Regency Centers Q2 2026 Earnings Report

Regency Centers EPS Results

• Actual EPS: $1.21
• Consensus EPS: $0.59
• Beat/Miss: Beat by +$0.62
• One Year Ago EPS: $1.16

Regency Centers Revenue Results

• Actual Revenue: $413.51 million
• Expected Revenue: $411.07 million
• Beat/Miss: Beat by +$2.44 million
• YoY Revenue Growth: N/A

Regency Centers Announcement Details

• Quarter: Q2 2026
• Date: 7/29/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 11:00AM ET

Regency Centers (NASDAQ:REG) (NASDAQ: REG) is a self-administered and self-managed real estate investment trust that owns, operates, develops and redevelops retail properties in the United States. The company primarily focuses on high-quality, grocery-anchored shopping centers designed to serve the daily needs of surrounding communities.

Regency’s properties typically include supermarkets, restaurants, specialty retailers, service providers and other complementary tenants. Its activities include leasing and managing shopping centers, pursuing redevelopment opportunities and developing new retail properties in established, attractive trade areas.

Headquartered in Jacksonville, Florida, Regency Centers traces its roots to 1963 and serves communities across major metropolitan areas in the United States. Lisa Palmer serves as the company’s president and chief executive officer.

Regency Centers Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Full-year outlook raised: Regency increased its same-property NOI outlook by 40 basis points at the midpoint, now expects total NOI growth in the mid-6% range, and forecasts core operating earnings per share growth of more than 5%.
• Positive Sentiment: Leasing fundamentals remained strong: Leased occupancy approached 97%, retention was 84%, and second-quarter cash rent spreads exceeded 10% while GAAP spreads approached 20%. Commenced occupancy also rose, providing additional visibility for future NOI growth.
• Positive Sentiment: Development pipeline expanded: The company expects 2026 development and redevelopment starts to approach $400 million, with more than $140 million started year to date. Its $680 million in-process pipeline was nearly 80% leased and is expected to generate blended returns of approximately 9%.
• Positive Sentiment: Balance sheet supports continued investment: Regency said leverage remains at the low end of its 5.0–5.5x target range, with an A-rated balance sheet, roughly $180 million–$190 million of expected free cash flow, and nearly full availability on its $1.5 billion revolving credit facility.
• Neutral Sentiment: Transaction markets remain highly competitive, with grocery-anchored shopping-center cap rates compressing into the 4% range in some cases. Management plans to remain selective on acquisitions, while a one-time lease termination fee will benefit third-quarter earnings and lower non-cash revenue expectations will weigh on FFO without reducing cash flow.

Presentation

[Operator]

Greetings, and welcome to the Regency Centers Corporation second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Christy McElroy. Please go ahead.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Good morning, and welcome to Regency Centers' second quarter 2026 earnings conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer; Mike Mas, Chief Financial Officer; Alan Roth, East Region President and Chief Operating Officer; and Nick Wibbenmeyer, West Region President and Chief Investment Officer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, including forward earnings guidance and future market conditions. These are based on the current beliefs and expectations of management and are subject to various risks and uncertainties. It is possible that actual results may differ materially from those suggested by these forward-looking statements we may make.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically in our most recent Form 10-K and 10-Q filings. In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance. Our caution on forward-looking statements also applies to these presentation materials. As a reminder, given the number of participants we have on the call today, we respectfully ask that you limit your questions to one. Please rejoin the queue if you have additional follow-up questions. Lisa?

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Thank you, Christy. Good morning, everyone, and thank you for joining us. Our team delivered another excellent quarter, extending the positive momentum we've built over the past several years. We generated strong NOI and earnings growth driven by sustained operating fundamentals and a disciplined capital allocation strategy. These results reflect the quality of our portfolio, the strength of our platform, and most importantly, the remarkable execution of our team. Across our portfolio, leasing demand trends remain robust, supported by the strength of our tenant base and their continued expansion plans. Our grocery-anchored neighborhood and community centers continue to benefit from a durable tenant mix of necessity, service, convenience, and value retailers. While the resilience of our consumer base is supported by the compelling demographic profile of the suburban trade areas we serve.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

We believe this positions us well to perform consistently through shorter-term periods of macro uncertainty, as well as longer-term across all economic cycles. We also continue to execute on our capital allocation strategy with momentum across our entire investments platform, including development, redevelopment, and acquisitions. Our national ground-up development program is one of Regency's most important differentiators. In an environment of continued low new supply and a scarcity of high-quality available space, our ability to source, execute, and deliver successful projects across our target markets is not only a driver of meaningful NOI growth, it also creates value in ways that no one else in our sector is replicating. Rather than relying solely on acquiring centers at market prices to drive external growth, we are building premier shopping centers at yields that represent substantial spreads to market cap rates.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

This platform and our ability to consistently drive value above our cost to build allows us to generate earnings accretion while also growing NAV. Mike will go into more detail, but our favorable year-to-date performance and enhanced visibility into the second half of the year gives us the confidence to raise our full-year forecasts for same-property and total NOI growth. We now expect core operating earnings per share growth to exceed 5%. Before I close, I'd also like to briefly mention our recently released corporate responsibility report, which highlights meaningful progress across our priorities. Corporate responsibility has long been a foundational strategy for our company. Its principles are deeply ingrained in our culture and day-to-day operations, the initiatives continue to generate real cost savings and ancillary revenue growth. In summary, I'm energized by our business today and the opportunities ahead.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Our high-quality portfolio located in the strongest suburban trade areas, our leading national development platform, our fortress balance sheet, most importantly, again, the best team in the business, all set us apart. I'm confident in our ability to deliver durable, sustainable growth and long-term value for our shareholders. Alan?

