UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12298 (Regency Centers Corporation)
Commission File Number 0-24763 (Regency Centers, L.P.)
REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
Florida (REGENCY CENTERS CORPORATION)
59-3191743
Delaware (REGENCY CENTERS, L.P.)
59-3429602
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Independent Drive, Suite 114
Jacksonville, Florida 32202
(904) 598-7000
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Regency Centers Corporation
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $.01 par value
REG
The Nasdaq Stock Market LLC
Regency Centers, L.P.
None
N/A
Securities registered pursuant to Section 12(g) of the Act:
Regency Centers Corporation: None
Regency Centers, L.P.: Units of Partnership Interest
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Regency Centers Corporation Yes ☒ No ☐ Regency Centers, L.P. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
Regency Centers Corporation Yes ☐ No ☒ Regency Centers, L.P. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
Accelerated filer
Emerging growth company
Non-accelerated filer
Smaller reporting company
Regency Centers, L.P.:
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Regency Centers Corporation ☐ Regency Centers, L.P. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Regency Centers Corporation ☒ Regency Centers, L.P. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.1
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to Section 240.10D-1(b).1
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants' most recently completed second fiscal quarter.
Regency Centers Corporation $10.1 billion Regency Centers, L.P. N/A
The number of shares outstanding of the Regency Centers Corporation’s common stock was 171,307,927 as of February 16, 2023.
Documents Incorporated by Reference
Portions of Regency Centers Corporation's proxy statement, prepared in connection with its upcoming 2023 Annual Meeting of Stockholders, are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent described therein.
1 Per SEC guidance, this blank checkbox is included on this cover page but no disclosure with respect thereto shall be made until the adoption and effectiveness of related stock exchange listing standards.
EXPLANATORY NOTE
This Annual Report on Form 10-K (this "Report") combines the annual reports on Form 10-K for the year ended December 31, 2022, of Regency Centers Corporation and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to "Regency Centers Corporation" or the "Parent Company" mean Regency Centers Corporation and its controlled subsidiaries and references to "Regency Centers, L.P." or the "Operating Partnership" mean Regency Centers, L.P. and its controlled subsidiaries. The terms "we," "our," "us," "the Company", "Regency Centers" and "Regency" as used in this Report mean the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust ("REIT") and the general partner of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units ("Units"). As of December 31, 2022, the Parent Company owned approximately 99.6% of the Units in the Operating Partnership. The remaining limited Units are owned by third party investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.
We believe combining the annual reports on Form 10-K of the Parent Company and the Operating Partnership into this single report provides the following benefits:
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent Company consists of the same individuals as the management of the Operating Partnership. These individuals are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the key differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of Units of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. Except for $200 million of unsecured private placement debt, the Parent Company does not hold any indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the $200 million of Parent Company debt. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the Consolidated Financial Statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units. The limited partners' Units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of stockholders' equity in noncontrolling interests in the Parent Company's financial statements.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this Report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this Report refers to actions or holdings as being actions or holdings of the Company.
As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.
TABLE OF CONTENTS
Item No.
Form 10-K
Report Page
PART I
1.
Business
1
1A.
Risk Factors
9
1B.
Unresolved Staff Comments
22
2.
Properties
23
3.
Legal Proceedings
49
4.
Mine Safety Disclosures
PART II
5.
Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
6.
Reserved
50
7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
51
7A.
Quantitative and Qualitative Disclosures About Market Risk
66
8.
Consolidated Financial Statements and Supplementary Data
67
9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
145
9A.
Controls and Procedures
9B.
Other Information
146
9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspection
PART III
10.
Directors, Executive Officers, and Corporate Governance
11.
Executive Compensation
12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
147
13.
Certain Relationships and Related Transactions, and Director Independence
14.
Principal Accountant Fees and Services
PART IV
15.
Exhibits and Financial Statement Schedules
148
16.
Form 10-K Summary
153
SIGNATURES
17.
Signatures
154
Forward-Looking Statements
Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Regency's future events, developments, or financial or operational performance or results, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as "may," "will," "could," "should," "would," "expect," "estimate," "believe," "intend," "forecast," "project," "anticipate," "guidance," and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained, and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.
Our operations are subject to a number of risks and uncertainties including, but not limited to, those described in "Item 1A. Risk Factors" of this Report. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and our other filings with and submissions to the Securities and Exchange Commission ("SEC"). If any of the events described in the risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected. Forward-looking statements are only as of the date they are made, and Regency undertakes no duty to update its forward-looking statements, whether as a result of new information, future events or developments or otherwise, except as and to the extent required by law.
Item 1. Business
Regency Centers Corporation is a fully integrated real estate company and self-administered and self-managed real estate investment trust that began its operations as a publicly-traded REIT in 1993. Our corporate headquarters are located at One Independent Drive, Suite 114, Jacksonville, Florida. Regency Centers, L.P. is the entity through which Regency Centers Corporation conducts substantially all of its operations and owns substantially all of its assets. Our business consists of acquiring, developing, owning, and operating income-producing retail real estate principally located in top markets within the United States. We generate revenues by leasing space to necessity, service, convenience, and value-based retailers serving the essential needs of our communities. Regency has been an S&P 500 Index member since 2017.
As of December 31, 2022, we had full or partial ownership interests in 404 properties, primarily anchored by market leading grocery stores, encompassing 51.1 million square feet ("SF") of gross leasable area ("GLA"). Our Pro-rata share of this GLA is 43.3 million square feet, including our share of properties owned through unconsolidated investment partnerships.
We are a preeminent national owner, operator, and developer of shopping centers located in suburban trade areas with compelling demographics. Our mission is to create thriving environments for retailers and service providers to connect with surrounding neighborhoods and communities. Our vision is to elevate quality of life as an integral thread in the fabric of our communities. Our portfolio includes thriving properties merchandised with highly productive grocers, restaurants, service providers, and best-in-class retailers that connect with their neighborhoods, communities, and customers.
Our values:
Our goals are to:
Key strategies to achieve our goals are to:
Competition
We are among the largest owners of shopping centers in the USA based on revenues, number of properties, GLA, and market capitalization. There are numerous companies and individuals engaged in the ownership, development, acquisition, and operation of shopping centers that compete with us in our targeted markets, including grocery store chains that own shopping centers and also anchor some of our shopping centers. This results in competition for attracting tenants as well as acquiring existing shopping centers and new development sites. In addition, brick and mortar shopping centers face continued competition from alternative shopping and delivery methods. We believe that our competitive advantages are driven by:
2
Corporate Responsibility and Human Capital
While executing our mission, we strive to achieve best-in-class corporate responsibility. Corporate responsibility, including our focus on ESG practices, is a foundational strategy of Regency. We believe that alignment of strategy and sustainable outcomes is critical to the long-term success of our Company, our shareholders, and the environment. Our ESG practices are built on four pillars:
These practices are guided by three overarching concepts: long-term value creation, our Regency brand and reputation, and the importance of maintaining our culture. Our continued commitment to these concepts guides our business strategy and helps us identify and address key corporate responsibility-related matters.
We regularly review our corporate responsibility (which term we use interchangeably with "ESG") strategies, goals, and objectives with our Board of Directors and its committees, which oversee our programs. More information about our corporate responsibility strategy, goals, performance, and reporting, including our annual Corporate Responsibility report, our Task Force on Climate-related Financial Disclosures ("TCFD") report, and our policies and practices related to corporate responsibility, is available on our website at www.regencycenters.com. The content of our website and other information contained therein, including relating to corporate responsibility, is not incorporated by reference into this Report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
Our People – Our people are our most important asset, and we strive to ensure that they are engaged, passionate about their work, connected to their teams, and supported to deliver their best performance. Regency recognizes and values the importance of attracting and retaining talented individuals with different skills, backgrounds, and experiences to encourage diversity of thoughts and ideas. In addition, we strive to maintain a safe and healthy workspace, promote employee well-being, and empower our employees by focusing on their personal and professional development through training and education opportunities.
As of December 31, 2022, we had 445 employees, including 5 part-time employees. We presently maintain 22 market offices nationwide, including our corporate headquarters in Jacksonville, Florida. None of our employees are represented by a collective bargaining unit, and we believe our relationship with our employees is good.
In 2022, we continued implementing our comprehensive, multi-year diversity, equity, and inclusion ("DEI") strategy focused on promoting and advancing diversity across our organization, enabling our employees to grow and succeed, and supporting social justice initiatives in our operations and broader communities. Furthermore, aligned with our near-and long-term human capital goals, we remained focused on employee engagement, leveraging our annual employee survey to identify opportunities to improve and further engage our people. Additionally, we continued to develop our employees and look for new opportunities to ensure we attract and retain our most important assets: our people.
Diversity, Equity, and Inclusion - We believe that much of our success is rooted in the diversity and inclusion of our teams and our commitment to a diverse and inclusive culture. We value diversity at all levels and focus on extending our DEI initiatives across our workforce. We continue to foster a culture in which everyone is respected, valued, and has an equal opportunity to contribute and thrive. Our commitment is unwavering, and we remain focused on building a workforce that represents the many customers we serve and the communities in which we operate.
Our most recent U.S. Equal Employment Opportunity Commission EEO-1 survey data can be found on our website, including additional information related to employee gender and ethnic diversity.
Human Rights – Regency is committed to a workplace free from discrimination and harassment and is focused on advancing fundamental human rights. Anti-discrimination and anti-harassment training is provided to all employees at orientation, and annually thereafter.
Talent Attraction and Retention – Our core values place a strong importance on our people, which we believe makes us an employer of choice. We understand the importance of attracting and retaining the best talent to build long-term value. We strive to offer some of the most competitive pay and benefits in the industry in which we operate and are continually looking for new opportunities to ensure that we attract and retain our people.
3
Training and Development– We strive to provide an environment where our people are connected to their teams, passionate about what they do, and supported to deliver their best efforts and results. From individual contributors to managers and senior leaders, we want to empower our employees to take control of their career growth and realize their full potential through meaningful training and development opportunities.
Health, Safety, and Well-Being – The safety, health, and well-being of our people are a top priority for Regency. We strive to provide a benefit package that is comprehensive, competitive, and thoughtfully designed to attract and retain the best in the business. We prioritize employee safety at our centers and offices, and require contractors working at our sites to engage in safe work practices.
Our Communities – Our predominately grocery-anchored neighborhood and community shopping centers provide many benefits to the communities in which we live and work, including significant local economic impacts in the form of investment, jobs, and taxes. Our local teams are passionate about investing in and engaging with our communities as they customize and cultivate our centers to create a distinctive environment to bring our tenants and shoppers together for the best retail experience.
We believe philanthropy and charitable giving are important elements of our corporate responsibility commitment. Throughout 2022, Regency supported its employees to serve and invest in community organizations through volunteer and financial support. Charitable contributions were made directly by the Company, as well as by the vast majority of our employees who donated their time and money to local non-profits directly serving their communities. Furthermore, as part of our strategy, we continued to improve our communities by investing in property enhancements and placemaking at our new and existing shopping centers.
Ethics and Governance – As long-term stewards of our investors’ capital, we are committed to best-in-class corporate governance. To create long-term value for our stakeholders, we place great emphasis on our culture and core values, the integrity and transparency of our reporting practices, and our overall governance structure in respect of oversight and shareholder rights.
To achieve the right mix of skills, experience, backgrounds, tenures, and competencies, including diversity in terms of gender, ethnic background, age, and other attributes, Regency’s board of directors annually reviews its overall board composition. In 2022, Regency announced the appointment of Kristin A. Campbell to our board of directors, effective January 15, 2023. Mrs. Campbell’s appointment aligns with Regency’s ongoing commitment to board refreshment and best-in-class corporate governance.
Environmental Stewardship – We believe sustainability is in the best interest of our investors, tenants, employees, and the communities in which we operate, and we strive to integrate sustainable practices throughout our business.
We have seven strategic priorities for identifying and implementing sustainable business practices and minimizing our environmental impact: green building, energy efficiency, renewable energy, greenhouse gas emissions ("GHG") reduction, water conservation, waste management, and climate change analysis. We believe these strategic priorities are not only the right thing to do to address environmental concerns such as air pollution, climate change, and resource scarcity but also support us in achieving key strategic objectives in our operations and development projects.
During 2022, we remained committed to measuring and reducing our GHG emissions. Earlier in the year, we refined our strategy and elevated our commitment by aligning our goals with the Science Based Targets initiative ("SBTi"). We have committed to reducing our absolute Scope 1 and 2 GHG emissions by 28% by 2030 from a 2019 base year, endorsed by the SBTi, and to achieve net-zero Scope 1 and 2 GHG emissions across all operations by 2050. Concurrently, we announced new near-and long-term goals to demonstrate our commitment to environmental sustainability as described in our 2021 Corporate Responsibility Report. Based on our current estimates and asset base, we do not expect these commitments to materially impact our operating results and financial condition.
As a long-term owner, operator, and developer of real estate, we acknowledge the potential for climate change to have a material impact on our properties, people, and long-term success. Regency wants to ensure that our properties can safely, sustainably, and responsibly withstand the test of time. We continue to refine our understanding of our exposure to climate-related impacts by conducting ongoing property-level analysis. We continue our efforts to understand and address the risks that climate change may pose to our business.
Compliance with Governmental Regulations
We are subject to various regulatory and tax-related requirements within the jurisdictions in which we operate. Changes to such requirements may result in unanticipated material financial impacts or adverse tax consequences and could materially affect our operating results and financial condition. Significant regulatory requirements include the laws and regulations described below.
4
REIT Laws and Regulations
We have elected to be taxed as a REIT under the federal income tax laws. As a REIT, we are generally not subject to federal income tax on taxable income that we distribute to our stockholders. Under the Internal Revenue Code (the "Code"), REITs are subject to numerous regulatory requirements, including the requirement to generally distribute at least 90% of taxable income each year. We will be subject to federal income tax on our taxable income at regular corporate rates if we fail to qualify as a REIT for tax purposes in any taxable year, or to the extent we distribute less than 100% of our taxable income. We will also generally not qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost. Even if we qualify as a REIT for federal income tax purposes, we may be subject to certain state and local income and franchise taxes and to federal income and excise taxes on our undistributed taxable income.
We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries ("TRS"). In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Code. A TRS is subject to federal and state income taxes which, to date, have not been material to us.
Environmental Laws and Regulations
Under various federal, state and local laws, ordinances and regulations, we may be liable for the cost to assess and remediate certain hazardous substances at our shopping centers. To the extent any environmental issues arise, they most typically stem from the historic practices of current and former dry cleaners, gas stations, and other similar businesses at our centers, as well as the presence of asbestos in some structures. These requirements often impose liability without regard to whether the owner knew of, or committed the acts or omissions that caused the presence of the hazardous substances. The presence of such substances, or the failure to properly address contamination caused by such substances, may adversely affect our ability to sell or lease the property or borrow using the property as collateral. Although we have a number of properties that could require or are currently undergoing varying levels of assessment and remediation, known environmental liabilities are not currently expected to have a material impact on our financial condition.
Information About Our Executive Officers
Our executive officers are appointed each year by our Board of Directors. Each of our executive officers has been employed by us for more than five years and, as of December 31, 2022, included the following:
Name
Age
Title
Executive Officer inPosition Shown Since
Martin E. Stein, Jr.
70
Executive Chairman of the Board of Directors
2020 (1)
Lisa Palmer
55
President and Chief Executive Officer
2020 (2)
Michael J. Mas
47
Executive Vice President, Chief Financial Officer
2019 (3)
James D. Thompson
Executive Vice President, Chief Operating Officer
2019 (4)
5
Company Website Access and SEC Filings
Our website may be accessed at www.regencycenters.com. All of our filings with the SEC can be accessed free of charge through our website promptly after filing; however, in the event that the website is inaccessible, we will provide paper copies of our most recent annual report on Form 10-K, the most recent quarterly report on Form 10-Q, current reports filed or furnished on Form 8-K, and all related amendments, excluding exhibits, free of charge upon request. These filings are also accessible on the SEC's website at www.sec.gov. The content of our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
General Information
Our registrar and stock transfer agent is Broadridge Corporate Issuer Solutions, Inc. ("Broadridge"), Lake Success, NY. We offer a dividend reinvestment plan ("DRIP") that enables our shareholders to reinvest dividends automatically, as well as to make voluntary cash payments toward the purchase of additional shares. For more information, contact Broadridge toll free at (877) 830-4936 or our Shareholder Relations Department at (904) 598-7000.
The Company's common stock is listed on the NASDAQ Global Select Market and trades under the stock symbol "REG".
Our independent registered public accounting firm is KPMG LLP, Jacksonville, Florida, Firm ID 185.
Annual Meeting of Shareholders
Our 2023 annual meeting of shareholders is currently expected to be held on Wednesday, May 3, 2023, and will be conducted in a virtual-only format to the extent permitted by applicable law.
Non-GAAP Measures
In addition to the required Generally Accepted Accounting Principles ("GAAP") presentations, we use and report certain non-GAAP measures as we believe these measures improve the understanding of our operational results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP, rather they supplement GAAP measures by providing additional information we believe to be useful to our shareholders. The principal limitation of these non-GAAP measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our Consolidated Financial Statements. In addition, they reflect the exercise of management's judgment about which expense and income items are excluded or included in determining these non-GAAP measures. In order to compensate for these limitations, reconciliations of the non-GAAP measures we use to their most directly comparable GAAP measures are provided. Non-GAAP measures should not be relied upon in evaluating the financial condition, results of operations, or future prospects of the Company.
Defined Terms
The following terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results, and are included in this document:
6
Companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since Nareit FFO excludes depreciation and amortization and gains on sale and impairments of real estate, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in percent leased, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, Nareit FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations. We provide a reconciliation of Net income attributable to common stockholders to Nareit FFO.
We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with our reported results under GAAP. We believe presenting our Pro-rata share of assets, liabilities, operating results, and other metrics, along with certain other non-GAAP measures, makes comparison of our operating results to those of other REITs more meaningful. The Pro-rata information provided is not, nor is it intended to be, presented in accordance with GAAP. The Pro-rata supplemental details of assets and liabilities and supplemental details of operations reflect our proportionate economic ownership of the assets, liabilities, and operating results of the properties in our portfolio
The Pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the assets, liabilities, and operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the Pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which generally provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our Pro-rata share.
7
The presentation of Pro-rata information has limitations which include, but are not limited to, the following:
Because of these limitations, the Pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the Pro-rata information as a supplement.
8
Item 1A. Risk Factors
Our operations are subject to a number of risks and uncertainties including, but not limited to, those listed below. When considering an investment in our securities, carefully read and consider these risks, together with all other information in our other filings and submissions to the SEC, which provide much more information and detail. If any of the events described in the following risk factors actually occur, our business, financial condition and/ or operating results, as well as the market price of our securities, could be materially adversely affected.
Risk Factors Related to the Current Economic Environment
Continued rising interest rates in the current economic environment may adversely impact our cost to borrow, real estate valuation, and stock price.
On multiple occasions during 2022, the Board of Governors of the Federal Reserve System ("the U.S. Federal Reserve") raised its benchmark federal funds rate, which has led to numerous increases in interest rates in the credit markets. The U.S. Federal Reserve may continue to raise the federal funds rate, which will likely lead to higher interest rates in the credit markets. Additionally, U.S. government policies implemented to address inflation, including actions by the U.S. Federal Reserve to increase interest rates, may negatively impact consumer spending, our tenants' businesses, and/or future demand for space in our shopping centers.
Rising interest rates adversely impact our cost of borrowing. Our exposure to increases in interest rates in the short term includes our variable-rate borrowings, which consist of borrowings under our unsecured senior line of credit and variable rate based secured notes payable. Increases in interest rates could increase our financing costs over time, either through near-term borrowings on our floating-rate line of credit or refinancing of our existing borrowings that may incur higher interest expenses related to the issuance of new debt. Prolonged periods of higher interest rates may negatively impact the valuation of our real estate asset portfolio and could result in the decline of our stock price and market capitalization, which may adversely impact our ability and willingness to raise equity capital on favorable terms through sales of our common shares, including through our At the Market ("ATM") program.
Although the extent of any prolonged periods of higher interest rates remains unknown at this time, negative impacts to our cost of capital may also adversely affect our future business plans and growth, at least in the near term.
Current economic challenges, including the potential for recession, may adversely impact our tenants and our business.
The success of our tenants in operating their businesses and their corresponding ability to pay us rent continue to be significantly impacted by many current economic challenges, which impact their cost of doing business, including, but not limited to, inflation, labor shortages, supply chain constraints, decreasing consumer confidence and discretionary spending, and increasing energy prices and interest rates. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the United States, including the potential for a recession.
These economic challenges could adversely impact our volume of leasing activity, which could include tenant move outs and/or higher levels of uncollectible lease income, as well as negatively affect the business and financial results of our tenants. The aggregate impacts of these current economic challenges may also negatively affect the overall market for retail space, resulting in decreased demand for space in our centers. This, in turn, could result in pricing pressure on rent that we are able to charge to new or renewing tenants, such that future rent spreads could be adversely impacted. Further, we may experience higher costs for tenant buildouts, as costs of materials and labor may increase and supply and availability of both may become more limited.
Risk Factors Related to Pandemics or other Health Crises
Pandemics or other health crises, such as the COVID-19 pandemic, may adversely affect our tenants' financial condition, the profitability of our properties, and our access to the capital markets and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
In response to the COVID-19 pandemic, federal, state, and local governments mandated or recommended various actions to reduce or prevent the spread of COVID-19, which altered customer behaviors and temporarily limited many of our tenants’ ability to operate. As a result, certain tenants requested rent concessions or sought to renegotiate future rents based on changes to the economic environment. Some tenants chose not to reopen or to honor the terms of their lease agreements. In addition, moratoria and other legal restrictions in certain states impacted our ability to bring legal action to enforce our leases and our ability to collect rent. Should federal, state, and local governments mandate or recommend lockdowns again in the future due to a pandemic or other similar health crises, tenants could request rent concessions or seek to renegotiate future rents.
In the event of future pandemics or similar health crises, consumers could elect to make more of their purchases online instead of in physical stores and businesses could delay executing new or renewals of leases amidst the immediate and uncertain economic impacts. These developments, coupled with potential tenant failures and a reduction in newly-formed businesses, could result in decreased demand for retail space in our centers, which could result in lower occupancy or higher levels of uncollectible lease income, as well as downward pressure on rents. Additionally, delays in construction of tenant improvements due to the impacts of constraints on supply chains and labor, resulting from government ordered lockdowns, could result in delayed rent commencement due to it taking longer for new tenants to open and operate.
Although the vast majority of our lease income is derived from contractual rent payments, the ability of certain of our tenants to meet their lease obligations could be negatively impacted by the disruptions and uncertainties of a new virus strain of COVID-19 or any future pandemic or other health crisis. Our tenants' ability to respond to these disruptions and uncertainties, including adjusting to governmental orders and changes in their customers' shopping habits and behaviors, may impact their ability to survive, and ultimately, their ability to comply with their lease obligations. Our future results of operations and overall financial performance could be uncertain should a new virus strain of COVID-19, or future pandemics or other health crises occur.
Risk Factors Related to Operating Retail-Based Shopping Centers
Economic and market conditions may adversely affect the retail industry and consequently reduce our revenues and cash flow, and increase our operating expenses.
Our properties are leased primarily to retail tenants from whom we derive most of our revenue in the form of base rent, expense recoveries and other income. Therefore, our performance and operating results are directly linked to the economic and market conditions occurring in the retail industry. We are subject to the risks that, upon expiration, leases for space in our properties are not renewed by existing tenants, vacant space is not leased to new tenants, and/or tenants demand modified lease terms, including costs for renovations or concessions. The economic and market conditions potentially affecting the retail industry and our properties specifically include the following:
To the extent that any or a combination of these conditions occur, they are likely to impact the retail industry, our retail tenants, the emergence of new tenants, the demand for retail space, market rents and rent growth, capital expenditures, the percent leased levels of our properties, the value of our properties, our ability to sell, acquire or develop properties, our operating results and our cash available for distributions to stock and unit holders.
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Shifts in retail trends, sales, and delivery methods between brick and mortar stores, e-commerce, home delivery, and curbside pick-up may adversely impact our revenues, results of operations, and cash flows.
Retailers are increasingly impacted by e-commerce and changes in customer buying habits, including shopping from home and the delivery or curbside pick-up of items ordered online. Retailers are considering these customer buying habits and other trends when making decisions regarding their brick and mortar stores and how they will compete and innovate in a rapidly changing retail environment. Many retailers in our shopping centers provide services or sell goods which have historically been less likely to be purchased online; however, the continuing change in customer buying habits, including increase in e-commerce sales in all retail categories may cause retailers to adjust the size or number of their retail locations in the future or close stores. For example, our grocer tenants are incorporating e-commerce concepts through home delivery and curbside pick-up, which could reduce foot traffic at our centers. These alternative delivery methods are more likely to impact foot traffic at our centers in certain higher-income markets where consumers are willing to pay premiums for such services. Changes in customer buying habits and shopping trends may also impact the profitability and financial condition of retailers that do not adapt to changes in market conditions, and therefore may impact their ability to pay rent. This shift may adversely impact our percent leased and rental rates, which would impact our results of operations and cash flows.
Changing economic and retail market conditions in geographic areas where our properties are concentrated may reduce our revenues and cash flow.
Economic conditions in markets where our properties are concentrated can greatly influence our financial performance. Our properties in California and Florida represent 26.0% and 21.3%, respectively, of our annualized base rent. Our revenues and cash flow may be adversely affected by this geographic concentration if market conditions, such as supply of or demand for retail space, deteriorate more significantly in these states compared to other geographic areas. Additionally, there is a risk that businesses and residents in major metropolitan cities may relocate to different states or suburban markets.
Our success depends on the continued presence and success of our "anchor" tenants.
"Anchor Tenants" (tenants occupying 10,000 square feet or more) operate large stores in our shopping centers, pay a significant portion of the total rent at a property and contribute to the attraction and success of other tenants by drawing shoppers to the property. Our net income and cash flow may be adversely affected by the loss of revenues and incurrence of additional costs in the event a significant Anchor Tenant:
Some anchors have the right to vacate their space and may prevent us from re-tenanting by continuing to comply and pay rent in accordance with their lease agreement. Vacated "Anchor Space" (spaces 10,000 square feet or more), including space that may be owned by the anchor (as discussed below), can reduce rental revenues generated by the shopping center in other spaces because of the loss of the departed anchor's customer drawing power. In addition, if a significant tenant vacates a property, so-called "co-tenancy clauses" in select leases may allow other tenants to modify or terminate their rent payment or other lease obligations. Co-tenancy clauses have several variants: they may allow a tenant to postpone a store opening if certain other tenants fail to open their stores; they may allow a tenant to close its store prior to lease expiration if another tenant closes its store prior to lease expiration; or more commonly, they may allow a tenant to pay reduced levels of rent until a certain number of tenants open their stores within the same shopping center.
Additionally, some of our shopping centers are anchored by retailers who own their space in a location that is within or immediately adjacent to our shopping center ("shadow anchors"). In those cases, the shadow anchors appear to the consumer as a retail tenant of the shopping center and, as a result, attract additional consumer traffic to the center. In the event that a shadow Anchor Space becomes vacant, it could negatively impact our center as consumer traffic would likely be reduced.
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A percentage of our revenues are derived from "local" tenants and our net income may be adversely impacted if these tenants are not successful, or if the demand for the types or mix of tenants significantly change.
At December 31, 2022, tenants with less than three locations ("Local Tenants") represent approximately 22% of annualized base rent. Local Tenants vary from retail shops and restaurants to service providers. These Local Tenants may be more vulnerable to negative economic conditions and changing customer buying habits and retail trends as they may have more limited resources and access to capital than other tenants. As such, in the event of such changing conditions, habits and trends, they may suffer disproportionately greater impacts and be at greater risk of lease default than other tenants.
We may be unable to collect balances due from tenants in bankruptcy.
Although lease income is supported by long-term lease contracts, tenants who file for bankruptcy have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to recover our claim and to re-lease the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files for bankruptcy and rejects its leases, we may experience a significant reduction in our revenues and may not be able to collect all pre-petition amounts owed by the bankrupt tenant.
Many of our costs and expenses associated with operating our properties may remain constant or increase, even if our lease income decreases.
Certain costs and expenses associated with our operating our properties, such as real estate taxes, insurance, utilities and common area expenses, generally do not decrease in the event of reduced occupancy or rental rates, non-payment of rents by tenants, general economic downturns, pandemics or other similar circumstances. In fact, in some cases, such as real estate taxes and insurance, they may actually increase despite such events. As such, we may not be able to lower the operating expenses of our properties sufficiently to fully offset such circumstances and may not be able to fully recoup these costs from our tenants. In such cases, our cash flows, operating results and financial performance may be adversely impacted.
Compliance with the Americans with Disabilities Act and other building, fire, and safety regulations may have a material negative effect on us.
All of our properties are required to comply with the Americans with Disabilities Act ("ADA"), which generally requires that buildings be made accessible to people with disabilities. Compliance with ADA requirements may require removal of access barriers, and noncompliance may result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease space in our properties are obligated by law to comply with the ADA provisions, and typically under tenant leases are obligated to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs may be adversely affected. In addition, we are required to operate the properties in compliance with fire and safety regulations and building codes as they may be adopted by governmental entities and become applicable to the properties. Costs to be in compliance with the ADA or any other building, fire, and safety regulations could have a material negative impact on our results of operations.
Risk Factors Related to Real Estate Investments
Our real estate assets may decline in value and be subject to impairment losses which may reduce our net income.
Our real estate properties are carried at cost unless circumstances indicate that the carrying value of these assets may not be recoverable which may result in impairment. We evaluate whether there are any indicators, including declines in property operating performance and general market conditions, such that the value of the real estate properties (including any related tangible or intangible assets or liabilities, including goodwill) may not be recoverable and therefore may be impaired. Our evaluation includes several key assumptions, including rental rates, costs of tenant improvements, leasing commissions, anticipated holding periods, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and may differ materially from actual results. Changes in our investment, redevelopment, and disposition strategies or changes in the market where an asset is located may alter management's intended holding period of an asset or asset group, which may result in an impairment loss and such loss may be material to our financial condition or operating performance.
