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EX-31.4 - REGENCY CENTERS CORPex-314063011.htm
EX-32.1 - REGENCY CENTERS CORPex-321063011.htm
EX-31.2 - REGENCY CENTERS CORPex-312063011.htm
EX-32.3 - REGENCY CENTERS CORPex-323063011.htm
EX-32.2 - REGENCY CENTERS CORPex-322063011.htm
EX-31.3 - REGENCY CENTERS CORPex-313063011.htm
EX-31.1 - REGENCY CENTERS CORPex-311063011.htm
EX-32.4 - REGENCY CENTERS CORPex-324063011.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

Commission File Number 1-12298 (Regency Centers Corporation)
Commission File Number 0-24763 (Regency Centers, L.P.)

REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
FLORIDA (REGENCY CENTERS CORPORATION)
 
59-3191743
DELAWARE (REGENCY CENTERS, L.P)
 
59-3429602
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
One Independent Drive, Suite 114
Jacksonville, Florida 32202
 
(904) 598-7000
(Address of principal executive offices) (zip code)
 
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
Regency Centers Corporation              YES  x    NO  o                     Regency Centers, L.P.              YES  x    NO  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Regency Centers Corporation              YES  x    NO  o                     Regency Centers, L.P.              YES  x    NO  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
x
 
Accelerated filer
o
Non-accelerated filer
o
 
Smaller reporting company
o
Regency Centers, L.P.:
Large accelerated filer
o
  
Accelerated filer
x
Non-accelerated filer
o
  
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company.
Regency Centers Corporation              YES  o    NO   x                    Regency Centers, L.P.              YES  o    NO  x
The number of shares outstanding of the Regency Centers Corporation’s voting common stock was 89,905,971 as of August 4, 2011.
 



EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2011 of Regency Centers Corporation and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to “Regency Centers Corporation” or the “Parent Company” mean Regency Centers Corporation and its controlled subsidiaries; and references to “Regency Centers, L.P.” or the “Operating Partnership” mean Regency Centers, L.P. and its controlled subsidiaries. The term “the Company” or “Regency” means the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust (“REIT”) and the general partner of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units (“Units”). As of June 30, 2011, the Parent Company owned approximately 99.8% of the Units in the Operating Partnership and the remaining limited Units are owned by investors. The Parent Company owns all of the Series 3, 4 and 5 Preferred Units of the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.
The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:
 
enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;  

eliminates duplicative disclosure and provides a more streamlined and readable presentation; and  

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. 
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent Company consists of the same members as the management of the Operating Partnership. These members are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. The Parent Company does not hold any indebtedness, but guarantees all of the unsecured public debt and less than 9% of the secured debt of the Operating Partnership. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units, Series 3, 4, and 5 Preferred Units owned by the Parent Company, and Series D Preferred Units owned by institutional investors. The Series D preferred units and limited partners' units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of stockholders' equity in noncontrolling interests in the Parent Company's financial statements. The Series 3, 4, and 5 Preferred Units owned by the Parent Company are eliminated in consolidation in the accompanying consolidated financial statements of the Parent Company and are classified as preferred units of general partner in the accompanying consolidated financial statements of the Operating Partnership.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. 

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.



TABLE OF CONTENTS
 
 
 
Form 10-Q
Report Page
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
Regency Centers Corporation:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010
 
 
 
 
Consolidated Statements of Operations for the periods ended June 30, 2011 and 2010
 
 
 
 
Consolidated Statements of Equity and Comprehensive Income (Loss) for the six months ended June 30, 2011 and 2010
 
 
 
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010
 
 
 
 
Consolidated Statements of Operations for the periods months ended June 30, 2011 and 2010
 
 
 
 
Consolidated Statements of Capital and Comprehensive Income (Loss) for the six months ended June 30, 2011 and 2010
 
 
 
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
(Removed and Reserved)
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
SIGNATURES
 
 
 
 
 
 





Item 1.    Financial Statements
REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
June 30, 2011 and December 31, 2010
(in thousands, except share data)
 
 
2011
 
2010
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
1,168,160

 
1,093,700

Buildings and improvements
 
2,408,966

 
2,284,522

Properties in development
 
499,584

 
610,932

 
 
4,076,710

 
3,989,154

Less: accumulated depreciation
 
755,378

 
700,878

 
 
3,321,332

 
3,288,276

Investments in real estate partnerships
 
425,559

 
428,592

Net real estate investments
 
3,746,891

 
3,716,868

Cash and cash equivalents
 
18,408

 
22,460

Accounts receivable, net of allowance for doubtful accounts of $4,827 and $4,819 at June 30, 2011 and December 31, 2010, respectively
 
27,301

 
36,600

Straight-line rent receivable, net of allowance of $1,598 and $1,396 at June 30, 2011 and December 31, 2010, respectively
 
47,768

 
45,241

Notes receivable
 
35,931

 
35,931

Deferred costs, less accumulated amortization of $68,172 and $69,158 at June 30, 2011 and December 31, 2010, respectively
 
62,912

 
63,165

Acquired lease intangible assets, less accumulated amortization of $13,707 and $13,996 at June 30, 2011 and December 31, 2010, respectively
 
18,320

 
18,219

Trading securities held in trust, at fair value
 
23,285

 
20,891

Other assets
 
39,474

 
35,164

Total assets
$
4,020,290

 
3,994,539

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
1,940,145

 
2,084,469

Unsecured line of credit
 
30,000

 
10,000

Accounts payable and other liabilities
 
121,617

 
138,196

Acquired lease intangible liabilities, less accumulated accretion of $4,434 and $11,010 at June 30, 2011 and December 31, 2010, respectively
 
8,682

 
6,682

Tenants’ security and escrow deposits
 
11,152

 
10,790

Total liabilities
 
2,111,596

 
2,250,137

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $.01 par value per share, 30,000,000 shares authorized; 11,000,000 Series 3-5 shares issued and outstanding at June 30, 2011 and December 31, 2010 with liquidation preferences of $25 per share
 
275,000

 
275,000

Common stock $.01 par value per share, 150,000,000 shares authorized; 89,905,318 and 81,886,872 shares issued at June 30, 2011 and December 31, 2010, respectively
 
899

 
819

Treasury stock at cost, 330,620 and 347,482 shares held at June 30, 2011 and December 31, 2010, respectively
 
(14,985
)
 
(16,175
)
Additional paid in capital
 
2,259,745

 
2,039,612

Accumulated other comprehensive loss
 
(76,162
)
 
(80,885
)
Distributions in excess of net income
 
(596,898
)
 
(533,194
)
Total stockholders’ equity
 
1,847,599

 
1,685,177

Noncontrolling interests:
 
 
 
 
Series D preferred units, aggregate redemption value of $50,000 at June 30, 2011 and December 31, 2010
 
49,158

 
49,158

Exchangeable operating partnership units, aggregate redemption value of $7,790 and $7,483 at June 30, 2011 and December 31, 2010, respectively
 
(862
)
 
(762
)
Limited partners’ interests in consolidated partnerships
 
12,799

 
10,829

Total noncontrolling interests
 
61,095

 
59,225

Total equity
 
1,908,694

 
1,744,402

Total liabilities and equity
$
4,020,290

 
3,994,539

See accompanying notes to consolidated financial statements.

1



REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 
Three months ended
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2011
 
2010
 
2011
 
2010
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
89,684

 
85,845

$
179,068

 
172,049

Percentage rent
 
151

 
264

 
1,058

 
624

Recoveries from tenants and other income
 
26,352

 
25,624

 
55,317

 
56,207

Management, transaction, and other fees
 
12,195

 
9,518

 
20,053

 
16,449

Total revenues
 
128,382

 
121,251

 
255,496

 
245,329

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
32,057

 
31,395

 
67,247

 
62,623

Operating and maintenance
 
17,861

 
17,221

 
37,436

 
34,819

General and administrative
 
15,177

 
12,656

 
32,131

 
27,974

Real estate taxes
 
14,297

 
14,378

 
29,000

 
28,871

Provision for doubtful accounts
 
1,586

 
63

 
2,212

 
2,402

Other expenses (income)
 
735

 
1,080

 
(174
)
 
1,687

Total operating expenses
 
81,713

 
76,793

 
167,852

 
158,376

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net of interest income of $587 and $640 for the three months ended June 30, 2011 and 2010, respectively, and $1,188 and $1,315 for the six months ended June 30, 2011 and 2010, respectively
 
30,563

 
30,635

 
61,428

 
59,764

Loss (gain) on sale of properties in development
 

 
226

 

 
(565
)
(Income) loss from deferred compensation plan
 
(143
)
 
988

 
(888
)
 
374

Loss on derivative instruments
 

 
579

 

 
922

Total other expense (income)
 
30,420

 
32,428

 
60,540

 
60,495

Income before equity in income (loss) of investments in real estate partnerships
 
16,249

 
12,030

 
27,104

 
26,458

Equity in income (loss) of investments in real estate partnerships
 
2,688

 
1,782

 
(37
)
 
(2,110
)
Income from continuing operations
 
18,937

 
13,812

 
27,067

 
24,348

Discontinued operations, net:
 
 
 
 
 
 
 
 
Operating (loss) income
 

 
(76
)
 

 
30

(Loss) gain on sale of operating properties and properties in development
 

 
(32
)
 

 
6,765

(Loss) income from discontinued operations
 

 
(108
)
 

 
6,795

Net income
 
18,937

 
13,704

 
27,067

 
31,143

Noncontrolling interests:
 
 
 
 
 
 
 
 
Preferred units
 
(931
)
 
(931
)
 
(1,862
)
 
(1,862
)
Exchangeable operating partnership units
 
(37
)
 
(27
)
 
(50
)
 
(121
)
Limited partners’ interests in consolidated partnerships
 
(189
)
 
(79
)
 
(271
)
 
(175
)
Net income attributable to noncontrolling interests
 
(1,157
)
 
(1,037
)
 
(2,183
)
 
(2,158
)
Net income attributable to controlling interests
 
17,780

 
12,667

 
24,884

 
28,985

Preferred stock dividends
 
(4,919
)
 
(4,919
)
 
(9,838
)
 
(9,838
)
Net income attributable to common stockholders
$
12,861

 
7,748

$
15,046

 
19,147

Income per common share - basic:
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

$
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common stockholders
$
0.14

 
0.09

$
0.17

 
0.23

Income per common share - diluted:
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

$
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common stockholders
$
0.14

 
0.09

$
0.17

 
0.23


See accompanying notes to consolidated financial statements.

2



REGENCY CENTERS CORPORATION
Consolidated Statements of Equity and Comprehensive Income (Loss)
For the six months ended June 30, 2011 and 2010
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling Interests
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Treasury
Stock
 
Additional
Paid In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Distributions
in Excess of
Net Income
 
Total
Stockholders’
Equity
 
Preferred Units
 
Exchangeable
Operating
Partnership
Units
 
Limited
Partners’
Interest  in
Consolidated
Partnerships
 
Total
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2009
$
275,000

 
815

 
(16,509
)
 
2,024,883

 
(49,973
)
 
(371,837
)
 
1,862,379

 
49,158

 
7,321

 
11,748

 
68,227

 
1,930,606

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 

 

 

 

 

 
28,985

 
28,985

 
1,862

 
121

 
175

 
2,158

 
31,143

Amortization of loss on derivative instruments
 

 

 

 

 
1,752

 

 
1,752

 

 
4

 

 
4

 
1,756

Change in fair value of derivative instruments
 

 

 

 

 
(25,729
)
 

 
(25,729
)
 

 
(60
)
 

 
(60
)
 
(25,789
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
5,008

 
 
 
 
 
 
 
2,102

 
7,110

Deferred compensation plan, net
 

 

 
(314
)
 
203

 

 

 
(111
)
 

 

 

 

 
(111
)
Restricted stock issued, net of amortization
 

 

 

 
3,426

 

 

 
3,426

 

 

 

 

 
3,426

Common stock redeemed for taxes withheld for stock based compensation, net
 

 

 

 
(1,404
)
 

 

 
(1,404
)
 

 

 

 

 
(1,404
)
Common stock issued for dividend reinvestment plan
 

 
1

 

 
1,313

 

 

 
1,314

 

 

 

 

 
1,314

Common stock issued for stock offerings, net of issuance costs
 

 
3

 

 
7,308

 

 

 
7,311

 

