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EX-32.4 - EXHIBIT 32.4 - REGENCY CENTERS CORPex-324093017.htm
EX-32.3 - EXHIBIT 32.3 - REGENCY CENTERS CORPex-323093017.htm
EX-32.2 - EXHIBIT 32.2 - REGENCY CENTERS CORPex-322093017.htm
EX-32.1 - EXHIBIT 32.1 - REGENCY CENTERS CORPex-321093017.htm
EX-31.4 - EXHIBIT 31.4 - REGENCY CENTERS CORPex-314093017.htm
EX-31.3 - EXHIBIT 31.3 - REGENCY CENTERS CORPex-313093017.htm
EX-31.2 - EXHIBIT 31.2 - REGENCY CENTERS CORPex-312093017.htm
EX-31.1 - EXHIBIT 31.1 - REGENCY CENTERS CORPex-311093017.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 September 30, 2017
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)
regencylogocolora06.jpg
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 (or for such shorter period that the registrant was required to file such reports), 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
x
Accelerated filer
o
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 

Regency Centers, L.P.:
Large accelerated filer
o
Accelerated filer
x
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Regency Centers Corporation              YES  o    NO   o                    Regency Centers, L.P.              YES  o    NO  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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 common stock was 170,110,464 as of November 2, 2017.
 




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2017, 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”,"Regency Centers" 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 September 30, 2017, the Parent Company owned approximately 99.8% of the Units in the Operating Partnership. The remaining limited Units are owned by investors. 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 individuals as the management of the Operating Partnership. These individuals are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the key 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. Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, the Parent Company does not have any other indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the debt of the Parent Company. 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. The 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.
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. Although the Parent Company is the issuer of the combined $500 million of unsecured public and private notes, the Operating Partnership is a co-issuer and guarantor of these notes. 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 (Unaudited)
 
 
 
 
Regency Centers Corporation:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Equity for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2017 and 2016
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Capital for the periods ended September 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2017 and 2016
 
 
 
 
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.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
SIGNATURES
 
 
 
 
 
 





PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
September 30, 2017 and December 31, 2016
(in thousands, except share data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,578,145

 
1,660,424

Buildings and improvements
 
5,834,405

 
3,092,197

Properties in development
 
433,707

 
180,878

 
 
10,846,257

 
4,933,499

Less: accumulated depreciation
 
1,281,510

 
1,124,391

 
 
9,564,747

 
3,809,108

Properties held for sale
 
27,802

 

Investments in real estate partnerships
 
380,930

 
296,699

Net real estate investments
 
9,973,479

 
4,105,807

Cash and cash equivalents
 
23,543

 
13,256

Restricted cash
 
7,098

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $12,279 and $9,021 at September 30, 2017 and December 31, 2016, respectively
 
143,153

 
111,722

Deferred leasing costs, less accumulated amortization of $91,213 and $83,529 at September 30, 2017 and December 31, 2016, respectively
 
71,826

 
69,000

Acquired lease intangible assets, less accumulated amortization of $123,662 and $56,695 at September 30, 2017 and December 31, 2016, respectively
 
508,868

 
118,831

Other assets
 
390,778

 
65,667

Total assets
$
11,118,745

 
4,488,906

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,943,986

 
1,363,925

Unsecured credit facilities
 
578,144

 
278,495

Accounts payable and other liabilities
 
276,363

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $49,968 and $23,538 at September 30, 2017 and December 31, 2016, respectively
 
637,217

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
46,351

 
28,868

Total liabilities
 
4,482,061

 
1,864,404

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 13,000,000 Series 6 and 7 shares issued and outstanding at December 31, 2016, with liquidation preferences of $25 per share
 

 
325,000

Common stock, $0.01 par value per share, 220,000,000 and 150,000,000 shares authorized; 170,109,043 and 104,497,286 shares issued at September 30, 2017 and December 31, 2016, respectively
 
1,701

 
1,045

Treasury stock at cost, 362,764 and 347,903 shares held at September 30, 2017 and December 31, 2016, respectively
 
(18,048
)
 
(17,062
)
Additional paid in capital
 
7,779,103

 
3,294,923

Accumulated other comprehensive loss
 
(14,141
)
 
(18,346
)
Distributions in excess of net income
 
(1,153,153
)
 
(994,259
)
Total stockholders’ equity
 
6,595,462

 
2,591,301

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $21,708 and $10,630 at September 30, 2017 and December 31, 2016, respectively
 
10,906

 
(1,967
)
Limited partners’ interests in consolidated partnerships
 
30,316

 
35,168

Total noncontrolling interests
 
41,222

 
33,201

Total equity
 
6,636,684

 
2,624,502

Total liabilities and equity
$
11,118,745

 
4,488,906

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 September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
195,393

 
111,886

$
532,625

 
329,506

Percentage rent
 
1,147

 
495

 
5,509

 
2,651

Recoveries from tenants and other income
 
59,554

 
34,532

 
162,089

 
103,894

Management, transaction, and other fees
 
6,047

 
5,855

 
19,353

 
18,759

Total revenues
 
262,141

 
152,768

 
719,576

 
454,810

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
91,474

 
40,705

 
243,757

 
119,721

Operating and maintenance
 
38,020

 
23,373

 
103,888

 
69,767

General and administrative
 
15,199

 
16,046

 
49,618

 
48,695

Real estate taxes
 
29,315

 
17,058

 
79,636

 
49,697

Other operating expenses (note 2)
 
3,195

 
1,046

 
81,621

 
5,795

Total operating expenses
 
177,203

 
98,228

 
558,520

 
293,675

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
34,679

 
21,945

 
97,285

 
70,489

Provision for impairment
 

 

 

 
1,666

Early extinguishment of debt
 

 
13,943

 
12,404

 
13,943

Net investment (income) loss, including unrealized (gains) losses of ($842) and ($383), and ($1,705) and ($888) for the three and nine months ended September 30, 2017 and 2016, respectively
 
(971
)
 
(821
)
 
(2,955
)
 
(1,268
)
Loss on derivative instruments
 

 
40,586

 

 
40,586

Total other expense (income)
 
33,708

 
75,653

 
106,734

 
125,416

Income from operations before equity in income of investments in real estate partnerships
 
51,230

 
(21,113
)
 
54,322

 
35,719

Equity in income of investments in real estate partnerships
 
12,221

 
22,647

 
33,804

 
46,618

Income from operations
 
63,451

 
1,534

 
88,126

 
82,337

Gain on sale of real estate, net of tax
 
131

 
9,580

 
4,913

 
22,997

Net income
 
63,582

 
11,114

 
93,039

 
105,334

Noncontrolling interests:
 
 
 
 
 
 
 
 
Exchangeable operating partnership units
 
(132
)
 
(16
)
 
(217
)
 
(165
)
Limited partners’ interests in consolidated partnerships
 
(637
)
 
(527
)
 
(1,884
)
 
(1,380
)
Income attributable to noncontrolling interests
 
(769
)
 
(543
)
 
(2,101
)
 
(1,545
)
Net income attributable to the Company
 
62,813

 
10,571

 
90,938

 
103,789

Preferred stock dividends and issuance costs
 
(3,147
)
 
(5,266
)
 
(16,128
)
 
(15,797
)
Net income attributable to common stockholders
$
59,666

 
5,305

$
74,810

 
87,992


 
 
 
 
 
 
 
 
Income per common share - basic
$
0.35

 
0.05

$
0.48

 
0.88

Income per common share - diluted
$
0.35

 
0.05

$
0.48

 
0.88

See accompanying notes to consolidated financial statements.

2




REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
$
63,582

 
11,114

$
93,039

 
105,334

Other comprehensive income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(39
)
 
1,294

 
(3,911
)
 
(25,338
)
Reclassification adjustment of derivative instruments included in net income
 
2,329

 
43,111

 
8,054

 
48,063

Unrealized gain on available-for-sale securities
 
8

 
53

 
51

 
90

Other comprehensive income
 
2,298

 
44,458

 
4,194

 
22,815

Comprehensive income
 
65,880

 
55,572

 
97,233

 
128,149

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
769

 
543

 
2,101

 
1,545

Other comprehensive income (loss) attributable to noncontrolling interests
 
5

 
158

 
(11
)
 
(139
)
Comprehensive income attributable to noncontrolling interests
 
774

 
701

 
2,090

 
1,406

Comprehensive income attributable to the Company
$
65,106

 
54,871

$
95,143

 
126,743

See accompanying notes to consolidated financial statements.

3





REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the nine months ended September 30, 2017 and 2016
(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
 
Exchangeable
Operating
Partnership
Units
 
Limited
Partners’
Interest  in
Consolidated
Partnerships
 
Total
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2015
 
$
325,000

 
972

 
(19,658
)
 
2,742,508

 
(58,693
)
 
(936,020
)
 
2,054,109

 
(1,975
)
 
30,486

 
28,511

 
2,082,620

Net income
 

 

 

 

 

 
103,789

 
103,789

 
165

 
1,380

 
1,545

 
105,334

Other comprehensive loss
 

 

 

 

 
22,954

 

 
22,954

 
33

 
(172
)
 
(139
)
 
22,815

Deferred compensation plan, net
 

 

 
2,776

 
(2,776
)
 

 

 

 

 

 

 

Restricted stock issued, net of amortization
 

 
2

 

 
9,965

 

 

 
9,967

 

 

 

 
9,967

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

 

 

 
(7,835
)
 

 

 
(7,835
)
 

 

 

 
(7,835
)
Common stock issued under dividend reinvestment plan
 

 

 

 
804

 

 

 
804

 

 

 

 
804

Common stock issued, net of issuance costs
 

 
71

 

 
549,474

 

 

 
549,545

 

 

 

 
549,545

Contributions from partners
 

 

 

 

 

 

 

 

 
8,675

 
8,675

 
8,675

Distributions to partners
 

 

 

 
(538
)
 

 

 
(538
)
 

 
(5,224
)
 
(5,224
)
 
(5,762
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(15,797
)
 
(15,797
)
 

 

 

 
(15,797
)
Common stock/unit ($1.50 per share)
 

 

 

 

 

 
(149,853
)
 
(149,853
)
 
(229
)
 

 
(229
)
 
(150,082
)
Balance at September 30, 2016
 
$
325,000

 
1,045

 
(16,882
)
 
3,291,602

 
(35,739
)
 
(997,881
)
 
2,567,145

 
(2,006
)
 
35,145

 
33,139

 
2,600,284

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
$
325,000

 
1,045

 
(17,062
)
 
3,294,923

 
(18,346
)
 
(994,259
)
 
2,591,301

 
(1,967
)
 
35,168

 
33,201

 
2,624,502

Net income
 

 

 

 

 

 
90,938

 
90,938

 
217

 
1,884

 
2,101

 
93,039

Other comprehensive income
 

 

 

 

 
4,205

 

 
4,205

 
6

 
(17
)
 
(11
)
 
4,194

Deferred compensation plan, net
 

 

 
(986
)
 
977

 

 

 
(9
)
 

 

 

 
(9
)
Restricted stock issued, net of amortization
 

 
2

 

 
10,918

 

 

 
10,920

 

 

 

 
10,920

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

 
(1
)
 

 
(18,431
)
 

 

 
(18,432
)
 

 

 

 
(18,432
)
Common stock issued under dividend reinvestment plan
 

 

 

 
908

 

 

 
908

 

 

 

 
908

Common stock issued, net of issuance costs
 

 
654

 

 
4,470,759

 

 

 
4,471,413

 

 

 

 
4,471,413

Restricted stock issued upon Equity One merger
 

 
1

 

 
7,950

 

 

 
7,951

 

 

 

 
7,951

Redemption of preferred stock
 
(325,000
)
 

 

 
11,099

 

 
(11,099
)
 
(325,000
)
 

 

 

 
(325,000
)
Contributions from partners
 

 

 

 

 

 

 

 
13,100

 
367

 
13,467

 
13,467

Distributions to partners
 

 

 

 

 

 

 

 

 
(7,086
)
 
(7,086
)
 
(7,086
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(5,029
)
 
(5,029
)
 

 

 

 
(5,029
)
Common stock/unit ($1.57 per share)
 

 

 

 

 

 
(233,704
)
 
(233,704
)
 
(450
)
 

 
(450
)
 
(234,154
)
Balance at September 30, 2017
 
$

 
1,701

 
(18,048
)
 
7,779,103

 
(14,141
)
 
(1,153,153
)
 
6,595,462

 
10,906

 
30,316

 
41,222

 
6,636,684

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
$
93,039

 
105,334

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
243,757

 
119,721

Amortization of deferred loan cost and debt premium
 
7,144

 
7,242

(Accretion) and amortization of above and below market lease intangibles, net
 
(18,784
)
 
(2,296
)
Stock-based compensation, net of capitalization
 
16,836

 
7,554

Equity in income of investments in real estate partnerships
 
(33,804
)
 
(46,618
)
Gain on sale of real estate, net of tax
 
(4,913
)
 
(22,997
)
Provision for impairment
 

 
1,666

Early extinguishment of debt
 
12,404

 
13,943

Distribution of earnings from operations of investments in real estate partnerships
 
40,817

 
39,765

Loss on derivative instruments
 
51

 

Deferred compensation expense
 
2,885

 
1,249

Realized and unrealized (gain) loss on investments
 
(2,878
)
 
(1,268
)
Changes in assets and liabilities:
 
 
 
 
Restricted cash
 
(1,569
)
 
(84
)
Accounts receivable, net
 
2,574

 
3,715

Straight-line rent receivables, net
 
(13,901
)
 
(4,894
)
Deferred leasing costs
 
(10,294
)
 
(7,841
)
Other assets
 
8,075

 
(59
)
Accounts payable and other liabilities
 
4,908

 
12,607

Tenants’ security, escrow deposits and prepaid rent
 
(2,490
)
 
(1,406
)
Net cash provided by operating activities
 
343,857

 
225,333

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(2,109
)
 
(333,220
)
Advance deposits paid on acquisition of operating real estate
 
(350
)
 
1,250

Acquisition of Equity One, net of cash acquired of $72,534
 
(648,763
)
 

Real estate development and capital improvements
 
(241,834
)
 
(146,773
)
Proceeds from sale of real estate investments
 
15,397

 
83,675

Issuance of notes receivable
 
(3,460
)
 

Investments in real estate partnerships
 
(12,296
)
 
(13,127
)
Distributions received from investments in real estate partnerships
 
36,603

 
52,536

Dividends on investment securities
 
200

 
189

Acquisition of securities
 
(14,011
)
 
(53,290
)
Proceeds from sale of securities
 
11,974

 
54,176

Net cash used in investing activities
 
(858,649
)
 
(354,584
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common stock issuance
 

 
549,545

Repurchase of common shares in conjunction with equity award plans
 
(19,251
)
 
(8,013
)
Proceeds from sale of treasury stock
 
100

 
957

Redemption of preferred stock and partnership units
 
(325,000
)
 

Distributions to limited partners in consolidated partnerships, net
 
(7,031
)
 
(3,126
)
Distributions to exchangeable operating partnership unit holders
 
(450
)
 
(229
)
Dividends paid to common stockholders
 
(232,796
)
 
(149,049
)
Dividends paid to preferred stockholders
 
(5,029
)
 
(15,797
)
Repayment of fixed rate unsecured notes
 

 
(300,000
)
Proceeds from issuance of fixed rate unsecured notes, net
 
953,115

 

Proceeds from unsecured credit facilities
 
950,000

 
395,000

Repayment of unsecured credit facilities
 
(650,000
)
 
(295,000
)
Proceeds from notes payable
 
126,999

 
20,223

Repayment of notes payable
 
(232,839
)
 
(41,584
)
Scheduled principal payments
 
(7,452
)
 
(4,462
)
Payment of loan costs
 
(12,868
)
 
(1,954
)
Early redemption costs
 
(12,419
)
 
(13,214
)
Net cash provided by financing activities
 
525,079

 
133,297

Net increase in cash and cash equivalents
 
10,287

 
4,046

Cash and cash equivalents at beginning of the period
 
13,256

 
36,856

Cash and cash equivalents at end of the period
$
23,543

 
40,902



5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017, and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $5,778 and $2,622 in 2017 and 2016, respectively)
$
73,273

 
54,904

Cash received for income tax refunds, net of payments
$
670

 

Supplemental disclosure of non-cash transactions:
 
 
 
 
Exchangeable operating partnership units issued for acquisition of real estate
$
13,100

 

Common stock issued under dividend reinvestment plan
$
908

 
804

Stock-based compensation capitalized
$
2,459

 
2,561

Contributions from limited partners in consolidated partnerships, net
$
311

 
8,674

Common stock issued for dividend reinvestment in trust
$
557

 
556

Contribution of stock awards into trust
$
1,372

 
1,513

Distribution of stock held in trust
$
677

 
4,096

Change in fair value of securities available-for-sale
$
51

 
90

Equity One Merger:
 
 
 
 
Notes payable assumed in Equity One merger, at fair value
$
757,399

 

Common stock exchanged for Equity One shares
$
(4,471,808
)
 

Deconsolidation of previously consolidated partnership:
 
 
 
 
Real estate, net
$

 
14,075

Investments in real estate partnerships
$

 
(3,355
)
Notes payable
$

 
(9,415
)
Other assets and liabilities
$

 
640

Limited partners' interest in consolidated partnerships
$

 
(2,099
)
See accompanying notes to consolidated financial statements.