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The fair value of real estate assets is subjective and is determined through the use of comparable sales information and other market data if available, or through use of an income approach such as the direct capitalization method or the discounted cash flow approach. Such cash flow projections take into account expected future operating income, trends and prospects, as well as the effects of demand, competition and other relevant criteria, and therefore are subject to management judgment. In estimating the fair value of undeveloped land, we generally use market data and comparable sales information.
These subjective assessments have a direct impact on our net income because recording an impairment charge results in an immediate negative adjustment to net income, which may be material. There can be no assurance that we will not record impairment charges in the future related to our assets.
We face risks associated with development, redevelopment, and expansion of properties.
We actively pursue opportunities for new retail development and existing property redevelopment and/or expansion. Development and redevelopment activities require various government and other approvals for entitlements, and any delay in such approvals may significantly delay development and redevelopment projects. We may not recover our investment in our projects for which approvals are not received, and delays may adversely impact our expected returns. Additionally, changes in political elections and policies may impact our ability to obtain favorable land use and zoning for in-process and future developments and redevelopment projects. We are subject to other risks associated with these activities, including the following:
We face risks associated with the development of mixed-use commercial properties.
If we engage in more complex acquisitions and mixed-use development and redevelopment projects, there could be more unique risks to our return on investment. Mixed-use projects refer to real estate projects that, in addition to retail space, may also include space for residential, office, hotel or other commercial purposes. We have less experience in developing and managing non-retail real estate than we do retail real estate. As a result, if a development or redevelopment project includes a non-retail use, we may seek to develop that component ourselves, sell the rights to that component to a third-party developer, or partner with a developer.
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We face risks associated with the acquisition of properties.
Our investment strategy includes investing in high-quality shopping centers that are leased to market-leading grocers, category-leading anchors, specialty retailers, and/or restaurants located in areas with above average household incomes and population densities. The acquisition of properties and/or real estate entities entails risks that include, but are not limited to, the following, any of which may adversely affect our results of operations and cash flows:
We may be unable to sell properties when desired because of market conditions.
Our properties, including their related tangible and intangible assets, represent the majority of our total consolidated assets and they may not be readily convertible to cash. Macro-economic events, pandemics and other health crises may impact our ability to sell properties on our preferred timing and at prices and returns we deem acceptable. As a result, our ability to sell one or more of our properties, including properties held in joint ventures, in response to changes in economic, industry, financial market, or other conditions may be limited. The real estate market is affected by many factors, such as general economic conditions, availability and terms of financing, interest rates and other factors, including supply and demand for space, that are beyond our control. There may be less demand for lower quality properties that we have identified for ultimate disposition in markets with uncertain economic or retail environments, and where buyers are more reliant on the availability of third party mortgage financing. If we want to sell a property, we can provide no assurance that we will be able to dispose of it in the desired time period or at all or that the sales price of a property will be attractive at the relevant time or even exceed the carrying value of our investment.
Changes in tax laws could impact our acquisition or disposition of real estate.
Certain properties we own have a low tax basis, which may result in a meaningful taxable gain on sale. We utilize, and intend to continue to utilize, Internal Revenue Code Section 1031 like-kind exchanges to tax-efficiently buy and sell properties; however, there can be no assurance that we will identify properties that meet our investment objectives for acquisitions or that changes to the tax laws do not eliminate the benefits of effectuating 1031 exchanges, or significantly change the requirements for a transaction to qualify for 1031 exchange treatment. In the event that we cannot or do not utilize 1031 exchanges, we may be required to distribute the gain proceeds to shareholders or pay income tax, which may reduce our cash flow available to fund our commitments or other priorities.
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Risk Factors Related to the Environment Affecting Our Properties
Climate change may adversely impact our properties directly and may lead to additional compliance obligations and costs as well as additional taxes and fees.
While we work with experts in the field to plan for the potential impacts of climate change on our business, we cannot reliably predict the extent, rate, timing, or impact of climate change. To the extent climate change causes adverse changes in weather patterns, our properties in certain markets, especially those nearer to the coasts, may experience increases in storm frequency and intensity and rising sea‑levels. Further, population migration may occur in response to these or other factors and negatively impact our centers. For example, climate and other environmental changes may result in volatile or decreased demand for retail space at certain of our properties, reduced rent or, in extreme cases, our inability to operate certain properties at all. Climate change may also have indirect effects on our business by increasing the cost of insurance or making insurance unavailable. Moreover, while the federal government has not yet enacted comprehensive legislation to address climate change, certain states in which we own and operate shopping centers, including California and New York, have done so. Compliance with these and future new laws or regulations related to climate change may require us to make additional investments in or for our existing properties, resulting in increased capital expenditures and operating costs, implement new or additional processes and controls to facilitate compliance, and/or pay additional energy, insurance, taxes and related fees and costs. At this time, there can be no assurance that we can anticipate all potential material impacts of climate change, or that climate change will not have a material adverse effect on the value of our properties and our financial performance in the future.
Geographic concentration of our properties makes our business more vulnerable to natural disasters, severe weather conditions and climate change.
A significant number of our properties are located in areas that are susceptible to earthquakes, tropical storms, hurricanes, tornadoes, wildfires, sea-level rise, and other natural disasters. At December 31, 2022, 20.6% of the GLA of our portfolio is located in the state of California, including a number of properties in the San Francisco Bay and Los Angeles areas. Additionally, 22.4% and 7.8% of the GLA of our portfolio is located in the states of Florida and Texas, respectively. Insurance costs for properties in these areas have increased, and recent intense weather conditions may cause property insurance premiums to increase significantly in the future. We recognize that the frequency and / or intensity of extreme weather events, and other climatic changes may continue to increase, and as a result, our exposure to these events may increase. These weather conditions may disrupt our business and the business of our tenants, which may affect the ability of some tenants to pay rent and may reduce the willingness of tenants or residents to remain in or move to these affected areas. Therefore, as a result of the geographic concentration of our properties, we face risks, including disruptions to our business and the businesses of our tenants and higher costs, such as uninsured property losses, higher insurance premiums, and potential additional regulatory requirements by government agencies in response to perceived risks.
Costs of environmental remediation may adversely impact our financial performance and reduce our cash flow.
Under various federal, state, and local laws, an owner or manager of real property may be liable for the costs to assess and remediate the presence of hazardous substances on the property, which in our case most typically arise from current or former dry cleaners, gas stations, asbestos usage, and historic land use practices. These laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous substances, which may adversely impact our financial performance and reduce our cash flow. The presence of, or the failure to properly address the presence of, hazardous substances may adversely affect our ability to sell or lease the property or borrow using the property as collateral. We can provide no assurance that we are aware of all potential environmental liabilities or their ultimate cost to address; that our properties will not be affected by tenants or nearby properties or other unrelated third parties; and that future uses or conditions, or changes in environmental laws and regulations, or their interpretation, will not result in additional material environmental liabilities to us.
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Risk Factors Related to Corporate Matters
An increased focus on metrics and reporting related to environmental, social and governance ("ESG") factors, may impose additional costs and expose us to new risks.
Investors have become more focused on understanding how companies address a variety of ESG factors. As they evaluate investment decisions, many investors look not only at company disclosures but also to ESG rating systems that have been developed by third parties to allow ESG comparisons between companies. Although we participate in a number of these ratings systems, we do not participate in all such systems, and may not score as well in all of the available ratings systems as other REITs and real estate operators. Further, the criteria used in these ratings systems may conflict with each other and change frequently, and we cannot guaranty that we will be able to score well in the future. We supplement our participation in ratings systems with published disclosures of our ESG activities, but some investors may desire other disclosures that we do not provide. In addition, as noted above, the SEC is currently evaluating potential new regulations that could impose additional ESG disclosure and other compliance requirements on us. Failure to participate in certain of the third party ratings systems, failure to score well in those ratings systems or failure to provide certain ESG disclosures could adversely impact us when investors compare us against similar companies in our industry, and could cause certain investors to be unwilling to invest in our stock, which could adversely impact our stock price and our ability to raise capital.
An uninsured loss or a loss that exceeds the insurance coverage on our properties may subject us to loss of capital and revenue on those properties.
We carry comprehensive liability, fire, flood, terrorism, business interruption, and environmental insurance for our properties. Some types of losses, such as losses from named windstorms, earthquakes, terrorism, or wars may have more limited coverage, or in some cases, can be excluded from insurance coverage. In addition, it is possible that the availability of insurance coverage in certain areas may decrease in the future, and the cost to procure such insurance may increase due to factors beyond our control. We may reduce the insurance we procure as a result of the foregoing or other factors. Should a loss occur at any of our properties that is in excess of the property or casualty insurance limits of our policies, we may lose part or all of our invested capital and revenues from such property, which may have a material adverse impact on our operating results, financial condition, and our ability to make distributions to stock and unit holders.
Terrorist activities or violence occurring at our properties also may directly affect the value of our properties through damage, destruction or loss. Insurance for such acts may be unavailable or cost more resulting in an increase to our operating expenses and adversely affect our results of operations. To the extent that our tenants are affected by such attacks and threats of violence, their businesses may be adversely affected, including their ability to continue to meet obligations under their existing leases.
Failure to attract and retain key personnel may adversely affect our business and operations.
The success of our business depends, in part, on the leadership and performance of our executive management team and other key personnel, and our ability to attract, retain and motivate talented and diverse employees may significantly impact our future performance. Competition for these individuals is intense, and we cannot be assured that we will retain all of our executive management team and other key personnel or that we will be able to attract and retain other highly qualified individuals for these positions in the future. Losing any key personnel may have an adverse effect on us.
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The unauthorized access, use, theft or destruction of tenant or employee personal, financial, or other data or of Regency's proprietary or confidential information stored in our information systems or by third parties on our behalf could impact our reputation and brand and expose us to potential liability and loss of revenues.
Many of our information technology systems (including those we use for administration, accounting, and communications, as well as the systems of our co-investment partners and other third-party business partners and service providers, whether cloud-based or hosted in proprietary servers) contain personal, financial or other information that is entrusted to us by our tenants and employees. Many of our information technology systems also contain our proprietary information and other confidential information related to our business. We are frequently subject to attempts to compromise our information technology systems. To the extent we or a third party were to experience a material breach of our or such third party's information technology systems that results in the unauthorized access, theft, use, destruction or other compromises of tenants' or employees' data or our confidential information stored in such systems, including through cyber-attacks or other external or internal methods, such a breach may damage our reputation and cause us to lose tenants, employees, and revenues, incur third party claims and cause disruption to our business and plans. Additionally, a successful ransomware attack, denial of service, or other impactful type of cyber-attack may occur. Despite planning, preparation, and preventative measures, such attacks may be successful and our business may be significantly disrupted if unable to quickly recover. Such security breaches also could result in a violation of applicable U.S. privacy and other laws, and subject us to private consumer, business partner, or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability, and we may not be able to recover these expenses from our service providers, responsible parties, or insurance carriers. Despite the ongoing significant investments in technology and training we make in cybersecurity, we can provide no assurance that we will avoid or prevent such breaches or attacks.
Additionally, federal, state and local authorities continue to develop laws to address data privacy protection. Monitoring such changes, and taking steps to comply, involves significant costs and effort by management, which may adversely affect our operating results and cash flows.
Despite the implementation of security measures for our disaster recovery and business continuity plans, our systems are vulnerable to damage from multiple sources other than cybersecurity risks, including computer viruses, energy blackouts, natural disasters, terrorism, war, and telecommunication failure. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business and cause us to incur additional costs to remedy such damages.
Risk Factors Related to Our Partnerships and Joint Ventures
We do not have voting control over all of the properties owned in our co-investment partnerships and joint ventures, so we are unable to ensure that our objectives will be pursued.
We have invested substantial capital as a partner in a number of partnerships and joint ventures to acquire, own, lease, develop or redevelop properties. These activities are subject to the same risks as our investments in our wholly-owned properties. However, these investments, and other future similar investments may involve risks that would not be present were a third party not involved, including the possibility that partners or other owners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions. Partners or other owners may have economic or other business interests or goals that are inconsistent with our own business interests or goals, and may be in a position to take actions contrary to our policies or objectives.
These investments, and other future similar investments, also have the potential risk of creating impasses on decisions, such as a sale or financing, because neither we nor our partner or other owner has full control over the partnership or joint venture. Disputes between us and partners or other owners might result in a premature termination of the applicable partnership or joint venture, or potentially litigation or arbitration, that may increase our investment and related risk as well as our costs and expenses associated with the investment, and distract management from sufficiently focusing their time and efforts on others areas of our business. In addition, we risk the possibility of being held liable for the actions of our partners or other owners. These factors may limit the return that we receive from such investments or cause our cash flows to be lower than our estimates.
The termination of our partnerships may adversely affect our cash flow, operating results, and our ability to make distributions to stock and unit holders.
If partnerships owning a significant number of properties were dissolved for any reason, we could lose the asset, property management, leasing and construction management fees from these partnerships as well as the operating income of the properties, which may adversely affect our operating results and our cash available for distribution to stock and unit holders. Certain of our partnership operating agreements provide either member the ability to elect buy/sell clauses. The election of these dissolution provisions could require us to invest additional capital to acquire the partners’ interest or to sell our share of the property thereby losing the operating income and cash flow.
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Risk Factors Related to Funding Strategies and Capital Structure
Our ability to sell properties and fund acquisitions and developments may be adversely impacted by higher market capitalization rates and lower NOI at our properties which may dilute earnings.
As part of our funding strategy, we sell properties that no longer meet our strategic objectives or investment standards and/or those with a limited future growth profile. These sales proceeds are used to fund debt repayment, acquisition of other properties, and new developments and redevelopments. An increase in market capitalization rates (which may or may not be driven by an increase in interest rates) or a decline in NOI may cause a reduction in the value of centers identified for sale, which would have an adverse impact on the amount of cash generated. Additionally, the sale of properties resulting in significant tax gains may require higher distributions to our stockholders or payment of additional income taxes in order to maintain our REIT status.
We depend on external sources of capital, which may not be available in the future on favorable terms or at all.
To qualify as a REIT, the Parent Company must, among other things, distribute to its stockholders each year at least 90% of its REIT taxable income (excluding any net capital gains). Because of these distribution requirements, we may not be able to fund all future capital needs with income from operations. In such instances, we would rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market's perception of our growth potential and our current and potential future earnings. Our access to debt depends on our credit rating, the willingness of creditors to lend to us and conditions in the capital markets. In addition to finding lenders willing to lend to us, we are dependent upon our joint venture partners to contribute their pro rata share of any amount needed to repay or refinance existing debt when lenders reduce the amount of debt our partnerships and joint ventures are eligible to refinance.
In addition, our existing debt arrangements also impose covenants that limit our flexibility in obtaining other financing. Additional equity offerings may result in substantial dilution of stockholders' interests and additional debt financing may substantially increase our degree of leverage.
Without access to external sources of capital, we would be required to pay outstanding debt with our operating cash flows and proceeds from property sales. Our operating cash flows may not be sufficient to pay our outstanding debt as it comes due and real estate investments generally cannot be sold quickly at a return we believe is appropriate. If we are required to deleverage our business with operating cash flows and proceeds from property sales, we may be forced to reduce the amount of, or eliminate altogether, our distributions to stock and unit holders or refrain from making investments in our business.
Our debt financing may adversely affect our business and financial condition.
Our ability to make scheduled payments or to refinance our indebtedness will depend primarily on our future performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond our control. In addition, we do not expect to generate sufficient operating cash flow to make balloon principal payments on our debt when due. If we are unable to refinance our debt on acceptable terms, we may be forced (i) to dispose of properties, which might result in losses, or (ii) to obtain financing at unfavorable terms, either of which may reduce the cash flow available for distributions to stock and unit holders. If we cannot make required mortgage loan payments, the mortgagee may foreclose on the property securing the mortgage.
Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition.
Our unsecured notes and unsecured line of credit (the "Line") contain customary covenants, including compliance with financial ratios, such as ratio of indebtedness to total asset value and fixed charge coverage ratio. These covenants may limit our operational flexibility and our investment activities. Moreover, if we breach any of the covenants in our debt agreements, and do not cure the breach within the applicable cure period, our lenders may require us to repay the debt immediately, even in the absence of a payment default. Many of our debt arrangements, including our unsecured notes and the Line, are cross-defaulted, which means that the lenders under those debt arrangements can require immediate repayment of their debt if we breach and fail to cure a default under certain of our other material debt obligations. As a result, any default under our debt covenants may have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations, and the market value of our stock.
Increases in interest rates would cause our borrowing costs to rise and negatively impact our results of operations.
Although a significant amount of our outstanding debt has fixed interest rates, we do borrow funds at variable interest rates under our credit facility, term loan, and certain secured borrowings. As of December 31, 2022, less than 1.0% of our outstanding debt was variable rate debt not hedged to fixed rate debt. Increases in interest rates would increase our interest expense on any variable rate debt to the extent we have not hedged our exposure to changes in interest rates. In addition, increases in interest rates will affect the terms under which we refinance our existing debt as it matures, to the extent we have not hedged our exposure to changes in interest rates. This would reduce our future earnings and cash flows, which may adversely affect our ability to service our debt and meet our other obligations and also may reduce the amount we are able to distribute to our stock and unit holders.
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Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate, which may adversely affect us.
We manage our exposure to interest rate volatility by using interest rate hedging arrangements. These arrangements involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements, and that these arrangements may not be effective in reducing our exposure to interest rate changes. There can be no assurance that our hedging arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our results of operations. Should we desire to terminate a hedging arrangement, there may be significant costs and cash requirements involved to fulfill our obligations under the hedging arrangement. In addition, failure to effectively hedge against interest rate changes may adversely affect our results of operations.
Risk Factors Related to the Market Price for Our Securities
Changes in economic and market conditions may adversely affect the market price of our securities.
The market price of our debt and equity securities may fluctuate significantly in response to many factors, many of which are out of our control, including:
These factors may cause the market price of our securities to decline, regardless of our financial condition, results of operations, business or prospects. It is impossible to ensure that the market price of our securities, including our common stock, will not fall in the future. A decrease in the market price of our common stock may reduce our ability to raise additional equity capital in the public markets. Selling common stock at a decreased market price would have a dilutive impact on existing stockholders.
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There is no assurance that we will continue to pay dividends at current or historical rates.
Our ability to continue to pay dividends at current or historical rates or to increase our dividend rate will depend on a number of factors, including, among others, the following:
If we do not maintain or periodically increase the dividend on our common stock, it may have an adverse effect on the market price of our common stock and other securities.
Risk Factors Related to the Company's Qualification as a REIT
If the Parent Company fails to qualify as a REIT for federal income tax purposes, it would be subject to federal income tax at regular corporate rates.
We believe that the Parent Company qualifies for taxation as a REIT for federal income tax purposes, and we plan to operate so that the Parent Company can continue to meet the requirements for taxation as a REIT. If the Parent Company continues to qualify as a REIT, it generally will not be subject to federal income tax on income that we distribute to our stockholders. Many REIT requirements, however, are highly technical and complex. The determination that the Parent Company is a REIT requires an analysis of various factual matters and circumstances, some of which may not be totally within our control and some of which involve questions of interpretation. For example, to qualify as a REIT, at least 95% of our gross income must come from specific passive sources, like rent, that are itemized in the REIT tax laws. There can be no assurance that the Internal Revenue Service ("IRS") or a court would agree with the positions we have taken in interpreting the REIT requirements. The Parent Company is also required to distribute to the stockholders at least 90% of its REIT taxable income, excluding net capital gains. The Parent Company will be subject to U.S. federal income tax on undistributed taxable income and net capital gains and to a 4% nondeductible excise tax on any amount by which distributions the Parent Company pays with respect to any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. The fact that we hold many of our assets through co-investment partnerships and their subsidiaries further complicates the application of the REIT requirements. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings, that make it more difficult for the Parent Company to remain qualified as a REIT.
Also, unless the IRS granted relief under certain statutory provisions, the Parent Company would remain disqualified as a REIT for four years following the year it first failed to qualify. If the Parent Company failed to qualify as a REIT (currently and/or with respect to any tax years for which the statute of limitations has not expired), the Parent Company would have to pay significant income taxes, reducing cash available to pay dividends, which would likely have a significant adverse effect on the value of our securities. In addition, we would no longer be required to pay any dividends to stockholders in order to maintain our REIT status. Although we believe that the Parent Company qualifies as a REIT, we cannot be assured that the Parent Company will continue to qualify or remain qualified as a REIT for tax purposes.
Even if the Parent Company qualifies as a REIT for federal income tax purposes, the Parent Company is required to pay certain federal, state, and local taxes on its income and property. For example, if we have net income from "prohibited transactions," that income will be subject to a 100% tax. In general, prohibited transactions include sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we have undertaken a significant number of asset sales in recent years, we do not believe that those sales should be considered prohibited transactions, but there can be no assurance that the IRS would not contend otherwise.
New legislation, as well as new regulations, administrative interpretations, or court decisions may be introduced, enacted, or promulgated from time to time, that may change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is adverse to our stockholders.
20
Dividends paid by REITs generally do not qualify for reduced tax rates.
Subject to limited exceptions, dividends paid by REITs (other than distributions designated as capital gain dividends, qualified dividends or returns of capital) are not eligible for reduced rates for qualified dividends paid by "C" corporations and are taxable at ordinary income tax rates. Under the Tax Cuts and Jobs Act of 2017 (the "TCJA"), however, domestic shareholders that are individuals, trusts, and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 3, 2017, and before January 1, 2026. Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which may adversely affect the value of the shares of REITs, including the per share trading price of the Parent Company's capital stock.
Certain foreign stockholders may be subject to U.S. federal income tax on gain recognized on a disposition of our common stock if we do not qualify as a "domestically controlled" REIT.
A foreign person, other than a "qualified shareholder" or a "qualified foreign pension fund," as each is defined for purposes of the Code, disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests is generally subject to U.S. federal income tax on any gain recognized on the disposition. This tax does not apply, however, to the disposition of stock in a REIT if the REIT is "domestically controlled." In general, the Parent Company will be a domestically controlled REIT if at all times during the five-year period ending on the applicable stockholder’s disposition of our stock, less than 50% in value of our stock was held directly or indirectly by non-U.S. persons. If the Parent Company were to fail to qualify as a domestically controlled REIT, gain recognized by a foreign stockholder on a disposition of our common stock would be subject to U.S. federal income tax unless our common stock was traded on an established securities market and the foreign stockholder did not at any time during a specified testing period directly or indirectly own more than 10% of our outstanding common stock.
We seek to act in the best interests of the Parent Company as a whole and do not take into consideration the particular tax consequences to any specific holder of our stock. Foreign persons should inform themselves as to the U.S. tax consequences, and the tax consequences within the countries of their citizenship, residence, domicile, and place of business, with respect to the purchase, ownership, and disposition of shares of our common stock.
Legislative or other actions affecting REITs may have a negative effect on us or our investors.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, may adversely affect the Parent Company or our investors. We cannot predict how changes in the tax laws might affect the Parent Company or our investors. New legislation, Treasury Regulations, administrative interpretations or court decisions may significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. There is also a risk that REIT status may be adversely impacted by a change in tax or other laws. Also, the law relating to the tax treatment of other entities, or an investment in other entities, may change, making an investment in such other entities more attractive relative to an investment in a REIT.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code limit our ability to hedge our liabilities. Generally, income from a hedging transaction does not constitute "gross income" for purposes of the 75% or 95% gross income tests, provided that we properly identify the hedging transaction pursuant to the applicable sections of the Code and Treasury Regulations. To the extent that we enter into other types of hedging transactions, or fail to make the proper tax identifications, the income from those transactions is likely to be treated as non-qualifying income for purposes of both gross income tests. As a result of these rules, we may need to limit our use of otherwise advantageous hedging techniques or implement those hedges through a TRS.
Risk Factors Related to the Company's Common Stock
Restrictions on the ownership of the Parent Company's capital stock to preserve its REIT status may delay or prevent a change in control.
Ownership of more than 7% by value of our outstanding capital stock is prohibited, with certain exceptions, by the Parent Company's articles of incorporation, for the purpose of maintaining its qualification as a REIT. This 7% limitation may discourage a change in control and may also (i) deter tender offers for our capital stock, which offers may be attractive to our stockholders, or (ii) limit the opportunity for our stockholders to receive a premium for their capital stock that might otherwise exist if an investor attempted to assemble a block in excess of 7% of our outstanding capital stock or to affect a change in control.
21
The issuance of the Parent Company's capital stock may delay or prevent a change in control.
The Parent Company's articles of incorporation authorize our Board of Directors to issue up to 30,000,000 shares of preferred stock and 10,000,000 shares of special common stock and to establish the preferences and rights of any shares issued. The issuance of preferred stock or special common stock may have the effect of delaying or preventing a change in control. The provisions of the Florida Business Corporation Act regarding affiliated transactions may also deter potential acquisitions by preventing the acquiring party from consummating a merger or other extraordinary corporate transaction without the approval of our disinterested stockholders.
Ownership in the Parent Company may be diluted in the future.
In the future, a stockholder's percentage ownership in the Company may be diluted because of equity issuances for acquisitions, capital market transactions or other corporate purposes, including equity awards we will grant to our directors, officers and employees. In the past we have issued equity in the secondary market and may do so again in the future, depending on the price of our stock and other factors.
In addition, our restated articles of incorporation, as amended, authorizes our Board of Directors to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such preferences, limitations, and relative rights, including preferences over our common stock respecting dividends and distributions, as our Board of Directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant the holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of the common stock.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The following table is a list of our shopping centers, summarized by state and in order of largest holdings by number of properties, presented for consolidated properties (excludes properties owned by unconsolidated co-investment partnerships):
December 31, 2022
December 31, 2021
Location
Number ofProperties
GLA (inthousands)
Percent ofTotal GLA
PercentLeased
Florida
88
10,783
27.8
%
95.1
89
10,771
28.4
93.7
California
53
8,204
21.1
93.9
8,219
21.7
93.2
Texas
25
3,239
8.3
98.0
3,240
8.5
96.0
Georgia
2,120
5.5
92.9
2,127
5.6
91.1
New York
1,953
5.0
89.0
1,749
4.6
Connecticut
1,452
3.7
1,464
3.9
94.4
Colorado
1,097
2.8
96.6
1,096
2.9
95.8
North Carolina
1,222
3.2
98.2
1,221
96.2
Washington
963
2.5
97.3
857
2.3
96.5
Ohio
1,224
96.7
1,215
98.3
Massachusetts
897
97.6
898
2.4
Oregon
742
1.9
94.6
741
2.0
94.5
Illinois
1,085
94.9
94.8
Virginia
939
93.4
90.8
Pennsylvania
443
1.1
98.7
326
0.9
97.1
Missouri
408
99.5
100.0
Tennessee
314
0.8
99.1
New Jersey
573
1.5
89.2
219
0.6
98.1
Maryland
250
320
82.0
Minnesota
246
—
0.0
Indiana
279
0.7
Delaware
230
228
Michigan
97
0.3
74.0
South Carolina
0.1
District of Columbia
85.8
Total
308
38,834
302
37,864
94.0
The weighted average annual effective rent for the consolidated portfolio of properties, net of tenant concessions, is $23.95 and $23.17 per square foot ("PSF") as of December 31, 2022 and 2021, respectively.
The following table is a list of our shopping centers, summarized by state and in order of largest holdings by number of properties, presented for unconsolidated properties (properties owned by our unconsolidated co-investment partnerships):
2,320
18.9
97.4
2,644
19.9
91.9
2,082
16.9
15.7
849
6.9
96.3
1,069
8.0
1,197
9.7
95.5
1,270
9.5
96.1
874
7.1
6.6
98.4
858
7.0
93.3
851
6.4
669
5.4
84.5
84.6
663
99.4
811
6.1
6.0
691
5.2
690
575
4.3
423
3.4
668
97.5
224
1.8
81.8
353
2.7
92.6
139
82.9
1.0
75.8
186
1.4
96.4
141
1.2
93
97.7
80
64
0.5
89.7
40
91.8
96
12,311
103
13,300
The weighted average annual effective rent for the unconsolidated portfolio of properties, net of tenant concessions, is $23.15 and $22.37 PSF as of December 31, 2022 and 2021, respectively.
24
The following table summarizes our top tenants occupying our shopping centers for consolidated properties plus our Pro-rata share of unconsolidated properties, as of December 31, 2022, based upon a percentage of total annualized base rent (GLA and dollars in thousands):
Tenant
GLA
Percent ofCompanyOwned GLA
AnnualizedBase Rent
Percent ofAnnualizedBase Rent
Number ofLeased Stores
Publix
2,876
$
31,679
Kroger Co.
2,987
7.3
30,438
3.1
Albertsons Companies, Inc.
1,920
4.7
29,144
3.0
46
Amazon/Whole Foods
1,185
25,756
2.6
36
TJX Companies, Inc.
1,457
3.6
25,129
63
CVS
1.6
15,606
56
Ahold Delhaize
473
12,003
L.A. Fitness Sports Club
474
9,989
Trader Joe's
282
9,595
28
JPMorgan Chase Bank
9,050
45
Ross Dress For Less
534
1.3
8,775
Nordstrom
8,398
Gap, Inc.
7,810
Starbucks
138
7,776
H.E. Butt Grocery Company
482
7,376
Wells Fargo Bank
130
7,039
JAB Holding Company
168
0.4
6,904
60
Petco Health and Wellness Company, Inc.
286
6,807
30
Target
654
6,790
Bank of America
119
6,778
Kohl's
526
6,247
Best Buy
259
6,027
Walgreens Boots Alliance
5,684
Bed Bath & Beyond Inc.
