Regency Centers - 10-Q quarterly report FY2015 Q2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015



o	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)

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.

Regency Centers Corporation YES x NO o Regency Centers, L.P. YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Regency Centers Corporation YES x NO o Regency Centers, L.P. YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Regency Centers Corporation:



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o

Regency Centers, L.P.:



Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Regency Centers Corporation YES o NO x Regency Centers, L.P. YES o NO x

The number of shares outstanding of the Regency Centers Corporation’s voting common stock was 94,156,976 as of July 31, 2015.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2015 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 term “the Company” or “Regency” means 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 June 30, 2015, the Parent Company owned approximately 99.8% of the Units in the Operating Partnership and the remaining limited Units are owned by investors. The Parent Company owns all of the Series 6 and 7 Preferred Units of the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.

The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:


•	enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation; and


•	creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

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 few 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 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. The Parent Company does not hold any indebtedness, but guarantees all of the unsecured public debt and approximately 15% of the secured debt of the Operating Partnership. 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, and Series 6 and 7 Preferred Units owned by the Parent Company. 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. The Series 6 and 7 Preferred Units owned by the Parent Company are eliminated in consolidation in the accompanying consolidated financial statements of the Parent Company and are classified as preferred units of general partner in the accompanying consolidated financial statements of the Operating Partnership.

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



		Form 10-Q Report Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

Regency Centers Corporation:

	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	1

	Consolidated Statements of Operations for the periods ended June 30, 2015 and 2014	2

	Consolidated Statements of Comprehensive Income for the periods ended June 30, 2015 and 2014	3

	Consolidated Statements of Equity for the periods ended June 30, 2015 and 2014	4

	Consolidated Statements of Cash Flows for the periods ended June 30, 2015 and 2014	6

Regency Centers, L.P.:

	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	8

	Consolidated Statements of Operations for the periods ended June 30, 2015 and 2014	9

	Consolidated Statements of Comprehensive Income for the periods ended June 30, 2015 and 2014	10

	Consolidated Statements of Capital for the periods ended June 30, 2015 and 2014	11

	Consolidated Statements of Cash Flows for the periods ended June 30, 2015 and 2014	12

	Notes to Consolidated Financial Statements	14

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51

Item 4.	Controls and Procedures	51

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 3.	Defaults Upon Senior Securities	52

Item 4.	Mine Safety Disclosures	52

Item 5.	Other Information	52

Item 6.	Exhibits	53

SIGNATURES		54

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Balance Sheets

June 30, 2015 and December 31, 2014

(in thousands, except share data)



		2015		2014
Assets		(unaudited)
Real estate investments at cost:
Land	$	1,405,931		1,380,211
Buildings and improvements		2,817,680		2,790,137
Properties in development		216,408		239,538
		4,440,019		4,409,886
Less: accumulated depreciation		990,744		933,708
		3,449,275		3,476,178
Operating properties held for sale		29,017		—
Investments in real estate partnerships		309,544		333,167
Net real estate investments		3,787,836		3,809,345
Cash and cash equivalents		27,114		113,776
Restricted cash		6,726		8,013
Accounts receivable, net of allowance for doubtful accounts of $5,066 and $4,523 at June 30, 2015 and December 31, 2014, respectively		25,506		30,999
Straight-line rent receivable, net of reserve of $767 and $652 at June 30, 2015 and December 31, 2014, respectively		59,168		55,768
Notes receivable		12,281		12,132
Deferred costs, less accumulated amortization of $82,561 and $81,822 at June 30, 2015 and December 31, 2014, respectively		74,978		71,502
Acquired lease intangible assets, less accumulated amortization of $41,058 and $36,112 at June 30, 2015 and December 31, 2014, respectively		46,737		52,365
Trading securities held in trust, at fair value		29,530		28,134
Other assets		28,392		15,136
Total assets	$	4,098,268		4,197,170
Liabilities and Equity
Liabilities:
Notes payable	$	1,868,700		1,946,357
Unsecured credit facilities		120,000		75,000
Accounts payable and other liabilities		142,415		181,197
Acquired lease intangible liabilities, less accumulated accretion of $15,718 and $13,993 at June 30, 2015 and December 31, 2014, respectively		30,125		32,143
Tenants’ security and escrow deposits and prepaid rent		27,161		25,991
Total liabilities		2,188,401		2,260,688
Commitments and contingencies (note 12)
Equity:
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 13,000,000 Series 6 and 7 shares issued and outstanding at June 30, 2015 and December 31, 2014, with liquidation preferences of $25 per share		325,000		325,000
Common stock, $0.01 par value per share,150,000,000 shares authorized; 94,347,602 and 94,108,061 shares issued at June 30, 2015 and December 31, 2014, respectively		943		941
Treasury stock at cost, 412,745 and 425,246 shares held at June 30, 2015 and December 31, 2014, respectively		(19,390	)	(19,382	)
Additional paid in capital		2,539,008		2,540,153
Accumulated other comprehensive loss		(48,799	)	(57,748	)
Distributions in excess of net income		(916,027	)	(882,372	)
Total stockholders’ equity		1,880,735		1,906,592
Noncontrolling interests:
Exchangeable operating partnership units, aggregate redemption value of $9,093 and $9,833 at June 30, 2015 and December 31, 2014, respectively		(1,940	)	(1,914	)
Limited partners’ interests in consolidated partnerships		31,072		31,804
Total noncontrolling interests		29,132		29,890
Total equity		1,909,867		1,936,482
Total liabilities and equity	$	4,098,268		4,197,170

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



		Three months ended June 30,					Six months ended June 30,
		2015		2014			2015		2014
Revenues:
Minimum rent	$	102,390		97,778		$	203,695		192,314
Percentage rent		300		545			2,108		1,930
Recoveries from tenants and other income		32,431		30,316			63,479		61,357
Management, transaction, and other fees		6,008		6,253			12,246		12,572
Total revenues		141,129		134,892			281,528		268,173
Operating expenses:
Depreciation and amortization		36,225		36,023			72,218		73,929
Operating and maintenance		20,185		19,498			41,358		40,003
General and administrative		15,099		15,223			31,477		29,421
Real estate taxes		15,667		14,898			30,798		29,697
Other operating expenses		1,779		1,795			2,943		3,968
Total operating expenses		88,955		87,437			178,794		177,018
Other expense (income):
Interest expense, net		26,675		27,445			53,308		54,580
Provision for impairment		—		—			—		225
Early extinguishment of debt		—		—			(61	)	—
Net investment income, including unrealized losses (gains) of $892 and ($290), and $475 and ($183) for the three and six months ended June 30, 2015 and 2014, respectively		(367	)	(628	)		(1,000	)	(821	)
Total other expense		26,308		26,817			52,247		53,984
Income from operations before equity in income of investments in real estate partnerships		25,866		20,638			50,487		37,171
Equity in income of investments in real estate partnerships		6,757		8,832			12,324		16,640
Income from operations		32,623		29,470			62,811		53,811
Gain on sale of real estate		5,657		1,691			6,460		2,406
Net income		38,280		31,161			69,271		56,217
Noncontrolling interests:
Exchangeable operating partnership units		(61	)	(53	)		(110	)	(95	)
Limited partners’ interests in consolidated partnerships		(473	)	(360	)		(977	)	(719	)
Income attributable to noncontrolling interests		(534	)	(413	)		(1,087	)	(814	)
Net income attributable to the Company		37,746		30,748			68,184		55,403
Preferred stock dividends		(5,266	)	(5,266	)		(10,531	)	(10,531	)
Net income attributable to common stockholders	$	32,480		25,482		$	57,653		44,872

Income per common share - basic	$	0.35		0.28		$	0.61		0.48
Income per common share - diluted	$	0.34		0.28		$	0.61		0.48

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



		Three months ended June 30,					Six months ended June 30,
		2015		2014			2015		2014
Net income	$	38,280		31,161		$	69,271		56,217
Other comprehensive loss:
Loss on settlement of derivative instruments:
Amortization of loss on settled derivative instruments recognized in net income		2,107		2,165			4,215		4,532
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments		18,376		(11,153	)		4,494		(24,953	)
Less: reclassification adjustment for change in fair value of derivative instruments included in net income		143		153			285		305
Available for sale securities
Unrealized (loss) gain on available-for-sale securities (note 4)		(30	)	914			(30	)	914
Other comprehensive income (loss)		20,596		(7,921	)		8,964		(19,202	)
Comprehensive income		58,876		23,240			78,235		37,015
Less: comprehensive income (loss) attributable to noncontrolling interests:
Net income attributable to noncontrolling interests		534		413			1,087		814
Other comprehensive income (loss) attributable to noncontrolling interests		119		(108	)		15		(194	)
Comprehensive income attributable to noncontrolling interests		653		305			1,102		620
Comprehensive income attributable to the Company	$	58,223		22,935		$	77,133		36,395

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION Consolidated Statements of Equity For the six months ended June 30, 2015 and 2014 (in thousands, except per share data) (unaudited)

															Noncontrolling Interests
		Preferred Stock	Common Stock		Treasury Stock		Additional Paid In Capital		Accumulated Other Comprehensive Loss		Distributions in Excess of Net Income		Total Stockholders’ Equity			Exchangeable Operating Partnership Units		Limited Partners’ Interest in Consolidated Partnerships		Total Noncontrolling Interests		Total Equity
Balance at December 31, 2013	$	325,000	923		(16,726	)	2,426,477		(17,404	)	(874,916	)	1,843,354			(1,426	)	19,206		17,780		1,861,134
Net income		—	—		—		—		—		55,403		55,403			95		719		814		56,217
Other comprehensive loss		—	—		—		—		(19,008	)	—		(19,008	)		(34	)	(160	)	(194	)	(19,202	)
Deferred compensation plan, net		—	—		(2,226	)	2,226		—		—		—			—		—		—		—
Restricted stock issued, net of amortization		—	—		—		5,831		—		—		5,831			—		—		—		5,831
Common stock redeemed for taxes withheld for stock based compensation, net		—	—		—		(3,210	)	—		—		(3,210	)		—		—		—		(3,210	)
Common stock issued for dividend reinvestment plan		—	—		—		604		—		—		604			—		—		—		604
Redemption of partnership units		—	—		—		—		—		—		—			(300	)	—		(300	)	(300	)
Contributions from partners		—	—		—		—		—		—		—			—		15,551		15,551		15,551
Distributions to partners		—	—		—		—		—		—		—			—		(1,008	)	(1,008	)	(1,008	)
Cash dividends declared:
Preferred stock/unit		—	—		—		—		—		(10,531	)	(10,531	)		—		—		—		(10,531	)
Common stock/unit ($0.94 per share)		—	—		—		—		—		(86,532	)	(86,532	)		(152	)	—		(152	)	(86,684	)
Balance at June 30, 2014	$	325,000	923		(18,952	)	2,431,928		(36,412	)	(916,576	)	1,785,911			(1,817	)	34,308		32,491		1,818,402

Balance at December 31, 2014	$	325,000	941		(19,382	)	2,540,153		(57,748	)	(882,372	)	1,906,592			(1,914	)	31,804		29,890		1,936,482
Net income		—	—		—		—		—		68,184		68,184			110		977		1,087		69,271
Other comprehensive income		—	—		—		—		8,949		—		8,949			15		—		15		8,964
Deferred compensation plan, net		—	—		(8	)	8		—		—		—			—		—		—		—
Restricted stock issued, net of amortization		—	3		—		7,001		—		—		7,004			—		—		—		7,004
Common stock redeemed for taxes withheld for stock based compensation, net		—	(1	)	—		(9,792	)	—		—		(9,793	)		—		—		—		(9,793	)
Common stock issued for dividend reinvestment plan		—	—		—		683		—		—		683			—		—		—		683
Common stock issued for stock offerings, net of issuance costs		—	—		—		955		—		—		955			—		—		—		955
Contributions from partners		—	—		—		—		—		—		—			—		256		256		256
Distributions to partners		—	—		—		—		—		—		—			—		(1,965	)	(1,965	)	(1,965	)

REGENCY CENTERS CORPORATION Consolidated Statements of Equity For the six months ended June 30, 2015 and 2014 (in thousands, except per share data) (unaudited)

