Shares of Regency Centers REG have rallied 12.6% in the past six months, outperforming the industry's growth of 10.5%.
REG is well-poised to gain from its strategically located portfolio of grocery-anchored premium shopping centers and the presence of leading grocers in its tenant roster. Strategic buyouts and an encouraging development pipeline bode well for long-term growth. A healthy balance sheet aids financial flexibility.
Analysts seem bullish about this Zacks Rank #2 (Buy) company, with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share being raised marginally over the past month to $4.49.
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Factors Behind REG's Stock Price Surge: Will the Trend Last?
Regency Centers boasts a portfolio of premium shopping centers concentrated in affluent suburban areas and near urban trade areas where consumers have high spending power. The company is witnessing solid demand for its centers in a healthy retail real estate environment, driving leasing activity, occupancy levels and rent growth. In the third quarter of 2024, REG executed 1.8 million square feet of comparable new and renewal leases at a blended cash rent spread of 9.3%.
Regency has a high-quality open-air shopping center portfolio, with more than 80% grocery-anchored neighborhood and community centers. This focus on building a premium portfolio of grocery-anchored shopping centers is a strategic fit because such centers are usually necessity-driven and attract dependable traffic. In uncertain times, the grocery component has benefited retail REITs like REG.
Regency Centers has a good tenant mix, which helps generate steady rental revenues.The company has numerous industry-leading grocers such as Publix, Kroger, Albertsons Companies ACI, TJX Companies TJX, Inc. and Amazon/Whole Foods as tenants. Six of Regency’s top 10 tenants are high-performing grocers. Anchor tenants (tenants renting spaces greater than or equal to 10,000 square feet) comprised 42% (based on pro-rata ABR) of its portfolio as of Sept. 30, 2024.
To enhance its portfolio, REG has been undertaking acquisitions and developmental activities. In October 2024, Regency acquired University Commons in Austin, TX, a 2.2 million-square-foot property anchored by H-E-B for around $14 million, at the company's share. As of Sept. 30, 2024, Regency’s in-process development and redevelopment projects had estimated net project costs of $618 million at the company’s share.
Regency Centers enjoys financial flexibility and focuses on strengthening its balance sheet position. This retail REIT had nearly $1.5 billion of capacity under its revolving credit facility as of Sept. 30, 2024. The company has a well-laddered debt maturity schedule, aiming to have less than nearly 15% of total debt maturing in any given year. As of Sept. 30, 2024, 88.1% of its wholly owned real estate assets were unencumbered, providing easy access to the secured and unsecured debt markets.
Other Stocks to Consider
Some other top-ranked stocks from the broader REIT sector are TANGER INC SKT and Cousins Properties CUZ, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for TANGER INC’s 2024 FFO per share has moved marginally northward over the past two months to $2.11.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has increased marginally over the past two months to $2.68.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.v
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