Regency Centers - 10-Q quarterly report FY2019 Q1

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 March 31, 2019



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)

Securities registered pursuant to Section 12(b) of the Act:

Regency Centers Corporation



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.01 par value	REG	The Nasdaq Stock Market LLC

Regency Centers, L.P.



Title of each class	Trading Symbol	Name of each exchange on which registered
None	N/A	N/A

________________________________

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, every Interactive Data File required to be submitted 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 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Regency Centers Corporation:



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

Regency Centers, L.P.:



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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Regency Centers Corporation YES o NO o Regency Centers, L.P. YES o NO 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 common stock was 167,518,691 as of May 9, 2019.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2019, 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”,"Regency Centers" 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 March 31, 2019, the Parent Company owned approximately 99.8% of the Units in the Operating Partnership. The remaining limited Units are owned by investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.

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 key differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. Except for $500 million of unsecured public and private placement debt, the Parent Company does not hold any indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees $500 million of debt of the Parent Company. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.

Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units. The limited partners' units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of stockholders' equity in noncontrolling interests in the Parent Company's financial statements.

In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company.

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.

TABLE OF CONTENTS



		Form 10-Q Report Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

Regency Centers Corporation:

	Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	1

	Consolidated Statements of Operations for the periods ended March 31, 2019 and 2018	2

	Consolidated Statements of Comprehensive Income for the periods ended March 31, 2019 and 2018	3

	Consolidated Statements of Equity for the periods ended March 31, 2019 and 2018	4

	Consolidated Statements of Cash Flows for the periods ended March 31, 2019 and 2018	5

Regency Centers, L.P.:

	Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	7

	Consolidated Statements of Operations for the periods ended March 31, 2019 and 2018	8

	Consolidated Statements of Comprehensive Income for the periods ended March 31, 2019 and 2018	9

	Consolidated Statements of Capital for the periods ended March 31, 2019 and 2018	10

	Consolidated Statements of Cash Flows for the periods ended March 31, 2019 and 2018	11

	Notes to Consolidated Financial Statements	13

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54

Item 4.	Controls and Procedures	54

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	56

Item 5.	Other Information	56

Item 6.	Exhibits	56

SIGNATURES		58

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Balance Sheets

March 31, 2019 and December 31, 2018

(in thousands, except share data)



		2019		2018
Assets		(unaudited)
Real estate assets, at cost	$	10,875,058		10,863,162
Less: accumulated depreciation		1,605,681		1,535,444
Real estate investments, net		9,269,377		9,327,718
Investments in real estate partnerships		456,733		463,001
Properties held for sale		15,275		60,516
Cash, cash equivalents and restricted cash (including $3,305 and $2,658 of restricted cash at March 31, 2019 and December 31, 2018, respectively)		42,784		45,190
Tenant and other receivables		160,635		172,359
Deferred leasing costs, less accumulated amortization of $102,141 and $101,093 at March 31, 2019 and December 31, 2018, respectively		82,477		84,983
Acquired lease intangible assets, less accumulated amortization of $225,693 and $219,689 at March 31, 2019 and December 31, 2018, respectively		280,613		387,069
Right of use assets, net		296,859		—
Other assets		412,851		403,827
Total assets	$	11,017,604		10,944,663
Liabilities and Equity
Liabilities:
Notes payable	$	3,009,886		3,006,478
Unsecured credit facilities		673,852		708,734
Accounts payable and other liabilities		183,983		224,807
Acquired lease intangible liabilities, less accumulated amortization of $99,163 and $92,746 at March 31, 2019 and December 31, 2018, respectively		475,065		496,726
Lease liabilities		225,122		—
Tenants’ security, escrow deposits and prepaid rent		46,923		57,750
Total liabilities		4,614,831		4,494,495
Commitments and contingencies		—		—
Equity:
Stockholders’ equity:
Common stock, $0.01 par value per share, 220,000,000 shares authorized; 167,517,243 and 167,904,593 shares issued at March 31, 2019 and December 31, 2018, respectively		1,675		1,679
Treasury stock at cost, 410,963 and 390,163 shares held at March 31, 2019 and December 31, 2018, respectively		(21,226	)	(19,834	)
Additional paid-in-capital		7,639,353		7,672,517
Accumulated other comprehensive loss		(6,096	)	(927	)
Distributions in excess of net income		(1,263,011	)	(1,255,465	)
Total stockholders’ equity		6,350,695		6,397,970
Noncontrolling interests:
Exchangeable operating partnership units, aggregate redemption value of $23,615 and $20,532 at March 31, 2019 and December 31, 2018, respectively		10,641		10,666
Limited partners’ interests in consolidated partnerships		41,437		41,532
Total noncontrolling interests		52,078		52,198
Total equity		6,402,773		6,450,168
Total liabilities and equity	$	11,017,604		10,944,663

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)



		Three months ended March 31,
		2019		2018
Revenues:
Lease income	$	277,303		267,510
Other property income		1,982		2,025
Management, transaction, and other fees		6,972		7,158
Total revenues		286,257		276,693
Operating expenses:
Depreciation and amortization		97,194		88,525
Operating and maintenance		40,638		42,516
General and administrative		21,300		17,606
Real estate taxes		34,155		30,425
Other operating expenses		1,134		1,632
Total operating expenses		194,421		180,704
Other expense (income):
Interest expense, net		37,752		36,785
Provision for impairment, net of tax		1,672		16,054
Gain on sale of real estate, net of tax		(16,490	)	(96	)
Early extinguishment of debt		10,591		162
Net investment income		(2,354	)	(32	)
Total other expense (income)		31,171		52,873
Income from operations before equity in income of investments in real estate partnerships		60,665		43,116
Equity in income of investments in real estate partnerships		30,828		10,349
Net income		91,493		53,465
Noncontrolling interests:
Exchangeable operating partnership units		(190	)	(111	)
Limited partners’ interests in consolidated partnerships		(857	)	(694	)
Income attributable to noncontrolling interests		(1,047	)	(805	)
Net income attributable to common stockholders	$	90,446		52,660

Income per common share - basic	$	0.54		0.31
Income per common share - diluted	$	0.54		0.31

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



		Three months ended March 31,
		2019		2018
Net income	$	91,493		53,465
Other comprehensive (loss) income:
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments		(5,489	)	9,505
Reclassification adjustment of derivative instruments included in net income		(176	)	2,138
Unrealized gain (loss) on available-for-sale debt securities		137		(119	)
Other comprehensive (loss) income		(5,528	)	11,524
Comprehensive income		85,965		64,989
Less: comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests		1,047		805
Other comprehensive (loss) income attributable to noncontrolling interests		(359	)	483
Comprehensive income attributable to noncontrolling interests		688		1,288
Comprehensive income attributable to the Company	$	85,277		63,701

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION Consolidated Statements of Equity For the three months ended March 31, 2019 and 2018 (in thousands, except per share data) (unaudited)

														Noncontrolling Interests
	Common Stock			Treasury Stock		Additional Paid In Capital		Accumulated Other Comprehensive Income (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, 2017	$	1,714		(18,307	)	7,873,104		(6,289	)	(1,158,170	)	6,692,052		10,907		30,095		41,002		6,733,054
Adjustment due to change in accounting policy (note 1)	—			—		—		12		30,889		30,901		—		2		2		30,903
Adjusted balance at January 1, 2018	1,714			(18,307	)	7,873,104		(6,277	)	(1,127,281	)	6,722,953		10,907		30,097		41,004		6,763,957
Net income	—			—		—		—		52,660		52,660		111		694		805		53,465
Other comprehensive income (loss)	—			—		—		11,041		—		11,041		23		460		483		11,524
Deferred compensation plan, net	—			(449	)	446		—		—		(3	)	—		—		—		(3	)
Restricted stock issued, net of amortization	1			—		4,120		—		—		4,121		—		—		—		4,121
Common stock redeemed for taxes withheld for stock based compensation, net	—			—		(6,643	)	—		—		(6,643	)	—		—		—		(6,643	)
Common stock repurchased and retired	(21		)	—		(124,968	)	—		—		(124,989	)	—		—		—		(124,989	)
Common stock issued under dividend reinvestment plan	—			—		358		—		—		358		—		—		—		358
Common stock issued, net of issuance costs	—			—		10		—		—		10		—		—		—		10
Distributions to partners	—			—		—		—		—		—		—		(1,018	)	(1,018	)	(1,018	)
Cash dividends declared:
Common stock/unit ($0.555 per share)	—			—		—		—		(95,207	)	(95,207	)	(194	)	—		(194	)	(95,401	)
Balance at March 31, 2018	1,694			(18,756	)	7,746,427		4,764		(1,169,828	)	6,564,301		10,847		30,233		41,080		6,605,381

Balance at December 31, 2018	1,679			(19,834	)	7,672,517		(927	)	(1,255,465	)	6,397,970		10,666		41,532		52,198		6,450,168
Net income	—			—		—		—		90,446		90,446		190		857		1,047		91,493
Other comprehensive income	—			—		—		(5,169	)	—		(5,169	)	(11	)	(348	)	(359	)	(5,528	)
Deferred compensation plan, net	—			(1,392	)	1,392		—		—		—		—		—		—		—
Restricted stock issued, net of amortization	2			—		3,950		—		—		3,952		—		—		—		3,952
Common stock redeemed for taxes withheld for stock based compensation, net	—			—		(6,051	)	—		—		(6,051	)	—		—		—		(6,051	)
Common stock repurchased and retired	(6		)	—		(32,772	)	—		—		(32,778	)	—		—		—		(32,778	)
Common stock issued under dividend reinvestment plan	—			—		383		—		—		383		—		—		—		383
Contributions from partners	—			—		—		—		—		—		—		895		895		895
Distributions to partners	—			—		—		—		—		—		—		(1,565	)	(1,565	)	(1,565	)
Reallocation of limited partner's interest	—			—		(66	)	—		—		(66	)	—		66		66		—
Cash dividends declared:
Common stock/unit ($0.585 per share)	—			—		—		—		(97,992	)	(97,992	)	(204	)	—		(204	)	(98,196	)
Balance at March 31, 2019	1,675			(21,226	)	7,639,353		(6,096	)	(1,263,011	)	6,350,695		10,641		41,437		52,078		6,402,773

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION

Consolidated Statements of Cash Flows

For the three months ended March 31, 2019 and 2018

(in thousands)

(unaudited)



		2019		2018
Cash flows from operating activities:
Net income	$	91,493		53,465
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		97,194		88,525
Amortization of deferred loan costs and debt premiums		2,921		2,471
(Accretion) and amortization of above and below market lease intangibles, net		(13,090	)	(8,181	)
Stock-based compensation, net of capitalization		3,475		3,397
Equity in income of investments in real estate partnerships		(30,828	)	(10,349	)
Gain on sale of real estate, net of tax		(16,490	)	(96	)
Provision for impairment, net of tax		1,672		16,054
Early extinguishment of debt		10,591		162
Distribution of earnings from operations of investments in real estate partnerships		14,417		13,319
Settlement of derivative instruments		(5,719	)	—
Deferred compensation expense		2,314		40
Realized and unrealized gain on investments		(2,354	)	(30	)
Changes in assets and liabilities:
Tenant and other receivables		9,050		4,296
Deferred leasing costs		(2,491	)	(1,189	)
Other assets		(11,212	)	(476	)
Accounts payable and other liabilities		(8,908	)	(13,793	)
Tenants’ security, escrow deposits and prepaid rent		(10,671	)	2,253
Net cash provided by operating activities		131,364		149,868
Cash flows from investing activities:
Acquisition of operating real estate		(15,722	)	(20,071	)
Advance deposits paid on acquisition of operating real estate		(1,250	)	—
Real estate development and capital improvements		(39,929	)	(51,968	)
Proceeds from sale of real estate investments		82,533		3,227
Issuance of notes receivable		—		(462	)
Investments in real estate partnerships		(19,587	)	(39,330	)
Distributions received from investments in real estate partnerships		41,587		2,328
Dividends on investment securities		116		71
Acquisition of investment securities		(5,359	)	(7,543	)
Proceeds from sale of investment securities		4,612		6,542
Net cash provided by (used in) investing activities		47,001		(107,206	)
Cash flows from financing activities:
Repurchase of common shares in conjunction with equity award plans		(6,148	)	(6,755	)
Common shares repurchased through share repurchase program		(32,778	)	(124,989	)
Proceeds from sale of treasury stock		8		99
Distributions to limited partners in consolidated partnerships, net		(1,485	)	(1,018	)
Distributions to exchangeable operating partnership unit holders		(204	)	(194	)
Dividends paid to common stockholders		(97,608	)	(94,849	)
Repayment of fixed rate unsecured notes		(250,000	)	—
Proceeds from issuance of fixed rate unsecured notes, net		298,983		299,511
Proceeds from unsecured credit facilities		110,000		185,000
Repayment of unsecured credit facilities		(145,000	)	(245,000	)
Proceeds from notes payable		—		1,740
Repayment of notes payable		(40,315	)	—
Scheduled principal payments		(2,235	)	(2,773	)
Payment of loan costs		(3,342	)	(9,179	)
Early redemption costs		(10,647	)	—
Net cash (used in) provided by financing activities		(180,771	)	1,593
Net (decrease) increase in cash and cash equivalents and restricted cash		(2,406	)	44,255
Cash and cash equivalents and restricted cash at beginning of the period		45,190		49,381
Cash and cash equivalents and restricted cash at end of the period	$	42,784		93,636



Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $1,015 and $2,179 in 2019 and 2018, respectively)	$	42,421	30,467
Cash paid (received) for income taxes, net	$	15	(407	)
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of real estate	$	—	9,700
Change in accrued capital expenditures	$	10,494	—
Common stock issued under dividend reinvestment plan	$	383	358
Stock-based compensation capitalized	$	573	837
Contributions from limited partners in consolidated partnerships, net	$	881	—
Common stock issued for dividend reinvestment in trust	$	238	205
Contribution of stock awards into trust	$	1,328	637
Distribution of stock held in trust	$	167	317
Change in fair value of debt securities available-for-sale	$	174	(128	)

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Balance Sheets

March 31, 2019 and December 31, 2018

(in thousands, except unit data)



		2019		2018
Assets		(unaudited)
Real estate assets, at cost	$	10,875,058		10,863,162
Less: accumulated depreciation		1,605,681		1,535,444
Real estate investments, net		9,269,377		9,327,718
Investments in real estate partnerships		456,733		463,001
Properties held for sale		15,275		60,516
Cash, cash equivalents and restricted cash (including $3,305 and $2,658 of restricted cash at March 31, 2019 and December 31, 2018, respectively)		42,784		45,190
Tenant and other receivables		160,635		172,359
Deferred leasing costs, less accumulated amortization of $102,141 and $101,093 at March 31, 2019 and December 31, 2018, respectively		82,477		84,983
Acquired lease intangible assets, less accumulated amortization of $225,693 and $219,689 at March 31, 2019 and December 31, 2018, respectively		280,613		387,069
Right of use assets, net		296,859		—
Other assets		412,851		403,827
Total assets	$	11,017,604		10,944,663
Liabilities and Capital
Liabilities:
Notes payable	$	3,009,886		3,006,478
Unsecured credit facilities		673,852		708,734
Accounts payable and other liabilities		183,983		224,807
Acquired lease intangible liabilities, less accumulated amortization of $99,163 and $92,746 at March 31, 2019 and December 31, 2018, respectively		475,065		496,726
Lease liabilities		225,122		—
Tenants’ security, escrow deposits and prepaid rent		46,923		57,750
Total liabilities		4,614,831		4,494,495
Commitments and contingencies		—		—
Capital:
Partners’ capital:
General partner; 167,517,243 and 167,904,593 units outstanding at March 31, 2019 and December 31, 2018, respectively		6,356,791		6,398,897
Limited partners; 349,902 units outstanding at March 31, 2019 and December 31, 2018		10,641		10,666
Accumulated other comprehensive (loss)		(6,096	)	(927	)
Total partners’ capital		6,361,336		6,408,636
Noncontrolling interest: Limited partners’ interests in consolidated partnerships		41,437		41,532
Total capital		6,402,773		6,450,168
Total liabilities and capital	$	11,017,604		10,944,663

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 March 31,
		2019		2018
Revenues:
Lease income	$	277,303		267,510
Other property income		1,982		2,025
Management, transaction, and other fees		6,972		7,158
Total revenues		286,257		276,693
Operating expenses:
Depreciation and amortization		97,194		88,525
Operating and maintenance		40,638		42,516
General and administrative		21,300		17,606
Real estate taxes		34,155		30,425
Other operating expenses		1,134		1,632
Total operating expenses		194,421		180,704
Other expense (income):
Interest expense, net		37,752		36,785
Provision for impairment, net of tax		1,672		16,054
Gain on sale of real estate, net of tax		(16,490	)	(96	)
Early extinguishment of debt		10,591		162
Net investment income		(2,354	)	(32	)
Total other expense (income)		31,171		52,873
Income from operations before equity in income of investments in real estate partnerships		60,665		43,116
Equity in income of investments in real estate partnerships		30,828		10,349
Net income		91,493		53,465
Limited partners’ interests in consolidated partnerships		(857	)	(694	)
Net income attributable to common unit holders	$	90,636		52,771

Income per common unit - basic	$	0.54		0.31
Income per common unit - diluted	$	0.54		0.31

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



		Three months ended March 31,
		2019		2018
Net income	$	91,493		53,465
Other comprehensive (loss) income:
Effective portion of change in fair value of derivative instruments:
Effective portion of change in fair value of derivative instruments		(5,489	)	9,505
Reclassification adjustment of derivative instruments included in net income		(176	)	2,138
Unrealized gain (loss) on available-for-sale debt securities		137		(119	)
Other comprehensive (loss) income		(5,528	)	11,524
Comprehensive income		85,965		64,989
Less: comprehensive income (loss) attributable to noncontrolling interests:
Net income attributable to noncontrolling interests		857		694
Other comprehensive (loss) income attributable to noncontrolling interests		(348	)	460
Comprehensive income attributable to noncontrolling interests		509		1,154
Comprehensive income attributable to the Partnership	$	85,456		63,835

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P. Consolidated Statements of Capital For the three months ended March 31, 2019 and 2018 (in thousands) (unaudited)

		General Partner Preferred and Common Units		Limited Partners		Accumulated Other Comprehensive Income (Loss)		Total Partners’ Capital		Noncontrolling Interests in Limited Partners’ Interest in Consolidated Partnerships		Total Capital
Balance at December 31, 2017	$	6,698,341		10,907		(6,289	)	6,702,959		30,095		6,733,054
Adjustment due to change in accounting policy (note 1)		30,889		—		12		30,901		2		30,903
Adjusted balance at January 1, 2018		6,729,230		10,907		(6,277	)	6,733,860		30,097		6,763,957
Net income		52,660		111		—		52,771		694		53,465
Other comprehensive loss		—		23		11,041		11,064		460		11,524
Deferred compensation plan, net		(3	)	—		—		(3	)	—		(3	)
Distributions to partners		(95,207	)	(194	)	—		(95,401	)	(1,018	)	(96,419	)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company		4,121		—		—		4,121		—		4,121
Common units repurchased and retired as a result of common stock repurchased and retired by Parent Company		(124,989	)	—		—		(124,989	)	—		(124,989	)
Common units issued as a result of common stock issued by Parent Company, net of repurchases		(6,275	)	—		—		(6,275	)	—		(6,275	)
Balance at March 31, 2018		6,559,537		10,847		4,764		6,575,148		30,233		6,605,381

Balance at December 31, 2018		6,398,897		10,666		(927	)	6,408,636		41,532		6,450,168
Net income		90,446		190		—		90,636		857		91,493
Other comprehensive income		—		(11	)	(5,169	)	(5,180	)	(348	)	(5,528	)
Contributions from partners		—		—		—		—		895		895
Distributions to partners		(97,992	)	(204	)	—		(98,196	)	(1,565	)	(99,761	)
Reallocation of limited partner's interest		(66	)	—		—		(66	)	66		—
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization		3,952		—		—		3,952		—		3,952
Common units repurchased and retired as a result of common stock repurchased and retired by Parent Company		(32,778	)	—		—		(32,778	)	—		(32,778	)
Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances		(5,668	)	—		—		(5,668	)	—		(5,668	)
Balance at March 31, 2019	$	6,356,791		10,641		(6,096	)	6,361,336		41,437		6,402,773

See accompanying notes to consolidated financial statements.

REGENCY CENTERS, L.P.

Consolidated Statements of Cash Flows

For the three months ended March 31, 2019 and 2018

(in thousands)

(unaudited)



		2019		2018
Cash flows from operating activities:
Net income	$	91,493		53,465
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		97,194		88,525
Amortization of deferred loan costs and debt premiums		2,921		2,471
(Accretion) and amortization of above and below market lease intangibles, net		(13,090	)	(8,181	)
Stock-based compensation, net of capitalization		3,475		3,397
Equity in income of investments in real estate partnerships		(30,828	)	(10,349	)
Gain on sale of real estate, net of tax		(16,490	)	(96	)
Provision for impairment, net of tax		1,672		16,054
Early extinguishment of debt		10,591		162
Distribution of earnings from operations of investments in real estate partnerships		14,417		13,319
Settlement of derivative instruments		(5,719	)	—
Deferred compensation expense		2,314		40
Realized and unrealized gain on investments		(2,354	)	(30	)
Changes in assets and liabilities:
Tenant and other receivables		9,050		4,296
Deferred leasing costs		(2,491	)	(1,189	)
Other assets		(11,212	)	(476	)
Accounts payable and other liabilities		(8,908	)	(13,793	)
Tenants’ security, escrow deposits and prepaid rent		(10,671	)	2,253
Net cash provided by operating activities		131,364		149,868
Cash flows from investing activities:
Acquisition of operating real estate		(15,722	)	(20,071	)
Advance deposits paid on acquisition of operating real estate		(1,250	)	—
Real estate development and capital improvements		(39,929	)	(51,968	)
Proceeds from sale of real estate investments		82,533		3,227
Issuance of notes receivable		—		(462	)
Investments in real estate partnerships		(19,587	)	(39,330	)
Distributions received from investments in real estate partnerships		41,587		2,328
Dividends on investment securities		116		71
Acquisition of investment securities		(5,359	)	(7,543	)
Proceeds from sale of investment securities		4,612		6,542
Net cash provided by (used in) investing activities		47,001		(107,206	)
Cash flows from financing activities:
Repurchase of common shares in conjunction with equity award plans		(6,148	)	(6,755	)
Common units repurchased through share repurchase program		(32,778	)	(124,989	)
Proceeds from sale of treasury stock		8		99
Distributions to limited partners in consolidated partnerships, net		(1,485	)	(1,018	)
Distributions to partners		(97,812	)	(95,043	)
Repayment of fixed rate unsecured notes		(250,000	)	—
Proceeds from issuance of fixed rate unsecured notes, net		298,983		299,511
Proceeds from unsecured credit facilities		110,000		185,000
Repayment of unsecured credit facilities		(145,000	)	(245,000	)
Proceeds from notes payable		—		1,740
Repayment of notes payable		(40,315	)	—
Scheduled principal payments		(2,235	)	(2,773	)
Payment of loan costs		(3,342	)	(9,179	)
Early redemption costs		(10,647	)	—
Net cash (used in) provided by financing activities		(180,771	)	1,593
Net (decrease) increase in cash and cash equivalents and restricted cash		(2,406	)	44,255
Cash and cash equivalents and restricted cash at beginning of the period		45,190		49,381
Cash and cash equivalents and restricted cash at end of the period	$	42,784		93,636

REGENCY CENTERS, L.P.

Consolidated Statements of Cash Flows

For the three months ended March 31, 2019, and 2018

(in thousands)

(unaudited)



		2019	2018
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $1,015 and $2,179 in 2019 and 2018, respectively)	$	42,421	30,467
Cash paid (received) for income taxes, net	$	15	(407	)
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of real estate	$	—	9,700
Change in accrued capital expenditures	$	10,494	—
Common stock issued by Parent Company for dividend reinvestment plan	$	383	358
Stock-based compensation capitalized	$	573	837
Contributions from limited partners in consolidated partnerships, net	$	881	—
Common stock issued for dividend reinvestment in trust	$	238	205
Contribution of stock awards into trust	$	1,328	637
Distribution of stock held in trust	$	167	317
Change in fair value of debt securities available-for-sale	$	174	(128	)

See accompanying notes to consolidated financial statements.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019


1.	Organization and Significant Accounting Policies

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 primarily engages in the ownership, management, leasing, acquisition, and development and redevelopment of shopping centers through the Operating Partnership, and has no other assets other than through its investment in the Operating Partnership, and its only liabilities are $500 million of unsecured public and private placement notes, which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership.

As of March 31, 2019, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 302 properties and held partial interests in an additional 117 properties through unconsolidated investments in real estate partnerships (also referred to as "joint ventures" or "investment partnerships").

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

Consolidation

The Company consolidates properties that are wholly-owned and properties where it owns less than 100%, but which it has control over the activities most important to the overall success of the partnership. Control is determined using an evaluation based on accounting standards related to the consolidation of Variable Interest Entities ("VIEs") and voting interest entities.

Ownership of the Operating Partnership

The Operating Partnership’s capital includes general and limited common Partnership Units. As of March 31, 2019, the Parent Company owned approximately 99.8% of the outstanding common Partnership Units of the Operating Partnership with the remaining limited common Partnership Units held by third parties (“Exchangeable operating partnership units” or “EOP units”). The EOP units are exchangeable for one share of common stock of the Parent Company and the unit holder cannot require redemption in cash or other assets. The Parent Company classifies EOP units as permanent equity in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity and Comprehensive Income. The Parent Company serves as general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating Partnership such that they do not have the power to direct the activities of the Operating Partnership. As such, the Operating Partnership is considered a VIE, and the Parent Company, which consolidates it, is the primary beneficiary. The Parent Company’s only investment is the Operating Partnership. Net income and distributions of the Operating Partnership are allocable to the general and limited common Partnership Units in accordance with their ownership percentages.

