Regency Centers (REG) Up 1% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Regency Centers Corporation (NYSE:REG) . Shares have added about 1% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is REG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Regency Centers Beats Q1 FFO and Revenues Estimates

Regency Centers’ first-quarter 2018 FFO per share of 96 cents surpassed the Zacks Consensus Estimate of 94 cents. Further, results compared favorably with 27 cents reported in the year-ago quarter. However, results in the year-ago period included one-time merger-related costs of 55 cents per share.

The company’s quarterly results reflect growth in same-property NOI.

Adjusted revenues for the quarter came in at $269.5 million, outpacing the Zacks Consensus Estimate of $263.1 million. In addition, the figure came in higher than the year-ago tally of $189.4 million.

Inside the Headlines

During the reported quarter, Regency executed around 1.0 million square feet of new and renewal leases on a comparable basis, leading to 8.4% blended rent spreads. Rent spreads on new leases came in at 15.5%, while the same for renewal leases was 6.8%.

As of Mar 31, 2018, the company’s wholly owned portfolio, along with its pro-rata shares of co-investment partnerships, was 95.1% leased. The same-property portfolio was 95.7% leased, which reflected a contraction of 40 basis points (bps) sequentially, however, remained flat year over year.

In addition, Regency’s same-property NOI as adjusted, excluding termination fees, climbed 4.0% on a year-over-year basis, mainly due to growth in base rent. Also, it reflects adjustments for the Equity One merger.

Regency’s cash and cash equivalents were $93.6 million at the end of first-quarter 2018, up from $49.4 million recorded at the end of 2017. The company’s total outstanding debt was $3.8 billion, up from $3.6 billion witnessed at the end of the previous year.

However, during the reported quarter, the company completed a public offering of $300 million 4.125% notes due 2028, as well as increased the size of its unsecured revolving credit facility to $1.25 billion, with maturity extension to 2023.

Notable Portfolio Activity

During the quarter under review, the company closed on $64.9 million of acquisitions and $3.5 million of dispositions.

At the first-quarter end, the company had 19 properties in development or redevelopment with combined, estimated net development costs of approximately $454 million.

Outlook

Regency expects FFO per share of $3.74-$3.79 compared with the previous guidance of $3.73-$3.82.

The company expects 2.40%-3.25% growth in same-property net operating income, excluding termination fees, compared with 2.25%-3.25% guided earlier.

Dividend Update

On Apr 25, Regency’s board of directors announced a quarterly cash dividend of 55.5 cents per share on its common stock. This dividend will be paid on May 30 to shareholders of record as of May 16, 2018.

Share Repurchase Update

During the first quarter, the company purchased 2.145 million shares of common stock at an average price of $58.24 per share for $125 million under its $250-million stock-repurchase program that is slated to expire on Feb 6, 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter.

Regency Centers Corporation Price and Consensus

VGM Scores

At this time, REG has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, REG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.