REGENCY CENTERS CORP (REG) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executing on our Strategy

During the year ended December 31, 2024, we had Net income attributable to common shareholders of $386.7 million as compared to $359.5 million during the year ended December 31, 2023 with the increase primarily related to the 2023 acquisition of UBP.

During the year ended December 31, 2024:

•
Our Pro-rata same property NOI, excluding termination fees, grew 3.1%, primarily attributable to improvements in base rent from increases in year over year occupancy rates, contractual rent steps in existing leases, and positive rent spreads on new and renewal leases.

•
We executed 2,032 new and renewal leasing transactions representing 9.9 million Pro-rata SF with positive rent spreads of 9.5% during 2024, compared to 1,839 such transactions representing 6.9 million Pro-rata SF with positive rent spreads of 10.0% in 2023. Rent spreads are calculated on all executed leasing transactions for comparable Retail Operating Property spaces, including spaces vacant greater than 12 months.

•
At December 31, 2024, our total property portfolio was 96.3% leased while our same property portfolio was 96.7% leased, compared to 95.1% and 95.7%, respectively, at December 31, 2023.

We continued our development and redevelopment of high quality shopping centers:

•
Estimated Pro-rata project costs of our current in process development and redevelopment projects totaled $497.3 million compared to $468.1 million at December 31, 2023.

•
Development and redevelopment projects completed during 2024 represented $236.6 million of estimated net project costs, with an average stabilized yield of 8.0%. A stabilized yield for development and redevelopment projects represents the incremental NOI (estimated stabilized NOI less NOI prior to project commencement) divided by the total project costs.

We engaged in successful capital markets transactions and related activity that enabled us to maintain liquidity and the financial flexibility to cost effectively fund investment opportunities and debt maturities:

•
We received a credit rating upgrade to A3 with a stable outlook from Moody's Investors Service, and S&P Global upgraded our outlook to 'Positive' and affirmed the Company's BBB+ credit rating.

•
On January 8, 2024, we priced a public offering of $400 million of senior unsecured notes due in 2034, with a coupon of 5.25% . We used a portion of the net proceeds to reduce the outstanding balance on the Line and invested the remaining net proceeds in certificates of deposit and short-term U.S. Treasury mutual funds until required for general corporate purposes including the repayment of outstanding debt, as further described below. All such investments matured within the year.

•
On June 17, 2024, we repaid $250 million of maturing senior unsecured notes.

•
On August 12, 2024, we priced a public offering of $325 million of senior unsecured notes due in 2035, with a coupon of 5.1%. We used the net proceeds from this offering to reduce the outstanding balance on the Line.

•
We have $101.6 million of secured loans maturing during the next 12 months, including Regency's pro-rata share of maturities within our unconsolidated real estate partnerships, which we intend to refinance or pay-off as they mature.

•
At December 31, 2024, we had $1.4 billion available on the Line, which expires on March 23, 2028 unless we exercise the available options to extend the maturity for two additional six-month periods, in which case the term will be extended in accordance with any such option exercise.

•
During November and December 2024, we entered into forward sale agreements with respect to 1,339,377 shares that were purchased in several tranches at a weighted average offering price of $74.66 per share before any underwriting discount and offering expenses. These shares are pledged under forward sale agreements and must be settled within one year of their trade dates, which vary by agreement and are expected to result in net proceeds of approximately $100 million. Proceeds from the issuance of shares are expected to be used to fund acquisitions of operating properties, to fund developments and redevelopments, and for general corporate purposes. No shares have been settled through December 31, 2024.

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Leasing Activity and Significant Tenants

We believe our high-quality, neighborhood and community shopping centers located in suburban trade areas with compelling demographics create attractive spaces for retail and service providers to operate their businesses.

Pro-rata Percent Leased

The following table summarizes Pro-rata percent leased of our combined consolidated and unconsolidated shopping center portfolio:

Our percent leased increased primarily due to favorable leasing activity in both our Anchor and Shop Space categories during 2024.