6





REGENCY CENTERS, L.P.
Consolidated Balance Sheets
September 30, 2017 and December 31, 2016
(in thousands, except unit data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,578,145

 
1,660,424

Buildings and improvements
 
5,834,405

 
3,092,197

Properties in development
 
433,707

 
180,878

 
 
10,846,257

 
4,933,499

Less: accumulated depreciation
 
1,281,510

 
1,124,391

 
 
9,564,747

 
3,809,108

Properties held for sale
 
27,802

 

Investments in real estate partnerships
 
380,930

 
296,699

Net real estate investments
 
9,973,479

 
4,105,807

Cash and cash equivalents
 
23,543

 
13,256

Restricted cash
 
7,098

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $12,279 and $9,021 at September 30, 2017 and December 31, 2016, respectively
 
143,153

 
111,722

Deferred leasing costs, less accumulated amortization of $91,213 and $83,529 at September 30, 2017 and December 31, 2016, respectively
 
71,826

 
69,000

Acquired lease intangible assets, less accumulated amortization of $123,662 and $56,695 at September 30, 2017 and December 31, 2016, respectively
 
508,868

 
118,831

Trading securities held in trust
 

 

Other assets
 
390,778

 
65,667

Total assets
$
11,118,745

 
4,488,906

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,943,986

 
1,363,925

Unsecured credit facilities
 
578,144

 
278,495

Accounts payable and other liabilities
 
276,363

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $49,968 and $23,538 at September 30, 2017 and December 31, 2016, respectively
 
637,217

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
46,351

 
28,868

Total liabilities
 
4,482,061

 
1,864,404

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
Preferred units of general partner, $0.01 par value per unit, 13,000,000 units issued and outstanding at December 31, 2016, liquidation preference of $25 per unit
 

 
325,000

General partner; 170,109,043 and 104,497,286 units outstanding at September 30, 2017 and December 31, 2016, respectively
 
6,609,603

 
2,284,647

Limited partners; 349,902 and 154,170 units outstanding at September 30, 2017 and December 31, 2016, respectively
 
10,906

 
(1,967
)
Accumulated other comprehensive loss
 
(14,141
)
 
(18,346
)
Total partners’ capital
 
6,606,368

 
2,589,334

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
30,316

 
35,168

Total noncontrolling interests
 
30,316

 
35,168

Total capital
 
6,636,684

 
2,624,502

Total liabilities and capital
$
11,118,745

 
4,488,906

See accompanying notes to consolidated financial statements.

7





REGENCY CENTERS, L.P.
Consolidated Statements of Operations
(in thousands, except per unit data)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
195,393

 
111,886

$
532,625

 
329,506

Percentage rent
 
1,147

 
495

 
5,509

 
2,651

Recoveries from tenants and other income
 
59,554

 
34,532

 
162,089

 
103,894

Management, transaction, and other fees
 
6,047

 
5,855

 
19,353

 
18,759

Total revenues
 
262,141

 
152,768

 
719,576

 
454,810

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
91,474

 
40,705

 
243,757

 
119,721

Operating and maintenance
 
38,020

 
23,373

 
103,888

 
69,767

General and administrative
 
15,199

 
16,046

 
49,618

 
48,695

Real estate taxes
 
29,315

 
17,058

 
79,636

 
49,697

Other operating expenses (note 2)
 
3,195

 
1,046

 
81,621

 
5,795

Total operating expenses
 
177,203

 
98,228

 
558,520

 
293,675

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
34,679

 
21,945

 
97,285

 
70,489

Provision for impairment
 

 

 

 
1,666

Early extinguishment of debt
 

 
13,943

 
12,404

 
13,943

Net investment (income) loss, including unrealized (gains) losses of ($842) and ($383), and ($1,705) and ($888) for the three and nine months ended September 30, 2017 and 2016, respectively
 
(971
)
 
(821
)
 
(2,955
)
 
(1,268
)
Loss on derivative instruments
 

 
40,586

 

 
40,586

Total other expense (income)
 
33,708

 
75,653

 
106,734

 
125,416

Income from operations before equity in income of investments in real estate partnerships
 
51,230

 
(21,113
)
 
54,322

 
35,719

Equity in income of investments in real estate partnerships
 
12,221

 
22,647

 
33,804

 
46,618

Income from operations
 
63,451

 
1,534

 
88,126

 
82,337

Gain on sale of real estate, net of tax
 
131

 
9,580

 
4,913

 
22,997

Net income
 
63,582

 
11,114

 
93,039

 
105,334

Limited partners’ interests in consolidated partnerships
 
(637
)
 
(527
)
 
(1,884
)
 
(1,380
)
Net income attributable to the Partnership
 
62,945

 
10,587

 
91,155

 
103,954

Preferred unit distributions and issuance costs
 
(3,147
)
 
(5,266
)
 
(16,128
)
 
(15,797
)
Net income attributable to common unit holders
$
59,798

 
5,321

$
75,027

 
88,157


 
 
 
 
 
 
 
 
Income per common unit - basic
$
0.35

 
0.05

$
0.48

 
0.88

Income per common unit - diluted
$
0.35

 
0.05

$
0.48

 
0.88

See accompanying notes to consolidated financial statements.

8




REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
$
63,582

 
11,114

$
93,039

 
105,334

Other comprehensive income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(39
)
 
1,294

 
(3,911
)
 
(25,338
)
Reclassification adjustment of derivative instruments included in net income
 
2,329

 
43,111

 
8,054

 
48,063

Unrealized gain on available-for-sale securities
 
8

 
53

 
51

 
90

Other comprehensive income
 
2,298

 
44,458

 
4,194

 
22,815

Comprehensive income
 
65,880

 
55,572

 
97,233

 
128,149

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
637

 
527

 
1,884

 
1,380

Other comprehensive income (loss) attributable to noncontrolling interests
 

 
91

 
(17
)
 
(172
)
Comprehensive income attributable to noncontrolling interests
 
637

 
618

 
1,867

 
1,208

Comprehensive income attributable to the Partnership
$
65,243

 
54,954

$
95,366

 
126,941

See accompanying notes to consolidated financial statements.

9





REGENCY CENTERS, L.P.
Consolidated Statements of Capital
For the nine months ended September 30, 2017 and 2016
 (in thousands)
(unaudited)
 
 
General Partner
Preferred and
Common Units
 
Limited
Partners
 
Accumulated
Other
Comprehensive Loss
 
Total
Partners’
Capital
 
Noncontrolling
Interests in
Limited Partners’
Interest in
Consolidated
Partnerships
 
Total
Capital
Balance at December 31, 2015
$
2,112,802

 
(1,975
)
 
(58,693
)
 
2,052,134

 
30,486

 
2,082,620

Net income
 
103,789

 
165

 

 
103,954

 
1,380

 
105,334

Other comprehensive loss
 

 
33

 
22,954

 
22,987

 
(172
)
 
22,815

Contributions from partners
 

 

 

 

 
8,675

 
8,675

Distributions to partners
 
(150,391
)
 
(229
)
 

 
(150,620
)
 
(5,224
)
 
(155,844
)
Preferred unit distributions
 
(15,797
)
 

 

 
(15,797
)
 

 
(15,797
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
9,967

 

 

 
9,967

 

 
9,967

Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
542,514

 

 

 
542,514

 

 
542,514

Balance at September 30, 2016
 
2,602,884

 
(2,006
)
 
(35,739
)
 
2,565,139

 
35,145

 
2,600,284

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
2,609,647

 
(1,967
)
 
(18,346
)
 
2,589,334

 
35,168

 
2,624,502

Net income
 
90,938

 
217

 

 
91,155

 
1,884

 
93,039

Other comprehensive income
 

 
6

 
4,205

 
4,211

 
(17
)
 
4,194

Deferred compensation plan, net
 
(9
)
 

 

 
(9
)
 

 
(9
)
Contributions from partners
 

 
13,100

 

 
13,100

 
367

 
13,467

Distributions to partners
 
(233,704
)
 
(450
)
 

 
(234,154
)
 
(7,086
)
 
(241,240
)
Preferred unit distributions
 
(5,029
)
 

 

 
(5,029
)
 

 
(5,029
)
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
 
10,920

 

 

 
10,920

 

 
10,920

Preferred stock redemptions
 
(325,000
)
 

 

 
(325,000
)
 

 
(325,000
)
Common units issued as a result of common stock issued by Parent Company, net of repurchases
 
4,453,889

 

 

 
4,453,889

 

 
4,453,889

Restricted units issued as a result of restricted stock issued by Parent Company upon Equity One merger
 
7,951

 

 

 
7,951

 

 
7,951

Balance at September 30, 2017
$
6,609,603

 
10,906

 
(14,141
)
 
6,606,368

 
30,316

 
6,636,684

See accompanying notes to consolidated financial statements.

10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
$
93,039

 
105,334

Adjustments to reconcile net income to net cash provided by operating activities:
 

 

Depreciation and amortization
 
243,757

 
119,721

Amortization of deferred loan cost and debt premium
 
7,144

 
7,242

(Accretion) and amortization of above and below market lease intangibles, net
 
(18,784
)
 
(2,296
)
Stock-based compensation, net of capitalization
 
16,836

 
7,554

Equity in income of investments in real estate partnerships
 
(33,804
)
 
(46,618
)
Gain on sale of real estate, net of tax
 
(4,913
)
 
(22,997
)
Provision for impairment
 

 
1,666

Early extinguishment of debt
 
12,404

 
13,943

Distribution of earnings from operations of investments in real estate partnerships
 
40,817

 
39,765

Loss on derivative instruments
 
51

 

Deferred compensation expense
 
2,885

 
1,249

Realized and unrealized (gain) loss on investments
 
(2,878
)
 
(1,268
)
Changes in assets and liabilities:
 

 

Restricted cash
 
(1,569
)
 
(84
)
Accounts receivable, net
 
2,574

 
3,715

Straight-line rent receivables, net
 
(13,901
)
 
(4,894
)
Deferred leasing costs
 
(10,294
)
 
(7,841
)
Other assets
 
8,075

 
(59
)
Accounts payable and other liabilities
 
4,908

 
12,607

Tenants’ security, escrow deposits and prepaid rent
 
(2,490
)
 
(1,406
)
Net cash provided by operating activities
 
343,857

 
225,333

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(2,109
)
 
(333,220
)
Advance deposits paid on acquisition of operating real estate
 
(350
)
 
1,250

Acquisition of Equity One, net of cash acquired of $72,534
 
(648,763
)
 

Real estate development and capital improvements
 
(241,834
)
 
(146,773
)
Proceeds from sale of real estate investments
 
15,397

 
83,675

Issuance of notes receivable
 
(3,460
)
 

Investments in real estate partnerships
 
(12,296
)
 
(13,127
)
Distributions received from investments in real estate partnerships
 
36,603

 
52,536

Dividends on investment securities
 
200

 
189

Acquisition of securities
 
(14,011
)
 
(53,290
)
Proceeds from sale of securities
 
11,974

 
54,176

Net cash used in investing activities
 
(858,649
)
 
(354,584
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common units issued as a result of common stock issued by Parent Company
 

 
549,545

Repurchase of common shares in conjunction with equity award plans
 
(19,251
)
 
(8,013
)
Proceeds from sale of treasury stock
 
100

 
957

Redemption of preferred partnership units
 
(325,000
)
 

Distributions (to) from limited partners in consolidated partnerships, net
 
(7,031
)
 
(3,126
)
Distributions to partners
 
(233,246
)
 
(149,278
)
Distributions to preferred unit holders
 
(5,029
)
 
(15,797
)
Repayment of fixed rate unsecured notes
 

 
(300,000
)
Proceeds from issuance of fixed rate unsecured notes, net
 
953,115

 

Proceeds from unsecured credit facilities
 
950,000

 
395,000

Repayment of unsecured credit facilities
 
(650,000
)
 
(295,000
)
Proceeds from notes payable
 
126,999

 
20,223

Repayment of notes payable
 
(232,839
)
 
(41,584
)
Scheduled principal payments
 
(7,452
)
 
(4,462
)
Payment of loan costs
 
(12,868
)
 
(1,954
)
Early redemption costs
 
(12,419
)
 
(13,214
)
Net cash provided by financing activities
 
525,079

 
133,297

Net increase in cash and cash equivalents
 
10,287

 
4,046

Cash and cash equivalents at beginning of the period
 
13,256

 
36,856

Cash and cash equivalents at end of the period
$
23,543

 
40,902


11





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2017, and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $5,778 and $2,622 in 2017 and 2016, respectively)
$
73,273

 
54,904

Cash received for income tax refunds, net of payments
$
670

 

Supplemental disclosure of non-cash transactions:
 
 
 
 
Limited partner units issued in exchange for acquisition of real estate
$
13,100

 

Common stock issued by Parent Company for dividend reinvestment plan
$
908

 
804

Stock-based compensation capitalized
$
2,459

 
2,561

Contributions from limited partners in consolidated partnerships, net
$
311

 
8,674

Common stock issued for dividend reinvestment in trust
$
557

 
556

Contribution of stock awards into trust
$
1,372

 
1,513

Distribution of stock held in trust
$
677

 
4,096

Change in fair value of securities available-for-sale
$
51

 
90

Equity One Merger:
 


 


Notes payable assumed in Equity One merger, at fair value
$
757,399

 

General partner units issued to Parent Company for common stock exchanged for Equity One shares
$
(4,471,808
)
 

Deconsolidation of previously consolidated partnership:
 
 
 
 
Real estate, net
$

 
14,075

Investments in real estate partnerships
$

 
(3,355
)
Notes payable
$

 
(9,415
)
Other assets and liabilities
$

 
640

Limited partners' interest in consolidated partnerships
$

 
(2,099
)
See accompanying notes to consolidated financial statements.

12




REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

1.
Organization and Significant Accounting Policies
General
Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the general partner of Regency Centers, L.P. (the “Operating Partnership”). The Parent Company engages in the ownership, management, leasing, acquisition, and development of retail shopping centers through the Operating Partnership. The Parent Company has no other assets other than through its investment in the Operating Partnership, and its only liabilities are the unsecured notes assumed from the merger with Equity One, Inc. ("Equity One"), which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership.
On March 1, 2017, Regency completed its merger with Equity One, whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock owned immediately prior to the effective time of the merger, resulting in the issuance of approximately 65.5 million shares of Regency common stock to effect the merger.
As of September 30, 2017, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 313 retail shopping centers and held partial interests in an additional 114 retail shopping centers through unconsolidated investments in real estate partnerships (also referred to as "joint ventures" or "investment partnerships").
The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. These adjustments are considered to be of a normal recurring nature.
Consolidation
The Company consolidates properties that are wholly owned and properties where it owns less than 100%, but which it controls. Control is determined using an evaluation based on accounting standards related to the consolidation of voting interest entities and variable interest entities ("VIEs"). For joint ventures that are determined to be a VIE, the Company consolidates the entity where it is deemed to be the primary beneficiary. Determination of the primary beneficiary is based on whether an entity has (1) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (2) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company's determination of the primary beneficiary considers all relationships between it and the VIE, including management agreements and other contractual arrangements.
Ownership of the Operating Partnership
The Operating Partnership’s capital includes general and limited common Partnership Units. As of September 30, 2017, the Parent Company owned approximately 99.8% of the outstanding common Partnership Units of the Operating Partnership with the remaining limited Partnership Units held by third parties (“Exchangeable operating partnership units” or “EOP units”). The Parent Company serves as general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating Partnership such that they do not have the power to direct the activities of the Operating Partnership. As such, the Operating Partnership is considered a VIE, and the Parent Company, which consolidates it, is the primary beneficiary. The Parent Company’s only investment is the Operating Partnership. Net income and distributions of the Operating Partnership are allocable to the general and limited common Partnership Units in accordance with their ownership percentages.
Segment Reporting
The Company's business is investing in retail shopping centers through direct ownership or through joint ventures. The Company actively manages its portfolio of retail shopping centers and may from time to time make decisions to sell lower performing properties not meeting its long-term investment objectives. The proceeds from sales are reinvested into higher quality retail shopping centers, through acquisitions or new developments, which management believes will generate sustainable revenue growth and attractive returns. It

13



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

is management's intent that all retail shopping centers will be owned or developed for investment purposes. The Company's revenues and net income are generated from the operation of its investment portfolio. The Company also earns fees for services provided to manage and lease retail shopping centers owned through joint ventures.
The Company's portfolio is located throughout the United States. Management does not distinguish or group its operations on a geographical basis for purposes of allocating resources or capital. The Company reviews operating and financial data for each property on an individual basis; therefore, the Company defines an operating segment as its individual properties. The individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature and economics of the centers, tenants and operational processes, as well as long-term average financial performance.
Goodwill
Goodwill, which is included within Other assets in the accompanying Consolidated Balance Sheets, represents the excess of the purchase price consideration for the Equity One merger over the fair value of the assets acquired and liabilities assumed, and reflects expected synergies from combining Regency's and Equity One's operations. The Company accounts for goodwill in accordance with the Intangibles - Goodwill and Other Topic of the FASB ASC, and allocates its goodwill to the reporting units, which have been determined to be at the individual property level. The Company will perform an impairment evaluation of its goodwill at least annually, in November of each year. The goodwill impairment evaluation may be completed through a qualitative or quantitative approach.
Under a qualitative approach, the impairment review for goodwill consists of an assessment of whether it is more-likely-than-not that the property’s fair value is less than its carrying value. If a qualitative approach indicates it is more likely-than-not that the estimated carrying value of a property exceeds its fair value, or if the Company chooses to bypass the qualitative approach for any property, the Company will perform the quantitative approach described below.
The first step of the quantitative approach consists of estimating the fair value of each property using discounted projected future cash flows and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment, if any, by determining an implied fair value of goodwill. The determination of each property’s implied fair value of goodwill requires allocation of the estimated fair value of the property to its assets and liabilities. Any unallocated fair value represents the implied fair value of goodwill which is compared to its corresponding carrying value.
Real Estate Partnerships
As of September 30, 2017, Regency has an ownership interest in 125 properties through partnerships, of which 11 are consolidated. Our partners in these ventures include institutional investors, other real estate developers and/or operators, and individual parties who help Regency source transactions for development and investment (the "Partners" or "limited partners"). Regency has a variable interest in these entities through its equity interests. As managing member, Regency maintains the books and records and typically provides leasing and property management to the partnerships. The partners’ level of involvement varies from protective decisions (debt, bankruptcy, selling primary asset(s) of business) to involvement in approving leases, operating budgets, and capital budgets.
Those partnerships for which the Partners only have protective rights are considered VIEs under ASC 810, Consolidation. Regency is the primary beneficiary of these VIEs as Regency has power over these partnerships and they operate primarily for the benefit of Regency. As such, Regency consolidates these entities and reports the limited partners’ interest as noncontrolling interests.
The operations of the VIEs are funded with cash flows generated by the properties, or in the case of developments, with capital contributions or third party construction loans. Regency does not provide financial support to the VIEs beyond the terms stipulated in the partnership operating agreements.
Those partnerships for which the partners are involved in the day to day decisions and do not have any other aspects that would cause them to be considered VIEs, are evaluated for consolidation using the voting interest model.

