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Section 1: 10-Q (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

Commission File Number 1-12298 (Regency Centers Corporation)
Commission File Number 0-24763 (Regency Centers, L.P.)

REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
FLORIDA (REGENCY CENTERS CORPORATION)
36563459_regencylogocolora01.jpg
59-3191743
DELAWARE (REGENCY CENTERS, L.P)
59-3429602
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
One Independent Drive, Suite 114
Jacksonville, Florida 32202
(904) 598-7000
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Regency Centers Corporation              YES  x    NO  o                     Regency Centers, L.P.              YES  x    NO  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Regency Centers Corporation              YES  x    NO  o                     Regency Centers, L.P.              YES  x    NO  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
x
 
Accelerated filer
o
Non-accelerated filer
o
 
Smaller reporting company
o
Regency Centers, L.P.:
Large accelerated filer
o
  
Accelerated filer
x
Non-accelerated filer
o
  
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Regency Centers Corporation              YES  o    NO   x                    Regency Centers, L.P.              YES  o    NO  x
The number of shares outstanding of the Regency Centers Corporation’s common stock was 104,493,307 as of October 31, 2016.
 





EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2016 of Regency Centers Corporation and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to “Regency Centers Corporation” or the “Parent Company” mean Regency Centers Corporation and its controlled subsidiaries; and references to “Regency Centers, L.P.” or the “Operating Partnership” mean Regency Centers, L.P. and its controlled subsidiaries. The term “the Company” or “Regency” means the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust (“REIT”) and the general partner of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units (“Units”). As of September 30, 2016, the Parent Company owned approximately 99.9% of the Units in the Operating Partnership and the remaining limited Units are owned by investors. The Parent Company owns all of the Series 6 and 7 Preferred Units of the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.
The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:
 
Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;  

Eliminates duplicative disclosure and provides a more streamlined and readable presentation; and  

Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. 
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent Company consists of the same individuals as the management of the Operating Partnership. These individuals are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. The Parent Company does not hold any indebtedness, but guarantees all of the unsecured public debt of the Operating Partnership. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units, and Series 6 and 7 Preferred Units owned by the Parent Company. The limited partners' units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of stockholders' equity in noncontrolling interests in the Parent Company's financial statements. The Series 6 and 7 Preferred Units owned by the Parent Company are eliminated in consolidation in the accompanying consolidated financial statements of the Parent Company and are classified as preferred units of general partner in the accompanying consolidated financial statements of the Operating Partnership.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. 

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.









TABLE OF CONTENTS
 
 
 
Form 10-Q
Report Page
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
Regency Centers Corporation:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2016 and 2015
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2016 and 2015
 
 
 
 
Consolidated Statements of Equity for the periods ended September 30, 2016 and 2015
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2016 and 2015
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015
 
 
 
 
Consolidated Statements of Operations for the periods ended September 30, 2016 and 2015
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended September 30, 2016 and 2015
 
 
 
 
Consolidated Statements of Capital for the periods ended September 30, 2016 and 2015
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended September 30, 2016 and 2015
 
 
 
 
Notes to Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 3.
Defaults Upon Senior Securities
 
 
 
Item 4.
Mine Safety Disclosures
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
SIGNATURES
 
 
 
 
 
 





PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
September 30, 2016 and December 31, 2015
(in thousands, except share data)
 
 
2016
 
2015
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land, including amounts held for future development
$
1,654,389

 
1,479,814

Buildings and improvements
 
3,086,287

 
2,896,396

Properties in development
 
157,537

 
169,690

 
 
4,898,213

 
4,545,900

Less: accumulated depreciation
 
1,108,221

 
1,043,787

 
 
3,789,992

 
3,502,113

Investments in real estate partnerships
 
274,940

 
306,206

Net real estate investments
 
4,064,932

 
3,808,319

Cash and cash equivalents
 
40,902

 
36,856

Restricted cash
 
4,005

 
3,767

Accounts receivable, net of allowance for doubtful accounts of $5,690 and $5,295 at September 30, 2016 and December 31, 2015, respectively
 
