FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number: 1-12298 REGENCY REALTY CORPORATION State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) Florida 59-3191743 REGENCY REALTY CORPORATION 121 West Forsyth Street Suite 200 Jacksonville, Florida 32202 (904) 356-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ____ No ____ (APPLICABLE ONLY TO CORPORATE REGISTRANTS) Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of August 14, 1996, there were 7,882,683 shares outstanding of the registrant's common stock.
Part I. Financial Information Item 1. Financial Statements REGENCY REALTY CORPORATION Consolidated Balance Sheets June 30, December 31, 1996 1995 ---- ---- Assets Real estate rental property, at cost ........... $ 291,818,923 278,731,167 Less: accumulated depreciation .............. 21,982,528 18,631,310 ------------- ------------- Real estate rental property, net .......... 269,836,395 260,099,857 Construction in progress ....................... 6,323,528 0 Investment in unconsolidated real estate partnerships .......................... 1,209,883 315,389 ------------- ------------- Total investments in real estate, net ..... 277,369,806 260,415,246 Cash and cash equivalents ...................... 6,167,003 3,401,701 Accounts receivable, net of allowance for uncollectible accounts of $405,361 and $474,019 at June 30, 1996 and December 31, 1995, respectively .............. 1,956,072 2,620,763 Deferred costs, less accumulated amortization of $3,024,573 and $2,547,765 at June 30, 1996 and December 31, 1995, respectively ..... 3,973,378 3,598,011 Other assets ................................... 1,328,752 969,676 ------------- ------------- $ 290,795,011 271,005,397 ============= ============= Liabilities and Stockholders' Equity Mortgage loans payable ......................... 99,243,786 93,277,273 Revolving line of credit ....................... 38,857,256 22,339,803 Tenant security and escrow deposits ............ 1,031,712 976,515 Accrued expenses ............................... 2,354,089 936,695 Accounts payable and other liabilities ......... 2,901,819 6,468,537 ------------- ------------- Total liabilities ......................... 144,388,662 123,998,823 ------------- ------------- Convertible operating partnerships units ....... 168,467 0 Stockholders' Equity Preferred stock - 10,000,000 shares authorized: Series A 8% cumulative convertible, 1,916 shares issued and outstanding at December 31, 1995 ......................... 0 1,916,268 Common stock $.01 par value per share: 25,000,000 shares authorized; 6,943,735 and 6,728,723 shares issued and outstanding at June 30, 1996 and December 31, 1995, respectively .............................. 69,441 67,287 Special common stock - 10,000,000 shares authorized: Class B $.01 par value per share, 2,500,000 shares issued and outstanding at June 30, 1996 and December 31, 1995, respectively .. 25,000 25,000 Additional paid in capital .................. 159,162,745 155,221,241 Distributions in excess of net income ....... (9,849,215) (8,073,188) Stock loans ................................. (3,170,089) (2,150,034) ------------- ------------- Total stockholders' equity ................ 146,237,882 147,006,574 ------------- ------------- $ 290,795,011 271,005,397 ============= ============= See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION Consolidated Statements of Operations For the Three Month Period Ended June 30, 1996 June 30, 1995 ------------ ------------- Real estate operation revenues: Minimum rent ................................. $ 8,097,696 6,111,373 Percentage rent .............................. 233,840 159,970 Recoveries from tenants ...................... 1,670,257 1,222,089 Other recoveries and income .................. 140,635 111,611 Leasing and brokerage ........................ 669,731 287,263 Management fees .............................. 139,754 209,208 ------------ ------------ Total real estate operation revenues ....... 10,951,913 8,101,514 ------------ ------------ Real estate operation expenses: Depreciation and amortization ................ 2,020,658 1,554,127 Operating and maintenance .................... 1,757,117 1,322,072 General and administrative ................... 1,338,320 1,023,037 Real estate taxes ............................ 991,792 697,249 ------------ ------------ Total real estate operation expenses ...... 6,107,887 4,596,485 ------------ ------------ Interest expense (income): Interest expense ............................. 2,385,573 2,207,201 Interest income .............................. (170,461) (108,165) ----------- ------------ Net interest expense ...................... 2,215,112 2,099,036 ----------- ------------ Net income ................................ 2,628,914 1,405,993 Preferred stock dividends ...................... 32,171 93,208 ----------- ------------ Net income for common stockholders ............. $ 2,596,743 1,312,785 =========== ============ Net income per common share outstanding ........ $ 0.26 0.20 =========== ============ Weighted average common shares outstanding ..... 9,849,738 6,496,237 ============ ============ See accompanying notes to consolidated financial statements
