United States SECURITIES AND EXCHANGE COMMISSION Washington DC 20549 FORM 10-Q (Mark One) [X] For the quarterly period ended June 30, 2001 -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 (Exact name of registrant as specified in its charter) Florida 59-3191743 ------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 121 West Forsyth Street, Suite 200 Jacksonville, Florida 32202 (Address of principal executive offices) (Zip Code) (904) 356-7000 (Registrant's telephone number, including area code) Unchanged (Former name, former address and former fiscal year, if changed since last report) 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. Yes [X] No[ ] (Applicable only to Corporate Registrants) As of August 10, 2001, there were 57,573,910 shares outstanding of the Registrant's common stock.
Independent Accountants' Review Report The Shareholders and Board of Directors Regency Centers Corporation: We have reviewed the consolidated balance sheet of Regency Centers Corporation as of June 30, 2001, and the related consolidated statements of operations and cash flows for the three-month and six-month periods ended June 30, 2001 and 2000 and the consolidated statement of stockholders' equity for the six-month period ended June 30, 2001. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Regency Centers Corporation as of December 31, 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated January 30, 2001, we expressed an unqualified opinion on those consolidated financial statements. /s/ KPMG LLP Jacksonville, Florida July 31, 2001 2
Part I Item 1. Financial Statements REGENCY CENTERS CORPORATION Consolidated Balance Sheets June 30, 2001 and December 31, 2000 (unaudited) <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Assets Real estate investments: Land $ 574,624,315 564,089,984 Buildings and improvements 1,838,370,888 1,813,554,881 ------------------ --------------- 2,412,995,203 2,377,644,865 Less: accumulated depreciation 175,046,761 147,053,900 ------------------ --------------- 2,237,948,442 2,230,590,965 Properties in development 337,558,857 296,632,730 Operating properties held for sale 141,417,943 184,150,762 Investments in real estate partnerships 109,782,162 85,198,279 ------------------ --------------- Net real estate investments 2,826,707,404 2,796,572,736 Cash and cash equivalents 13,127,853 100,987,895 Notes receivable 55,835,389 66,423,893 Tenant receivables, net of allowance for uncollectible accounts of $5,710,513 and $4,414,085 at June 30, 2001 and December 31, 2000, respectively 30,947,781 39,407,777 Deferred costs, less accumulated amortization of $16,351,876 and $13,910,018 at June 30, 2001 and December 31, 2000, respectively 31,120,652 21,317,141 Other assets 7,315,790 10,434,298 ------------------ --------------- $ 2,965,054,869 3,035,143,740 ================== =============== Liabilities and Stockholders' Equity Liabilities: Notes payable 1,029,996,767 841,072,156 Unsecured line of credit 233,000,000 466,000,000 Accounts payable and other liabilities 62,506,524 75,460,304 Tenants' security and escrow deposits 8,432,085 8,262,885 ------------------ --------------- Total liabilities 1,333,935,376 1,390,795,345 ------------------ --------------- Preferred units 375,403,652 375,407,777 Exchangeable operating partnership units 31,903,778 34,899,813 Limited partners' interest in consolidated partnerships 3,672,718 8,625,839 ------------------ --------------- Total minority interest 410,980,148 418,933,429 ------------------ --------------- Stockholders' equity: Series 2 cumulative convertible preferred stock and paid in capital, $.01 par value per share: 1,502,532 shares authorized; 1,487,507 shares issued and outstanding at June 30, 2001 and December 31, 2000; liquidation preference $20.83 per share 34,696,112 34,696,112 Common stock $.01 par value per share: 150,000,000 shares authorized; 60,906,593 and 60,234,925 shares issued at June 30, 2001 and December 31, 2000; respectively 609,066 602,349 Treasury stock; 3,378,160 and 3,336,754 shares held at June 30, 2001 and December 31, 2000, respectively, at cost (67,685,020) (66,957,282) Additonal paid in capital 1,324,269,681 1,317,668,173 Distributions in excess of net income (62,538,751) (51,064,870) Stock loans (9,211,743) (9,529,516) ------------------ --------------- Total stockholders' equity 1,220,139,345 1,225,414,966 ------------------ --------------- Commitments and contingencies $ 2,965,054,869 3,035,143,740 ================== =============== </TABLE> See accompanying notes to consolidated financial statements 3
REGENCY CENTERS CORPORATION Consolidated Statements of Operations For the Three Months ended June 30, 2001 and 2000 (unaudited) <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Revenues: Minimum rent $ 66,747,585 62,589,168 Percentage rent 547,136 392,944 Recoveries from tenants 18,527,032 16,471,573 Service operations revenue 8,721,592 7,112,340 Equity in income of investments in real estate partnerships 727,063 (302,851) ------------------ --------------- Total revenues 95,270,408 86,263,174 ------------------ --------------- Operating expenses: Depreciation and amortization 16,872,664 14,625,223 Operating and maintenance 11,997,667 10,602,934 General and administrative 4,602,583 3,761,187 Real estate taxes 9,646,763 8,290,209 Other expenses 1,972,290 919,715 ------------------ --------------- Total operating expenses 45,091,967 38,199,268 ------------------ --------------- Interest expense (income): Interest expense 19,118,135 18,198,723 Interest income (1,288,350) (819,558) ------------------ --------------- Net interest expense 17,829,785 17,379,165 ------------------ --------------- Income before minority interests, gain and provision on real estate investments 32,348,656 30,684,741 Gain on sale of operating properties 1,029,647 18,310 Provison for loss on operating properties held for sale - (6,909,625) ------------------ --------------- Income before minority interests 33,378,303 23,793,426 Minority interests (9,229,297) (7,676,382) ------------------ --------------- Net income 24,149,006 16,117,044 Preferred stock dividends (743,754) (699,459) ------------------ --------------- Net income for common stockholders $ 23,405,252 15,417,585 ================== =============== Net income per share: Basic $ 0.41 0.27 ================== =============== Diluted $ 0.41 0.27 ================== =============== </TABLE> See accompanying notes to consolidated financial statements 4