24,816

 
32,292

Straight-line rent receivable, net of reserve of $3,688 and $1,365 at September 30, 2016 and December 31, 2015, respectively
 
67,931

 
63,392

Notes receivable
 
10,480

 
10,480

Deferred leasing costs, less accumulated amortization of $82,277 and $76,823 at September 30, 2016 and December 31, 2015, respectively
 
68,455

 
66,367

Acquired lease intangible assets, less accumulated amortization of $53,878 and $45,639 at September 30, 2016 and December 31, 2015, respectively
 
122,738

 
105,380

Trading securities held in trust, at fair value
 
29,280

 
29,093

Other assets
 
24,749

 
26,935

Total assets
$
4,458,288

 
4,182,881

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
1,364,200

 
1,699,771

Unsecured credit facilities
 
263,421

 
164,514

Accounts payable and other liabilities
 
145,689

 
164,515

Acquired lease intangible liabilities, less accumulated accretion of $22,067 and $17,555 at September 30, 2016 and December 31, 2015, respectively
 
56,455

 
42,034

Tenants’ security, escrow deposits and prepaid rent
 
28,239

 
29,427

Total liabilities
 
1,858,004

 
2,100,261

Commitments and contingencies (note 11)
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 13,000,000 Series 6 and 7 shares issued and outstanding at September 30, 2016 and December 31, 2015, with liquidation preferences of $25 per share
 
325,000

 
325,000

Common stock, $0.01 par value per share,150,000,000 shares authorized; 104,492,738 and 97,212,638 shares issued at September 30, 2016 and December 31, 2015, respectively
 
1,045

 
972

Treasury stock at cost, 345,359 and 417,862 shares held at September 30, 2016 and December 31, 2015, respectively
 
(16,882
)
 
(19,658
)
Additional paid in capital
 
3,291,602

 
2,742,508

Accumulated other comprehensive loss
 
(35,739
)
 
(58,693
)
Distributions in excess of net income
 
(997,881
)
 
(936,020
)
Total stockholders’ equity
 
2,567,145

 
2,054,109

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $11,947 and $10,502 at September 30, 2016 and December 31, 2015, respectively
 
(2,006
)
 
(1,975
)
Limited partners’ interests in consolidated partnerships
 
35,145

 
30,486

Total noncontrolling interests
 
33,139

 
28,511

Total equity
 
2,600,284

 
2,082,620

Total liabilities and equity
$
4,458,288

 
4,182,881

See accompanying notes to consolidated financial statements.

1





REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
111,886

 
105,071

$
329,506

 
308,766

Percentage rent
 
495

 
486

 
2,651

 
2,593

Recoveries from tenants and other income
 
34,532

 
30,725

 
103,894

 
94,205

Management, transaction, and other fees
 
5,855

 
5,786

 
18,759

 
18,032

Total revenues
 
152,768

 
142,068

 
454,810

 
423,596

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
40,705

 
37,032

 
119,721

 
109,249

Operating and maintenance
 
23,373

 
19,761

 
69,767

 
61,119

General and administrative
 
16,046

 
14,750

 
48,695

 
46,227

Real estate taxes
 
17,058

 
16,044

 
49,697

 
46,842

Other operating expenses
 
1,046

 
1,880

 
5,795

 
4,825

Total operating expenses
 
98,228

 
89,467

 
293,675

 
268,262

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
21,945

 
25,099

 
70,489

 
78,407

Provision for impairment
 

 

 
1,666

 

Early extinguishment of debt
 
13,943

 

 
13,943

 
(61
)
Net investment (income) loss, including unrealized (gains) losses of ($383) and $1,296, and ($888) and $1,771 for the three and nine months ended September 30, 2016 and 2015, respectively
 
(821
)
 
1,190

 
(1,268
)
 
