Greetings and welcome to the Regency Centers Corporation Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christy McElroy, Senior Vice President, Capital Markets. Thank you, Christy. You may begin.

Good morning, and welcome to Regency Centers' fourth quarter 2023 earnings conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer; Mike Mas, Chief Financial Officer; Alan Roth, East Region President and Chief Operating Officer; and Nick Wibbenmeyer, West Region President and Chief Investment Officer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance including forward earnings guidance and future market conditions, based on management's current beliefs and expectations and are subject to various risks and uncertainties. It's possible that actual results may differ materially from those suggested by these forward-looking statements. Factors and risks that could cause actual results to differ materially are included in our presentation today and are described in more detail in our filings with the SEC, in our most recent Form 10-K and 10-Q filings. We will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information including disclosures related to forward earnings guidance. Our caution on forward-looking statements also applies to these presentation materials. Lisa?

Thank you, Christy, and good morning, everyone. We had another strong quarter in Q4, finishing off an exceptional year for Regency. I'm so proud of the success and what we accomplished, a direct result of the hard work of our dedicated and talented team. Tenant demand across our shopping centers remains robust, which is most evident in our record shop occupancy and in the strength of our leasing pipeline. As we look ahead, we believe the current macroeconomic backdrop supports the continuation of positive trends for neighborhood and community shopping centers. This favorable retail demand environment has served as a great foundation for driving success in creating value through our sector-leading development program. In 2023, we started more than $250 million of new projects with a healthy pipeline of future projects that the team continues to build. We are on track to start $1 billion or more of projects over the next five years. My hat is off to everyone on our team. You have heard me say it before, I believe we have the best development platform in the sector. Our experienced team and our ability to create value through this platform, along with our ability to self-fund through levered free cash flow, are unique competitive advantages for Regency. It was also a big year on the transactional side, highlighted by the closing of the Urstadt Biddle acquisition in August. The integration into Regency is now essentially complete. Kudos to everyone involved for effecting such a smooth and seamless transition. Our ability to grow through developments and transactions is also a testament to the strength and stability of our balance sheet, which in turn enabled us to successfully execute on our $400 million bond issuance and revolving credit line recast in January. Our ability to access low-cost capital reflects the quality of our portfolio, our track record, and the strength of our lending relationships. Most of you on this call also know that I'm very proud of Regency's best-in-class corporate responsibility, reputation, and practices. I'm also grateful when the efforts of our team are recognized, such as in the most recent Americas Most Responsible Companies List, where Regency ranked 6th overall in the United States and first in the real estate and housing category. Our company has been included in this list for all five years of its existence, and this is the highest ranking any real estate company has ever achieved. For the benefit of our shareholders and all stakeholders, we are committed to adhering to our corporate responsibility principles in all areas of our business. Before turning it over to Alan, I reiterate that we believe the strength in leasing demand over the past 24 months or so is showing no signs of abating. Consistent job growth and moderating inflation are driving consumer resiliency in our trade areas. We also continue to experience tailwinds favoring brick-and-mortar retail in strong suburban markets, supporting a positive retail environment ahead.

Thank you, Lisa, and good morning, everyone. We had another quarter with great operating results and leasing momentum capping off a very active 2023. Our teams are taking full advantage of the healthy retail environment that has continued into 2024. Our success was evident in same-property NOI growth of 3.6% in 2023, excluding COVID period reserve collections and termination fees, with base rent growth being the most significant driver, a function primarily of driving rents higher, commencing shop occupancy, and bringing redevelopment projects online. In the fourth quarter, we executed nearly 2.5 million square feet of leases, with activity from categories including grocers, restaurants, health and wellness, off-price, and personal services. Our leasing pipelines remained robust, representing another 1 million square feet of potential new leases in LOI and lease negotiation. We achieved cash rent spreads of 12% on a blended basis in Q4, including 35% spreads on new leasing. Full-year 2023 cash rent spreads of 10% were our highest annual level since 2016. GAAP and net effective rent spreads were above 20% in the quarter, demonstrating our ability to obtain contractual rent steps in our leases while also being judicious on CapEx spend. Our same-property percent lease rate was up another 30 basis points in Q4, ending the year at 95.7%, and our prelease spread widened further to 280 basis points as a result of our leasing success in the quarter. This pipeline of executed deals now reflects more than $40 million of base rent for leases yet to commence. I've said in the past that records are made to be broken, and the team drove our shop leased rate to yet another new record high of 93.4% in the fourth quarter. That represents an impressive 150 basis point increase in shop leasing year-over-year, reflective of nearly 1.4 million square feet of shop space leased, our highest shop volume in more than a decade. Our anchor lease rate also ticked higher in the quarter and ended the year up 10 basis points over 2022, despite the impact from bankruptcy-related closures. Our teams have made great progress remerchandising this space with exceptional retailers and at higher rents. And in some cases, our ability to recapture this space has acted as a catalyst for long-awaited redevelopment projects. As I look towards 2024, it will take some time to see the benefit of this re-tenanting activity, given the 12 to 24-month average downtime associated with anchor re-leasing and lead times on redevelopment projects. For example, some of the Bed Bath spaces that we've released will not commence until the fourth quarter of this year. So even with our substantial leasing progress, our anchor commenced occupancy rate ended 2023 lower by 60 basis points, and as a result, we will feel the impact of these vacancies in 2024. That said, the work we've done to date means we have meaningful visibility into our anchor commencement trajectory. We expect to move our portfolio lease rate even higher in 2024 as demand for space in our high-quality centers continues unabated. This will ultimately drive an elevated level of anchor commencement in late 2024 and into 2025. In closing, I am really proud of the tremendous work and success of our team over the last year, and I am excited for another great year of leasing activity as the current retail environment is enabling us to create meaningful long-term value at our shopping centers.