 
(7,311
)
 

 
(7,311
)
 

Contributions from partners
 

 

 

 

 

 

 

 

 

 
128

 
128

 
128

Distributions to partners
 

 

 

 

 

 

 

 

 

 
(1,212
)
 
(1,212
)
 
(1,212
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock/unit
 

 

 

 

 

 
(9,838
)
 
(9,838
)
 
(1,862
)
 

 

 
(1,862
)
 
(11,700
)
Common stock/unit ($.925 per share)
 

 

 

 

 

 
(75,574
)
 
(75,574
)
 

 
(290
)
 

 
(290
)
 
(75,864
)
Balance at June 30, 2010
$
275,000

 
819

 
(16,823
)
 
2,035,729

 
(73,950
)
 
(428,264
)
 
1,792,511

 
49,158

 
(215
)
 
10,839

 
59,782

 
1,852,293

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2010
$
275,000

 
819

 
(16,175
)
 
2,039,612

 
(80,885
)
 
(533,194
)
 
1,685,177

 
49,158

 
(762
)
 
10,829

 
59,225

 
1,744,402

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 

 

 

 

 

 
24,884

 
24,884

 
1,862

 
50

 
271

 
2,183

 
27,067

Amortization of loss on derivative instruments
 

 

 

 

 
4,723

 

 
4,723

 

 
10

 

 
10

 
4,733

Total comprehensive income
 

 
 
 
 
 
 
 
 
 
 
 
29,607

 
 
 
 
 
 
 
2,193

 
31,800

Deferred compensation plan, net
 

 

 
1,190

 
715

 

 

 
1,905

 

 

 

 

 
1,905

Restricted stock issued, net of amortization
 

 

 

 
5,391

 

 

 
5,391

 

 

 

 

 
5,391

Common stock redeemed for taxes withheld for stock based compensation, net
 

 

 

 
(1,824
)
 

 

 
(1,824
)
 

 

 

 

 
(1,824
)
Common stock issued for dividend reinvestment plan
 

 

 

 
562

 

 

 
562

 

 

 

 

 
562

Common stock issued for stock offerings, net of issuance costs
 

 
80

 

 
215,289

 

 

 
215,369

 

 

 

 

 
215,369

Contributions from partners
 

 

 

 

 

 

 

 

 

 
2,509

 
2,509

 
2,509

Distributions to partners
 

 

 

 

 

 

 

 

 

 
(810
)
 
(810
)
 
(810
)
Cash dividends declared:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock/unit
 

 

 

 

 

 
(9,838
)
 
(9,838
)
 
(1,862
)
 

 

 
(1,862
)
 
(11,700
)
Common stock/unit ($.925 per share)
 

 

 

 

 

 
(78,750
)
 
(78,750
)
 

 
(160
)
 

 
(160
)
 
(78,910
)
Balance at June 30, 2011
$
275,000

 
899

 
(14,985
)
 
2,259,745

 
(76,162
)
 
(596,898
)
 
1,847,599

 
49,158

 
(862
)
 
12,799

 
61,095

 
1,908,694


3



REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the six months ended June 30, 2011 and 2010
(in thousands)
(unaudited)
 
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
Net income
$
27,067

 
31,143

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
67,247

 
62,832

Amortization of deferred loan cost and debt premium
 
6,140

 
3,185

Accretion of above and below market lease intangibles, net
 
(390
)
 
(777
)
Stock-based compensation, net of capitalization
 
5,010

 
3,199

Equity in loss of investments in real estate partnerships
 
37

 
2,110

Net gain on sale of properties
 

 
(7,350
)
Provision for doubtful accounts
 
2,212

 
2,361

Distribution of earnings from operations of investments in real estate partnerships
 
22,872

 
21,694

Settlement of derivative instruments
 

 
(26,761
)
Loss on derivative instruments
 

 
922

Deferred compensation expense (income)
 
1,724

 
(240
)
Realized gain on trading securities held in trust
 
(172
)
 
(157
)
Unrealized (gain) loss on trading securities held in trust
 
(731
)
 
517

Changes in assets and liabilities:
 
 
 
 
Accounts receivable
 
5,163

 
5,418

Straight-line rent receivables, net
 
(2,526
)
 
(2,365
)
Deferred leasing costs
 
(7,003
)
 
(6,278
)
Other assets
 
(6,833
)
 
4,168

Accounts payable and other liabilities
 
(17,220
)
 
(8,630
)
Tenants’ security and escrow deposits
 
310

 
(126
)
Net cash provided by operating activities
 
102,907

 
84,865

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(5,415
)
 

Development of real estate including acquisition of land
 
(32,066
)
 
(22,983
)
Proceeds from sale of real estate investments
 
2,067

 
34,501

Investments in real estate partnerships
 
(188,132
)
 
(210,021
)
Distributions received from investments in real estate partnerships
 
149,357

 
79,600

Dividends on trading securities held in trust
 
98

 
106

Acquisition of trading securities held in trust
 
(10,274
)
 
(6,601
)
Proceeds from sale of trading securities held in trust
 
8,685

 
6,653

Net cash used in investing activities
 
(75,680
)
 
(118,745
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common stock issuance
 
215,369

 

Proceeds from sale of treasury stock
 
2,096

 
801

Distributions to limited partners in consolidated partnerships, net
 
(633
)
 
(1,182
)
Distributions to exchangeable operating partnership unit holders
 
(160
)
 
(290
)
Distributions to preferred unit holders
 
(1,862
)
 
(1,862
)
Dividends paid to common stockholders
 
(78,188
)
 
(74,260
)
Dividends paid to preferred stockholders
 
(9,838
)
 
(9,838
)
Repayment of fixed rate unsecured notes
 
(161,691
)
 

Proceeds from issuance of fixed rate unsecured notes, net
 

 
148,949

Proceeds from line of credit
 
320,000

 
110,000

Repayment of line of credit
 
(300,000
)
 
(110,000
)
Proceeds from notes payable
 
1,790

 
3,378

Repayment of notes payable
 
(15,560
)
 
(21,188
)
Scheduled principal payments
 
(2,470
)
 
(2,449
)
Payment of loan costs
 
(132
)
 
(1,223
)
Net cash (used in) provided by financing activities
 
(31,279
)
 
40,836

Net (decrease) increase in cash and cash equivalents
 
(4,052
)
 
6,956

Cash and cash equivalents at beginning of the period
 
22,460

 
99,477

Cash and cash equivalents at end of the period
$
18,408

 
106,433





4



REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the six months ended June 30, 2011 and 2010
(in thousands)
(unaudited)

 
 
2011
 
2010
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $957 and $3,323 in 2011 and 2010, respectively)
$
67,052

 
59,081

Supplemental disclosure of non-cash transactions:
 
 
 
 
Common stock issued for partnership units exchanged
$

 
7,311

Real estate received through distribution in kind
$
46,157

 

Mortgage loans assumed through distribution in kind
$
27,405

 

Mortgage loans assumed for the acquisition of operating real estate
$
5,937

 

Real estate received through foreclosure on notes receivable
$

 
990

Change in fair value of derivative instruments
$

 
84

Common stock issued for dividend reinvestment plan
$
562

 
1,314

Stock-based compensation capitalized
$
515

 
333

Contributions from limited partners in consolidated partnerships, net
$
2,332

 
98

Common stock issued for dividend reinvestment in trust
$
323

 
318

Contribution of stock awards into trust
$
1,105

 
1,112

Distribution of stock held in trust
$

 
51

See accompanying notes to consolidated financial statements.



5



REGENCY CENTERS, L.P.
Consolidated Balance Sheets
June 30, 2011 and December 31, 2010
(in thousands, except unit data)
 
 
2011
 
2010
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
1,168,160

 
1,093,700

Buildings and improvements
 
2,408,966

 
2,284,522

Properties in development
 
499,584

 
610,932


 
4,076,710

 
3,989,154

Less: accumulated depreciation
 
755,378

 
700,878


 
3,321,332

 
3,288,276

Investments in real estate partnerships
 
425,559

 
428,592

Net real estate investments
 
3,746,891

 
3,716,868

Cash and cash equivalents
 
18,408

 
22,460

Accounts receivable, net of allowance for doubtful accounts of $4,827 and $4,819 at June 30, 2011 and December 31, 2010, respectively
 
27,301

 
36,600

Straight-line rent receivable, net of allowance of $1,598 and $1,396 at June 30, 2011 and December 31, 2010, respectively
 
47,768

 
45,241

Notes receivable
 
35,931

 
35,931

Deferred costs, less accumulated amortization of $68,172 and $69,158 at June 30, 2011 and December 31, 2010, respectively
 
62,912

 
63,165

Acquired lease intangible assets, less accumulated amortization of $13,707 and $13,996 at June 30, 2011 and December 31, 2010, respectively
 
18,320

 
18,219

Trading securities held in trust, at fair value
 
23,285

 
20,891

Other assets
 
39,474

 
35,164

Total assets
$
4,020,290

 
3,994,539

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
1,940,145

 
2,084,469

Unsecured line of credit
 
30,000

 
10,000

Accounts payable and other liabilities
 
121,617

 
138,196

Acquired lease intangible liabilities, less accumulated accretion of $4,434 and $11,010 at June 30, 2011 and December 31, 2010, respectively
 
8,682

 
6,682

Tenants’ security and escrow deposits
 
11,152

 
10,790

Total liabilities
 
2,111,596

 
2,250,137

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
Series D preferred units, par value $100: 500,000 units issued and outstanding at June 30, 2011 and December 31, 2010
 
49,158

 
49,158

Preferred units of general partner, $.01 par value per unit, 11,000,000 units issued and outstanding at June 30, 2011 and December 31, 2010, liquidation preference of $25 per unit
 
275,000

 
275,000

General partner; 89,905,318 and 81,886,872 units outstanding at June 30, 2011 and December 31, 2010, respectively
 
1,648,761

 
1,491,062

Limited partners; 177,164 units outstanding at June 30, 2011 and December 31, 2010
 
(862
)
 
(762
)
Accumulated other comprehensive loss
 
(76,162
)
 
(80,885
)
Total partners’ capital
 
1,895,895

 
1,733,573

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
12,799

 
10,829

Total noncontrolling interests
 
12,799

 
10,829

Total capital
 
1,908,694

 
1,744,402

Total liabilities and capital
$
4,020,290

 
3,994,539


See accompanying notes to consolidated financial statements.


6



REGENCY CENTERS, L.P.
Consolidated Statements of Operations
(in thousands, except per unit data)
(unaudited)
 
 
Three months ended
 
Six months ended
 
 
June 30,
 
June 30,
 
 
2011
 
2010
 
2011
 
2010
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
89,684

 
85,845

$
179,068

 
172,049

Percentage rent
 
151

 
264

 
1,058

 
624

Recoveries from tenants and other income
 
26,352

 
25,624

 
55,317

 
56,207

Management, transaction, and other fees
 
12,195

 
9,518

 
20,053

 
16,449

Total revenues
 
128,382

 
121,251

 
255,496

 
245,329

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
32,057

 
31,395

 
67,247

 
62,623

Operating and maintenance
 
17,861

 
17,221

 
37,436

 
34,819

General and administrative
 
15,177

 
12,656

 
32,131

 
27,974

Real estate taxes
 
14,297

 
14,378

 
29,000

 
28,871

Provision for doubtful accounts
 
1,586

 
63

 
2,212

 
2,402

Other expenses (income)
 
735

 
1,080

 
(174
)
 
1,687

Total operating expenses
 
81,713

 
76,793

 
167,852

 
158,376

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net of interest income of $587 and $640 for the three months ended June 30, 2011 and 2010, respectively, and $1,188 and $1,315 for the six months ended June 30, 2011 and 2010, respectively
 
30,563

 
30,635

 
61,428

 
59,764

Loss (gain) on sale of properties in development
 

 
226

 

 
(565
)
(Income) loss from deferred compensation plan
 
(143
)
 
988

 
(888
)
 
374

Loss on derivative instruments
 

 
579

 

 
922

Total other expense (income)
 
30,420

 
32,428

 
60,540

 
60,495

Income before equity in income (loss) of investments in real estate partnerships
 
16,249

 
12,030

 
27,104

 
26,458

Equity in income (loss) of investments in real estate partnerships
 
2,688

 
1,782

 
(37
)
 
(2,110
)
Income from continuing operations
 
18,937

 
13,812

 
27,067

 
24,348

Discontinued operations, net:
 
 
 
 
 
 
 
 
Operating (loss) income
 

 
(76
)
 

 
30

(Loss) gain on sale of operating properties and properties in development
 

 
(32
)
 

 
6,765

(Loss) income from discontinued operations
 

 
(108
)
 

 
6,795

Net income
 
18,937

 
13,704

 
27,067

 
31,143

Noncontrolling interests:
 
 
 
 
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
(189
)
 
(79
)
 
(271
)
 
(175
)
Net income attributable to noncontrolling interests
 
(189
)
 
(79
)
 
(271
)
 
(175
)
Net income attributable to controlling interests
 
18,748

 
13,625

 
26,796

 
30,968

Preferred unit distributions
 
(5,850
)
 
(5,850
)
 
(11,700
)
 
(11,700
)
Net income attributable to common unit holders
$
12,898

 
7,775

$
15,096

 
19,268

Income per common unit - basic
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

$
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common unit holders
$
0.14

 
0.09

$
0.17

 
0.23

Income per common unit - diluted
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

$
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common unit holders
$
0.14

 
0.09

$
0.17

 
0.23


See accompanying notes to consolidated financial statements.

