Regency Centers Corp Q1 FY2026 Earnings Call

Greetings, and welcome to the Regency Centers Corporation First Quarter 2026 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Christy McElroy. Please go ahead.

Good morning, and welcome to Regency Centers' First Quarter 2026 Earnings Conference Call. Joining me today are Lisa Palmer, President and Chief Executive Officer; Mike Mas, Chief Financial Officer; Alan Roth, East Region President and Chief Operating Officer; and Nick Wibbenmeyer, West Region President and Chief Investment Officer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, including forward earnings guidance and future market conditions. These are based on the current beliefs and expectations of management and are subject to various risks and uncertainties. It is possible that actual results may differ materially from those suggested by these forward-looking statements we may make. Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically in our most recent Form 10-K and 10-Q filings. In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance. Our caution on forward-looking statements also applies to these presentation materials. As a reminder, given the number of participants we have on the call today, we respectfully ask that you limit your questions to one. Please rejoin the queue if you have additional follow-up questions. Lisa?

Thank you, Christy. Good morning, everyone, and thank you for joining us. We are off to an outstanding start to the year, building on the positive momentum from last year. In the first quarter, we delivered strong same-property NOI and earnings growth driven by robust operating fundamentals and accretive capital allocation. Our results demonstrate the durability of our portfolio, the strength of our platform and the execution of our team. Our tenants are performing well in our centers, supported by the resiliency and spending power of consumers in our strong suburban trade areas, as well as our focus on essential retail anchored by top-performing grocers. It is this combination of high-quality trade areas and our concentration of necessity-based, value-oriented and convenience retail that positions our portfolio to perform consistently, even in uncertain macroeconomic environments. We also continue to see significant momentum across our investments platform. Our track record of success in ground-up development is one of Regency's greatest differentiators and is a key driver of our external growth strategy. In an environment with very little new retail supply, our ability to source, execute and deliver high-quality developments across the country really sets Regency apart. Our project deliveries will translate into meaningful NOI contribution in 2026 and beyond, boosting total NOI growth and driving earnings and NAV accretion. As we look ahead, I'm really energized by our strong start to the year and by the opportunities in front of us. I want to reiterate just how distinct Regency's growth story is. Our portfolio of high-quality, grocery-anchored neighborhood and community centers located in some of the strongest trade areas in the country has consistently delivered durable cash flows across economic cycles. Our leading national development platform is creating meaningful value for shareholders at a time when few others can compete with our expertise, relationships and proven results. Our strong balance sheet gives us flexibility and the capacity to be opportunistic with low-cost and substantial access to capital. And most importantly, we have the best team in the business. With this foundation, Regency is exceptionally well positioned to continue delivering strong and sustainable growth for our shareholders.

Thank you, Lisa, and good morning, everyone. We delivered another excellent quarter to start the year, following what was a record-breaking year for us in 2025. The fundamentals across our portfolio remain strong, and I couldn't be more proud of our team's execution. Tenant demand continues to be robust across nearly all categories and regions, spanning both anchor and shop space. Grocers, restaurants, health and wellness concepts and off-price retailers are among the most active, but the breadth of engagement across our portfolio is really impressive. The availability of high-quality space is increasingly scarce, both at our centers and in our trade areas, and that dynamic is working in our favor. Our same-property percent leased, which is approaching 97%, was up 10 basis points over the fourth quarter. A sequential uptick in Q1 is seasonally unusual, and it really speaks to the strength of the demand we're experiencing and to the durability of our occupancy. Leased occupancy is now close to our prior peak, though I am confident further upside is achievable, particularly in anchor leasing, where we continue to have meaningful engagement with leading national retailers. What is especially encouraging is the nature of our activity today. We continue having success proactively leasing occupied space, upgrading merchandising, bringing in new and vibrant concepts and replacing outdated or underperforming uses. Our same-property commenced rate also increased 20 basis points in the quarter as we made meaningful progress commencing tenants within our SNO pipeline. The pipeline continues to be a significant tailwind to future NOI growth, representing approximately $42 million of incremental base rent. We achieved robust cash re-leasing spreads in the first quarter and cash spreads were near a record high. These results reflect our ability to achieve compelling mark-to-market rent increases in addition to embedding meaningful contractual rent steps into our leases. That success is the basis for our ability to drive strong, sustainable rent growth within our portfolio over the long term. Same-property NOI growth of 4.4% in the first quarter was reflective of these strong operating trends, along with the substantial progress we've made raising occupancy and completing redevelopment projects. In closing, the trend we are seeing in leasing activity, tenant sales, collections and foot traffic remained very favorable. We are positioned for success and continued growth ahead and I'm excited about what our team will accomplish.