													Noncontrolling Interests
		Preferred Stock	Common Stock	Treasury Stock		Additional Paid In Capital	Accumulated Other Comprehensive Loss		Distributions in Excess of Net Income		Total Stockholders’ Equity			Exchangeable Operating Partnership Units		Limited Partners’ Interest in Consolidated Partnerships	Total Noncontrolling Interests		Total Equity
Cash dividends declared:
Preferred stock/unit		—	—	—		—	—		(10,531	)	(10,531	)		—		—	—		(10,531	)
Common stock/unit ($0.97 per share)		—	—	—		—	—		(91,308	)	(91,308	)		(151	)	—	(151	)	(91,459	)
Balance at June 30, 2015	$	325,000	943	(19,390	)	2,539,008	(48,799	)	(916,027	)	1,880,735			(1,940	)	31,072	29,132		1,909,867

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION

Consolidated Statements of Cash Flows

For the six months ended June 30, 2015 and 2014

(in thousands)

(unaudited)



		2015		2014
Cash flows from operating activities:
Net income	$	69,271		56,217
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		72,218		73,928
Amortization of deferred loan cost and debt premium		5,058		5,675
Amortization and (accretion) of above and below market lease intangibles, net		(936	)	(1,698	)
Stock-based compensation, net of capitalization		5,620		4,534
Equity in income of investments in real estate partnerships		(12,324	)	(16,640	)
Gain on sale of real estate		(6,460	)	(2,406	)
Provision for impairment		—		225
Early extinguishment of debt		(61	)	—
Distribution of earnings from operations of investments in real estate partnerships		22,719		18,736
Settlement of derivative instruments		—		4,648
Gain on derivative instruments		—		(9	)
Deferred compensation expense		581		830
Realized and unrealized gain on investments		(1,000	)	(847	)
Changes in assets and liabilities:
Restricted cash		1,587		37
Accounts receivable		(5,895	)	(10,365	)
Straight-line rent receivables, net		(3,552	)	(3,062	)
Deferred leasing costs		(5,470	)	(5,323	)
Other assets		(3,209	)	(2,016	)
Accounts payable and other liabilities		(12,004	)	(1,964	)
Tenants’ security and escrow deposits and prepaid rent		1,270		(904	)
Net cash provided by operating activities		127,413		119,596
Cash flows from investing activities:
Acquisition of operating real estate		—		(79,444	)
Advance deposits on acquisition of operating real estate		(4,500	)	—
Real estate development and capital improvements		(109,118	)	(93,764	)
Proceeds from sale of real estate investments		26,567		7,790
Investments in real estate partnerships		(1,344	)	(4,287	)
Distributions received from investments in real estate partnerships		15,014		21,496
Dividends on investments		87		66
Acquisition of securities		(20,581	)	(18,195	)
Proceeds from sale of securities		17,169		3,702
Net cash used in investing activities		(76,706	)	(162,636	)
Cash flows from financing activities:
Net proceeds from common stock issuance		955		—
Redemption of preferred stock and partnership units		—		(300	)
Distributions to limited partners in consolidated partnerships, net		(1,722	)	(938	)
Distributions to exchangeable operating partnership unit holders		(151	)	(152	)
Dividends paid to common stockholders		(90,625	)	(85,928	)
Dividends paid to preferred stockholders		(10,531	)	(10,531	)
Repayment of fixed rate unsecured notes		—		(150,000	)
Proceeds from issuance of fixed rate unsecured notes, net		—		248,705
Proceeds from unsecured credit facilities		85,000		245,000
Repayment of unsecured credit facilities		(40,000	)	(235,000	)
Proceeds from notes payable		2,399		655
Repayment of notes payable		(76,027	)	(6,615	)
Scheduled principal payments		(2,921	)	(3,413	)
Payment of loan costs		(3,746	)	(2,391	)
Net cash used in financing activities		(137,369	)	(908	)
Net decrease in cash and cash equivalents		(86,662	)	(43,948	)
Cash and cash equivalents at beginning of the period		113,776		80,684
Cash and cash equivalents at end of the period	$	27,114		36,736

REGENCY CENTERS CORPORATION

Consolidated Statements of Cash Flows

For the six months ended June 30, 2015, and 2014

(in thousands)

(unaudited)



		2015		2014
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $4,015 and $3,272 in 2015 and 2014, respectively)	$	53,458		54,083
Cash paid for income taxes	$	697		—
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of real estate	$	—		78,049
Initial fair value of non-controlling interest recorded at acquisition	$	—		15,385
Change in fair value of derivative instruments	$	4,494		24,953
Common stock issued for dividend reinvestment plan	$	683		604
Stock-based compensation capitalized	$	1,493		1,410
Contributions from limited partners in consolidated partnerships, net	$	13		95
Common stock issued for dividend reinvestment in trust	$	432		384
Contribution of stock awards into trust	$	1,475		1,847
Distribution of stock held in trust	$	1,898		4
Change in fair value of securities available-for-sale	$	(30	)	914

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Balance Sheets

June 30, 2015 and December 31, 2014

(in thousands, except unit data)



		2015		2014
Assets		(unaudited)
Real estate investments at cost:
Land	$	1,405,931		1,380,211
Buildings and improvements		2,817,680		2,790,137
Properties in development		216,408		239,538
		4,440,019		4,409,886
Less: accumulated depreciation		990,744		933,708
		3,449,275		3,476,178
Operating properties held for sale		29,017		—
Investments in real estate partnerships		309,544		333,167
Net real estate investments		3,787,836		3,809,345
Cash and cash equivalents		27,114		113,776
Restricted cash		6,726		8,013
Accounts receivable, net of allowance for doubtful accounts of $5,066 and $4,523 at June 30, 2015 and December 31, 2014, respectively		25,506		30,999
Straight-line rent receivable, net of reserve of $767 and $652 at June 30, 2015 and December 31, 2014, respectively		59,168		55,768
Notes receivable		12,281		12,132
Deferred costs, less accumulated amortization of $82,561 and $81,822 at June 30, 2015 and December 31, 2014, respectively		74,978		71,502
Acquired lease intangible assets, less accumulated amortization of $41,058 and $36,112 at June 30, 2015 and December 31, 2014, respectively		46,737		52,365
Trading securities held in trust, at fair value		29,530		28,134
Other assets		28,392		15,136
Total assets	$	4,098,268		4,197,170
Liabilities and Capital
Liabilities:
Notes payable	$	1,868,700		1,946,357
Unsecured credit facilities		120,000		75,000
Accounts payable and other liabilities		142,415		181,197
Acquired lease intangible liabilities, less accumulated accretion of $15,718 and $13,993 at June 30, 2015 and December 31, 2014, respectively		30,125		32,143
Tenants’ security and escrow deposits and prepaid rent		27,161		25,991
Total liabilities		2,188,401		2,260,688
Commitments and contingencies (note 12)
Capital:
Partners’ capital:
Preferred units of general partner, $0.01 par value per unit, 13,000,000 units issued and outstanding at June 30, 2015 and December 31, 2014, liquidation preference of $25 per unit		325,000		325,000
General partner; 94,347,602 and 94,108,061 units outstanding at June 30, 2015 and December 31, 2014, respectively		1,604,534		1,639,340
Limited partners; 154,170 units outstanding at June 30, 2015 and December 31, 2014		(1,940	)	(1,914	)
Accumulated other comprehensive loss		(48,799	)	(57,748	)
Total partners’ capital		1,878,795		1,904,678
Noncontrolling interests:
Limited partners’ interests in consolidated partnerships		31,072		31,804
Total noncontrolling interests		31,072		31,804
Total capital		1,909,867		1,936,482
Total liabilities and capital	$	4,098,268		4,197,170

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Statements of Operations

(in thousands, except per unit data)

(unaudited)



		Three months ended June 30,					Six months ended June 30,
		2015		2014			2015		2014
Revenues:
Minimum rent	$	102,390		97,778		$	203,695		192,314
Percentage rent		300		545			2,108		1,930
Recoveries from tenants and other income		32,431		30,316			63,479		61,357
Management, transaction, and other fees		6,008		6,253			12,246		12,572
Total revenues		141,129		134,892			281,528		268,173
Operating expenses:
Depreciation and amortization		36,225		36,023			72,218		73,929
Operating and maintenance		20,185		19,498			41,358		40,003
General and administrative		15,099		15,223			31,477		29,421
Real estate taxes		15,667		14,898			30,798		29,697
Other operating expenses		1,779		1,795			2,943		3,968
Total operating expenses		88,955		87,437			178,794		177,018
Other expense (income):
Interest expense, net		26,675		27,445			53,308		54,580
Provision for impairment		—		—			—		225
Early extinguishment of debt		—		—			(61	)	—
Net investment income, including unrealized losses (gains) of $892 and ($290), and $475 and ($183) for the three and six months ended June 30, 2015 and 2014, respectively		(367	)	(628	)		(1,000	)	(821	)
Total other expense		26,308		26,817			52,247		53,984
Income from operations before equity in income of investments in real estate partnerships		25,866		20,638			50,487		37,171
Equity in income of investments in real estate partnerships		6,757		8,832			12,324		16,640
Income from operations		32,623		29,470			62,811		53,811
Gain on sale of real estate		5,657		1,691			6,460		2,406
Net income		38,280		31,161			69,271		56,217
Limited partners’ interests in consolidated partnerships		(473	)	(360	)		(977	)	(719	)
Net income attributable to the Partnership		37,807		30,801			68,294		55,498
Preferred unit distributions		(5,266	)	(5,266	)		(10,531	)	(10,531	)
Net income attributable to common unit holders	$	32,541		25,535		$	57,763		44,967

Income per common unit - basic	$	0.35		0.28		$	0.61		0.48
Income per common unit - diluted	$	0.34		0.28		$	0.61		0.48

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



		Three months ended June 30,					Six months ended June 30,
		2015		2014			2015		2014
Net income	$	38,280		31,161		$	69,271		56,217
Other comprehensive loss:
Loss on settlement of derivative instruments:
Amortization of loss on settled derivative instruments recognized in net income		2,107		2,165			4,215		4,532
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments		18,376		(11,153	)		4,494		(24,953	)
Less: reclassification adjustment for change in fair value of derivative instruments included in net income		143		153			285		305
Available for sale securities
Unrealized (loss) gain on available-for-sale securities (note 4)		(30	)	914			(30	)	914
Other comprehensive income (loss)		20,596		(7,921	)		8,964		(19,202	)
Comprehensive income		58,876		23,240			78,235		37,015
Less: comprehensive income (loss) attributable to noncontrolling interests:
Net income attributable to noncontrolling interests		473		360			977		719
Other comprehensive income (loss) attributable to noncontrolling interests		86		(92	)		—		(160	)
Comprehensive income attributable to noncontrolling interests		559		268			977		559
Comprehensive income attributable to the Partnership	$	58,317		22,972		$	77,258		36,456

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P. Consolidated Statements of Capital For the six months ended June 30, 2015 and 2014 (in thousands) (unaudited)

		General Partner Preferred and Common Units		Limited Partners		Accumulated Other Comprehensive Loss		Total Partners’ Capital		Noncontrolling Interests in Limited Partners’ Interest in Consolidated Partnerships		Total Capital
Balance at December 31, 2013	$	1,860,758		(1,426	)	(17,404	)	1,841,928		19,206		1,861,134
Net income		55,403		95		—		55,498		719		56,217
Other comprehensive income		—		(34	)	(19,008	)	(19,042	)	(160	)	(19,202	)
Contributions from partners		—		—		—		—		15,551		15,551
Distributions to partners		(86,532	)	(152	)	—		(86,684	)	(1,008	)	(87,692	)
Redemption of partnership units		—		(300	)	—		(300	)	—		(300	)
Preferred unit distributions		(10,531	)	—		—		(10,531	)	—		(10,531	)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company		5,831		—		—		5,831		—		5,831
Common units issued as a result of common stock issued by Parent Company, net of repurchases		(2,606	)	—		—		(2,606	)	—		(2,606	)
Balance at June 30, 2014		1,822,323		(1,817	)	(36,412	)	1,784,094		34,308		1,818,402

