Regency Centers Earnings Call Nuggets: FFO Details and Redevelopment Impact
Regency Centers Corporation (NYSE:REG) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Christine McElroy – UBS: Lisa, if I think about your Q1 FFO of $0.64 and your Q2 guidance is $0.62 to $0.64. What are some of the factors that are built into that range that could cause your FFO to be down sequentially whether it’s timing of move-outs or something else and what impact is assumed for captive insurance process on other income. I think that’s a Q2 thing, right?
Lisa Palmer – EVP and CFO: I’ll start with – actually the run rate with $0.64 and in the range of $0.62 to $0.64 there isn’t that much of a sequential decline. But again I’ll come back to the fact that we were 5.1% same property growth for this quarter and we’re expecting our range for the remainder of the year is 2.5% to 3.2%. So, we are expecting some of it to moderate. That would be — that would have a negative impact. At the same time, we would expect to have lower G&A for the quarter because as you’ll note year-over-year we are about $2 million higher and that’s almost directly related to a lower amount of development overhead capitalization. As Brian mentioned the (indiscernible) starts as well as some other potential expected starts we would expect capitalization to normalize and so the north — the run rate to hit the G&A of $60 million to $63 million for the year will occur in the second quarter. With regards to other income, yes, you are correct; we used to recognize the captive insurance income in one quarter we are now recognizing that on a monthly basis. So, it’s going to be more even throughout the year. In 2012, our other income was north of $10 million. The first quarter of this year was I think I believe is like about $2.2 million, so that’s a pretty good run rate, so we expect that to be flat. The different being the first quarter of last year we were less than $1 million, so we just had an easier comp for the first quarter.
Christine McElroy – UBS: Then Brian with regard to ground up development starts, can you talk a little bit about the markets that you’re targeting, the anchors that are driving some of those starts and what kind of yield are you looking at and sort of what’s changed over the last year or two with regard to your confidence in leasing up small shop space on development?
Brian M. Smith – President and COO: We’ll start with the anchors, you talked about the anchors. In terms of what we’re working on right now that are at least in the high probability category we have six or seven Whole Foods projects we’re working on, ex about three of those are redevelopment, so on ground that would be three or four Whole Foods, three publics. We got Mariano’s that we hope to start this year in Chicago, Northgate, Hispana grocer in urban LA, and possibly at King Soopers and the Fresh Market. In terms of pipeline we feel really confident in our ability to hit them within the guidance. And returns right now look like they will be about 8% for the year and if you look at that on an incremental basis because share of those coming out of land held it would be about 9%. Then in terms of what’s giving us confidence, we’re building in infill markets, we’re building in Washington D.C., Miami, Coastal California, Seattle, so large high barrier markets where there is limited new supply coming on anywhere, but in those particular markets it’s very tight, there is strong retailer demand, and we’re rightsizing the amount of shop space we build. So, I think I mentioned on the call that we are approaching 90% on our in-process developments, even though it is only about 50% funded and really that’s consistent with what we’ve done since the downturn which is the rightsizing and building in the right areas.
Nathan Isbee – Stifel Nicolaus: Just two quick questions. You mentioned that the redevelopment in the rest of the year is negatively impacting same-store NOI. Could you quantify like how much that is impacting, let’s say, on a normalized basis without the redevelopment would your same-store NOI would come in?
Lisa Palmer – EVP and CFO: The first quarter would have been 4.8%, as I mentioned the 30 basis points impact without redevelopments. And for the full year forecast, we are expecting it basically to have zero impact. So, it is going to go from the 30 basis points positive down to flat.
Nathan Isbee – Stifel Nicolaus: So, there is no negative impact there?
Lisa Palmer – EVP and CFO: Not negative, it is just that we are going to lose the positive impact in the 5.1%.
Nathan Isbee – Stifel Nicolaus: And then just finally on the development, you talk about renewed opportunities here with the Whole Foods etcetera. Any of these deals would you say are old deals that you are taking out of storage versus new opportunities that are arising at this point?
Brian M. Smith – President and COO: Nate, look at our total pipeline for 2013 and 2014 and there is only one – maybe two, there will be one next year. So, there are almost all new opportunities.
Martin E. Stein, Jr. – Chairman and CEO: Except for on the redevelopment front.
Nathan Isbee – Stifel Nicolaus: So, these are deals that you have new leased stores not even like you are monitoring them, working on them without taking the (land down) fire to the crash?
Brian M. Smith – President and COO: Well, not entirely. We will start one here this year in urban L.A. that I mentioned with the Northgate and that one I start working on 20 years ago before coming to Regency. So, it’s been – we’ve been working on long, long, long time. But I would say you’re right, the vast majority of these are all newly sourced up, but when actually newly we probably have been working on all of them for at least a minimum of two years maybe one is new this year.