REGENCY CENTERS CORPORATION Consolidated Statements of Operations For the Six Months ended June 30, 2001 and 2000 (unaudited) <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Revenues: Minimum rent $ 132,806,958 123,902,924 Percentage rent 1,660,561 1,052,461 Recoveries from tenants 37,731,431 33,082,037 Service operations revenue 14,170,939 9,366,744 Equity in income of investments in real estate partnerships 1,892,262 60,663 ------------------ --------------- Total revenues 188,262,151 167,464,829 ------------------ --------------- Operating expenses: Depreciation and amortization 32,768,580 28,386,988 Operating and maintenance 24,309,142 21,103,043 General and administrative 8,917,757 8,257,266 Real estate taxes 19,280,396 16,321,881 Other expenses 3,351,622 919,715 ------------------ --------------- Total operating expenses 88,627,497 74,988,893 ------------------ --------------- Interest expense (income): Interest expense 38,455,278 33,889,872 Interest income (3,265,651) (1,662,558) ------------------ --------------- Net interest expense 35,189,627 32,227,314 ------------------ --------------- Income before minority interests, gain and provision on real estate investments 64,445,027 60,248,622 Gain on sale of operating properties 1,098,305 18,310 Provison for loss on operating properties held for sale - (6,909,625) ------------------ --------------- Income before minority interests 65,543,332 53,357,307 Minority interests (18,248,502) (14,920,321) ------------------ --------------- Net income 47,294,830 38,436,986 Preferred stock dividends (1,477,591) (1,398,918) ------------------ --------------- Net income for common stockholders $ 45,817,239 37,038,068 ================== =============== Net income per share: Basic $ 0.80 0.65 ================== =============== Diluted $ 0.80 0.65 ================== =============== </TABLE> See accompanying notes to consolidated financial statements 5
REGENCY CENTERS CORPORATION Consolidated Statement of Stockholders' Equity For the Six Months ended June 30, 2001 (unaudited) <TABLE> <CAPTION> Additional Distributions Total Series 2 Common Treasury Paid In in exess of Stock Stockholders' Preferred Stock Stock Stock Capital Net Income Loans Equity --------------- --------- ------------ -------------- ------------- ------------ -------------- <S> <C> <C> <C> <C> <C> <C> <C> Balance at December 31, 2000 $ 34,696,112 602,349 (66,957,282) 1,317,668,173 (51,064,870) (9,529,516) 1,225,414,966 Common stock issued net, as compensation for directors or officers, or issued under stock options - 5,788 (644,182) 4,280,222 - - 3,641,828 Common stock cancelled under stock loans - (27) (45,470) (278,588) - 317,773 (6,312) Common stock issued for partnership units exchanged - 972 - 2,599,874 - - 2,600,846 Repurchase of common stock - (16) (38,086) - - - (38,102) Cash dividends declared: Common stock ($.50 per share) and preferred stock - - - - (58,768,711) - (58,768,711) Net income - - - - 47,294,830 - 47,294,830 --------------- --------- ------------ -------------- ------------- ------------ -------------- Balance at June 30, 2001 $ 34,696,112 609,066 (67,685,020) 1,324,269,681 (62,538,751) (9,211,743) 1,220,139,345 ============= ========= ============ ============== ============= ============ ============== </TABLE> See accompanying notes to consolidated financial statements. 6
REGENCY CENTERS CORPORATION Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2001 and 2000 (unaudited) <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Cash flows from operating activities: Net income $ 47,294,830 38,436,986 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,768,580 28,386,988 Deferred loan cost and debt premium amortization 419,034 417,714 Stock based compensation 3,228,847 2,249,594 Minority interests 18,248,502 14,920,321 Equity in income of investments in real estate partnerships (1,892,262) (60,663) Gain on sale of operating properties (1,098,305) (18,310) Provision for loss on operating properties held for sale - 6,909,625 Changes in assets and liabilities: Tenant receivables 7,402,336 2,335,747 Deferred leasing costs (4,567,123) (3,576,996) Other assets 2,247,251 (800,041) Tenants' security and escrow deposits 108,576 243,722 Accounts payable and other liabilities (12,286,052) (2,755,890) ------------------ ------------------ Net cash provided by operating activities 91,874,214 86,688,797 ------------------ ------------------ Cash flows from investing activities: Acquisition and development of real estate, net (36,572,281) (135,129,471) Acquistion of partners' interest in investments in real estate partnerships, net of cash acquired 1,547,043 (1,402,371) Investment in real estate partnerships (45,944,999) (23,320,328) Capital improvements (6,906,123) (6,603,403) Proceeds from sale of operating properties 21,545,876 7,491,870 Repayment of notes receivable 14,594,060 15,673,125 Distributions received from investments in real estate partnerships 11,943,959 - ------------------ ------------------ Net cash used in investing activities (39,792,465) (143,290,578) ------------------ ------------------ Cash flows from financing activities: Net proceeds from common stock issuance 38,264 22,672 Repurchase of common stock (38,102) (10,634,695) Net distributions to limited partners in consolidated partnerships (5,005,010) (1,616,183) Distributions to exchangeable partnership unit holders (1,773,689) (2,018,021) Distributions to preferred unit holders (16,737,503) (13,254,513) Dividends paid to common stockholders (57,291,120) (54,290,289) Dividends paid to preferred stockholders (1,477,591) (1,398,918) Net proceeds from fixed rate unsecured notes 219,707,400 - (Additional costs) net proceeds from issuance of preferred units (4,125) 68,242,763 (Repayment) proceeds of unsecured line of credit, net (233,000,000) 92,820,690 Proceeds from notes payable 50,670 6,734,632 Repayment of notes payable (32,407,364) (40,881,096) Scheduled principal payments (2,971,572) (3,335,282) Deferred loan costs (9,032,049) - ------------------ ------------------ Net cash (used in) provided by financing activities (139,941,791) 40,391,760 ------------------ ------------------ Net decrease in cash and cash equivalents (87,860,042) (16,210,021) Cash and cash equivalents at beginning of period 100,987,895 54,117,443 ------------------ ------------------ Cash and cash equivalents at end of period $ 13,127,853 37,907,422 ================== ================== </TABLE> 7
REGENCY CENTERS CORPORATION Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2001 and 2000 (unaudited) continued <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Supplemental disclosure of cash flow information - cash paid for interest (net of capitalized interest of approximately $10,086,000 and $5,960,000 in 2001 and 2000, respectively) $ 29,791,718 33,228,474 ================== ================== Supplemental disclosure of non-cash transactions: Mortgage loans assumed for the acquisition of real estate $ 5,470,479 - ================== ================== Exchangeable operating partnership units and common stock issued for investments in real estate partnerships $ - 329,948 ================== ================== Exchangeable operating partnership units and common stock issued for the acquisition of partners' interest in investments in real estate partnerships $ - 1,287,111 ================== ================== Exchangeable operating partnership units issued for the acquisition of real estate $ - 103,885 ================== ================== Notes receivable taken in connection with sales of development properties $ 4,005,556 24,349,824 ================== ================== </TABLE> See accompanying notes to consolidated financial statements. 8