Pro-rata Leasing Activity

The following table summarizes leasing activity, including our Pro-rata share of activity within the portfolio of our real estate partnerships (totals as a weighted-average PSF):

The weighted-average base rent PSF on signed Shop Space leases during 2024 was $38.92 PSF, which is higher than the weighted average annual base rent PSF of all Shop Space leases due to expire during the next 12 months of $35.98 PSF. New and renewal rent spreads, compared to prior rents on these same spaces leased, were positive at 9.5% for the 12 months ended December 31, 2024, compared to 10.0% for the 12 months ended December 31, 2023.

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Diversification and Concentration of Tenant Risk

We seek to reduce our risk by limiting concentration. For example, we utilize geographic diversification, as described in "Item 2. Properties" of this Report, and also seek to avoid dependence on any single property, market, or tenant. Based on percentage of annualized base rent, the following table summarizes our most significant tenants, of which four of the top five are grocers:

(1)
Includes Regency's Pro-rata share of unconsolidated properties and excludes those owned by anchors.

(2)
In October 2022, Kroger Co. and Albertsons Companies, Inc. announced a proposed merger, and in September 2023, an agreement for a separate transaction was announced to divest certain assets of each company to a third party, C&S Wholesale Grocers. The proposed merger was terminated in the fourth quarter of 2024 after adverse court rulings that enjoined the transaction primarily due to antitrust issues.

Bankruptcies and Credit Concerns

Our management team devotes significant time to researching and monitoring consumer preferences and trends, customer shopping behaviors, changes in delivery methods, shifts to e-commerce, and changing demographics in order to anticipate the challenges and opportunities impacting our industry. We seek to mitigate potentially adverse impacts through maintaining a high quality portfolio, diversifying our geographic and tenant mix, replacing less successful tenants with stronger operators, anchoring our centers with market leading grocery stores that drive customer traffic, and investing in suburban trade areas with compelling demographic populations benefiting from high levels of disposal income. The potential for a recession and the severity and duration of any economic downturn could negatively impact our existing tenants and their ability to continue to meet their lease obligations.

Although base rent is derived from long-term lease contracts, tenants that file for bankruptcy generally have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, in a tenant bankruptcy situation it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to adjudicate our claim and significant downtime to re-lease the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files for bankruptcy and rejects its leases, we could experience a significant reduction in our revenues. As of December 31, 2024, the tenants who are currently in bankruptcy and which continue to occupy space in our shopping centers represent an aggregate of 0.7% of our Pro-rata annual base rent with no single tenant exceeding 0.5% of Pro-rata annual base rent.

For a discussion and analysis of the year ended December 31, 2023, compared to the same period in 2022, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 16, 2024.

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Results of Operations

The results of operations for the year ended December 31, 2024, include a full year of results from our acquisition of UBP on August 18, 2023 as compared to a partial year in 2023.

Comparison of the years ended December 31, 2024 and 2023:

The changes in revenues are summarized in the following table:

Lease income increased by $127.4 million primarily due to the following:

•
$89.5 million increase in Base rent, mainly driven by the following:

o
$63.0 million increase resulting from the acquisition of UBP;

o
$22.5 million increase resulting from same properties, including:

▪
$15.1 million increase due to increases from occupancy, rent steps in existing leases, and positive rental spreads on new and renewal leases; and

▪
$7.4 million increase due to redevelopment projects that commenced operations in 2024.

o
$6.5 million increase from acquisitions of other operating properties in 2024 and 2023;

o
$1.9 million increase from rent commencements at completed development properties; partially offset by

o
$4.4 million decrease due to dispositions of operating properties.

•
$33.4 million increase in contractual Recoveries from tenants which represents their proportionate share of the operating, maintenance, insurance, and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased, mainly from the following:

o
$23.5 million increase from the acquisition of UBP;

o
$8.6 million increase from same properties primarily due to higher operating costs in the current year coupled with higher expense recovery rates;

o
$2.3 million increase driven by the acquisition of other operating properties in 2023 and 2024 and rent commencements at development properties; partially offset by

o
$1.0 million decrease from dispositions of operating properties.