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Thank you, Lisa, and good morning, everyone. We delivered another outstanding operating quarter, driving overall leased and shop occupancy to new highs while maintaining robust rent growth reflective of the fundamental strength across our portfolio. These positive results collectively contributed to same-property NOI growth of 3.8% in the quarter, with base rent growth serving as the primary driver. Our same-property leased rate is now nearly 97%, as we are pushing both anchor and shop leasing higher, supported by continued strong tenant demand and a retention rate of 84%. This is a direct reflection of the favorable leasing environment, coupled with limited availability of high-quality space. Commenced occupancy was also up 20 basis points in the quarter as we continue to successfully convert our SNO pipeline into rent-paying tenants.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Our pipeline of newly executed leases provides us with visibility of further upside in commenced occupancy, which will remain an important component of future same-property NOI growth. Leasing is active and broad-based across nearly every category and region in which we operate. Grocers, health and wellness concepts, restaurants, personal services, and value-oriented retailers continue to expand. At the same time, quality space is in short supply, both within our portfolio and throughout our markets, providing our teams significant leverage in lease negotiations, and they are doing an excellent job capturing that opportunity. This is translating into strong rent growth, with cash rent spreads above 10% in the quarter and GAAP spreads of nearly 20%. We also continue to successfully embed annual rent escalators into nearly all of our newly executed leases, one of the primary drivers of sustainable base rent growth well into the future.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

This fundamental backdrop is also supporting our ability to boost expense recoveries. We are seeing our recovery rates benefit significantly from higher commenced occupancy, as well as improved lease terms. We saw the power of this in the second quarter as we completed our expense reconciliations for the prior year with market conditions and the quality of our leases driving success. Building on some of Lisa's comments, our centers benefit from both trade-up and trade-down behavior, sitting at the intersection of convenience, offering value and everyday essentials. Tenant sales growth is widespread throughout the portfolio, foot traffic is showing steady increases, and accounts receivables remain below historical averages, confirming a very healthy tenant base. Our team remains focused on capitalizing on strong tenant demand and favorable supply dynamics, creating opportunities to drive NOI higher while further strengthening the merchandising quality in our portfolio.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

That combination of strong fundamentals and disciplined execution gives us confidence in our ability to continue driving NOI growth. With that, I'll hand it over to Nick.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Thank you, Alan, and good morning, everyone. During the second quarter, we continued to build on the success of our investments platform, further extending our external growth trajectory. We made meaningful progress across development, redevelopment, and acquisition activity in addition to identifying future opportunities. Our new project pipelines remain particularly strong, providing a clear path to future growth. As a result, we've raised our eye level on new development and redevelopment projects and now expect starts in 2026 to approach $400 million. This truly is a unique story to Regency. We have a visible external growth pipeline that results in real value creation on top of earnings accretion. It also allows us to approach acquisitions as opportunistic and strategic rather than as a required deployment of capital. This is especially valuable in environments like today, with transaction markets that are extremely competitive and continue to compress cap rates.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Year-to-date, we've started more than $140 million of new projects. One of the highlights of which was the start of The Berkeley at Durbin Park during the second quarter. This $55 million ground-up project will be anchored by Whole Foods and TJ Maxx, located within a vibrant master planned community in a strong suburb of Jacksonville. We're also making great progress executing on our $680 million in-process pipeline, for which we continue to expect blended returns of 9%. Leasing momentum for these projects has been outstanding, with in-process developments nearly 80% leased. Beyond accelerated leasing, our team continues to partner with anchors to efficiently get stores open ahead of schedule and accelerate rent commencements. This includes the recent early openings of Trader Joe's at Golden Hills in Central California and Kroger at Westchester Plaza in Cincinnati.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

These are just a few great examples of the success and positive trends across our pipeline. In closing, our ability to increasingly source new and exciting projects is a testament to the flywheel effect I've referred to in the past. We are excited about the opportunities in front of us as our recent successes, retailer relationships, development expertise, and access to capital allow us to continue to be confident in our ability to drive sustainable and attractive external growth, creating significant value for our shareholders. Mike?