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 1. Summary of Significant Accounting Policies (a) Organization and Principles of Consolidation The accompanying consolidated financial statements include the accounts of Regency Centers Corporation, its wholly owned qualified REIT subsidiaries, and its majority owned or controlled subsidiaries and partnership (the "Company" or "Regency"). All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. The Company owns approximately 97% of the outstanding common units ("Units") of Regency Centers, L.P., ("RCLP" or the "Partnership") and a 50.01% partnership interest in a majority owned real estate partnership (the "Majority Partnership"). Regency invests in retail shopping centers through its partnership interest in RCLP. All of the acquisition, development, operations and financing activity of Regency including the issuance of Units or preferred units are executed by RCLP. The equity interests of third parties held by RCLP and the Majority Partnership are included in the consolidated financial statements as preferred or exchangeable operating partnership units ("Units") and limited partners' interest in consolidated partnerships. The Company is a qualified real estate investment trust ("REIT") which began operations in 1993 as Regency Realty Corporation. In February 2001, the Company changed its name to Regency Centers Corporation. The financial statements reflect all adjustments which are of a normal recurring nature, and in the opinion of management, are necessary to properly state the results of operations and financial position. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted although management believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2000 Form 10-K filed with the Securities and Exchange Commission. (b) Real Estate Investments Land, buildings and improvements are recorded at cost. All direct and indirect costs clearly associated with the acquisition, development and construction of real estate projects are capitalized as buildings and improvements. Maintenance and repairs which do not improve or extend the useful lives of the respective assets are reflected in operating and maintenance expense. The property cost includes the capitalization of interest expense incurred during construction based on average outstanding expenditures. Depreciation is computed using the straight line method over estimated useful lives of up to forty years for buildings and improvements, term of lease for tenant improvements, and three to seven years for furniture and equipment. 9
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) (b) Real Estate Investments (continued) Operating properties held for sale include properties that no longer meet the Company's long-term investment standards such as expected growth in revenue or market dominance. Once identified and marketed for sale, these properties are segregated on the balance sheet as operating properties held for sale. The Company also develops shopping centers and stand-alone retail stores for resale. Once completed, these developments are also included in operating properties held for sale. Operating properties held for sale are carried at the lower of cost or fair value less estimated selling costs. Depreciation and amortization are suspended during the period held for sale. The results of operations from the operating properties held for sale were $3.0 and $5.9 for the three months and six months ended June 30, 2001. The Company reviews its real estate investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. (c) Reclassifications Certain reclassifications have been made to the 2000 amounts to conform to classifications adopted in 2001. 2. Segments The Company was formed, and currently operates, for the purpose of 1) operating and developing Company owned retail shopping centers (Retail segment), and 2) providing services including property management and commissions earned from third parties, and development related profits and fees earned from the sales of shopping centers and build to suit properties to third parties (Service operations segment). The Company's reportable segments offer different products or services and are managed separately because each requires different strategies and management expertise. There are no material inter-segment sales or transfers. The Company assesses and measures operating results starting with net operating income for the Retail segment and income for the Service operations segment and converts such amounts into a performance measure referred to as Funds From Operations ("FFO"). The operating results for the individual retail shopping centers have been aggregated since all of the Company's shopping centers exhibit highly similar economic characteristics as neighborhood shopping centers, and offer similar degrees of risk and opportunities for growth. FFO as defined by the National Association of Real Estate Investment Trusts consists of net income (computed in accordance with generally accepted accounting principles) excluding gains (or losses) from debt restructuring and sales of income producing property held for investment, plus depreciation and amortization of real estate, and adjustments for unconsolidated investments in real estate partnerships and joint ventures. The Company further adjusts FFO by distributions made to holders of Units and preferred stock that results in a diluted FFO amount. The Company considers diluted FFO to be the industry standard for reporting the operations of real estate investment trusts ("REITs"). Adjustments for investments in real estate partnerships are calculated to reflect diluted FFO on the same basis. While management believes that diluted FFO is the most relevant and widely used measure of the Company's performance, such amount does not represent cash flow from operations as defined by accounting principles generally accepted 10
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 2. Segments (continued) in the United States of America, should not be considered an alternative to net income as an indicator of the Company's operating performance, and is not indicative of cash available to fund all cash flow needs. Additionally, the Company's calculation of diluted FFO, as provided below, may not be comparable to similarly titled measures of other REITs. The accounting policies of the segments are the same as those described in note 1. The revenues, diluted FFO, and assets for each of the reportable segments are summarized in the following tables for the three month and six month periods ended June 30, 2001 and 2000. Assets not attributable to a particular segment consist primarily of cash and deferred costs. 11