Balance at December 31, 2014		1,964,340		(1,914	)	(57,748	)	1,904,678		31,804		1,936,482
Net income		68,184		110		—		68,294		977		69,271
Other comprehensive loss		—		15		8,949		8,964		—		8,964
Contributions from partners		—		—		—		—		256		256
Distributions to partners		(91,308	)	(151	)	—		(91,459	)	(1,965	)	(93,424	)
Preferred unit distributions		(10,531	)	—		—		(10,531	)	—		(10,531	)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company		7,004		—		—		7,004		—		7,004
Common units issued as a result of common stock issued by Parent Company, net of repurchases		(8,155	)	—		—		(8,155	)	—		(8,155	)
Balance at June 30, 2015	$	1,929,534		(1,940	)	(48,799	)	1,878,795		31,072		1,909,867

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Statements of Cash Flows

For the six months ended June 30, 2015 and 2014

(in thousands)

(unaudited)



		2015		2014
Cash flows from operating activities:
Net income	$	69,271		56,217
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		72,218		73,928
Amortization of deferred loan cost and debt premium		5,058		5,675
Amortization and (accretion) of above and below market lease intangibles, net		(936	)	(1,698	)
Stock-based compensation, net of capitalization		5,620		4,534
Equity in income of investments in real estate partnerships		(12,324	)	(16,640	)
Gain on sale of real estate		(6,460	)	(2,406	)
Provision for impairment		—		225
Early extinguishment of debt		(61	)	—
Distribution of earnings from operations of investments in real estate partnerships		22,719		18,736
Settlement of derivative instruments		—		4,648
Gain on derivative instruments		—		(9	)
Deferred compensation expense		581		830
Realized and unrealized gain on investments		(1,000	)	(847	)
Changes in assets and liabilities:
Restricted cash		1,587		37
Accounts receivable		(5,895	)	(10,365	)
Straight-line rent receivables, net		(3,552	)	(3,062	)
Deferred leasing costs		(5,470	)	(5,323	)
Other assets		(3,209	)	(2,016	)
Accounts payable and other liabilities		(12,004	)	(1,964	)
Tenants’ security and escrow deposits and prepaid rent		1,270		(904	)
Net cash provided by operating activities		127,413		119,596
Cash flows from investing activities:
Acquisition of operating real estate		—		(79,444	)
Advance deposits on acquisition of operating real estate		(4,500	)	—
Real estate development and capital improvements		(109,118	)	(93,764	)
Proceeds from sale of real estate investments		26,567		7,790
Investments in real estate partnerships		(1,344	)	(4,287	)
Distributions received from investments in real estate partnerships		15,014		21,496
Dividends on investments		87		66
Acquisition of securities		(20,581	)	(18,195	)
Proceeds from sale of securities		17,169		3,702
Net cash used in investing activities		(76,706	)	(162,636	)
Cash flows from financing activities:
Net proceeds from common units issued as a result of common stock issued by Parent Company		955		—
Redemption of preferred partnership units		—		(300	)
Distributions (to) from limited partners in consolidated partnerships, net		(1,722	)	(938	)
Distributions to partners		(90,776	)	(86,080	)
Distributions to preferred unit holders		(10,531	)	(10,531	)
Repayment of fixed rate unsecured notes		—		(150,000	)
Proceeds from issuance of fixed rate unsecured notes, net		—		248,705
Proceeds from unsecured credit facilities		85,000		245,000
Repayment of unsecured credit facilities		(40,000	)	(235,000	)
Proceeds from notes payable		2,399		655
Repayment of notes payable		(76,027	)	(6,615	)
Scheduled principal payments		(2,921	)	(3,413	)
Payment of loan costs		(3,746	)	(2,391	)
Net cash used in financing activities		(137,369	)	(908	)
Net decrease in cash and cash equivalents		(86,662	)	(43,948	)
Cash and cash equivalents at beginning of the period		113,776		80,684
Cash and cash equivalents at end of the period	$	27,114		36,736

REGENCY CENTERS, L.P.

Consolidated Statements of Cash Flows

For the six months ended June 30, 2015, and 2014

(in thousands)

(unaudited)



		2015		2014
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $4,015 and $3,272 in 2015 and 2014, respectively)	$	53,458		54,083
Cash paid for income taxes	$	697		—
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of real estate	$	—		78,049
Initial fair value of non-controlling interest recorded at acquisition	$	—		15,385
Change in fair value of derivative instruments	$	4,494		24,953
Common stock issued by Parent Company for dividend reinvestment plan	$	683		604
Stock-based compensation capitalized	$	1,493		1,410
Contributions from limited partners in consolidated partnerships, net	$	13		95
Common stock issued for dividend reinvestment in trust	$	432		384
Contribution of stock awards into trust	$	1,475		1,847
Distribution of stock held in trust	$	1,898		4
Change in fair value of securities available-for-sale	$	(30	)	914

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015


1.	Organization and Principles of Consolidation

General

Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the general partner of Regency Centers, L.P. (the “Operating Partnership”). The Parent Company currently owns approximately 99.8% of the outstanding common Partnership Units of the Operating Partnership. The Parent Company engages in the ownership, management, leasing, acquisition, and development of retail shopping centers through the Operating Partnership, and has no other assets or liabilities other than through its investment in the Operating Partnership. As of June 30, 2015, the Parent Company, the Operating Partnership and their controlled subsidiaries on a consolidated basis (the "Company” or “Regency”) directly owned 200 retail shopping centers and held partial interests in an additional 119 retail shopping centers through investments in real estate partnerships (also referred to as "joint ventures" or "co-investment partnerships").

The financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal recurring nature.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2018, with adoption as early as January 1, 2017 permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis (Topic 810), which requires amendments to both the variable interest entity ("VIE") and voting models. The amendments (i) rescind the indefinite deferral of certain aspects of accounting standards relating to consolidations and provide a permanent scope exception for registered money market funds and similar unregistered money market funds, (ii) modify the identification of variable interests (fees paid to a decision maker or service provider), the VIE characteristics for a limited partnership or similar entity and primary beneficiary determination under the VIE model, and (iii) eliminate the presumption within the current voting model that a general partner controls a limited partnership or similar entity. The new guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted. The amendments may be applied using either a modified retrospective or full retrospective approach. The Company currently intends to adopt the standard during the first quarter of 2016 and does not currently anticipate a material impact upon adoption.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30), which simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years with early adoption permitted. The Company will adopt this ASU in the first quarter of 2016, which will result in a decrease to total assets and liabilities of the net unamortized balance of debt issuance costs, which is $6.4 million at June 30, 2015, exclusive of the line of credit costs.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015


2.	Real Estate Investments

There were no shopping centers nor land acquired during the six months ended June 30, 2015; however, the Company has made $4.5 million of deposits related to the potential acquisition of operating properties. The following table details the shopping centers acquired or land acquired for development during the six months ended June 30, 2014:



(in thousands)		Six months ended June 30, 2014
Date Purchased	Property Name	City/State	Property Type	Ownership	Purchase Price	Debt Assumed, Net of Premiums	Intangible Assets	Intangible Liabilities
1/31/14	Persimmon Place	Dublin, CA	Development	100%	$14,200	—	—	—
2/14/14	Shops at Mira Vista	Austin, TX	Operating	100%	22,500	319	2,329	291
3/7/14	Fairfield Portfolio ⁽¹⁾	Fairfield, CT	Operating	80%	149,344	77,730	12,650	5,601
6/2/14	Willow Oaks Crossing	Concord, NC	Development	100%	3,342	—	—	—
Total property acquisitions					$189,386	$78,049	$14,979	$5,892

⁽¹⁾ On March 7, 2014, the Company acquired an 80% controlling interest in the Fairfield Portfolio. As a result of consolidation, the Company recorded the non-controlling interest of approximately $15.4 million at fair value. The portfolio consists of three operating properties located in Fairfield, CT.

The real estate operations acquired were not considered material to the Company, individually or in the aggregate, therefore pro-forma financial information is not required.

3. Property Dispositions

Dispositions

The following table provides a summary of shopping centers and land parcels disposed of:



	Three months ended June 30,				Six months ended June 30,
(in thousands)	2015		2014		2015		2014
Net proceeds from sale of real estate investments	$	22,968	$	2,747	$	26,382	$	7,219
Gain on sale of real estate	$	5,657	$	1,691	$	6,460	$	2,406
Number of operating properties sold	1		1		2		2
Number of land parcels sold	—		1		—		3
Percent interest sold	100%		100%		100%		100%

At June 30, 2015, the Company was under contract to sell an operating property. The assets associated with this property have been classified as Operating properties held for sale in the accompanying Consolidated Balance Sheets.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

4. Available-for-Sale Securities

Available-for-sale securities are included in other assets in the accompanying Consolidated Balance Sheets, and consists of the following:



	June 30, 2015
(in thousands)	Amortized Cost		Gains in Accumulated Other Comprehensive Loss	Losses in Accumulated Other Comprehensive Loss		Estimated Fair Value
Certificates of deposit	$	1,750	1	—		1,751
Corporate bonds	6,180		—	(31	)	6,149
Total	$	7,930	1	(31	)	7,900



	June 30, 2014
(in thousands)	Amortized Cost		Gains in Accumulated Other Comprehensive Loss	Losses in Accumulated Other Comprehensive Loss	Estimated Fair Value
Common stock	$	14,350	914	—	15,264

Realized gains or losses on investments are recorded in our consolidated statements of operations within other income. Upon the sale of a security classified as available-for-sale, the security’s specific unrealized gain (loss) is reclassified out of accumulated other comprehensive loss into earnings based on the specific identification method. During the six months ended June 30, 2015 and 2014, there were no reclassifications from accumulated other comprehensive loss into earnings.

The contractual maturities of available-for sale securities were as follows:



	June 30, 2015
(in thousands)	Less than 12 months		1-3 Years	Over 3 Years	Total
Certificates of deposit	$	1,751	—	—	1,751
Corporate bonds	457		4,171	1,521	6,149
Total	$	2,208	4,171	1,521	7,900

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

5. Notes Payable and Unsecured Credit Facilities

The Company’s debt outstanding consists of the following:



(in thousands)	June 30, 2015		December 31, 2014
Notes payable:
Fixed rate mortgage loans	$	438,683	518,993
Variable rate mortgage loans ⁽¹⁾	32,238		29,839
Fixed rate unsecured loans	1,397,779		1,397,525
Total notes payable	1,868,700		1,946,357
Unsecured credit facilities:
Line of Credit	45,000		—
Term Loan	75,000		75,000
Total unsecured credit facilities	120,000		75,000
Total debt outstanding	$	1,988,700	2,021,357

⁽¹⁾ An interest rate swap is in place to establish a fixed interest rate on $28.1 million of this variable rate mortgage. See note 6.

The weighted average contractual interest rates were 5.4% and 1.1% on the fixed rate and variable rate debt, respectively, at June 30, 2015. Significant financing activity since December 31, 2014, excluding scheduled principal payments, includes:


•	The Company repaid three mortgages totaling $76.0 million that were scheduled to mature during 2015;


•	The Company drew $2.4 million on a construction loan for the ongoing redevelopment of a shopping center in a consolidated real estate partnership;


•	The Company borrowed $45.0 million, net of repayments, on its $800.0 million Line of Credit (the "Line"); and

•

In May 2015, the Company amended its Line to extend the maturity to May 13, 2019 and reduced the applicable interest rate. Based on current credit ratings, the Line bears interest at an annual rate of LIBOR plus 92.5 basis points on any drawn balance plus an annual 15 basis point facility fee on the entire $800.0 million capacity. The interest rates are based on the higher of the Company's current corporate credit ratings issued by Moody's or S&P. Further, the Company has options to extend the maturity for two additional six-month periods.


•	Subsequent to June 30, 2015, the Company repaid the $350.0 million fixed rate unsecured loan that matured.

As of June 30, 2015, scheduled principal payments and maturities on notes payable were as follows:



(in thousands)	June 30, 2015
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Mortgage Loan Maturities	Unsecured Maturities ⁽¹⁾		Total
2015	$	3,175	141	350,000		353,316
2016	6,135		41,442	—		47,577
2017	5,399		116,425	400,000		521,824
2018	4,453		57,358	—		61,811
2019	3,443		106,000	120,000		229,443
Beyond 5 Years	15,639		105,447	650,000		771,086
Unamortized debt premiums (discounts), net	—		5,864	(2,221	)	3,643
Total	$	38,244	432,677	1,517,779		1,988,700

⁽¹⁾ Includes unsecured public debt and unsecured credit facilities.