325
5,538
Ulta
172
5,161
AT&T, Inc.
109
4,929
Dick's Sporting Goods, Inc.
274
4,832
Life Time
111
4,700
Xponential Fitness
118
4,631
72
Top Tenants
17,649
43.3
320,591
32.8
949
Our leases for tenant space under 10,000 square feet generally have initial terms ranging from three to seven years. Leases greater than 10,000 square feet ("Anchor Leases") generally have initial lease terms in excess of five years and are mostly comprised of Anchor Tenants. Many of the leases contain provisions allowing the tenant the option of extending the term of the lease at expiration. Our leases typically provide for the payment of fixed base rent, the tenant’s Pro-rata share of real estate taxes, insurance, and common area maintenance ("CAM") expenses, and reimbursement for utility costs if not directly metered.
The following table summarizes Pro-rata lease expirations for the next ten years and thereafter, for our consolidated and unconsolidated properties, assuming no tenants renew their leases (GLA and dollars of In Place Annual Base Rent Expiring Under Leases in thousands):
Lease Expiration Year
Number of Tenants with Expiring Leases
Pro-rata Expiring GLA
Percent of Total Company GLA
In Place Annual Base Rent Expiring Under Leases
Percent of In Place Annual Base Rent
Pro-rata Expiring Average Annual Base Rent PSF
(1)
171
85
0.2
1,275
15.03
2023
930
2,803
72,559
7.6
25.88
2024
1,211
5,571
13.8
128,039
13.4
22.98
2025
1,193
5,117
12.7
123,403
12.9
24.12
2026
1,058
4,998
12.4
120,059
12.5
24.02
2027
1,196
5,725
14.2
136,987
14.3
23.93
2028
659
3,930
98,400
10.3
25.04
2029
341
2,055
5.1
44,765
21.79
2030
285
1,895
46,163
4.8
24.36
2031
332
1,546
3.8
42,393
4.4
27.42
2032
454
1,695
4.2
46,320
27.32
Thereafter
356
4,908
12.2
97,645
10.2
19.89
8,186
40,328
958,008
23.76
During 2023, we have a total of 930 leases expiring, representing 2.8 million square feet of GLA. These expiring leases have an average base rent of $25.88 PSF. The average base rent of new leases signed during 2022 was $32.47 PSF. During periods of economic weakness or when percent leased is low, tenants have more bargaining power, which may result in rental rate declines on new or renewal leases. In periods of recovery and/or when percent leased levels are high, landlords have more bargaining power, which generally results in rental rate growth on new and renewal leases.
Demand for retail space in high quality, community centers located in areas with compelling demographics remains strong, especially among successful business operators and growing innovative business concepts. However, inflationary challenges and the potential for an economic recession could result in pressure on base rent growth for new and renewal leases as businesses seek to manage costs.
26
The following table lists information about our consolidated and unconsolidated properties. For further information, see "Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report.
27
Property Name
CBSA (1)
State
Owner-shipInterest (2)
YearAcquired
YearConstructedor Last MajorRenovation
Mortgages orEncumbrances(in 000's)
GrossLeasableArea(GLA)(in 000's)
PercentLeased (3)
AverageBase RentPSF (4)
Major Tenant(s) (5)
Amerige Heights Town Center
Los Angeles-Long Beach-Anaheim
CA
2000
100.0%
32.04
Albertsons, (Target)
Brea Marketplace
40%
2005
1987
352
94.3%
20.81
24 Hour Fitness, Big 5 Sporting Goods, Childtime Childcare, Old Navy, Sprout's, Target
Circle Center West
2017
1989
94.5%
37.59
Marshalls
Circle Marina Center
2019
1994
24,000
94.8%
30.69
Staples, Big 5 Sporting Goods, Centinela Feed & Pet Supplies
Culver Center
217
92.4%
32.94
Ralphs, Best Buy, LA Fitness, Sit N' Sleep
El Camino Shopping Center
1999
136
42.19
Bristol Farms, CVS
Granada Village
2012
50,000
227
27.29
Sprout's Markets, Rite Aid, PETCO, Homegoods, Burlington, TJ Maxx
Hasley Canyon Village
2003
16,000
97.5%
26.85
Ralphs
Heritage Plaza
99.9%
42.09
Ralphs, CVS, Daiso, Mitsuwa Marketplace, Big 5 Sporting Goods
Laguna Niguel Plaza
1985
42
30.90
CVS,(Albertsons)
Morningside Plaza
1996
91
25.15
Stater Bros.
Newland Center
2016
152
95.6%
28.13
Albertsons
Plaza Hermosa
2013
95
28.44
Von's, CVS
Ralphs Circle Center
1983
20.56
Rona Plaza
52
88.4%
20.14
Superior Super Warehouse
Seal Beach
20%
2002
1966
96.6%
26.73
Pavilions, CVS
Talega Village Center
2007
102
97.7%
23.06
Town and Country Center
35%
2018
1992
93,628
73
57.21
Whole Foods, CVS, Citibank
Tustin Legacy
112
97.9%
34.71
Stater Bros, CVS
Twin Oaks Shopping Center
19,000
98
22.25
Ralphs, Rite Aid
Valencia Crossroads
173
28.65
Whole Foods, Kohl's
Village at La Floresta
2014
87
97.8%
37.39
Whole Foods
Von's Circle Center
1972
5,031
151
27.52
Von's, Ross Dress for Less, Planet Fitness
Woodman Van Nuys
108
96.1%
16.32
El Super
Silverado Plaza
Napa
1974
8,667
96.4%
21.39
Nob Hill, CVS
Gelson's Westlake Market Plaza
Oxnard-Thousand Oaks-Ventura
86
98.8%
32.11
Gelson's Markets, John of Italy Salon & Spa
Oakbrook Plaza
83
96.3%
22.22
Gelson's Markets, (CVS), (Ace Hardware)
Westlake Village Plaza and Center
2015
201
98.9%
41.86
Von's, Sprouts, (CVS)
French Valley Village Center
Rvrside-San Bernardino-Ontario
2004
99
98.4%
27.58
Oakshade Town Center
Sacramento-Roseville-Folsom
2011
1998
4,869
104
99.3%
23.31
Safeway, Office Max, Rite Aid
Prairie City Crossing
90
22.39
Safeway
Raley's Supermarket
1964
14.00
Raley's
The Marketplace
1990
27.13
Safeway, CVS, Petco
4S Commons Town Center
San Diego-Chula Vista-Carlsbad
85%
80,812
252
33.96
Ace Hardware, Bed Bath & Beyond, Cost Plus World Market, CVS, Jimbo's…Naturally!, Ralphs, ULTA
Balboa Mesa Shopping Center
207
29.07
CVS, Kohl's, Von's
El Norte Pkwy Plaza
99.0%
20.13
Von's, Children's Paradise, ACE Hardware
Friars Mission Center
39.09
Ralphs, CVS
29
Navajo Shopping Center
11,000
15.68
Albertsons, Rite Aid, O'Reilly Auto Parts
Point Loma Plaza
22,391
205
99.4%
23.96
Von's, Jo-Ann Fabrics, Marshalls, UFC Gym
Rancho San Diego Village
1981
95.1%
24.64
Smart & Final, 24 Hour Fitness, (Longs Drug)
Scripps Ranch Marketplace
132
99.5%
33.05
Vons, CVS
The Hub Hillcrest Market
149
91.0%
42.54
Ralphs, Trader Joe's
Twin Peaks
1988
208
22.11
Target, Grocer
200 Potrero
San Francisco-Oakland-Berkeley
1928
31
11.34
Gizmo Art Production, INC.
Bayhill Shopping Center
28,800
122
99.2%
27.69
CVS, Mollie Stone's Market
Clayton Valley Shopping Center
260
90.2%
23.66
Grocery Outlet, Central, CVS, Dollar Tree, Ross Dress For Less
Diablo Plaza
1982
94.9%
41.83
Bevmo!, (Safeway), (CVS)
El Cerrito Plaza
256
79.5%
29.87
Barnes & Noble, Jo-Ann Fabrics, PETCO, Ross Dress For Less, Trader Joe's, (CVS)
Encina Grande
107
35.81
Whole Foods, Walgreens
Persimmon Place
37.31
Whole Foods, Nordstrom Rack, Homegoods
Plaza Escuela
93.5%
44.20
The Container Store, Trufusion, Talbots, The Cheesecake Factory, Barnes & Noble
Pleasant Hill Shopping Center
98.3%
24.29
Target, Burlington, Ross Dress for Less, Homegoods
Potrero Center
1997
76.8%
33.03
Safeway, 24 Hour Fitness, Ross Dress for Less, Petco
Powell Street Plaza
2001
166
97.3%
35.38
Trader Joe's, Bevmo!, Ross Dress For Less, Marshalls, Old Navy
San Carlos Marketplace
36.29
TJ Maxx, Best Buy, PetSmart, Bassett Furniture
San Leandro Plaza
37.66
(Safeway), (CVS)
Serramonte Center
1,072
89.9%
26.75
Buy Buy Baby, Cost Plus World Market, Crunch Fitness, DAISO, Dave & Buster's, Dick's Sporting Goods, Divano Homes, H&M, Macy's, Nordstrom Rack, Old Navy, Party City, Ross Dress for Less, Target, TJ Maxx, Uniqlo
Tassajara Crossing
26.40
Safeway, CVS, Alamo Hardware
Willows Shopping Center (6)
247
78.6%
30.85
REI, UFC Gym, Old Navy, Ulta, Five Below
Woodside Central
1993
81
Chuck E. Cheese, Marshalls, (Target)
Ygnacio Plaza
1968
25,850
110
95.4%
40.57
Sports Basement,TJ Maxx
Blossom Valley
San Jose-Sunnyvale-Santa Clara
22,300
93.7%
27.44
Mariposa Shopping Center
2020
26,950
127
94.0%
21.72
Safeway, CVS, Ross Dress for Less
Shoppes at Homestead
116
25.30
CVS, Crunch Fitness, (Orchard Supply Hardware)
Snell & Branham Plaza
11,570
92
98.5%
21.11
The Pruneyard
2,200
41.19
Trader Joe's, The Sports Basement, Camera Cinemas, Marshalls
West Park Plaza
98.0%
20.32
Safeway, Rite Aid
Golden Hills Plaza
San Luis Obispo-Paso Robles
2006
244
85.6%
6.92
Lowe's, TJ Maxx
Five Points Shopping Center
Santa Maria-Santa Barbara
22,924
97.6%
30.78
Smart & Final, CVS, Ross Dress for Less, Big 5 Sporting Goods, PETCO
Corral Hollow
Stockton
167
70.4%
20.69
Safeway, CVS
Alcove On Arapahoe
Boulder
CO
26,700
159
89.5%
19.51
PETCO, HomeGoods, Jo-Ann Fabrics, Safeway, Ulta Salon
Crossroads Commons
1986
34,500
143
93.6%
29.95
Whole Foods, Barnes & Noble
Crossroads Commons II
1995
5,500
41.11
(Whole Foods), (Barnes & Noble)
Falcon Marketplace
Colorado Springs
25.14
(Wal-Mart)
Marketplace at Briargate
35.01
(King Soopers)
Monument Jackson Creek
12.52
King Soopers
Woodmen Plaza
13.67
Applewood Shopping Ctr
Denver-Aurora-Lakewood
360
91.9%
16.64
Applejack Liquors, Hobby Lobby, Homegoods, King Soopers, PetSmart, Sierra Trading Post, Ulta
Belleview Square
117
20.83
Boulevard Center
77
87.6%
31.81
Eye Care Specialists, (Safeway)
Buckley Square
1978
90.5%
11.23
Ace Hardware, King Soopers
Cherrywood Square Shop Ctr
9,650
12.78
Hilltop Village
101
98.7%
12.64
Littleton Square
11.88
Lloyd King Center
12.40
Ralston Square Shopping Center
1977
96.7%
15.95
Shops at Quail Creek
2008
38
92.5%
25.79
Stroh Ranch
13.87
Centerplace of Greeley III
Greeley
11.73
Hobby Lobby, Best Buy, TJ Maxx
22 Crescent Road
Bridgeport-Stamford-Norwalk
CT
1984
60.00
-
91 Danbury Road
1965
29.47
Black Rock
80%
18,637
91.2%
29.66
Old Navy, The Clubhouse
Brick Walk (6)
31,131
98.1%
44.79
Compo Acres Shopping Center
43
95.9%
54.78
Copps Hill Plaza
8,962
62.4%
26.12
Rite Aid, Stop & Shop, Homegoods
Danbury Green
124
26.78
Trader Joe's, Hilton Garden Inn, DSW, Staples, Rite Aid, Warehouse Wines & Liquors
Darinor Plaza (6)
20.24
Kohl's, Old Navy, Party City
Fairfield Center (6)
88.7%
Fairfield University Bookstore, Merril Lynch
Post Road Plaza
55.98
Walmart Norwalk
142
0.56
WalMart, HomeGoods
Westport Row
93.0%
43.32
The Fresh Market, Pottery Barn
Brookside Plaza
Hartford-E Hartford-Middletown
95.8%
15.56
Bed, Bath & Beyond, Burlington Coat Factory, PetSmart, ShopRite, Staples, TJ Maxx
Corbin's Corner
53,000
31.71
Best Buy, Edge Fitness, Old Navy, The Tile Shop, Total Wine and More, Trader Joe's
Southbury Green
New Haven-Milford
156
83.9%
ShopRite, Homegoods
Shops at The Columbia
Washington-Arlington-Alexandri
DC
85.8%
42.56
Spring Valley Shopping Center
1930
10,797
100.30
Pike Creek
Philadelphia-Camden-Wilmington
DE
16.75
Acme Markets, Edge Fitness, Pike Creek Community Hardware
Shoppes of Graylyn
1971
25.44
Rite Aid
Corkscrew Village
Cape Coral-Fort Myers
FL
82
96.5%
14.84
Shoppes of Grande Oak
79
17.92
Millhopper Shopping Center
Gainesville
19.40
Newberry Square
181
90.3%
9.47
Publix, Floor & Décor, Dollar Tree
Anastasia Plaza
Jacksonville
97.4%
15.09
Atlantic Village
96.8%
18.11
LA Fitness, Pet Supplies Plus
Brooklyn Station on Riverside
97.2%
28.17
The Fresh Market
Courtyard Shopping Center
137
3.68
Target, (Publix)
East San Marco
2022
59
28.36
Fleming Island
95.7%
16.92
Publix, PETCO, Planet Fitness, (Target)
Hibernia Pavilion
92.0%
16.59
John's Creek Center
9,000
76
16.67
Julington Village
10,000
17.20
Publix, (CVS)
Mandarin Landing
1976
140
88.5%
19.67
Whole Foods, Aveda Institute, Baptist Health
Nocatee Town Center
114
Oakleaf Commons
16.66
Old St Augustine Plaza
248
11.08
Publix, Burlington Coat Factory, Hobby Lobby, LA Fitness, Ross Dress for Less
Pablo Plaza
161
18.34
Whole Foods, Office Depot, Marshalls, HomeGoods, PetSmart
Pine Tree Plaza
96.9%
14.58
Seminole Shoppes
50%
2009
7,612
Shoppes at Bartram Park
135
22.20
Publix, (Kohl's), (Tutor Time)
Shops at John's Creek
26.42
South Beach Regional
92.3%
17.15
Trader Joe's, Home Depot, Ross Dress for Less, Bed Bath & Beyond, Staples, Nordstrom Rack
Starke (6)
27.05
Aventura Shopping Center
Miami-Ft Lauderdale-PompanoBch
38.19
CVS, Publix
Aventura Square (6)
1991
2,340
144
78.8%
39.74
Bed Bath & Beyond, DSW Warehouse, Jewelry Exchange, Old Navy
Banco Popular Building
0.0%
Bird 107 Plaza
92.9%
21.98
Walgreens
Bird Ludlam
192
25.60
CVS, Goodwill, Winn-Dixie
Boca Village Square
22.70
Boynton Lakes Plaza
93.8%
16.63
Citi Trends, Pet Supermarket, Publix
Boynton Plaza
105
21.07
Caligo Crossing
46.34
(Kohl's)
Chasewood Plaza
Publix, Pet Smart
Concord Shopping Plaza
309
13.35
Big Lots, Dollar Tree, Home Depot, Winn-Dixie, YouFit Health Club
Coral Reef Shopping Center
75
84.6%
31.86
Aldi, Walgreens
32
Country Walk Plaza
22.44
Publix, CVS
Countryside Shops
193
25.03
Publix, Ross Dress for Less
Fountain Square
177
28.90
Publix, Ross Dress for Less, TJ Maxx, Ulta, (Target)
Gardens Square
18.98
Greenwood Shopping Centre
133
16.81
Publix, Bealls
Hammocks Town Center
187
95.2%
18.33
CVS, Goodwill, Publix, Metro-Dade Public Library, YouFit Health Club, (Kendall Ice Arena)
Pine Island
255
15.24
Publix, Burlington Coat Factory, Beall's Outlet, YouFit Health Club
Pine Ridge Square
19.23
The Fresh Market, Bed Bath & Beyond, Marshalls, Ulta
Pinecrest Place (6)
96.0%
40.60
Whole Foods, (Target)
33
34
Point Royale Shopping Center
202
16.80
Winn-Dixie, Burlington Coat Factory, Pasteur Medical Center, Planet Fitness, Rana Furniture
Prosperity Centre
23.41
Bed Bath & Beyond, Office Depot, TJ Maxx, CVS
Sawgrass Promenade
90.7%
13.45
Publix, Walgreens, Dollar Tree
Sheridan Plaza
507
19.76
Publix, Kohl's, LA Fitness, Ross Dress for Less, Pet Supplies Plus, Wellmax, Burlington, Marshalls
Shoppes @ 104
90.0%
19.88
Winn-Dixie, CVS
Shoppes at Lago Mar
15.90
Publix, YouFit Health Club
Shoppes of Jonathan's Landing
27.15
(Publix)
Shoppes of Oakbrook
410
200
68.3%
18.45
Publix, Tuesday Morning, Duffy's Sports Bar, CVS
Shoppes of Silver Lakes
20.62
Publix, Goodwill
Shoppes of Sunset
74.2%
25.56
Shoppes of Sunset II
23.09
Shops at Skylake
287
24.81
Publix, LA Fitness, TJ Maxx, Goodwill, Pasteur Medical
Tamarac Town Square
125
12.54
Publix, Dollar Tree, Retro Fitness
University Commons (6)
180
34.79
Whole Foods, Nordstrom Rack, Barnes & Noble, Bed Bath & Beyond
Waterstone Plaza
61
17.74
Welleby Plaza
14.98
Publix, Dollar Tree
Wellington Town Square
95.0%
West Bird Plaza
2021
25.43
West Lake Shopping Center
22.02
Westport Plaza
91.6%
21.06
Berkshire Commons
Naples-Marco Island
15.83
Publix, Walgreens
Naples Walk
18.95
Pavillion
23.51
LA Fitness, Paragon Theaters, J. Lee Salon Suites
Shoppes of Pebblebrook Plaza
97.0%
16.51
Publix, (Walgreens)
Glengary Shoppes
North Port-Sarasota-Bradenton
20.42
Best Buy, Barnes & Noble
Alafaya Village
Orlando-Kissimmee-Sanford
93.9%
25.76
Kirkman Shoppes
25.78
LA Fitness, Walgreens
Lake Mary Centre
93.3%
17.55
The Fresh Market, Academy Sports, Hobby Lobby, LA Fitness, Ross Dress for Less, Office Depot
Plaza Venezia
36,500
203
32.31
Publix, Eddie V's
Town and Country
78
11.47
Ross Dress for Less
35
Unigold Shopping Center
115
89.3%
15.61
YouFit Health Club, Ross Dress for Less
Willa Springs
16,700
22.58
Cashmere Corners
Port St. Lucie
14.83
WalMart
The Plaza at St. Lucie West
25.58
Charlotte Square
Punta Gorda
1980
94.1%
11.68
WalMart, Buffet City
Ryanwood Square
Sebastian-Vero Beach
12.28
Publix, Beall's, Harbor Freight Tools
South Point
65
Treasure Coast Plaza
1,166
134
98.2%
18.77
Publix, TJ Maxx
Carriage Gate
Tallahassee
24.83
Trader Joe's, TJ Maxx
Ocala Corners (6)
88.3%
13.89
Bloomingdale Square
Tampa-St Petersburg-Clearwater
19.30
Bealls, Dollar Tree, Home Centric, LA Fitness, Publix
Northgate Square
Regency Square
19.79
AMC Theater, Dollar Tree, Five Below, Marshalls, Michael's, PETCO, Shoe Carnival, Staples, TJ Maxx, Ulta, Old Navy, (Best Buy), (Macdill)
Shoppes at Sunlake Centre
24.78
Suncoast Crossing (6)
7.01
Kohl's, (Target)
The Village at Hunter's Lake
28.05
Sprouts
Town Square
44
33.86
PETCO, Barnes & Noble
Village Center
22.38
Publix, PGA Tour Superstore, Walgreens
Westchase
17.57
Ashford Place
Atlanta-SandySprings-Alpharett
GA
86.1%
24.58
Harbor Freight Tools
Briarcliff La Vista
1962
Michael's
Briarcliff Village
189
17.01
Burlington, Party City, Publix, Shoe Carnival, TJ Maxx
Bridgemill Market
91.7%
17.77
Brighten Park
28.37
Lidl, Big Blue Swim School, Kohl's
Buckhead Court
89.7%
31.78
Buckhead Landing
74.3%
19.52
Binders Art Supplies & Frames, Kroger
Buckhead Station
234
25.27
Bed Bath & Beyond, Cost Plus World Market, DSW Warehouse, Nordstrom Rack, Old Navy, Saks Off 5th, TJ Maxx, Ulta
Cambridge Square
1979
71
40.0%
26.89
Chastain Square
23.53
Cornerstone Square
18.96
Aldi, Barking Hound Village, CVS, HealthMarkets Insurance
Dunwoody Hall
13,800
96.2%
21.03
Dunwoody Village
1975
121
21.49
The Fresh Market, Walgreens, Dunwoody Prep
Howell Mill Village
25.11
Paces Ferry Plaza
40.24
Powers Ferry Square
35.26
HomeGoods, PETCO
Powers Ferry Village
69
10.48
Publix, The Juice Box
Russell Ridge
90.8%
13.30
Kroger
Sandy Springs
25.63
Trader Joe's, Fox's, Peter Glenn Ski & Sports
Sope Creek Crossing
95.5%
16.72
The Shops at Hampton Oaks
89.1%
11.81
(CVS)
Williamsburg at Dunwoody
82.7%
27.64
Civic Center Plaza
Chicago-Naperville-Elgin
IL
22,000
265
10.54
Super H Mart, Home Depot, O'Reilly Automotive, King Spa
Clybourn Commons
37.88
PETCO
Glen Oak Plaza
2010
1967
Trader Joe's, Walgreens, Northshore University Healthsystems
Hinsdale Lake Commons (fka Hinsdale)
185
16.30
Whole Foods, Goodwill, Charter Fitness, Petco
Mellody Farm
93.1%
29.15
Whole Foods, Nordstrom Rack, REI, HomeGoods, Barnes & Noble, West Elm
Naperville Plaza
1961
23,000
25.65
Casey's Foods, Trader Joe's, Oswald's Pharmacy
Riverside Sq & River's Edge
169
17.54
Mariano's Fresh Market, Dollar Tree, Party City, Blink Fitness
37
Roscoe Square
24,500
70.0%
28.09
Mariano's Fresh Market, Walgreens
Westchester Commons
18.05
Mariano's Fresh Market, Goodwill
Willow Festival (6)
404
18.84
Whole Foods, Lowe's, CVS, HomeGoods, REI, Best Buy, Ulta
Shops on Main
IN
94%
16.46
Whole Foods, Dick's Sporting Goods, Ross Dress for Less, HomeGoods, DSW, Nordstrom Rack, Marshalls
Willow Lake Shopping Center
Indianapolis-Carmel-Anderson
72.4%
Indiana Bureau of Motor Vehicles, (Kroger)
Willow Lake West Shopping Center
26.76
Fellsway Plaza
Boston-Cambridge-Newton
MA
75%
35,446
158
25.90
Stop & Shop, Planet Fitness, BioLife Plasma Services
Shaw's at Plymouth
19.34
Shaw's
Shops at Saugus
30.54
Trader Joe's, La-Z-Boy, PetSmart
Star's at Cambridge
41.18
Star Market
Star's at Quincy
23.63
Star's at West Roxbury
94.7%
26.66
The Abbot
1912
77.0%
90.15
Center for Effective Alturism
Twin City Plaza
22.09
Shaw's, Marshall's, Extra Space Storage, Walgreens, K&G Fashion, Dollar Tree, Everfitness, Formlabs
Festival at Woodholme
Baltimore-Columbia-Towson
MD
18,510
94.6%
40.95
Parkville Shopping Center
9,960
165
17.45
Giant, Parkville Lanes, Dollar Tree, Petco, The Cellar Parkville
Southside Marketplace
24,800
25.45
Giant
Village at Lee Airpark (6)
30.79
Giant, (Sunrise)
Burnt Mills
86.9%
42.83
Cloppers Mill Village
19.47
Shoppers Food Warehouse, Dollar Tree
Firstfield Shopping Center
43.23
Takoma Park
1960
15.21
Planet Fitness
Watkins Park Plaza
29.21
LA Fitness, CVS
Westbard Square
38.59
Giant, Bowlmor AMF
Woodmoor Shopping Center
1954
35.70
Fenton Marketplace
Flint
MI
74.0%
8.71
Family Farm & Home
Apple Valley Square
Minneapol-St. Paul-Bloomington
MN
179
Jo-Ann Fabrics, PETCO, Savers, Experience Fitness, (Burlington Coat Factory), (Aldi)
Cedar Commons
28.33
Colonial Square
19,700
26.47
Lund's
Rockford Road Plaza
20,000
204
13.82
Kohl's, PetSmart, HomeGoods, TJ Maxx
Rockridge Center
14,500
14.63
CUB Foods
Brentwood Plaza
St. Louis
MO
11.50
Schnucks
Bridgeton
12.14
Schnucks, (Home Depot)
Dardenne Crossing
11.60
Kirkwood Commons
210
10.35
Walmart, TJ Maxx, HomeGoods, Famous Footwear, (Target), (Lowe's)
Blakeney Town Center (fka Blakeney Shopping Center)
Charlotte-Concord-Gastonia
NC
384
99.7%
26.17
Harris Teeter, Marshalls, Best Buy, Petsmart, Off Broadway Shoes, Old Navy, (Target)
Carmel Commons
91.3%
24.75
Chuck E. Cheese, The Fresh Market, Party City
Cochran Commons
3,359
17.43
Harris Teeter, (Walgreens)
Willow Oaks
17.83
Shops at Erwin Mill
Durham-Chapel Hill
55%
19.27
Harris Teeter
Southpoint Crossing
16.98
39
Village Plaza
12,000
23.16
Woodcroft Shopping Center
14.52
Food Lion, ACE Hardware
Glenwood Village
Raleigh-Cary
18.28
Holly Park
1969
160
20.06
DSW Warehouse, Trader Joe's, Ross Dress For Less, Staples, US Fitness Products, Jerry's Artarama, Pet Supplies Plus, Ulta
Lake Pine Plaza
14.35
Market at Colonnade Center
58
28.26
Midtown East
36,000
24.28
Wegmans
Ridgewood Shopping Center
1951
9,278
94
21.35
Shoppes of Kildaire
Trader Joe's, Aldi, Staples, Barnes & Noble
Sutton Square
21.09
Village District
30%
75,000
559
26.46
Harris Teeter, The Fresh Market, Wake Public Library, Walgreens, Talbots, Great Outdoor Provision Co., York Properties,The Cheshire Cat Gallery, Crunch Fitness Select Club, Bailey's Fine Jewelry, Sephora, Barnes & Noble, Goodnight's Comedy Club
Chimney Rock (6)
New York-Newark-Jersey City
NJ
218
37.34
Whole Foods, Nordstrom Rack, Saks Off 5th, The Container Store, Ulta
District at Metuchen
32.18
Plaza Square
62.0%
19.60
Grocer
Glenwood Green (7)
70%
355
83.0%
11.00
ShopRite, Target, Rendina
Haddon Commons
54
15.18
Acme Markets
101 7th Avenue
NY
57
1175 Third Avenue
116.62
The Food Emporium
1225-1239 Second Ave
137.95
90 - 30 Metropolitan Avenue
35.57
Michaels, Staples, Trader Joe's
Broadway Plaza (6)
41.06
Aldi, Best Buy, Bob's Discount Furniture, TJ Maxx, Blink Fitness
Clocktower Plaza Shopping Ctr (6)
49.89
Stop & Shop
East Meadow
15.73
Marshalls, Stew Leonard's
East Meadow Plaza
Lidl, Dollar Deal
Eastport
48
12.98
King Kullen, Rite Aid
Hewlett Crossing I & II
8,879
38.48
Lake Grove Commons
Whole Foods, LA Fitness
Rivertowns Square
90.9%
23.85
Ulta, The Learning Experience, Mom's Organic Market, Look Cinemas
The Gallery at Westbury Plaza
312
51.21
Trader Joe's, Nordstrom Rack, Saks Fifth Avenue, Bloomingdale's, The Container Store, HomeGoods, Old Navy, Gap Outlet, Bassett Home Furnishings, Famous Footware
The Point at Garden City Park (6)
30.09
King Kullen, Ace Hardware
Valley Stream
1950
28.89
King Kullen
Wading River
84.1%
23.38
King Kullen, CVS, Ace Hardware
41
Westbury Plaza
88,000
390
27.04
WalMart, Costco, Marshalls, Total Wine and More, Olive Garden
Cherry Grove
Cincinnati
OH
12.35
Kroger, Shoe Carnival, TJ Maxx, Tuesday Morning
Hyde Park
401
17.41
Kroger, Kohl's, Walgreens, Jo-Ann Fabrics, Ace Hardware, Staples, Marshalls
Red Bank Village
176
7.73
Regency Commons
79.0%
27.33
West Chester Plaza
10.44
East Pointe
Columbus
Kroger New Albany Center
13.47
Northgate Plaza (Maxtown Road)
11.98
Kroger, (Home Depot)
Corvallis Market Center
Corvallis
OR
22.29
Michaels, TJ Maxx, Trader Joe's
Northgate Marketplace
Medford
84.2%
22.18
Trader Joe's, REI, PETCO
Northgate Marketplace Ph II
18.16
Dick's Sporting Goods, Homegoods, Marshalls
Greenway Town Center
Portland-Vancouver-Hillsboro
16.19
Dollar Tree, Rite Aid, Whole Foods
Murrayhill Marketplace
150
84.4%
20.35
Safeway, Planet Fitness
Sherwood Crossroads
12.56
Tanasbourne Market (6)
30.18
Walker Center
23.23
Bed Bath & Beyond
Allen Street Shopping Ctr
Allentown-Bethlehem-Easton
PA
1958
18.74
Grocery Outlet Bargain Market
Lower Nazareth Commons
26.62
Burlington Coat Factory, PETCO, (Wegmans), (Target)
Stefko Boulevard Shopping Center
86.4%
11.31
Valley Farm Market, Dollar Tree
Hershey (6)
Harrisburg-Carlisle
30.00
Baederwood Shopping Center
24,365
27.91
Whole Foods, Planet Fitness
City Avenue Shopping Center
162
91.8%
20.76
Ross Dress for Less, TJ Maxx, Dollar Tree
Gateway Shopping Center
34.25
Trader Joe's, Staples, TJ Maxx, Jo-Ann Fabrics
Mercer Square Shopping Center
93.2%
22.73
Weis Markets
Newtown Square Shopping Center
19.80
Acme Markets, Michael's
Warwick Square Shopping Center
40.4%
27.74
Indigo Square
Charleston-North Charleston
SC
29.98
Greenwise (Vac 8/29/20)
Merchants Village
17.65
Harpeth Village Fieldstone
Nashvil-Davdsn-Murfree-Frankln
TN
Northlake Village
15.46
Peartree Village
20.33
Kroger, PETCO
Hancock
Austin-Round Rock-Georgetown
TX
263
19.39
24 Hour Fitness, Firestone Complete Auto Care, H.E.B, PETCO, Twin Liquors
Market at Round Rock
123
19.82
Sprout's Markets, Office Depot, Tuesday Morning
North Hills
164
21.88
H.E.B.