7



REGENCY CENTERS, L.P.
Consolidated Statements of Capital and Comprehensive Income (Loss)
For the six months ended June 30, 2011 and 2010
(in thousands)
(unaudited)
 
 
Preferred
Units
 
General Partner
Preferred and
Common Units
 
Limited
Partners
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Partners’
Capital
 
Noncontrolling
Interests in
Limited Partners’
Interest in
Consolidated
Partnerships
 
Total
Capital
Balance at December 31, 2009
$
49,158

 
1,912,352

 
7,321

 
(49,973
)
 
1,918,858

 
11,748

 
1,930,606

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
1,862

 
28,985

 
121

 

 
30,968

 
175

 
31,143

Amortization of loss on derivative instruments
 

 

 
4

 
1,752

 
1,756

 

 
1,756

Change in fair value of derivative instrument
 

 

 
(60
)
 
(25,729
)
 
(25,789
)
 

 
(25,789
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
6,935

 
 
 
7,110

Deferred compensation plan, net
 

 
(111
)
 

 

 
(111
)
 

 
(111
)
Contributions from partners
 

 

 

 

 

 
128

 
128

Distributions to partners
 

 
(75,574
)
 
(290
)
 

 
(75,864
)
 
(1,212
)
 
(77,076
)
Preferred unit distributions
 
(1,862
)
 
(9,838
)
 

 

 
(11,700
)
 

 
(11,700
)
Restricted stock issued by Parent Company, net of amortization
 

 
3,426

 

 

 
3,426

 

 
3,426

Common units issued as a result of common stock issued by Parent Company, net of repurchases
 

 
(90
)
 

 

 
(90
)
 

 
(90
)
Common units exchanged for common stock of Parent Company
 

 
7,311

 
(7,311
)
 

 

 

 

Balance at June 30, 2010
$
49,158

 
1,866,461

 
(215
)
 
(73,950
)
 
1,841,454

 
10,839

 
1,852,293

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2010
$
49,158

 
1,766,062

 
(762
)
 
(80,885
)
 
1,733,573

 
10,829

 
1,744,402

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
1,862

 
24,884

 
50

 

 
26,796

 
271

 
27,067

Amortization of loss on derivative instruments
 

 

 
10

 
4,723

 
4,733

 

 
4,733

Total comprehensive income
 

 

 

 

 
31,529

 

 
31,800

Deferred compensation plan, net
 

 
1,905

 

 

 
1,905

 

 
1,905

Contributions from partners
 

 

 

 

 

 
2,509

 
2,509

Distributions to partners
 

 
(78,750
)
 
(160
)
 

 
(78,910
)
 
(810
)
 
(79,720
)
Preferred unit distributions
 
(1,862
)
 
(9,838
)
 

 

 
(11,700
)
 

 
(11,700
)
Restricted stock issued by Parent Company, net of amortization
 

 
5,391

 

 

 
5,391

 

 
5,391

Common units issued as a result of common stock issued by Parent Company, net of repurchases
 

 
214,107

 

 

 
214,107

 

 
214,107

Balance at June 30, 2011
$
49,158

 
1,923,761

 
(862
)
 
(76,162
)
 
1,895,895

 
12,799

 
1,908,694


See accompanying notes to consolidated financial statements.

8



REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the six months ended June 30, 2011 and 2010
(in thousands)
(unaudited)
 
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
Net income
$
27,067

 
31,143

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
67,247

 
62,832

Amortization of deferred loan cost and debt premium
 
6,140

 
3,185

Accretion of above and below market lease intangibles, net
 
(390
)
 
(777
)
Stock-based compensation, net of capitalization
 
5,010

 
3,199

Equity in loss of investments in real estate partnerships
 
37

 
2,110

Net gain on sale of properties
 

 
(7,350
)
Provision for doubtful accounts
 
2,212

 
2,361

Distribution of earnings from operations of investments in real estate partnerships
 
22,872

 
21,694

Settlement of derivative instruments
 

 
(26,761
)
Loss on derivative instruments
 

 
922

Deferred compensation expense (income)
 
1,724

 
(240
)
Realized gain on trading securities held in trust
 
(172
)
 
(157
)
Unrealized (gain) loss on trading securities held in trust
 
(731
)
 
517

Changes in assets and liabilities:
 
 
 
 
Accounts receivable
 
5,163

 
5,418

Straight-line rent receivables, net
 
(2,526
)
 
(2,365
)
Deferred leasing costs
 
(7,003
)
 
(6,278
)
Other assets
 
(6,833
)
 
4,168

Accounts payable and other liabilities
 
(17,220
)
 
(8,630
)
Tenants’ security and escrow deposits
 
310

 
(126
)
Net cash provided by operating activities
 
102,907

 
84,865

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(5,415
)
 

Development of real estate including acquisition of land
 
(32,066
)
 
(22,983
)
Proceeds from sale of real estate investments
 
2,067

 
34,501

Investments in real estate partnerships
 
(188,132
)
 
(210,021
)
Distributions received from investments in real estate partnerships
 
149,357

 
79,600

Dividends on trading securities held in trust
 
98

 
106

Acquisition of trading securities held in trust
 
(10,274
)
 
(6,601
)
Proceeds from sale of trading securities held in trust
 
8,685

 
6,653

Net cash used in investing activities
 
(75,680
)
 
(118,745
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common units issued as a result of common stock issued by Parent Company
 
215,369

 

Proceeds from sale of treasury stock
 
2,096

 
801

Distributions to limited partners in consolidated partnerships, net
 
(633
)
 
(1,182
)
Distributions to partners
 
(78,348
)
 
(74,550
)
Preferred unit distributions
 
(11,700
)
 
(11,700
)
Repayment of fixed rate unsecured notes
 
(161,691
)
 

Proceeds from issuance of fixed rate unsecured notes, net
 

 
148,949

Proceeds from line of credit
 
320,000

 
110,000

Repayment of line of credit
 
(300,000
)
 
(110,000
)
Proceeds from notes payable
 
1,790

 
3,378

Repayment of notes payable
 
(15,560
)
 
(21,188
)
Scheduled principal payments
 
(2,470
)
 
(2,449
)
Payment of loan costs
 
(132
)
 
(1,223
)
Net cash (used in) provided by financing activities
 
(31,279
)
 
40,836

Net (decrease) increase in cash and cash equivalents
 
(4,052
)
 
6,956

Cash and cash equivalents at beginning of the period
 
22,460

 
99,477

Cash and cash equivalents at end of the period
$
18,408

 
106,433






9




REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the six months ended June 30, 2011 and 2010
(in thousands)
(unaudited)
 
 
2011
 
2010
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $957 and $3,323 in 2011 and 2010, respectively)
$
67,052

 
59,081

Supplemental disclosure of non-cash transactions:
 
 
 
 
Common stock issued by Parent Company for partnership units exchanged
$

 
7,311

Real estate received through distribution in kind
$
46,157

 

Mortgage loans assumed through distribution in kind
$
27,405

 

Mortgage loans assumed for the acquisition of real estate
$
5,937

 

Real estate received through foreclosure on notes receivable
$

 
990

Change in fair value of derivative instruments
$

 
84

Common stock issued by Parent Company for dividend reinvestment plan
$
562

 
1,314

Stock-based compensation capitalized
$
515

 
333

Contributions from limited partners in consolidated partnerships, net
$
2,332

 
98

Common stock issued for dividend reinvestment in trust
$
323

 
318

Contribution of stock awards into trust
$
1,105

 
1,112

Distribution of stock held in trust
$

 
51

See accompanying notes to consolidated financial statements.



10


REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)
1.
Organization and Principles of Consolidation
General
Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the managing general partner of Regency Centers, L.P. (the “Operating Partnership”). The Parent Company currently owns approximately 99.8% of the outstanding common Partnership Units of the Operating Partnership. The Parent Company engages in the ownership, management, leasing, acquisition, and development of retail shopping centers through the Operating Partnership, and has no other assets or liabilities other than through its investment in the Operating Partnership. At June 30, 2011, the Parent Company, the Operating Partnership and their controlled subsidiaries on a consolidated basis (“the Company” or “Regency”) directly owned 220 retail shopping centers and held partial interests in an additional 147 retail shopping centers through investments in real estate partnerships (also referred to as joint ventures or co-investment partnerships).
Estimates, Risks, and Uncertainties
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates in the Company's financial statements relate to the carrying values of its investments in real estate including its shopping centers, properties in development and its investments in real estate partnerships, accounts receivable, net, and derivative instruments. Although the U.S. economy is recovering, economic conditions remain challenging, and therefore, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change significantly, if economic conditions were to weaken.
Consolidation
The accompanying consolidated financial statements include the accounts of the Parent Company, the Operating Partnership, its wholly-owned subsidiaries, and consolidated partnerships in which the Company has a controlling interest. Investments in real estate partnerships not controlled by the Company are accounted for under the equity method. All significant inter-company balances and transactions are eliminated in the consolidated financial statements.

2.    Real Estate Investments

On June 2, 2011, the Company acquired a shopping center for a purchase price of $11.0 million which included the assumption of $5.9 million in debt, recorded net of an approximately $310,000 debt premium. Acquired lease intangible assets and acquired lease intangible liabilities of $1.7 million and $2.6 million, respectively, were recorded for this acquisition.

On May 4, 2011, the Company entered into an agreement with the DESCO Group ("DESCO") to redeem its entire 16.35% interest in Macquarie CountryWide-Regency-DESCO, LLC ("MCWR-DESCO"). The agreement allowed for a distribution-in-kind ("DIK") of the assets in the co-investment partnership. The assets were distributed as 100% ownership interests to DESCO and to Regency after a selection process, as provided for by the agreement. Regency selected four assets, all in the St. Louis market. The properties which the Company received through the DIK were recorded at the carrying value of the Company's equity investment of $18.8 million. Additionally, as part of the agreement, Regency received a $5.0 million disposition fee at closing on May 4, 2011 to buyout its asset, property, and leasing management contracts, and will receive $1.0 million for transition services it will continue to provide through 2011, of which approximately $250,000 has been recognized. At December 31, 2010, MCWR-DESCO owned 32 shopping centers, had total assets of $366.8 million and recorded a net loss of $4.9 million for the year ended and the Company's share of its total assets and net loss was $60.0 million and approximately $817,000, respectively.



11

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

3.    Discontinued Operations

During the six months ended June 30, 2011, the Company did not sell any operating or development properties. During the six months ended June 30, 2010, the Company sold 100% of its ownership interest in one operating property and one property in development for net proceeds of $25.5 million. The combined operating income and gain on the sale of these properties were reclassified to discontinued operations. The revenues included in discontinued operations were approximately $626,000 for the six months ended June 30, 2010. The operating income and gain on sales of properties included in discontinued operations are reported net of income taxes, if the property is sold by Regency Realty Group, Inc., a wholly-owned subsidiary of the Operating Partnership, which is a Taxable REIT Subsidiary as defined in Section 856(l) of the Internal Revenue Code. During the six months ended June 30, 2010, an immaterial amount of income tax expense was allocated to gain on sale of properties in development from discontinued operations.