Real Estate Partnerships

As of March 31, 2019, Regency had a partial ownership interest in 129 properties through partnerships, of which 12 are consolidated. Regency's partners include institutional investors, other real estate developers and/or operators, and individual parties who had a role in Regency sourcing transactions for development and investment (the "Partners" or "limited partners"). Regency has a variable interest in these entities through its equity interests, with Regency the primary beneficiary in certain of these real estate partnerships. As such, Regency consolidates the partnerships for which it is the primary beneficiary and reports the limited partners’ interests as noncontrolling interests. For those partnerships which Regency is not the primary beneficiary and does not control, but has significant influence, Regency recognizes its investment in them using the equity method of accounting.

The assets of these partnerships are restricted to the use of the partnerships and cannot be used by general creditors of the Company. And similarly, the obligations of the partnerships can only be settled by the assets of these partnerships.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

The major classes of assets, liabilities, and non-controlling equity interests held by the Company's consolidated VIEs, exclusive of the Operating Partnership as a whole, are as follows:



(in thousands)	March 31, 2019		December 31, 2018
Assets
Net real estate investments	$	128,175	112,085
Cash, cash equivalents and restricted cash	22,274		7,309
Liabilities
Notes payable	17,640		18,432
Equity
Limited partners’ interests in consolidated partnerships	31,146		30,280

Leases

Lease Income and Tenant Receivables

The Company leases space to tenants under agreements with varying terms that generally provide for fixed payments of base rent, with designated increases over the term of the lease. Some of the lease agreements contain provisions that provide for additional rents based on tenants' sales volume ("percentage rent"). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Additionally, most all lease agreements contain provisions for reimbursement of the tenants' share of actual real estate taxes, insurance and common area maintenance (“CAM”) costs (collectively "Recoverable Costs") incurred.

Lease terms generally range from three to seven years for tenant space under 10,000 square feet (“Shop Space”) and in excess of five years for spaces greater than 10,000 square feet (“Anchor Tenants”). Many leases also provide the option for the tenants to extend their lease beyond the initial term of the lease. If the tenants do not exercise renewal options and the leases mature, the tenants must relinquish their space so it can be leased to a new tenant, which generally involves some level of cost to prepare the space for re-leasing. These costs are capitalized and depreciated over the shorter of the life of the subsequent lease or the life of the improvement.

On January 1, 2019, the Company adopted the new accounting guidance in Accounting Standards Codification (“ASC”) Topic 842, Leases, including all related Accounting Standard Updates (“ASU”). The Company elected to use the alternative modified retrospective transition method provided in ASU 2018-11 (the "effective date method"). Under this method, the effective date of January 1, 2019 is the date of initial application. In connection with the adoption of Topic 842, the Company elected a package of practical expedients, transition options, and accounting policy elections as follows:


•	Package of practical expedients - applied to all leases, allowing the Company not to reassess (i) whether expired or existing contracts contain leases under the new definition of a lease, (ii) lease classification for expired or existing leases, and (iii) whether previously capitalized initial direct costs would qualify for capitalization under Topic 842;


•	For land easements, the Company elected not to assess at transition whether any expired or existing land easements are, or contain, leases if they were not previously accounted for as leases under the previous lease accounting standard ("Topic 840");

•

Lessor separation and allocation practical expedient - Regency elected, as lessor, to aggregate non-lease components with the related lease component if certain conditions are met, and account for the combined component based on its predominant characteristic, which generally results in combining lease and non-lease components of its tenant lease contracts to a single line shown as Lease income in the accompanying Consolidated Statements of Operations; and


•	The Company made an accounting policy election to continue to exclude, from contract consideration, sales tax (and similar taxes) collected from lessees.

The Company's existing leases were not re-evaluated and continue to be classified as operating leases, as per the practical expedient package elected above. New and modified leases will now require evaluation of

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

specific classification criteria, which, based on the customary terms of the Company's leases, should continue to be classified as operating leases. However, certain longer-term leases (both lessee and lessor leases) may be classified as direct financing or sales type leases, which may result in selling profit and an accelerated pattern of earnings recognition.

CAM is a non-lease component of the lease contract under Topic 842, and therefore would be accounted for under Topic 606, Revenue from Contracts with Customers, and presented separate from Lease income in the Statements of Operations, based on an allocation of the overall contract price, which is not necessarily the amount that would be billable to the tenants for CAM reimbursements per the terms of the lease contract. As the timing and pattern of providing the CAM service to the tenant is the same as the timing and pattern of the tenants' use of the underlying lease asset, the Company elected, as part of the package of practical expedients, to combine CAM with the remaining lease components, along with tenants' reimbursement of real estate taxes and insurance, and recognize them together as Lease income in the accompanying Statements of Operations.

Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases for which collectibility is considered probable at the commencement date. At lease commencement, the Company expects that collectibility is probable for all of its leases due to the Company’s credit checks on tenants and other creditworthiness analysis undertaken before entering into a new lease; therefore, income from all operating leases is initially recognized on a straight-line basis. Lease income each period is reduced by amounts considered uncollectible on a lease-by-lease basis, with any changes in collectibility assessments recognized as a current period adjustment to Lease income. For operating leases in which collectibility of Lease income is not considered probable, Lease income is recognized on a cash basis and all previously recognized uncollectible Lease income is reversed in the period in which the Lease income is determined not to be probable of collection.

Topic 842 also changes the treatment of leasing costs, such that non-contingent internal leasing and legal costs associated with leasing activities can no longer be capitalized. The Company, as a lessor, may only defer as initial direct costs the incremental costs of a tenant operating lease that would not have been incurred if the lease had not been obtained. These costs generally include third party broker payments, which are capitalized to Deferred leasing costs in the accompanying Consolidated Balance Sheets and amortized over the expected term of the lease to Depreciation and amortization expense in the accompanying Consolidated Statements of Operations.

Lease Obligations

The Company has 22 properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties, which are all classified as operating leases. Accordingly, the Company owns only a long-term leasehold or similar interest in these properties. The building and improvements constructed on the leased land are capitalized as Real estate assets in the accompanying Consolidated Balance Sheets and depreciated over the shorter of the useful life of the improvements or the lease term. These ground leases expire through the year 2101, and in most cases, provide for renewal options.

In addition, the Company has non-cancelable operating leases pertaining to office space from which it conducts its business. Office leases expire through the year 2029, and in most cases, provide for renewal options. Leasehold improvements are capitalized as tenant improvements, included in Other assets in the Consolidated Balance Sheets, and depreciated over the shorter of the useful life of the improvements or the lease term.

Upon the adoption of Topic 842 the Company has recognized Lease liabilities on its Consolidated Balance Sheets for its ground and office leases of $225.4 million at January 1, 2019, and corresponding Right of use assets of $297.8 million, net of or including the opening balance for straight line rent and above / below market ground lease intangibles related to these same ground and office leases. A key input in estimating the Lease liabilities and resulting Right of use assets is establishing the discount rate in the lease, which requires additional inputs for the longer-term ground leases, including interest rates that correspond with the remaining term of the lease, the Company's credit spread, and a securitization adjustment necessary to reflect the collateralized payment terms present in the lease. See Note 7, Leases, for additional disclosures.

The ground and office lease expenses continue to be recognized on a straight line basis over the term of the leases, including management's estimate of expected option renewal periods. For ground leases, the

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

Company generally assumes it will exercise options through the latest option date of that shopping center's anchor tenant lease.

Revenues and Other Receivables

Other property income includes incidental income from the properties and is generally recognized at the point in time that the performance obligation is met. All income from contracts with the Company's real estate partnerships is included within Management, transaction and other fees on the Consolidated Statements of Operations. The primary components of these revenue streams, the timing of satisfying the performance obligations, and amounts recognized are as follows:



		Three months ended March 31,
(in thousands)	Timing of satisfaction of performance obligations	2019		2018
Other property income	Point in time	$	1,982	2,025
Management, transaction and other fees
Property management services	Over time	$	3,764	3,768
Asset management services	Over time	1,777		1,703
Leasing services	Point in time	758		685
Other transaction fees	Point in time	673		1,002
Total management, transaction, and other fees		$	6,972	7,158

The accounts receivable for the above Other property income and management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $11.0 million and $12.5 million, as of March 31, 2019 and December 31, 2018, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to current year presentation, including amounts in Cash, cash equivalents, and restricted cash in the accompanying Consolidated Balance Sheets, and in Lease income and Other property income in the accompanying Consolidated Statements of Operations.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

Recent Accounting Pronouncements

The following table provides a brief description of recent accounting pronouncements and expected impact on our financial statements:



Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
Recently adopted:

Leases (Topic 842) and related updates: ASU 2016-02, February 2016, Leases (Topic 842) ASU 2018-10, July 2018: Codification Improvements to Topic 842, Leases ASU 2018-11, July 2018, Leases (Topic 842): Targeted Improvements ASU 2018-20, December 2018, Leases (Topic 842): Narrow-Scope Improvements for Lessors ASU 2019-01, March 2019, Leases (Topic 842): Codification Improvements	Topic 842 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. It also makes targeted changes to lessor accounting. The provisions of these ASUs are effective as of January 1, 2019, with early adoption permitted. Topic 842 provides a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief or an additional transition method, allowing for initial application at the date of adoption and a cumulative-effect adjustment to opening retained earnings. See the updated Leases accounting policy disclosed earlier in Note 1 and the added Leases disclosures in Note 7.	January 2019	The Company has completed its evaluation and adoption of this standard, as discussed earlier in Note 1. The Company utilized the alternative modified retrospective transition method provided in ASU 2018-11 (the "effective date method"), under which the effective date of January 1, 2019 is also the date of initial application. See the updated Leases accounting policy disclosed earlier in Note 1 and the added disclosures in Note 7, Leases. Beyond the policy, presentation and disclosure changes discussed, the following changes had a direct impact to Net Income from the adoption of Topic 842: Capitalization of indirect internal non-contingent leasing costs and legal leasing costs are no longer permitted upon the adoption of this standard, which is resulting in an increase to Total operating expenses in the Consolidated Statements of Operations. Previous capitalization of internal leasing costs was $1.3 million and $6.5 million during the three months ended March 31, 2018 and the year ended December 31, 2018, respectively. Previous capitalization of legal costs was $0.4 million and $1.6 million during the three months ended March 31, 2018 and the year ended December 31, 2018, respectively, including our pro rata share recognized through Equity in income of investments in real estate partnerships.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019



Standard	Description	Date of adoption	Effect on the financial statements or other significant matters
Not yet adopted:

ASU 2016-13, June 2016, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU also applies to how the Company evaluates impairments of any held to maturity debt securities.	January 2020	The Company is currently evaluating the accounting standard, but does not expect the adoption to have a material impact on its financial position, results of operations, or cash flows.

ASU 2018-19, November 2018: Codification Improvements to Topic 326, Financial Instruments - Credit Losses	This ASU clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases.	January 2020	The Company currently does not expect the adoption of this ASU to have a material impact on its financial statements and related disclosures. See Topic 842 for disclosure of collectibility policy over lease receivables from operating leases.

ASU 2018-13, August 2018, Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement	This ASU modifies the disclosure requirements for fair value measurements within the scope of Topic 820, Fair Value Measurements, including the removal and modification of certain existing disclosures, and the addition of new disclosures.	January 2020	The Company is currently evaluating the impact of adopting this new accounting standard, which is expected to only impact fair value measurement disclosures and therefore should have no impact on the Company's financial position, results of operations, or cash flows.

ASU 2018-15, August 2018, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.	The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The ASU provides further clarification of the appropriate presentation of capitalized costs, the period over which to recognize the expense, the presentation within the Statements of Operations and Statements of Cash Flows, and the disclosure requirements. Early adoption of the standard is permitted.	January 2020	The Company is currently evaluating the accounting standard, but does not expect the adoption to have a material impact on its financial position, results of operations, or cash flows.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019


2.	Real Estate Investments

The following table details the shopping centers acquired or land acquired or leased for development:



(in thousands)		Three months ended March 31, 2019
Date Purchased	Property Name	City/State	Property Type	Ownership	Purchase Price	Debt Assumed, Net of Premiums	Intangible Assets	Intangible Liabilities
1/8/19	Pablo Plaza ⁽¹⁾	Jacksonville, FL	Operating	100.0%	$600	—	—	—
2/8/19	Melrose Market	Seattle, WA	Operating	100.0%	15,515	—	941	358
Total property acquisitions					$16,115	—	941	358
⁽¹⁾ The Company purchased a .17 acre land parcel adjacent to the Company's existing operating Pablo Plaza for redevelopment.

