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Business Context and Reporting Period

Company: Regency Centers Corporation (formerly Regency Realty Corporation)

Filing Type: Form 10-K (Annual Report)

Reporting Period: Fiscal year ended December 31, 2000

Regency Centers is a qualified Real Estate Investment Trust (REIT) and a leading owner, operator, and developer of grocer-anchored neighborhood shopping centers. The company operates through Regency Centers, L.P., an operating partnership in which Regency owns approximately 98% of the units. As of December 31, 2000, the portfolio consisted of 242 shopping centers with 27.1 million square feet of gross leasable area (GLA), 95.3% of which was leased. The portfolio is geographically diversified across 22 states, with significant concentrations in Florida (23.5%), California (17.7%), and Texas (15%).

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 20% to $361.6 million, driven by the full-year impact of the Pacific Retail Trust acquisition (completed Feb 1999), new development completions, and an 8% increase in rental rates on stabilized properties.
• Net Income Decline: Net income for common stockholders decreased 3% to $84.8 million. This decline was primarily due to a $13.0 million provision for loss on operating properties held for sale and increased preferred unit distributions, which offset gains from acquisition and development activities.
• Debt Expansion: Total debt increased by approximately $295 million to $1.307 billion to fund acquisitions and development. This included a $150 million unsecured debt offering and $94 million in preferred unit issuances during 2000.
• Portfolio Expansion: The number of properties increased from 216 to 242, and GLA grew from 24.8 million to 27.8 million square feet.

Guidance, Outlook, and Risks

Management Outlook: Management anticipates continued growth in net income driven by increasing occupancy, rental rate growth, and development. The company maintains a conservative capital structure strategy, aiming to fund growth through free cash flow, development sales, and joint ventures without returning to equity markets. A major joint venture with the Oregon Public Employees Retirement Fund (OPERF) was formed to invest in a $300 million portfolio of shopping centers.

Risks and Contingencies:

• Market Risk: Exposure to interest rate fluctuations on variable-rate debt (LIBOR-based line of credit and mortgages).
• Tenant Concentration: Reliance on major grocer anchors (Kroger, Publix, Safeway, Albertsons) which collectively represent a significant portion of base rent.
• Environmental Liability: Potential costs associated with environmental remediation, particularly regarding dry cleaning plants, though management believes reserves and insurance mitigate material impact.
• Development Risk: Unsuccessful development activities or delays in lease-up could reduce cash flow.

Investor Verification Checklist

• Provision for Loss: Verify the details of the $13.0 million provision for loss on operating properties held for sale and the specific properties involved.
• Debt Maturities: Review the scheduled principal repayments, noting that $514.8 million is due in 2002 (including the unsecured line of credit).
• Preferred Unit Obligations: Confirm the impact of $384 million in preferred units with an average distribution rate of 8.72% on future cash flows.
• Development Pipeline: Assess the $730 million total investment required for 56 projects currently under development and the funding sources for the remaining $312 million.
• Occupancy Trends: Monitor the 95.3% overall occupancy rate, specifically noting lower occupancy in development properties versus the 95.3% rate on stabilized properties.