Regency Centers (REG) Boosts Portfolio With Property Buyout
Regency Centers REG recently closed the acquisition of a neighborhood center, The Longmeadow Shops, in Longmeadow, MA, expanding its footprint of high-quality shopping centers in premier suburban trade areas with compelling demographics. Shares of the company witnessed a loss of 1.39% on the Dec 15 normal trading session on the NYSE, reflecting broader market concerns.
The Longmeadow Shops is a premier shopping and dining destination within the trade area, encompassing 100,000 square feet of space that is currently 100% leased. It consists of a strong national tenant mix, including CVS, Athleta, Starbucks, Bank of America, Talbots, Gap, J. Crew Factory and Chico’s.
The center, which has an established reputation and relationship with the surrounding neighborhoods, also houses local favorite dining places such as Posto, Max Burger and Delaney’s Market.
Hence, given the strategic location of the property and its popularity, it is likely to draw in substantial consumer footfall and boost sales, making the move strategic for Regency.
Per Jack deVilliers, senior vice president and senior market officer “We continue to make strategic and accretive investments in the Northeast, powered by our financial strength and access to capital. As long-term owners of our properties, we look forward to further investing in portfolio growth and demonstrating why we are a company-of-choice for this retail environment.”
Regency is focused on building a premium portfolio of grocery-anchored shopping centers. Over the years, the company has made several strategic acquisitions and developments in the key markets of the United States to bolster external growth.
In August 2023, the retail real estate investment trust (REIT) acquired Urstadt Biddle Properties Inc. in an all-stock transaction. The combined portfolio comprising 480 properties and encompassing more than 56 million square feet of the gross leasable area enhanced Regency's geographic diversification, tenant mix, growth prospects and balance sheet strength. The acquisition was immediately accretive to its core operating earnings.
In addition, REG’s healthy balance sheet position is expected to support its growth endeavors. As of Sep 30, 2023, the retail REIT had nearly $1.2 billion available under its revolving credit facility.
Shares of this Zacks Rank #3 (Hold) company have gained 12.6% in the quarter-to-date period compared with the industry's upside of 17.4%.
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However, given the conveniences of online shopping, rising e-commerce adoption is concerning for Regency. The efforts of online retailers to go deeper into the grocery business in recent years are likely to hurt the market share for brick-and-mortar stores, raising concerns for the company.
A high interest rate environment is likely to increase the company's borrowing costs, affecting its ability to purchase or develop real estate.
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Realty Income O and TANGER INC SKT. While SKT sports a Zacks Rank #1 (Strong Buy) at present, O carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Realty Income’s ongoing year’s funds from operations (FFO) per share is pegged at $4.01, indicating a year-over-year increase of 2.3%.
The Zacks Consensus Estimate for TANGER INC’s current-year FFO per share stands at $1.94, implying a rise of 6% from the year-ago reported figure.
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.
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