Thank you, Alan. Good morning, everyone. We continue to experience strong momentum in our development and redevelopment program as our investment teams were active in the fourth quarter. With additional projects breaking ground in Q4, we ended 2023 with just over $250 million in starts. This is the highest level of starts in a single year for Regency in nearly two decades and demonstrates the incredible work and progress our team has made in sourcing new projects and ramping up our pipeline to achieve our goals. Among our fourth quarter starts is the $23 million redevelopment of Avenida Biscayne. With this project, we are excited to bring additional shop space to one of the best pieces of commercial real estate in South Florida, adjacent to our existing Aventura Square shopping center. In the quarter, we also began the redevelopment of Cambridge Square Atlanta. This $15 million project will bring a new Publix as well as extensive improvements to the center. As of year-end, our in-process pipeline has grown to $468 million, and overall our execution remains on time and on budget with expected blended returns of more than 8%. Our in-process projects are 89% preleased on average, reflecting the tremendous work of our team and continued strong demand from high-quality retailers. I'll reiterate Alan's comments about anchor recapture, as it can often be a catalyst to unlock creative redevelopment opportunities and bring exciting new merchandising to reinvigorate a center. We have several examples of those within our in-process redevelopment pipeline today, including Baptist Health at Mandarin Landing, Sprouts at Circle Marina Center, REI at Walker Center, and Publix at Buckhead Landing. Moving to acquisitions, private transaction activity remains light, but our teams were still able to close two compelling transactions in the fourth quarter. As disclosed previously, we closed on the acquisition of Nohl Plaza in Orange County, California, in October, and as a reminder, we bought this center as a future redevelopment pipeline project. In December, we acquired The Longmeadow Shops in Massachusetts. This 100,000 square foot neighborhood center is fully leased to a strong national merchandising mix of tenants and serves as the premier shopping and dining destination within its trade area. Looking ahead to 2024 and beyond, our team is focused on further building our value creation pipelines and achieving our goal of starting more than $1 billion of development and redevelopment projects over the next five years. While it is difficult to get developments to pencil, we continue to be uniquely suited and remain optimistic about finding and executing attractive opportunities. Demand continues to be strong among best-in-class grocers, as well as other retailers and service providers looking to grow their footprints in our high-quality centers and within our trade areas. As Lisa just said, Regency has the best development team in the business and our free cash flow and balance sheet give us the capability to fund projects and continue the success we enjoyed in 2023.

Thank you, Nick, and good morning, everyone. I'll start with some highlights from our full-year results, walk through details related to our initial 2024 guidance range, and finish by discussing recent balance sheet activity. We reported Nareit FFO of $4.15 per share and core operating earnings of $3.95 per share in 2023. Year-over-year growth in core operating earnings per share was nearly 6%, excluding the timing impact of COVID period reserve collections, driven in large part by same-property NOI growth of 3.6%. Base rent, following significant gains in rent paying occupancy, remained the largest contributor to our NOI growth rate at 360 basis points. Turning to our initial guidance for 2024, I'll first refer you to the helpful detail on Slides 5 through 7 in our earnings presentation. Excluding the timing impact of COVID period reserve collections last year, the midpoint of our 2024 range reflects core operating earnings growth of more than 3%. The largest contributor to growth continues to be same-property NOI, for which our guidance assumes a range of 2% to 2.5%. Base rent growth this year will continue to be driven by embedded rent steps, positive re-leasing spreads, additional rent commencement of shop leases, and deliveries of redevelopment projects. However, anchor space recapture is expected to impact our commenced occupancy rate in the near term, primarily as a result of bankruptcy-related move outs and some junior anchor move outs following lease expiration. Given the longer lead time to open new anchor tenants, we expect our average commenced occupancy rate to be down by about 50 basis points year-over-year in 2024, impacting same-property NOI growth in the short term. But more importantly, due to robust tenant demand, we have been re-leasing this anchor space just about as quickly as we are recapturing it, and we expect our overall portfolio lease rate will trend higher throughout the year. We will begin to benefit from this outsized anchor rent commencement activity beginning in late 2024. In addition to same-property NOI growth, our earnings range also reflects previously discussed accretion from the UBP merger as well as positive contributions from recently completed ground-up developments. As we discussed last quarter, the impact of higher rates and debt refinancing activity remains a headwind to core operating earnings growth this year. That said, we are very pleased to gain greater visibility on this impact as we took advantage of an attractive debt capital markets window in early January to prefund our 2024 maturities with a new $400 million bond priced at 5.25%. Notably, as you consider our guidance range for interest expense and preferred dividends, please know that it is showing net of expected interest income. January proved to be a busy month as we also closed on the recast of our revolving credit facility, which was upsized by $250 million to a $1.5 billion total commitment, which included tightening our borrowing spread by 15 basis points. In an environment where access to capital is even more precious, and banks are being incrementally more discriminating, we are proud of this result, a reflection of Regency's performance track record, portfolio quality, and balance sheet position, as well as the strength of our long-standing banking partnerships. Our recent activity has further fortified our sector-leading balance sheet and liquidity position. We remain at the low end of our targeted leverage range of 5 times to 5.5 times net debt to EBITDA. Following the prefunding of our 2024 maturities, our next unsecured bond maturity is not until November of 2025. We have ample capacity on our newly upsized revolver and expect to generate free cash flow north of $160 million this year. This liquidity, balance sheet capacity, and differentiated access to capital allow us to further grow our development and redevelopment pipelines as both Lisa and Nick discussed, and remain opportunistic as we look for incremental avenues to drive growth and value. With that, we are happy to take your questions. Thank you.

