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Regency Centers Corp REG

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Morningstar’s Analysis

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Raising FVEs for Shopping Center REITs as 2021 Sees Strong Brick-and-Mortar Sales Growth

Kevin Brown, CFA Equity Analyst

Analyst Note

| Kevin Brown, CFA |

We are increasing our fair value estimates for no-moat Federal Realty to $136 from $122, for no-moat Kimco Realty to $26.50 from $21, and for no-moat Regency Centers to $75 from $66. While the pandemic posed a significant threat to brick-and-mortar retail, retailers are seeing very strong sales growth in 2021. Many sales shifted online early in the pandemic as people stayed at home and avoided public spaces, leading to significant e-commerce sales growth at the expense of brick-and-mortar sales. However, the negative impact of the pandemic on brick-and-mortar retail disappeared in the second half of 2020. While foot traffic was down in 2020, consumers were spending more per ticket due to extra income from the government stimulus checks and due to less competition for disposable income from travel and experiences. In 2021, foot traffic returned to prepandemic levels while spending levels remained high, leading to double-digit growth in brick-and-mortar sales in each of the first three quarters of 2021.

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Company Profile

Business Description

Regency Centers is the largest shopping center-focused retail REIT. The company's portfolio includes an interest in 402 properties, which includes nearly 54 million square feet of retail space. The portfolio is geographically diversified with 22 regional offices and no single market representing more than 14% of total company NOI. Regency's retail portfolio is primarily composed of grocery-anchored centers with 80% of properties featuring a grocery anchor and grocery stores representing 20% of annual base rent.

Contact
One Independent Drive, Suite 114
Jacksonville, FL, 32202-5019
T +1 904 598-7000
Sector Real Estate
Industry REIT - Retail
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 431

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