Regency Centers' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Regency Centers Corporation ( REG)

Q4 2011 Earnings Call

February 2, 2012 10:00 am ET

Executives

Hap Stein – Chairman and Chief Executive Officer

Brian Smith – President and Chief Operating Officer

Bruce Johnson – Chief Financial Officer

Lisa Palmer – Senior Vice President, Capital Markets

Chris Leavitt – Senior Vice President and Treasurer

Analysts

[Michael Bellarmine] – Citi

Craig Schmidt – Bank of America Merrill Lynch

Christy McElroy – UBS

Jay Habermann - Goldman Sachs

Paul Morgan - Morgan Stanley

Michael Mueller - JPMorgan

Jeff Donnelly - Wells Fargo

Chris Lucas - Robert Baird

Cedrik Lachance - Green Street Advisors

[Tao Akesanya] – Jeffries and Company

Todd Lukasic – Morningstar

[Gaonton Gar] – Credit Suisse

Jim Sullivan – Cowen and Company

Wes Golladay – RBC Capital Markets

Vincent Chao – Deutsche Bank

[Semi Farique] – ISI

Philip Martin – Morningstar

Presentation

Operator

Good day and welcome to the Regency Centers Corporation Fourth Quarter 2011 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to your moderator, Senior Vice President of Capital Markets, Ms. Lisa Palmer. Please go ahead, ma’am.

Lisa Palmer

Thank you, Tom. Good morning, everyone and thank you for joining us. On the call this morning are Hap Stein, Chairman and CEO; Brian Smith, President and COO; Bruce Johnson, CFO and Chris Leavitt, Senior Vice President and Treasurer.

Before we start, I'd like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in these forward-looking statements. Please refer to the documents filed by Regency Centers Corporation with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in these forward-looking statements. Hap?

Hap Stein

Thank you, Lisa, and good morning. As I stated at Investor Day, Regency’s executive team is committed to regain our standing as a blue chip shopping center company by achieving four critical objectives, which I shared with you then, and I want to very briefly review with you now.

First, generating dependable NOI growth of 3%. Second, reinvigorating a disciplined development program that will add significant value to the portfolio. Third, further strengthening the balance sheet and assuring access to capital, and fourth, compounding recurring funds from operations and NAV per share by 5%.

As I reflect back on 2011, I am gratified by the progress the team has made in positioning 2012 to be a turnaround year for Regency. I’d like to now highlight those key accomplishments that will be important building blocks for both 2012 and the sustainable achievement of these four objectives in subsequent years.

We leased nearly 7 million square feet of space, including 2 million square feet of new leases, and that strong tenant demand is continuing. We increased occupancy in the operating portfolio to 93.5% and this represents the highest level in three years.

We sold on a pro rata basis more than $90 million of operating properties and recycled the capital into $110 million of dominant grocery-anchored shopping centers with much better prospects for future growth in NOI. We started over $95 million of new development and nearly $25 million of redevelopments or expansions at attractive returns of more than 9%.

In addition, we sold or converted to development almost $30 million of land held and we took further steps to improve the balance sheet. Among these was renewing our $600 million line of credit, closing on a $250 million term loan, and refinancing more than $500 million of mortgages in our co-investment partnerships.

In addition to this significant progress, there are several other important reasons and I’m confident that our focus strategy will soon start translating into performance that will manifest into the ultimate measure, total shareholder return in excess of our shopping center peers.

It all starts with our exceptional people. Many of you have had first-hand opportunities to see how good they are through our investor relations group or on property tours. Regency’s team and our enduring customer relationships are advantages that enable Regency to fully leverage our other essential assets, expertly execute our strategy, and effectively accomplish our critical goals and objectives.

It is clear to me our key customers truly recognize the value of Regency’s platform and generally respect and appreciate doing business with our people. In the mind of our retailers, brokers, our co-investment partners, and other key stakeholders, Regency is a blue chip company. In fact, the vast majority of Regency’s portfolio contains dominant grocery-anchored shopping centers that are located in attractive markets. Our experience has shown that centers with highly productive grocery anchors attract better side shop retailers, maintain and grow occupancy and produce reliable NOI.

Let me take a moment to remind you of the key attributes of the portfolio. 87% is in a top 50 market. Average household income of approximately $100,000, three mile density of over 90,000 people, and grocery sales that we’re proud to publish of $25 million and $500 per square foot.

In 2012, we’ll place even greater focus on selling the small segment of the portfolio, including legacy developments that we determine might be a drag on NOI, and buying centers that will enhance future growth. Regency’s capability to manufacture dominant grocery-anchored shopping centers in attractive markets on a basis that is accretive to NAV, and especially to the price at which we could acquire comparable properties, is an essential Regency advantage. We have incorporated the valuable lessons learned and are focusing on the construction and repositioning of core shopping centers that we want on long term.

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