REGENCY REALTY CORPORATION Consolidated Statements of Operations For the Six Month Period Ended June 30, 1996 June 30, 1995 ------------- ------------- Real estate operation revenues: Minimum rent ................................. $ 16,001,151 12,006,137 Percentage rent .............................. 423,720 316,821 Recoveries from tenants ...................... 3,283,459 2,383,422 Other recoveries and income .................. 224,819 254,733 Leasing and brokerage ........................ 1,243,816 546,321 Management fees .............................. 276,686 456,793 ------------ ------------ Total real estate operation revenues ....... 21,453,651 15,964,227 ------------ ------------ Real estate operation expenses: Depreciation and amortization ................ 3,905,109 3,053,763 Operating and maintenance .................... 3,459,652 2,657,276 General and administrative ................... 2,603,640 2,059,103 Real estate taxes ............................ 1,911,857 1,345,645 ------------ ------------ Total real estate operation expenses ...... 11,880,258 9,115,787 ------------ ------------ Interest expense (income): Interest expense ............................. 4,630,378 4,191,753 Interest income .............................. (287,178) (205,540) ------------ ------------ Net interest expense ...................... 4,343,200 3,986,213 ------------ ------------ Net income ................................ 5,230,193 2,862,227 Preferred stock dividends ...................... 57,721 208,183 ------------ ------------ Net income for common stockholders ............. $ 5,172,472 2,654,044 ============ ============ Net income per common share outstanding ........ $ 0.53 0.41 ============ ============ Weighted average common shares outstanding ..... 9,817,812 6,482,144 ============ ============ See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION Consolidated Statements of Cash Flows For the Six Months Ended June 30, 1996 and 1995 1996 1995 ---- ---- Cash flows from operating activities: Net income ...................................... $ 5,230,193 2,862,227 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................... 3,905,109 3,053,763 Equity in income of unconsolidated real estate partnership investments ............ (21,345) (10,251) Changes in assets and liabilities: Decrease in accounts receivable .............. 664,691 890,093 (Increase) in deferred leasing commissions ... (244,959) (176,298) (increase) in other assets ................... (436,158) (386,436) Increase in tenants' security and escrow deposits ........................ 55,197 45,909 Increase in accrued expenses ................. 1,671,882 1,117,584 (Decrease) increase in accounts payable and other liabilities ...................... (2,559,384) 76,553 ------------ ------------ Net cash provided by operating activities ... 8,265,226 7,473,144 ------------ ------------ Cash flows from investing activities: Investment in real estate ....................... (11,796,039) (12,122,170) Investment in unconsolidated real estate partnership ....................... (881,308) 0 Capital expenditures ............................ (1,291,717) (1,068,216) Construction in progress ........................ (6,323,528) (1,692,804) Distribution received from unconsolidated real estate partnership investment ............ 8,160 0 ------------ ------------ Net cash used in investing .................. (20,284,432) (14,883,190) ------------ ------------ Cash flows from financing activities: Dividends paid in cash .......................... (7,262,093) (5,367,061) Proceeds (repayments) from revolving line of credit, net ............................ 16,517,453 (13,539,955) Proceeds from mortgage loans payable ............ 3,918,750 25,400,000 Net proceeds from construction loans ............ 2,435,743 2,764,425 Principal payments on mortgage loans payable .... (387,981) (112,164) Issuance of convertible operating partnership units .............................. 169,852 0 Payment of loan closing costs ................... (607,216) (181,338) ------------ ------------ Net cash provided by financing activities ... 14,784,508 8,963,907 ------------ ------------ Net increase in cash and cash equivalents ... 2,765,302 1,553,861 ------------ ------------ Cash and cash equivalents at beginning of period .. 3,401,701 2,860,837 ------------ ------------ Cash and cash equivalents at end of period ........ $ 6,167,003 4,414,698 ============ ============ See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION Notes to Consolidated Financial Statements 1. The Company Regency Realty Corporation (the Company) was incorporated in the State of Florida for the purpose of managing, leasing, brokering, acquiring, and developing shopping centers. At June 30, 1996, the Company owned 35 shopping centers and 4 office complexes in four states in the southeastern United States. The Company also provides management, leasing, brokerage and development services for real estate not owned by the Company (third parties). The Company commenced operations effective with the completion of its initial public offering on November 5, 1993. The accompanying consolidated financial statements include the accounts of Regency Realty Group, Inc. (the "Management Company"), it's wholly owned or majority owned shopping centers and office complexes and its joint ventures. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 19, 1996. Certain amounts for 1995 have been reclassified to conform to the presentation adopted in 1996. 2. Basis of Presentation The accompanying interim unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are of a normal recurring nature, and in the opinion of management, are necessary to properly state the results of operations and financial position. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. 3. Acquisition and Development Through June 30, 1996, the Company has completed the acquisition of three shopping centers and one parcel of land for development of a new shopping center. These properties are 100% owned unless noted otherwise and are summarized as follows: Date Acquired Company Shopping Center Location Year Built by the Company GLA Parkway Station Warner Robbins, GA 1983/1987 02-28-96 94,290 Welleby Plaza Sunrise, FL 1982 05-31-96 109,949 Ocean East Mall (1) Stuart, FL 01-31-96 104,772 South Monroe (2) Tallahassee, FL 03-21-96 80,440 (1) Redevelopment project to be completed in 1997. The Company acquired a 25% interest. (2) New shopping center development to be completed in 1997. 4. Secured Line of Credit The Company closed on a $75 million unsecured acquisition and development revolving line of credit on May 17, 1996. The initial proceeds were used to pay off the a secured line of credit and will provide financing for new acquisition and development activity. The interest rate is Libor + 162.5 basis points with interest only for two years, and if then terminated, becomes a two year term loan maturing in May, 2000 with principal due in seven equal quarterly installments. However, the borrower may request a one year extension of the interest only revolving period annually, in May of each year beginning in May 1997. 5. Subsequent Event One June 11, 1996, the Company entered into a Stock Purchase Agreement (the "Agreement") with Security Capital U. S. Realty and Security Capital Holdings S.A. (collectively, "US Realty"). Under the agreement, the Company will sell an aggregate of 7,499,400 shares of Common Stock to U.S. Realty at a price of $17.625 per share for an aggregate purchase price of up to $132,176,925. At the initial closing on July 10, 1996, the Company sold 934,400 shares to US Realty for a total purchase price of $16,468,000. Not later than December 1, 1996 (the "Second Closing") and June 1, 1997 ("Subsequent Closings"), the Company may sell 2,717,400 shares at the Second Closing for a total of $47,894,175, and up to 3,847,600 shares at Subsequent Closings for a total of $67,813,950. The second and subsequent closings are subject to approval by the Company's shareholders at the Special Meeting of Shareholders to be held September 10, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and and Results of Operation The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Realty Corporation (the "Company") appearing elsewhere in this Form 10-Q. Business The Company's principal business is owning, managing, and developing neighborhood and community shopping centers in Florida and the Southeast. At June 30, 1996 the Company owned and managed 35 shopping centers and 4 suburban office buildings. Of the total 39 properties owned, 28 are located in Florida, and 29 are anchored by supermarkets. The Company's three largest tenants in order by number of store locations are Publix Supermarkets (13), Winn-Dixie Stores (7), and Wal-Mart (7). Acquisition and Development During 1996, the Company acquired two shopping centers (the "1996 Acquisitions") for $11.8 million for a total of 204,239 square feet. The Company also acquired a parcel of land to begin development of a new shopping center, and entered into a joint venture to redevelop an existing shopping center. Total cost at completion of these two development projects will be $12.2 million and are expected to be completed during the second quarter of 1997. During 1995, the Company acquired five shopping centers and completed the development or expanded four shopping centers for a total cost of $62 million (the "1995 Acquisitions") of which approximately $12.1 million were closed during the six months ended June 30, 1995. Liquidity and Capital Resources The Company's total indebtedness at June 30, 1996 was $138 million, of which $94 million or 68% bears a fixed rate of interest averaging 7.55%. Based upon the Company's total market capitalization (debt and equity) at June 30, 1996 of $346.6 million (the stock price was $21.00 per share and the total shares and common stock equivalents outstanding were 9,928,530), the Company's debt