4.    Income Taxes

Income tax expense (benefit) is included in other expenses in the accompanying Consolidated Statements of Operations and consists of the following for the three and six months ended June 30, 2011 and 2010 (in thousands):

 
 
For the three months ended June 30,
 
 
For the six months ended June 30,
 
 
2011
 
2010
 
 
2011
 
2010
Income tax expense (benefit) from:
 
 
 
 
 
 
 
 
 
Continuing operations
$
217

 
74

 
$
(1,597
)
 
81

Discontinued operations
 

 
2

 
 

 
20

Total income tax expense (benefit)
$
217

 
76

 
$
(1,597
)
 
101



5.    Notes Payable and Unsecured Line of Credit
The Parent Company does not hold any indebtedness, but guarantees all of the unsecured debt and 8.2% of the secured debt of the Operating Partnership.
Notes Payable
Notes payable consist of mortgage loans secured by properties and unsecured public debt. Mortgage loans may be prepaid, but could be subject to yield maintenance premiums. Mortgage loans are generally due in monthly installments of principal and interest or interest only, and mature over various terms through 2022, whereas, interest on unsecured public debt is payable semi-annually and the debt matures over various terms through 2021. Fixed interest rates on mortgage loans range from 5.22% to 8.40% with a weighted average rate of 6.55%. Fixed interest rates on unsecured public debt range from 4.80% to 7.95% with a weighted average rate of 5.61%. As of June 30, 2011, the Company had two variable rate mortgage loans, one in the amount of $3.9 million with a variable interest rate equal to LIBOR plus 380 basis points maturing on October 1, 2014 and one construction loan with a current balance of $8.9 million with a variable interest rate of LIBOR plus 300 basis points maturing on September 2, 2011. On January 18, 2011, the Company paid the maturing balance of $161.7 million of 7.95% ten-year senior unsecured notes from proceeds from the unsecured line of credit.
The Company is required to comply with certain financial covenants for its unsecured public debt as defined in the indenture agreements such as Consolidated Debt to Consolidated Assets, Consolidated Secured Debt to Consolidated Assets, Consolidated Income for Debt Service to Consolidated Debt Service, and Unencumbered Consolidated Assets to Unsecured Consolidated Debt. As of June 30, 2011, management of the Company believes it is in compliance with all financial covenants for its unsecured public debt.

12

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

Unsecured Line of Credit
The Company has a $600.0 million unsecured line of credit (the “Line”) commitment under an agreement with Wells Fargo Bank and a syndicate of other banks that matures in February 2012. The Line has a variable interest rate of LIBOR plus 55 basis points and an annual facility fee of 15 basis points subject to Regency maintaining its corporate credit and senior unsecured ratings at BBB. The balance on the Line was $30.0 million and $10.0 million at June 30, 2011 and December 31, 2010, respectively. The Company has initiated discussions with its lender to enter into a new Line commitment and term, and expects to close on a new commitment prior to February 2012.
The Company is required to comply with certain financial covenants as defined in the Credit Agreement such as Minimum Net Worth, Ratio of Total Liabilities to Gross Asset Value (“GAV”) and Ratio of Recourse Secured Indebtedness to GAV, Ratio of Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) to Fixed Charges, and other covenants customary with this type of unsecured financing. As of June 30, 2011, management of the Company believes it is in compliance with all financial covenants for the Line. The proceeds from the Line are used to finance the acquisition and development of real estate and for general working-capital purposes.
The Company previously had a $113.8 million revolving credit facility under an agreement with Wells Fargo Bank and a syndicate of other banks that matured in February 2011. There was no balance outstanding at December 31, 2010 and the Company did not renew this facility when it matured in February 2011.
The Company’s outstanding debt at June 30, 2011 and December 31, 2010 consists of the following (in thousands): 
 
 
2011
 
2010
Notes payable:
 
 
 
 
Fixed rate mortgage loans
$
417,712

 
402,151

Variable rate mortgage loans
 
12,767

 
11,189

Fixed rate unsecured loans
 
1,509,666

 
1,671,129

Total notes payable
 
1,940,145

 
2,084,469

Unsecured line of credit
 
30,000

 
10,000

Total
$
1,970,145

 
2,094,469


As of June 30, 2011, scheduled principal payments and maturities on notes payable were as follows (in thousands): 
Scheduled Principal Payments and Maturities by Year:
 
Scheduled
Principal
Payments
 
Mortgage Loan
Maturities
 
Unsecured
Maturities (1)
 
Total
2011
$
2,825

 
8,850

 
20,000

 
31,675

2012
 
5,836

 

 
222,377

 
228,213

2013
 
5,763

 
16,342

 

 
22,105

2014
 
5,174

 
20,928

 
150,000

 
176,102

2015
 
3,783

 
46,313

 
350,000

 
400,096

Beyond 5 Years
 
11,398

 
302,238

 
800,000

 
1,113,636

Unamortized debt (discounts)/premiums, net
 

 
1,029

 
(2,711
)
 
(1,682
)
Total
$
34,779

 
395,700

 
1,539,666

 
1,970,145


(1) Includes unsecured public debt and the Line. The Line is included in 2012 maturities and matures in February 2012.

6.    Fair Value Measurements

Trading Securities Held in Trust

The Company has investments in marketable securities that are classified as trading securities held in trust on the accompanying Consolidated Balance Sheets. The fair value of the trading securities held in trust was determined using Level 1 quoted prices in active markets. The fair value of the trading securities held in trust was $23.3 million and $20.9 million at June 30, 2011 and December 31, 2010, respectively.

13

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

Notes Payable
The fair value of the Company's notes payable are estimated based on the current rates available to the Company for debt of the same terms and remaining maturities. Fixed rate loans assumed in connection with real estate acquisitions are recorded in the accompanying consolidated financial statements at fair value at the time the property is acquired including those loans assumed in distribution-in-kind liquidations. Each of these fair value measurements fall within Level 3 of the fair value hierarchy. Based on the estimates used by the Company, the fair value of notes payable was $2.2 billion at both June 30, 2011 and December 31, 2010.

7.    Equity and Capital

Common Stock of the Parent Company
On March 9, 2011, the Parent Company settled its forward sale agreements dated December 4, 2009 (the "Forward Equity Offering") with J.P. Morgan and Wells Fargo Securities by delivering an aggregate 8.0 million shares of common stock. Upon physical settlement of the Forward Equity Offering, the Company received net proceeds of approximately $215.4 million. The Company used a portion of the proceeds to repay the Line, which had been drawn upon to repay unsecured notes of $161.7 million that matured in January 2011.

8.    Stock-Based Compensation
The Company recorded stock-based compensation in general and administrative expenses in the accompanying Consolidated Statements of Operations, the components of which are further described below for the three and six months ended June 30, 2011 and 2010 (in thousands): 
 
 
For the three months ended June 30,
 
 
For the six months ended June 30,
 
 
2011
 
2010
 
 
2011
 
2010
 
 
 
 
 
 
 
 
 
 
Restricted stock
$
2,695

 
1,713

 
$
5,391

 
3,426

Directors' fees paid in common stock
 
72

 
57

 
 
134

 
106

Less: Amount capitalized
 
(258
)
 
(166
)
 
 
(515
)
 
(333
)
Total
$
2,509

 
1,604

 
$
5,010

 
3,199


The recorded amounts of stock-based compensation expense represent amortization of the grant date fair value of restricted stock awards over the respective vesting periods. Compensation expense specifically identifiable to development and leasing activities is capitalized and included above.


14

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

There were no stock options granted during the six months ended June 30, 2011. The Company issues new shares to fulfill option exercises from its authorized shares available. The following table reports stock option activity during the six months ended June 30, 2011: 
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value
(in thousands)
Outstanding December 31, 2010
442,880

$
51.85

 
3.5

 
(4,255
)
Less: Exercised
12,561

 
35.61

 
 
 
 
Less: Forfeited
26,754

 
51.43

 
 
 
 
Less: Expired
12,023

 
60.18

 
 
 
 
Outstanding June 30, 2011
391,542

$
52.14

 
3.5

$
(3,200
)
Vested and expected to vest - June 30, 2011
391,542

$
52.14

 
3.5

$
(3,200
)
Exercisable June 30, 2011
391,542

$
52.14

 
3.5

$
(3,200
)

The following table presents information regarding non-vested option activity during the six months ended June 30, 2011: 
 
Non-vested
Number of
Options
 
Weighted
Average
Grant-Date
Fair Value
Non-vested at December 31, 2010
2,185

$
8.78

Less: 2011 Vesting
2,185

 
8.78

Non-vested at June 30, 2011

$


The following table reports non-vested restricted stock activity during the six months ended June 30, 2011: 
 
Number of
Shares
 
Intrinsic
Value
(in thousands)
 
Weighted
Average
Grant
Price
Non-vested at December 31, 2010
436,559

 
 
 
 
Add: Time-based awards granted
126,139

 
 
$
42.15

Add: Performance-based awards granted
18,246

 
 
$
41.54

Add: Market-based awards granted
165,689

 
 
$
41.54

Less: Vested and Distributed
171,292

 
 
$
43.08

Less: Forfeited
79

 
 
$
63.26

Non-vested at June 30, 2011
575,262

$
25,294

 


The weighted-average grant price for restricted stock granted during the six months ended June 30, 2011 was $41.79. The total intrinsic value of restricted stock vested during the six months ended June 30, 2011 was $7.5 million.

As of June 30, 2011, there was $19.0 million of unrecognized compensation cost related to non-vested restricted stock granted under the Parent Company's Long-term Omnibus Plan. When recognized, this compensation results in additional paid in capital in the accompanying Consolidated Statements of Equity and Comprehensive Income (Loss) of the Parent Company and in general partner preferred and common units in the accompanying Consolidated Statements of Capital and Comprehensive Income (Loss) of the Operating Partnership. This unrecognized compensation cost is expected to be recognized over the next three years, through 2014. The Company issues new restricted stock from its authorized shares available at the date of grant.


15

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

9.    Non-Qualified Deferred Compensation Plan

The Company maintains a non-qualified deferred compensation plan (“NQDCP”). This plan allows select employees and directors to defer part or all of their salary, cash bonus, and restricted stock awards. Restricted stock awards that are designated to be deferred into the NQDCP upon vesting are classified as liabilities from the grant date through the vesting date. All contributions into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited in a Rabbi trust. The Company accounts for the NQDCP in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 710 and the restricted stock awards under Topic 718. The assets in the Rabbi trust remain subject to the claims of creditors of the Company and are not the property of the participant. The NQDCP allows participants to allocate their account balance among various investments, including several mutual funds and the Company's common stock. The assets of the Rabbi trust, exclusive of the shares of the Company's common stock, are classified as trading securities on the accompanying Consolidated Balance Sheets, and accordingly, realized and unrealized gains and losses are recognized within income from deferred compensation plan in the accompanying Consolidated Statements of Operations. Investments in shares of the Company's common stock are included, at cost, as treasury stock in the accompanying Consolidated Balance Sheets of the Parent Company and as a reduction of general partner capital in the accompanying Consolidated Balance Sheets of the Operating Partnership. The participants' deferred compensation liability is included within accounts payable and other liabilities in the accompanying Consolidated Balance Sheets and was $37.3 million and $35.0 million at June 30, 2011 and December 31, 2010, respectively. Increases or decreases in the deferred compensation liability, including amounts attributable to participant investments in the shares of the Company's common stock, are recorded as general and administrative expense within the accompanying Consolidated Statements of Operations.

Effective June 20, 2011, the Company amended its NQDCP such that participant account balances held in the Regency common stock fund including future deferrals of Regency common stock must remain allocated to the Regency common stock fund and may only be distributed to the participant in the form of Regency common stock upon termination from the plan.  Additionally, participant account balances allocated to various diversified mutual funds are now prohibited from being allocated into the Regency common stock fund.  As a result, changes in participant account balances related to the Regency common stock fund will be recorded directly within stockholders' equity rather than general and administrative expense.



