Regency Centers Earnings: High Percentage Rent and NOI Growth Lead to Higher Than Anticipated FFO

First-quarter results for Regency Centers were better than we anticipated, giving us confidence in our $76 fair value estimate for the no-moat company. Same-store occupancy remained flat sequentially and was up 80 basis points year over year at 95.1%. Re-leasing spreads were 5.5% in the first quarter, a little below our estimate of 8.1% higher rent over prior rent terms. Still, same-store revenues were up 3.8%, same-store operating expenses were up 4.1%, and same-store net operating income was up 3.7%. Excluding the impact of lease termination fees and excluding the impact of rent owed from 2020 and 2021 collected in 2022, same-store NOI was up 6.3%, which was better than our estimate of same-store NOI increasing 3.0%. Part of the reason same-store NOI growth was higher was that the company reported $7.7 million in percentage rent due to high tenant sales, well above our estimate of just $1.5 million percentage rent in the quarter. Regency reported core funds from operations of $1.03 per share in the first quarter, better than our $0.96 estimate largely due to the higher NOI growth.