•
$2.8 million change in Uncollectible lease income primarily driven by elevated collections in 2023 of previously reserved amounts, which reduced our adjustment in the comparative period.

•
$3.0 million increase in Other lease income primarily due to:

o
$5.1 million increase driven by acquisition of UBP; partially offset by

o
$2.1 million decrease mainly due to lease termination fee income recognized in the comparative period.

•
$9.5 million increase in Straight-line rent mainly due to:

o
$4.3 million due to timing and degree of contractual rent steps and new lease commencements within same properties;

o
$3.4 million increase from the acquisition of UBP, and

o
$1.8 million increase from lease commencements at development properties and acquisitions of other operating properties.

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•
$6.0 million decrease in Above and below market rent, net primarily due to:

o
$8.9 million decrease from same properties mainly driven by accelerated below market rent amortization from an early tenant move-out in 2023; partially offset by

o
$2.9 million increase from the acquisition of UBP and other operating properties.

Other property income increased by $3.1 million primarily due to business interruption insurance proceeds received in 2024.

There were no significant changes in Management, transaction, and other fees.

Changes in our operating expenses are summarized in the following table:

Depreciation and amortization increased by $42.4 million, mainly due to the following:

•
$33.4 million increase from the acquisition of UBP;

•
$6.4 million increase from acquisitions of other operating properties and development properties becoming available for occupancy;

•
$3.2 million increase from same properties mainly driven by the timing of capital expenditures being placed in service within our redevelopment projects and accelerated amortization of certain early tenant move-outs; partially offset by

•
$1.1 million decrease from dispositions of operating properties.

Property operating expense increased by $19.4 million, mainly due to the following:

•
$18.1 million increase from the acquisition of UBP; and

•
$1.3 million increase from same properties primarily attributable to higher recoverable common area maintenance and other tenant-related costs.

Real estate taxes increased by $18.9 million, mainly due to the following:

•
$14.9 million increase from acquisition of UBP; and

•
$3.5 million net increase from same properties primarily due to increases in real estate tax assessments across the portfolio.

•
$1.2 million increase from the acquisitions of other operating properties and development properties; offset by

•
$0.7 million decrease from dispositions of operating properties.

General and administrative costs increased by $3.7 million, mainly due to the following:

•
$6.9 million increase in compensation costs primarily driven by salary increases and performance-based incentive compensation;

•
$1.6 million increase primarily attributable to higher costs in technology related spending and professional fees;

•
$0.5 million increase due to changes in the value of participant obligations within the deferred compensation plan, which were attributable to increases in the market values of those investments recognized in Net investment income; partially offset by

•
$5.3 million change in overhead capitalization due to the number, timing and status of our development and redevelopment projects.

Other operating expenses increased by $1.4 million, mainly due to the acquisition of UBP.

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Changes in Other expense, net are summarized in the following table:

Interest expense, net increased by $25.9 million primarily due to the following:

•
$32.4 million increase in Interest on notes payable is primarily due to:

o
$21.8 million increase due to a higher weighted average outstanding balance, coupled with incrementally higher weighted average contractual interest rates, and

o
$10.6 million increase related to the loans assumed with the UBP acquisition;

•
$1.7 million increase in Interest on unsecured credit facilities is primarily due to a higher weighted average outstanding balance under our Line coupled with incrementally higher weighted average contractual interest rates; partially offset by

•
$7.7 million increase in interest income primarily due to maintaining higher levels of excess cash in short term investments.

Provision for impairment of real estate of $14.3 million was recognized in 2024 related to the sale of one operating property and the change in expected hold period of another operating property.

During 2024, we recognized gains on sale of $34.2 million mainly from the sale of five operating properties and recognition of two sales type leases. During 2023, we recognized gains on sale of we recognized gains on sale of $0.7 million from three land parcels.

There were no significant changes in Loss (gain) on early extinguishments of debt, Net investment income and Equity in income of investments in real estate partnerships.