[Mike Mas, CFO at Regency Centers Corporation]

Thank you, Nick, and good morning, everyone. As you've heard from the team, Regency delivered impressive financial results in the second quarter, supported by execution across our operating and investment platforms. As you heard from Nick, we now have enhanced visibility into the second half of the year, we continue to grow our investment opportunity set and in-process development pipeline. All of this speaks to the power and durability of Regency's growth algorithm. We combine the strong, stable organic performance of our high-quality portfolio with accelerating contribution from accretive capital allocation focused on successful development and redevelopment projects and operating property acquisitions. As a result, we are raising our full-year outlook.

[Mike Mas, CFO at Regency Centers Corporation]

We've increased same-property NOI growth by 40 basis points at the midpoint, primarily due to higher commenced occupancy expectations, supported by greater clarity around tenant activity in the second half, in addition to higher expense recoveries following the completion of our annual reconciliation process. Our revised outlook now reflects total NOI growth in the mid-6% area, as well as core operating earnings per share growth exceeding 5%. I also want to highlight a few atypical items within NAREIT FFO, which are largely offsetting each other within our guidance ranges. These include a singular lease termination fee that will contribute to a higher level of term fees in the third quarter. A reduction to our non-cash revenue outlook, largely related to lower below-market rent amortization and higher straight-line rent reserves.

[Mike Mas, CFO at Regency Centers Corporation]

Our A-rated balance sheet remains a competitive advantage, with leverage comfortably within our target range of 5x to 5.5x, along with strong and growing free cash flow, Nearly full availability on our $1.5 billion revolving credit facility. This flexible financial and liquidity position provides us with attractive access to low-cost capital and supports our ability to fully fund our investment pipelines and pursue additional growth opportunities. Stepping back, everything that drives value for Regency is working in concert. Strong leasing fundamentals, consistent embedded rent growth, Unmatched development-led external growth strategy, a healthy balance sheet, and Disciplined value-creating capital allocation position us for durable and attractive growth ahead. With that, we welcome your questions.

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Please limit yourself to one question, You can rejoin the queue for additional questions. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Michael Goldsmith with UBS.

[Michael Goldsmith, Analyst at UBS]

Good morning. Thanks a lot for taking my question. Can you provide a little bit more clarity on the term fees? It looks like you're now expecting a larger one in the back half. Can you provide some more details around that? How is that impacting your revised outlook? Is that included or excluded from your same property NOI guidance? Thanks.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Hey, Michael. Good morning. It's Alan Roth. I'll let Mike answer the guidance side of it. Let me just start with one of our major EV operators decided that they were not going to open 11 of our locations as part of a package deal. Great operator, financially sound. They're going to continue to operate about 15 units within our portfolio. Importantly, we are collecting rent through the end of this year. We got a termination fee of 4 years of rent out of that, and we are already engaged on 8 of those 11 locations for a backfill. It was overall an exceptional transaction in terms of what's impacting the numbers. Guidance, I'll let

[Mike Mas, CFO at Regency Centers Corporation]

Sure. Hey, Michael. It's a good opportunity to highlight the excellent disclosure on the reconciliation. If you look at page six of our slides, where you can see lease termination fees is not part of Regency same-property NOI metric. That healthy $0.015 guide raise in the same property NOI line is excluding the positive deal that Alan just described. The $0.015 is incorporated into our core operating earnings raise and FFO raise for the quarter. What I would like to highlight is that the raise in same-property growth of 40 basis points at the midpoint, raising both the low and high end, is really the material driver to our enhanced outlook. Great leasing activity, enhanced visibility into average commenced occupancy going north from this point forward.

[Mike Mas, CFO at Regency Centers Corporation]

We had a great recovery season in the second quarter, and we think that expense recovery ratio will hold for the balance of the year.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Michael.

[Michael Goldsmith, Analyst at UBS]

Thank you very much.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Thanks, Michael.

[Operator]

Our next question will come from Jamie Feldman with Wells Fargo.

[Jamie Feldman, Analyst at Wells Fargo]

Great. Thanks for taking the question. You walk through a wide range of capital options to fund new investment. You're comfortably in your target range for leverage. Can you just talk about how you do think about the different sources of capital, including OP units, as we've seen some of your peers start to use a little bit more? Especially as you find larger deals or if you want to find larger deals, how you'd think about the mix of capital sources. Thank you.

[Mike Mas, CFO at Regency Centers Corporation]

I got you, Jamie. Everything here starts with free cash flow. We're very consistent with how we think about sources and uses. Free cash flow's in the area of $180, $190 million this year. We will leverage that neutral to our balance sheet. I appreciate you noting where we are. We are at the lower end of our targeted range, 5x to 5.5x. We have some capacity there. That levered free cash flow is the fundamental source for driving our development business. We can go confidently into that business and make commitments and deliver upon those commitments. We do have excess levered free cash flow that we can deploy into acquisitions. To the extent we find bigger transactions beyond that, or to the extent we grow our development platform, we will consider other sources of capital.

[Mike Mas, CFO at Regency Centers Corporation]

We are very fortunate to have access to all types. That could be JV capital, which we've deployed, and you can see in our results. That can be more debt capital. Again, I said we're at the low end of our leverage range. That could be equity. We've raised equity in the past, and we will raise equity wisely going forward. Rest assured, what you'll see us acquire will be accretive to consistent growth, accretive to a consistent quality, and most importantly, accretive to whatever source of capital we deploy at that point in time.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thank you, Jamie.

