Regency Centers Corporation (REG) reported FFO (funds from operations) of $48.1 million or 56 cents per share in the first quarter of 2011, compared to $48.6 million or 58 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Excluding impairments and other non-recurring items, FFO in the reported quarter was $51.0 million or 59 cents per share compared to $52.3 million or 63 cents per share in the year-ago period. The recurring FFO was in line with the Zacks Consensus Estimate.
The company reported total revenues of $119.3 million in first quarter 2011, compared to $117.6 million in the year-ago quarter. The reported revenues during the quarter were above the Zacks Consensus Estimate of $115 million.
During the quarter, Regency reported a 0.6% increase in same-store net operating income (NOI), excluding termination fees with a rental rate decline of 4.9% (cash basis).
The company executed a total of 360 new and renewal lease transactions during the quarter, spanning 1.3 million square feet. The same-store portfolio of the company was 92.0% leased at quarter-end.
Regency started two projects during the quarter for net development costs of $13.8 million. One project of $2.7 million was completed in the current quarter. As on March 31, 2011, the company had 30 projects under development (94% funded and 83% leased) at an estimated total cost of $531.3 million.
During the quarter, the California State Teachers’ Retirement System (CalSTRS) formed a partnership with Regency and committed an additional $100.0 million of equity to RegCal, LLC. Regency increased its commitment to nearly $62.0 million to maintain its 25% ownership in the deal. CalSTRS’ increased its total commitment to the partnership to $185.0 million and extended the investment period till the end of 2013.
During the quarter, Regency completed the sale of a co-investment operating property for $10.7 million. In addition, the company sold two land parcels for $1.4 million.
The company maintains a conservative capital structure and follows a self-funding capital strategy to fund its growth, which includes disposal of non-strategic assets and a continued focus on industry-leading co-investment partnership programs. At quarter-end 2011, Regency had cash and cash equivalents of about $65.8 million.
Regency currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Underperform recommendation on the stock. One of its competitors, Developer Diversified Realty Corp. (DRE) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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