Thank you, Alan, and good morning, everyone. We continue to have significant momentum within our investments platform, evident in an active first quarter of accretive investment activity. Our team is successfully executing on and delivering projects within our in-process pipeline, and we continue to source attractive new ground-up projects. During the first quarter, we completed $42 million of projects, including Oakley Shops at Laurel Fields, a Safeway-anchored neighborhood center we developed ground up in the Bay Area. Our team did an exceptional job bringing this project to fruition in less than 18 months, one of the quickest ground-up deliveries that I can recall. We also started another $73 million of new projects this quarter, including Crystal Brook Corner, a redevelopment on Long Island. We acquired this underutilized piece of real estate and are transforming it into a Whole Foods-anchored neighborhood center. This project demonstrates our ability to look at acquisition opportunities through a differentiated lens, leveraging Regency's platform, our relationships and our development expertise to drive near-term value creation. Our in-process pipeline now exceeds $600 million, with exceptional leasing momentum and blended returns above 9%. The team has been executing these projects on time and on budget, which I want to emphasize as a direct result of the substantial risk mitigation we undertake before we break ground. Within our ground-up development platform, we continue to see remarkable results. An example includes Ellis Village in Northern California, which we started in the second half of 2025. The project is already 100% leased with an anticipated anchor opening later this year. Our Sunbed and Stonebridge ground-up projects in the Northeast each celebrated Whole Foods openings during the first quarter, both with strong community reception. As Lisa discussed, ground-up development remains a substantial differentiator for Regency, and our brand as a developer has never been stronger. We are the only national developer of high-quality grocery-anchored shopping centers at scale in an environment of otherwise limited new supply. Our teams are actively sourcing new projects, and we continue to have visibility to a potential of more than $1 billion of project starts over the next three years. Leading grocers across the country remain engaged to expand with us and shop tenants are excited to be part of our projects. Landowners trust us to deliver given our proven track record and the strength of our grocery relationships, particularly among master plan developers, where our retail projects are providing a significant amenity and value to their communities. This positive momentum continues to enhance our success, strategically positioning us to capitalize on additional opportunities. We are creating real value for shareholders at meaningful spreads to market cap rates, and we are excited about the opportunities for continued growth in our investment platform.

Thank you, Nick. Good morning, everyone. Regency delivered another strong quarter to start the year, a testament to our team's continued execution on our strategy and the favorable conditions of our markets. Same-property NOI growth was 4.4% in the first quarter including 3.5% of base rent growth. Recall last quarter, we discussed that Q1 would be above and that Q2 would fall below our full year guidance range. With this quarter driven by the uneven nature of other income, and next quarter driven by a tough comp relative to last year's favorable expense reconciliation performance. Most importantly, base rent continues to grow at very healthy levels, benefiting from increasing rents, commencing our SNO pipeline and delivering on our accretive redevelopment projects. Looking through the variables in first and second quarters, we are maintaining guidance for full year same-property NOI growth of 3.25% to 3.75% as well as for growth in core operating earnings and NAREIT FFO per share each at 4.5% at the midpoint. We continue to expect total NOI growth north of 6%, reflecting meaningful contributions from ground-up development deliveries and the substantial acquisitions we completed last year. We did make a few minor assumption changes within our outlook. We modestly increased development and redevelopment spend as a result of increased starts expectations as well as our acquisitions guidance to now include known transactions. These changes reflect continued strong investment activity and support positive momentum in external growth and value creation. The strength of our balance sheet is an important element of this ability to accretively allocate capital. We have worked strategically over time to position the company with low leverage, strong liquidity and dependable access to attractively priced capital. In February, we issued $450 million of 7-year unsecured notes at a 4.5% coupon, achieving the lowest credit spread in Regency's history. This execution represents one of the most favorable cost of debt capital in the REIT sector and is a direct reflection of our A credit ratings from both Moody's and S&P. Leverage remains near the low end of our target range of 5 to 5.5x, and we have nearly full availability on our credit facility and our strong free cash flow generation allows us to fund our development pipeline with no current need to raise equity or sell properties. In closing, we are gratified by another strong quarter and look forward to continued success as our teams execute our differentiated strategy through the balance of the year. With that, we welcome your questions.

And our first question will come from Cooper Clark with Wells Fargo. Okay. With that, moving on to Michael Goldsmith with UBS.

Mike, can you walk us through the sort of the noncash revenue component you guided to $51 million for the year and the prorated expectation for the first quarter? If you split it by four, it would have been about $12.75 million for the first quarter. You came in at like $9.7 million-ish, so can you walk through what drives the difference there from the prorated number, the lumpiness that is natural with the noncash revenues, and how you expect the rest of the year to play out?