(in thousands)		Three months ended March 31, 2018
Date Purchased	Property Name	City/State	Property Type	Ownership	Purchase Price	Debt Assumed, Net of Premiums	Intangible Assets	Intangible Liabilities
1/2/18	Ballard in Blocks I	Seattle, WA	Operating	49.9%	$54,500	—	3,668	2,350
1/2/18	Ballard in Blocks II	Seattle, WA	Development	49.9%	4,000	—	—	—
1/5/18	Metuchen	Metuchen, NJ	Operating	20%	33,830	—	3,147	1,905
1/10/18	Hewlett Crossing I & II	Hewlett, NY	Operating	100%	30,900	9,700	3,114	1,868
Total property acquisitions					$123,230	9,700	9,929	6,123

3. Property Dispositions

Dispositions

The following table provides a summary of consolidated shopping centers and land parcels disposed of during the periods set forth below:



	Three months ended March 31,
(in thousands, except number sold data)	2019			2018
Net proceeds from sale of real estate investments	$	82,533		3,227
Gain on sale of real estate, net of tax	$	16,490		96
Provision for impairment of real estate sold	$	1,672		374
Number of operating properties sold	4			1
Number of land parcels sold	2			—
Percent interest sold	100		%	100	%

At March 31, 2019, the Company also had one property classified within Properties held for sale on the Consolidated Balance Sheets.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

4. Other Assets

The following table represents the components of Other assets in the accompanying Consolidated Balance Sheets:



(in thousands)	March 31, 2019		December 31, 2018
Goodwill, net	$	314,143	314,143
Investments	44,400		41,287
Prepaid and other	30,099		17,937
Derivative assets	11,909		17,482
Furniture, fixtures, and equipment, net	5,990		6,127
Deferred financing costs, net	6,310		6,851
Total other assets	$	412,851	403,827

The following table presents the goodwill balances and activity during the year to date periods ended:



	March 31, 2019						December 31, 2018
(in thousands)	Goodwill			Accumulated Impairment Losses		Total	Goodwill			Accumulated Impairment Losses		Total
Beginning of year balance	$	316,858		(2,715	)	314,143	$	331,884		—		331,884
Goodwill resulting from Equity One merger	—			—		—	500			—		500
Goodwill allocated to Provision for impairment	—			—		—	—			(12,628	)	(12,628	)
Goodwill allocated to Properties held for sale	—			—		—	(1,159		)	—		(1,159	)
Goodwill associated with disposed reporting units:
Goodwill allocated to Provision for impairment	(1,779		)	1,779		—	(9,913		)	9,913		—
Goodwill allocated to Gain on sale of real estate	(527		)	527		—	(4,454		)	—		(4,454	)
End of period balance	$	314,552		(409	)	314,143	$	316,858		(2,715	)	314,143

As the Company identifies properties ("reporting units") that no longer meet its investment criteria, it will evaluate the property for potential sale. A decision to sell a reporting unit results in the need to evaluate its goodwill for recoverability and may result in impairment. If events occur that trigger an impairment evaluation at multiple reporting units, a goodwill impairment may be significant.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

5. Notes Payable and Unsecured Credit Facilities

The Company’s outstanding debt consisted of the following:



(in thousands)	Weighted Average Contractual Rate	Weighted Average Effective Rate	March 31, 2019			December 31, 2018
Notes payable:
Fixed rate mortgage loans	4.5%	4.1%	$	360,865		403,306
Variable rate mortgage loans	3.5%	3.6%	127,081		⁽¹⁾	127,850
Fixed rate unsecured public and private debt	4.0%	4.4%	2,521,940			2,475,322
Total notes payable			3,009,886			3,006,478
Unsecured credit facilities:
Line of Credit (the "Line") ⁽²⁾	3.5%	3.7%	110,000			145,000
Term loans	2.4%	2.5%	563,852			563,734
Total unsecured credit facilities			673,852			708,734
Total debt outstanding			$	3,683,738		3,715,212

⁽¹⁾ Includes five mortgages whose interest rates vary on LIBOR based formulas. Three of these variable rate loans have interest rate swaps in place to fix the interest rates at a range of 2.8% to 4.1%.
⁽²⁾ Weighted average effective and contractual rate for the Line is calculated based on a fully drawn Line balance.

Significant financing activity during 2019 includes:

•

On March 6, 2019, the Company issued $300 million of 4.65% senior unsecured public notes, which priced at 99.661%, and mature in March 2049. The net proceeds of the offering were used (i) to repay a $39.5 million mortgage maturing in 2020 with an interest rate of 7.3%, including a prepayment premium of $1 million, (ii) to repay in full its outstanding $250 million 4.8% notes due April 15, 2021, including a make-whole premium of approximately $9.6 million and accrued interest, and (iii) for general corporate purposes.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

As of March 31, 2019, scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:



(in thousands)	March 31, 2019
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Mortgage Loan Maturities	Unsecured Maturities ⁽¹⁾		Total
2019	$	7,284	13,216	—		20,500
2020	11,287		39,074	300,000		350,361
2021	11,599		76,251	—		87,850
2022	11,798		5,848	675,000		692,646
2023	10,043		59,375	—		69,418
Beyond 5 Years	27,013		209,843	2,250,000		2,486,856
Unamortized debt premium/(discount) and issuance costs	—		5,315	(29,208	)	(23,893	)
Total	$	79,024	408,922	3,195,792		3,683,738

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

The Company was in compliance as of March 31, 2019 with the financial and other covenants under its unsecured public and private placement debt and unsecured credit facilities.

6. Derivative Financial Instruments

The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors, and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

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 (Liabilities)⁽¹⁾
Effective Date	Maturity Date	Notional Amount		Counterparty Pays Variable Rate of	Regency Pays Fixed Rate of		March 31, 2019			December 31, 2018
12/6/18	6/28/19	$	250,000	30 year U.S. Treasury	3.147%	⁽²⁾	$	—		(5,491	)
4/3/17	12/2/20	$	300,000	1 Month LIBOR with Floor	1.824%		2,255			3,759
8/1/16	1/5/22	265,000		1 Month LIBOR with Floor	1.053%		8,110			10,838
4/7/16	4/1/23	20,000		1 Month LIBOR	1.303%		626			880
12/1/16	11/1/23	33,000		1 Month LIBOR	1.490%		918			1,376
6/2/17	6/2/27	37,500		1 Month LIBOR with Floor	2.366%		(224		)	629
							$	11,685		11,991

⁽¹⁾ 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.
(2) On March 7, 2019, the Company settled its 30 year Treasury rate lock in connection with its issuance of the $300 million 4.65% unsecured notes due March 2049 for $5.7 million, which is included in the balance of AOCI and will be reclassified to earnings over the 30 year term of the hedged transaction.

These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and, as of March 31, 2019, 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 Sheets.

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



Location and Amount of Gain (Loss) Recognized in OCI on Derivative					Location and Amount of Gain (Loss) Reclassified from AOCI into Income					Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded
	Three months ended March 31,					Three months ended March 31,					Three months ended March 31,
(in thousands)	2019			2018		2019			2018		2019		2018
Interest rate swaps	$	(5,489	)	9,505	Interest expense	$	(176	)	2,138	Interest expense, net	$	37,752	36,785

As of March 31, 2019, the Company expects approximately $1.6 million of net deferred losses on derivative instruments in AOCI, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months. Included in the reclassification is $7.1 million related to previously settled swaps on the Company's ten and thirty year fixed rate unsecured debt.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

7. Leases

Lessor Accounting

The Company's Lease income is comprised of both fixed and variable income, as follows:

Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent, and in some cases stated amounts for CAM, real estate taxes, and insurance. Income for these amounts is recognized on a straight line basis.

Variable lease income includes the following two main items in the lease contracts:

Recoveries from tenants represents amounts which tenants are contractually obligated to reimburse the Company for the tenants’ portion of actual Recoverable Costs incurred. Generally the Company’s leases provide for the tenants to reimburse the Company based on the tenants’ share of the actual costs incurred in proportion to the tenants’ share of leased space in the property.

Percentage rent represents amounts billable to tenants based on the tenants' actual sales volume in excess of levels specified in the lease contract.

The following table provides a disaggregation of lease income recognized during the three months ended March 31, 2019, under ASC Topic 842, Leases, as either fixed or variable lease income based on the criteria specified in ASC 842:



		Three months ended March 31,
		2019
Operating lease income
Fixed and in-substance fixed lease income	$	201,878
Variable lease income		62,835
Other lease related income, net
Above/below market rent amortization		13,454
Uncollectible amounts in lease income		(864	)
Total lease income	$	277,303

Future minimum rents under non-cancelable operating leases as of March 31, 2019 and December 31, 2018, excluding variable lease payments, are as follows:



		Future Minimum Rents as of (in thousands)
Year Ending December 31,		March 31, 2019			December 31, 2018
2019	$	578,963	⁽¹	⁾	761,151
2020		713,553			693,848
2021		629,638			608,587
2022		537,753			516,369
2023		437,109			414,424
Thereafter		1,778,839			1,691,203
Total	$	4,675,855			4,685,582
⁽¹⁾ The future minimum rental income for 2019 as of March 31, 2019 includes amounts due between April 1, 2019 and December 31, 2019.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

Lessee Accounting

The Company has shopping centers that are subject to non-cancelable, long-term ground leases where a third party owns the underlying land and has leased the land to the Company to construct and/or operate a shopping center.

The Company has 22 properties within its consolidated real estate portfolio that are either partially or completely on land subject to ground leases with third parties. Accordingly, the Company owns only a long-term leasehold or similar interest in these properties. These ground leases expire through the year 2101, and in most cases, provide for renewal options. Buildings and improvements constructed on the leased land are capitalized as Real estate assets in the accompanying Consolidated Balance Sheets and depreciated over the shorter of the useful life of the improvements or the lease term.

The ground and office lease expense continues to be recognized on a straight line basis over the term of the leases, including management's estimate of expected option renewal periods. Operating lease expense under the Company's ground and office leases was as follows, including straight lined rent expense and variable lease expenses such as CPI increases, performance based rent and reimbursements of landlord costs:



		Three months ended March 31,
		2019
Operating lease expense
Ground leases	$	3,673
Office leases		1,042
Total fixed operating lease expense	$	4,715
Variable lease expense
Ground leases	$	428
Office leases		143
Total variable lease expense	$	571
Total Lease Expense	$	5,286
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases	$	3,692

Operating lease expense under the Company's ground and office leases was $5.3 million and $4.2 million during the three months ended March 31, 2019 and 2018, respectively, which includes fixed and variable rent expense.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

The following table summarizes the undiscounted future cash flows by year attributable to the operating lease liabilities under ground and office leases as of March 31, 2019, and provides a reconciliation to the Lease liability included in the accompanying Consolidated Balance Sheets:



		Lease liabilities (in thousands)
Year Ending December 31,		Ground Leases		Office Leases		Total
2019 ⁽¹⁾	$	8,004		3,807		11,811
2020		10,706		4,976		15,682
2021		10,674		3,863		14,537
2022		10,698		2,893		13,591
2023		10,914		2,188		13,102
Thereafter		598,327		5,955		604,282
Total undiscounted lease liabilities	$	649,323		23,682		673,005
Present value discount		(445,324	)	(2,559	)	(447,883	)
Lease liabilities		203,999		21,123		225,122
Weighted average discount rate		5.2	%	4.0	%
Weighted average remaining term		49.9 years		5.9 years

⁽¹⁾ The undiscounted lease liability maturities shown for 2019 are as of March 31, 2019, and includes amounts due between April 1, 2019 and December 31, 2019.

The following table summarizes the future obligations under non-cancelable operating leases, excluding unexercised renewal options, as of December 31, 2018:



		Future Lease Obligations (in thousands)
Year Ending December 31,		Ground Leases	Office Leases	Total Future Lease Obligations
2019	$	10,672	4,405	15,077
2020		10,439	4,294	14,733
2021		10,344	3,549	13,893
2022		10,258	2,893	13,151
2023		10,369	2,189	12,558
Thereafter		461,762	5,944	467,706
Total	$	513,844	23,274	537,118

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

8. 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:



	March 31, 2019			December 31, 2018
(in thousands)	Carrying Amount		Fair Value	Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	3,009,886	3,066,580	$	3,006,478	2,961,769
Unsecured credit facilities	$	673,852	675,769	$	708,734	710,902

The above fair values represent management's estimate of the amounts that would be received from selling those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants as of March 31, 2019 and December 31, 2018, respectively. 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, appropriate risk-adjusted discount rates, and available observable and unobservable inputs. Service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value of these financial instruments, the fair values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.

(b) Fair Value Measurements

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

Securities

The Company has investments in marketable securities that are included within other assets on the accompanying Consolidated Balance Sheets. The fair value of the securities was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of securities are recorded within Net investment (income) loss in the accompanying Consolidated Statements of Operations, and include unrealized gains of $2.2 million and unrealized losses of $384,000, during the three months ended March 31, 2019 and 2018, respectively.

