operate a property due to a
breach or not exercising renewal options of the ground lease, we would be unable to derive income from such property, which
would impair the value of our investments, and materially and adversely affect our financial condition, results of operations and
cash flows.
Geographic concentration of our properties makes our business vulnerable to natural disasters, severe weather
conditions and climate change. An uninsured loss or a loss that exceeds the insurance coverage on our properties may
subject us to loss of capital and revenue on those properties.
A significant number of our properties are located in areas that are susceptible to earthquakes, tropical storms,
hurricanes, tornadoes, wildfires, sea-level rise, and other natural disasters. As of December 31, 2017, 26% of the total insured
value of our portfolio is located in the state of California, including a number of properties in the San Francisco Bay and Los
Angeles areas. Additionally, 18% and 7% of the total insured value of our portfolio is located in the states of Florida and Texas,
respectively. Recent intense weather conditions may cause property insurance premiums to increase significantly in the future.
We recognize that the frequency and / or intensity of extreme weather events, sea-level rise, and other climatic changes may
continue to increase, and as a result, our exposure to these events may increase. These weather conditions may disrupt our
business and the business of our tenants, which may affect the ability of some tenants to pay rent and may reduce the
willingness of tenants or residents to remain in or move to these affected areas. Therefore, as a result of the geographic
8 concentration of our properties, we face risks, including higher costs, such as uninsured property losses and higher insurance
premiums, and disruptions to our business and the businesses of our tenants.
We carry comprehensive liability, fire, flood, terrorism, rental loss, and environmental insurance for our properties
with policy specifications and insured limits customarily carried for similar properties. Some types of losses, such as losses
from named wind storms, earthquakes, terrorism, or wars may have limited coverage or be excluded from insurance coverage.
Although we carry specific insurance coverage for named windstorm and earthquake losses, the policies are subject to
deductibles up to 2% to 5% of the total insured value of each property, up to a $10 million maximum deductible per occurrence
for each of these perils, with limits of $300 million per occurrence for all perils except earthquake, which has a total annual
aggregate limit of $300 million. Terrorism coverage is limited to $200 million per occurrence related to property damage.
Liability claims are limited to $151 million per occurrence. Should a loss occur at any of our properties that is subject to a
substantial deductible or is in excess of the property or casualty insurance limits of our policies, we may lose part or all of our
invested capital and revenues from such property, which may have a material adverse impact on our operating results, financial
condition, and our ability to make distributions to stock and unit holders.
To the extent climate change causes adverse changes in weather patterns, our properties in certain markets may
experience increases in storm intensity and rising sea levels. Over time, these conditions may result in volatile or decreased
demand for retail space at certain of our properties or, in extreme cases, our inability to operate the properties at all. Climate
change may also have indirect effects on our business by increasing the cost of insurance on favorable terms, or making
insurance unavailable. Moreover, compliance with new laws or regulations related to climate change, including compliance
with “green” building codes, may require us to make improvements to our existing properties or increase taxes and fees
assessed on us or our properties. At this time, there can be no assurance that climate change will not have a material adverse
effect on us.
Terrorist activities or violence occurring at our properties also may directly affect the value of our properties through damage,
destruction or loss. Insurance for such acts may be unavailable or cost more resulting in an increase to our operating expenses and
adversely affect our results of operations. To the extent that our tenants are affected by such attacks and threats of attacks, their
businesses may be adversely affected, including their ability to continue to meet obligations under their existing leases.
Loss of our key personnel may adversely affect our business and operations.
The success of our business depends, in part, on the leadership and performance of our executive management team
and key employees, and our ability to attract, retain and motivate talented employees may significantly impact our future
performance. Competition for these individuals is intense, and we cannot assure you that we will retain our executive
management team and other key employees or that we will be able to attract and retain other highly qualified individuals for
these positions in the future. Losing any one or more of these persons may have a material adverse effect on us.
We face competition from numerous sources, including other REITs and other real estate owners.
The ownership of shopping centers is highly fragmented. We face competition from other public REITs, large private
investors, institutional investors, and from numerous small owners in the acquisition, ownership, and leasing of shopping
centers. We also compete to develop shopping centers with other REITs engaged in development activities as well as with
local, regional, and national real estate developers. This competition may:
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reduce the number of properties available for acquisition or development;
increase the cost of properties available for acquisition or development; and
hinder our ability to attract and retain tenants, leading to increased vacancy rates and/or reduced rents.
If we cannot successfully compete in our targeted markets, our cash flow, and therefore distributions to stock and unit
holders, may be adversely affected.
Costs of environmental remediation may reduce our cash flow available for distribution to stock and unit holders.
Under various federal, state, and local laws, an owner or manager of real property may be liable for the costs of
removal or remediation of hazardous or toxic substances on the property. These laws often impose liability without regard to
whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances. The cost of any required
remediation may exceed the value of the property and/or the aggregate assets of the owner or the responsible party. The
presence of, or the failure to properly remediate, hazardous or toxic substances may adversely affect our ability to sell or lease a
contaminated property or to use the property as collateral for a loan. We can provide no assurance that we are aware of all
potential environmental liabilities; that any previous owner, occupant or tenant did not create any material environmental
condition not known to us; that our properties will not be affected by tenants or nearby properties or other unrelated third
parties; and that future uses or conditions, or changes in environmental laws and regulations will not result in additional
material environmental liabilities to us.
9 Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make
unintended expenditures.
All of our properties are required to comply with the Americans with Disabilities Act (“ADA”), which generally
requires that buildings be made accessible to people with disabilities. Compliance with ADA requirements may require
removal of access barriers, and noncompliance may result in imposition of fines by the U.S. government or an award of
damages to private litigants, or both. While the tenants to whom we lease space in our properties are obligated by law to
comply with the ADA provisions, and typically under tenant leases are obligated to cover costs associated with compliance, if
required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than
anticipated, the ability of these tenants to cover costs may be adversely affected. In addition, we are required to operate the
properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted
by governmental entities and become applicable to the properties. We may be required to make substantial capital expenditures
to comply with these requirements, and these expenditures may have a material adverse effect on our ability to meet our
financial obligations and make distributions to our stock and unit holders.
We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other
significant disruptions of our information technology (IT) networks and related systems.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the internet,
malware, computer viruses, attachments to e mails, persons inside our organization or persons with access to systems, and
other significant disruptions of our IT networks and related systems. Our IT networks and related systems are essential to the
operation of our business and our ability to perform day to day operations and, in some cases, may be critical to the operations
of certain of our tenants and co-investment partners. Although we make efforts to maintain the security and integrity of our IT
networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption,
there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or
disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities
remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not
recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative
measures, and thus it is impossible for us to entirely mitigate this risk.
A breach or significant and extended disruption in the functioning of our systems, including our primary website, may damage
our reputation and cause us to lose customers, tenants and revenues, generate third party claims, result in the unintended and/or
unauthorized public disclosure or the misappropriation of proprietary, personal identifying and confidential information, and
require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues, and we may not be
able to recover these expenses in whole or in any part from our service providers, responsible parties, or insurance carriers.
Risk Factors Related to Our Partnerships and Joint Ventures
We do not have voting control over properties owned in our co-investment partnerships and joint ventures, so we are
unable to ensure that our objectives will be pursued.
We have invested substantial capital as a partner in a number of partnerships and joint ventures to acquire, own, lease,
develop or redevelop properties. These activities are subject to the same risks as our investments in our wholly-owned
properties. These investments, and other future similar investments may involve risks that would not be present were a third
party not involved, including the possibility that partners or other owners might become bankrupt, suffer a deterioration in their
creditworthiness, or fail to fund their share of required capital contributions. Partners or other owners may have economic or
other business interests or goals that are inconsistent with our own business interests or goals, and may be in a position to take
actions contrary to our policies or objectives.
These investments, and other future similar investments, also have the potential risk of creating impasses on decisions,
such as a sale or financing, because neither we nor our partner or other owner has full control over the partnership or joint
venture. Disputes between us and partners or other owners might result in litigation or arbitration that may increase our
expenses and prevent management from focusing their time and efforts on our business. Consequently, actions by, or disputes
with, partners or other owners might result in subjecting properties owned by the partnership or joint venture to additional risk.
In addition, we risk the possibility of being liable for the actions of our partners or other owners. These factors may limit the
return that we receive from such investments or cause our cash flows to be lower than our estimates.
The termination of our partnerships may adversely affect our cash flow, operating results, and our ability to make
distributions to stock and unit holders.
If partnerships owning a significant number of properties were dissolved for any reason, we would lose the asset,
property management, leasing and construction management fees from these partnerships, which may adversely affect our
operating results and our cash available for distribution to stock and unit holders.
10 Risk Factors Related to Funding Strategies and Capital Structure
Higher market capitalization rates and lower net operating income ("NOI") at our properties may adversely impact our
ability to sell properties and fund developments and acquisitions, and may dilute earnings.
As part of our funding strategy, we sell operating properties that no longer meet our investment standards or those with
a limited future growth profile. These sales proceeds are used to fund the construction of new developments, redevelopments,
and repay debt and acquisitions. An increase in market capitalization rates or a decline in NOI may cause a reduction in the
value of centers identified for sale, which would have an adverse impact on the amount of cash generated. In order to meet the
cash requirements of our development program, we may be required to sell more properties than initially planned, which may
have a negative impact on our earnings. Additionally, the sale of properties resulting in significant tax gains may require higher
distributions to our stockholders or payment of additional income taxes in order to maintain our REIT status. We intend to
utilize 1031 exchanges to mitigate taxable income, however there can be no assurance that we will identify properties that meet
our investment objectives for acquisitions.
We depend on external sources of capital, which may not be available in the future on favorable terms or at all.
To qualify as a REIT, the Parent Company must, among other things, distribute to its stockholders each year at least
90% of its REIT taxable income (excluding any net capital gains). Because of these distribution requirements, we may not be
able to fund all future capital needs with income from operations. We therefore will have to rely on third-party sources of
capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on
a number of things, including the market's perception of our growth potential and our current and potential future earnings. Our
access to debt depends on our credit rating, the willingness of creditors to lend to us and conditions in the capital markets. In
addition to finding creditors willing to lend to us, we are dependent upon our joint venture partners to contribute their pro rata
share of any amount needed to repay or refinance existing debt when lenders reduce the amount of debt our partnerships and
joint ventures are eligible to refinance.
In addition, our existing debt arrangements also impose covenants that limit our flexibility in obtaining other
financing. Additional equity offerings may result in substantial dilution of stockholders' interests and additional debt financing
may substantially increase our degree of leverage.
Without access to external sources of capital, we would be required to pay outstanding debt with our operating cash
flows and proceeds from property sales. Our operating cash flows may not be sufficient to pay our outstanding debt as it comes
due and real estate investments generally cannot be sold quickly at a return we believe is appropriate. If we are required to
deleverage our business with operating cash flows and proceeds from property sales, we may be forced to reduce the amount of,
or eliminate altogether, our distributions to stock and unit holders or refrain from making investments in our business.
Our debt financing may adversely affect our business and financial condition.
Our ability to make scheduled payments or to refinance our indebtedness will depend primarily on our future
performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond our control. In
addition, we do not expect to generate sufficient operating cash flow to make balloon principal payments on our debt when due.
If we are unable to refinance our debt on acceptable terms, we may be forced (i) to dispose of properties, which might result in
losses, or (ii) to obtain financing at unfavorable terms, either of which may reduce the cash flow available for distributions to
stock and unit holders. If we cannot make required mortgage payments, the mortgagee may foreclose on the property securing
the mortgage.
Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition.
Our unsecured notes, unsecured term loans, and unsecured line of credit contain customary covenants, including
compliance with financial ratios, such as ratio of total debt to gross asset value and fixed charge coverage ratio. Fixed charge
coverage ratio is defined as earnings before interest, taxes, depreciation and amortization ("EBITDA") divided by the sum of
interest expense and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders, if any.
These covenants may limit our operational flexibility and our acquisition activities. Moreover, if we breach any of the
covenants in our debt agreements, and do not cure the breach within the applicable cure period, our lenders may require us to
repay the debt immediately, even in the absence of a payment default. Many of our debt arrangements, including our unsecured
notes, unsecured term loans, and unsecured line of credit are cross-defaulted, which means that the lenders under those debt
arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under
certain of our other material debt obligations. As a result, any default under our debt covenants may have an adverse effect on
our financial condition, our results of operations, our ability to meet our obligations, and the market value of our stock.
11 Increases in interest rates would cause our borrowing costs to rise and negatively impact our results of operations.
Although a significant amount of our outstanding debt has fixed interest rates, we do borrow funds at variable interest
rates under our credit facilities and term loans. As of December 31, 2017, 2.7% of our outstanding debt was variable rate debt.
Increases in interest rates would increase our interest expense on any variable rate debt to the extent we have not hedged our
exposure to changes in interest rates. In addition, increases in interest rates will affect the terms under which we refinance our
existing debt as it matures, to the extent we have not hedged our exposure to changes in interest rates. This would reduce our
future earnings and cash flows, which may adversely affect our ability to service our debt and meet our other obligations and
also may reduce the amount we are able to distribute to our stock and unit holders.
Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will
not yield the economic benefits we anticipate, which may adversely affect us.
From time to time, we manage our exposure to interest rate volatility by using interest rate hedging arrangements that
involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements, and that these
arrangements may not be effective in reducing our exposure to interest rate changes. There can be no assurance that our
hedging arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on
our results of operations. Should we desire to terminate a hedging agreement, there may be significant costs and cash
requirements involved to fulfill our obligations under the hedging agreement. Failure to hedge effectively against interest rate
changes may adversely affect our results of operations.
We may acquire properties or portfolios of properties through tax-deferred contribution transactions, which may result
in stockholder dilution and limit our ability to sell such assets.
We may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for
partnership interests in our operating partnership, which may result in stockholder dilution. This acquisition structure may have
the effect of, among other things, reducing the amount of tax depreciation we may deduct over the tax life of the acquired
properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through
restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to
maintain their tax bases. These restrictions may limit our ability to sell an asset at a time, or on terms, that would be favorable
absent such restrictions.
Risk Factors Related to our Company and the Market Price for Our Securities
As a result of our merger with Equity One, Inc., the Gazit Parties became significant stockholders of Regency Centers
and may have interests that are different from our other stockholders.
Mr. Chaim Katzman and Gazit-Globe, Ltd. and certain of its affiliated entities ("the Gazit Parties") own less than 10%
of outstanding shares of our common stock. This concentration of ownership in one group of stockholders may potentially be
disadvantageous to the interests of our other stockholders. The Gazit Parties have sold some of the shares they own in Regency
Centers since we merged, and have filed a plan with the SEC to continue selling shares. Continued sales of our shares may
cause volatility in our stock price, and we may find it more expensive to raise capital, if needed, through the sale of additional
equity securities.
Under the governance agreement entered into as a part of the merger with Equity One, we nominated Mr. Katzman to
our board of directors. Effective February 14, 2018, Mr. Katzman resigned from our board. However, so long as the Gazit
Parties beneficially own 7% or more of our outstanding common stock, the Gazit Parties will have the right to designate another
person to be appointed to our board of directors, which person must be reasonably acceptable to our board of directors.
Changes in economic and market conditions may adversely affect the market price of our securities.
The market price of our debt and equity securities may fluctuate significantly in response to many factors, many of
which are out of our control, including:
•
•
•
•
•
•
•
•
actual or anticipated variations in our operating results;
changes in our funds from operations or earnings estimates;
publication of research reports about us or the real estate industry in general and recommendations by financial
analysts or actions taken by rating agencies with respect to our securities or those of other REIT's;
the ability of our tenants to pay rent and meet their other obligations to us under current lease terms and our ability to
re-lease space as leases expire;
increases in market interest rates that drive purchasers of our stock to demand a higher dividend yield;
changes in market valuations of similar companies;
adverse market reaction to any additional debt we incur in the future;
any future issuances of equity securities;
12 •
•
•
•
•
•
•
additions or departures of key management personnel;
strategic actions by us or our competitors, such as acquisitions or restructurings;
actions by institutional stockholders;
changes in our dividend payments;
potential tax law changes on REITs;
speculation in the press or investment community; and
general market and economic conditions.
These factors may cause the market price of our securities to decline, regardless of our financial condition, results of
operations, business or prospects. It is impossible to ensure that the market price of our securities, including our common
stock, will not fall in the future. A decrease in the market price of our common stock may reduce our ability to raise additional
equity in the public markets. Selling common stock at a decreased market price would have a dilutive impact on existing
stockholders.
There is no assurance that we will continue to pay dividends at historical rates.
Our ability to continue to pay dividends at historical rates or to increase our dividend rate will depend on a number of
factors, including, among others, the following:
•
•
•
our financial condition and results of future operations;
the terms of our loan covenants; and
our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.
If we do not maintain or periodically increase the dividend on our common stock, it may have an adverse effect on the
market price of our common stock and other securities.
Risk Factors Related to Laws and Regulations
If the Parent Company fails to qualify as a REIT for federal income tax purposes, it would be subject to federal income
tax at regular corporate rates.
We believe that the Parent Company qualifies for taxation as a REIT for federal income tax purposes, and we plan to
operate so that we can continue to meet the requirements for taxation as a REIT. If the Parent Company continues to qualify as
a REIT, it generally will not be subject to federal income tax on income that we distribute to our stockholders. Many REIT
requirements, however, are highly technical and complex. The determination that the Parent Company is a REIT requires an
analysis of various factual matters and circumstances, some of which may not be totally within our control and some of which
involve questions of interpretation. For example, to qualify as a REIT, at least 95% of our gross income must come from
specific passive sources, like rent, that are itemized in the REIT tax laws. There can be no assurance that the Internal Revenue
Service (“IRS”) or a court would agree with the positions we have taken in interpreting the REIT requirements. We are also
required to distribute to our stockholders at least 90% of our REIT taxable income, excluding capital gains. The fact that we
hold many of our assets through co-investment partnerships and their subsidiaries further complicates the application of the
REIT requirements. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts
might issue new rulings, that make it more difficult, or impossible, for the Parent Company to remain qualified as a REIT.
Also, unless the IRS granted relief under certain statutory provisions, the Parent Company would remain disqualified
as a REIT for four years following the year it first failed to qualify. If the Parent Company failed to qualify as a REIT
(currently and/or with respect to any tax years for which the statute of limitations has not expired), we would have to pay
significant income taxes, reducing cash available to pay dividends, which would likely have a significant adverse effect on the
value of our securities. In addition, we would no longer be required to pay any dividends to stockholders. Although we believe
that the Parent Company qualifies as a REIT, we cannot assure you that the Parent Company will continue to qualify or remain
qualified as a REIT for tax purposes.
Even if the Parent Company qualifies as a REIT for federal income tax purposes, we are required to pay certain
federal, state, and local taxes on our income and property. For example, if we have net income from “prohibited transactions,”
that income will be subject to a 100% tax. In general, prohibited transactions include sales or other dispositions of property
held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a
prohibited transaction depends on the facts and circumstances related to that sale. While we have undertaken a significant
number of asset sales in recent years, we do not believe that those sales should be considered prohibited transactions, but there
can be no assurance that the IRS would not contend otherwise.
In addition, on December 22, 2017, H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Cuts and
Jobs Act") was signed into law by the U.S. President. Although we are not aware of any provision in the final tax reform
legislation or any pending tax legislation that would adversely affect our ability to operate as a REIT, new legislation, as well as
new regulations, administrative interpretations, or court decisions may be introduced, enacted, or promulgated from time to
13 time, that may change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax
consequences of that qualification, in a manner that is adverse to our stockholders.
Recent changes to the U.S. tax laws may have a significant negative impact on the overall economy, our tenants, our
investors, and our business.
The Tax Cuts and Jobs Act made significant changes to the Internal Revenue Code of 1986, as amended (the "Code").
While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes
to non-REIT provisions in the Code may have unanticipated effects on us or our stockholders. Moreover, Congressional leaders
have recognized that the process of adopting extensive tax legislation in a short amount of time without hearings and substantial
time for review is likely to have led to drafting errors, issues needing clarification and unintended consequences that will have
to be reviewed in subsequent tax legislation. At this point, it is not clear when Congress will address these issues or when the
Internal Revenue Service will issue administrative guidance on the changes made in the Tax Cuts and Jobs Act.
As a result of the changes to U.S. federal tax laws implemented by the Tax Cuts and Jobs Act, our taxable income and
the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as
a REIT, may significantly change. The long-term impact of the Tax Cuts and Jobs Act on the overall economy, government
revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this early stage of the new law’s
implementation. Furthermore, the Tax Cuts and Jobs Act may negatively impact certain of our tenants’ operating results,
financial condition, and future business plans. The Tax Cuts and Jobs Act may also result in reduced government revenues, and
therefore reduced government spending, which may negatively impact some of our tenants that rely on government funding.
There can be no assurance that the Tax Cuts and Jobs Act will not negatively impact our operating results, financial condition,
and future business operations.
Dividends paid by REITs generally do not qualify for reduced tax rates.
Subject to limited exceptions, dividends paid by REITs (other than distributions designated as capital gain dividends,
qualified dividends or returns of capital) are not eligible for reduced rates for qualified dividends paid by "C" corporations and
are taxable at ordinary income tax rates. The more favorable rates applicable to regular corporate qualified dividends may
cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than
investments in the stocks of non-REIT corporations that pay dividends, which may adversely affect the value of the shares of
REITs, including the shares of our capital stock.
Under the recently passed Tax Cuts and Jobs Act, the rate brackets for non-corporate taxpayer’s ordinary income are
adjusted, the top tax rate is reduced from 39.6% to 37% (excluding the 3.8% Medicare tax on net investment income), and
ordinary REIT dividends are taxed at even lower effective rates. Under the Tax Cuts and Jobs Act, for taxable years beginning
after December 31, 2017 and before January 1, 2026, distributions from REITs that are treated as dividends but are not
designated as qualified dividends or capital gain dividends are generally taxed as ordinary income after deducting 20% of the
amount of the dividend in the case of non-corporate stockholders. At the maximum ordinary income tax rate of 37% applicable
for taxable years beginning after December 31, 2017 and before January 1, 2026, the maximum tax rate on ordinary REIT
dividends for non-corporate stockholders is generally 29.6% (plus the 3.8% Medicare tax on net investment income).
Foreign stockholders may be subject to U.S. federal income tax on gain recognized on a disposition of our common stock
if we do not qualify as a "domestically controlled" REIT.
A foreign person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist
principally of U.S. real property interests is generally subject to U.S. federal income tax on any gain recognized on the
disposition. This tax does not apply, however, to the disposition of stock in a REIT if the REIT is "domestically controlled." In
general, we will be a domestically controlled REIT if at all times during the five-year period ending on the applicable
stockholder’s disposition of our stock, less than 50% in value of our stock was held directly or indirectly by non-U.S. persons.
If we were to fail to qualify as a domestically controlled REIT, gain recognized by a foreign stockholder on a disposition of our
common stock would be subject to U.S. federal income tax unless our common stock was traded on an established securities
market and the foreign stockholder did not at any time during a specified testing period directly or indirectly own more than
10% of our outstanding common stock.
Legislative or other actions affecting REITs may have a negative effect on us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative
process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive
application, may adversely affect Regency or our investors. We cannot predict how changes in the tax laws might affect
Regency or our investors. New legislation, Treasury Regulations, administrative interpretations or court decisions may
significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification,
or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an
14
investment in other entities, may change, making an investment in such other entities more attractive relative to an investment
in a REIT.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code limit our ability to hedge our liabilities. Generally, income from a hedging
transaction that constitutes “qualifying income” for purposes of the 75% or 95% gross income tests applicable to REITs, does
not constitute “gross income” for purposes of the 75% or 95% gross income tests, provided that we properly identify the
hedging transaction pursuant to the applicable sections of the Code and Treasury Regulations. To the extent that we enter into
other types of hedging transactions, or fail to make the proper tax identifications, the income from those transactions is likely to
be treated as non-qualifying income for purposes of both gross income tests. As a result of these rules, we may need to limit our
use of otherwise advantageous hedging techniques or implement those hedges through a taxable REIT subsidiary, or TRS.
Changes in accounting standards may impact our financial results.
The Financial Accounting Standards Board ("FASB"), in conjunction with the SEC, has several key projects recently
completed or on their agenda that may impact how we currently account for our material transactions, including lease
accounting and other convergence projects with the International Accounting Standards Board. The largest projects, Revenue
from Contracts with Customers and Leases, have been issued and will be adopted by the Company by their effective dates, as
further described in note 1. The Leases standard is expected to have an impact on our financial statements when adopted to
require all of our operating leases for office, ground and equipment leases to be recorded on our balance sheet. Also, we will no
longer capitalize internal leasing compensation costs and legal costs associated with leasing activities under the new standard,
which will result in an increase in our general and administrative costs and a reduction to our net income.
Restrictions on the ownership of the Parent Company's capital stock to preserve its REIT status may delay or prevent a
change in control.
Ownership of more than 7% by value of our outstanding capital stock is prohibited, with certain exceptions, by the
Parent Company's articles of incorporation, for the purpose of maintaining its qualification as a REIT. This 7% limitation may
discourage a change in control and may also (i) deter tender offers for our capital stock, which offers may be attractive to our
stockholders, or (ii) limit the opportunity for our stockholders to receive a premium for their capital stock that might otherwise
exist if an investor attempted to assemble a block in excess of 7% of our outstanding capital stock or to affect a change in
control.
The issuance of the Parent Company's capital stock may delay or prevent a change in control.
The Parent Company's articles of incorporation authorize our Board of Directors to issue up to 30,000,000 shares of
preferred stock and 10,000,000 shares of special common stock and to establish the preferences and rights of any shares issued.
The issuance of preferred stock or special common stock may have the effect of delaying or preventing a change in control.
The provisions of the Florida Business Corporation Act regarding affiliated transactions may also deter potential acquisitions by
preventing the acquiring party from consummating a merger or other extraordinary corporate transaction without the approval
of our disinterested stockholders.
Item 1B. Unresolved Staff Comments
None.
15 Item 2. Properties
The following table is a list of the shopping centers, summarized by state and in order of largest holdings, presented
for Consolidated Properties (excludes properties owned by unconsolidated co-investment partnerships):
Location
Florida
California
Texas
Georgia
Connecticut
Virginia
New York
Ohio
Colorado
Illinois
Massachusetts
North Carolina
Washington
Louisiana
Oregon
Missouri
Maryland
Tennessee
Pennsylvania
Indiana
Delaware
New Jersey
Michigan
South Carolina
Arizona
Total
December 31, 2017
December 31, 2016
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
96
56
23
21
14
8
9
8
14
6
9
10
7
5
7
4
3
3
3
1
1
1
1
1
—
311
11,255
8,549
3,018
2,047
1,458
1,420
1,198
1,196
1,146
1,069
907
895
825
753
741
408
372
317
317
254
232
218
97
51
—
38,743
29.1%
22.1%
7.8%
5.3%
3.8%
3.7%
3.1%
3.1%
3.0%
2.8%
2.3%
2.3%
2.1%
1.9%
1.9%
1.1%
1.0%
0.8%
0.8%
0.7%
0.6%
0.6%
0.3%
0.1%
—%
100.0%
94.7%
96.5%
97.4%
95.2%
96.9%
86.3%
99.0%
99.5%
97.2%
88.3%
99.1%
97.0%
99.4%
94.2%
94.8%
99.7%
86.6%
97.6%
93.2%
97.7%
95.6%
86.7%
98.6%
71.2%
—%
95.5%
37
43
23
15
3
7
1
8
14
5
3
10
6
—
7
4
1
3
3
1
1
1
1
—
1
198
4,168
5,734
3,014
1,395
316
1,233
105
1,184
1,146
817
516
895
672
—
741
408
117
317
317
254
232
218
97
—
36
23,932
17.4%
24.0%
12.6%
5.8%
1.3%
5.2%
0.4%
4.9%
4.8%
3.4%
2.2%
3.8%
2.8%
—%
3.1%
1.7%
0.5%
1.3%
1.3%
1.1%
1.0%
0.9%
0.4%
—%
0.1%
100.0%
93.6%
97.7%
96.0%
93.8%
94.7%
87.5%
—%
98.4%
93.8%
98.7%
95.5%
96.2%
99.3%
—%
93.3%
99.5%
97.9%
96.3%
94.7%
97.9%
93.6%
65.9%
97.1%
—%
60.4%
94.8%
Certain Consolidated Properties are encumbered by mortgage loans of $636.7 million, excluding debt issuance costs
and premiums and discounts, as of December 31, 2017.
The weighted average annual effective rent for the consolidated portfolio of properties, net of tenant concessions, is
$21.01 and $19.70 per square foot ("PSF") as of December 31, 2017 and 2016, respectively.
16 The following table is a list of the shopping centers, summarized by state and in order of largest holdings, presented
for Unconsolidated Properties (includes properties owned by unconsolidated co-investment partnerships):
Location
California
Virginia
North Carolina
Maryland
Florida
Texas
Colorado
Massachusetts
Minnesota
Illinois
Pennsylvania
Washington
New Jersey
Connecticut
New York
Indiana
Oregon
Georgia
South Carolina
Delaware
District of
Columbia
Arizona
Total
December 31, 2017
December 31, 2016
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
21
18
8
11
10
7
5
2
5
4
6
5
3
1
1
2
1
1
1
1
2
2,791
2,554
1,326
1,184
1,040
933
836
726
674
671
666
621
287
186
141
139
93
86
80
64
40
18.4%
16.9%
8.8%
7.8%
6.9%
6.2%
5.5%
4.8%
4.4%
4.4%
4.4%
4.1%
1.9%
1.2%
0.9%
0.9%
0.6%
0.6%
0.5%
0.4%
0.3%
—
115
—
15,138
—%
100.0%
97.0%
94.3%
91.6%
95.8%
97.4%
97.4%
96.2%
95.7%
98.3%
95.5%
95.7%
96.5%
98.2%
100.0%
100.0%
99.1%
98.4%
97.5%
100.0%
90.1%
91.8%
—%
95.6%
20
18
8
11
7
7
5
—
5
4
6
5
2
1
1
2
1
1
1
1
2
2,652
2,551
1,275
1,182
729
932
853
—
674
671
664
621
158
186
141
139
93
86
80
64
40
19.1%
18.3%
9.2%
8.5%
5.2%
6.7%
6.1%
—%
4.8%
4.8%
4.8%
4.6%
1.1%
1.3%
1.0%
1.0%
0.7%
0.6%
0.6%
0.5%
0.3%
1
109
108
13,899
0.8%
100.0%
97.5%
95.1%
95.3%
96.1%
98.4%
98.4%
95.1%
—%
98.6%
95.7%
91.7%
95.2%
100.0%
94.8%
100.0%
100.0%
94.7%
98.5%
100.0%
92.6%
100.0%
89.7%
96.3%
Certain Unconsolidated Properties are encumbered by mortgage loans of $1.5 billion, excluding debt issuance costs
and premiums and discounts, as of December 31, 2017.
The weighted average annual effective rent for the unconsolidated portfolio of properties, net of tenant concessions, is
$20.63 and $19.25 PSF as of December 31, 2017 and 2016, respectively.
17 The following table summarizes the largest tenants occupying our shopping centers for Consolidated Properties plus
our pro-rata share of Unconsolidated Properties, as of December 31, 2017, based upon a percentage of total annualized base
rent (GLA and dollars in thousands):
Tenant
Publix
Kroger
Albertsons/Safeway
TJX Companies
Whole Foods
Ahold/Delhaize
CVS
Nordstrom
L.A. Fitness Sports Club
PETCO
Ross Dress For Less
Bed Bath & Beyond
Trader Joe's
Gap
Dick's Sporting Goods
Wells Fargo Bank
Starbucks
Target
Bank of America
JPMorgan Chase Bank
H.E.B.