tp total market capitalization ratio was 39.8%. The Company funded the 1995 Acquisitions from borrowings on its line of credit (the "Line"), origination of new mortgage loans, and the proceeds from a $50 million private placement (the "Private Placement"). The Private Placement was completed on December 20, 1995 by issuing 2,500,000 shares of non-voting Class B common stock to a single investor. The Class B common shares are convertible into 2,975,468 shares of common stock beginning on the third anniversary of the issuance date subject to limitations that the holder may not beneficially own more than 4.9% of the Company's outstanding common stock except in certain circumstances. On May 17, 1996, the Company obtained an unsecured $75 million revolving line of credit from Wells Fargo National Bank ("Wells Line") with an interest rate of Libor plus 1.625%. The proceeds were used to pay off the balance of the Line, and will be used to finance future acquisition and development activity. The two shopping centers purchased in 1996 were financed by proceeds from a mortgage loan and the Wells Line. The Company's principal demands for liquidity are dividends to stockholders, the operations, maintenance and improvement of real estate, and scheduled interest and principal payments. The Company paid common and preferred dividends of $7.3 million and $5.4 million to its stockholders during 1996 and 1995, respectively. The percentage of funds from operations paid out in cash dividends, or "dividend payout ratio", was 82.7% and 86.7% during the six months ended June 30, 1996 and 1995, respectively. In January 1996, the Company increased its quarterly common dividend to $.405 per share or $1.62 annually. As a result of the Private Placement, the Company has outstanding 2,500,000 shares of Class B common with a current annual dividend rate of $1.9845 ($1.6674 on a converted common stock basis). Accordingly, dividends paid by the Company during 1996 have increased substantially over 1995 due to the common stock dividend increase and the Private Placement. During 1996 and 1995, the Company's net cash used in investing activities was $20.3 million and $14.9 million, respectively, related to real estate acquisitions, leasing and renewal activity, and building improvements. The
Company invested approximately $1.3 million and $1.1 million for improvements to its properties as of June 30, 1996 and 1995, respectively. The Company anticipates that cash provided by operating activities, unused amounts under the Wells Line, and cash reserves are adequate to meet liquidity requirements. At June 30, 1996, the Company has cash of $6.2 million of which $1.8 million was restricted. The Company has made an election to be taxed, and is operating so as to qualify, as a Real Estate Investment Trust ("REIT") for Federal income tax purposes, and accordingly has paid no Federal income tax subsequent to its IPO in 1993. While the Company intends to continue to pay dividends to its stockholders, the Company will reserve such amounts of cash flow as it considers necessary for the proper maintenance and improvement of its real estate, while still maintaining its qualification as a REIT. The Company's real estate portfolio grew substantially during 1995 as a result of the acquisitions and developments discussed above. The Company expects to continue this level of growth during 1996 and intends to meet the related capital requirements, principally for the acquisition or development of new properties, from borrowings on the Wells Line, new mortgage loans and from additional public or private equity offerings. Because such acquisition and development activities are discretionary in nature, they are not expected to burden the Company's capital resources currently available for liquidity requirements. Results of Operations Comparison of Three Months Ended June 30, 1996 to 1995 Total real estate operation revenues increased $2.8 million, or 35.2%, to $10.9 million for the three months ended June 30, 1996 as compared to $8.1 million for the comparable period in 1995. The increase in revenue was primarily attributable to a $2.0 million increase in minimum rent. The Company experienced this growth primarily as a result of its 1996 and 1995 Acquisitions which contributed approximately $1.56 million of additional minimum rent in the three month period ended June 30, 1996. At June 30, 1996, the real estate portfolio was 95.8% leased compared to 94.8% at June 30, 1995. Average rents per sf were $8.54 and $8.25 at June 30, 1996 and 1995, respectively. The increase is due primarily from the 1996 and 1995 Acquisitions which had higher average rents than the average of the portfolio prior to the 1995 Acquisitions. Revenues from property management, leasing, brokerage, and development services provided on properties not owned by the Company were $.81 million vs. $.50 million for the period ending June 30, 1996 and 1995, respectively. Total real estate operation expenses increased $1.5 million for the three months ended June 30, 1996, or 32.9%, to $6.1 million as compared to $4.6 million for the comparable period in 1995. Operating, maintenance and real estate taxes increased $.73 million to $2.7 million or 36%. This increase was primarily attributable to $.55 million in operating expenses associated with the 1996 and 1995 Acquisitions. General and administrative expense increased 31% during 1996 to $1.3 million due to accruing higher amounts for performance based deferred compensation that potentially could be earned. Performance based compensation earned in 1995 was primarily accrued during the third and fourth quarters of 1995 when the Company determined (primarily as a result of the Private Placement) that such compensation could potentially be earned. Depreciation and amortization was $2.0 million or 30% higher than 1995, predominately a result of additional depreciation and amortization on the Company's 1996 and 1995 Acquisitions. Interest expense increased to $2.4 million in 1996 from $2.2 million in 1995 or 8% due primarily to increased average outstanding loan balances as a result of the 1996 and 1995 Acquisitions. During the second quarter, preferred stock dividends declined as a result of the full conversion of the remaining Series A preferred stock into common stock. Net income for common stockholders was $2.6 million or $.26 per share in 1996 vs. $1.3 million or $.20 per share in 1995. The increase is due primarily to the 1996 and 1995 Acquisitions which contributed to a 35.2% increase in real estate operation revenues, a 36% increase in operating, maintenance and real estate taxes, a 30% increase in depreciation expense and an 8% increase in interest expense.
Comparison of Six Months Ended June 30, 1996 to 1995 Total real estate operation revenues increased $5.5 million, or 34.4%, to $21.4 million for the six months ended June 30, 1996 as compared to $15.9 million for the comparable period in 1995. The increase in revenue was primarily attributable to a $3.9 million increase in minimum rent. The Company experienced this growth primarily as a result of its 1996 and 1995 Acquisitions which contributed approximately $3.2 million of additional minimum rent in the six month period ended June 30, 1996. Revenues from property management, leasing, brokerage, and development services provided on properties not owned by the Company were $1.52 million vs. $1.0 million for the period ending June 30, 1996 and 1995, respectively. Total real estate operation expenses increased $2.8 million for the six months ended June 30, 1996, or 30%, to $11.9 million as compared to $9.1 million for the comparable period in 1995. Operating, maintenance and real estate taxes increased $1.4 million to $5.4 million or 34%. This increase was primarily attributable to $1.1 million in operating expenses associated with the 1996 and 1995 Acquisitions. General and administrative expense increased 26% during 1996 to $2.6 for the reasons mentioned earlier. Depreciation and amortization was $3.9 million or 27.9% higher than 1995, predominately a result of additional depreciation and amortization on the Company's 1996 and 1995 Acquisitions. Interest expense increased to $4.6 million in 1996 from $4.2 million in 1995 or 10.5% due primarily to increased average outstanding loan balances as a result of the 1996 and 1995 Acquisitions. The preferred stock dividends declined as a result of the full conversion of the remaining Series A preferred stock into common stock at the end of the second quarter. Net income for common stockholders was $5.2 million or $.53 per share in 1996 vs. $2.6 million or $.41 per share in 1995. The increase is due primarily to the 1996 and 1995 Acquisitions which contributed to a 34.4% increase in real estate operation revenues, a 34% increase in operating, maintenance and real estate taxes, a 27.9% increase in depreciation expense and a 10.5% increase in interest expense. Funds from Operations The Company considers funds from operations ("FFO") to be one measure of REIT performance and defines it as net income (computed in accordance with generally accepted accounting principles) excluding gains (or losses) from debt restructuring and sales of property, adjusted for certain noncash amounts, primarily depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. FFO as defined above has become a measure used by many industry analysts; however, FFO should not be considered an alternative to net income as an indication of the Company's performance or to cash flow as a measure of liquidity determined in accordance with generally accepted accounting principles. FFO for the six months ended June 30, 1996 and 1995 are summarized in the following table: 1996 1995 Net income for common stockholders $ 5,172 2,654 Add: non-cash amounts: Real estate depreciation and amortization 3,560 2,752 Common stock compensation: Board of directors' fees and 401 (k) compensation 249 215 Long-term compensation plans 623 192 Straight-lining of rents charge 14 94 ----- ----- Funds from operations $ 9,618 5,907 ===== ===== Weighted average shares outstanding 9,818 6,482 ===== ===== Funds from operations per share $ 0.98 0.91 ===== =====