Available-for-Sale Debt Securities

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

Interest Rate Derivatives

The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of the credit

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

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 March 31, 2019
(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)
Securities	$	36,318		36,318	—		—
Available-for-sale debt securities	8,082			—	8,082		—
Interest rate derivatives	11,909			—	11,909		—
Total	$	56,309		36,318	19,991		—

Liabilities:
Interest rate derivatives	$	(224	)	—	(224	)	—



	Fair Value Measurements as of December 31, 2018
(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)
Securities	$	33,354		33,354	—		—
Available-for-sale debt securities	7,933			—	7,933		—
Interest rate derivatives	17,482			—	17,482		—
Total	$	58,769		33,354	25,415		—

Liabilities:
Interest rate derivatives	$	(5,491	)	—	(5,491	)	—

There were no assets measured at fair value on a nonrecurring basis as of March 31, 2019. The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a non-recurring basis as of December 31, 2018:

Fair Value Measurements as of December 31, 2018

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Significant Unobservable Inputs

Total Gains

(in thousands)

Balance

(Level 1)

(Level 2)

(Level 3)

(Losses)

Properties held for sale

42,760

—

42,760

—

(6,579

)

During the year-ended December 31, 2018, the Company remeasured three properties, classified as held for sale, to fair value based on the expected selling price. Two of these three properties have been sold and the third continues to be classified as held for sale in the accompanying Consolidated Balance Sheets.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

9. Equity and Capital

Common Stock of the Parent Company

At the Market ("ATM") Program

Under the Parent Company's ATM equity offering program, the Parent Company may sell up to $500 million of common stock at prices determined by the market at the time of sale. There were no shares issued under the ATM equity program during the three months ended March 31, 2019 or 2018. As of March 31, 2019, all $500 million of common stock remained available for issuance under this ATM equity program.

Share Repurchase Program

On February 7, 2018, the Company's Board authorized a common share repurchase program under which the Company may repurchase, from time to time, up to $250 million worth of shares of its outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased will be retired. In January 2019, the Company settled 563,229 shares, repurchased in December 2018, for $32.8 million at an average price of $58.17 per share, under this repurchase program. The program was scheduled to expire on February 6, 2020; however, the program was closed upon the authorization by the Company's Board of a new share repurchase program, as further discussed below.

On February 5, 2019, the Company's Board authorized a new common share repurchase program under which the Company, may purchase, from time to time, up to a maximum of $250 million of shares of its outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased will be retired. The program is set to expire on February 4, 2020. The timing and actual number of shares purchased under the program depend upon marketplace conditions and other factors. The program remains subject to the discretion of the Board. Through March 31, 2019, no shares have been repurchased under this new program.

Common Units of the Operating Partnership

Common units of the operating partnership are issued or redeemed and retired for each of the shares of Parent Company common stock issued or repurchased and retired, as described above.

Accumulated Other Comprehensive Income (Loss) ("AOCI")

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



	Controlling Interests							Noncontrolling Interests				Total
	Cash Flow Hedges			Unrealized gain (loss) on Available-For-Sale Debt Securities		AOCI		Cash Flow Hedges		AOCI		AOCI
Balance as of December 31, 2018	$	(805	)	(122	)	(927	)	189		189		(738	)
Other comprehensive income before reclassifications	(5,154		)	137		(5,017	)	(335	)	(335	)	(5,352	)
Amounts reclassified from AOCI ⁽¹⁾	(152		)	—		(152	)	(24	)	(24	)	(176	)
Current period other comprehensive income, net	(5,306		)	137		(5,169	)	(359	)	(359	)	(5,528	)
Balance as of March 31, 2019	$	(6,111	)	15		(6,096	)	(170	)	(170	)	(6,266	)

⁽¹⁾ Amounts reclassified from AOCI into income are presented within Interest expense, net in the Consolidated Statements of Operations.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019




	Controlling Interests							Noncontrolling Interests				Total
(in thousands)	Cash Flow Hedges			Unrealized gain (loss) on Available-For-Sale Debt Securities		AOCI		Cash Flow Hedges		AOCI		AOCI
Balance as of December 31, 2017	$	(6,262	)	(27	)	(6,289	)	(112	)	(112	)	(6,401	)
Opening adjustment due to change in accounting policy ⁽²⁾	12			—		12		2		2		14
Adjusted balance as of January 1, 2018	(6,250		)	(27	)	(6,277	)	(110	)	(110	)	(6,387	)
Other comprehensive income before reclassifications	9,003			(119	)	8,884		502		502		9,386
Amounts reclassified from AOCI ⁽¹⁾	2,157			—		2,157		(19	)	(19	)	2,138
Current period other comprehensive income, net	11,160			(119	)	11,041		483		483		11,524
Balance as of March 31, 2018	$	4,910		(146	)	4,764		373		373		5,137

⁽¹⁾ Amounts reclassified from AOCI into income are presented within Interest expense, net in the Consolidated Statement of Operations.
⁽²⁾ Upon adoption of ASU 2017-12, the Company recognized the immaterial adjustment to opening retained earnings and AOCI for previously recognized hedge ineffectiveness from off-market hedges, as further discussed in note 1.

10. Stock-Based Compensation

During the three months ended March 31, 2019, the Company granted 233,237 shares of restricted stock with a weighted-average grant-date fair value of $65.02 per share. The Company records stock-based compensation expense within General and administrative expenses in the accompanying Consolidated Statements of Operations.

11. Non-Qualified Deferred Compensation Plan ("NQDCP")

The Company maintains a NQDCP which allows select employees and directors to defer part or all of their cash bonus, director fees, and vested restricted stock awards. All contributions into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited in a Rabbi trust.

The following table reflects the balances of the assets and deferred compensation liabilities of the Rabbi trust and related participant account obligations in the accompanying Consolidated Balance Sheets, excluding Regency stock:



(in thousands)	March 31, 2019		December 31, 2018	Location in Consolidated Balance Sheets
Assets:
Securities	$	34,278	31,351	Other assets
Liabilities:
Deferred compensation obligation	$	34,115	31,166	Accounts payable and other liabilities

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

12. 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 March 31,
(in thousands, except per share data)	2019		2018
Numerator:
Income from operations attributable to common stockholders - basic	$	90,446	52,660
Income from operations attributable to common stockholders - diluted	$	90,446	52,660
Denominator:
Weighted average common shares outstanding for basic EPS	167,440		170,704
Weighted average common shares outstanding for diluted EPS ⁽¹⁾	167,717		170,959

Income per common share – basic	$	0.54	0.31
Income per common share – diluted	$	0.54	0.31
⁽¹⁾ Includes the dilutive impact of unvested restricted stock using the treasury stock method.

Income allocated to noncontrolling interests of the Operating Partnership has been excluded from the numerator and exchangeable Operating Partnership units have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would be anti-dilutive. Weighted average exchangeable Operating Partnership units outstanding for both the three months ended March 31, 2019 and 2018 were 349,902 for both periods.

Operating Partnership Earnings per Unit

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



	Three months ended March 31,
(in thousands, except per share data)	2019		2018
Numerator:
Income from operations attributable to common unit holders - basic	$	90,636	52,771
Income from operations attributable to common unit holders - diluted	$	90,636	52,771
Denominator:
Weighted average common units outstanding for basic EPU	167,790		171,054
Weighted average common units outstanding for diluted EPU ⁽¹⁾	168,067		171,309

Income per common unit – basic	$	0.54	0.31
Income per common unit – diluted	$	0.54	0.31
⁽¹⁾ Includes the dilutive impact of unvested restricted stock using the treasury stock method.

13. Commitments and Contingencies

Litigation

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.

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.

Notes to Unaudited Consolidated Financial Statements

March 31, 2019

Environmental

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. The Company can give no assurance that existing environmental studies with respect to the shopping centers have revealed all potential environmental contaminants or 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.

Letters of Credit

The Company has the right to issue letters of credit under the Line up to an amount not to exceed $50.0 million, which reduces the credit availability under the Line. These letters of credit are primarily issued as collateral on behalf of its captive insurance program and to facilitate the construction of development projects. As of March 31, 2019 and December 31, 2018, the Company had $12.6 million and $9.4 million, respectively in letters of credit outstanding.

Purchase Commitments

The Company enters into purchase and sale agreements to buy or sell real estate assets in the normal course of business, which generally provide limited recourse if either party ends the contract. At March 31, 2019, the Company has an option to purchase up to an additional 81.63% ownership interest in an operating shopping center by December 2019 and currently expects to acquire an additional 16.63% interest by that date for approximately $16.7 million.

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, and technology disruptions. For additional information, see “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2018. 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.

Defined Terms

In addition to the required Generally Accepted Accounting Principles ("GAAP") presentations, we use certain non-GAAP performance measures as we believe these measures improve the understanding of the Company's operational results. We continually evaluate the usefulness, relevance, limitations, 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 terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results:

•

Development Completion is a property in development that is deemed complete upon the earliest of: (i) 90% of total estimated net development costs have been incurred and percent leased equals or exceeds 95%, or (ii) the property features at least two years of anchor operations, or (iii) three years have passed since the start of construction. Once deemed complete, the property is termed a Retail Operating Property the following calendar year.


•	Fixed Charge Coverage Ratio is defined as Operating EBITDAre divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.

•

NAREIT EBITDAre is a measure of REIT performance, which the National Association of Real Estate Investment Trusts ("NAREIT") defines as net income, computed in accordance with GAAP, excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) gains on sales and impairments of real estate, and (v) adjustments to reflect the Company's share of unconsolidated partnerships and joint ventures.

•

NAREIT Funds from Operations ("NAREIT FFO") is a commonly used measure of REIT performance, which NAREIT defines as net income, computed in accordance with GAAP, excluding gains on sales and impairments of real estate, net of tax, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute NAREIT FFO for all periods presented in accordance with NAREIT's definition in effect during that period. Effective January 1, 2019, we prospectively adopted the NAREIT FFO White Paper - 2018 Restatement ("2018 FFO White Paper"), and elected the option of excluding gains on sale and impairments of land, which are considered incidental to our main business. Prior period amounts were not restated to conform to the current year presentation, and therefore are calculated as described above, and also include gains on sale and impairments of land.

Many companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since NAREIT FFO excludes depreciation and amortization and gains on sale and impairments of real estate, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in 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, NAREIT FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and,

therefore, should not be considered a substitute measure of cash flows from operations. The Company provides a reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO.

•

Net Operating Income ("NOI") is the sum of base rent, percentage rent, and recoveries from tenants and other leasing and property income, less operating and maintenance expenses, real estate taxes, ground rent, and uncollectible lease income / provision for doubtful accounts. NOI excludes straight-line rental income and expense, above and below market rent and ground rent amortization, tenant lease inducement amortization, and other fees. The Company also provides disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.


•	A Non-Same Property is a property acquired, sold, or a Development Completion during either calendar year period being compared. Non-retail properties and corporate activities, including the captive insurance program, are part of Non-Same Property.


•	Operating EBITDAre (previously Adjusted EBITDA) begins with the NAREIT EBITDAre and excludes certain non-cash components of earnings derived from above and below market rent amortization and straight-line rents.


•	Pro-Rata information includes 100% of our consolidated properties plus our economic share (based on our ownership interest) in our unconsolidated real estate investment partnerships.

We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of certain operating metrics, along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more meaningful.

The pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our pro-rata share.

The presentation of pro-rata information has limitations which include, but are not limited to, the following:


•	The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting or allocating noncontrolling interests, and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and


•	Other companies in our industry may calculate their pro-rata interest differently, limiting the comparability of pro-rata information.

Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata information as a supplement.


•	Property In Development includes properties in various stages of development and redevelopment including active pre-development activities.


•	A Retail Operating Property is any retail property not termed a Property in Development. A retail property is any property where the majority of the income is generated from retail uses.


•	Same Property is a Retail Operating Property that was owned and operated for the entirety of both calendar year periods being compared. This term excludes all developments and Non-Same Properties.

Overview of Our Strategy

Regency Centers Corporation began its operations as a publicly-traded REIT in 1993, and, as of March 31, 2019, had full or partial ownership interests in 419 retail properties primarily anchored by market leading grocery stores. Our properties are principally located in affluent and infill trade areas of the United States, and contain 52.6 million square feet ("SF") of gross leasable area ("GLA"). All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P., our wholly-owned subsidiaries, and through our co-investment partnerships.

As of March 31, 2019, the Parent Company owns approximately 99.8% of the outstanding common partnership units of the Operating Partnership.