Shops at Mira Vista
68
25.31
Trader Joe's, Champions Westlake Gymnastics & Cheer
Tech Ridge Center
715
216
23.81
H.E.B., Pinstack, Baylor Scott & White
Bethany Park Place
Dallas-Fort Worth-Arlington
10,200
98.6%
11.97
CityLine Market
29.90
CityLine Market Phase II
28.18
Hillcrest Village
49.88
Keller Town Center
120
17.10
Tom Thumb
Lebanon/Legacy Center
87.2%
29.35
(WalMart)
Market at Preston Forest
22.53
Mockingbird Commons
19.99
Tom Thumb, Ogle School of Hair Design
Preston Oaks (6)
40.03
Central Market, Talbots
Prestonbrook
15.45
Shiloh Springs
89.8%
14.77
Alden Bridge
Houston-Woodlands-Sugar Land
26,000
21.81
Kroger, Walgreens
Baybrook East (7)
2,683
13.17
H.E.B
Cochran's Crossing
20.43
Indian Springs Center
25.46
Market at Springwoods Village
53%
4,250
99.1%
17.73
Panther Creek
24.71
CVS, The Woodlands Childrens Museum, Fitness Project
Southpark at Cinco Ranch
14.06
Kroger, Academy Sports, PETCO, Spec's Liquor and Finer Foods
Sterling Ridge
129
22.16
Kroger, CVS
Sweetwater Plaza
95.3%
18.46
The Village at Riverstone
17.11
Weslayan Plaza East
Berings, Ross Dress for Less, Michaels, The Next Level Fitness, Spec's Liquor, Trek Bicycle
Weslayan Plaza West
32,629
92.6%
Randalls Food, Walgreens, PETCO, Jo-Ann's, Tuesday Morning, Homegoods
Westwood Village
20.47
Fitness Project, PetSmart, Office Max, Ross Dress For Less, TJ Maxx, (Target)
Woodway Collection
7,482
94.2%
31.73
Carytown Exchange
Richmond
VA
65%
86.2%
26.91
Hanover Village Shopping Center
9.81
Aldi, Tractor Supply Company, Harbor Freight Tools, Tuesday Morning
Village Shopping Center
1948
24,250
88.8%
24.99
Ashburn Farm Village Center
17.33
Patel Brothers, The Shop Gym
Belmont Chase
33.98
Cooper's Hawk Winery, Whole Foods
Braemar Village Center
25%
23.68
Centre Ridge Marketplace
11,640
20.82
United States Coast Guard Ex, Planet Fitness
Festival at Manchester Lakes
88.2%
31.72
Amazon Fresh, Homesense
Fox Mill Shopping Center
22,500
26.79
Greenbriar Town Center
76,200
340
28.93
Big Blue Swim School, Bob's Discount Furniture, CVS, Giant, Marshalls, Planet Fitness, Ross Dress for Less, Total Wine and More
Kamp Washington Shopping Center
31.99
PGA Tour Superstore
Kings Park Shopping Center
21,800
33.57
Giant, CVS
Lorton Station Marketplace
7,300
66.9%
27.18
Amazon Fresh
Point 50
32.34
Saratoga Shopping Center
22,800
113
21.62
Shops at County Center
Harris Teeter, Planet Fitness
The Crossing Clarendon
420
90.1%
38.84
Whole Foods, Crate & Barrel, The Container Store, Barnes & Noble, Pottery Barn, Ethan Allen, The Cheesecake Factory, Life Time Fitness
The Field at Commonwealth
Village Center at Dulles
48,000
304
25.48
Giant, Gold's Gym, CVS, Advance Auto Parts, Chuck E. Cheese, HomeGoods, Goodwill, Furniture Max
Willston Centre I
1952
28.34
CVS, Fashion K City
Willston Centre II
24,419
27.97
Safeway, (Target), (PetSmart)
6401 Roosevelt
Seattle-Tacoma-Bellevue
WA
1929
25.29
Aurora Marketplace
13,400
18.75
Safeway, TJ Maxx
Ballard Blocks I
27.68
LA Fitness, Ross Dress for Less, Trader Joe's
Ballard Blocks II
34.81
Bright Horizons, Kaiser Permanente, PCC Community Markets, Prokarma, Trufusion, West Marine
Broadway Market
21,500
Gold's Gym, Mosaic Salon Group, Quality Food Centers
Cascade Plaza
206
12.79
Big 5 Sporting Goods, Big Lots, Dollar Tree, Jo-Ann Fabrics, Planet Fitness, Ross Dress For Less, Safeway, Aaron's
Eastgate Plaza
31.69
Grand Ridge Plaza
331
99.6%
25.96
Bevmo!, Dick's Sporting Goods, Marshalls, Regal Cinemas,Safeway, Ulta
Inglewood Plaza
45.41
Island Village
106
16.15
Klahanie Shopping Center
37.42
(QFC)
Melrose Market
36.32
Overlake Fashion Plaza
29.55
Marshalls, Bevmo!, Amazon Go Grocery
Pine Lake Village
26.49
Quality Food Centers, Rite Aid
Roosevelt Square
27.63
Whole Foods, Bartell, Guitar Center, LA Fitness
Sammamish-Highlands
37.98
Trader Joe's, Bartell Drugs, (Safeway)
Southcenter
33.16
(Target)
Regency Centers Total
1,883,098
51,145
23.77
Item 3. Legal Proceedings
We are a party to various legal proceedings that arise in the ordinary course of our business. We are not currently involved in any litigation, nor, to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations. However, no assurances can be given as to the outcome of any threatened or pending legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Our common stock is listed on the NASDAQ Global Select Market under the symbol "REG."
As of February 06, 2023, there were 87,993 holders of our common stock.
We intend to pay regular quarterly distributions to Regency Centers Corporation's common stockholders. Future distributions will be declared and paid at the discretion of our Board of Directors and will depend upon cash generated by our operating results, our financial condition, cash flows, capital requirements, future business prospects, annual dividend requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, and such other factors as our Board of Directors deems relevant. In order to maintain Regency Centers Corporation's qualification as a REIT for federal income tax purposes, we are generally required to make annual distributions equal to at least 90% of our real estate investment trust taxable income for the taxable year. Under certain circumstances we could be required to make distributions in excess of cash available for distributions in order to meet such requirements. We have a dividend reinvestment plan under which our shareholders may elect to reinvest their dividends automatically in common stock. Under the plan, we may elect to purchase common stock in the open market on behalf of shareholders or may issue new common stock to such stockholders.
Under the revolving credit agreement of our Line, in the event of any monetary default, we may not make distributions to stockholders except to the extent necessary to maintain our REIT status.
There were no unregistered sales of equity securities during the quarter ended December 31, 2022.
The following table represents information with respect to purchases by Regency of its common stock by months during the three month period ended December 31, 2022:
Period
Total number ofsharespurchased (1)
Total number of sharespurchased as part ofpublicly announced plansor programs (2)
Average pricepaid per share
Maximum number or approximatedollar value of shares that may yet bepurchased under the plans orprograms (2)
October 1, 2022, through October 31, 2022
54.36
174,607,162
November 1, 2022, through November 30, 2022
December 1, 2022, through December 31, 2022
The performance graph furnished below shows Regency's cumulative total stockholder return relative to the S&P 500 Index, the FTSE Nareit Equity REIT Index, and the FTSE Nareit Equity Shopping Centers index since December 31, 2017. The following performance graph and table do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other previous or future filings by us under the Securities Act of 1933, as amended (the "Securities Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act").
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
100.00
87.98
98.03
74.59
127.84
110.51
S&P 500
95.62
125.72
148.85
191.58
156.89
FTSE NAREIT Equity REITs
95.38
120.17
110.56
158.36
119.78
FTSE NAREIT Equity Shopping Centers
85.45
106.84
77.31
127.60
111.60
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executing on our Strategy
During the year ended December 31, 2022, we had Net income attributable to common stockholders of $482.9 million, which includes gains on sale of real estate of $109.0 million, as compared to $361.4 million during the year ended December 31, 2021.
During the year ended December 31, 2022:
We continued our development and redevelopment of high quality shopping centers:
We maintained liquidity and financial flexibility to cost effectively fund investment opportunities and debt maturities:
Leasing Activity and Significant Tenants
We believe our high-quality, grocery anchored shopping centers located in suburban trade areas with compelling demographics create attractive spaces for retail and service providers to operate their businesses.
Pro-rata Percent Leased
The following table summarizes Pro-rata percent leased of our combined consolidated and unconsolidated shopping center portfolio:
Percent Leased – All properties
94.1
Anchor Space (spaces ≥ 10,000 SF)
96.8
97.0
Shop Space (spaces < 10,000 SF)
91.5
Our percent leased increased primarily due to favorable leasing activity in our Shop Space category during 2022.
Pro-rata Leasing Activity
The following table summarizes leasing activity, including our Pro-rata share of activity within the portfolio of our co-investment partnerships (totals as a weighted-average PSF):
Year Ended December 31, 2022
LeasingTransactions
SF(in thousands)
BaseRent PSF
TenantAllowanceand LandlordWork PSF
LeasingCommissionsPSF
Anchor Space Leases
New
632
5.32
Renewal
3,252
16.36
1.07
0.23
Total Anchor Space Leases
3,884
16.16
4.86
1.06
Shop Space Leases
562
37.55
36.17
11.48
1,287
2,395
35.94
1.66
0.77
Total Shop Space Leases
1,849
3,453
36.44
12.23
4.05
Total Leases
1,981
7,337
25.70
8.33
2.47
Year Ended December 31, 2021
667
20.10
44.50
6.18
2,941
15.34
0.21
3,608
16.22
8.68
1.31
1,022
34.38
28.77
10.87
1,257
2,324
34.31
1.62
0.79
1,830
3,346
34.33
9.92
3.87
1,979
6,954
24.93
9.28
2.54
The weighted-average base rent PSF on signed Shop Space leases during 2022 was $36.44 PSF, which is higher than the weighted average annual base rent PSF of all Shop Space leases due to expire during the next 12 months of $34.76 PSF. New and renewal rent spreads, as compared to prior rents on these same spaces leased, were positive at 7.4% for the 12 months ended December 31, 2022, as compared to 5.5% for the 12 months ended December 31, 2021.
The success of our tenants in operating their businesses and their corresponding ability to pay us rent continue to be significantly impacted by many current economic challenges, which increase their cost of doing business, including, but not limited to, inflation, labor shortages, supply chain constraints, increasing energy prices and interest rates. Additionally, macroeconomic and geopolitical risks create challenges that may exacerbate current market conditions in the United States.
These economic conditions could adversely impact our volume of leasing activity, leasing spreads, and financial results generally, as well as adversely affect the business and financial results of our tenants. The aggregate impacts of these current economic challenges may also negatively affect the overall market for retail space, resulting in decreased demand for space in our centers. This, in turn, could result in downward pressure on rents that we are able to charge to new or renewing tenants, such that future spreads could be adversely impacted. Further, we may experience higher costs for tenant buildouts, as costs of materials and labor may increase and supply and availability of both may become more limited.
Significant Tenants and Concentrations of Risk
We seek to reduce our operating and leasing risks through geographic diversification of our properties, as seen in "Item 2. Properties" of this Report. We seek to avoid dependence on any single property, market, or tenant. Based on percentage of annualized base rent, the following table summarizes our most significant tenants, of which four of the top five are grocers:
Anchor
Number ofStores
Percentage ofCompany-owned GLA (1)
Percentage ofAnnualBase Rent (1)
Bankruptcies and Credit Concerns
Our management team devotes significant time to researching and monitoring consumer preferences and trends, customer shopping behaviors, changes in delivery methods, shifts to e-commerce, and changing demographics in order to anticipate the challenges and opportunities impacting our industry. We seek to mitigate these potential impacts through maintaining a high quality portfolio, tenant diversification, replacing weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive customer traffic, and maintaining our presence in suburban trade areas with compelling demographic populations benefiting from high levels of disposal income. The potential for a recession and the severity and duration of any economic downturn could negatively impact our existing tenants and their ability to continue to meet their lease obligations.
Although base rent is derived from long-term lease contracts, tenants that file bankruptcy generally have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to adjudicate our claim and significant downtime to re-lease the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its leases, we could experience a significant reduction in our revenues. Tenants who are currently in bankruptcy and continue to occupy space in our shopping centers represent an aggregate of 0.5% of our annual base rent on a Pro-rata basis.
Results from Operations
The United States is currently experiencing high levels of inflation. Inflation, as well as other ongoing changes in economic conditions such as labor shortages, employee retention costs, increased material and shipping costs, higher interest rates, and supply chain constraints have spurred a rise in wages and increased operating costs and challenges for our tenants and us.
Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation on our operations by requiring tenants to pay their Pro-rata share of operating expenses, including common-area maintenance, real estate taxes, insurance, and utilities at our centers. Over half of our leases are for terms of less than ten years, primarily for Shop Space, which permits us to seek increased rents upon re-rental at market rates. However, our success in passing through increases in our operating expenses to our tenants is dependent on the tenants' ability to absorb and pay these increases. Additionally, increases in operating expenses passed through to our tenants, without a corresponding increase in our tenants' profitability, may limit our ability to grow base rent as tenants look to manage their total occupancy costs.
Comparison of the years ended December 31, 2022 and 2021:
Revenues changed as summarized in the following table:
(in thousands)
Change
Lease income
Base rent
821,755
765,941
55,814
Recoveries from tenants
280,658
258,596
22,062
Percentage rent
9,635
6,601
3,034
Uncollectible lease income
13,841
23,481
(9,640
)
Other lease income
14,748
16,021
(1,273
Straight-line rent
24,272
18,189
6,083
Above / below market rent amortization
22,543
24,539
(1,996
Total lease income
1,187,452
1,113,368
74,084
Other property income
10,719
12,456
(1,737
Management, transaction, and other fees
25,851
40,337
(14,486
Total revenues
1,224,022
1,166,161
57,861
Lease income increased $74.1 million, driven by the following contractually billable components of rent to the tenants per the lease agreements:
Other property income decreased $1.7 million primarily due to a decrease in settlements, which were higher in 2021.
Management, transaction, and other fees decreased $14.5 million primarily due to $13.6 million of promote income recognized during 2021 for our performance as managing member of the USAA partnership, as well as a decrease in asset and property management fees resulting from a smaller portfolio of properties within our co-investment partnerships following the sale of several properties to third parties or the purchase and consolidation by Regency.
Changes in our operating expenses are summarized in the following table:
Depreciation and amortization
319,697
303,331
16,366
Property operating expense
196,148
184,553
11,595
Real estate taxes
149,795
142,129
7,666
General and administrative
79,903
78,218
1,685
Other operating expenses
6,166
5,751
415
Total operating expenses
751,709
713,982
37,727
Depreciation and amortization costs increased $16.4 million, on a net basis, as follows:
Property operating expense increased $11.6 million, on a net basis, as follows:
Real estate taxes increased $7.7 million, on a net basis, as follows:
General and administrative costs increased $1.7 million, on a net basis, as follows:
The following table presents the components of Other expense (income):
Interest expense, net
Interest on notes payable
148,803
147,439
1,364
Interest on unsecured credit facilities
2,058
2,119
(61
Capitalized interest
(4,166
(4,202
Hedge expense
438
Interest income
(947
(624
(323
146,186
145,170
1,016
Provision for impairment of real estate
84,389
(84,389
Gain on sale of real estate, net of tax
(109,005
(91,119
(17,886
Net investment (income) loss
6,921
(5,463
12,384
Total other expense (income)
44,102
132,977
(88,875
The $1.0 million net increase in interest expense was primarily driven by an increase in mortgage interest expense from assumed loans on recently acquired properties. We expect that refinancing our debt at maturity or borrowing on our variable rate Line, in the current interest rate environment, could result in higher interest expense in future periods if interest rates remain elevated.
During 2021, we recognized $84.4 million of impairment losses resulting from the impairment of two operating properties.
During 2022, we recognized gains on sale of $109.0 million from five land parcels and two operating properties. During 2021, we recognized gains on sale of $91.1 million from five land parcels and six operating properties.
Net investment income decreased $12.4 million, to a Net investment loss of $6.9 million, primarily driven by unrealized losses during 2022 of investments held in the non-qualified deferred compensation plan and our captive insurance company. There is an offsetting $10.7 million benefit in General and administrative costs related to participant obligations within the deferred compensation plans.
Equity in income of investments in real estate partnerships changed as follows:
Regency'sOwnership
GRI - Regency, LLC ("GRIR")
40.00%
35,819
34,655
1,164
Equity One JV Portfolio LLC ("NYC") (1)
30.00%
9,173
315
8,858
Columbia Regency Retail Partners, LLC ("Columbia I")
20.00%
1,817
1,976
(159
Columbia Regency Partners II, LLC ("Columbia II")
1,735
10,987
(9,252
Columbia Village District, LLC
1,669
1,522
RegCal, LLC ("RegCal") (2)
25.00%
4,499
2,441
US Regency Retail I, LLC ("USAA") (3)
20.01%
631
(631
Other investments in real estate partnerships
35.00% - 50.00%
5,112
(5,058
10,170
Total equity in income of investments in real estate partnerships
59,824
47,086
12,738
The $12.7 million increase in our Equity in income of investments in real estate partnerships was largely attributable to the following changes:
The following represents the remaining components that comprise Net income attributable to common stockholders and unit holders:
Net income
488,035
366,288
121,747
Income attributable to noncontrolling interests
(5,170
(4,877
(293
Net income attributable to common stockholders
482,865
361,411
121,454
Net income attributable to exchangeable operating partnership units
2,105
1,615
490
Net income attributable to common unit holders
484,970
363,026
121,944
Comparison of the years ended December 31, 2021 and 2020:
For a comparison of our results from operations for the years ended December 31, 2021 and 2020, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022.
Supplemental Earnings Information
We use certain non-GAAP measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of our operating results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with our reported results under GAAP. We believe presenting our Pro-rata share of operating results, along with other non-GAAP measures, may assist in comparing our operating results to other REITs. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP measures to determine how best to provide relevant information to the public, and thus such reported non-GAAP measures could change. See "Defined Terms" in "Item 1. Business" for additional information regarding the definition of and other information regarding the non-GAAP measures we present in this Report.
We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP, rather they supplement GAAP measures by providing additional information we believe to be useful to shareholders. The principal limitation of these non-GAAP measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our Consolidated Financial Statements. In addition, they reflect the exercise of management's judgment about which expense and income items are excluded or included in determining these non-GAAP measures. In order to compensate for these limitations, reconciliations of the non-GAAP measures we use to their most directly comparable GAAP measures are provided, including as set forth below. Non-GAAP measures should not be relied upon in evaluating our financial condition, results of operations, or future prospects.
Pro-rata Same Property NOI:
Pro-rata same property NOI, excluding termination fees/expenses, changed from the following major components:
Real estate revenues:
892,253
861,382
30,871
302,171
292,319
9,852
11,004
7,701
3,303
Termination fees
5,007
6,734
(1,727
14,816
25,734
(10,918
11,847
11,556
291
8,338
9,863
(1,525
Total real estate revenue
1,245,436
1,215,289
30,147
Real estate operating expenses:
Operating and maintenance
197,481
190,017
7,464
159,189
159,620
(431
Ground rent
11,761
11,829
(68
Total real estate operating expenses
368,431
361,466
6,965
Pro-rata same property NOI
877,005
853,823
23,182
Less: Termination fees / expense
Pro-rata same property NOI, excluding termination fees / expense
871,998
847,089
24,909
Pro-rata same property NOI growth, excluding termination fees / expense
Real estate revenue increased $30.1 million, on a net basis, as follows:
Base rent increased $30.9 million due to increases from occupancy, rent steps in existing leases, and positive rental spreads on new and renewal leases.
Recoveries from tenants increased $9.9 million due to increases in recoverable expenses and greater recovery rates from higher average occupancy.
Percentage rent increased $3.3 million, primarily due to improved tenant sales.
Termination fees decreased $1.7 million primarily due to termination fees from several tenants at various properties during 2021, both wholly owned and within our partnerships.
Uncollectible lease income decreased $10.9 million primarily driven by the higher level of 2021 collections of previously reserved amounts, which have continued but to a lesser degree in 2022.
Other property income decreased $1.5 million primarily due to a decrease in settlements from 2021.
Real estate operating expenses increased $7.0 million, on a net basis, as follows:
Operating and maintenance increased $7.5 million primarily due to increases in insurance and other reimbursable costs.
Same Property Roll-forward:
Our same property pool includes the following property count, Pro-rata GLA, and changes therein:
(GLA in thousands)
PropertyCount
Beginning same property count
393
41,294
40,228
Acquired properties owned for entirety of comparable periods (1)
327
924
Developments that reached completion by beginning of earliest comparable period presented
683
Disposed properties
(5
(195
(8
(420
SF adjustments (2)
(115
(121
Ending same property count
389
41,383
Nareit FFO and Core Operating Earnings:
Our reconciliation of net income attributable to common stock and unit holders to Nareit FFO and to Core Operating Earnings is as follows:
(in thousands, except share information)
Reconciliation of Net income to Nareit FFO
Adjustments to reconcile to Nareit FFO: (1)
Depreciation and amortization (excluding FF&E)
344,629
330,364
95,815
Gain on sale of real estate
(121,835
(100,499
Exchangeable operating partnership units
Nareit FFO attributable to common stock and unit holders
707,764
688,706
Reconciliation of Nareit FFO to Core Operating Earnings
Nareit Funds From Operations
Adjustments to reconcile to Core Operating Earnings: (1)
Not Comparable Items
Early extinguishment of debt
Promote income
(13,589
Certain Non Cash Items
(11,327
(13,534
Uncollectible straight-line rent
(14,155
(5,965
Above/below market rent amortization, net
(21,434
(23,889
Debt premium/discount amortization
(184
(565
Core Operating Earnings
660,840
631,164
Reconciliation of Same Property NOI to Nearest GAAP Measure:
Our reconciliation of Net income attributable to common stockholders to Same Property NOI, on a Pro-rata basis, is as follows:
Less:
Other (1)
51,090
46,860
Plus:
Other operating expense
Other expense
Equity in income of investments in real estate excluded from NOI (2)
35,824
53,119
Net income attributable to noncontrolling interests
5,170
4,877
Pro-rata NOI
896,786
852,487
Less non-same property NOI (3)
(19,781
1,336
Liquidity and Capital Resources
General
We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. A significant portion of our cash from operations is distributed to our common shareholders in the form of dividends in order to maintain our status as a REIT.
Except for $200 million of private placement debt, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating Partnership is a co-issuer and a guarantor of the $200 million of outstanding debt of our Parent Company. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity, and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units.
We continually assess our available liquidity and our expected cash requirements, including monitoring our tenant rent collections. We have access to and draw on multiple financing sources to fund our operations and our long-term capital needs, including the requirements of our in process and planned developments, redevelopments, and other capital expenditures, and the repayment of debt. We expect to meet these needs by using a combination of the following: cash flow from operations after funding our dividend, borrowings from our Line, proceeds from the sale of real estate, mortgage loan and unsecured bank financing, distributions received from our co-investment partnerships, and when the capital markets are favorable, proceeds from the sale of equity securities or the issuance of new unsecured debt. We continually evaluate alternative financing options, and we believe we can obtain new financing on reasonable terms, although likely at higher interest rates than that of our debt currently outstanding.
We have no unsecured debt maturities in 2023, $250 million of unsecured debt maturing in 2024, and what we believe is a manageable level of secured mortgage maturities during the next 12 months, including those mortgages within our real estate partnerships. Based upon our available cash balance, sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs for the next year.
In addition to our $66.5 million of unrestricted cash, we have the following additional sources of capital available:
ATM equity program (see note 12 to our Consolidated Financial Statements)
Original offering amount
500,000
Available capacity
350,363
Line of Credit (see note 9 to our Consolidated Financial Statements)
Total commitment amount
1,250,000
Available capacity (1)
1,240,619
Maturity (2)
March 23, 2025
The declaration of dividends is determined quarterly by our Board of Directors. On February 8, 2023, our Board of Directors declared a common stock dividend of $0.65 per share, payable on April 5, 2023, to shareholders of record as of March 15, 2023. While future dividends will be determined at the discretion of our Board of Directors, we plan to continue paying an aggregate amount of distributions to our stock and unit holders that, at a minimum, meet the requirements to continue qualifying as a REIT for federal income tax purposes. We have historically generated sufficient cash flow from operations to fund our dividend distributions. During the years ended December 31, 2022 and 2021, we generated cash flow from operations of $655.8 million and $659.4 million, respectively, and paid $430.1 million and $404.9 million in dividends to our common stock and unit holders, respectively.
We currently have development and redevelopment projects in various stages of construction, along with a pipeline of potential projects for future development or redevelopment. After funding our common stock dividend payment in January 2023, we estimate that we will require capital during the next 12 months of approximately $351.4 million related to leasing commissions, tenant improvements, in-process developments and redevelopments, capital contributions to our co-investment partnerships, and repaying maturing debt. These capital requirements are being impacted by current levels of high inflation resulting in increased costs of construction materials, labor, and services from third party contractors and suppliers. In response, we have implemented mitigation strategies such as entering into fixed cost construction contracts, pre-ordering materials, and other planning efforts. Further, continued challenges from permitting delays, labor shortages, and supply chain disruptions may extend the time to completion of these projects.
If we start new developments or redevelopments, commit to property acquisitions, repay debt prior to maturity, declare future dividends, or repurchase shares of our common stock, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease.
We endeavor to maintain a high percentage of unencumbered assets. As of December 31, 2022, 89.5% of our wholly-owned real estate assets were unencumbered. Our low level of encumbered assets allows us to more readily access the secured and unsecured debt markets and to maintain availability on the Line. Our trailing 12 month fixed charge coverage ratio, including our Pro-rata share of our partnerships, was 4.6x and 4.5x for the periods ended December 31, 2022 and 2021, respectively, and our Pro-rata net debt-to-operating EBITDAre ratio on a trailing 12 month basis was 5.0x and 5.1x, respectively, for the same periods.
Our Line and unsecured debt require that we remain in compliance with various covenants, which are described in note 9 to the Consolidated Financial Statements. We are in compliance with these covenants at December 31, 2022, and expect to remain in compliance. Please also refer to the Risk Factors discussed in Item 1A of Part I herein.