The following represents the remaining components that comprise Net income attributable to common shareholders and unit holders:

The $3.1 million increase in Income attributable to noncontrolling interests is mainly due to the acquisition of UBP.

The $8.6 million increase in Preferred stock dividends is related to the preferred stock issued in connection with the UBP acquisition. The current period includes a full year of dividends as compared to a partial year in 2023, as the UBP acquisition was completed on August 18, 2023.

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Supplemental Earnings Information on Non-GAAP Measures

We use certain non-GAAP measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the operating results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated real estate partnerships, when read in conjunction with our reported results under GAAP. We believe presenting our Pro-rata share of operating results, along with other non-GAAP measures, may assist in comparing our operating results to other REITs. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP measures to determine how best to provide relevant information to the public, and thus such reported non-GAAP measures could change. See "Non-GAAP Measures" in "Item 1. Business" for additional information regarding the definition of and other information regarding the non-GAAP measures we present in this Report.

We do not consider non-GAAP measures as an alternative to financial measures determined in accordance with GAAP, rather they supplement GAAP measures by providing additional information we believe to be useful to our shareholders. The principal limitation of these non-GAAP measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our Consolidated Financial Statements. In addition, they reflect the exercise of management's judgment about which expense and income items are excluded or included in determining these non-GAAP measures. In order to compensate for these limitations, reconciliations of the non-GAAP measures we use to their most directly comparable GAAP measures are provided, including as set forth below. Non-GAAP measures should not be relied upon in evaluating the financial condition, results of operations, or future prospects.

Pro-rata Same Property NOI:

Pro-rata same property NOI, excluding termination fees/expenses, increased $27.8 million from the following major components:

Total real estate revenue increased by $31.2 million, on a net basis, as follows:

•
Base rent increased by $26.3 million due to rent steps in existing leases, positive rental spreads on new and renewal leases, and increases in occupancy, as well as redevelopment projects completing and operating.

•
Recoveries from tenants increased by $9.0 million due to increases in recoverable expenses, expense recovery rates and increased occupancy.

•
Termination fees decreased by $3.0 million due to higher termination fees recognized in 2023 due to early tenant move outs.

•
Uncollectible lease income adjustment decreased by $3.7 million primarily driven by favorable collections in 2023 of previously reserved amounts, reducing our adjustment in the comparable period.

•
Other lease income increased by $1.1 million primarily due to sustainability income and other fees.

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•
Other property income increased by $1.5 million primarily due to business interruption insurance proceeds received in 2024.

Total real estate operating expenses increased by $6.4 million, on a net basis, as follows:

•
Operating and maintenance increased by $1.7 million primary due to increases in common area maintenance and other tenant-recoverable costs.

•
Real estate taxes increased by $4.2 million primary due to an increase in real estate assessments across the portfolio.

Reconciliation of Pro-rata Same Property NOI to Net Income Attributable to Common Shareholders:

Our reconciliation of Net income attributable to common shareholders to Same Property NOI, on a Pro-rata basis, is as follows:

(1)
Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interests.

(2)
Includes non-NOI income earned and expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.

Same Property Roll-forward:

Our same property pool includes the following property count, Pro-rata GLA, and changes therein:

(1)
SF adjustments arising from re-measurements or redevelopments.

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Nareit FFO, Core Operating Earnings and AFFO:

Our reconciliation of net income attributable to common shareholders to Nareit FFO, to Core Operating Earnings, and to AFFO is as follows:

(1)
Includes Regency's consolidated entities and its Pro-rata share of unconsolidated investment partnerships, net of Pro-rata share attributable to noncontrolling interests.

Liquidity and Capital Resources

General

We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. A significant portion of our cash from operations is distributed to our common shareholders in the form of dividends in order to maintain our status as a REIT.

Except for $200 million of private placement debt, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership, its subsidiaries, or by our real estate partnerships. The Operating Partnership is a co-issuer and a guarantor of the $200 million of outstanding debt of our Parent Company. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units.