14



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Those partnerships in which Regency has a controlling financial interest are consolidated and the limited partners’ ownership interest and share of net income is recorded as noncontrolling interest.
Those partnerships in which Regency does not have a controlling financial interest are accounted for using the equity method, and its ownership interest is recognized through single-line presentation as Investments in real estate partnerships in the Consolidated Balance Sheet, and Equity in income of investments in real estate partnerships in the Consolidated Statements of Operations. Cash distributions of earnings from operations of investments in real estate partnerships are presented in cash flows provided by operating activities in the accompanying Consolidated Statements of Cash Flows. Cash distributions from the sale of a property or loan proceeds received from the placement of debt on a property included in investments in real estate partnerships are presented in cash flows provided by investing activities in the accompanying Consolidated Statements of Cash Flows. The net difference in the carrying amount of investments in real estate partnerships and the underlying equity in net assets is either (1) accreted to income and recorded in Equity in income of investments in real estate partnerships in the accompanying Consolidated Statements of Operations over the expected useful lives of the properties and other intangible assets, which range in lives from 10 to 40 years, or (2) recognized upon sale of the underlying asset(s) or settlement of underlying liabilities, or (3) recognized at liquidation if the joint venture agreement includes a unilateral right to elect to dissolve the real estate partnership and, upon such an election, receive a distribution in-kind.
The assets of the partnerships are restricted to the use of the partnerships and cannot be used as security by general creditors of the Company. And similarly, the obligations of the partnerships can only be settled by the assets of the partnerships.
The major classes of assets, liabilities, and non-controlling equity interests held by the Company's VIEs, exclusive of the Operating Partnership as a whole, are as follows:
(in thousands)
September 30, 2017
December 31, 2016
Assets
 
 
Real estate assets, net
$
93,821

86,440

Cash and cash equivalents
4,053

3,444

Liabilities
 
 
Notes payable
12,691

8,175

Equity
 
 
Limited partners’ interests in consolidated partnerships
17,604

17,565


15



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Recent Accounting Pronouncements
The following table provides a brief description of recent accounting pronouncements and expected impact on our financial statements:
Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
Recently adopted:
 
 
 
 
 
 
ASU 2016-09, March 2016, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
 
This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities, an option to recognize stock compensation forfeitures as they occur, and changes to classification on the statement of cash flows.
 
January 2017
 
The adoption of this standard resulted in the reclassification of income taxes withheld on share-based awards out of operating activities into financing activities on the Statement of Cash Flows. As retrospective application was required for this component of the ASU, $8.0 million was reclassified on the Statements of Cash Flows for the nine months ended September 30, 2016.

 
 
 
 
 
 
 
ASU 2017-01
January 2017, Business Combinations (Topic 805): Clarifying the Definition of a Business
 
This ASU amends and provides a screen to determine when an integrated set of assets and activities, collectively referred to as a "set", is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business.

If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. Early adoption is permitted.
 
July 2017
 
This standard changed the treatment of individual operating properties from being considered a business to being considered an asset.

This change results in acquisition costs being capitalized as part of asset acquisitions, whereas previous treatment had them recognized in earnings in the period incurred.

The Company adopted this standard effective July 1, 2017.
 
 
 
 
 
 
 
Not yet adopted:
 
 
 
 
 
 
ASU 2017-04, January 2017, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
 
This ASU simplifies how an entity tests goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Instead, under this update, the Company will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company would then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
 
October 2017
 
The Company plans to early adopt this ASU on October 1, 2017.

The adoption of this ASU will not have a material impact on the Company's financial statements and related disclosures.
 
 
 
 
 
 
 

16



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
ASU 2017-12, August 2017, Targeted Improvements to Accounting for Hedging Activities
 
This ASU provides updated guidance to better align a company’s financial reporting for hedging activities with the economic objectives of those activities.

The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying the ASU as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the update.

 
January 2018
 
The Company plans to early adopt this ASU on January 1, 2018.

While the Company continues to assess all potential impacts of the standard, it currently does not expect the adoption and implementation of this standard to have a material impact on the consolidated financial statements.
 
 
 
 
 
 
 
ASU 2016-01, January 2016, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
 
This ASU amends the guidance to classify equity securities with readily-determinable fair values into different categories and requires equity securities to be measured at fair value with changes in the fair value recognized through net income. Equity investments accounted for under the equity method are not included in the scope of this amendment. Early adoption of this amendment is not permitted.

 
January 2018
 
The Company does not expect the adoption and implementation of this standard to have a material impact on its results of operations, financial condition or cash flows.

 
 
 
 
 
 
 
ASU 2016-15, August 2016, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
 
This ASU makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. Early adoption is permitted on a retrospective basis.
 
January 2018
 
The ASU is consistent with the Company's current treatment and the Company does not expect the adoption and implementation of this standard to have an impact on its cash flow statement.

 
 
 
 
 
 
 
ASU 2016-18, November 2016, Statement of Cash Flows (Topic 230): Restricted Cash
 
This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. The amendments in this ASU should be applied using a retrospective transition method to each period presented.
 
January 2018
 
The Company expects the adoption of this ASU to result in a change to the classification and presentation of changes in restricted cash on its cash flow statement, which is not expected to be material. There should be no change to the Company's financial condition or results of operations.
 
 
 
 
 
 
 

17



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
Revenue from Contracts with Customers (Topic 606) and related updates:

ASU 2014-09, May 2014, Revenue from Contracts with Customers (Topic 606)

ASU 2016-08, March 2016, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations

ASU 2016-10, April 2016, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

ASU 2016-12, May 2016, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients

ASU 2016-19, December 2016, Technical Corrections and Improvements

ASU 2016-20, December 2016, Technical Corrections and Improvements to Topic 606 Revenue from Contracts With Customers

ASU 2017-05, February 2017, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (Subtopic 610-20)
 
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("Topic 606"). The objective of Topic 606 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. It will supersede most of the existing revenue guidance, including industry-specific guidance. The core principal of this new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying Topic 606, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized.

Topic 606 applies to all contracts with customers except those that are within the scope of other topics in the FASB's accounting standards codification. As a result, Topic 606 does not apply to revenue from lease contracts until the adoption of the new leases standard, Topic 842, in January 2019.

ASU 2017-05 clarifies that ASC 610-20 applies to all nonfinancial assets (including real estate) for which the counterparty is not a customer and requires an entity to derecognize a nonfinancial asset in a partial sale transaction when it ceases to have a controlling financial interest in the asset and has transferred control of the asset. Once an entity transfers control of the nonfinancial asset, the entity is required to measure any noncontrolling interest it receives or retains at fair value. Under the current guidance, a partial sale is recognized and carryover basis is used for the retained interest resulting in only partial gain recognition by the entity, however, the new guidance eliminates the use of carryover basis and generally requires the full gain be recognized.

The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most recent period presented in the financial statements.
 
January 2018
 
The majority of the Company's revenue originates from lease contracts and will be subject to Topic 842 to be adopted in January 2019. Upon the adoption of the new leases standard, certain recoveries from tenants may become subject to the revenue standard, which may have a different recognition pattern or presentation than under current GAAP.

Beyond revenue from lease contracts, the Company's other main revenue streams, include:

 - Management, transaction and other fees from the Company's real estate partnerships, primarily in the form of property management fees, asset management fees, and leasing commission fees. The Company evaluated all partnership fee relationships and does not currently expect any changes in the timing of revenue recognition from these revenue streams.

 - Sales of real estate assets will be accounted for under Subtopic 610-20, which provides for revenue recognition based on transfer of control. For property sales where Regency has no continuing involvement, there should be no change to the Company's timing of recognition. For property sales in which Regency has continuing involvement, full gain recognition may be required, where gains may have been deferred under existing GAAP. Upon adoption of ASU 2017-05, some of the Company's $33 million of previously deferred gains from property sales to entities in which Regency had continuing involvement will remain deferred and be recognized in the future, while some will be recognized through opening retained earnings.

 The Company is still analyzing the disclosure requirements and intends to follow the modified retrospective method of adoption, applying the standard to only 2018, and not restating prior periods presented in future financial statements.
 
 
 
 
 
 
 

18



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Standard
 
Description
 
Date of adoption
 
Effect on the financial statements or other significant matters
ASU 2016-02, February 2016, Leases (Topic 842)
 
This ASU amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. It also makes targeted changes to lessor accounting, including a change to the treatment of internal leasing costs and legal costs, which can no longer be capitalized.

Early adoption of this standard is permitted to coincide with adoption of ASU 2014-09. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.
 
January 2019
 
The Company is evaluating the impact this standard will have on its financial statements and related disclosures.
Upon adoption, the Company will recognize right of use assets and corresponding lease obligations for its office and ground leases.
Capitalization of internal leasing costs and legal costs will no longer be permitted upon the adoption of this standard, which will result in an increase in Total operating expenses in the Consolidated Statements of Operations in the period of adoption and prospectively.

Historic capitalization of internal leasing costs was $7.5 million and $10.5 million during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively.

Historic capitalization of legal costs was $0.9 million and $0.7 million during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, including our pro rata share recognized through Equity in income of investments in real estate partnerships.
 
 
 
 
 
 
 
ASU 2016-13, June 2016, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
 
This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

This ASU also applies to how the Company determines its allowance for doubtful accounts on tenant receivables.
 
January 2020
 
The Company is evaluating the alternative methods of adoption and the impact it will have on its financial statements and related disclosures.

19



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017


2.
Real Estate Investments
Acquisitions
The following table details the shopping centers acquired or land acquired or leased for development:
(in thousands)
 
Nine months ended September 30, 2017
Date Purchased
 
Property Name
 
City/State
 
Property Type
 
Ownership
 
Purchase Price
 
Debt Assumed, Net of Premiums
 
Intangible Assets
 
Intangible Liabilities
3/6/17
 
The Field at Commonwealth
 
Chantilly, VA
 
Development
 
100%
 
$9,500
 
 
 
3/8/17
 
Pinecrest Place (1)
 
Miami, FL
 
Development
 
100%
 
 
 
 
4/13/17
 
Mellody Farm (2)
 
Chicago, IL
 
Development
 
100%
 
26,200
 
 
 

6/28/17
 
Concord outparcel (3)
 
Miami, FL
 
Operating
 
100%
 
350
 
 
 
7/20/17
 
Aventura Square outparcel (4)
 
Miami, FL
 
Operating
 
100%
 
1,750
 
 
90
 
9
Total property acquisitions
 
 
 
 
 
$37,800
 
 
90
 
9
(1)  The Company leased 10.67 acres for a ground up development.
(2)  The Operating Partnership issued 195,732 partnership units valued at $13.1 million as partial consideration for the purchase price.
(3)  The Company purchased a 0.67 acre vacant outparcel adjacent to the Company's existing operating Concord Shopping Plaza.
(4)  The Company purchased a 0.06 acre outparcel improved with a leased building adjacent to the Company's existing operating Aventura Square.
 
 
 
(in thousands)
 
Nine months ended September 30, 2016
Date Purchased
 
Property Name
 
City/State
 
Property Type
 
Ownership
 
Purchase Price
 
Debt Assumed, Net of Premiums
 
Intangible Assets
 
Intangible Liabilities
2/22/16
 
Garden City Park
 
Garden City Park, NY
 
Operating
 
100%
 
$17,300
 
 
10,171
 
2,940
3/4/16
 
The Market at Springwoods Village (1)
 
Houston, TX
 
Development
 
53%
 
$17,994
 
 
 
5/16/16
 
Market Common Clarendon
 
Arlington, VA
 
Operating
 
100%
 
$280,500
 
 
15,428
 
15,662
7/15/16
 
Klahanie Shopping Center
 
Sammamish, WA
 
Operating
 
100%
 
$35,988
 
 
2,264
 
539
8/4/16
 
The Village at Tustin Legacy
 
Tustin, CA
 
Development
 
100%
 
$18,800
 
 
 
Total property acquisitions
 
 
 
 
 
$370,582
 
 
27,863
 
19,141
(1)  Regency acquired a 53% controlling interest in the Market at Springwoods Village partnership to develop a shopping center on land contributed by the partner. As a result of consolidation, the Company recorded the partner's non-controlling interest of $8.4 million in Limited partners' interests in consolidated partnerships in the accompanying Consolidated Balance Sheets.
Equity One Merger
General
On March 1, 2017, Regency completed its merger with Equity One, a NYSE listed shopping center company, whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock owned immediately prior to the effective time of the merger resulting in approximately 65.5 million Regency common shares being issued to effect the merger.

20



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

The following table provides the components that make up the total purchase price for the Equity One merger:
(in thousands, except stock price)
Purchase Price
Shares of common stock issued for merger
65,379

Closing stock price on March 1, 2017
$
68.40

Value of common stock issued for merger
$
4,471,808

Debt repaid
716,278

Other cash payments
5,019

Total purchase price
$
5,193,105

As part of the merger, Regency acquired 121 properties, including 8 properties held through co-investment partnerships. The consolidated net assets and results of operations of Equity One are included in the consolidated financial statements from the closing date, March 1, 2017, going forward and resulted in the following impact to Revenues and Net income attributable to common stockholders for the three and nine months ended September 30, 2017:
 
 
September 30, 2017
(in thousands)
 
Three months ended
Nine months ended
Increase in total revenues
$
102,437

238,250

Increase in net income attributable to common stockholders
 
23,517

52,981

The Company incurred $1.2 million and $75.6 million of merger-related transaction costs during the three and nine months ended September 30, 2017, respectively, which are recorded in Other operating expenses in the accompanying Consolidated Statements of Operations. There were no such merger costs incurred during the same periods of 2016.
Provisional Purchase Price Allocation of Merger
The Equity One merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values.
The acquired assets and assumed liabilities of an acquired operating property generally include, but are not limited to: land, buildings and improvements, identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of acquired in-place leases. This methodology requires estimating an “as-if vacant” fair value of the physical property, which includes land, building, and improvements and also determining the estimated fair value of identifiable intangible assets and liabilities, considering the following categories: (i) value of in-place leases, and (ii) above and below-market value of in-place leases. The excess of the purchase price consideration over the fair value of assets acquired and liabilities assumed results in goodwill in the business combination, which reflects expected synergies from combining Regency's and Equity One's operations. The goodwill is not expected to be deductible for tax purposes.
The provisional fair market value of the acquired operating properties is based on a valuation prepared by Regency with assistance of a third party valuation specialist. The third party used stabilized NOI and market specific capitalization and discount rates as the primary inputs in determining the fair value of the real estate assets. Management reviewed the inputs used by the third party specialist as well as the allocation of the purchase price to ensure reasonableness and that the procedures were performed in accordance with management's policy. Management and the third party valuation specialist have prepared their provisional fair value estimates for each of the operating properties acquired, but are still in process of reviewing all of the underlying inputs and assumptions; therefore, the purchase price and its allocation, in their entirety, are not yet complete as of the date of this filing but have been updated to reflect management's current best estimates of fair values as of the acquisition date . Once the purchase price and allocation are complete, an additional adjustment to the purchase price or allocation may occur.

21



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

The following table summarizes the current provisional purchase price allocation based on the Company's valuation, including estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed:
(in thousands)
 
Provisional Purchase Price Allocation
Land
 
$
2,914,790

Building and improvements
 
2,699,937

Properties in development
 
68,744

Properties held for sale
 
19,600

Investments in unconsolidated real estate partnerships
 
103,566

Real estate assets
 
5,806,637

Cash, accounts receivable and other assets
 
112,271

Intangible assets
 
460,541

Goodwill
 
302,303

Total assets acquired
 
6,681,752

 
 
 
Notes payable
 
757,399

Accounts payable, accrued expenses, and other liabilities
 
121,441

Lease intangible liabilities
 
609,807

Total liabilities assumed
 
1,488,647

 
 
 
Total purchase price
 
$
5,193,105

During the three months ended September 30, 2017, the Company adjusted the provisional purchase price allocation to reflect current best estimates of fair values of the acquired operating properties, based on the valuation process described above. These adjustments resulted in the following increases (decreases) to earnings during the three months ended September 30, 2017 that would have been recognized in previous periods if the adjustments to provisional amounts were recognized as of the acquisition date:
(in thousands)
Three months ended September 30, 2017
decrease in Minimum rent
$
(567
)
decrease in Depreciation and amortization
1,645

decrease in Operating and maintenance
142

Net increase to earnings of provisional purchase price allocation adjustments
$
1,220

The allocation of the purchase price is based on management’s assessment, which may change in the future as more information becomes available. Subsequent adjustments made to the purchase price allocation upon completion of the Company's fair value assessment process will not exceed one year from the acquisition date. The allocation of the purchase price described above requires a significant amount of judgment and represents management's best estimate of the fair value as of the acquisition date.

22



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

The following table details the provisional weighted average amortization and net accretion periods, in years, of the major classes of intangible assets and intangible liabilities arising from the Equity One merger:
(in years)
 
Weighted Average Amortization Period
Assets:
 
 
In-place leases
 
11.0
Above-market leases
 
8.9
Below-market ground leases
 
54.6
Liabilities:
 
 
Acquired lease intangible liabilities
 
24.8
Pro forma Information (unaudited)
The following unaudited pro forma financial data includes the incremental revenues, operating expenses, depreciation and amortization, and costs of the Equity One acquisition as if it had occurred on January 1, 2016:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands, except per share data)
 
2017
 
2016
 
2017
 
2016
Total revenues
 
$
262,708

 
251,823

 
788,345

 
752,121

Income (loss) from operations
(1) 
63,537

 
3,358

 
190,112

 
(4,560
)
Net income (loss) attributable to common stockholders
(1) 
59,621

 
(1,907
)
 
171,795

 
(21,744
)
Income (loss) per common share - basic
 
$
0.35

 
(0.01
)
 
1.01

 
(0.13
)
Income (loss) per common share - diluted
 
0.35

 
(0.01
)
 
1.01

 
(0.13
)
(1) The pro forma earnings for the three and nine months ended September 30, 2017, were adjusted to exclude $1.2 million and $98.5 million of merger costs, respectively, while 2016 pro forma earnings were adjusted to include all merger costs during the first quarter of 2016.
The pro forma financial data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor does it purport to represent the results of operations for future periods.