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 2. Segments (continued) <TABLE> <CAPTION> For the three months ended June 30, 2001 June 30, 2000 ------------- ------------- <S> <C> <C> Revenues: Retail segment $ 86,548,816 79,150,834 Service operations segment 8,721,592 7,112,340 ------------------ -------------------- Total revenues $ 95,270,408 86,263,174 ================== ==================== Funds from Operations: Retail segment net operating income $ 65,934,033 60,276,000 Service operations segment income 8,721,592 7,112,340 Adjustments to calculate diluted FFO: Interest expense (19,118,135) (18,198,723) Interest income 1,288,350 819,558 General and administrative and other (6,574,873) (4,680,902) Non-real estate depreciation (460,816) (314,155) Minority interest of limited partners (42,714) (236,881) Gain on sale of operating properties including depreciation on developments sold (2,023,114) (18,310) Minority interest in depreciation and amortization (98,425) (149,947) Share of joint venture depreciation and amortization 237,258 546,006 Distributions on preferred units (8,368,752) (6,942,014) ------------------ -------------------- Funds from Operations - diluted 39,494,404 38,212,972 ------------------ -------------------- Reconciliation to net income for common stockholders: Real estate related depreciation and amortization (16,411,848) (14,311,067) Minority interest in depreciation and amortization 98,425 149,947 Share of joint venture depreciation and amortization (237,258) (546,006) Provision for loss on operating properties held for sale - (6,909,625) Gain on sale of operating properties including depreciation on developments sold 2,023,114 18,310 Minority interest of exchangeable operating partnership units (817,831) (497,487) ------------------ -------------------- Net income $ 24,149,006 16,117,044 ================== ==================== </TABLE> 12
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 2. Segments (continued) <TABLE> <CAPTION> For the six months ended June 30, 2001 June 30, 2000 ------------- ------------- <S> <C> <C> Revenues: Retail segment $ 174,091,212 158,098,085 Service operations segment 14,170,939 9,366,744 ------------------ -------------------- Total revenues $ 188,262,151 167,464,829 ================== ==================== Funds from Operations: Retail segment net operating income $ 131,599,979 120,709,780 Service operations segment income 14,170,939 9,366,744 Adjustments to calculate diluted FFO: Interest expense (38,455,278) (33,889,872) Interest income 3,265,651 1,662,558 General and administrative and other (12,269,379) (9,176,981) Non-real estate depreciation (849,848) (600,781) Minority interest of limited partners (132,500) (480,314) Gain on sale of operating properties including depreciation on developments sold (2,091,772) (18,310) Minority interest in depreciation and amortization (98,424) (299,828) Share of joint venture depreciation and amortization 371,692 933,589 Distributions on preferred units (16,737,503) (13,254,513) ------------------ -------------------- Funds from Operations - diluted 78,773,557 74,952,072 ------------------ -------------------- Reconciliation to net income for common stockholders: Real estate related depreciation and amortization (31,918,732) (27,804,516) Minority interest in depreciation and amortization 98,424 299,828 Share of joint venture depreciation and amortization (371,692) (933,589) Provision for loss on operating properties held for sale - (6,909,625) Gain on sale of operating properties including depreciation on developments sold 2,091,772 18,310 Minority interest of exchangeable operating partnership units (1,378,499) (1,185,494) ------------------ -------------------- Net income $ 47,294,830 38,436,986 ================== ==================== June 30, December 31, Assets (in thousands): 2001 2000 ---------------------- ---- ---- Retail segment $ 2,474,807 2,454,476 Service operations segment 438,684 447,929 Cash and other assets 51,564 132,739 ------------------ -------------------- Total assets $ 2,965,055 3,035,144 ================== ==================== </TABLE> 13
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 3. Investments in Real Estate Partnerships The Company uses the equity method to account for all investments in which it owns less than 50% and does not have a controlling financial interest. The Company's combined investment in these partnerships was $109.8 million and $85.2 million at June 30, 2001 and December 31, 2000, respectively. Net income is allocated to the Company in accordance with the respective partnership agreements. During the second quarter, Regency formed a joint venture with an affiliate of Macquarie CountryWide Trust of Australia ("CountryWide"). CountryWide is a Sydney, Australia based property trust with a similar investment philosophy to Regency, focusing on grocery-anchored shopping centers. The venture purchased five Regency centers, consisting of three operating properties and two recently completed developments. Regency has a 25% ownership in the venture. On December 31, 2000, the Company contributed $4.5 million to Columbia Regency Retail Partners, LLC ("Columbia") representing a 10% equity interest. During the second quarter, the Company contributed $24.3 million and increased its ownership to a 20% equity interest. 4. Notes Payable and Unsecured Line of Credit The Company's outstanding debt at June 30, 2001 and December 31, 2000 consists of the following (in thousands): <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Notes Payable: Fixed rate mortgage loans $ 268,557 270,491 Variable rate mortgage loans 20,268 40,640 Fixed rate unsecured loans 741,172 529,941 -------------- --------------- Total notes payable 1,029,997 841,072 Unsecured line of credit 233,000 466,000 -------------- --------------- Total $ 1,262,997 1,307,072 ============== =============== </TABLE> On April 30, 2001, the Company modified the terms of its line of credit (the "Line") by reducing the commitment to $600 million, reducing the interest rate spread from 1.0% to .85% and extending the maturity date to April 2004. Interest rates paid on the Line during the six months ended June 30, 2001 and 2000 were based on LIBOR plus .85% and 1.0% or 4.975% and 7.625%, respectively. The spread that the Company pays on the Line is dependent upon maintaining specific investment grade ratings. The Company is required to comply and is in compliance with certain financial and other covenants customary with this type of unsecured financing. The Line is used primarily to finance the acquisition and development of real estate, but is also available for general working capital purposes. 14
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 4. Notes Payable and Unsecured Line of Credit (continued) On January 22, 2001 the Company, through RCLP, completed a $220 million unsecured debt offering with an interest rate of 7.95%. The notes were priced at 99.867%, are due on January 15, 2011 and are guaranteed by the Company. The net proceeds of the offering were used to reduce the balance of the Line. Mortgage loans are secured by certain real estate properties, and may be prepaid, but could be subject to a yield-maintenance premium. Mortgage loans are generally due in monthly installments of interest and principal and mature over various terms through 2019. Variable interest rates on mortgage loans are currently based on LIBOR plus a spread in a range of 125 basis points to 135 basis points. Fixed interest rates on mortgage loans range from 6.82% to 9.5%. As of June 30, 2001, scheduled principal repayments on notes payable and the Line were as follows (in thousands): <TABLE> <CAPTION> Scheduled Principal Term Loan Total Scheduled Payments by Year Payments Maturities Payments -------------------------- -------------- --------------- --------------- <S> <C> <C> <C> 2001 $ 2,890 35,113 38,003 2002 5,051 44,095 49,146 2003 4,803 22,867 27,670 2004 (includes the Line) 5,185 432,913 438,098 2005 4,011 148,043 152,054 Beyond 5 Years 33,026 516,169 549,195 Unamortized debt premiums - 8,831 8,831 -------------- --------------- --------------- Total $ 54,966 1,208,031 1,262,997 ============== =============== =============== </TABLE> Unconsolidated partnerships and joint ventures had mortgage loans payable of $74.3 million at June 30, 2001 and the Company's proportionate share of these loans was $18.8 million. The fair value of the Company's notes payable and Line are estimated based on the current rates available to the Company for debt of the same remaining maturities. Variable rate notes payable, and the Line, are considered to be at fair value since the interest rates on such instruments reprice based on current market conditions. Fixed rate loans assumed in connection with real estate acquisitions are recorded in the accompanying financial statements at fair value. The Company considers the carrying value of all other fixed rate notes payable to be a reasonable estimation of their fair value based on the fact that the rates of such notes are similar to rates available to the Company for debt of the same terms. 15
