The paragraph serves as the introduction to Regency Centers Corporation's Fourth Quarter 2024 Earnings Conference Call. Christy McElroy, the host, introduces key executives participating in the call and mentions that the discussion will include forward-looking statements about the company's future business and financial outlook, which are subject to risks and uncertainties. The paragraph highlights that actual results may differ from these predictions due to various factors, which are detailed in the company's SEC filings. Additionally, non-GAAP financial measures will be discussed, with relevant GAAP measures available on the company's Investor Relations website. A presentation with further information and disclosures is also available online.

The paragraph highlights Regency's exceptional quarterly and annual performance, driven by strong tenant demand and strategic execution. It mentions significant growth in same property NOI, earnings, base rent, lease rates, and dividends. Regency has taken advantage of limited supply growth in its sector by focusing on development, with $250 million in new projects for the second consecutive year and nearly $500 million in ongoing projects. This development platform is considered a key differentiator. For 2024, Regency plans over $500 million in accretive investments through development, acquisitions, and share repurchases while maintaining a strong balance sheet.

The paragraph highlights the successful performance of Regency in 2024, driven by significant leasing activity and robust rent growth. The company achieved record leasing volumes, signing nearly 2,000 leases covering over 9.4 million square feet. This led to record high same property and shop occupancy lease rates of 96.7% and 94.1%, respectively. Regency also saw a 100 basis point increase in same property commence rates in Q4 and maintained a strong tenant demand environment across various sectors. The company has an executed lease pipeline supporting future rent commencement, and cash rent spreads improved significantly throughout the year, reaching approximately 11% by the fourth quarter.

The article highlights Regency's successful year, with nearly 9% renewal rent spreads, the highest in over fifteen years, and approximately 20% GAAP rent spreads, indicating a strong market and tenant health. Same property NOI growth was 3.6% for the year, aided by improved expense recovery. The company's credit risk remains manageable despite retail bankruptcies, thanks to strategic merchandising and asset management. Looking ahead, Regency is well-positioned for continued success due to strong retail demand and limited supply. The company also initiated $260 million in development projects in 2024, marking the highest level of starts in almost two decades.

The paragraph highlights Regency's successful expansion of its project pipeline, completing over $230 million in projects in 2024, including Buckhead Landing in Atlanta. The company's development projects, many currently underway, promise significant returns with high occupancy rates. Regency attributes its success to its expertise, industry relationships, and capital access, with a positive outlook on future opportunities. There is increased activity in acquisitions, with recent purchases in Austin and Nashville, enhancing Regency's market presence.

The paragraph outlines Regency's strong financial performance and positive outlook. Regency reported a robust quarter and a successful year, with core operating earnings growing over 5%, and same property NOI increasing by 3.6%, primarily driven by base rent growth. They expect this positive trend to continue, with 2025 earnings guidance indicating NAREIT FFO growth between $4.52 and $4.58 per share, representing nearly 6% growth. The main driver of earnings growth is projected to be the same property NOI, expected to grow between 3.2% and 4%, supported by factors like contractual rent, release spreads, and higher occupancy, including contributions from redevelopment initiatives. Additionally, the integration of properties from a past merger is noted as these now contribute to the same property pool.

The paragraph discusses Regency's financial outlook and strategy amidst increasing bankruptcy filings. Despite these challenges, their credit loss expectation remains stable at 75 to 100 basis points of total revenues. The company emphasizes its resilient portfolio and effective risk management. In the fourth quarter, Regency raised $100 million in equity to enhance liquidity and balance sheet capacity, with ample funding sources available. Their strong cash flow and substantial line of credit further support financial stability. With low leverage and no immediate debt maturities, Regency is well-positioned to capitalize on growth opportunities and enhance shareholder value. A Q&A session is about to begin, with instructions provided for participants.

In the paragraph, Andrew Reale from Bank of America asks about the $250 million development and redevelopment spending planned for the current year and seeks details on projects starting in 2025, along with expected yields. Nick Wibbenmeyer responds, confirming a clear forecast for the ongoing projects started in 2023 and 2024, which will continue into 2025. They also anticipate finding an additional $250 million for new projects in 2025. Wibbenmeyer discusses yield expectations, noting steady increases with ground-up development yields at over 7% and redevelopment yields in the low double digits, resulting in a blended yield in the high single digits.

