2018 Annual Report
To Our Fellow Shareholders:
Regency’s exceptional team produced another year of sector-leading performance in 2018.
Through their talent and efforts we executed our proven strategy by proactively and
thoughtfully managing our premier portfolio, creating value through development and
redevelopment, fortifying our balance sheet, and cost effectively funding new investments.
In 2018, perhaps more than ever, retailers and their customers have demonstrated that
physical stores, located in top trade areas and in thriving centers, remain a critical component
of a multi-channel strategy. At Regency, we spend a significant amount of time ensuring that
our approach to the business allows us to benefit from tenants that are able to prosper in the
evolving marketplace and are producing demand for our well-located, well-merchandised, and
well-designed retail centers.
ANOTHER SUCCESSFUL YEAR
Highlights from a highly successful 2018 include:
• Achieved Net Operating Income (“NOI”) growth in the same property portfolio of 3.4%
and over 96% leased, marking the 7th consecutive year of 3.4% or higher same property
NOI growth.
• Started nearly $200 million of compelling developments and redevelopments.
•
Increased free cash flow to over $170 million, which together with Regency’s “blue-
chip” balance sheet enabled us to fund our developments on an earnings accretive
basis.
• Grew earnings as indicated by NAREIT Funds from Operations per share to$3.83, or
approximately $650 million, translating to compounded growth in core operating
earnings, which eliminates certain non-recurring and non-cash impacts, of 7% over the
last 3 years.
Increased the dividend by over 5% in 2018 and for 2019, representing a low payout ratio
of nearly 70% from core operating earnings and after capital expenditures.
•
In addition, this year marked an important milestone with the release of our inaugural
Corporate Responsibility Report, which outlines Regency’s approach to Corporate Responsibility
and showcases our Environmental, Social, and Governance initiatives. Some of our focus areas
highlighted in this report include:
• Employee dedication and well-being, evidenced by strong employee engagement and
•
award-winning health and retirement benefits.
Investment in the betterment of the communities where Regency has a presence. This
investment is reflected in the long-standing partnerships with national and local
philanthropic organizations, including United Way and Habitat for Humanity. In
addition, Regency has invested more than $1 billion in development and redevelopment
over the last five years, resulting in property enhancements and job creation.
• A commitment to excellence in corporate governance, demonstrated by executive
compensation practices that ensure executive compensation is aligned with
shareholders and the implementation of a Board refreshment plan to foster expertise,
diversity and chemistry that supports the Company’s success.
• Sustainable operating and building practices across Regency’s operating portfolio and
development program, resulting in GRESB Green Star designation for the past three
years. Regency’s sustainability initiatives include minimizing environmental impacts
including reductions in greenhouse gas emissions, energy consumption, and water use.
These accomplishments in 2018 demonstrate the effectiveness of Regency’s time-proven
strategy. We remain determined to distinguish the company by effectively employing our
combination of unequaled strategic advantages to successfully achieve our objectives.
• Our well-conceived, well-merchandised centers are located in trade areas with
substantial purchasing power that will attract best-in-class grocers, restaurants, service
providers and merchants – to average same property NOI growth of 3%.
• Our experienced development and redevelopment capabilities, growing pipeline
including several larger scale redevelopments, and anchor and tenant relationships will
enable us to capitalize on value creation opportunities – to deliver over $1.25 billion in
high-quality developments and redevelopments at attractive returns on investment
over the next five years.
• Our pristine balance sheet and substantial free cash flow of over $170 million will cost
effectively fund new investments, while providing financial flexibility and access to
capital through future cycles as we target a Debt to EBITDA ratio of 5 times.
I have never been more confident about the inherent quality of our portfolio, value-add asset
management and development capabilities, strong balance sheet, and especially our amazing
team. These advantages collectively will position Regency to grow earnings, cash flow, and
dividends and in turn, total shareholder return that is consistently at or near the top of the
shopping center sector.
A PORTFOLIO POSITIONED FOR GROWTH
Regency’s portfolio is distinguished by its unrivaled combination of quality, breadth, and scale.
Our 425 properties representing over 53 million square feet are located in the affluent and
densely populated trade areas of the nation’s 22 most attractive markets. Our centers are
appealing to retailers and their shoppers, as represented by ending the year at over 96% leased
and another year of impressive NOI growth in the same property portfolio.
Based on our many conversations with better retailers it is clear that physical stores remain a
critical component of a multichannel strategy. This is apparent in how retailers are investing in
their physical footprints and providing a differentiated shopping experience to meet the
evolving needs of their customers. Publix, Kroger, Whole Foods, TJX, CVS, and others that are
prominent in Regency’s portfolio are exhibiting their ability to remain relevant. Our shopping
centers attract these and other “winning” retailers and restaurants as they more thoughtfully
and deliberately execute on their expansion plans.
Our market offices and local teams span 22 markets across the nation and are executing on the
key components of sector-leading NOI growth including: high rent paying occupancy,
contractual rent steps, mark-to-market rents, and redevelopments. Through focused asset
management, these teams are forming and maintaining retailer relationships to assure our
centers are anchored by highly productive operators and supported by an appealing mix of
national, regional, and local merchants. Our Fresh Look® philosophy continues to resonate with
shoppers and operators alike. The strength of our merchandising mix, combined with our
placemaking elements, elevate the draw of our properties and increase shopper frequency and
dwell time.
Through the combination of trade areas with substantial purchasing power, distinctive
merchandising and design and effective local presence in our markets, Regency’s portfolio is
extremely well positioned to achieve our strategic objective to average same property NOI
growth of 3%+ over the long term, as we have for the last seven consecutive years.
A DEVELOPMENT AND REDEVELOPMENT PLATFORM FOR VALUE CREATION
Our development and redevelopment platform is a critical strategic advantage for creating
significant value for our shareholders. With our in-house expertise, Regency is uniquely
positioned to capitalize on compelling opportunities in new developments as well as
redevelopments within our existing portfolio. Developments and redevelopments generate
attractive returns on capital while enhancing and securing the long term competitive
advantages of those centers.
Our track record and success is supported by a disciplined approach to invest and own premier
shopping centers located in dense and affluent trade areas where we merchandise with the
leading grocers, retailers, restaurants, and service providers. In 2018, we started nearly $200
million of these developments and redevelopments. I am excited to share some details on a few
of these exceptional projects.
In Richmond, VA we recently closed on Carytown Exchange, a development that is an integral
part of a vibrant near urban corridor known for its eclectic shops and as a retail destination. The
development will bring in one of the country’s best grocers in Publix, along with specialty
restaurants, while retaining the architectural character that the area is known for.
Market Common Clarendon, located in suburban Washington, D.C., exemplifies our impressive
redevelopment pipeline. This shopping center is anchored by an extremely productive Whole
Foods and recently renovated Apple store and is located in a highly trafficked corridor within
close walking distance of a transit stop. We saw an opportunity to make further enhancements
to the center through the redevelopment of a previously vacant office building, which will bring
first-rate restaurants and retailers to the first floor, a high-end luxury fitness operator, and also
contemporary office space in the floors above. The redevelopment will activate this area and
create a close connection with the rest of the center.
During the next several years we look forward to unveiling a number of other superb projects in
our pipeline, which will contribute toward our five-year goal of starting and delivering over
$1.25 billion of high-quality, value-add developments and redevelopments.
ACCRETIVE CAPITAL ALLOCATION THROUGH DISCIPLINED FINANCIAL MANAGEMENT
Achieving sector leading same property NOI growth and starting over $1 billion in value-add
developments and redevelopments in the last five years are achievements for which we are
extremely proud. These accomplishments have been supported and made possible by our
pristine balance sheet and significant free cash flow after capital expenditures and dividends.
In 2018, we further enhanced our already strong balance sheet via a $300 million unsecured
bond offering that extended duration and reduced overall interest expense. We also recast and
upsized our credit facility to $1.25 billion, enhancing liquidity and financial flexibility. This
ongoing fortification continues to position Regency to weather future challenges and profit
from investment opportunities.
Regency’s capital allocation strategy benefits from a self-funding model. Growing free cash
flow, which alone supports our development program on a leverage neutral basis, is the
underlying foundation of Regency’s self-funding model. Together with the sales of lower
growth assets, free cash flow also enables us to invest in high-growth acquisitions and our own
stock when pricing is compelling. This capital allocation strategy preserves a conservative
balance sheet and allows us to add value and enhance the quality of our portfolio on a net
accretive basis. I am very pleased with how well we executed on our capital allocation strategy
in 2018:
• Started nearly $200 million of developments and redevelopments at an average return
of 7.8%.
• Repurchased $247 million of common stock at compelling pricing through our share
repurchase program.
• Acquired $164 million of high-growth premier assets such as The District at Metuchen,
anchored by Whole Foods Market and, located in an affluent New Jersey suburb with
high barriers to entry.
• Disposed of $225 million of lower growth assets.
In addition as I noted earlier, the significant amount of free cash flow and reliable growth in
earnings translated into a low dividend payout ratio which enabled Regency to comfortably
increase the dividends in 2018 and for 2019.
WELL POSITIONED FOR THE FUTURE
Through the team’s outstanding execution of Regency’s proven strategy, I am confident that
our Company has never been better positioned. Looking forward, our commitment to ensuring
that our business remains relevant, and to continuous improvement, have never been more
important and we are prepared for the challenge.
In closing, our culture, the reputation we’ve earned, our track record of success, and our
forward-thinking strategies are all made possible by the incredible team here at Regency. This
highly engaged group of professionals continues to do what it takes to achieve superior results.
Without a doubt our people are our most valuable asset.
From myself, our team, and our Board, I want to extend a heartfelt thank you to our
shareholders, tenants, partners and communities for their interest, support and trust. We are
looking forward to a new year when Regency’s exciting journey in the ever-changing world will
once again continue our remarkable progress building an enduring and great company.
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, 2018
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
The Nasdaq Stock Market LLC
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 every Interactive Data File required to be submitted 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 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
$10.4 billion
Regency Centers, L.P.
N/A
The number of shares outstanding of the Regency Centers Corporation’s common stock was 167,506,148 as of February 13, 2019.
Documents Incorporated by Reference
Portions of Regency Centers Corporation's proxy statement in connection with its 2019 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, 2018 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, 2018,
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
$500 million of unsecured public and private placement debt, 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 unsecured public and private placement debt of the Parent Company. 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.
11.
12.
13.
14.
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
6
17
18
34
34
34
36
38
62
63
139
139
140
140
140
141
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, 2018, had full or
partial ownership interests in 425 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 53.6 million square feet ("SF") of gross
leasable area ("GLA"). Our ownership share of this GLA is 43.4 million square feet, including our share of the partially owned
properties. 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. 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 owner, operator, and developer of shopping centers connecting
outstanding retailers and service providers with surrounding neighborhoods and communities. Our goals are to:
• Own and manage a 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 strategies to achieve our goals are to:
•
Increase earnings per share and dividends and generate total shareholder returns at or near the top of our
shopping center peers.
•
Sustain same property NOI growth at or near the top of 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; and
• Attract and motivate an exceptional team of employees who operate efficiently and are recognized as industry
leaders.
1 Corporate Responsibility
Regency’s vision is to be the preeminent national owner, operator and developer of shopping centers, connecting
outstanding retailers and service providers with its neighborhoods and communities while practicing best-in-class corporate
responsibility. Our corporate responsibility report highlights our commitment to stakeholders and the critical role Regency's
core values have on how we practice corporate responsibility. We are committed to transparent reporting on sustainability and
corporate responsibility efforts in accordance with the guidelines of the Global Reporting Initiative. A copy of our corporate
responsibility report is available on our website, www.regencycenters.com.
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 supports 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 enhance disclosure using industry accepted reporting frameworks.
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 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 22 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.
2 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
66
51
51
63
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 position 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.
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 ("SEC") 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. The content of our website is not
incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and
any references to our website are intended to be inactive textual references only.
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.
On October 25, 2018, the Company's Board approved the transfer of the Company's common stock from listing on The
New York Stock Exchange ("NYSE") to The NASDAQ Global Select Market ("NASDAQ"). The last day of trading on the
NYSE was November 12, 2018. The Company's common stock commenced trading on NASDAQ on November 13, 2018, and
continues to trade under the stock symbol "REG".
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 2019 annual meeting of shareholders will be held at the Ponte Vedra Inn and Club, 200 Ponte Vedra Blvd., Ponte
Vedra Beach, Florida, at 2:45 p.m. on Tuesday, May 7, 2019.
3 Defined Terms
In addition to the required Generally Accepted Accounting Principles ("GAAP") presentations, we use certain non-
GAAP performance measures as we believe these measures improve the understanding of the Company's operational results.
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 is a Retail Operating Property that was owned and operated for the entirety of both calendar year
periods being compared. This term excludes all developments and Non-Same Properties.
• 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 the captive insurance program, are part of
Non-Same Property.
• Retail Operating Property is any retail property not termed a Property in Development. A retail property is any
property where the majority of the income is generated from retail uses.
• Property In Development includes properties in various stages of development and redevelopment including active
pre-development activities.
• Development Completion is a property in development 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 property
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 the following calendar year.
• 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.
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, along with other non-GAAP measures, makes comparisons of other REITs' operating results
to the Company's more meaningful.
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.
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.
• NAREIT EBITDAre is a measure of REIT performance, which the National Association of Real Estate Investment
Trusts ("NAREIT") defines as net income, computed in accordance with GAAP, excluding (i) interest expense, (ii)
income tax expense, (iii) depreciation and amortization, (iv) gains and losses from sales of depreciable property, (v)
operating real estate impairments, and (vi) adjustments to reflect the Company's share of unconsolidated partnerships
and joint ventures.
4 • Operating EBITDAre (previously Adjusted EBITDA) begins with the NAREIT EBITDAre and excludes certain non-
cash components of earnings derived from above and below market rent amortization and straight-line rents.
• Fixed Charge Coverage Ratio is defined as Operating EBITDAre 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 base rent, percentage rent, and recoveries from tenants and other income,
less operating and maintenance, real estate taxes, ground rent, and provision for doubtful accounts. NOI excludes
straight-line rental income and expense, above and below market rent and ground rent amortization, tenant lease
inducement 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
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.
5 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 tenants 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.
Retailers are increasingly impacted by e-commerce and changes in customer buying habits, including the delivery or
curbside pick-up of items ordered online. 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. Our grocer tenants are incorporating e-commerce concepts through home delivery,
which could reduce foot traffic at our centers. 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.
6 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, 2018, our properties in California, Florida, and Texas accounted for 28.1%,
20.1%, and 7.1%, 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.
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 Co., Albertsons
Companies, Inc., Whole Foods, and TJX Companies, who accounted for 3.2%, 3.0%, 2.8%, 2.4%, and 2.3%, respectively, of
our total annualized base rent on a pro-rata basis, for the year ended December 31, 2018. 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 re-lease 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 lease contracts 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 may be facing reduced 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, 2018, Shop Space Tenants represent approximately 35.3% of our GLA leased at average base rents
of $33.75 per square foot ("PSF"). A one-percent decline in our shop space occupancy may result in a reduction to minimum
rent of approximately $4.8 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 re-lease 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.
7 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.
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,
including 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;
construction cost increases may reduce investment returns on development and redevelopment opportunities;
• we may be unable to lease developments to full occupancy on a timely basis;
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• we may abandon development opportunities and lose our investment due to adverse market conditions;
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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;
an expansion of our development and acquisition focus to include more complex redevelopments and mixed use
properties in very dense urban locations could absorb resources and potentially result in inconsistent deliveries,
adversely impacting annual NOI and earnings growth;
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• mixed use properties may include differing tenant profiles or mixes, more complex entitlement processes, and/or
multi-story buildings, outside our traditional expertise, which could impact annual NOI and earnings growth; and
• we may develop or redevelop mixed use centers with partners for the residential or office components, making us
dependent upon that partner's ability to perform and to agree on major decisions that impact our investment returns of
the project.
8 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;
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 desired because of market conditions.
Our properties, including their related tangible and intangible assets, represent the majority of our total consolidated
assets and they may not be readily convertible to cash. 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 29 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 adversely affect our financial condition, results of operations and cash flows.
9 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, 2018, 25% 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, 19% and 6% 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
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. Climate change may result in volatile or decreased demand for
retail space at certain of our properties or, in extreme cases, our inability to operate certain 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 be assured that we will retain all of 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.
10 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.
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.
The unauthorized access, use, theft or destruction of tenant or employee personal, financial or other data or of
Regency’s proprietary or confidential information stored in our information systems or by third parties on our behalf
could impact our reputation and brand and expose us to potential liability and loss of revenues.
Many of our information technology systems (including those we use for administration, accounting, and
communications, as well as the systems of our co-investment partners and other third-party business partners and service
providers, whether cloud-based or hosted in proprietary servers) contain personal, financial or other information that is
entrusted to us by our tenants and employees. Many of our information technology systems also contain proprietary Regency
information and other confidential information related to our business. We are frequently subject to attempts to compromise
our information technology systems. To the extent we or a third party were to experience a material breach of our or such third
party’s information technology systems that result in the unauthorized access, theft, use, destruction or other compromises of
tenants’ or employees' data or confidential information of the Company stored in such systems, including through cyber-attacks
or other external or internal methods, such a breach may damage our reputation and cause us to lose tenants and revenues,
generate third party claims and the potential disruption to our business and plans. Such security breaches also could result in a
violation of applicable U.S. privacy and other laws, and subject us to private consumer, business partner, or securities litigation
and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal
liability, and we may not be able to recover these expenses from our service providers, responsible parties, or insurance carriers.
The techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as
well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched
or have been in place for a period of time. The Company manages cyber risk by evaluating the impact of a potential cyber
breach on our business and determining the level of investment in the prevention, detection and response to a breach. We
continue to make significant investments in technology, third-party services and personnel to develop and implement systems
and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology
systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such
breaches or data loss.
11 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 could 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.
Risk Factors Related to Funding Strategies and Capital Structure
Higher market capitalization rates and lower 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.
12 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.
The interest rates on our Unsecured Credit facilities as well as on our variable rate mortgages and interest rate swaps
might change based on changes to the method in which LIBOR or its replacement rate is determined.
LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on
the London interbank market, and is widely used as a reference for setting the interest rate on loans globally. We have
Unsecured Credit facilities, variable rate mortgages, and interest rate swaps with variable interest rates or options for such that
are based upon an annual rate of LIBOR plus a spread. LIBOR rates charged on such debt and swaps change monthly.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it
intends to phase out LIBOR by the end of 2021. The Alternative Reference Rates Committee ("ARRC"), a steering committee
comprised of large U.S. financial institutions, has proposed replacing USD-LIBOR with a new index calculated by short term
repurchase agreements - the Secured Overnight Financing Rate ("SOFR"). The replacement for LIBOR at this time is still
uncertain.
If LIBOR ceases to exist, the Administrative Agent under our line of credit may, to the extent practicable (and with our
consent but subject to certain objection rights on the part of the line lenders) establish a replacement rate for LIBOR, which
must be determined generally in accordance with similar situations in other transactions in which it is serving as administrative
agent or otherwise consistent with market practice generally). Establishing a replacement rate for LIBOR in this manner may
result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have
been made on the line if LIBOR was available in its current form. Our other debt based upon LIBOR will experience similar
types of adjustments. Such adjustments could have an adverse impact on our financing costs.
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, 2018, 4.9% 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.
13 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
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;
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.
14 Corporate responsibility, specifically related to environmental, social and governance factors, may impose additional
costs and expose us to new risks.
Regency, as well as investors, are focused on corporate responsibility, specifically related to environmental, social and
governance factors. Some investors may use these factors to guide their investment strategies. Third-party providers of
corporate responsibility ratings and reports on companies have increased to meet growing investor demand for measurement of
corporate responsibility performance. Although we have scored highly in these metrics to date, there can be no assurance that
we will continue to score highly in the future. In addition, the criteria by which companies are rated may change, which could
cause us to perform worse than in the past. We may face reputational damage in the event our corporate responsibility
procedures or standards do not meet the standards set by various constituencies. Furthermore, should our competitors
outperform us in such metrics, potential or current investors may elect to invest with our competition instead. The occurrence
of any of the foregoing could have an adverse effect on the price of our shares and our business, financial condition and results
of operations, including increased capital expenditures and or increased operating expenses.
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. We will be subject
to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% nondeductible excise tax on
any amount by which distributions we pay with respect to any calendar year are less than the sum of 85% of our ordinary
income, 95% of our capital gain net income and 100% of our undistributed income from prior years. 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 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 in order to maintain
our REIT status. Although we believe that the Parent Company qualifies as a REIT, we cannot be assured 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.
New legislation, as well as new regulations, administrative interpretations, or court decisions may be introduced,
enacted, or promulgated from time to 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.
15 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, including our taxable income, the
amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a
REIT. 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 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
investment in other entities, may change, making an investment in such other entities more attractive relative to an investment
in a REIT.
16 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 ("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 that will impact how we currently account for our material transactions, including lease accounting. Accounting
Standards Codification ("ASC") Topic 842, Leases, will be adopted by the Company on January 1, 2019 and, as further
described in note 1(o), 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 direct 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.
17 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
Colorado
New York
North Carolina
Massachusetts
Ohio
Virginia
Washington
Oregon
Illinois
Louisiana
Missouri
Maryland
Tennessee
Pennsylvania
Indiana
Delaware
New Jersey
Michigan
South Carolina
Total
December 31, 2018
December 31, 2017
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
90
54
23
21
14
14
11
10
9
8
8
7
7
6
5
4
3
3
3
1
1
1
1
1
10,745
8,168
3,019
2,048
1,453
1,146
1,367
895
907
1,205
1,332
825
741
1,075
753
408
372
318
317
254
232
218
97
51
28.3%
21.5%
8.0%
5.4%
3.8%
3.0%
3.6%
2.3%
2.4%
3.2%
3.5%
2.2%
2.0%
2.8%
2.0%
1.1%
1.0%
0.8%
0.8%
0.7%
0.6%
0.6%
0.3%
0.1%
305
37,946
100.0%
94.7%
96.6%
97.3%
95.5%
95.6%
96.2%
97.8%
96.8%
98.9%
99.4%
83.8%
99.4%
96.1%
91.2%
92.8%
100.0%
85.4%
99.1%
98.1%
98.4%
95.6%
96.9%
100.0%
94.8%
95.5%
96
56
23
21
14
14
9
10
9
8
8
7
7
6
5
4
3
3
3
1
1
1
1
1
11,255
8,549
3,018
2,047
1,458
1,146
1,198
895
907
1,196
1,420
825
741
1,069
753
408
372
317
317
254
232
218
97
51
29.1%
22.1%
7.8%
5.3%
3.8%
3.0%
3.1%
2.3%
2.3%
3.1%
3.7%
2.1%
1.9%
2.8%
1.9%
1.1%
1.0%
0.8%
0.8%
0.7%
0.6%
0.6%
0.3%
0.1%
311
38,743
100.0%
94.7%
96.5%
97.4%
95.2%
96.9%
97.2%
99.0%
97.0%
99.1%
99.5%
86.3%
99.4%
94.8%
88.3%
94.2%
99.7%
86.6%
97.6%
93.2%
97.7%
95.6%
86.7%
98.6%
71.2%
95.5%
Certain Consolidated Properties are encumbered by mortgage loans of $525.2 million, excluding debt issuance costs
and premiums and discounts, as of December 31, 2018.
The weighted average annual effective rent for the consolidated portfolio of properties, net of tenant concessions, is
$21.51 and $21.01 PSF as of December 31, 2018 and 2017, respectively.
18 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
Maryland
Florida
North Carolina
Texas
Washington
Colorado
Pennsylvania
Minnesota
Illinois
New Jersey
Massachusetts
Indiana
District of
Columbia
Connecticut
New York
Oregon
Georgia
South Carolina
Delaware
Total
December 31, 2018
December 31, 2017
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
Number of
Properties
GLA (in
thousands)
Percent of
Total GLA
Percent
Leased
22
17
11
10
9
7
7
6
6
5
4
4
2
2
2
1
1
1
1
1
1
3,017
2,403
1,184
1,045
1,417
933
859
854
666
665
671
353
726
139
40
186
141
93
86
80
64
19.3%
15.4%
7.6%
6.7%
9.1%
6.0%
5.5%
5.5%
4.2%
4.2%
4.3%
2.3%
4.6%
0.9%
0.3%
1.2%
0.9%
0.6%
0.5%
0.5%
0.4%
120
15,622
100.0%
94.2%
94.8%
96.2%
98.8%
94.1%
98.2%
95.1%
93.2%
94.4%
99.0%
97.1%
96.4%
98.4%
100.0%
84.4%
80.1%
100.0%
100.0%
83.8%
100.0%
90.1%
95.4%
21
18
11
10
8
7
5
5
6
5
4
3
2
2
2
1
1
1
1
1
1
2,791
2,554
1,184
1,040
1,326
933
621
836
666
674
671
287
726
139
40
186
141
93
86
80
64
18.4%
16.9%
7.8%
6.9%
8.8%
6.2%
4.1%
5.5%
4.4%
4.4%
4.4%
1.9%
4.8%
0.9%
0.3%
1.2%
0.9%
0.6%
0.6%
0.5%
0.4%
115
15,138
100.0%
97.0%
94.3%
95.8%
97.4%
91.6%
97.4%
96.5%
96.2%
95.7%
98.3%
95.5%
98.2%
95.7%
99.1%
91.8%
100.0%
100.0%
98.4%
97.5%
100.0%
90.1%
95.6%
Certain Unconsolidated Properties are encumbered by non-recourse mortgage loans of $1.6 billion, excluding debt
issuance costs and premiums and discounts, as of December 31, 2018.
The weighted average annual effective rent for the unconsolidated portfolio of properties, net of tenant concessions, is
$21.46 and $20.63 PSF as of December 31, 2018 and 2017, respectively.
19 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, 2018, based upon a percentage of total annualized base
rent (GLA and dollars in thousands):
Tenant
Publix
Kroger Co.
Albertsons Companies, Inc.
Whole Foods
TJX Companies
CVS
Ahold/Delhaize
Bed Bath & Beyond
Nordstrom
Ross Dress For Less
PETCO
L.A. Fitness Sports Club
Trader Joe's
JAB Holding Company (1)
Starbucks
Wells Fargo Bank
Gap
Walgreens
Target
Bank of America
JPMorgan Chase Bank
H.E.B.
Kohl's
Dick's Sporting Goods
Ulta
Top 25 Tenants
Percent of
Company
Owned GLA
6.5%
6.6%
4.2%
2.4%
3.0%
1.5%
1.3%
1.4%
0.7%
1.3%
0.8%
1.0%
0.6%
0.4%
0.3%
0.3%
0.5%
0.7%
1.3%
0.3%
0.2%
0.8%
1.4%
0.8%
0.4%
38.7%
$
Annualized
Base Rent
29,341
27,632
25,871
21,845
21,277
14,222
13,202
9,956
8,755
8,548
8,443
8,389
8,039
6,733
6,697
6,620
6,592
6,412
6,365
6,167
5,940
5,844
5,645
5,388
5,049
278,972
Percent of
Annualized
Base Rent
3.2%
3.0%
2.8%
2.4%
2.3%
1.6%
1.4%
1.1%
1.0%
0.9%
0.9%
0.9%
0.9%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
0.6%
0.6%
0.6%
0.6%
30.4%
Number of
Leased
Stores
70
56
47
32
59
57
16
22
9
25
43
12
26
62
101
52
15
27
6
40
34
5
8
7
19
850
GLA
2,839
2,855
1,833
1,053
1,282
662
563
594
320
551
352
423
258
181
140
132
196
288
570
119
108
344
612
340
169
16,784
(1) JAB Holding Company includes Panera, Einstein Bros Bagels, Peet's' Coffee & Tea, and Krispy
Kreme
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 typically 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.
20 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
Average Base
Rent
(1)
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Thereafter
Total
549
1,014
1,335
1,301
1,271
1,136
620
373
325
291
359
351
321
3,146
4,815
5,102
5,535
4,456
3,573
1,888
1,972
1,892
2,182
5,738
8,925
40,620
0.8% $
7.7%
11.9%
12.6%
13.6%
11.0%
8.8%
4.6%
4.8%
4.7%
5.4%
14.1%
100.0% $
8,569
65,555
103,395
105,970
121,984
106,188
78,781
49,747
48,486
42,762
50,727
104,319
886,483
1.0% $
7.4%
11.7%
11.9%
13.8%
12.0%
8.9%
5.6%
5.4%
4.8%
5.7%
11.8%
100.0% $
26.72
20.84
21.47
20.77
22.04
23.83
22.05
26.35
24.59
22.60
23.25
18.18
21.82
(1) Leases currently under month-to-month rent or in process of renewal.
During 2019, we have a total of 1,014 leases expiring, representing 3.1 million square feet of GLA. These expiring
leases have an average base rent of $20.84 PSF. The average base rent of new leases signed during 2018 was $27.15 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 2019 to meet or exceed average rental rates on leases expiring in 2019. 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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33
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
Since November 13, 2018, our common stock has traded on NASDAQ under the symbol "REG." Before November
13, 2018, our common stock traded on the NYSE, also under the symbol "REG".
As of February 7, 2019, there were 70,487 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 revolving credit 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.
There were no unregistered sales of equity securities during the quarter ended December 31, 2018.
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, 2018:
Period
October 1, 2018, through
October 31, 2018
November 1, 2018,
through November 30,
2018
December 1, 2018,
through December 31,
2018
Total number of
shares
purchased (1)
Total number of shares
purchased as part of
publicly announced
plans or programs (2)
Average
price paid
per share
Maximum number or approximate
dollar value of shares that may yet
be purchased under the plans or
programs (2)
—
—
—
—
—
2,107,124
$
$
$
—
—
$125,009,963
$125,009,963
57.70
$3,371,220
(1) Represents shares repurchased to cover payment of withholding taxes in connection with restricted stock vesting by
participants under Regency's Long-Term Omnibus Plan.
(2) 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 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. Through December 31, 2018, the Company has repurchased 4,252,333 shares
for $246.5 million. On February 5, 2019, the Company's Board authorized a new repurchase program under which the
Company may purchase, from time to time, up to a maximum of $250 million under terms and conditions similar to the
predecessor plan. Any additional shares purchased will be under the new program.
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, 2013. 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.
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
12/31/18
Regency Centers Corporation
$
S&P 500
FTSE NAREIT Equity REITs
FTSE NAREIT Equity Shopping Centers
100.00
100.00
100.00
100.00
142.54
113.69
130.14
129.96
156.83
115.26
134.30
136.10
163.05
129.05
145.74
141.10
168.90
157.22
153.36
125.06
148.61
150.33
146.27
106.87
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, 2018 (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
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
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
Income per common share - diluted
NAREIT FFO (2)
Other information:
Net cash provided by operating activities (3)
Net cash used in investing activities (3)
Net cash (used in) provided by financing activities (3)
Dividends paid to common stockholders and unit holders
$
$
$
2018
2017 (1)
2016
2015
2014
$ 1,120,975
740,806
170,818
209,351
42,974
—
252,325
(3,198)
249,127
—
249,127
984,326
744,763
113,661
125,902
43,341
(9,737)
178,980
(2,903)
176,077
(16,128)
159,949
614,371
403,152
100,745
110,474
56,518
—
166,992
(2,070)
164,922
(21,062)
143,860
569,763
365,098
74,630
130,035
22,508
—
152,543
(2,487)
150,056
(21,062)
128,994
537,898
353,348
27,969
156,581
31,270
(996)
188,847
(1,457)
187,390
(21,062)
166,328
1.46
1.00
1.42
1.36
1.80
652,857
494,843
277,301
276,515
269,149
610,327
(106,024)
(508,494)
469,784
(1,007,230)
568,948
297,177
(408,632)
88,711
285,543
(139,346)
(223,117)
277,742
(210,290)
(34,360)
376,755
323,285
201,336
181,691
172,900
Common dividends declared per share
2.22
2.10
2.00
1.94
1.88
Common stock outstanding including exchangeable operating
partnership units
Balance sheet data:
168,254
171,715
104,651
97,367
94,262
Real estate investments before accumulated depreciation
$ 11,326,163
11,279,125
5,230,198
4,852,106
4,743,053
Total assets
Total debt
Total liabilities
Total stockholders’ equity
Total noncontrolling interests
10,944,663
11,145,717
4,488,906
4,182,881
4,197,170
3,715,212
3,594,977
1,642,420
1,864,285
2,021,357
4,494,495
4,412,663
1,864,404
2,100,261
2,260,688
6,397,970
6,692,052
2,591,301
2,054,109
1,906,592
52,198
41,002
33,201
28,511
29,890
(1) 2017 reflects the results of our merger with Equity One on March 1, 2017, and therefore only includes ten
months of operating results for the Equity One portfolio, but also includes merger and integration related costs
within Operating expenses.
(2) See Item 1, Defined Terms, for the definition of NAREIT FFO and Item 7, Supplemental Earnings Information,
for a reconciliation to the nearest GAAP measure.
(3) On January 1, 2018, the Company retrospectively adopted Accounting Standards Update No. 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash, which changed the classification and presentation of
changes in the total of cash, cash equivalents and restricted cash in the Consolidated Statements of Cash Flows.
Amounts presented for the years ended December 31, 2017 and 2016 were restated to conform presentation.
36 Operating Partnership
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
Net income
Income attributable to noncontrolling interests
Net income attributable to the Partnership
Preferred unit distributions and issuance costs
Net income attributable to common unit holders
Income per common unit - diluted:
NAREIT FFO (2)
Other information:
Net cash provided by operating activities (3)
Net cash used in investing activities (3)
Net cash (used in) provided by financing activities (3)
Distributions paid on common units
Balance sheet data:
2018
2017 (1)
2016
2015
2014
$ 1,120,975
740,806
170,818
209,351
42,974
—
252,325
(2,673)
249,652
—
249,652
1.46
$
$
984,326
744,763
113,661
125,902
43,341
(9,737)
178,980
(2,515)
176,465
(16,128)
160,337
1.00
614,371
403,152
100,745
110,474
56,518
—
166,992
(1,813)
165,179
(21,062)
144,117
1.42
569,763
365,098
74,630
130,035
22,508
—
152,543
(2,247)
150,296
(21,062)
129,234
1.36
537,898
353,348
27,969
156,581
31,270
(996)
188,847
(1,138)
187,709
(21,062)
166,647
1.80
652,857
494,843
277,301
276,515
269,149
$
610,327
469,784
297,177
(106,024)
(1,007,230)
(408,632)
(508,494)
376,755
568,948
323,285
88,711
201,336
285,543
(139,346)
(223,117)
181,691
277,742
(210,290)
(34,360)
172,900
Real estate investments before accumulated depreciation
Total assets
$ 11,326,163
10,944,663
11,279,125
11,145,717
Total debt
Total liabilities
Total partners’ capital
Total noncontrolling interests
3,715,212
4,494,495
6,408,636
41,532
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
(1) 2017 reflects the results of our merger with Equity One on March 1, 2017, and therefore only includes ten
months of operating results for the Equity One portfolio, but also includes merger and integration related costs
within Operating expenses.
(2) See Item 1, Defined Terms, for the definition of NAREIT FFO and Item 7, Supplemental Earnings Information,
for a reconciliation to the nearest GAAP measure.
(3) On January 1, 2018, the Company retrospectively adopted Accounting Standards Update No. 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash, which changed the classification and presentation of
changes in the total of cash, cash equivalents and restricted cash in the Consolidated Statements of Cash Flows.
Amounts presented for the years ended December 31, 2017 and 2016 were restated to conform presentation.
37 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executing on our Strategy
We reported Net income attributable to common stockholders of $249.1 million during the year ended December 31, 2018, as
compared to $159.9 million, net of $80.7 million of merger costs, during the same period in 2017.
We sustained superior same property NOI growth:
• We achieved pro-rata same property NOI growth, as adjusted, excluding termination fees, of 3.4%.
• We executed 1,802 leasing transactions representing 6.2 million pro-rata SF of new and renewal leasing, with trailing
twelve month rent spreads of 8.3% on comparable retail operating property spaces.
• At December 31, 2018, our total property portfolio was 95.6% leased, while our same property portfolio was 96.1%
leased.