Our mission is to be the preeminent national owner, operator, and developer of shopping centers connecting outstanding retailers and service providers with surrounding neighborhoods and communities. Our goals are to:

•

Own and manage a portfolio of high-quality neighborhood and community shopping centers anchored by market leading grocers and located in affluent suburban and near urban trade areas in the country’s most desirable metro areas. We expect that this combination will produce highly desirable and attractive centers with best-in-class retailers. These centers should command higher rental and occupancy rates resulting in excellent prospects to grow net operating income ("NOI");


•	Maintain an industry leading and disciplined development and redevelopment platform to deliver exceptional retail centers at higher returns as compared to acquisitions;


•	Support our business activities with a strong balance sheet; and


•	Engage a talented, dedicated team of employees, who are guided by Regency’s strong values and special culture, which are aligned with shareholder interests.

Executing on our Strategy

During the three months ended March 31, 2019:

We had Net income attributable to common stockholders of $90.4 million as compared to $52.7 million during the three months ended March 31, 2018.

We sustained same property NOI growth:


•	We achieved pro-rata same property NOI growth, excluding termination fees, of 2.9%.


•	We executed 289 leasing transactions representing 1.0 million pro-rata SF of new and renewal leasing, with trailing twelve month rent spreads of 8.4% on comparable retail operating property spaces.


•	At March 31, 2019, our total property portfolio was 94.6% leased, while our same property portfolio was 95.0% leased.

We continued our development and redevelopment of high quality shopping centers at attractive returns on investment:


•	We started two new redevelopments representing a total pro-rata project investment of $13.5 million upon completion, with a weighted average projected return on investment of 6.4%.


•	Including the two new redevelopment projects, a total of 21 properties were in the process of development or redevelopment, representing a pro-rata investment upon completion of $403.3 million.

We maintained a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and debt maturities:

•

On March 6, 2019, the Company issued $300 million of 4.65% senior unsecured public notes, which mature in March 2049, using the proceeds to repay $39.5 million of mortgage debt with an interest rate of 7.3% and to repay $250 million of 4.8% senior unsecured notes due April 2021. This offering further enhanced our financial flexibility and increased the duration of our average maturities to over 10 years while maintaining our weighted average interest rate.


•	At March 31, 2019, our annualized net debt-to-operating EBITDAre ratio on a pro-rata basis was 5.3x.

Property Portfolio

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



(GLA in thousands)	March 31, 2019	December 31, 2018
Number of Properties	302	305
Properties in Development	6	6
GLA	37,393	37,946
% Leased – Operating and Development	94.4%	95.5%
% Leased – Operating	94.7%	95.9%
Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions.	$21.67	$21.51

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



(GLA in thousands)	March 31, 2019	December 31, 2018
Number of Properties	117	120
Properties in Development	2	2
GLA	15,211	15,622
% Leased – Operating and Development	95.4%	95.4%
% Leased –Operating	95.7%	95.7%
Weighted average annual effective rent PSF, net of tenant concessions	$21.26	$21.46

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:



	March 31, 2019	December 31, 2018
% Leased – All Properties	94.6%	95.6%
Anchor space	96.9%	98.4%
Shop space	90.5%	90.9%

The decline in anchor space percent leased is primarily attributable to the closure of one Sears and one K-Mart location as a result of the Sears bankruptcy filing.

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



	Three months ended March 31, 2019
	Leasing Transactions ⁽¹⁾	SF (in thousands)	Base Rent PSF		Tenant Allowance and Landlord Work PSF		Leasing Commissions PSF
Anchor Leases
New	3	75	$	14.80	$	42.63	$	4.47
Renewal	20	445	$	12.80	$	0.26	$	0.08
Total Anchor Leases ⁽¹⁾	23	520	$	13.09	$	6.36	$	0.71
Shop Space
New	86	147	$	33.78	$	27.49	$	7.63
Renewal	180	334	$	32.29	$	1.72	$	0.49
Total Shop Space Leases ⁽¹⁾	266	481	$	32.75	$	9.59	$	2.67
Total Leases	289	1,001	$	22.54	$	7.91	$	1.65

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



	Three months ended March 31, 2018
	Leasing Transactions ^(1,2)	SF (in thousands)	Base Rent PSF		Tenant Allowance and Landlord Work PSF		Leasing Commissions PSF
Anchor Leases
New	6	78	$	24.54	$	26.11	$	9.89
Renewal	15	313	$	14.21	$	0.16	$	0.47
Total Anchor Leases ⁽¹⁾	21	391	$	16.27	$	5.32	$	2.34
Shop Space
New	109	178	$	31.40	$	25.11	$	14.06
Renewal	223	397	$	32.61	$	0.79	$	2.12
Total Shop Space Leases ⁽¹⁾	332	575	$	32.24	$	8.31	$	5.81
Total Leases	353	966	$	25.78	$	7.10	$	4.41

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

The weighted average base rent on signed shop space leases during 2019 was $32.75 and exceeds the average annual base rent of all shop space leases due to expire during the next 12 months of $31.50 PSF. In the anchor category, base rent PSF on new leases decreased due to the limited volume and geographic location of anchor deals in 2019 as compared to 2018. On a comparable basis, new anchor deal rent spreads were positive.

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 most significant tenants, based on their percentage of annualized base rent:



	March 31, 2019
Grocery Anchor	Number of Stores	Percentage of Company- owned GLA ⁽¹⁾	Percentage of Annualized Base Rent ⁽¹⁾
Publix	70	6.6%	3.3%
Kroger	56	6.7%	3.1%
Albertsons Companies	46	4.3%	2.8%
Whole Foods	32	2.5%	2.5%
TJX Companies	59	3.0%	2.4%

⁽¹⁾ Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors.

Bankruptcies and Credit Concerns

Our management team devotes significant time to researching and monitoring retail trends, consumer preferences, customer shopping behaviors, changes in retail delivery methods, and changing demographics in order to anticipate the challenges and opportunities impacting the retail industry. A greater shift to e-commerce, large-scale retail business failures, and tight credit markets could negatively impact consumer spending and have an adverse effect on our results of operations. We seek to mitigate these potential impacts through tenant diversification, replacing weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive foot traffic, and maintaining a presence in affluent suburbs and dense infill trade areas. As a result of our research and findings, we may reduce new leasing, suspend leasing, or curtail allowances for construction of leasehold improvements within a certain retail category or to a specific retailer in order to reduce our risk from bankruptcies and store closings.

We closely monitor the operating performance and rent collections of tenants in our shopping centers as well as those retailers experiencing significant changes to their business models as a result of reduced customer traffic in their stores and increased competition from e-commerce sales. Retailers who are unable to withstand these and other business pressures may file for bankruptcy. Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to recover our claim and to release the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its leases, we could experience a significant reduction in our revenues. Tenants who are in bankruptcy and continue to occupy space in our shopping centers at March 31, 2019 represent an aggregate of 0.2% of our annual base rent on a pro-rata basis.

Results from Operations

Comparison of the three months ended March 31, 2019 and 2018:

Our revenues increased as summarized in the following table:



	Three months ended March 31,
(in thousands)	2019		2018	Change
Lease income ⁽¹⁾	$	277,303	267,510	9,793
Other property income	1,982		2,025	(43	)
Management, transaction, and other fees	6,972		7,158	(186	)
Total revenues	$	286,257	276,693	9,564

⁽¹⁾As discussed in Note 1 to the Consolidated Financial Statements, Regency adopted ASC Topic 842, Leases, using the modified retrospective adoption method as of January 1, 2019, and elected to apply the transition provisions of the standard at the beginning of the period of adoption. As such, the prior period amounts prepared and presented under the former ASC Topic 840, Leases, were not restated, but were reclassified to conform with the current year presentation. Part of the practical expedients in ASC Topic 842 allow management to avoid separating lease and non-lease components of Lease income, therefore all lease income earned pursuant to tenant leases, including recoveries from tenants and percentage rent, in 2019 and as reclassified for 2018, is reflected in Lease income in the accompanying Consolidated Statements of Operations.

Lease income increased $9.8 million, driven by the following contractually billable components of rent to the tenants per the lease agreements:

$5.0 million increase from billable base rent, as follows:


•	$4.6 million increase from rent commencing at development properties;


•	$1.0 million increase from acquisitions of operating properties; and


•	$5.4 million increase from same properties due to rental rate growth on new and renewal leases, rent steps in existing leases, and rent commencements,


•	reduced by $6.0 million from the sale of operating properties.

$2.3 million increase from billable Recoveries from tenants, which represent amounts contractually billable to tenants per the terms of the leases for their reimbursements to us for the 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, on a net basis, as follows:


•	$1.5 million increase from rent commencing at development properties;


•	$362,000 increase from acquisitions of operating properties; and


•	$2.1 million increase from same properties due to a $2.5 million increase in real estate recoveries offset by a $0.4 million decrease in CAM recoveries;


•	reduced by $1.7 million from the sale of operating properties.

$632,000 decrease in Percentage rent primarily due to timing of tenant sales reporting.

$5.0 million increase in Above and below market rent amortization within our same property portfolio, primarily driven by accelerated amortization related to 2019 tenant move-outs.

$1.0 million decrease in Other lease income from lower termination and assignment fees.

$0.9 million decrease from uncollectible lease income. Beginning with the adoption of ASC 842, Leases, on January 1, 2019, uncollectible lease income is recorded as a direct charge against Lease income. The uncollectible lease income was $0.9 million during the three months ended March 31, 2019, as compared to $1.2 million of Provision for doubtful accounts during the three months ended March 31, 2018, which is included in Other operating expenses in the accompanying Consolidated Statements of Operations.

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



	Three months ended March 31,
(in thousands)	2019		2018	Change
Depreciation and amortization	$	97,194	88,525	8,669
Operating and maintenance	40,638		42,516	(1,878	)
General and administrative	21,300		17,606	3,694
Real estate taxes	34,155		30,425	3,730
Provision for doubtful accounts ⁽¹⁾	—		1,195	(1,195	)
Other operating expenses	1,134		437	697
Total operating expenses	$	194,421	180,704	13,717
⁽¹⁾ Beginning with the adoption of ASC 842, Leases, on January 1, 2019, uncollectible lease income is a direct charge against Lease income, which totaled $0.9 million during the three months ended March 31, 2019.

Depreciation and amortization costs increased, on a net basis, as follows:


•	$2.1 million increase as we began depreciating costs at development properties where tenant spaces were completed and became available for occupancy;


•	$763,000 increase from acquisitions of operating properties and corporate assets; and


•	$8.9 million increase from same properties, primarily attributable to additional depreciation at redevelopment properties;


•	reduced by $3.1 million decrease from the sale of operating properties.

Operating and maintenance costs decreased, on a net basis, as follows:


•	$1.7 million increase from operations commencing at development properties; offset by


•	$775,000 decrease is primarily due to a $1.2 million decrease related to hail storm losses incurred in 2018 offset by $400,000 increase from the acquisition of operating properties;


•	$1.6 million decrease from same properties primarily attributable to a decrease in snow removal costs; and


•	$1.2 million decrease from the sale of operating properties.

General and administrative increased, on a net basis, as follows:


•	$2.0 million net increase in compensation-related costs, primarily due to appreciation in the value of participant obligations within the deferred compensation plan; and


•	$1.7 million increase due to eliminating capitalization of non-contingent internal leasing costs and legal costs associated with leasing activities upon the adoption of ASC 842, Leases, on January 1, 2019.

Real estate taxes increased, on a net basis, as follows:


•	$1.0 million increase from development properties where capitalization ceased as tenant spaces became available for occupancy;


•	$309,000 increase from acquisitions of operating properties; and


•	$3.1 million increase within the same property portfolio from increased tax assessments;


•	reduced by $719,000 from the sale of operating properties.

Provision for doubtful accounts was $1.2 million during the three months ended March 31, 2018. Beginning with the adoption of ASC 842, Leases, on January 1, 2019, uncollectible lease income is a direct charge against Lease income. The uncollectible lease income was $0.9 million during the three months ended March 31, 2019, as compared to $1.2 million of Provision for doubtful accounts during the three months ended March 31, 2018.

Other operating expenses increased $697,000, attributable to an increase in taxes, legal, and abandoned pursuit costs recognized in 2019.

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



	Three months ended March 31,
(in thousands)	2019			2018		Change
Interest expense, net
Interest on notes payable	$	32,513		32,968		(455	)
Interest on unsecured credit facilities	4,543			4,288		255
Capitalized interest	(1,015		)	(2,179	)	1,164
Hedge expense	2,115			2,102		13
Interest income	(404		)	(394	)	(10	)
Interest expense, net	$	37,752		36,785		967
Provision for impairment, net of tax	1,672			16,054		(14,382	)
Gain on sale of real estate, net of tax	(16,490		)	(96	)	(16,394	)
Early extinguishment of debt	10,591			162		10,429
Net investment income	(2,354		)	(32	)	(2,322	)
Total other expense (income)	$	31,171		52,873		(21,702	)

The $1.0 million net increase in total interest expense is driven by $1.2 million increase due to lower capitalization of interest based on the size and progress of development and redevelopment projects in process.

During the three months ended March 31, 2019, we recognized $1.7 million of impairment losses on two operating properties which were sold. During the three months ended March 31, 2018, we recognized $16.1 million of impairment losses on two operating properties, both of which have been sold.