190

Loss on derivative instruments
 
40,586

 

 
40,586

 

Total other expense
 
75,653

 
26,289

 
125,416

 
78,536

Income (loss) from operations before equity in income of investments in real estate partnerships
 
(21,113
)
 
26,312

 
35,719

 
76,798

Equity in income of investments in real estate partnerships
 
22,647

 
5,667

 
46,618

 
17,991

Income from operations
 
1,534

 
31,979

 
82,337

 
94,789

Gain on sale of real estate, net of tax
 
9,580

 
27,755

 
22,997

 
34,215

Net income
 
11,114

 
59,734

 
105,334

 
129,004

Noncontrolling interests:
 
 
 
 
 
 
 
 
Exchangeable operating partnership units
 
(16
)
 
(94
)
 
(165
)
 
(204
)
Limited partners’ interests in consolidated partnerships
 
(527
)
 
(643
)
 
(1,380
)
 
(1,619
)
Income attributable to noncontrolling interests
 
(543
)
 
(737
)
 
(1,545
)
 
(1,823
)
Net income attributable to the Company
 
10,571

 
58,997

 
103,789

 
127,181

Preferred stock dividends
 
(5,266
)
 
(5,266
)
 
(15,797
)
 
(15,797
)
Net income attributable to common stockholders
$
5,305

 
53,731

$
87,992

 
111,384


 
 
 
 
 
 
 
 
Income per common share - basic
$
0.05

 
0.57

$
0.88

 
1.18

Income per common share - diluted
$
0.05

 
0.57

$
0.88

 
1.18

See accompanying notes to consolidated financial statements.

2




REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Net income
$
11,114

 
59,734

$
105,334

 
129,004

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
1,294

 
(15,768
)
 
(25,338
)
 
(11,274
)
Reclassification adjustment of derivative instruments included in net income
 
43,111

 
2,155

 
48,063

 
6,654

Unrealized gain (loss) on available-for-sale securities
 
53

 
(43
)
 
90

 
(73
)
Other comprehensive income (loss)
 
44,458

 
(13,656
)
 
22,815

 
(4,693
)
Comprehensive income
 
55,572

 
46,078

 
128,149

 
124,311

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
543

 
737

 
1,545

 
1,823

Other comprehensive income (loss) attributable to noncontrolling interests
 
158

 
(149
)
 
(139
)
 
(134
)
Comprehensive income attributable to noncontrolling interests
 
701

 
588

 
1,406

 
1,689

Comprehensive income attributable to the Company
$
54,871

 
45,490

$
126,743

 
122,622

See accompanying notes to consolidated financial statements.


3





REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the nine months ended September 30, 2016 and 2015
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling Interests
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Treasury
Stock
 
Additional
Paid In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Distributions
in Excess of
Net Income
 
Total
Stockholders’
Equity
 
Exchangeable
Operating
Partnership
Units
 
Limited
Partners’
Interest  in
Consolidated
Partnerships
 
Total
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2014
 
$
325,000

 
941

 
(19,382
)
 
2,540,153

 
(57,748
)
 
(882,372
)
 
1,906,592

 
(1,914
)
 
31,804

 
29,890

 
1,936,482

Net income
 

 

 

 

 

 
127,181

 
127,181

 
204

 
1,619

 
1,823

 
129,004

Other comprehensive loss
 

 

 

 

 
(4,559
)
 

 
(4,559
)
 
(7
)
 
(127
)
 
(134
)
 
(4,693
)
Deferred compensation plan, net
 

 

 
(56
)
 
56

 

 

 

 

 

 

 

Restricted stock issued, net of amortization
 

 

 

 
10,441

 

 

 
10,441

 

 

 

 
10,441

Common stock redeemed for taxes withheld for stock based compensation, net
 

 

 

 
(9,770
)
 

 

 
(9,770
)
 

 

 

 
(9,770
)
Common stock issued for dividend reinvestment plan
 

 