We developed and redeveloped high quality shopping centers at attractive returns on investment:
• We started three new developments representing a total pro-rata project investment of $80.5 million upon completion,
with a weighted average projected return on investment of 7.1%.
• We started eight new redevelopments representing a total pro-rata project investment of $112.2 million upon
completion, with a weighted average projected return on investment of 8.3%.
•
Including these new projects, a total of 19 properties were in the process of development or redevelopment,
representing a pro-rata investment upon completion of $389.9 million.
• We completed four new developments representing a total pro-rata project investment of $167.7 million, with a
weighted average return on investment of 7.4%.
• We completed twelve new redevelopments representing a total pro-rata project investment of $184.4 million, with a
weighted average return on investment of 6.9%.
We maintained a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and
debt maturities:
• On March 9, 2018, the Company received proceeds from the sale of $300.0 million of 4.125% senior unsecured public
notes, which priced at 99.837% and mature in March 2028. $60 million of the proceeds was used to repay our
unsecured revolving credit facility (the “Line”) and $163.2 million was used, in April, to early redeem our $150.0
million 6.0% senior unsecured public notes originally due June 2020, including accrued and unpaid interest through
the redemption date and a make-whole amount. We used the remainder of the proceeds to repay 2018 mortgage
maturities and for general corporate purposes.
•
On March 26, 2018, we amended and restated our Line. The amendment and restatement increases the size of the
Line to $1.25 billion from $1.0 billion and extends the maturity date to March 23, 2022, with options to extend
maturity for two additional six-month periods. Borrowings will bear interest at an annual rate of LIBOR plus 87.5
basis points, subject to our credit ratings, compared to a rate of 92.5 basis points under the previous facility. An annual
facility fee of 15 basis points, subject to our credit ratings, applies to the Line.
• During 2018, we repurchased $246.5 million of our common stock at a weighted average price per share of $57.97.
• At December 31, 2018, our annualized net debt-to-operating EBITDAre ratio on a pro-rata basis was 5.3x.
38 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.
Pro-rata Occupancy
The following table summarizes pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping
center portfolio:
% Leased – All properties
Anchor space
Shop space
December 31, 2018 December 31, 2017
95.6%
98.4%
90.9%
95.5%
98.1%
91.1%
The decline in shop space percent leased is driven by strategic vacancies in preparation for redevelopments.
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, 2018
Leasing
Transactions (1)
SF (in
thousands)
Base Rent PSF
Tenant
Allowance and
Landlord Work
PSF
Leasing
Commissions
PSF
Anchor Leases
New
Renewal
Total Anchor Leases (1)
Shop Space
New
Renewal
Total Shop Space Leases (1)
Total Leases
38
99
137
519
1,146
1,665
1,802
625
2,886
3,511
890
1,838
2,728
6,239
$
$
$
$
$
18.75
15.18
15.82
33.05
33.65
33.45
23.53
$
$
$
$
$
29.78
0.60
5.79
28.17
0.83
9.75
7.52
(1) Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.
Year ended December 31, 2017
Leasing
Transactions (1)(2)
SF (in
thousands)
Base Rent PSF
Tenant
Allowance and
Landlord Work
PSF
Anchor Leases
New
Renewal
Total Anchor Leases (1)
Shop Space
New
Renewal
Total Shop Space Leases (1)
Total Leases
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
$
$
$
$
$
29.56
0.02
7.89
26.81
1.47
9.63
8.70
$
$
$
$
$
$
$
$
$
$
6.96
0.35
1.52
13.86
2.13
5.96
3.46
Leasing
Commissions
PSF
4.92
0.46
1.65
13.17
2.40
5.87
3.62
(1) Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.
(2) For the year ending December 31, 2017, amounts include leasing activity of properties acquired from Equity One
beginning March 1, 2017.
39 Total weighted average base rent on signed shop space leases during 2018 was $33.45 PSF and exceeds the average
annual base rent of all shop space leases due to expire during the next 12 months of $30.62 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 Co.
Albertsons Companies, Inc.
Whole Foods
TJX Companies
Number of
Stores
70
56
47
32
59
December 31, 2018
Percentage of
Company-
owned GLA (1)
6.5%
6.6%
4.2%
2.4%
3.0%
Percentage of
Annualized
Base Rent (1)
3.2%
3.0%
2.8%
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 at December 31, 2018 in our shopping centers represent an aggregate of 0.4% of our annual base rent on a pro-
rata basis.
40 Results from Operations
Comparison of the years ended December 31, 2018 and 2017:
Results from operations for the year ended December 31, 2017 reflect the results of our merger with Equity One on
March 1, 2017, and therefore only includes ten months of operating results for the Equity One portfolio in 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
$
818,483
7,486
245,196
21,316
28,494
Total revenues
$
1,120,975
Minimum rent changed as follows:
2018
2017
Change
728,078
6,635
206,675
16,780
26,158
984,326
90,405
851
38,521
4,536
2,336
136,649
•
•
•
$14.1 million increase from rent commencing at development properties;
$12.6 million increase from acquisitions of operating properties; and
$77.4 million increase at same properties, including $64.1 million from properties acquired through our
merger with Equity One which only includes ten months of 2017 operating results. The remaining increase is
driven by redevelopments, rental rate growth on new and renewal leases, and rent commencements;
•
reduced by $13.7 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 increased as follows:
•
•
•
$4.4 million increase from rent commencing at development properties;
$2.9 million increase from acquisitions of operating properties; and
$34.4 million increase from same properties, including $26.7 million from properties acquired through our
merger with Equity One which only includes ten months of 2017 operating results. The remaining increase is
associated with higher recoverable costs;
•
reduced by $3.2 million from the sale of operating properties.
Other income, which consists of incidental income earned at our centers, increased $4.5 million from same properties,
including $2.7 million from properties acquired through our merger with Equity One, primarily from termination and
assignment fees.
Management, transaction and other fees increased $2.3 million due partially to an increase in development fees from
active developments within unconsolidated partnerships, along with an increase in leasing and property management fees
earned from unconsolidated partnerships.
41 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
2018
2017
Change
$
$
359,688
168,034
65,491
137,856
9,737
740,806
334,201
143,990
67,624
109,723
89,225
744,763
25,487
24,044
(2,133)
28,133
(79,488)
(3,957)
Depreciation and amortization costs changed as follows:
•
•
•
$6.4 million increase as we began depreciating costs at development properties where tenant spaces were
completed and became available for occupancy;
$6.0 million net increase from acquisitions of operating properties; and
$20.4 million net increase at same properties, including $15.9 million from properties acquired through our
merger with Equity One which only includes ten months of 2017 operating results. The remaining increase is
primarily attributable to redevelopment assets being placed in service;
•
reduced by $7.3 million from the sale of operating properties.
Operating and maintenance costs changed as follows:
•
•
•
$6.3 million increase from operations commencing at development properties;
$2.1 million increase from acquisitions of operating properties; and
$18.2 million increase at same properties, including $15.1 million from properties acquired through our
merger with Equity One which only includes ten months of 2017 operating results. The remaining increase is
primarily attributable to increases in recoverable costs;
•
reduced by $2.6 million from the sale of operating properties.
General and administrative changed as follows:
•
•
•
•
$4.9 million decrease in the value of participant obligations within the deferred compensation plan; and
$1.6 million net decrease in compensation and management consulting costs; offset by
$3.8 million increase from decreased leasing overhead capitalization due to the different mix of leasing
transactions; and
$500,000 increase from lower development overhead capitalization based on the timing and size of current
development and redevelopment projects.
Real estate taxes changed as follows:
•
•
•
$2.8 million increase from development properties where capitalization ceased as tenant spaces became
available for occupancy;
$2.3 million increase from acquisitions of operating properties; and
$24.4 million increase at same properties, including $19.9 million from properties acquired through the
Equity One merger which only includes ten months of 2017 operating results. The remaining increase is from
increased tax assessments;
•
reduced by $1.4 million from the sale of operating properties.
Other operating expenses decreased $79.5 million, primarily attributable to transaction costs related to the Equity One
merger in 2017.
42 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
Gain on sale of real estate, net of tax
Early extinguishment of debt
Net investment income
Total other expense (income)
$
2018
2017
Change
129,299
18,999
(7,020)
8,408
(1,230)
148,456
38,437
(28,343)
11,172
1,096
170,818
119,301
14,677
(7,946)
8,408
(1,811)
132,629
—
(27,432)
12,449
(3,985)
113,661
9,998
4,322
926
—
581
15,827
38,437
(911)
(1,277)
5,081
57,157
The $15.8 million net increase in total interest expense is due to:
•
$10.0 million net increase in interest on notes payable primarily due to:
$7.6 million increase from the issuances of $950 million of new unsecured debt during 2017. The
debt proceeds were used as follows:
$325 million used to redeem all of our preferred stock,
$415 million used to fund consideration paid to Equity One to repay its credit facilities not
assumed by the Company in the merger, and
$210 million used to retire mortgage loans and to reduce the outstanding balance on the
Line;
$3.4 million net increase from the issuance of $300 million of new unsecured debt in March 2018 to
redeem $150 million of unsecured debt in April 2018, and to repurchase common stock;
$3.2 million of additional interest on notes payable assumed with the Equity One merger; and
$725,000 increase from amortization of additional debt premiums and loan costs from above debt
issuances; offset by
$4.9 million net decrease in mortgage interest expense primarily due to mortgage payoffs during
2018 and 2017.
•
further increased by $4.3 million in interest on unsecured credit facilities related to higher average balances
primarily related to the Equity One merger and higher interest rates.
During 2018, we recognized $38.4 million of impairment losses, including $12.6 million of goodwill impairment, on
ten operating properties and two land parcels, eight of which have been sold. Of the four remaining properties, three are
included in Properties held for sale as of December 31, 2018. We did not recognize any impairments during 2017.
During 2018, we early redeemed $150 million of 6% senior unsecured notes resulting in $11.0 million of debt
extinguishment costs. During 2017, we repaid nine mortgages with a portion of the proceeds from our unsecured public debt
offering, and recognized $12.4 million of debt extinguishment costs.
Net investment income decreased $5.1 million, driven by valuation changes in the stock market, primarily attributable
to investments held within the non-qualified deferred compensation plan.
43
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)
Other investments in real estate partnerships
Regency's
Ownership
40.00%
30.00%
20.00%
20.00%
30.00%
25.00%
20.01%
9.375% -
50.00%
2018
2017
Change
$
29,614
27,440
490
1,311
4,673
943
1,542
937
3,464
686
3,620
1,530
850
1,403
4,456
3,356
43,341
2,174
(196)
(2,309)
3,143
93
139
(3,519)
108
(367)
Total equity in income of investments in real estate partnerships
$
42,974
The $367,000 decrease in total Equity in income in investments in real estate partnerships is attributed to:
•
•
•
•
$2.2 million increase within GRIR primarily due to an increase in minimum rent across the portfolio of
properties and reduced depreciation;
$2.3 million decrease within Columbia I due to our $2.4 million share of gains on the sale of real estate
recognized in 2017;
$3.1 million increase within Columbia II due to our $3.1 million share of gains on the sale of real estate
recognized in 2018; and
$3.5 million decrease within USAA due to our $3.3 million share of gains on the sale of real estate recognized
in 2017.
The following represents the remaining components that comprise net income attributable to the common stockholders
and unit holders:
(in thousands)
Income from operations
Deferred income tax benefit
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
2018
2017
Change
$
$
$
252,325
—
(3,198)
—
249,127
525
249,652
169,243
9,737
(2,903)
(16,128)
159,949
388
160,337
83,082
(9,737)
(295)
16,128
89,178
137
89,315
The $9.7 million income tax benefit during 2017 was 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 redeemed all of our outstanding preferred stock.
44 Comparison of the years ended December 31, 2017 and 2016:
Results from operations for the year ended December 31, 2017 reflect the results of our merger with Equity One on
March 1, 2017, and therefore only includes ten months of operating results for the Equity One portfolio in 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.
45 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 as follows:
•
•
•
$2.2 million increase in the value of participant obligations within the deferred compensation plan; and
$4.6 million increase in compensation costs related to additional staffing and incentive compensation as a
result of the Equity One merger;
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
$73.3 million increase primarily attributable to transaction costs related to the Equity One merger in March
2017.
46 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
Gain on sale of real estate, net of tax
Early extinguishment of debt
Net investment income
Loss on derivative instruments
Total other expense (income)
2017
2016
Change
$
$
$
119,301
14,677
(7,946)
8,408
(1,811)
132,629
—
(27,432)
12,449
(3,985)
—
113,661
81,330
5,635
(3,481)
8,408
(1,180)
90,712
4,200
(47,321)
14,240
(1,672)
40,586
100,745
37,971
9,042
(4,465)
—
(631)
41,917
(4,200)
19,889
(1,791)
(2,313)
(40,586)
12,916
The $41.9 million net increase in total interest expense is due to:
•
$38.0 million increase in interest on notes payable due to:
$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
in 2017. The debt proceeds were used as follows:
$325 million used to redeem all of our preferred stock,
$415 million used to fund consideration paid to Equity One to repay its credit facilities not
assumed by the Company in the merger, and
$210 million used to retire mortgage loans and to reduce the outstanding balance on the
Line;
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 during 2016;
•
•
$9.0 million increase in interest on unsecured credit facilities related to higher average balances primarily
related to the Equity One merger;
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 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 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, attributable primarily to 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.
47
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)
Other investments in real estate partnerships
Regency's
Ownership
40.00%
30.00%
20.00%
20.00%
30.00%
25.00%
20.01%
50.00%
2017
2016
Change
$
27,440
29,791
686
3,620
1,530
850
1,403
4,456
3,356
—
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)
Total equity in income of investments in real estate partnerships
$
43,341
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)
Income from operations
Deferred income tax benefit
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
2017
2016
Change
$
$
$
169,243
(9,737)
(2,903)
(16,128)
159,949
388
160,337
166,992
—
(2,070)
(21,062)
143,860
257
144,117
2,251
(9,737)
(833)
4,934
16,089
131
16,220
The $9.7 million income tax benefit during 2017 was due to revaluing the net deferred tax liability at a taxable REIT
subsidiary 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 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.
48 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 for the year ended December 31, 2017, as if the
merger had occurred January 1, 2017. 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, 2017, nor does it purport to represent the same property NOI
and growth for future periods.
Our pro-rata same property NOI as adjusted, excluding termination fees, changed as follows:
(in thousands)
Base rent
Percentage rent
Recoveries from tenants
Other income
Operating expenses
Pro-rata same property NOI, as adjusted
Less: Termination fees
Pro-rata same property NOI, as adjusted,
excluding termination fees
Pro-rata same property NOI growth, as
adjusted, excluding termination fees
2018
$ 824,238
8,574
266,274
20,826
327,563
$ 792,349
1,222
2017 (1)
795,836
9,065
244,082
16,994
299,507
766,470
990
Change
28,402
(491)
22,192
3,832
28,056
25,879
232
$ 791,127
765,480
25,647
3.4%
(1) Adjusted for Equity One operating results prior to the merger for this period. 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 $28.4 million, driven by increases in rental rate growth on new and renewal leases, contractual rent
steps in existing leases, and rent commencements.
Recoveries from tenants increased $22.2 million, as a result of increases in recoverable costs, as noted below.
Other income increased $3.8 million, due to an increase in parking income, land rental, temporary tenants.
Operating expenses increased $28.1 million, primarily due to a $17.6 million increase in real estate tax assessments
and $8.8 million increase in common area maintenance costs.
49 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
2018
2017
Property
Count
GLA
Property
Count
GLA
395
40,601
289
26,392
7
917
1
180
8
(11)
—
—
399
512
(1,178)
—
14
40,866
2
(7)
110
—
395
331
(546)
14,181
63
40,601
(1) SF adjustments arise from remeasurements or redevelopments.
NAREIT FFO:
Our reconciliation of net income attributable to common stock and unit holders to NAREIT 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
2018
2017
$
249,127
159,949
390,603
37,895
(25,293)
525
652,857
364,908
—
(30,402)
388
494,843
NAREIT FFO attributable to common stock and unit holders
$
(1) Includes Regency's pro-rata share of unconsolidated investment partnerships, net of pro-rata share
attributable to noncontrolling interests.
50 Reconciliation of Same Property NOI to Nearest GAAP Measure:
Our reconciliation of Net income attributable to common stockholders to Same Property NOI, on a pro-rata basis, is as
follows:
(in thousands)
Net income (loss) 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 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)
2018
2017
Same
Property
Other (1)
Total
Same
Property
Other (1)
Total
$ 416,657
(167,530)
249,127
344,386
(184,437)
159,949
—
—
45,377
333,001
—
28,494
28,343
11,529
26,687
65,491
727
33,701
4,017
165,460
28,494
28,343
56,906
359,688
65,491
4,744
199,161
—
—
37,812
320,090
—
1,066
44,627
26,158
27,432
9,545
14,111
67,624
74,430
96,466
26,158
27,432
47,357
334,201
67,624
75,496
141,093
53,640
3,040
56,680
51,351
1,939
53,290
—
—
—
3,198
3,198
—
—
—
—
—
—
2,903
2,903
16,128
16,128
42,762
766,470
—
26,029
42,762
792,499
Pro-rata NOI, as adjusted
$ 792,349
31,997
824,346
(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 two month period ended February 28, 2017 was subject to a limited internal
review by Regency. The table below provides Same Property NOI detail for the non-ownership period of Equity One.
(in thousands)
Base rent
Percentage rent
Recoveries from tenants
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
44,390
1,265
13,863
611
17,367
42,762
30
42,732
51 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 $500 million of unsecured public and private placement debt, our Parent Company has no capital
commitments other than its guarantees of the commitments of our Operating Partnership. The Operating Partnership is a co-
issuer and a guarantor on the $500 million of outstanding debt of our Parent Company. All remaining debt is held by our
Operating Partnership or by our co-investment partnerships. 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 our $42.5 million of unrestricted cash at December 31, 2018, the Company has the following additional
sources of capital available:
(in thousands)
ATM equity program (see note 11 to our Consolidated Financial Statements)
December 31, 2018
Original offering amount
Available capacity
Line of Credit (the "Line") (see note 8 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
1,250,000
1,095,612
March 23, 2022
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 $0.585 per share, payable on March 7, 2019, to shareholders of record
as of February 25, 2019. 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.