In May 1995 the National Association of Real Estate Investment Trusts (NAREIT) amended the definition of FFO and recommended the following changes to become effective for fiscal years ending in 1996: (1) amortization of loan costs and depreciation of office furniture and equipment should not be added back to net income, (2) non-recurring gains (losses) should be excluded from FFO, and (3) gains (losses) from the sale of undepreciated real estate considered to be part of a company's recurring business may be included in FFO. The Company modified its definition of FFO for these changes effective January 1, 1996 and also has restated amounts reported for 1995 for comparison purposes. Environmental Matters The Company like others in the commercial real estate industry, is subject to numerous environmental laws and regulations including the operation of dry cleaning plants by tenants at several of its shopping centers. The Company believes that these dry cleaners are operating in accordance with current laws and regulations. Based on information presently available, no environmental accruals were made and management believes that the ultimate disposition of currently known matters will not have a material effect on the financial position, liquidity, or operations of the Company. Economic Conditions A substantial number of the Company's long-term leases contain provisions designed to mitigate the adverse impact of inflation on the Company's net income. Such provisions include percentage rentals, rental escalation clauses and reimbursements for common area maintenance, insurance, and real estate taxes. In addition, 39% of the Company's leases have terms of five years or less, which allows the Company the opportunity to increase rents upon lease expiration. Approximately 39% of the Company's leases expire beyond 10 years and are generally anchor tenants. Unfavorable economic conditions could result in the inability of certain tenants to meet their lease obligations and otherwise could adversely affect the Company's ability to attract and retain desirable tenants. Recently, several national and regional retailers have publicized their financial difficulties and several have filed for protection under the bankruptcy laws. National or regional tenants of which the Company has leases that have filed for bankruptcy protection are Pic N Pay Shoes ("PNP") and Discovery Zone ("DZ"). Total annual rent from PNP is less than one percent of total annual rent from all tenants, and all stores continue to operate and pay rent. Total rent from DZ is less than one percent of total annual rent from all tenants. The Company has two leases with DZ of which the store located at Regency Square in Brandon has closed and the other remains open and has guarantees extending to Blockbuster Entertainment. Regency Square, the Company's only "Power Center" containing approximately 342,000 sf is currently 95% occupied. The Company has had no other significant tenant bankruptcies. At June 30, 1996 approximately 10%, 5% and 5% of the Company's total rent is received from Publix, Winn-Dixie, and Wal-Mart, respectively (the "Three Major Tenants"). In February, 1996, Wal-Mart closed its store located at The Market Place in Alexander City, Alabama in order to relocate to a new larger store nearby. Wal-Mart will continue to pay rent due under its lease at The Market Place which expires in October, 2007. During 1995, the Company added a new Winn-Dixie store to The Market Place. Although the Company considers the financial condition and its relations with the Three Major Tenants to be very solid, a significant downturn in business or the non-renewal of expiring leases of the Three Major Tenants could adversely effect the Company. Management also believes that the shopping centers are relatively well positioned to withstand adverse economic conditions since they typically are anchored by supermarkets, drug stores and discount department stores that offer day-to-day necessities rather than luxury goods.
Part II. Other Information Item 1. Legal Proceedings None Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of shareholders was held on Tuesday, May 14, 1996 at 2:00 p.m. to elect three Class III Directors to serve for three year terms expiring at the annual meeting of shareholders to be held in 1999 and until their successors have been elected and qualified. Regarding this meeting votes were cast as follows: 4,797,768 Common stock votes For and 304,118 votes Abstained. Accordingly, the proposal passed. Item 6. Exhibits and Reports on Form 8-K 1. A report on Form 8-K was filed on June 28, 1996, reporting on a Stock Purchase Agreement dated June 11, 1996 among the Company, Security Capital Holdings S.A. and Security Capital U.S. Realty.
Pursuant to the requirements 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. REGENCY REALTY CORPORATION By:/s/ J. Christian Leavitt J. Christian Leavitt Vice President, Treasurer and Secretary Date: August 14, 1996