Summary of Cash Flow Activity
The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:
Net cash provided by operating activities
655,815
659,388
(3,573
Net cash used in investing activities
(206,108
(286,352
80,244
Net cash used in financing activities
(475,958
(656,459
180,501
Net (decrease) increase in cash, cash equivalents, and restricted cash
(26,251
(283,423
257,172
Total cash, cash equivalents, and restricted cash
68,776
95,027
Net cash provided by operating activities:
Net cash provided by operating activities changed by $3.6 million due to:
Net cash used in investing activities:
Net cash used in investing activities changed by $80.2 million as follows:
Cash flows from investing activities:
Acquisition of operating real estate, net of cash acquired of $3,061 and $2,991 in 2022 and 2021, respectively
(169,639
(392,051
222,412
Real estate development and capital improvements
(195,418
(177,631
(17,787
Proceeds from sale of real estate
143,133
206,193
(63,060
Collection (issuance) of notes receivable, net
1,823
(20
1,843
Investments in real estate partnerships
(36,266
(23,476
(12,790
Return of capital from investments in real estate partnerships
48,473
99,945
(51,472
Dividends on investment securities
1,113
813
300
Acquisition of investment securities
(21,112
(23,971
2,859
Proceeds from sale of investment securities
21,785
23,846
(2,061
Significant changes in investing activities include:
During the same period in 2021, we invested $23.5 million in our real estate partnerships, including:
We plan to continue developing and redeveloping shopping centers for long-term investment. During 2022, we deployed capital of $195.4 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:
Capital expenditures:
Land acquisitions
12,484
11,820
664
Building and tenant improvements
75,420
53,752
21,668
Redevelopment costs
68,730
78,056
(9,326
Development costs
27,861
19,426
8,435
4,133
4,085
Capitalized direct compensation
10,492
(3,702
195,418
177,631
17,787
62
The following table summarizes our development projects in-process and completed:
(in thousands, except cost PSF)
Market
Ownership
Start Date
Estimated Stabilization Year (1)
Estimated / Actual NetDevelopmentCosts (2) (3)
GLA (3)
Cost PSFof GLA (2) (3)
% of CostsIncurred
Developments In-Process
Glenwood Green
Old Bridge, NJ
Q1-22
45,530
184
Eastfield at Baybrook - Phase 1B
Houston, TX
Q2-22
10,384
Total Developments In-Process
55,914
273
Developments Completed
Carrytown Exchange - Phase I & II
Richmond, VA
64%
Q4-18
29,268
74
396
Jacksonville, FL
100%
Q4-20
18,970
322
Total Developments Completed
48,238
363
The following table summarizes our redevelopment projects in-process and completed:
Estimated Incremental Project Costs (2) (3)
% of Costs Incurred
Redevelopments In-Process
Metro, DC
56,002
Boston, MA
Q2-19
59,033
Westbard Square Phase I
Bethesda, MD
Q2-21
37,269
Atlanta, GA
27,709
Town & Country Center
Los Angeles, CA
Q4-22
24,525
Various Properties
Various
20%-100%
40,403
1,502
Total Redevelopments In-Process
244,941
2,021
Redevelopments Completed
Hollywood, FL
Q3-19
11,915
Preston Oaks
Dallas, TX
19,658
Serramonte Center-Phases 1 & 2
San Francisco, CA
33,229
8,916
243
Total Redevelopments Completed
73,718
1,925
Net cash used in financing activities:
Net cash flows used in financing activities changed during 2022, as follows:
Cash flows from financing activities:
Net proceeds from common stock issuances
61,284
82,510
(21,226
Repurchase of common shares in conjunction with equity award plans
(6,447
(4,083
(2,364
Common shares repurchased through share repurchase program
(75,419
Distributions to limited partners in consolidated partnerships, net
(7,245
(4,345
(2,900
Dividend payments and operating partnership distributions
(430,143
(404,900
(25,243
Repayments of unsecured credit facilities, net
(265,000
265,000
Debt repayment, including early redemption costs
(17,964
(53,269
35,305
Payment of loan costs
(88
(7,468
7,380
Proceeds from sale of treasury stock, net
(32
Significant financing activities during the years ended December 31, 2022 and 2021 included the following:
Contractual Obligations
We have contractual obligations at December 31, 2022, which are discussed in our notes to Consolidated Financial Statements and include:
Critical Accounting Estimates
Knowledge about our accounting policies is necessary for a complete understanding of our Consolidated Financial Statements. The preparation of our Consolidated Financial Statements requires that we make certain estimates that impact the balance of assets and liabilities as of a financial statement date and the reported amount of income and expenses during a financial reporting period. These accounting estimates are based upon, but not limited to, our judgments about historical and expected future results, current market conditions, and interpretation of industry accounting standards. While the following is not intended to be a comprehensive list of our accounting estimates, the estimates discussed below are believed to be critical because of their significance to the Consolidated Financial Statements and the possibility that future events may differ from those judgments, or that the use of different assumptions could result in materially different estimates. We review these estimates on a periodic basis to ensure reasonableness; however, the amounts we may ultimately realize could differ from such estimates.
Valuation of Real Estate Investments
In accordance with GAAP, we evaluate our real estate for impairment whenever there are events or changes in circumstances, including property operating performance, general market conditions or changes in expected hold periods, that indicate that the carrying value of our real estate properties (including any related amortizable intangible assets or liabilities) may not be recoverable. If such events or changes occur, we compare the current carrying value of the asset to the estimated undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Our estimated cash flows are based on several key assumptions, including rental rates, expected leasing activity, costs of tenant improvements, leasing commissions, expected hold period, comparable sales information, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and the resulting impairment, if any, could differ from the actual gain or loss recognized upon ultimate sale in an arm's length transaction. If the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of carrying value over the estimated fair value.
The estimated fair value of real estate assets is subjective and is estimated through comparable sales information and other market data if available, as well as the use of an income approach such as the direct capitalization method or the discounted cash flow approach. The discounted cash flow method uses similar assumptions to the undiscounted cash flow method above, as well as a discount rate. Such cash flow projections and rates are subject to management judgment and changes in those assumptions could impact the estimation of fair value. In estimating the fair value of undeveloped land, we generally use market data and comparable sales information. Changes in events or changes in circumstances may alter the expected hold period of an asset or asset group, which may result in an impairment loss and such loss could be material to the Company's financial condition or operating performance.
Recent Accounting Pronouncements
See note 1 to Consolidated Financial Statements.
Environmental Matters
We are subject to numerous environmental laws and regulations as they apply to our shopping centers, pertaining primarily to chemicals historically used by certain current and former dry cleaning and gas station tenants and the existence of asbestos in older shopping centers. We believe that the few tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we endeavor to require tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems, in accordance with the terms of our leases. We carry an environmental insurance policy for certain third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also secured environmental insurance policies, where appropriate, on a relatively small number of specific properties with known contamination, in order to mitigate our environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.
As of December 31, 2022, we had accrued liabilities of $12.1 million for our Pro-rata share of environmental remediation, including our Investments in real estate partnerships. We believe that the ultimate remediation of currently known environmental matters will not have a material effect on our financial position, cash flows, or results of operations. We can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contamination; that our estimate of liabilities will not change as more information becomes available; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to us.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to two significant components of interest rate risk:
We continuously monitor the capital markets and evaluate our ability to issue new debt, to repay maturing debt, or fund our commitments. We continue to believe, in light of our credit ratings, the available capacity under our unsecured credit facility, and the number of high quality, unencumbered properties that we own which could collateralize borrowings, we will be able to successfully issue new secured or unsecured debt to fund maturing debt obligations. It is uncertain the degree to which capital market volatility and rising interest rates will adversely impact the interest rates on any new debt that we may issue.
Our interest rate risk is monitored using a variety of techniques. The table below presents the principal cash flows, weighted average interest rates of remaining debt, and the fair value of total debt as of December 31, 2022. For variable rate mortgages and unsecured credit facilities for which we have interest rate swaps in place to fix the interest rate, they are included in the Fixed rate debt section below at their all-in fixed rate. The table is presented by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes. Although the average interest rate for variable rate debt is included in the table, those rates represent rates that existed as of December 31, 2022, and are subject to change on a monthly basis. In addition, the Company continually assesses the market risk for its floating rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $42,500 per year based on $4.3 million of floating rate mortgage debt outstanding at December 31, 2022. If the Company increases its line of credit balance in the future, additional decreases to future earnings and cash flows could occur.
Further, the table below incorporates only those exposures that exist as of December 31, 2022, and does not consider exposures or positions that could arise after that date or obligations repaid before maturity. Since firm commitments are not presented, the table has limited predictive value. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, our hedging strategies at that time, and actual interest rates.
The table below presents the principal cash flow payments associated with our outstanding debt by year, weighted average interest rates on debt outstanding at each year-end, and fair value of total debt as of December 31, 2022.
(dollars in thousands)
Fair Value
Fixed rate debt (1)
69,078
345,607
293,732
316,287
666,703
2,053,192
3,744,599
3,329,135
Average interest rate for all fixed rate debt (2)
3.82
3.83
3.84
3.89
Variable rate SOFR debt (1)
4,243
Average interest rate for all variable rate debt (2)
3.07
Item 8. Consolidated Financial Statements and Supplementary Data
Regency Centers Corporation and Regency Centers, L.P.
Index to Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Equity for the years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020
84
Consolidated Statements of Capital for the years ended December 31, 2022, 2021, and 2020
Notes to Consolidated Financial Statements
Financial Statement Schedule
Schedule III - Consolidated Real Estate and Accumulated Depreciation - December 31, 2022
All other schedules are omitted because of the absence of conditions under which they are required, materiality or because information required therein is shown in the Consolidated Financial Statements or notes thereto.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Regency Centers Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III - Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 17, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of expected hold periods for certain real estate assets
As discussed in Note 1 to the consolidated financial statements and presented on the consolidated balance sheet, real estate assets, less accumulated depreciation was $9.4 billion as of December 31, 2022. The Company evaluates real estate properties (including any related amortizable intangible assets or liabilities) for impairment whenever there are events or changes in circumstances that indicate the carrying value of the real estate properties may not be recoverable.
We identified the Company’s assessment of events or changes in circumstances that could indicate a shortened expected hold period for certain real estate properties as a critical audit matter. Subjective auditor judgment was required to evaluate the events or changes in circumstances assessed by the Company that could indicate shortened expected hold periods for certain real estate properties. A shortening of the expected hold period could indicate a potential impairment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of a control related to the Company’s assessment of events or changes in circumstances that could indicate shortened expected hold periods for certain real estate properties. To evaluate relevant events or changes in circumstances indicating a potential shortening of the expected holding period, we:
/s/ KPMG LLP
We have served as the Company's auditor since 1993.
Jacksonville, Florida
February 17, 2023
Opinion on Internal Control Over Financial Reporting
We have audited Regency Centers Corporation and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III - Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements), and our report dated February 17, 2023 expressed an unqualified opinion on those consolidated financial statements.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
To the Board of Directors of Regency Centers Corporation
and the Partners of Regency Centers, L.P.:
We have audited the accompanying consolidated balance sheets of Regency Centers, L.P. and subsidiaries (the Partnership) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, capital, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III - Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 17, 2023 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
As discussed in Note 1 to the consolidated financial statements and presented on the consolidated balance sheet, real estate assets, less accumulated depreciation was $9.4 billion as of December 31, 2022. The Partnership evaluates real estate properties (including any related amortizable intangible assets or liabilities) for impairment whenever there are events or changes in circumstances that indicate the carrying value of the real estate properties may not be recoverable.
We identified the Partnership’s assessment of events or changes in circumstances that could indicate a shortened expected hold period for certain real estate properties as a critical audit matter. Subjective auditor judgment was required to evaluate the events or changes in circumstances assessed by the Partnership that could indicate shortened expected hold periods for certain real estate properties. A shortening of the expected hold period could indicate a potential impairment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of a control related to the Partnership’s assessment of events or changes in circumstances that could indicate shortened expected hold periods for certain real estate properties. To evaluate relevant events or changes in circumstances indicating a potential shortening of the expected hold period, we:
We have served as the Partnership's auditor since 1998.
We have audited Regency Centers, L.P. and subsidiaries' (the Partnership) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, capital, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule III - Consolidated Real Estate and Accumulated Depreciation (collectively, the consolidated financial statements), and our report dated February 17, 2023 expressed an unqualified opinion on those consolidated financial statements.
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Consolidated Balance Sheets
December 31, 2022 and 2021
(in thousands, except share data)
Assets
Net real estate investments:
Real estate assets, at cost (note 1)
11,858,064
11,495,581
Less: accumulated depreciation
2,415,860
2,174,963
Real estate assets, net
9,442,204
9,320,618
Investments in real estate partnerships (note 4)
350,377
372,591
Net real estate investments
9,792,581
9,693,209
Properties held for sale
25,574
Cash, cash equivalents, and restricted cash, including $2,310 and $1,930 of restricted cash at December 31, 2022 and 2021, respectively (note 1)
Tenant and other receivables (note 1)
188,863
153,091
Deferred leasing costs, less accumulated amortization of $117,137 and $117,878 at December 31, 2022 and 2021, respectively
68,945
65,741
Acquired lease intangible assets, less accumulated amortization of $338,053 and $312,186 at December 31, 2022 and 2021, respectively (note 6)
197,745
212,707
Right of use assets, net
275,513
280,783
Other assets (note 5)
267,797
266,431
Total assets
10,860,220
10,792,563
Liabilities and Equity
Liabilities:
Notes payable (note 9)
3,726,754
3,718,944
Accounts payable and other liabilities
317,259
322,271
Acquired lease intangible liabilities, less accumulated amortization of $193,315 and $172,293 at December 31, 2022 and 2021, respectively (note 6)
354,204
363,276
Lease liabilities
213,722
215,788
Tenants’ security, escrow deposits and prepaid rent
70,242
62,352
Total liabilities
4,682,181
4,682,631
Commitments and contingencies (note 16)
Equity:
Stockholders’ equity (note 12):
Common stock $0.01 par value per share, 220,000,000 shares authorized; 171,124,593 and 171,213,008 shares issued at December 31, 2022 and 2021, respectively
1,711
1,712
Treasury stock at cost, 465,415 and 427,901 shares held at December 31, 2022 and 2021, respectively
(24,461
(22,758
Additional paid-in capital
7,877,152
7,883,458
Accumulated other comprehensive income (loss)
7,560
(10,227
Distributions in excess of net income
(1,764,977
(1,814,814
Total stockholders’ equity
6,096,985
6,037,371
Noncontrolling interests (note 12):
Exchangeable operating partnership units, aggregate redemption value of $46,340 and $56,844 at December 31, 2022 and 2021, respectively
34,489
35,447
Limited partners’ interests in consolidated partnerships (note 1)
46,565
37,114
Total noncontrolling interests
81,054
72,561
Total equity
6,178,039
6,109,932
Total liabilities and equity
See accompanying notes to Consolidated Financial Statements.
Consolidated Statements of Operations
For the years ended December 31, 2022, 2021, and 2020
(in thousands, except per share data)
Revenues:
980,166
9,508
26,501
1,016,175
Operating expenses:
345,900
170,073
143,004
75,001
12,642
746,620
Other expense (income):
156,678
Goodwill impairment
132,128
18,536
(67,465
21,837
Net investment loss (income)
(5,307
256,407
Income from operations before equity in income of investments in real estate partnerships
428,211
319,202
13,148
Equity in income of investments in real estate partnerships (note 4)
34,169
47,317
Noncontrolling interests:
(2,105
(1,615
(203
Limited partners’ interests in consolidated partnerships
(3,065
(3,262
(2,225
(2,428
44,889
Income per common share - basic (note 15)
2.82
2.12
0.27
Income per common share - diluted (note 15)
2.81
0.26
Consolidated Statements of Comprehensive Income
Other comprehensive income (loss):
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments
20,061
5,391
(19,187
Reclassification adjustment of derivative instruments included in net income
833
4,141
11,262
Unrealized (loss) gain on available-for-sale securities
(1,309
(405
Other comprehensive income (loss)
19,585
9,127
(7,605
Comprehensive income
507,620
375,415
39,712
Less: comprehensive income attributable to noncontrolling interests:
2,428
Other comprehensive income (loss) attributable to noncontrolling interests
1,798
729
(977
Comprehensive income attributable to noncontrolling interests
6,968
5,606
1,451
Comprehensive income attributable to the Company
500,652
369,809
38,261
Consolidated Statements of Equity
Stockholders' Equity
Noncontrolling Interests
CommonStock
TreasuryStock
AdditionalPaid InCapital
AccumulatedOtherComprehensiveLoss
Distributionsin Excess ofNet Income
TotalStockholders’Equity
ExchangeableOperatingPartnershipUnits
LimitedPartners’Interest inConsolidatedPartnerships
TotalNoncontrollingInterests
TotalEquity
Balance at December 31, 2019
1,676
(23,199
7,654,930
(11,997
(1,408,062
6,213,348
36,100
40,513
76,613
6,289,961
2,225
Other comprehensive (loss) income:
Other comprehensive loss before reclassifications
(17,589
(79
(1,199
(1,278
(18,867
Amounts reclassified from accumulated other comprehensive income
10,961
251
301
Deferred compensation plan, net
(1,237
1,237
Restricted stock issued, net of amortization
14,246
14,248
Common stock repurchased for taxes withheld for stock based compensation, net
(5,059
Common stock issued under dividend reinvestment plan
1,139
Common stock issued, net of issuance costs
125,589
125,608
Contributions from partners
606
Issuance of exchangeable operating partnership units
Distributions to partners
(4,888
Cash dividends declared:
Common stock/unit ($2.380 per share)
(402,633
(1,822
(404,455
Balance at December 31, 2020
1,697
(24,436
7,792,082
(18,625
(1,765,806
5,984,912
35,727
37,508
73,235
6,058,147
3,262
Other comprehensive income:
Other comprehensive income before reclassifications
4,603
383
4,986
3,795
329
346
1,678
(1,603
12,650
12,652
(3,553
1,286
Common stock issued for partnership units exchanged
(99
82,497
Common stock/unit ($2.410 per share)
(410,419
(1,836
(412,255
Balance at December 31, 2021
3,065
Other comprehensive income
17,008
1,664
1,744
18,752
779
(1,703
1,702
(1
16,665
16,667
(5,858
Common stock repurchased and retired
(13
(75,406
524
(1,275
61,274
Reallocation of noncontrolling interest, net of transaction costs
(6,482
6,266
(216
13,223
(14,816
Common stock/unit ($2.525 per share)
(433,028
(1,873
(434,901
Balance at December 31, 2022
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan costs and debt premiums
5,799
6,003
9,023
(Accretion) and amortization of above and below market lease intangibles, net
(20,995
(22,936
(40,540
Stock-based compensation, net of capitalization
16,521
12,515
13,581
Equity in income of investments in real estate partnerships
(59,824
(47,086
(34,169
Distribution of earnings from investments in real estate partnerships
61,416
71,934
47,703
Settlement of derivative instrument
(2,472
Deferred compensation (revenue) expense
(6,128
4,572
4,668
Realized and unrealized loss (gain) on investments
7,040
(5,348
(5,519
Changes in assets and liabilities:
Tenant and other receivables
(35,274
(24,869
16,944
Deferred leasing costs
(10,801
(6,966
(6,973
Other assets
1,292
(1,226
(1,200
(9,088
6,677
997
7,130
5,701
(3,650
499,118
(16,767
(180,804
189,444
Proceeds from property insurance casualty claims
7,957
(1,340
(51,440
32,125
(25,155
19,986
(25,641
Net proceeds from common stock issuance
(5,512
Proceeds from sale of treasury stock
269
(2,770
Distributions to exchangeable operating partnership unit holders
(1,867
(1,815
(1,366
Dividends paid to common stockholders
(428,276
(403,085
(300,537
Repayment of fixed rate unsecured notes
(300,000
Proceeds from issuance of fixed rate unsecured notes, net
598,830
Proceeds from unsecured credit facilities
95,000
610,000
Repayments of proceeds from unsecured credit facilities, net
(95,000
(830,000
Repayment of notes payable
(6,745
(42,014
(67,189
Scheduled principal payments
(11,219
(11,255
(11,104
(5,063
Early redemption costs
(21,755
(210,589
262,888
Cash, cash equivalents, and restricted cash at beginning of the year
378,450
115,562
Cash, cash equivalents, and restricted cash at end of the year
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $4,166, $4,202, and $4,355 in 2022, 2021, and 2020, respectively)
141,359
140,084
151,338
Cash paid for income taxes, net of refunds
570
378
1,870
Supplemental disclosure of non-cash transactions:
Common stock and exchangeable operating partnership dividends declared but not paid
111,709
107,480
101,412
Exchangeable operating partnership units issued for acquisition of real estate
Previously held equity investments in real estate assets acquired
17,179
(4,609
5,986
Mortgage loans assumed by Company with the acquisition of real estate
22,779
111,104
16,359
Mortgage loan assumed by purchaser with the sale of real estate
8,250
Common stock issued by Parent Company for partnership units exchanged
Real estate received in lieu of promote interest
13,589
Change in fair value of securities
1,658
513
Change in accrued capital expenditures
4,888
10,188
12,166
Common stock issued for dividend reinvestment plan
Stock-based compensation capitalized
735
666
1,119
Contributions from (distributions to) limited partners in consolidated partnerships, net
5,436
(1,512
Reallocation of equity upon acquisition of a limited partner's interest in a consolidated partnership
Common stock issued for dividend reinvestment in trust
1,126
1,084
819
Contribution of stock awards into trust
2,250
1,416
1,524
Distribution of stock held in trust
786
3,647
1,052
(in thousands, except unit data)
Liabilities and Capital
Capital:
Partners’ capital (note 12):
General partner; 171,124,593 and 171,213,008 units outstanding at December 31, 2022 and 2021, respectively
6,089,425
6,047,598
Limited partners; 741,433 and 760,046 units outstanding at December 31, 2022 and 2021
Total partners’ capital
6,131,474
6,072,818
Noncontrolling interests: Limited partners’ interests in consolidated partnerships
Total capital
Total liabilities and capital
(in thousands, except per unit data)
45,092
Income per common unit - basic (note 15):
Income per common unit - diluted (note 15):
1,713
689
(948
4,778
3,951
1,277
502,842
371,464
38,435
Consolidated Statements of Capital
General PartnerPreferred andCommon Units
LimitedPartners
TotalPartners’Capital
NoncontrollingInterests inLimited Partners’Interest inConsolidatedPartnerships
TotalCapital
6,225,345
6,249,448
(17,668
11,011
(409,343
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
Common units issued as a result of common stock issued by Parent Company, net of issuance costs
Common units repurchased as a result of common stock repurchased by Parent Company, net of issuances
(3,920
6,003,537
6,020,639
4,626
3,812
(416,600
(2,267
Common units exchanged for common stock of Parent Company
17,088
784
Contribution from partners
(449,717
Reallocation of limited partners' interest, net of transaction costs
Common units repurchased and retired as a result of common stock repurchased and retired by Parent Company
(5,334
Repurchase of common units in conjunction with equity award plans
Proceeds from treasury units issued as a result of treasury stock sold by Parent Company
(301,903
Proceeds from notes payable
Common stock issued by Parent Company for dividend reinvestment plan
REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Regency Centers Corporation (the "Parent Company") began its operations as a REIT in 1993 and is the general partner of Regency Centers, L.P. (the "Operating Partnership"). The Parent Company primarily engages in the ownership, management, leasing, acquisition, development and redevelopment of shopping centers through the Operating Partnership, and has no other assets other than through its investment in the Operating Partnership, and its only liabilities are $200 million of unsecured private placement notes, which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership.
As of December 31, 2022, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis (the "Company" or "Regency") owned 308 properties and held partial interests in an additional 96 properties through unconsolidated Investments in real estate partnerships (also referred to as "joint ventures" or "investment partnerships").
Estimates, Risks, and Uncertainties
The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of commitments and contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates in the Company's financial statements relate to the net carrying values of its real estate investments, collectibility of lease income, and acquired lease intangible assets and liabilities. It is possible that the estimates and assumptions that have been utilized in the preparation of the Consolidated Financial Statements could change significantly if economic conditions were to weaken.
Consolidation
The accompanying Consolidated Financial Statements include the accounts of the Parent Company, the Operating Partnership, its wholly-owned subsidiaries, and consolidated partnerships in which the Company has a controlling interest. Investments in real estate partnerships not controlled by the Company are accounted for under the equity method. All significant inter-company balances and transactions are eliminated in the Consolidated Financial Statements.
The Company consolidates properties that are wholly-owned and properties where it owns less than 100%, but has control over the activities most important to the overall success of the partnership. Control is determined using an evaluation based on accounting standards related to the consolidation of Variable Interest Entities ("VIEs") and voting interest entities. For joint ventures that are determined to be a VIE, the Company consolidates the entity where it is deemed to be the primary beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.
Ownership of the Parent Company
The Parent Company has a single class of common stock outstanding.
Ownership of the Operating Partnership
The Operating Partnership's capital includes general and limited common Partnership Units. As of December 31, 2022, the Parent Company owned approximately 99.6%, or 171,124,593, of the 171,866,026 outstanding common Partnership Units of the Operating Partnership, with the remaining limited common Partnership Units held by third parties ("Exchangeable operating partnership units" or "EOP units"). Each EOP unit is exchangeable for cash or one share of common stock of the Parent Company, at the discretion of the Parent Company, and the unit holder cannot require redemption in cash or other assets (i.e. registered shares of the Parent). The Parent Company has evaluated the conditions as specified under Accounting Standards Codification ("ASC") Topic 480, Distinguishing Liabilities from Equity, as it relates to exchangeable operating
partnership units outstanding and concluded that it has the right to satisfy the redemption requirements of the units by delivering unregistered common stock. Accordingly, the Parent Company classifies EOP units as permanent equity in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity and Comprehensive Income. The Parent Company serves as general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating Partnership such that they do not have the power to direct the activities of the Operating Partnership. As such, the Operating Partnership is considered a VIE, and the Parent Company, which consolidates it, is the primary beneficiary. The Parent Company's only investment is the Operating Partnership. Net income and distributions of the Operating Partnership are allocable to the general and limited common Partnership Units in accordance with their ownership percentages.
Real Estate Partnerships
Regency has a partial ownership interest in 107 properties through partnerships, of which 11 are consolidated. Regency's partners include institutional investors and other real estate developers and/or operators (the "Partners" or "Limited Partners"). The assets of these partnerships are restricted to the use of the partnerships and cannot be used by general creditors of the Company. And similarly, the obligations of these partnerships can only be settled by the assets of these partnerships or additional contributions by the partners. Regency has a variable interest in these partnerships through its equity interests. As managing member, Regency maintains the books and records and typically provides leasing and property and asset management services to the partnerships. The Partners' level of involvement in these partnerships varies from protective decisions (debt, bankruptcy, selling primary asset(s) of business) to participating involvement such as approving leases, operating budgets, and capital budgets.
The net difference in the carrying amount of investments in real estate partnerships and the underlying equity in net assets is accreted to earnings and recorded in Equity in income of investments in real estate partnerships in the accompanying Consolidated Statements of Operations over the expected useful lives of the properties and other intangible assets, which range in lives from 10 to 40 years.
The majority of the operations of the VIEs are funded with cash flows generated by the properties, or in the case of developments, with capital contributions or third party construction loans. The major classes of assets, liabilities, and noncontrolling equity interests held by the Company's consolidated VIEs, exclusive of the Operating Partnership, are as follows:
107,725
379,075
Cash, cash equivalents, and restricted cash
2,420
5,202
Liabilities
Notes payable
4,188
5,000
Equity
24,364
27,950
Noncontrolling Interests of the Parent Company
The Consolidated Financial Statements of the Parent Company include the following ownership interests held by owners other than the common stockholders of the Parent Company: (i) the limited Partnership Units in the Operating Partnership held by third parties ("Exchangeable operating partnership units") and (ii) the minority-owned interest held by third parties in consolidated partnerships ("Limited partners' interests in consolidated partnerships"). The Parent Company has included all of these noncontrolling interests in permanent equity, separate from the Parent Company's stockholders' equity, in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity. The portion of net income or comprehensive income attributable to these noncontrolling interests is included in net income and comprehensive income in the accompanying Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income of the Parent Company.
Limited partners' interests in consolidated partnerships are not redeemable by the holders. The Parent Company also evaluated its fiduciary duties to itself, its shareholders, and, as the managing general partner of the Operating Partnership, to the Operating Partnership, and concluded its fiduciary duties are not in conflict with each other or the underlying agreements. Therefore, the Parent Company classifies such units and interests as permanent equity in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity.
Noncontrolling Interests of the Operating Partnership
The Operating Partnership has determined that limited partners' interests in consolidated partnerships are noncontrolling interests. Subject to certain conditions and pursuant to the terms of the partnership agreements, the Company generally has the right, but not the obligation, to purchase the other members' interest or sell its own interest in these consolidated partnerships. The Operating Partnership has included these noncontrolling interests in permanent capital, separate from partners' capital, in the accompanying Consolidated Balance Sheets and Consolidated Statements of Capital. The portion of net income (loss) or comprehensive income (loss) attributable to these noncontrolling interests is included in Net income and Comprehensive income in the accompanying Consolidated Statements of Operations and Consolidated Statements Comprehensive Income of the Operating Partnership.
Leasing Income and Tenant Receivables
The Company leases space to tenants under agreements with varying terms that generally provide for fixed payments of base rent, with stated increases over the term of the lease. Some of the lease agreements contain provisions that provide for additional rents based on tenants' sales volume ("percentage rent"), which are recognized when the tenants achieve the specified targets as defined in their lease agreements. Additionally, most lease agreements contain provisions for reimbursement of the tenants' share of actual real estate taxes and insurance and common area maintenance ("CAM") costs (collectively "Recoverable Costs") incurred.
Lease terms generally range from three to seven years for tenant space under 10,000 square feet ("Shop Space") and in excess of five years for spaces greater than 10,000 square feet ("Anchor Space"). Many leases also provide tenants the option to extend their lease beyond the initial term of the lease. If a tenant does not exercise its option or otherwise negotiate to renew, the lease expires and the lease contains an obligation for the tenant to relinquish its space, allowing it to be leased to a new tenant. This generally involves some level of cost to prepare the space for re-leasing, which is capitalized and depreciated over the shorter of the life of the subsequent lease or the life of the improvement.
The Company accounts for its leases under ASC Topic 842, Leases ("Topic 842"), as follows:
Classification
Under Topic 842, new leases or modifications thereto must be evaluated against specific classification criteria, which, based on the customary terms of the Company's leases, are classified as operating leases. However, certain longer-term leases (both lessee and lessor leases) may be classified as direct financing or sales type leases, which may result in selling profit and an accelerated pattern of earnings recognition. At December 31, 2022, all of the Company's leases were classified as operating leases.