[Jamie Feldman, Analyst at Wells Fargo]

Thank you.

[Operator]

Our next question will come from Andrew Reale with Bank of America.

[Andrew Reale, Analyst at Bank of America]

Good morning. Thanks for taking my question. I guess just to go back to the FFO reconciliation, you moved a small number of leases to cash basis in the first half. Just any color on what type of tenants those were, and maybe if you're anticipating any more cash basis conversions in the back half. Thanks.

[Mike Mas, CFO at Regency Centers Corporation]

Sure. Thanks, Andrew Reale. Yeah. The non-cash line item, we did revise down this quarter, there's really a couple things going on there. As you mentioned, this is a normal part of the business. Tenants will move from accrual accounting to cash accounting. We know, what happens when that occurs is whatever straight-line rent you've accrued to that point in time gets reversed, that is what is occurring in this quarter. To highlight that, there is one lease in particular that had an outsized impact on that outcome this quarter, that's really what's kind of driving our revised outlook for the year. By the way, just as an aside, that lease that did convert to cash is current on their cash payments. We're not losing any cash flow in our core operating earnings guidance.

[Mike Mas, CFO at Regency Centers Corporation]

The second element that's going on in the non-cash line item is accelerated below-market rent. Pardon me for getting technical. The good news of retaining more tenants that were on our watch list that we had provisioned for them departing or moving out is not occurring. What that also means is the below-market rent that you would've accelerated into income is also not occurring. That is revised out of our non-cash outlook this quarter. What does that really mean when you zoom out? Cash earnings are growing at Regency. We are retaining more tenants. Average commenced occupancy continues to increase. That is also translating and amplifying through recovery income, that is what's driving our core operating earnings guide increase of $0.03 at the midpoint. All of those indications are very positive for our outlook.

[Mike Mas, CFO at Regency Centers Corporation]

The non-cash items are in FFO, unfortunately, they have moved in the wrong direction on us. Those, again, are not impacting that free cash flow number I mentioned earlier.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thank you, Andrew.

[Andrew Reale, Analyst at Bank of America]

Thanks.

[Operator]

Moving next to Ronald Kamdem with Morgan Stanley.

[Ronald Kamdem, Analyst at Morgan Stanley]

Hey, staying on the presentation, the 94.5 sort of commenced occupancy, I think we've talked about sort of further upside from here. Can you just tell us in terms of how high you think occupancy can go, specifically inline occupancy, and how you guys are sort of incentivizing the team to sort of keep driving that higher? Thanks.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Ronald, good morning. It's Alan. Appreciate the question. I've had the luxury of saying records are meant to be broken for many quarters, so I've stopped saying that and really not guiding to how far that runway can go. Our teams are focused on great operators, on quality merchandising, and they're going to continue to keep that pedal down. When I look back at the last quarter of deals that were completed, there's a number of just great users out there that the power of the platform has come into fruition. Sourdough & Co., we signed four deals with them, in Oregon, Colorado, Georgia, sort of around the country, where our teams are banding together on a great use there. everbowl, a couple deals in North Carolina and California. That great concept that I say is new, maybe it's not that new, is PopUp Bagels.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Multiple deals with them. If you transition into the fitness sector, you've got [solidcore], who's been a strong staple for us, and Pilates Addiction, owned by the Sequel Brands. There's just some great retailers that the teams are executing on multiple deals around the country, leveraging the platform. They're going to continue to press forward on great users without any expectation of where ultimately it can go. From a commenced occupancy, to answer that question, we're at roughly 240 basis points SNO spread today, and if you just look back at that historic sort of stabilized number, it's 180 basis points-ish. That gives a little bit of context in terms of where we think that can go in terms of future runway, which we certainly have.

[Ronald Kamdem, Analyst at Morgan Stanley]

Thank you.

[Operator]

Greg McGinniss with Scotiabank has our next question.

[Greg McGinniss, Analyst at Scotiabank]

Hey, thank you. I was hoping that you could give us maybe a little bit of color on the acquisition environment, the availability of shopping centers that kind of fit your underwriting criteria, cap rate trends, and your use of JVs to acquire those. Is there dry capital in these structures or mandates to spend where we could see you continue to invest there?