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 5. Stockholders' Equity and Minority Interest At June 30, 2001, the face value of total preferred units issued was $384 million with an average fixed distribution rate of 8.72% vs. $360 million with an average fixed distribution rate of 8.72% at June 30, 2000. Terms and conditions of the Preferred Units are summarized as follows: <TABLE> <CAPTION> Units Issue Issuance Distribution Callable Series Issued Price Amount Rate By Company - --------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Series A 1,600,000 $ 50.00 $ 80,000,000 8.125% 06/25/03 Series B 850,000 100.00 85,000,000 8.750% 09/03/04 Series C 750,000 100.00 75,000,000 9.000% 09/03/04 Series D 500,000 100.00 50,000,000 9.125% 09/29/04 Series E 700,000 100.00 70,000,000 8.750% 05/25/05 Series F 240,000 100.00 24,000,000 8.750% 09/08/05 ------------- ----------------- 4,640,000 $ 384,000,000 ============= ================= </TABLE> 16
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 6. Earnings Per Share The following summarizes the calculation of basic and diluted earnings per share for the three month periods ended June 30, 2001 and 2000 (in thousands except per share data): <TABLE> <CAPTION> 2001 2000 ------------- -------------- <S> <C> <C> Basic Earnings Per Share (EPS) Calculation: ------------------------------------------- Weighted average common shares outstanding 57,504 56,678 ============= ============== Net income for Basic EPS $ 23,405 15,418 ============= ============== Basic EPS $ 0.41 0.27 ============= ============== Diluted Earnings Per Share (EPS) Calculation -------------------------------------------- Weighted average shares outstanding for Basic EPS 57,504 56,678 Exchangeable operating partnership units 1,566 1,918 Incremental shares to be issued under common stock options using the Treasury method 203 32 ------------- -------------- Total diluted shares 59,273 58,628 ============= ============== Net income for Basic EPS $ 23,405 15,418 Add: minority interest of exchangeable operating partnership units 818 497 ------------- -------------- Net income for Diluted EPS $ 24,223 15,915 ============= ============== Diluted EPS $ 0.41 0.27 ============= ============== The Series 2 preferred stock is not included in the above calculation because the effect is anti-dilutive. </TABLE> 17
REGENCY CENTERS CORPORATION Notes to Consolidated Financial Statements June 30, 2001 (unaudited) 6. Earnings Per Share (continued) The following summarizes the calculation of basic and diluted earnings per share for the six month periods ended June 30, 2001 and 2000 (in thousands except per share data): <TABLE> <CAPTION> 2001 2000 ------------- -------------- Basic Earnings Per Share (EPS) Calculation: ------------------------------------------- <S> <C> <C> Weighted average common shares outstanding 57,353 56,595 ============= ============== Net income for Basic EPS $ 45,817 37,038 ============= ============== Basic EPS $ 0.80 0.65 ============= ============== Diluted Earnings Per Share (EPS) Calculation -------------------------------------------- Weighted average shares outstanding for Basic EPS 57,353 56,595 Exchangeable operating partnership units 1,612 1,997 Incremental shares to be issued under common stock options using the Treasury method 183 16 ------------- -------------- Total diluted shares 59,148 58,608 ============= ============== Net income for Basic EPS $ 45,817 37,038 Add: minority interest of exchangeable operating partnership units 1,379 1,186 ------------- -------------- Net income for Diluted EPS $ 47,196 38,224 ============= ============== Diluted EPS $ 0.80 0.65 ============= ============== </TABLE> The Series 2 preferred stock is not included in the above calculation because the effect is anti-dilutive. 18
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporation ("Regency" or "Company") appearing elsewhere within. Organization - ------------ Regency is a qualified real estate investment trust ("REIT") which began operations in 1993. Regency had previously operated under the name Regency Realty Corporation, but changed its name to Regency Centers Corporation in February 2001 to more appropriately acknowledge its brand and position in the shopping center industry. Regency invests in retail shopping centers through its partnership interest in Regency Centers, L.P., ("RCLP") an operating partnership in which Regency currently owns approximately 97% of the outstanding common partnership units ("Units"). The acquisition, development, operations and financing activity of Regency including the issuance of Units or preferred units is executed by RCLP. Shopping Center Business - ------------------------ Regency is a national owner, operator and developer of primarily grocery-anchored neighborhood retail shopping centers. Regency's retail properties summarized by state and in order by largest holdings including their gross leasable areas (GLA) are as follows: <TABLE> <CAPTION> June 30, 2001 December 31, 2000 Location # Properties GLA % Leased * # Properties GLA % Leased * -------- ------------ --------- ---------- ------------ ----------- ---------- <S> <C> <C> <C> <C> <C> <C> Florida 54 6,556,816 92.8% 55 6,558,734 92.7% California 38 4,702,645 98.3% 39 4,922,329 98.4% Texas 35 4,515,255 94.9% 33 4,125,058 94.2% Georgia 26 2,556,122 94.4% 26 2,553,041 95.2% Ohio 14 1,869,824 96.5% 13 1,760,955 96.7% North Carolina 13 1,302,751 98.3% 13 1,302,751 97.4% Colorado 12 1,208,122 98.5% 10 897,788 97.9% Washington 9 1,095,640 96.8% 10 1,180,020 95.8% Oregon 9 786,911 92.6% 9 776,853 91.7% Alabama 7 666,798 95.9% 5 516,062 97.9% Arizona 8 519,528 98.6% 8 522,014 97.9% Tennessee 10 493,860 99.7% 10 493,860 99.7% Virginia 6 419,442 97.1% 6 419,440 95.3% Missouri 2 370,095 95.8% 2 369,045 95.8% Kentucky 5 336,547 95.8% 5 325,347 100.0% Illinois 2 300,162 91.9% 1 178,601 86.4% Michigan 3 274,987 91.1% 3 274,987 94.1% Delaware 2 239,077 99.5% 2 239,077 98.6% Mississippi 2 185,061 98.2% 2 185,061 97.7% South Carolina 4 183,872 98.5% 4 183,872 97.4% New Jersey 3 112,614 100.0% 3 112,514 100.0% Wyoming 1 87,777 - 1 87,777 - Pennsylvania 1 6,000 100.0% 1 6,000 100.0% -------------- --------------- ---------------- -------------- --------------- ------------- Total 266 28,789,906 95.6% 261 27,991,186 95.4% ============== =============== ================ ============== =============== ============= </TABLE> * Excludes pre-stabilized properties under development 19