Kohl's
Wal-Mart
Best Buy
Walgreens
Percent of
Company
Owned GLA
Annualized
Base Rent
Percent of
Annualized
Base Rent
Number of
Leased
Stores
6.2%
6.5%
4.0%
3.2%
2.2%
1.4%
1.5%
0.7%
1.0%
0.8%
1.3%
1.1%
0.6%
0.4%
0.9%
0.3%
0.3%
1.3%
0.3%
0.2%
0.8%
1.4%
1.3%
0.5%
0.5%
$
28,002
27,560
25,465
20,958
20,133
13,509
12,975
8,747
8,384
8,233
8,072
7,880
7,667
6,542
6,520
6,465
6,423
6,365
5,911
5,855
5,762
5,645
4,935
4,822
4,700
3.1%
3.1%
2.9%
2.4%
2.3%
1.5%
1.5%
1.0%
0.9%
0.9%
0.9%
0.9%
0.9%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
0.6%
0.6%
0.6%
0.5%
0.5%
69
58
46
58
27
16
57
9
12
43
24
16
25
15
8
54
103
6
39
36
5
8
7
7
18
GLA
2,750
2,868
1,772
1,427
970
623
640
320
445
351
564
500
252
197
417
133
137
570
115
109
344
612
573
216
222
Our leases for tenant space under 10,000 square feet generally have initial terms ranging from three to seven years.
Leases greater than 10,000 square feet generally have initial lease terms in excess of five years, mostly comprised of anchor
tenants. Many of the anchor leases contain provisions allowing the tenant the option of extending the term of the lease at
expiration. Our leases provide for the payment of fixed minimum rent, the tenant's pro-rata share of real estate taxes, insurance,
and common area maintenance (“CAM”) expenses, and reimbursement for utility costs if not directly metered.
18 The following table summarizes pro-rata lease expirations for the next ten years and thereafter, for our Consolidated
and Unconsolidated Properties, assuming no tenants renew their leases (GLA and dollars in thousands):
Lease
Expiration
Year
Number of
Tenants with
Expiring Leases
Pro-rata
Expiring GLA
Percent of Total
Company GLA
In Place Base
Rent Expiring
Under Leases
Percent of Base
Rent
Pro-rata
Expiring ABR
(1)
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Thereafter
Total
316
1,055
1,236
1,313
1,216
1,313
575
372
344
306
357
565
8,968
343
2,776
5,224
4,742
4,919
5,658
3,435
2,109
2,003
1,984
1,973
5,945
41,111
0.8% $
6.8%
12.7%
11.5%
12.0%
13.8%
8.4%
5.1%
4.9%
4.8%
4.8%
14.4%
100.0% $
8,718
64,498
100,542
99,892
100,850
121,526
72,658
49,721
47,950
47,744
43,156
105,542
862,797
1.0% $
7.5%
11.7%
11.6%
11.7%
14.1%
8.4%
5.8%
5.6%
5.5%
5.0%
12.1%
100.0% $
25.40
23.23
19.25
21.07
20.50
21.48
21.15
23.58
23.94
24.06
21.87
17.75
21.00
(1) Leases currently under month-to-month rent or in process of renewal.
During 2018, we have a total of 1,055 leases expiring, representing 2.8 million square feet of GLA. These expiring
leases have an average base rent of $23.23 PSF. The average base rent of new leases signed during 2017 was $25.13 PSF.
During periods of recession or when occupancy is low, tenants have more bargaining power, which may result in rental rate
declines on new or renewal leases. In periods of recovery and/or when occupancy levels are high, landlords have more
bargaining power, which generally results in rental rate growth on new and renewal leases. Based on current economic trends
and expectations, the quality and mix of tenants in our centers, and pro-rata percent leased of 95.6%, we expect average base
rent on new and renewal leases during 2018 to meet or exceed average rental rates on leases expiring in 2018. Exceptions may
arise in certain geographic areas or at specific shopping centers based on the local economic situation, competition, location,
quality, and size of the space being leased, among other factors. Additionally, significant changes or uncertainties affecting
micro- or macroeconomic climates may cause significant changes to our current expectations.
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32
Item 3. Legal Proceedings
We are a party to various legal proceedings that arise in the ordinary course of our business. We are not currently
involved in any litigation, nor to our knowledge is any litigation threatened against us, the outcome of which would, in our
judgment based on information currently available to us, have a material adverse effect on our financial position or results of
operations.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities
Our common stock is traded on the New York Stock Exchange under the symbol "REG." The following table sets
forth the high and low sales prices and the cash dividends declared on our common stock by quarter for 2017 and 2016.
2017
2016
Quarter Ended
High Price
Low Price
March 31
June 30
September 30
December 31
$
72.05
69.07
67.67
70.64
61.90
58.63
60.80
61.19
Cash
Dividends
Declared
High Price
Low Price
$
0.51
0.53
0.53
0.53
77.17
83.73
85.35
77.25
66.05
72.35
75.76
65.16
Cash
Dividends
Declared
0.50
0.50
0.50
0.50
We have determined that the dividends paid during 2017 and 2016 on our common stock qualify for the following tax
treatment:
Total
Distribution
per Share
$
2.10
2.00
Ordinary
Dividends
Total Capital
Gain
Distributions
Nontaxable
Distributions
Unrecapt Sec
1250 Gain
1.81
1.06
0.21
0.16
0.08
0.78
0.02
0.16
2017
2016
As of February 9, 2018, there were 65,170 holders of common equity.
We intend to pay regular quarterly distributions to Regency Centers Corporation's common stockholders. Future
distributions will be declared and paid at the discretion of our Board of Directors and will depend upon cash generated by
operating activities, our financial condition, capital requirements, annual dividend requirements under the REIT provisions of
the Internal Revenue Code of 1986, as amended, and such other factors as our Board of Directors deems relevant. In order to
maintain Regency Centers Corporation's qualification as a REIT for federal income tax purposes, we are generally required to
make annual distributions at least equal to 90% of our real estate investment trust taxable income for the taxable year. Under
certain circumstances, which we do not expect to occur, we could be required to make distributions in excess of cash available
for distributions in order to meet such requirements. We have a dividend reinvestment plan under which shareholders may elect
to reinvest their dividends automatically in common stock. Under the plan, we may elect to purchase common stock in the
open market on behalf of shareholders or may issue new common stock to such stockholders.
Under the loan agreement of our line of credit, in the event of any monetary default, we may not make distributions to
stockholders except to the extent necessary to maintain our REIT status.
On February 7, 2018, our board of directors (the "Board") authorized a share repurchase program for up to $250
million of shares of our common stock. The share repurchase program authorizes us to purchase from time to time our
outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased
will be retired. The program is scheduled to expire on February 6, 2020. The timing of share purchases under this new program
depends upon marketplace conditions and other factors, and the program remains subject to the discretion of the Board.
There were no unregistered sales of equity securities during the quarter ended December 31, 2017.
33 The following table represents information with respect to purchases by the Parent Company of its common stock
during the months in the three month period ended December 31, 2017:
Period
October 1, 2017, through
October 31, 2017
November 1, 2017, through
November 30, 2017
December 1, 2017, through
December 31, 2017
Total number of
shares
purchased (1)
Average
price paid
per share
Total number of
shares purchased
as part of publicly
announced plans
or programs
Maximum number or
approximate dollar value
of shares that may yet be
purchased under the plans
or programs
61
—
—
$
$
$
64.31
—
—
—
—
—
—
—
—
(1) Represents shares delivered in payment of withholding taxes in connection with option exercises or
restricted stock vesting by participants under Regency's Long-Term Omnibus Plan.
34
The performance graph furnished below shows Regency's cumulative total stockholder return to the S&P 500 Index,
the FTSE NAREIT Equity REIT Index, and the FTSE NAREIT Equity Shopping Centers index since December 31, 2012. The
stock performance graph should not be deemed filed or incorporated by reference into any other filing made by us under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate the stock
performance graph by reference in another filing.
12/31/12
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
Regency Centers Corporation
S&P 500
FTSE NAREIT Equity REITs
FTSE NAREIT Equity Shopping Centers
$
100.00
100.00
100.00
100.00
101.81
132.39
102.47
104.99
145.11
150.51
133.35
136.45
159.66
152.59
137.61
142.89
166.00
170.84
149.33
148.14
171.96
208.14
157.14
131.31
35 Item 6. Selected Financial Data
The following table sets forth Selected Financial Data for the Company on a historical basis for the five years ended
December 31, 2017 (in thousands, except per share and unit data, number of properties, and ratio of earnings to fixed charges).
This historical Selected Financial Data has been derived from the audited consolidated financial statements. This information
should be read in conjunction with the consolidated financial statements of Regency Centers Corporation and Regency Centers,
L.P. (including the related notes thereto) and Management's Discussion and Analysis of the Financial Condition and Results of
Operations, each included elsewhere in this Form 10-K.
Parent Company
(in thousands, except per share and unit data, number of properties, and ratio of earnings to fixed charges)
2017
(1)
2016
2015
2014
2013
Operating data:
Revenues
Operating expenses
$
984,326
744,763 (2)
Total other expense (income)
Income from operations before equity in income of
investments in real estate partnerships and income taxes
Equity in income of investments in real estate partnerships
Deferred income tax (benefit) of taxable REIT subsidiary
Income from continuing operations
Income (loss) from discontinued operations (4)
Gain on sale of real estate, net of tax
Net income
Income attributable to noncontrolling interests
Net income attributable to the Company
Preferred stock dividends and issuance costs
Net income attributable to common stockholders
NAREIT FFO (5)
Core FFO (5)
Income per common share - diluted (note 13)
Continuing operations
Discontinued operations (4)
Net income attributable to common stockholders
Other information:
Net cash provided by operating activities
Net cash (used in) investing activities
Net cash provided by (used in) financing activities
Dividends paid to common stockholders and unit holders
Common dividends declared per share
Common stock outstanding including exchangeable operating
partnership units
Ratio of earnings to fixed charges (6)
Ratio of earnings to combined fixed charges and preference
dividends (6)
Balance sheet data:
Real estate investments before accumulated depreciation
Total assets
Total debt
Total liabilities
Total stockholders’ equity
Total noncontrolling interests
614,371
403,152 (2)
148,066 (3)
63,153
56,518
—
119,671
—
47,321
166,992
(2,070)
164,922
(21,062)
143,860
277,301
333,957
1.42
—
1.42
569,763
365,098
110,236
94,429
22,508
—
116,937
—
35,606
152,543
(2,487)
150,056
(21,062)
128,994
276,515
288,872
1.36
—
1.36
537,898
353,348
489,007
324,687
83,046
111,741
101,504
31,270
(996)
133,770
—
55,077
188,847
(1,457)
187,390
(21,062)
166,328
269,149
261,506
1.80
—
1.80
52,579
31,718
—
84,297
65,285
1,703
151,285
(1,481)
149,804
(21,062)
128,742
240,621
241,619
0.69
0.71
1.40
141,093
98,470
43,341
(9,737)
151,548
—
27,432
178,980
(2,903)
176,077
(16,128)
159,949
494,843
592,137
1.00
—
1.00
$
$
$
$
471,146
(1,007,980)
568,948
297,360 (7)
(409,671)
88,711 (7)
285,543 (7)
(139,346)
(223,117) (7)
277,742
(210,290)
(34,360)
250,731
(9,817)
(182,579)
323,285
2.10
201,336
2.00
181,691
1.94
172,900
168,095
1.88
1.85
171,715
104,651
97,367
94,262
92,499
2.2
2.1
$ 11,279,125
11,145,717
3,594,977
4,412,663
6,692,052
41,002
2.6
2.1
5,230,198
4,488,906
1,642,420
1,864,404
2,591,301
33,201
2.5
2.1
4,852,106
4,182,881
1,864,285
2,100,261
2,054,109
28,511
2.6
2.2
1.8
1.5
4,743,053
4,385,380
4,197,170
3,913,516
2,021,357
1,854,697
2,260,688
2,052,382
1,906,592
1,843,354
29,890
17,780
(1) 2017 reflects the results of our merger with Equity One on March 1, 2017.
(2) During the years ended December 31, 2017 and 2016, the Company recognized $80.7 million and $6.5 million,
respectively, of merger and integration related costs within Operating expenses associated with the Equity One merger,
which was effective on March 1, 2017.
36 (3) During the year ended December 31, 2016, the Company recognized a $40.6 million charge to settle $220 million of
forward starting interest rate swaps related to new debt previously expected to be issued in 2017. As a result of its July
2016 equity offering and the early redemption of the $300 million notes in August 2016, the Company believed that the
issuance of new fixed rate debt within the remaining period of the forward starting swaps was probable to no longer occur.
Accordingly, the Company ceased hedge accounting and reclassified the $40.6 million paid to settle the forward starting
swaps from Accumulated other comprehensive loss to earnings.
(4) On January 1, 2014, the Company prospectively adopted Financial Accounting Standards Board ("FASB") Accounting
Standards Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and
Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,
which changes the requirements for reporting discontinued operations. Under the new guidance, only disposals
representing a strategic shift in operations should be presented as discontinued operations. No property disposals since
adoption of this ASU qualify as discontinued operations, therefore prior period amounts were not reclassified for property
sales since adoption.
(5) See Item 1, Defined Terms, for the definition of NAREIT FFO and Core FFO and Item 7, Supplemental Earnings
Information, for a reconciliation to the nearest GAAP measure.
(6) See Exhibit 12.1 for additional information regarding the computations of ratio of earnings to fixed charges and ratio of
earnings to combined fixed charges and preference dividends.
(7) In January 2017, the Company adopted ASU 2016-09, Improvements to Share-Based Payment Accounting, resulting in
the reclassification of previously reported employee tax withholdings from Net cash provided by operating activities to
Net cash provided by (used in) financing activities. See note 1 for further discussion.
37 Operating Partnership
(in thousands, except per share and unit data, number of properties, and ratio of earnings to fixed charges)
2017
(1)
2016
2015
2014
2013
Net income attributable to common unit holders
$
160,337
Operating data:
Revenues
Operating expenses
Total other expense (income)
Income from operations before equity in income of
investments in real estate partnerships and income taxes
Equity in income of investments in real estate partnerships
Deferred income tax (benefit) of taxable REIT subsidiary
Income from continuing operations
Income (loss) from discontinued operations (4)
Gain on sale of real estate, net of tax
Net income
Income attributable to noncontrolling interests
Net income attributable to the Partnership
Preferred unit distributions and issuance costs
NAREIT FFO (5)
Core FFO (5)
Income per common unit - diluted (note 13):
Continuing operations
Discontinued operations (4)
Net income attributable to common unit holders
Other information:
Net cash provided by operating activities
Net cash (used in) investing activities
Net cash provided by (used in) financing activities
Distributions paid on common units
Ratio of earnings to fixed charges (6)
Ratio of combined fixed charges and preference dividends to
earnings (6)
Balance sheet data:
Real estate investments before accumulated depreciation
Total assets
Total debt
Total liabilities
Total partners’ capital
Total noncontrolling interests
$
984,326
744,763 (2)
141,093
614,371
403,152 (2)
148,066 (3)
569,763
365,098
110,236
94,429
22,508
—
116,937
—
35,606
152,543
(2,247)
150,296
(21,062)
129,234
276,515
288,872
1.36
—
1.36
537,898
353,348
83,046
101,504
31,270
(996)
133,770
—
55,077
188,847
(1,138)
187,709
(21,062)
166,647
269,149
261,506
1.80
—
1.80
63,153
56,518
—
119,671
—
47,321
166,992
(1,813)
165,179
(21,062)
144,117
277,301
333,957
1.42
—
1.42
297,360 (7)
(409,671)
88,711 (7)
201,336
2.6
285,543 (7)
(139,346)
(223,117) (7)
181,691
2.5
277,742
(210,290)
(34,360)
172,900
2.6
489,007
324,687
111,741
52,579
31,718
—
84,297
65,285
1,703
151,285
(1,205)
150,080
(21,062)
129,018
240,621
241,619
0.69
0.71
1.40
250,731
(9,817)
(182,579)
168,095
1.8
98,470
43,341
(9,737)
151,548
—
27,432
178,980
(2,515)
176,465
(16,128)
$
$
$
494,843
592,137
1.00
—
1.00
471,146
(1,007,980)
568,948
323,285
2.2
2.1
2.1
2.1
2.2
1.5
$ 11,279,125
11,145,717
3,594,977
4,412,663
6,702,959
30,095
5,230,198
4,488,906
1,642,420
1,864,404
2,589,334
35,168
4,852,106
4,182,881
1,864,285
2,100,261
2,052,134
30,486
4,743,053
4,197,170
2,021,357
2,260,688
1,904,678
31,804
4,385,380
3,913,516
1,854,697
2,052,382
1,841,928
19,206
(1) 2017 reflects the results of our merger with Equity One on March 1, 2017.
(2) During the years ended December 31, 2017 and 2016, the Operating Partnership recognized $80.7 million and $6.5
million, respectively, of merger and integration related costs within Operating expenses associated with the Equity One
merger, which was effective on March 1, 2017.
(3) During the year ended December 31, 2016, the Operating Partnership recognized a $40.6 million charge to settle $220
million of forward starting interest rate swaps related to new debt previously expected to be issued in 2017. As a result of
its July 2016 equity offering and the early redemption of the $300 million notes in August 2016, the Operating Partnership
believed that the issuance of new fixed rate debt within the remaining period of the forward starting swaps was probable to
no longer occur. Accordingly, the Operating Partnership ceased hedge accounting and reclassified the $40.6 million paid to
settle the forward starting swaps from Accumulated other comprehensive loss to earnings.
(4) On January 1, 2014, the Operating Partnership prospectively adopted Financial Accounting Standards Board ("FASB")
Accounting Standards Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant
and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,
which changes the requirements for reporting discontinued operations. Under the new guidance, only disposals
representing a strategic shift in operations should be presented as discontinued operations. No property disposals since
adoption of this ASU qualify as discontinued operations, therefore prior period amounts were not reclassified for property
sales since adoption.
(5) See Item 1, Defined Terms, for the definition of NAREIT FFO and Core FFO and Item 7, Supplemental Earnings
Information, for a reconciliation to the nearest GAAP measure.
38 (6) See Exhibit 12.1 for additional information regarding the computations of ratio of earnings to fixed charges and ratio of
earnings to combined fixed charges and preference dividends.
(7) In January 2017, the Company adopted ASU 2016-09, Improvements to Share-Based Payment Accounting, which
resulted in the reclassification of previously reported employee tax withholdings from Net cash provided by operating
activities to Net cash provided by (used in) financing activities. See note 1 for further discussion.
39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executing on our Strategy
During the year ended 2017, we completed the merger with Equity One on March 1, 2017 and acquired 121 properties
representing 16.0 million SF of GLA for $5.2 billion, further enhancing the quality of our operating portfolio of retail shopping
centers. The consolidated net assets and results of operations of Equity One are included in the consolidated financial
statements from the closing date, March 1, 2017.
We had Net income attributable to common stockholders of $159.9 million, net of $80.7 million of merger costs, as compared
to $143.9 million of Net income attributable to common stockholders during the year ended December 31, 2016.
We sustained superior same property NOI growth compared to the average of our shopping center peers:
• We achieved pro-rata same property NOI growth, excluding termination fees, of 3.6%.
• We executed 1,849 leasing transactions representing 6.3 million pro-rata SF of new and renewal leasing, with trailing
twelve month rent spreads of 7.8% on comparable retail operating property spaces.
• At December 31, 2017, our total property portfolio was 95.5% leased, while our same property portfolio was 96.3%
leased.
We developed and redeveloped high quality shopping centers at attractive returns on investment:
• We started five new developments representing a total investment of $197.5 million upon completion, with projected
weighted average returns on investment of 7.3%.
•
Including these new projects, a total of 23 properties were in the process of development or redevelopment at
December 31, 2017, representing a pro-rata investment upon completion of $543.8 million.
We maintained a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and
debt maturities:
•
In January 2017, we issued $300.0 million of 4.4% senior unsecured notes due February 1, 2047, the proceeds of
which were used to redeem all of the $250.0 million 6.625% Series 6 preferred stock and reduce the balance of our
unsecured line of credit (the "Line").
• On March 1, 2017 in conjunction with the merger with Equity One, we increased the commitment amount of our line
to $1.0 billion.
•
In June 2017, we issued an additional $125.0 million of 4.4% senior unsecured notes due February 1, 2047, the
proceeds of which were used to redeem the $75.0 million of 6.0% Series 7 preferred stock on August 23, 2017, and to
reduce the Line balance.
• Also in June 2017, the Company issued an additional $175.0 million of 3.6% senior unsecured public notes due in
2027, with proceeds used to retire $112.0 million of mortgage loans with interest rates ranging from 7.0% to 7.8% on
various properties, and to reduce the Line balance.
• At December 31, 2017, our annualized net debt-to-adjusted EBITDA ratio on a pro-rata basis was 5.4x.
Leasing Activity and Significant Tenants
We believe our high-quality, grocery anchored shopping centers located in densely populated, desirable infill trade
areas create attractive spaces for retail tenants.
40 Pro-rata Occupancy
The following table summarizes pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping
center portfolio:
% Leased – Operating
Anchor space
Shop space
December 31, 2017 December 31, 2016
96.2%
98.3%
92.5%
96.0%
97.8%
93.1%
The decline in shop space percent leased is due to the merger with Equity One, which had lower shop space occupancy
than Regency.
Pro-rata Leasing Activity
The following table summarizes leasing activity, including our pro-rata share of activity within the portfolio of our co-
investment partnerships:
Year ended December 31, 2017
Leasing
Transactions (1)(3)
SF (in
thousands)
Base Rent PSF (2)
Tenant
Improvements
PSF (2)
Leasing
Commissions
PSF (2)
39
87
126
548
1,175
1,723
1,849
895
2,465
3,360
952
2,005
2,957
6,317
$
$
$
$
$
17.34
14.47
15.24
32.45
31.31
31.68
22.93
$
$
$
$
$
9.71
—
2.59
12.06
1.02
4.57
3.52
$
$
$
$
$
4.92
0.46
1.65
13.17
2.40
5.87
3.62
Anchor Leases
New
Renewal
Total Anchor Leases
Shop Space
New
Renewal
Total Shop Space Leases
Total Leases
(1) Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.
(2) Totals for base rent, tenant improvements, and leasing commissions reflect the weighted average PSF.
(3) For the period ending December 31, 2017, amounts include leasing activity of properties acquired from Equity One
beginning March 1, 2017.
Year ended December 31, 2016
Leasing
Transactions (1)
SF (in
thousands)
Base Rent PSF (2)
Tenant
Improvements
PSF (2)
Leasing
Commissions
PSF (2)
Anchor Leases
New
Renewal
Total Anchor Leases (1)
Shop Space
New
Renewal
Total Shop Space Leases (1)
Total Leases
22
84
106
443
987
1,430
1,536
729
1,610
2,339
774
1,502
2,276
4,615
$
$
$
$
$
16.99
14.00
14.94
30.56
31.16
30.95
22.84
$
$
$
$
$
7.95
0.50
2.83
12.29
1.26
5.01
3.90
$
$
$
$
$
2.42
0.54
1.13
14.01
3.87
7.32
4.18
(1) Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.
(2) Totals for base rent, tenant improvements, and leasing commissions reflect the weighted average PSF.
41 Total average pro-rata base rent on signed shop space leases during 2017 was $31.68 PSF and approximates the pro-
rata average annual base rent of all shop space leases due to expire during the next twelve months of $31.72 PSF.
Significant Tenants and Concentrations of Risk
We seek to reduce our operating and leasing risks through geographic diversification and by avoiding dependence on
any single property, market, or tenant. The following table summarizes our most significant tenants, based on their percentage
of annualized base rent:
Anchor
Publix
Kroger
Albertsons/Safeway
TJX Companies
Whole Foods
Number of
Stores
69
58
46
58
27
December 31, 2017
Percentage of
Company-
owned GLA (1)
6.2%
6.5%
4.0%
3.2%
2.2%
Percentage of
Annualized
Base Rent (1)
3.1%
3.1%
2.9%
2.4%
2.3%
(1) Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors.
Bankruptcies and Credit Concerns
Our management team devotes significant time to researching and monitoring retail trends, consumer preferences,
customer shopping behaviors, changes in retail delivery methods, and changing demographics in order to anticipate the
challenges and opportunities impacting the retail industry. A greater shift to e-commerce, large-scale retail business failures,
unemployment, and tight credit markets could negatively impact consumer spending and have an adverse effect on our results
of operations. We seek to mitigate these potential impacts through tenant diversification, re-tenanting weaker tenants with
stronger operators, anchoring our centers with market leading grocery stores that drive foot traffic, and maintaining a presence
in affluent suburbs and dense infill trade areas. As a result of our research and findings, we may reduce new leasing, suspend
leasing, or curtail allowances for construction of leasehold improvements within a certain retail category or to a specific retailer
in order to reduce our risk from bankruptcies and store closings.
We closely monitor the operating performance and rent collections of tenants in our shopping centers as well as those
retailers experiencing significant changes to their business models as a result of reduced customer traffic in their stores and
increased competition from e-commerce sales. Retailers who are unable to withstand these and other business pressures may
file for bankruptcy. Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally have
the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt
tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all
other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any
unsecured claims we hold. Additionally, we may incur significant expense to recover our claim and to release the vacated
space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its
leases, we could experience a significant reduction in our revenues. Tenants who have filed for bankruptcy and continue to
occupy space in our shopping centers represent an aggregate of 0.3% of our annual base rent on a pro-rata basis.
42 Results from Operations
Comparison of the years ended December 31, 2017 and 2016:
Results from operations for the twelve months ended December 31, 2017 reflect the results of our merger with Equity
One on March 1, 2017.
Our total revenues increased as summarized in the following table:
(in thousands)
Minimum rent
Percentage rent
Recoveries from tenants
Other income
Management, transaction, and other fees
Total revenues
Minimum rent changed as follows:
2017
2016
Change
$
$
728,078
6,635
206,675
16,780
26,158
984,326
444,305
4,128
127,677
12,934
25,327
614,371
283,773
2,507
78,998
3,846
831
369,955
•
•
•
•
•
$7.2 million increase from development properties;
$5.2 million increase from acquisitions of operating properties;
$15.1 million increase at same properties reflecting an increase from rental rate growth on new and renewal
leases, contractual rent steps, and our redevelopment properties; and
$261.4 million increase from properties acquired through the Equity One merger;
reduced by $5.2 million from the sale of operating properties.
Percentage rent increased $2.5 million primarily as a result of properties acquired through the Equity One merger.
Recoveries from tenants represent reimbursements to us for tenants' pro-rata share of the operating, maintenance, and
real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased as follows:
•
•
•
•
•
$1.7 million increase from rent commencing at development properties;
$1.9 million increase from acquisitions of operating properties;
$8.4 million increase from same properties associated with higher recoverable costs and an improvement in
recovery rates; and
$68.6 million increase from properties acquired through the Equity One merger;
reduced by $1.7 million from the sale of operating properties.
Other income, which consists of incidental income earned at our centers, increased $3.8 million as follows:
•
•
•
•
$354,000 increase from development properties;
$1.0 million from acquisitions of operating properties; and
$3.9 million from properties acquired through the Equity One merger;
reduced by $1.4 million in same properties primarily due to other fee income in 2016.
43 Changes in our operating expenses are summarized in the following table:
(in thousands)
Depreciation and amortization
Operating and maintenance
General and administrative
Real estate taxes
Other operating expenses
Total operating expenses
2017
2016
Change
$
$
334,201
143,990
67,624
109,723
89,225
744,763
162,327
95,022
65,327
66,395
14,081
403,152
171,874
48,968
2,297
43,328
75,144
341,611
Depreciation and amortization costs changed as follows:
•
•
•
•
•
$2.8 million increase as we began depreciating costs at development properties where tenant spaces were
completed and became available for occupancy;
$2.7 million increase from acquisitions of operating properties and corporate assets;
$2.2 million increase at same properties, attributable primarily to redevelopments; and
$165.9 million increase from properties acquired through the Equity One merger;
reduced by $1.8 million from the sale of operating properties.
Operating and maintenance costs changed as follows:
•
•
•
•
•
•
$1.4 million increase from operations commencing at development properties;
$1.5 million increase from acquisitions of operating properties;
$1.0 million net increase from claims losses within the company's wholly-owned captive insurance program;
$1.0 million increase at same properties primarily attributable to recoverable costs; and
$45.3 million increase from properties acquired through the Equity One merger;
reduced by $1.2 million from the sale of operating properties.
General and administrative changed increased as follows:
•
•
•
$2.2 million increase in the value of participant obligations within the deferred compensation plan, and
$4.6 million increase primarily in compensation costs related to additional staffing as a result of the Equity
One merger, and additional incentive compensation;
reduced by $4.5 million primarily from greater development overhead capitalization based on the progress
and size of current development and redevelopment projects.
Real estate taxes changed as follows:
•
•
•
•
•
$782,000 increase from development properties where capitalization ceased as tenant spaces became
available for occupancy;
$1.3 million increase from acquisitions of operating properties;
$3.6 million increase at same properties from increased tax assessments; and
$38.6 million increase from properties acquired through the Equity One merger;
reduced by $1.0 million from sold properties.
Other operating expenses increased as follows:
•
•
$1.8 million increase in corporate expenses due to an increase in franchise taxes; and
$79.4 million increase primarily attributable to transaction costs related to the Equity One merger in March
2017;
44 2017
2016
Change
The following table presents the components of other expense (income):
(in thousands)
Interest expense, net
Interest on notes payable
$
Interest on unsecured credit facilities
Capitalized interest
Hedge expense
Interest income
Interest expense, net
Provision for impairment
Early extinguishment of debt
Net investment income
Loss on derivative instruments
119,301
14,677
(7,946)
8,408
(1,811)
132,629
—
12,449
(3,985)
—
81,330
5,635
(3,481)
8,408
(1,180)
90,712
4,200
14,240
(1,672)
40,586
Total other expense (income)
$
141,093
148,066
The $41.9 million net increase in total interest expense is due to:
•
$38.0 million increase in interest on notes payable due to:
37,971
9,042
(4,465)
—
(631)
41,917
(4,200)
(1,791)
(2,313)
(40,586)
(6,973)
$26.0 million of additional interest on notes payable assumed with the Equity One merger; and
$29.7 million increase in interest attributable to the issuance of $950 million of new unsecured debt;
offset by $6.9 million decrease in mortgage interest expense primarily due to the payoff of nine
mortgages loans; and
$10.8 million decrease due to the early redemption of our $300 million notes in the third quarter of
2016;
•
•
$9.0 million increase in interest on unsecured credit facilities related to higher average balances including, a
new $300 million term loan which closed on March 1, 2017;
offset by $4.5 million decrease from higher capitalization of interest based on the size and progress of
development and redevelopment projects in process.
We did not recognize any impairments during 2017. During 2016, we recognized $4.2 million of impairment losses on
two operating properties and two land parcels, all of which have since been sold.
During 2017, we repaid nine mortgages with a portion of the proceeds from our unsecured public debt offering in June
2017, and recognized $12.4 million of debt extinguishment costs. In 2016, we recognized a $14.2 million charge in connection
with the early redemption of the $300 million unsecured notes.
Net investment income increased $2.3 million, driven by realized and unrealized gains on investments held within the
non-qualified deferred compensation plan.
During 2016, we recognized a $40.6 million charge to settle $220 million of forward starting interest rate swaps
related to new debt previously expected to be issued in 2017.
45
Our equity in income of investments in real estate partnerships decreased as follows:
(in thousands)
GRI - Regency, LLC (GRIR)
Equity One JV Portfolio LLC (NYC)
Columbia Regency Retail Partners, LLC (Columbia I)
Columbia Regency Partners II, LLC (Columbia II)
Cameron Village, LLC (Cameron)
RegCal, LLC (RegCal)
US Regency Retail I, LLC (USAA)
Regency's
Ownership
40.00%
30.00%
20.00%
20.00%
30.00%
25.00%
20.01%
Other investments in real estate partnerships
50.00%
Total Equity in income of investments in real estate partnerships
2017
2016
Change
$
27,440
29,791
686
3,620
1,530
850
1,403
4,456
3,356
$
43,341
—
4,180
3,240
695
1,080
1,180
16,352
56,518
(2,351)
686
(560)
(1,710)
155
323
3,276
(12,996)
(13,177)
The $13.2 million decrease in our Total Equity in income in investments in real estate partnerships is largely attributed
to:
•
•
•
•
$2.4 million decrease within GRIR driven by gains on sale of real estate that were recognized in 2016, offset
by lower depreciation expense in 2017 related to assets that became fully depreciated in 2016;
$1.7 million decrease within Columbia II due to gains on sale of real estate that were recognized in 2016;
$3.3 million increase within USAA due to gains on sale of real estate recognized in 2017; and
$13.0 million decrease within Other investments in real estate partnerships due to our pro-rata share of gains
on sale of real estate recognized in these partnerships in 2016.