3.    Property Dispositions
Dispositions
The following table provides a summary of shopping centers and land parcels disposed of:
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
(in thousands)
 
2017
 
2016
 
2017
 
2016
 
Net proceeds from sale of real estate investments
 
$
167

 
$
47,180

 
$
15,397

 
$
85,885

(1) 
Gain on sale of real estate, net of tax
 
$
131

 
$
9,580

 
$
4,913

 
$
22,997

 
Provision for impairment of real estate sold
 
$

 
$

 
$

 
$
(1,666
)
 
Number of operating properties sold
 

 
3

 
1

 
7

 
Number of land parcels sold
 

 
2

 
7

 
12

 
Percent interest sold
 
%
 
100
%
 
100
%
 
100
%
 
(1)  Includes cash deposits received in the previous year.

23



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

4.    Notes Payable and Unsecured Credit Facilities
The Company’s outstanding debt consisted of the following:
(in thousands)
Weighted Average Contractual Rate
Weighted Average Effective Rate
September 30, 2017
 
December 31, 2016
Notes payable:
 
 
 
 
 
Fixed rate mortgage loans
5.0%
4.3%
$
496,869

 
384,786

Variable rate mortgage loans
2.4%
2.6%
122,036

(1) 
86,969

Fixed rate unsecured public and private debt
3.8%
4.2%
2,325,081

 
892,170

Total notes payable
 
 
2,943,986

 
1,363,925

Unsecured credit facilities:
 
 
 
 
 
Line of Credit (the "Line") (2)
2.1%
2.2%
15,000

 
15,000

Term loans
2.4%
2.5%
563,144

 
263,495

Total unsecured credit facilities
 
 
578,144

 
278,495

Total debt outstanding
 
 
$
3,522,130

 
1,642,420

 
 
 
 
 
 
(1)  Includes five mortgages whose interest rates vary on LIBOR based formulas. Three of these variable rate loans have interest rate swaps in place to fix the interest rates at a range of 2.8% to 4.07%
(2)  Weighted average effective and contractual rate for the Line is calculated based on a fully drawn Line balance.
During January 2017, the Company issued $650.0 million of senior unsecured public notes as follows:
$300.0 million of 4.4% senior unsecured public notes due in 2047, which priced at 99.110%. The Company used the net proceeds to redeem all of the outstanding shares of its $250 million 6.625% Series 6 preferred stock on February 16, 2017 and to pay down the balance of the Line.
$350.0 million of 3.6% senior unsecured public notes due in 2027, which priced at 99.741%. The Company used the net proceeds to repay a $250.0 million Equity One term loan upon the effective date of the merger and to pay merger related transaction costs.
During June 2017, the Company issued an additional $300.0 million of senior unsecured public notes under the same terms as the January offering noted above as follows:
$125.0 million of 4.4% senior unsecured public notes due in 2047, which priced at 100.784%, with proceeds used to redeem all of the outstanding shares of its $75.0 million 6.000% Series 7 preferred stock on August 23, 2017, with the balance used to pay down the Line.
$175.0 million of 3.6% senior unsecured public notes due in 2027, which priced at 100.379%, with proceeds used to retire $112.0 million of mortgage loans with interest rates ranging from 7.0% to 7.8% on various properties, with the balance used to pay down the Line.
The Company completed the following additional debt transactions in connection with the Equity One merger:
Increased the size of its Line commitment to $1.0 billion with an accordion feature permitting the Company to request an increase in the facility of up to an additional $500 million.
Completed a $300 million unsecured term loan that matures on December 2, 2020 with the option to prepay at par anytime prior to maturity without penalty. The interest rate on the term loan is equal to LIBOR plus a ratings based margin; however, the Company entered into interest rate swaps to fix the interest rate on the entire $300 million with a weighted average interest rate of 1.824% (see note 5). The proceeds of the term loan were used to repay a $300 million Equity One term loan that came due as a result of the merger.
Assumed $300 million of senior unsecured public notes with an interest rate of 3.75% maturing in 2022.
Assumed $200 million of the senior unsecured private placement notes issued in two $100 million tranches with interest rates of 3.81% and 3.91%, respectively, maturing in 2026.

24



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Assumed $226.3 million of fixed rate mortgage loans with interest rates ranging from 3.76% to 7.94%, and assumed a $27.8 million variable rate mortgage loan whose interest rate varies with LIBOR.
The public and private unsecured notes assumed from Equity One have covenants that are similar to the Company's existing debt covenants described in Regency's latest Form 10-K.
As of September 30, 2017, scheduled principal payments and maturities on notes payable and unsecured credit facilities were as follows:
(in thousands)
September 30, 2017
Scheduled Principal Payments and Maturities by Year:
Scheduled
Principal
Payments
 
Mortgage
Loan
Maturities
 
Unsecured
Maturities (1)
 
Total
2017
$
2,708

 

 

 
2,708

2018
10,641

 
139,976

 

 
150,617

2019
13,860

 
13,216

 
15,000


42,076

2020
11,122

 
51,580

 
450,000

 
512,702

2021
11,426

 
39,001

 
250,000

 
300,427

Beyond 5 Years
48,674

 
266,179

 
2,215,000

 
2,529,853

Unamortized debt premium/(discount) and issuance costs

 
10,522

 
(26,775
)
 
(16,253
)
Total
$
98,431

 
520,474

 
2,903,225

 
3,522,130

 
 
 
 
 
 
 
 
(1)  Includes unsecured public debt and unsecured credit facilities.
The Company has $140.0 million of mortgage loans maturing through 2018, which it currently intends to refinance if held within a co-investment partnership or pay off if wholly owned. The Company has sufficient capacity on its Line to repay this maturing debt, all of which is in the form of non-recourse mortgage loans.
The Company was in compliance as of September 30, 2017 with the financial and other covenants under its unsecured public and private placement debt and unsecured credit facilities.
5.    Derivative Financial Instruments
The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets:
 
 
 
 
 
 
 
 
 
 
 
Fair Value
 
(in thousands)
 
 
 
 
 
 
 
Assets (Liabilities)(1)
 
Effective Date
 
Maturity Date
 
Notional Amount
 
Bank Pays Variable Rate of
 
Regency Pays Fixed Rate of
 
September 30, 2017
 
December 31, 2016
 
4/3/17
 
12/2/20
 
$
300,000

 
1 Month LIBOR with Floor
 
1.824%
 
$
(687
)
 

 
8/1/16
 
1/5/22
 
265,000

 
1 Month LIBOR with Floor
 
1.053%
 
8,722

 
9,889

 
4/7/16
 
4/1/23
 
20,000

 
1 Month LIBOR
 
1.303%
 
622

 
720

 
12/1/16
 
11/1/23
 
33,000

 
1 Month LIBOR
 
1.490%
 
857

 
1,013

 
6/2/17
 
6/2/27
 
37,500

 
1 Month LIBOR with Floor
 
2.366%
 
(495
)
 
(580
)
Total derivative financial instruments
 
$
9,019

 
11,042

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Derivatives in an asset position are included within Other assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts payable and other liabilities.
These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and, as of September 30, 2017, does not have any derivatives that are not designated as hedges. The Company has master netting agreements;

25



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

however, the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore, none are offset in the accompanying Consolidated Balance Sheets.
The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within Interest expense, in the accompanying Consolidated Statements of Operations.
The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements:
Derivatives in FASB
ASC Topic 815 Cash
Flow Hedging
Relationships:
 
Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective
Portion)
 
Location and Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
 
Three months ended September 30,
 
 
 
Three months ended September 30,
(in thousands)
 
2017
 
2016
 
 
 
2017
 
2016
Interest rate swaps
 
$
(39
)
 
1,294

 
Interest expense
 
$
(2,329
)
 
(43,111
)
 
 
 
 
 
 
 
 
 
 
 
Derivatives in FASB
ASC Topic 815 Cash
Flow Hedging
Relationships:
 
Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective
Portion)
 
Location and Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
 
Nine months ended September 30,
 
 
 
Nine months ended September 30,
(in thousands)
 
2017
 
2016
 
 
 
2017
 
2016
Interest rate swaps
 
$
(3,911
)
 
(25,338
)
 
Interest expense
 
$
(8,054
)
 
(48,063
)
As of September 30, 2017, the Company expects $9.1 million of net deferred losses on derivative instruments in Accumulated other comprehensive loss, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months. Included in the reclassification is $8.4 million which is related to previously settled swaps on the Company's ten year fixed rate unsecured loans.

6.    Fair Value Measurements
(a) Disclosure of Fair Value of Financial Instruments
All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation, reasonably approximate their fair values, except for the following:
 
September 30, 2017
 
December 31, 2016
(in thousands)
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Financial assets:
 
 
 
 
 
 
 
Notes receivable
$
13,984

 
13,869

 
$
10,481

 
10,380

Financial liabilities:
 
 
 
 
 
 
 
Notes payable
$
2,943,986

 
3,027,557

 
$
1,363,925

 
1,435,000

Unsecured credit facilities
$
578,144

 
580,000

 
$
278,495

 
279,700

The above fair values represent management's estimate of the amounts that would be received from selling those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants as of September 30, 2017 and December 31, 2016, respectively. These fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments about the assumptions that market participants would use in pricing the asset or liability.

26



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

The Company develops its judgments based on the best information available at the measurement date, including expected cash flows, appropriate risk-adjusted discount rates, and available observable and unobservable inputs. Service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value of these financial instruments, the fair values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.
The following methods and assumptions were used to estimate the fair value of these financial instruments:
Notes Receivable
The fair value of the Company's Notes receivable is estimated by calculating the present value of future contractual cash flows discounted at interest rates available for notes of the same terms and maturities, adjusted for counter-party specific credit risk. The fair value of Notes receivable was determined primarily using Level 3 inputs of the fair value hierarchy, which considered counter-party credit risk and collateral risk of the underlying property securing the note receivable.
Notes Payable
The fair value of the Company's unsecured debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the unsecured debt was determined using Level 2 inputs of the fair value hierarchy.
The fair value of the Company's mortgage notes payable is estimated by discounting future cash flows of each instrument at rates that reflect the current market rates available to the Company for debt of the same terms and 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. The fair value of the mortgage notes payable was determined using Level 2 inputs of the fair value hierarchy.
Unsecured Credit Facilities
The fair value of the Company's Unsecured credit facilities is estimated based on the interest rates currently offered to the Company by financial institutions. The fair value of the credit facilities was determined using Level 2 inputs of the fair value hierarchy.
The following interest rate ranges were used by the Company to estimate the fair value of its financial instruments:
 
 
September 30, 2017
 
December 31, 2016
 
 
Low
 
High
 
Low
 
High
Notes receivable
 
3.5%
 
7.4%
 
7.2%
 
7.2%
Notes payable
 
3.1%
 
3.7%
 
2.9%
 
3.9%
Unsecured credit facilities
 
1.7%
 
2.2%
 
1.5%
 
1.6%
(b) Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis:
Trading Securities Held in Trust
The Company has investments in marketable securities, which are assets of the non-qualified deferred compensation plan ("NQDCP"), that are classified as trading securities and included within Other assets on the accompanying Consolidated Balance Sheets. The fair value of the trading securities held in trust was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of trading securities are recorded within net investment (income) loss from deferred compensation plan in the accompanying Consolidated Statements of Operations.
Available-for-Sale Securities
Available-for-sale securities consist of investments in certificates of deposit and corporate bonds, and are recorded at fair value using matrix pricing methods to estimate fair value, which are considered Level 2

27



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

inputs of the fair value hierarchy. Unrealized gains or losses on these securities are recognized through Other comprehensive income.
Interest Rate Derivatives
The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.
The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis:
 
Fair Value Measurements as of September 30, 2017
(in thousands)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Assets:
Balance
 
(Level 1)
 
(Level 2)
 
(Level 3)
Trading securities held in trust
$
30,720

 
30,720

 

 

Available-for-sale securities
10,054

 

 
10,054

 

Interest rate derivatives
10,201

 

 
10,201

 

Total
$
50,975

 
30,720

 
20,255

 

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest rate derivatives
$
(1,182
)
 

 
(1,182
)
 

 
Fair Value Measurements as of December 31, 2016
(in thousands)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Assets:
Balance
 
(Level 1)
 
(Level 2)
 
(Level 3)
Trading securities held in trust
$
28,588

 
28,588

 

 

Available-for-sale securities
7,420

 

 
7,420

 

Interest rate derivatives
11,622

 

 
11,622

 

Total
$
47,630

 
28,588

 
19,042

 

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest rate derivatives
$
(580
)
 

 
(580
)
 



28



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

7.    Equity and Capital
Preferred Stock of the Parent Company
Redemption:
The Parent Company redeemed all of the issued and outstanding shares of its $250 million 6.625% Series 6 cumulative redeemable preferred stock on February 16, 2017. The redemption price of $25.21 per share included accrued and unpaid dividends, resulting in an aggregate amount being paid of $252.0 million. The funds used to redeem the Series 6 preferred stock were provided by the $300 million 30 year senior unsecured debt offering completed in January 2017, as discussed in note 4.
On August 23, 2017, the Parent Company also redeemed all of the issued and outstanding shares of its $75 million 6% Series 7 cumulative redeemable preferred stock. The redemption price of $25.22 per share included accrued and unpaid dividends resulting in an aggregate amount being paid of $75.7 million. The Company used proceeds from its senior unsecured notes issued in June 2017 to fund the redemption, as discussed in note 4.
Common Stock of the Parent Company
Issuances:
At the Market ("ATM") Program
The Company's ATM equity offering program authorizes the Parent Company to sell up to $500 million of common stock at prices determined by the market at the time of sale. As of September 30, 2017, $500 million of common stock remained available for issuance under this ATM equity program.
There were no shares issued under the ATM equity program during the three months ended September 30, 2017 or 2016, or during the nine months ended September 30, 2017. The following table presents the shares that were issued under the ATM equity program during the nine months ended September 30, 2016:
 
Nine months ended September 30,
(dollar amounts are in thousands, except price per share data)
2017
 
2016
Shares issued (1)

 
182,787

Weighted average price per share
$

 
$
68.85

Gross proceeds
$

 
$
12,584

Commissions
$

 
$
157

Issuance costs (2)
$
349

 
$
80

(1)  Reflects shares traded in December and settled in January.
(2) Includes legal and accounting costs associated with maintaining the ATM program.
Forward Equity Offering
In March 2016, the Parent Company entered into a forward sale agreement (the "Forward Equity Offering") to issue 3.10 million shares of its common stock at an offering price of $75.25 per share before any underwriting discount and offering expenses.
In June 2016, the Parent Company partially settled its forward equity offering by delivering 1.85 million shares of newly issued common stock thereby receiving $137.5 million of net proceeds which were used to repay the Line. The remaining 1.25 million shares must be settled under the forward sale agreement prior to December 27, 2017.
Equity One merger
On March 1, 2017, Regency completed its merger with Equity One, whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock that they owned immediately prior to the effective time of the Merger resulting in approximately 65.5 million shares being issued to effect the merger.


29



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Common Units of the Operating Partnership
Issuances:
Common units were issued to the Parent Company in relation to the Parent Company's issuance of common stock, as discussed above.
In April 2017, the Operating Partnership issued 195,732 limited partner units, valued at $13.1 million, as partial purchase price consideration for the acquisition of land to be developed.
Accumulated Other Comprehensive Loss ("AOCI")
The following tables present changes in the balances of each component of AOCI:
 
Controlling Interest
 
Noncontrolling Interest
 
Total
(in thousands)
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
AOCI
Balance as of December 31, 2015
$
(58,650
)
 
(43
)
 
(58,693
)
 
(785
)
 

 
(785
)
 
(59,478
)
Other comprehensive income before reclassifications
(25,015
)
 
89

 
(24,926
)
 
(322
)
 

 
(322
)
 
(25,248
)
Amounts reclassified from accumulated other comprehensive income
47,880

 

 
47,880

 
183

 

 
183

 
48,063

Current period other comprehensive income, net
22,865

 
89

 
22,954

 
(139
)
 

 
(139
)
 
22,815

Balance as of September 30, 2016
$
(35,785
)
 
46

 
(35,739
)
 
(924
)
 

 
(924
)
 
(36,663
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Controlling Interest
 
Noncontrolling Interest
 
Total
(in thousands)
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
Cash Flow Hedges
 
Unrealized gain (loss) on Available-For-Sale Securities
 
AOCI
 
AOCI
Balance as of December 31, 2016
$
(18,327
)
 
(19
)
 
(18,346
)
 
(301
)
 

 
(301
)
 
(18,647
)
Other comprehensive income before reclassifications
(3,768
)
 
51

 
(3,717
)
 
(143
)
 

 
(143
)
 
(3,860
)
Amounts reclassified from accumulated other comprehensive income
7,922

 

 
7,922

 
132

 

 
132

 
8,054

Current period other comprehensive income, net
4,154

 
51

 
4,205

 
(11
)
 

 
(11
)
 
4,194

Balance as of September 30, 2017
$
(14,173
)
 
32

 
(14,141
)
 
(312
)
 

 
(312
)
 
(14,453
)
The following represents amounts reclassified out of AOCI into income:
AOCI Component
Amount Reclassified from AOCI into income
Affected Line Item(s) Where Net Income is Presented
 
Three months ended September 30,
 
Nine months ended September 30,
 
(in thousands)
2017
 
2016
 
2017
 
2016
 
Interest rate swaps
$
2,329

 
43,111

 
$
8,054

 
48,063

Interest expense and Loss on derivative instruments

8.    Stock-Based Compensation
During nine months ended September 30, 2017, the Company granted 231,065 shares of restricted stock with a weighted-average grant-date fair value of $71.93 per share. The Company records stock-based compensation expense within General and administrative expenses in the accompanying Consolidated Statements of Operations.