The table on the previous page includes properties owned by joint ventures in which Regency has an ownership position. Historically, Regency excluded single tenant properties from the table, but beginning with March 31, 2001 began including these properties. Amounts reported for December 31, 2000 have been restated to include these properties for comparative purposes. Regency is focused on building a platform of grocery anchored neighborhood shopping centers because grocery stores provide convenience shopping of daily necessities, foot traffic for adjacent local tenants, and should withstand adverse economic conditions. Regency's current investment markets have continued to offer stable economies, and accordingly, Regency expects to realize growth in net income as a result of increasing occupancy in the portfolio, increasing rental rates, development and acquisition of shopping centers in targeted markets, and redevelopment of existing shopping centers. The following table summarizes the four largest grocery tenants occupying Regency's shopping centers at June 30, 2001: <TABLE> <CAPTION> Grocery Number of % of % of Annualized Average Remaining Anchor Stores Total GLA Base Rent Lease Term ------ ------ --------- --------- ---------- <S> <C> <C> <C> <C> Kroger 57 11.4% 9.7% 16 yrs Publix 44 7.4% 5.3% 12 yrs Safeway 33 5.7% 4.9% 12 yrs Albertsons 23 2.8% 2.4% 12 yrs </TABLE> Number of stores includes tenant owned stores. All reported amounts above include properties owned through joint ventures. Acquisition and Development of Shopping Centers - ----------------------------------------------- Regency has implemented a growth strategy dedicated to developing high-quality shopping centers. This development process can require 12 to 36 months from initial land or redevelopment acquisition through construction and lease-up and finally stabilized income, depending upon the size and type of project. Generally, anchor tenants begin operating their stores prior to construction completion of the entire center, resulting in rental income during the development phase. At June 30, 2001, Regency had 51 projects under construction or undergoing major renovations, which when complete will represent an investment of $740 million. Total cost necessary to complete these developments is estimated to be $279 million and will be expended through 2002. These developments are approximately 62% complete and over 66% pre-leased. Liquidity and Capital Resources - ------------------------------- Management anticipates that cash generated from operating activities will provide the necessary funds on a short-term basis for its operating expenses, interest expense and scheduled principal payments on outstanding indebtedness, recurring capital expenditures necessary to properly maintain the shopping centers, and distributions to share and unit holders. Net cash provided by operating activities was $91.9 million and $86.7 million for the six months ended June 30, 2001 and 2000, respectively. During the first six months of 2001 and 2000, respectively, Regency incurred capital expenditures of $6.9 million and $6.6 million, paid scheduled principal payments of $3.0 million and $3.3 million, and paid dividends and distributions of $77.3 million and $71.0 million to its share and unit holders. Management expects to meet long-term liquidity requirements for maturing debt, non-recurring capital expenditures, and acquisition, renovation and development of shopping centers from: (i) excess cash generated from operating activities, (ii) working capital reserves, (iii) additional debt borrowings, and (iv) additional equity raised in the private and public markets. Net 20
cash used in investing activities was $39.8 million and $143.3 million during the first six months of 2001 and 2000, respectively, primarily for the purposes discussed under Acquisition and Development of Shopping Centers. Net cash used in financing activities was $139.9 million for the six months ended June 30, 2001 and net cash provided from financing activities was $40.4 million for the six months ended June 30, 2000. Regency's outstanding debt at June 30, 2001 and December 31, 2000 consists of the following (in thousands): <TABLE> <CAPTION> 2001 2000 ---- ---- <S> <C> <C> Notes Payable: Fixed rate mortgage loans $ 268,557 270,491 Variable rate mortgage loans 20,268 40,640 Fixed rate unsecured loans 741,172 529,941 -------------- --------------- Total notes payable 1,029,997 841,072 Unsecured line of credit 233,000 466,000 -------------- --------------- Total $ 1,262,997 1,307,072 ============== =============== </TABLE> Mortgage loans are secured by certain real estate properties, and may be prepaid, but could be subject to a yield-maintenance premium. Mortgage loans are generally due in monthly installments of interest and principal and mature over various terms through 2019. Variable interest rates on mortgage loans are currently based on LIBOR plus a spread in a range of 125 basis points to 135 basis points. Fixed interest rates on mortgage loans range from 6.82% to 9.5%. On April 30, 2001, the Company modified the terms of its line of credit (the "Line") by reducing the commitment to $600 million, reducing the interest rate spread from 1.0% to .85% and extending the maturity date to April 2004. Interest rates paid on the Line during the six months ended June 30, 2001 and 2000 were based on LIBOR plus .85% and 1.0% or 4.975% and 7.625%, respectively. The spread that the Company pays on the Line is dependent upon maintaining specific investment grade ratings. The Company is required to comply and is in compliance with certain financial and other covenants customary with this type of unsecured financing. The Line is used primarily to finance the acquisition and development of real estate, but is also available for general working capital purposes. On January 22, 2001 the Company, through RCLP, completed a $220 million unsecured debt offering with an interest rate of 7.95%. The notes were priced at 99.867%, are due on January 15, 2011 and are guaranteed by the Company. The net proceeds of the offering were used to reduce the balance of the Line. At June 30, 2001, the face value of total preferred units issued was $384 million with an average fixed distribution rate of 8.72% vs. $360 million with an average fixed distribution rate of 8.72% at June 30, 2000. 21
