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Regency Centers Corp. REG is slated to report first-quarter 2025 results on April 29, after the closing bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) reported NAREIT FFO per share of $1.09, outpacing the Zacks Consensus Estimate of $1.07. Results reflected healthy leasing activity and a year-over-year improvement in the same property's net operating income and base rent.
Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on all occasions, with the average beat being 3.13%. This is depicted in the graph below:
Regency Centers Corporation Price and EPS Surprise
Regency Centers Corporation price-eps-surprise | Regency Centers Corporation Quote
In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2025 performance.
US Retail Real Estate Market in Q1 2025
Per a Cushman & Wakefield CWK report, there has been a pullback in net absorption for the U.S. shopping center market, resulting in a negative shift in the first quarter. Although the national vacancy rate increased 20 basis points (bps) to 5.5% year over year, the vacancy rate remains near a historical low, with minimal new construction and most tenants having already right-sized their real estate needs. Asking rents for the U.S. shopping center market grew from the year-ago quarter.
The first quarter witnessed negative net absorption in the U.S. shopping center market, totaling 5.9 million square feet (msf). This represents the largest single-quarter decline since the third quarter of 2020. The decrease was due to negative net absorption observed in all four regions of the country. Neighborhood centers accounted for 75% of the pullback in demand.
The lack of new construction is also contributing to the scarcity, as only 2.2 msf of new shopping center space was delivered from the beginning of the year through April 14, 2025. As of the first quarter of 2025, there are only 10.6 msf under construction with an inventory of 4.32 billion square feet.
The reversal in net demand is leading to easing pressure on asking rents. The asking rents for U.S. shopping centers increased 2.3% year over year to $24.76 per square foot in the first quarter.
Factors at Play for Regency
Regency’s premium portfolio is situated in affluent suburban areas and near urban trade areas of the United States. With more people continuing to move to the suburbs due to post-pandemic migration and the hybrid work setup, Regency’s suburban shopping center portfolio is expected to have benefited.