30



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017


9.    Non-Qualified Deferred Compensation Plan ("NQDCP")
The Company maintains a NQDCP which allows select employees and directors to defer part or all of their cash bonus, director fees, and vested restricted stock awards. All contributions into the participants' accounts are fully vested upon contribution to the NQDCP and are deposited in a Rabbi trust.
The following table reflects the balances of the assets held in the Rabbi trust and related participant account obligations in the accompanying Consolidated Balance Sheets, excluding Regency stock:
(in thousands)
September 30, 2017
 
December 31, 2016
Assets:
 
 
 
Trading securities held in trust (1)
$
30,720

 
28,588

Liabilities:
 
 
 
Accounts payable and other liabilities
$
30,423

 
28,214

(1) Included within Other assets in the accompanying Consolidated Balance Sheets.

10.    Earnings per Share and Unit
Parent Company Earnings per Share
The following summarizes the calculation of basic and diluted earnings per share:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands, except per share data)
 
2017
 
2016
 
2017
 
2016
Numerator:
 
 
 
 
 
 
 
 
Income from operations attributable to common stockholders - basic
 
$
59,666

 
5,305

 
$
74,810

 
87,992

Income from operations attributable to common stockholders - diluted
 
$
59,666

 
5,305

 
$
74,810

 
87,992

Denominator:
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for basic EPS
 
170,105

 
103,675

 
155,881

 
99,639

Weighted average common shares outstanding for diluted EPS (1)
 
170,466

 
104,255

 
156,190

 
100,128


 
 
 
 
 
 
 
 
Income per common share – basic
 
$
0.35

 
0.05

 
$
0.48

 
0.88

Income per common share – diluted
 
$
0.35

 
0.05

 
$
0.48

 
0.88

(1)  Includes the dilutive impact of unvested restricted stock and shares issuable under the forward equity offering using the treasury stock method.
Income 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 and nine months ended September 30, 2017 were 349,902 and 276,503, respectively, while they were 154,170 during the same periods of 2016.

31



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

Operating Partnership Earnings per Unit
The following summarizes the calculation of basic and diluted earnings per unit:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands, except per share data)
 
2017
 
2016
 
2017
 
2016
Numerator:
 
 
 
 
 
 
 
 
Income from operations attributable to common unit holders - basic
 
$
59,798

 
5,321

 
$
75,027

 
88,157

Income from operations attributable to common unit holders - diluted
 
$
59,798

 
5,321

 
$
75,027

 
88,157

Denominator:
 
 
 
 
 
 
 
 
Weighted average common units outstanding for basic EPU
 
170,455

 
103,829

 
156,158

 
99,793

Weighted average common units outstanding for diluted EPU (1)
 
170,816

 
104,409

 
156,467

 
100,282


 
 
 
 
 
 
 
 
Income per common unit – basic
 
$
0.35

 
0.05

 
$
0.48

 
0.88

Income per common unit – diluted
 
$
0.35

 
0.05

 
$
0.48

 
0.88

(1)  Includes the dilutive impact of unvested restricted stock and the forward equity offering using the treasury stock method.

11.    Commitments and Contingencies
Litigation
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. Legal fees are expensed as incurred.
After the announcement of the merger agreement with Equity One on November 14, 2016, a putative class action was filed on behalf of a purported stockholder in the Circuit Court for Duval County, Florida, under the following caption: Robert Garfield on Behalf of Himself and All Others Similarly Situated vs. Regency Centers Corporation, Martin E. Stein, Jr., John C. Schweitzer, Raymond L. Bank, Bryce Blair, C. Ronald Blankenship, J. Dix Druce, Jr., Mary Lou Fiala, David P. O'Connor, and Thomas G. Wattles, No. 16-2017-CA-000688-XXXX-MA, filed February 3, 2017.
The class action alleged, among other matters, that the definitive joint proxy statement/prospectus filed by Regency and Equity One with the Securities and Exchange Commission (the “SEC”) on January 24, 2017 (the “Joint Proxy Statement/Prospectus”) omitted certain material information in connection with the merger. The complainant sought various remedies, including injunctive relief to prevent the consummation of the merger unless certain allegedly material information was disclosed and sought compensatory and rescissory damages in the event the merger was consummated without such disclosures.
On February 17, 2017, the defendants entered into a stipulation of settlement with respect to the class action, pursuant to which the parties agreed, among other things, that Regency would make certain supplemental disclosures. The supplemental disclosures were made by Regency in the Current Report on Form 8-K filed by Regency with the SEC on February 17, 2017. The stipulation of settlement remains subject to court approval.
Environmental
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 believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that existing environmental studies with respect to the shopping centers have revealed all potential environmental contaminants or 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

32



REGENCY CENTERS CORPORATION AND REGENCY CENTERS, L.P.
Notes to Unaudited Consolidated Financial Statements
September 30, 2017

in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.
Letters of Credit
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. These letters of credit are primarily issued as collateral on behalf of its captive insurance program and to facilitate the construction of development projects. As of September 30, 2017 and December 31, 2016, the Company had $5.9 million and $5.8 million, respectively, in letters of credit outstanding.

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 and redevelopment 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 real estate industry and markets in which the Company operates, 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, our ability to successfully integrate the business of Equity One successfully and realize the anticipated synergies and related benefits of our merger with Equity One, 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 building pads ("out-parcels"), changes in leasing activity and market rents, timing of development starts, meeting development schedules, natural disasters in geographic areas in which we operate, cost of environmental remediation, our inability to exercise voting control over the co-investment partnerships through which we own many of our properties, and technology disruptions. For additional information, see “Risk Factors” included here in and in our Annual Report on Form 10-K for the year ended December 31, 2016. 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. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of uncertain events.

Defined Terms
We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP , as we believe these measures improve the understanding of the Company's operational results. We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of certain operating metrics regardless of ownership structure, along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more meaningful. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
The following terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results:
Same Property information is provided for retail operating properties that were owned and operated for the entirety of both calendar year periods being compared and excludes Non-Same Properties and Properties in Development.
A Non-Same Property is a property acquired, sold, or a development completion during either calendar year period being compared. Non-retail properties and corporate activities, including activities of our captive insurance company, are part of Non-Same Property.
Property In Development includes land or properties in various stages of development and redevelopment including active pre-development activities.
Development Completion is a project in development that is deemed complete upon the earliest of: (i) 90% of total estimated net development costs have been incurred and percent leased equals or exceeds 95%, or (ii) the project

33





features at least two years of anchor operations, or (iii) three years have passed since the start of construction. Once deemed complete, the property is termed a retail operating property.
Pro-Rata information includes 100% of our consolidated properties plus our economic share (based on our ownership interest) in our unconsolidated real estate investment partnerships.
The pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our pro-rata share.
The presentation of pro-rata information has limitations which include, but are not limited to, the following:
The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting or allocating noncontrolling interests, and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and
Other companies in our industry may calculate their pro-rata interests differently, limiting the comparability of pro-rata information.
Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata information as a supplement.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, real estate gains and losses, development and acquisition pursuit costs, straight line rental income, and above and below market rent amortization.
Fixed Charge Coverage Ratio is defined as Adjusted EBITDA divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.
Net Operating Income ("NOI") is the sum of minimum rent, percentage rent and recoveries from tenants and other income, less operating and maintenance, real estate taxes, and provision for doubtful accounts. NOI excludes straight-line rental income and expense, above and below market rent amortization and other fees. The Company also provides disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.
NAREIT Funds from Operations ("NAREIT FFO") is a commonly used measure of REIT performance, which the National Association of Real Estate Investment Trusts ("NAREIT") defines as net income, computed in accordance with GAAP, excluding gains and losses from sales of depreciable property, net of tax, excluding operating real estate impairments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute NAREIT FFO for all periods presented in accordance with NAREIT's definition. Many companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since NAREIT FFO excludes depreciation and amortization and gains and losses from depreciable property dispositions, and impairments, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations. The Company provides a reconciliation of Net Income (Loss) Attributable to Common Stockholders to NAREIT FFO.
Core FFO is an additional performance measure used by Regency as the computation of NAREIT FFO includes certain non-comparable items that affect the Company's period-over-period performance.  Core FFO excludes from NAREIT FFO: (a) transaction related income or expenses; (b) impairments on land; (c) gains or losses from the early extinguishment of debt; and (d) other non-comparable amounts as they occur.  The Company provides a reconciliation of NAREIT FFO to Core FFO.

34





Overview of Our Strategy
Regency Centers began its operations as a publicly-traded REIT in 1993, and, as of September 30, 2017, had full or partial ownership interests in 427 retail properties primarily anchored by market leading grocery stores. Our properties are principally located in affluent and infill trade areas of the United States, and contain 54.1 million square feet ("SF") of gross leasable area ("GLA"). All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P., our wholly-owned subsidiaries, and through our co-investment partnerships; however, $500 million of unsecured public and private placement debt is held by the Parent Company, which it assumed through the merger with Equity One.
As of September 30, 2017, the Parent Company owns approximately 99.8% of the outstanding common partnership units of the Operating Partnership.
Our mission is to be the preeminent national shopping center owner, operator and developer. Our strategy is to:
Own and manage an unequaled portfolio of high-quality neighborhood and community shopping centers anchored by market leading grocers and located in affluent suburban and near urban trade areas in the country’s most desirable metro areas. This combination produces highly desirable and attractive centers with best-in-class retailers. These centers command higher rental and occupancy rates resulting in excellent prospects to grow net operating income ("NOI");
Maintain an industry leading and disciplined development and redevelopment platform to deliver exceptional retail centers at higher margins as compared to acquisitions;
Support our business activities with a strong balance sheet; and
Engage a talented, dedicated team of employees, who are guided by Regency’s special culture and aligned with shareholder interests.
Key goals to achieve our strategy are to:
Sustain superior same property NOI growth compared to our shopping center peers;
Develop and redevelop high quality shopping centers at attractive returns on investment;
Maintain a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and debt maturities on a favorable basis, and to weather economic downturns;
Attract and motivate an exceptional team of employees who operate efficiently and are recognized as industry leaders; and
Generate reliable growth in earnings per share, funds from operations per share, and most importantly total shareholder returns that consistently rank among the leading shopping center REITS.
Executing on our Strategy
During the nine months ended September 30, 2017:
We had Net income attributable to common stockholders of $74.8 million, net of $75.6 million of merger costs, as compared to $88.0 million during the nine months ended 2016.
We completed the merger with Equity One on March 1, 2017 and acquired 121 properties for $5.2 billion, further enhancing the quality of our operating portfolio of retail shopping centers.
We sustained superior same property NOI growth compared to the average of our shopping center peers:
We achieved pro-rata same property NOI growth, excluding termination fees, of 4.0%.
We executed 1,308 leasing transactions representing 4.6 million pro-rata SF of new and renewal leasing, with trailing twelve month rent spreads of 9.4% on comparable retail operating property spaces.
At September 30, 2017, our total property portfolio was 95.3% leased, while our same property portfolio was 96.1% leased.
We developed and redeveloped high quality shopping centers at attractive returns on investment:

35





We started three new developments representing a total investment of $159.0 million upon completion, with projected weighted average returns on investment of 7.1%.
Including these new projects, a total of 30 properties were in the process of development or redevelopment, representing a pro-rata investment upon completion of $598.0 million.
We maintained a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and debt maturities:
In January 2017, we issued $300.0 million of 4.4% senior unsecured notes due February 1, 2047, the proceeds of which were used to redeem all of the $250.0 million 6.625% Series 6 preferred stock and reduce the balance of the Line.
On March 1, 2017 in conjunction with the merger with Equity One, we increased the commitment amount of our line of credit to $1.0 billion.
In June 2017, we issued an additional $125.0 million of 4.4% senior unsecured notes due February 1, 2047, the proceeds of which were used to redeem the $75.0 million of 6.0% Series 7 preferred stock on August 23, 2017, and to repay the line balance.
Also in June 2017, the Company issued an additional $175.0 million of 3.6% senior unsecured public notes due in 2027, with proceeds used to retire $112.0 million of mortgage loans with interest rates ranging from 7.0% to 7.8% on various properties, with the balance used to pay down our line.
At September 30, 2017, our annualized net debt-to-adjusted EBITDA ratio on a pro-rata basis was 5.4x.

Equity One Merger
On March 1, 2017, Regency completed its merger with Equity One, whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. Under the terms of the Merger Agreement, each Equity One stockholder received 0.45 of a newly issued share of Regency common stock for each share of Equity One common stock owned immediately prior to the effective time of the merger resulting in approximately 65.5 million shares being issued to effect the merger. The following table provides the components that make up the total purchase price for the Equity One merger:
(in thousands, except stock price)
Purchase Price
Shares of common stock issued for merger
65,379

Closing stock price on March 1, 2017
$
68.40

Value of common stock issued for merger
$
4,471,808

Debt repaid
716,278

Other cash payments
5,019

Total purchase price
$
5,193,105

As part of the merger, Regency acquired 121 properties representing 16.0 million SF of GLA, including 8 properties held through co-investment partnerships. The consolidated net assets and results of operations of Equity One are included in the consolidated financial statements from the closing date, March 1, 2017 through September 30, 2017.

36





Shopping Center Portfolio
The following table summarizes general information related to the Consolidated Properties in our shopping center portfolio:
(GLA in thousands)
 
September 30, 2017
 
December 31, 2016
Number of Properties
 
313
 
198
Properties in Development
 
8
 
6
GLA
 
39,090
 
23,931
% Leased – Operating and Development
 
95.1%
 
94.8%
% Leased – Operating
 
95.7%
 
96.0%
Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions.
 
$20.70
 
$19.70
The following table summarizes general information related to the Unconsolidated Properties owned in co-investment partnerships in our shopping center portfolio:
(GLA in thousands)
 
September 30, 2017
 
December 31, 2016
Number of Properties
 
114
 
109
GLA
 
14,977
 
13,899
% Leased –Operating
 
96.2%
 
96.3%
Weighted average annual effective rent PSF, net of tenant concessions
 
$20.33
 
$19.25
For the purpose of the following disclosures of occupancy and leasing activity, "anchor space" is considered space greater than or equal to 10,000 SF and "shop space" is less than 10,000 SF. The following table summarizes pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping center portfolio:
 
 
September 30, 2017
 
December 31, 2016
% Leased – Operating
 
95.7%
 
96.0%
Anchor space
 
97.7%
 
97.8%
Shop space
 
92.3%
 
93.1%
The decline in shop space percent leased is due to the merger with Equity One, which had lower shop space occupancy than Regency.
    

37





The following table summarizes leasing activity, including our pro-rata share of activity within the portfolio of our co-investment partnerships:
 
 
Nine months ended September 30, 2017
 
 
Leasing
Transactions (1,3)
 
SF (in thousands)
 
Base Rent
PSF (2)
 
Tenant Improvements
PSF (2)
 
Leasing Commissions
PSF (2)
Anchor Leases
 

 

 

 

 

New
 
27
 
628
 
$
18.80

 
$
8.48

 
$
5.06

Renewal
 
64
 
1,946
 
$
15.01

 
$

 
$
0.45

Total Anchor Leases (1)
 
91
 
2,574
 
$
15.94

 
$
2.07

 
$
1.57

Shop Space
 

 

 


 


 


New
 
383
 
660
 
$
31.77

 
$
12.20

 
$
12.21

Renewal
 
834
 
1,392
 
$
31.42

 
$
1.07

 
$
2.64

Total Shop Space Leases (1)
 
1,217
 
2,052
 
$
31.53

 
$
4.65

 
$
5.71

Total Leases
 
1,308
 
4,626
 
$
22.86

 
$
3.21

 
$
3.41

 
 
 
 
 
 
 
 
 
 
 
(1)  Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.
(2)  Totals for base rent, tenant improvements, and leasing commissions reflect the weighted average PSF.
(3)  For the period ending September 30, 2107, amounts include leasing activity of properties acquired from Equity One beginning March 1, 2017.
 
 
Nine months ended September 30, 2016
 
 
Leasing
Transactions (1)
 
SF (in thousands)
 
Base Rent
PSF (2)
 
Tenant Improvements
PSF (2)
 
Leasing Commissions
PSF (2)
Anchor Leases
 
 
 
 
 
 
 
 
 
 
New
 
11
 
312
 
$
13.92

 
$
4.98

 
$
3.75

Renewal
 
64
 
1,302
 
$
13.29

 
$
0.35

 
$
0.83

Total Anchor Leases (1)
 
75
 
1,614
 
$
13.41

 
$
1.24

 
$
1.39

Shop Space
 
 
 
 
 
 
 
 
 
 
New
 
313
 
561
 
$
29.93

 
$
12.00

 
$
13.83

Renewal
 
696
 
1,066
 
$
31.57

 
$
1.48

 
$
4.18

Total Shop Space Leases (1)
 
1,009
 
1,627
 
$
31.00

 
$
5.11

 
$
7.51

Total Leases
 
1,084
 
3,241
 
$
22.24

 
$
3.18

 
$
4.46

 
 
 
 
 
 
 
 
 
 
 
(1)  Number of leasing transactions reported at 100%; all other statistics reported at pro-rata share.
(2)  Totals for base rent, tenant improvements, and leasing commissions reflect the weighted average PSF.
Total average base rent on signed shop space leases during 2017 was $31.53 and exceeds the average annual base rent of all shop space leases due to expire during the next 12 months of $29.59 PSF, by 6.6%.

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Significant Tenants and Concentrations of Risk
We seek to reduce our operating and leasing risks through geographic diversification and by avoiding dependence on any single property, market, or tenant. The following table summarizes our most significant tenants, based on their percentage of annualized base rent:
 
 
September 30, 2017
Grocery Anchor
 
Number of
Stores
 
Percentage of
Company-
owned GLA (1)
 
Percentage  of
Annualized
Base Rent (1) 
Kroger
 
59
 
6.6%
 
3.2%
Publix
 
68
 
6.2%
 
3.1%
Albertsons/Safeway
 
46
 
4.0%
 
2.8%
TJX Companies
 
57
 
3.2%
 
2.4%
Whole Foods
 
26
 
2.1%
 
2.2%
 
 
 
 
 
 
 
(1) Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors.
Bankruptcies and Credit Concerns
Our management team devotes significant time to researching and monitoring retail trends, consumer preferences, customer shopping behaviors, changes in retail delivery methods, and changing demographics in order to anticipate the challenges and opportunities impacting the retail industry. Certain segments of the retail industry face reductions in sales and increased bankruptcies amid stronger competition from e-commerce. A greater shift to e-commerce, large-scale retail business failures, unemployment, and tight credit markets could negatively impact consumer spending and have an adverse effect on our results of operations. We seek to mitigate these potential impacts through tenant diversification, re-tenanting weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive foot traffic, and maintaining a presence in affluent suburbs and dense infill trade areas. As a result of our research and findings, we may reduce new leasing, suspend leasing, or curtail allowances for construction of leasehold improvements within a certain retail category or to a specific retailer in order to reduce our risk from bankruptcies and store closings.
We closely monitor the operating performance and rent collections of tenants in our shopping centers as well as those retailers experiencing significant changes to their business models as a result of reduced customer traffic in their stores and increased competition from e-commerce sales.  Retailers who are unable to withstand these and other business pressures may file for bankruptcy. Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally 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. Tenants who have filed for bankruptcy and continue to occupy space in our shopping centers represent an aggregate of 0.5% of our annual base rent on a pro-rata basis.