 

 
966

 

 

 
966

 

 

 

 
966

Common stock issued for stock offerings, net of issuance costs
 

 
1

 

 
945

 

 

 
946

 

 

 

 
946

Contributions from partners
 

 

 

 

 

 

 

 

 
454

 
454

 
454

Distributions to partners
 

 

 

 

 

 

 

 

 
(2,792
)
 
(2,792
)
 
(2,792
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(15,797
)
 
(15,797
)
 

 

 

 
(15,797
)
Common stock/unit ($1.455 per share)
 

 

 

 

 

 
(136,974
)
 
(136,974
)
 
(223
)
 

 
(223
)
 
(137,197
)
Balance at September 30, 2015
 
$
325,000

 
942

 
(19,438
)
 
2,542,791

 
(62,307
)
 
(907,962
)
 
1,879,026

 
(1,940
)
 
30,958

 
29,018

 
1,908,044

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
 
$
325,000

 
972

 
(19,658
)
 
2,742,508

 
(58,693
)
 
(936,020
)
 
2,054,109

 
(1,975
)
 
30,486

 
28,511

 
2,082,620

Net income
 

 

 

 

 

 
103,789

 
103,789

 
165

 
1,380

 
1,545

 
105,334

Other comprehensive loss
 

 

 

 

 
22,954

 

 
22,954

 
33

 
(172
)
 
(139
)
 
22,815

Deferred compensation plan, net
 

 

 
2,776

 
(2,776
)
 

 

 

 

 

 

 

Restricted stock issued, net of amortization
 

 
2

 

 
9,965

 

 

 
9,967

 

 

 

 
9,967

Common stock redeemed for taxes withheld for stock based compensation, net
 

 

 

 
(7,835
)
 

 

 
(7,835
)
 

 

 

 
(7,835
)
Common stock issued for dividend reinvestment plan
 

 

 

 
804

 

 

 
804

 

 

 

 
804

Common stock issued for stock offerings, net of issuance costs
 

 
71

 

 
549,474

 

 

 
549,545

 

 

 

 
549,545

Contributions from partners
 

 

 

 

 

 

 

 

 
8,675

 
8,675

 
8,675

Distributions to partners
 

 

 

 
(538
)
 

 

 
(538
)
 

 
(5,224
)
 
(5,224
)
 
(5,762
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(15,797
)
 
(15,797
)
 

 

 

 
(15,797
)
Common stock/unit ($1.50 per share)
 

 

 

 

 

 
(149,853
)
 
(149,853
)
 
(229
)
 

 
(229
)
 
(150,082
)
Balance at September 30, 2016
 
$
325,000

 
1,045

 
(16,882
)
 
3,291,602

 
(35,739
)
 
(997,881
)
 
2,567,145

 
(2,006
)
 
35,145

 
33,139

 
2,600,284

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2016 and 2015
(in thousands)
(unaudited)
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net income
$
105,334

 
129,004

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
119,721

 
109,249

Amortization of deferred loan cost and debt premium
 
7,242

 
7,404

(Accretion) and amortization of above and below market lease intangibles, net
 
(2,296
)
 
(1,250
)
Stock-based compensation, net of capitalization
 
7,554

 
8,379

Equity in income of investments in real estate partnerships
 
(46,618
)
 
(17,991
)
Gain on sale of real estate, net of tax
 
(22,997
)
 
(34,215
)
Provision for impairment
 
1,666

 

Early extinguishment of debt
 
13,943

 
(61
)
Distribution of earnings from operations of investments in real estate partnerships
 
39,765

 
34,527

Settlement of derivative instruments
 

 
(7,267
)
Deferred compensation expense
 
1,249

 
(610
)
Realized and unrealized loss (gain) on investments
 
(1,268
)
 
189

Changes in assets and liabilities:
 
 
 
 
Restricted cash
 
(84
)
 
1,534

Accounts receivable, net
 
(4,269
)
 