Michael, before you finish, for some reason, you're breaking up. If you could start from the beginning, that would be great.

Lisa, sorry about that. Is this any better? Great. Yes. So I want to walk through the noncash revenue component; you guided to $51 million for the year. So prorated that would have been—if you split it by four—probably $12.75 million for the first quarter. You came in at like $9.7 million-ish, so can you kind of walk through what drives the difference there from the prorated number, the lumpiness that is natural with noncash revenues, and how you expect the rest of the year to play out?

It's much better.

Thank you, Michael. I appreciate the question. As you just said, noncash can be uneven by nature and straight-lining our guidance range would have led to a slightly higher expectation for Q1, and there are a couple of things going on. One, we did make an adjustment to a single tenant lease where we moved that lease to a cash basis. So that, in effect, results in a reserve on straight-line rent that's booked in the quarter. That's probably the largest component driving that variance today. We haven't taken our eyesight off full year guidance, obviously at $51 million. And I'd also say last year, just as a reminder, you can get fits and starts with tenant outs and the acceleration of below-market rents. That can also be a driver of changes to the cadence of noncash. So just to make sure you keep a look out for that going forward. Let me quickly say another commercial for why we use core operating earnings to really tell the story of how we grow cash and cash flow at Regency: we eliminate noncash, we eliminate nonrecurring items. I think that core operating earnings number is really valuable as we think about the earnings potential of the company.

Our next question comes from Samir Khanal with Bank of America.

Maybe to start kind of high level, grocers are stable? I mean, I guess maybe provide color on small shop tenant health given the macro and higher prices. Talk about occupancy costs? And have you seen any differences across categories among the shop tenants, the discretionary retail or restaurants, given higher prices in the macro?

Thanks, Samir. I'll start, and then I'll have Alan cover specifics to our portfolio. But as you've heard us say many times, we are really well positioned to perform throughout economic cycles because of the format of our shopping centers: necessity, value and convenience perform even in tougher times. So we're well aware of the pressures on consumers with the rise in gas prices. There can be a trade-down effect, and Alan can add color with our foot traffic data. We start to see even more traffic at our centers as a result of that. And on top of that, layer in the trade areas in which we operate—our consumers are more resilient and more able to withstand these price increases and pressures. So our tenants are healthy; we're seeing that in every metric within the portfolio. I'll let Alan add some specifics.

To expand on Lisa's points about tenant health: the first place I look is tenant sales, and they do remain healthy within our portfolio. The next spot I look is collections, and we're continuing to be near record lows there. And then, as Lisa mentioned, foot traffic is very resilient. For Q1 results, foot traffic was up 2.3%. But to your point about recent macro environment and higher fuel prices, what does April look like? When we look at the portfolio in April, foot traffic is actually up 3%, more than it was in Q1 during this period of increased fuel prices. So we continue to feel good, and I would bring that back to Lisa's comment about the consumers and the trade areas in which we operate. We're going to continue to keep a watchful eye on things, but metrics we track remain certainly positive.

Moving on to Craig Mailman with Citi.

You guys bumped up expected starts a bit here. Can you talk about which projects are now slated to start this year and the overall leasing activity? And maybe anything else on the horizon that wasn't included in these new starts but could potentially start later this year—just talk about the overall environment for your different projects.

Craig, I appreciate the question. Let me start and then I'll give it to Nick real quick because I want to just clear up something. We guide on development spend, and we are highlighting that we have added visibility to additional starts that will drive that spend this year. But I want to be clear that our guidance is on spend, not starts. Nick will take it from there.

Yes, Craig. I appreciate the question. As we said in our opening remarks, we feel really good about our ground-up development program. As you've seen over the last three years, we've started just over $800 million. And as we look forward, we expect our investment platform to invest over $1 billion over the next three years. So you can see continued upward momentum as our team does a tremendous job uncovering these opportunities around the country. We continue to be bullish about that opportunity set and are raising our eyesight regarding what that spend will be based on an expectation of higher starts and previously anticipated activity.

We'll go next to Juan Sanabria with BMO Capital Markets.

Just piggybacking off Craig's question. On the greenfield new starts, you mentioned master-planned communities being a good source of opportunities for you. But just curious— with the uncertainty on single-family build-to-rent and potential temporary pausing by some developers for homes, has that changed the prospects of that line of business going forward for Regency's future development pipeline?