39






Results from Operations    
Comparison of the three months ended September 30, 2017 to 2016:
Our revenues increased as summarized in the following table:
 
 
Three months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Minimum rent
 
$
195,393

 
111,886

 
83,507

Percentage rent
 
1,147

 
495

 
652

Recoveries from tenants
 
54,483

 
31,443

 
23,040

Other income
 
5,071

 
3,089

 
1,982

Management, transaction, and other fees
 
6,047

 
5,855

 
192

Total revenues
 
$
262,141

 
152,768

 
109,373

Minimum rent increased as follows:
$1.8 million increase from development properties;
$192,000 increase from new acquisitions of operating properties;
$4.0 million increase from same properties rental rate growth on new and renewal leases; and
$78.7 million increase from properties acquired through the Equity One merger;
reduced by $874,000 from the sale of operating properties.
Percentage rent increased $652,000 primarily as a result of properties acquired through the Equity One merger.
Recoveries from tenants represent reimbursements to us for tenants' pro-rata share of the operating, maintenance, and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased as follows:
$532,000 increase from rent commencing at development properties;
$1.3 million increase from same properties associated with higher real estate taxes and improvements in recovery rates; and
$21.5 million increase from properties acquired through the Equity One merger;
reduced by $267,000 from the sale of operating properties.
Other income, which consists of incidental income earned at our centers, increased as follows:
$563,000 increase from same properties primarily due to settlements and other fees;
$1.4 million increase from properties acquired through the Equity One merger.

40





Changes in our operating expenses are summarized in the following table: 
 
 
Three months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Depreciation and amortization
 
$
91,474

 
40,705

 
50,769

Operating and maintenance
 
38,020

 
23,373

 
14,647

General and administrative
 
15,199

 
16,046

 
(847
)
Real estate taxes
 
29,315

 
17,058

 
12,257

Other operating expenses
 
3,195

 
1,046

 
2,149

Total operating expenses
 
$
177,203

 
98,228

 
78,975

Depreciation and amortization costs increased as follows:
$653,000 increase as we began depreciating costs at development properties where tenant spaces were completed and became available for occupancy;
$808,000 increase from same properties attributable primarily to redevelopments; and
$49.6 million increase from properties acquired through the Equity One merger;
reduced by $348,000 from the sale of operating properties.
Operating and maintenance costs increased as follows:
$268,000 increase from operations commencing at development properties;
$1.2 million net increase from claims losses within the company's wholly owned captive insurance program, including the impact of hurricane losses; and
$14.3 million increase from properties acquired through the Equity One merger and other new acquisitions of operating properties;
reduced by $1.0 million from same properties primarily attributable to a reduction in non-recoverable costs; and
reduced by $185,000 from the sale of operating properties.
General and administrative
$1.6 million net decrease primarily from higher development overhead capitalization based on the timing and size of current development projects, offset by;
$709,000 increase in compensation costs primarily related to additional staffing as a result of the Equity One merger.
Real estate taxes increased as follows:
$305,000 increase from development properties where capitalization ceased as tenant spaces became available for occupancy and new acquisitions of operating properties;
$554,000 increase from same properties from increased tax assessments; and
$11.6 million increase from properties acquired through the Equity One merger;
reduced by $249,000 from sold properties.

41





Other operating expenses increased as follows:
$432,000 increase in corporate expenses due to an increase in pursuit costs and franchise taxes;
$1.4 million increase from properties acquired through the Equity One merger;
reduced by $266,000 primarily due to acquisition costs incurred in the second quarter of 2016.
The following table presents the components of other expense (income):
 
 
Three months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Interest expense, net
 
 
 
 
 
 
Interest on notes payable
 
$
31,577

 
19,828

 
11,749

Interest on unsecured credit facilities
 
3,974

 
1,556

 
2,418

Capitalized interest
 
(2,488
)
 
(857
)
 
(1,631
)
Hedge expense
 
2,102

 
1,807

 
295

Interest income
 
(486
)
 
(389
)
 
(97
)
Interest expense, net
 
34,679

 
21,945

 
12,734

Early extinguishment of debt
 

 
13,943

 
(13,943
)
Net investment income
 
(971
)
 
(821
)
 
(150
)
Loss on derivative instruments
 

 
40,586

 
(40,586
)
     Total other expense (income)
 
$
33,708

 
75,653

 
(41,945
)
The $12.7 million net increase in total interest expense is due to:
$11.7 million net increase in interest on notes payable from:
$7.6 million of additional interest on notes payable assumed with the Equity One merger; and
$9.4 million increase from issuances of $950 million of new unsecured debt;
offset by $3.1 million decrease in mortgage interest expense primarily due to the payoff of nine mortgages utilizing proceeds from the June 2017 debt offering; and
$2.1 million decrease due to the early redemption of our $300 million notes in the third quarter of 2016;
$2.4 million increase in interest on unsecured credit facilities related to higher average balances including a new $300 million term loan which closed on March 1, 2017;
offset by $1.6 million decrease from higher capitalization of interest based on the size and progress of development and redevelopment projects in process.
In connection with the early redemption of the $300 million notes during the three months ended September 30, 2016, we recognized a $13.9 million charge, including a $13.2 million make-whole premium and $700,000 of unamortized debt issuance costs.
During the three months ended September 30, 2016, we recognized a $40.6 million charge to settle $220 million of forward starting interest rate swaps related to debt previously expected to be issued in 2017 to repay our $300 million notes due June 2017.
    

42





Our equity in income of investments in real estate partnerships increased as follows:
 
 
 
Three months ended September 30,
 
 
(in thousands)
Regency's Ownership
 
2017
 
2016
 
Change
GRI - Regency, LLC (GRIR)
40.00%
 
$
6,917

 
6,862

 
55

New York Common Retirement Fund (NYC)
30.00%
 
183

 

 
183

Columbia Regency Retail Partners, LLC (Columbia I)
20.00%
 
284

 
314

 
(30
)
Columbia Regency Partners II, LLC (Columbia II)
20.00%
 
332

 
366

 
(34
)
Cameron Village, LLC (Cameron)
30.00%
 
174

 
150

 
24

RegCal, LLC (RegCal)
25.00%
 
331

 
205

 
126

US Regency Retail I, LLC (USAA)
20.01%
 
3,599

 
227

 
3,372

Other investments in real estate partnerships
20.00% - 50.00%
 
400

 
14,523

 
(14,123
)
Total equity in income of investments in real estate partnerships
 
$
12,220

 
22,647

 
(10,427
)
The $10.4 million decrease in our equity in income of investments in real estate partnerships is largely attributed to a decrease in the gains on sale of real estate within Other investments partially offset by an increase in gains within USAA.
The following represents the remaining components that comprised net income attributable to the common stockholders and unit holders:
 
 
Three months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Income from operations
 
$
63,451

 
1,534

 
61,917

Gain on sale of real estate, net of tax
 
131

 
9,580

 
(9,449
)
Income attributable to noncontrolling interests
 
(769
)
 
(543
)
 
(226
)
Preferred stock dividends and issuance costs
 
(3,147
)
 
(5,266
)
 
2,119

Net income attributable to common stockholders
 
$
59,666

 
5,305

 
54,361

Net income attributable to exchangeable operating partnership units
 
132

 
16

 
116

Net income attributable to common unit holders
 
$
59,798

 
5,321

 
54,477

During the three months ended September 30, 2017, we did not have any operating property or land parcel sales, as compared to gains of $9.6 million from the sale of three operating properties and two land parcels during the three months ended September 30, 2016.
Preferred stock dividends decreased $2.1 million due to the redemption of our $250 million 6.625% Series 6 Preferred Stock in February 2017 and our $75 million 6.000% Series 7 Preferred Stock in August 2017.

43







Comparison of the nine months ended September 30, 2017 to 2016:
Results from operations for the nine months ended September 30, 2017, reflect the results of our merger with Equity One on March 1, 2017.
Our revenues increased as summarized in the following table:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Minimum rent
 
$
532,625

 
329,506

 
203,119

Percentage rent
 
5,509

 
2,651

 
2,858

Recoveries from tenants
 
149,811

 
94,684

 
55,127

Other income
 
12,278

 
9,210

 
3,068

Management, transaction, and other fees
 
19,353

 
18,759

 
594

Total revenues
 
$
719,576

 
454,810

 
264,766

Minimum rent increased as follows:
$5.4 million increase from development properties;
$5.4 million increase from new acquisitions of operating properties;
$12.0 million increase from same properties reflecting a $9.8 million increase from rental rate growth on new and renewal leases, and a $2.0 million increase in straight line rent; and
$184.4 million increase from properties acquired through the Equity One merger;
reduced by $4.0 million from the sale of operating properties.
Percentage rent increased $2.9 million primarily as a result of properties acquired through the Equity One merger.
Recoveries from tenants represent reimbursements to us for tenants' pro-rata share of the operating, maintenance, and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased as follows:
$1.4 million increase from rent commencing at development properties;
$1.8 million increase from new acquisitions of operating properties;
$5.0 million increase from same properties associated with higher recoverable costs and an improvement in recovery rates; and
$48.3 million increase from properties acquired through the Equity One merger;
reduced by $1.3 million from the sale of operating properties.
Other income, which consists of incidental income earned at our centers, increased as follows:
$471,000 increase from development properties;
$876,000 increase from new acquisitions of operating properties; and
$2.5 million from properties acquired through the Equity One merger;
reduced by $691,000 decrease from same properties primarily due to other fee income.
Management, transaction, and other fees increased $594,000 primarily from investments in real estate partnerships acquired through the Equity One merger.
    

44





Changes in our operating expenses are summarized in the following table:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Depreciation and amortization
 
$
243,757

 
119,721

 
124,036

Operating and maintenance
 
103,888

 
69,767

 
34,121

General and administrative
 
49,618

 
48,695

 
923

Real estate taxes
 
79,636

 
49,697

 
29,939

Other operating expenses
 
81,621

 
5,795

 
75,826

Total operating expenses
 
$
558,520

 
293,675

 
264,845

Depreciation and amortization costs increased as follows:
$2.1 million increase as we began depreciating costs at development properties where tenant spaces were completed and became available for occupancy;
$3.4 million increase from new acquisitions of operating properties and corporate assets;
$2.7 million increase from same properties primarily attributable to redevelopments; and
$117.2 million increase from properties acquired through the Equity One merger;
reduced by $1.4 million from the sale of operating properties.
Operating and maintenance costs increased as follows:
$1.0 million increase from operations commencing at development properties;
$1.5 million increase from acquisitions of operating properties;
$1.2 million net increase from claims losses within the company's wholly owned captive insurance program, including the impact of hurricane losses;
$659,000 increase in recoverable costs partially offset by $264,000 in nonrecoverable costs at same properties; and
$30.9 million increase from properties acquired through the Equity One merger;
reduced by $882,000 from the sale of operating properties.
General and administrative expenses increased $923,000 from the following:
$1.6 million increase in the value of participant obligations within the deferred compensation plan, and
$3.9 million increase in compensation costs primarily related to additional staffing as a result of the Equity One merger, including a $2.4 million increase in non-compensation costs, offset by;
$4.6 million net decrease primarily from greater development overhead capitalization based on the timing and size of current development projects.
Real estate taxes increased as follows:
$542,000 increase from development properties where capitalization ceased as tenant spaces became available for occupancy;
$1.2 million increase from acquisitions of operating properties;
$1.9 million increase at same properties from increased tax assessments; and
$27.0 million increase from properties acquired through the Equity One merger;

45





reduced by $659,000 from sold properties.
Other operating expenses increased as follows:
$854,000 increase in corporate expenses due to an increase in franchise taxes and pursuit costs;
$77.5 million increase primarily from transaction costs related to the Equity One merger in March 2017;
reduced by $2.1 million primarily due to higher acquisition costs incurred in 2016; and
reduced by $495,000 at same properties primarily related to higher environmental expenses incurred in 2016.
The following table presents the components of other expense (income):
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Interest expense, net
 
 
 
 
 
 
Interest on notes payable
 
$
87,492

 
63,899

 
23,593

Interest on unsecured credit facilities
 
10,718

 
3,829

 
6,889

Capitalized interest
 
(5,778
)
 
(2,622
)
 
(3,156
)
Hedge expense
 
6,305

 
6,306

 
(1
)
Interest income
 
(1,452
)
 
(923
)
 
(529
)
Interest expense, net
 
97,285

 
70,489

 
26,796

Provision for impairment
 

 
1,666

 
(1,666
)
Early extinguishment of debt
 
12,404

 
13,943

 
(1,539
)
Net investment income
 
(2,955
)
 
(1,268
)
 
(1,687
)
Loss on derivative instruments
 

 
40,586

 
(40,586
)
     Total other expense (income)
 
$
106,734

 
125,416

 
(18,682
)
The $26.8 million net increase in total interest expense is due to:
$23.6 million net increase in interest on notes payable due to:
$18.3 million of additional interest on notes payable assumed with the Equity One merger; and
$20.5 million increase from issuances of $950 million of new unsecured debt;
offset by $4.3 million decrease in mortgage interest expense primarily due to the payoff of nine mortgages utilizing proceeds from the June 2017 debt offering; and
$10.9 million decrease due to the early redemption of our $300 million notes in the third quarter of 2016;
$6.9 million increase in interest on unsecured credit facilities related to higher average balances including a new $300 million term loan which closed on March 1, 2017;
offset by $3.2 million decrease from higher capitalization of interest based on the size and progress of development and redevelopment projects in process.    
We did not recognize any impairments for the nine months ended September 30, 2017. During the nine months ended September 30, 2016, we recognized a $1.7 million impairment loss on one operating property and one parcel of land that have since been sold.
During the nine months ended September 30, 2017, we repaid nine mortgages with a portion of the proceeds from our unsecured public debt offering in June 2017, and recognized $12.4 million of debt extinguishment costs. In connection with the early redemption of the $300 million notes during the three months ended September 30, 2016, we recognized a $13.9 million charge, including a $13.2 million make-whole premium and $700,000 of unamortized debt issuance costs.

46





Net investment income increased $1.7 million, driven by gains within the non-qualified deferred compensation plan.
During the nine months ended September 30, 2016, we recognized a $40.6 million charge to settle $220 million of forward starting interest rate swaps related to debt previously expected to be issued in 2017.
Our equity in income of investments in real estate partnerships decreased as follows:
 
 
 
Nine months ended September 30,
 
 
(in thousands)
Ownership
 
2017
 
2016
 
Change
GRI - Regency, LLC (GRIR)
40.00%
 
$
20,791

 
23,975

 
(3,184
)
New York Common Retirement Fund (NYC)
30.00%
 
417

 

 
417

Columbia Regency Retail Partners, LLC (Columbia I)
20.00%
 
3,344

 
2,557

 
787

Columbia Regency Partners II, LLC (Columbia II)
20.00%
 
1,072

 
2,236

 
(1,164
)
Cameron Village, LLC (Cameron)
30.00%
 
636

 
487

 
149

RegCal, LLC (RegCal)
25.00%
 
1,010

 
684

 
326

US Regency Retail I, LLC (USAA)
20.01%
 
4,251

 
739

 
3,512

Other investments in real estate partnerships
20.00% - 50.00%
 
2,283

 
15,940

 
(13,657
)
Total equity in income of investments in real estate partnerships
 
$
33,804

 
46,618

 
(12,814
)
The $12.8 million decrease in our equity in income of investments in real estate partnerships is largely attributed to:
$3.2 million decrease within GRIR driven by gains on sale of real estate that were recognized in 2016, offset by lower depreciation expense in 2017 related to assets that became fully depreciated in 2016;
$1.2 million decrease within Columbia II due to gains on sale of real estate that were recognized in 2016;
$3.5 million increase within USAA due to gains on sale of real estate recognized in 2017; and
$13.7 million decrease in Other investments in real estate partnerships due to gains on sale of real estate recognized in 2016.
The following represents the remaining components that comprise net income attributable to the common stockholders and unit holders:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Income from operations
 
$
88,126

 
82,337

 
5,789

Gain on sale of real estate, net of tax
 
4,913

 
22,997

 
(18,084
)
Income attributable to noncontrolling interests
 
(2,101
)
 
(1,545
)
 
(556
)
Preferred stock dividends and issuance costs
 
(16,128
)
 
(15,797
)
 
(331
)
Net income attributable to common stockholders
 
$
74,810

 
87,992

 
(13,182
)
Net income attributable to exchangeable operating partnership units
 
217

 
165

 
52

Net income attributable to common unit holders
 
$
75,027

 
88,157

 
(13,130
)
During the nine months ended September 30, 2017, we sold one operating property and seven land parcels resulting in gains of $4.9 million, compared to gains of $23.0 million from the sale of seven operating properties and twelve land parcels during the same period in 2016.