Good morning. Thanks a lot for taking my question. As we look at the algorithm for 2024, is it that same property NOI growth is solid? And then there's some puts and takes related to the merger and debt refinancing and a normalization of some factors that just may limit the flow-through. So I guess my question is what gets you to the low and the high end of the range this year? And then thinking about anchor leasing coming online at the end of 2024 and into 2025, and potentially more normalized comparisons kind of going forward, should that algorithm look better going forward?

Hey, Michael, you pack a punch with one question. There is a lot in there. So let me unpack some of that. And if I don't get to it all, I'm certain that others will have similar questions. So just to recap what you said there from a core earnings perspective, there are big moving parts, and you've got it largely correct. Same-property NOI growth is the largest and has been the largest contributor to our earnings growth rate. So at the midpoint, we're looking at a core growth rate of just over 3%. Same-property growth, as you can see, is in the 2% to 2.5% range, the largest contributor there. Very proud to deliver the UBP merger accretion estimate of 1.5% to our growth rate, and that's been consistent, as you know, since we announced the transaction back in May. We continue to deliver upon that underwriting. The headwinds, of course, and you alluded to some of them, but let me just click through them for the benefit of everyone. No further COVID collections of about $4 million, that's $0.02 a share. By the way, we're extraordinarily happy for that headwind to be behind us. And kudos to the team for collecting on that rent. Lower termination fees is about $0.02, and of course, the results of our recent debt financing, which we're also extraordinarily pleased with, is another $0.02 of headwind to earnings growth. To your follow-up question, just let me start here. The puts and takes of outperformance — underperformance relative to the midpoint will come through the NOI plan, specifically within the NOI plan, it's going to come through move-outs as it typically does, occupancy and our assumptions around that. We've put together this occupancy plan, this leasing plan, and later in the call, I'm sure Alan will jump in and give us some color. But we feel really good about the direction of our percent leased. When you look at the top line kind of surface level, we're going to move percent leased up towards our 96% target by about 20 basis points this year. And on the surface, that looks like we're moving in the exact right direction, consistent with the dynamics we're seeing in the marketplace, which we spent some time in the prepared remarks describing. But it's what's happening beneath the surface, uniquely in 2024, which is causing some of that drag. In the first quarter of this year, a decline in commenced occupancy of about 80 basis points. Much of that, the vast majority of that, we can see it. It's bankruptcy filings, it's moveouts from Rite Aid, it's the moveouts from Bed Bath & Beyond. We have a couple of high rent paying leases in Manhattan that are expiring, and we have great activity on the re-lease of those spaces. But we're going to feel that occupancy decline early in the year. And then to finish it up on your impactful question, as I said in the remarks, we're re-leasing this space as quickly as we can get it. By year-end, our commenced occupancy rate should be north of where we started. We should be up by about 20 basis points on that rate, on a spot basis again. But it's that downtime, it's that average, it's that impact of timing that's going to weigh on our 2% to 2.5% growth rate. So lastly, 2025 is looking — from an algorithm perspective, if all can hold together here, we should see the benefit of that commenced occupancy rate coming back online and moving our growth forward.

Mike, thank you so much for the thorough response.

Michael, if I may just one second, just to come back to what we did say in our prepared remarks, because the takeaway... there's a lot of words because it was a lot of — it was a big question. The health of our business is really good. The demand is really strong. And we said that in all the prepared remarks. The downtime associated with these anchor move outs is very short-term in nature. This is not something that is permanent, certainly nothing that we're seeing right now. As I've said in my remarks, as Alan did, we're not seeing any signs of the healthy demand for our space abating whatsoever. And I think that's a really important thing to remember.