As of June 30, 2001, scheduled principal repayments on notes payable and the Line were as follows (in thousands): <TABLE> <CAPTION> Scheduled Principal Term Loan Total Scheduled Payments by Year Payments Maturities Payments -------------------------- ---------------------------------------------------- <S> <C> <C> <C> 2001 $ 2,890 35,113 38,003 2002 5,051 44,095 49,146 2003 4,803 22,867 27,670 2004 (includes the Line) 5,185 432,913 438,098 2005 4,011 148,043 152,054 Beyond 5 Years 33,026 516,169 549,195 Unamortized debt premiums - 8,831 8,831 ---------------------------------------------------- Total $ 54,966 1,208,031 1,262,997 ==================================================== </TABLE> Unconsolidated partnerships and joint ventures had mortgage loans payable of $74.3 million at June 30, 2001, and Regency's proportionate share of these loans was $18.8 million. Regency believes it qualifies and intends to qualify as a REIT under the Internal Revenue Code. As a REIT, Regency is allowed to reduce taxable income by all or a portion of its distributions to stockholders. As distributions have exceeded taxable income, no provision for federal income taxes has been made. While Regency intends to continue to pay dividends to its stockholders, it also will reserve such amounts of cash flow as it considers necessary for the proper maintenance and improvement of its real estate, while still maintaining its qualification as a REIT. Regency's real estate portfolio has grown substantially as a result of the development activity discussed above. Regency intends to continue to acquire and develop shopping centers in the near future, and expects to meet the related capital requirements from borrowings on the Line. Regency expects to repay the Line from time to time from additional public and private equity or debt offerings and from proceeds from the sale of real estate. Because acquisition and development activities are discretionary in nature, they are not expected to burden Regency's capital resources currently available for liquidity requirements. Regency expects that cash provided by operating activities, unused amounts available under the Line, and cash reserves are adequate to meet liquidity requirements. Results from Operations Comparison of the six months ended June 30, 2001 to 2000 Revenues increased $20.8 million or 12% to $188.3 million in 2001. The increase was due primarily to revenues from newly completed developments that only partially operated during 2000, and from growth in rental rates at the operating properties. Minimum rent increased $8.9 million or 7%, and recoveries from tenants increased $4.6 million or 14%. At June 30, 2001, Regency was operating or developing 266 retail properties. Regency identifies its properties as either development properties or stabilized properties. Development properties are defined as properties that are in the construction and initial lease-up process that are not yet 93% leased and occupied. Stabilized properties are all properties not identified as development. At June 30, 2001, Regency had 215 stabilized properties that were 95.6% leased. At December 31, 2000, stabilized properties were 95.4% leased. In 2001, rental rates grew by 12.3% from renewal leases and new leases replacing previously occupied spaces in the stabilized properties. 22
Service operations revenue includes fees earned in Regency's service operations segment which includes property management and leasing commissions earned from third parties, and development profits earned from the sale of shopping centers, build to suit properties, and land to third parties. Service operations revenue increased by $4.8 million to $14.2 million in 2001, or 51%. The increase was primarily due to a $4.4 million increase in development profits. Operating expenses increased $13.6 million or 18% to $88.6 million in 2001. Combined operating and maintenance, and real estate taxes increased $6.2 million or 16% during 2001 to $43.6 million. The increase was primarily due to expenses incurred by newly completed developments that only partially operated during 2000, and general increases in operating expenses on the stabilized properties. General and administrative expenses were $8.9 million during 2001 vs. $8.3 million in 2000 or an increase of 8%. Depreciation and amortization increased $4.4 million during 2001 or 15% primarily due to developments that only partially operated during 2000. In June 2000, the Company identified six operating properties that did not meet its long-term investment standards, and accordingly classified these properties as operating properties held for sale on its balance sheet and ceased the depreciation and amortization of these assets. The Company reduced the carrying value of these properties to the lower of cost or fair value, net of selling costs and this reduction resulted in a $6.9 million provision for loss on operating properties held for sale that was charged against net income at June 30, 2000. Interest expense increased to $38.5 million in 2001 from $33.9 million in 2000 or 13%. The increase was primarily due to higher debt balances and a higher percentage of outstanding debt with fixed interest rates, which are generally higher than variable interest rates. Regency had $1.3 billion and $1.1 billion of outstanding debt at June 30, 2001 and 2000, respectively. On June 30, 2001, 80% of outstanding debt had fixed interest rates vs. 66% on June 30, 2000. Preferred unit distributions increased $3.5 million to $16.7 million during 2001 as a result of the preferred units issued in the second and third quarters of 2000. Net income for common stockholders was $45.8 million in 2001 vs. $37.0 million in 2000, or a 23% increase. Diluted earnings per share was $0.80 in 2001 vs. $0.65 in 2000, or 24% higher as a result of the increase in net income. Comparison of the three months ended June 30, 2001 to 2000 Revenues increased $9.0 million or 10% to $95.3 million in 2001. The increase was due primarily to revenues from newly completed developments that only partially operated during 2000, and from growth in rental rates at the operating properties. Minimum rent increased $4.2 million or 7%, and recoveries from tenants increased $2.1 million or 12%. Service operations revenue includes fees earned in Regency's service operations segment which includes property management and leasing commissions earned from third parties, and development profits earned from the sale of shopping centers, build to suit properties, and land to third parties. Service operations revenue increased by $1.6 million to $8.7 million in 2001, or 23%. The increase was primarily due to a $1.3 million increase in development profits. Operating expenses increased $6.9 million or 18% to $45.1 million in 2001. Combined operating and maintenance, and real estate taxes increased $2.8 million or 15% during 2001 to $21.6 million. The increase was primarily due to expenses incurred by newly completed developments that only partially operated during 2000, and general increases in operating expenses on the stabilized properties. General and administrative expenses were $4.6 million 23