We continually assess our available liquidity and our expected cash requirements, including monitoring our tenant rent collections. We have access to and draw on multiple financing sources to fund our operations and our long-term capital needs, including the requirements of our in process and planned developments, redevelopments, other capital expenditures, and the repayment of debt. We expect to meet these needs for the next 12 months and beyond by using a combination of the following: cash flow from operations after funding our common stock and preferred stock dividends, borrowings from our Line, proceeds from the sale of real estate, mortgage loan and unsecured bank financing, distributions received from our real estate partnerships, and when the capital markets are favorable, proceeds from the sale of equity securities or the issuance of new unsecured debt. We continually evaluate alternative financing options, and we believe we can obtain new financing on reasonable terms, although likely at higher interest rates than that of our debt currently outstanding, due to the current interest rate environment.

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On January 8, 2024, we priced a public offering of $400 million of senior unsecured notes due in 2034 (the "January 2024 Notes") under our existing shelf registration statement filed with the SEC. The January 2024 Notes were issued at 99.617% of par value with a coupon of 5.25%, and will mature on January 15, 2034. Additionally, on August 12, 2024, we priced a public offering of $325 million of senior unsecured notes due in 2035 (the "August 2024 Notes") under our existing shelf registration statement filed with the SEC. The August 2024 Notes were issued at 99.813% of par value with a coupon of 5.10%, and will mature on January 15, 2035.

We redeemed $250 million of senior unsecured notes that matured in June 2024, and our next maturity of senior unsecured notes occurs in November 2025. We have $101.6 million of secured loan maturities during the next 12 months, including Regency's pro-rata share of maturities within our unconsolidated real estate partnerships, which we intend to refinance or pay-off as they mature. Based upon our available cash balance, sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs for the next year, although, in the longer term, we can provide no assurances.

In addition to our $56.3 million of unrestricted cash, we have the following additional sources of capital available:

(1)
During November and December 2024, we entered into forward sale agreements with respect to 1,339,377 shares that were purchased in several tranches at a weighted average offering price of $74.66 per share before any underwriting discount and offering expenses. These shares are pledged under forward sale agreements and must be settled within one year of their trade dates, which vary by agreement and are expected to result in net proceeds of approximately $100 million. After giving effect to this forward equity offering as of December 31, 2024, $400 million of common stock remains available for issuance under the ATM program authorized by the Company's Board of Directors, which is subject to change in the discretion of the Board.

(2)
Net of letters of credit issued against our Line.

(3)
The Company has the option under its Line to extend the maturity for two additional six-month periods, subject to the terms of the Line.

The declaration of dividends is determined quarterly by our Board of Directors. On February 4, 2025, our Board of Directors:

•
Declared a common stock dividend of $0.705 per share, payable on April 2, 2025, to shareholders of record as of March 12, 2025;

•
Declared a dividend on the Series A Preferred Stock, which will be paid at a rate of $0.390625 per share on April 30, 2025. The dividend will be payable to holders of record of the Series A Preferred Stock as of the close of business on April 15, 2025; and

•
Declared a dividend on the Series B Preferred Stock, which will be paid at a rate of $0.367200 per share on April 30, 2025. The dividend will be payable to holders of record of the Series B Preferred Stock as of the close of business on April 15, 2025.

While future dividends will be determined at the discretion of our Board of Directors, we plan to continue paying an aggregate amount of distributions to our stock and unit holders, that, at a minimum, meet the requirements to continue qualifying as a REIT for federal income tax purposes. We have historically generated sufficient cash flow from operations to fund our dividend distributions. During the years ended December 31, 2024 and 2023, we generated cash flows from operating activities of $790.2 million and $719.6 million, respectively, and paid $507.0 million and $458.8 million in dividends to our common and preferred stock and unit holders, in the same respective periods.

We currently have development and redevelopment projects in various stages of planning, design and construction, along with a pipeline of potential projects for future development or redevelopment. After funding our common and preferred stock dividend payments in January 2025, we estimate that we will require capital during the next 12 months of approximately $544.9 million related to leasing commissions, tenant improvements, in-process developments and redevelopments, capital contributions to our real estate partnerships, and repaying maturing debt. These capital requirements are being impacted by inflation resulting in increased costs of construction materials, labor, and services from third party contractors and suppliers. In response, we have implemented mitigation strategies such as entering into fixed cost construction contracts, pre-ordering materials, and other planning efforts. Further, continued challenges from permitting delays and labor and material shortages may extend the time to completion of these projects.

