Regency Centers Earnings: Accelerating Expense Growth, Slow Same-Store NOI Growth

Regency Centers reported fourth-quarter results that were slightly below our estimates, but we don’t see anything in the quarter that would materially change our $76 fair value estimate for the no-moat company. Same-store occupancy improved 30 basis points sequentially to 94.7%, relatively in line with our 94.8% estimate. Re-leasing spreads were very strong at 11.7% in the fourth quarter, better than our estimate of new rents being 8.8% higher than expiring rents. As a result, base rent increased 3.2% and same-store revenue rose 3.6% in the quarter. However, same-store expense growth continues to accelerate and rose 10.2%, leading to same-store net income growth of just 0.8% that was slightly below our estimate of 1.5% growth. Regency reported core funds from operations, or FFO, of $0.99 per share for the fourth quarter, which was a penny below our $1.00 estimate.