We expect to generate sufficient cash flow from operations to fund our dividend distributions. We generated cash flow
from operations of approximately $610.3 million and $469.8 million for the years ended December 31, 2018 and 2017,
respectively. We paid $376.8 million and $328.3 million to our common and preferred stock and unit holders for the years
ended December 31, 2018 and 2017, respectively. We currently do not have any preferred shares or units issued and
outstanding.
To meet our additional cash requirements beyond our dividend, we will utilize the following:
remaining cash generated from operations after dividends paid,
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.
52 During the next twelve months, we estimate that we will require approximately $171.8 million of cash to fund the
following:
•
•
•
$143.7 million to complete in-process developments and redevelopments,
$13.2 million to repay maturing debt, and
$14.9 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. In addition, we have a contractual commitment to purchase, through December 2019, up to an
additional 90.6% ownership interest in an operating shopping center. We currently expect the seller to require us to purchase an
additional 25.6% ownership interest in the property by December 2019 for approximately $27.5 million.
We endeavor to maintain a high percentage of unencumbered assets. As of December 31, 2018, 87.8% 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 Fixed charge coverage ratio, including our pro-rata share of our partnerships,
was 4.2 and 4.1 times for the periods ended December 31, 2018 and 2017, respectively.
Our Line, Term Loans, and unsecured loans require that we remain in compliance with various covenants, which are
described in note 8 to the Consolidated Financial Statements. We are in compliance with these covenants at December 31, 2018
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 (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents and
restricted cash
Total cash and cash equivalents and restricted cash
2018
610,327
(106,024)
(508,494)
(4,191)
45,190
$
$
2017
469,784
(1,007,230)
568,948
31,502
49,381
Change
140,543
901,206
(1,077,442)
(35,693)
(4,191)
Net cash provided by operating activities:
Net cash provided by operating activities increased by $140.5 million due to:
•
•
•
$119.3 million increase in cash from operating income, including the additional cash flows from properties
acquired through the Equity One merger in March 2017, net of merger costs;
$764,000 increase in operating cash flow distributions from our unconsolidated real estate partnerships; and,
$20.5 million net increase in cash due to timing of cash receipts and payments related to operating activities.
53 Net cash used in investing activities:
Net cash used in investing activities changed by $901.2 million as follows:
(in thousands)
Cash flows from investing activities:
Acquisition of operating real estate
Advance deposits paid on acquisition of operating real estate
Acquisition of Equity One, net of cash and restricted cash acquired
of $74,507
Real estate development and capital improvements
Proceeds from sale of real estate investments
Proceeds from (issuance of) notes receivable
Investments in real estate partnerships
Distributions received from investments in real estate partnerships
Dividends on investment securities
Acquisition of investment securities
Proceeds from sale of investment securities
Net cash used in investing activities
Significant investing and divesting activities included:
2018
2017
Change
$
(85,289)
—
(124,727)
(4,917)
39,438
4,917
—
(226,191)
250,445
15,648
(74,238)
14,647
(646,790)
(346,857)
110,015
(5,236)
(23,529)
36,603
531
(23,164)
21,587
$ (106,024)
365
(23,535)
21,378
(1,007,230)
646,790
120,666
140,430
20,884
(50,709)
(21,956)
166
371
209
901,206
• We invested $85.3 million in 2018 to acquire three operating properties. Other than those included with the
Equity One merger, we invested $124.7 million in 2017 to acquire two operating properties and two real
estate parcels at existing operating properties.
• 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 $646.8 million, net of cash and restricted cash acquired, to repay credit facilities not assumed with
the merger at the closing date.
• We invested $120.7 million less in 2018 than 2017 on real estate development, redevelopment, and capital
improvements, as further detailed in a table below.
• We received proceeds of $250.4 million from the sale of ten shopping centers and nine land parcels in 2018,
compared to $110.0 million for six shopping centers and nine land parcels in 2017.
• We invested $74.2 million in our real estate partnerships during 2018, including:
$48.8 million to fund our share of acquiring four operating properties,
$1.3 million to acquire an interest in one land parcel for development,
$21.9 million to fund our share of development and redevelopment activities, and
$2.2 million to fund our share of maturing debt.
During the same period in 2017, we invested $23.5 million in our real estate partnerships, including:
$8.8 million to acquire an interest in one land parcel for development,
$7.8 million to fund our share of development and redevelopment activities, and
$6.9 million to fund our share of maturing debt.
54
• Distributions from our unconsolidated real estate partnerships include return of capital from sales or financing
proceeds. The $14.6 million received in 2018 is driven by the sale of one land parcel and one operating
property plus our share of proceeds from financing activities at two operating properties. During the same
period in 2017, we received $36.6 million from the sale of three operating properties and one land parcel plus
our share of proceeds from refinancing certain operating properties 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. During 2018,
we deployed capital of $226.2 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
2018
2017
Change
2,787
68,463
51,351
86,800
6,303
10,487
24,775
54,200
133,597
109,601
7,946
16,738
(21,988)
14,263
(82,246)
(22,801)
(1,643)
(6,251)
(120,666)
Real estate development and capital improvements
$
226,191
346,857
• During 2018 we acquired three land parcels for new development and redevelopment projects as compared to
four land parcels acquired during 2017.
• Building and tenant improvements increased $14.3 million during the year ended December 31, 2018
primarily related to the overall increase in the size of our portfolio from the merger with Equity One in March
2017.
• Redevelopment expenditures were lower during 2018 due to the timing, magnitude, and number of projects
currently in process. 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 redevelopment related tenant improvement costs. The size and
magnitude of each redevelopment project varies with each redevelopment plan.
• Development expenditures were lower in 2018 due to the progress towards completion of our development
projects currently in process. At December 31, 2018 and 2017, we had six and eight consolidated
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 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 program, which includes redevelopment
of our existing properties. We currently expect that our development activity will approximate our recent
historical averages, although the amount of activity by type will vary and likely shift towards more
redevelopment in the near future. Internal compensation costs directly attributable to these activities are
capitalized as part of each project. Changes in the level of future development activity could adversely impact
results of operations by reducing the amount of internal costs for development projects that may be
capitalized. A 10% reduction in development activity without a corresponding reduction in development
related compensation costs could result in an additional charge to net income of $1.5 million per year.
55 The following table summarizes our in-process consolidated development projects:
(in thousands, except cost PSF)
December 31, 2018
Property Name
The Village at Riverstone
Pinecrest Place (2)
Mellody Farm
Indigo Square
Carytown Exchange (3)
The Village at Hunter's Lake
Total
Market
Houston, TX
Miami, FL
Chicago, IL
Charleston, SC
Richmond, VA
Tampa, FL
Estimated
/Actual
Anchor
Opens
Estimated Net
Development
Costs (1)
Sept-18
$
Jan-18
Sept-18
Mar-19
Nov-20
Apr-20
30,658
16,373
103,939
16,808
26,360
21,999
Start
Date
Q4-16
Q1-17
Q2-17
Q4-17
Q4-18
Q4-18
% of Costs
Incurred (1) GLA
86% 167
88%
70
80% 259
81%
51
3% 107
7%
72
Cost
PSF
GLA (1)
184
234
401
330
246
306
$
216,137
67% 726
$ 298
(1) Includes leasing costs and is net of tenant reimbursements.
(2) Estimated Net Development Costs for Pinecrest Place excludes the cost of land, which the Company has leased long term.
(3) Estimated Net Development Costs for Carytown Exchange excludes the cost of land, which was contributed by a partner.
The following table summarizes our pro-rata share of in-process unconsolidated development projects:
(in thousands, except cost PSF)
December 31, 2018
Property Name
Midtown East
Ballard Blocks II
Total
Market
Raleigh, NC
Seattle, WA
Start
Date
Q4-17
Q1-18
Estimated
/Actual
Anchor
Opens
Sept-19
Oct-19
Estimated Net
Development
Costs (1)
$
$
22,639
32,161
54,800
% of Costs
Incurred (1)
67%
43%
54%
GLA
87
57
144
Cost PSF
GLA (1)
$
$
260
564
381
(1) Includes leasing costs and is net of tenant reimbursements.
The following table summarizes our completed consolidated development projects:
(in thousands, except cost PSF)
December 31, 2018
Property Name
Chimney Rock Crossing
Northgate Marketplace Ph II
Market at Springwoods Village (2)
The Field at Commonwealth
Market
New York, NY
Medford, OR
Houston, TX
Metro DC
Total
Completion
Date
Net
Development
Costs (1)
GLA
Cost PSF
GLA (1)
Q2-18
Q2-18
Q4-18
Q4-18
$
$
70,105
40,791
25,373
43,378
179,647
218
177
167
167
729
$
$
322
230
152
260
246
(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%.
56 Net cash (used in) provided by financing activities:
Net cash flows generated from financing activities changed during 2018, as follows:
(in thousands)
Cash flows from financing activities:
Equity issuances
Repurchase of common shares in conjunction with equity award
plans
Common shares repurchased through share repurchase program
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, including early redemption costs
Payment of loan costs
Proceeds from sale of treasury stock, net
Net cash (used in) provided by financing activities
2018
2017
Change
$
—
88,458
(88,458)
(6,772)
(213,851)
—
(4,526)
(376,755)
85,000
301,251
(283,492)
(9,448)
99
$ (508,494)
(18,649)
—
(325,000)
(8,139)
(328,314)
345,000
1,084,184
(255,421)
(13,271)
100
568,948
11,877
(213,851)
325,000
3,613
(48,441)
(260,000)
(782,933)
(28,071)
3,823
(1)
(1,077,442)
Significant financing activities during the years ended December 31, 2018 and 2017 include the following:
• We had no equity issuances during 2018. During December 2017, we raised $88.5 million upon settling the
remaining 1,250,000 shares under the forward equity offering.
• We repurchased for cash a portion of the common stock related to vested stock based compensation awards to
satisfy employee federal and state tax withholding requirements. The 2017 repurchases were higher due to the
vesting of Equity One's stock-based compensation program as a result of the merger.
• We paid $213.9 million to repurchase 3,689,104 common shares in 2018 through our repurchase program.
Additionally, we repurchased 563,229 shares in December 2018 that settled for $32.8 million in January
2019.
• We paid $325.0 million in 2017 to redeem all of our preferred stock.
• Net distributions to Limited partners in consolidated partnerships decreased $3.6 million primarily due to
proceeds from property refinancings distributed during 2017.
• We paid $48.4 million more in dividends during 2018 as a result of issuing common shares as merger
consideration to acquire Equity One in 2017, combined with an increase in our dividend rate from $2.10 per
share during 2017 to $2.22 per share during 2018.
• We had the following debt related activity during 2018:
We borrowed, net of payments, an additional $85.0 million on our Line.
We received proceeds of $299.5 million upon issuance, in March, of $300.0 million of senior
unsecured public notes and drew $1.7 million on a construction loan to fund an in-process
development project.
We paid $160.5 million, including a make-whole premium, to early redeem our senior unsecured
public notes originally due June 2020 and $123.0 million to pay scheduled principal mortgage
payments and mortgages maturities.
We paid $9.4 million of loan costs in connection with our public note offering above and expanding
our Line commitment.
57 • We had the following debt related activity during 2017:
We borrowed, net of payments, an additional $45.0 million on our Line.
We received proceeds of $300.0 million upon closing a new term loan related to the merger with
Equity One.
We received proceeds of $1.1 billion from debt issuances including
*
$953.1 million, including debt premiums, from our $950.0 million senior unsecured public
note issuances in 2017. The debt proceeds were used as follows:
*
*
*
$325 million used to redeem all of our preferred stock,
$415 million used to fund consideration paid to Equity One to repay its credit
facilities not assumed by the Company in the merger, and
$213.1 million used to retire mortgage loans and to reduce the outstanding balance
on the Line;
*
*
$122.5 million from mortgage loans, and
$8.6 million in construction loan proceeds.
We paid $255.4 million to repay or refinance mortgage loans and to pay scheduled principal
payments.
We paid $13.3 million of loan costs in connection with the new debt issued above, including
expanding our Line commitment.
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 8, note 9, and note 16 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, 2018, we have a contractual commitment to
purchase, through December 2019, up to an additional 90.6% ownership interest in an operating shopping center. We currently
expect the seller to require us to purchase an additional 25.6% ownership interest in the property by December 2019 for
approximately $27.5 million.
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, 2018, 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 13 to the Consolidated Financial
Statements.
58 (in thousands)
2019
2020
2021
2022
2023
Beyond 5
Years
Total
Payments Due by Period
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
U.S. Treasury rate lock
$ 163,223
523,669
457,680
827,419
156,771
2,806,715
$ 4,935,477
46,303
122,512
119,233
80,113
73,424
196,027
637,612
4,982
4,908
3,858
2,893
2,189
5,944
24,774
(577)
(614)
(309)
—
—
—
(1,500)
10,672
10,439
10,344
10,258
10,369
461,762
513,844
393
27,547
5,491
394
—
—
394
—
—
394
—
—
394
—
—
18,073
—
—
20,042
27,547
5,491
Total
$ 258,034
661,308
591,200
921,077
243,147
3,488,521
$ 6,163,287
(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.
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. If the acquisition is determined
to be a business combination, 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
59 received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. Transaction costs associated with asset acquisitions are capitalized, while such costs are expensed for business
combinations in the period incurred.
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. The
Company consolidates partnerships in which it owns less than 100%, but which it controls. Control is determined using an
evaluation based on accounting standards related to the consolidation of variable interest entities ("VIEs") and voting interest
entities. 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. 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 partnership is
recognized in Equity in income (loss) of investments in real estate partnerships in our Consolidated Statements of Operations.
Development and Redevelopment of Real Estate Assets and Cost Capitalization
We have a development program, which includes redevelopment of our existing properties. We capitalize the
acquisition of land, the construction of buildings, and other specifically identifiable development costs incurred by recording
them in Real estate assets, at cost, 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
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, 2018, 2017, and 2016, we capitalized interest of
$7.0 million, $7.9 million, and $3.5 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, 2018, 2017, and 2016, we capitalized $17.1 million, $17.6 million, and $13.0
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.
60 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, and the financial condition and long-term prospects of
the entity. 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.
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, 2018 we and our Investments in real estate partnerships had accrued liabilities of $8.7 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.
61 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 8 to the Consolidated Financial Statements, which
has a variable interest rate that is based upon an annual rate of LIBOR plus 0.875%. LIBOR rates charged on
our Line change monthly and 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 0.700% 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
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, 2018 (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, 2018 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 $1.8 million per year based on $38.1 million of floating rate mortgage debt and $145.0 million of
floating rate line of credit debt outstanding at December 31, 2018. 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, 2018 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
$22,734
389,866
300,600
582,646
69,418
2,186,859
3,552,123
3,489,384
2019
2020
2021
2022
2023
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)
3.81%
3.86%
3.74%
3.93%
3.94%
3.98%
$ —
—
38,059
145,000
—
—
183,059
183,287
3.27%
3.27%
3.22%
—%
—%
—%
—
(1) Weighted average interest rates at the end of each year presented.
62 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, 2018 and 2017
Consolidated Statements of Operations for the years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Equity for the years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017, and 2016
Regency Centers, L.P.:
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Operations for the years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Capital for the years ended December 31, 2018, 2017, and 2016
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017, and 2016
Notes to Consolidated Financial Statements
Financial Statement Schedule
64
69
70
71
72
74
77
78
79
80
82
84
Schedule III - Consolidated Real Estate and Accumulated Depreciation - December 31, 2018
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.
63 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, 2018 and 2017, 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, 2018, 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, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three year period ended December
31, 2018, 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, 2018, 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 21, 2019, 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 21, 2019
64 Report of Independent Registered Public Accounting Firm
To 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, 2018, 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, 2018, 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, 2018 and 2017, 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,
2018, and the related notes and financial statement schedule III - Real Estate and Accumulated Depreciation (collectively, the
“consolidated financial statements”), and our report dated February 21, 2019, 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 21, 2019
65 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, 2018 and 2017, 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, 2018, 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, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three year period ended December
31, 2018, 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, 2018, 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 21, 2019, 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 21, 2019
66 Report of Independent Registered Public Accounting Firm
To 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, 2018, 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, 2018, 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, 2018 and 2017, 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, 2018, and the related notes and financial statement schedule III - Real Estate and Accumulated Depreciation
(collectively, the “consolidated financial statements”), and our report dated February 21, 2019, 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 21, 2019
67 This page intentionally left blank.
68 REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
December 31, 2018 and 2017
(in thousands, except share data)
Assets
Real estate assets, at cost (notes 1, 2 and 3):
Less: accumulated depreciation
Real estate assets, net
Investments in real estate partnerships (note 4)
Properties held for sale, net
Cash and cash equivalents
Restricted cash
Tenant and other receivables, net (note 1)
Deferred leasing costs, less accumulated amortization of $101,093 and $93,291 at December 31, 2018 and
2017, respectively
Acquired lease intangible assets, less accumulated amortization of $219,689 and $148,280 at December 31,
2018 and 2017, respectively (note 6)
Other assets (note 5)
Total assets
Liabilities and Equity
Liabilities:
Notes payable (note 8)
Unsecured credit facilities (note 8)
Accounts payable and other liabilities
Acquired lease intangible liabilities, less accumulated amortization of $92,746 and $56,550 at
December 31, 2018 and 2017, respectively (note 6)
Tenants’ security, escrow deposits and prepaid rent
Total liabilities
Commitments and contingencies (notes 15 and 16)
Equity:
Stockholders’ equity (note 11):
Common stock $0.01 par value per share, 220,000,000 shares authorized; 167,904,593 and
171,364,908 shares issued at December 31, 2018 and 2017, respectively
Treasury stock at cost, 390,163 and 366,628 shares held at December 31, 2018 and 2017, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Distributions in excess of net income
Total stockholders’ equity
Noncontrolling interests (note 11):
Exchangeable operating partnership units, aggregate redemption value of $20,532 and $24,206 at
December 31, 2018 and 2017, respectively
Limited partners’ interests in consolidated partnerships
Total noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
2018
2017
$ 10,863,162
1,535,444
9,327,718
463,001
60,516
42,532
2,658
172,359
10,892,821
1,339,771
9,553,050
386,304
—
45,370
4,011
170,985
84,983
80,044
387,069
403,827
$ 10,944,663
478,826
427,127
11,145,717
$
3,006,478
708,734
224,807
496,726
57,750
4,494,495
—
2,971,715
623,262
234,272
537,401
46,013
4,412,663
—
1,679
1,714
(19,834)
7,672,517
(927)
(1,255,465)
6,397,970
(18,307)
7,873,104
(6,289)
(1,158,170)
6,692,052
10,666
41,532
52,198
6,450,168
$ 10,944,663
10,907
30,095
41,002
6,733,054
11,145,717
69 REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
For the years ended December 31, 2018, 2017, and 2016
(in thousands, except per share data)
2018
2017
2016
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
Provision for impairment
Gain on sale of real estate, net of tax
Early extinguishment of debt
Net investment loss (income)
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
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 14)
Income per common share - diluted (note 14)
See accompanying notes to consolidated financial statements.