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Hey, Greg, this is Nick. Good morning. Yeah, we'll start first with just what we're seeing in the market. The market's very active in the transactions world. We continue to see especially private capital allocate towards grocery-anchor shopping centers for the same reason we're attracted to them. As I said in my opening remarks, that is continuing to quarter-over-quarter compress cap rates. I believe when we talked about this last quarter, I was talking mid-5s±, and we're now seeing some things trade starting with a four. Very aggressive capital from a core acquisition standpoint.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

The blessing that we have given our business plan, as Mike already talked about, is first and foremost, we're focused on growing our development and redevelopment platform given the yields you can see that we're accomplishing there and feel really confident in our visibility to continue and execute the in-process ones and continuing to grow that pipeline.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

As Mike also said, we do have excess capital, as you alluded to. One part of that is our JV capital. Very proud of our long-term partnership with State of Oregon. They have re-upped, so to speak, that capital commitment. There is quite a bit of availability still within that partnership. We still have capacity on our balance sheet, as Mike talked to. As you can see this quarter, we're still active in the transactions market, but we're going to be picky.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

We're going to make sure that they check all the boxes Mike spoke about earlier, which is we can fund them creatively, whether that's on balance sheet or with our partnerships. Make sure that we like the quality of the asset from quality of the trade area, quality of the tenants, and importantly, the quality of the future growth. When we see those opportunities, and again, we're very active in that world, we're just very particular to only pounce on those that check that box, and we're doing that very effectively.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Greg.

[Greg McGinniss, Analyst at Scotiabank]

Could you just touch on the difference in kind of

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Hey, Greg.

[Greg McGinniss, Analyst at Scotiabank]

acquisition cap rate? Yeah.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Greg, Sorry, queue for a second question. Thank you.

[Greg McGinniss, Analyst at Scotiabank]

Okay.

[Operator]

Moving on to Todd Thomas with KeyBanc Capital Markets.

[Todd Thomas, Analyst at KeyBanc Capital Markets]

Hi. Thanks. I wanted to ask about the Kroger-Ahold Delhaize merger. I was wondering first, can you just discuss whether there's any geographic overlap across the banners there and if any potential formats, I guess, could be at risk longer term? Then second, that combination there would create a new top tenant for the company, be almost 150 basis points more rent exposure than Publix. Just any considerations around that larger concentration and whether that creates any asset management sort of needs or opportunities.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Hey, Todd. It's Lisa. I think that you might be confusing Giant of Ahold with Giant Eagle. The merger is actually Kroger with Giant Eagle.

[Todd Thomas, Analyst at KeyBanc Capital Markets]

Yeah.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

I'll let Alan Roth touch on that.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Yeah. Todd Thomas, Giant Eagle is Pittsburgh based. That is the announcement with Kroger, of which we don't own any Giant Eagles in our portfolio. When you think about the 500 assets, the only overlap for us from a market perspective would be Columbus, Ohio. Again, so it's super de minimis. I think there's maybe three Kroger centers that have sort of some trade area overlap there. You're not the first. There's a lot of people that see Giant Food and assume that Giant Food that's in Maryland, which is the Ahold Delhaize, as you mentioned, versus the Giant Eagle out of Pittsburgh. Again, it's not much of a material thing for Regency Centers.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Todd.

[Operator]

We'll go next to Michael Griffin with Evercore ISI.

[Michael Griffin, Analyst at Evercore ISI]

Great. Thanks. Maybe sticking on that vein of grocers. One of your larger tenants had some cautious commentary in their recent earnings report around consumer sentiment, and I think it's maybe the lower end consumer is getting squeezed. Maybe that's not applicable within your footprint in Regency's portfolio, do you have a sense, has either grocer health or the outlook changed at all, are occupancy costs stable? If you could just give us any insights there, that'd be helpful.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Of course, Griff. Thanks. This is Lisa, obviously. Appreciate the question. I know you've heard me say this before. I've been in the business a really long time, the grocery business has always been extremely competitive through decades of my experience, it continues to be so, even more so today. The best physical locations with the better operators are going to continue to be critical to the entire grocery sector. You see that through all of their expansion plans, which both Alan and Nick talked about. We're seeing it in our development pipeline with those expansion plans. I'll remind you that there was even more concern pre-COVID, then coming through COVID, a renewed appreciation for that physical location. The grocers understand that they need to invest in every aspect of the business from an omnichannel standpoint, we're seeing that happen.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

From our perspective specifically, we haven't seen anything in our portfolio, or in our close relationships and conversations with our grocers, that would give us any pause or change our view of grocery whatsoever. We are in active dialogue, while it is a really competitive environment, we believe that operating with owning the best real estate, operating with the best grocer banners in those markets is a winning long-term strategy.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Griff.

[Operator]

Our next question will come from Floris van Dijkum with Ladenburg Thalmann.

[Floris van Dijkum, Analyst at Ladenburg Thalmann]

Hey, thanks. Congrats. Solid quarter again. You mentioned your fixed rent bumps that you're getting. I would imagine all your shop tenants have 3% or greater. Maybe talk a little bit about what you're seeing on the anchor side. How successful are you in getting annual rent bumps for your anchor tenants? Are even grocers now willing to contemplate those leases? Obviously, those don't come up very often. Maybe if you can talk a little about what's happening also on the anchor front in terms of pushing those escalators through to your tenants.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Good morning, Floris. Appreciate the question. Yeah, you're right. More than 80% of our new shop leases do have 3% or more, importantly, because we're leaning into the or more component for the quarter. Things have also certainly improved, to your point, on the anchor side. Is it having success on the annual escalators that we would all like to? No, I don't think the anchor side has transitioned as much as certainly as the shop world has. However, what we are experiencing is larger rent spreads than we were seeing before. There's many anchor tenants that may have had 10-year, even up to 20-year term flat rents. In today's environment, you're getting those escalators in maybe five-year increments. There's certainly improvement.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

We are leaning in where we can appropriately lean in, but also being mindful of we want the best operator that is going to be right for our asset, right for the community, and right for further merchandising.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Floris.