The following represents the remaining components that comprise net income attributable to the common stockholders
and unit holders:
(in thousands)
2017
2016
Change
Income from operations before income taxes
Deferred income tax benefit
Gain on sale of real estate, net of tax
Income attributable to noncontrolling interests
Preferred stock dividends and issuance costs
Net income attributable to common stockholders
Net income attributable to exchangeable operating
partnership units
Net income attributable to common unit holders
$
$
$
141,811
9,737
27,432
(2,903)
(16,128)
159,949
388
160,337
119,671
—
47,321
(2,070)
(21,062)
143,860
257
144,117
22,140
9,737
(19,889)
(833)
4,934
16,089
131
16,220
The $9.7 million income tax benefit during 2017 was primarily due to revaluing the net deferred tax liability at a TRS
entity acquired through the Equity One merger, as a result of the change in corporate tax rates from the 2017 Tax Cuts and Jobs
Act.
During 2017, we sold six operating properties and nine land parcels resulting in gains of $27.4 million, compared to
gains of $47.3 million from the sale of eleven operating properties and sixteen land parcels during 2016.
During 2017, we redeemed both our Series 6 and Series 7 preferred stock, resulting in a decrease to preferred stock
dividends, offset by a charge upon writing off issuance costs.
46 Comparison of the years ended December 31, 2016 and 2015:
Our total revenues increased as summarized in the following table:
(in thousands)
Minimum rent
Percentage rent
Recoveries from tenants
Other income
Management, transaction, and other fees
Total revenues
Minimum rent changed as follows:
2016
2015
Change
$
$
444,305
4,128
127,677
12,934
25,327
614,371
415,155
3,750
116,120
9,175
25,563
569,763
29,150
378
11,557
3,759
(236)
44,608
•
•
•
$11.9 million increase from rent commencing at development properties;
$15.3 million increase from acquisitions of operating properties; and
$7.9 million increase at same properties, reflecting a $9.7 million increase from redevelopments and rental
rate growth on new and renewal leases, offset by a $1.8 million charge to straight line rent primarily
attributable to expected early terminations;
•
reduced by $5.9 million from the sale of operating properties.
Recoveries from tenants represent reimbursements to us for tenants' pro-rata share of the operating, maintenance, and
real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants changed as follows:
•
•
•
•
$3.9 million increase from rent commencing at development properties;
$4.2 million increase from acquisitions of operating properties; and
$5.6 million increase from same properties associated with higher recoverable costs;
reduced by $2.1 million from the sale of operating properties.
Other income, which consists of incidental income earned at our centers, increased $3.8 million as follows:
•
•
$2.3 million in same properties primarily as a result of lease termination and easement fees; and
$1.5 million in parking income related to the acquisition of Market Common Clarendon.
Changes in our operating expenses are summarized in the following table:
(in thousands)
Depreciation and amortization
Operating and maintenance
General and administrative
Real estate taxes
Other operating expenses
Total operating expenses
2016
2015
Change
$
$
162,327
95,022
65,327
66,395
14,081
403,152
146,829
82,978
65,600
61,855
7,836
365,098
15,498
12,044
(273)
4,540
6,245
38,054
Depreciation and amortization costs changed as follows:
•
•
•
•
$4.8 million increase as we began depreciating costs at development properties where tenant spaces were
completed and became available for occupancy;
$8.8 million increase from acquisitions of operating properties; and
$5.8 million increase at same properties, attributable to recent capital improvements and redevelopments;
reduced by $3.9 million from the sale of operating properties and other corporate asset disposals.
47 Operating and maintenance costs changed as follows:
•
•
•
•
$2.6 million increase from operations commencing at development properties;
$6.2 million increase from acquisitions of operating properties; and
$4.8 million increase at same properties primarily attributable to recoverable costs;
reduced by $1.6 million from the sale of operating properties.
Real estate taxes changed as follows:
•
•
•
•
$1.6 million increase from development properties where capitalization ceased as tenant spaces became
available for occupancy;
$2.8 million increase from acquisitions of operating properties; and
$1.4 million increase at same properties from increased tax assessments;
reduced by $1.3 million from sold properties.
Other operating expenses increased $6.2 million primarily due to costs incurred from 2016 acquisition activities,
including costs associated with the merger with Equity One, Inc.
The following table presents the components of other expense (income):
(in thousands)
Interest expense, net
Interest on notes payable
Interest on unsecured credit facilities
Capitalized interest
Hedge expense
Interest income
Interest expense, net
Provision for impairment
Early extinguishment of debt
Net investment income
Loss on derivative instruments
Total other expense (income)
2016
2015
Change
$
$
$
81,330
5,635
(3,481)
8,408
(1,180)
90,712
4,200
14,240
(1,672)
40,586
148,066
98,485
3,566
(6,739)
8,900
(1,590)
102,622
—
8,239
(625)
—
110,236
(17,155)
2,069
3,258
(492)
410
(11,910)
4,200
6,001
(1,047)
40,586
37,830
The $11.9 million decrease in total interest expense is due to:
•
•
•
$17.2 million decrease in interest on notes payable due to lower interest rates from refinancing and
deleveraging activities during 2016 and the early redemption of our $300 million notes in August 2016; offset
by
$2.1 million increase in interest on unsecured credit facilities related to higher average balances on our Line
and a $100 million increase on our Term Loan during 2016; and
$3.3 million increase due to lower interest capitalization on our development and redevelopment projects
based on the status and cumulative spend on the projects in process.
During 2016, we recognized $4.2 million of impairment losses on two operating properties and two land parcels, all of
which have since been sold. We did not recognize any impairments during 2015.
We redeemed all of our outstanding $400 million notes in two tranches occurring in 2016 and 2015. During 2016, we
recognized a $14.2 million charge when redeeming the $300 million notes. During 2015, we early redeemed $100 million of
those same notes, which included an $8.2 million make-whole premium charge.
Net investment income increased $1.0 million, driven by realized and unrealized gains on investments held within the
non-qualified deferred compensation plan during 2016.
48 We recognized a $40.6 million charge to settle $220 million of forward starting interest rate swaps related to new debt
previously expected to be issued in 2017. As a result of our July 2016 equity offering and the early redemption of the $300
million notes in August 2016, the Company believed that the issuance of new fixed rate debt within the remaining period of the
forward starting swaps was probable to no longer occur. Accordingly, we ceased hedge accounting and reclassified the $40.6
million paid to settle the forward starting swaps from Accumulated other comprehensive loss to earnings.
Our equity in income of investments in real estate partnerships increased as follows:
(in thousands)
GRI - Regency, LLC (GRIR)
Columbia Regency Retail Partners, LLC (Columbia I)
Columbia Regency Partners II, LLC (Columbia II)
Cameron Village, LLC (Cameron)
RegCal, LLC (RegCal)
US Regency Retail I, LLC (USAA)
Other investments in real estate partnerships
Total equity in income of investments in real estate
partnerships
Regency's
Ownership
40.00%
20.00%
20.00%
30.00%
25.00%
20.01%
50.00%
2016
2015
Change
$
29,791
4,180
3,240
695
1,080
1,180
18,148
(278)
755
643
576
807
11,643
4,458
2,485
52
504
373
16,352
1,857
14,495
$
56,518
22,508
34,010
The $34.0 million increase in our equity in income in investments in real estate partnerships is largely attributed to (i)
our share of gains on the sale of real estate within our GRIR, Columbia I, Columbia II, and Other investments in real estate
partnerships; (ii) interest expense savings within GRIR resulting from decreased debt balances and refinancing activity at lower
interest rates; and (iii) and a decrease in depreciation expense within GRIR from fully depreciated land improvement assets.
The following represents the remaining components that comprise net income attributable to the common stockholders
and unit holders:
(in thousands)
Income from operations
Gain on sale of real estate, net of tax
Income attributable to noncontrolling interests
Preferred stock dividends and issuance costs
Net income attributable to common stockholders
Net income attributable to exchangeable operating
partnership units
Net income attributable to common unit holders
2016
2015
Change
$
$
$
119,671
47,321
(2,070)
(21,062)
143,860
257
144,117
116,937
35,606
(2,487)
(21,062)
128,994
240
129,234
2,734
11,715
417
—
14,866
17
14,883
During 2016, we sold 11 operating properties and 16 land parcels resulting in gains of $47.3 million, compared to
gains of $35.6 million from the sale of five operating properties and two land parcels during 2015.
Supplemental Earnings Information
We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP,
as we believe these measures improve the understanding of the Company's operating results. We manage our entire real estate
portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships
require partner approval. Therefore, we believe presenting our pro-rata share of operating results regardless of ownership
structure, along with other non-GAAP measures, may assist in comparing the Company's operating results to other REITs. We
continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to
determine how best to provide relevant information to the public, and thus such reported measures could change. See "Defined
Terms" in Part I, Item 1.
Pro-Rata Same Property NOI:
For purposes of evaluating same property NOI on a comparative basis, and in light of the merger with Equity One on
March 1, 2017, we are presenting our same property NOI on a pro forma basis as if the merger had occurred January 1, 2016.
This perspective allows us to evaluate same property NOI growth over a comparable period. The pro forma same property NOI
as adjusted is not necessarily indicative of what the actual same property NOI and growth would have been if the merger had
occurred on January 1, 2016, nor does it purport to represent the same property NOI and growth for future periods.
49 Our pro-rata same property NOI as adjusted, excluding termination fees, changed from the following major
components:
(in thousands)
Base rent (1)
Percentage rent (1)
Recovery revenue (1)
Other income (1)
Operating expenses (1)
2017
2016
Change
$ 782,142
8,499
238,076
14,019
288,940
755,556
10,364
227,322
15,026
279,700
728,568
1,359
26,586
(1,865)
10,754
(1,007)
9,240
25,228
(669)
Pro-rata same property NOI, as adjusted
$ 753,796
Less: Termination fees (1)
690
Pro-rata same property NOI, as adjusted,
excluding termination fees
Pro-rata same property NOI growth, as
adjusted
$ 753,106
727,209
25,897
3.6%
(1) Adjusted for Equity One operating results prior to the merger for these periods. For
additional information and details about the Equity One operating results included herein,
refer to the Same Property NOI reconciliation at the end of the Supplemental Earnings
section.
Base rent increased $26.6 million, driven by increases in rental rate growth on new and renewal leases, contractual rent
steps and rent commencement at redevelopments.
Percentage rent decreased $1.9 million, as a result of lease negotiations to shift percentage rent into base rent upon
renewal, coupled with decline in performance at certain historically larger percentage rent paying tenants.
Recovery revenue increased $10.8 million, as a result of increases in recoverable costs, as noted below, and
improvements in recovery rates.
Other income decreased $1.0 million, due to a reduction in lease termination and other fee income.
Operating expenses increased $9.2 million, primarily due to higher real estate taxes from increases in assessed values.
Same Property Rollforward:
Our same property pool includes the following property count, pro-rata GLA, and changes therein:
(GLA in thousands)
Beginning same property count
Acquired properties owned for entirety of comparable
periods
Developments that reached completion by beginning of
earliest comparable period presented
Disposed properties
Properties acquired through Equity One merger
SF adjustments (1)
Ending same property count
2017
2016
Property
Count
GLA
Property
Count
GLA
289
26,392
300
26,508
1
180
6
443
2
(7)
110
—
395
331
(546)
14,181
63
40,601
2
(19)
—
—
289
342
(933)
—
32
26,392
(1) SF adjustments arise from remeasurements or redevelopments.
50 NAREIT FFO and Core FFO:
Our reconciliation of net income attributable to common stock and unit holders to NAREIT FFO and Core FFO is as
follows:
(in thousands, except share information)
Reconciliation of Net income to NAREIT FFO
Net income attributable to common stockholders
Adjustments to reconcile to NAREIT FFO: (1)
Depreciation and amortization (excluding FF&E)
Provision for impairment to operating properties
Gain on sale of operating properties, net of tax
Exchangeable operating partnership units
NAREIT FFO attributable to common stock and unit holders
Reconciliation of NAREIT FFO to Core FFO
NAREIT FFO attributable to common stock and unit holders
Adjustments to reconcile to Core FFO: (1)
Development pursuit costs
$
$
Deferred income tax benefit
Acquisition pursuit and closing costs
Merger related costs
Gain on sale of land
Provision for impairment to land
(Gain) loss on derivative instruments and hedge
ineffectiveness
Loss on early extinguishment of debt
Preferred redemption charge
Merger related debt offering interest
Hurricane losses
Core FFO attributable to common stockholders
$
2017
2016
$
159,949
143,860
364,908
—
(30,402)
388
494,843
193,451
3,159
(63,426)
257
277,301
494,843
277,301
1,569
(9,737)
138
80,715
(3,623)
—
(15)
12,449
12,227
975
2,596
592,137
1,503
—
2,007
6,539
(8,769)
580
40,589
14,207
—
—
—
333,957
(1) Includes Regency's pro-rata share of unconsolidated investment partnerships, net of pro-rata share
attributable to noncontrolling interests.
51 Reconciliation of Same Property NOI to Nearest GAAP Measure:
Our reconciliation of property revenues and property expenses to Same Property NOI, on a pro-rata basis, is as
follows:
(in thousands)
Net income attributable to common
stockholders
Less:
Management, transaction, and other fees
Gain on sale of real estate, net of tax
Other (2)
Plus:
Depreciation and amortization
General and administrative
Other operating expense, excluding
provision for doubtful accounts
Other expense (income)
Equity in income (loss) of investments
in real estate excluded from NOI (3)
Net income attributable to
noncontrolling interests
Preferred stock dividends and issuance
costs
Same Property NOI for non-ownership
periods of Equity One (4)
Pro-rata NOI, as adjusted
2017
2016
Same
Property
Other (1)
Total
Same
Property
Other (1)
Total
$ 340,455
(180,506)
159,949
278,322
(134,462)
143,860
—
—
33,935
308,311
—
906
44,745
26,158
27,432
13,422
25,890
67,624
74,590
96,348
26,158
27,432
47,357
334,201
67,624
75,496
141,093
—
—
5,849
146,708
—
25,327
47,321
10,295
15,619
65,327
1,966
28,335
10,410
119,731
25,327
47,321
16,144
162,327
65,327
12,376
148,066
51,069
2,221
53,290
31,050
2,902
33,952
—
—
2,903
2,903
16,128
16,128
—
—
2,070
2,070
21,062
21,062
42,245
$ 753,796
—
38,186
42,245
791,982
248,036
728,568
—
19,716
248,036
748,284
(1) Includes revenues and expenses attributable to non-same property, sold property, development properties, corporate
activities, and noncontrolling interests.
(2) Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees,
and noncontrolling interest.
(3) Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, including those separated out above
for our consolidated properties.
(4) NOI from Equity One prior to the merger was derived from the accounting records of Equity One without adjustment.
Equity One's financial information for the period ended February 28, 2017 and the period ended December 31, 2016 was
subject to a limited internal review by Regency. The table below provides Same Property NOI detail for the non-ownership
periods of Equity One.
(in thousands)
Base rent
Percentage rent
Recovery revenue
Other income
Operating expenses
Pro-rata same property NOI, as
adjusted
Less: Termination fees
Pro-rata same property NOI, as
adjusted, excluding termination fees
Two Months Ended
February 2017
Twelve Months Ended
December 2016
$
$
$
43,798
1,143
13,889
611
17,196
42,245
30
42,215
256,326
5,143
79,651
3,647
96,731
248,036
135
247,901
52 Liquidity and Capital Resources
General
We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet,
finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. We
continuously monitor the capital markets and evaluate our ability to issue new debt or equity, to repay maturing debt, or fund
our capital commitments.
Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on
March 1, 2017, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating
Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating
Partnership is a co-issuer and a guarantor on the $500 million of outstanding debt of our Parent Company assumed in the Equity
One merger. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and
will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership
units. Based upon our available sources of capital, our current credit ratings, and the number of high quality, unencumbered
properties we own, we believe our available capital resources are sufficient to meet our expected capital needs.
In addition to its $45.4 million of cash, the Company has the following additional sources of capital available:
(in thousands)
ATM equity program (see note 10 to our Consolidated Financial Statements)
December 31, 2017
Original offering amount
Available capacity
Line of Credit (the "Line") (see note 7 to our Consolidated Financial STatements)
Total commitment amount
Available capacity (1)
Maturity (2)
(1) Net of letters of credit.
(2) The Company has the option to extend the maturity for two additional six-month periods.
$
$
$
$
500,000
500,000
1,000,000
930,600
May 13, 2019
We operate our business such that we expect net cash flow from operating activities will provide the necessary funds
to pay our distributions to our common and preferred stock and unit holders, which were $328.3 million and $222.4 million for
the years ended December 31, 2017 and 2016, respectively. We currently do not have any preferred shares issued and
outstanding. Our dividend distribution policy is set by our Board of Directors, who monitors our financial position. Our Board
of Directors recently declared a common stock dividend of $0.555 per share, payable on March 2, 2018, to shareholders of
record as of February 20, 2018. Future dividends will be declared at the discretion of our Board of Directors and will be subject
to capital requirements and availability. We plan to continue paying an aggregate amount of distributions to our stock and unit
holders that, at a minimum, meet the requirements to continue qualifying as a REIT for federal income tax purposes.
During the next twelve months, we estimate that we will require approximately $256.4 million of cash, including
$238.0 million to complete in-process developments and redevelopments, $6.4 million to repay maturing debt, and $12.0
million to fund our pro-rata share of estimated capital contributions to our co-investment partnerships for repayment of
maturing debt. If we start new developments, redevelop additional shopping centers, commit to new acquisitions, prepay debt
prior to maturity, or repurchase shares of our common stock, our cash requirements will increase. If we refinance maturing
debt, our cash requirements will decrease. To meet our cash requirements, we will utilize cash generated from operations,
proceeds from the sale of real estate, available borrowings from our Line, and when the capital markets are favorable, proceeds
from the sale of equity or the issuance of new long-term debt. In addition, we are under contract to purchase, through
November 2019, up to 100% ownership interest in an operating shopping center valued at $205.0 million. We are currently
expecting to be able to purchase a 30% ownership interest in the property by November 2019.
We endeavor to maintain a high percentage of unencumbered assets. As of December 31, 2017, 85.7% of our wholly-
owned real estate assets were unencumbered. Such assets allow us to access the secured and unsecured debt markets and to
maintain availability on the Line. Our annualized coverage ratio, including our pro-rata share of our partnerships, was 4.1 and
3.3 times for for the periods ended December 31, 2017 and 2016, respectively. We define our coverage ratio as earnings before
interest, taxes, investment transaction profits net of deal costs, depreciation and amortization (“ EBITDA”) divided by the sum
of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.
53 Our Line, Term Loans, and unsecured loans require that we remain in compliance with various covenants, which are
described in note 7 to the Consolidated Financial Statements. We are in compliance with these covenants at December 31, 2017
and expect to remain in compliance.
Summary of Cash Flow Activity
The following table summarizes net cash flows related to operating, investing, and financing activities of the
Company:
(in thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net increase (decrease) in cash and cash
equivalents
Total cash and cash equivalents
2017
471,146
(1,007,980)
568,948
32,114
45,370
$
$
2016
Change
297,360
(409,671)
88,711
(23,600)
13,256
173,786
(598,309)
480,237
55,714
32,114
Net cash provided by operating activities:
Net cash provided by operating activities increased by $173.8 million due to:
•
•
$201.3 million increase in cash from operating income;
$3.1 million increase in operating cash flow distributions from our unconsolidated real estate partnerships;
and, decreased by,
•
$30.7 million net decrease in cash due to timing of cash receipts and payments related to operating activities.
Net cash used in investing activities:
Net cash used in investing activities increased by $598.3 million as follows:
(in thousands)
Cash flows from investing activities:
Acquisition of operating real estate
Costs paid in advance of real estate acquisitions
Acquisition of Equity One, net of cash acquired of $72,534
Real estate development and capital improvements
Proceeds from sale of real estate investments
Issuance of notes receivable
Investments in real estate partnerships
Distributions received from investments in real estate partnerships
Dividends on investment securities
Acquisition of securities
Proceeds from sale of securities
Net cash used in investing activities
2017
2016
Change
$ (124,727)
(4,917)
(648,763)
(347,780)
112,161
(5,236)
(23,529)
36,603
365
(23,535)
21,378
$(1,007,980)
(333,220)
(750)
—
(234,598)
135,269
—
(37,879)
58,810
330
(55,223)
57,590
(409,671)
208,493
(4,167)
(648,763)
(113,182)
(23,108)
(5,236)
14,350
(22,207)
35
31,688
(36,212)
(598,309)
Significant investing and divesting activities included:
• Other than those included with the merger, we invested $124.7 million in 2017 to acquire two operating
properties and two real estate parcels at existing operating properties, compared to three operating properties
for $333.2 million during 2016.
• We issued 65.5 million shares of common stock to the shareholders of Equity One valued at $4.5 billion in a
stock for stock exchange and merged Equity One into the Company on March 1, 2017. As part of the merger,
we paid $648.8 million, net of cash acquired, which was used by Equity One to repay its credit facilities not
assumed by the Company with the merger.
54 • We invested $113.2 million more in 2017 than 2016 on real estate development and capital improvements, as
further detailed in a table below.
• We received proceeds of $112.2 million from the sale of six shopping centers and nine land parcels in 2017,
compared to $135.3 million for 11 shopping centers and 16 land parcels in 2016.
• We invested $23.5 million in our real estate partnerships during 2017 to fund our share of maturing mortgage
debt and development and redevelopment activities, compared to $37.9 million during the same period in
2016, which included contributions to fund the acquisition of an operating property.
• Distributions from our unconsolidated real estate partnerships include return of capital from sales or financing
proceeds. The $36.6 million received in 2017 is driven by the sale of three operating properties and one land
parcel plus our share of proceeds from refinancing certain operating properties within the partnerships.
During the same period in 2016, we received $58.8 million from the sale of ten shopping centers within the
partnerships.
• Acquisition of securities and proceeds from sale of securities pertain to investments held in our captive
insurance company and our deferred compensation plan.
We plan to continue developing and redeveloping shopping centers for long-term investment purposes. We deployed
capital of $347.8 million for the development, redevelopment, and improvement of our real estate properties as comprised of
the following:
(in thousands)
Capital expenditures:
Land acquisitions for development / redevelopment
Building and tenant improvements
Redevelopment costs
Development costs
Capitalized interest
Capitalized direct compensation
$
Real estate development and capital improvements
$
2017
2016
Change
26,688
54,200
133,597
108,611
7,946
16,738
347,780
26,938
32,941
51,226
107,300
3,482
12,711
234,598
(250)
21,259
82,371
1,311
4,464
4,027
113,182
• During both 2017 and 2016 we acquired four land parcels for new development projects.
• Building and tenant improvements increased $21.3 million during the year ended December 31, 2017
primarily related to the overall increase in the size of our portfolio from the merger with Equity One in March
2017.
• Redevelopment expenditures were higher during 2017 due to the timing, magnitude, and number of projects
currently in process, including projects acquired from Equity One. We intend to continuously improve our
portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing
building expansion, facade renovations, new out-parcel building construction, and tenant improvement costs.
The size and scope of each redevelopment project varies with each redevelopment plan.
• Development expenditures were higher in 2017 due to the progress towards completion of our development
projects currently in process. At December 31, 2017 and 2016, we had nine and six development projects,
respectively, that were either under construction or in lease up. See the tables below for more details about
our development projects.
•
Interest is capitalized on our development and redevelopment projects and is based on cumulative actual
development costs expended. We cease interest capitalization when the property is no longer being
developed or is available for occupancy upon substantial completion of tenant improvements, but in no event
would we capitalize interest on the project beyond 12 months after the anchor opens for business.
• We have a staff of employees who directly support our development and redevelopment programs. Internal
compensation costs directly attributable to these activities are capitalized as part of each project. Changes in
the level of future development and redevelopment activity could adversely impact results of operations by
reducing the amount of internal costs for development and redevelopment projects that may be capitalized. A
10% reduction in development and redevelopment activity without a corresponding reduction in development
related compensation costs could result in an additional charge to net income of $1.8 million per year.
55 The following table summarizes our consolidated development projects:
December 31, 2017
(in thousands, except cost PSF)
Property Name
Northgate Marketplace Ph II
The Market at Springwoods Village (2)
Chimney Rock Crossing
The Village at Riverstone
The Field at Commonwealth
Pinecrest Place (3)
Mellody Farm
Indigo Square
Total
Market
Medford, OR
Houston , TX
New York, NY
Houston, TX
Metro DC
Miami, FL
Chicago, IL
Charleston, SC
Start
Date
Q4-15
Q1-16
Q4-16
Q4-16
Q1-17
Q1-17
Q2-17
Q4-17
Estimated
/Actual
Anchor
Opens
Estimated Net
Development
Costs (1)
% of Costs
Incurred (1) GLA
Cost
PSF
GLA (1)
Oct-16
$
May-17
April-18
Oct-18
Aug-18
Jan-18
Oct-18
Feb-19
40,791
27,492
71,005
30,658
45,033
16,427
97,399
16,574
98%
82%
79%
50%
64%
21%
39%
31%
177
89
218
165
187
70
252
51
$
345,379
58% 1,209
$
230
309
326
186
241
235
387
325
286
(1) Includes leasing costs, and is net of tenant reimbursements.
(2) Estimated Net Development Costs are reported at full project cost. Our ownership interest in this consolidated property is
53%.
(3) Estimated Net Development Costs for Pinecrest Place excludes the cost of land, which the Company has leased long term.
The following table summarizes our pro-rata share of unconsolidated development projects. There were no
unconsolidated development projects at December 31, 2016.
(in thousands, except cost PSF)
December 31, 2017
Property Name
Market
Estimated
/Actual
Anchor
Opens
Estimated Net
Development
Costs (1)
Start
Date
% of Costs
Incurred (1)
GLA
Cost PSF
GLA (1)
Midtown East
(1) Includes leasing costs, and is net of tenant reimbursements.
Raleigh, NC
Q4-17
July-19
$
22,015
35%
87
$
253
The following table summarizes our completed consolidated development projects:
(in thousands, except cost PSF)
December 31, 2017
Property Name
Willow Oaks Crossing
Market
Charlotte, NC
The Village at Tustin Legacy
Los Angeles, CA
Completion
Date
Net
Development
Costs (1)
GLA
Cost
PSF
GLA (1)
Q1-17
Q4-17
$
$
13,991
37,122
51,113
69
$
112
181
$
203
331
282
(1) Includes leasing costs and is net of tenant reimbursements.
56
Net cash provided by financing activities:
Net cash flows generated from financing activities increased by $480.2 million during 2017, as follows:
(in thousands)
Cash flows from financing activities:
Equity issuances
Repurchase of common shares in conjunction with tax
withholdings on equity award plans
Preferred stock redemption
Distributions to limited partners in consolidated partnerships, net
Dividend payments and operating partnership distributions
Borrowings on unsecured credit facilities, net
Proceeds from debt issuance
Debt repayments
Payment of loan costs
Proceeds from sale of treasury stock, net
Net cash provided by financing activities
2017
2016
Change
$
88,458
548,920
(460,462)
(18,649)
(325,000)
(8,139)
(328,314)
345,000
1,084,184
(255,421)
(13,271)
100
$
568,948
(7,984)
—
(4,213)
(222,398)
115,000
53,446
(392,755)
(2,233)
928
88,711
(10,665)
(325,000)
(3,926)
(105,916)
230,000
1,030,738
137,334
(11,038)
(828)
480,237
Significant financing activities during the years ended December 31, 2017 and 2016 include the following:
• We raised $88.5 million during December 2017 upon settling the remaining 1,250,000 shares under the
forward equity offering. We raised $548.9 million during 2016 by:
issuing 182,787 shares of common stock through our ATM program at an average price of $68.85
per share resulting in net proceeds of $12.3 million,
issuing 1,850,000 shares under our forward equity offering at an average price of $74.32 per share
resulting in proceeds of $137.5 million, and
issuing 5,000,000 shares of common stock at $79.78 per share resulting in net proceeds of $400.1
million.
• We repurchased for cash a portion of the common stock related to stock based compensation to satisfy
employee federal and state tax withholding requirements. The repurchases increased $10.7 million in 2017
primarily due to the vesting of Equity One's stock based compensation program as a result of the merger.
• We redeemed all of the issued and outstanding shares of our 6.625% Series 6 and 6.000% Series 7 cumulative
redeemable preferred stock on February 16, 2017 and August 23, 2017, respectively, for $325.0 million.
• Net distributions to consolidated partnerships increased $3.9 million primarily due to excess proceeds from
property refinancings during 2017.
• As a result of the shares of common stock issued during 2016 and common shares issued as merger
consideration during 2017, combined with an increase in our quarterly dividend rate, our annual dividend
payments increased $105.9 million.
• During 2017 and 2016, we received proceeds of $300.0 million upon closing a new term loan and $100.0
million of proceeds upon expanding an existing term loan, respectively. The proceeds from the new term loan
were used to repay a $300.0 million Equity One term loan that was not assumed in the merger and proceeds
from the term loan expansion were used to fund acquisition activities. During 2017, we borrowed $45.0
million on our Line, net of repayments, compared to $15.0 million net borrowings in 2016.
• We issued $1.1 billion of debt in 2017 related to the following activity:
In January and June, we issued $650.0 million and $300.0 million of senior unsecured public notes,
respectively. The notes were issued in two tranches of which $425.0 million is due in 2047 and
$525.0 million is due in 2027. The January proceeds of $648.0 million were used to redeem all of
our $250.0 million Series 6 preferred stock and to fund consideration paid to Equity One to repay its
credit facilities not assumed by the Company in the merger.
57
A portion of the $300 million June bond offering proceeds were used to retire approximately $112.0
million of loans secured by mortgages with interest rates ranging from 7.0% to 7.8% on various
properties and to reduce the outstanding balance on the Line. We used the remainder of the proceeds
to redeem all of our $75.0 million Series 7 preferred stock in August and for general corporate
purposes.
Additionally, during 2017 we received proceeds of $122.5 million from mortgage loans and $8.6
million from development construction draws, all within consolidated real estate partnerships.
During 2016, we received $53.4 million in mortgage proceeds upon encumbering two properties.
• We paid $255.4 million to repay or refinance mortgage loans and to pay scheduled principal payments as
compared to $392.8 million in 2016.
Contractual Obligations
We have debt obligations related to our mortgage loans, unsecured notes, unsecured credit facilities and interest rate
swap obligations as described further below and in note 7 and note 15 to the Consolidated Financial Statements. We have
shopping centers that are subject to non-cancelable long-term ground leases where a third party owns and has leased the
underlying land to us to construct and/or operate a shopping center. We also have non-cancelable operating leases pertaining to
office space from which we conduct our business. In addition, at December 31, 2017 we have a commitment to purchase up to
100% ownership interest in an operating property valued at $205.0 million by November 2019. Our current expectation is to
acquire a 30% interest by that date, and is reflected accordingly in the following table.
The following table of Contractual Obligations summarizes our debt maturities, including our pro-rata share of
obligations within co-investment partnerships as of December 31, 2017, and excludes the following:
• Recorded debt premiums or discounts and issuance costs that are not obligations;
• Obligations related to construction or development contracts, since payments are only due upon satisfactory
performance under the contracts;
• Letters of credit of $9.4 million issued to cover our captive insurance program and performance obligations on
certain development projects, which the latter will be satisfied upon completion of the development projects; and
• Obligations for retirement savings plans due to uncertainty around timing of participant withdrawals, which are
solely within the control of the participant, and are further discussed in note 12 to the Consolidated Financial
Statements.
58 Payments Due by Period
2018
2019
2020
2021
2022
Beyond 5
Years
Total
$ 257,062
223,934
659,897
429,423
667,130
2,586,335
$ 4,823,781
43,501
46,768
110,326
114,224
84,095
237,847
636,761
4,744
4,860
4,573
3,684
2,798
8,155
28,814
(216)
(221)
(227)
(115)
—
—
(779)
9,738
10,690
10,432
10,338
10,251
473,817
525,266
(in thousands)
Notes payable:
Regency (1)
Regency's share of
joint ventures (1) (2)
Operating leases:
Regency - office
leases
Subleases:
Regency - office
leases
Ground leases:
Regency
Regency's share of
joint ventures
Purchase commitment
—
60,000
385
391
392
—
392
—
392
18,321
20,273
—
—
60,000
Total
$ 315,214
346,422
785,393
557,946
764,666
3,324,475
$ 6,094,116
(1) Includes interest payments.
(2) We are obligated to contribute our pro-rata share to fund maturities if they are not refinanced. We believe that
our partners are financially sound and have sufficient capital or access thereto to fund future capital requirements.