$
$
$
$
818,483
7,486
266,512
28,494
1,120,975
359,688
168,034
65,491
137,856
9,737
740,806
148,456
38,437
(28,343)
11,172
1,096
—
170,818
209,351
42,974
—
252,325
(525)
(2,673)
(3,198)
249,127
—
249,127
728,078
6,635
223,455
26,158
984,326
334,201
143,990
67,624
109,723
89,225
744,763
132,629
—
(27,432)
12,449
(3,985)
—
113,661
125,902
43,341
(9,737)
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
(47,321)
14,240
(1,672)
40,586
100,745
110,474
56,518
—
166,992
(257)
(1,813)
(2,070)
164,922
(21,062)
143,860
1.47
1.46
1.00
1.00
1.43
1.42
70 REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2018, 2017, and 2016
(in thousands)
Net income
Other comprehensive 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
Comprehensive income
Less: comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests
Other comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to the Company
See accompanying notes to consolidated financial statements.
2018
252,325
$
2017
178,980
2016
166,992
402
5,342
1,151
11,103
(10,332)
51,139
(95)
5,649
257,974
3,198
299
3,497
254,477
$
(8)
12,246
191,226
2,903
189
3,092
188,134
24
40,831
207,823
2,070
484
2,554
205,269
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73
REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 2018, 2017, and 2016
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred loan costs and debt premiums
(Accretion) and amortization 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
Gain on derivative instruments
Deferred compensation expense
Realized and unrealized gain on investments (note 13)
Changes in assets and liabilities:
Tenant and other receivables, net
Deferred leasing costs
Other assets (note 5)
Accounts payable and other liabilities
Tenants’ security, escrow deposits and prepaid rent
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of operating real estate
Advance deposits paid on acquisition of operating real estate
Acquisition of Equity One, net of cash and restricted cash acquired of $74,507
Real estate development and capital improvements
Proceeds from sale of real estate investments
Proceeds from (issuances of) notes receivable
Investments in real estate partnerships
Distributions received from investments in real estate partnerships
Dividends on investment securities
Acquisition of investment securities
Proceeds from sale of investment securities
Net cash used in investing activities
2018
2017
2016
$
252,325
178,980
166,992
359,688
10,476
(33,330)
13,635
(42,974)
(28,343)
38,437
11,172
—
54,266
—
(1,085)
1,177
(26,374)
(8,366)
(1,410)
(760)
11,793
610,327
(85,289)
—
—
(226,191)
250,445
15,648
(74,238)
14,647
531
(23,164)
21,587
(106,024)
334,201
9,509
(23,144)
20,549
(43,341)
(27,432)
—
12,449
(9,737)
53,502
76
3,844
(3,837)
(26,081)
(14,448)
9,536
(2,114)
(2,728)
469,784
(124,727)
(4,917)
(646,790)
(346,857)
110,015
(5,236)
(23,529)
36,603
365
(23,535)
21,378
(1,007,230)
162,327
9,762
(3,879)
10,652
(56,518)
(47,321)
4,200
14,240
—
50,361
—
1,655
(1,673)
(8,800)
(10,349)
673
5,419
(564)
297,177
(333,220)
(750)
—
(233,451)
135,161
—
(37,879)
58,810
330
(55,223)
57,590
(408,632)
74 REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 2018, 2017, and 2016
(in thousands)
Cash flows from financing activities:
Net proceeds from common stock issuance
Repurchase of common shares in conjunction with equity award plans
Proceeds from sale of treasury stock
Acquisition of treasury stock
Common shares repurchased through share repurchase program
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 (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of the year
Cash and cash equivalents and restricted cash at end of the year
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $7,020, $7,946, and $3,482 in 2018,
2017, and 2016, respectively)
Cash paid (received) 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.
2018
2017
2016
—
(6,772)
99
—
(213,851)
—
(4,526)
(777)
(375,978)
—
(150,000)
299,511
575,000
(490,000)
1,740
(113,037)
(9,964)
(9,448)
(10,491)
(508,494)
(4,191)
49,381
45,190
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
31,502
17,879
49,381
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
(22,744)
40,623
17,879
136,645
5,455
109,956
(269)
82,950
—
—
9,700
(206)
1,333
3,509
13,000
841
1,314
524
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)
$
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75 This page intentionally left blank.
76 REGENCY CENTERS, L.P.
Consolidated Balance Sheets
December 31, 2018 and 2017
(in thousands, except unit data)
Assets
Real estate assets, at cost (notes 1, 2 and 3):
Less: accumulated depreciation
Real estate assets, net
Investments in real estate partnerships (note 4)
Properties held for sale, net
Cash and cash equivalents
Restricted cash
Tenant and other receivables, net (note 1)
Deferred leasing costs, less accumulated amortization of $101,093 and $93,291 at December 31, 2018 and
2017, respectively
Acquired lease intangible assets, less accumulated amortization of $219,689 and $148,280 at December 31,
2018 and 2017, respectively (note 6)
Other assets (note 5)
Total assets
Liabilities and Capital
Liabilities:
Notes payable (note 8)
Unsecured credit facilities (note 8)
Accounts payable and other liabilities
Acquired lease intangible liabilities, less accumulated amortization of $92,746 and $56,550 at
December 31, 2018 and 2017, respectively (note 6)
Tenants’ security, escrow deposits and prepaid rent
Total liabilities
Commitments and contingencies (notes 15 and 16)
Capital:
Partners’ capital (note 11):
General partner; 167,904,593 and 171,364,908 units outstanding at December 31, 2018 and 2017,
respectively
Limited partners; 349,902 units outstanding at December 31, 2018 and 2017
Accumulated other comprehensive loss
Total partners’ capital
Noncontrolling interests (note 11):
Limited partners’ interests in consolidated partnerships
Total noncontrolling interests
Total capital
Total liabilities and capital
See accompanying notes to consolidated financial statements.
2018
2017
$ 10,863,162
1,535,444
9,327,718
463,001
60,516
42,532
2,658
172,359
10,892,821
1,339,771
9,553,050
386,304
—
45,370
4,011
170,985
84,983
80,044
387,069
403,827
$ 10,944,663
478,826
427,127
11,145,717
$
3,006,478
708,734
224,807
496,726
57,750
4,494,495
—
2,971,715
623,262
234,272
537,401
46,013
4,412,663
—
6,398,897
10,666
(927)
6,408,636
6,698,341
10,907
(6,289)
6,702,959
41,532
41,532
6,450,168
$ 10,944,663
30,095
30,095
6,733,054
11,145,717
77 REGENCY CENTERS, L.P.
Consolidated Statements of Operations
For the years ended December 31, 2018, 2017, and 2016
(in thousands, except per unit data)
2018
2017
2016
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
Provision for impairment
Gain on sale of real estate, net of tax
Early extinguishment of debt
Net investment loss (income)
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
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 14):
Income per common unit - diluted (note 14):
See accompanying notes to consolidated financial statements.
$
$
$
$
818,483
7,486
266,512
28,494
1,120,975
359,688
168,034
65,491
137,856
9,737
740,806
148,456
38,437
(28,343)
11,172
1,096
—
170,818
209,351
42,974
—
252,325
(2,673)
249,652
—
249,652
728,078
6,635
223,455
26,158
984,326
334,201
143,990
67,624
109,723
89,225
744,763
132,629
—
(27,432)
12,449
(3,985)
—
113,661
125,902
43,341
(9,737)
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
(47,321)
14,240
(1,672)
40,586
100,745
110,474
56,518
—
166,992
(1,813)
165,179
(21,062)
144,117
1.47
1.46
1.00
1.00
1.43
1.42
78 REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2018, 2017, and 2016
(in thousands)
Net income
Other comprehensive 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
Comprehensive income
Less: comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests
Other comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to the Partnership
See accompanying notes to consolidated financial statements.
2018
252,325
$
2017
178,980
2016
166,992
402
5,342
1,151
11,103
(10,332)
51,139
(95)
5,649
257,974
2,673
288
2,961
255,013
$
(8)
12,246
191,226
2,515
168
2,683
188,543
24
40,831
207,823
1,813
426
2,239
205,584
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81
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the years ended December 31, 2018, 2017, and 2016
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred loan costs and debt premiums
(Accretion) and amortization 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
Gain on derivative instruments
Deferred compensation expense
Realized and unrealized gain on investments (note 13)
Changes in assets and liabilities:
Tenant and other receivables, net
Deferred leasing costs
Other assets (note 5)
Accounts payable and other liabilities
Tenants’ security, escrow deposits and prepaid rent
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of operating real estate
Advance deposits paid on acquisition of operating real estate
Acquisition of Equity One, net of cash and restricted cash acquired of $74,507
Real estate development and capital improvements
Proceeds from sale of real estate investments
Proceeds from (issuances of) notes receivable
Investments in real estate partnerships
Distributions received from investments in real estate partnerships
Dividends on investment securities
Acquisition of investment securities
Proceeds from sale of investment securities
Net cash used in investing activities
2018
2017
2016
$
252,325
178,980
166,992
359,688
10,476
(33,330)
13,635
(42,974)
(28,343)
38,437
11,172
—
54,266
—
(1,085)
1,177
(26,374)
(8,366)
(1,410)
(760)
11,793
610,327
(85,289)
—
—
(226,191)
250,445
15,648
(74,238)
14,647
531
(23,164)
21,587
(106,024)
334,201
9,509
(23,144)
20,549
(43,341)
(27,432)
—
12,449
(9,737)
53,502
76
3,844
(3,837)
(26,081)
(14,448)
9,536
(2,114)
(2,728)
469,784
(124,727)
(4,917)
(646,790)
(346,857)
110,015
(5,236)
(23,529)
36,603
365
(23,535)
21,378
(1,007,230)
162,327
9,762
(3,879)
10,652
(56,518)
(47,321)
4,200
14,240
—
50,361
—
1,655
(1,673)
(8,800)
(10,349)
673
5,419
(564)
297,177
(333,220)
(750)
—
(233,451)
135,161
—
(37,879)
58,810
330
(55,223)
57,590
(408,632)
82 REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the years ended December 31, 2018, 2017, and 2016
(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
Common shares repurchased through share repurchase program
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 (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of the year
Cash and cash equivalents and restricted cash at end of the year
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $7,020, $7,946, and $3,482 in 2018,
2017, and 2016, respectively)
Cash paid (received) 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.
2018
2017
2016
—
88,458
548,920
(6,772)
99
—
(213,851)
—
(4,526)
(376,755)
—
(150,000)
299,511
575,000
(490,000)
1,740
(113,037)
(9,964)
(9,448)
(10,491)
(508,494)
(4,191)
49,381
45,190
(18,649)
100
—
—
(325,000)
(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
31,502
17,879
49,381
(7,984)
957
(29)
—
—
(4,213)
(201,336)
(21,062)
(300,000)
—
460,000
(345,000)
53,446
(72,803)
(5,860)
(2,233)
(14,092)
88,711
(22,744)
40,623
17,879
136,645
5,455
109,956
(269)
82,950
—
—
9,700
(206)
1,333
3,509
13,000
841
1,314
524
13,100
27,000
(8)
1,210
3,210
186
557
1,372
677
—
757,399
— 4,471,808
—
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24
1,070
2,963
8,755
728
1,538
4,114
—
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14,144
(3,355)
(9,415)
571
(2,099)
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83 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
1.
Summary of Significant Accounting Policies
(a)
Organization and Principles of Consolidation
General
Regency Centers Corporation (the “Parent Company”) began its operations as a 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, development and redevelopment of shopping centers through
the Operating Partnership, and has no other assets other than through its investment in the Operating
Partnership. The Parent Company's only liabilities are $500 million of unsecured notes, 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, 2018, the Parent Company, the Operating Partnership, and
their controlled subsidiaries on a consolidated basis (the "Company” or “Regency”) owned 305 properties and
held partial interests in an additional 120 properties 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. GAAP requires the
Company's management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of commitments and 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, collectability of accounts receivable and 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 VIEs and voting interest entities. 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.
Ownership of the Parent Company
The Parent Company has a single class of common stock outstanding.
84 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Ownership of the Operating Partnership
The Operating Partnership's capital includes general and limited common Partnership Units. As of December
31, 2018, the Parent Company owned approximately 99.8%, or 167,904,593, of the 168,254,495 outstanding
common Partnership Units of the Operating Partnership, with the remaining limited common 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. Accordingly, the Operating Partnership is considered a VIE, and the Parent Company, which
consolidates it, is the primary beneficiary. 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 133 properties through partnerships, of which 13 are consolidated.
Regency's partners include institutional investors, other real estate developers and/or operators, and individual
parties who had a role in Regency sourcing 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 in these partnerships varies from protective decisions
(debt, bankruptcy, selling primary asset(s) of business) to involvement in approving leases, operating budgets,
and capital budgets. 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.
• 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 Regency's 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 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 accreted to earnings 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.
• Those partnerships for which the Partners only have protective rights are considered VIEs under
ASC Topic 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.
85 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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.
The major classes of assets, liabilities, and noncontrolling 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, 2018
December 31, 2017
$112,085
7,309
18,432
172,736
4,993
16,551
Limited partners’ interests in consolidated
partnerships
30,280
17,572
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 common stockholders of the Parent Company: (i) the limited Partnership Units in
the Operating Partnership held by third parties ("Exchangeable operating partnership units") 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. 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 of the Parent Company.
In accordance with ASC Topic 480, Distinguishing Liabilities from Equity, securities that are redeemable for
cash or other assets at the option of the holder, not solely within the control of the issuer, are to be classified
as redeemable noncontrolling interests outside of permanent equity in the Consolidated Balance Sheets. The
Parent Company has evaluated the conditions as specified under 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.
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
of the Operating Partnership.
86 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
(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 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,
2018
2017
25,590
25,305
30,953
105,677
—
(10,100)
(5,066)
172,359
25,329
14,825
34,472
93,284
15,803
(8,040)
(4,688)
170,985
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
2018
Gross provision for doubtful accounts
Provision for straight line rent reserve
$
$
4,993
1,741
3,992
1,129
1,705
2,271
Real Estate Sales
On January 1, 2018, the Company adopted the new accounting guidance for sales of nonfinancial
assets (“Subtopic 610-20”), as discussed further in the section below, Recent Accounting
Pronouncements. Upon adoption of the new standard, the Company's accounting policy for real
estate sales subject to Subtopic 610-20 has been updated. Effective January 1, 2018, the Company
derecognizes real estate and recognizes a gain or loss on sales of real estate when a contract exists
and control of the property has transferred to the buyer. Control of the property, including
controlling financial interest, is generally considered to transfer upon closing through transfer of the
legal title and possession of the property. Any retained noncontrolling interest is measured at fair
value. This change in accounting policy resulted in the recognition, through opening retained
87 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
earnings on January 1, 2018, of $30.9 million of previously deferred gains from property sales to the
Company's Investments in real estate partnerships.
Prior to January 1, 2018, the Company recognized profits from sales of real estate under the full
accrual method by the Company when: (i) a sale was consummated; (ii) the buyer's initial and
continuing investment was adequate to demonstrate a commitment to pay for the property; (iii) the
Company's receivable, if applicable, was not subject to future subordination; (iv) the Company had
transferred to the buyer the usual risks and rewards of ownership; and (v) the Company did not have
substantial continuing involvement with the property.
Management Services
On January 1, 2018, the Company adopted the new accounting guidance for revenue recognition (Topic 606
Revenue from Contracts with Customers, “Topic 606”), as discussed further in the section below, Recent
Accounting Pronouncements. Upon adoption of the new standard, certain of the Company's significant
accounting policies subject to Topic 606 have been updated.
The Company adopted Topic 606 using a modified retrospective approach and applied the transition practical
expedients allowed by the standard. Additionally, the Company does not need to estimate variable
consideration to recognize revenue and was able to apply the practical expedient related to the remaining
performance obligations, because all of its performance obligations are:
•
•
•
satisfied at a point in time,
part of a contract that has an original expected duration of one year or less, or
considered to be a series of performance obligations where variable consideration is
allocated entirely to a wholly unsatisfied distinct day of service that forms part of the series.
Subsequent to the adoption of Topic 606, the Company recognizes revenue when or as control of the
promised services are transferred to its customers, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for those services. The following is a description of the Company's
revenue from contracts with customers which is in the scope of Topic 606.
Property and Asset Management Services
The Company is engaged under agreements with its joint venture partnerships, which are generally
perpetual in nature and cancellable through unanimous partner approval, absent an event of default.
Under these agreements, the Company is to provide asset management, property management, and
leasing services for the 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 over the monthly or quarterly periods as
services are rendered. Property management and asset management services represent a series of
distinct daily services. Accordingly, the Company satisfies its performance obligation as service is
rendered each day and the variability associated with that compensation is resolved each day.
Amounts due from the partnerships for such services are paid during the month following the
monthly or quarterly service periods.
Several of the Company’s partnership agreements provide for incentive payments, generally referred
to as “promotes” or “earnouts,” to Regency for appreciation in property values in Regency's capacity
as manager. The terms of these promotes are based on appreciation in real estate value over
designated time intervals. The Company evaluates its expected promote payout at each reporting
period, which generally does not result in revenue recognition until the measurement period has
completed, when the amount can be reasonably determined and the amount is not probable of
significant reversal. The Company did not recognize any promote revenue during the years ended
December 31, 2018, 2017, or 2016.