[Operator]

Moving on to Craig Mailman with Citigroup.

[Craig Mailman, Analyst at Citigroup]

Hey, good morning, everyone. Lisa, I know you spent a lot of time discussing the differentiator that the development platform has been for Regency, and you guys are upping the starts this year to $400 million. I'm just kind of curious what the potential sustainability or acceleration is even from here, to put capital to work and continue to drive the value and just kind of curious also, with cap rates falling to below 5% in some instances, how does that change the replacement cost rent math for you guys or your risk appetite there? Does that free up more projects that may have been a little bit harder to pencil now that the exit value may be even better?

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Hi, Craig. Appreciate the question. I'll just reiterate something that you even mentioned that I've said before, and I will say it again. We have the best national development platform in the business. I know you've heard Nick say, and other members of our team, it's not an easy business. The reason for our success is the experience that we have of the team, the relationships that we have locally as well as nationally, and simply just the ability to execute. We have confidence that we're able to sustain, if not grow, the levels at which we've been starting projects and delivering to the come in the future for the past several years. There's no question we continue to hear others have a difficult time making it pencil, but it's all of those things, cost of capital, relationships, experience, that are enabling us to be successful.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

I have 100% confidence that that's going to continue into the foreseeable future.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Craig.

[Operator]

Our next question comes from Mike Mueller with JPMorgan.

[Mike Mueller, Analyst at JPMorgan]

Yeah. Hi. Just out of curiosity on the Berkeley development in your backyard, is that something you've been pursuing for a while and maybe couldn't get land before, or is it just more of a recent opportunity?

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Yeah, Mike, appreciate the question. We've been working on that project now for several years. That's why, as Lisa alluded to, these projects are not easy. They are complicated. They don't just sort of fall out of the sky like sometimes some acquisitions do. These are blood, sweat, and tears over an extended period of time. Similar to the story we've talked about in the past, it's a great master planned community. It's the entrance into this master planned community. We've been working with that owner for several years to come up with a site plan that works for us and works for them, and obviously bringing another Whole Foods to Jacksonville, bringing a TJ Maxx to St. John's County, we're just really excited about it.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Again, a several-year process, and I say that to just reinforce what Lisa just said on the last question, which is why we're bullish about our ability to continue to deliver. We have a pipeline of projects we are currently working on that is very healthy. We're not going to bat 1,000, but we feel really good about similar to this one, ultimately bringing those things online in terms of starting them and then more importantly, delivering them as we've done time and time again. Really excited about that project and excited about ones to come in the near future.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Thank you for asking the question. Gives me an opportunity to come over top and just reiterate, because that project is a great example of each one of the things that I said. One, fantastic team locally that is working on that project. Two, it wouldn't have happened without the relationships that we have in this market. Three, it wouldn't have happened without the relationship with Whole Foods. It's going to be a great center and one that we will own for a very long time.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Mike.

[Operator]

Moving next to Juan Sanabria with BMO Capital Markets.

[Juan Sanabria, Analyst at BMO Capital Markets]

Hi, good morning. Thanks for the time. Just curious on the acquisition front, if you guys have studied or are thinking about expanding the breadth of opportunities to maybe include non-anchored strips or maybe larger lifestyle or power centers, just given the compression in grocery anchor. I suspect I know the answer, but curious on the thoughts and the rationale, just given the strength of the asset management team to take advantage of opportunities in those other kind of subcategories.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Yeah. Appreciate the question, Juan. As you can appreciate, yes, we're constantly looking at all opportunities across the spectrum retail real estate. We continue As Mike said earlier, and I said earlier, to really be particular, we like our formats. We like grocery-anchored neighborhood shopping centers. We like best-in-class community shopping centers for the durability, for the merchandising, and for what we believe is the long-term ability to grow rents in those shopping centers. That is our primary focus, as you've seen time and time again. We are looking at whether it be adding on to our existing centers, as you saw us do here with Berkshire Commons, a little strip center. We have bought those. We continue to look at those. When they match our strategy and we can fund them accretively, we will move on those.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

As it relates to power centers, as we've talked about, the box business is a different business. I don't think you're going to see us, unless it's something very unusual, moving into the power center business.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thank you, Juan.

[Operator]

As a final reminder, that is star one if you would like to ask a question. We'll go next to Paulina Rojas with Green Street.