During the three months ended March 31, 2019, we sold 2 operating properties and 2 land parcels for gains totaling $16.5 million.

During the three months ended March 31, 2019, we early redeemed the $250 million 4.8% senior unsecured notes resulting in $10.6 million of debt extinguishment costs. During the same period in 2018, we modified our Line, resulting in $162,000 of debt extinguishment costs.

Net investment income increased $2.3 million, primarily driven by changes in unrealized gains of plan assets held in the non-qualified deferred compensation plan.

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



		Three months ended March 31,
(in thousands)	Regency's Ownership	2019		2018		Change
GRI - Regency, LLC (GRIR)	40.00%	$	10,736	7,518		3,218
New York Common Retirement Fund (NYC)	30.00%	271		(28	)	299
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%	403		238		165
Columbia Regency Partners II, LLC (Columbia II)	20.00%	482		464		18
Cameron Village, LLC (Cameron)	30.00%	256		244		12
RegCal, LLC (RegCal)	25.00%	2,619		436		2,183
US Regency Retail I, LLC (USAA)	20.01%	255		235		20
Other investments in real estate partnerships	18.38% - 50.00%	15,806		1,242		14,564
Total equity in income of investments in real estate partnerships		$	30,828	10,349		20,479

The $20.5 million increase in our equity in income of investments in real estate partnerships is largely attributed to the following changes:


•	$3.2 million increase at GRIR due to a $3.0 million gain recognized during 2019 on the sale of an operating property within the partnership;


•	$2.2 million increase at RegCal due to a $2.5 million gain recognized during 2019 on the sale of an operating property within the partnership; and


•	$14.6 million increase within Other investments in real estate partnerships due to a $15.1 million gain recognized during 2019 on the sale of our ownership interest in a single operating property partnership.

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



	Three months ended March 31,
(in thousands)	2019			2018		Change
Net income	$	91,493		53,465		38,028
Income attributable to noncontrolling interests	(1,047		)	(805	)	(242	)
Net income attributable to common stockholders	$	90,446		52,660		37,786
Net income attributable to exchangeable operating partnership units	190			111		79
Net income attributable to common unit holders	$	90,636		52,771		37,865

Supplemental Earnings Information

We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the Company's operating results. We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of operating results regardless of ownership structure, along with other non-GAAP measures, may assist in comparing the Company's operating results to other REITs. We continually evaluate the usefulness, relevance, limitations, 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. See "Defined Terms" at the beginning of this Management's Discussion and Analysis.

Pro-Rata Same Property NOI:

Our pro-rata same property NOI, excluding termination fees, changed from the following major components:



	Three months ended March 31,
(in thousands)	2019			2018	Change
Base rent ⁽¹⁾	$	211,025		205,282	5,743
Recoveries from tenants ⁽¹⁾	67,167			65,007	2,160
Percentage rent ⁽¹⁾	3,764			4,263	(499	)
Termination fees ⁽¹⁾	486			1,180	(694	)
Uncollectible lease income ⁽²⁾	(657		)	—	(657	)
Other lease income ⁽¹⁾	2,178			2,552	(374	)
Other property income	1,567			1,686	(119	)
Total real estate revenue	285,530			279,970	5,560
Operating and maintenance	40,749			42,342	(1,593	)
Real estate taxes	36,844			33,495	3,349
Ground rent	2,315			2,481	(166	)
Provision for doubtful accounts ⁽²⁾	—			1,141	(1,141	)
Total real estate operating expenses	79,908			79,459	449
Pro-rata same property NOI	$	205,622		200,511	5,111
Less: Termination fees	486			1,180	(694	)
Pro-rata same property NOI, excluding termination fees	$	205,136		199,331	5,805
Pro-rata same property NOI growth, excluding termination fees					2.9	%

⁽¹⁾ Represents amounts included within Lease income, in the accompanying Consolidated Statements of Operations and further discussed in Note 1, that are contractually billable to the tenants per the terms of the lease agreements
⁽²⁾ Beginning with the adoption of ASC 842, Leases, on January 1, 2019, uncollectible lease income is a direct charge against Lease income. Provision for doubtful accounts was included in Total real estate operating expenses during the three months ended March 31, 2018.

Billable Base rent increased $5.7 million during the three months ended March 31, 2019, driven by increases in rental rate growth on new and renewal leases, and contractual rent steps from leases, offset by fewer rent commencements.

Billable Recoveries from tenants increased $2.2 million during the three months ended March 31, 2019, as a result of increases in recoverable real estate taxes, as noted below.

Operating and maintenance expenses decreased $1.6 million during the three months ended March 31, 2019, primarily due to lower snow removal costs.

Real estate taxes increased $3.3 million during the three months ended March 31, 2019, due to higher real estate tax assessments.

Same Property Rollforward:

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



	Three months ended March 31,
	2019				2018
(GLA in thousands)	Property Count		GLA		Property Count		GLA
Beginning same property count	399		40,866		395		40,600
Acquired properties owned for entirety of comparable periods	6		415		7		917
Developments that reached completion by beginning of earliest comparable period presented	3		358		8		512
Disposed properties	(7	)	(766	)	(1	)	(77	)
SF adjustments ⁽¹⁾	—		32		—		9
Ending same property count	401		40,905		409		41,961

⁽¹⁾ SF adjustments arise from remeasurements or redevelopments.

NAREIT FFO:

Our reconciliation of net income attributable to common stock and unit holders to NAREIT FFO is as follows:



	Three months ended March 31,
(in thousands, except share information)	2019			2018
Reconciliation of Net income to NAREIT FFO
Net income attributable to common stockholders	$	90,446		52,660
Adjustments to reconcile to NAREIT FFO:⁽¹⁾
Depreciation and amortization (excluding FF&E)	104,498			96,197
Provision for impairment to operating properties	1,672			16,054
Gain on sale of operating properties, net of tax	(37,070		)	(102	)
Provision for impairment to land	18			—
Exchangeable operating partnership units	190			111
NAREIT FFO attributable to common stock and unit holders	$	159,754		164,920

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

Same Property NOI Reconciliation:

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



	Three months ended March 31,
	2019							2018
(in thousands)	Same Property			Other ⁽¹⁾		Total		Same Property		Other ⁽¹⁾		Total
Net income attributable to common stockholders	$	128,398		(37,952	)	90,446		$	129,221	(76,561	)	52,660
Less:
Management, transaction, and other fees	—			6,972		6,972		—		7,158		7,158
Other ⁽²⁾	16,187			2,780		18,967		27,193		(13,020	)	14,173
Plus:
Depreciation and amortization	92,891			4,303		97,194		77,211		11,314		88,525
General and administrative	250			21,050		21,300		—		17,606		17,606
Other operating expense, excluding provision for doubtful accounts ⁽³⁾	253			881		1,134		72		365		437
Other expense (income)	6,021			25,150		31,171		7,371		45,502		52,873
Equity in income (loss) of investments in real estate excluded from NOI ⁽⁴⁾	(6,004		)	374		(5,630	)	13,829		1,264		15,093
Net income attributable to noncontrolling interests	—			1,047		1,047		—		805		805
Pro-rata NOI, as adjusted	$	205,622		5,101		210,723		$	200,511	6,157		206,668

⁽¹⁾ Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities.
⁽²⁾ Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interest.
⁽³⁾ Provision for doubtful accounts is applicable only to 2018 amounts. Beginning January 1, 2019, with the adoption of Topic 842, Leases, uncollectible amounts are presented net within Lease income.
⁽⁴⁾ Includes non-NOI income earned and expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.

Liquidity and Capital Resources

General

We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. We continuously monitor the capital markets and evaluate our ability to issue new debt or equity, to repay maturing debt, or fund our capital commitments.

Except for $500 million of unsecured public and private placement debt, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating Partnership is a co-issuer and a guarantor of the $500 million of outstanding debt of our Parent Company. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units. Based upon our available sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs.

In addition to our $39.5 million of unrestricted cash, we have the following additional sources of capital available:



(in thousands)	March 31, 2019
ATM equity program
Original offering amount	$	500,000
Available capacity	$	500,000

Line of Credit
Total commitment amount	$	1,250,000
Available capacity⁽¹⁾	$	1,127,400
Maturity ⁽²⁾	March 23, 2022

⁽¹⁾ Net of letters of credit.
⁽²⁾ The Company has the option to extend the maturity for two additional six-month periods.

Our dividend distribution policy is set by our Board of Directors, who monitors our financial position. Our Board of Directors recently declared a common stock dividend of $0.585 per share, payable on May 23, 2019, to shareholders of record as of May 13, 2019. 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.

We expect to generate sufficient cash flow from operations to fund our dividend distributions. We generated cash flow from operations of approximately $131.4 million and $149.9 million for the three months ended March 31, 2019 and 2018, respectively. We paid $97.8 million and $95.0 million to our common stock and unit holders for the three months ended March 31, 2019 and 2018, respectively.

To meet our additional cash requirements beyond our dividend, we will utilize the following:


•	remaining cash generated from operations after dividends paid,


•	proceeds from the sale of real estate,


•	available borrowings from our Line, and


•	when the capital markets are favorable, proceeds from the sale of equity or the issuance of new long-term debt.

We also expect to generate sufficient cash flow from operations, after dividends paid, to fund our cash requirements during the next twelve months, which we estimate will total approximately $182.0 million to fund the following:


•	$163.8 million to complete in-process developments and redevelopments,


•	$13.2 million to repay maturing debt, and


•	$5.0 million to fund our pro-rata share of estimated capital contributions to our co-investment partnerships for repayment of maturing debt.

If we start new developments, redevelop additional shopping centers, commit to new acquisitions, prepay debt prior to maturity, or repurchase shares of our common stock, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease. In addition, we have an option to purchase, through December 2019, up to an additional 81.63% ownership interest in an operating shopping center. We currently expect the seller to require us to purchase an additional 16.63% ownership interest in the property by December 2019 for approximately $16.7 million.

We endeavor to maintain a high percentage of unencumbered assets. As of December 31, 2018, 87.7% 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 annualized Fixed charge coverage ratio, including our pro-rata share of our partnerships, was 4.2 times for each of the periods ended March 31, 2019 and December 31, 2018.

Our Line, Term Loans, 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, 2018. We are in compliance with these covenants at March 31, 2019 and expect to remain in compliance.

Summary of Cash Flow Activity

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



	Three months ended March 31,
(in thousands)	2019			2018		Change
Net cash provided by operating activities	$	131,364		149,868		(18,504	)
Net cash provided by (used in) investing activities	47,001			(107,206	)	154,207
Net cash (used in) provided by financing activities	(180,771		)	1,593		(182,364	)
Net (decrease) increase in cash and cash equivalents and restricted cash	$	(2,406	)	44,255		(46,661	)
Total cash and cash equivalents and restricted cash	$	42,784		93,636		(50,852	)

Net cash provided by operating activities:

Net cash provided by operating activities decreased $18.5 million due to:


•	$15.3 million net decrease in cash due to timing of cash receipts and payments, and


•	$5.7 million decrease from cash paid to settle treasury rate locks put in place in 2018 to hedge changes in interest rates on a 30 year fixed rate debt offering completed during 2019; offset by,


•	$1.1 million increase in operating cash flow distributions from our unconsolidated real estate partnerships, and


•	$1.4 million increase in cash from operating income.

Net cash used in investing activities:

Net cash provided by (used in) investing activities changed by $154.2 million as follows:



	Three months ended March 31,
(in thousands)	2019			2018		Change
Cash flows from investing activities:
Acquisition of operating real estate	$	(15,722	)	(20,071	)	4,349
Advance deposits paid on acquisition of operating real estate	(1,250		)	—		(1,250	)
Real estate development and capital improvements	(39,929		)	(51,968	)	12,039
Proceeds from sale of real estate investments	82,533			3,227		79,306
Issuance of notes receivable	—			(462	)	462
Investments in real estate partnerships	(19,587		)	(39,330	)	19,743
Distributions received from investments in real estate partnerships	41,587			2,328		39,259
Dividends on investment securities	116			71		45
Acquisition of investment securities	(5,359		)	(7,543	)	2,184
Proceeds from sale of investment securities	4,612			6,542		(1,930	)
Net cash provided by (used in) investing activities	$	47,001		(107,206	)	154,207

Significant changes in investing activities include:


•	We acquired two operating properties for $15.7 million during 2019 and one operating property for $20.1 million during the same period in 2018.


•	We invested $12.0 million less in 2019 than the same period in 2018 on real estate development, redevelopment, and capital improvements, as further detailed in a table below.


•	We sold four operating properties and two land parcels in 2019 and received proceeds of $82.5 million, compared to one operating property in 2018 for proceeds of $3.2 million.


•	We invested $19.6 million in our real estate partnerships during 2019, including:


◦	$9.2 million to fund our share of acquiring an additional equity interest in one partnership,


◦	$8.1 million to fund our share of development and redevelopment activities, and


◦	$2.3 million to fund our share of debt refinancing.