Leasing Services
Leasing service fees are based on a percentage of the total rent due under the lease. The leasing
service is considered performed upon successful execution of an acceptable tenant lease for the joint
ventures’ shopping centers, at which time revenue is recognized. Payment of the first half of the fee
88 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
is generally due upon lease execution and the second half is generally due upon tenant opening or
rent payments commencing.
Transaction Services
The Company also receives transaction fees, as contractually agreed upon with each joint venture,
which include acquisition fees, disposition fees, and financing service fees. Control of these services
is generally transferred at the time the related transaction closes, which is the point in time when the
Company recognizes the related fee revenue. Any unpaid amounts related to transaction-based fees
are included in Tenant and other receivables, net, within the Consolidated Balance Sheets.
All income from management service contracts is included within Management, transaction and
other fees on the Consolidated Statements of Operations, as follows:
(in thousands)
Property management services
Asset management services
Leasing services
Other transaction fees
Timing of satisfaction of
performance obligations
Over time
Over time
Point in time
Point in time
Year ended December 31,
2018
2017
2016
$ 14,663
13,917
13,075
7,213
4,044
2,574
7,090
3,573
1,578
6,746
4,285
1,221
Total management, transaction, and other fees
$ 28,494
26,158
25,327
The accounts receivable for management services, which is included within Tenant and other
receivables, net, in the accompanying Consolidated Balance Sheets, are $12.5 million and $8.7
million, as of December 31, 2018 and 2017.
(c)
Real Estate Investments
The following table details the components of Real estate assets in the Consolidated Balance Sheets:
(in thousands)
Land
Land improvements
Buildings
Building and tenant improvements
Construction in progress
Total real estate assets
Capitalization and Depreciation
December 31, 2018 December 31, 2017
$
$
4,205,445
613,847
5,088,102
901,596
54,172
4,235,032
556,140
4,999,378
787,880
314,391
10,863,162
10,892,821
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.
89 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Depreciation is computed using the straight-line method over estimated useful lives of
approximately 15 years for land improvements, 40 years for buildings and improvements, and 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 Real estate assets in the accompanying Consolidated
Balance Sheets, and are included in Construction in progress within the above table. 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.
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, 2018 and 2017, the
Company had deposits of approximately $550,000 and $3.5 million, respectively, included in
Construction in progress. 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, 2018, 2017, and 2016, the Company
expensed pre-development costs of approximately $1.9 million, $1.5 million, and $1.5 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 Accounting Standards Update ("ASU") 2017-01: Business Combinations (Topic
805) - Clarifying the Definition of a Business, 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 Depreciation and amortization expense in the Consolidated Statements of Operations
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
90 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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. 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
intangible assets or liabilities) may not be recoverable. For those properties with such indicators,
management evaluates recoverability of the property's carrying amount. 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 both December 31, 2018 and 2017, primarily due to the tax free merger with Equity
One and inheriting lower carryover tax basis.
91 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
(d)
Cash and Cash Equivalents and Restricted Cash
Any instruments which have an original maturity of 90 days or less when purchased are considered cash
equivalents. As of December 31, 2018 and 2017, $2.7 million and $4.0 million, respectively, of cash was
restricted through escrow agreements and certain mortgage loans, and are presented as Restricted cash in the
Consolidated Balance Sheets.
(e)
Other Assets
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. The Company accounts for goodwill in
accordance with ASC Topic 350, Intangibles - Goodwill and Other, and allocates its goodwill to its
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, or
more frequently as triggers occur.
The goodwill impairment evaluation is completed using either 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 reporting unit’s fair value is less than its carrying value,
including goodwill. If a qualitative approach indicates it is more likely-than-not that the estimated
carrying value of a reporting unit (including goodwill) exceeds its fair value, or if the Company
chooses to bypass the qualitative approach for any reporting unit, the Company will perform the
quantitative approach described below.
The quantitative approach consists of estimating the fair value of each reporting unit 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 a goodwill 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.
The fair value of securities is determined using quoted market prices.
Debt securities are classified as held to maturity when the Company has the positive intent and
ability to hold the securities to maturity. Debt 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 through earnings in Investment income in the
Consolidated Statements of Operations. Debt 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.
Equity securities with readily determinable fair values are measured at fair value with changes in the
fair value recognized through net income and presented within Investment income in the
Consolidated Statements of Operations.
(f)
Deferred Leasing Costs
Deferred leasing costs consist of internal and external commissions and legal costs 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. See note 1(o), Recent Accounting Pronouncements, for expected changes in 2019 upon adoption
of a new accounting standard.
92 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
(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 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 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 generally 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 Company also utilizes cash flow hedges to lock
U.S. Treasury rates in anticipation of future fixed-rate debt issuances. The gains or losses resulting from
changes in fair value of derivatives that qualify as cash flow hedges are recognized in Accumulated other
comprehensive income (“AOCI”). Upon the settlement of a hedge, gains and losses remaining in AOCI are
amortized through earnings over the underlying term of the hedged transaction. The cash receipts or
payments related to interest rate swaps are presented in cash flows provided by operating activities in the
accompanying Consolidated Statements of Cash Flows.
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.
(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 TRS as defined in Section 856(l) of 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
93 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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 and projected
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 (2015 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”) was signed into law in December 2017. 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 were
recognized in the Company's December 2017 financial statements, even though the effective date of the law
for most provisions is January 1, 2018. The Company calculated the tax impact of the change in tax law. The
revaluation of the deferred tax assets and liabilities at the appropriate tax rate resulted in a $9.7 million
benefit recognized in earnings for 2017. To the extent that all information necessary was not available,
prepared or analyzed, companies were allotted a measurement period to make adjustments for the effect of
the law. The Company completed its analysis of the Act during 2018 and recorded an immaterial benefit in
earnings.
(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 the
cost of stock-based compensation based on the grant-date fair value of the award, which is expensed over the
vesting period.
When the Parent Company issues common stock 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 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 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, new developments, or redevelopment of existing centers, 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
94 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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.
(n)
Reclassifications
Certain amounts included in the Consolidated Balance Sheets for 2017 have been reclassified to conform to
the 2018 financial statement presentation as a result of changes in presentation of Real estate assets, at cost.
95 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
(o)
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 2017-12,
August 2017,
Targeted
Improvements to
Accounting for
Hedging Activities
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 adoption method requires 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 adopted this ASU using a
modified retrospective transition method,
which resulted in an immaterial
adjustment to opening retained earnings
and accumulated other comprehensive
income for previously recognized hedge
ineffectiveness from off-market hedges.
ASU 2016-01,
January 2016,
Financial
Instruments—Overall
(Subtopic 825-10):
Recognition and
Measurement of
Financial Assets and
Financial Liabilities
This ASU amends the guidance on equity
securities with readily determinable fair
values to no longer require classification as
either trading or available-for-sale and now
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.
January
2018
The Company's adoption of this standard
did not have a significant impact on its
results of operations, financial condition
or cash flows as the Company had, at
January 1, 2018, an insignificant amount
of equity securities within the scope of this
standard.
The adoption did not result in a material
impact to the Company's fair value
disclosures.
This ASU makes eight targeted changes to
how cash receipts and cash payments are
presented and classified in the statement of
cash flows.
January
2018
The adoption of this ASU did not result in
a change to the Company's Consolidated
Statements of Cash Flows.
ASU 2016-15,
August 2016,
Statement of Cash
Flows (Topic 230):
Classification of
Certain Cash
Receipts and Cash
Payments
96 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Standard
ASU 2016-18,
November 2016,
Statement of Cash
Flows (Topic 230):
Restricted Cash
Description
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 are
applied using a retrospective transition
method to each period presented.
Date of
adoption
January
2018
Effect on the financial statements or
other significant matters
The adoption of this ASU resulted in a
change to the classification and
presentation of changes in restricted cash
on its cash flow statement, which was not
material. There was no change to the
Company's financial condition or results
of operations as a result of adopting this
ASU.
Upon adoption, and for the years ended
December 31, 2017 and 2016, net cash
provided by operating activities decreased
by $1.4 million and $298,000, and net
cash used in investing activities increased
by $749,000 and decreased $1.2 million,
respectively, with a corresponding
increase in cash and cash equivalents and
restricted cash within the Consolidated
Statements of Cash Flows.
ASU 2017-05,
February 2017,
Clarifying the Scope
of Asset
Derecognition
Guidance and
Accounting for
Partial Sales of
Nonfinancial Assets
(Subtopic 610-20)
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.
January
2018
Sales of real estate assets are now
accounted for under Subtopic 610-20,
which provides for revenue recognition
based on transfer of control.
For normal arms length property sales to
unrelated parties, where Regency has no
retained interest in the property, the
Company will continue to recognize the
full gain or loss upon transfer of control.
For property sales in which Regency
retains a noncontrolling interest in the
property, fair value recognition for the
retained noncontrolling interest is now
required, which will result in full gain
recognition upon loss of control.
The Company applied the modified
retrospective adoption method, and on
January 1, 2018, recognized through
opening retained earnings $30.9 million of
previously deferred gains from property
sales to entities in which Regency had
continuing involvement, resulting in a
corresponding increase to the value of the
Company's investment in those
partnerships.
97 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 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 supersedes
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. The Company's lease
contracts will be subject to Topic 842, in
January 2019.
Date of
adoption
January
2018
Effect on the financial statements or
other significant matters
The Company utilized the modified
retrospective method of adoption,
applying the standard to only 2018, and
not restating prior periods presented in
future financial statements.
The majority of the Company's revenue
originates from lease contracts and will be
subject to Topic 842 to be adopted in
January 2019.
Beyond revenue from lease contracts, the
Company's primary revenue stream
subject to Topic 606 is Management,
transaction, and other fees from the
Company's real estate partnerships,
primarily in the form of property
management services, asset management
services, and leasing services. The
Company evaluated all partnership service
relationships and did not identify any
changes in the timing or amount of
revenue recognition from these revenue
streams.
The adoption of Topic 606 resulted in
additional disclosures to enable users of
financial statements to understand the
nature, amount, timing, and uncertainty of
revenue and cash flows arising from
contracts with customers, as seen in Note
1(b).
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
98 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Standard
Description
Date of
adoption
Effect on the financial statements or
other significant matters
Not yet adopted:
Leases (Topic 842)
and related updates:
ASU 2016-02,
February 2016,
Leases (Topic 842)
ASU 2018-10, July
2018: Codification
Improvements to
Topic 842, Leases
ASU 2018-11, July
2018, Leases (Topic
842): Targeted
Improvements
ASU 2018-20,
December 2018,
Leases (Topic 842):
Narrow-Scope
Improvements for
Lessors
Topic 842, Leases
(continued)
The Company continues to evaluate the
impact this standard will have on its
financial statements and related
disclosures. Based on adoption and
implementation efforts to date,
management has identified expected
changes from the new standard from its
perspective as both a lessee and a lessor,
as noted in the following pages.
Topic 842 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.
January
2019
The provisions of these ASUs are effective
as of January 1, 2019, with early adoption
permitted. Topic 842 provides 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 or an additional
transition method, allowing for initial
application at the date of adoption and a
cumulative-effect adjustment to opening
retained earnings.
Lessee Accounting:
The new standard establishes a right-of-use
model (“ROU”) that requires a lessee to
recognize a ROU asset and lease liability
on the balance sheet for all leases with a
term longer than 12 months. Leases will be
classified as finance or operating, with
classification affecting the pattern and
classification of expense recognition in the
income statement.
An entity may choose to use either (1) its
effective date or (2) the beginning of the
earliest comparable period presented in the
financial statements as its date of initial
application. The Company will elect
option 1 and only present as of the effective
date.
The new standard provides a number of
optional practical expedients in transition.
The Company expects to elect the “package
of practical expedients”, which allows the
Company not to reassess under the new
standard prior conclusions about lease
identification, lease classification, and
initial direct costs.
The new standard will also provide
significant new disclosures about the
Company’s leasing activities.
The Company has ground lease
agreements in which the Company is the
lessee for land beneath all or a portion of
the buildings at certain consolidated
shopping centers. The Company also has
office leases for its headquarters and field
offices.
Based on current estimates, the Company
anticipates recognizing operating lease
liabilities for its ground and office leases,
with a corresponding ROU asset, of less
than 5% of total assets. For these existing
operating leases, the Company will
continue to recognize a single lease
expense for its existing ground and office
operating leases, currently included in
Operating and maintenance expenses and
General and administrative expenses,
respectively, in the Consolidated
Statements of Operations.
Future ground leases entered into or
acquired subsequent to the adoption date
may be classified as operating or finance
leases, based on specific classification
criteria. Finance leases would result in a
slightly accelerated impact to earnings,
using the effective interest method, and
different classification of the expense.
99 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Standard
Topic 842, Leases
(continued)
Description
Lessor Accounting:
Topic 842 requires lessors to classify leases
as a sales-type, direct financing, or
operating lease. A lease is a sales-type
lease if any one of five criteria are met,
each of which indicate that the lease, in
effect, transfers control of the underlying
asset to the lessee. If none of those five
criteria are met, but two additional criteria
are both met, indicating that the lessor has
transferred substantially all the risks and
benefits of the underlying asset to the
lessee and a third party, the lease is a direct
financing lease. All leases that are not
sales-type or direct financing leases are
operating leases.
The new standard also includes a change to
the treatment of internal leasing costs and
legal costs, which can no longer be
capitalized. Only incremental costs of a
lease that would not have been incurred if
the lease had not been obtained may be
deferred as initial direct costs.
Additionally, the new standard requires
lessors to allocate the consideration in a
contract between the lease component
(right to use an underlying asset) and non-
lease component (transfer of a good or
service that is not a lease). However,
lessors are provided with a practical
expedient, elected by class of underlying
asset, to account for lease and non-lease
components of a contract as a single lease
component if certain criteria are met.
Lessors that make these elections will be
required to provide additional disclosures.
Date of
adoption
Effect on the financial statements or
other significant matters
The Company's existing lessor leases will
continue to be classified as operating
leases. Leases entered into after the
effective date of the new standard may be
classified as operating or sales-type leases,
based on specific classification criteria.
Operating leases will continue to have a
similar patter of recognition as under
current GAAP. Sales-type lease
accounting, however, will result in the
recognition of selling-profit at lease
commencement, with interest income
recognized over the life of the lease.
The terms of the Company's leases
generally provide that the Company is
entitled to receive reimbursements from
tenants for operating expenses such as real
estate taxes, insurance and CAM, in
addition to the base rental payments for
use of the underlying asset (e.g. unit of the
shopping center). Under the new standard,
CAM is considered a non-lease
component of a lease contract, which
would be accounted for under Topic 606.
However, the Company expects to apply
the practical expedient to account for its
lease and non-lease components as a
single, combined operating lease
component. While the timing of
recognition should remain the same, the
Company expects to no longer present
Minimum rent and Recoveries from
tenants separately in our Consolidated
Statements of Operations beginning
January 1, 2019.
Capitalization of indirect 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.
Previous capitalization of internal leasing
costs was $6.5 million, $10.4 million, and
$10.5 million during the years ended
December 31, 2018, 2017, and 2016,
respectively.
Previous capitalization of legal costs was
$1.6 million, $1.2 million, and $0.7
million during the years ended December
31, 2018, 2017 and 2016, respectively,
including our pro rata share recognized
through Equity in income of investments
in real estate partnerships.
The Company will continue its evaluation
of the accounting standard, additional
impacts of adoption, and changes in
presentation and disclosure requirements.
100 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Description
The amendments in this ASU align the
requirements for capitalizing
implementation costs incurred in a hosting
arrangement that is a service contract with
the requirements for capitalizing
implementation costs incurred to develop
or obtain internal-use software (and hosting
arrangements that include an internal-use
software license). The ASU provides
further clarification of the appropriate
presentation of capitalized costs, the period
over which to recognize the expense, the
presentation within the Statements of
Operations and Statements of Cash Flows,
and the disclosure requirements.
Early adoption of the standard is permitted.
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.
This ASU also applies to how the Company
determines its allowance for doubtful
accounts on tenant receivables.
This ASU modifies the disclosure
requirements for fair value measurements
within the scope of Topic 820, Fair Value
Measurement, including the removal and
modification of certain existing disclosures,
and the addition of new disclosures.
Standard
ASU 2018-15,
August 2018,
Intangibles -
Goodwill and Other -
Internal-Use
Software (Subtopic
350-40): Customer's
Accounting for
Implementation Costs
Incurred in a Cloud
Computing
Arrangement That Is
a Service Contract
ASU 2016-13, June
2016, Financial
Instruments—Credit
Losses (Topic 326):
Measurement of
Credit Losses on
Financial
Instruments
ASU 2018-13,
August 2018, Fair
Value Measurements
(Topic 820):
Disclosure
Framework -
Changes to the
Disclosure
Requirements for
Fair Value
Measurement
Date of
adoption
January
2020
Effect on the financial statements or
other significant matters
The Company is currently evaluating the
accounting standard, but does not expect
the adoption to have a material impact on
its financial position, results of operations,
or cash flows.
January
2020
The Company is evaluating the alternative
methods of adoption and the impact it will
have on its financial statements and
related disclosures.
January
2020
The Company is currently evaluating the
impact of adopting this new accounting
standard, which is expected to only impact
fair value measurement disclosures and
therefore should have minimal impact on
the Company's financial position, results
of operations, or cash flows.
101 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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, 2018
01/10/18
Hewlett Crossing I & II
Hewlett, NY
Operating
$ 30,900
9,700
04/03/18
12/14/18
12/27/18
12/31/18
Rivertowns Square
Pablo Plaza (1)
The Village at Hunter's Lake
Carytown Exchange (2)
Dobbs Ferry, NY
Operating
Jacksonville, FL
Operating
Tampa, FL
Development
68,933
1,310
1,812
Richmond, VA
Development
13,284
—
—
—
—
Total property acquisitions
$ 116,239
9,700
3,114
4,993
—
—
264
8,371
1,868
5,554
—
—
—
7,422
(1) The Company purchased a 5,000 square foot building adjacent to the Company's existing operating Pablo Plaza for redevelopment.
