Analyst Note| Kevin Brown |
No-moat Regency Centers reported fourth-quarter results in line with our expectations, leading us to reaffirm our $61 fair value estimate. Same-store occupancy fell 60 basis points sequentially to 92.9%, in line with our 92.8% estimate. Re-leasing spreads continued to shrink with Regency only reporting a 0.6% spread in the fourth quarter, though it is positive to note that both new leases and renewals were both in positive territory after new leases had gone negative in the third quarter. Rent collection for the fourth quarter improved to 92% from 86% in the third quarter and 72% in the second quarter. Ignoring the write-off of uncollectible lease income, same-store net operating income only fell 3.4% in the fourth quarter but including that figure causes same-store NOI to fall 10.5% year-over-year. However, this is an improvement from the 15.2% decline reported in the third quarter. As a result, funds from operations fell 19.2% year over year to $0.73, in line with our estimates and a 4-cent improvement over the third quarter.