In the event that a co-investment partner was unable to fund its share of the capital requirements of the co-
investment partnership, we would have the right, but not the obligation, to loan the defaulting partner the amount of
its capital call.
59 Critical Accounting Estimates
Knowledge about our accounting policies is necessary for a complete understanding of our financial statements. The
preparation of our financial statements requires that we make certain estimates that impact the balance of assets and liabilities
as of a financial statement date and the reported amount of income and expenses during a financial reporting period. These
accounting estimates are based upon, but not limited to, our judgments about historical and expected future results, current
market conditions, and interpretation of industry accounting standards. They are considered to be critical because of their
significance to the financial statements and the possibility that future events may differ from those judgments, or that the use of
different assumptions could result in materially different estimates. We review these estimates on a periodic basis to ensure
reasonableness; however, the amounts we may ultimately realize could differ from such estimates.
Accounts Receivable and Straight Line Rent
Minimum rent, percentage rent, and expense recoveries from tenants for common area maintenance costs, insurance
and real estate taxes are the Company's principal source of revenue. As a result of generating this revenue, we will routinely
have accounts receivable due from tenants. We are subject to tenant defaults and bankruptcies that may affect the collection of
outstanding receivables. To address the collectability of these receivables, we analyze historical tenant collection rates, write-
off experience, tenant credit-worthiness and current economic trends when evaluating the adequacy of our allowance for
doubtful accounts and straight line rent reserve. Although we estimate uncollectible receivables and provide for them through
charges against income, actual experience may differ from those estimates.
Real Estate Investments
Acquisition of Real Estate Investments
Upon acquisition of real estate operating properties, the Company estimates the fair value of acquired tangible assets
(consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities
(consisting of above and below-market leases and in-place leases), assumed debt, and any noncontrolling interest in the
acquiree at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these
estimates, the Company allocates the estimated fair value to the applicable assets and liabilities. Any excess consideration
above the fair value allocated to the applicable assets and liabilities results in goodwill. Fair value is determined based on an
exit price approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The Company expenses transaction costs associated
with business combinations in the period incurred and capitalizes costs associated with asset acquisitions.
We strategically co-invest with partners to own, manage, acquire, develop and redevelop operating properties. We
analyze our investments in real estate partnerships in order to determine whether the entity should be consolidated. If it is
determined that these investments do not require consolidation because the entities are not variable interest entities (“VIEs”),
we are not considered the primary beneficiary of the entities determined to be VIEs, we do not have voting control, and/or the
limited partners (or non-managing members) have substantive kick-out or participation rights, then the selection of the
accounting method used to account for our investments in real estate partnerships is generally determined by our voting
interests and the degree of influence we have over the entity. Management uses its judgment when making these
determinations. We use the equity method of accounting for investments in real estate partnerships when we have significant
influence but do not have a controlling financial interest. Under the equity method, we record our investments in and advances
to these entities as investments in real estate partnerships in our consolidated balance sheets, and our proportionate share of
earnings or losses earned by the joint venture is recognized in equity in income (loss) of investments in real estate partnerships
in our consolidated statements of operations.
Development of Real Estate Assets and Cost Capitalization
We capitalize the acquisition of land, the construction of buildings, and other specifically identifiable development
costs incurred by recording them in properties in development in our accompanying Consolidated Balance Sheets. Other
specifically identifiable development costs include pre-development costs essential to the development process, as well as,
interest, real estate taxes, and direct employee costs incurred during the development period. Once a development property is
substantially complete and held available for occupancy, these indirect costs are no longer capitalized.
•
Pre-development costs are incurred prior to land acquisition during the due diligence phase and include
contract deposits, legal, engineering, and other professional fees related to evaluating the feasibility of
developing a shopping center. If we determine it is probable that a specific project undergoing due diligence
will not be developed, we immediately expense all related capitalized pre-development costs not considered
recoverable.
•
Interest costs are capitalized to each development project based on applying our weighted average borrowing
rate to that portion of the actual development costs expended. We cease interest cost capitalization when the
60 property is no longer being developed or is available for occupancy upon substantial completion of tenant
improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor
opens for business. During the years ended December 31, 2017, 2016, and 2015, we capitalized interest of
$7.9 million, $3.5 million, and $6.7 million, respectively, on our development projects.
• Real estate taxes are capitalized to each development project over the same period as we capitalize interest.
• We have a staff of employees who directly support our development program. All direct internal costs
attributable to these development activities are capitalized as part of each development project. The
capitalization of costs is directly related to the actual level of development activity occurring. During the
years ended December 31, 2017, 2016, and 2015, we capitalized $17.6 million, $13.0 million, and $13.8
million, respectively, of direct internal costs incurred to support our development program.
Valuation of Real Estate Investments
In accordance with GAAP, we evaluate our real estate for impairment whenever there are indicators, including
property operating performance and general market conditions, that the carrying value of our real estate properties (including
any related amortizable intangible assets or liabilities) may not be recoverable. If such indicators occur, we compare the current
carrying value of the asset to the estimated undiscounted cash flows that are directly associated with the use and ultimate
disposition of the asset. Our estimated cash flows are based on several key assumptions, including rental rates, costs of tenant
improvements, leasing commissions, anticipated hold period, comparable sales information, and assumptions regarding the
residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and the
resulting impairment, if any, could differ from the actual gain or loss recognized upon ultimate sale in an arm's length
transaction. If the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized
equal to the excess of carrying value over fair value. Changes in our disposition strategy or changes in the marketplace may
alter the hold period of an asset or asset group, which may result in an impairment loss and such loss could be material to the
Company's financial condition or operating performance. In estimating the fair value of undeveloped land, we generally use
market data and comparable sales information.
We evaluate our investments in real estate partnerships for impairment whenever there are indicators, including
underlying property operating performance and general market conditions, that the value of our investments in real estate
partnerships may be impaired. An investment in a real estate partnerships is considered impaired only if we determine that its
fair value is less than the net carrying value of the investment in that real estate partnerships on an other-than-temporary basis.
Cash flow projections for the investments consider property level factors, such as expected future operating income, trends and
prospects, as well as the effects of demand, competition and other factors. We consider various qualitative factors to determine
if a decrease in the value of our investment is other-than-temporary. These factors include the age of the real estate
partnerships, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the
entity and relationships with our partners and banks. If we believe that the decline in the fair value of the investment is
temporary, no impairment charge is recorded. If our analysis indicates that there is an other-than-temporary impairment related
to the investment in a particular real estate partnership, the carrying value of the investment will be adjusted to an amount that
reflects the estimated fair value of the investment.
Derivative Instruments
The Company utilizes financial derivative instruments to manage risks associated with changing interest rates.
Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities
that result in the receipt or future payment of known and uncertain cash amounts, the amount of which are determined by
interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and
duration of the Company's known or expected cash payments principally related to the Company's borrowings. For additional
information on the Company’s use and accounting for derivatives, see Notes 1 and 8 to the Consolidated Financial Statements.
The Company assesses effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective
portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in other comprehensive
income which is included in accumulated other comprehensive loss on our consolidated balance sheet and our consolidated statement
of equity. Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not
perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. If a cash flow hedge
is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges
is recognized in earnings in the period affected.
The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques
including expected discounted cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including
the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The
Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective
counterparty's nonperformance risk in the fair value measurements.
61 Recent Accounting Pronouncements
See Note 1 to Consolidated Financial Statements.
Environmental Matters
We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining
primarily to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground
petroleum storage tanks. We believe that the tenants who currently operate dry cleaning plants or gas stations do so in
accordance with current laws and regulations. Generally, we use all legal means to cause tenants to remove dry cleaning plants
from our shopping centers or convert them to more environmentally friendly systems. Where available, we have applied and
been accepted into state-sponsored environmental programs. We have a blanket environmental insurance policy for third-party
liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also
placed environmental insurance, where possible, on specific properties with known contamination, in order to mitigate our
environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily
remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.
As of December 31, 2017 we and our Investments in real estate partnerships had accrued liabilities of $9.9 million for
our pro-rata share of environmental remediation. We believe that the ultimate disposition of currently known environmental
matters will not have a material effect on our financial position, liquidity, or results of operations; however, we can give no
assurance that existing environmental studies on our shopping centers have revealed all potential environmental liabilities; that
any previous owner, occupant or tenant did not create any material environmental condition not known to us; that the current
environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby
properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation
will not result in additional environmental liability to us.
Off-Balance Sheet Arrangements
We do not have off-balance sheet arrangements, financings, or other relationships with other unconsolidated entities
(other than our unconsolidated investment partnerships) or other persons, also known as variable interest entities, not previously
discussed. Our unconsolidated investment partnership properties have been financed with non-recourse loans. We have no
guarantees related to these loans.
Inflation/Deflation
Inflation has been historically low and has had a minimal impact on the operating performance of our shopping
centers; however, inflation may become a greater concern in the near future. Most all of our long-term leases contain
provisions designed to mitigate the adverse impact of inflation, which require tenants to pay their pro-rata share of operating
expenses, including common-area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to
increases in costs and operating expenses resulting from inflation. In addition, many of our leases are for terms of less than ten
years, which permits us to seek increased rents upon re-rental at market rates. However, during deflationary periods or periods
of economic weakness, minimum rents and percentage rents will decline as the supply of available retail space exceeds demand
and consumer spending declines. Occupancy declines will result in lower recovery rates of our operating expenses.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to two significant components of interest rate risk:
• We have a Line commitment, as further described in Note 7 to the Consolidated Financial Statements, which
has a variable interest rate that is based upon an annual rate of LIBOR plus 0.925%. LIBOR rates charged on
our Line change monthly. The spread on the Line is dependent upon maintaining specific credit ratings. If
our credit ratings are downgraded, the spread on the Line would increase, resulting in higher interest costs.
The interest rate spread based on our credit rating ranges from LIBOR plus 0.875% to LIBOR plus 1.550%.
• We are also exposed to changes in interest rates when we refinance our existing long-term fixed rate debt.
The objective of our interest rate risk management program is to limit the impact of interest rate changes on
earnings and cash flows. To achieve these objectives, we borrow primarily at fixed interest rates and may
enter into derivative financial instruments such as interest rate swaps, caps, or treasury locks in order to
62 mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate
transactions for speculative purposes. Our interest rate swaps are structured solely for the purpose of interest
rate protection.
We continuously monitor the capital markets and evaluate our ability to issue new debt to repay maturing debt or fund
our commitments. Based upon the current capital markets, our current credit ratings, our current capacity under our unsecured
credit facilities, and the number of high quality, unencumbered properties that we own which could collateralize borrowings,
we expect that we will be able to successfully issue new secured or unsecured debt to fund these debt obligations.
Our interest rate risk is monitored using a variety of techniques. The table below presents the principal cash flows,
weighted average interest rates of remaining debt, and the fair value of total debt as of December 31, 2017 (dollars in
thousands). The table is presented by year of expected maturity to evaluate the expected cash flows and sensitivity to interest
rate changes. Although the average interest rate for variable rate debt is included in the table, those rates represent rates that
existed as of December 31, 2017 and are subject to change on a monthly basis. In addition, the Company continually assesses
the market risk for its floating rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash
flows by approximately $1.0 million per year based on $36.3 million of floating rate mortgage debt and $60.0 million of
floating rate line of credit debt outstanding at December 31, 2017. If the Company increases its line of credit balance in the
future, additional decreases to future earnings and cash flows would occur.
Further, the table below incorporates only those exposures that exist as of December 31, 2017 and does not consider
exposures or positions that could arise after that date. Since firm commitments are not presented, the table has limited
predictive value. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the
exposures that arise during the period, our hedging strategies at that time, and actual interest rates.
Fixed rate debt
$122,867
22,578
539,702
300,427
582,466
1,947,384
3,515,424
3,586,673
2018
2019
2020
2021
2022
Thereafter
Total
Fair Value
Average interest rate for all
fixed rate debt (1)
Variable rate LIBOR debt
Average interest rate for all
variable rate debt (1)
3.89%
3.88%
3.83%
3.70%
3.89%
$
—
68,569
—
27,750
—
3.91%
—
96,319
96,371
—%
2.16%
—%
2.39%
—%
—%
—
(1) Average interest rates at the end of each year presented.
63 This page intentionally left blank.
64 Item 8. Consolidated Financial Statements and Supplementary Data
Regency Centers Corporation and Regency Centers, L.P.
Index to Financial Statements
Reports of Independent Registered Public Accounting Firm
Regency Centers Corporation:
Consolidated Balance Sheets as of December 31, 2017 and 2016
Consolidated Statements of Operations for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Equity for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015
Regency Centers, L.P.:
Consolidated Balance Sheets as of December 31, 2017 and 2016
Consolidated Statements of Operations for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Capital for the years ended December 31, 2017, 2016, and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015
Notes to Consolidated Financial Statements
Financial Statement Schedule
67
71
72
73
74
76
79
80
81
82
84
86
Schedule III - Consolidated Real Estate and Accumulated Depreciation - December 31, 2017
128
All other schedules are omitted because of the absence of conditions under which they are required, materiality or because
information required therein is shown in the consolidated financial statements or notes thereto.
65 This page intentionally left blank.
66 Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Regency Centers Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Regency Centers Corporation and subsidiaries (the “Company”)
as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, equity, and cash
flows for each of the years in the three year period ended December 31, 2017, and the related notes and the financial statement
schedule III - Real Estate and Accumulated Depreciation (collectively, the “consolidated financial statements”). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three year period ended December
31, 2017, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 27, 2018, expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP
We have served as the Company's auditor since 1993.
Jacksonville, Florida
February 27, 2018
Certified Public Accountants
67 Report of Independent Registered Public Accounting Firm
The Stockholders and Board of Directors
Regency Centers Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Regency Centers Corporation and subsidiaries' (the “Company”) internal control over financial reporting as of
December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements
of operations, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31,
2017, and the related notes and financial statement schedule III - Real Estate and Accumulated Depreciation (collectively, the
“consolidated financial statements”), and our report dated February 27, 2018, expressed an unqualified opinion on those
consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Jacksonville, Florida
February 27, 2018
Certified Public Accountants
68 Report of Independent Registered Public Accounting Firm
To the Partners
Regency Centers, L.P.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Regency Centers, L.P. and subsidiaries (the “Partnership”) as
of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, capital, and cash flows
for each of the years in the three year period ended December 31, 2017, and the related notes and the financial statement schedule
III - Real Estate and Accumulated Depreciation (collectively, the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December
31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three year period ended December
31, 2017, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 27, 2018, expressed an unqualified opinion on the effectiveness of the Partnership’s
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP
We have served as the Partnership's auditor since 1998.
Jacksonville, Florida
February 27, 2018
Certified Public Accountants
69 Report of Independent Registered Public Accounting Firm
The the Partners
Regency Centers, L.P.:
Opinion on Internal Control Over Financial Reporting
We have audited Regency Centers, L.P. and subsidiaries' (the “Partnership“) internal control over financial reporting as of December
31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated balance sheets of the Partnership as of December 31, 2017 and 2016, the related consolidated
statements of operations, comprehensive income, capital, and cash flows for each of the years in the three-year period ended
December 31, 2017, and the related notes and financial statement schedule III - Real Estate and Accumulated Depreciation
(collectively, the “consolidated financial statements”), and our report dated February 27, 2018, expressed an unqualified opinion
on those consolidated financial statements.
Basis for Opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Jacksonville, Florida
February 27, 2018
Certified Public Accountants
70 REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
December 31, 2017 and 2016
(in thousands, except share data)
Assets
Real estate investments at cost (notes 1, 2 and 3):
Land
Buildings and improvements
Properties in development
Less: accumulated depreciation
Investments in real estate partnerships (note 4)
Net real estate investments
Cash and cash equivalents
Restricted cash
Tenant and other receivables, net (note 1)
Deferred leasing costs, less accumulated amortization of $93,291 and $83,529 at December 31, 2017 and
2016, respectively
Acquired lease intangible assets, less accumulated amortization of $148,280 and $56,695 at December 31,
2017 and 2016, respectively (note 5)
Other assets (note 1)
Total assets
Liabilities and Equity
Liabilities:
Notes payable (note 7)
Unsecured credit facilities (note 7)
Accounts payable and other liabilities
Acquired lease intangible liabilities, less accumulated amortization of $56,550 and $23,538 at
December 31, 2017 and 2016, respectively (note 5)
Tenants’ security and escrow deposits and prepaid rent
Total liabilities
Commitments and contingencies (notes 14 and 15)
Equity:
Stockholders’ equity (note 10):
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 13,000,000 Series 6 and 7
shares issued and outstanding at December 31, 2016, with liquidation preferences of $25 per share
Common stock $0.01 par value per share, 220,000,000 and 150,000,000 shares authorized; 171,364,908
and 104,497,286 shares issued at December 31, 2017 and 2016, respectively
Treasury stock at cost, 366,628 and 347,903 shares held at December 31, 2017 and 2016, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Distributions in excess of net income
Total stockholders’ equity
Noncontrolling interests (note 10):
Exchangeable operating partnership units, aggregate redemption value of $24,206 and $10,630 at
December 31, 2017 and 2016, respectively
Limited partners’ interests in consolidated partnerships
Total noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
2017
2016
$ 4,667,744
5,910,686
314,391
10,892,821
1,339,771
9,553,050
386,304
9,939,354
45,370
4,011
170,985
1,660,424
3,092,197
180,878
4,933,499
1,124,391
3,809,108
296,699
4,105,807
13,256
4,623
111,722
80,044
69,000
478,826
427,127
$11,145,717
118,831
65,667
4,488,906
$ 2,971,715
623,262
234,272
537,401
46,013
4,412,663
—
1,363,925
278,495
138,936
54,180
28,868
1,864,404
—
—
325,000
1,714
1,045
(18,307)
7,873,104
(6,289)
(1,158,170)
6,692,052
(17,062)
3,294,923
(18,346)
(994,259)
2,591,301
10,907
30,095
41,002
6,733,054
$11,145,717
(1,967)
35,168
33,201
2,624,502
4,488,906
71 REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
For the years ended December 31, 2017, 2016, and 2015
(in thousands, except per share data)
2017
2016
2015
Revenues:
Minimum rent
Percentage rent
Recoveries from tenants and other income
Management, transaction, and other fees
Total revenues
Operating expenses:
Depreciation and amortization
Operating and maintenance
General and administrative
Real estate taxes
Other operating expenses
Total operating expenses
Other expense (income):
Interest expense, net of interest income of $1,811, $1,180, and $1,590 in 2017, 2016, and
2015, respectively
Provision for impairment
Early extinguishment of debt
Net investment income, including unrealized (gains) losses of ($1,136), ($773), and
$1,734 in 2017, 2016, and 2015, respectively (note 12)
Loss on derivative instruments
Total other expense (income)
Income from operations before equity in income of investments in real estate
partnerships and income taxes
Equity in income of investments in real estate partnerships (note 4)
Deferred income tax (benefit) of taxable REIT subsidiary
Income from operations
Gain on sale of real estate, net of tax
Net income
Noncontrolling interests:
Exchangeable operating partnership units
Limited partners’ interests in consolidated partnerships
Income attributable to noncontrolling interests
Net income attributable to the Company
Preferred stock dividends and issuance costs
Net income attributable to common stockholders
Income per common share - basic (note 13)
Income per common share - diluted (note 13)
See accompanying notes to consolidated financial statements.
$
$
$
$
728,078
6,635
223,455
26,158
984,326
334,201
143,990
67,624
109,723
89,225
744,763
132,629
—
12,449
(3,985)
—
141,093
98,470
43,341
(9,737)
151,548
27,432
178,980
(388)
(2,515)
(2,903)
176,077
(16,128)
159,949
444,305
4,128
140,611
25,327
614,371
162,327
95,022
65,327
66,395
14,081
403,152
90,712
4,200
14,240
(1,672)
40,586
148,066
63,153
56,518
—
119,671
47,321
166,992
(257)
(1,813)
(2,070)
164,922
(21,062)
143,860
415,155
3,750
125,295
25,563
569,763
146,829
82,978
65,600
61,855
7,836
365,098
102,622
—
8,239
(625)
—
110,236
94,429
22,508
—
116,937
35,606
152,543
(240)
(2,247)
(2,487)
150,056
(21,062)
128,994
1.00
1.00
1.43
1.42
1.37
1.36
72 REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2017, 2016, and 2015
(in thousands)
Net income
Other comprehensive (loss) income:
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments
Reclassification adjustment of derivative instruments included in net income
Available for sale securities
Unrealized (loss) gain on available-for-sale securities
Other comprehensive income (loss)
Comprehensive income
Less: comprehensive income (loss) attributable to noncontrolling interests:
Net income attributable to noncontrolling interests
Other comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to the Company
$
See accompanying notes to consolidated financial statements.
2017
178,980
$
2016
166,992
2015
152,543
1,151
11,103
(10,332)
51,139
(10,089)
9,152
(8)
12,246
191,226
2,903
189
3,092
188,134
24
40,831
207,823
2,070
484
2,554
205,269
(43)
(980)
151,563
2,487
(35)
2,452
149,111
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75
REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 2017, 2016, and 2015
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
2017
2016
2015
$
178,980
166,992
152,543
Depreciation and amortization
Amortization of deferred loan cost and debt premium
Net accretion of above and below market lease intangibles, net
Stock-based compensation, net of capitalization
Equity in income of investments in real estate partnerships
Gain on sale of real estate, net of tax
Provision for impairment
Early extinguishment of debt
Deferred income tax benefit of taxable REIT subsidiary
Distribution of earnings from operations of investments in real estate partnerships
Settlement of derivative instruments
Gain on derivative instruments
Deferred compensation expense
Realized and unrealized gain on investments (note 12)
Changes in assets and liabilities:
Restricted cash
Accounts receivable, net
Straight-line rent receivable, net
Deferred leasing costs
Other assets (note 1)
Accounts payable and other liabilities
Tenants’ security and escrow deposits and prepaid rent
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of operating real estate
Costs paid in advance of real estate acquisitions
Acquisition of Equity One, net of cash acquired of $72,534
Real estate development and capital improvements
Proceeds from sale of real estate investments
(Issuance) / Collection of notes receivable
Investments in real estate partnerships
Distributions received from investments in real estate partnerships
Dividends on investment securities
Acquisition of securities
Proceeds from sale of securities
Net cash used in investing activities
334,201
9,509
(23,144)
20,549
(43,341)
(27,432)
—
12,449
(9,737)
53,502
—
76
3,844
(3,837)
1,362
(7,077)
(19,004)
(14,448)
9,536
(2,114)
(2,728)
471,146
(124,727)
(4,917)
(648,763)
(347,780)
112,161
(5,236)
(23,529)
36,603
365
(23,535)
21,378
(1,007,980)
162,327
9,762
(3,879)
10,652
(56,518)
(47,321)
4,200
14,240
—
50,361
—
—
1,655
(1,673)
59
(1,581)
(7,219)
(10,349)
673
5,543
(564)
297,360
(333,220)
(750)
—
(234,598)
135,269
—
(37,879)
58,810
330
(55,223)
57,590
(409,671)
146,829
9,677
(1,598)
11,081
(22,508)
(35,606)
—
8,239
—
46,646
(7,267)
—
207
(626)
1,926
(2,059)
(8,231)
(12,949)
(496)
(3,810)
3,545
285,543
(42,983)
(2,250)
—
(205,103)
108,822
1,719
(20,054)
23,801
243
(31,941)
28,400
(139,346)
76 REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 2017, 2016, and 2015
(in thousands)
Cash flows from financing activities:
Net proceeds from common stock issuance
Repurchase of common shares in conjunction with tax withholdings on equity award plans
Proceeds from sale of treasury stock
Acquisition of treasury stock
Redemption of preferred stock and partnership units
Distributions to limited partners in consolidated partnerships, net
Distributions to exchangeable operating partnership unit holders
Dividends paid to common stockholders
Dividends paid to preferred stockholders
Repayment of fixed rate unsecured notes
Proceeds from issuance of fixed rate unsecured notes, net
Proceeds from unsecured credit facilities
Repayment of unsecured credit facilities
Proceeds from notes payable
Repayment of notes payable
Scheduled principal payments
Payment of loan costs
Early redemption costs
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $7,946, $3,482, and $6,740 in 2017,
2016, and 2015, respectively)
Cash (received) paid for income taxes
Supplemental disclosure of non-cash transactions:
Exchangeable operating partnership units issued for acquisition of real estate
Mortgage loans assumed for the acquisition of operating real estate
Change in fair value of securities available-for-sale
Common stock issued for dividend reinvestment plan
Stock-based compensation capitalized
Contributions from limited partners in consolidated partnerships, net
Common stock issued for dividend reinvestment in trust
Contribution of stock awards into trust
Distribution of stock held in trust
Equity One Merger:
Notes payable assumed in Equity One merger, at fair value
Common stock exchanged for Equity One shares
Deconsolidation of previously consolidated partnership:
Real estate, net
Investments in real estate partnerships
Notes payable
Other assets and liabilities
Limited partners' interest in consolidated partnerships
See accompanying notes to consolidated financial statements.
2017
2016
2015
88,458
(18,649)
100
—
(325,000)
(8,139)
(635)
(322,650)
(5,029)
—
953,115
1,100,000
(755,000)
131,069
(232,839)
(10,162)
(13,271)
(12,420)
568,948
32,114
13,256
45,370
548,920
(7,984)
957
(29)
—
(4,213)
(307)
(201,029)
(21,062)
(300,000)
—
460,000
(345,000)
53,446
(72,803)
(5,860)
(2,233)
(14,092)
88,711
(23,600)
36,856
13,256
198,494
(9,906)
—
—
—
(5,341)
(299)
(181,392)
(21,062)
(450,000)
248,160
445,000
(355,000)
4,316
(76,168)
(5,878)
(5,998)
(8,043)
(223,117)
(76,920)
113,776
36,856
109,956
(269)
82,950
—
101,527
1,015
$
$
$
$
$
$
$
$
$
$
$
$
13,100
27,000
(8)
1,210
3,210
186
557
1,372
677
757,399
$
$ 4,471,808
$
$
$
$
$
—
—
—
—
—
—
—
24
1,070
2,963
8,755
728
1,538
4,114
—
—
14,144
(3,355)
(9,415)
571
(2,099)
—
42,799
(43)
1,250
2,988
13
833
1,651
1,898
—
—
—
—
—
—
—
77 This page intentionally left blank.
78 REGENCY CENTERS, L.P.
Consolidated Balance Sheets
December 31, 2017 and 2016
(in thousands, except unit data)
Assets
Real estate investments at cost (notes 1, 2 and 3):
Land
Buildings and improvements
Properties in development
Less: accumulated depreciation
Investments in real estate partnerships (note 4)
Net real estate investments
Cash and cash equivalents
Restricted cash
Tenant and other receivables, net (note 1)
Deferred leasing costs, less accumulated amortization of $93,291 and $83,529 at December 31, 2017 and
2016, respectively
Acquired lease intangible assets, less accumulated amortization of $148,280 and $56,695 at December 31,
2017 and 2016, respectively (note 5)
Other assets (note 1)
Total assets
Liabilities and Capital
Liabilities:
Notes payable (note 7)
Unsecured credit facilities (note 7)
Accounts payable and other liabilities
Acquired lease intangible liabilities, less accumulated amortization of $56,550 and $23,538 at
December 31, 2017 and 2016, respectively (note 5)
Tenants’ security and escrow deposits and prepaid rent
Total liabilities
Commitments and contingencies (notes 14 and 15)
Capital:
Partners’ capital (note 10):
Preferred units of general partner, $0.01 par value per unit, 13,000,000 units issued and outstanding at
December 31, 2016, liquidation preference of $25 per unit
General partner; 171,364,908 and 104,497,286 units outstanding at December 31, 2017 and 2016,
respectively
Limited partners; 349,902 and 154,170 units outstanding at December 31, 2017 and 2016
Accumulated other comprehensive loss
Total partners’ capital
Noncontrolling interests (note 10):
Limited partners’ interests in consolidated partnerships
Total noncontrolling interests
Total capital
Total liabilities and capital
See accompanying notes to consolidated financial statements.
2017
2016
$ 4,667,744
5,910,686
314,391
10,892,821
1,339,771
9,553,050
386,304
9,939,354
45,370
4,011
170,985
1,660,424
3,092,197
180,878
4,933,499
1,124,391
3,809,108
296,699
4,105,807
13,256
4,623
111,722
80,044
69,000
478,826
427,127
$11,145,717
118,831
65,667
4,488,906
$ 2,971,715
623,262
234,272
537,401
46,013
4,412,663
—
1,363,925
278,495
138,936
54,180
28,868
1,864,404
—
—
325,000
6,698,341
10,907
(6,289)
6,702,959
2,284,647
(1,967)
(18,346)
2,589,334
30,095
30,095
6,733,054
$11,145,717
35,168
35,168
2,624,502
4,488,906
79 REGENCY CENTERS, L.P.
Consolidated Statements of Operations
For the years ended December 31, 2017, 2016, and 2015
(in thousands, except per unit data)
2017
2016
2015
Revenues:
Minimum rent
Percentage rent
Recoveries from tenants and other income
Management, transaction, and other fees
Total revenues
Operating expenses:
Depreciation and amortization
Operating and maintenance
General and administrative
Real estate taxes
Other operating expenses
Total operating expenses
Other expense (income):
Interest expense, net of interest income of $1,811, $1,180, and $1,590 in 2017, 2016, and
2015, respectively
Provision for impairment
Early extinguishment of debt
Net investment income, including unrealized (gains) losses of ($1,136), ($773), and
$1,734 in 2017, 2016, and 2015, respectively (note 12)
Loss on derivative instruments
Total other expense (income)
Income from operations before equity in income of investments in real estate
partnerships and income taxes
Equity in income of investments in real estate partnerships (note 4)
Deferred income tax (benefit) of taxable REIT subsidiary
Income from operations
Gain on sale of real estate, net of tax
Net income
Limited partners’ interests in consolidated partnerships
Net income attributable to the Partnership
Preferred unit distributions and issuance costs
Net income attributable to common unit holders
Income per common unit - basic (note 13):
Income per common unit - diluted (note 13):
See accompanying notes to consolidated financial statements.
$
$
$
$
728,078
6,635
223,455
26,158
984,326
334,201
143,990
67,624
109,723
89,225
744,763
132,629
—
12,449
(3,985)
—
141,093
98,470
43,341
(9,737)
151,548
27,432
178,980
(2,515)
176,465
(16,128)
160,337
444,305
4,128
140,611
25,327
614,371
162,327
95,022
65,327
66,395
14,081
403,152
90,712
4,200
14,240
(1,672)
40,586
148,066
63,153
56,518
—
119,671
47,321
166,992
(1,813)
165,179
(21,062)
144,117
415,155
3,750
125,295
25,563
569,763
146,829
82,978
65,600
61,855
7,836
365,098
102,622
—
8,239
(625)
—
110,236
94,429
22,508
—
116,937
35,606
152,543
(2,247)
150,296
(21,062)
129,234
1.00
1.00
1.43
1.42
1.37
1.36
80 REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2017, 2016, and 2015
(in thousands)
Net income
Other comprehensive (loss) income:
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments
Reclassification adjustment of derivative instruments included in net income
Available for sale securities
Unrealized (loss) gain on available-for-sale securities
Other comprehensive income (loss)
Comprehensive income
Less: comprehensive income (loss) attributable to noncontrolling interests:
Net income attributable to noncontrolling interests
Other comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to the Partnership
$
See accompanying notes to consolidated financial statements.