(2) The Company closed on the Carytown Exchange development, with a partner contributing land valued at $13 million which is recorded
within Limited partners' interest in consolidated partnerships in the accompanying Consolidated Balance Sheets. Regency is contributing
the capital to fund the development, which is currently estimated to be approximately $26 million.
Property Name
City/State
Property Type
Purchase
Price
(in thousands)
Date
Purchased
03/06/17
03/08/17
04/13/17
06/28/17
07/20/17
Chantilly, VA
The Field at Commonwealth
Pinecrest Place (1)
Mellody Farm (2)
Concord outparcel (3)
Miami, FL
Aventura Square outparcel (4) Miami, FL
Miami, FL
Chicago, IL
December 31, 2017
Development
$
9,500
Development
—
Development
26,200
Operating
Operating
350
1,750
3,900
81,600
68,084
Debt
Assumed,
Net of
Premiums
—
—
—
—
—
—
27,000
—
Intangible
Assets
Intangible
Liabilities
—
—
—
—
90
—
—
—
—
—
9
—
4,997
3,842
8,929
9,551
8,002
17,562
11/15/17
Indigo Square
Mount Pleasant, SC
Development
12/21/17
Scripps Ranch Marketplace
San Diego, CA
12/28/17
Roosevelt Square
Seattle, WA
Operating
Operating
Total property acquisitions
$ 191,384
27,000
(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.
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.
102 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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.
Final Purchase Price Allocation of Merger
The Equity One merger has been accounted for using the acquisition method of accounting in accordance with ASC
Topic 805, Business Combinations, which requires, among other things, that the assets acquired and liabilities assumed
be recognized at their acquisition date fair values and allows a measurement period, not to exceed one year from the
acquisition date, to finalize the acquisition date fair values. The merger closed on March 1, 2017, and the Company
finalized its purchase price allocation by March 1, 2018.
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, and (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 resulted in goodwill in the business combination. The goodwill is not deductible for tax purposes.
The fair 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 fair value estimates for each of the operating properties acquired, and completed the
purchase price allocation during the measurement period.
103 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
The following table summarizes the final 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
Construction in progress
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
Total purchase price
Final Purchase Price
Allocation
$
$
2,865,053
2,619,163
68,744
19,600
99,666
5,672,226
112,909
458,877
332,384
6,576,396
757,399
122,217
503,675
1,383,291
5,193,105
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.
The following table details the 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
10.8
7.8
55.3
24.9
104 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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)
Total revenues
Income from operations
Net income attributable to common stockholders (1)
Income per common share - basic
(1)
Year ended December 31,
2016
2017
$
1,052,221
1,006,367
281,393
262,270
1.54
63,907
40,868
0.25
0.25
Income 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, as if they had occurred during 2016.
1.54
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, except number sold data)
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 parcels sold
Year ended December 31,
2018
2017
2016
$
$
$
250,445
28,343
31,041
10
9
110,015
27,432
—
6
9
135,161 '(1)
47,321
1,700
11
16
(1) Includes cash deposits received in the previous year.
At December 31, 2018, the Company also had four properties classified as Properties held for sale on the Consolidated
Balance Sheets, which have sold or are expected to sell subsequent to December 31, 2018.
105 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
4.
Investments in Real Estate Partnerships
The Company invests in real estate partnerships, which consist of the following:
(in thousands)
GRI - Regency, LLC (GRIR)
New York Common Retirement Fund (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)
New York Common Retirement Fund (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
December 31, 2018
Regency's
Ownership
Number of
Properties
Total
Investment
Total Assets
of the
Partnership
The
Company's
Share of Net
Income of
the
Partnership
Net Income
of the
Partnership
40.00%
30.00%
20.00%
20.00%
30.00%
25.00%
20.01%
9.375% -
50.00%
70
6
7
13
1
7
7
9
$ 189,381
1,646,448
54,250
277,626
29,614
490
74,139
2,239
13,625
141,807
1,311
6,650
38,110
11,169
31,235
—
377,121
98,633
139,844
89,524
125,231
456,828
4,673
943
1,542
937
3,464
23,367
3,177
6,167
4,685
8,661
120
$ 463,001
3,227,831
42,974
129,085
December 31, 2017
Regency's
Ownership
Number of
Properties
Total
Investment
Total Assets
of the
Partnership
The
Company's
Share of
Net Income
of the
Partnership
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
27,440
686
69,211
2,757
7,057
130,836
3,620
18,233
13,720
11,784
27,829
—
74,116
329,992
99,808
138,717
90,900
154,987
1,530
850
1,403
4,456
3,356
7,690
2,917
5,613
22,299
11,238
115
$ 386,304
2,885,720
43,341
139,958
106 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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,
2018
2017
3,001,481
57,053
169,297
3,227,831
2,682,578
54,021
149,121
2,885,720
1,609,647
1,514,729
$
$
$
49,501
90,577
498,852
979,254
42,466
70,498
445,068
812,959
Total liabilities and capital
$
3,227,831
2,885,720
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)
Investments in real estate partnerships
December 31,
2018
2017
$
$
498,852
(38,064)
3,513
(1,300)
—
463,001
445,068
(37,852)
11,290
(1,300)
(30,902)
386,304
(1) The USAA partnership has 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) Upon adoption of ASU 2017-05 (ASC Subtopic 610-20) on January 1, 2018, the Company recognized
$30.9 million of previously deferred gains through opening retained earnings, as discussed in note 1 to
the Consolidated Financial Statements.
107 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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
Early extinguishment of debt
Other expense (income)
Total other expense (income)
Net income of the Partnerships
The Company's share of net income of the
Partnerships
$
$
Year ended December 31,
2017
2016
2018
$
414,631
396,596
364,087
99,847
66,299
5,697
54,119
1,003
99,327
58,283
5,582
49,904
2,923
99,252
52,725
5,342
42,813
2,356
$
226,965
216,019
202,488
73,508
(16,624)
—
1,697
58,581
129,085
73,244
(34,276)
—
1,651
40,619
139,958
69,193
(70,907)
69
2,197
552
161,047
42,974
43,341
56,518
108 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Acquisitions
The following table provides a summary of shopping centers and land parcels acquired through our unconsolidated
real estate partnerships:
(in thousands)
Date
Purchased
Property
Name
City/State
Property
Type
Year ended December 31, 2018
Co-
investment
Partner
Ownership
%
Purchase
Price
Debt
Assumed,
Net of
Premiums
Intangible
Assets
Intangible
Liabilities
01/02/18
01/02/18
01/05/18
05/18/18
09/07/18
12/17/18
12/14/18
Ballard
Blocks I
Ballard
Blocks II
The District
at Metuchen
Crossroads
Commons II
Ridgewood
Shopping
Center
Shoppes at
Bartram
Park
Town and
Country
Center
Seattle, WA
Operating
Other
49.90%
$ 54,500
Seattle, WA
Development
Other
49.90%
4,000
Metuchen,
NJ
Operating
Columbia
II
20.00%
33,830
Boulder, CO
Operating
Columbia I
20.00%
10,500
—
—
—
—
3,668
2,350
—
—
3,147
1,905
447
769
Raleigh, NC
Operating
Columbia
II
20.00%
45,800
10,233
3,372
2,278
Jacksonville,
FL
Operating (1)
Other
50.00%
984
—
—
—
Los Angeles,
CA
Operating
Other
9.38%
197,248
90,000
Total property acquisitions
$ 346,862
100,233
(1) Land parcels purchased as additions to the existing operating property.
(in thousands)
Year ended December 31, 2017
3,255
13,889
5,650
12,952
City/State
Property
Type
Co-
investment
Partner
Ownership
%
Purchase
Price
Debt
Assumed,
Net of
Premiums
Intangible
Assets
Intangible
Liabilities
Total property acquisitions
$ 15,075
Raleigh, NC
Development
Other
50.00%
$ 15,075
—
—
—
—
—
—
Date
Purchased
Property
Name
10/11/17
Midtown
East
Dispositions
The following table provides a summary of shopping centers and land 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
Year ended December 31,
2017
2016
2018
$
$
$
27,144
16,624
3,608
1
2
73,122
34,276
6,591
3
1
174,090
70,907
25,003
10
1
109 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Notes Payable
Scheduled principal repayments on notes payable held by our unconsolidated investments in real estate partnerships as
of December 31, 2018 were as follows:
Scheduled Principal Payments and Maturities by Year:
Scheduled
Principal
Payments
Mortgage Loan
Maturities
Unsecured
Maturities
2019
2020
2021
2022
2023
Beyond 5 Years
Net unamortized loan costs, debt premium /
(discount)
$
20,062
17,043
11,048
7,811
2,989
7,353
—
Total notes payable
$
66,306
65,939
326,583
269,942
170,702
171,608
529,637
(10,705)
1,523,706
—
—
19,635
—
—
—
—
19,635
Total
86,001
343,626
300,625
178,513
174,597
536,990
Regency’s
Pro-Rata
Share
22,294
101,841
104,375
68,417
65,096
175,032
(10,705)
1,609,647
(3,082)
533,973
These fixed and variable rate loans are all non-recourse, and mature through 2034, with 92.4% having a weighted
average fixed interest rate of 4.6%. The remaining notes payable float over LIBOR and had a weighted average
variable interest rate of 4.6% at December 31, 2018. Maturing loans 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,
2017
2016
2018
$
27,873
25,260
24,595
5.
Other Assets
The following table represents the components of Other assets in the accompanying Consolidated Balance Sheets:
(in thousands)
Goodwill
Investments
Prepaid and other
Derivative assets
Furniture, fixtures, and equipment, net
Deferred financing costs, net
Total other assets
December 31, 2018 December 31, 2017
$
$
314,143
41,287
17,937
17,482
6,127
6,851
403,827
331,884
41,636
30,332
14,515
6,123
2,637
427,127
110 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
The following table presents the goodwill balances and activity during the year to date periods ended:
(in thousands)
December 31, 2018
December 31, 2017
Beginning of year balance
Goodwill resulting from Equity One merger
Goodwill allocated to Provision for impairment
Goodwill
$ 331,884
500
—
Accumulated
Impairment
Losses
Total
Goodwill
Accumulated
Impairment
Losses
Total
— 331,884
—
—
500
331,884
—
—
— 331,884
(12,628)
(12,628)
Goodwill allocated to Properties held for sale
(1,159)
—
(1,159)
Goodwill associated with disposed reporting units:
Goodwill allocated to Provision for impairment
Goodwill allocated to Gain on sale of real estate
(9,913)
(4,454)
9,913
—
—
(4,454)
—
—
—
—
—
—
—
—
—
—
—
—
End of year balance
$ 316,858
(2,715)
314,143
331,884
— 331,884
During the year ended December 31, 2018, the Company recognized a $38.4 million provision for impairment, net of
tax, on seven operating properties that sold or are expected to sell, including $12.6 million of goodwill. As the
Company identifies properties ("reporting units") that no longer meet its investment criteria, it will evaluate the
property for potential sale. A decision to sell a reporting unit results in the need to evaluate its goodwill for
recoverability and may result in impairment. If events occur that trigger an impairment evaluation at multiple
reporting units, a goodwill impairment may be significant.
6.
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,
2018
2017
$
$
$
$
$
457,379
57,294
92,085
606,758
(219,689)
387,069
584,371
5,101
589,472
(92,746)
496,726
470,315
64,625
92,166
627,106
(148,280)
478,826
588,850
5,101
593,951
(56,550)
537,401
111 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
The following table provides a summary of amortization and net accretion amounts from acquired lease intangibles:
(in thousands)
In-place lease amortization
Above-market lease amortization
Below-market ground lease amortization
Year ended December 31,
2017
2016
2018
Line item in Consolidated
Statements of Operations
$ 76,649
88,284
11,533 Depreciation and amortization
10,433
1,688
9,443
1,886
1,742 Minimum rent
1,111 Operating and maintenance
Acquired lease intangible asset amortization
$ 88,770
99,613
14,386
Below-market lease amortization
$ 45,561
34,786
6,827 Minimum rent
Above-market ground lease amortization
94
136
167 Operating and maintenance
Acquired lease intangible liability
amortization
$ 45,655
34,922
6,994
The estimated aggregate amortization and net accretion amounts from 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
$
2019
2020
2021
2022
2023
27,768
26,646
25,986
24,239
23,499
53,506
40,528
32,344
24,692
19,605
1,554
1,554
1,554
1,554
1,554
7.
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
Section 199A dividend
Year ended December 31,
2017
2.10
86%
10%
4%
—%
—%
2018
$2.22
98%
—%
—%
2%
98%
2016
2.00
53%
8%
39%
—%
—%
112 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Our consolidated expense (benefit) for income taxes for the years ended December 31, 2018, 2017, and 2016 was as
follows:
(in thousands)
Income tax expense (benefit):
Current
Deferred
Total income tax expense (benefit) (1)
Year ended December 31,
2017
2016
2018
$
$
5,667
(5,145)
522
1,168
(10,815)
(9,647)
(153)
—
(153)
(1) Includes $706,000 and $90,000 of tax expense presented within Other operating
expenses during the year ended December 31, 2018 and 2017, respectively.
Additionally, $184,000 and $153,000 of tax benefit is presented within Gain on sale
of real estate (or Provision for impairment), net of tax, during the years ended
December 31, 2018 and 2016, respectively.
The TRS entities are subject to federal and state income taxes and file separate tax returns. Income tax expense
(benefit) 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
Permanent items
All other items
$
Total income tax expense (benefit) (1)
Income tax expense (benefit) attributable to operations (1) $
Year ended December 31,
2018
2017
2016
(584)
636
(392)
—
1,067
(205)
522
522
1,190
108
(1,512)
(9,737)
—
304
(9,647)
(9,647)
933
56
(1,239)
—
—
97
(153)
(153)
(1) Includes $706,000 and $90,000 of tax expense presented within Other operating expenses during the
year ended December 31, 2018 and 2017, respectively. Additionally, $184,000 and $153,000 of tax
benefit is presented within Gain on sale of real estate (or Provision for impairment), net of tax, during
the years ended December 31, 2018 and 2016, respectively.
113 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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
Provision for impairment
Deferred interest expense
Capitalized costs under Section 263A
Net operating loss carryforward
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,
2018
2017
3,785
2,617
713
166
2,123
9,404
(7,907)
1,497
(565)
(14,829)
—
(15,394)
(13,897)
3,785
2,754
729
373
2,297
9,938
(8,300)
1,638
(528)
(19,757)
(7)
(20,292)
(18,654)
The net deferred tax liability decreased during 2018 primarily due to the sale of properties at the TRS entities. 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, 2018, 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.
8.
Notes Payable and Unsecured Credit Facilities
The Company’s outstanding debt consists of the following:
(in thousands)
Notes payable:
Weighted
Average
Contractual
Rate
Weighted
Average
Effective
Rate
Maturing
Through
December 31,
2018
2017
Fixed rate mortgage loans
Variable rate mortgage loans (1)
Fixed rate unsecured public and private debt
10/1/2036
6/2/2027
2/1/2047
Total notes payable
Unsecured credit facilities:
Line of Credit (2)
Term Loans
Total unsecured credit facilities
Total debt outstanding
3/23/2022
1/5/2022
4.8%
3.5%
4.0%
3.4%
2.4%
4.3% $
3.7%
403,306
127,850
4.4%
2,475,322
$ 3,006,478
520,193
125,866
2,325,656
2,971,715
3.5%
2.5%
145,000
563,734
$
708,734
60,000
563,262
623,262
$ 3,715,212
3,594,977
(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%.
(2) Maturity is subject to two six month extensions as the Company's option. The weighted average contractual and
effective interest rates for the Line are calculated based on a fully drawn Line balance.
114 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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, and are generally due in monthly installments of
principal and interest or interest only. Unsecured public debt may be prepaid subject to accrued and unpaid interest
through the proposed redemption date and a make-whole premium. 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, 2018, management of the Company
believes it is in compliance with all financial covenants for its unsecured public debt.
Unsecured Credit Facilities
The Company has an unsecured line of credit commitment (the "Line") and unsecured term loans (the "Term Loans")
under separate credit agreements with a syndicate of banks.
The Line has a borrowing capacity of $1.25 billion, which is reduced by the balance of outstanding borrowings and
commitments under outstanding letters of credit. The Line bears interest at a variable rate of LIBOR plus 0.875% and
is subject to a commitment fee of 0.15%, both of which are based on the Company's corporate credit rating.
The Term Loans bear interest at a variable rate based on LIBOR plus 0.95% and have interest rate swaps in place to fix
the interest, as discussed further in note 9.
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 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 31, 2018, management of the Company believes it is in compliance
with all financial covenants for the Line and Term Loans.
Scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:
(in thousands)
December 31, 2018
Scheduled
Principal
Payments
Mortgage
Loan
Maturities
Scheduled Principal Payments and
Maturities by Year:
2019
$
2020
2021
2022
2023
Beyond 5 Years
Unamortized debt premium/(discount) and
issuance costs
9,518
11,287
11,599
11,798
10,043
27,013
—
Total notes payable
$
81,258
Unsecured
Maturities (1)
—
300,000
250,000
710,000
—
Total
22,734
389,867
338,659
727,646
69,418
13,216
78,580
77,060
5,848
59,375
209,845
1,950,000
2,186,858
5,974
449,898
(25,944)
3,184,056
(19,970)
3,715,212
(1) Includes unsecured public and private debt and unsecured credit facilities.
The Company has $13.2 million of debt maturing over the next twelve months, which is in the form of a non-recourse
mortgage loan. The Company currently intends to payoff the maturing balance and leave the property unencumbered.
The Company has sufficient capacity on its Line to repay the maturing debt, if necessary.
115 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
9.
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
12/6/18
6/28/19
$ 250,000
4/3/17
12/2/20
300,000
30 year U.S.
Treasury
1 Month LIBOR
with Floor
1 Month LIBOR
with Floor
8/1/16
4/7/16
1/5/22
4/1/23
265,000
20,000
1 Month LIBOR
12/1/16
11/1/23
33,000
1 Month LIBOR
6/2/17
6/2/27
37,500
1 Month LIBOR
with Floor
Total derivative financial instruments
Fair Value at
December 31,
Assets (Liabilities) (1)
Regency
Pays
Fixed
Rate of
2018
2017
3.147% $ (5,491)
—
1.824%
3,759
1,804
10,838
10,744
1.053%
1.303%
1.490%
880
1,376
2.366%
629
$ 11,991
801
1,166
(177)
14,338
(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, as of December 31, 2018,
does not have any derivatives that are not designated as hedges. The Company has master netting agreements;
however, the Company generally does not have multiple derivatives subject to a single master netting agreement with
the same counterparties and none are offset in the accompanying Consolidated Balance Sheets.