The Company was in compliance as of June 30, 2015 with the financial and other covenants under its unsecured public debt and unsecured credit facilities.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

6. Derivative Financial Instruments

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
(in thousands)							Assets ⁽²⁾			Liabilities ⁽²⁾
Effective Date	Maturity Date	Early Termination Date ⁽¹⁾	Notional Amount		Bank Pays Variable Rate of	Regency Pays Fixed Rate of	June 30, 2015		December 31, 2014	June 30, 2015			December 31, 2014
10/16/13	10/16/20	N/A	$	28,100	1 Month LIBOR	2.196%	$	—	—	$	(763	)	(764	)
8/1/15	8/1/25	2/1/16	75,000		3 Month LIBOR	2.479%	72		—	—			(289	)
8/1/15	8/1/25	2/1/16	50,000		3 Month LIBOR	2.479%	48		—	—			(193	)
8/1/15	8/1/25	2/1/16	50,000		3 Month LIBOR	2.479%	48		—	—			(193	)
8/1/15	8/1/25	2/1/16	45,000		3 Month LIBOR	3.412%	—		—	(3,772		)	(3,964	)
6/15/17	6/15/27	12/15/17	20,000		3 Month LIBOR	3.488%	—		—	(888		)	(1,227	)
6/15/17	6/15/27	12/15/17	100,000		3 Month LIBOR	3.480%	—		—	(4,380		)	(6,080	)
6/15/17	6/15/27	12/15/17	100,000		3 Month LIBOR	3.480%	—		—	(4,380		)	(6,084	)
Total derivative financial instruments							$	168	—	$	(14,183	)	(18,794	)

⁽¹⁾ Represents the date specified in the agreement for either optional or mandatory early termination which will result in cash settlement.

⁽²⁾Derivatives in an asset position are included within Other Assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts Payable and Other Liabilities.

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 currently does not have any derivatives that are not designated as hedges. The Company has master netting agreements; however, the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore, none are offset in the accompanying Consolidated Balance Sheet.

The Company expects to issue new debt in 2015 and 2017. In order to mitigate the risk of interest rate volatility, the Company previously entered into $220 million of forward starting interest rate swaps to partially hedge the new debt expected to be issued in 2015 and another $220 million of forward starting interest rate swaps to partially hedge the new debt expected to be issued in 2017. These interest rate swaps lock in the 10-year treasury rate and swap spread at a weighted average fixed rate of 2.67% and 3.48%, respectively. A current market based credit spread applicable to Regency will be added to the locked in fixed rate at time of issuance that will determine the final bond yield.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within interest expense.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements:



Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)				Location and Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location and Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three months ended June 30,					Three months ended June 30,						Three months ended June 30,
(in thousands)	2015		2014			2015			2014			2015		2014
Interest rate swaps	$	18,376	(11,153	)	Interest expense	$	(2,250	)	(2,318	)	Other expenses	$	—	—

Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)				Location and Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location and Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Six months ended June 30,					Six months ended June 30,						Six months ended June 30,
(in thousands)	2015		2014			2015			2014			2015		2014
Interest rate swaps	$	4,494	(24,953	)	Interest expense	$	(4,500	)	(4,837	)	Other expenses	$	—	—

As of June 30, 2015, the Company expects $8.5 million of net deferred losses on derivative instruments accumulated in other comprehensive income to be reclassified into earnings during the next 12 months, of which $7.6 million is related to previously settled swaps.

7. Fair Value Measurements

(a) Disclosure of Fair Value of Financial Instruments

All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation, reasonably approximate their fair values, except for the following:



	June 30, 2015			December 31, 2014
(in thousands)	Carrying Amount		Fair Value	Carrying Amount		Fair Value
Financial assets:
Notes receivable	$	12,281	12,165	$	12,132	11,980
Financial liabilities:
Notes payable	$	1,868,700	1,990,000	$	1,946,357	2,116,000
Unsecured credit facilities	$	120,000	120,000	$	75,000	75,000

The table above reflects carrying amounts in the accompanying Consolidated Balance Sheets under the indicated captions. The above fair values approximate 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 June 30, 2015 and December 31, 2014. These fair value measurements maximize the use of observable inputs. 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

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.

The following methods and assumptions were used to estimate the fair value of these financial instruments:

Notes Receivable

The fair value of the Company's notes receivable is estimated by calculating the present value of future contractual cash flows discounted at interest rates available for notes of the same terms and maturities, adjusted for counter-party specific credit risk. The fair value of notes receivable was determined primarily using Level 3 inputs of the fair value hierarchy, which considered counter-party credit risk and loan to value ratio on the underlying property securing the note receivable.

Notes Payable

The fair value of the Company's notes payable is estimated by discounting future cash flows of each instrument at rates that reflect the current market rates available to the Company for debt of the same terms and maturities. Fixed rate loans assumed in connection with real estate acquisitions are recorded in the accompanying consolidated financial statements at fair value at the time the property is acquired. The fair value of the notes payable was determined using Level 2 inputs of the fair value hierarchy.

Unsecured Credit Facilities

The fair value of the Company's unsecured credit facilities is estimated based on the interest rates currently offered to the Company by financial institutions. The fair value of the credit facilities was determined using Level 2 inputs of the fair value hierarchy.

The following interest rate ranges were used by the Company to estimate the fair value of its financial instruments:



	June 30, 2015		December 31, 2014
	Low	High	Low	High
Notes receivable	7.3%	7.3%	7.4%	7.4%
Notes payable	1.6%	3.8%	0.9%	3.4%
Unsecured credit facilities	1.1%	1.2%	1.3%	1.3%

(b) Fair Value Measurements

The following financial instruments are measured at fair value on a recurring basis:

Trading Securities Held in Trust

The Company has investments in marketable securities, which are assets of the non-qualified deferred compensation plan ("NQDCP"), that are classified as trading securities held in trust on the accompanying Consolidated Balance Sheets. The fair value of the trading securities held in trust was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of trading securities are recorded within net investment (income) loss from deferred compensation plan in the accompanying Consolidated Statements of Operations.

Available-for-Sale Securities

Available-for-sale securities consist of investments in certificates of deposit and corporate bonds, and are recorded at fair value using matrix pricing methods to estimate fair value, which are considered Level 2 inputs of the fair value hierarchy. Unrealized gains or losses on these securities are recognized through other comprehensive income.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

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 June 30, 2015
(in thousands)				Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
Assets	Balance			(Level 1)	(Level 2)		(Level 3)
Trading securities held in trust	$	29,530		29,530	—		—
Available-for-sale securities	7,900			—	7,900		—
Interest rate derivatives	168			—	168		—
Total	$	37,598		29,530	8,068		—

Liabilities
Interest rate derivatives	$	(14,183	)	—	(14,183	)	—



	Fair Value Measurements as of December 31, 2014
(in thousands)				Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs		Significant Unobservable Inputs
Assets	Balance			(Level 1)	(Level 2)		(Level 3)
Trading securities held in trust	$	28,134		28,134	—		—
Liabilities
Interest rate derivatives	$	(18,794	)	—	(18,794	)	—

There were no assets measured at fair value on a nonrecurring basis as of June 30, 2015.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

8. Equity and Capital

Common Stock of the Parent Company

Issuances:

The current ATM equity offering program authorizes the Parent Company to sell up to $200 million of common stock at prices determined by the market at the time of sale. As of June 30, 2015, $95.0 million of common stock remained available for issuance under this ATM equity program.

There were no shares issued under the ATM equity program for the three months ended June 30, 2015. The following table presents the shares that were issued under the ATM equity program during the six months ended June 30, 2015:



	Six months ended June 30,
(dollar amounts are in thousands, except price per share data)	2015
Shares issued	18,125
Weighted average price per share	$	64.72
Total proceeds	$	1,173
Commissions	$	15
Issuance costs	$	—

In January 2015, the Parent Company entered into a forward sale and an underwritten public offering of 2.875 million shares of its common stock at a price of $67.40 per share which will result in gross proceeds of approximately $193.8 million, before any underwriting discount and offering expenses. The forward sale will settle on one or more dates occurring no later than approximately 12 months after the date of the offering. The Company intends to use any net proceeds that it receives upon settlement of the forward sale agreement to fund development and redevelopment activities, fund potential acquisition opportunities, repay maturing debts, and/or for general corporate purposes.

Common Units of the Operating Partnership

Issuances:

Common units were issued to the Parent Company in relation to the Parent Company's issuance of common stock, as discussed above.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

Accumulated Other Comprehensive Loss

The following tables present changes in the balances of each component of AOCI:



	Controlling Interest							Noncontrolling Interest					Total
(in thousands)	Cash Flow Hedges			Unrealized gain (loss) on Available-For-Sale Securities		AOCI		Cash Flow Hedges		Unrealized gain (loss) on Available-For-Sale Securities	AOCI		AOCI
Balance as of December 31, 2013	$	(17,404	)	—		(17,404	)	(479	)	—	(479	)	(17,883	)
Other comprehensive income before reclassifications	(24,669		)	912		(23,757	)	(284	)	2	(282	)	(24,039	)
Amounts reclassified from accumulated other comprehensive income	4,749			—		4,749		88		—	88		4,837
Current period other comprehensive income, net	(19,920		)	912		(19,008	)	(196	)	2	(194	)	(19,202	)
Balance as of June 30, 2014	$	(37,324	)	912		(36,412	)	(675	)	2	(673	)	(37,085	)

Balance as of December 31, 2014	$	(57,748	)	—		(57,748	)	(750	)	—	(750	)	(58,498	)
Other comprehensive income before reclassifications	4,558			(30	)	4,528		(64	)	—	(64	)	4,464
Amounts reclassified from accumulated other comprehensive income	4,421			—		4,421		79		—	79		4,500
Current period other comprehensive income, net	8,979			(30	)	8,949		15		—	15		8,964
Balance as of June 30, 2015	$	(48,769	)	(30	)	(48,799	)	(735	)	—	(735	)	(49,534	)

The following represents amounts reclassified out of AOCI into income:



AOCI Component	Amount Reclassified from AOCI into income								Affected Line Item Where Net Income is Presented
	Three months ended June 30,				Six months ended June 30,
(in thousands)	2015		2014		2015		2014
Interest rate swaps	$	2,250	$	2,318	$	4,500	$	4,837	Interest expense

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

9. Stock-Based Compensation

The Company recorded stock-based compensation in general and administrative expenses in the accompanying Consolidated Statements of Operations. During 2015, the Company granted 209,069 shares of restricted stock with a weighted-average grant-date fair value of $69.80 per share.

10. 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 restricted stock awards. All contributions into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited into a Rabbi trust. The assets of the Rabbi trust, exclusive of the shares of the Company's common stock, are classified as trading securities in the accompanying Consolidated Balance Sheets, and were $29.5 million and $28.1 million at June 30, 2015 and December 31, 2014, respectively. The participants' deferred compensation liability, also exclusive of the shares of the Company's common stock, is included within accounts payable and other liabilities in the accompanying Consolidated Balance Sheets and was $29.0 million and $27.6 million at June 30, 2015 and December 31, 2014, respectively.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

11. Earnings per Share and Unit

Parent Company Earnings per Share

The following summarizes the calculation of basic and diluted earnings per share:



	Three months ended June 30,			Six months ended June 30,
(in thousands, except per share data)	2015		2014	2015		2014
Numerator:
Income from operations	$	32,623	29,470	$	62,811	53,811
Gain on sale of real estate	5,657		1,691	6,460		2,406
Less: income attributable to noncontrolling interests	534		413	1,087		814
Income from operations attributable to the Company	37,746		30,748	68,184		55,403
Less: preferred stock dividends and other	5,266		5,442	10,531		10,884
Income from operations attributable to common stockholders - basic	$	32,480	25,306	57,653		44,519
Income from operations attributable to common stockholders - diluted	$	32,480	25,328	57,653		44,550
Denominator:
Weighted average common shares outstanding for basic EPS	94,136		91,975	94,036		91,958
Weighted average common shares outstanding for diluted EPS	94,504		92,021	94,392		91,991

Income per common share – basic	$	0.35	0.28	$	0.61	0.48
Income per common share – diluted	$	0.34	0.28	$	0.61	0.48

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 have no impact. Weighted average exchangeable Operating Partnership units outstanding for the three and six months ended June 30, 2015 were 154,170, and for the three and six months ended June 30, 2014 were 159,338 and 159,804, respectively.

