Regency Centers Q3 Earnings Call Highlights

Key Points

• Regency raised its full-year outlook after third-quarter same-property NOI grew 5.1%; its revised guidance implies at least 4.25% NOI growth and 5.7% core operating earnings-per-share growth.
• Leasing reached records, with the portfolio 97% leased and shop occupancy at 94.6%; quarterly cash rent spreads were 12%, including 15% on negotiated renewals.
• Regency expects same-property NOI growth to moderate to the mid-3% range in 2027 as occupancy gains slow and debt refinancing weighs on earnings growth. Its development pipeline stood at about $680 million, with expected blended returns of 9%.

Regency Centers NASDAQ: REG raised its full-year outlook after reporting stronger third-quarter property income and record leasing levels, while executives said growth in 2027 could moderate as occupancy gains slow and debt refinancing adds pressure to earnings.

Same-property net operating income, or NOI, rose 5.1% in the third quarter and 4.4% for the year to date, Chief Operating Officer Alan Roth said on the company’s earnings call. Regency also increased its dividend by 6% during the quarter.

Chief Financial Officer Mike Mas said the company increased the midpoint of its full-year same-property NOI growth outlook to 4.25% or higher. It also raised the midpoint of its core operating earnings per-share guidance, which now implies 5.7% growth for the year.

Occupancy reaches records

Regency’s same-property portfolio was 97% leased at quarter-end, while shop occupancy reached 94.6%, both record levels, Roth said. Commenced occupancy, which measures space where leases have begun, rose to a record 95.1% as more tenants started paying rent.

Roth attributed the results to strong tenant demand and limited availability of high-quality space. Cash rent spreads were 12% in the quarter, including 15% on negotiated renewals, while spreads measured under generally accepted accounting principles were 22%.

Tenant collections and sales remained solid, receivables were below historical levels and bankruptcy impacts were minimal, Roth said. He added that Regency is leasing some space before existing tenants leave, reducing downtime and giving the company opportunities to improve its tenant mix.

In response to an analyst’s question, Roth said the company had $2 million of incremental signed leasing pipeline tied to space that was still occupied. Regency pursues such deals when it believes a replacement operator can strengthen traffic, sales and rents across a center, he said.

2027 growth and refinancing outlook

Mas said Regency expects same-property NOI growth in the mid-3% range in 2027, with full guidance to come on its fourth-quarter call in February. He cited continued high occupancy, rent growth, tenant health and redevelopment contributions.

Occupancy increases are likely to moderate after reaching historical highs. Mas said average commenced occupancy increased by about 150 basis points in 2025 and was expected to rise by roughly 80 basis points in 2026, leaving an estimated 40 to 50 basis points of improvement next year.

The preliminary outlook also assumes bad-debt expense moves toward a historical level approaching 50 basis points, compared with about 25 basis points this year. Mas characterized that assumption as a normalization rather than a response to specific tenant health concerns.

Refinancing debt maturing early next year could affect Regency’s long-term target earnings growth rate by 150 to 200 basis points, Mas said. Based on borrowing costs at the time of the call, he said the company’s bias was toward the lower end of that range.

Development pipeline expands

Chief Investment Officer Nick Wibbenmeyer said Regency had started more than $280 million of development and redevelopment projects year to date through October, including more than $100 million in the third quarter. The company continues to expect starts to approach $400 million by year-end.

Recent ground-up projects include a Whole Foods-anchored center in Southern California and, shortly after quarter-end, a Sprouts-anchored project in Northern California. Regency’s in-process pipeline stood at approximately $680 million, with expected blended returns of 9%, Wibbenmeyer said.

Asked about returns on ground-up projects, he said those developments were generally landing in a 7% to 8% range. He said Regency typically secures substantial pre-leasing, entitlements and construction bids before closing on projects.

The company also acquired more than $100 million of properties during the quarter, bringing its year-to-date total through October to more than $170 million. Some purchases were funded with joint venture capital alongside a longstanding partner.

President and Chief Executive Officer Lisa Palmer said Regency would remain selective with investments in a higher-interest-rate environment. Asked about potential stock buybacks, she said development and redevelopment opportunities currently offer better returns, although repurchases remain an option when their returns are more attractive.

About Regency Centers (NASDAQ:REG)

Regency Centers Corporation is a real estate investment trust that owns, operates, develops and redevelops grocery-anchored shopping centers in the United States. Its properties are designed to serve everyday consumer needs and typically include supermarkets, restaurants, service providers, retailers and other commercial tenants.

The company focuses primarily on high-quality shopping centers located in established and growing communities, often in affluent or densely populated trade areas.

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