Recognition and Presentation
Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases for which collectibility is considered probable. CAM is considered a non-lease component of the lease contract under Topic 842. However, as the timing and pattern of providing the CAM service to the tenant is the same as the timing and pattern of the tenant's use of the underlying lease asset, the Company elected, as part of an available practical expedient, to combine CAM with the remaining lease components, along with tenant's reimbursement of real estate taxes and insurance, and recognize them together as Lease income in the accompanying Consolidated Statements of Operations.
Collectibility
At lease commencement, the Company generally expects that collectibility of substantially all payments due under the lease is probable due to the Company's credit checks on tenants and other creditworthiness analysis undertaken before entering into a new lease; therefore, income from most operating leases is initially recognized on a straight-line basis. For operating leases in which collectibility of Lease income is not considered probable, Lease income is recognized on a cash basis and all previously recognized straight-line rent receivables are reversed in the period in which the Lease income is determined not to be probable of collection. Should collectibility of Lease income become probable again, through evaluation of qualitative and quantitative measures on a tenant by tenant basis, accrual basis accounting resumes and all commencement-to-date straight-line rent is recognized in that period.
In addition to the lease-specific collectibility assessment performed under Topic 842, the Company may also recognize a general reserve, as a reduction to Lease income, for its portfolio of operating lease receivables which are not expected to be fully collectible based on the Company's historical collection experience. The Company estimates the collectibility of the accounts receivable related to base rents, straight-line rents, recoveries from tenants, and other revenue taking into consideration the Company's historical write-off experience, tenant credit-worthiness, current economic trends, and remaining lease terms. Uncollectible lease income is a direct charge against Lease income. Although we estimate uncollectible receivables and provide for them through charges against income, actual experience may differ from those estimates.
The following table represents the components of Tenant and other receivables, net of amounts considered uncollectible, in the accompanying Consolidated Balance Sheets:
December 31,
Tenant receivables
31,486
27,354
Straight-line rent receivables
128,214
103,942
Other receivables (1)
29,163
21,795
Total tenant and other receivables, net
Real Estate Sales
The Company accounts for sales of nonfinancial assets under ASC Subtopic 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, whereby the Company derecognizes real estate and recognizes a gain or loss on sales when a contract exists and control of the property has transferred to the buyer. Control of the property, including controlling financial interest, is generally considered to transfer upon closing through transfer of the legal title and possession of the property. While generally rare, any retained noncontrolling interest is measured at fair value at that time.
Management Services and Other Property Income
The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers ("Topic 606"), when or as control of the promised services are transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The following is a description of the Company's revenue from contracts with customers within the scope of Topic 606.
Property and Asset Management Services
The Company is engaged under agreements with its joint venture partnerships, which are generally perpetual in nature and cancellable through unanimous partner approval, absent an event of default. Under these agreements, the Company is to provide asset and property management and leasing services for the joint ventures' shopping centers. The fees are market-based, generally calculated as a percentage of either revenues earned or the estimated values of the properties managed or the proceeds received, and are recognized over the monthly or quarterly periods as services are rendered. Property management and asset management services represent a series of distinct daily services. Accordingly, the Company satisfies its performance obligation as service is rendered each day and the variability associated with that compensation is resolved each day. Amounts due from the partnerships for such services are paid during the month following the monthly or quarterly service periods.
Several of the Company's partnership agreements provide for incentive payments, generally referred to as "promotes" or "earnouts," to Regency for appreciation in property values in Regency's capacity as manager. The terms of these promotes are based on appreciation in real estate value over designated time intervals or upon designated events. The Company evaluates its expected promote payout at each reporting period, which generally does not result in revenue recognition until the measurement period has completed, when the amount can be reasonably determined and the amount is not probable of significant reversal.
Leasing Services
Leasing service fees are based on a percentage of the total rent due under the lease. The leasing service is considered performed upon successful execution of an acceptable tenant lease for the joint ventures' shopping centers, at which time revenue is recognized. Payment of the first half of the fee is generally due upon lease execution and the second half is generally due upon tenant opening or rent payments commencing.
Transaction Services
The Company also receives transaction fees, as contractually agreed upon with each joint venture, which include acquisition fees, disposition fees, and financing service fees. Control of these services is generally transferred at the time the related transaction closes, which is the point in time when the Company recognizes the related fee revenue. Any unpaid amounts related to transaction-based fees are included in Tenant and other receivables within the Consolidated Balance Sheets.
Other Property Income
Other property income includes parking fee and other incidental income from the properties and is generally recognized at the point in time that the performance obligation is met.
All income from contracts with the Company's real estate partnerships is included within Management, transaction and other fees on the Consolidated Statements of Operations. The primary components of these revenue streams, the timing of satisfying the performance obligations, and amounts are as follows:
Year ended December 31,
Timing ofsatisfaction ofperformanceobligations
Management, transaction, and other fees:
Property management services
Over time
13,470
14,415
14,444
Asset management services
6,752
6,963
Leasing services
Point in time
3,945
4,096
3,150
Other transaction fees
1,684
1,316
1,944
Total management, transaction, and other fees
The accounts receivable for management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $16.4 million and $13.2 million, as of December 31, 2022 and 2021, respectively.
The following table details the components of Real estate assets in the Consolidated Balance Sheets:
Land
4,379,877
4,340,084
Land improvements
707,227
684,613
Buildings
5,465,877
5,270,540
1,171,650
1,061,044
Construction in progress
133,433
139,300
Total real estate assets
Capitalization and Depreciation
Maintenance and repairs that do not improve or extend the useful lives of the respective assets are recorded in operating and maintenance expense.
As part of the leasing process, the Company may provide the lessee with an allowance for the construction of leasehold improvements. These leasehold improvements are capitalized and recorded as tenant improvements, and depreciated over the shorter of the useful life of the improvements or the remaining lease term. If the allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of Lease income. Factors considered during this evaluation include, among other things, who holds legal title to the improvements as well as other controlling rights provided by the lease agreement and provisions for substantiation of such costs (e.g. unilateral control of the tenant space during the build-out process). Determination of the appropriate accounting for the payment of a tenant allowance is made on a lease-by-lease basis, considering the facts and circumstances of the individual tenant lease.
Depreciation is computed using the straight-line method over estimated useful lives of approximately 15 years for land improvements, 40 years for buildings and improvements, and the shorter of the useful life or the remaining lease term subject to a maximum of 10 years for tenant improvements, and three to seven years for furniture and equipment.
Development and Redevelopment Costs
Land, buildings, and improvements are recorded at cost. All specifically identifiable costs related to development and redevelopment activities are capitalized into Real estate assets in the accompanying Consolidated Balance Sheets, and are included in Construction in progress within the above table. The capitalized costs include pre-development costs essential to the development or redevelopment of the property, construction costs, interest costs, real estate taxes, and allocated direct employee costs incurred during the period of development or redevelopment.
Pre-development costs represent the costs the Company incurs prior to land acquisition or pursuing a redevelopment including contract deposits, as well as legal, engineering, and other external professional fees related to evaluating the feasibility of developing or redeveloping a shopping center. As of December 31, 2022 and 2021, the Company had nonrefundable deposits and other pre-development costs of approximately $6.9 million and $10.8 million, respectively. If the Company determines that the development or redevelopment of a particular shopping center is no longer probable, any related pre-development costs previously capitalized are immediately expensed. During the years ended December 31, 2022, 2021, and 2020, the Company expensed pre-development costs of approximately $588,000, $1.5 million, and $10.5 million, respectively, in Other operating expenses in the accompanying Consolidated Statements of Operations.
Interest costs are capitalized into each development and redevelopment project based upon applying the Company's weighted average borrowing rate to that portion of the actual development or redevelopment costs expended. The Company discontinues interest and real estate tax capitalization when the property is no longer being developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would the Company capitalize interest on the project beyond 12 months after substantial completion of the building shell. During the years ended December 31, 2022, 2021, and 2020, the Company capitalized interest of $4.2 million, $4.2 million, and $4.4 million, respectively, on our development and redevelopment projects.
We have a staff of employees directly supporting our development and redevelopment program. All direct internal costs attributable to these development activities are capitalized as part of each development and redevelopment project. The capitalization of costs is directly related to the actual level of development activity occurring. During the years ended December 31, 2022, 2021, and 2020, we capitalized $10.8 million, $11.3 million, and $10.2 million, respectively, of direct internal costs incurred to support our development and redevelopment program.
Acquisitions
Upon acquisition of operating real estate properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities (consisting of above and below-market leases and in-place leases), assumed debt, and any noncontrolling interest in the acquiree at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these estimates, the Company allocates the relative fair value to the applicable assets and liabilities. The acquisition of operating properties are generally considered asset acquisitions and therefore transaction costs are capitalized. Fair value is determined based on an exit price approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company's methodology includes estimating an "as-if vacant" fair value of the physical property, which includes land, building, and improvements. In addition, the Company determines the estimated fair value of identifiable intangible assets and liabilities, considering the following categories: (i) value of in-place leases, and (ii) above and below-market value of in-place leases.
The value of in-place leases is estimated based on the value associated with the costs avoided in originating leases compared to the acquired in-place leases as well as the value associated with lost rental and recovery revenue during the assumed lease-up period. The value of in-place leases is recorded to Depreciation and amortization expense in the Consolidated Statements of Operations over the remaining expected term of the respective leases.
Above-market and below-market in-place lease values for acquired properties are recorded based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management's estimate of fair market lease rates for comparable in-place leases, measured over a period equal to the remaining non-cancelable term of the lease, including below-market renewal options, if applicable. The value of above-market leases is amortized as a reduction of Lease income over the remaining terms of the respective leases and the value of below-market leases is accreted to Lease income over the remaining terms of the respective leases, including below-market renewal options, if applicable. If tenants do not remain in their lease through the expected term or exercise an assumed renewal option, there could be a material impact to earnings.
The Company does not assign value to customer relationship intangibles if it has pre-existing business relationships with the major retailers at the acquired property since they do not provide incremental value over the Company's existing relationships.
Held for Sale
The Company classifies land, an operating property, or a property in development as held-for-sale upon satisfaction of the following criteria: (i) management commits to a plan to sell a property (or group of properties), (ii) the property is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such properties, (iii) an active program to locate a buyer and other actions required to complete the plan to sell the property have been initiated, (iv) the sale of the property is probable and transfer of the asset is expected to be completed within one year, (v) the property is being actively marketed for sale, and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Properties held-for-sale are carried at the lower of cost or fair value less costs to sell.
The Company evaluates whether there are any events or changes in circumstances, including property operating performance, and general market conditions, or changes in expected hold periods, that indicate the carrying value of the real estate properties (including any related amortizable intangible assets or liabilities) may not be recoverable. For those properties with such events or changes, management evaluates recoverability of the property's carrying amount. Through the evaluation, the current carrying value of the asset is compared to the estimated undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Estimated cash flows are based on several key assumptions, including rental rates, expected leasing activity, costs of tenant improvements, leasing commissions, expected hold period, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and could differ materially from actual results. Changes in events or changes in circumstances may alter the hold period of an asset or asset group which may result in an impairment loss and such loss could be material to the Company's financial condition or operating performance. To the extent that the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of carrying value over the estimated fair value. If such indicators are not identified, management will not assess the recoverability of a property's carrying value. If a property previously classified as held and used is changed to held for sale, the Company estimates fair value, less expected costs to sell, which could cause the Company to determine that the property is impaired.
The estimated fair value of real estate assets is subjective and is estimated through comparable sales information and other market data if available, or through use of an income approach such as the direct capitalization method or the discounted cash flow approach. The discounted cash flow approach uses similar assumptions to the undiscounted cash flow approach above, as well as a discount rate. Such cash flow projections and rates are subject to management judgment and changes in those assumptions could impact the estimate of fair value. In estimating the fair value of undeveloped land, the Company generally uses market data and comparable sales information.
A loss in value of investments in real estate partnerships under the equity method of accounting, other than a temporary decline, must be recognized in the period in which the loss occurs. If management identifies events or circumstances that indicate that the value of the Company's investment in real estate partnerships may be impaired, it evaluates the investment by calculating the estimated fair value of the investment by discounting estimated future cash flows over the expected term of the investment.
Tax Basis
The net book basis of the Company's real estate assets exceeds the net tax basis by approximately $2.6 billion at December 31, 2022 and 2021, primarily due to the tax free merger with Equity One and inheriting lower carryover tax basis.
Any instruments which have an original maturity of 90 days or less when purchased are considered cash equivalents. As of December 31, 2022 and 2021, $2.3 million and $1.9 million, respectively, of cash was restricted through escrow agreements and certain mortgage loans.
Goodwill
Goodwill represents the excess of the purchase price consideration from the Equity One merger in 2017 over the fair value of the assets acquired and liabilities assumed. The Company accounts for goodwill in accordance with ASC Topic 350, Intangibles - Goodwill and Other, and allocates its goodwill to its reporting units, which have been determined to be at the individual property level. The Company performs an impairment evaluation of its goodwill at least annually, in November of each year, or more frequently as triggers occur. See note 5.
The goodwill impairment evaluation is completed using either a qualitative or quantitative approach. Under a qualitative approach, the impairment review for goodwill consists of an assessment of whether it is more-likely-than-not that the reporting unit's fair value is less than its carrying value, including goodwill. If a qualitative approach indicates it is more likely-than-not that the estimated carrying value of a reporting unit (including goodwill) exceeds its fair value, or if the Company chooses to bypass the qualitative approach for any reporting unit, the Company will perform the quantitative approach described below.
The quantitative approach consists of estimating the fair value of each reporting unit using discounted projected future cash flows and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, the Company would then recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
Investments
The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. The fair value of securities is determined using quoted market prices.
Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized through earnings in Investment income in the Consolidated Statements of Operations. Debt securities not classified as held to maturity or as trading, are classified as available-for-sale, and are carried at fair value, with the unrealized gains and losses, net of tax, included in the determination of comprehensive income and reported in the Consolidated Statements of Comprehensive Income.
Equity securities with readily determinable fair values are measured at fair value with changes in the fair value recognized through net income and presented within Investment income in the Consolidated Statements of Operations.
Deferred leasing costs consist of costs associated with leasing the Company's shopping centers, and are presented net of accumulated amortization. Such costs are amortized over the period through lease expiration. If the lease is terminated early, the remaining leasing costs are written off.
Under ASC Topic 842, the Company, as a lessor, may only defer as initial direct costs the incremental costs of a tenant's operating lease that would not have been incurred if the lease had not been obtained. These costs generally consist of third party broker payments. Non-contingent internal leasing and legal costs associated with leasing activities are expensed within General and administrative expenses.
The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or future payment of known and uncertain cash amounts, the amount of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash payments principally related to the Company's borrowings.
All derivative instruments, whether designated in hedging relationships or not, are recorded on the accompanying Consolidated Balance Sheets at their fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The Company uses interest rate swaps to mitigate its interest rate risk on a related financial instrument or forecasted transaction, and the Company designates these interest rate swaps as cash flow hedges. Interest rate swaps designated as cash flow hedges generally involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company may also utilize cash flow hedges to lock U.S. Treasury rates in anticipation of future fixed-rate debt issuances. The gains or losses resulting from changes in fair value of derivatives that qualify as cash flow hedges are recognized in Accumulated other comprehensive income (loss) ("AOCI"). Upon the settlement of a hedge, gains and losses remaining in AOCI are amortized through earnings over the underlying term of the hedged transaction. The cash receipts or payments related to interest rate swaps are presented in cash flows provided by operating activities in the accompanying Consolidated Statements of Cash Flows.
The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company assesses, both at inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows and/or forecasted cash flows of the hedged items.
In assessing the valuation of the hedges, the Company uses standard market conventions and techniques such as discounted cash flow analysis, option pricing models, and termination costs at each balance sheet date. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized.
The Parent Company believes it qualifies, and intends to continue to qualify, as a REIT under the Code. As a REIT, the Parent Company will generally not be subject to federal income tax, provided that distributions to its stockholders are at least equal to REIT taxable income. All wholly-owned corporate subsidiaries of the Operating Partnership have elected to be a TRS or qualify as a REIT. The TRS's are subject to federal and state income taxes and file separate tax returns. As a pass through entity, the Operating Partnership generally does not pay taxes, but its taxable income or loss is reported by its partners, of which the Parent Company, as general partner and approximately 99.6% owner, is allocated its Pro-rata share of tax attributes.
The Company accounts for income taxes related to its TRS's under the asset and liability approach, which requires the recognition of the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. A valuation allowance is recorded to reduce deferred tax assets when it is believed that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The Company considers all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards, tax planning strategies and recent and projected results of operations in order to make that determination.
In addition, tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open tax years (2018 and forward for federal and state) based on an assessment of many factors including past experience and interpretations of tax laws applied to the facts of each matter.
The Company has certain properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties, which are all classified as operating leases. Accordingly, the Company owns only a long-term leasehold or similar interest in these properties. The building and improvements constructed on the leased land are capitalized as Real estate assets in the accompanying Consolidated Balance Sheets and depreciated over the shorter of the useful life of the improvements or the lease term.
In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its business. Leasehold improvements are capitalized as tenant improvements, included in Other assets in the Consolidated Balance Sheets, and depreciated over the shorter of the useful life of the improvements or the lease term.
Under Topic 842, the Company recognizes Lease liabilities on its Consolidated Balance Sheets for its ground and office leases and corresponding Right of use assets related to these same ground and office leases which are classified as operating leases. A key input in estimating the Lease liabilities and resulting Right of use assets is establishing the discount rate in the lease, which since the rates implicit in the lease contracts are not readily determinable, requires additional inputs for the longer-term ground leases, including market-based interest rates that correspond with the remaining term of the lease, the Company's credit spread, and a securitization adjustment necessary to reflect the collateralized payment terms present in the lease. This discount rate is applied to the remaining unpaid minimum rental payments for each lease to measure the operating lease liabilities.
The ground and office lease expenses are recognized on a straight-line basis over the term of the leases, including management's estimate of expected option renewal periods. For ground leases, the Company generally assumes it will exercise options through the latest option date of that shopping center's anchor tenant lease.
Basic earnings per share of common stock and unit are computed based upon the weighted average number of common shares and units, respectively, outstanding during the period. Diluted earnings per share and unit reflect the conversion of obligations and the assumed exercises of securities including the effects of shares issuable under the Company's share-based payment arrangements, if dilutive. Dividends paid on the Company's share-based compensation awards are not participating securities as they are forfeitable.
The Company grants stock-based compensation to its employees and directors. The Company recognizes the cost of stock-based compensation based on the grant-date fair value of the award, which is expensed over the vesting period.
When the Parent Company issues common stock as compensation, it receives a like number of common units from the Operating Partnership. The Company is committed to contributing to the Operating Partnership all proceeds from the share-based awards granted under the Parent Company's Long-Term Omnibus Plan (the "Plan"). Accordingly, the Parent Company's ownership in the Operating Partnership will increase based on the amount of proceeds contributed to the Operating Partnership for the common units it receives. As a result of the issuance of common units to the Parent Company for stock-based compensation, the Operating Partnership records the effect of stock-based compensation for awards of equity in the Parent Company.
The Company's business is investing in retail shopping centers through direct ownership or partnership interests. The Company actively manages its portfolio of retail shopping centers and may from time to time make decisions to sell lower performing properties or developments not meeting its long-term investment objectives. The proceeds from sales are generally reinvested into higher quality retail shopping centers, through acquisitions, new developments, or redevelopment of existing centers, which management believes will generate sustainable revenue growth and attractive returns. It is management's intent that all retail shopping centers will be owned or developed for investment purposes; however, the Company may decide to sell all or a portion of a development upon completion. The Company's revenues and net income are generated from the operation of its investment portfolio. The Company also earns fees for services provided to manage and lease retail shopping centers owned through joint ventures.
The Company's portfolio is located throughout the United States. Management does not distinguish or group its operations on a geographical basis for purposes of allocating resources or capital. The Company reviews operating and financial data for each property on an individual basis; therefore, the Company defines an operating segment as its individual properties. The individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the centers, tenants and operational processes, as well as long-term average financial performance.
Grocer anchor tenants represent approximately 20% of Pro-rata annual base rent. No single tenant accounts for 5% or more of revenue and none of the shopping centers are located outside the United States.
Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement is determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company uses a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from independent sources (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the Company's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:
The Company also re-measures nonfinancial assets and nonfinancial liabilities, initially measured at fair value in a business combination or other new basis event, at fair value in subsequent periods if a re-measurement event occurs.
100
The following table provides a brief description of recent accounting pronouncements and expected impact on our financial statements:
Standard
Description
Date of adoption
Effect on the financial statements or other significant matters
Recently adopted:
ASU 2021-05, Leases (Topic 842): Lessors - Certain Leases with Variable Lease Payments
The amendments in this update affect lessor lease classification. Lessors should classify and account for a lease as an operating lease if both of the following criteria are met: (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. This update results in similar treatment under the current Topic 842 as under the previous Topic 840.
January 2022
The adoption of this standard did not have a material impact to the Company's financial condition, results of operations, cash flows or related footnote disclosures as the Company's customary lease terms do not result in sales-type or direct financing classification, although future leases may.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.
The amendments in this update provide exceptions to the guidance in Topic 815 related to changes to the critical terms of a hedging relationship due to reference rate reform, which if criteria are met, provide such changes should not result in the dedesignation and redesignation of the hedging relationship.
March 2020 through December 31, 2022
The Company has elected to apply the hedge accounting expedients and exceptions related to changes to the reference rate from LIBOR to SOFR in the Company’s interest rate swaps. Application of these exceptions preserves the hedge designation of interest rate swaps and the related accounting and presentation consistent with past presentation.
The following tables detail consolidated shopping centers acquired or land acquired for development or redevelopment for the periods set forth below:
DatePurchased
City/State
PropertyType
Regency Ownership
PurchasePrice (1)
DebtAssumed,Net ofPremiums (1)
IntangibleAssets (1)
IntangibleLiabilities (1)
3/1/22
Development
3/31/22
Bainbridge Island, WA
Operating
30,650
2,900
6,839
4/1/22
Apple Valley (2)
Apple Valley, MN
34,070
4,773
Cedar Commons (2)
Minneapolis, MN
29,330
4,369
Corral Hollow (2)
Tracy, CA
40,600
3,410
Shops at the Columbia (2)
Washington, DC
14,000
889
5/6/22
Baederwood Shoppes
Jenkintown, PA
51,603
5,796
1,062
10/12/22
East Meadow, NY
30,000
3,295
10,867
Total property acquisitions
241,253
25,432
19,571
In addition to the acquisitions listed above, the Company acquired, for $9.0 million, the remaining 50% ownership interest from its partner in Kroger New Albany Center, an existing consolidated property.
7/30/21
Willa Springs (2)
Winter Springs, FL
17,682
1,562
643
8/1/21
Dunwoody Hall (2)
Dunwoody, GA
32,000
14,612
2,255
973
Alden Bridge (2)
Woodlands, TX
43,000
27,529
3,198
2,308
Hasley Canyon Village (2)
Castaic, CA
31,000
16,941
2,037
Shiloh Springs (2)
Garland, TX
19,500
1,825
1,079
Bethany Park Place (2)
Allen, TX
18,000
10,800
996
1,732
Blossom Valley (2)
Mountain View, CA
44,000
23,611
2,895
732
11/18/21
Blakeney Shopping Center
Charlotte, NC
181,000
14,096
4,431
12/30/21
Long Island, NY
21,505
1,675
38,000
6,521
35,000
1,469
1,366
498
533,000
111,175
63,254
16,737
Dispositions
The following table provides a summary of consolidated shopping centers and land parcels sold during the periods set forth below:
(in thousands, except number sold data)
Net proceeds from sale of real estate investments
109,005
91,119
67,465
Provision for impairment of real estate sold
958
Number of operating properties sold
Number of land parcels sold
Percent interest sold
50% - 100%
The Company invests in real estate partnerships, which consist of the following:
Regency's Ownership
Number of Properties
Total Investment
Total Assets of the Partnership
The Company's Share of Net Income of the Partnership
Net Income of the Partnership
GRI - Regency, LLC (GRIR)
155,302
1,501,876
83,989
New York Common Retirement Fund (NYC) (1)
674
2,468
35,673
Columbia Regency Retail Partners, LLC (Columbia I)
7,423
138,493
9,392
Columbia Regency Partners II, LLC (Columbia II)
41,757
405,927
8,674
5,836
96,002
5,597
RegCal, LLC (RegCal) (2)
5,789
24,326
18,258
Individual Investors
Ballard Bocks
49.90%
62,624
126,482
1,300
2,925
35.00%
40,409
206,931
2,404
Others
50.00%
30,563
105,500
2,993
6,254
Total investments in real estate partnerships
2,608,005
173,166
153,125
1,537,411
78,112
New York Common Retirement Fund (NYC)
11,688
82,446
6,939
7,360
135,537
10,256
35,251
352,469
55,059
5,554
94,536
5,131
RegCal, LLC (RegCal)
24,995
103,587
8,448
US Regency Retail I, LLC (USAA) (1)
3,155
63,783
128,959
1,742
3,811
39,021
207,339
(733
2,014
31,814
113,160
(6,067
26,351
2,755,444
199,276
The summarized balance sheet information for the investments in real estate partnerships, on a combined basis, is as follows:
Investments in real estate, net
2,359,289
2,530,964
Acquired lease intangible assets, net
16,821
18,735
231,895
205,745
1,398,297
1,444,867
Acquired lease intangible liabilities, net
17,619
20,978
Other liabilities
81,714
90,097
Capital - Regency
412,784
438,510
Capital - Third parties
697,591
760,992
The following table reconciles the Company's capital recorded by the unconsolidated partnerships to the Company's investments in real estate partnerships reported in the accompanying Consolidated Balance Sheet:
Basis difference
(62,407
(65,919
The revenues and expenses for the investments in real estate partnerships, on a combined basis, are summarized as follows:
378,096
416,222
381,094
86,193
94,026
101,590
61,224
66,061
65,146
42,010
54,618
53,747
5,615
5,837
5,870
3,851
3,624
3,126
198,893
224,166
229,479
54,874
58,109
66,786
(49,424
(75,162
(7,146
587
554
Provision for impairment
9,833
6,037
(7,220
60,194
Net income of the Partnerships
91,421
The Company's share of net income of the Partnerships
The following table provides a summary of shopping centers and land parcels acquired through our unconsolidated real estate partnerships during 2022, which had no such acquisitions in 2021:
Year ended December 31, 2022
PropertyName
Co-investmentPartner
Ownership%
Purchase Price (1)
Debt Assumed, Net of Premiums (1)
Intangible Assets (1)
Intangible Liabilities (1)
03/25/22
Naperville, IL
Columbia II
52,380
22,074
4,336
814
06/24/22
Baybrook East 1B
Other
5,540
57,920
The following table provides a summary of shopping centers and land parcels disposed of through our unconsolidated real estate partnerships:
Proceeds from sale of real estate investments
116,377
224,708
27,974
49,424
75,162
7,147
The Company's share of gain on sale of real estate
12,748
9,380
2,413
Number of land out-parcels sold
Notes Payable
Scheduled principal repayments on notes payable held by our unconsolidated investments in real estate partnerships as of December 31, 2022, were as follows:
(in thousands)Scheduled Principal Payments and Maturities by Year:
ScheduledPrincipalPayments
MortgageLoanMaturities
UnsecuredMaturities
Regency'sPro-RataShare
3,194
125,108
128,302
51,187
2,205
33,690
35,895
14,298
3,433
139,683
143,116
43,908
3,807
218,883
23,800
246,490
79,741
3,802
32,800
36,602
12,420
Beyond 5 Years
9,194
809,650
818,844
300,506
Net unamortized loan costs, debt premium / (discount)
(10,952
(3,800
Total notes payable
25,635
1,348,862
498,260
These fixed and variable rate notes payable are all non-recourse to the partnerships, and mature through 2034, with 97.9% having a weighted average fixed interest rate of 3.7%. The remaining notes payable float with LIBOR or SOFR and had a weighted average variable interest rate of 5.9% at December 31, 2022. As notes payable mature, they will be repaid from proceeds from new borrowings and/or partner capital contributions. Refinancing debt at maturity in the current interest rate environment could result in higher interest expense in future periods if rates remain elevated. The Company is obligated to contribute its Pro-rata share to fund maturities if the loans are not refinanced, and it has the capacity to do so from existing cash balances, availability on its line of credit, and operating cash flows. The Company believes that its partners are financially sound and have sufficient capital or access thereto to fund future capital requirements. In the event that a co-investment partner was unable to fund its share of the capital requirements of the co-investment partnership, the Company would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call which would be secured by the partner's membership interest.
Management fee income
In addition to earning our Pro-rata share of net income or loss in each of these co-investment partnerships, we receive fees as discussed in Note 1, as follows:
Asset management, property management, leasing, and investment and financing services
40,301
26,618
The following table represents the components of Other assets in the accompanying Consolidated Balance Sheets as of the periods set forth below:
167,062
167,095
54,581
65,112
Prepaid and other
28,615
21,332
Derivative assets
6,575
Furniture, fixtures, and equipment, net
5,808
5,444
Deferred financing costs, net
5,156
7,448
Total other assets
The following table presents the goodwill balances and activity during the year to date periods ended:
AccumulatedImpairmentLosses
Beginning of year balance
300,529
(133,434
307,413
(133,545
173,868
Goodwill allocated to Provision for impairment
Goodwill allocated to Properties held for sale
(2,465
Goodwill associated with disposed reporting units:
(111
Goodwill allocated to Gain on sale of real estate
(33
(4,308
End of year balance
300,496
As the Company identifies properties ("reporting units") that no longer meet its investment criteria, it will evaluate the property for potential sale. A decision to sell a reporting unit results in the need to evaluate its goodwill for recoverability and may result in impairment. Additionally, other changes impacting a reporting unit may be considered a triggering event. If events occur that trigger an impairment evaluation at multiple reporting units, a goodwill impairment may be significant.