during 2001 vs. $3.8 million in 2000 or an increase of 22%. Depreciation and amortization increased $2.2 million during 2001 or 15% primarily due to developments that only partially operated during 2000. In June 2000, the Company identified six operating properties that did not meet its long-term investment standards, and accordingly classified these properties as operating properties held for sale on its balance sheet and ceased the depreciation and amortization of these assets. The Company reduced the carrying value of these properties to the lower of cost or fair value, net of selling costs and this reduction resulted in a $6.9 million provision for loss on operating properties held for sale that was charged against net income at June 30, 2000. Interest expense increased to $19.1 million in 2001 from $18.2 million in 2000 or 5%. The increase was primarily due to higher debt balances and a higher percentage of outstanding debt with fixed interest rates, which are generally higher than variable interest rates. Preferred unit distributions increased $1.4 million to $8.4 million during 2001 as a result of the preferred units issued in May and September 2000. Net income for common stockholders was $23.4 million in 2001 vs. $15.4 million in 2000, or a 50% increase. Diluted earnings per share was $0.41 in 2001 vs. $0.27 in 2000, or 52% higher as a result of the increase in net income. New Accounting Standards and Accounting Changes - ----------------------------------------------- The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendment to FASB Statement No. 133" ("FAS 138"), which was effective for the Company on January 1, 2001. FAS 138 and FAS 133 establish accounting and reporting standards for derivative instruments and hedging activities. FAS 138 and FAS 133 require entities to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. FAS 138 and FAS 133 had no impact to the financial statements as Regency has no derivative instruments. Environmental Matters - --------------------- Regency, like others in the commercial real estate industry, is subject to numerous environmental laws and regulations. The operation of dry cleaning plants at Regency's shopping centers is the principal environmental concern. Regency believes that the tenants who operate these plants do so in accordance with current laws and regulations and has established procedures to monitor their operations. Additionally, Regency uses all legal means to cause tenants to remove dry cleaning plants from its shopping centers. Where available, Regency has applied and been accepted into state sponsored environmental programs. Regency has a blanket environmental insurance policy that covers it against third party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. Regency has also placed environmental insurance on specific properties with known contamination in order to mitigate its environmental risk. Management believes that the ultimate disposition of currently known environmental matters will not have a material effect on the financial position, liquidity, or operations of Regency. 24
Inflation - --------- Inflation has remained relatively low during 2001 and 2000 and has had a minimal impact on the operating performance of the shopping centers; however, substantially all of Regency's long-term leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling Regency to receive percentage rentals based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses are often related to increases in the consumer price index or similar inflation indices. In addition, many of Regency's leases are for terms of less than ten years, which permits Regency to seek increased rents upon re-rental at market rates. Most of Regency's leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing Regency's exposure to increases in costs and operating expenses resulting from inflation. 25
Item 3. Quantitative and Qualitative Disclosures about Market Risk Market Risk - ----------- Regency is exposed to interest rate changes primarily as a result of its line of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of Regency's real estate investment portfolio and operations. Regency's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives Regency borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. Regency has no plans to enter into derivative or interest rate transactions for speculative purposes, and at June 30, 2001, Regency did not have any borrowings hedged with derivative financial instruments. Regency's interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts maturing (in thousands), weighted average interest rates of remaining debt, and the fair value of total debt (in thousands), by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes. <TABLE> <CAPTION> Fair 2001 2002 2003 2004 2005 Thereafter Total Value ---- ---- ---- ---- ---- ---------- ----- ----- <S> <C> <C> <C> <C> <C> <C> <C> <C> Fixed rate debt 24,636 43,868 13,304 199,913 148,043 571,134 1,000,898 1,009,729 Average interest rate for all debt 7.92% 7.88% 7.86% 7.99% 8.08% 8.11% - Variable rate LIBOR debt 10,477 228 9,563 233,000 - - 253,268 253,268 Average interest rate for all debt 5.83% 5.83% 5.75% - - - - - </TABLE> As the table incorporates only those exposures that exist as of June 30, 2001, it does not consider those exposures or positions, which could arise after that date. Regency's ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, Regency's hedging strategies at that time, and interest rates. Forward Looking Statements - -------------------------- This report on Form 10-Q contains certain forward-looking statements under the federal securities law. These statements are based on current expectations, estimates, and projections about the industry and markets in which Regency Centers Corporation operates, management's beliefs, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Actual operating results may be affected by changes in national and local economic conditions, competitive market conditions, obtaining governmental approvals and meeting development schedules, and other factors cited in our reports filed with the SEC and therefore, may differ materially from what is expressed or forecasted in this report. 26
Part II Item 4. Submission of Matters to a Vote of Security Holders The annual meeting for Regency Centers Corporation was held on May 1, 2001 for the purposes set forth below. All items were approved with total outstanding votes received of 49.9 million shares of the 58.9 million common and preferred shares authorized to vote. The number of shares voted for, against or withheld, as well as abstentions or broker nonvotes, as to each matter was as follows: Election of Directors Nominee For Withheld ------- --- -------- Martin E. Stein 46,650,799 3,212,486 Raymond L. Bank 49,596,958 266,327 C. Ronald Blankenship 48,107,322 1,755,963 A. R. Carpenter 49,596,749 266,536 J. Dix Druce 49,597,058 266,227 Thomas G. Wattles 49,595,248 268,037 Continuation for an additional five years of the participation rights granted to Security Capital to purchase shares of capital stock issued by Regency in the future. For Against Abstain or Broker Nonvote --- -------- ------------------------- 48,101,504 230,182 1,531,599 Amendment to Regency's charter to delete restrictions on foreign ownership of Regency's capital stock. For Against Abstain or Broker Nonvote --- ------- ------------------------- 49,821,801 8,970 12,513 Item 6 Exhibits and Reports on Form 8-K: (a) Exhibits 10. Material Contracts 10.1 Credit Agreement dated as of April 30, 2001 among Regency Centers, L.P., Regency Realty Group, Inc., Regency Centers Corporation and the financial institutions party thereto. 15. Letter Regarding Unaudited Interim Financial Information. (b) Reports on Form 8-K None 27
SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 13, 2001 REGENCY CENTERS CORPORATION By: /s/ J. Christian Leavitt ---------------------------- Senior Vice President, and Chief Accounting Officer 28