47





Supplemental Earnings Information
We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the Company's operating results. We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of operating results regardless of ownership structure, along with other non-GAAP measures, may assist in comparing the Company's operating results to other REITs'. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change. See "Defined Terms" at the beginning of this Management's Discussion and Analysis.
Pro-Rata Same Property NOI:
For purposes of evaluating same property NOI on a comparative basis, and in light of the merger with Equity One on March 1, 2017, we are presenting our same property NOI on a pro forma basis as if the merger had occurred January 1, 2016. This perspective allows us to evaluate same property NOI growth over a comparable period. The pro forma same property NOI is not necessarily indicative of what the actual same property NOI and growth would have been if the merger had occurred on January 1, 2016, nor does it purport to represent the same property NOI and growth for future periods.
Our pro-rata same property NOI, as adjusted, excluding termination fees, grew from the following major components:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Base rent (1)
 
$
197,529

 
190,618

 
6,911

 
$
588,465

 
568,979

 
19,486

Percentage rent (1)
 
1,270

 
1,764

 
(494
)
 
7,294

 
8,093

 
(799
)
Recovery revenue (1)
 
59,033

 
56,694

 
2,339

 
178,979

 
172,084

 
6,895

Other income (1)
 
4,357

 
3,530

 
827

 
10,438

 
11,158

 
(720
)
Operating expenses (1)
 
71,364

 
70,935

 
429

 
216,354

 
212,602

 
3,752

Pro-rata same property NOI, as adjusted
 
$
190,825

 
181,671

 
9,154

 
$
568,822

 
547,712

 
21,110

Less: Termination fees (1)
 
214

 
137

 
77

 
472

 
1,038

 
(566
)
Pro-rata same property NOI, as adjusted, excluding termination fees
 
$
190,611

 
181,534

 
9,077

 
$
568,350

 
546,674

 
21,676

Pro-rata same property NOI growth, as adjusted
 
 
 
 
 
5.0
%
 
 
 
 
 
4.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Adjusted for Equity One operating results prior to the merger for these periods. For additional information and details about the Equity One operating results included herein, refer to the Same Property NOI Reconciliation at the end of the Supplemental Earnings section.
Base rent increased $6.9 million and $19.5 million during the three and nine months ended September 30, 2017, respectively, driven by increases in rental rate growth on new and renewal leases and contractual rent steps from anchor leases, minimally offset by a slight decrease in the percentage of leases that have rent commenced.
Recovery revenue increased $2.3 million and $6.9 million during the three and nine months ended September 30, 2017, as a result of increases in recoverable costs, as noted below, and improvements in recovery rates.
Other income increased $0.8 million during the three months ended September 30, 2017 and decreased $0.7 million during the nine months ended September 30, 2017, due to the timing of lease termination fees and other fee income.
Operating expenses increased $3.8 million during the nine months ended September 30, 2017, primarily due to higher real estate taxes.

48





Same Property Rollforward:
Our same property pool includes the following property count, pro-rata GLA, and changes therein:
 
Three months ended September 30,
 
2017
 
2016
(GLA in thousands)
Property Count
GLA
 
Property Count
GLA
Beginning same property count
400

41,076

 
298

26,964

Disposed properties
(1
)
(24
)
 
(6
)
(295
)
SF adjustments (1)

21

 

(33
)
Ending same property count
399

41,073

 
292

26,636

 
 
 
 
 
 
 
Nine months ended September 30,
 
2017
 
2016
(GLA in thousands)
Property Count
GLA
 
Property Count
GLA
Beginning same property count
289

26,392

 
300

26,508

Acquired properties owned for entirety of comparable periods
1

180

 
6

443

Developments that reached completion by beginning of earliest comparable period presented
2

331

 
2

342

Disposed properties
(3
)
(82
)
 
(16
)
(660
)
SF adjustments (1)

71

 

3

Properties acquired through Equity One merger
110

14,181

 


Ending same property count
399

41,073

 
292

26,636

 
 
 
 
 
 
(1) SF adjustments arise from remeasurements or redevelopments.

49





NAREIT FFO and Core FFO:
Our reconciliation of net income attributable to common stock and unit holders to NAREIT FFO and Core FFO is as follows:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands, except share information)
 
2017
 
2016
 
2017
 
2016
Reconciliation of Net income to NAREIT FFO
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
59,666

 
5,305

 
$
74,810

 
87,992

Adjustments to reconcile to NAREIT FFO:(1)
 
 
 
 
 
 
 
 
Depreciation and amortization (excluding FF&E)
 
99,284

 
47,826

 
266,873

 
143,373

Provision for impairment to operating properties
 

 

 

 
659

Gain on sale of operating properties, net of tax
 
(3,349
)
 
(23,067
)
 
(8,415
)
 
(38,016
)
Exchangeable operating partnership units
 
132

 
16

 
217

 
165

NAREIT FFO attributable to common stock and unit holders
 
$
155,733

 
30,080

 
$
333,485

 
194,173

Reconciliation of NAREIT FFO to Core FFO
 
 
 
 
 
 
 
 
NAREIT FFO attributable to common stock and unit holders
 
$
155,733

 
30,080

 
$
333,485

 
194,173

Adjustments to reconcile to Core FFO:(1)
 
 
 
 
 
 
 
 
Development pursuit costs
 
202

 
(47
)
 
521

 
1,766

Acquisition pursuit and closing costs
 

 
287

 
138

 
907

Merger related costs
 
1,175

 

 
75,584

 

Gain on sale of land
 
(119
)
 
(628
)
 
(2,969
)
 
(7,886
)
Provision for impairment to land
 

 
35

 

 
547

Loss on derivative instruments and hedge ineffectiveness
 
2

 
40,586

 
(12
)
 
40,589

Early extinguishment of debt
 

 
13,943

 
12,404

 
13,957

Preferred redemption charge
 
2,859

 

 
12,226

 

Merger related debt offering interest
 

 

 
975

 

Hurricane losses
 
1,852

 

 
1,852

 

Core FFO attributable to common stock and unit holders
 
$
161,704

 
84,256

 
$
434,204

 
244,053

 
 
 
 
 
 
 
 
 
(1) Includes Regency's pro-rate share of unconsolidated investment partnerships, net of pro-rata share attributable to noncontrolling interest.
     

50





Same Property NOI Reconciliation:
Our reconciliation of property revenues and property expenses to Same Property NOI, on a pro-rata basis, is as follows:
 
 
Three months ended September 30,
 
 
2017
 
2016
(in thousands)
 
Same Property
 
Other (1)
 
Total
 
Same Property
 
Other (1)
 
Total
Net income attributable to common stockholders
 
$
138,926

 
(79,260
)
 
59,666

 
$
77,483

 
(72,178
)
 
5,305

Less:
 
 
 
 
 
 
 
 
 
 
 
 
Management, transaction, and other fees
 

 
6,047

 
6,047

 

 
5,855

 
5,855

Gain on sale of real estate, net of tax
 

 
131

 
131

 

 
9,580

 
9,580

Other (2)
 
3,977

 
9,296

 
13,273

 
2,429

 
1,253

 
3,682

Plus:
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
37,246

 
54,228

 
91,474

 
36,189

 
4,517

 
40,706

General and administrative
 

 
15,199

 
15,199

 

 
16,046

 
16,046

Other operating expense, excluding provision for doubtful accounts
 
149

 
1,981

 
2,130

 
79

 
420

 
499

Other expense (income)
 
7,148

 
26,561

 
33,709

 
6,890

 
68,763

 
75,653

Equity in income (loss) of investments in real estate excluded from NOI (3)
 
11,333

 
475

 
11,808

 
904

 
(1,020
)
 
(116
)
Net income attributable to noncontrolling interests
 

 
769

 
769

 

 
543

 
543

Preferred stock dividends and issuance costs
 

 
3,147

 
3,147

 

 
5,266

 
5,266

NOI from Equity One prior to merger (4)
 

 

 

 
62,555

 

 
62,555

Pro-rata NOI, as adjusted
 
$
190,825

 
7,626

 
198,451

 
$
181,671

 
5,669

 
187,340

 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities.
(2)  Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interest.
(3)  Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.
(4)  NOI from Equity One prior to the merger was derived from the accounting records of Equity One without adjustment. Equity One's financial information for the period ended February 28, 2017 and the period ended September 30, 2016 was subject to a limited internal review by Regency. The table below provides Same Property NOI detail for the non-ownership periods of Equity One.



51





 
 
Nine months ended September 30,
 
 
2017
 
2016
(in thousands)
 
Same Property
 
Other (1)
 
Total
 
Same Property
 
Other (1)
 
Total
Net income attributable to common stockholders
 
$
350,221

 
(275,411
)
 
74,810

 
$
212,329

 
(124,337
)
 
87,992

Less:
 
 
 
 
 
 
 
 
 
 
 
 
Management, transaction, and other fees
 

 
19,353

 
19,353

 

 
18,759

 
18,759

Gain on sale of real estate, net of tax
 

 
4,913

 
4,913

 

 
22,997

 
22,997

Other(2)
 
11,607

 
24,927

 
36,534

 
8,075

 
3,096

 
11,171

Plus:
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
112,690

 
131,067

 
243,757

 
109,708

 
10,013

 
119,721

General and administrative
 

 
49,618

 
49,618

 

 
48,695

 
48,695

Other operating expense, excluding provision for doubtful accounts
 
514

 
78,260

 
78,774

 
975

 
3,371

 
4,346

Other expense (income)
 
37,209

 
69,525

 
106,734

 
21,212

 
104,204

 
125,416

Equity in income (loss) of investments in real estate excluded from NOI (3)
 
36,790

 
1,729

 
38,519

 
23,500

 
(1,819
)
 
21,681

Net income attributable to noncontrolling interests
 

 
2,101

 
2,101

 

 
1,546

 
1,546

Preferred stock dividends and issuance costs
 

 
16,128

 
16,128

 

 
15,797

 
15,797

NOI from Equity One prior to merger
 
43,005

 

 
43,005

 
188,063

 

 
188,063

Pro-rata NOI, as adjusted
 
$
568,822

 
23,824

 
592,646

 
$
547,712

 
12,618

 
560,330

 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities.
(2)  Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interest.
(3)  Includes non-NOI expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.
(4)  NOI from Equity One prior to the merger was derived from the accounting records of Equity One without adjustment. Equity One's financial information for the period ended February 28, 2017 and the period ended September 30, 2016 was subject to a limited internal review by Regency. The following is Same Property NOI detail for the non-ownership periods of Equity One:
(in thousands)
 
Two Months Ended
February 2017
 
Three Months Ended
September 2016
 
Nine Months Ended
September 2016
Base rent
 
$
44,593

 
$
65,305

 
194,952

Percentage rent
 
1,151

 
1,128

 
4,331

Recovery revenue
 
14,175

 
20,647

 
61,627

Other income
 
615

 
918

 
2,736

Operating expenses
 
17,529

 
25,443

 
75,583

Pro-rata same property NOI, as adjusted (1)
 
$
43,005

 
$
62,555

 
188,063

Less: Termination fees
 
30

 
21

 
93

Pro-rata same property NOI, as adjusted, excluding termination fees
 
$
42,975

 
$
62,534

 
187,970



52





Liquidity and Capital Resources
General
We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. We continuously monitor the capital markets and evaluate our ability to issue new debt or equity, to repay maturing debt, or fund our capital commitments.
Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating Partnership is a co-issuer and a guarantor on the outstanding debt of our Parent Company. 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. Based upon our available sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs.    
In addition to its $23.5 million cash balance, the Company has the following additional sources of capital available:
(in thousands)
 
September 30, 2017
ATM equity program
 
 
Original offering amount
 
$
500,000

Available capacity
 
$
500,000

 
 
 
Forward Equity Offering
 
 
Original offering amount
 
$
233,300

Available equity offering to settle (1)
 
$
94,063

 
 
 
Line of Credit
 
 
Total commitment amount
 
$
1,000,000

Available capacity (2)
 
$
979,100

Maturity (3)
 
May 13, 2019

 
 
 
(1)  We have 1.25 million shares to settle prior to December 27, 2017 at an offering price of $75.25 per share before any underwriting discount and offering expenses.
(2)  Net of letters of credit.
(3)  The Company has the option to extend the maturity for two additional six-month periods.
We operate our business such that we expect net cash provided by operating activities will provide the necessary funds to pay our distributions to our common and preferred share and unit holders, which were $238.3 million and $165.1 million for the nine months ended September 30, 2017 and 2016, respectively. We currently do not have any preferred shares issued and outstanding. Our dividend distribution policy is set by our Board of Directors, who monitors our financial position. Our Board of Directors recently declared our common stock dividend of $0.53 per share, payable on November 29, 2017. Future dividends will be declared at the discretion of our Board of Directors and will be subject to capital requirements and availability. 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.
During the next twelve months, we estimate that we will require approximately $300 million of cash, including $261.9 million to complete in-process developments and redevelopments, and $38.1 million to repay maturing debt. If we start new developments, redevelop additional shopping centers, or commit to new acquisitions, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease. To meet our cash requirements, we may utilize cash generated from operations, proceeds from the sale of real estate, available borrowings from our Line, and when the capital markets are favorable, proceeds from the sale of equity or the issuance of new long-term debt.
We endeavor to maintain a high percentage of unencumbered assets. At September 30, 2017, 86.6% of our wholly-owned real estate assets were unencumbered. Such assets allow us to access the secured and unsecured debt markets and to maintain availability on the Line. Our annualized coverage ratio, including our pro-rata share of our partnerships, was 4.1 times and 3.3 times for the periods ended September 30, 2017 and December 31, 2016, respectively.

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Our Line, term loans, and unsecured notes require that we remain in compliance with various covenants, which are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. The debt assumed in conjunction with the Equity One merger contain covenants that are consistent with our existing debt covenants. We are in compliance with these covenants at September 30, 2017 and expect to remain in compliance.
Summary of Cash Flow Activity
The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Net cash provided by operating activities
 
$
343,857

 
225,333

 
118,524

Net cash used in investing activities
 
(858,649
)
 
(354,584
)
 
(504,065
)
Net cash provided by financing activities
 
525,079

 
133,297

 
391,782

Net increase in cash and cash equivalents
 
$
10,287

 
4,046

 
6,241

Total cash and cash equivalents
 
$
23,543

 
40,902

 
(17,359
)
Net cash provided by operating activities:
Net cash provided by operating activities increased $118.5 million due to:
$132.1 million increase in cash from operating income; and,
$1.1 million increase in operating cash flow distributions from our unconsolidated real estate partnerships; offset by
$14.7 million net decrease in cash due to timing of cash receipts and payments related to operating activities.

Net cash used in investing activities:
Net cash used in investing activities increased by $504.1 million as follows:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Cash flows from investing activities:
 
 
 
 
 
 
Acquisition of operating real estate
 
$
(2,109
)
 
(333,220
)
 
331,111

Advance deposits paid on acquisition of operating real estate
 
(350
)
 
1,250

 
(1,600
)
Acquisition of Equity One, net of cash acquired of $72,534
 
(648,763
)
 

 
(648,763
)
Real estate development and capital improvements
 
(241,834
)
 
(146,773
)
 
(95,061
)
Proceeds from sale of real estate investments
 
15,397

 
83,675

 
(68,278
)
Issuance of notes receivable
 
(3,460
)
 

 
(3,460
)
Investments in real estate partnerships
 
(12,296
)
 
(13,127
)
 
831

Distributions received from investments in real estate partnerships
 
36,603

 
52,536

 
(15,933
)
Dividends on investment securities
 
200

 
189

 
11

Acquisition of securities
 
(14,011
)
 
(53,290
)
 
39,279

Proceeds from sale of securities
 
11,974

 
54,176

 
(42,202
)
Net cash used in investing activities
 
$
(858,649
)
 
(354,584
)
 
(504,065
)

Significant changes in investing activities include:

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Other than those included with the merger, we acquired two real estate parcels at existing operating properties for $2.1 million during 2017 compared to $333.2 million for three operating properties in the same period in 2016.
We issued 65.5 million common shares to the shareholders of Equity One valued at $4.5 billion in a stock for stock exchange and merged Equity One into the Company on March 1, 2017. As part of the merger, we paid $648.8 million, net of cash acquired, to repay Equity One credit facilities not assumed with the merger.
We invested $95.1 million more in 2017 than the same period in 2016 on real estate development and capital improvements, as further detailed in a table below.
We received proceeds of $15.4 million from the sale of seven land parcels and one operating property in 2017, compared to $83.7 million for seven shopping centers and twelve land parcels in the same period in 2016.
We invested $12.3 million in our real estate partnerships during 2017 to fund our share of maturing mortgage debt and redevelopment activity, compared to $13.1 million during the same period in 2016.
Distributions from our unconsolidated real estate partnerships include return of capital from sales or financing proceeds. The $36.6 million received in 2017 is driven by the sale of two operating properties and one land parcel plus our share of proceeds from refinancing certain operating properties within the partnerships. During the same period in 2016, we received $52.5 million from the sale of nine shopping centers within the partnerships.
Acquisition of securities and proceeds from sale of securities pertain to investments held in our captive insurance company and our deferred compensation plan.
We plan to continue developing and redeveloping shopping centers for long-term investment. We deployed capital of $241.8 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Capital expenditures:
 
 
 
 
 
 
Land acquisitions for development / redevelopment
 
$
22,748

 
8,654

 
14,094

Building and tenant improvements
 
31,130

 
19,393

 
11,737

Redevelopment costs
 
103,395

 
35,695

 
67,700

Development costs
 
65,688

 
71,067

 
(5,379
)
Capitalized interest
 
5,778

 
2,622

 
3,156

Capitalized direct compensation
 
13,095

 
9,342

 
3,753

Real estate development and capital improvements
 
$
241,834

 
146,773

 
95,061

During 2017 we acquired three land parcels for new development projects as compared to one land parcel acquired during 2016.
Building and tenant improvements increased $11.7 million in 2017, materially related to the overall increase in the size of our portfolio from the merger with Equity One in March 2017.
Redevelopment expenditures are higher in 2017 due to the timing, magnitude, and number of projects currently in process at existing centers and in process projects acquired from Equity One. We intend to continuously improve our portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing building expansion, new out-parcel building construction, and tenant improvement costs.  The size and magnitude of each redevelopment project varies with each redevelopment plan.
Development expenditures are higher in 2017 due to the progress towards completion of our development projects currently in process. At September 30, 2017 and December 31, 2016, we had eight and six development projects, respectively, that were either under construction or in lease up. See the tables below for more details about our development projects.
Interest is capitalized on our development and redevelopment projects and is based on cumulative actual development costs expended. We cease interest capitalization when the property is no longer being

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developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor opens for business.
We have a staff of employees who directly support our development and redevelopment programs. Internal compensation costs directly attributable to these activities are capitalized as part of each project. Changes in the level of future development and redevelopment activity could adversely impact results of operations by reducing the amount of internal costs for development and redevelopment projects that may be capitalized. A 10% reduction in development and redevelopment activity without a corresponding reduction in development related compensation costs could result in an additional charge to net income of $1.5 million per year.
The following table summarizes our development projects (in thousands, except cost PSF):
 
 
 
 
 
 
September 30, 2017
Property Name
 
Market
 
Start Date
 
Estimated /Actual Anchor Opening
 
Estimated Net Development Costs (1)
 
% of Costs Incurred (1)
 
GLA
 
Cost PSF of GLA (1)
Northgate Marketplace Ph II
 
Medford, OR
 
Q4-15
 
Oct-16
 
40,700

 
96%
 
177
 
230

The Market at Springwoods Village (2)
 
Houston , TX
 
Q1-16
 
May-17
 
27,492

 
75%
 
89
 
309

The Village at Tustin Legacy
 
Los Angeles, CA
 
Q3-16
 
Oct-17
 
37,472

 
81%
 
112
 
335

Chimney Rock Crossing
 
New York, NY
 
Q4-16
 
May-18
 
71,254

 
59%
 
218
 
327

The Village at Riverstone
 
Houston, TX
 
Q4-16
 
Oct-18
 
30,638

 
45%
 
165
 
186

The Field at Commonwealth
 
Metro DC
 
Q1-17
 
Aug-18
 
45,210

 
48%
 
187
 
242

Pinecrest Place (3)
 
Miami, FL
 
Q1-17
 
Mar-18
 
16,427

 
16%
 
70
 
235

Mellody Farm
 
Chicago, IL
 
Q2-17
 
Oct-18
 
97,399

 
31%
 
252
 
387

Total
 
 
 
 
 
 
 
$
366,592

 
54%
 
1,270
 
$
289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Includes leasing costs and is net of tenant reimbursements.
(2)  Estimated Net Development Costs are reported at full project cost. Our ownership interest in this consolidated property is 53%. Anchor rent commencement date is May 2017. Expected Anchor opening date is October 2017.
(3)  Estimated Net Development Costs for Pinecrest Place excludes the cost of land, which the Company has leased long term.
The following table summarizes our completed development projects (in thousands, except cost PSF):
 
 
Nine months ended September 30, 2017
Property Name
 
Location
 
Completion Date
 
Net Development
Costs (1)
 
GLA
 
Cost PSF
of GLA (1)
Willow Oaks Crossing
 
Charlotte, NC
 
Q1-17
 
$
13,991

 
69
 
$
203

 
 
 
 
 
 
 
 
 
 
 
(1)  Includes leasing costs and is net of tenant reimbursements.