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If we start new developments or redevelopments, commit to property acquisitions, repay debt prior to maturity, declare future dividends, or repurchase shares of our common stock, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease.

We endeavor to maintain a high percentage of unencumbered assets. As of December 31, 2024, 88.6% of our wholly-owned real estate assets were unencumbered. Our low level of encumbered assets allows us to more readily access the secured and unsecured debt markets and to maintain borrowing capacity on the Line.

Our Line and unsecured debt require that we remain in compliance with various financial covenants customary for debt of this type, which are described in Note 9 of the Consolidated Financial Statements. We were in compliance with these covenants at December 31, 2024, and expect to remain in compliance.

Summary of Cash Flow Activity

The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:

Net cash provided by operating activities:

Net cash provided by operating activities changed by $70.6 million due to:

•
$68.0 million increase in cash from operations due to the acquisition of UBP, and timing of receipts and payments

•
$2.6 million increase in operating cash flow distributions from Investments in real estate partnerships.

Net cash used in investing activities:

Net cash used in investing activities changed by $15.3 million as follows:

Significant changes in investing activities include:

•
We paid $45.4 million in 2024 to purchase one operating property. In 2023, we paid $45.4 million to purchase two operating properties.

•
During 2023, we invested $82.4 million, net of $14.1 million in cash acquired, for the acquisition of UBP, including $39.3 million for UBP debt repaid at closing, and $57.2 million in direct transaction and other costs.

•
During 2024, we invested $110.5 million more on real estate development, redevelopment, and capital improvements, as further detailed in a table below.

•
We sold six operating properties in 2024 for proceeds of $108.6 million compared to five land parcels and one development project interest in 2023 for proceeds of $11.2 million.

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•
We received additional property insurance claim proceeds of $5.3 million in 2024 primarily attributable to a single property that was impacted by a weather event in 2019.

•
During 2024, in connection with a secured lending transaction entered into by the Company, we issued a note receivable in the amount of $29.8 million at an interest rate of 6.8% maturing in January 2027, secured by a mortgage and the related grocery-anchored shopping center. In addition, we issued $2.9 million short-term notes receivable to real estate partners in 2024, as compared to the issuance of a $4.0 million in 2023.

•
We collected $3.1 million in notes receivable during 2024, and collected $4.0 million during 2023.

•
Investments in real estate partnerships:

o
In 2024, we invested $41.3 million to fund our share of acquiring one operating property within an existing real estate partnership, and for our share of development and redevelopment activities, including investing in two new ground up development projects,

o
In 2023, we invested $13.1 million, including $2.8 million to fund our share of acquiring one operating property within an existing real estate partnership, and $10.3 million to fund our share of development and redevelopment activities.

•
Return of capital from our unconsolidated investments in real estate partnerships includes sales or financing proceeds:

o
During 2024, we received $13.0 million, which represents our share of proceeds from debt financing activities and the sale of an ownership interest in a real estate partnership.

o
During 2023, we received $11.3 million, including $3.6 million from our share of proceeds from debt financing activities and $7.7 million from our share of proceeds from real estate sales.

•
Acquisition of securities and proceeds from sale of securities pertain to investment activities held in our captive insurance company and our deferred compensation plan. Additionally, we invested approximately $90 million in commercial deposits with proceeds received from the sale of the January 2024 Notes. The commercial deposits were subsequently settled at maturity during the second quarter of 2024.

We plan to continue developing and redeveloping shopping centers for long-term investment. During 2024, we deployed capital of $343.4 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:

•
In 2024, we acquired three land parcels for development and two income-producing outparcels, compared to one land parcel for development in 2023.

•
Building and tenant improvements increased $20.9 million in 2024, primarily related to the timing and volume of capital projects.