The Company had the following acquired lease intangibles as of the periods set forth below:
In-place leases
452,868
443,460
Above-market leases
82,930
81,433
Total intangible assets
535,798
524,893
Accumulated amortization
(338,053
(312,186
Below-market leases
547,519
535,569
(193,315
(172,293
The following table provides a summary of amortization and net accretion amounts from acquired lease intangibles:
Line item in Consolidated Statements of Operations
In-place lease amortization
34,568
33,621
48,297
Above-market lease amortization
5,828
5,487
7,658
Acquired lease intangible asset amortization
40,396
39,108
55,955
Below-market lease amortization
28,642
30,378
50,103
The estimated aggregate amortization and net accretion amounts from acquired lease intangibles for the next five years are as follows:
In Process Year EndingDecember 31,
Amortization of In-place lease intangibles
Net accretion of Above/ Below market leaseintangibles
28,033
22,518
21,830
20,406
17,611
19,814
14,421
19,098
11,392
17,956
Lessor Accounting
All of the Company's leases are classified as operating leases. The Company's Lease income is comprised of both fixed and variable income. Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent, and in some cases stated amounts for CAM, real estate taxes, and insurance ("Recoverable Costs"). Income for these amounts is recognized on a straight-line basis.
Variable lease income includes the following two main items in the lease contracts:
The following table provides a disaggregation of lease income recognized as either fixed or variable lease income based on the criteria specified in Topic 842:
December 31, 2020
Operating lease income
Fixed and in-substance fixed lease income
851,409
797,502
807,603
Variable lease income
287,149
262,619
247,384
Other lease related income, net:
Above/below market rent and tenant rent inducement amortization, net
42,219
Uncollectible straight-line rent (1)
12,510
5,227
(34,673
Uncollectible amounts billable in lease income (1)
(82,367
Future minimum rents under non-cancelable operating leases, excluding variable lease payments, are as follows:
For the year ended December 31,
850,211
768,797
657,870
552,735
440,844
1,579,740
4,850,197
Lessee Accounting
The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party owns the underlying land and has leased the land to the Company to construct and/or operate a shopping center.
The Company has 19 properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties. Accordingly, the Company owns only a long-term leasehold or similar interest in these properties. These ground leases expire through the year 2101, and in most cases, provide for renewal options.
In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its business. Office leases expire through the year 2029, and in many cases, provide for renewal options.
The ground and office lease expense is recognized on a straight-line basis over the term of the leases, including management's estimate of expected option renewal periods. Operating lease expense under the Company's ground and office leases was as follows, including straight-line rent expense and variable lease expenses such as CPI increases, percentage rent and reimbursements of landlord costs:
Fixed operating lease expense
Ground leases
13,759
13,862
13,716
Office leases
4,162
4,309
4,334
Total fixed operating lease expense
17,921
18,171
18,050
Variable lease expense
1,591
1,032
1,044
611
615
585
Total variable lease expense
2,202
1,647
1,629
Total lease expense
20,123
19,818
19,679
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows for operating leases
14,656
15,165
15,003
The following table summarizes the undiscounted future cash flows by year attributable to the operating lease liabilities for ground and office leases as of December 31, 2022, and provides a reconciliation to the Lease liability included in the accompanying Consolidated Balance Sheets:
Lease Liabilities
Ground Leases
Office Leases
10,750
4,046
14,796
10,799
3,082
13,881
10,801
2,880
13,681
10,722
2,715
13,437
1,517
12,239
516,564
517,305
Total undiscounted lease liabilities
570,358
14,981
585,339
Present value discount
(370,486
(1,131
(371,617
199,872
13,850
Weighted average discount rate
Weighted average remaining term (in years)
46.8
8. Income Taxes
The Company has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code with certain of its subsidiaries treated as taxable REIT subsidiary entities, which are subject to federal and state income taxes.
The following table summarizes the tax status of dividends paid on our common shares:
Dividend per share
2.53
(2)
2.19
Ordinary income
Capital gain (3)
Additional tax status information:
Qualified dividend income
Section 199A dividend
Section 897 ordinary dividends
Section 897 capital gains
Our consolidated expense (benefit) for income taxes for the years ended December 31, 2022, 2021, and 2020 was as follows:
Income tax expense (benefit):
Current
(332
620
2,157
Deferred
293
421
(891
Total income tax expense (benefit) (1)
(39
1,041
1,266
The TRS entities are subject to federal and state income taxes and file separate tax returns. Income tax expense (benefit) differed from the amounts computed by applying the U.S. Federal income tax rate to pretax income of the TRS entities, as follows:
Computed expected tax expense (benefit)
504
544
(3,665
State income tax, net of federal benefit
477
(593
Valuation allowance
1,043
Permanent items
5,079
All other items
(273
(598
Total income tax expense (1)
Income tax expense attributable to operations (1)
The tax effects of temporary differences (included in Accounts payable and other liabilities in the accompanying Consolidated Balance Sheets) are summarized as follows:
Deferred tax assets
Fixed assets
1,039
1,007
1,379
2,418
(1,007
(2,418
Deferred tax assets, net
Deferred tax liabilities
(12,527
(13,004
(340
(12,588
(13,344
Net deferred tax liabilities
The Company believes it is more likely than not that the remaining deferred tax assets will not be realized unless tax planning strategies are implemented.
The Company's outstanding debt, net of unamortized debt premium (discount) and debt issuance costs, consisted of the following as of the dates set forth below:
MaturingThrough
WeightedAverageContractualRate
WeightedAverageEffectiveRate
Notes payable:
Fixed rate mortgage loans
3/1/2032
3.9%
3.5%
342,135
359,414
Variable rate mortgage loans (1)
6/2/2027
3.4%
3.7%
136,246
115,539
Fixed rate unsecured debt
3/15/2049
3.8%
4.0%
3,248,373
3,243,991
Unsecured credit facilities:
Line of Credit (2)
3/23/2025
5.0%
5.3%
Total debt outstanding
Notes payable consist of mortgage loans secured by properties and unsecured public and private debt. Mortgage loans may be repaid before maturity, but could be subject to yield maintenance premiums, and are generally due in monthly installments of principal and interest or interest only. Unsecured public debt may be repaid before maturity subject to accrued and unpaid interest through the proposed redemption date and a make-whole premium. Interest on unsecured public and private debt is payable semi-annually.
The Company is required to comply with certain financial covenants for its unsecured public debt as defined in the indenture agreements such as the following ratios: Consolidated Debt to Consolidated Assets, Consolidated Secured Debt to Consolidated Assets, Consolidated Income for Debt Service to Consolidated Debt Service, and Unencumbered Consolidated Assets to Unsecured Consolidated Debt. As of December 31, 2022, management of the Company believes it is in compliance with all financial covenants for its unsecured public debt.
Unsecured Credit Facilities
The Company has an unsecured line of credit commitment (the "Line") with a syndicate of banks. At December 31, 2022, the Line had a borrowing capacity of $1.25 billion, which is reduced by the balance of outstanding borrowings and commitments from issued letters of credit. The Line bears interest at a variable rate of LIBOR plus an applicable margin of 0.865% and is subject to a commitment fee of 0.15%, both of which are based on the Company's corporate credit rating. On January 12, 2023, the Line was amended to convert the reference rate from LIBOR to SOFR plus a 0.10% market adjustment, with no changes in the applicable margin.
The Company is required to comply with certain financial covenants as defined in the Line credit agreement, such as Ratio of Indebtedness to Total Asset Value ("TAV"), Ratio of Unsecured Indebtedness to Unencumbered Asset Value, Ratio of Adjusted EBITDA to Fixed Charges, Ratio of Secured Indebtedness to TAV, Ratio of Unencumbered Net Operating Income to Unsecured Interest Expense, and other covenants customary with this type of unsecured financing. As of December 31, 2022, the Company is in compliance with all financial covenants for the Line.
Scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:
Scheduled Principal Payments and Maturities by Year:
UnsecuredMaturities (1)
9,695
59,383
4,849
90,758
250,000
3,732
44,250
297,982
3,922
112,365
200,000
3,788
137,915
525,000
2,873
319
2,050,000
Unamortized debt premium/(discount) and issuance costs
4,532
(26,627
(22,095
28,859
449,522
The Company has $59.4 million of debt maturing over the next 12 months, which is in the form of five non-recourse mortgage loans. The Company currently intends to repay three of the maturing balances, leaving the properties unencumbered, with plans to refinance the two remaining. The Company has sufficient capacity on its Line to repay the maturing debt, if necessary.
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors, and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative transactions or purposes other than mitigation of interest rate risk. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with quality credit ratings. The Company does not anticipate that any of the counterparties will fail to meet their obligations.
The Company's objectives in using interest rate derivatives are to attempt to stabilize interest expense where possible and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets:
Fair Value at December 31,
Assets (Liabilities) (1)
EffectiveDate
MaturityDate
NotionalAmount
Bank Pays VariableRate of
Regency PaysFixed Rate of
4/7/16
4/1/23
LIBOR
1.303
(175
12/1/16
11/1/23
SOFR
1.490
883
(412
9/17/19
3/17/25
1.443
1,443
(364
6/2/17
6/2/27
2.261
2,158
(1,907
12/20/19 (2)
12/19/26
1.750
1,939
Total derivative financial instruments
(2,858
These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and, as of December 31, 2022, does not have any derivatives that are not designated as hedges.
The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in Accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
The following table represents the effect of the derivative financial instruments on the accompanying Consolidated Financial Statements:
Location and Amount of Gain (Loss) Recognized in OCI on Derivative
Location and Amount of Loss (Gain) Reclassified from AOCI into Income
Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded
Interest rate swaps
8,790
Early extinguishment of debt (1)
2,472
As of December 31, 2022, the Company expects approximately $5.4 million of accumulated comprehensive income on derivative instruments in AOCI, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months.
All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation, reasonably approximates their fair values, except for the following:
CarryingAmount
Financial liabilities:
3,333,378
4,103,533
The above fair values represent management's estimate of the amounts that would be received from selling those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants as of December 31, 2022 and 2021, respectively. These fair value measurements maximize the use of observable inputs which are classified within Level 2 of the fair value hierarchy. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments about the assumptions that market participants would use in pricing the asset or liability.
The Company develops its judgments based on the best information available at the measurement date, including expected cash flows, appropriately risk-adjusted discount rates, and available observable and unobservable inputs. Service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value of these financial instruments, the fair values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.
The following financial instruments are measured at fair value on a recurring basis:
Securities
The Company has investments in marketable securities that are included within Other assets on the accompanying Consolidated Balance Sheets. The fair value of the securities was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of securities are recorded within Net investment loss (income) in the accompanying Consolidated Statements of Operations, and includes unrealized losses of $8.0 million for the year ended December 31, 2022, and unrealized gains of $1.7 million and $3.0 million for the years ended December 31, 2021, and 2020, respectively.
Available-for-Sale Debt Securities
Available-for-sale debt securities consist of investments in certificates of deposit and corporate bonds, and are recorded at fair value using either recent trade prices for the identical debt instrument or comparable instruments by issuers of similar industry sector, issuer rating, and size, to estimate fair value, which are considered Level 2 inputs of the fair value hierarchy. Unrealized gains or losses on these debt securities are recognized through other comprehensive income.
Interest Rate Derivatives
The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.
The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis:
Fair Value Measurements as of December 31, 2022
Balance
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Assets:
40,089
Available-for-sale debt securities
14,492
Interest rate derivatives
61,156
21,067
Fair Value Measurements as of December 31, 2021
49,513
15,599
The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a non-recurring basis:
Total Gains (Losses)
Operating properties
140,500
(84,277
During the year ended December 31, 2022, there were no real estate assets re-measured to estimated fair value on a nonrecurring basis. During the year ended December 31, 2021, the Company revalued two shopping centers to estimated fair value due to a change in expected hold period using a discounted cash flow model.
Common Stock of the Parent Company
Dividends Declared
On February 8, 2023, our Board of Directors declared a common stock dividend of $0.65 per share, payable on April 5,
2023, to shareholders of record as of March 15, 2023.
At the Market ("ATM") Program
Under the Parent Company's ATM equity offering program, the Parent Company may sell up to $500 million of common stock at prices determined by the market at the time of sale.
During 2021, the Company entered into forward sale agreements under its ATM program to issue shares of its common stock which were issued and settled as follows:
The proceeds were used to fund acquisitions. All shares are now settled under the forward sales agreements. No other sales occurred under the ATM program during 2022.
As of December 31, 2022, $350.4 million of common stock remained available for issuance under this ATM equity program.
Share Repurchase Program
On February 3, 2021, the Company’s Board authorized a common share repurchase program under which the Company could purchase, from time to time, up to a maximum of $250 million of its outstanding common stock through open market purchases or in privately negotiated transactions (referred to as the "Authorized Repurchase Program"). Any shares purchased, if not retired, were treated as treasury shares.
During the year ended December 31, 2022, the Company executed multiple trades to repurchase 1,294,201 common shares under the Authorized Repurchase Program for a total of $75.4 million at a weighted average price of $58.25 per share. All repurchased shares were retired on the respective settlement dates. At December 31, 2022, $174.6 million remained available under this Authorized Repurchase Program. This Authorized Repurchase Program expired on February 3, 2023.
On February 8, 2023, the Company's Board authorized a new common share repurchase program under which the Company may purchase, from time to time, up to a maximum of $250 million of its outstanding common stock through open market purchases, and/or in privately negotiated transactions. The timing and price of share repurchases, if any, will be dependent upon market conditions and other factors. Any shares repurchased, if not retired, will be treated as treasury shares. This new authorization will expire on February 7, 2025, unless modified of earlier terminated by the Board.
Common Units of the Operating Partnership
Common units of the operating partnership are issued or redeemed and retired for each of the shares of Parent Company common stock issued or repurchased and retired, as described above. During the year ended December 31, 2022, 18,613 Partnership Units were converted to Parent Company common stock.
General Partners
The Parent Company, as general partner, owned the following Partnership Units outstanding:
Partnership units owned by the general partner
171,125
171,213
Partnership units owned by the limited partners
760
Total partnership units outstanding
171,866
171,973
Percentage of partnership units owned by the general partner
99.6
The Company recorded stock-based compensation in General and administrative expenses in the accompanying Consolidated Statements of Operations, the components of which are further described below:
Restricted stock (1)
12,651
Directors' fees paid in common stock and other employee stock grants
589
530
452
Capitalized stock-based compensation
(735
(666
(1,119
The Company established its Omnibus Incentive Plan (the "Plan") under which the Board of Directors may grant stock options and other stock-based awards to officers, directors, and other key employees. The Plan allows the Company to issue up to 5.0 million shares in the form of the Parent Company's common stock or stock options. As of December 31, 2022, there were 4.1 million shares available for grant under the Plan.
Restricted Stock Awards
The Company grants restricted stock under the Plan to its employees as a form of long-term compensation and retention. The terms of each restricted stock grant vary depending upon the participant's responsibilities and position within the Company. The Company's stock grants can be categorized as either time-based awards, performance-based awards, or market-based awards. All awards are valued at fair value, earn dividends throughout the vesting period, and have no voting rights. Fair value is measured using the grant date market price for all time-based or performance-based awards. Market based awards are valued using a Monte Carlo simulation to estimate the fair value based on the probability of satisfying the market conditions and the projected stock price at the time of payout, discounted to the valuation date over a three year performance period. Assumptions include historic volatility over the previous three year period, risk-free interest rates, and Regency's historic daily return as compared to the market index. Since the award payout includes dividend equivalents and the total shareholder return includes the value of dividends, no dividend yield assumption is required for the valuation. Compensation expense is measured at the grant date and recognized on a straight-line basis over the requisite vesting period for the entire award.
The following table summarizes non-vested restricted stock activity:
Number of Shares
Intrinsic Value (in thousands)
Weighted Average Grant Price
Non-vested as of December 31, 2021
691,862
Time-based awards granted (1) (4)
148,048
71.36
Performance-based awards granted (2) (4)
15,674
71.68
Market-based awards granted (3) (4)
112,759
74.98
Change in market-based awards earned for performance (3)
5,153
71.58
Vested (5)
(250,491
71.05
Forfeited
(11,306
62.65
Non-vested as of December 31, 2022 (6)
711,699
44,481
Volatility
43.10
42.60
18.50
Risk free interest rate
1.39
0.18
1.30
Weighted-average grant price for restricted stock
72.86
46.55
64.14
Intrinsic value of restricted stock vested
17,797
10,939
14,423
401(k) Retirement Plan
The Company maintains a 401(k) retirement plan covering substantially all employees and permits participants to defer eligible compensation up to the maximum allowable amount determined by the IRS. This deferred compensation, together with Company matching contributions equal to 100% of employee deferrals up to a maximum of $5,000 of their eligible compensation, is fully vested and funded as of December 31, 2022. Additionally, an annual profit sharing contribution may be made, which are fully vested after three years in service. Costs for Company contributions to the plan totaled $4.4 million, $4.1 million, and $3.5 million for the years ended December 31, 2022, 2021, and 2020, respectively.
Non-Qualified Deferred Compensation Plan ("NQDCP")
The Company maintains a NQDCP which allows select employees and directors to defer part or all of their cash bonus, director fees, and vested restricted stock awards. All contributions into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited in a Rabbi trust.
The following table reflects the balances of the assets and deferred compensation liabilities of the Rabbi trust and related participant account obligations in the accompanying Consolidated Balance Sheets, excluding Regency stock:
Location in Consolidated Balance Sheets
36,163
44,464
Deferred compensation obligation
36,085
44,388
Realized and unrealized gains and losses on securities held in the NQDCP are recognized within Net investment loss (income) in the accompanying Consolidated Statements of Operations. Changes in participant obligations, which is based on changes in the value of their investment elections, is recognized within General and administrative expenses within the accompanying Consolidated Statements of Operations.
Investments in shares of the Company's common stock are included, at cost, as Treasury stock in the accompanying Consolidated Balance Sheets of the Parent Company and as a reduction of General partner capital in the accompanying Consolidated Balance Sheets of the Operating Partnership. The participant's deferred compensation liability attributable to the participants' investments in shares of the Company's common stock are included, at cost, within Additional paid in capital in the accompanying Consolidated Balance Sheets of the Parent Company and as a reduction of General partner capital in the accompanying Consolidated Balance Sheets of the Operating Partnership. Changes in participant account balances related to the Regency common stock fund are recorded directly within stockholders' equity.
Parent Company Earnings per Share
The following summarizes the calculation of basic and diluted earnings per share:
Numerator:
Income attributable to common stockholders - basic
Income attributable to common stockholders - diluted
Denominator:
Weighted average common shares outstanding for basic EPS
171,404
170,236
169,231
Weighted average common shares outstanding for diluted EPS (1) (2)
171,791
170,694
169,460
Income per common share – basic
Income per common share – diluted
Income allocated to noncontrolling interests of the Operating Partnership has been excluded from the numerator and exchangeable Operating Partnership units have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would be anti-dilutive. Weighted average exchangeable Operating Partnership units outstanding for the years ended December 31, 2022, 2021, and 2020, were 748,336, 761,955, and 765,046, respectively.
Operating Partnership Earnings per Unit
The following summarizes the calculation of basic and diluted earnings per unit:
Income attributable to common unit holders - basic
Income attributable to common unit holders - diluted
Weighted average common units outstanding for basic EPU
172,152
170,998
169,997
Weighted average common units outstanding for diluted EPU (1) (2)
172,540
171,456
170,225
Income per common unit – basic
Income per common unit – diluted
Litigation
The Company is involved in litigation on a number of matters, and is subject to other disputes that arise in the ordinary course of business. While the outcome of any particular lawsuit or dispute cannot be predicted with certainty, in the opinion of management, the Company's currently pending litigation and disputes are not expected to have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity. Legal fees are expensed as incurred.
Environmental
The Company is subject to numerous environmental laws and regulations pertaining primarily to chemicals historically used by certain current and former dry cleaning tenants, the existence of asbestos in older shopping centers, older underground petroleum storage tanks and other historic land use. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that existing environmental studies with respect to its shopping centers have revealed all potential environmental contaminants; that its estimate of liabilities will not change as more information becomes available; that any previous owner, occupant or tenant did not create any material environmental condition not known to the Company; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; and that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.
Letters of Credit
The Company has the right to issue letters of credit under the Line up to an amount not to exceed $50.0 million, which reduces the credit availability under the Line. These letters of credit are primarily issued as collateral on behalf of its captive insurance program and to facilitate the construction of development projects. As of December 31, 2022 and 2021, the Company had $9.4 million in letters of credit outstanding.
Schedule III - Consolidated Real Estate and Accumulated Depreciation
Initial Cost
Total Cost
Net Cost
Shopping Centers (1)
Land & LandImprovements
Building &Improvements
CostCapitalizedSubsequent toAcquisition (2)
AccumulatedDepreciation
Net ofAccumulatedDepreciation
Mortgages
48,340
34,895
(57,260
15,378
10,597
25,975
(1,550
24,425
40,560
25,617
25,650
66,210
(4,361
61,849
23,033
17,173
17,140
40,173
(3,112
37,061
4,860
2,251
2,386
7,246
(450
6,796
2,198
272
(318
2,152
30,760
35,830
1,743
30,812
37,521
68,333
(29,841
38,492
(80,812
2,685
934
1,127
3,724
16,614
24,171
271
24,442
41,056
(4,272
36,784
(205
1,424
3,004
5,852
215
6,067
9,071
(1,188
7,883
17,014
21,958
597
22,555
39,569
(1,436
38,133
(26,000
10,109
11,288
12,499
22,608
(6,361
16,247
9,065
1,025
3,338
10,090
(3,587
6,503
5,438
21,328
(56
5,382
26,710
(1,196
25,514
2,584
9,865
10,991
13,575
(9,016
4,559
4,282
18,827
2,093
4,868
20,334
25,202
(5,198
20,004
2,751
10,459
11,129
9,486
14,853
24,339
(4,497
19,842
Aventura Square
88,098
20,771
1,799
89,657
21,011
110,668
(4,541
106,127
(2,340
12,016
33,556
323
33,879
45,895
(859
45,036
(24,365
23,074
33,838
14,057
27,758
43,211
70,969
(19,638
51,331
2,160
1,137
(1,294
2,003
8,132
9,756
3,942
8,323
13,507
(10,116
11,714
17,193
(368
14,372
16,334
30,706
(8,092
22,614
2,295
9,551
2,957
2,965
11,838
14,803
(9,463
5,340
12,405
12,571
17,403
(835
16,568
(10,200
10,371
5,136
5,192
15,563
(1,241
14,322
42,663
38,481
935
39,416
82,079
(8,188
73,891
22,251
20,815
497
21,312
43,563
(6,766
36,797
(18,637
82,411
89,165
1,431
90,596
173,007
(4,278
168,729
3,940
14,912
22,981
8,639
33,194
41,833
(12,435
29,398
31,988
5,850
767
6,617
38,605
(515
38,090
(22,300
43,888
9,726
53,888
(2,903
50,985
3,659
10,787
3,001
13,788
17,447
(9,205
8,242
2,628
11,236
5,203
3,606
15,461
19,067
(9,494
9,573
12,879
20,713
280
20,993
33,872
(4,581
29,291
2,788
3,473
357
3,830
6,618
(1,897
4,721
694
3,292
600
3,892
4,586
(3,407
1,179
4,597
24,836
5,750
5,519
29,664
35,183
(21,385
13,798
Brick Walk
25,299
41,995
2,071
44,066
69,365
(12,220
57,145
(31,131
BridgeMill Market
7,521
13,306
969
7,522
14,274
21,796
(3,693
18,103
3,033
8,137
621
3,067
8,724
11,791
(3,743
8,048
3,983
18,687
11,395
4,234
29,831
34,065
(21,759
12,306
Broadway Plaza
40,723
42,170
2,100
44,270
84,993
(9,024
75,969
7,019
8,688
283
6,998
8,992
15,990
(3,053
12,937
35,161
17,494
6,104
22,596
58,759
(6,220
52,539
1,417
7,432
4,422
11,854
13,271
(9,809
3,462
45,502
16,642
16,745
62,247
(6,221
56,026
70,411
36,518
2,094
70,448
38,575
109,023
(10,036
98,987
2,970
5,978
1,402
10,350
(4,999
5,351
2,459
4,897
2,546
4,958
7,504
(3,993
3,511
774
4,347
605
4,952
5,726
(3,437
2,289
2,466
12,548
5,206
3,422
16,798
20,220
(11,975
8,245
4,974
3,224
1,302
7,729
9,031
(7,203
1,828
23,720
19,270
(53
23,721
19,216
42,937
(2,641
40,296
3,187
9,397
647
10,044
13,231
(2,638
10,593
4,704
16,748
16,802
21,506
(728
20,778
6,661
11,502
1,295
5,694
13,764
19,458
(7,161
12,297
1,141
6,845
1,008
7,853
8,994
(2,308
6,686
4,612
20,829
5,603
6,886
24,158
31,044
(20,840
10,204
30,074
12,644
2,307
14,951
45,025
(4,491
40,534
3,533
15,862
5,080
20,942
24,475
(13,651
10,824
Chimney Rock
23,623
48,200
440
48,640
72,263
(15,623
56,640
22,930
9,028
183
9,211
32,141
(2,140
30,001
29,303
18,437
18,590
47,893
(2,210
45,683
(24,000
12,208
15,839
16,082
28,388
(5,640
22,748
2,744
3,081
3,185
5,929
(997
4,932
24,189
35,422
2,248
24,538
37,321
61,859
(29,371
32,488
Clocktower Plaza Shopping Ctr
49,630
19,624
702
20,326
69,956
(4,310
65,646
15,056
5,594
496
6,090
21,146
(2,008
19,138
13,154
12,315
2,549
14,864
28,018
(11,607
16,411
28,627
10,395
11,269
39,896
(2,312
37,584
30,819
36,506
1,616
31,272
37,669
68,941
(7,356
61,585
29,515
40,673
2,411
29,514
43,085
72,599
(7,436
65,163
(8,962
14,922
15,200
15,332
17,231
32,563
(3,981
28,582
8,407
8,004
8,855
17,262
(4,397
12,865
1,772
6,944
8,622
10,394
(6,862
3,532
126
8,887
24,121
24,160
33,047
(706
32,341
6,674
12,244
472
6,696
12,694
19,390
(7,892
11,498
18,713
20,373
194
20,567
39,280
(2,143
37,137
(16,000
17,982
35,574
13,718
23,175
44,099
67,274
(12,190
55,084
5,867
5,874
(3
5,871
108,841
32,308
2,329
34,637
143,478
(7,932
135,546
128
30,303
19,255
1,038
20,293
50,596
(4,172
46,424
4,194
4,005
727
4,343
4,583
8,926
(2,563
6,363
Darinor Plaza
693
32,140
1,236
711
33,358
34,069
(7,099
26,970
5,300
8,181
2,499
10,680
15,980
(6,750
9,230
15,145
12,110
12,299
27,444
(700
26,744
(13,800
3,342
15,934
6,409
22,343
25,685
(17,574
8,111
12,325
21,378
12,267
21,527
33,794
(946
32,848
13,135
25,070
(29
25,041
38,176
(380
37,796
1,730
7,189
2,607
1,941
9,585
11,526
(7,081
4,445
4,517
13,528
18,045
(357
17,688
2,985
5,649
5,677
8,602
(282
8,320
7,600
11,538
15,334
10,328
24,144
34,472
(12,157
22,315
11,025
27,371
3,570
30,941
41,966
(14,632
27,334
2,834
7,370
3,000
3,263
9,941
13,204
(6,644
6,560
5,040
11,572
20,175
10,518
26,269
36,787
(16,314
20,473
Fairfield Center
6,731
29,420
1,550
30,970
37,701
(8,265
29,436
1,340
4,168
487
1,246
4,749
5,995
(3,136
30,712
7,327
9,963
34,923
13,079
48,002
(8,109
39,893
(35,446
2,298
8,510
(7,934
512
2,362
2,874
(1,336
1,538
3,077
11,587
3,380
3,111
14,933
18,044
(9,610
8,434
29,722
29,041
(183
29,784
28,796
58,580
(12,810
45,770
11,924
16,856
11,822
17,512
29,334
(15,494
13,840
6,660
28,021
2,541
30,562
37,222
(18,551
18,671
2,136
8,273
769
9,042
11,178
(5,974
5,204
52,665
7,134
12,097
55,087
16,809
71,896
(19,483
52,413
3,157
11,153
5,942
4,654
15,598
20,252
(9,632
10,620
4,103
12,951
1,564
4,124
14,494
18,618
(5,568
13,050
9,120
11,541
1,010
12,551
21,671
(3,076
18,595
1,194
5,381
428
5,809
7,003
(4,906
2,097
12,699
18,482
3,718
11,521
23,378
34,899
(12,797
22,102
24,208
61,033
5,886
24,918
66,209
91,127
(29,671
61,456
7,777
24,829
975
25,804
33,581
(5,936
27,645
28,764
25,113
1,337
26,450
55,214
(6,132
49,082
8,232
28,260
(12,901
4,692
18,899
23,591
(11,890
11,701
2,284
9,443
807
10,250
12,534
(6,472
6,062
17,630
8,231
8,247
25,877
(540
25,337
12,390
26,097
14,665
12,215
40,937
53,152
(21,674