16

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

10.    Earnings per Share and Unit
Parent Company Earnings per Share
The following summarizes the calculation of basic and diluted earnings per share for the periods ended June 30, 2011 and 2010, respectively (in thousands except per share data): 
 
 
Three months ended
 
Six months ended
 
 
2011
 
2010
 
2011
 
2010
Numerator:
 
 
 
 
 
 
 
 
Income from continuing operations
$
18,937

 
13,812

 
27,067

 
24,348

Discontinued operations
 

 
(108
)
 

 
6,795

Net income
 
18,937

 
13,704

 
27,067

 
31,143

Less: Preferred stock dividends
 
4,919

 
4,919

 
9,838

 
9,838

Less: Noncontrolling interests
 
1,157

 
1,037

 
2,183

 
2,158

Net income attributable to common stockholders
 
12,861

 
7,748

 
15,046

 
19,147

Less: Dividends paid on unvested restricted stock
 
218

 
178

 
437

 
356

Net income attributable to common stockholders - basic
$
12,643

 
7,570

 
14,609

 
18,791

Add: Dividends paid on Treasury Method restricted stock
 
20

 

 
34

 

Net income for common stockholders - diluted
$
12,663

 
7,570

 
14,643

 
18,791

Denominator:
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for basic EPS
 
89,074

 
81,054

 
86,090

 
80,952

Incremental shares to be issued under unvested restricted stock
 
44

 

 
36

 

Incremental shares under Forward Equity Offering
 

 
1,522

 
848

 
1,305

Weighted average common shares outstanding for diluted EPS
 
89,118

 
82,576

 
86,974

 
82,257

Income per common share – basic
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

 
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common stockholders
$
0.14

 
0.09

 
0.17

 
0.23

Income per common share – diluted
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

 
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common stockholders
$
0.14

 
0.09

 
0.17

 
0.23


Income (Loss) allocated to noncontrolling interests of the Operating Partnership has been excluded from the numerator and Exchangeable Operating Partnership units have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact. Weighted average Exchangeable Operating Partnership units outstanding for the three months ended June 30, 2011 and 2010 were 177,164 and 256,598, respectively. Weighted average Exchangeable Operating Partnership units outstanding for the six months ended June 30, 2011 and 2010 were 177,164 and 354,126, respectively.





17

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

Operating Partnership Earnings per Unit
The following summarizes the calculation of basic and diluted earnings per unit for the periods ended June 30, 2011 and 2010, respectively (in thousands except per unit data): 
 
 
Three months ended
 
Six months ended
 
 
2011
 
2010
 
2011
 
2010
Numerator:
 
 
 
 
 
 
 
 
Income from continuing operations
$
18,937

 
13,812

 
27,067

 
24,348

Discontinued operations
 

 
(108
)
 

 
6,795

Net income
 
18,937

 
13,704

 
27,067

 
31,143

Less: Preferred unit distributions
 
5,850

 
5,850

 
11,700

 
11,700

Less: Noncontrolling interests
 
189

 
79

 
271

 
175

Net income attributable to common unit holders
 
12,898

 
7,775

 
15,096

 
19,268

Less: Dividends paid on unvested restricted stock
 
218

 
178

 
437

 
356

Net income attributable to common unit holders - basic
$
12,680

 
7,597

 
14,659

 
18,912

Add: Dividends paid on Treasury Method restricted stock
 
20

 

 
34

 

Net income for common unit holders - diluted
$
12,700

 
7,597

 
14,693

 
18,912

Denominator:
 
 
 
 
 
 
 
 
Weighted average common units outstanding for basic EPU
 
89,251

 
81,311

 
86,267

 
81,306

Incremental units to be issued under unvested restricted stock
 
44

 

 
36

 

Incremental units under Forward Equity Offering
 

 
1,522

 
848

 
1,305

Weighted average common units outstanding for diluted EPU
 
89,295

 
82,833

 
87,151

 
82,611

Income per common unit – basic
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

 
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common unit holders
$
0.14

 
0.09

 
0.17

 
0.23

Income per common unit – diluted
 
 
 
 
 
 
 
 
Continuing operations
$
0.14

 
0.09

 
0.17

 
0.15

Discontinued operations
 

 

 

 
0.08

Net income attributable to common unit holders
$
0.14

 
0.09

 
0.17

 
0.23





18

REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
June 30, 2011
(unaudited)

11.    Commitments and Contingencies
The Company is involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity. The Company is also subject to numerous environmental laws and regulations as they apply to real estate pertaining to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground petroleum storage tanks. The Company estimates the cost associated with remediating all of its environmental obligations at June 30, 2011 and December 31, 2010 to be $2.7 million and $2.9 million, respectively, all of which has been accrued in accounts payable and other liabilities on the accompanying Consolidated Balance Sheets. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations; however, it can give no assurance that existing environmental studies with respect to the shopping centers have revealed all potential environmental liabilities; that any previous owner, occupant or tenant did not create any material environmental condition not known to it; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.
The Company has the right to issue letters of credit under the Line up to an amount not to exceed $50.0 million which reduces the credit availability under the Line. The Company also has stand alone letters of credit with other banks. These letters of credit are primarily issued as collateral to facilitate the construction of development projects. As of June 30, 2011 and December 31, 2010, the Company had $4.0 million and $5.3 million letters of credit outstanding, respectively. 

19




Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements    

    In addition to historical information, the following information contains forward-looking statements as defined under federal securities laws. These forward-looking statements include statements about anticipated changes in our revenues, the size of our development program, earnings per share and unit, returns and portfolio value, and expectations about our liquidity. These statements are based on current expectations, estimates and projections about the industry and markets in which Regency Centers Corporation (the “Parent Company”) and Regency Centers, L.P. (the “Operating Partnership”), collectively “Regency” or “the Company”, operate, and management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, changes in national and local economic conditions; financial difficulties of tenants; competitive market conditions, including timing and pricing of acquisitions and sales of properties and out-parcels; changes in leasing activity and market rents; timing of development starts; meeting development schedules; our inability to exercise voting control over the co-investment partnerships through which we own or develop many of our properties; consequences of any armed conflict or terrorist attack against the United States; and the ability to obtain governmental approvals. For additional information, see “Risk Factors” under Part II Item 1A of this quarterly report on Form 10-Q and in our annual report on Form 10-K for the year ended December 31, 2010. The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporation and Regency Centers, L.P. appearing elsewhere herein.

Overview

Regency Centers Corporation began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the managing general partner in Regency Centers, L.P. We are focused on achieving total shareholder returns in excess of REIT shopping center averages, and sustaining growth in our net asset value and our earnings over an extended period of time. We will achieve these goals through owning, operating, and investing in a high-quality portfolio of primarily grocery-anchored shopping centers that are tenanted by market-dominant grocers, category-leading anchors, specialty retailers, and restaurants located in areas with above average household incomes and population densities. All of our operating, investing, and financing activities are performed through the Operating Partnership, its wholly-owned subsidiaries, and through its investments in real estate partnerships with third parties (also referred to as co-investment partnerships or joint ventures). The Parent Company currently owns approximately 99.8% of the outstanding common partnership units of the Operating Partnership. Because of our structure and certain public debt financing, the Operating Partnership is also a registrant.

At June 30, 2011, we directly owned 220 shopping centers located in 24 states representing 23.8 million square feet of gross leasable area (“GLA”). Through co-investment partnerships, we own partial ownership interests in 147 shopping centers located in 23 states and the District of Columbia representing 18.7 million square feet of GLA.  
We earn revenues and generate cash flow by leasing space in our shopping centers to grocery stores, major retail anchors, side-shop retailers, and restaurants, including ground leasing or selling building pads (out-parcels) to these same types of tenants. Historically, we have experienced growth in revenues by increasing occupancy and rental rates in our existing shopping centers and by acquiring and developing new shopping centers. Increasing occupancy in our shopping centers to historical levels and achieving positive rental rate growth are key objectives of our strategic plan.
At June 30, 2011, the consolidated operating shopping centers were 91.7% leased, down slightly from 92.6% leased at December 31, 2010. We currently expect rental rates to decline moderately in isolated markets as we release vacant space, or renew expiring leases, where the previous tenant's rental rates were above market.
We continue to closely monitor the operating performance and rent collections of all tenants in our shopping centers, especially those tenants operating retail formats that are experiencing significant changes in competition, business practice, and store closings in other locations. We expect these weaker tenants to continue moving out of our shopping centers during 2011, which will provide us the opportunity to release these vacancies to financially stronger vibrant tenants that will contribute to the overall success of our shopping centers. We also evaluate consumer preferences, shopping behaviors and demographics to anticipate both challenges and opportunities in the changing retailing industry.
We closely monitor tenants who have co-tenancy clauses in their lease agreements. These tenants are typically located in larger format community shopping centers that contain multiple anchor tenants whose leases contain these types of clauses. Co-tenancy clauses have several variants: they may allow a tenant to postpone a store opening if certain other tenants fail to open their store; they may allow a tenant the opportunity to close their store prior to lease expiration if another tenant closes

20



their store prior to lease expiration; or more commonly, they may allow a tenant to pay reduced levels of rent until a certain number of tenants open their stores within the same shopping center. In certain geographic areas where economic weakness persists, we have centers that contain leases with these types of clauses, and we could experience reductions in rent and occupancy related to tenants exercising their co-tenancy clauses.
We grow our shopping center portfolio through acquisitions of operating centers and new shopping center development. We will continue to use our unique combination of development capabilities, market presence, and anchor relationships to invest in value-added opportunities sourced from land owners and joint venture partners, the redevelopment of existing centers, and the development of land. Development is customer driven, meaning we generally have an executed lease from the anchor before we start construction. Developments serve the growth needs of our anchors and specialty retailers, resulting in modern shopping centers with long-term anchor leases that produce attractive returns on our invested capital. This development process typically requires three to five years from initial land or redevelopment acquisition through construction, lease-up, and stabilization of rental income, but can take longer depending upon tenant demand for new stores and the size of the project. We intend to fund our acquisition and development activity from various capital sources including new debt, equity and through capital recycling. Capital recycling involves identifying non-strategic assets from our real estate portfolio and selling those in the open market; and reinvesting the sale proceeds into new higher quality developments and acquisitions that will generate sustainable revenue growth and attractive returns.
Co-investment partnerships provide us with a reliable capital source for shopping center acquisitions, as well as, the opportunity to earn fees for asset management, property management, and other investing and financing services. As asset manager, we are engaged by our partners to apply similar operating, investment and capital strategies to the portfolios owned by the co-investment partnerships as those applied to the portfolio that we wholly-own. Co-investment partnerships grow their shopping center investments through acquisitions from third parties or direct purchases from us. Although selling properties to co-investment partnerships reduces our direct ownership interest, it provides a source of capital that further strengthens our balance sheet while we continue to share, to the extent of our ownership interest, in the risks and rewards of shopping centers that meet our high quality standards and long-term investment strategy.
    
Our co-investment partnerships have significant levels of debt that mature through 2012 and are subject to significant borrowing risks if the capital markets again become unavailable as they were during the recession. While we have to date successfully refinanced our maturing loans, a downturn in the U.S. economy could hinder our ability to access capital, including access from or by our joint venture partners, or to obtain future financing to fund maturing debt. Currently, we believe that our joint venture partners have sufficient capital or access thereto for these future capital requirements. The impact to the Company or a co-investment partner defaulting on its share of a capital call is discussed below under “Liquidity and Capital Resources”.

Shopping Center Portfolio
The following table summarizes general information related to the consolidated properties in our shopping center portfolio, which we use to evaluate and monitor our performance:
 
 
June 30,
2011
 
December 31,
2010
Number of Properties
 
220

 
215

Properties in Development
 
18

 
25

Gross Leasable Area
 
23,829,082

 
23,266,987

% Leased – Operating and Development
 
91.4
%
 
91.6
%
% Leased – Operating
 
91.7
%
 
92.6
%
The following table summarizes general information related to the unconsolidated properties owned in co-investment partnerships in our shopping center portfolio, which we use to evaluate and monitor our performance:
 
 
June 30,
2011
 
December 31,
2010
Number of Properties
 
147

 
181

Properties in Development
 
1

1

1

Gross Leasable Area
 
18,661,675

 
21,809,665

% Leased – Operating and Development
 
93.5
%
 
93.6
%
% Leased – Operating
 
93.6
%
 
93.8
%

21



We seek to reduce our operating and leasing risks through diversification which we achieve by geographically diversifying our shopping centers, avoiding dependence on any single property, market, or tenant, and owning a portion of our shopping centers through co-investment partnerships. The following table summarizes our four largest tenants, each of which is a grocery tenant, occupying the shopping centers at June 30, 2011: 
Grocery Anchor
 
Number of
Stores (1)
 
Percentage of
Company-
owned GLA (2)
 
Percentage  of
Annualized
Base Rent (2) 
Kroger
 
53

 
7.2
%
 
4.5
%
Publix
 
56

 
6.8
%
 
4.4
%
Safeway
 
57

 
5.6
%
 
3.7
%
Super Valu
 
29

 
3.1
%
 
2.4
%
(1) Includes stores owned by grocery anchors that are attached to our centers.
(2) Includes Regency's pro-rata share of unconsolidated properties.