•
Redevelopment costs are $41.1 million higher than prior year. We intend to continuously improve our portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing building expansion, facade renovation, new out-parcel building construction, and redevelopment related tenant improvement costs. The size and magnitude of each redevelopment project varies with each redevelopment plan. The timing and duration of these projects could also result in volatility in NOI. See the tables below for more details about our redevelopment projects.

•
Development costs are higher in 2024 due to the progress towards completion of our development projects in process. See the tables below for more details about our development projects.

•
Interest is capitalized on our development and redevelopment projects and is based on cumulative actual costs expended. We cease interest capitalization when the property is no longer being developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor tenant opens for business. If we reduce our development and redevelopment activity, the amount of interest that we capitalize may be lower than historical averages.

•
We have a staff of employees who directly manage and support our development and redevelopment program. Internal compensation costs directly attributable to these activities are capitalized as part of each project.

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The following table summarizes our development projects in-process and completed:

(1)
Estimated Stabilization Year represents the estimated first full calendar year that the project will reach our expected stabilized yield.

(2)
Includes leasing costs and is net of tenant reimbursements.

(3)
Estimated Net Development Costs and GLA are reported based on Regency’s ownership interest in the real estate partnership at completion.

The following table summarizes our redevelopment projects in process and completed:

(1)
Estimated Stabilization Year represents the estimated first full calendar year that the project will reach our expected stabilized yield.

(2)
Includes leasing costs and is net of tenant reimbursements.

(3)
Estimated Net Development Costs are reported based on Regency’s ownership interest in the real estate partnership at completion.

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Net cash used in financing activities:

Net cash flows from financing activities increased by $138.0 million during 2024, as follows:

Significant changes in financing activities include the following:

•
We repurchased a portion of the common stock granted to employees for stock-based compensation to satisfy employee tax withholding requirements, which totaled $19.5 million and $7.7 million during the years ended December 31, 2024 and 2023, respectively. The 2024 period includes $10.7 million of these repurchases to satisfy employee tax withholding obligations related to the UBP acquisition.

•
During 2024, we paid $200.1 million to repurchase 3,306,709 shares of our common stock under our Repurchase Program, as compared to $20.0 million to repurchase 349,519 shares of our common stock during 2023.

•
During 2024, we received $6.8 million in contributions for the limited partners' share of development funding. During 2023, we received $10.2 million of contributions from limited partners for their share of debt repayments and development funding.

•
During 2024, we distributed $12.2 million to limited partners, including proceeds to partially redeem a noncontrolling interest in one real estate partnership. During 2023, we distributed $7.8 million in operating distributions.

•
We paid $48.1 million more in dividends as a result of an increase in our dividend rate per share and the number of shares of our common stock outstanding, as well as preferred dividends which commenced in late 2023 as a result of the UBP acquisition.

•
We had the following debt related activity during 2024:

o
We repaid $87.0 million in net proceeds from our Line,

o
We received $722.9 million in proceeds from issuing unsecured public debt

o
We received $12.0 million in proceeds from issuance of a mortgage loan

o
We paid $392.5 million for debt repayments, including:

▪
$250.0 million in unsecured public debt repayments,

▪
$131.3 million for repaying seven mortgage loans at maturity, and

▪
$11.2 million in principal mortgage payments.

o
We paid $16.7 million in loan costs relating to the recast of the Line as well as the unsecured public debt offerings.

•
We had the following debt related activity during 2023:

o
We received $59.5 million in proceeds from issuance of a mortgage refinancing,

o
We paid $72.8 million for debt repayments, including:

▪
$11.2 million in principal mortgage payments, and

▪
$61.6 million for a combination of repaying or refinancing six mortgage loans at maturity.

•
We paid $9.2 million in 2023 for the redemption of exchangable operating partnership units.