Thanks for that. And maybe — you can ask your second question, Michael. Maybe I'll keep it very short. You're looking for NOI growth of 2% to 2.5% for the core portfolio. How are you thinking about growth in the UBP portfolio? Is that growing a little bit faster than the core?

It is. Just looking at '24 on a standalone basis, the growth rate in that portfolio is north of the 2% to 2.5%. It would be accretive if we have included it in the same-property portfolio. It would have been additive, I should say, by about 25 basis points to that 2% to 2.5% range. We like — and it's consistent. What we saw in that portfolio was a leasing opportunity. That portfolio was about and is about 200 basis points shy of our lease rate. And the team has assimilated the assets into the Regency platform. They are making great progress and we're excited about the prospects there. But that growth rate is slightly additive.

Thank you so much for the thorough responses.

Thanks, Michael.

Appreciate it, Michael.

Thanks. Good morning. I know your acquisition guide currently sits at zero, but can you talk about the volume of centers you described as of interest to Regency out there today? And would you be surprised if you ended the year as a net acquirer?

I appreciate the question. Yeah, I'll just give you a little color to what we're seeing in the market. We're definitely seeing a little pickup. As you heard us say time and time again in 2023, there were definitely a lot fewer opportunities out in the market. We were happy with the needles in the haystack that we did find, as you know, in 2023. But as we've turned the page into 2024, we are seeing more activity out there. I'd say, it's still below historical norms, but definitely a pickup from '23. As always, we're very active in underwriting and understanding those opportunities and it goes back to what we always say: when we find opportunities that are equal or accretive to our quality and our growth rate, and accretive to earnings, we're going to pounce. We are hopeful to continue to find those needles in the haystack as we move through '24.

Got it. Thank you.

Great, thank you. And thanks for the comments on '24. I know there's a lot to get done, but comments into '25, right, because I think investors, the market, is kind of trying to look past, let's say, some of these headwinds in '24 in terms of a higher longer-term growth rate for that same-store NOI. Can you remind me, like, do you have a company goal target for that same-store NOI? And second would be what other key initiatives are you working on, whether it's portfolio composition, technology, etc. to drive that higher same-store NOI, let's say, into '25 and beyond?

Thanks, Jeff, for the question. We do provide, and have really always provided kind of our same-property NOI growth model, if you will, as we affectionately call it. It's in our materials. We do target over the long-term to grow same-property NOI by 2.5% to 3% annually. The primary component of that will be contractual rent steps and cash re-leasing spreads. Occupancy, whether — and in this case, we have percent commenced occupancy in 2024 coming down; occupancy is one that will move that up or down. We have had a really successful track record of adding to that same-property NOI growth through our investment and redevelopment dollars. So that is our long-term goal.

Thank you. And then a more detailed question. Can you talk a little bit more about The Longmeadow Shops, the acquisition in December? Can you discuss anything around the cap rate, seller motivation, value-add opportunity? Any color on that asset would be helpful. Thank you.

Sure. This is Nick. Appreciate the question, Jeff. I'll start with just your question related to the cap rate and valuation. Again, we talk about needles in the haystack and using every tool we have in our tool belt. This is one of those opportunities where the seller approached us. They were looking for a units transaction. As you can appreciate a units transaction, they care about the currency they're getting, and therefore they wanted Regency currency. They were a fan of ours from afar, and so for planning purposes, they were ready to transact. They'd owned the assets for decades. We were excited about the opportunity. From a valuation standpoint, this thing is plus or minus an 8% going-in yield. So very attractive from a yield standpoint as well as quality standpoint. We're excited about the future of that opportunity.

Thank you.

Thanks, Jeff.

Hey, thanks. Maybe I just want to follow up. I know it seems like the call has been kind of focused on what the longer-term earnings power is, given just how good fundamentals are. I guess, I maybe want to come at it from a different way. Lisa, you've seen kind of the perfect storm of minimal supply, good demand, and that's helped push market-led growth. But inflation has also been a big piece of that the last couple of years as kind of top line for a lot of your tenants has taken off. As inflation starts to moderate back to more normalized levels, are you seeing any pushback on the market rent growth kind of being able to be sustained into '25? You know it's too early for '26, particularly with some cost pressures, maybe in the labor side, that's hitting some of the fast casual, fast-food guys that may hit some other type of tenancy?

I know you addressed me with that question, Craig, but I think it's best to allow Alan to handle that.

Yeah, Craig. I appreciate the question. As I've said in our opening remarks, 10% is our highest total annual rent growth in seven years. But we prefer to emphasize the GAAP growth as a better measure and we have some impressive spread this quarter, 20% total over 50% on new deals. To your question from an inflation perspective, we're approaching peak occupancy. When we reach, or are near that point, I still think the pricing power is there, and it is expected that the teams can continue to push on both the spreads and the steps as we go forward. We are getting more steps. We're getting steps in more deals now and we're getting higher steps. Approximately 95% of our new deals had steps, and 70% of those had 3% or higher. Again, I think the focus is there and I believe that given where occupancy is, that trend can continue, Craig?