Operating Partnership Earnings per Unit

The following summarizes the calculation of basic and diluted earnings per unit:



	Three months ended June 30,			Six months ended June 30,
(in thousands, except per share data)	2015		2014	2015		2014
Numerator:
Income from operations	$	32,623	29,470	$	62,811	53,811
Gain on sale of real estate	5,657		1,691	6,460		2,406
Less: income attributable to noncontrolling interests	473		360	977		719
Income from operations attributable to the Partnership	37,807		30,801	68,294		55,498
Less: preferred unit distributions and other	5,266		5,442	10,531		10,884
Income from operations attributable to common unit holders - basic	32,541		25,359	57,763		44,614
Income from operations attributable to common unit holders - diluted	32,541		25,381	57,763		44,645
Denominator:
Weighted average common units outstanding for basic EPU	94,290		92,134	94,190		92,118
Weighted average common units outstanding for diluted EPU	94,658		92,180	94,546		92,151

Income per common unit – basic	$	0.35	0.28	$	0.61	0.48
Income per common unit – diluted	$	0.34	0.28	$	0.61	0.48

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Consolidated Financial Statements

June 30, 2015

12. Commitments and Contingencies

The Company is involved in litigation on a number of matters and is subject to certain claims, which arise in the normal course of business, none of which, in the opinion of management, is 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.

The Company is also subject to numerous environmental laws and regulations as they apply to real estate pertaining to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground petroleum storage tanks. 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; however, it can give no assurance that existing environmental studies with respect to the shopping centers have revealed all potential environmental liabilities; that any previous owner, occupant or tenant did not create any material environmental condition not known to it; 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 the Company.

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 to facilitate the construction of development projects. As of June 30, 2015 and December 31, 2014, the Company had $5.9 million in letters of credit outstanding.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

In addition to historical information, the following information contains forward-looking statements as defined under federal securities laws. These forward-looking statements include statements about anticipated changes in our revenues, the size of our development and redevelopment program, earnings per share and unit, returns and portfolio value, and expectations about our liquidity. These statements are based on current expectations, estimates and projections about the real estate industry and markets in which the Company operates, and management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, changes in national and local economic conditions; financial difficulties of tenants; competitive market conditions, including timing and pricing of acquisitions and sales of properties and building pads ("out-parcels"); changes in leasing activity and market rents; timing of development starts; meeting development schedules; natural disasters in geographic areas in which we operate; cost of environmental remediation; our inability to exercise voting control over the co-investment partnerships through which we own many of our properties; technology disruptions. For additional information, see “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2014. The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporation and Regency Centers, L.P. appearing elsewhere herein. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of uncertain events.

Overview of Our Strategy

Regency Centers began its operations as a publicly-traded REIT in 1993, and currently owns direct or partial interests in 319 shopping centers, the majority of which are grocery-anchored community and neighborhood centers. Our centers are located in the top markets of 27 states and the District of Columbia, and contain 38.0 million square feet of gross leasable area. All of our operating, investing, and financing activities are performed through the Operating Partnership, its wholly-owned subsidiaries, and through its co-investment partnerships. The Parent Company currently owns approximately 99.8% of the outstanding common partnership units of the Operating Partnership.

Our mission is to be the preeminent grocery-anchored shopping center owner and developer through:


•	First-rate performance of our exceptionally merchandised and located national portfolio;


•	Value-enhancing services of the best team of professionals in the business; and


•	Creation of superior growth in shareholder value.

Our strategic objectives are to:


•	Sustain average annual 3% same-property net operating income (“NOI”) growth from a high-quality portfolio of community and neighborhood shopping centers;


•	Develop new high quality shopping centers at attractive returns on investment from a disciplined development program;


•	Cost-effectively enhance our already strong balance sheet to reduce our cost of capital, provide financial flexibility and weather economic downturns; and


•	Engage a talented and dedicated team that operates efficiently and is recognized as a leader in the real estate industry and sustainability initiatives.

We earn revenues and generate cash flow by leasing space in our shopping centers to grocery stores, major retail anchors, restaurants, side-shop retailers, and service providers, as well as ground leasing or selling building pads to these same types of tenants. We experience growth in revenues by increasing occupancy and rental rates in our existing shopping centers and by acquiring and developing new shopping centers.

We grow our shopping center portfolio through acquisitions of operating centers and new shopping center development. We will continue to use our development capabilities, market presence, and anchor relationships to invest in value-added new developments and redevelopments of existing centers. We fund our acquisition and development activity from various capital sources including operating cash flow, property sales, equity offerings, new financing, and co-investment real estate partnerships. Co-investment real estate partnerships provide us with an additional capital source for shopping center acquisitions, developments, and redevelopments, as well as the opportunity to earn fees for asset management, property management, and other investing and financing services.

Shopping Center Portfolio

The following table summarizes general information related to the Consolidated Properties in our shopping center portfolio:



(GLA in thousands)	June 30, 2015	December 31, 2014
Number of Properties	200	202
Properties in Development	6	7
Gross Leasable Area	23,114	23,200
% Leased – Operating and Development	95.7%	95.3%
% Leased – Operating	95.9%	95.9%
Weighted average annual effective rent per square foot ("SF")⁽¹⁾	$18.67	$18.30
⁽¹⁾ Net of tenant concessions.

The following table summarizes general information related to the Unconsolidated Properties owned in co-investment partnerships in our shopping center portfolio:



(GLA in thousands)	June 30, 2015	December 31, 2014
Number of Properties	119	120
Gross Leasable Area	14,870	15,000
% Leased – Operating	96.1%	96.0%
Weighted average annual effective rent per SF⁽¹⁾	$18.51	$17.85
⁽¹⁾ Net of tenant concessions.

For the purpose of the following disclosures of occupancy and leasing activity, anchor space is considered space greater than or equal to 10,000 SF and shop space is less than 10,000 SF. The following table summarizes pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping center portfolio:



	June 30, 2015	December 31, 2014
% Leased – Operating	95.9%	95.9%
Anchor	98.7%	98.8%
Shop space	91.4%	91.2%

We continue to see increases in shop space occupancy. The slight decrease in occupancy within our anchor space relates to redevelopment.

The following table summarizes leasing activity, including Regency's pro-rata share of activity within the portfolio of our co-investment partnerships:



	Six months ended June 30, 2015
	Leasing Transactions ⁽¹⁾	SF (in thousands)	Base Rent PSF ⁽²⁾		Tenant Improvements PSF ⁽²⁾		Leasing Commissions PSF ⁽²⁾
New leases
Anchor space	2	37	$	14.79	$	—	$	2.71
Shop space	228	375	$	31.06	$	10.27	$	13.83
Total New Leases ⁽¹⁾	230	412	$	29.62	$	9.36	$	12.85
Renewals
Anchor space	20	579	$	11.21	$	0.02	$	1.04
Shop space	469	704	$	30.93	$	0.92	$	3.87
Total Renewal Leases ⁽¹⁾	489	1,283	$	22.03	$	0.51	$	2.60
Total Leases	719	1,695	$	23.87	$	2.66	$	5.09



	Six months ended June 30, 2014
	Leasing Transactions ⁽¹⁾	SF (in thousands)	Base Rent PSF ⁽²⁾		Tenant Improvements PSF ⁽²⁾		Leasing Commissions PSF ⁽²⁾
New leases
Anchor space	15	539	$	14.45	$	4.38	$	4.09
Shop space	219	387	$	27.39	$	8.52	$	12.57
Total New Leases ⁽¹⁾	234	926	$	19.86	$	6.11	$	7.63
Renewals
Anchor space	28	597	$	11.48	$	0.37	$	1.09
Shop space	384	579	$	27.19	$	0.85	$	3.44
Total Renewal Leases ⁽¹⁾	412	1,176	$	19.21	$	0.61	$	2.25
Total Leases	646	2,102	$	19.49	$	3.03	$	4.62

⁽¹⁾ Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.

⁽²⁾ Totals for base rent, tenant improvements, and leasing commissions reflect the weighted average per square foot ("PSF").

Base rent PSF continues to improve in both new and renewal leasing activity. While there is a slight decrease in anchor space renewal rates, they still represents a 3.5% increase over prior rents for those units.

Significant Tenants and Concentrations of Risk

We seek to reduce our operating and leasing risks through geographic diversification and by avoiding dependence on any single property, market, or tenant. The following table summarizes our three most significant tenants, each of which is a grocery tenant, occupying our shopping centers:



	June 30, 2015
Grocery Anchor	Number of Stores ⁽¹⁾	Percentage of Company- owned GLA ⁽²⁾	Percentage of Annualized Base Rent ⁽²⁾
Kroger	55	8.7%	4.5%
Publix	46	6.5%	3.7%
Safeway/Albertsons	50	5.0%	3.0%

⁽¹⁾ Includes stores owned by grocery anchors that are attached to our centers.
⁽²⁾ Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors.

Bankruptcies

Although base rent is supported by long-term lease contracts, tenants who file bankruptcy may have the legal right to reject any or all of their leases and close related stores. 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. We monitor the operating performance and rent collections of all tenants in our shopping centers, especially those tenants operating retail formats that are experiencing significant changes in competition, business practice, and store closings in other locations. We are not currently aware of the pending bankruptcy or announced store closings of any tenants in our shopping centers that would individually cause a material reduction in our revenues, and no tenant represents more than 5% of our annual base rent on a pro-rata basis.

Our management team devotes significant time to monitoring consumer preferences, shopping behaviors, and demographics to anticipate both challenges and opportunities in the changing retail industry that may affect our tenants. As a result of our findings, we may reduce new leasing, suspend leasing, or curtail the allowance for the construction of leasehold improvements within a certain retail category or to a specific retailer.

Liquidity and Capital Resources

Our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. 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. All debt is held by our Operating Partnership or by our co-investment partnerships. The following table represents the remaining available capacity under our at the market ("ATM") equity program and unsecured credit facilities:



(in thousands)	June 30, 2015
ATM equity program
Total capacity	$	200,000
Remaining capacity	$	95,000

Term Loan⁽¹⁾
Total capacity	$	165,000
Remaining capacity	$	90,000

Line of Credit (the "Line")
Total capacity	$	800,000
Remaining capacity⁽²⁾	$	749,100
Maturity ⁽³⁾	May 13, 2019

⁽¹⁾ The Company has $75.0 million outstanding and may elect to borrow up to an additional $90.0 million through August 31, 2015.
⁽²⁾Net of letters of credit
⁽³⁾ The Company has the option to extend the maturity for two additional six-month periods.

In January 2015, the Parent Company entered into an underwritten public offering for 2.875 million shares of its common stock at a price of $67.40 per share which will result in gross proceeds of approximately $193.8 million, before any underwriting discount and offering expenses. In connection with this offering, the Parent Company entered into a forward sale agreement (the "Forward Equity Offering") with an affiliate of Wells Fargo Securities, LLC for the underwritten shares. The Forward Equity Offering will settle on one or more dates occurring no later than 12 months after the date of the offering.

The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:



	Six months ended June 30,
(in thousands)	2015			2014		Change
Net cash provided by operating activities	$	127,413		119,596		7,817
Net cash used in investing activities	(76,706		)	(162,636	)	85,930
Net cash used in financing activities	(137,369		)	(908	)	(136,461	)
Net decrease in cash and cash equivalents	$	(86,662	)	(43,948	)	(42,714	)
Total cash and cash equivalents	$	27,114		36,736		(9,622	)

Net cash provided by operating activities:

Net cash provided by operating activities increased $7.8 million due to:


•	$12.6 million increase in cash from operating income; and,


•	$4.0 million increase in operating cash flow distributions from our unconsolidated real estate partnerships as several redevelopment projects were completed and began generating cash flows; offset by


•	$4.6 million decrease as a result of the cash generated from settlement of the treasury hedges in May 2014 in connection with our bond issuance; and,


•	$4.1 million net decrease in cash due to timing of cash receipts and payments related to operating activities.

We operate our business such that we expect net cash provided by operating activities will provide the necessary funds to pay our distributions to our common and preferred share and unit holders, which were $101.3 million and $96.6 million for the six months ended June 30, 2015 and 2014, respectively. Our dividend distribution policy is set by our Board of Directors who monitors our financial position. Our Board of Directors recently declared our quarterly dividend on shares of our common stock of $0.485 per share, payable on September 2, 2015. Future dividends will be declared at the discretion of our Board of Directors and will be subject to capital requirements and availability. 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.