During the same period in 2018, we invested $39.3 million,including:


◦	$32.7 million to fund our share of acquiring four operating properties,


◦	$3.4 million to acquire an interest in one land parcel for development,


◦	$3.2 million to fund our share of development and redevelopment activities.

•

Distributions from our unconsolidated real estate partnerships include return of capital from sales or financing proceeds. The $41.6 million received in 2019 is driven by the sale of two operating properties, the sale of our ownership interest in a single operating property partnership, and our share of proceeds from debt refinancing activities. During the same period in 2018, we received $2.3 million from the sale of one land parcel.


•	Acquisition of securities and proceeds from sale of securities pertain to investment activities held in our captive insurance company and our deferred compensation plan.

We plan to continue developing and redeveloping shopping centers for long-term investment. During 2019, we deployed capital of $39.9 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:



	Three months ended March 31,
(in thousands)	2019		2018	Change
Capital expenditures:
Building and tenant improvements	10,141		11,922	(1,781	)
Redevelopment costs	8,570		15,551	(6,981	)
Development costs	15,863		18,447	(2,584	)
Capitalized interest	739		2,062	(1,323	)
Capitalized direct compensation	4,616		3,986	630
Real estate development and capital improvements	$	39,929	51,968	(12,039	)


•	Building and tenant improvements decreased $1.8 million in 2019, primarily related to the timing of capital projects.

•

Redevelopment expenditures are lower in 2019 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, facade renovation, new out-parcel building construction, and redevelopment related tenant improvement costs. The size and magnitude of each redevelopment project varies with each redevelopment plan.


•	Development expenditures are lower in 2019 due to the progress during 2018 towards completion of our development projects currently in process. At March 31, 2019 and December 31, 2018, we had six and eight consolidated development projects that were either under construction or in lease up. See the tables below for more details about our development projects.


•	Interest is capitalized on our development and redevelopment projects and is based on cumulative actual costs expended. We cease interest capitalization when the property is no longer being developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor opens for business.

•

We have a staff of employees who directly support our development program, which includes redevelopment of our existing properties. We currently expect that our development activity will approximate our recent historical averages, although the amount of activity by type will vary and likely shift towards more redevelopment in the near future. Internal compensation costs directly attributable to these activities are capitalized as part of each project. Changes in the level of future development activity could adversely impact results of operations by reducing the amount of internal costs for development projects that may be capitalized. A 10% reduction in development activity without a corresponding reduction in development related compensation costs could result in an additional charge to net income of $1.5 million per year.

The following table summarizes our in-process consolidated development projects:



(in thousands, except cost PSF)				March 31, 2019
Property Name	Market	Start Date	Estimated Project Completion	Estimated Net Development Costs ⁽¹⁾		% of Costs Incurred⁽¹⁾	GLA	Cost PSF of GLA ⁽¹⁾
Carytown Exchange ⁽³⁾	Richmond, VA	Q4-18	2021	$	25,580	2%	68	$	376
Indigo Square	Charleston, SC	Q4-17	2019	16,931		89%	51	332
Mellody Farm	Chicago, IL	Q2-17	2019	103,939		86%	259	401
Pinecrest Place ⁽²⁾	Miami, FL	Q1-17	2019	16,375		91%	70	234
The Village at Hunter's Lake	Tampa, FL	Q4-18	2020	22,067		10%	72	306
The Village at Riverstone	Houston, TX	Q4-16	2019	30,638		91%	167	183
Total				$	215,530	72%	687	$	314

⁽¹⁾ Includes leasing costs and is net of tenant reimbursements.
⁽²⁾ Estimated Net Development Costs for Pinecrest Place excludes the cost of land, which the Company has leased long term.
⁽³⁾ Estimated Net Development Costs and GLA reported based on Regency's ownership interest in the partnership at project completion, which is currently estimated to be 64%.

The following table summarizes our pro-rata share of in-process unconsolidated development projects:



(in thousands, except cost PSF)				March 31, 2019
Property Name	Market	Start Date	Estimated Project Completion	Estimated Net Development Costs ⁽¹⁾		% of Costs Incurred ⁽¹⁾	GLA	Cost PSF of GLA ⁽¹⁾
Ballard Blocks II	Seattle, WA	Q1-18	2019	$	32,524	55%	56	$	581
Midtown East	Raleigh, NC	Q4-17	2019	22,682		75%	87	261
Total				$	55,206	64%	143	$	386

⁽¹⁾ Includes leasing costs and is net of tenant reimbursements.

Net cash (used in) provided by financing activities:

Net cash flows generated from financing activities changed by $182.4 million during 2019, as follows:



	Three months ended March 31,
(in thousands)	2019			2018		Change
Cash flows from financing activities:
Repurchase of common shares in conjunction with equity award plans	$	(6,148	)	(6,755	)	607
Common shares repurchased through share repurchase program	(32,778		)	(124,989	)	92,211
Distributions to limited partners in consolidated partnerships, net	(1,485		)	(1,018	)	(467	)
Dividend payments and operating partnership distributions	(97,812		)	(95,043	)	(2,769	)
Repayments of unsecured credit facilities, net	(35,000		)	(60,000	)	25,000
Proceeds from debt issuance	298,983			301,251		(2,268	)
Debt repayment, including early redemption costs	(303,197		)	(2,773	)	(300,424	)
Payment of loan costs	(3,342		)	(9,179	)	5,837
Proceeds from sale of treasury stock, net	8			99		(91	)
Net cash (used in) provided by financing activities	$	(180,771	)	1,593		(182,364	)

Significant financing activities during the three months ended March 31, 2019 and 2018 include the following:


•	We repurchased for cash a portion of the common stock granted to employees for stock based compensation to satisfy employee tax withholding requirements.


•	We paid $32.8 million to repurchase 563,229 common shares through our share repurchase program that were executed in December 2018 but not settled until January 2019. During the three months ended March 31, 2018, we paid $125 million to repurchase 2,145,209 common shares through the same share repurchase program.


•	We paid $2.8 million more in dividends as a result of an increase in our dividend rate from $0.555 per share, during the three months ended March 31, 2018, to $0.585 per share, during the three months ended March 31, 2019, partially offset by the reduced shares outstanding in 2019.


•	We had the following debt related activity during 2019:


▪	We repaid, net of draws, $35 million on our Line.


▪	We received proceeds of $299 million upon issuance, in March, of $300 million of senior unsecured public notes.


▪	We paid $259.6 million, including a make-whole premium, to early redeem our senior unsecured public notes originally due April 2021, $40.5 million, including prepayment penalty, to repay a 2020 mortgage maturity with an interest rate of 7.3%, and $3.0 million in principal mortgage payments.


▪	We paid $3.3 million of loan costs in connection with our public note offering above.


•	We had the following debt related activity during 2018:


▪	We repaid, net of draws, $60 million on our Line.


▪	We issued $300 million of senior unsecured public notes and received proceeds of $299.5 million.


▪	We received proceeds of $1.7 million from construction loan draws used to fund an in-process development project.


▪	We paid $2.8 million to pay scheduled principal mortgage payments and $9.2 million of loan costs in connection with our $300 million public note offering noted above and upon expanding our Line commitment.

Investments in Real Estate Partnerships

The following table is a summary of the unconsolidated combined assets and liabilities of these co-investment partnerships and our pro-rata share:



	Combined			Regency's Share ⁽¹⁾
(dollars in thousands)	March 31, 2019		December 31, 2018	March 31, 2019			December 31, 2018
Number of Co-investment Partnerships	15		16
Regency’s Ownership	18.38%-50%		9.38%-50%
Number of Properties	117		120
Assets	$	3,158,911	3,227,831	$	1,069,854		1,079,071
Liabilities	1,743,717		1,749,725	578,671			580,219
Equity	1,415,194		1,478,106	491,183			498,852
Negative investment in US Regency Retail I, LLC				3,619			3,513
Basis difference				(36,769		)	(38,064	)
Impairment of investment in real estate partnerships				(1,300		)	(1,300	)
Investments in real estate partnerships				$	456,733		463,001

⁽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 our consolidated financial statements.

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



(in thousands)	Regency's Ownership	March 31, 2019			December 31, 2018
GRI - Regency, LLC (GRIR)	40.00%	$	182,221		189,381
New York Common Retirement Fund (NYC)	30.00%	53,846			54,250
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%	9,279			13,625
Columbia Regency Partners II, LLC (Columbia II)	20.00%	40,020			38,110
Cameron Village, LLC (Cameron)	30.00%	11,035			11,169
RegCal, LLC (RegCal)	25.00%	23,858			31,235
Other investments in real estate partnerships	18.38% - 50.00%	136,474			125,231
Total Investment in real estate partnerships		$	456,733		463,001
US Regency Retail I, LLC (USAA) ⁽¹⁾	20.01%	(3,619		)	(3,513	)
Net Investment in real estate partnerships		$	453,114		459,488
⁽¹⁾ The USAA partnership has distributed proceeds from debt financing and real estate sales in excess of Regency's carrying value of its investment, resulting in a negative investment balance, which is classified within Accounts payable and other liabilities in the Consolidated Balance Sheets.

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)	March 31, 2019
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Mortgage Loan Maturities		Unsecured Maturities	Total		Regency’s Pro-Rata Share
2019	$	14,382	16,186		—	30,568		10,340
2020	17,043		330,615		—	347,658		111,957
2021	11,048		269,942		19,635	300,625		104,375
2022	7,811		170,702		—	178,513		68,417
2023	2,989		171,608		—	174,597		65,095
Beyond 5 Years	7,353		549,637		—	556,990		167,032
Net unamortized loan costs, debt premium / (discount)	—		(9,960	)	—	(9,960	)	(2,962	)
Total	$	60,626	1,498,730		19,635	1,578,991		524,254

At March 31, 2019, our investments in real estate partnerships had notes payable of $1.6 billion maturing through 2034, of which 92.0% had a weighted average fixed interest rate of 4.5%. The remaining notes payable float over LIBOR and had a weighted average variable interest rate of 4.7%. These fixed and variable rate notes payable are all non-recourse, and our pro-rata share was $524.3 million as of March 31, 2019. As notes payable mature, we expect they will be repaid from proceeds from new borrowings and/or partner capital contributions.

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 March 31,
(in thousands)	2019		2018
Asset management, property management, leasing, and other transaction fees	$	6,658	7,056

Recent Accounting Pronouncements

See Note 1 to Consolidated Financial Statements.

Environmental Matters

We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining primarily to chemicals 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 March 31, 2019 we and our Investments in real estate partnerships had accrued liabilities of $9.0 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 near future. Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation, which 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 will 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, 2018.

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.

Other than the implementation of ASC Topic 842, Leases, there have been no changes in the Parent Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the first quarter of 2019 which 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.

Other than the implementation of ASC Topic 842, Leases, there have been no changes in the Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred during the first quarter of 2019 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various legal proceedings that arise in the ordinary course of our business. We are not currently involved in any litigation nor to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations.

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, 2018.

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

There were no unregistered sales of equity securities during the quarter ended March 31, 2019.

The following table represents information with respect to purchases by the Parent Company of its common stock, by month, during the three months ended March 31, 2019.



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⁽²⁾
January 1 through January 31, 2019	563,229	$	58.20	563,229	$	3,371,220
February 1 through February 28, 2019	95,191	$	64.52	—	$	250,000,000
March 1 through March 31, 2019	108	$	66.11	—	$	250,000,000

⁽¹⁾ Includes 95,299 shares repurchased at an average price of $64.52 to cover payment of withholding taxes in connection with restricted stock vesting by participants under Regency's Long-Term Omnibus Plan.
⁽²⁾ On February 7, 2018, the Company's Board authorized a common share repurchase program under which the Company may purchase, from time to time, up to a maximum of $250 million of its outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased will be retired. Through January 2019, the Company has repurchased 4,252,333 shares for $246.6 million under this existing repurchase program. The program was scheduled to expire on February 6, 2020; however, the program was closed upon the authorization by the Company's Board of a new share repurchase program, as further discussed below. On February 5, 2019, the Company's Board authorized a new common share repurchase program under which the Company, may purchase, from time to time, up to a maximum of $250 million of shares of its outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased will be retired. The program is set to expire on February 4, 2020. The timing and actual number of shares purchased under the program depend upon marketplace conditions and other factors. The program remains subject to the discretion of the Board. Through March 31, 2019, no shares have been repurchased under this new program.

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.

31.1Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation.

31.2Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation.

31.3Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.

31.4Rule 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.



May 10, 2019	REGENCY CENTERS CORPORATION
	By:	/s/ Lisa Palmer Lisa Palmer, President and Chief Financial Officer (Principal Financial Officer)

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



May 10, 2019	REGENCY CENTERS, L.P.
	By:	Regency Centers Corporation, General Partner
	By:	/s/ Lisa Palmer Lisa Palmer, President and 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 FY2019 Q1

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