And again, I would just come on top. When you think about our business model and our value proposition to our investors, it is the sustainability and the safety of that growing cash flow stream, which translates to our core operating earnings growth and then dividend growth. I know that we're getting far removed from the 2020 year, but I think it's really important to remember that we went through a time, the entire world went through a time that none of us had ever experienced before. We did not cut our dividend. I think that's really important when you again think about the value proposition for our investors. It's core operating earnings growth plus dividend growth to get to total shareholder returns in the 8% to 10% range.

No, that's helpful. And I don't know, maybe this one's for Mike, or I don't want to direct it to any one person, but interest expense headwinds have been an issue. You guys have successfully sourced some acquisitions and you have potentially a billion dollars of redevelopment ongoing over the next five years. I'm just trying to get at when you see the numbers, the snow pipeline really kicking in, average occupancy, the timing of some of these anchor box backfills normalizing out, when maybe the headwinds moderate enough that you start to see kind of the leverage multiplier on same-store kind of flow through the earnings? Is that in the next couple of years, or do you really have to get through the continued repricing of the debt stack?

Another power-packed question. I appreciate it, Craig. We do have some headwinds to our growth rate this year, and we ran through them, and I think we understand those in '24; and again, happy to dig into any of those that you'd like to. I do see the power of our existing free cash flow and the ability to put that capital directly into our growing and exciting development and redevelopment pipeline, which will add to our growth rate going forward. Beyond that, we actually have a leverage perspective, given our balance sheet position at the low end of our targeted leverage range, even on a leverage-neutral basis, we have more capital driven again by that free cash flow to put into our acquisition intents. Nick did a nice job of explaining how we think about acquisition activity going forward, which will add to our core operating earnings growth rate. When you combine that with a normalization and continued growing of our commenced occupancy through '24 towards the end, unfortunately, into '25, I think those elements will reflect themselves in a core operating earnings growth rate that is at least meeting the objectives that Lisa outlined of being 4% on core operating earnings with a commensurate increase in dividend growth. If we can do better on the margin in all elements of our business, rent growth, maybe even push those occupancy records even a little bit higher, all of those should result in maybe an even more amplified vision of growth.

No, that's helpful. Appreciate the color. Thanks.

Hey, Mike. Good morning. I guess one on the integration with Urstadt Biddle. I know you've talked about 1.5% accretion for a while now. As you've had time to digest this portfolio, what potential further upside are you seeing maybe from an internal growth standpoint on the occupancy side? And also, what about the opportunities to unlock some of the redevelopment opportunities there?

Hey Samir. Yeah, I'll reiterate the — from the beginning, we've articulated the strategy behind this merger as being a portfolio that looks like Regency's assets. On a long-term basis, we see a growth rate that looks like Regency's growth rate. In the near term, one element that we liked about the opportunity was this ability to bring that rent-paying occupancy higher than it currently exists. In fact, this year we are seeing an additive growth rate from a same-property perspective because of that movement in commenced occupancy. So there's not — what you didn't hear me say is, there's a big redevelopment, heavier component of this merger in the near term. But I'm not — we're not dismissing that either. We do see — we are — we know it's a leasing exercise right now. But as we're leasing up this portfolio, we have an eye towards the future, as we do across all our assets. We are constantly looking to find value-add accretive redevelopment opportunities for really well-located pieces of commercial real estate, and that's what we bought. We're pretty excited about the long-term prospects there.

Okay and then, I guess my second question is around the health of the consumer and the local shop segment. I appreciate the comments on the consumer being resilient and that you're not seeing an impact on the business yet. When you look at credit card debt, it's at record levels, and you see delinquencies that are up. What are you seeing not just on the Shop segment, but kind of the local side of that? Thanks.

I'll take it. If Alan would like to add, please feel free, Alan. But generally speaking, think about our portfolio and the types of shopping centers we own: neighborhood community shopping centers tend to be more about convenience, value, necessity, and service. The consumer — in the trade areas where we mostly operate, there's not been a lot of job losses. People still have their jobs and they are still earning wages. They're still spending. When people do cut back, they tend not to cut back at their neighborhood and community shopping centers first; they may trade down, which sometimes also benefits us. We're not going to say that we won't feel any pressure from consumer spending declining. But again, we have long-term leases, and we can absorb, and our tenants, because they are high-quality, good operators, can also absorb some decline in sales. Sales do not need to grow every year for a tenant to be able to pay their rent. Our tenants are great operators. It has been, in my experience, we have gone through many cycles at Regency, and there have been more moderate recessions. Even if we were to enter into a recession, there have been more moderate recessions where we really didn't feel any pain. I don't have any visibility to a recession of that type or that type of decline in 2024, so don't expect to feel much pressure.