In the paragraph, Mike Mas explains the drivers of earnings and guidance for 2025. The primary contributor to earnings growth is the same-property net operating income (NOI), expected to increase between 3.2% and 4%. Additional boosts come from accretive capital allocation through transactions, developments from the pipeline, and share repurchases from the previous year. However, there are headwinds due to interest rate expenses, particularly from a bond placed in 2024. Despite these challenges, there is a positive contribution from general and administrative (G&A) expenses due to the successful growth of the development business, which allows for increased overhead capitalization. The growth rate in G&A capitalization is expected to plateau in 2025.

The paragraph features a Q&A session where Michael Goldsmith from UBS asks about the thought process behind setting a credit loss reserve of 75 to 100 basis points. Mike Mas explains that this figure combines uncollectible lease income (historically around 50 basis points, but only 30 in 2024) and estimated lost base rent due to bankruptcy filings, making the total range speculative but informed by recent filings. Alan Roth adds that their limited exposure to financial risk reflects a careful management strategy and stable tenant health.

In the paragraph, a discussion is taking place about the company's performance and outlook. Despite a lower AR (accounts receivable), both sales and traffic are increasing, while the supply is limited. Many retailers are struggling to meet growth objectives, creating an opportunity for the company to attract retailers by offering prime real estate. The focus of the analysis is on the same-store NOI (Net Operating Income) range for the year, which is better than anticipated. Although slightly wider than last year's guidance, the company, represented by Mike Mas, explains that the range is consistent with historical patterns, influenced by factors such as move-outs and credit loss. The overall positive outlook is attributed to a strong leasing performance in the fourth quarter.

The paragraph discusses the company's investment strategy, highlighting that their primary focus remains on development and redevelopment projects, despite recent inquiries about acquisitions. Lisa Palmer emphasizes that their investment approach has not changed, and they will pursue acquisitions only if they align with their objectives. Nick Wibbenmeyer notes a strong investor interest in the types of centers they are targeting, particularly grocery-anchored neighborhood and community centers. While the company is prioritizing development, they remain open to acquisition opportunities that meet their criteria.

The paragraph discusses a company's active involvement in the transactions market, focusing on acquiring opportunities with strong growth potential and creative funding. The company feels positive about its 2025 prospects, particularly in Nashville, intending to provide more details next quarter. They mention achieving a desirable yield north of 7% on new developments and targeting a 150 basis point spread on core grocery-anchored assets. The prioritization of investments is on developments that promise immediate value creation. In response to Floris van Dijkum's question about capital allocation, the company is involved in ground-up developments further from city centers (like Cheshire and Oakley) but gains higher returns from redevelopments in first-ring suburbs. They also indicate having a significant pipeline of redevelopment opportunities in these areas.

In the paragraph, Nick Wibbenmeyer discusses his company's development and redevelopment efforts, emphasizing their focus across all geographic territories, including infill and suburban areas. While they are open to mixed-use projects, their primary focus remains on core retail. They intend to partner with third parties for more complex mixed-use projects, particularly those involving horizontal mixed-use elements in new developments. Overall, the company aims to continue growing through strategic redevelopment and selective partnerships.

In the paragraph, Juan Sanabria from BMO Capital Markets asks about builder economic occupancy expectations for 2025 and the impact on same-store versus redevelopment potential. He also inquires about comments on growth rates potentially leveling off in 2025, especially in relation to capitalized interest offsetting general and administrative (G&A) pressures due to inflation. Mike Mas responds, stating that while they expect peak occupancy and anticipate some tenant churn, they aim to increase rent-paying occupancy by 75 basis points or more in 2025, which is crucial for growth. This growth is expected to quickly impact their average numbers and support their long-term growth outlook on a same-property basis.

The paragraph discusses the anticipated impact of redevelopment on the company's property group rate, which is expected to exceed 100 basis points. The developments have been progressing well, with good visibility into their outcomes. The conversation shifts to the General and Administrative (G&A) expenses, highlighting significant benefits from the company's growing development pipeline over the past few years, which has led to increased capitalized overhead. This increase is expected to continue meaningfully into 2025, after which growth will plateau as the team reaches full capacity. The company aims to sustain $150 million in project starts, which will align capitalized overhead growth with normal G&A growth rates. Lisa Palmer emphasizes that while growth will not stop, it will stabilize and continue at a normal pace. The operator then opens the floor for a question from Todd Thomas of KeyBanc Capital Markets.