2017
178,980
$
2016
166,992
2015
152,543
1,151
11,103
(10,332)
51,139
(10,089)
9,152
(8)
12,246
191,226
2,515
168
2,683
188,543
24
40,831
207,823
1,813
426
2,239
205,584
(43)
(980)
151,563
2,247
(33)
2,214
149,349
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83
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the years ended December 31, 2017, 2016, and 2015
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
178,980
166,992
152,543
2017
2016
2015
Depreciation and amortization
Amortization of deferred loan cost and debt premium
Net accretion of above and below market lease intangibles, net
Stock-based compensation, net of capitalization
Equity in income of investments in real estate partnerships
Gain on sale of real estate, net of tax
Provision for impairment
Early extinguishment of debt
Deferred income tax benefit of taxable REIT subsidiary
Distribution of earnings from operations of investments in real estate partnerships
Settlement of derivative instruments
Gain on derivative instruments
Deferred compensation expense
Realized and unrealized gain on investments (note 12)
Changes in assets and liabilities:
Restricted cash
Accounts receivable, net
Straight-line rent receivable, net
Deferred leasing costs
Other assets (note 1)
Accounts payable and other liabilities
Tenants’ security and escrow deposits and prepaid rent
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of operating real estate
Costs paid in advance of real estate acquisitions
Acquisition of Equity One, net of cash acquired of $72,534
Real estate development and capital improvements
Proceeds from sale of real estate investments
(Issuance) / Collection of notes receivable
Investments in real estate partnerships
Distributions received from investments in real estate partnerships
Dividends on investment securities
Acquisition of securities
Proceeds from sale of securities
Net cash used in investing activities
334,201
9,509
(23,144)
20,549
(43,341)
(27,432)
—
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(9,737)
53,502
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(19,004)
(14,448)
9,536
(2,114)
(2,728)
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(124,727)
(4,917)
(648,763)
(347,780)
112,161
(5,236)
(23,529)
36,603
365
(23,535)
21,378
(1,007,980)
162,327
9,762
(3,879)
10,652
(56,518)
(47,321)
4,200
14,240
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(1,673)
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(10,349)
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297,360
(333,220)
(750)
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135,269
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(37,879)
58,810
330
(55,223)
57,590
(409,671)
146,829
9,677
(1,598)
11,081
(22,508)
(35,606)
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(7,267)
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(626)
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(3,810)
3,545
285,543
(42,983)
(2,250)
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108,822
1,719
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23,801
243
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28,400
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84 REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the years ended December 31, 2017, 2016, and 2015
(in thousands)
Cash flows from financing activities:
Net proceeds from common units issued as a result of common stock issued by Parent
Company
Repurchase of common units in conjunction with tax withholdings on equity award plans
Proceeds from treasury units issued as a result of treasury stock sold by Parent Company
Acquisition of treasury units as a result of treasury stock acquired by Parent Company
Redemption of preferred partnership units
Distributions to limited partners in consolidated partnerships, net
Distributions to partners
Distributions to preferred unit holders
Repayment of fixed rate unsecured notes
Proceeds from issuance of fixed rate unsecured notes, net
Proceeds from unsecured credit facilities
Repayment of unsecured credit facilities
Proceeds from notes payable
Repayment of notes payable
Scheduled principal payments
Payment of loan costs
Early redemption costs
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $7,946, $3,482, and $6,740 in 2017,
2016, and 2015, respectively)
Cash paid for income taxes
Supplemental disclosure of non-cash transactions:
Common stock issued by Parent Company for partnership units exchanged
Mortgage loans assumed for the acquisition of operating real estate
Change in fair value of securities available-for-sale
Common stock issued by Parent Company for dividend reinvestment plan
Stock-based compensation capitalized
Contributions from limited partners in consolidated partnerships, net
Common stock issued for dividend reinvestment in trust
Contribution of stock awards into trust
Distribution of stock held in trust
Equity One Merger:
Notes payable assumed in Equity One merger, at fair value
Common stock exchanged for Equity One shares
Deconsolidation of previously consolidated partnership:
Real estate, net
Investments in real estate partnerships
Notes payable
Other assets and liabilities
Limited partners' interest in consolidated partnerships
See accompanying notes to consolidated financial statements.
2017
2016
2015
88,458
548,920
198,494
(18,649)
100
—
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(8,139)
(323,285)
(5,029)
—
953,115
1,100,000
(755,000)
131,069
(232,839)
(10,162)
(13,271)
(12,420)
568,948
32,114
13,256
45,370
(7,984)
957
(29)
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(4,213)
(201,336)
(21,062)
(300,000)
—
460,000
(345,000)
53,446
(72,803)
(5,860)
(2,233)
(14,092)
88,711
(23,600)
36,856
13,256
(9,906)
—
—
—
(5,341)
(181,691)
(21,062)
(450,000)
248,160
445,000
(355,000)
4,316
(76,168)
(5,878)
(5,998)
(8,043)
(223,117)
(76,920)
113,776
36,856
109,956
(269)
82,950
—
101,527
1,015
$
$
$
$
$
$
$
$
$
$
$
$
13,100
27,000
(8)
1,210
3,210
186
557
1,372
677
757,399
$
$ 4,471,808
$
$
$
$
$
—
—
—
—
—
—
—
24
1,070
2,963
8,755
728
1,538
4,114
—
—
14,144
(3,355)
(9,415)
571
(2,099)
—
42,799
(43)
1,250
2,988
13
833
1,651
1,898
—
—
—
—
—
—
—
85 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
1.
Summary of Significant Accounting Policies
(a)
Organization and Principles of Consolidation
General
Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust
(“REIT”) in 1993 and is the general partner of Regency Centers, L.P. (the “Operating Partnership”). The
Parent Company engages in the ownership, management, leasing, acquisition, and development of retail
shopping centers through the Operating Partnership, and has no other assets other than through its investment
in the Operating Partnership, and its only liabilities are the unsecured notes assumed from the merger with
Equity One, which are co-issued and guaranteed by the Operating Partnership. The Parent Company
guarantees all of the unsecured debt of the Operating Partnership. As of December 31, 2017, the Parent
Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis (the
"Company” or “Regency”) owned 311 retail shopping centers and held partial interests in an additional 115
retail shopping centers through unconsolidated investments in real estate partnerships (also referred to as
"joint ventures" or "co-investment partnerships").
On March 1, 2017, Regency completed its merger with Equity One, whereby Equity One merged with and
into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger
Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for
each share of Equity One common stock owned immediately prior to the effective time of the merger,
resulting in the issuance of approximately 65.5 million shares of Regency common stock to effect the merger.
Estimates, Risks, and Uncertainties
The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted
Accounting Principles (“GAAP”) requires the Company's management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The most significant estimates in the Company's
financial statements relate to the net carrying values of its real estate investments, accounts receivable,
straight line rent receivable, goodwill, and acquired lease intangible assets and acquired lease intangible
liabilities. It is possible that the estimates and assumptions that have been utilized in the preparation of the
consolidated financial statements could change significantly if economic conditions were to weaken.
Consolidation
The accompanying consolidated financial statements include the accounts of the Parent Company, the
Operating Partnership, its wholly-owned subsidiaries, and consolidated partnerships in which the Company
has a controlling interest. Investments in real estate partnerships not controlled by the Company are
accounted for under the equity method. All significant inter-company balances and transactions are
eliminated in the consolidated financial statements.
The Company consolidates properties that are wholly owned or properties where it owns less than 100%, but
which it controls. Control is determined using an evaluation based on accounting standards related to the
consolidation of voting interest entities and variable interest entities ("VIEs"). For joint ventures that are
determined to be a VIE, the Company consolidates the entity where it is deemed to be the primary
beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to
direct the activities of the VIE that most significantly impact the entity's economic performance, and (2) the
obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive
benefits from the entity that could potentially be significant to the VIE. The Company's determination of the
primary beneficiary considers all relationships between it and the VIE, including management agreements
and other contractual arrangements.
86 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Ownership of the Parent Company
The Parent Company has a single class of common stock outstanding. At December 31, 2016, the Company
also had two series of preferred stock outstanding (“Series 6 and 7 Preferred Stock”). The dividends on the
Series 6 and 7 Preferred Stock were cumulative and payable in arrears quarterly. During 2017, the Company
redeemed in full the Series 6 and 7 Preferred Stock.
Ownership of the Operating Partnership
The Operating Partnership's capital includes general and limited common Partnership Units. As of December
31, 2017, the Parent Company owned approximately 99.8%, or 171,364,908, of the 171,714,810 outstanding
common Partnership Units of the Operating Partnership, with the remaining limited Partnership Units held by
third parties ("Exchangeable operating partnership units" or "EOP units"). The Parent Company serves as
general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating
Partnership such that they do not have the power to direct the activities of the Operating Partnership. As
such, the Operating Partnership is considered a VIE, and the Parent Company is the primary beneficiary,
which consolidates it. The Parent Company's only investment is the Operating Partnership. Net income and
distributions of the Operating Partnership are allocable to the general and limited common Partnership Units
in accordance with their ownership percentages.
Real Estate Partnerships
Regency has a partial ownership interest in 126 properties through partnerships, of which 11 are consolidated.
These partners include institutional investors, other real estate developers and/or operators, and individual
parties who help Regency source transactions for development and investment (the "Partners" or "limited
partners"). Regency has a variable interest in these entities through its equity interests. As managing
member, Regency maintains the books and records and typically provides leasing and property management
to the partnerships. The Partners’ level of involvement varies from protective decisions (debt, bankruptcy,
selling primary asset(s) of business) to involvement in approving leases, operating budgets, and capital
budgets.
• Those partnerships for which the Partners only have protective rights are considered VIEs under
ASC 810, Consolidation. Regency is the primary beneficiary of these VIEs as Regency has power
over these partnerships and they operate primarily for the benefit of Regency. As such, Regency
consolidates these entities and reports the limited partners’ interest as noncontrolling interests.
The majority of the operations of the VIEs are funded with cash flows generated by the properties, or
in the case of developments, with capital contributions or third party construction loans. Regency
does not provide financial support to the VIEs.
• Those partnerships for which the Partners are involved in the day to day decisions and do not have
any other aspects that would cause them to be considered VIEs, are evaluated for consolidation using
the voting interest model.
Those partnerships in which Regency has a controlling financial interest are consolidated
and the limited partners’ ownership interest and share of net income is recorded as
noncontrolling interest.
Those partnerships in which Regency does not have a controlling financial interest are
accounted for using the equity method and its ownership interest is recognized through
single-line presentation as Investments in Real Estate Partnerships, in the Consolidated
Balance Sheet, and Equity in Income of Investments in Real Estate Partnerships, in the
Consolidated Statements of Operations. Cash distributions of earnings from operations
from investments in real estate partnerships are presented in cash flows provided by
operating activities in the accompanying Consolidated Statements of Cash Flows. Cash
distributions from the sale of a property or loan proceeds received from the placement of
debt on a property included in investments in real estate partnerships are presented in cash
flows provided by investing activities in the accompanying Consolidated Statements of
Cash Flows. Distributed proceeds from debt refinancing and real estate sales in excess of
Regency's carrying value of its investment has resulted in a negative investment balance for
87 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
one partnership, which is recorded within Accounts payable and other liabilities in the
Consolidated Balance Sheets.
The net difference in the carrying amount of investments in real estate partnerships and the
underlying equity in net assets is either accreted to income and recorded in equity in income
of investments in real estate partnerships in the accompanying Consolidated Statements of
Operations over the expected useful lives of the properties and other intangible assets,
which range in lives from 10 to 40 years, or recognized at liquidation if the joint venture
agreement includes a unilateral right to elect to dissolve the real estate partnership and,
upon such an election, receive a distribution in-kind.
The assets of these partnerships are restricted to the use of the partnerships and cannot be used by general
creditors of the Company. And similarly, the obligations of these partnerships can only be settled by the
assets of these partnerships.
The major classes of assets, liabilities, and non-controlling equity interests held by the Company's VIEs,
exclusive of the Operating Partnership as a whole, are as follows:
(in thousands)
Assets
Net real estate investments
Cash and cash equivalents
Liabilities
Notes payable
Equity
December 31, 2017
December 31, 2016
$172,736
4,993
16,551
86,440
3,444
8,175
Limited partners’ interests in consolidated
partnerships
17,572
17,565
Noncontrolling Interests
Noncontrolling Interests of the Parent Company
The consolidated financial statements of the Parent Company include the following ownership interests held
by owners other than the preferred and common stockholders of the Parent Company: (i) the limited
Partnership Units in the Operating Partnership held by third parties and (ii) the minority-owned interest held
by third parties in consolidated partnerships (“Limited partners' interests in consolidated partnerships”). The
Parent Company has included all of these noncontrolling interests in permanent equity, separate from the
Parent Company's stockholders' equity, in the accompanying Consolidated Balance Sheets and Consolidated
Statements of Equity and Comprehensive Income (Loss). The portion of net income or comprehensive
income attributable to these noncontrolling interests is included in net income and comprehensive income in
the accompanying Consolidated Statements of Operations and Consolidated Statements of Comprehensive
Income (Loss) of the Parent Company.
In accordance with the FASB ASC Topic 480, securities that are redeemable for cash or other assets at the
option of the holder, not solely within the control of the issuer, are classified as redeemable noncontrolling
interests outside of permanent equity in the Consolidated Balance Sheets. The Parent Company has evaluated
the conditions as specified under the FASB ASC Topic 480 as it relates to exchangeable operating partnership
units outstanding and concluded that it has the right to satisfy the redemption requirements of the units by
delivering unregistered common stock. Each outstanding exchangeable operating partnership unit is
exchangeable for one share of common stock of the Parent Company, and the unit holder cannot require
redemption in cash or other assets. Limited partners' interests in consolidated partnerships are not redeemable
by the holders. The Parent Company also evaluated its fiduciary duties to itself, its shareholders, and, as the
managing general partner of the Operating Partnership, to the Operating Partnership, and concluded its
fiduciary duties are not in conflict with each other or the underlying agreements. Therefore, the Parent
Company classifies such units and interests as permanent equity in the accompanying Consolidated Balance
Sheets and Consolidated Statements of Equity.
88 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Noncontrolling Interests of the Operating Partnership
The Operating Partnership has determined that limited partners' interests in consolidated partnerships are
noncontrolling interests. Subject to certain conditions and pursuant to the terms of the agreement, the
Company generally has the right, but not the obligation, to purchase the other member’s interest or sell its
own interest in these consolidated partnerships. The Operating Partnership has included these noncontrolling
interests in permanent capital, separate from partners' capital, in the accompanying Consolidated Balance
Sheets and Consolidated Statements of Capital. The portion of net income (loss) or comprehensive income
(loss) attributable to these noncontrolling interests is included in net income and comprehensive income in the
accompanying Consolidated Statements of Operations and Consolidated Statements Comprehensive Income
(Loss) of the Operating Partnership.
(b)
Revenues and Tenant Receivable
Leasing Revenue and Receivables
The Company leases space to tenants under agreements with varying terms. Leases are accounted
for as operating leases with minimum rent recognized on a straight-line basis over the term of the
lease regardless of when payments are due.
When the Company is the owner of the leasehold improvements, recognition of straight line lease
revenue commences when the lessee is given possession of the leased space upon completion of
tenant improvements. However, when the leasehold improvements are owned by the tenant, the
lease inception date is the date the tenant obtains possession of the leased space for purposes of
constructing its leasehold improvements.
More than half of all of the lease agreements with anchor tenants contain provisions that provide for
additional rents based on tenants' sales volume ("percentage rent"). Percentage rents are recognized
when the tenants achieve the specified targets as defined in their lease agreements. Most all lease
agreements contain provisions for reimbursement of the tenants' share of real estate taxes, insurance
and common area maintenance (“CAM”) costs. Recovery of real estate taxes, insurance, and CAM
costs are recognized as the respective costs are incurred in accordance with the lease agreements.
The following table represents the components of Tenant and other receivables, net in the
accompanying Consolidated Balance Sheets:
$
(in thousands)
Billed tenant receivables
Accrued CAM, insurance and tax reimbursements
Other receivables
Straight-line rent receivables
Notes receivable
Less: allowance for doubtful accounts
Less: straight-line rent reserves
Total tenant and other receivables, net
$
December 31,
2017
2016
25,329
14,825
34,472
93,284
15,803
(8,040)
(4,688)
170,985
15,599
9,221
12,058
73,384
10,481
(5,460)
(3,561)
111,722
The Company estimates the collectibility of the accounts receivable related to base rents, straight-
line rents, expense reimbursements, and other revenue taking into consideration the Company's
historical write-off experience, tenant credit-worthiness, current economic trends, and remaining
lease terms. The Company recorded the following provisions for doubtful accounts:
(in thousands)
Year ended December 31,
2017
2016
2015
Gross provision for doubtful accounts
Provision for straight line rent reserve
$
$
3,992
1,129
1,705
2,271
2,364
714
89 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Real Estate Sales
Profits from sales of real estate are recognized under the full accrual method by the Company when:
(i) a sale is consummated; (ii) the buyer's initial and continuing investment is adequate to
demonstrate a commitment to pay for the property; (iii) the Company's receivable, if applicable, is
not subject to future subordination; (iv) the Company has transferred to the buyer the usual risks and
rewards of ownership; and (v) the Company does not have substantial continuing involvement with
the property.
Management Services
The Company is engaged under agreements with its joint venture partners to provide asset
management, property management, leasing, investing, and financing services for such joint
ventures' shopping centers. The fees are market-based, generally calculated as a percentage of either
revenues earned or the estimated values of the properties managed or the proceeds received, and are
recognized as services are rendered, when fees due are determinable, and collectibility is reasonably
assured. The Company also receives transaction fees, as contractually agreed upon with each joint
venture, which include fees such as acquisition fees, disposition fees, “promotes”, or “earnouts”, and
are recognized as services are rendered, when fees due are determinable, and collectibility is
reasonably assured.
(c)
Real Estate Investments
Capitalization and Depreciation
Maintenance and repairs that do not improve or extend the useful lives of the respective assets are
recorded in operating and maintenance expense.
As part of the leasing process, the Company may provide the lessee with an allowance for the
construction of leasehold improvements. These leasehold improvements are capitalized and
recorded as tenant improvements, and depreciated over the shorter of the useful life of the
improvements or the remaining lease term. If the allowance represents a payment for a purpose
other than funding leasehold improvements, or in the event the Company is not considered the owner
of the improvements, the allowance is considered to be a lease incentive and is recognized over the
lease term as a reduction of minimum rent. Factors considered during this evaluation include,
among other things, who holds legal title to the improvements as well as other controlling rights
provided by the lease agreement and provisions for substantiation of such costs (e.g. unilateral
control of the tenant space during the build-out process). Determination of the appropriate
accounting for the payment of a tenant allowance is made on a lease-by-lease basis, considering the
facts and circumstances of the individual tenant lease.
Depreciation is computed using the straight-line method over estimated useful lives of
approximately 40 years for buildings and improvements, the shorter of the useful life or the
remaining lease term subject to a maximum of 10 years for tenant improvements, and three to seven
years for furniture and equipment.
Development Costs
Land, buildings, and improvements are recorded at cost. All specifically identifiable costs related to
development activities are capitalized into properties in development on the accompanying
Consolidated Balance Sheets. The capitalized costs include pre-development costs essential to the
development of the property, development costs, construction costs, interest costs, real estate taxes,
and allocated direct employee costs incurred during the period of development. Interest costs are
capitalized into each development project based upon applying the Company's weighted average
borrowing rate to that portion of the actual development costs expended. The Company discontinues
interest and real estate tax capitalization when the property is no longer being developed or is
available for occupancy upon substantial completion of tenant improvements, but in no event would
the Company capitalize interest on the project beyond 12 months after substantial completion of the
building shell.
90 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Pre-development costs represent the costs the Company incurs prior to land acquisition including
contract deposits, as well as legal, engineering, and other external professional fees related to
evaluating the feasibility of developing a shopping center. As of December 31, 2017 and 2016, the
Company had refundable deposits of approximately $3.5 million and $1.2 million, respectively,
included in pre-development costs. If the Company determines that the development of a particular
shopping center is no longer probable, any related pre-development costs previously capitalized are
immediately expensed. During the years ended December 31, 2017, 2016, and 2015, the Company
expensed pre-development costs of approximately $1.5 million, $1.5 million, and $1.7 million,
respectively, in other operating expenses in the accompanying Consolidated Statements of
Operations.
Acquisitions
Through June 30, 2017, the Company and its real estate partnerships accounted for operating
property acquisitions as business combinations using the acquisition method. Effective July 1, 2017,
upon the adoption of ASU 2017-01: Definition of a Business accounting standard, operating property
acquisitions are generally considered asset acquisitions. The Company expenses transaction costs
associated with business combinations in the period incurred and capitalizes transaction costs
associated with asset acquisitions. Both business combinations and asset acquisitions require that
the Company recognize and measure the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the operating property acquired ("acquiree").
The Company's methodology includes estimating an “as-if vacant” fair value of the physical
property, which includes land, building, and improvements. In addition, the Company determines
the estimated fair value of identifiable intangible assets and liabilities, considering the following
categories: (i) value of in-place leases, and (ii) above and below-market value of in-place leases.
The value of in-place leases is estimated based on the value associated with the costs avoided in
originating leases compared to the acquired in-place leases as well as the value associated with lost
rental and recovery revenue during the assumed lease-up period. The value of in-place leases is
recorded to amortization expense over the remaining expected term of the respective leases.
Above-market and below-market in-place lease values for acquired properties are recorded based on
the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-
place leases and (ii) management's estimate of fair market lease rates for comparable in-place leases,
measured over a period equal to the remaining non-cancelable term of the lease, including below-
market renewal options, if applicable. The value of above-market leases is amortized as a reduction
of minimum rent over the remaining terms of the respective leases and the value of below-market
leases is accreted to minimum rent over the remaining terms of the respective leases, including
below-market renewal options, if applicable. The Company does not assign value to customer
relationship intangibles if it has pre-existing business relationships with the major retailers at the
acquired property since they do not provide incremental value over the Company's existing
relationships.
Held for Sale
The Company classifies land, an operating property, or a property in development as held-for-sale
upon satisfaction of the following criteria: (i) management commits to a plan to sell a property (or
group of properties), (ii) the property is available for immediate sale in its present condition subject
only to terms that are usual and customary for sales of such properties, (iii) an active program to
locate a buyer and other actions required to complete the plan to sell the property have been initiated,
(iv) the sale of the property is probable and transfer of the asset is expected to be completed within
one year, (v) the property is being actively marketed for sale, and (vi) actions required to complete
the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan
will be withdrawn. Operating properties held-for-sale are carried at the lower of cost or fair value
less costs to sell.
Impairment
We evaluate whether there are any indicators, including property operating performance and general
market conditions, that the value of the real estate properties (including any related amortizable
91 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
intangible assets or liabilities) may not be recoverable. Through the evaluation, we compare the
current carrying value of the asset to the estimated undiscounted cash flows that are directly
associated with the use and ultimate disposition of the asset. Our estimated cash flows are based on
several key assumptions, including rental rates, costs of tenant improvements, leasing commissions,
anticipated hold period, and assumptions regarding the residual value upon disposition, including the
exit capitalization rate. These key assumptions are subjective in nature and could differ materially
from actual results. Changes in our disposition strategy or changes in the marketplace may alter the
hold period of an asset or asset group which may result in an impairment loss and such loss could be
material to the Company's financial condition or operating performance. To the extent that the
carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is
recognized equal to the excess of carrying value over fair value. If such indicators are not identified,
management will not assess the recoverability of a property's carrying value. If a property
previously classified as held and used is changed to held-for-sale, the Company estimates fair value,
less expected costs to sell, which could cause the Company to determine that the property is
impaired.
The fair value of real estate assets is subjective and is determined through comparable sales
information and other market data if available, or through use of an income approach such as the
direct capitalization method or the traditional discounted cash flow approach. Such cash flow
projections consider factors such as expected future operating income, trends and prospects, as well
as the effects of demand, competition and other factors, and therefore is subject to management
judgment and changes in those factors could impact the determination of fair value. In estimating
the fair value of undeveloped land, the Company generally uses market data and comparable sales
information.
A loss in value of investments in real estate partnerships under the equity method of accounting,
other than a temporary decline, must be recognized in the period in which the loss occurs. If
management identifies indicators that the value of the Company's investment in real estate
partnerships may be impaired, it evaluates the investment by calculating the fair value of the
investment by discounting estimated future cash flows over the expected term of the investment.
Tax Basis
The net book basis of the Company's real estate assets exceeds the net tax basis by approximately
$2.8 billion at December 31, 2017, primarily due to the tax free merger with Equity One and
inheriting lower carryover tax basis. The net tax basis of the Company's real estate assets exceeded
the book basis by approximately $190.3 million at December 31, 2016, primarily due to the property
impairments recorded for book purposes and the cost basis of the assets acquired and their carryover
basis recorded for tax purposes.
(d)
Cash and Cash Equivalents
Any instruments which have an original maturity of 90 days or less when purchased are considered cash
equivalents. As of December 31, 2017 and 2016, $4.0 million and $4.6 million, respectively, of cash was
restricted through escrow agreements and certain mortgage loans.
92 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
(e)
Other Assets
The following table represents the components of Other assets in the accompanying Consolidated Balance
Sheets:
(in thousands)
Goodwill (1)
Investments
Prepaid and other
Derivative assets
Furniture, fixtures, and equipment, net
Deferred financing costs, net
Total other assets
December 31,
2017
2016
$
$
331,884
41,636
30,332
14,515
6,123
2,637
427,127
—
36,008
10,386
11,622
4,094
3,557
65,667
(1) Goodwill amount is subject to provisional accounting for the purchase price
allocation from the Equity One merger, as discussed in note 2.
Goodwill
Goodwill represents the excess of the purchase price consideration for the Equity One merger over
the fair value of the assets acquired and liabilities assumed, and reflects expected synergies from
combining Regency's and Equity One's operations. The Company accounts for goodwill in
accordance with the Intangibles - Goodwill and Other Topic of the FASB ASC 350, and allocates its
goodwill to the reporting units, which have been determined to be at the individual property level.
The Company performs an impairment evaluation of its goodwill at least annually, in November of
each year. The Company's current goodwill impairment analysis, using a qualitative approach, did
not result in any indication of impairment.
The goodwill impairment evaluation may be completed through a qualitative or quantitative
approach. Under a qualitative approach, the impairment review for goodwill consists of an
assessment of whether it is more-likely-than-not that the property’s fair value is less than its carrying
value. If a qualitative approach indicates it is more likely-than-not that the estimated carrying value
of a property exceeds its fair value, or if the Company chooses to bypass the qualitative approach for
any property, the Company will perform the quantitative approach described below.
The quantitative approach consists of estimating the fair value of each property using discounted
projected future cash flows and comparing those estimated fair values with the carrying values,
which include the allocated goodwill. If the estimated fair value is less than the carrying value, the
Company would then recognize an impairment charge for the amount by which the carrying amount
exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that
reporting unit.
Investments
The Company determines the appropriate classification of its investments in debt and equity
securities at the time of purchase and reevaluates such determinations at each balance sheet date.
Debt securities are classified as held to maturity when the Company has the positive intent and
ability to hold the securities to maturity. Marketable securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading securities and are reported at
fair value, with unrealized gains and losses recognized in earnings. Debt and marketable equity
securities not classified as held to maturity or as trading, are classified as available-for-sale, and are
carried at fair value, with the unrealized gains and losses, net of tax, included in the determination of
comprehensive income and reported in the Consolidated Statements of Comprehensive Income. The
fair value of securities is determined using quoted market prices.
93 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
(f)
Deferred Leasing Costs
Deferred leasing costs consist of internal and external commissions associated with leasing the Company's
shopping centers, and are presented net of accumulated amortization. Such costs are amortized over the
period through lease expiration. If the lease is terminated early, the remaining leasing costs are written off.
(g)
Derivative Financial Instruments
The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by
managing the amount, sources, and duration of its debt funding and the use of derivative financial
instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that
arise from business activities that result in the receipt or future payment of known and uncertain cash
amounts, the amount of which are determined by interest rates. The Company's derivative financial
instruments are used to manage differences in the amount, timing, and duration of the Company's known or
expected cash payments principally related to the Company's borrowings.
All derivative instruments, whether designated in hedging relationships or not, are recorded on the
accompanying Consolidated Balance Sheets at their fair value. The accounting for changes in the fair value
of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a
derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has
satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge
of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a
particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and
qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the
timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair
value of the hedged asset or liability attributable to the hedged risk in a fair value hedge or the earnings effect
of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts
that are intended to economically hedge certain risks, even though hedge accounting does not apply or the
Company elects not to apply hedge accounting.
The Company uses interest rate swaps to mitigate its interest rate risk on a related financial instrument or
forecasted transaction, and the Company designates these interest rate swaps as cash flow hedges. Interest
rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in
exchange for the Company making fixed-rate payments over the life of the agreements without exchange of
the underlying notional amount. The gains or losses resulting from changes in fair value of derivatives that
qualify as cash flow hedges are recognized in other comprehensive income (“OCI”) while the ineffective
portion of the derivative's change in fair value is recognized in the Statements of Operations as interest
expense. Upon the settlement of a hedge, gains and losses remaining in OCI are amortized through earnings
over the underlying term of the hedged transaction.
The Company formally documents all relationships between hedging instruments and hedged items, as well
as its risk management objectives and strategies for undertaking various hedge transactions. The Company
assesses, both at inception of the hedge and on an ongoing basis, whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in the cash flows and/or forecasted cash flows
of the hedged items.
In assessing the valuation of the hedges, the Company uses standard market conventions and techniques such
as discounted cash flow analysis, option pricing models, and termination costs at each balance sheet date. All
methods of assessing fair value result in a general approximation of value, and such value may never actually
be realized.
The cash receipts or payments to settle interest rate swaps are presented in cash flows provided by operating
activities in the accompanying Consolidated Statements of Cash Flows.
(h)
Income Taxes
The Parent Company believes it qualifies, and intends to continue to qualify, as a REIT under the Code. As a
REIT, the Parent Company will generally not be subject to federal income tax, provided that distributions to
its stockholders are at least equal to REIT taxable income. Each wholly-owned corporate subsidiary of the
Operating Partnership has elected to be a Taxable REIT Subsidiary (“TRS”) as defined in Section 856(l) of
94 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
the Code. The TRS's are subject to federal and state income taxes and file separate tax returns. As a pass
through entity, the Operating Partnership generally does not pay taxes, but its taxable income or loss is
reported by its partners, of which the Parent Company, as general partner and approximately 99.8% owner, is
allocated its pro-rata share of tax attributes.
The Company accounts for income taxes related to its TRS’s under the asset and liability approach, which
requires the recognition of the amount of taxes payable or refundable for the current year and deferred tax
assets and liabilities for the expected future tax consequences of events that have been recognized in the
financial statements. Under this method, deferred tax assets and liabilities are determined based on the
differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. The Company records net deferred tax
assets to the extent it believes it is more likely than not that these assets will be realized. A valuation
allowance is recorded to reduce deferred tax assets when it is believed that it is more likely than not that all or
some portion of the deferred tax asset will not be realized. The Company considers all available positive and
negative evidence, including forecasts of future taxable income, the reversal of other existing temporary
differences, available net operating loss carryforwards, tax planning strategies and recent results of operations
in order to make that determination.
In addition, tax positions are initially recognized in the financial statements when it is more likely than not the
position will be sustained upon examination by the tax authorities. Such tax positions shall initially and
subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being
realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts. The Company believes that it has appropriate support for the income tax positions taken and to be
taken on its tax returns and that its accruals for tax liabilities are adequate for all open tax years (2014 and
forward for federal and state) based on an assessment of many factors including past experience and
interpretations of tax laws applied to the facts of each matter.
The Tax Cuts and Jobs Act (the “Act”), signed into law in December 2017, includes numerous provisions that
will affect businesses. Key provisions in the Act have significant financial statement effects. These effects
include remeasurement of deferred taxes, recognition of liabilities for taxes on mandatory deemed repatriation
and certain other foreign income, and reassessment of the realizability of deferred tax assets. Because the
asset and liability approach under ASC 740 requires companies to recognize the effect of tax law changes in
the period of enactment, the effects must be recognized in companies’ December 2017 financial statements,
even though the effective date of the law for most provisions is January 1, 2018. To the extent that all
information necessary is not available, prepared or analyzed, companies are allotted a measurement period to
make adjustments for the effect of the law. The Company has calculated the tax impact of the change in tax
law, most notably, the deferred tax assets and liabilities have been revalued at the appropriate tax rate. The
impact resulted in a $9.7 million benefit recognized in earnings for 2017.
(i)
Earnings per Share and Unit
Basic earnings per share of common stock and unit are computed based upon the weighted average number of
common shares and units, respectively, outstanding during the period. Diluted earnings per share and unit
reflect the conversion of obligations and the assumed exercises of securities including the effects of shares
issuable under the Company's share-based payment arrangements, if dilutive. Dividends paid on the
Company's share-based compensation awards are not participating securities as they are forfeitable.
(j)
Stock-Based Compensation
The Company grants stock-based compensation to its employees and directors. The Company recognizes
stock-based compensation based on the grant-date fair value of the award and the cost of the stock-based
compensation is expensed over the vesting period.