56

Contractual Obligations and Other Commitments

We have material obligations at December 31, 2024, which are discussed in our notes to Consolidated Financial Statements and include:

•
Mortgage loans, unsecured notes, and unsecured credit facilities as discussed in note 9, and related interest rate swaps as discussed in note 10;

•
We have shopping centers that are subject to non-cancelable long-term ground leases where a third party owns and has leased the underlying land to us to construct and/or operate a shopping center. We also have non-cancelable operating leases pertaining to office space from which we conduct our business. These lease obligations are discussed in note 7;

•
Our share of mortgage loans within our Investments in real estate partnerships, as discussed in note 4;

•
Letters of credit of $10.9 million issued to cover our captive insurance program and performance obligations on certain development projects, the latter of which will be satisfied upon completion of the development projects;

•
Obligations for retirement savings plans due to uncertainty around timing of participant withdrawals, which are solely within the control of the participant, and are further discussed in note 14; and

•
We will also incur obligations related to construction or development contracts on projects in process; however, future amounts under these construction contracts are not due until future satisfactory performance under the contracts.

Critical Accounting Estimates

Knowledge about our significant accounting policies is necessary for a complete understanding of our Consolidated Financial Statements. The preparation of our Consolidated Financial Statements requires that we make certain estimates, judgments, and assumptions that impact the balance of assets and liabilities as of the financial statement date and the reported amount of income and expenses during the financial reporting period. These accounting estimates, judgments and assumptions are based upon, but not limited to historical experience, current trends, expected future results, current market conditions, and interpretation of industry accounting standards. While the following is not intended to be a comprehensive list of our accounting estimates, the estimates discussed below are believed to be critical because of their significance to the Consolidated Financial Statements and the possibility that future events may differ from those judgments, or that the use of different assumptions could result in materially different estimates. We review these estimates on a periodic basis to ensure reasonableness; however, the amounts we may ultimately realize could differ from such estimates.

Impairment of Real Estate Investments

In accordance with GAAP, we evaluate our real estate for impairment whenever there are events or changes in circumstances, including property operating performance, general market conditions or changes in expected hold periods, that indicate that the carrying value of our real estate properties (including any related amortizable intangible assets or liabilities) may not be recoverable. If such events or changes occur, we compare the current carrying value of the asset to the estimated undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Our estimated cash flows are based on several key assumptions, including rental rates, expected leasing activity, costs of tenant improvements, leasing commissions, expected hold period, comparable sales information, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and the resulting impairment, if any, could differ from the actual gain or loss recognized upon ultimate sale in an arm's length transaction. If the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of carrying value over the estimated fair value.

The estimated fair value of real estate assets is subjective and is estimated through comparable sales information and other market data if available, as well as the use of an income approach such as the direct capitalization method or the discounted cash flow approach. The discounted cash flow method uses similar assumptions to the undiscounted cash flow method above, as well as a discount rate. Such cash flow projections and rates are subject to management judgment and changes in those assumptions could impact the estimation of fair value. In estimating the fair value of undeveloped land, we generally use market data and comparable sales information. Changes in events or changes in circumstances may alter the expected hold period of an asset or asset group, which may result in an impairment loss and such loss could be material to the Company's financial condition or operating performance.

Recent Accounting Pronouncements

See note 1 to Consolidated Financial Statements.

57

Environmental Matters

We are subject to numerous environmental laws and regulations, which primarily pertain to chemicals historically used by certain current and former dry cleaning and gas station tenants and the existence of asbestos in older shopping centers. We believe that the relatively few tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we endeavor to require tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems, in accordance with the terms of our leases. We carry an environmental insurance policy for certain third-party liabilities and, in certain circumstances, remediation costs on shopping centers for currently unknown contamination. We have also secured environmental insurance policies, where appropriate, on a relatively small number of specific properties with known contamination, in order to mitigate our environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.

The Company had accrued liabilities of $17.3 million for environmental remediation, which are included in Accounts payable, and other liabilities on the Company’s Consolidated Balance Sheets as of December 31, 2024. We believe that the ultimate remediation of currently known environmental matters will not have a material effect on our financial position, cash flows, or results of operations. We can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contamination; that our estimate of liabilities will not change as more information becomes available; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to us.