And Samir, I would just add, just from an operator's perspective, we're going to look first at our AR balances; they're healthy. We're going to look next at sales reports; they remain strong. We're going to then look at whether we're seeing elevated levels of assignments; we're not. All of those things dovetail into the consumer's reaction, at least within our portfolio right now.

Thank you.

Hey, good afternoon. We've spoken about finding ground-up developers maybe lacking the capital to get construction started. Do you still see that as an opportunity for investment this year, or are there other non-traditional, opportunistic investment opportunities that you're looking to pursue this year?

Greg, this is Nick. I greatly appreciate the question. Yeah, I mean I'll just say it this way, again, we have the benefit of every tool in the toolbox available to us when it comes to sourcing development, acquisition, and investment opportunities overall. There's no doubt construction loans are still hard for people to get. We are continuing to engage with smaller developers who many times need more than just debt capital; they need expertise and relationships to fix their cash-on-cash returns. So both debt and equity are in play in those conversations. More times than not, those conversations turn into some sort of equity participation given we can bring more tools to the overall deals than just debt. That being said, when appropriate, we will lean into deals that we want to own long-term. We recently closed a transaction where we are just providing senior and mezzanine debt on a potential future acquisition. It may have future development opportunities as well. We go into these conversations with every tool in our tool belt and bring them out, and we're excited about the future potential.

Great, thanks for the second question here. It's a bit of a different type of asset from your shopping center bread-and-butter, but what's your confidence in re-leasing those Manhattan vacancies that you talked about? Is 101 7th Ave potentially addressed this year as well?

Greg. Yes, thank you for that question. The rents, as you know, are very high in Manhattan, and we did lose two key tenants: a former food importer in the middle of last year and then a CVS that vacated just last month. We'll get it back and lease it. I think that speaks to the strength of the real estate; we do have signed transactions to solve the Third Avenue premises that ties into that story of down rent-paying occupancy in '24, but we're not coming back online until the fourth quarter likely of this year. As to Second Avenue, we're negotiating a lease as well. The real estate is certainly strong enough for us to find those replacement users. I feel very good about that, but it is impacting us in '24. Regarding Barneys, we continue to pursue all avenues: leasing it, demising it, redeveloping it, or evaluating the sale. For us, we're going to act upon what makes the most financial sense. It's certainly a top priority for us.

Thank you.

Hey, two quick ones. I'm looking at the supplement, I see Avenida Biscayne and Cambridge Square was added. Can you provide an update on Westbard Square? That looked like $450 million; is that still coming on in the next sort of 12 months to 18 months? And even beyond that, how are you guys thinking about potential new starts and development given the strength of the balance sheet?

Ron, greatly appreciate the question. So, to start with Westbard, we're really happy to announce that redevelopment continues to progress very well. Giant, which is the grocer that we relocated and built a new flagship for them, just opened in the last couple of weeks, and it's doing tremendously well. If anyone's in the DC area, I'd highly recommend you check out that asset as we're very proud of the continued redevelopment potential. As you zoom out and look at the wider scope, we feel really good about our development and redevelopment pipeline. We started over $250 million in 2023, which was the highest amount of starts in quite some time. But we're not done. We still see a very strong pipeline as we look into 2024 and beyond. It's all aspects of the business: redeveloping our existing portfolio, sometimes it's tear down rebuilds of grocers, as you've seen with Cambridge. Other times, it is putting these junior boxes back in production in one way or another. Alan and I alluded to in our remarks. Lastly, we have ground-up net new opportunities that are extremely difficult to pencil. There's no question about that. These are difficult transactions to pull together, but as you saw us execute in 2023, we are doing it and we're excited about the potential to continue with several projects, some sooner rather than later. We hope to announce one here in the next couple of weeks in the Northeast, that would be a phenomenal ground-up opportunity our team is rounding home base right now. We're excited that pipeline, and we expect to grow and hit our target of around $1 billion of starts in the next five years.

So many of you know, I played softball and my favorite softball team actually opened their season today. This is a softball: Give me another opportunity to say that we have the best team in the business, the best platform in the business. Our levered free cash flow funds it. That is a competitive advantage for us, and it's something we're really proud of. I expect, and I'm confident that we will continue to execute and perform. Thanks for the question. That was great.

Right. Just if I could sneak in my second one. Closer to the thought on the same-store NOI. One specifically, I think you talked about an 80 basis points dip in 1Q. What's bad debt that's factored into the same-store NOI guidance and how that compares to historical? The bigger picture is the messaging that because this was an odd year, as you flip the calendar, we should be thinking more about sort of the same-store NOI translating to core earnings growth in the mid-single digits and so forth, just making sure that's still the messaging. Thanks.