When the Parent Company issues common shares as compensation, it receives a like number of common
units from the Operating Partnership. The Company is committed to contributing to the Operating
Partnership all proceeds from the exercise of stock options or other share-based awards granted under the
Parent Company's Long-Term Omnibus Plan (the “Plan”). Accordingly, the Parent Company's ownership in
the Operating Partnership will increase based on the amount of proceeds contributed to the Operating
Partnership for the common units it receives. As a result of the issuance of common units to the Parent
95 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Company for stock-based compensation, the Operating Partnership records the effect of stock-based
compensation for awards of equity in the Parent Company.
(k)
Segment Reporting
The Company's business is investing in retail shopping centers through direct ownership or partnership
interests. The Company actively manages its portfolio of retail shopping centers and may from time to time
make decisions to sell lower performing properties or developments not meeting its long-term investment
objectives. The proceeds from sales are generally reinvested into higher quality retail shopping centers,
through acquisitions or new developments, which management believes will generate sustainable revenue
growth and attractive returns. It is management's intent that all retail shopping centers will be owned or
developed for investment purposes; however, the Company may decide to sell all or a portion of a
development upon completion. The Company's revenues and net income are generated from the operation of
its investment portfolio. The Company also earns fees for services provided to manage and lease retail
shopping centers owned through joint ventures.
The Company's portfolio is located throughout the United States. Management does not distinguish or group
its operations on a geographical basis for purposes of allocating resources or capital. The Company reviews
operating and financial data for each property on an individual basis; therefore, the Company defines an
operating segment as its individual properties. The individual properties have been aggregated into one
reportable segment based upon their similarities with regard to both the nature and economics of the centers,
tenants and operational processes, as well as long-term average financial performance.
(l)
Business Concentration
Grocer anchor tenants represent approximately 18% of pro-rata annual base rent. No single tenant accounts for
5% or more of revenue and none of the shopping centers are located outside the United States.
(m)
Fair Value of Assets and Liabilities
Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value
measurement is determined based on the assumptions that market participants would use in pricing the asset
or liability. As a basis for considering market participant assumptions in fair value measurements, the
Company uses a fair value hierarchy that distinguishes between market participant assumptions based on
market data obtained from independent sources (observable inputs that are classified within Levels 1 and 2 of
the hierarchy) and the Company's own assumptions about market participant assumptions (unobservable
inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as
follows:
• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
Company has the ability to access.
• Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
• Level 3 - Unobservable inputs for the asset or liability, which are typically based on the Company's
own assumptions, as there is little, if any, related market activity.
The Company also remeasures nonfinancial assets and nonfinancial liabilities, initially measured at fair value
in a business combination or other new basis event, at fair value in subsequent periods if a remeasurement
event occurs.
96 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
(n)
Recent Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements and expected impact on
our financial statements:
Standard
Description
Date of
adoption
Effect on the financial statements
or other significant matters
Recently adopted:
ASU 2016-09, March
2016, Compensation-
Stock Compensation
(Topic 718):
Improvements to
Employee Share-Based
Payment Accounting
This ASU affects entities that issue share-based payment
awards to their employees. The ASU is designed to simplify
several aspects of accounting for share-based payment award
transactions including income tax consequences, classification
of awards as either equity or liabilities, an option to recognize
stock compensation forfeitures as they occur, and changes to
classification on the statement of cash flows.
January
2017
ASU 2017-01
January 2017, Business
Combinations (Topic
805): Clarifying the
Definition of a Business
This ASU amends and provides a screen to determine when an
integrated set of assets and activities, collectively referred to
as a "set", is not a business. The screen requires that when
substantially all of the fair value of the gross assets acquired
(or disposed of) is concentrated in a single identifiable asset or
a group of similar identifiable assets, the set is not a business.
July 2017
If the screen is not met, the amendments in this update (1)
require that to be considered a business, a set must include, at
a minimum, an input and a substantive process that together
significantly contribute to the ability to create output and (2)
remove the evaluation of whether a market participant could
replace missing elements. The amendments provide a
framework to assist entities in evaluating whether both an
input and a substantive process are present. Early adoption is
permitted.
This ASU simplifies how an entity tests goodwill for
impairment by eliminating Step 2 from the goodwill
impairment test. Step 2 measures a goodwill impairment loss
by comparing the implied fair value of a reporting unit's
goodwill with the carrying amount of that goodwill. Instead,
under this update, the Company will perform its annual, or
interim, goodwill impairment test by comparing the fair value
of a reporting unit with its carrying amount. The Company
would then recognize an impairment charge for the amount by
which the carrying amount exceeds the reporting unit's fair
value, not to exceed the total amount of goodwill allocated to
that reporting unit.
ASU 2017-04, January
2017, Intangibles -
Goodwill and Other
(Topic 350): Simplifying
the Test for Goodwill
Impairment
The adoption of this standard
resulted in the reclassification of
income taxes withheld on share-
based awards out of operating
activities into financing activities
on the Statement of Cash Flows.
As retrospective application was
required for this component of the
ASU, $8.0 million was reclassified
on the Statements of Cash Flows
for the year ended December 31,
2016.
This standard changed the
treatment of individual operating
properties from being considered a
business to being considered an
asset.
This change results in acquisition
costs being capitalized as part of
asset acquisitions, whereas
previous treatment had them
recognized in earnings in the
period incurred.
The Company adopted this
standard effective July 1, 2017.
October
2017
The Company early adopted this
ASU on October 1, 2017.
The adoption of this ASU did not
have an impact on the Company's
financial statements and related
disclosures, but rather simplified
the method of evaluating goodwill
for impairment.
97 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Description
Date of
adoption
Effect on the financial statements
or other significant matters
This ASU provides updated guidance to better align a
company’s financial reporting for hedging activities with the
economic objectives of those activities.
January
2018
The Company plans to early adopt
this ASU on January 1, 2018.
The transition guidance provides companies with the option of
early adopting the new standard using a modified retrospective
transition method in any interim period after issuance of the
update, or alternatively requires adoption for fiscal years
beginning after December 15, 2018. This adoption method
will require the Company to recognize the cumulative effect of
initially applying the ASU as an adjustment to accumulated
other comprehensive income with a corresponding adjustment
to the opening balance of retained earnings as of the beginning
of the fiscal year that an entity adopts the update.
The Company has assessed the
impacts of the standard and has
determined that the adoption and
implementation of this standard
will not have a material impact on
the consolidated financial
statements.
This ASU amends the guidance to classify equity securities
with readily-determinable fair values into different categories
and requires equity securities to be measured at fair value with
changes in the fair value recognized through net income.
Equity investments accounted for under the equity method are
not included in the scope of this amendment. Early adoption of
this amendment is not permitted.
January
2018
The Company has assessed the
impacts of the standard and
determined that the adoption and
implementation of this standard
will not have a material impact on
its results of operations, financial
condition or cash flows.
This ASU makes eight targeted changes to how cash receipts
and cash payments are presented and classified in the
statement of cash flows to eliminate current diversity in
practice. Early adoption is permitted on a retrospective basis.
January
2018
Standard
Not yet adopted:
ASU 2017-12, August
2017, Targeted
Improvements to
Accounting for Hedging
Activities
ASU 2016-01, January
2016, Financial
Instruments—Overall
(Subtopic 825-10):
Recognition and
Measurement of
Financial Assets and
Financial Liabilities
ASU 2016-15, August
2016, Statement of Cash
Flows (Topic 230):
Classification of Certain
Cash Receipts and Cash
Payments
ASU 2016-18,
November 2016,
Statement of Cash Flows
(Topic 230): Restricted
Cash
This ASU requires entities to show the changes in the total of
cash, cash equivalents, restricted cash, and restricted cash
equivalents in the statement of cash flows. The amendments in
this ASU should be applied using a retrospective transition
method to each period presented.
January
2018
The ASU is consistent with the
Company's current treatment and
the Company has determined that
the adoption and implementation of
this standard will not have an
impact on its cash flow statement.
The Company has assessed the
impacts of the standard and
determined that the adoption will
result in a change to the
classification and presentation of
changes in restricted cash on its
cash flow statement, which is not
expected to be material. There will
be no change to the Company's
financial condition or results of
operations from the adoption of
this standard.
98 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Date of
adoption
January
2018
Description
In May 2014, the FASB issued ASU 2014-09, Revenue from
Contracts with Customers ("Topic 606"). The objective of
Topic 606 is to establish a single comprehensive model for
entities to use in accounting for revenue arising from contracts
with customers. It will supersede most of the existing revenue
guidance, including industry-specific guidance. The core
principal of this new standard is that an entity should
recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. In applying Topic 606,
companies will perform a five-step analysis of transactions to
determine when and how revenue is recognized.
Topic 606 applies to all contracts with customers except those
that are within the scope of other topics in the FASB's
accounting standards codification. As a result, Topic 606 does
not apply to revenue from lease contracts until the adoption of
the new leases standard, Topic 842, in January 2019.
ASU 2017-05 clarifies that ASC 610-20 applies to all
nonfinancial assets (including real estate) for which the
counterparty is not a customer and requires an entity to
derecognize a nonfinancial asset in a partial sale transaction
when it ceases to have a controlling financial interest in the
asset and has transferred control of the asset. Once an entity
transfers control of the nonfinancial asset, the entity is
required to measure any noncontrolling interest it receives or
retains at fair value. Under the current guidance, a partial sale
is recognized and carryover basis is used for the retained
interest resulting in only partial gain recognition by the entity,
however, the new guidance eliminates the use of carryover
basis and generally requires the full gain be recognized.
The standard allows for either "full retrospective" adoption,
meaning the standard is applied to all of the periods presented,
or "modified retrospective" adoption, meaning the standard is
applied only to the most recent period presented in the
financial statements.
Additional disclosures are also required in order to enable
users of financial statements to understand the nature, amount,
timing, and uncertainty of revenue and cash flows arising from
contracts with customers, including disaggregated disclosures
of revenue recognized, contract balances, and performance
obligations.
Effect on the financial statements
or other significant matters
The majority of the Company's
revenue originates from lease
contracts and will be subject to
Topic 842 to be adopted in January
2019. Upon the adoption of the
new leases standard, certain
recoveries from tenants may
become subject to the revenue
standard, which may have a
different recognition pattern or
presentation than under current
GAAP.
Beyond revenue from lease
contracts, the Company's other
main revenue streams, include:
- Management, transaction and
other fees from the Company's real
estate partnerships, primarily in the
form of property management fees,
asset management fees, and leasing
commission fees. The Company
evaluated all partnership fee
relationships and does not currently
expect any changes in the timing of
revenue recognition from these
revenue streams.
- Sales of real estate assets will be
accounted for under Subtopic
610-20, which provides for
revenue recognition based on
transfer of control. For property
sales where Regency has no
continuing involvement, there
should be no change to the
Company's timing of recognition.
For property sales in which
Regency has continuing
involvement, full gain recognition
may be required, where gains may
have been deferred under existing
GAAP. Upon adoption of ASU
2017-05, the Company's $30.9
million of previously deferred
gains from transactions with equity
method investees will be
recognized through opening
retained earnings.
The Company intends to follow
the modified retrospective method
of adoption, applying the standard
to only 2018, and not restating
prior periods presented in future
financial statements.
Standard
Revenue from Contracts
with Customers (Topic
606) and related
updates:
ASU 2014-09, May
2014, Revenue from
Contracts with
Customers (Topic
606)
ASU 2016-08,
March 2016,
Revenue from
Contracts with
Customers (Topic
606): Principal
versus Agent
Considerations
ASU 2016-10, April
2016, Revenue from
Contracts with
Customers (Topic
606): Identifying
Performance
Obligations and
Licensing
ASU 2016-12, May
2016, Revenue from
Contracts with
Customers (Topic
606): Narrow-
Scope
Improvements and
Practical
Expedients
ASU 2016-19,
December 2016,
Technical
Corrections and
Improvements
ASU 2016-20,
December 2016,
Technical
Corrections and
Improvements to
Topic 606 Revenue
from Contracts With
Customers
ASU 2017-05,
February 2017,
Clarifying the
Scope of Asset
Derecognition
Guidance and
Accounting for
Partial Sales of
Nonfinancial Assets
(Subtopic 610-20)
99 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Standard
Description
ASU 2016-02, February
2016, Leases (Topic
842)
This ASU amends the existing accounting standards for lease
accounting, including requiring lessees to recognize most
leases on their balance sheets. It also makes targeted changes
to lessor accounting, including a change to the treatment of
internal leasing costs and legal costs, which can no longer be
capitalized.
Early adoption of this standard is permitted to coincide with
adoption of ASU 2014-09. The standard requires a modified
retrospective transition approach for all leases existing at, or
entered into after, the date of initial application, with an option
to use certain transition relief.
Date of
adoption
January
2019
Effect on the financial statements
or other significant matters
The Company is evaluating the
impact this standard will have on
its financial statements and related
disclosures.
Upon adoption, the Company will
recognize right of use assets and
corresponding lease obligations for
its office and ground lease
obligations.
Capitalization of internal leasing
costs and legal costs will no longer
be permitted upon the adoption of
this standard, which will result in
an increase in Total operating
expenses in the Consolidated
Statements of Operations in the
period of adoption and
prospectively.
Historic capitalization of internal
leasing costs was $10.4 million and
$10.5 million during the years
ended December 31, 2017 and
2016, respectively.
Historic capitalization of legal
costs was $1.2 million and $0.7
million during the years ended
December 31, 2017 and 2016,
respectively, including our pro rata
share recognized through Equity in
income of investments in real
estate partnerships.
ASU 2016-13, June
2016, Financial
Instruments—Credit
Losses (Topic 326):
Measurement of Credit
Losses on Financial
Instruments
This ASU replaces the incurred loss impairment methodology
in current GAAP with a methodology that reflects expected
credit losses and requires consideration of a broader range of
reasonable and supportable information to inform credit loss
estimates.
January
2020
The Company is evaluating the
alternative methods of adoption
and the impact it will have on its
financial statements and related
disclosures.
This ASU also applies to how the Company determines its
allowance for doubtful accounts on tenant receivables.
100 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
2.
Real Estate Investments
Acquisitions
The following tables detail the shopping centers acquired or land acquired or leased for development.
(in thousands)
Date
Purchased
Property Name
City/State
Property Type
Purchase
Price
Debt Assumed,
Net of
Premiums
Intangible
Assets
Intangible
Liabilities
December 31, 2017
3/6/2017
The Field at Commonwealth
Pinecrest Place (1)
3/8/2017
4/13/2017 Mellody Farm (2)
Chantilly, VA
Development
$
9,500
Miami, FL
Chicago, IL
Development
—
Development
26,200
6/28/2017
7/20/2017
Concord outparcel (3)
Miami, FL
Aventura Square outparcel (4) Miami, FL
Operating
Operating
11/15/2017
Indigo Square
Mount Pleasant, SC Development
12/21/2017
Scripps Ranch Marketplace
San Diego, CA
12/28/2017 Roosevelt Square
Seattle, WA
Operating
Operating
Total property acquisitions
350
1,750
3,900
81,600
68,084
$ 191,384
—
—
—
—
—
—
—
—
—
—
90
—
—
—
—
—
9
—
27,000
—
27,000
4,997
3,842
8,929
9,551
8,002
17,562
(1) The Company leased 10.67 acres for a ground up development.
(2) The Operating Partnership issued 195,732 partnership units valued at $13.1 million as partial consideration for the purchase price.
(3) The Company purchased a 0.67 acre vacant outparcel adjacent to the Company's existing operating Concord Shopping Plaza.
(4) The Company purchased a 0.06 acre outparcel improved with a leased building adjacent to the Company's existing operating Aventura
Square.
December 31, 2016
(in thousands)
Date
Purchased
Property Name
City/State
Property Type
Purchase
Price
2/22/2016
Garden City Park
Garden City Park, NY Operating
$ 17,300
3/4/2016
The Market at Springwoods
Village (1)
Houston, TX
Development
17,994
5/16/2016 Market Common Clarendon
Arlington, VA
7/15/2016
Klahanie Shopping Center
Sammamish, WA
8/4/2016
The Village at Tustin Legacy
Tustin, CA
10/26/2016 Nocatee Phase III
Jacksonville, FL
10/30/2016 Brooklyn Station Phase II
Jacksonville, FL
Operating
Operating
Development
Development
Development
280,500
35,988
18,800
240
50
12/6/2016
The Village at Riverstone
Houston, TX
Development
16,656
Total property acquisitions
$ 387,528
Debt
Assumed,
Net of
Premiums
—
Intangible
Assets
Intangible
Liabilities
10,171
2,940
—
—
—
—
—
—
—
—
—
15,428
2,264
—
15,662
539
—
—
—
—
—
—
—
—
27,863
19,141
(1) Regency acquired a 53% controlling interest in the Market at Springwoods Village partnership to develop a shopping center on land
contributed by the partner. As a result of consolidation, the Company recorded the partner's non-controlling interest of $8.4 million in
Limited partners' interests in consolidated partnerships in the accompanying Consolidated Balance Sheets.
Equity One Merger
General
On March 1, 2017, Regency completed its merger with Equity One, a NYSE listed shopping center company, whereby
Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the
terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency
common stock for each share of Equity One common stock owned immediately prior to the effective time of the
merger resulting in approximately 65.5 million Regency common shares being issued to effect the merger.
101 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The following table provides the components that make up the total purchase price for the Equity One merger:
(in thousands, except stock price)
Purchase Price
Shares of common stock issued for merger
Closing stock price on March 1, 2017
$
Value of common stock issued for merger $
Other cash payments
Total purchase price
$
65,379
68.40
4,471,808
721,297
5,193,105
As part of the merger, Regency acquired 121 properties, including 8 properties held through co-investment
partnerships. The consolidated net assets and results of operations of Equity One are included in the consolidated
financial statements from the closing date, March 1, 2017, going forward and resulted in the following impact to
Revenues and Net income attributable to common stockholders:
(in thousands)
Year ended
December 31, 2017
Increase in total revenues
Increase in net income attributable to common
stockholders
$
$
337,761
81,766
The Company incurred $80.7 million and $6.5 million, respectively, of merger-related transaction costs during the
years ended December 31, 2017 and 2016, which are recorded in Other operating expenses in the accompanying
Consolidated Statements of Operations, and are not reflected in the table above.
Provisional Purchase Price Allocation of Merger
The Equity One merger has been accounted for using the acquisition method of accounting in accordance with ASC
805, Business Combinations, which requires, among other things, that the assets acquired and liabilities assumed be
recognized at their acquisition date fair values.
The acquired assets and assumed liabilities of an acquired operating property generally include, but are not limited to:
land, buildings and improvements, identified tangible and intangible assets and liabilities associated with in-place
leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of
acquired in-place leases. This methodology requires estimating an “as-if vacant” fair value of the physical property,
which includes land, building, and improvements and also determining the estimated fair value of identifiable
intangible assets and liabilities, considering the following categories: (i) value of in-place leases, (ii) above and below-
market value of in-place leases, and deferred taxes related to the book tax difference created through purchase
accounting. The excess of the purchase price consideration over the fair value of assets acquired and liabilities
assumed results in goodwill in the business combination, which reflects expected synergies from combining Regency's
and Equity One's operations and the deferred tax liability at one of the acquired taxable REIT subsidiaries. The
goodwill is not expected to be deductible for tax purposes.
The provisional fair market value of the acquired operating properties is based on a valuation prepared by Regency
with assistance of a third party valuation specialist. The third party used stabilized NOI and market specific
capitalization and discount rates as the primary inputs in determining the fair value of the real estate assets.
Management reviewed the inputs used by the third party specialist as well as the allocation of the purchase price to
ensure reasonableness and that the procedures were performed in accordance with management's policy. Management
and the third party valuation specialist have prepared their provisional fair value estimates for each of the operating
properties acquired, but are still in process of reviewing all of the underlying inputs and assumptions; therefore, the
purchase price and its allocation, in their entirety, are not yet complete as of the date of this filing but have been
updated to reflect management's current best estimates of fair values as of the acquisition date. Once the purchase
price and allocation are complete, an additional adjustment to the purchase price or allocation may occur.
102 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The following table summarizes the current provisional purchase price allocation based on the Company's valuation,
including estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired
and liabilities assumed:
(in thousands)
Land
Building and improvements
Properties in development
Properties held for sale
Investments in unconsolidated real estate partnerships
Real estate assets
Cash, accounts receivable and other assets
Intangible assets
Goodwill
Total assets acquired
Notes payable
Accounts payable, accrued expenses, and other liabilities
Lease intangible liabilities
Total liabilities assumed
Provisional Purchase
Price Allocation
$
2,865,053
2,619,553
68,744
19,600
99,666
5,672,616
112,909
458,554
331,884
6,575,963
757,399
121,798
503,661
1,382,858
Total purchase price
$
5,193,105
During the three months ended December 31, 2017, the Company adjusted the provisional purchase price allocation to
reflect current best estimates of fair values of the acquired operating properties, based on the valuation process
described above. These adjustments resulted in the following increases (decreases) to earnings during the three
months ended December 31, 2017 that would have been recognized in previous periods if the adjustments to
provisional amounts were recognized as of the acquisition date:
(in thousands)
Three months ended
December 31, 2017
decrease in Minimum rent
decrease in Depreciation and amortization
increase in Equity in income of investments in real estate
partnerships
Net decrease to earnings of provisional purchase price
allocation adjustments
$
$
(2,386)
1,435
350
(601)
The allocation of the purchase price is based on management’s assessment, which may change in the future as more
information becomes available. Subsequent adjustments made to the purchase price allocation upon completion of the
Company's fair value assessment process will not exceed one year from the acquisition date. The allocation of the
purchase price described above requires a significant amount of judgment and represents management's best estimate
of the fair value as of the acquisition date.
103 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The following table details the provisional weighted average amortization and net accretion periods, in years, of the
major classes of intangible assets and intangible liabilities arising from the Equity One merger:
(in years)
Assets:
In-place leases
Above-market leases
Below-market ground leases
Liabilities:
Below-market leases
Weighted Average
Amortization Period
11.3
7.9
55.3
25.8
Pro forma Information (unaudited)
The following unaudited pro forma financial data includes the incremental revenues, operating expenses, depreciation
and amortization, and costs of the Equity One acquisition as if it had occurred on January 1, 2016:
(in thousands, except per share data)
Year ended December 31,
2017
2016
(1)
$ 1,052,221
281,393
Total revenues
Income (loss) from operations
Net income (loss) attributable to common
40,868
stockholders
Income (loss) per common share - basic
0.25
0.25
Income (loss) per common share - diluted
(1) The pro forma earnings for the year ended December 31, 2017, were adjusted to
exclude $103.6 million of merger costs, while 2016 pro forma earnings were
adjusted to include all merger costs during the first quarter of 2016.
262,270
1.54
1.54
1,006,367
63,907
(1)
The pro forma financial data is not necessarily indicative of what the actual results of operations would have been
assuming the transaction had been completed as set forth above, nor does it purport to represent the results of
operations for future periods.
3.
Property Dispositions
Dispositions
The following table provides a summary of consolidated shopping centers and land parcels disposed of:
(in thousands)
Net proceeds from sale of real estate investments
Gain on sale of real estate, net of tax
Provision for impairment of real estate sold
$
$
$
Number of operating properties sold
Number of land out-parcels sold
(1) Includes cash deposits received in the previous year.
Year ended December 31,
2017
2016
2015
112,161
27,432
—
6
9
137,479 (1)
47,321
1,700
11
16
108,822
35,606
—
5
2
104 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
4.
Investments in Real Estate Partnerships
The Company invests in real estate partnerships, which consist of the following:
(in thousands)
GRI - Regency, LLC (GRIR)
Equity One JV Portfolio, LLC (NYC)
Columbia Regency Retail Partners, LLC
(Columbia I)
Columbia Regency Partners II, LLC
(Columbia II)
Cameron Village, LLC (Cameron)
RegCal, LLC (RegCal)
US Regency Retail I, LLC (USAA)
Other investments in real estate partnerships
Total investments in real estate
partnerships
(in thousands)
GRI - Regency, LLC (GRIR)
Columbia Regency Retail Partners, LLC
(Columbia I)
Columbia Regency Partners II, LLC
(Columbia II)
Cameron Village, LLC (Cameron)
RegCal, LLC (RegCal)
US Regency Retail I, LLC (USAA)
Other investments in real estate partnerships
50.00%
Total investments in real estate
partnerships
December 31, 2017
Regency's
Ownership
Number of
Properties
Total
Investment
Total Assets
of the
Partnership
Net Income
of the
Partnership
The
Company's
Share of
Net Income
of the
Partnership
40.00%
30.00%
20.00%
20.00%
30.00%
25.00%
20.01%
50.00%
70
6
6
12
1
7
7
6
$ 198,521
1,656,068
53,277
284,412
69,211
2,757
27,440
686
7,057
130,836
18,233
3,620
13,720
11,784
27,829
—
329,992
99,808
138,717
90,900
74,116
154,987
7,690
2,917
5,613
22,299
11,238
1,530
850
1,403
4,456
3,356
115
$ 386,304
2,885,720
139,958
43,341
December 31, 2016
Regency's
Ownership
Number of
Properties
Total
Investment
Total Assets
of the
Partnership
Net Income
of the
Partnership
The
Company's
Share of
Net Income
of the
Partnership
40.00%
20.00%
20.00%
30.00%
25.00%
20.01%
70
7
12
1
7
8
4
$ 201,240
1,676,134
74,758
29,791
9,687
145,192
21,024
4,180
14,750
11,877
21,516
13,176
24,453
338,307
99,967
141,827
109,665
16,765
2,326
4,358
5,901
3,240
695
1,080
1,180
97,650
35,915
16,352
109
$ 296,699
2,608,742
161,047
56,518
105 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The summarized balance sheet information for the investments in real estate partnerships, on a combined basis, is as
follows:
(in thousands)
Investments in real estate, net
Acquired lease intangible assets, net
Other assets
Total assets
Notes payable
Acquired lease intangible liabilities, net
Other liabilities
Capital - Regency
Capital - Third parties
December 31,
2017
2016
2,682,578
54,021
149,121
2,885,720
2,439,110
42,974
126,658
2,608,742
1,514,729
1,309,931
$
$
$
42,466
70,498
445,068
812,959
29,678
64,979
405,722
798,432
Total liabilities and capital
$
2,885,720
2,608,742
The following table reconciles the Company's capital recorded by the unconsolidated partnerships to the Company's
investments in real estate partnerships reported in the accompanying consolidated balance sheet:
(in thousands)
Capital - Regency
Basis difference
Negative investment in USAA (1)
Impairment of investment in real estate partnerships
Restricted Gain Method deferral (2)
Net book equity in excess of purchase price
Investments in real estate partnerships
December 31,
2017
2016
$
$
445,068
40,351
11,290
(1,300)
(30,902)
(78,203)
386,304
405,722
1,382
—
(1,300)
(30,902)
(78,203)
296,699
(1) During 2017, the USAA partnership distributed proceeds from debt refinancing and real estate sales
in excess of Regency's carrying value of its investment resulting in a negative investment balance, which
is recorded within Accounts payable and other liabilities in the Consolidated Balance Sheets.
(2) Represents gains deferred under the Company's restricted gain method to maximize deferrals of gains
associated with historic sales of shopping centers into joint ventures which contain distribution-in-kind
("DIK") provisions as a liquidation election. Regency has not sold any shopping centers into joint
ventures during the years ended December 31, 2017, 2016 and 2015. As discussed further in note 1(n),
the accounting for these deferred gains will change upon the adoption of ASU 2017-05 and Topic 606 on
January 1, 2018.
106 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The revenues and expenses for the investments in real estate partnerships, on a combined basis, are summarized as
follows:
(in thousands)
Total revenues
Operating expenses:
Depreciation and amortization
Operating and maintenance
General and administrative
Real estate taxes
Other operating expenses
Total operating expenses
Other expense (income):
Interest expense, net
Gain on sale of real estate
Provision for impairment
Early extinguishment of debt
Other expense (income)
Year ended December 31,
2017
2016
2015
$
396,596
364,087
363,745
99,327
58,283
5,582
49,904
2,923
99,252
52,725
5,342
42,813
2,356
111,648
51,970
5,292
43,769
2,989
$
216,019
202,488
215,668
73,244
(34,276)
—
—
1,651
40,619
139,958
69,193
(70,907)
—
69
2,197
552
161,047
43,341
56,518
79,477
(2,766)
9,102
—
1,516
87,329
60,748
22,508
Total other expense (income)
Net income of the Partnerships
The Company's share of net income of the
Partnerships
$
$
Acquisitions
The following table provides a summary of shopping centers and land parcels acquired through our unconsolidated
real estate partnerships:
(in thousands)
Year ended December 31, 2017
Date
Purchased
Property
Name
City/
State
Property
Type
10/11/2017
Midtown
East
Raleigh,
NC
Development
Total property acquisitions
Co-
investment
Partner
ITB
Holdings,
LLC
Ownership
%
Purchase
Price
Debt
Assumed,
Net of
Premiums
Intangible
Assets
Intangible
Liabilities
50.00%
$ 15,075
$ 15,075
—
—
—
—
—
—
(in thousands)
Date
Purchased
Property
Name
City/
State
Property
Type
Year ended December 31, 2016
Co-
investment
Partner
Ownership
%
Purchase
Price
Debt
Assumed,
Net of
Premiums
Intangible
Assets
Intangible
Liabilities
Applewood
Village
Shops
Plaza
Venezia
Denver,
CO
Orlando,
FL
3/24/2016
12/20/2016
Total property acquisitions
Operating (1)
GRIR
40.00%
$
200
—
—
—
Operating
Columbia
II
20.00%
92,350
$ 92,550
35,076
35,076
6,899
6,899
11,548
11,548
(1) Land parcels purchased as additions to the operating property.
107 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Dispositions
The following table provides a summary of shopping centers and land out-parcels disposed of through our
unconsolidated real estate partnerships:
(in thousands)
Proceeds from sale of real estate investments
Gain on sale of real estate
The Company's share of gain on sale of real estate
$
$
$
Number of operating properties sold
Number of land out-parcels sold
Notes Payable
Year ended December 31,
2016
2015
2017
73,122
34,276
6,591
3
1
174,090
70,907
25,003
10
1
39,459
2,766
1,108
2
—
Scheduled principal repayments on notes payable held by our unconsolidated investments in real estate partnerships as
of December 31, 2017 were as follows:
Scheduled Principal Payments and Maturities by Year:
Scheduled
Principal
Payments
Mortgage Loan
Maturities
Unsecured
Maturities
2018
2019
2020
2021
2022
Beyond 5 Years
Net unamortized loan costs, debt premium /
(discount)
Total notes payable
$
$
21,059
19,852
16,823
10,818
7,569
3,011
—
79,132
30,022
73,259
224,090
269,942
195,702
633,298
—
—
19,635
—
—
—
Total
51,081
93,111
260,548
280,760
203,271
636,309
Regency’s
Pro-Rata
Share
19,647
24,448
91,039
100,402
73,369
215,071
(10,351)
1,415,962
—
19,635
(10,351)
1,514,729
(3,365)
520,611
These loans are all non-recourse. Maturities will be repaid from proceeds from refinancing, partner capital
contributions, or a combination thereof. The Company is obligated to contribute its pro-rata share to fund maturities if
the loans are not refinanced, and it has the capacity to do so from existing cash balances, availability on its line of
credit, and operating cash flows. The Company believes that its partners are financially sound and have sufficient
capital or access thereto to fund future capital requirements. In the event that a co-investment partner was unable to
fund its share of the capital requirements of the co-investment partnership, the Company would have the right, but not
the obligation, to loan the defaulting partner the amount of its capital call.
Management fee income
In addition to earning our pro-rata share of net income or loss in each of these co-investment partnerships, we receive
fees, as follows:
(in thousands)
Asset management, property management, leasing, and
investment and financing services
Year ended December 31,
2016
2015
2017
$
25,260
24,595
24,519
108 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
5.
Acquired Lease Intangibles
The Company had the following acquired lease intangibles:
(in thousands)
In-place leases
Above-market leases
Below-market ground leases
Total intangible assets
Accumulated amortization
Acquired lease intangible assets, net
Below-market leases
Above-market ground leases
Total intangible liabilities
Accumulated amortization
Acquired lease intangible liabilities, net
December 31,
2017 (1)
2016
$
$
$
$
$
470,315
64,625
92,166
627,106
(148,280)
478,826
588,850
5,101
593,951
(56,550)
537,401
96,178
14,684
64,664
175,526
(56,695)
118,831
71,996
5,722
77,718
(23,538)
54,180
(1) Includes estimated values for acquired lease intangibles from the Equity One
merger, for which the accounting remains provisional as of December 31, 2017, as
discussed in Note 2.