Net cash used in investing activities:

Net cash used in investing activities decreased by $85.9 million, primarily due to the Company completing no shopping center acquisitions in 2015:



	Six months ended June 30,
(in thousands)	2015			2014		Change
Cash flows from investing activities:
Acquisition of operating real estate	$	—		(79,444	)	79,444
Advance deposits on acquisition of operating real estate	(4,500		)	—		(4,500	)
Real estate development and capital improvements	(109,118		)	(93,764	)	(15,354	)
Proceeds from sale of real estate investments	26,567			7,790		18,777
Investments in real estate partnerships	(1,344		)	(4,287	)	2,943
Distributions received from investments in real estate partnerships	15,014			21,496		(6,482	)
Dividends on investments	87			66		21
Acquisition of securities	(20,581		)	(18,195	)	(2,386	)
Proceeds from sale of securities	17,169			3,702		13,467
Net cash used in investing activities	$	(76,706	)	(162,636	)	85,930

Significant changes in investing and divesting activities include:


•	We did not acquire any operating properties during 2015, compared to the acquisition of four shopping centers for $79.4 million in the same period of 2014.


•	We invested an additional $15.4 million on real estate development and capital improvements, as further discussed in the table below.


•	We received proceeds of $26.6 million from the sale of two shopping centers in 2015, compared to $7.8 million for two shopping centers and three out-parcels during 2014.

•

Distributions from our unconsolidated real estate partnerships include return of capital from sales or financing proceeds. The $15.0 million received in 2015 is primarily driven by $12.3 million of proceeds from the sale of one shopping center with a co-investment partner and $2.3 million of financing proceeds. During 2014, we received $21.5 million from selling four operating properties and land held in partnerships.


•	Acquisition of securities and proceeds from sale of securities result from investing activities, including our non-qualified deferred compensation plan.

We plan to continue developing and redeveloping shopping centers for long-term investment purposes. We deployed capital of $109.1 million for the development, redevelopment, and improvement of our real estate properties as comprised of the following:



	Six months ended June 30,
(in thousands)	2015		2014	Change
Capital expenditures:
Land acquisitions	$	—	17,282	(17,282	)
Building and tenant improvements	13,106		13,634	(528	)
Redevelopments	24,351		14,299	10,052
Developments	59,494		37,007	22,487
Capitalized interest	4,015		3,272	743
Capitalized direct compensation	8,152		8,270	(118	)
Real estate development and capital improvements	$	109,118	93,764	15,354


•	There were no land acquisitions during 2015, as compared to the acquisition of two land parcels for $17.3 million during 2014.

•

Redevelopment expenditures were higher during 2015 due to the timing, magnitude, and number of projects currently in process. We intend to continuously improve our portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing building expansion, new out-parcel building construction, and tenant improvement costs. The size and magnitude of each redevelopment project varies with each redevelopment plan.


•	Development expenditures were higher during 2015 due to the larger size of and progress towards completion of our development projects. At June 30, 2015 and December 31, 2014, we had six and seven development projects, respectively, that were either under construction or in lease up.

We have a staff of employees who directly support our development and redevelopment program. Internal compensation costs directly attributable to these activities are capitalized as part of each project as summarized in the table above. Changes in the level of future development and redevelopment activity could adversely impact results of operations by reducing the amount of internal costs for development and redevelopment projects that may be capitalized. A 10% reduction in development and redevelopment activity without a corresponding reduction in the compensation costs directly related to our development and redevelopment activities could result in an additional charge to net income of $1.1 million per year.

The following table details our development projects:



(in thousands, except cost PSF)				June 30, 2015
Property Name	Location	Start Date	Estimated /Actual Anchor Opening	Estimated Net Development Costs ⁽¹⁾		% of Costs Incurred⁽¹⁾	GLA	Cost PSF of GLA ⁽¹⁾
Brooklyn Station on Riverside	Jacksonville, FL	Q4-13	Oct-14	$	15,143	83%	50	$	303
Persimmon Place	Dublin, CA	Q1-14	June-15	59,976		84%	153	392
Willow Oaks Crossing	Concord, NC	Q2-14	Nov-15	13,608		50%	69	197
Belmont Shopping Center	Ashburn, VA	Q3-14	Aug-15	28,482		55%	91	313
CityLine Market	Richardson, TX	Q3-14	March-16	27,898		42%	80	349
The Village at La Floresta	Brea, CA	Q4-14	Feb-16	33,116		52%	87	381
Total				$	178,223	64%	530	$	336	⁽²⁾

⁽¹⁾ Amount represents costs on an accrual basis, including leasing costs, net of tenant reimbursements.
⁽²⁾ Amount represents a weighted average.

The following table summarizes our completed development project:

(in thousands, except cost PSF)

Six months ended June 30, 2015

Property Name

Location

Completion Date

Net Development

Costs ⁽¹⁾

GLA

Cost PSF

of GLA ⁽¹⁾

Fountain Square

Miami, FL

6/30/2015

55,937

177

316

⁽¹⁾ Includes leasing costs, net of tenant reimbursements.

Net cash used in financing activities:

Net cash flows used in financing activities increased by $136.5 million during 2015, for dividend payments and debt repayments with no offsetting debt issuance, as follows:



	Six months ended June 30,
(in thousands)	2015			2014		Change
Cash flows from financing activities:
Equity issuances	$	955		—		955
Stock redemption	—			(300	)	300
Distributions to limited partners in consolidated partnerships, net	(1,722		)	(938	)	(784	)
Dividend payments	(101,307		)	(96,611	)	(4,696	)
Unsecured credit facilities, net	45,000			10,000		35,000
Proceeds from debt issuance	2,399			249,360		(246,961	)
Payment of debt issue costs	(3,746		)	(2,391	)	(1,355	)
Debt repayment	(78,948		)	(160,028	)	81,080
Net cash used in financing activities	$	(137,369	)	(908	)	(136,461	)

Significant financing activities during the six months ended June 30, 2015 and 2014 include:


•	During 2015, we borrowed $45.0 million on our Line, net of repayments, as compared to the $10.0 million during 2014.


•	During the six months ended June 30, 2015, we spent $78.9 million to repay three mortgages that were scheduled to mature in 2015 in addition to scheduled principal payments, as compared to $160.0 million in 2014, of which $150.0 million was used to repay maturing ten-year unsecured public debt, $6.6 million to repay one mortgage scheduled to mature in 2014, and scheduled principal payments.

We endeavor to maintain a high percentage of unencumbered assets. At June 30, 2015, 80.1% of our wholly-owned real estate assets were unencumbered. Such assets allow us to access the secured and unsecured debt markets and to maintain availability on the Line. Our coverage ratio, including our pro-rata share of our partnerships, was 2.7 times for the trailing four quarters ended June 30, 2015 and 2014. We define our coverage ratio as earnings before interest, taxes, investment transaction profits net of deal costs, depreciation and amortization (“Core EBITDA”) divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.

Through the remainder of 2015, we estimate that we will require approximately $458.7 million of cash, including $91.4 million to complete in-process developments and redevelopments, $350.1 million to repay maturing debt and approximately $17.2 million to fund our pro-rata share of estimated capital contributions to our co-investment partnerships for repayment of debt. If we start new developments or redevelop additional shopping centers, our cash requirements will increase. To meet our cash requirements, we will utilize cash generated from operations, proceeds from the sale of real estate, proceeds from settling our $193.8 million Forward Equity Offering, up to $839.1 million available borrowings from our Line and Term Loan, and when the capital markets are favorable, proceeds from the sale of equity under our remaining $95.0 million ATM program and the issuance of new long-term debt.

We continuously monitor the capital markets and evaluate our ability to issue new debt to repay maturing debt or fund our commitments. Based upon the current capital markets, our current credit ratings, and the number of high quality, unencumbered properties that we own which could collateralize borrowings, we currently expect that we will successfully issue new secured or unsecured debt to fund our obligations, as needed.

On August 3, 2015, we repaid $350.0 million of fixed rate, unsecured debt at maturity, from a $350.0 million draw on our unsecured credit facilities. We currently expect to repay the credit facilities draw using proceeds from partially settling the Forward Equity Offering and issuing new long-term debt during 2015. We also have $400.0 million of fixed rate, unsecured debt maturing June 15, 2017, which we expect to repay in 2017 from the proceeds of issuing new long-term debt, draws on the Line and other proceeds. In order to mitigate the risk of interest rate volatility, we have $220.0 million of forward starting interest rate swaps to partially hedge any new long-term debt issued in 2015 and an additional $220.0 million of forward starting interest rate swaps to partially hedge any new long-term debt issued in 2017. These interest rate swaps lock in the 10-year treasury rate and swap spread at a weighted average fixed rate of 2.67% and 3.48%, respectively. A current market based credit spread applicable to Regency will be added to the locked in fixed rate at time of issuance that will determine the final bond yield. At June 30, 2015, the fair value of the interest rate swaps that are expected to settle in 2015 is a $3.6 million obligation.

Our Line, Term Loan, and unsecured loans require that we remain in compliance with various covenants, which are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014, with the Minimum Tangible Net Worth covenant removed from our Unsecured Credit Facilities. We are in compliance with these covenants at June 30, 2015 and expect to remain in compliance.

Investments in Real Estate Partnerships

At June 30, 2015 and December 31, 2014, we had investments in real estate partnerships of $309.5 million and $333.2 million, respectively. The following table is a summary of the unconsolidated combined assets and liabilities of these co-investment partnerships and our pro-rata share:



	Regency's Share ⁽¹⁾					Combined
(dollars in thousands)	June 30, 2015			December 31, 2014		June 30, 2015		December 31, 2014
Number of Co-investment Partnerships						13		13
Regency’s Ownership						20%-50%		20%-50%
Number of Properties						119		120
Assets	$	956,626		981,359		$	2,739,947	2,807,502
Liabilities	538,243			539,310		1,559,648		1,558,874
Equity ⁽²⁾	418,383			442,049		1,180,299		1,248,628
less: Impairment	(1,300		)	(1,300	)
less: Ownership percentage or Restricted Gain Method deferral	(29,336		)	(29,379	)
less: Net book equity in excess of purchase price	(78,203		)	(78,203	)
Investments in real estate partnerships	$	309,544		333,167

⁽¹⁾Pro-rata financial information is not, and is not intended to be, a presentation in accordance with GAAP. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on our operations, which includes such items on a single line presentation under the equity method in its consolidated financial statements.

⁽²⁾The difference between our share of the net assets of the co-investment partnerships and our investments in real estate partnerships per the accompanying Consolidated Balance Sheets at June 30, 2015 and December 31, 2014 relates to the differences noted in the reconciliation above (in thousands).

Our equity method investments in real estate partnerships consist of the following:



(in thousands)	Regency's Ownership	June 30, 2015		December 31, 2014
GRI - Regency, LLC (GRIR) ⁽¹⁾	40.00%	$	229,121	247,175
Columbia Regency Retail Partners, LLC (Columbia I) ⁽¹⁾	20.00%	15,616		15,916
Columbia Regency Partners II, LLC (Columbia II) ⁽¹⁾	20.00%	6,387		9,343
Cameron Village, LLC (Cameron)	30.00%	11,462		12,114
RegCal, LLC (RegCal) ⁽¹⁾	25.00%	12,889		13,354
US Regency Retail I, LLC (USAA) ⁽¹⁾	20.01%	534		806
Other investments in real estate partnerships	50.00%	33,535		34,459
Total		$	309,544	333,167

⁽¹⁾These partnership agreements have a unilateral right for election to dissolve the partnership and receive a distribution-in-kind ("DIK") upon liquidation; therefore, the Company has applied the Restricted Gain Method to determine the amount of gain recognized on property sales to these partnerships. During 2015, the Company did not sell any properties to these real estate partnerships.