The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in accumulated
other comprehensive income ("AOCI") and subsequently reclassified into earnings in the period that the hedged
forecasted transaction affects earnings. The following table represents the effect of the derivative financial instruments
on the accompanying consolidated financial statements:
Location and
Amount of Gain (Loss)
Recognized in OCI on Derivative
Location and Amount of Gain
(Loss) Reclassified from AOCI into Income
Total amounts presented in the Consolidated
Statements of Operations in which the effects of
cash flow hedges are recorded
Year ended December 31,
Year ended December 31,
Year ended December 31,
(in
thousands) 2018
2017
2016
2018
2017
2016
2018
2017
2016
Interest
rate
swaps
$ 402
1,151
10,613
Interest
expense
$(5,342)
(11,103)
(10,553)
Interest
expense, net
$ (148,456)
(132,629)
(90,712)
$ —
— (20,945)
Loss on
derivative
instruments (1)
Interest
rate
swaps
(1) During 2016, the Company completed an equity offering, rather than its previously expected issuance of new
fixed rate debt, to fund the repayment of maturing debt and to settle the forward starting swaps entered in
contemplation of the previously anticipated new debt transaction. 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 income to earnings during 2016.
Loss on
derivative
instruments (1)
— (40,586)
— 40,586
$ —
—
$
116 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
As of December 31, 2018, the Company expects $867,000 of net deferred losses on derivative instruments in AOCI,
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 $7.4 million which is related to previously settled swaps on the
Company's ten year fixed rate unsecured debt.
10.
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 (1)
Financial liabilities:
Notes payable
Unsecured credit facilities
$
$
$
December 31,
2018
2017
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
—
— $
15,803
15,660
3,006,478
708,734
2,961,769
710,902
$
$
2,971,715
623,262
3,058,044
625,000
(1) Notes receivable are included in Tenant and other receivables, net on the Consolidated Balance Sheets.
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, 2018 and 2017. 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.
(b)
Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis:
Securities
The Company has investments in marketable securities that are included within other assets on the
accompanying Consolidated Balance Sheets. The fair value of the securities was determined using quoted
prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the
value of securities are recorded within Net investment loss (income) in the accompanying Consolidated
Statements of Operations, and includes unrealized losses (gains) of $3,314, ($1,136), and ($773) for the years
ended December 31, 2018, 2017, and 2016, respectively.
Available-for-Sale Debt Securities
Available-for-sale debt 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 debt securities are recognized through
other comprehensive income.
117 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
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 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, 2018
Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Balance
(Level 1)
(Level 2)
(Level 3)
33,354
7,933
17,482
58,769
33,354
—
—
33,354
—
7,933
17,482
25,415
—
—
—
—
(5,491)
—
(5,491)
—
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)
—
—
—
—
—
$
$
$
$
$
$
(in thousands)
Assets:
Securities
Available-for-sale debt securities
Interest rate derivatives
Total
Liabilities:
Interest rate derivatives
(in thousands)
Assets:
Securities
Available-for-sale debt securities
Interest rate derivatives
Total
Liabilities:
Interest rate derivatives
118 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair
value on a non-recurring basis:
Fair Value Measurements as of December 31, 2018
Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Total
Gains
(in thousands)
Balance
(Level 1)
(Level 2)
(Level 3)
(Losses)
Properties held for sale
42,760
—
42,760
—
(6,579)
During the year ended December 31, 2018, the Company recognized a $38.4 million provision for impairment, net of
tax, which included $31.8 million on real estate sold or held and used and $6.6 million on the above three properties
classified as held for sale. The impairment of the real estate assets was determined based on the expected selling price
as compared to the Company's carrying value of its investment.
There were no assets measured at fair value on a nonrecurring basis as of December 31, 2017.
11.
Equity and Capital
Common Stock of the Parent Company
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. There were no shares issued under the ATM
equity program during the years ended December 31, 2018 or 2017. As of December 31, 2018, all $500.0 million
of common stock remained available for issuance under this ATM equity program.
Share Repurchase Program
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 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 $246.5 million of shares. The program was scheduled to expire on
February 6, 2020; however, the program was closed upon the authorization by the Company's Board of a new
share repurchase program, as further discussed below.
Share Repurchase Program - Subsequent Event
On February 5, 2019, the Company's Board authorized a new 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 set to expire on February 4, 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.
Transfer of Listing
On October 25, 2018, the Company's Board approved the transfer of the Company's common stock from listing on
NYSE to NASDAQ. The last day of trading on the NYSE was November 12, 2018. The Company's common
stock commenced trading on NASDAQ on November 13, 2018, and continues to trade under the stock symbol
"REG".
119 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
Common Units of the Operating Partnership
Common units were issued to or redeemed from the Parent Company in relation to the Parent Company's issuance
or repurchase of common stock, as discussed above.
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,
2018
2017
167,904
350
168,254
171,365
350
171,715
Percentage of partnership units owned by the general partner
99.8%
99.8%
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the balances of each component of AOCI:
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
(in thousands)
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
Opening adjustment due to change
in accounting policy (1)
Adjusted balance as of January 1,
2018
Other comprehensive income before
reclassifications
Amounts reclassified from
accumulated other comprehensive
income
Current period other
comprehensive income, net
$ (58,650)
(43)
(58,693)
(785)
(10,587)
24
(10,563)
255
50,910
— 50,910
229
40,323
$ (18,327)
24
40,347
(19)
(18,346)
484
(301)
1,134
(8)
1,126
17
10,931
— 10,931
172
12,065
$ (6,262)
12
(8)
(27)
—
12,057
(6,289)
189
(112)
12
2
(6,250)
(27)
(6,277)
(110)
131
(95)
36
271
5,314
5,445
—
5,314
(95)
5,350
28
299
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(785)
(59,478)
255
(10,308)
229
51,139
484
40,831
(301)
(18,647)
17
1,143
172
11,103
189
12,246
(112)
(6,401)
2
14
(110)
(6,387)
271
307
28
5,342
299
5,649
(738)
Balance as of December 31, 2018
(1) Upon adoption of ASU 2017-12, the Company recognized the immaterial adjustment to opening retained earnings and AOCI for
previously recognized hedge ineffectiveness from off-market hedges, as further discussed in note 1.
(805)
(927)
(122)
189
189
—
$
120 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
12.
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,
2017
2016
2018
16,745
399
(3,509)
—
13,635
15,525
303
(3,210)
7,931
20,549
13,422
193
(2,963)
—
10,652
(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, 2018, there were 1.2 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, 2018
The following table summarizes non-vested restricted stock activity:
Year ended December 31, 2018
Number of
Shares
Intrinsic Value
(in thousands)
Weighted
Average
Grant Price
Non-vested as of December 31, 2017
Time-based awards granted (1) (4)
Performance-based awards granted (2) (4)
Market-based awards granted (3) (4)
Change in market-based awards earned for performance (3)
Vested (5)
Forfeited
Non-vested as of December 31, 2018 (6)
570,077
130,584
14,935
113,126
64,330
(287,331)
(10,550)
595,171
$34,925
$61.66
$62.57
$65.74
$60.34
$60.23
$68.65
(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,
2018
19.20%
2.26%
2017
18.00%
1.48%
2016
18.50%
0.88%
(4)The weighted-average grant price for restricted stock granted during the years is summarized below:
Year ended December 31,
2018
2017
2016
Weighted-average grant price
for restricted stock
$
63.50
$
72.05
$
79.40
(5) The total intrinsic value of restricted stock vested during the years is summarized below (in thousands):
Year ended December 31,
2018
2017
2016
Intrinsic value of restricted
stock vested
$
17,306
$
14,376
$
15,400
(6) As of December 31, 2018, there was $13.1 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, 2018
13.
Saving and Retirement Plans
401(k) Retirement Plan
The Company maintains a 401(k) retirement plan covering substantially all employees and permits participants to
defer eligible compensation up to the maximum allowable amount determined by the IRS. 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, 2018. Additionally, an annual
profit sharing contribution may be made, which vests over a three year period. Costs for Company contributions to the
plan totaled $3.9 million, $4.1 million and $3.3 million for the years ended December 31, 2018, 2017, and 2016,
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,
2018
2017
$
$
31,351
31,662
31,166
31,383
(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 securities held in the NQDCP are recognized within Net investment
income 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, 2018
14.
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:
Year ended December 31,
2018
2017
2016
Income from operations attributable to common stockholders - basic
Income from operations attributable to common stockholders - diluted
Denominator:
$249,127
159,949
$249,127
159,949
143,860
143,860
Weighted average common shares outstanding for basic EPS
Weighted average common shares outstanding for diluted EPS (1)
169,724
170,100
159,536
159,960 (2)
100,863
101,285 (2)
Income per common share – basic
Income per common share – diluted
$
$
1.47
1.46
1.00
1.00
1.43
1.42
(1) Includes the dilutive impact of unvested restricted stock.
(2) Using the treasury stock method, weighted average common shares outstanding for basic and diluted earnings
per share excludes 1.3 million shares issuable under the forward equity offering outstanding during 2017 and
2016, as they would be anti-dilutive.
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 be anti-
dilutive. Weighted average exchangeable Operating Partnership units outstanding for the years ended December 31,
2018, 2017, and 2016 were 349,902, 295,054, 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:
Year ended December 31,
2018
2017
2016
Income from operations attributable to common unit holders - basic
$ 249,652
Income from operations attributable to common unit holders - diluted $ 249,652
Denominator:
160,337
160,337
144,117
144,117
Weighted average common units outstanding for basic EPU
Weighted average common units outstanding for diluted EPU (1)
170,074
170,450
159,831
160,255 (2) 101,439 (2)
101,017
Income per common unit – basic
Income per common unit – diluted
$
$
1.47
1.46
1.00
1.00
1.43
1.42
(1) Includes the dilutive impact of unvested restricted stock.
(2) Using the treasury stock method, weighted average common shares outstanding for basic and diluted
earnings per share excludes 1.3 million shares issuable under the forward equity offering outstanding during
2017 and 2016, as they would be anti-dilutive.
124 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
15.
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, 2018, 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)
2019
2020
2021
2022
2023
Thereafter
Total
$
$
761,151
693,848
608,587
516,369
414,424
1,691,203
4,685,582
The shopping centers' tenants primarily include 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 18.0% of pro-rata annual base rent. There were no tenants that individually
represented more than 5% of the Company's total annualized base rent.
The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party
owns the underlying land and has leased the 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 as tenant improvements, included in Other assets in the Consolidated Balance Sheets,
and depreciated over the shorter of the useful life of the improvements or the lease term.
Operating lease expense under the Company's ground and office leases was $19.1 million, $18.4 million, and $13.1
million for the years ended December 31, 2018, 2017, and 2016, respectively. The following table summarizes the
future obligations under non-cancelable operating leases as of December 31, 2018:
In Process Year Ending
December 31,
Future Obligations
(in thousands)
2019
2020
2021
2022
2023
Thereafter
Total
$
$
15,077
14,733
13,893
13,151
12,558
467,706
537,118
125 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
16.
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.
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.
Letters 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 both December 31, 2018
and 2017, the Company had $9.4 million in letters of credit outstanding.
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, 2018, the
Company has a commitment to purchase up to an additional 90.6% ownership interest in an operating shopping center
by December 2019 and currently expects to acquire an additional 25.6% interest by that date.
126 REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
December 31, 2018
17.
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, 2018 and 2017:
(in thousands except per share and per unit data)
Year ended December 31, 2018
Operating Data:
Revenue
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 276,693
281,412
278,310
284,560
Net income attributable to common stockholders
Net income attributable to exchangeable operating partnership
units
Net income attributable to common unit holders
$ 52,660
47,841
69,722
78,904
111
100
147
167
$ 52,771
47,941
69,869
79,071
Net income attributable to common stock and unit holders per
share and unit:
Basic
Diluted
Year ended December 31, 2017
Operating Data:
Revenue
$
$
0.31
0.31
0.28
0.28
0.41
0.41
0.47
0.46
$ 196,131
261,305
262,141
264,749
Net (loss) income attributable to common stockholders
Net (loss) income attributable to exchangeable operating
partnership units
Net (loss) 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 (loss) income attributable to common stock and unit holders
per share and unit:
Basic
Diluted
$
$
(0.26)
(0.26)
0.28
0.28
0.35
0.35
0.50
0.50
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137
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Schedule III - Consolidated Real Estate and Accumulated Depreciation, continued
December 31, 2018
(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 $8.7 billion at December 31, 2018.
The changes in total real estate assets for the years ended December 31, 2018, 2017, and 2016 are as follows (in thousands):
Beginning balance
Acquired properties and land
Developments and improvements
Sale of properties
Properties held for sale
Provision for impairment
Ending balance
2018
$
10,892,821
113,911
198,005
(277,270)
(59,438)
(4,867)
10,863,162
$
2017
4,933,499
5,772,265
273,871
(86,814)
—
—
10,892,821
2016
4,545,900
370,010
148,904
(126,855)
—
(4,460)
4,933,499
The changes in accumulated depreciation for the years ended December 31, 2018, 2017, and 2016 are as follows (in thousands):
Beginning balance
Depreciation expense
Sale of properties
Accumulated depreciation related to properties held for sale
Provision for impairment
Ending balance
2018
2017
2016
$
1,339,771
1,124,391
249,489
(45,901)
(7,729)
(186)
1,535,444
$
222,395
(7,015)
—
—
1,339,771
1,043,787
115,355
(32,791)
—
(1,960)
1,124,391
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, 2018.
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
There have not been any changes in the Parent Company's internal controls over financial reporting identified in
connection with this evaluation that occurred during the fourth quarter of 2018 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
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.
139 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, 2018.
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
There have not been any changes in the Operating Partnership's internal controls over financial reporting identified in
connection with this evaluation that occurred during the fourth quarter of 2018 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 2019 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 2019 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
—
—
1,221,853
N/A
1,221,853
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
(1) This column does not include 595,171 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 2019 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 2019 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 2019 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. 2018 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)
(vi)
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;
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and RBC Capital Markets, LLC;
142 (b)
(c)
(d)
(e)
(vii)
(viii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and SunTrust Robinson Humphrey, Inc.; and
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency
Centers, L.P. and Mizuho Securities USA LLC.
Form of Amendment No. 1 to the Equity Distribution Agreement, dated November 13, 2018 (incorporated by
referent to Exhibit 1.1 to the Company’s Form 8-K filed on November 14, 2018). The Amendment No.1 to
each of the Equity Distribution Agreements, dated November 13, 2018, and listed in Exhibit 1 (a) are
substantially identical in all material respects to the Form of Amendment No. 1 to the 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 item 601 of Regulation S-K.
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).
(i)
Amendment No. 1 to the Forward Master Confirmation (incorporated by reference to Exhibit 1.2 to
the Company’s form 8-K filed on November 14, 2018).
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).
(i)
Amendment No. 1 to the Forward Master Confirmation (incorporated by reference to Exhibit 1.3 to
the Company’s form 8-K filed on November 14, 2018).
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)
(i)
Amendment No. 1 to the Forward Master Confirmation (incorporated by reference to Exhibit 1.4 to
the Company’s form 8-K filed on November 14, 2018).
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) 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
143 Bank), as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form
8-K filed on June 3, 2010).
(iii)
(iv)
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
(incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on
August 18, 2015).
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)
(viii)
(ix)
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)
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, as successor to Sun Trust Bank, as Trustee (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).
(d)
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)
144 ~(a)
~(b)
~(c)
~(d)
~(e)
~(f)
~(g)
~(h)
~(i)
~(j)
~(k)
~(l)
~(m)
~(n)
~(o)
(p)
(q)
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).
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).
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).
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).
Fourth Amended and Restated Credit Agreement, dated as of March 23, 2018, 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 26, 2018).
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).
145 (i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
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).
Seventh Amendment to Term Loan Agreement, dated as of March 23, 2018, 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 26, 2018).
(r)
(s)
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).
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).
(i)
First Amendment to the 2017 Term Loan Agreement, dated as of March 23, 2018, 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 26, 2018).
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.
146 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 21, 2019
REGENCY CENTERS CORPORATION
By:
/s/ Martin E. Stein, Jr.
Martin E. Stein. Jr., Chairman of the Board and Chief
Executive Officer
February 21, 2019
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 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
/s/ Martin E. Stein, Jr.
Martin E. Stein. Jr., Chairman of the Board and Chief
Executive Officer
/s/ Lisa Palmer
Lisa Palmer, President, Chief Financial Officer, and Director
(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/ Bryce Blair
Bryce Blair, Director
/s/ C. Ronald Blankenship
C. Ronald Blankenship, Director
/s/ Deirdre J. Evens
Deirdre J. Evens, 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
Martin E. Stein, Jr. (3)
Chairman and Chief Executive Officer
Regency Centers Corporation
Peter D. Linneman (1) (4)
Principal
Linneman Associates
David P. O'Connor (2) (4)
Managing Partner
High Rise Capital Partners, LLC
Lisa Palmer (3)
President and Chief Financial Officer
Regency Centers Corporation
John C. Schweitzer (2a) (4) (5)
President
Westgate Corporation
Thomas G. Wattles (1a) (3)
Director
Columbia Property Trust
Joseph F. Azrack (2) (3)
Principal
Azrack & Company
Bryce Blair (3) (4a)
Chairman
Invitation Homes, Inc.
C. Ronald Blankenship (1) (3a)
Director
Civeo Corporation
Deirdre J. Evens (1) (2)
Executive Vice President and General Manager,
Records and Information Management, North America
Iron Mountain Incorporated
Mary Lou Fiala (3) (4)
Former President and Chief Operating Officer
Regency Centers Corporation
(1)
Audit Committee
(2) Compensation Committee
Investment Committee
(3)
(4) Nominating and Corporate Governance Committee
(5)
Lead Director
(a) Committee Chairman
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