Yes, great question and insightful. The reality is our program to date has not been heavily involved in the build-to-rent type communities. The master-planned communities we are working with and continue to work with around the country are single-family for-sale communities and/or they include townhomes or apartment components. We haven't seen any impact to the master-planned communities we're working on in terms of their appetite and desire to continue to push forward to build retail within their communities at this point.

And Todd Thomas with KeyBanc Capital Markets.

Sticking with ground-up development, can you talk about the cadence of starts during the balance of the year and also discuss how yields are trending on new projects that you're underwriting relative to prior yields? Would future master-plan starts look similar or potentially have a different yield profile?

I appreciate the question, Todd. On timing, developments are lumpy because our focus is not just hitting a timeline; it is making sure we de-risk these opportunities before we close. We want to be fully through entitlements, have pre-leasing done with anchors, have drawings done and bids in hand, and have visibility to execute. That's a complicated process and we are often one phone call away from an outside delay. That means while the program is building, it will always be lumpy. That said, we continue to have good visibility to an increased amount of starts this year, which is why we increased our projected spend. Although lumpy and likely more back-end weighted this year, we still feel confident in the overall trajectory of that.

Let me double down on Craig's question as well. That guidance is spend, and I would consider that to be ratable throughout the year from a spend standpoint. Then, per Nick's comments, we do think starts are growing and will probably be more back-end loaded, which is setting us up for deliveries in 2027 and beyond.

And on the second half of your question about yields, I'll let Nick speak to that.

On yields, we're not changing our eyesight. As you've seen, our development yields are firmly in that 7% plus range, and that's where our expectations continue to be. We feel good about achieving those returns.

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

Alan, I appreciated your comment on the leasing pipeline. It looks like another strong year ahead with high lease rates as well as commenced occupancy. Your comment on the rent bumps you're embedding—I realize that's probably more on the small shop side—but has anything changed in terms of the leverage you have when it comes to those anchor leases? I realize many of these grocers have effectively flat leases with multiple option periods. Whether it's being able to take back control of the site earlier through shorter options, embedding greater escalators, can you talk about leverage on the negotiating side as it relates to anchors and where you're able to push rents there?

Thank you for the question. You're right that much of the rent-step progress has been on the shop side. To give you a stat, 90% of our new shop leasing included 3% or greater embedded rent steps, and about a quarter had 4% or greater. In terms of leverage on anchors, we're not seeing a dramatic shift in embedded steps on the anchor front, but there is still pricing power. That can show up as better control over work letters, lower tenant improvements, or getting more rent upfront—there are levers there for sure. We're not seeing options becoming meaningfully shorter right now. For us, we're willing to align as long as it's the right quality anchor retailer that is sustainable for our project. The pipeline is strong: we signed a public deal for a redevelopment in the first quarter, we signed a PGA Superstore, and we are bringing our first Terra's Life to a Virginia project that they're rapidly expanding throughout. And then the usual names—Ross, TJX, Burlington, Ulta, etc.—are active. It's robust. I feel really good about where those anchor transactions are. As I said in my opening remarks, that's where the real opportunity lies for us to get back to peak levels in driving continued occupancy.

I would add that it really comes down to supply and demand. When we reach peak occupancy and there's no space available for anchors, we have pricing power and more leverage. Right now there's limited availability, and as that continues to move in our favor, we'll incrementally have more pricing power and be able to push harder. But there also has to be a win-win: we have to consider their businesses and margins. I also believe as our retailers get more efficient—learning operational efficiencies through technology and artificial intelligence—that will enable them to pay more rent. I'm optimistic about that.

We'll go next to Handel St. Juste with Mizuho Securities.

This is Ravi Vaidya on the line for Handel. Hope you guys are doing well. Can you identify the tenant that was moved to a cash basis? Was that a bankruptcy? And how should we think about the current reserve range, especially since you've utilized less than 10 basis points so far of the current reserve?

Sure. I'm not going to name the tenant by name. It's one lease out of well over 9,000 leases where we made a judgment call on their ability to meet the terms of future lease obligations. Remember, they're still current and paying rent in the near term. Core operating earnings is unimpacted. This is an accounting treatment of future rent increases. From a ULI perspective, we had a really good quarter. We're operating below historical averages and plan to operate around to slightly below historical averages, and we're meeting that expectation today. So our outlook on ULI remains high and we feel confident about tenancy health. This is a different comment from bankruptcies—bankruptcies are move-outs. We still have some ongoing bankruptcy filings. There are breadcrumbs that could indicate we may come out of those fine, but we're not done with those. Bankruptcies are an uncertain process and we need more time for clarity; it's a normal part of our business.

Moving on to Floris Gerbrand Van Dijkum with Ladenburg Thalmann.