    Although base rent is supported by long-term lease contracts, tenants who file bankruptcy have the legal right to reject any or all of their leases and close related stores. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its leases, we could experience a significant reduction in our revenues and tenant receivables. We are closely monitoring industry trends and sales data to help us identify declines in retail categories or tenants who might be experiencing financial difficulties as a result of slowing sales, lack of credit, changes in retail formats or increased competition. As a result of our findings, we may reduce new leasing, suspend leasing, or curtail the allowance for the construction of leasehold improvements within a certain retail category or to a specific retailer.
Blockbuster Video, which filed for Chapter 11 bankruptcy protection on September 23, 2010, represents the majority of our video rental leases with annual base rent of less than 1.0% of our annualized base rent on a pro-rata basis. Most of the remaining leases are expected to be assigned to Dish Network, which purchased Blockbuster's assets in April 2011.
Movie Gallery/Hollywood Video filed for Chapter 11 bankruptcy protection on February 2, 2010 and closed all of its stores in our shopping centers. The base rent loss associated with these store closings is insignificant to our annual base rent on a pro-rata basis.
We periodically monitor the credit quality of our tenants by reviewing their reported credit ratings and sales data. We communicate often with those tenants who have announced store closings or filed bankruptcy. We are not currently aware of the pending bankruptcy or announced store closings of any tenants in our shopping centers beyond those described above that would individually cause a material reduction in our revenues, and no tenant represents more than 5% of our annual base rent on a pro-rata basis.

Liquidity and Capital Resources
Our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units. Any new debt is issued by our Operating Partnership or by our co-investment partnerships. Accordingly, the discussion below regarding liquidity and capital resources is presented on a consolidated basis for the Company. The following table summarizes net cash flows related to operating, investing, and financing activities of the Company for the six months ended June 30, 2011 and 2010 (in thousands): 
 
 
2011
 
2010
Net cash provided by operating activities
$
102,907

 
84,865

Net cash used in investing activities
 
(75,680
)
 
(118,745
)
Net cash (used in) provided by financing activities
 
(31,279
)
 
40,836

Net (decrease) increase in cash and cash equivalents
$
(4,052
)
 
6,956

    

22



On June 30, 2011 our cash balance was $18.4 million. We operate our business such that we expect net cash provided by operating activities, in combination with proceeds generated from sales of development properties and land, will provide the necessary funds to pay our scheduled mortgage loan principal payments, capital expenditures necessary to maintain our shopping centers, and distributions to our share and unit holders. The following table summarizes these amounts for the six months ended June 30, 2011 and 2010 (in thousands):
 
 
2011
 
2010
Cash flow from operations
$
102,907

 
84,865

Settlement of derivative instruments
 

 
26,761

Gain on sales of developments and land
 

 
473

  Total
$
102,907

 
112,099


 

 

Scheduled principal payments
$
2,470

 
2,449

Capital expenditures to maintain shopping centers
 
3,941

 
3,247

Distributions to share and unit holders
 
90,048

 
86,250

  Total
$
96,459

 
91,946

Our dividend distribution policy is set by our Board of Directors and they continuously review our financial results. Our Board of Directors recently declared our quarterly dividend of $0.4625 per share, payable August 31, 2011 to stock and unit holders of record as of August 17, 2011. Our dividend has remained unchanged since May 2009. We plan to continue paying an aggregate amount of distributions to our stock and unit holders that at a minimum meet the requirements to continue qualifying as a REIT for Federal income tax purposes.
We endeavor to maintain a high percentage of unencumbered assets - 81.7% of our real estate assets at June 30, 2011 are unencumbered. Such assets allow us to access the secured and unsecured debt markets and to maintain significant availability on our $600.0 million unsecured line of credit (“the Line”). Our debt to asset ratio (before the effect of accumulated depreciation), including our pro-rata share of the debt and assets of joint ventures is 44.7% at June 30, 2011, a significant decline from our ratio at December 31, 2010 of 48.1% due to the settlement of our forward sale agreements ("Forward Equity Offering") in March 2011. Our coverage ratio including our pro-rata share of our partnerships was 2.2 times for the six months ended June 30, 2011 as compared to 2.1 times for the year ended December 31, 2010. We define our coverage ratio as earnings before interest, taxes, depreciation and amortization (“EBITDA”) divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.
At June 30, 2011, commitments available to us under the Line totaled $600.0 million, which had an outstanding balance of $30.0 million. The Line matures in February 2012. We have initiated discussions with our lenders to evaluate our Line requirements and we expect to complete and close on a new $600.0 million line commitment prior to the maturity date of the Line. In February 2011, a $113.8 million revolving credit facility expired with no balance outstanding and we did not renew this facility.
On January 15, 2011, $161.7 million of unsecured debt matured, and we repaid the maturity by borrowing on the Line. On March 9, 2011, we received net proceeds of $215.4 million from the settlement of the 8.0 million common share Forward Equity Offering and used a portion of the proceeds to payoff the balance of the Line. Through 2013, we currently estimate that we will require approximately $325.1 million primarily to repay $267.6 million of maturing debt (excluding scheduled principal payments), complete in-process developments, and to fund our pro-rata share of estimated capital contributions to our co-investment partnerships for repayment of debt.
At June 30, 2011 we had 19 development properties, which includes one unconsolidated development property owned in a co-investment partnership, that were either under construction or in lease up, which when completed, will represent a net investment of $400.7 million after projected sales of adjacent land and out-parcels. This compares to 26 development properties at December 31, 2010 representing an investment of $530.6 million upon completion. We estimate that we will earn an average return on investment from our current development projects of 6.8% when completed and fully leased. Costs necessary to complete in-process development projects, net of reimbursements and projected land sales, are estimated to be $4.6 million.

23



At June 30, 2011, our joint ventures had $323.5 million of scheduled secured mortgage loans and credit lines maturing through 2013. A more detailed loan maturity schedule and further discussion about the repayment of maturing debt is included below under Notes Payable. Year to date through June 30, 2011, the co-investment partnerships have repaid $440.9 million of maturing 2011 debt and expect to repay remaining 2011 maturities from new mortgage loan financings.
We believe that our joint venture partners are financially sound and have sufficient capital or access thereto to fund future capital requirements. We communicate with our co-investment partners regularly regarding the operating and capital budgets of our co-investment partnerships, and believe that we will successfully complete the refinancing of our joint venture debt as it matures in the future. In the event that a co-investment partner was unable to fund its share of the capital requirements of the co-investment partnership, we would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call at an interest rate at the lesser of prime plus a pre-defined spread or the maximum rate allowed by law. A decision to loan to a defaulting joint venture partner, which would be secured by the defaulting partner's partnership interest, would be based on the fair value of the co-investment partnership assets, our joint venture partner's financial health, and would be subject to an evaluation of our own capital commitments and sources to fund those commitments. Alternatively, should we determine that our joint venture partners will not have sufficient capital to meet future capital needs, we could trigger liquidation of the partnership. For the co-investment partnerships that have distribution-in-kind (“DIK”) provisions, and own multiple properties, a liquidation of the co-investment partnership could be completed by either a DIK of the properties to each joint venture partner in proportion to its partnership interest, open market sale, or a combination of both methods. Our co-investment partnership properties have been financed with non-recourse loans that represent 100% of the total debt of the co-investment partnerships including lines of credit as of June 30, 2011. We and our partners have no guarantees related to these loans. In those co-investment partnerships which have DIK provisions, if we trigger liquidation by distribution-in-kind, each partner would receive title to properties selected in a rotation process for distribution and would assume any related loans secured by the properties distributed. The loan agreements generally provide for assumption by either joint venture partner after obtaining any required lender consent. We would only be responsible for those loans we assume through the DIK and only to the extent of the value of the property we receive, since after assumption through the DIK the loans would remain non-recourse.
Our preferred stock and preferred units, though callable by us, are not redeemable in cash at the option of the holders.
Although common or preferred equity raised in the public markets by the Parent Company is an option to fund future capital needs, access to these markets could be limited at times. When conditions for the issuance of securities are acceptable, we will evaluate issuing debt or equity to fund new acquisition opportunities, fund new developments, or repay maturing debt. At June 30, 2011, the Parent Company and the Operating Partnership have an existing universal shelf registration statement available for the issuance of new equity and debt securities.

Investments in Real Estate Partnerships

At June 30, 2011, we had investments in real estate partnerships of $425.6 million. The following table is a summary of unconsolidated combined assets and liabilities of these co-investment partnerships and our pro-rata share (see note below) at June 30, 2011 and December 31, 2010 (dollars in thousands): 
 
 
2011
 
2010
Number of Co-investment Partnerships
 
17

 
18

Regency’s Ownership
 
 20%-50%

 
 16.35%-50%

Number of Properties
 
147

 
181

Combined Assets
$
3,572,268

 
3,983,122

Combined Liabilities
$
1,960,569

 
2,262,476

Combined Equity
$
1,611,699

 
1,720,646

Regency’s Share of (1):
 
 
 
 
Assets
$
1,186,650

 
1,263,400

Liabilities
$
635,142

 
706,026

(1) Pro-rata financial information is not, and is not intended to be, a presentation in accordance with U.S. Generally Accepted Accounting Principles. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on the operations of Regency, which includes such items on a single line presentation under the equity method in its consolidated financial statements.

24



Investments in real estate partnerships are primarily composed of co-investment partnerships in which we currently invest with five co-investment partners and a closed-end real estate fund (“Regency Retail Partners” or the “Fund”), as further summarized below. In addition to earning our pro-rata share of net income or loss in each of these co-investment partnerships, we receive recurring market-based fees for asset management, property management, and leasing as well as fees for investment and financing services, which were $14.2 million and $13.0 million for the six months ended June 30, 2011 and 2010, respectively. During 2011 and 2010 we received transaction fees from our co-investment partnerships of $5.0 million and $2.6 million, respectively, which are non-recurring.
Our investments in real estate partnerships as of June 30, 2011 and December 31, 2010 consist of the following (in thousands): 
 
Ownership
 
2011
 
2010
GRI - Regency, LLC (GRIR)
40.00
%
$
290,066

 
277,235

Macquarie CountryWide-Regency III, LLC (MCWR III)
24.95
%
 
(137
)
 
63

Macquarie CountryWide-Regency-DESCO, LLC (MCWR-DESCO) (1)

 

 
20,050

Columbia Regency Retail Partners, LLC (Columbia I)
20.00
%
 
19,350

 
20,025

Columbia Regency Partners II, LLC (Columbia II)
20.00
%
 
9,159

 
9,815

Cameron Village, LLC (Cameron)
30.00
%
 
17,281

 
17,604

RegCal, LLC (RegCal)
25.00
%
 
22,995

 
15,340

Regency Retail Partners, LP (the Fund)
20.00
%
 
16,917

 
17,478

US Regency Retail I, LLC (USAA)
20.01
%
 
3,591

 
3,941

Other investments in real estate partnerships
50.00
%
 
46,337

 
47,041

    Total
 
$
425,559

 
428,592

(1) At December 31, 2010, our ownership interest in MCWR-DESCO was 16.35%. The liquidation of MCWR-DESCO was complete effective May 4, 2011.

On May 4, 2011, we entered into an agreement with the DESCO Group ("DESCO") to redeem our entire 16.35% interest in Macquarie CountryWide-Regency-DESCO, LLC ("MCWR-DESCO"). The agreement allowed for a DIK of the assets in the co-investment partnership. The assets were distributed as 100% ownership interests to DESCO and to Regency after a selection process, as provided for by the agreement. Regency selected four assets, all in the St. Louis market. The properties which we received through the DIK were recorded at the carrying value of our equity investment of $18.8 million. Additionally, as part of the agreement, we received a $5.0 million disposition fee at closing on May 4, 2011 to buyout our asset, property, and leasing management contracts, and will receive $1.0 million for transition services we will continue to provide through 2011, of which approximately $250,000 has been recognized.