[Paulina Rojas, Analyst at Green Street]

Good morning. This is a follow-up on JVs. Some of your JV deals made me wonder how you think about the trade-offs of growing your JV partnership more aggressively, benefiting from the fee income to boost yields versus the complexities in general around partial ownership. I ask because we have seen other players in our space and also in other real estate industries scale this arm in an environment where, in general, acquisition yields are hard to find.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

I'll start, Mike can color up if I miss anything. Paulina, as we've often said, when we think about JVs, we think about employing them for three reasons: access to capital, access to opportunity, access to expertise. That comes when it's a different use, perhaps. The other two, we're not in a position, say, where we need access to capital. Never say never. We do appreciate the partners that we have, and we'll continue to invest in those partnerships, maintain those relationships. If there ever is a need for access to capital, access to opportunity, and as we've been acquiring with Oregon, it does help us execute on these acquisitions on an accretive basis for the reasons that you mentioned. Oregon is a 20+ year partner. We do still have capacity, and we will still continue to invest that capital that we have with them.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

To the extent of scaling further, that's something that we would always evaluate. Again, if it checks one of those boxes, if it gives us access to opportunity, and that opportunity's got to check all the boxes that Nick and Mike mentioned. Is it accretive to earnings? Is it accretive to future growth rate, and accretive or equal to the quality of what we already own? That's how we think about it.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Thanks, Paulina.

[Operator]

Moving on to Michel Wurman with BTG Pactual.

[Michel Wurman, Analyst at BTG Pactual]

Thanks. Good morning. Lisa, you mentioned the Corporate Responsibility Report, and obviously, Regency Centers has seen significant growth in kind of renewable energy out of the portfolio in recent years. Maybe with the kind of the national conversation and local level pretty active around power generation and electricity bills, I'm just curious what kind of the go-forward opportunity is to expand the Solar Program at Regency Centers and how you think about that, not just from a Corporate Responsibility, but from an investment perspective, whether it's on the expense side of Regency Centers or services you can provide to the tenants in the communities. Maybe just some color there on where that could go in the coming years. Thank you.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

I think I'll probably let Alan hit those tactics. I'll just reiterate that Corporate Responsibility is just, again, ingrained in our culture. If you look at our values on our website, we live those. Connecting to our communities, being responsible, striving for excellence, all fits our priorities as we think about Corporate Responsibility, in which renewable energy and solar is part of that. The opportunity for that, though, I'm going to let Alan.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Yeah, Mike, I would just expand upon, obviously the Corporate Responsibility being certainly step one. A lot of our developments, we're incorporating that into right out of the ground, whether some municipalities requiring it or others that are not. Then also thinking about it from an ancillary income perspective. Not just solar, but there's a various amount of things that we're thinking about. It's not a small part of our business. I mean, it's nearly $35 million a year of ancillary income, and it is growing. It's beyond just the solar, it's the EV revenues, it's fees, it's temp deals, it's different various marketing events. So, I think it's checking a lot of boxes and something that we remain keenly focused on.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

I'll just add, we do continue to invest in our Solar Program. You see that in the growth that's within our Corporate Responsibility Report. We are adding new projects this year. We're underwriting new projects for future years. We're having the most success in states like Connecticut, Massachusetts, and California. We continue to grow that program. Thanks, Mike.

[Operator]

We have a follow-up question from Floris van Dijkum with Ladenburg Thalmann.

[Floris van Dijkum, Analyst at Ladenburg Thalmann]

Hey, thanks for taking my added question. More on the capital allocation front, and development is really what your unique sauce in some ways, I would say about Regency, and I think, Lisa, you mentioned it a couple of times on the call as well. You don't seem to have a big land pipeline. How do you tie up land? Because when you do development, land presumably is one of the biggest swing factors in whether a project pencils or not. Can you maybe talk about your strategy regarding getting access to land, and how do you look at that as you build your future pipeline going forward?

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Floris, I will let Nick answer the question, but I just love that you opened the door for me to just say it one more time, that it really is a differentiator because we are allocating and investing our free cash flow in shopping centers that you would otherwise need to buy at market cap rates, and we're developing them at returns that are a substantial spread to that. It really provides us that visibility to future growth as we deliver these. Appreciate you recognizing it and giving me another opportunity to say it.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Yeah. I'll just add to that, Floris, specifically to your question. I appreciate you focused on that, because if you do look at our land held, it's actually shrunk over the last couple of years as we've grown our development program. That's really because we brought some land in that we had legacy land into production, and we haven't had to speculatively purchase land to grow the program. Specifically, we're being very efficient in our ability to, more times than not close until the project from our perspective is very effectively de-risked.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

That means entitlements in hand, that means pre-leasing with our anchor especially, and even shops in many cases, hard bids in hand, that we feel really good not only about our going-in yield, as Lisa Palmer alluded, and you can see our ground ups are 7%+, but also delivering them at those yields. It's one thing to plan them at those yields, it's another thing to bring them online, which we're doing very effectively. To your point, we have to work with the seller and control the real estate through contracts. That's how we continue to work with master plan developers and other sellers. We explain it in the process, and they share in some of that risk, so to speak, to maximize their land value and put it into production.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Really proud of the team, again, it goes back to Lisa Palmer reiterated, just those relationships. The success we have in the market, the relationships we have with the grocers. When we sit down with a seller, we're transparent. We tell them what's ahead of us collectively, our track record speaks for itself.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Floris van Dijkum.