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Net cash provided by financing activities:
Net cash flows generated from financing activities increased by $391.8 million during 2017, as follows:
 
 
Nine months ended September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
Cash flows from financing activities:
 
 
 
 
 
 
Equity issuances
 
$

 
549,545

 
(549,545
)
Repurchase of common shares in conjunction with equity award plans
 
(19,251
)
 
(8,013
)
 
(11,238
)
Preferred stock redemption
 
(325,000
)
 

 
(325,000
)
Distributions to limited partners in consolidated partnerships, net
 
(7,031
)
 
(3,126
)
 
(3,905
)
Dividend payments
 
(238,275
)
 
(165,075
)
 
(73,200
)
Unsecured credit facilities
 
300,000

 
100,000

 
200,000

Proceeds from debt issuance
 
1,080,114

 
20,223

 
1,059,891

Debt repayment
 
(252,710
)
 
(359,260
)
 
106,550

Payment of loan costs
 
(12,868
)
 
(1,954
)
 
(10,914
)
Proceeds from sale of treasury stock
 
100

 
957

 
(857
)
Net cash provided by financing activities
 
$
525,079

 
133,297

 
391,782

Significant financing activities during the nine months ended September 30, 2017 and 2016 include the following:
We raised $549.5 million during 2016 by
issuing 182,787 shares of common stock through our ATM program at an average price of $68.85 per share resulting in net proceeds of $12.3 million,
issuing 1,850,000 shares under our forward equity offering at an average price of $74.32 per share resulting in proceeds of $137.5 million, and
issuing 5,000,000 shares of common stock at $79.78 per share resulting in net proceeds of $400.1 million.
We repurchased for cash a portion of the common stock related to stock based compensation to satisfy employee federal and state tax withholding requirements. The repurchases increased $11.2 million in 2017 due to the vesting of Equity One's stock based compensation program as a result of the merger.
We redeemed all of the issued and outstanding shares of our 6.625% Series 6 and 6.000% Series 7 cumulative redeemable preferred stock on February 16, 2017 and August 23, 2017, respectively, for $325.0 million.
Net distributions to consolidated partnerships increased $3.9 million primarily due to excess proceeds from property refinancings during 2017.
As a result of the common shares issued during 2016 and common shares issued as merger consideration during 2017, combined with an increase in our quarterly dividend rate, our dividend payments increased $73.2 million.
We received $300.0 million in proceeds upon closing a new term loan and used the funds to repay a $300.0 million Equity One term loan that became due upon merger.
We issued $1.1 billion of debt in 2017 related to the following activity:
In January and June, we issued $650.0 million and $300.0 million of senior unsecured public notes, respectively. The notes are in two tranches of which $425.0 million is due in 2047 and $525.0 million is due in 2027. The January proceeds of $648.0 million were used to redeem all of our $250.0 million Series 6 preferred stock and to repay Equity One's $250.0 million term loan and Equity One's outstanding Line balance upon the effective date of the merger.

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A portion of the June proceeds of $305.1 million was used to retire approximately $112.0 million of loans secured by mortgages with interest rates ranging from 7.0% to 7.8% on various properties and to reduce the outstanding balance on the Line. We used the remainder of the proceeds to redeem all of our $75.0 million Series 7 preferred stock in August and for general corporate purposes.
We received proceeds of $122.5 million from mortgage loans and $4.5 million from development construction draws, all within consolidated real estate partnerships.
We paid $252.7 million to repay or refinance mortgage loans and pay scheduled principal payments as compared to $359.3 million in 2016.
In connection with the new debt issued above, the expansion of our Line commitment, and assumption of mortgages from Equity One, we incurred $12.9 million of loan costs.

Investments in Real Estate Partnerships
The following table is a summary of the unconsolidated combined assets and liabilities of these co-investment partnerships and our pro-rata share:
 
 
Combined
 
Regency's Share (1)
(dollars in thousands)
 
September 30, 2017
 
December 31, 2016
 
September 30, 2017
 
December 31, 2016
Number of Co-investment Partnerships
 
12

 
11

 
 
 
 
Regency’s Ownership
 
 20%-50%

 
 20%-50%

 
 
 
 
Number of Properties
 
114

 
109

 
 
 
 
Assets
 
$
2,880,390

 
2,608,742

 
$
997,454

 
878,977

Liabilities
 
1,638,510

 
1,404,588

 
561,203

 
473,255

Equity
 
1,241,880

 
1,204,154

 
436,251

 
405,722

Negative investment in US Regency Retail I, LLC (2)
 
 
 
11,138

 

Basis difference
 
 
 
43,946

 
1,382

Restricted Gain Method deferral
 
 
 
(30,902
)
 
(30,902
)
Impairment of investment in real estate partnerships
 
 
 
(1,300
)
 
(1,300
)
Net book equity in excess of purchase price
 
 
 
(78,203
)
 
(78,203
)
Investments in real estate partnerships
 
 
 
$
380,930

 
296,699

 
 
 
 
 
 
 
 
 
(1)  Pro-rata financial information is not, and is not intended to be, a presentation in accordance with GAAP. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on our operations, which includes such items on a single line presentation under the equity method in our consolidated financial statements.
(2)  During 2017, the USAA partnership distributed proceeds from debt refinancing and real estate sales in excess of Regency's carrying value of its investment resulting in a negative investment balance, which is recorded within Accounts payable and other liabilities in the Consolidated Balance Sheets.

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Our equity method investments in real estate partnerships consist of the following:
(in thousands)
Regency's Ownership
 
September 30, 2017
 
December 31, 2016
GRI - Regency, LLC (GRIR)
40.00%
 
$
198,106

 
201,240

New York Common Retirement Fund (NYC) (1)
30.00%
 
57,448

 

Columbia Regency Retail Partners, LLC (Columbia I)
20.00%
 
7,183

 
9,687

Columbia Regency Partners II, LLC (Columbia II)
20.00%
 
13,706

 
14,750

Cameron Village, LLC (Cameron)
30.00%
 
11,929

 
11,877

RegCal, LLC (RegCal)
25.00%
 
27,806

 
21,516

US Regency Retail I, LLC (USAA) (2)
20.01%
 

 
13,176

Other investments in real estate partnerships (1)
20.00% - 50.00%
 
64,752

 
24,453

    Total investment in real estate partnerships
 
 
$
380,930

 
296,699

 
 
 
 
 
 
(1)  Includes investments in real estate partnerships acquired as part of the Equity One merger, which was effective on March 1, 2017.
(2)  During 2017, the USAA partnership distributed proceeds from debt refinancing and real estate sales in excess of Regency's carrying value of its investment resulting in a negative investment balance, which is recorded within Accounts payable and other liabilities in the Consolidated Balance Sheets.
Notes Payable - Investments in Real Estate Partnerships
Scheduled principal repayments on notes payable held by our investments in real estate partnerships were as follows:
(in thousands)
 
September 30, 2017
Scheduled Principal Payments and Maturities by Year:
 
Scheduled
Principal
Payments
 
Mortgage  Loan
Maturities
 
Unsecured
Maturities
 
Total
 
Regency’s
Pro-Rata
Share
2017
 
$
5,043

 

 
19,635

 
24,678

 
5,755

2018
 
21,059

 
30,022

 

 
51,081

 
19,647

2019
 
19,852

 
73,259

 

 
93,111

 
24,448

2020
 
16,823

 
222,199

 

 
239,022

 
86,167

2021
 
10,818

 
269,942

 

 
280,760

 
100,402

Beyond 5 Years
 
10,580

 
829,000

 

 
839,580

 
288,440

Net unamortized loan costs, debt premium / (discount)
 

 
(10,503
)
 

 
(10,503
)
 
(3,355
)
Total
 
$
84,175

 
1,413,919

 
19,635

 
1,517,729

 
521,504

At September 30, 2017, our investments in real estate partnerships had notes payable of $1.5 billion maturing through 2031, of which 98.7% had a weighted average fixed interest rate of 4.6%. The remaining notes payable float over LIBOR and had a weighted average variable interest rate of 2.7%. These notes payable are all non-recourse, and our pro-rata share was $521.5 million as of September 30, 2017. As notes payable mature, we expect they will be repaid from proceeds from new borrowings and/or partner capital contributions.
We believe that our partners are financially sound and have sufficient capital or access thereto to fund future capital requirements. 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.


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Management fee income
In addition to earning our pro-rata share of net income or loss in each of these co-investment partnerships, we receive fees, as shown below:
 
 
Three months ended September 30,
 
Nine months ended September 30,
(in thousands)
 
2017
 
2016
 
2017
 
2016
Asset management, property management, leasing, and investment and financing services
 
$
5,884

 
5,821

 
$
18,735

 
18,415


Recent Accounting Pronouncements
See note 1 to Consolidated Financial Statements.

Environmental Matters
We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining to chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers, and underground petroleum storage tanks. We believe that the tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we use all legal means to cause tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems. Where available, we have applied and been accepted into state-sponsored environmental programs. We have a blanket environmental insurance policy for third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also placed environmental insurance, where possible, on specific properties with known contamination, in order to mitigate our environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.
As of September 30, 2017 we and our Investments in real estate partnerships had accrued liabilities of $9.7 million for our pro-rata share of environmental remediation. We believe that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity, or results of operations; however, we can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contaminants and liabilities; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; 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 us.

Inflation/Deflation
Inflation has been historically low and has had a minimal impact on the operating performance of our shopping centers; however, inflation may become a greater concern in the near future. Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation. Most of our leases require tenants to pay their pro-rata share of operating expenses, including common-area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. However, during deflationary periods or periods of economic weakness, minimum rents and percentage rents typically decline as the supply of available retail space exceeds demand and consumer spending declines. Occupancy declines resulting from a weak economic period will also likely result in lower recovery rates of our operating expenses.


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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, 2016.

Item 4. Controls and Procedures
Controls and Procedures (Regency Centers Corporation)
Under the supervision and with the participation of the Parent Company's management, including its chief executive officer and chief financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, the Parent Company's chief executive officer and chief financial officer concluded that its 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 filed or submitted 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 the Parent Company in the reports it files or submits is accumulated and communicated to management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
On March 1, 2017, we completed the Merger with Equity One, whereby Equity One merged with and into the Parent Company with the Parent Company continuing as the surviving corporation. As permitted by SEC guidance for newly acquired businesses, we excluded Equity One from our assessment of internal control over financial reporting, which represented total assets acquired of $6.7 billion (approximately 60% of Company's Total assets) as of September 30, 2017. We are in the process of integrating Equity One's operations into our internal control structure. None of these integration activities are expected to have a material impact on our system of internal control over financial reporting.
There have been no changes in the Parent Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the third quarter of 2017 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 the Operating Partnership's management, including the chief executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the chief executive officer and chief financial officer of its general partner concluded that its 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 filed or submitted 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 the Operating Partnership in the reports it files or submits is accumulated and communicated to management, including the chief executive officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure.
On March 1, 2017, we completed the Merger with Equity One, whereby Equity One merged with and into the Parent Company with the Parent Company continuing as the surviving corporation. As permitted by SEC guidance for newly acquired businesses, we excluded Equity One from our assessment of internal control over financial reporting, which represented total assets of $6.7 billion (approximately 60% of Company's Total assets) as of September 30, 2017. We are in the process of integrating Equity One's operations into our internal control structure. None of these integration activities are expected to have a material impact on our system of internal control over financial reporting.
There have been no changes in the Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred during the third quarter of 2017 and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.


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PART II - OTHER INFORMATION

Item 1.    Legal Proceedings
We are a party to various legal proceedings that 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.
After the announcement of the merger agreement on November 14, 2016, a putative class action was filed on behalf of a purported stockholder in the Circuit Court for Duval County, Florida, under the following caption: Robert Garfield on Behalf of Himself and All Others Similarly Situated vs. Regency Centers Corporation, Martin E. Stein, Jr., John C. Schweitzer, Raymond L. Bank, Bryce Blair, C. Ronald Blankenship, J. Dix Druce, Jr., Mary Lou Fiala, David P. O'Connor, and Thomas G. Wattles, No. 16-2017-CA-000688-XXXX-MA, filed February 3, 2017.
The class action alleged, among other matters, that the definitive joint proxy statement/prospectus filed by Regency and Equity One with the Securities and Exchange Commission (the “SEC”) on January 24, 2017 (the “Joint Proxy Statement/Prospectus”) omitted certain material information in connection with the Merger. The complainant sought various remedies, including injunctive relief to prevent the consummation of the Merger unless certain allegedly material information was disclosed and sought compensatory and rescissory damages in the event the Merger was consummated without such disclosures.
On February 17, 2017, the defendants entered into a stipulation of settlement with respect to the class action, pursuant to which the parties agreed, among other things, that Regency would make certain supplemental disclosures. The supplemental disclosures were made by Regency in the Current Report on Form 8-K filed by Regency with the SEC on February 17, 2017.

Item 1A. Risk Factors
The following represent new, emerging or updated risk factors, and should be read together with the risk factors disclosed in item 1A. of Part I of our Form 10-K for the year ended December 31, 2016:
Risks Relating to Our Industry and Real Estate Investments
The integration of bricks and mortar stores with e-commerce retailers may have an adverse impact on our revenue and cash flow.
The recent announcement of the proposed merger of Amazon.com with Whole Foods Market, Inc has highlighted the increasing impact of e-commerce on retailers and the shopping habits of retail customers. Although no definite conclusions can be made at this time, these trends may also have an impact on decisions that retailers make regarding their bricks and mortar stores. Changes in shopping trends as a result of the growth in e-commerce may also impact the profitability of retailers that do not adapt to changes in market conditions. These conditions could adversely impact our results of operations and cash flows if we are unable to meet the needs of our tenants or if our tenants encounter financial difficulties as a result of changing market conditions.




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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of equity securities during the quarter ended September 30, 2017.
The following table represents information with respect to purchases by the Parent Company of its common stock during the months in the three month period ended September 30, 2017.
Period
Total number of shares purchased (1)
Average price paid per share
Total number of shares purchased as part of publicly announced plans or programs
Maximum number or approximate dollar value of shares that may yet be purchased under the plans or programs
July 1 through July 31, 2017
2,453

$
63.55



August 1 through August 31, 2017
601

$
65.53



September 1 through September 30, 2017

$



 
 
 
 
 
(1) Represents shares repurchased to cover payment of withholding taxes in connection with restricted stock vesting by participants under Regency's Long-Term Omnibus Plan.
Item 3.    Defaults Upon Senior Securities
None.

Item 4.    Mine Safety Disclosures    
None.

Item 5.    Other Information
None.

Item 6. Exhibits
In reviewing any 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. Each agreement contains 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

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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.
Ex #    Description
31.    Rule 13a-14(a)/15d-14(a) Certifications.
31.1Rule 13a-14 Certification of Chief Executive Officer for Regency Centers Corporation.
31.2Rule 13a-14 Certification of Chief Financial Officer for Regency Centers Corporation.
31.3Rule 13a-14 Certification of Chief Executive Officer for Regency Centers, L.P.
31.4Rule 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
101.LAB    XBRL Taxonomy Extension Label Linkbase Document
101.PRE        XBRL Taxonomy Extension Presentation Linkbase Document
__________________________
*
Furnished, not filed.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.

November 6, 2017
REGENCY CENTERS CORPORATION
 
By:

/s/ Lisa Palmer
Lisa Palmer, President and Chief Financial Officer (Principal Financial Officer)
 
 
 
 
By:

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

November 6, 2017
REGENCY CENTERS, L.P.
 
By:
Regency Centers Corporation, General Partner
 
By:

/s/ Lisa Palmer
Lisa Palmer, President and Chief Financial Officer (Principal Financial Officer)
 
 
 
 
By:

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

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