The following table provides a summary of amortization and net accretion amounts from acquired lease intangibles:
(in thousands)
Year ended December 31,
2016
2017 (4)
2015
In-place lease amortization
Above-market lease amortization (1)
Below-market ground lease amortization (3)
Acquired lease intangible asset amortization
Below-market lease amortization (2)
Above-market ground lease amortization (3)
$
$
$
88,284
9,443
1,886
99,613
34,786
136
Acquired lease intangible liability amortization $
34,922
11,533
1,742
1,111
14,386
6,827
167
6,994
9,141
1,950
351
11,442
3,940
215
4,155
(1) Amounts are recorded as a reduction to minimum rent.
(2) Amounts are recorded as an increase to minimum rent.
(3) Above and below market ground lease amortization are recorded as offsets to Operating and
maintenance.
(4) Amortization and net accretion for the year ended December 31, 2017, includes amounts subject
to provisional accounting from the Equity One merger, as discussed in Note 2.
109 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The estimated aggregate amortization and net accretion amounts from acquired lease intangibles, including provisional
purchase price accounting for Equity One acquired lease intangibles, for the next five years are as follows:
(in thousands)
In Process Year Ending
December 31,
Net accretion of
Above / Below market
lease intangibles
Amortization of
In-place lease
intangibles
Net amortization of
Below / Above ground
lease intangibles
2018
2019
2020
2021
2022
$
29,654
28,754
27,710
27,106
25,440
72,769
54,743
41,211
32,893
25,202
1,560
1,550
1,544
1,545
1,555
6.
Income Taxes
The Company has elected to be taxed as a REIT under the applicable provisions of the Code with certain of its
subsidiaries treated as TRS entities, which are subject to federal and state income taxes.
The following table summarizes the tax status of dividends paid on our common shares:
(in thousands)
Dividend per share
Ordinary income
Capital gain
Return of capital
Qualified dividend income
Year ended December 31,
2017
$2.10
86%
10%
4%
—%
2016
2.00
53%
8%
39%
—%
2015
1.94
71%
5%
19%
5%
Our consolidated expense (benefit) for income taxes for the years ended December 31, 2017, 2016, and 2015 was as
follows:
(in thousands)
Income tax (benefit) expense:
Current
Deferred
Total income tax (benefit) expense (1)
Year ended December 31,
2017
2016
2015
$
$
1,168
(10,815)
(9,647)
(153)
—
(153)
(1,604)
—
(1,604)
(1) Includes $90 thousand of tax expense presented within Other operating expenses
during the year ended December 31, 2017, and $153 thousand and $1.6 million of tax
benefit presented within Gain on sale of real estate, net of tax, during the years ended
December 31, 2016 and 2015, respectively.
The income tax benefit for the year ended December 31, 2017 was primarily due to the income tax benefit from
revaluing the net deferred tax liability at a TRS entity acquired through the Equity One merger, as a result of the
change in corporate tax rates from the 2017 Tax Cuts and Jobs Act.
110
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The TRS entities are subject to federal and state income taxes and file separate tax returns. Income tax (benefit)
expense differed from the amounts computed by applying the U.S. Federal income tax rate to pretax income of the
TRS entities, as follows:
(in thousands)
Computed expected tax expense (benefit)
State income tax, net of federal benefit
Valuation allowance
Tax rate change
All other items
Total income tax benefit (1)
Income tax benefit attributable to operations (1)
Year ended December 31,
2017
2016
2015
$
$
1,190
108
(1,512)
(9,737)
304
(9,647)
(9,647)
933
56
(1,239)
—
97
(153)
(153)
1,730
224
(3,556)
—
(2)
(1,604)
(1,604)
(1) Includes $90 thousand of tax expense presented within Other operating expenses during the year
ended December 31, 2017, and $153 thousand and $1.6 million of tax benefit presented within Gain on
sale of real estate, net of tax, during the years ended December 31, 2016 and 2015, respectively.
The tax effects of temporary differences and carryforwards (included in Accounts payable and other liabilities in the
accompanying Consolidated Balance Sheets) are summarized as follows:
(in thousands)
Deferred tax assets
Investments in real estate partnerships
Provision for impairment
Deferred interest expense
Capitalized costs under Section 263A
Net operating loss carryforward
Employee benefits
Other
$
Deferred tax assets
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities
Straight line rent
Fixed assets
Other
Deferred tax liabilities
Net deferred tax liabilities
$
December 31,
2017
2016
—
3,785
2,754
729
373
—
2,297
9,938
(8,300)
1,638
(528)
(19,757)
(7)
(20,292)
(18,654)
361
5,827
2,714
1,145
—
44
3,059
13,150
(12,507)
643
643
—
—
643
—
The net deferred tax liability increased during 2017 primarily due to the acquisition of a net deferred tax liability, from
the basis difference of its real estate assets, at one TRS acquired as part of the Equity One merger, as discussed in note
2.
Due to uncertainty regarding the realization of certain deferred tax assets, the Company previously established
valuation allowances, primarily in connection with the deferred interest and NOL carryforwards related to certain
TRSs. As of December 31, 2017, the minimal projected future taxable income and unpredictable nature of potential
property sales with built in losses support the conclusion that it is still more likely than not that some of the deferred
tax assets will not be realized.
111 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
7.
Notes Payable and Unsecured Credit Facilities
The Company’s outstanding debt consists of the following:
(in thousands)
Notes payable:
Fixed rate mortgage loans
Variable rate mortgage loans
Fixed rate unsecured public and private debt
Total notes payable
Unsecured credit facilities:
Line of Credit
Term Loans
Total unsecured credit facilities
Total debt outstanding
December 31,
2017
2016
$
$
$
$
520,193
125,866 (1)
2,325,656
2,971,715
60,000
563,262
623,262
384,786
86,969
892,170
1,363,925
15,000
263,495
278,495
3,594,977
1,642,420
(1) Includes five mortgages, whose interest varies on LIBOR based formulas. Three of these
variable rate loans have interest rate swaps in place to fix the interest rates at a range of 2.8%
to 4.1%.
Notes Payable
Notes payable consist of mortgage loans secured by properties and unsecured public and private debt. Mortgage loans
may be prepaid, but could be subject to yield maintenance premiums. Mortgage loans are generally due in monthly
installments of principal and interest or interest only, whereas, interest on unsecured public and private debt is payable
semi-annually.
The Company is required to comply with certain financial covenants for its unsecured public debt as defined in the
indenture agreements such as the following ratios: Consolidated Debt to Consolidated Assets, Consolidated Secured
Debt to Consolidated Assets, Consolidated Income for Debt Service to Consolidated Debt Service, and Unencumbered
Consolidated Assets to Unsecured Consolidated Debt. As of December 31, 2017, management of the Company
believes it is in compliance with all financial covenants for its unsecured public debt.
As of December 31, 2017, the key interest rates of the Company's notes payables were as follows:
Interest Rates
Maturing
Through Minimum Maximum
Weighted Average
Effective Rate
Weighted Average
Contractual Rate
Mortgage loans (1)
Fixed rate unsecured public
and private debt
2036
2047
2.39%
8.00%
3.60%
6.00%
4.23%
4.11%
4.77%
4.57%
(1) Interest rates disclosed for mortgages include variable rate mortgages using the fixed interest rates from
the interest rate swaps, as disclosed in Note 8.
Unsecured Credit Facilities
The Company has an unsecured line of credit commitment (the "Line") and unsecured term loan commitments (the
"Term Loans") under separate credit agreements with a syndicate of banks.
The Company is required to comply with certain financial covenants as defined in the Line and Term Loan credit
agreements, such as Ratio of Indebtedness to Total Asset Value ("TAV"), Ratio of Unsecured Indebtedness to
Unencumbered Asset Value, Ratio of Adjusted Earnings Before Interest Taxes Depreciation and Amortization
(“EBITDA”) to Fixed Charges, Ratio of Secured Indebtedness to TAV, Ratio of Unencumbered Net Operating Income
to Unsecured Interest Expense, and other covenants customary with this type of unsecured financing. As of December
112 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
31, 2017, management of the Company believes it is in compliance with all financial covenants for the Line and Term
Loan.
The key terms of the Line and Term Loans were as follows:
December 31, 2017
(in thousands)
Total
Capacity
Remaining
Capacity
Maturing
Through
Line (7)
$1,000,000
$ 930,600 (1) 5/13/2019 (2)
Term Loan (8) $ 265,000
Term Loan (8) $ 300,000
$
$
—
—
1/5/2022
12/2/2020
Variable
Interest Rate (4)
LIBOR plus
0.925%
LIBOR plus
0.95%
LIBOR plus
0.95%
Weighted
Average
Effective
Rate
Weighted
Average
Contractual
Rate
Fee
$
75 (3) (6)
2.30%
2.12%
(5) $
35 (6)
(9) $
35 (6)
2.20%
2.00%
2.80%
2.77%
(1) Borrowing capacity is reduced by the balance of outstanding borrowings and commitments under outstanding
letters of credit.
(2) Maturity is subject to two six month extensions at the Company's option.
(3) In addition, carries a commitment fee that is subject to adjustment based on the higher of the Company's corporate
credit ratings from Moody's and S&P. At December 31, 2017, the commitment fee was 0.15%.
(4) Interest rate spread is subject to Regency maintaining its corporate credit and senior unsecured ratings at BBB+.
(5) The interest rate on the underlying debt is LIBOR + 0.95%. Effective July 7, 2016, an interest rate swap is in place
to fix the interest on the entire balance at 2% through maturity.
(6) Annual fee, in thousands.
(7) Weighted average contractual and effective rates for the Line are calculated based on a fully drawn Line balance.
(8) Weighted average contractual and effective rates for the Term Loans are based on the fixed rate with the interest
rate swap.
(9) The interest rate on the underlying debt is LIBOR + 0.95%, with an interest rate swap in place to fix the interest on
the entire balance at 2.774% through maturity.
Scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:
(in thousands)
Scheduled Principal Payments and Maturities
by Year:
December 31, 2017
Scheduled
Principal
Payments
Mortgage
Loan
Maturities
Unsecured
Maturities (1)
2018
2019
2020
2021
2022
Beyond 5 Years
$
10,641
9,360
11,122
11,426
11,618
37,056
112,226
21,787
78,580
66,751
5,848
—
60,000
450,000
250,000
565,000
Total
122,867
91,147
539,702
328,177
582,466
260,328
1,650,000
1,947,384
Unamortized debt premium/(discount) and
issuance costs
—
9,316
Total notes payable
554,836
(1) Includes unsecured public and private debt and unsecured credit facilities.
91,223
$
(26,082)
2,948,918
(16,766)
3,594,977
The Company has $112.2 million of debt maturing over the next twelve months, all of which is in the form of non-recourse
mortgage loans. The Company currently intends to payoff the maturing balances with proceeds from unsecured borrowings
and leave the properties unencumbered. The Company has sufficient capacity on its Line to repay the maturing debt, if
necessary.
113 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
8.
Derivative Financial Instruments
The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as
their classification on the Consolidated Balance Sheets:
(in thousands)
Effective
Date
Maturity
Date
Notional
Amount
Bank Pays
Variable Rate of
4/3/17
12/2/20
$300,000
8/1/16
4/7/16
1/5/22
4/1/23
12/1/16
11/1/23
265,000
20,000
33,000
6/2/17
6/2/27
37,500
1 Month LIBOR
with Floor
1 Month LIBOR
with Floor
1 Month LIBOR
1 Month LIBOR
1 Month LIBOR
with Floor
Total derivative financial instruments
Fair Value at
December 31,
Assets (Liabilities) (1)
Regency
Pays
Fixed
Rate of
2017
2016
1.824% $
1,804
—
1.053%
1.303%
1.490%
2.366%
10,744
801
1,166
9,889
720
1,013
(177)
$ 14,338
(580)
11,042
(1) Derivatives in an asset position are included within Other assets in the accompanying
Consolidated Balance Sheets, while those in a liability position are included within
Accounts payable and other liabilities.
These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow
hedges. The Company does not use derivatives for trading or speculative purposes and currently does not have any
derivatives that are not designated as hedges. The Company has master netting agreements; however, the Company
does not have multiple derivatives subject to a single master netting agreement with the same counterparties.
Therefore none are offset in the accompanying Consolidated Balance Sheets.
The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is
recorded in accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in
the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of
the derivatives is recognized directly in earnings within interest expense, in the accompanying Consolidated
Statements of Operations.
The following table represents the effect of the derivative financial instruments on the accompanying consolidated
financial statements:
Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective
Portion)
Location and Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
Location and Amount of Gain or
(Loss) Recognized in
Income on Derivative
(Ineffective Portion and
Missed Forecast)
Year ended December 31,
Year ended December 31,
Year ended December 31,
(in
thousands)
2017
2016
2015
2017
2016
2015
2017
2016
2015
Interest
rate swaps $ 1,151
(10,332)
(10,089)
Interest
expense
$(11,103)
(51,139)
(9,152)
Loss on
derivative
instruments
$
— (40,586)
—
114 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
As of December 31, 2017, the Company expects $6.9 million of net deferred losses on derivative instruments
accumulated in other comprehensive income, including the Company's share from its Investments in real estate
partnerships, to be reclassified into earnings during the next 12 months. Included in the reclass is $8.4 million which
is related to previously settled swaps on the Company's ten year fixed rate unsecured loans.
Hedge Settlement
During the third quarter of 2016, the Company initiated and completed a $400.1 million equity offering for the primary
purpose of funding the early redemption of its $300 million notes. The Company also used $40.6 million from the net
offering proceeds to settle $220 million of forward starting swaps related to new debt previously expected to be issued
in 2017 to repay the notes at maturity. As a result of the equity offering, the Company believed that the issuance of
new fixed rate debt within the remaining period of the forward starting swaps was probable not to occur. Accordingly,
the Company ceased hedge accounting and reclassified the $40.6 million paid to settle the forward starting swaps from
Accumulated other comprehensive loss to earnings during the third quarter of 2016.
Subsequent Event
On February 9, 2018, the Company executed a ten year treasury rate lock on $285.0 million notional amount at a fixed
interest rate of 2.899%, intended to designate as a cash flow hedge against changes in interest rates on anticipated
future fixed-rate unsecured borrowings.
9.
Fair Value Measurements
(a)
Disclosure of Fair Value of Financial Instruments
All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at
amounts which, in management's estimation, reasonably approximates their fair values, except for the
following:
(in thousands)
Financial assets:
Notes receivable
Financial liabilities:
Notes payable
Unsecured credit facilities
$
$
$
December 31,
2017
2016
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
15,803
15,660
2,971,715
623,262
3,058,044
625,000
$
$
$
10,481
10,380
1,363,925
278,495
1,435,000
279,700
The above fair values represent management's estimate of the amounts that would be received from selling
those assets or that would be paid to transfer those liabilities in an orderly transaction between market
participants as of December 31, 2017 and 2016. These fair value measurements maximize the use of
observable inputs. However, in situations where there is little, if any, market activity for the asset or liability
at the measurement date, the fair value measurement reflects the Company's own judgments about the
assumptions that market participants would use in pricing the asset or liability.
The Company develops its judgments based on the best information available at the measurement date,
including expected cash flows, appropriately risk-adjusted discount rates, and available observable and
unobservable inputs. Service providers involved in fair value measurements are evaluated for competency
and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value
of these financial instruments, the fair values presented above are not necessarily indicative of amounts that
will be realized upon disposition of the financial instruments.
115 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The following methods and assumptions were used to estimate the fair value of these financial instruments:
Notes Receivable
The fair value of the Company's notes receivable is estimated by calculating the present value of future contractual
cash flows discounted at interest rates available for notes of the same terms and maturities, adjusted for counter-
party specific credit risk. The fair value of notes receivable was determined primarily using Level 3 inputs of
the fair value hierarchy, which considered counter-party credit risk and collateral risk of the underlying property
securing the note receivable.
Notes Payable
The fair value of the Company's unsecured debt is estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The fair
value of the unsecured debt was determined using Level 2 inputs of the fair value hierarchy.
The fair value of the Company's mortgage notes payable is estimated by discounting future cash flows of each
instrument at rates that reflect the current market rates available to the Company for debt of the same terms and
maturities. Fixed rate loans assumed in connection with real estate acquisitions are recorded in the accompanying
consolidated financial statements at fair value at the time the property is acquired. The fair value of the mortgage
notes payable was determined using Level 2 inputs of the fair value hierarchy.
Unsecured Credit Facilities
The fair value of the Company's Unsecured credit facilities is estimated based on the interest rates currently
offered to the Company by financial institutions. The fair value of the credit facilities was determined using
Level 2 inputs of the fair value hierarchy.
The following interest rates were used by the Company to estimate the fair value of its financial instruments:
December 31,
2017
2016
Low
3.8%
3.0%
2.0%
High
7.8%
3.9%
3.0%
Low
7.2%
2.9%
1.5%
High
7.2%
3.9%
1.6%
Notes receivable
Notes payable
Unsecured credit facilities
(b)
Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis:
Trading Securities Held in Trust
The Company has investments in marketable securities, which are assets of the non-qualified deferred
compensation plan ("NQDCP"), that are classified as trading securities held in trust on the accompanying
Consolidated Balance Sheets. The fair value of the trading securities held in trust was determined using quoted
prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value
of trading securities are recorded within net investment (income) loss from deferred compensation plan in the
accompanying Consolidated Statements of Operations.
Available-for-Sale Securities
Available-for-sale securities consist of investments in certificates of deposit and corporate bonds, and are recorded
at fair value using matrix pricing methods to estimate fair value, which are considered Level 2 inputs of the fair
value hierarchy. Unrealized gains or losses on these securities are recognized through Other comprehensive
income.
Interest Rate Derivatives
The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques
including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects
116 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
the contractual terms of the derivatives, including the period to maturity, and uses observable market-based
inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation
adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's
nonperformance risk in the fair value measurements.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within
Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level
3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and
its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments
on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are
not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its
interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.
The following table presents the placement in the fair value hierarchy of assets and liabilities that are
measured at fair value on a recurring basis:
Fair Value Measurements as of December 31, 2017
Quoted Prices
in Active
Markets for
Identical
Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Balance
(Level 1)
(Level 2)
(Level 3)
31,662
9,974
14,515
56,151
31,662
—
—
31,662
—
9,974
14,515
24,489
—
—
—
—
(177)
—
(177)
—
Fair Value Measurements as of December 31, 2016
Quoted Prices
in Active
Markets for
Identical
Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Balance
(Level 1)
(Level 2)
(Level 3)
28,588
7,420
11,622
47,630
28,588
—
—
28,588
—
7,420
11,622
19,042
(580)
—
(580)
—
—
—
—
—
(in thousands)
Assets:
Trading securities held in trust $
Available-for-sale securities
Interest rate derivatives
Total
Liabilities:
Interest rate derivatives
$
$
(in thousands)
Assets:
Trading securities held in trust $
Available-for-sale securities
Interest rate derivatives
Total
Liabilities:
Interest rate derivatives
$
$
117 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
10.
Equity and Capital
Preferred Stock of the Parent Company
There were no preferred stock series outstanding as of December 31, 2017. Terms and conditions of the preferred
stock outstanding at December 31, 2016, which were redeemed during 2017, are summarized as follows:
Series 6
Series 7
Date of Issuance
2/16/2012
8/23/2012
Shares Issued
and
10,000,000
3,000,000
Liquidation
Preference
$ 250,000,000
Distribution
Rate
6.625%
75,000,000
6.000%
Callable
By Company
2/16/2017
8/23/2017
13,000,000
$ 325,000,000
The Series 6 and 7 preferred shares were perpetual, absent a change in control of the Parent Company, were not
convertible into common stock of the Parent Company, and were redeemable at par upon the Company’s election
beginning 5 years after the issuance date. None of the terms of the preferred stock contained any unconditional
obligations that would have require the Company to redeem the securities at any time or for any purpose.
Preferred Shares Redemption
On February 16, 2017, the Parent Company redeemed all of the issued and outstanding 6.625% Series 6 cumulative
redeemable preferred shares. The redemption price of $25.21 per share included accrued and unpaid dividends,
resulting in an aggregate amount being paid of $252.0 million. The funds used to redeem the Series 6 preferred shares
were provided by the January 2017 senior unsecured debt offering.
On August 23, 2017, the Parent Company also redeemed all of the issued and outstanding 6.000% Series 7 cumulative
redeemable preferred stock. The redemption price of $25.22 per share included accrued and unpaid dividends
resulting in an aggregate amount being paid of $75.7 million. The Company used proceeds from its senior unsecured
notes issued in June 2017 to fund the redemption.
Common Stock of the Parent Company
Issuances:
At the Market ("ATM") Program
Under the Parent Company's ATM equity offering program, the Parent Company may sell up to $500.0 million of
common stock at prices determined by the market at the time of sale. As of December 31, 2017, $500.0 million in
common stock remained available for issuance under this ATM equity program.
The following table presents the shares that were issued under the ATM equity program, which was used to fund
investment activities:
(dollar amounts are in thousands, except price per share data)
Shares issued (1)
Weighted average price per share
Gross proceeds
Commissions
Issuance costs (2)
Year ended December 31,
2017
2016
—
—
—
—
349
182,787
68.85
12,584
157
97
$
$
$
$
(1) Reflects shares traded in December and settled in January each year.
(2) Includes legal and accounting costs associated with maintaining the ATM program.
Forward Equity Offering
In March 2016, the Parent Company entered into a forward sale agreement (the "Forward Equity Offering") to
issue 3.10 million shares of its common stock at an offering price of $75.25 per share, before any underwriting
discount and offering expenses.
118 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
In June 2016, the Parent Company partially settled its forward equity offering by delivering 1.85 million shares of
newly issued common stock, receiving $137.5 million of net proceeds, which were used to reduce the balance on
the Line.
In December 2017, the Parent Company settled the remaining shares in its forward equity offering by delivering
1.25 million shares of newly issued common stock, receiving $89.1 million of net proceeds, which were used to
reduce the balance on the Line.
Equity One merger
On March 1, 2017, Regency completed its merger with Equity One. Under the terms of the merger Agreement,
each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of
Equity One common stock that they owned immediately prior to the effective time of the Merger resulting in
approximately 65.5 million shares being issued to effect the merger.
Share Repurchase Program - Subsequent Event
On February 7, 2018, the Company's Board authorized a common share repurchase program under which the
Company may purchase, from time to time, up to a maximum of $250 million of shares of its outstanding
common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased
will be retired. The program is scheduled to expire on February 6, 2020. The timing and actual number of shares
purchased under the program depend upon marketplace conditions and other factors. The program remains
subject to the discretion of the board. Through the date of filing, the Company has repurchased $74.2 million of
shares.
Preferred Units of the Operating Partnership
All preferred units for the Parent Company were retired, as discussed above.
Common Units of the Operating Partnership
Issuances:
Common units were issued to the Parent Company in relation to the Parent Company's issuance of common stock,
as discussed above.
In April 2017, the Operating Partnership issued 195,732 limited partner units, valued at $13.1 million, as partial
purchase price consideration for the acquisition of land for development.
General Partners
The Parent Company, as general partner, owned the following Partnership Units outstanding:
(in thousands)
Partnership units owned by the general partner
Partnership units owned by the limited partners
Total partnership units outstanding
December 31,
2017
2016
171,365
350
171,715
104,497
154
104,651
Percentage of partnership units owned by the general partner
99.8%
99.9%
119 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the balances of each component of AOCI:
(in thousands)
Balance as of December 31, 2014
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Current period other
comprehensive income, net
Balance as of December 31, 2015
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Current period other
comprehensive income, net
Balance as of December 31, 2016
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Current period other
comprehensive income, net
Balance as of December 31, 2017
Controlling Interest
Unrealized
gain (loss) on
Available-
For-Sale
Securities
Cash
Flow
Hedges
AOCI
Noncontrolling Interest
Unrealized
gain (loss) on
Available-
For-Sale
Securities
Cash
Flow
Hedges
AOCI
Total
AOCI
$ (57,748)
— (57,748)
(750)
(9,897)
(43)
(9,940)
(192)
8,995
—
8,995
157
(902)
$ (58,650)
(43)
(43)
(945)
(58,693)
(10,587)
24
(10,563)
50,910
— 50,910
40,323
$ (18,327)
24
(19)
40,347
(18,346)
(35)
(785)
255
229
484
(301)
1,134
(8)
1,126
17
10,931
— 10,931
172
12,065
$ (6,262)
(8)
(27)
12,057
(6,289)
189
(112)
—
—
—
—
—
—
—
—
—
—
—
—
—
(750)
(58,498)
(192)
(10,132)
157
9,152
(35)
(785)
(980)
(59,478)
255
(10,308)
229
51,139
484
(301)
40,831
(18,647)
17
1,143
172
11,103
189
(112)
12,246
(6,401)
The following represents amounts reclassified out of AOCI into income:
AOCI Component
Amount Reclassified from AOCI into
Income
Affected Line Item(s)
Where Net Income is
Presented
(in thousands)
Year ended December 31,
2016
2015
2017
Interest rate swaps
$
11,103
51,139
9,152
Interest expense and Loss on
derivative instruments
120 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
11.
Stock-Based Compensation
The Company recorded stock-based compensation in general and administrative expenses in the accompanying
Consolidated Statements of Operations, the components of which are further described below:
(in thousands)
Restricted stock (1)
Directors' fees paid in common stock (1)
Capitalized stock-based compensation (2)
Stock based compensation attributable to post-
combination service from Equity One merger
$
Stock-based compensation, net of capitalization
$
Year ended December 31,
2016
2015
2017
15,525
303
(3,210)
7,931
20,549
13,422
193
(2,963)
—
10,652
13,869
200
(2,988)
—
11,081
(1) Includes amortization of the grant date fair value of restricted stock awards over the respective vesting periods.
(2) Includes compensation expense specifically identifiable to development and leasing activities.
The Company established its Long Term Omnibus Plan (the "Plan") under which the Board of Directors may grant
stock options and other stock-based awards to officers, directors, and other key employees. The Plan allows the
Company to issue up to 4.1 million shares in the form of the Parent Company's common stock or stock options. As of
December 31, 2017, there were 2.1 million shares available for grant under the Plan either through stock options or
restricted stock.
Restricted Stock Awards
The Company grants restricted stock under the Plan to its employees as a form of long-term compensation and
retention. The terms of each restricted stock grant vary depending upon the participant's responsibilities and position
within the Company. The Company's stock grants can be categorized as either time-based awards, performance-based
awards, or market-based awards. All awards are valued at fair value, earn dividends throughout the vesting period,
and have no voting rights. Fair value is measured using the grant date market price for all time-based or performance-
based awards. Market based awards are valued using a Monte Carlo simulation to estimate the fair value based on the
probability of satisfying the market conditions and the projected stock price at the time of payout, discounted to the
valuation date over a three year performance period. Assumptions include historic volatility over the previous three
year period, risk-free interest rates, and Regency's historic daily return as compared to the market index. Since the
award payout includes dividend equivalents and the total shareholder return includes the value of dividends, no
dividend yield assumption is required for the valuation. Compensation expense is measured at the grant date and
recognized on a straight-line basis over the requisite vesting period for the entire award.
121 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
The following table summarizes non-vested restricted stock activity:
Year ended December 31, 2017
Number of
Shares
Intrinsic Value
(in thousands)
Weighted
Average Grant
Price
Non-vested as of December 31, 2016
Add: Time-based awards granted (1) (4)
Add: Performance-based awards granted (2) (4)
Add: Market-based awards granted (3) (4)
Less: Vested and Distributed (5)
Less: Forfeited
561,261
118,339
38,494
65,449
207,403
6,063
$69.47
$68.95
$78.54
$69.32
$66.91
Non-vested and expected to vest as of December 31, 2017 (6)
570,077
$39,438
(1) Time-based awards vest beginning on the first anniversary following the grant date over a three or four year
service period. These grants are subject only to continued employment and are not dependent on future
performance measures. Accordingly, if such vesting criteria are not met, compensation cost previously recognized
would be reversed.
(2) Performance-based awards are earned subject to future performance measurements. Once the performance
criteria are achieved and the actual number of shares earned is determined, shares vest over a required service
period. The Company considers the likelihood of meeting the performance criteria based upon management's
estimates from which it determines the amounts recognized as expense on a periodic basis.
(3) Market-based awards are earned dependent upon the Company's total shareholder return in relation to the
shareholder return of a NAREIT index over a three-year period. Once the performance criteria are met and the
actual number of shares earned is determined, the shares are immediately vested and distributed. The probability of
meeting the criteria is considered when calculating the estimated fair value on the date of grant using a Monte Carlo
simulation. These awards are accounted for as awards with market criteria, with compensation cost recognized over
the service period, regardless of whether the performance criteria are achieved and the awards are ultimately earned.
The significant assumptions underlying determination of fair values for market-based awards granted were as
follows:
Volatility
Risk free interest rate
Year ended December 31,
2016
18.50%
0.88%
2015
17.10%
0.78%
2017
18.00%
1.48%
(4)The weighted-average grant price for restricted stock granted during the years is summarized below:
Year ended December 31,
2016
2015
2017
Weighted-average grant price
for restricted stock
$
72.05
$
79.40
$
69.80
(5) The total intrinsic value of restricted stock vested during the years is summarized below (in thousands):
Year ended December 31,
2017
2016
2015
Intrinsic value of restricted
stock vested
$
14,376
$
15,400
$
18,600
(6) As of December 31, 2017, there was $14.2 million of unrecognized compensation cost related to non-vested
restricted stock granted under the Parent Company's Plan. When recognized, this compensation results in additional
paid in capital in the accompanying Consolidated Statements of Equity of the Parent Company and in general
partner preferred and common units in the accompanying Consolidated Statements of Capital of the Operating
Partnership. This unrecognized compensation cost is expected to be recognized over the next three years. The
Company issues new restricted stock from its authorized shares available at the date of grant.
122 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
12.
Saving and Retirement Plans
401(k) Retirement Plan
The Company maintains a 401(k) retirement plan covering substantially all employees, which permits participants to
defer up to the maximum allowable amount determined by the IRS of their eligible compensation. This deferred
compensation, together with Company matching contributions equal to 100% of employee deferrals up to a maximum
of $5,000 of their eligible compensation, is fully vested and funded as of December 31, 2017. Additionally, an annual
profit sharing contribution is made, which vests over a three year period. Costs for Company contributions to the plan
totaled $4.1 million, $3.3 million and $3.1 million for the years ended December 31, 2017, 2016, and 2015,
respectively.
Non-Qualified Deferred Compensation Plan
The Company maintains a non-qualified deferred compensation plan (“NQDCP”), which allows select employees and
directors to defer part or all of their cash bonus, director fees, and vested restricted stock awards. All contributions
into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited in a Rabbi trust.
The following table reflects the balances of the assets and deferred compensation liabilities of the Rabbi trust in the
accompanying Consolidated Balance Sheets:
Non Qualified Deferred Compensation
Plan Component (1)
(in thousands)
Assets:
Trading securities held in trust (2)
Liabilities:
Accounts payable and other liabilities
Year ended December 31,
2017
2016
$
$
31,662
28,588
31,383
28,214
(1) Assets and liabilities of the Rabbi trust are exclusive of the shares of the
Company's common stock.
(2) Included within Other assets in the accompanying Consolidated Balance
Sheets.
Realized and unrealized gains and losses on trading securities are recognized within income from deferred
compensation plan in the accompanying Consolidated Statements of Operations. Changes in participant obligations,
which is based on changes in the value of their investment elections, is recognized within general and administrative
expenses within the accompanying Consolidated Statements of Operations.
Investments in shares of the Company's common stock are included, at cost, as treasury stock in the accompanying
Consolidated Balance Sheets of the Parent Company and as a reduction of general partner capital in the accompanying
Consolidated Balance Sheets of the Operating Partnership. The participant's deferred compensation liability
attributable to the participants' investments in shares of the Company's common stock are included, at cost, within
additional paid in capital in the accompanying Consolidated Balance Sheets of the Parent Company and as a reduction
of general partner capital in the accompanying Consolidated Balance Sheets of the Operating Partnership. Changes in
participant account balances related to the Regency common stock fund are recorded directly within stockholders'
equity.
123 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
13.