Good morning. Lisa, great to hear your voice. You've built over the last decade a track record as a best-in-class shopping center developer, which really differentiates your platform. How should we think about— as I recall, you also don't have a big land bank—how do you protect yourself from rising land values, which is a big input in developments? Maybe talk about your option strategy versus owning, and how long in advance do you typically work to get land under option before you start to activate developments?

Floris, thank you. I appreciate the recognition of our development platform. A lot of what Nick will say has to do with why we are successful: the team, the relationships, the experience and the track record. It's a virtuous cycle. I'll pass it over to Nick to provide more specifics on the mechanics of how we approach land and options.

For us, we are not driving a large land bank to support this development program. We work with land sellers, option their property and work through the process. As I articulated earlier, de-risking that process before we close is critical. A really hard part of the business is sitting down with landowners and having conversations about the value of their land and educating them. We do that every day. Given our track record, our access to information and retailer relationships, we win more than our fair share of those conversations. It's challenging and never easy, but our team is adept and that's why we've been successful.

Moving on to Ronald Kamdem with Morgan Stanley.

You showed the slide about the run rate for occupancy upside, which shows leased occupancy is already at peak but commenced hasn't. Do you think commenced occupancy can get to a new peak this year? And what kind of tailwind would that provide for same-store NOI going forward?

I appreciate you noticing that disclosure. Yes, we feel optimistic about the prospects for this portfolio in the current environment. We have set new records on percent leased and we have room to run on percent commenced. Our plan and expectation for the year is that we will continue to shrink the gap between leased and commenced. We will continue to drive outsized base rent growth as a result, and there will be some amplifying factor through recoveries as well. We think that will play through the balance of this year. Beyond that, we are an active asset manager and we aspire to invest in our portfolio through redevelopment. Sometimes that means managing vacancy and taking on vacancies. We are not leasing for occupancy alone; we are leasing to maximize NOI over the long run.

Ron, to add, we executed 1.5 million square feet in Q1 and our teams are full speed ahead. They hit the ground running and I'm really proud of what they accomplished. That's more GLA than we executed in Q1 of 2025 despite being at these peak levels. They'll continue to grind and find opportunities not just for vacant space but to lean into better operators and upgraded merchandising where we're leasing occupied space.

We'll go next to Hong Zhang with JPMorgan.

Could you touch on how you're viewing potentially tapping the equity market today, given that your stock price is higher than when you tapped last year?

We also have grown NOI since that time. We always take an opportunistic view of issuing equity, and currently we have more than enough balance sheet capacity and free cash flow to meet our needs. If we see an opportunity we can fund accretively with equity, we would take advantage of it. We have a good track record of issuing equity judiciously and accretively. So it's a tool in our toolbox that we will access when the opportunity presents itself.

We'll hear next from an analyst with Deutsche Bank.

Yes. I hope this is a fair question. You guys have been doing very well over a long period of time so people tend to expect more and more. You're having a great quarter and a solid outlook, but the stock is down today. So when people look at your stock relative to peers, they may see a premium valuation that is warranted, but they may question whether you can continue to outperform. What are investors possibly underestimating about your story that should give confidence you can sustain superior earnings growth that validates the premium valuation?

I learned from my predecessor that in the short term the market can be a weighing machine and in the long term it's a weighing machine. When you take the combination of what we refer to as our strategic advantages—the quality of our portfolio, the development platform, the balance sheet and our team—that combination is truly unique. Over the long term, I have 100% confidence that we will be at or near the top of the sector in same-property NOI growth. If you look back five to ten years, you'll see that has been the case, and we've used less capital than the rest of the sector to get that growth. If you look at investments and the accretion from those investments, whether funded by equity or debt, the returns are at or near the top of the sector. Because of those four things—quality portfolio, strong development platform, balance sheet to fund it, and people to execute it—I believe the strategy will continue to deliver over the long term.

And we'll hear next from Cooper Clark with Wells Fargo.

That is great to hear. I was hoping you could talk about portfolio trends you've historically seen during periods of higher oil prices and the impact that has on traffic levels and consumer spending trends.

The last time we saw gas prices at these levels was a very different period, including during the pandemic, so it's not a direct historical comparison. Generally, in my 30 years at the company in the modern era of Regency, we've seen same-property NOI decline notably twice: during the global financial crisis and during COVID. Our property type—the format of our neighborhood and community shopping centers—is defensive and produces consistent, durable, steady cash flows through cycles. When you think about the quality of the portfolio, the format of the shopping centers and the trade areas in which we operate, we are able to grow through varying macro environments, and that's our expectation going forward.

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

Thank you all. Appreciate your time, and thank you to the team as well. Have a great day.

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