(4,408
)
Straight-line rent receivables, net
 
(4,894
)
 
(6,274
)
Deferred leasing costs
 
(7,841
)
 
(8,268
)
Other assets
 
(59
)
 
(2,257
)
Accounts payable and other liabilities
 
12,607

 
10,230

Tenants’ security, escrow deposits and prepaid rent
 
(1,406
)
 
(1,152
)
Net cash provided by operating activities
 
217,349

 
216,763

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(333,220
)
 
(42,983
)
Advance deposits refunded (paid) on acquisition of operating real estate
 
1,250

 
(2,250
)
Real estate development and capital improvements
 
(146,773
)
 
(150,967
)
Proceeds from sale of real estate investments
 
83,675

 
93,727

Collection of notes receivable
 

 
1,000

Investments in real estate partnerships
 
(13,127
)
 
(18,644
)
Distributions received from investments in real estate partnerships
 
52,536

 
15,014

Dividends on investment securities
 
189

 
128

Acquisition of securities
 
(53,290
)
 
(25,675
)
Proceeds from sale of securities
 
54,176

 
22,296

Net cash used in investing activities
 
(354,584
)
 
(108,354
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common stock issuance
 
549,545

 
946

Proceeds from sale of treasury stock
 
957

 
51

Acquisition of treasury stock
 
(29
)
 

Distributions to limited partners in consolidated partnerships, net
 
(3,126
)
 
(2,352
)
Distributions to exchangeable operating partnership unit holders
 
(229
)
 
(223
)
Dividends paid to common stockholders
 
(149,049
)
 
(136,008
)
Dividends paid to preferred stockholders
 
(15,797
)
 
(15,797
)
Repayment of fixed rate unsecured notes
 
(300,000
)
 
(350,000
)
Proceeds from issuance of fixed rate unsecured notes, net
 

 
248,160

Proceeds from unsecured credit facilities
 
395,000

 
445,000

Repayment of unsecured credit facilities
 
(295,000
)
 
(305,000
)
Proceeds from notes payable
 
20,223

 
3,325

Repayment of notes payable
 
(41,584
)
 
(76,027
)
Scheduled principal payments
 
(4,462
)
 
(4,384
)
Payment of loan costs
 
(1,954
)
 
(5,996
)
Early redemption costs
 
(13,214
)
 

Net cash provided by (used in) financing activities
 
141,281

 
(198,305
)
Net increase (decrease) in cash and cash equivalents
 
4,046

 
(89,896
)
Cash and cash equivalents at beginning of the period
 
36,856

 
113,776

Cash and cash equivalents at end of the period
$
40,902

 
23,880


5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2016, and 2015
(in thousands)
(unaudited)
 
 
2016
 
2015
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $2,622 and $5,403 in 2016 and 2015, respectively)
$
54,904

 
71,734

Cash paid for income taxes
$

 
871

Supplemental disclosure of non-cash transactions:
 
 
 
 
Mortgage loans assumed for the acquisition of real estate
$

 
42,799

Change in fair value of derivative instruments
$
(25,338
)
 
(10,845
)
Common stock issued for dividend reinvestment plan
$
804

 
966

Stock-based compensation capitalized
$
2,561

 
2,196

Contributions from limited partners in consolidated partnerships, net
$
8,674

 
13

Common stock issued for dividend reinvestment in trust
$
556

 
631

Contribution of stock awards into trust
$
1,513

 
1,633

Distribution of stock held in trust
$
4,096

 
1,898

Change in fair value of securities available-for-sale
$
90

 
(73
)
Deconsolidation of previously consolidated partnership:
 
 
 
 
Real estate, net
$
14,075

 

Investments in real estate partnerships
$
(3,355
)
 

Notes payable
$
(9,415
)
 

Other assets and liabilities
$
640

 

Limited partners' interest in consolidated partnerships
$
(2,099
)
 

See accompanying notes to consolidated financial statements.