Yeah, appreciate it, Ron. So from a credit loss perspective — and I think that's how I'll take your question. We are planning for credit loss in the range of 75 basis points to 100 basis points, but we are planning for 75 to 100 basis points of credit loss. That is very similar to what we planned for. In fact, we kind of ended the year towards the lower end of that range in 2023. Roughly half of that credit loss provision is, I'd call it bankruptcy related, and the balance is a traditional bad debt expense. I think to extend your question beyond kind of the drop in commenced occupancy in '24, as we solve them pretty actively throughout the course of the year, yes, we're going to — it's about driving that commenced occupancy rate, closing that gap on the SNO pipeline. That is what's going to translate to top-line earnings growth on a core basis.

Hi, just maybe a softball here, Lisa given your recent comments. But just curious on why do you think you guys are able to find a decent amount of development start opportunities when if we listen to some of your peers, they're saying market rents have to grow 40% to 50% for new developments to pencil. Where is the disconnect, I guess in those two comments?

I've never seen Nick play softball, so I'm a little afraid of this answer, but I'll let him answer.

Thank you, Juan. I appreciate the question. With that setup, now I'm nervous about what my answer is going to be. No, I'm kidding. It is a great question, Juan, and both are true. Finding land that is appropriately priced, tenants that want to pay enough rent to make sense for that land cost and construction cost is extremely difficult. It is finding needles in a haystack. Because it's so hard, and because you have to have all those tools in your tool belt, is why I am so excited. As Lisa has said time and time again, we have the best team in the business. We have 23 offices waking up every day, working with our critical grocery partners, helping them grow their business, and they want to grow their business. Sitting at the table with us, shoulder-to-shoulder with the land sellers, with the contractors, helping us collectively figure out how to make these deals pencil so that they can get net new stores opened. Although there are very few opportunities where that calculus comes together to make financial sense, it's not zero, and we continue to get more than our fair share. Because it's so hard to find those opportunities, that excites me because we can execute on them, and we will continue to.

And where do you think we should think of yields for new starts that you may find in '24?

Another great question. As you've seen, our in-process pipeline, as you can see, is in that 8% plus range on a blended basis. I would expect that to be the continued blended rate. That's not to say some opportunities that we want to lean into that we think are compelling that we won't see the numbers start with the seven from an initial yield standpoint. I'd say our blended basis, we'd expect to see us continue to push north of 8%. I just want to stress again on the development side: I don't expect we'll wake up tomorrow and see a bunch of new supply coming on the market because of how difficult it is first and foremost. Secondly, I just want to stress how much we derisk these opportunities before we close and put a shovel in the ground. We have entitlements in hand before we close. We're substantially pre-leased, especially with our grocers and other anchors as you've seen in our pipeline. That pre-leasing is critical for high-quality anchor tenants. Lastly, our construction drawings and bids are in hand. These are the key pieces of the puzzle to give us the confidence these yields make sense. Our teams have done a tremendous job, and I appreciate the daily efforts to deliver these on-time and on-budget.

And one more follow-up, if you don't mind. Anything unusual in the fourth quarter on the OpEx side, flowing through the same store, that impacted the growth rate for the quarter that we should be aware of thinking forward?

Yes and no. So on a full-year basis in '23, I think our growth rate was about 7% on OpEx. You know insurance is a big part of the story, Juan, and I think you're pretty well versed in what the property insurance market feels like today, and we are not immune from that impact. Inflation has been an impact as well, as you know. We're largely triple net, so we're able to pass through successfully the vast majority of any increases, including those in insurance to our tenant base. You can see that in our recovery rate, which has held its own. Unique items in the fourth quarter include real estate taxes where we had kind of a burn-off of a brownfield credit in a real estate tax line item. I don't know if you're picking that up in your analysis, but that was one unique item in the fourth quarter that won't recur going forward.

Thank you.

Hi, good morning. I guess a clarification question on the junior anchor comments. The ones that moved out at least aspirational, were these all Manhattan and other in a watch list of tenants, or are there other groups of tenants in that bucket? If so, why did they move or vacate?

Anthony, this is Alan. I appreciate the question. It was mostly Manhattan and bankruptcies, but on top of that were many intentional move-outs. As part of our intense asset management approach, I would give a few examples: I know a number of you live in or around Connecticut, and in Norwalk, by way of example, we've got a retailer that's going to stop paying rent here next month, and we'll be down for the entire year. We're bringing Target into that project, but it's not going to open until likely Q2 or Q3 of 2025. It's a phenomenal merchandiser—great and highly accretive transaction, something that was the right long-term decision for us, yet will impact 2024. I would also take a couple of office supply examples. We have three of them, in fact, that we intentionally decided to replace. One was Sprouts, another with Homesense, and one with a Baptist Health medical facility that I think Nick mentioned in his remarks. This is an opportunity to enhance merchandising, provide durable occupancy with enhanced tenant credit and get significant rent growth. This is our proactive way of thinking, and the uneven climb is coming offline here in 2024 from a rent-paying perspective, filtering its way back in year-end and into 2025.

Okay. If I get to my next question. You look at '25 and '26, you have like 7% of your anchors in those two years. Are you going to keep doing this and maybe pushing tenants out for higher rent, or is this kind of the peak of this activity in '24?