31,478
Hershey
808
826
(567
11,850
18,205
821
19,026
30,876
(3,166
27,710
(8,879
5,065
239
5,304
10,233
(4,242
5,991
1,600
1,909
1,960
3,560
2,364
131
2,995
4,581
4,354
3,104
8,826
11,930
(4,705
7,225
5,734
16,709
11,805
8,343
25,905
34,248
(17,075
8,975
23,799
2,274
8,828
26,220
35,048
(8,282
26,766
5,157
14,279
7,444
9,610
17,270
26,880
(8,580
18,300
9,809
39,905
7,299
47,204
57,013
(30,450
26,563
24,974
25,903
1,143
25,050
52,020
(8,011
44,009
8,087
9,849
(4
9,845
17,932
(2,336
15,596
2,159
946
3,105
4,405
(1,928
2,477
12,354
23,660
12,361
23,824
36,185
(724
35,461
2,294
12,841
816
13,547
15,951
(7,842
8,109
9,364
26,243
9,367
26,933
36,300
(5,742
30,558
6,772
16,224
1,384
6,802
17,578
24,380
(6,661
17,719
14,451
20,089
20,497
34,948
(4,608
30,340
3,844
6,599
1,392
7,991
11,835
(6,528
5,307
24,036
57,476
2,507
59,983
84,019
(14,241
69,778
2,008
7,632
2,029
8,748
10,777
(5,546
5,231
3,913
7,874
9,053
12,966
(6,923
6,043
2,030
8,859
(3,527
2,433
7,362
(3,197
4,165
1,779
10,060
1,651
11,711
13,490
(7,454
6,036
15,992
12,964
4,099
16,343
16,712
33,055
(13,077
19,978
7,913
27,230
671
27,901
35,814
(7,095
28,719
6,455
9,839
6,160
10,318
16,478
(5,678
4,400
11,445
1,867
13,312
17,712
(8,446
9,266
2,000
9,676
8,650
1,996
18,330
(11,494
8,832
12,592
12,781
12,857
25,449
(4,302
21,147
(4,250
1,706
4,885
347
1,727
5,211
6,938
(3,406
35,628
66,847
(458
66,389
102,017
(14,087
87,930
4,451
10,807
(74
10,733
15,184
(1,818
13,366
1,073
5,358
5,920
1,901
10,450
12,351
(8,007
4,344
10,728
3,026
13,754
16,754
(8,214
8,540
2,999
6,765
1,321
8,086
11,085
(6,426
4,659
4,300
13,951
14,920
19,220
(9,276
9,944
2,670
18,401
14,396
2,903
32,564
35,467
(18,563
16,904
18,173
13,554
2,264
15,818
33,991
25,882
2,412
10,150
1,338
11,488
13,900
(9,815
12,500
10,697
8,721
16,276
15,642
31,918
(11,114
20,804
10,124
8,691
8,629
11,045
16,399
(9,765
17,679
4,900
19,774
4,342
24,116
29,016
(14,104
5,668
13,727
(51
4,995
14,349
19,344
(7,629
11,715
12,189
30,171
30,304
42,493
(9,159
33,334
1,769
6,652
4,973
2,840
10,554
13,394
(6,739
6,655
5,011
8,692
9,818
14,829
(5,269
9,560
2,662
11,284
5,433
16,717
19,379
(6,970
12,409
6,591
28,966
915
29,881
36,472
(12,266
24,206
(4,869
4,000
6,668
6,038
4,766
11,940
16,706
(6,362
10,344
3,503
11,671
1,811
3,190
13,795
16,985
(8,550
Ocala Corners
1,816
10,515
11,126
12,942
(5,686
7,256
2,368
11,405
13,513
3,455
23,831
27,286
(11,850
15,436
11,894
21,407
11,347
14,135
30,513
44,648
(7,846
36,802
2,812
12,639
20,927
13,803
22,575
36,378
(13,670
22,708
14,414
6,002
15,212
19,952
35,164
(15,633
19,531
15,626
22,124
23,203
38,829
(5,971
32,858
5,197
19,746
890
20,636
25,833
(14,605
11,228
38,114
623
26,692
38,020
64,712
(15,824
48,888
20,652
7,238
27,193
33,043
(15,288
17,755
21,086
28,123
3,778
31,901
52,987
(8,835
44,152
6,300
1,835
12,826
19,126
(7,989
11,137
23,147
1,129
24,276
38,227
(5,550
32,677
6,220
980
7,200
7,868
(4,385
3,483
Pinecrest Place
4,193
13,275
(189
3,992
13,287
17,279
(2,943
14,336
104,395
3,446
107,841
132,670
(17,147
115,523
4,200
3,610
4,202
13,717
17,919
(8,598
9,321
15,239
11,367
328
14,628
26,934
(1,468
25,466
18,201
14,889
6,614
19,386
20,318
39,704
(6,474
33,230
15,240
5,196
5,372
20,612
(1,204
19,408
133,422
116,758
(88,642
85,205
76,333
161,538
(13,169
148,369
8,248
30,716
3,728
34,444
42,692
(18,905
23,787
3,687
17,965
10,011
5,758
31,663
(21,120
10,543
1,191
4,672
501
5,173
6,364
(4,206
4,164
13,032
13,536
17,700
(7,411
10,289
763
(899
1,505
28,797
30,302
(4,255
26,047
7,069
1,181
9,803
16,872
(7,867
9,005
11,682
26,215
765
11,681
26,981
38,662
(5,582
33,080
20,939
6,317
6,464
27,403
(1,784
25,619
10,336
9,500
1,192
9,755
11,273
21,028
(4,539
16,489
3,917
3,616
3,963
7,880
(2,947
4,933
4,770
25,191
6,581
5,060
31,482
36,542
(26,489
10,053
15,505
52,505
3,201
16,853
54,358
71,211
(8,303
62,908
1,500
4,917
5,248
6,748
(3,501
3,247
40,371
32,108
7,523
40,382
39,620
80,002
(5,539
74,463
2,234
6,903
1,503
8,406
10,640
(6,019
4,621
10,581
10,376
20,957
(3,013
17,944
9,300
8,075
8,756
9,592
16,539
26,131
(11,463
14,668
36,006
57,886
416
58,302
94,308
(10,008
84,300
8,226
9,201
10,501
(5,666
4,835
6,889
28,056
4,352
32,408
39,297
(11,213
28,084
10,846
12,525
13,191
24,037
(3,334
20,703
59,949
26,334
881
27,215
87,164
(5,065
82,099
390,106
172,652
91,745
416,378
238,125
654,503
(64,161
590,342
3,968
8,367
12,335
(2,118
10,217
82,260
97,273
15,030
83,483
111,080
194,563
(21,348
173,215
2,731
6,360
2,454
7,606
(4,218
5,842
5,236
11,802
12,142
17,378
(857
11,193
2,784
7,078
6,899
13,977
(3,783
10,194
5,420
9,450
11,700
17,120
(7,406
9,714
11,552
19,875
(2,952
16,923
16,643
15,091
3,049
17,247
17,536
34,783
(4,826
29,957
5,091
5,985
714
6,699
11,790
(5,849
5,941
4,474
5,628
6,080
(1,464
9,090
20,538
42,992
336
43,328
63,866
(8,722
55,144
(410
17,529
21,829
1,203
23,032
40,561
(5,645
34,916
2,860
595
1,911
4,771
(375
4,396
556
1,271
4,105
(296
3,809
9,957
11,296
2,057
9,973
13,337
23,310
(11,645
11,665
9,082
6,124
540
9,087
6,659
15,746
(3,940
11,806
(10,000
1,863
(84
1,501
2,292
3,793
(1,617
2,176
11,691
9,026
299
9,325
21,016
(3,171
17,845
(179
1,487
7,717
1,351
1,448
9,107
10,555
(4,799
5,756
19,201
17,984
375
18,811
18,749
37,560
(13,100
24,460
84,586
39,342
2,221
85,117
41,032
126,149
(10,755
115,394
3,117
8,869
11,986
11,693
17,020
27,055
16,180
18,534
41,721
60,255
(16,276
43,979
12,001
3,477
3,332
15,131
18,463
(10,243
8,220
28,188
53,405
1,296
54,701
82,889
(12,254
70,635
6,563
7,939
368
8,307
14,870
(2,063
12,807
26,661
34,325
6,603
29,743
37,846
67,589
(8,206
12,750
2,300
15,050
16,350
(9,452
6,898
18,395
11,306
21,438
15,745
37,183
(9,122
28,061
SouthPoint Crossing
4,412
12,235
4,382
18,063
(8,443
9,620
Starke
1,683
1,766
(943
823
31,082
13,520
13,519
44,601
(2,925
41,676
27,003
9,425
9,426
36,429
33,791
21,973
13,386
13,462
35,435
(2,884
32,551
12,846
12,162
13,708
26,554
(11,002
15,552
4,280
8,189
1,108
9,297
13,577
(7,277
Suncoast Crossing
9,030
10,764
4,533
13,374
10,953
24,327
(9,079
15,248
22,415
12,054
12,134
34,549
(2,539
32,010
12,584
9,221
1,407
10,628
23,212
(2,738
20,474
Tanasbourne Market
3,269
10,861
(294
3,149
10,687
13,836
(6,776
7,060
8,560
15,464
2,416
17,880
26,440
(10,680
15,760
12,945
37,169
40,624
54,213
(18,146
36,067
(715
72,910
6,086
47,165
79,187
46,974
126,161
(867
125,294
154,932
126,328
34,127
157,814
157,573
315,387
(26,426
288,961
30,955
18,242
30,956
18,246
49,202
(7,338
41,864
108,653
216,771
3,903
220,674
329,327
(41,384
287,943
18,773
61,906
6,531
19,611
67,599
87,210
(20,874
66,336
10,927
36,052
957
37,009
47,936
(7,104
40,832
1,718
6,204
6,230
7,948
(1,303
6,645
The Point at Garden City Park
9,764
2,559
13,817
16,376
(4,474
11,902
112,136
86,918
2,162
89,080
201,216
(11,275
189,941
(2,200
843
372
737
598
1,335
1,152
9,735
12,923
12,939
22,674
(2,079
20,595
13,013
(73
12,940
30,119
(3,118
27,001
4,664
5,207
5,229
9,893
8,057
270
8,402
9,285
(5,386
3,899
7,553
21,554
22,681
30,234
(5,120
25,114
(1,166
13,829
23,922
13,828
23,920
37,748
(6,190
31,558
17,245
44,225
2,612
17,263
46,819
64,082
(21,174
42,908
5,200
25,827
9,483
6,557
33,953
40,510
(17,764
22,746
5,490
5,144
6,637
5,561
11,710
17,271
(4,807
12,464
University Commons
4,070
30,785
588
31,373
35,443
(9,142
26,301
17,659
1,178
18,837
36,758
(17,231
19,527
13,297
16,241
13,887
30,111
(713
13,140
20,559
(303
13,156
20,240
33,396
25,767
Village at Lee Airpark
11,099
12,975
11,803
15,803
27,606
(13,669
13,937
3,885
14,131
5,480
22,146
27,626
(12,613
15,013
49,037
22,618
895
23,513
72,550
(5,236
67,314
(5,031
14,969
18,641
(260
14,915
18,435
33,350
(718
32,632
3,840
7,232
4,039
3,878
11,233
15,111
(8,273
6,838
20,394
21,261
21,270
41,664
(5,443
36,221
5,498
13,500
13,562
19,060
(3,040
16,020
1,496
7,787
2,140
9,927
11,423
(8,702
2,721
2,041
12,131
2,707
2,600
16,879
(7,451
9,428
12,934
18,594
15,386
16,473
31,859
(2,950
28,909
1,857
7,572
678
10,107
(6,706
3,401
10,561
9,792
10,031
20,592
(2,773
17,819
5,840
5,759
2,892
8,651
14,491
9,255
127,859
21,514
(18,733
117,732
12,908
130,640
(11,941
118,699
116,129
51,460
6,005
117,559
56,035
173,594
(12,517
161,077
(88,000
5,302
9,400
14,702
(4,675
10,027
3,366
11,751
11,062
4,894
21,285
26,179
(10,450
15,729
7,043
27,195
30,533
17,620
47,151
64,771
(33,500
31,271
9,035
7,455
(40
7,415
16,450
(1,947
14,503
(1,457
43,597
16,428
6,349
45,260
21,114
66,374
(5,505
60,869
19,933
25,301
(1,626
18,979
24,629
43,608
(17,551
26,057
13,322
15,314
15,491
28,813
(809
28,004
(16,700
7,435
3,721
974
4,686
12,130
(1,506
10,624
Willow Festival
1,954
56,501
3,478
59,957
61,933
(21,751
40,182
6,664
7,908
(343
6,294
7,935
14,229
(3,518
10,711
Willows Shopping Center
51,964
78,029
2,358
51,992
80,359
132,351
(15,214
117,137
1,419
6,284
1,617
1,421
7,899
9,320
(5,547
3,773
7,195
7,578
13,078
(4,628
8,450
7,621
11,018
1,330
12,348
19,969
(12,043
7,926
3,500
9,288
3,489
9,990
13,479
(6,203
7,276
Corporate Assets
1,325
(1,325
Land held for future development
11,349
(4,615
5,041,114
5,911,477
905,473
5,087,104
6,770,960
(2,415,860
(473,849
See accompanying report of independent registered public accounting firm.
Depreciation and amortization of the Company's investment in buildings and improvements reflected in the statements of operations is calculated over the estimated useful lives of the assets, which are up to 40 years. The aggregate cost for federal income tax purposes was approximately $9.7 billion at December 31, 2022.
The changes in total real estate assets for the years ended December 31, 2022, 2021, and 2020 are as follows:
Beginning balance
11,101,858
11,095,294
Acquired properties and land
224,653
479,708
39,087
Developments and improvements
171,629
172,012
154,657
Disposal of building and tenant improvements
(29,523
(10,898
(35,034
Sale of properties
(4,276
(107,090
(95,780
(50,873
(38,122
(89,136
(18,244
Ending balance
The changes in accumulated depreciation for the years ended December 31, 2022, 2021, and 2020 are as follows:
1,994,108
1,766,162
Depreciation expense
270,520
253,437
278,861
(100
(28,715
(10,812
Accumulated depreciation related to properties held for sale
(28,110
(4,357
(4,859
(712
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Controls and Procedures (Regency Centers Corporation)
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of the Parent Company's management, including its chief executive officer and chief financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the Parent Company's chief executive officer and chief financial officer concluded that as of December 31, 2022, the Parent Company's disclosure controls and procedures were effective to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Parent Company in the reports it files or submits is accumulated and communicated to management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
The Parent Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of its management, including its chief executive officer and chief financial officer, the Parent Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under the framework in Internal Control - Integrated Framework (2013), the Parent Company's management concluded that its internal control over financial reporting was effective as of December 31, 2022.
KPMG LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Report and, as part of their audit, has issued a report, included within "Item 8. Financial Statements and Supplementary Data" of this Report, on the effectiveness of the Parent Company's internal control over financial reporting.
The Parent Company's system of internal control over financial reporting was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with accounting principles generally accepted in the United States. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Controls
There have been no changes in the Parent Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Controls and Procedures (Regency Centers, L.P.)
Under the supervision and with the participation of the Operating Partnership's management, including the chief executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the chief executive officer and chief financial officer of its general partner concluded that, as of December 31, 2022, the Operating Partnership's disclosure controls and procedures were effective to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Operating Partnership in the reports it files or submits is accumulated and communicated to management, including the chief executive officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure.
The Operating Partnership's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of its management, including the chief executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under the framework in Internal Control - Integrated Framework (2013), the Operating Partnership's management concluded that its internal control over financial reporting was effective as of December 31, 2022.
KPMG LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Report and, as part of their audit, has issued a report, included within "Item 8. Financial Statements and Supplementary Data" of this Report, on the effectiveness of the Operating Partnership's internal control over financial reporting.
The Operating Partnership's system of internal control over financial reporting was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with accounting principles generally accepted in the United States. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
There have been no changes in the Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B. Other Information
Not applicable
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 10. Directors, Executive Officers, and Corporate Governance
Information concerning our directors, executive officers, and corporate governance is incorporated herein by reference to our definitive proxy statement to be filed with the SEC within 120 days after the end of the fiscal year covered by this Report with respect to the 2023 Annual Meeting of Stockholders. Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3).
Code of Ethics.
We have a code of ethics applicable to our Board of Directors, principal executive officers, principal financial officer, principal accounting officer and persons performing similar functions. The text of this code of ethics may be found on our website at https://investors.regencycenters.com/corporate-governance/governance-overview. We will post a notice of any waiver from, or amendment to, any provision of our code of ethics on our website.
Item 11. Executive Compensation
Incorporated herein by reference to our definitive proxy statement to be filed with the SEC within 120 days after the end of the fiscal year covered by this Report with respect to the 2023 Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table provides information about securities that may be issued under our existing equity compensation plans:
Equity Compensation Plan Information
(as of December 31, 2022)
(a)
(b)
(c)
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)
Weighted-average exercise price of outstanding options, warrants and rights (2)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) (3)
Equity compensation plans approved by security holders
4,056,077
Equity compensation plans not approved by security holders
Information about security ownership is incorporated herein by reference to our definitive proxy statement to be filed with the SEC within 120 days after the end of the fiscal year covered by this Report with respect to the 2023 Annual Meeting of Stockholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Regency Centers Corporation and Regency Centers, L.P. 2022 financial statements and financial statement schedule, together with the reports of KPMG LLP are listed on the index immediately preceding the financial statements within "Item 8. Financial Statements and Supplementary Data" of this Report.
In reviewing the agreements included as exhibits to this Report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries or other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Report not misleading. Additional information about the Company may be found elsewhere in this Report and the Company's other public files, which are available without charge through the SEC's website at http://www.sec.gov .
Unless otherwise indicated below, the Commission file number to the exhibit is No. 001-12298.
Underwriting Agreement
Form of Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and the parties listed below (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed on May 17, 2017). The Equity Distribution Agreements listed below are substantially identical in all material respects to the Form of Equity Distribution Agreement, except for the identities of the parties, and have not been filed as exhibits to the Company’s 1934 Act reports pursuant to Instruction 2 to item 601 of Regulation S-K:
(i)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and Wells Fargo Securities, LLC;
(ii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and J.P. Morgan Securities LLC;
(iii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and Merrill Lynch, Pierce, Fenner & Smith Incorporated;
(iv)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and BB&T Capital Markets, a division of BB&T Securities, LLC;
(v)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and BTIG, LLC;
(vi)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and RBC Capital Markets, LLC;
(vii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and SunTrust Robinson Humphrey, Inc.; and
(viii)
Equity Distribution Agreement dated May 17, 2017 among Regency Centers Corporation, Regency Centers, L.P. and Mizuho Securities USA LLC.
Form of Amendment No. 1 to the Equity Distribution Agreement, dated November 13, 2018 (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed on November 14, 2018). The Amendment No.1 to each of the Equity Distribution Agreements, dated November 13, 2018, and listed in Exhibit 1 (a) are substantially identical in all material respects to the Form of Amendment No. 1 to the Equity Distribution Agreement, except for the identities of the parties, and have not been filed as exhibits to the Company’s 1934 Act reports pursuant to item 601 of Regulation S-K.
Form of Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020 (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed on May 8, 2020). The Amendments No. 2 to each of the Equity Distribution Agreements listed below are substantially identical in all material respects to the Form of Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, except for the identities of the parties, and have not been filed as exhibits to the Company’s 1934 Act reports pursuant to Instruction 2 to item 601 of Regulation S-K:
Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P. and Wells Fargo Bank, National Association and Wells Fargo Securities, LLC.
Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P. and SunTrust Robinson Humphrey, Inc.
Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P. and BTIG, LLC
Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P., JPMorgan Chase Bank, National Association and J.P. Morgan Securities LLC
Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P., Bank of America, N.A. and BofA Securities, Inc.
(d)
Amendment No. 2 to the Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P., Mizuho Markets Americas LLC and Mizuho Securities USA LLC (incorporated by reference to Exhibit 1.2 to the Company’s Form 8-K filed on May 8, 2020).
(e)
Form of Equity Distribution Agreement, dated May 8, 2020 (incorporated by reference to Exhibit 1.3 to the Company’s Form 8-K filed on May 8, 2020). The Equity Distribution Agreements listed below are substantially identical in all material respects to the Form of Equity Distribution Agreement, except for the identities of the parties, and have not been filed as exhibits to the Company’s 1934 Act reports pursuant to Instruction 2 to item 601 of Regulation S-K:
Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P. and Jefferies LLC.
Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P. and SMBC Nikko Securities America, Inc.
Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P. and Regions Securities LLC
Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P., The Bank of Nova Scotia and Scotia Capital (USA) Inc.
Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P., Bank of Montreal and BMO Capital Markets Corp.
Equity Distribution Agreement, dated May 8, 2020, among Regency Centers Corporation, Regency Centers, L.P., TD Securities (USA) LLC and The Toronto-Dominion Bank
(f)
Form of Forward Master Confirmation, dated May 8, 2020 (incorporated by reference to Exhibit 1.4 to the Company’s Form 8-K filed on May 8, 2020). The Forward Master Confirmations listed below are substantially identical in all material respects to the Form of Forward Master Confirmation, except for the identities of the parties, and have not been filed as exhibits to the Company’s 1934 Act reports pursuant to Instruction 2 to item 601 of Regulation S-K:
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and Wells Fargo Bank, National Association and Wells Fargo Securities, LLC.
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and Bank of America, N.A.
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and JPMorgan Chase Bank, National Association, New York Branch
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and Bank of Montreal
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and Mizuho Markets Americas LLC
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and Jefferies LLC
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and The Bank of Nova Scotia
Forward Master Confirmation, dated May 8, 2020, by and between Regency Centers Corporation and The Toronto-Dominion Bank.
Articles of Incorporation and Bylaws
Restated Articles of Incorporation of Regency Centers Corporation (amendment is incorporated by reference to Exhibit 3.A to the Company’s Form 10-Q filed on August 8, 2017).
Amended and Restated Bylaws of Regency Centers Corporation (amendment is incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on August 5, 2022).
Fifth Amended and Restated Agreement of Limited Partnership of Regency Centers, L.P. , (incorporated by reference to Exhibit 3(d) to the Company's Form 10-K filed on February 19, 2014).
Instruments Defining Rights of Security Holders
See Exhibits 3(a) and 3(b) for provisions of the Articles of Incorporation and Bylaws of the Company defining the rights of security holders. See Exhibits 3(c) for provisions of the Partnership Agreement of Regency Centers, L.P. defining rights of security holders.
Indenture dated December 5, 2001 between Regency Centers, L.P., the guarantors named therein and First Union National Bank, as trustee (incorporated by reference to Exhibit 4.4 to Regency Centers, L.P.'s Form 8-K filed on December 10, 2001).
First Supplemental Indenture dated as of June 5, 2007 among Regency Centers, L.P., the Company as guarantor and U.S. Bank National Association, as successor to Wachovia Bank, National Association (formerly known as First Union National Bank), as trustee (incorporated by reference to Exhibit 4.1 to Regency Centers, L.P.'s Form 8-K filed on June 5, 2007).
Second Supplemental Indenture dated as of June 2, 2010 to the Indenture dated as of December 5, 2001 between Regency Centers, L.P., Regency Centers Corporation, as guarantor, and U.S. Bank National Association, as successor to Wachovia Bank, National Association (formerly known as First Union National Bank), as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on June 3, 2010).
Third Supplemental Indenture dated as of August 17, 2015 to the Indenture dated as of December 5, 2001 among Regency Centers, L.P., Regency Centers Corporation, as guarantor, and U.S. Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on August 18, 2015).
Fourth Supplemental Indenture dated as of January 26, 2017 among Regency Centers, L.P., Regency Centers Corporation, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on January 26, 2016).
Fifth Supplemental Indenture dated as of March 6, 2019 among Regency Centers, L.P., Regency Centers Corporation, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on March 6, 2019).
Sixth Supplemental Indenture dated as of May 13, 2020 among Regency Centers, L.P., Regency Centers Corporation, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on May 13, 2020).
Assumption Agreement, dated as of March 1, 2017, by Regency Centers Corporation (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on March 1, 2017).
Description of the Company’s Securities Registered under Section 12 of the Exchange Act. (incorporated by reference to Exhibit 4(e) to the Company’s Form 10-K filed on February 18, 2020).
Material Contracts (~ indicates management contract or compensatory plan)
~(a)
Amended and Restated Deferred Compensation Plan dated May 6, 2003 (incorporated by reference to Exhibit 10(k) to the Company's Form 10-K filed on March 12, 2004).
~(b)
Regency Centers Corporation 2005 Deferred Compensation Plan (incorporated by reference to Exhibit 10(s) to the Company's Form 8-K filed on December 21, 2004).
~(c)
First Amendment to Regency Centers Corporation 2005 Deferred Compensation Plan dated December 2005 (incorporated by reference to Exhibit 10(q)(i) to the Company's Form 10-K filed on March 10, 2006).
~(d)
Second Amendment to the Regency Centers Corporation Amended and Restated Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on June 14, 2011).
~(e)
Third Amendment to the Regency Centers Corporation 2005 Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on June 14, 2011).
~(f)
Regency Centers Corporation Amended and Restated Omnibus Incentive Plan (incorporated by reference to Appendix B to the Company's 2019 Annual Meeting Proxy Statement filed on March 21, 2019).
~(g)
Form of Stock Rights Award Agreement - (incorporated by reference to Exhibit 10(g) to the Company's Form 10-K filed on February 17, 2022).
~(h)
Form of Performance Stock Rights Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on January 6, 2022).
~(i)
Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10(c) to the Company's Form 10-K filed on March 10, 2006).
~(j)
Form of 409A Amendment to Stock Option Agreement (incorporated by reference to Exhibit 10(c)(i) to the Company's Form 10-K filed on March 17, 2009).
~(k)
Form of Director/Officer Indemnification Agreement (filed as an Exhibit to Pre-effective Amendment No. 2 to the Company's registration statement on Form S-11 filed on October 5, 1993 (33-67258), and incorporated by reference).
~(l)
Form of Severance and Change of Control Agreement dated as of January 1, 2022, among Regency Centers Corporation, Regency Centers, L.P. and the executives listed below (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K filed on January 6, 2022). The Severance and Change of Control Agreements listed below are substantially identical except for the identities of the parties and the amount of severance for each which are described in Item 5.02(e) of referenced 8-K.
Severance and Change of Control Agreement dated as of January 1, 2022, by and between Regency Center Corporation, Regency Centers, L.P. and Martin E. Stein, Jr.
Severance and Change of Control Agreement dated as of January 1, 2022, by and between Regency Center Corporation, Regency Centers, L.P. and Lisa Palmer
Severance and Change of Control Agreement dated as of January 1, 2022, by and between Regency Center Corporation, Regency Centers, L.P. and Michael J. Mas
~(m)
The following Severance and Change of Control Agreement dated as of January 1, 2022, among Regency Centers Corporation, Regency Centers, L.P. and the executives listed below. The Severance and Change of Control Agreements listed below are substantially identical except for the identities of the parties and the amount of severance.
Severance and Change of Control Agreement dated as of January 1, 2022, by and between Regency Center Corporation, Regency Centers, L.P. and Alan T. Roth
Severance and Change of Control Agreement dated as of January 1, 2022, by and between Regency Center Corporation, Regency Centers, L.P. and Nicholas A. Wibbenmeyer
(n)
Fifth Amended and Restated Credit Agreement, dated as of February 9, 2021, by and among Regency Centers, L.P., as borrower, Regency Centers Corporation, as guarantor, Wells Fargo Bank, National Association, as Administrative Agent, and certain lender party thereto (incorporated by reference to Exhibit 4.1 to the Company’s 8-K filed on February 12, 2021).
Fifth Amended and Restated Credit Agreement Conformed thru First Amendment dated as of January 12, 2023.
(o)
Second Amended and Restated Limited Liability Company Agreement of Macquarie CountryWide-Regency II, LLC dated as of July 31, 2009 by and among Global Retail Investors, LLC, Regency Centers, L.P. and Macquarie CountryWide (US) No. 2 LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on November 6, 2009).
Amendment No. 1 to Second Amended and Restate Limited Liability Company Agreement of GRI-Regency, LLC (formerly Macquarie CountryWide-Regency II, LLC) (incorporated by reference to Exhibit 10.(h)(i) to the Company’s Form 10-K filed March 1, 2011).
21.
Subsidiaries of Regency Centers Corporation
22.
Subsidiary Guarantors and Issuers of Guaranteed Securities
23.
Consent of Independent Accountants
23.1
Consent of KPMG LLP for Regency Centers Corporation and Regency Centers, L.P.
31.
Rule 13a-14(a)/15d-14(a) Certifications.
31.1
Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation.
31.2
Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation.
31.3
Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.
31.4
Rule 13a-14 Certification of Chief Financial Officer for Regency Centers, L.P.
32.
Section 1350 Certifications.
The certifications in this exhibit 32 are being furnished solely to accompany this Report pursuant to 18 U.S.C. § 1350, and are not being filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section and shall not be deemed to be incorporated by reference into any of the Company's filings under the Securities Act or the Exchange Act, whether made before or after the date hereof, except to the extent that the Company specifically incorporates it by reference.
32.1
18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers Corporation.
32.2
18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers Corporation.
32.3
18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers, L.P.
32.4
18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers, L.P.
101.
Interactive Data Files
101.INS+
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH+
Inline XBRL Taxonomy Extension Schema Document
101.CAL+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+
Inline XBRL Taxonomy Definition Linkbase Document
101.LAB+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
+ Submitted electronically with this Annual Report
Item 16. Form 10-K Summary
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
By:
/s/ Lisa Palmer
Lisa Palmer, President and Chief Executive Officer
Regency Centers Corporation, General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Martin E. Stein, Jr.
Martin E. Stein. Jr., Executive Chairman of the Board
Lisa Palmer, President, Chief Executive Officer, and Director
/s/ Michael J. Mas
Michael J. Mas, Executive Vice President, Chief Financial Officer (Principal Financial Officer)
/s/ J. Christian Leavitt
J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer)
/s/ Bryce Blair
Bryce Blair, Director
/s/ C. Ronald Blankenship
C. Ronald Blankenship, Director
/s/ Kristin A. Campbell
Kristin A. Campbell, Director
/s/ Deirdre J. Evens
Deirdre J. Evens, Director
/s/ Thomas W. Furphy
Thomas W. Furphy, Director
/s/ Karin M. Klein
Karin M. Klein, Director
/s/ Peter Linneman
Peter Linneman, Director
/s/ David P. O'Connor
David P. O'Connor, Director
/s/ James H Simmons
James H. Simmons, Director
/s/ Thomas G. Wattles
Thomas G. Wattles, Director