Notes Payable and Unsecured Line of Credit
Notes Payable
Notes payable consist of mortgage loans secured by properties and unsecured public debt. The Parent Company does not hold any indebtedness, but guarantees all of the unsecured public debt and 8.2% of the secured debt of the Operating Partnership. Mortgage loans may be prepaid, but could be subject to yield maintenance premiums and are generally due in monthly installments of principal and interest or interest only, and mature over various terms through 2022. Interest on unsecured public debt is payable semi-annually and the debt matures over various terms through 2021. Fixed interest rates on mortgage loans range from 5.22% to 8.40% with a weighted average rate of 6.55%. Fixed interest rates on unsecured public debt range from 4.80% to 7.95% with a weighted average rate of 5.61%. As of June 30, 2011, we had two variable rate mortgage loans, one in the amount of $3.9 million with an interest rate equal to LIBOR plus 380 basis points maturing on October 1, 2014 and one construction loan with a current balance of $8.9 million with a variable interest rate of LIBOR plus 300 basis points maturing on September 2, 2011. On January 18, 2011, we paid the maturing balance of $161.7 million of 7.95% ten-year senior unsecured notes from a portion of the proceeds received with the Forward Equity Offering settlement as further discussed below under Equity and Capital.

25



At June 30, 2011, 97.8% of our total debt had fixed interest rates, compared with 99.0% at December 31, 2010. We intend to limit the percentage of variable interest rate debt to be no more than 30% of total debt, which we believe to be an acceptable risk. Currently, our variable rate debt represents less than 3.0% of our total debt.
We are required to comply with certain financial covenants for our unsecured public debt as defined in the indenture agreements such as Consolidated Debt to Consolidated Assets, Consolidated Secured Debt to Consolidated Assets, Consolidated Income for Debt Service to Consolidated Debt Service, and Unencumbered Consolidated Assets to Unsecured Consolidated Debt. As of June 30, 2011, management believes we are in compliance with all financial covenants for our unsecured public debt.
Unsecured Line of Credit
We have a $600.0 million Line commitment under an agreement with Wells Fargo Bank and a syndicate of other banks that matures in February 2012. The Line has a current interest rate of LIBOR plus 55 basis points and an annual facility fee of 15 basis points subject to maintaining our corporate credit and senior unsecured ratings at BBB. The balance on the Line was $30.0 million and $10.0 million at June 30, 2011 and December 31, 2010, respectively. We have initiated discussions with our lender to enter into a new Line commitment and term, and we expect to close on the new commitment prior to February 2012.
The interest spread paid on the Line commitment is dependent upon maintaining specific investment-grade ratings. We are also required to comply with certain financial covenants as defined in the Credit Agreement such as Minimum Net Worth, Ratio of Total Liabilities to Gross Asset Value (“GAV”) and Ratio of Recourse Secured Indebtedness to GAV, Ratio of EBITDA to Fixed Charges, and other covenants customary with this type of unsecured financing. As of June 30, 2011, management believes we are in compliance with all financial covenants for the Line. The Line is used to finance the acquisition and development of real estate and for general working-capital purposes.
We previously had a $113.8 million revolving credit facility under an agreement with Wells Fargo Bank and a syndicate of other banks that matured in February 2011. There was no balance outstanding at December 31, 2010 and we did not renew this facility when it matured.
Outstanding debt at June 30, 2011 and December 31, 2010 consists of the following (in thousands): 
 
 
2011
 
2010
Notes payable:
 
 
 
 
Fixed rate mortgage loans
$
417,712

 
402,151

Variable rate mortgage loans
 
12,767

 
11,189

Fixed rate unsecured loans
 
1,509,666

 
1,671,129

Total notes payable
 
1,940,145

 
2,084,469

Unsecured line of credit
 
30,000

 
10,000

Total
$
1,970,145

 
2,094,469

As of June 30, 2011, scheduled principal payments and maturities on notes payable were as follows (in thousands): 
Scheduled Principal Payments and Maturities by Year:
 
Scheduled
Principal
Payments
 
Mortgage  Loan
Maturities
 
Unsecured
Maturities (1)
 
Total
2011
$
2,825

 
8,850

 
20,000

 
31,675

2012
 
5,836

 

 
222,377

 
228,213

2013
 
5,763

 
16,342

 

 
22,105

2014
 
5,174

 
20,928

 
150,000

 
176,102

2015
 
3,783

 
46,313

 
350,000

 
400,096

Beyond 5 Years
 
11,398

 
302,238

 
800,000

 
1,113,636

Unamortized debt (discounts)/premiums, net
 

 
1,029

 
(2,711
)
 
(1,682
)
Total
$
34,779

 
395,700

 
1,539,666

 
1,970,145


(1) Includes unsecured public debt and the Line. The Line is included in 2012 maturities and matures in February 2012.


26



Notes Payable - Investments in Real Estate Partnerships
At June 30, 2011, our investments in real estate partnerships had notes payable of $1.8 billion maturing through 2028, of which 99.4% had weighted average fixed interest rates of 5.7%, and the remaining note payable had a variable interest rate based on LIBOR plus 270 basis points. These loans are all non-recourse and our pro-rata share was $594.6 million.
On April 14, 2011, GRIR placed mortgages totaling $340.0 million on 20 assets in the partnership. The refinance included a weighted average interest rate of 4.9% over a weighted average 11-year term and is interest-only for the first year. The GRIR partners contributed their pro-rata share of the capital necessary to repay the balance of the 2011 maturities not repaid from the new loans, which we funded from the proceeds of the settlement of the Forward Equity Offering. Year to date through June 30, 2011, the co-investment partnerships have repaid $440.9 million of maturing 2011 debt and expect to repay remaining 2011 maturities from new mortgage loan financings during 2011.
As of June 30, 2011, scheduled principal payments and maturities on notes payable held by our investments in real estate partnerships were as follows (in thousands): 
Scheduled Principal Payments and Maturities by Year:
 
Scheduled
Principal
Payments
 
Mortgage  Loan
Maturities
 
Unsecured
Maturities
 
Total
 
Regency’s
Pro-Rata
Share
2011
$
2,942

 
43,868

 

 
46,810

 
14,752

2012
 
10,942

 
244,418

 
10,872

 
266,232

 
100,879

2013
 
14,538

 
24,373

 

 
38,911

 
14,308

2014
 
15,234

 
78,189

 

 
93,423

 
27,693

2015
 
15,634

 
132,546

 

 
148,180

 
48,177

Beyond 5 Years
 
80,906

 
1,157,510

 

 
1,238,416

 
388,137

Unamortized debt premiums, net
 

 
2,888

 

 
2,888

 
634

Total
$
140,196

 
1,683,792

 
10,872

 
1,834,860

 
594,580


Equity and Capital

Common Stock of the Parent Company
On March 9, 2011, we settled the Forward Equity Offering dated December 4, 2009 with J.P. Morgan and Wells Fargo Securities by delivering an aggregate 8.0 million shares of the Company's common stock and received net proceeds of approximately $215.4 million. We used a portion of the proceeds to repay the Line, which had been drawn upon to repay unsecured notes of $161.7 million that matured in January 2011. The balance of the proceeds is being used for general working capital purposes.

Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board ("FASB") issued new guidance concerning fair value measurements and disclosure. The new guidance is the result of joint efforts by the FASB and the International Accounting Standards Board ("IASB") to develop a single, converged fair value framework on how to measure fair value and the necessary disclosures concerning fair value measurements. The guidance is effective for interim and annual periods beginning after December 15, 2011 and no early adoption is permitted. We are currently evaluating this new guidance and its materiality to the consolidated financial statements.
In June 2011, the FASB issued revised guidance as the manner in which entities present comprehensive income in the financial statements. This guidance removes the previous presentation options and provides that entities must report comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. This guidance does not change the items that must be reported in other comprehensive income nor does it require incremental disclosures in addition to those previously required. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We are currently evaluating this new guidance and its impact to the consolidated financial statements.
 



27



Results from Operations
Comparison of the three months ended June 30, 2011 to 2010:
Our revenues increased by $7.1 million or 5.9% to $128.4 million in 2011, as summarized in the following table (in thousands): 
 
 
2011
 
2010
 
Change
Minimum rent
$
89,684

 
85,845

 
3,839

Percentage rent
 
151

 
264

 
(113
)
Recoveries from tenants and other income
 
26,352

 
25,624

 
728

Management, transaction, and other fees
 
12,195

 
9,518

 
2,677

Total revenues
$
128,382

 
121,251

 
7,131

Minimum rent and recoveries from tenants and other income increased due to the acquisition of two operating properties during the second half of 2010 and the four properties received through the DESCO DIK in May 2011. The increase in management, transaction, and other fees was due to the $5.0 million disposition fee and approximately $250,000 in consulting fees we received as a result of the DESCO DIK liquidation during the three months ended June 30, 2011 as compared to the $2.6 million disposition fee we received related to GRI's acquisition of MCW's investment during the three months ended June 30, 2010.
We earn fees, at market-based rates, for asset management, disposition, property management, leasing, acquisition, and financing services that we provide to our co-investment partnerships and third parties as follows (in thousands): 
 
 
2011
 
2010
 
Change
Asset management fees
$
1,679

 
1,772

 
(93
)
Property management fees
 
3,709

 
3,892

 
(183
)
Transaction fees
 
5,000

 
2,594

 
2,406

Leasing commissions and other fees
 
1,807

 
1,260

 
547

 
$
12,195

 
9,518

 
2,677

Our operating expenses increased by $4.9 million or 6.4% to $81.7 million in 2011. The following table summarizes our operating expenses (in thousands): 
 
 
2011
 
2010
 
Change
Depreciation and amortization
$
32,057

 
31,395

 
662

Operating, maintenance, and real estate taxes
 
32,158

 
31,599

 
559

General and administrative
 
15,177

 
12,656

 
2,521

Provision for doubtful accounts
 
1,586

 
63

 
1,523

Other expenses
 
735

 
1,080

 
(345
)
Total operating expenses
$
81,713

 
76,793

 
4,920


Increases in depreciation and amortization expense along with operating, maintenance, and real estate tax expense are primarily related to the acquisition of the four properties received through the DESCO DIK during the three months ended June 30, 2011. The majority of these cost increases are recoverable from our tenants and included in our revenues. General and administrative expense increased $2.5 million due to higher levels of compensation earned as a result of higher levels of performance during the three months ended June 30, 2011, as compared to 2010.

28



The following table presents the change in interest expense (in thousands): 
 
 
2011
 
2010
 
Change
Interest on notes payable
$
28,835

 
31,213

 
(2,378
)
Interest on line of credit
 
317

 
374

 
(57
)
Capitalized interest
 
(368
)
 
(1,243
)
 
875

Hedge interest
 
2,366

 
931

 
1,435

Interest income
 
(587
)
 
(640
)
 
53

 
$
30,563

 
30,635

 
(72
)
Interest on notes payable decreased during the three months ended June 30, 2011 as a result of the repayment of $161.7 million of unsecured debt in January 2011. Capitalized interest decreased as a result of reduced development activity during the three months ended June 30, 2011, as compared to 2010. Hedge interest increased as a result of $61.6 million of hedges settled subsequent to the three months ended June 30, 2010 that resulted in increased hedge interest expense for the three months ended June 30, 2011.
During the three months ended June 30, 2011, we sold two out-parcels for net proceeds of approximately $764,000 and recognized no gain, whereas during the three months ended June 30, 2010, we sold three out-parcels for net proceeds of $3.9 million and recognized a gain of approximately $65,000.
Our equity in income (loss) of investments in real estate partnerships changed by approximately $906,000 during the three months ended June 30, 2011, as compared to 2010 as follows (in thousands): 
 
Ownership
 
2011
 
2010
 
Change
GRI - Regency, LLC (GRIR)
40.00
%
$
1,565

 
1,853

 
(288
)
Macquarie CountryWide-Regency III, LLC (MCWR III)
24.95
%
 
(75
)
 
(27
)
 
(48
)
Macquarie CountryWide-Regency-DESCO, LLC (MCWR-DESCO) (1)

 
(84
)
 
(159
)
 
75

Columbia Regency Retail Partners, LLC (Columbia I)
20.00
%
 
202

 
(171
)
 
373

Columbia Regency Partners II, LLC (Columbia II)
20.00
%
 
36

 
6

 
30

Cameron Village, LLC (Cameron)
30.00
%
 
53

 
(141
)
 
194

RegCal, LLC (RegCal)
25.00
%
 
198

 
72

 
126

Regency Retail Partners, LP (the Fund)
20.00
%
 
37

 
6

 
31

US Regency Retail I, LLC (USAA)
20.01
%
 
270

 
(23
)
 
293

Other investments in real estate partnerships
50.00
%
 
486

 
366

 
120

    Total
 
$
2,688

 
1,782

 
906

(1) At June 30, 2010, our ownership interest in MCWR-DESCO was 16.35%. The liquidation of MCWR-DESCO was complete effective May 4, 2011.
Related to our Parent Company's results, our net income attributable to common stockholders for the three months ended June 30, 2011 was $12.9 million, an increase in net income of $5.2 million as compared to net income of $7.7 million for the three months ended June 30, 2011. The increase in net income was primarily related to the $5.0 million disposition fee received for the DESCO DIK that was recognized during the three months ended June 30, 2011. Our diluted net income per share was $0.14 for the three months ended June 30, 2011, as compared to diluted net income per share of $0.09 for the three months ended June 30, 2010.
Related to our Operating Partnership results, our net income attributable to common unit holders for the three months ended June 30, 2011 was $12.9 million, an increase of $5.1 million as compared to net income of $7.8 million for the three months ended June 30, 2010 for the same reason stated above. Our diluted net income per unit was $0.14 for the three months ended June 30, 2011, as compared to net income per unit of $0.09 for the three months ended June 30, 2010.