From a practical perspective, we are constantly looking at our entire portfolio for opportunities to appropriately remerchandise, drive accretive returns, and focus on redevelopment opportunities. That's always been part of our mantra, and we're going to certainly continue to do that.

I'd just add that over the long term, we expect to be in that 2.5% to 3% range.

Thanks. I just wanted to go back to Juan's question about OpEx expenses. I guess, just high-level, I know you explained some of the causes of it, but I guess how concerning is the increase in expenses as it pertains to your business and ability to push rent? Does that actually start to impact the way you think about where you want to own properties, whether that be local politics or how these local governments are run?

I appreciate the question, Ki Bin. Listen, from a go-forward basis, the directionality of our OpEx and the growth rate in that line item hasn't changed our capital allocation thoughts at all. We continue to want to grow our portfolio across the entirety of our regions. In fact, in Phoenix, we'd like to dive in and add to the extent we can find some opportunities in that region and add that to the Regency portfolio. No change from a capital allocation perspective as a result of the increases. I'll let Alan comment on the pressure that may or may not exist on rent growth.

I would say, Ki Bin, generally speaking, we're not seeing pressure on rent growth. Does it play a small part? Sure. Our retailers certainly look at their overall occupancy costs. When you layer all of that in, again on the margin, I think that could certainly have a small impact. But it's just not material enough at this point to change the realities of where we are.

Okay. And then a quick follow-up here. The 50 basis points drag from the commenced occupancy, is that roughly equivalent to the NOI drag?

Let me break down the NOI drag a little differently, which I think will help you. Same-property NOI growth, let me go through the puts and takes: 2% to 2.5%. Base rent is going to be the largest positive contributor to that growth rate, in fact about the same range. Redevelopment contributions are going to be 50 to 75 basis points positive. The offsets are coming from two primary areas: bankruptcies, about 50 basis points of drag on announced bankruptcies, as well as the Manhattan assets we've spoken about today dragging us by about 30 basis points. That 80 basis points drag you asked about is tied to the commenced occupancy drag in the first quarter.

Thanks. Not sure if you've answered this with the previous line of questioning, but you said 2025 is setting up based on lease timing to be a disproportionate year of growth in NOI. Does that mean '24 should be disproportionately above your long-term 3% target?

I think you meant to say 2025 in your question, not 2024.

Yeah, we're not meeting our objectives in 2024 that we articulate on a long-term basis. And that we — frankly, hold ourselves accountable for that. In '25, yes, to the extent, and again, we're not giving '25 guidance, Linda. The extent to which we deliver what we see it delivering at the end of this year going into '25 and compressing that commenced rate, bringing that SNO pipeline back online, we should translate into above-average core operating earnings growth, all else being equal. And I stress all else being equal; we're going to have a bond to refinance again in '25. There are other elements to the plan that certainly incorporate, and will impact that result. But I think the idea and the direction you have in mind is correct.

And the other big part of all else being equal is that we can't control any geopolitical or economic uncertainty. But all else being equal, I absolutely agree. That's why I would come back to over the long term: two years isn't a long term, but it's an average. We expect to be in that 2.5% to 3% average same-property NOI growth.

That's very helpful. Thank you. And my second question is on the Rite Aid and Bed Bath & Beyond that contribute to the economic anchor occupancy decline. Can you just give us an update on where you are in various stages of signed leases versus working on backfill still?

Yeah, Linda, happy to answer that question. This is Alan. The team has made really great progress. I'll start with Bed Bath & Beyond: 9 of our 12 are executed. Many of those won't come online until later this year, but we have great retailers coming in like REI, RH outlet, LL Bean, Fresh Market, and TJ Maxx. There are some great users that are backfilling these spaces, and we've experienced rent spreads that exceeded what we anticipated, north of 40%, while also keeping our capital levels judicious. The remaining three are all in negotiation right now, so we are beyond the point of prospecting. We hope to wrap those up in relative short order and really have all of those back open and rent-paying. With respect to Rite Aid, we had 22 locations, including those that came through the UBP merger. Six of those have been rejected; five are closed, and one is in the closing process. A testament to how our team proactively gets in front of these, two of those six locations are already leased: one to a hardware store and one to a fitness operator. We’re actually pursuing the remaining four and will stay focused on the balance of that portfolio as you know, Rite Aid continues to go through that process as they haven't officially exited bankruptcy.

And how do we think about those rents for Rite Aid, are they sort of all over the map? Are they above or below market?

Yes, they are all over the map. However, I can tell you that we have double-digit certainly from a mark-to-market. Generally speaking, 15% to 20%, but there are some massive ones that can be in there and some that are flat. So I feel very good about the upside depending on those that we get back.

Thank you. There are no further questions at this time. I'd like to hand the floor over to Lisa Palmer for any closing comments.

Thank you all for your interest in Regency. Hope everyone has a great weekend. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.