Notes Payable - Investments in Real Estate Partnerships

Scheduled principal repayments on notes payable held by our investments in real estate partnerships were as follows:



(in thousands)	June 30, 2015
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Mortgage Loan Maturities		Unsecured Maturities	Total		Regency’s Pro-Rata Share
2015	$	9,913	59,803		—	69,716		20,742
2016	17,135		305,076		—	322,211		113,155
2017	17,517		77,385		11,460	106,362		24,214
2018	18,696		67,022		—	85,718		27,655
2019	17,934		65,939		—	83,873		21,618
Beyond 5 Years	34,827		763,123		—	797,950		298,764
Unamortized debt premiums, net	—		(1,249	)	—	(1,249	)	(550	)
Total	$	116,022	1,337,099		11,460	1,464,581		505,598

At June 30, 2015, our investments in real estate partnerships had notes payable of $1.5 billion maturing through 2025, of which 99.2% had a weighted average fixed interest rate of 5.4%, and the remaining notes payable float over LIBOR and had a weighted average variable interest rate of 1.8%. These loans are all non-recourse, and our pro-rata share was $505.6 million as of June 30, 2015. As notes payable mature, they will be repaid from proceeds from refinancing and partner capital contributions. We are obligated to contribute our pro-rata share to fund maturities if they are not refinanced. We believe that our 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, we would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call.

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 shown below:



	Three months ended June 30,			Six months ended June 30,
(in thousands)	2015		2014	2015	2014
Asset management, property management, leasing, and investment and financing services	$	5,856	6,026	11,993	12,188

Recent Accounting Pronouncements

See note 1 to Consolidated Financial Statements.

Results from Operations

Comparison of the three months ended June 30, 2015 to 2014:

Our revenues increased as summarized in the following table:



	Three months ended June 30,
(in thousands)	2015		2014	Change
Minimum rent	$	102,390	97,778	4,612
Percentage rent	300		545	(245	)
Recoveries from tenants	30,421		28,146	2,275
Other income	2,010		2,170	(160	)
Management, transaction, and other fees	6,008		6,253	(245	)
Total revenues	$	141,129	134,892	6,237

Minimum rent increased as follows:


•	$200,000 increase due to the 2014 acquisitions of operating properties and $2.5 million increase from operations beginning at development properties; and


•	$4.1 million increase from same properties driven by higher rental rates and rent paying occupancy growth (same property includes operating properties owned for the entirety of both calendar year periods being presented, including redevelopments);


•	offset by a $2.2 million decrease from the sale of operating properties.

Recoveries from tenants represent reimbursements to us for tenants' pro-rata share of the operating, maintenance, and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased as follows:


•	$241,000 increase due to the 2014 acquisitions of operating properties and $579,000 increase from operations beginning at development properties; and


•	$2.0 million increase in recoveries at same properties, which was driven by an increase in recoverable costs and an increase in our recovery ratio, driven by occupancy improvements;


•	offset by $570,000 decrease from the sale of operating properties.

Changes in our operating expenses are summarized in the following table:



	Three months ended June 30,
(in thousands)	2015		2014	Change
Depreciation and amortization	$	36,225	36,023	202
Operating and maintenance	20,185		19,498	687
General and administrative	15,099		15,223	(124	)
Real estate taxes	15,667		14,898	769
Other operating expenses	1,779		1,795	(16	)
Total operating expenses	$	88,955	87,437	1,518

Operating and maintenance costs increased $687,000 attributable to the following:


•	$431,000 increase related to operations beginning at development properties;


•	$238,000 related to 2014 acquired properties; and


•	$464,000 at same properties, primarily driven by snow removal costs;


•	offset by $446,000 decrease for sold properties.

General and administrative expenses decreased $124,000 from a $667,000 reduction in value of participant obligations within the deferred compensation plan, offset by higher salaries, benefits and incentives.

Real estate taxes increased $769,000, due to


•	$188,000 increase related to operations beginning at development properties;


•	$124,000 related to 2014 acquired properties; and


•	$665,000 at same properties from increased tax assessments;


•	offset by $208,000 decrease from sold properties.

The following table presents the components of other expense (income):



	Three months ended June 30,
(in thousands)	2015			2014		Change
Interest expense, net
Interest on notes payable	$	25,856		26,121		(265	)
Interest on unsecured credit facilities	786			1,069		(283	)
Capitalized interest	(1,956		)	(1,631	)	(325	)
Hedge expense	2,252			2,351		(99	)
Interest income	(263		)	(465	)	202
Interest expense, net	26,675			27,445		(770	)
Net investment income	(367		)	(628	)	261
Total other expense (income)	$	26,308		26,817		(509	)

Our interest expense decreased mainly due to higher capitalized interest, which is based on higher cumulative costs incurred on development and redevelopment projects. Additional decreases resulted from lower average outstanding balances and variable interest rates on our unsecured credit facilities, and from reducing our notes payable.

The $261,000 decrease in net investment income is largely related to the change in the fair value of plan assets in the non-qualified deferred compensation plan, which is consistent with the change in plan liabilities included in general and administrative expenses above.

Our equity in income of investments in real estate partnerships decreased as follows:



		Three months ended June 30,
(in thousands)	Ownership	2015		2014		Change
GRI - Regency, LLC (GRIR)	40.00%	$	5,336	1,916		3,420
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%	380		354		26
Columbia Regency Partners II, LLC (Columbia II)	20.00%	142		(230	)	372
Cameron Village, LLC (Cameron)	30.00%	216		121		95
RegCal, LLC (RegCal)	25.00%	100		683		(583	)
Regency Retail Partners, LP (the Fund) ⁽¹⁾	20.00%	—		3		(3	)
US Regency Retail I, LLC (USAA)	20.01%	191		175		16
Other investments in real estate partnerships	50.00%	392		5,810		(5,418	)
Total		$	6,757	8,832		(2,075	)

⁽¹⁾ On August 13, 2013, Regency Retail Partners, LP (the "Fund") sold 100% of its interest in its entire portfolio of shopping centers to a third party. The Fund was dissolved following the final distribution of proceeds in 2014.

The decrease in our equity in income of investments in real estate partnerships is principally due to the sale of operating properties and land from the various partnerships during the periods:


•	The GRIR partnership income increase of $3.4 million was driven by our $1.1 million pro-rata gain on one operating property sold during 2015 coupled with $1.7 million less pro-rata depreciation expense due to a redevelopment demolition in 2014.


•	The RegCal partnership income decreased $583,000 this quarter as 2014 included $651,000 of pro-rata gain from the sale of an operating property during the three months ended June 30, 2014.


•	Our other real estate partnerships sold an operating property which generated a pro-rata gain of $4.9 million during the three months ended June 30, 2014.

The following represents the remaining components that comprised net income attributable to the common stockholders and unit holders:



	Three months ended June 30,
(in thousands)	2015			2014		Change
Income from operations	$	32,623		29,470		3,153
Gain on sale of real estate	5,657			1,691		3,966
Income attributable to noncontrolling interests	(534		)	(413	)	(121	)
Preferred stock dividends	(5,266		)	(5,266	)	—
Net income attributable to common stockholders	$	32,480		25,482		6,998
Net income attributable to exchangeable operating partnership units	61			53		8
Net income attributable to common unit holders	$	32,541		25,535		7,006

During the three months ended June 30, 2015, we sold an operating property for a gain of $5.7 million, net of taxes, as compared to $1.7 million gain for an operating property sold during the three months ended June 30, 2014.

Comparison of the six months ended June 30, 2015 to 2014:

Our revenues increased as summarized in the following table:



	Six months ended June 30,
(in thousands)	2015		2014	Change
Minimum rent	$	203,695	192,314	11,381
Percentage rent	2,108		1,930	178
Recoveries from tenants	59,356		55,687	3,669
Other income	4,123		5,670	(1,547	)
Management, transaction, and other fees	12,246		12,572	(326	)
Total revenues	$	281,528	268,173	13,355

Minimum rent increased as follows:


•	$2.8 million increase due to the 2014 acquisitions of operating properties and $4.3 million increase from operations beginning at development properties; and


•	$8.1 million increase from same properties driven by higher rental rates and rent paying occupancy growth;


•	offset by a $3.8 million decrease from the sale of operating properties.


•	$855,000 increase due to the 2014 acquisitions of operating properties and $1.2 million increase from operations beginning at development properties; and


•	$2.5 million increase from same properties associated with higher recoverable costs and rent paying occupancy improvements;


•	offset by $866,000 decrease from the sale of operating properties.

Other income, which consists of incidental income earned at our centers, decreased primarily as a result of a large settlement fee earned in the first quarter of 2014.

We earned fees, at market-based rates, for asset management, property management, leasing, acquisition, and financing services that we provided to our co-investment partnerships and third parties as follows:



	Six months ended June 30,
(in thousands)	2015		2014	Change
Asset management fees	$	3,121	3,014	107
Property management fees	6,631		6,610	21
Leasing commissions and other fees	2,494		2,948	(454	)
Total management, transaction, and other fees	$	12,246	12,572	(326	)

Changes in our operating expenses are summarized in the following table:



	Six months ended June 30,
(in thousands)	2015		2014	Change
Depreciation and amortization	$	72,218	73,929	(1,711	)
Operating and maintenance	41,358		40,003	1,355
General and administrative	31,477		29,421	2,056
Real estate taxes	30,798		29,697	1,101
Other operating expenses	2,943		3,968	(1,025	)
Total operating expenses	$	178,794	177,018	1,776

Depreciation and amortization decreased $1.7 million:


•	$464,000 increase from acquisitions;


•	$1.1 million increase from new development operations;


•	offset by a $1.4 million decrease at same properties attributable to a large redevelopment beginning during 2014;


•	and a $1.9 million decrease from disposals.

Operating and maintenance increased $1.4 million:


•	$781,000 from acquisitions;


•	$866,000 from new development operations; and


•	$462,000 at same properties;


•	partially offset by a decrease $754,000 from sold properties.

General and administrative expenses increased $2.1 million due to higher salaries, benefits and incentives of $2.3 million, offset by a reduction in value of participant obligations within the deferred compensation plan.

Real estate taxes increased $1.1 million:


•	$555,000 from acquisitions,


•	$531,000 from new development operations, and


•	$421,000 at same properties,


•	partially offset by a decrease of $406,000 from sold properties.

Other operating expenses decreased $1.0 million for the six months ended June 30, 2015 primarily due to increases in transaction costs in the second quarter of 2014 due to property acquisitions and pursuit costs.

The following table presents the components of other expense (income):



	Six months ended June 30,
(in thousands)	2015			2014		Change
Interest expense, net
Interest on notes payable	$	51,748		51,758		(10	)
Interest on unsecured credit facilities	1,602			1,921		(319	)
Capitalized interest	(4,015		)	(3,272	)	(743	)
Hedge expense	4,502			4,853		(351	)
Interest income	(529		)	(680	)	151
Interest expense, net	53,308			54,580		(1,272	)
Provision for impairment	—			225		(225	)
Early extinguishment of debt	(61		)	—		(61	)
Net investment income	(1,000		)	(821	)	(179	)
Total other expense (income)	$	52,247		53,984		(1,737	)

Our interest expense decreased mainly due to:


•	lower average outstanding balances and variable interest rates on our unsecured credit facilities;


•	higher capitalized interest, which is based on higher cumulative costs incurred on development and redevelopment projects; and


•	hedge expense decreased as our 2014 favorably settled forward starting hedges are amortizing into interest expense to reduce our overall bond interest yield.

During the six months ended June 30, 2014, we recognized a $225,000 impairment on three parcels of land. We did not have any impairments during the six months ended June 30, 2015.

Our equity in income of investments in real estate partnerships decreased as follows:



		Six months ended June 30,
(in thousands)	Ownership	2015		2014		Change
GRI - Regency, LLC (GRIR)	40.00%	$	9,330	5,126		4,204
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%	750		735		15
Columbia Regency Partners II, LLC (Columbia II)	20.00%	294		(47	)	341
Cameron Village, LLC (Cameron)	30.00%	362		308		54
RegCal, LLC (RegCal)	25.00%	234		775		(541	)
Regency Retail Partners, LP (the Fund)⁽¹⁾	20.00%	—		16		(16	)
US Regency Retail I, LLC (USAA)	20.01%	408		335		73
Other investments in real estate partnerships	50.00%	946		9,392		(8,446	)
Total		$	12,324	16,640		(4,316	)

⁽¹⁾ On August 13, 2013, the Fund sold 100% of its interest in its entire portfolio of shopping centers to a third party. The Fund was dissolved following the final distribution of proceeds in 2014.