Earnings per Share and Unit
Parent Company Earnings per Share
The following summarizes the calculation of basic and diluted earnings per share:
(in thousands, except per share data)
Numerator:
Income from operations attributable to common stockholders - basic
Income from operations attributable to common stockholders - diluted
Denominator:
Year ended December 31,
2017
2016
2015
$ 159,949
$ 159,949
143,860
143,860
128,994
128,994
Weighted average common shares outstanding for basic EPS
Weighted average common shares outstanding for diluted EPS (1)
159,536
159,960
100,863
101,285
94,391
94,856
Income per common share – basic
Income per common share – diluted
(1) Includes the dilutive impact of unvested restricted stock.
$
$
1.00
1.00
1.43
1.42
1.37
1.36
Amounts excluded for each because they would be anti-dilutive include:
The 1.3 million shares issuable under the forward equity offering outstanding at December 31, 2017 and 2016, using
the treasury stock method .
Income allocated to noncontrolling interests of the Operating Partnership has been excluded from the numerator and
exchangeable Operating Partnership units have been omitted from the denominator for the purpose of computing
diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no
impact. Weighted average exchangeable Operating Partnership units outstanding for the years ended December 31,
2017, 2016, and 2015 were 295,054, 154,170, and 154,170 respectively.
Operating Partnership Earnings per Unit
The following summarizes the calculation of basic and diluted earnings per unit:
(in thousands, except per share data)
Numerator:
Income from operations attributable to common unit holders - basic
Income from operations attributable to common unit holders - diluted
Denominator:
Weighted average common units outstanding for basic EPU
Weighted average common units outstanding for diluted EPU (1)
Income per common unit – basic
Income per common unit – diluted
Year ended December 31,
2016
2015
2017
$ 160,337
$ 160,337
144,117
144,117
129,234
129,234
159,831
160,255
101,017
101,439
94,546
95,011
$
$
1.00
1.00
1.43
1.42
1.37
1.36
(1) Includes the dilutive impact of unvested restricted stock and forward equity offering using the treasury stock
method.
124 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
14.
Operating Leases
The Company's properties are leased to tenants under operating leases. Our leases for tenant space under 10,000
square feet generally have initial terms ranging from three to seven years. Leases greater than 10,000 square feet
generally have initial lease terms in excess of five years, mostly comprised of anchor tenants. Many of the anchor
leases contain provisions allowing the tenant the option of extending the term of the lease at expiration. Future
minimum rents under non-cancelable operating leases as of December 31, 2017, excluding both tenant reimbursements
of operating expenses and additional percentage rent based on tenants' sales, are as follows:
In Process Year Ending
December 31,
Future Minimum
Rents (in thousands)
2018
2019
2020
2021
2022
Thereafter
Total
$
$
734,157
669,345
589,515
505,592
412,924
1,643,594
4,555,127
The shopping centers' tenant base primarily includes national and regional supermarkets, drug stores, discount
department stores, restaurants, and other retailers and, consequently, the credit risk is concentrated in the retail
industry. Grocer anchor tenants represent approximately 18% of pro-rata annual base rent. There were no tenants that
individually represented more than 5% of the Company's annualized future minimum rents.
The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party
owns and has leased the underlying land to the Company to construct and/or operate a shopping center. Ground leases
expire through the year 2101, and in most cases, provide for renewal options. Buildings and improvements
constructed on the leased land are capitalized and depreciated over the shorter of the useful life of the improvements or
the lease term.
In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its
business. Office leases expire through the year 2029, and in most cases, provide for renewal options. Leasehold
improvements are capitalized, recorded as tenant improvements, and depreciated over the shorter of the useful life of
the improvements or the lease term.
Operating lease expense was $18.4 million, $13.1 million, and $9.5 million for the years ended December 31, 2017,
2016, and 2015, respectively. The following table summarizes the future obligations under non-cancelable operating
leases as of December 31, 2017:
In Process Year Ending
December 31,
Future Obligations
(in thousands)
2018
2019
2020
2021
2022
Thereafter
Total
$
$
14,266
15,329
14,778
13,907
13,049
481,972
553,301
125 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
15.
Commitments and Contingencies
Litigation
The Company is involved in litigation on a number of matters and is subject to certain claims, which arise in the
normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect
on the Company's consolidated financial position, results of operations, or liquidity. Legal fees are expensed as
incurred.
After the announcement of the merger agreement on November 14, 2016, a putative class action was filed on behalf of
a purported stockholder in the Circuit Court for Duval County, Florida, under the following caption: Robert Garfield
on Behalf of Himself and All Others Similarly Situated vs. Regency Centers Corporation, Martin E. Stein, Jr., John C.
Schweitzer, Raymond L. Bank, Bryce Blair, C. Ronald Blankenship, J. Dix Druce, Jr., Mary Lou Fiala, David P.
O'Connor, and Thomas G. Wattles, No. 16-2017-CA-000688-XXXX-MA, filed February 3, 2017.
The class action alleges, among other matters, that the definitive joint proxy statement/prospectus filed by Regency
and Equity One with the Securities and Exchange Commission (the “SEC”) on January 24, 2017 (the “Joint Proxy
Statement/Prospectus”) omitted certain material information in connection with the merger. The complainant saught
various remedies, including injunctive relief to prevent the consummation of the merger unless certain allegedly
material information was disclosed and saught compensatory and rescissory damages in the event the merger was
consummated without such disclosures.
On February 17, 2017, the defendants entered into a stipulation of settlement with respect to the class action, pursuant
to which the parties have agreed, among other things, that Regency will make certain supplemental disclosures. The
supplemental disclosures were made by Regency in the Current Report on Form 8-K filed by Regency with the SEC
on February 17, 2017. The stipulation of settlement was approved by the courts and the case dismissed in January
2018.
Environmental
The Company is also subject to numerous environmental laws and regulations as they apply to real estate pertaining to
chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground
petroleum storage tanks. The Company believes that the ultimate disposition of currently known environmental
matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no
assurance that existing environmental studies with respect to the shopping centers have revealed all potential
environmental contaminants or liabilities; that any previous owner, occupant or tenant did not create any material
environmental condition not known to it; that the current environmental condition of the shopping centers will not be
affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes
in applicable environmental laws and regulations or their interpretation will not result in additional material
environmental liability to the Company.
Letter of Credit
The Company has the right to issue letters of credit under the Line up to an amount not to exceed $50.0 million, which
reduces the credit availability under the Line. These letters of credit are primarily issued as collateral on behalf of its
captive insurance program and to facilitate the construction of development projects. As of December 31, 2017 and
2016, the Company had $9.4 million and $5.8 million in letters of credit outstanding, respectively.
Purchase Commitments
The Company enters purchase and sale agreements to buy or sell real estate assets in the normal course of business,
which generally provide limited recourse if either party ends the contract. In addition, at December 31, 2017, the
Company has a commitment to purchase up to 100% ownership interest in an operating property valued at $205
million by November 2019, currently expecting to acquire 30% interest by that date.
126 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2017
16.
Summary of Quarterly Financial Data (Unaudited)
The following table summarizes selected Quarterly Financial Data for the Company on a historical basis for the years
ended December 31, 2017 and 2016:
(in thousands except per share and per unit data)
Year ended December 31, 2017
Operating Data:
Revenue
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 196,131
261,305
262,141
264,749
Net income attributable to common stockholders
Net income attributable to exchangeable operating partnership
units
Net income attributable to common unit holders
$ (33,223)
48,368
59,666
85,138
(19)
$ (33,242)
104
132
171
48,472
59,798
85,309
Net income attributable to common stock and unit holders per
share and unit:
Basic
Diluted
Year ended December 31, 2016
Operating Data:
Revenue
$
$
(0.26)
(0.26)
0.28
0.28
0.35
0.35
0.50
0.50
$ 149,628
152,413
152,769
159,561
Net income attributable to common stockholders
Net income attributable to exchangeable operating partnership
units
Net income attributable to common unit holders
$ 47,877
34,810
5,305
55,868
85
$ 47,962
64
34,874
16
5,321
92
55,960
Net income attributable to common stock and unit holders per
share and unit:
Basic
Diluted
$
$
0.49
0.49
0.36
0.35
0.05
0.05
0.53
0.53
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137
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Schedule III - Consolidated Real Estate and Accumulated Depreciation, continued
December 31, 2017
(in thousands)
Depreciation and amortization of the Company's investment in buildings and improvements reflected in the statements of
operations is calculated over the estimated useful lives of the assets, which are up to 40 years. The aggregate cost for federal
income tax purposes was approximately $8.8 billion at December 31, 2017.
The changes in total real estate assets for the years ended December 31, 2017, 2016, and 2015 are as follows (in thousands):
Beginning balance
Acquired properties
Developments and improvements
Sale of properties
Provision for impairment
Ending balance
2017
2016
$
4,933,499
5,772,265
273,871
(86,814)
—
$
10,892,821
4,545,900
370,010
148,904
(126,855)
(4,460)
4,933,499
2015
4,409,886
39,850
174,972
(78,808)
—
4,545,900
The changes in accumulated depreciation for the years ended December 31, 2017, 2016, and 2015 are as follows (in thousands):
Beginning balance
Depreciation expense
Sale of properties
Provision for impairment
Ending balance
2017
2016
2015
$
$
1,124,391
222,395
(7,015)
—
1,339,771
1,043,787
115,355
(32,791)
(1,960)
1,124,391
933,708
119,475
(9,396)
—
1,043,787
See accompanying report of independent registered public accounting firm.
138 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Controls and Procedures (Regency Centers Corporation)
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of the Parent Company's management, including its chief executive
officer and chief financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based on this evaluation, the Parent Company's chief executive officer and chief financial officer
concluded that its disclosure controls and procedures were effective as of the end of the period covered by this annual report on
Form 10-K to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls
and procedures include controls and procedures designed to ensure that information required to be disclosed by the Parent
Company in the reports it files or submits is accumulated and communicated to management, including its chief executive
officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
The Parent Company's management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the
participation of its management, including its chief executive officer and chief financial officer, the Parent Company conducted
an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its
evaluation under the framework in Internal Control - Integrated Framework (2013), the Parent Company's management
concluded that its internal control over financial reporting was effective as of December 31, 2017.
KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included
in this annual report on Form 10-K and, as part of their audit, has issued a report, included herein, on the effectiveness of the
Parent Company's internal control over financial reporting.
The Parent Company's system of internal control over financial reporting was designed to provide reasonable assurance
regarding the preparation and fair presentation of published financial statements in accordance with accounting principles
generally accepted in the United States. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance and may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Changes in Internal Controls
Other than the integration of Equity One's operations into our control structure, there have been no changes in the Parent
Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the
fourth quarter of 2017 and that have materially affected, or are reasonably likely to materially affect, its internal controls over
financial reporting.
Controls and Procedures (Regency Centers, L.P.)
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of the Operating Partnership's management, including the chief
executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of its
disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the
Exchange Act. Based on this evaluation, the chief executive officer and chief financial officer of its general partner concluded
that its disclosure controls and procedures were effective as of the end of the period covered by this annual report on Form 10-K
to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and
procedures include controls and procedures designed to ensure that information required to be disclosed by the Operating
139 Partnership in the reports it files or submits is accumulated and communicated to management, including the chief executive
officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
The Operating Partnership's management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the
participation of its management, including the chief executive officer and chief financial officer of its general partner, the
Operating Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting based on the
framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on its evaluation under the framework in Internal Control - Integrated Framework (2013), the Operating
Partnership's management concluded that its internal control over financial reporting was effective as of December 31, 2017.
KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included
in this annual report on Form 10-K and, as part of their audit, has issued a report, included herein, on the effectiveness of the
Operating Partnership's internal control over financial reporting.
The Operating Partnership's system of internal control over financial reporting was designed to provide reasonable
assurance regarding the preparation and fair presentation of published financial statements in accordance with accounting
principles generally accepted in the United States. All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance and may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Changes in Internal Controls
Other than the integration of Equity One's operations into our control structure, there have been no changes in the
Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred
during the fourth quarter of 2017 and that have materially affected, or are reasonably likely to materially affect, its internal
controls over financial reporting.
Item 9B. Other Information
Not applicable
Item 10. Directors, Executive Officers, and Corporate Governance
PART III
Information concerning our directors, executive officers, and corporate governance is incorporated herein by reference
to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the
fiscal year covered by this Form 10-K with respect to the 2018 Annual Meeting of Stockholders. Information regarding
executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3).
Code of Ethics.
We have a code of ethics applicable to our Board of Directors, principal executive officers, principal financial officer,
principal accounting officer and persons performing similar functions. The text of this code of ethics may be found on our web
site at www.regencycenters.com. We will post a notice of any waiver from, or amendment to, any provision of our code of
ethics on our web site.
Item 11. Executive Compensation
Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to the 2018 Annual
Meeting of Stockholders.
140 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information
(a)
(b)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (1)
Weighted-average
exercise price of
outstanding options,
warrants and rights(2)
(c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column a) (3)
N/A
— $
— $
N/A
—
—
1,502,643
N/A
1,502,643
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
(1) This column does not include 570,077 shares that may be issued pursuant to unvested restricted stock and
performance share awards.
(2) The weighted average exercise price excludes stock rights awards, which we sometimes refer to as unvested
restricted stock.
(3) The Regency Centers Corporation 2011 Omnibus Incentive Plan, (“Omnibus Plan”), as approved by
stockholders at our 2011 annual meeting, provides that an aggregate maximum of 4.1 million shares of our
common stock are reserved for issuance under the Omnibus Plan.
Information about security ownership is incorporated herein by reference to our definitive proxy statement to be filed
with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with
respect to the 2018 Annual Meeting of Stockholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to the 2018 Annual
Meeting of Stockholders.
Item 14. Principal Accountant Fees and Services
Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to the 2018 Annual
Meeting of Stockholders.
141 Item 15. Exhibits and Financial Statement Schedules
(a)
Financial Statements and Financial Statement Schedules:
PART IV
Regency Centers Corporation and Regency Centers, L.P. 2017 financial statements and financial statement
schedule, together with the reports of KPMG LLP are listed on the index immediately preceding the financial
statements in Item 8, Consolidated Financial Statements and Supplemental Data.
(b)
Exhibits:
In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with
information regarding their terms and are not intended to provide any other factual or disclosure information about the
Company, its subsidiaries or other parties to the agreements. The Agreements contain representations and warranties by each
of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the
other parties to the applicable agreement and:
•
•
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the
risk to one of the parties if those statements prove to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of the
applicable agreement, which disclosures are not necessarily reflected in the agreement;
• may apply standards of materiality in a way that is different from what may be viewed as material to you or
other investors; and
• were made only as of the date of the applicable agreement or such other date or dates as may be specified in
the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were
made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are
responsible for considering whether additional specific disclosures of material information regarding material contractual
provisions are required to make the statements in this report not misleading. Additional information about the Company may
be found elsewhere in this report and the Company's other public files, which are available without charge through the SEC's
website at http://www.sec.gov.
Unless otherwise indicated below, the Commission file number to the exhibit is No. 001-12298.
1.
Underwriting Agreement
(a)
Form of Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and the parties listed below (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-
K filed on May 17, 2017). The Equity Distribution Agreements listed below are substantially identical in all
material respects to the Form of Equity Distribution Agreement, except for the identities of the parties, and
have not been filed as exhibits to the Company’s 1934 Act reports pursuant to Instruction 2 to item 601 of
Regulation S-K:
(i)
(ii)
(iii)
(iv)
(v)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and Wells Fargo Securities, LLC;
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and J.P. Morgan Securities LLC;
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and Merrill Lynch, Pierce, Fenner & Smith Incorporated;
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and BB&T Capital Markets, a division of BB&T Securities, LLC;
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and BTIG, LLC;
142 (vi)
(vii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and RBC Capital Markets, LLC;
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and SunTrust Robinson Humphrey, Inc.; and
(viii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and Mizuho Securities USA LLC.
Forward Master Confirmation, dated May 17, 2017, by and between Regency Centers Corporation and Wells
Fargo Bank, National Association (incorporated by reference to Exhibit 1.2 to the Company’s Form 8-K filed
on May 17, 2017).
Forward Master Confirmation, dated May 17, 2017, by and between Regency Centers Corporation and
JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 1.3 to the Company’s
Form 8-K filed on May 17, 2017).
Forward Master Confirmation, dated May 17, 2017, by and between Regency Centers Corporation and Bank
of America, N.A. (incorporated by reference to Exhibit 1.4 to the Company’s Form 8-K filed on May 17,
2017)
Forward Master Confirmation, dated May 17, 2017, by and between Regency Centers Corporation and Royal
Bank of Canada (incorporated by reference to Exhibit 1.5 to the Company’s Form 8-K filed on May 17,
2017).
(b)
(c)
(d)
(e)
3.
Articles of Incorporation and Bylaws
(a)
(b)
(c)
Restated Articles of Incorporation of Regency Centers Corporation (amendment is incorporated by reference
to Exhibit 3.A to the Company’s Form 10-Q filed on August 8, 2017).
Amended and Restated Bylaws of Regency Centers Corporation (amendment is incorporated by reference to
Exhibit 3.B to the Company’s Form 10-Q filed on August 8, 2017).
Fifth Amended and Restated Agreement of Limited Partnership of Regency Centers, L.P., (incorporated by
reference to Exhibit 3(d) to the Company's Form 10-K filed on February 19, 2014).
4.
Instruments Defining Rights of Security Holders
(a)
(b)
See Exhibits 3(a) and 3(b) for provisions of the Articles of Incorporation and Bylaws of the Company
defining the rights of security holders. See Exhibits 3(c) and 3(d) for provisions of the Partnership
Agreement of Regency Centers, L.P. defining rights of security holders.
Indenture dated December 5, 2001 between Regency Centers, L.P., the guarantors named therein and First
Union National Bank, as trustee (incorporated by reference to Exhibit 4.4 to Regency Centers, L.P.'s Form 8-
K filed on December 10, 2001).
(i)
(ii)
First Supplemental Indenture dated as of June 5, 2007 among Regency Centers,
L.P., the Company as guarantor and U.S. Bank National Association, as successor
to Wachovia Bank, National Association (formerly known as First Union National
Bank), as trustee (incorporated by reference to Exhibit 4.1 to Regency Centers,
L.P.'s Form 8-K filed on June 5, 2007).
Second Supplemental Indenture dated as of June 2, 2010 to the Indenture dated as
of December 5, 2001 between Regency Centers, L.P., Regency Centers
Corporation, as guarantor, and U.S. Bank National Association, as successor to
Wachovia Bank, National Association (formerly known as First Union National
Bank), as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form
8-K filed on June 3, 2010).
(iii)
Third Supplemental Indenture dated as of August 17, 2015 to the Indenture dated
as of December 5, 2001 among Regency Centers, L.P., Regency Centers
Corporation, as guarantor, and U.S. Bank, National Association, as trustee
143 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on
August 18, 2015).
(iv)
Fourth Supplemental Indenture dated as of January 26, 2017 among Regency
Centers, L.P., Regency Centers Corporation, as guarantor, and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's
Form 8-K filed on January 26, 2016).
(c)
Indenture dated September 9, 1998 between the Company, as successor-by-merger to IRT Property Company,
and SunTrust Bank, as trustee (incorporated by reference to Exhibit 4.2 of Form 8-K filed by IRT Property
Company on September 15, 1998)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Supplemental Indenture No. 1, dated September 9, 1998, between the Company, as
successor-by-merger to IRT Property Company, and SunTrust Bank, as Trustee
(incorporated by reference to Exhibit 4.3 of Form 8-K filed by IRT Property
Company on September 15, 1998)
Supplemental Indenture No. 2, dated November 1, 1999, between the Company, as
successor-by-merger to IRT Property Company, and SunTrust Bank, as Trustee
(incorporated by reference to Exhibit 4.5 of Form 8-K filed by IRT Property
Company on November 12, 1999)
Supplemental Indenture No. 3, dated February 12, 2003, between the Company
and SunTrust Bank, as Trustee (incorporated by reference to Exhibit 4.2 of Form
8-K filed by Equity One, Inc. on February 20, 2003)
Supplemental Indenture No. 5, dated April 23, 2004, between the Company and
SunTrust Bank, as Trustee (incorporated by reference to Exhibit 4.1 of Form 10-Q
filed by Equity One, Inc. on May 10, 2004)
Supplemental Indenture No. 6, dated May 20, 2005, between the Company and
SunTrust Bank, as Trustee (incorporated by reference to Exhibit 4.2 of Form 10-Q
filed by Equity One, Inc. on August 5, 2005)
Supplemental Indenture No. 8, dated December 30, 2005, between the Company
and SunTrust Bank, as Trustee (incorporated by reference to Exhibit 4.17 of Form
10-K filed by Equity One, Inc. on March 3, 2006)
Supplemental Indenture No. 13, dated as of October 25, 2012, between the
Company and U.S. Bank National Association, as Trustee (incorporated by
reference to Exhibit 4.1 of Form 8-K filed by Equity One, Inc. on October 25,
2012)
(d)
(e)
(f)
Supplemental Indenture No. 14, dated as of March 1, 2017, among Equity One, Inc., Regency Centers
Corporation, Regency Centers, L.P., and U.S. Bank National Association (incorporated by reference to
Exhibit 4.1 to the Company’s Form 8-K filed on March 1, 2017).
Supplemental Indenture No. 15, dated as of July 26, 2017, among Regency Centers Corporation, Regency
Centers, L.P., and U.S. Bank National Association (incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K filed on July 27, 2017).
Assumption Agreement, dated as of March 1, 2017, by Regency Centers Corporation (incorporated by
reference to Exhibit 4.2 to the Company’s Form 8-K filed on March 1, 2017)
10.
Material Contracts (~ indicates management contract or compensatory plan)
~(a)
~(b)
Form of Stock Rights Award Agreement (incorporated by reference to Exhibit 10(b) to the Company's Form
10-K filed on March 10, 2006).
Form of 409A Amendment to Stock Rights Award Agreement (incorporated by reference to
Exhibit 10(b)(i) to the Company's Form 10-K filed on March on 17, 2009).
144 ~(c)
~(d)
~(e)
~(f)
~(g)
~(h)
~(i)
~(j)
~(k)
~(l)
Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10(c)
to the Company's Form 10-K filed on March 10, 2006).
Form of 409A Amendment to Stock Option Agreement (incorporated by reference to
Exhibit 10(c)(i) to the Company's Form 10-K filed on March 17, 2009).
Amended and Restated Deferred Compensation Plan dated May 6, 2003 (incorporated by
reference to Exhibit 10(k) to the Company's Form 10-K filed on March 12, 2004).
Regency Centers Corporation 2005 Deferred Compensation Plan (incorporated by reference
to Exhibit 10(s) to the Company's Form 8-K filed on December 21, 2004).
First Amendment to Regency Centers Corporation 2005 Deferred Compensation Plan dated
December 2005 (incorporated by reference to Exhibit 10(q)(i) to the Company's Form 10-K
filed on March 10, 2006).
Second Amendment to the Regency Centers Corporation Amended and Restated Deferred
Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K
filed on June 14, 2011).
Third Amendment to the Regency Centers Corporation 2005 Deferred Compensation Plan
(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on June 14,
2011).
Regency Centers Corporation 2011 Omnibus Plan (incorporated by reference to Annex A to the Company's
2011 Annual Meeting Proxy Statement filed on March 24, 2011).
Form of Director/Officer Indemnification Agreement (filed as an Exhibit to Pre-effective Amendment No. 2
to the Company's registration statement on Form S-11 filed on October 5, 1993 (33-67258), and incorporated
by reference).
Amended and Restated Severance and Change of Control Agreement dated as of April 27, 2017, by and
between the Company and Martin E. Stein, Jr. (incorporated by reference to Exhibit 10.1 of the Company's
Form 10-Q filed on May 10, 2017).
~(m)
Form of Amended and Restated Severance and Change of Control Agreement dated as of July 15, 2015 by
and between the Company and Lisa Palmer (incorporated by reference to Exhibit 10.3 of the Company's
Form 8-K filed on July 20, 2015).
~(n)
~(o)
(p)
Form of Amended and Restated Severance and Change of Control Agreement dated as of July 15, 2015 by
and between the Company and Dan M. Chandler, III (incorporated by reference to Exhibit 10.4 of the
Company's Form 8-K filed on July 20, 2015).
Form of Amended and Restated Severance and Change of Control Agreement dated as of July 15, 2015 by
and between the Company and James D. Thompson (incorporated by reference to Exhibit 10.6 of the
Company's Form 8-K filed on July 20, 2015).
Third Amended and Restated Credit Agreement dated as of September 7, 2011 by and among Regency
Centers, , L.P., the Company, each of the financial institutions party thereto, and Wells Fargo Bank, National
Association (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on November 8,
2011).
(i)
(ii)
(iii)
First Amendment to Third Amended and Restated Credit Agreement dated
September 13, 2012 (incorporated by reference to Exhibit 10.1 to the Company's
Form 10-Q filed on November 9, 2012).
Second Amendment to Third Amended and Restated Credit Agreement dated June
27, 2014 (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q
filed on August 8, 2014).
Third Amendment to Third Amended and Restated Credit Agreement dated May
13, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K
filed on May 18, 2015).
145 (iv)
(v)
Fourth Amendment to Third Amended and Restated Credit Agreement dated June
15, 2016 (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q
filed on August 5, 2016).
Fifth Amendment to Third Amended and Restated Credit Agreement, dated as of
March 2, 2017, by and among Regency Centers, L.P., as borrower, Regency
Centers Corporation, as guarantor, Wells Fargo Bank, National Association, as
administrative agent, and certain lenders party thereto (incorporated by reference
to Exhibit 4.2 to the Company’s Form 8-K filed on March 2, 2017).
(q)
Term Loan Agreement dated as of November 17, 2011 by and among Regency Centers, L.P., the Company,
each of the financial institutions party thereto and Wells Fargo Securities, LLC (incorporated by reference to
Exhibit 10.1 to the Company's Form 10-K filed on February 29, 2012).
(i)
(ii)
(iii)
(iv)
(v)
(vi)
First Amendment to Term Loan Agreement dated as of June 19, 2012
(incorporated by reference to Exhibit 10(h)(i) to the Company's Form 10-K filed
on March 1, 2013).
Second Amendment to Term Loan Agreement dated as of December 19, 2012
(incorporated by reference to Exhibit 10(h)(ii) to the Company's Form 10-K filed
on March 1, 2013).
Third Amendment to Term Loan Agreement dated as of June 27, 2014
(incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed on
August 8, 2014).
Fourth Amendment to Term Loan Agreement dated as of May 13, 2015
(incorporated by reference to Exhibit 10(j)(iv) to the Company's Form 10-K filed
on February 18, 2016).
Fifth Amendment to Term Loan Agreement dated as of July 7, 2016 (incorporated
by reference to exhibit 10.1 to the Company's Form 8-K filed on July 7, 2016).
Sixth Amendment to Term Loan Agreement, dated as of March 2, 2017, by and
among Regency Centers L.P., as borrower, Regency Centers Corporation, as
guarantor, Wells Fargo Bank, National Association, as administrative agent, and
certain lenders party thereto (incorporated by reference to Exhibit 4.3 to the
Company’s Form 8-K filed on March 2, 2017).
(r)
(s)
(t)
Second Amended and Restated Limited Liability Company Agreement of Macquarie CountryWide-Regency
II, LLC dated as of July 31, 2009 by and among Global Retail Investors, LLC, Regency Centers, L.P. and
Macquarie CountryWide (US) No. 2 LLC (incorporated by reference to Exhibit 10.1 to the Company's Form
10-Q filed on November 6, 2009).
(i)
Amendment No. 1 to Second Amended and Restate Limited Liability Company Agreement of GRI-
Regency, LLC (formerly Macquarie CountryWide-Regency II, LLC) (incorporated by reference to
Exhibit 10.(h)(i) to the Company’s Form 10-K filed March 1, 2011).
Governance Agreement, dated as of November 14, 2016, by and among Regency Centers Corporation, Gazit
Globe, Ltd. and certain of its affiliated entities (incorporated by reference to Exhibit 10.2 to the Current
Report on Form 8-K filed by Regency Centers Corporation with the SEC on November 15, 2016).
Term Loan Agreement, dated as of March 2, 2017, by and among Regency Centers, L.P., as borrower,
Regency Centers Corporation, as guarantor, Wells Fargo Bank, National Association, as administrative agent,
and certain lenders party thereto (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed
on March 2, 2017).
12.
Computation of ratios
12.1
Computation of Ratio of Earnings to Fixed Charges and Ratio of Combined Fixed Charges and Preference
Dividends to Earnings
146 21.
23.
Subsidiaries of Regency Centers Corporation
Consents of Independent Accountants
23.1
Consent of KPMG LLP for Regency Centers Corporation.
23.2
Consent of KPMG LLP for Regency Centers, L.P.
31.
Rule 13a-14(a)/15d-14(a) Certifications.
31.1
Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation.
31.2
Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation.
31.3
Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.
31.4
Rule 13a-14 Certification of Chief Financial Officer for Regency Centers, L.P.
32.
Section 1350 Certifications.
The certifications in this exhibit 32 are being furnished solely to accompany this report pursuant to 18 U.S.C. § 1350, and are
not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated
by reference into any of the Company's filings, whether made before or after the date hereof, regardless of any general
incorporation language in such filing.
32.1
18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers Corporation.
32.2
18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers Corporation.
32.3
18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers, L.P.
32.4
18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers, L.P.
101.
Interactive Data Files
101.INS+
XBRL Instance Document
101.SCH+
XBRL Taxonomy Extension Schema Document
101.CAL+
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+
XBRL Taxonomy Definition Linkbase Document
101.LAB+
XBRL Taxonomy Extension Label Linkbase Document
101.PRE+
XBRL Taxonomy Extension Presentation Linkbase Document
__________________________
+Submitted electronically with this Annual Report
147 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
February 27, 2018
REGENCY CENTERS CORPORATION
By:
/s/ Martin E. Stein, Jr.
Martin E. Stein. Jr., Chairman of the Board and Chief
Executive Officer
February 27, 2018
REGENCY CENTERS, L.P.
By: Regency Centers Corporation, General Partner
By:
/s/ Martin E. Stein, Jr.
Martin E. Stein. Jr., Chairman of the Board and Chief
Executive Officer
148 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
February 27, 2018
/s/ Martin E. Stein, Jr.
Martin E. Stein. Jr., Chairman of the Board and Chief
Executive Officer
/s/ Lisa Palmer
Lisa Palmer, President and Chief Financial Officer
(Principal Financial Officer)
/s/ J. Christian Leavitt
J. Christian Leavitt, Senior Vice President and Treasurer
(Principal Accounting Officer)
/s/ Joseph Azrack
Joseph Azrack, Director
/s/ Raymond L Bank
Raymond L Bank, Director
/s/ Bryce Blair
Bryce Blair, Director
/s/ C. Ronald Blankenship
C. Ronald Blankenship, Director
/s/ Mary Lou Fiala
Mary Lou Fiala, Director
/s/ Peter Linneman
Peter Linneman, Director
/s/ David P. O'Connor
David P. O'Connor, Director
/s/ John C. Schweitzer
John C. Schweitzer, Director
/s/ Thomas G. Wattles
Thomas G. Wattles, Director
149 Executive Officers
Martin E. Stein, Jr.
Chairman and Chief Executive Officer
James D. Thompson
Executive Vice President of Operations
Lisa Palmer
President and Chief Financial Officer
Dan M. Chandler, III
Executive Vice President of Investments
Board of Directors
Peter D. Linneman (1)
Principal
Linneman Associates
David P. O'Connor (2),(4)
Senior Managing Partner
High Rise Capital Partners, LLC
John C. Schweitzer (2a),(4),(5)
President
Westgate Corporation
Thomas G. Wattles (1a),(3)
Chairman Emeritus
DCT Industrial Trust
Martin E. Stein, Jr. (3)
Chairman and Chief Executive Officer
Regency Centers
Joseph F. Azrack (2)
Principal
Azrack & Company
Raymond L. Bank (1),(4)
President
Raymond L. Bank & Associates, Inc.
Bryce Blair (4a)
Chairman
Invitation Homes, LLC
C. Ronald Blankenship (1),(2),(3a)
Retired Chairman and Chief Executive Officer
Verde Realty
Mary Lou Fiala (3),(4)
Former President and Chief Operating Officer
Regency Centers
(1) Audit Committee
(2) Compensation Committee
(3) Investment Committee
(4) Nominating and Corporate Governance Committee
(5) Lead Director
(a) Committee Chairman