29



Comparison of the six months ended June 30, 2011 to 2010:
Our revenues increased by $10.2 million or 4.1% to $255.5 million in 2011, as summarized in the following table (in thousands): 
 
 
2011
 
2010
 
Change
Minimum rent
$
179,068

 
172,049

 
7,019

Percentage rent
 
1,058

 
624

 
434

Recoveries from tenants and other income
 
55,317

 
56,207

 
(890
)
Management, transaction, and other fees
 
20,053

 
16,449

 
3,604

Total revenues
$
255,496

 
245,329

 
10,167

Minimum rent increased due to the acquisition of two operating properties during the second half of 2010 and the four properties received through the DESCO DIK in May 2011. The increase in percentage rent was due to increased sales during the six months ended June 30, 2011, as compared to 2010. The decrease in recoveries from tenants and other income resulted from a higher level of store closures and termination fees experienced during the six months ended June 30, 2010 that did not reoccur at the same level during 2011; the result of an improving retail sales environment. The increase in management, transaction, and other fees was due to the $5.0 million disposition fee and approximately $250,000 in consulting fees we received as a result of the DESCO DIK liquidtion during the six months ended June 30, 2011 as compared to the $2.6 million disposition fee we received related to GRI's acquisition of MCW's investment during the six months ended June 30, 2010.
We earn fees, at market-based rates, for asset management, disposition, property management, leasing, acquisition, and financing services that we provide to our co-investment partnerships and third parties as follows (in thousands): 
 
 
2011
 
2010
 
Change
Asset management fees
$
3,406

 
3,180

 
226

Property management fees
 
7,672

 
7,844

 
(172
)
Transaction fees
 
5,000

 
2,594

 
2,406

Leasing commissions and other fees
 
3,975

 
2,831

 
1,144

 
$
20,053

 
16,449

 
3,604

Our operating expenses increased by $9.5 million or 6.0% to $167.9 million in 2011. The following table summarizes our operating expenses (in thousands): 
 
 
2011
 
2010
 
Change
Depreciation and amortization
$
67,247

 
62,623

 
4,624

Operating, maintenance, and real estate taxes
 
66,436

 
63,690

 
2,746

General and administrative
 
32,131

 
27,974

 
4,157

Provision for doubtful accounts
 
2,212

 
2,402

 
(190
)
Other expenses
 
(174
)
 
1,687

 
(1,861
)
Total operating expenses
$
167,852

 
158,376

 
9,476


Increases in depreciation and amortization expense along with operating, maintenance, and real estate tax expense are primarily related to the acquisition of the four properties received through the DESCO DIK during the six months ended June 30, 2011. The majority of these cost increases are recoverable from our tenants and included in our revenues. General and administrative expense increased $4.2 million due to higher levels of compensation earned as a result of higher levels of performance during the six months ended June 30, 2011, as compared to 2010. Other expenses decreased as a result of a $1.6 million income tax benefit recorded during the six months ended June 30, 2011 compared to a tax expense of approximately $81,000 recorded during the six months ended June 30, 2010.

30



The following table presents the change in interest expense (in thousands): 
 
 
2011
 
2010
 
Change
Interest on notes payable
$
58,067

 
61,905

 
(3,838
)
Interest on line of credit
 
773

 
741

 
32

Capitalized interest
 
(957
)
 
(3,323
)
 
2,366

Hedge interest
 
4,733

 
1,756

 
2,977

Interest income
 
(1,188
)
 
(1,315
)
 
127

 
$
61,428

 
59,764

 
1,664

Interest on notes payable decreased during the six months ended June 30, 2011 as a result of the repayment of $161.7 million of unsecured debt in January 2011. Capitalized interest decreased as a result of reduced development activity during the six months ended June 30, 2011, as compared to 2010. Hedge interest increased as a result of $61.6 million of hedges settled subsequent to June 30, 2010 that resulted in increased hedge interest expense for the six months ended June 30, 2011.
During the six months ended June 30, 2011, we sold four out-parcels for net proceeds of $2.1 million and recognized no gain, whereas during the six months ended June 30, 2010, we sold eight out-parcels for net proceeds of $8.3 million and recognized a gain of approximately $442,000.
Our equity in income (loss) of investments in real estate partnerships changed by $2.1 million million during the six months ended June 30, 2011, as compared to 2010 as follows (in thousands): 
 
Ownership
 
2011
 
2010
 
Change
GRI - Regency, LLC (GRIR)
40.00
%
$
2,742

 
(2,324
)
 
5,066

Macquarie CountryWide-Regency III, LLC (MCWR III)
24.95
%
 
(130
)
 
(60
)
 
(70
)
Macquarie CountryWide-Regency-DESCO, LLC (MCWR-DESCO) (1)

 
(359
)
 
(418
)
 
59

Columbia Regency Retail Partners, LLC (Columbia I)
20.00
%
 
484

 
193

 
291

Columbia Regency Partners II, LLC (Columbia II)
20.00
%
 
113

 
27

 
86

Cameron Village, LLC (Cameron)
30.00
%
 
190

 
(237
)
 
427

RegCal, LLC (RegCal)
25.00
%
 
261

 
21

 
240

Regency Retail Partners, LP (the Fund)
20.00
%
 
75

 
(38
)
 
113

US Regency Retail I, LLC (USAA)
20.01
%
 
254

 
(98
)
 
352

Other investments in real estate partnerships
50.00
%
 
(3,667
)
 
824

 
(4,491
)
    Total
 
$
(37
)
 
(2,110
)
 
2,073

(1) At June 30, 2010, our ownership interest in MCWR-DESCO was 16.35%. The liquidation of MCWR-DESCO was complete effective May 4, 2011.
The change in our equity in income (loss) of investments in real estate partnerships is primarily related to a $4.6 million provision for impairment recorded on our investment in a joint venture in which we have an ownership interest of 50% ("Other investments in real estate partnerships") for the six months ended June 30, 2011 as well as the provision for impairment of $12.3 million, of which our pro-rata share was $4.9 million that GRIR recognized for the six months ended June 30, 2010. Also, our equity in income of GRIR increased for the six months ended June 30, 2011, resulting from lower interest expense for the six months ended June 30, 2011, as compared to 2010 due to significant repayments of debt during 2010.
If we sell a property or classify a property as held-for-sale, we are required to reclassify its operations into discontinued operations for all prior periods which results in a reclassification of amounts previously reported as continuing operations into discontinued operations. There was no income from discontinued operations for the six months ended June 30, 2011. Income from discontinued operations was $6.8 million for the six months ended June 30, 2010 and includes $6.8 million in gains from the sale of one operating property and one property in development for net proceeds of $25.5 million and the operations of the shopping centers sold.

31



Related to our Parent Company's results, our net income attributable to common stockholders for the six months ended June 30, 2011 was $15.0 million, a decrease in net income of $4.1 million as compared to net income of $19.1 million for the six months ended June 30, 2010. The lower net income was primarily related to the $6.8 million gain recorded from the sale of an operating property and a development property recognized during the six months ended June 30, 2010, offset by the increase in disposition fees recognized during the six months ended June 30, 2011. Our diluted net income per share was $0.17 for the six months ended June 30, 2011 as compared to diluted net income per share of $0.23 for the six months ended June 30, 2010.
Related to our Operating Partnership results, our net income attributable to common unit holders for the six months ended June 30, 2011 was $15.1 million, a decrease of $4.2 million as compared to net income of $19.3 million for the six months ended June 30, 2010 for the same reasons stated above. Our diluted net income per unit was $0.17 for the six months ended June 30, 2011 as compared to net income per unit of $0.23 for the six months ended June 30, 2010.



32




Item 3.    Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in Item 7A. of Part II of our Form 10-K for the year ended December 31, 2010.

Item 4. Controls and Procedures (Regency Centers Corporation)
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
There have been no changes in our internal controls over financial reporting identified in connection with this evaluation that occurred during the second quarter of 2011 and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Controls and Procedures (Regency Centers, L.P.)
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
There have been no changes in our internal controls over financial reporting identified in connection with this evaluation that occurred during the second quarter of 2011 and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



33





PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

We are a party to various legal proceedings which arise in the ordinary course of our business. We are not currently involved in any litigation nor to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors
There have been no material changes from the risk factors disclosed in Item 1A. of Part I of our Form 10-K for the year ended December 31, 2010.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter ended June 30, 2011.

The following table represents information with respect to purchases by the Parent Company of its common stock during the monthly periods ended June 30, 2011:    
 
 
 
 
Maximum number or
 
 
 
Total number of
approximate dollar
 
Total number
Average price
shares purchased as
value of shares that may yet
 
of shares
paid per
part of publicly announced
be purchased under the
Period
purchased (1)
share
plans or programs
plans or programs
April 1 through
 April 30, 2011
422

$
43.21



May 1 through
May 31, 2011
364

45.96



June 1 through
 June 30, 2011




Total
786

$
44.48



(1) Represents shares delivered in payment of withholding taxes in connection with options exercised and restricted stock vesting by participants under Regency's Long-Term Omnibus Plan.

Item 3.    Defaults Upon Senior Securities

None

Item 4.    (Removed and Reserved)

Item 5. Other Information
None




34




Item 6.    Exhibits

In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries or other parties to the agreements. The Agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading. Additional information about the Company may be found elsewhere in this report and the Company's other public files, which are available without charge through the SEC's website at http://www.sec.gov.
    
Unless otherwise indicated below, the Commission file number to the exhibit is No. 001-12298.

Exhibit No.    Description

31.    Rule 13a-14(a)/15d-14(a) Certifications.

31.1    Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation

31.2    Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation

31.3    Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.

31.4    Rule 13a-14 Certification of Chief Financial Officer for Regency Centers, L.P.

32.    Section 1350 Certifications.

32.1*    18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers Corporation

32.2*    18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers Corporation

32.3*    18 U.S.C. § 1350 Certification of Chief Executive Officer for Regency Centers, L.P.

32.4*    18 U.S.C. § 1350 Certification of Chief Financial Officer for Regency Centers, L.P.

101.    Interactive Data Files

101.INS**+    XBRL Instance Document

101.SCH**+    XBRL Taxonomy Extension Schema Document

101.CAL**+    XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**+    XBRL Taxonomy Definition Linkbase Document


35



101.LAB**+    XBRL Taxonomy Extension Label Linkbase Document

101.PRE**+    XBRL Taxonomy Extension Presentation Linkbase Document

__________________________
*    Furnished, not filed
**    Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
+    To be furnished by amendment.


36




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
August 5, 2011
REGENCY CENTERS CORPORATION and REGENCY CENTERS, L.P.
 
By:

/s/ Bruce M. Johnson
Bruce M. Johnson, Executive Vice President, Chief Financial Officer (Principal Financial Officer), and Director
 
 

/s/ J. Christian Leavitt
J. Christian Leavitt, Senior Vice President and Treasurer (Principal Accounting Officer)



37