Regency Centers Reports Solid 3Q Results After Adjusting for Noncash Items

Third-quarter results for Regency Centers were in line with our estimates, leading us to reaffirm our $75 fair value estimate for the no-moat company. Same-store occupancy increased 20 basis points sequentially and 90 basis points year-over-year to 94.7%. Re-leasing spreads were relatively strong at 7.0% in the third quarter, though that was slightly below our estimate of 8.3% spreads. While same-store revenues were up just 0.7% in the third quarter, this includes the noncash impact of reducing reserves of uncollectible lease income back to straight-line rent. We think the same-store base rent growth of 3.9% is more representative of the improvement to Federal Realty's operations in the third quarter. Similarly, while same-store net operating income fell 0.9% year-over-year in the third quarter, removing the impact of lease termination fees and uncollectible lease income improves the same-store NOI figure to 2.6%, which is in line with our estimate of 2.2% growth. Regency reported core funds from operations of $0.94 in the third quarter, which was in line with our estimate and in line with the $0.94 figure reported in the second quarter of 2022.