[Floris van Dijkum, Analyst at Ladenburg Thalmann]

Thanks.

[Operator]

We have another follow-up question from Jamie Feldman with Wells Fargo.

[Jamie Feldman, Analyst at Wells Fargo]

Great. Thank you. Along those lines, just thinking about some of the other construction costs, can you just give us the state of affairs of what construction costs are doing across your markets for the major pieces of your projects? If you don't mind, medical and fitness has been growing in the portfolio. What are your thoughts on how large that could get in terms of total ABR and the credit quality of those types of tenants?

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Thank you, Jamie. Way to sneak in two questions. I'll take the first and have Alan take the second. The first in terms of cost, as you've alluded to, look, it's volatile. There's no question. Fuel prices today are very volatile. At the time we've been on this call, I haven't checked, but for all I know, they've gone up or down 10%. The really good news about our team, as I just talked about in the previous question, our de-risking of these projects is, look, we've been doing this for a very long time. Forget about even decades. Just look over the last five or six years, we've dealt with major supply chain issues as we were building shopping centers coming out of COVID.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

Came the tariff impact and the potential impact of that on our projects, now here we are dealing with fuel price volatility. It's not a fun part of the construction business, but it is just the reality of the construction business, that volatility is always part of it. Our teams do an excellent job of, again, bidding the majority of these costs before we even start to try to de-risk it, carrying appropriate contingencies and cost escalation to deal with the unknowns. They always happen. We don't know what they are, that's why they are unknowns. We've appropriately underwritten contingencies, which is why you've seen the vast majority of our projects come in on time and on budget.

[Nick Wibbenmeyer, West Region President and Chief Investment Officer at Regency Centers Corporation]

We're not going to bat 1,000, every now and then there's a little bit of an impact, if you look at a blended basis, we're winning more than we're losing in terms of our underwriting. It's why we continue to feel confident, as much as it's not fun dealing with volatility, that even through volatility, we can perform at the numbers we're showing you all.

[Alan Roth, East Region President and COO at Regency Centers Corporation]

Jamie, on your medical and fitness question, we are at about 12% of ABR, and that is up 200 basis points over the last roughly five years. We certainly are leaning in more. I would tell you the medical tenants certainly tend to be stickier. It's something that has become a bigger part of the open-air shopping center arena. From a fitness standpoint, look, healthy living is a very real mindset in today's environment. Again, we feel really comfortable and really confident in having fitness as something that the consumer and our communities want. It's just really about aligning with the right operators. Again, I don't have a specific target, but it is something that we are clearly leaning a bit more into.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Jamie.

[Operator]

Our next question will come from Tayo Okusanya with Deutsche Bank.

[Tayo Okusanya, Analyst at Deutsche Bank]

Hi, yes. Good morning, everyone. Lisa, while I recognize that the focus from an external growth perspective is on the development side, curious how you're thinking on the acquisition front. It's been a while since you've done a large deal. Curious how you're thinking about further consolidation amongst the public names in this space, or if the strategy there is really more to be selective, finding onesies and twosies where they kind of fit your bill.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Appreciate the question, Tayo. We are always active. I will remind you that last year it wasn't a merger. We did acquire a large portfolio in Southern California, which was funded very accretively. We are constantly evaluating the entire market. It's just that we approach it the same way, and we've always said that, whether it's a single asset, a portfolio of assets like we acquired last year, or whether we're looking at a company. We have the balance sheet to act, and we have the team to capitalize on those opportunities. When they're presented, we will be aggressive, and we will act offensively.

[Christy McElroy, SVP of Capital Markets at Regency Centers Corporation]

Thanks, Tayo.

[Tayo Okusanya, Analyst at Deutsche Bank]

Thank you.

[Operator]

This now concludes our question-and-answer session. I would like to turn the floor back over to Lisa Palmer for closing comments.

[Lisa Palmer, President and CEO at Regency Centers Corporation]

Thank you all for your time today, and happy Thursday.

[Operator]

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Participants

Executives

• Christy McElroy, SVP of Capital Markets
• Lisa Palmer, President and CEO
• Alan Roth, East Region President and COO
• Nick Wibbenmeyer, West Region President and Chief Investment Officer
• Mike Mas, CFO

Analysts

• Michael Goldsmith, Analyst at UBS
• Jamie Feldman, Analyst at Wells Fargo
• Andrew Reale, Analyst at Bank of America
• Ronald Kamdem, Analyst at Morgan Stanley
• Greg McGinniss, Analyst at Scotiabank
• Todd Thomas, Analyst at KeyBanc Capital Markets
• Michael Griffin, Analyst at Evercore ISI
• Floris van Dijkum, Analyst at Ladenburg Thalmann
• Craig Mailman, Analyst at Citigroup
• Mike Mueller, Analyst at JPMorgan
• Juan Sanabria, Analyst at BMO Capital Markets
• Paulina Rojas, Analyst at Green Street
• Michel Wurman, Analyst at BTG Pactual
• Tayo Okusanya, Analyst at Deutsche Bank