The $4.3 million decrease in our equity in income in investments in real estate partnerships for 2015, as compared to 2014, is largely attributed to:


•	$4.2 million increase in pro-rata share of income from our GRIR partnership was driven by our $1.1 million pro-rata gain on one operating property sold during 2015 coupled with $1.7 million less pro-rata depreciation expense due to redevelopment activity in 2014;


•	$424,000 pro-rata share of impairment losses recognized upon sale of two properties within Columbia II during 2014;


•	$654,000 of pro-rata gain on one operating property disposed of within RegCal during 2014; and


•	$8.4 million decrease within our Other investment partnerships driven by the gains on sale of two land parcels and one operating property during 2014.

The following represents the remaining components that comprise net income attributable to the common stockholders and unit holders:



	Six months ended June 30,
(in thousands)	2015			2014		Change
Income from operations	$	62,811		53,811		9,000
Gain on sale of real estate	6,460			2,406		4,054
Income attributable to noncontrolling interests	(1,087		)	(814	)	(273	)
Preferred stock dividends	(10,531		)	(10,531	)	—
Net income attributable to common stockholders	$	57,653		44,872		12,781
Net income attributable to exchangeable operating partnership units	110			95		15
Net income attributable to common unit holders	$	57,763		44,967		12,796

During the six months ended June 30, 2015, we sold two operating properties resulting in a gain of $6.5 million, compared to a gain of $2.4 million from the sale of two operating properties during 2014.

Supplemental Earnings Information

We use certain non-GAAP performance measures, in addition to the required GAAP presentations, as we believe these measures are beneficial to us in improving the understanding of the Company's operational results among the investing public. We believe such measures make comparisons of other REITs' operating results to the Company's more meaningful. We continually evaluate the usefulness, relevance, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

The following are our definitions of Same Property Net Operating Income ("NOI"), Funds from Operations ("FFO"), and Core FFO, which we believe to be beneficial non-GAAP performance measures used in understanding our operational results:


Ÿ	NOI is calculated as total property revenues (minimum rent, percentage rents, and recoveries from tenants and other income) less direct property operating expenses (operating and maintenance and real estate taxes) from the properties owned by us, and excludes corporate-level income (including management, transaction, and other fees), for the entirety of the periods presented.


•	Pro-Rata information includes 100% of our consolidated properties plus our ownership interest in our unconsolidated real estate investment partnerships.


•	Same Property information is provided for operating properties that were owned and operated for the entirety of both calendar year periods being compared and excludes Non-Same Properties and Properties in Development. A Non-Same Property is a property acquired, sold, or development property completed during either calendar year period being compared.


•	Same Property NOI includes NOI for Same Properties, but excludes straight-line rental income, net of reserves, above and below market rent amortization, banking charges, and other fees. Same Property NOI is a key measure used by management in evaluating the performance of our properties.

FFO is a commonly used measure of REIT performance, which the National Association of Real Estate Investment Trusts ("NAREIT") defines as net income, computed in accordance with GAAP, excluding gains and losses from sales of depreciable property, net of tax, excluding operating real estate impairments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute FFO for all periods presented in accordance with NAREIT's definition. Many companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since FFO excludes depreciation and amortization and gains and losses from depreciable property dispositions, and impairments, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, 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, 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 an alternative for cash flow as a measure of liquidity.

•

Core FFO is an additional performance measure used by Regency as the computation of FFO includes certain non-cash and non-comparable items that affect the Company's period-over-period performance. Core FFO excludes from FFO, but is not limited to: (a) transaction related gains, income or expense; (b) impairments on land; (c) gains or losses from the early extinguishment of debt; and (d) other non-core amounts as they occur. The Company provides a reconciliation of FFO to Core FFO.

Same Property NOI

Our pro-rata same property NOI grew 4.2% from the following major components:



	Three months ended June 30,					Six months ended June 30,
(in thousands)	2015		2014	Change		2015		2014	Change
Base rent	$	117,140	112,815	4,325		$	233,246	224,488	8,758
Percentage rent	736		1,089	(353	)	3,136		3,125	11
Recovery revenue	35,858		33,940	1,918		70,337		68,322	2,015
Other income	1,667		1,826	(159	)	3,250		4,587	(1,337	)
Operating expenses	42,116		40,989	1,127		85,233		84,913	320
Pro-rata same property NOI	$	113,285	108,681	4,604		$	224,736	215,609	9,127
Growth				4.2	%				4.2	%

Pro-rata same property base rent increased $4.3 million and $8.8 million during the three and six months ended June 30, 2015, respectively, because of contractual rent steps, rental rate growth, and improvements in rent paying occupancy.

Pro-rata same property recovery revenue increased $1.9 million and $2.0 million during the three and six months ended June 30, 2015, respectively, from increases in recoverable costs and improvements in rent paying occupancy.

Pro-rata same property other income decreased $1.3 million during the six months ended June 30, 2015 as a result of a large settlement fee earned in 2014.

Pro-rata same property operating expenses increased $1.1 million during the three months ended June 30, 2015 primarily associated with increased real estate taxes and snow removal costs.

Our reconciliation of property revenues and property expenses to Same Property NOI, on a pro-rata basis, is as follows:



	Three months ended June 30,
	2015						2014
(in thousands)	Same Property			Other ⁽¹⁾		Total	Same Property	Other ⁽¹⁾		Total
Income from operations	$	60,343		(27,720	)	32,623	57,563	(28,093	)	29,470
Less:
Management, transaction, and other fees	—			6,008		6,008	—	6,253		6,253
Other ⁽²⁾	1,502			679		2,181	1,729	913		2,642
Plus:
Depreciation and amortization	32,380			3,845		36,225	31,248	4,775		36,023
General and administrative	—			15,099		15,099	—	15,223		15,223
Other operating expense, excluding provision for doubtful accounts	(72		)	1,294		1,222	205	1,059		1,264
Other expense (income)	6,701			19,607		26,308	7,542	19,275		26,817
Equity in income (loss) of investments in real estate excluded from NOI ⁽³⁾	15,435			495		15,930	13,852	423		14,275
Pro-rata NOI	$	113,285		5,933		119,218	108,681	5,496		114,177

	Six months ended June 30,
	2015						2014
(in thousands)	Same Property			Other ⁽¹⁾		Total	Same Property	Other ⁽¹⁾		Total
Income from continuing operations, before tax	$	118,199		(55,388	)	62,811	107,249	(53,438	)	53,811
Less:
Management, transaction, and other fees	—			12,246		12,246	—	12,572		12,572
Other⁽²⁾	3,467			1,101		4,568	4,075	1,015		5,090
Plus:
Depreciation and amortization	65,189			7,029		72,218	66,592	7,337		73,929
General and administrative	—			31,477		31,477	—	29,421		29,421
Other operating expense, excluding provision for doubtful accounts	(119		)	1,787		1,668	282	2,824		3,106
Other expense (income)	13,280			38,967		52,247	15,026	38,958		53,984
Equity in income (loss) of investments in real estate excluded from NOI ⁽³⁾	31,654			1,007		32,661	30,535	(2,059	)	28,476
Pro-rata NOI	$	224,736		11,532		236,268	215,609	9,456		225,065

⁽¹⁾Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities.

⁽²⁾ Includes straight-line rental income, net of reserves, above and below market rent amortization, banking charges, and other fees.

⁽³⁾ Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.

Our same property pool includes the following property count, pro-rata GLA, and changes therein:



	Three months ended June 30,
	2015				2014
(GLA in thousands)	Property Count		GLA		Property Count		GLA
Beginning same property count	304		26,730		314		26,050
Disposed properties	(1	)	(54	)	(5	)	(74	)
SF adjustments ⁽¹⁾	—		6		—		57
Ending same property count	303		26,682		309		26,033

	Six months ended June 30,
	2015				2014
(GLA in thousands)	Property Count		GLA		Property Count		GLA
Beginning same property count	298		25,526		304		25,109
Acquired properties owned for entirety of comparable periods	4		427		6		560
Developments that reached completion by beginning of earliest comparable period presented	3		790		5		359
Disposed properties	(2	)	(75	)	(6	)	(85	)
SF adjustments ⁽¹⁾	—		14		—		90
Ending same property count	303		26,682		309		26,033

⁽¹⁾ SF adjustments arise from remeasurements or redevelopments.

FFO and Core FFO

The Company's reconciliation of net income available to common shareholders to FFO and Core FFO is as follows:



	Three months ended June 30,					Six months ended June 30,
(in thousands, except share information)	2015			2014		2015			2014
Reconciliation of Net income to FFO
Net income attributable to common stockholders	$	32,480		25,482		$	57,653		44,872
Adjustments to reconcile to FFO:
Depreciation and amortization ⁽¹⁾	45,293			46,645		90,385			93,383
Provision for impairment ⁽²⁾	—			424		—			424
Gain on sale of operating properties ⁽²⁾	(6,792		)	(6,710	)	(7,475		)	(7,419	)
Exchangeable operating partnership units	61			53		110			95
FFO	$	71,042		65,894		$	140,673		131,355
Reconciliation of FFO to Core FFO
FFO	$	71,042		65,894		$	140,673		131,355
Adjustments to reconcile to Core FFO:
Development and acquisition pursuit costs ⁽²⁾	484			371		523			1,711
Gain on sale of land ⁽²⁾	43			(424	)	(68		)	(3,328	)
Provision for impairment to land	—			—		—			225
Hedge ineffectiveness ⁽²⁾	1			—		4			—
Early extinguishment of debt ⁽²⁾	—			41		(61		)	41
Investment income	(417		)	—		(417		)	—
Core FFO	$	71,153		65,882		$	140,654		130,004

⁽¹⁾ Includes Regency's pro-rata share of unconsolidated co-investment partnerships, net of pro-rata share attributable to noncontrolling interests.

⁽²⁾ Includes Regency's pro-rata share of unconsolidated co-investment partnerships.

Environmental Matters

We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground petroleum storage tanks. We believe that the tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we use all legal means to cause tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems. Where available, we have applied and been accepted into state-sponsored environmental programs. We have a blanket environmental insurance policy for third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also placed environmental insurance, where possible, on 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 June 30, 2015 we had accrued liabilities of $9.5 million for our pro-rata share of environmental remediation. We believe that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity, or results of operations; however, we can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental liabilities; 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.

Inflation/Deflation

Inflation has been historically low and has had a minimal impact on the operating performance of our shopping centers; however, inflation may become a greater concern in the future. Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation. Most of our leases require tenants to pay their pro-rata share of operating expenses, including common-area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. However, during deflationary periods or periods of economic weakness, minimum rents and percentage rents will decline as the supply of available retail space exceeds demand and consumer spending declines. Occupancy declines resulting from a weak economic period will also likely result in lower recovery rates of our operating expenses.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in item 7A of Part II of our Form 10-K for the year ended December 31, 2014.

Item 4. Controls and Procedures

Controls and Procedures (Regency Centers Corporation)

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 Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, the Parent Company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q 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.

There have been no changes in our internal controls over financial reporting identified in connection with this evaluation that occurred during the second quarter of 2015 and 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 its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q 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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various legal proceedings which 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.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in item 1A. of Part I of our Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter ended June 30, 2015.

The following table represents information with respect to purchases by the Parent Company of its common stock during the months in the three month period ended June 30, 2015:



Period	Total number of shares purchased ⁽¹⁾	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number or approximate dollar value of shares that may yet be purchased under the plans or programs
April 1 through April 30, 2015	—	$	—	—	$	—
May 1 through May 31, 2015	—	$	—	—	$	—
June 1 through June 30, 2015	—	$	—	—	$	—

⁽¹⁾ Represents shares delivered in payment of withholding taxes in connection with restricted stock vesting by participants under Regency's Long-Term Omnibus Plan.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

In reviewing any 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. Each agreement contains 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:


•	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;


•	have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;


•	may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and


•	were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

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.

Ex # Description

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.

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 XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

__________________________


*	Furnished, not filed.

SIGNATURES

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.



August 6, 2015	REGENCY CENTERS CORPORATION
	By:	/s/ Lisa Palmer Lisa Palmer, Executive Vice President, Chief Financial Officer (Principal Financial Officer)

	By:	/s/ J. Christian Leavitt J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer)



August 6, 2015	REGENCY CENTERS, L.P.
	By:	Regency Centers Corporation, General Partner
	By:	/s/ Lisa Palmer Lisa Palmer, Executive Vice President, Chief Financial Officer (Principal Financial Officer)

	By:	/s/ J. Christian Leavitt J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer)

Regency Centers - 10-Q quarterly report FY2015 Q2

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