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Regency Centers Corp. REG seems well-poised to benefit from its portfolio of premium open-air shopping centers. The company is witnessing solid demand for its centers amid a healthy retail real estate environment, driving leasing activity, occupancy levels and rent growth. Also, its focus on building a high-quality portfolio of grocery-anchored shopping centers and an encouraging development pipeline bodes well. A healthy balance sheet provides financial flexibility for portfolio expansion.
Analysts seem bullish on this Jacksonville, FL-based Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for this retail real estate investment trust’s (REIT) 2024 funds from operations (FFO) per share indicates a favorable outlook as it has moved marginally upward over the past week to $4.27.
Shares of REG have gained 20.4% in the past six months, outperforming the industry's 16.6% growth. Given its solid fundamentals and positive estimate revisions, the stock is likely to keep performing well in the quarters ahead.
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What's Aiding REG?
Regency Centers has a high-quality open-air shopping center portfolio, with more than 80% grocery-anchored neighborhood and community centers. Its premium shopping centers are situated in affluent suburban areas and near the urban trade areas where consumers have high spending power, enabling the company to attract top grocers and retailers.
Amid these tailwinds, Regency Centers is witnessing healthy demand for its centers, fueling higher leasing activity and rental growth. In the third quarter of 2024, the company executed 1.8 million square feet of comparable new and renewal leases at a blended cash rent spread of 9.3%.
Regency Centers is making efforts to improve its portfolio with acquisitions and developments in key markets. In October 2024, REG acquired University Commons in Austin, TX, a 2.2 million square feet property anchored by H-E-B for around $14 million, at the company's share. In the third quarter of 2024, it started new development and redevelopment projects worth around $100 million, at the company’s share.Given the company’s prudent financial management, it is well-poised to explore growth opportunities.
Regency Centers maintains a healthy balance sheet position. As of Sept. 30, 2024, this retail REIT had nearly $1.5 billion of capacity under its revolving credit facility. As of the same date, its pro-rata net debt and preferred stock to operating EBITDAre was 5.2X. The company’s investment-grade credit ratings of A3 and BBB+ from Moody’s and S&P Global, respectively, render it access to the debt market at favorable costs.