In the paragraph, Alan Roth addresses questions about renewal and leasing spreads, attributing the elevated spreads to strong sales and limited supply. He notes the positive momentum in both new leasing spreads and gap rent spreads, with a reported 16% increase in new leasing spreads and over 30% in gap spreads for new transactions, highlighting sustainable growth. Regarding tenant retention for 2025, Roth mentions a historical retention rate of 70-75% and expresses confidence in maintaining this rate. This strategy allows them to keep successful retailers while cycling through deals for business relevance. Michael Gorman, with BTIG, is then introduced to ask the next question.

The paragraph discusses competition in the development sector, noting that while construction costs are moderating and retailer demand remains strong, there is increased interest from institutional capital and local developers. Nick Wibbenmeyer acknowledges that major retailers like HEB, Publix, and Kroger are active in self-development but maintains strong relationships with them to find collaboration opportunities. He identifies local developers as significant competition, as they have become more active in recent months. However, he notes that these local competitors face challenges such as establishing relationships, acquiring expertise, and securing capital, which are essential to succeed in the development space. Despite a slight increase in local competition, Nick suggests that his company remains well-positioned due to their established capabilities.

The paragraph discusses the positive outlook for growth and development in a fragmented industry, emphasizing the benefits of having a national platform. Lisa Palmer expresses confidence in their ability to capitalize on opportunities due to their strong positioning and scale. Wes Golladay from Baird asks about the development pipeline's growth potential, noting its current size relative to enterprise value. Lisa Palmer responds by highlighting their focus on a sustainable $150 million annual grocery-anchored development program, crediting the team's hard work. She notes that opportunity availability has been the main constraint but is optimistic about expanding further if opportunities increase, supported by a strong balance sheet.

The paragraph discusses the credit loss assumptions related to potential rent loss from tenant bankruptcies. Manoj, speaking on behalf of Steve Sakwa from Evercore ISI, asks about the conservativeness and base assumptions behind a 25-50 basis points allowance for loss. Mike Mas responds that the assumptions are derived from a detailed, ground-up process that assesses risk on a tenant-by-tenant basis. They consider the likelihood of sites being rejected through bankruptcy court and aim to provide a practical outlook on how they expect to end the year.

The paragraph features a discussion during an earnings call, where Ki Bin Kim from Truist Securities commends the company for keeping their same store operating expenses nearly flat year over year despite a challenging economic environment. Mike Mas attributes this success to the diligent work of their operations team and effective contract negotiations. Ki Bin Kim believes the tenants likely appreciate this effort. Following this, Paulina Roxas from Green Street raises a broader question about the sensitivity of the business and the retail sector to uncertainties in immigration policies and tariffs, though she does not ask for a specific stance on these policies.

In the paragraph, Lisa Palmer discusses the expected impact of economic cycles on Regency's portfolio. She believes that due to Regency's strong positioning, including resilient trade areas, high-quality centers, and a focus on necessity and value-driven categories, the company is unlikely to experience a material impact. The tenants have been resilient and adaptable, managing to survive difficult times and maintain strong sales, which allows them to afford rent and continue attracting consumers. While acknowledging that Regency and its tenants are not immune to economic challenges, Palmer is optimistic about the future impact being minimal.

The paragraph discusses a company that continues to grow sales and generate revenue despite squeezed margins. They successfully manage challenges such as rising construction and labor costs, while achieving their development goals and returns. Paulina Roxas and Linda Tsai are part of a Q&A session where Tsai inquires about the stability of development yields given the cost fluctuations. Nick Wibbenmeyer responds, emphasizing the company's focus on maintaining yields and effectively managing unpredictability in costs. He highlights the company's track record of outperforming expectations through careful project management and risk mitigation.

In the paragraph, the speaker discusses the process of managing real estate before starting construction, including conducting due diligence, preparing drawings, and acquiring bids. They mention the need to properly account for potential cost increases due to uncertain inputs, a process they've regularly dealt with and expect to continue. The speaker compliments the team's successful handling of these challenges. Later, during a Q&A session, Mike Mueller from JPMorgan asks if more occupancy can be achieved at 94.1% leased. Alan Roth and Lisa Palmer express confidence in their teams' ability to maximize leasing, emphasizing ongoing efforts to optimize real estate quality for shareholders. The operator confirms no further questions, allowing Lisa Palmer to give closing remarks.

The speaker expresses gratitude to the Regency team for their exceptional results and anticipates an even better year in 2025. They also thank the participants for their time, and the operator concludes the conference, inviting participants to disconnect.

This summary was generated with AI and may contain some inaccuracies.