6





REGENCY CENTERS, L.P.
Consolidated Balance Sheets
September 30, 2016 and December 31, 2015
(in thousands, except unit data)
    
 
 
2016
 
2015
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land, including amounts held for future development
$
1,654,389

 
1,479,814

Buildings and improvements
 
3,086,287

 
2,896,396

Properties in development
 
157,537

 
169,690

 
 
4,898,213

 
4,545,900

Less: accumulated depreciation
 
1,108,221

 
1,043,787

 
 
3,789,992

 
3,502,113

Investments in real estate partnerships
 
274,940

 
306,206

Net real estate investments
 
4,064,932

 
3,808,319

Cash and cash equivalents
 
40,902

 
36,856

Restricted cash
 
4,005

 
3,767

Accounts receivable, net of allowance for doubtful accounts of $5,690 and $5,295 at September 30, 2016 and December 31, 2015, respectively
 
24,816

 
32,292

Straight-line rent receivable, net of reserve of $3,688 and $1,365 at September 30, 2016 and December 31, 2015, respectively
 
67,931

 
63,392

Notes receivable
 
10,480

 
10,480

Deferred leasing costs, less accumulated amortization of $82,277 and $76,823 at September 30, 2016 and December 31, 2015, respectively
 
68,455

 
66,367

Acquired lease intangible assets, less accumulated amortization of $53,878 and $45,639 at September 30, 2016 and December 31, 2015, respectively
 
122,738

 
105,380

Trading securities held in trust, at fair value
 
29,280

 
29,093

Other assets
 
24,749

 
26,935

Total assets
$
4,458,288

 
4,182,881

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
1,364,200

 
1,699,771

Unsecured credit facilities
 
263,421

 
164,514

Accounts payable and other liabilities
 
145,689

 
164,515

Acquired lease intangible liabilities, less accumulated accretion of $22,067 and $17,555 at September 30, 2016 and December 31, 2015, respectively
 
56,455

 
42,034

Tenants’ security, escrow deposits and prepaid rent
 
28,239

 
29,427

Total liabilities
 
1,858,004

 
2,100,261

Commitments and contingencies (note 11)
 


 


Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
Preferred units of general partner, $0.01 par value per unit, 13,000,000 units issued and outstanding at September 30, 2016 and December 31, 2015, liquidation preference of $25 per unit
 
325,000

 
325,000

General partner; 104,492,738 and 97,212,638 units outstanding at September 30, 2016 and December 31, 2015, respectively
 
2,277,884

 
1,787,802

Limited partners; 154,170 units outstanding at September 30, 2016 and December 31, 2015
 
(2,006
)
 
(1,975
)
Accumulated other comprehensive loss
 
(35,739
)
 
(58,693
)
Total partners’ capital
 
2,565,139

 
2,052,134

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
35,145

 
30,486

Total noncontrolling interests
 
35,145

 
30,486

Total capital
 
2,600,284

 
2,082,620

Total liabilities and capital
$
4,458,288

 
4,182,881

See accompanying notes to consolidated financial statements.

7





REGENCY CENTERS, L.P.
Consolidated Statements of Operations
(in thousands, except per unit data)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
111,886

 
105,071

$
329,506

 
308,766

Percentage rent
 
495

 
486

 
2,651

 
2,593

Recoveries from tenants and other income
 
34,532

 
30,725

 
103,894

 
94,205

Management, transaction, and other fees
 
5,855

 
5,786

 
18,759

 
18,032

Total revenues
 
152,768

 
142,068

 
454,810

 
423,596

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
40,705

 
37,032

 
119,721

 
109,249

Operating and maintenance
 
23,373

 
19,761

 
69,767

 
61,119

General and administrative
 
16,046

 
14,750

 
48,695

 
46,227

Real estate taxes
 
17,058

 
16,044

 
49,697

 
46,842

Other operating expenses
 
1,046

 
1,880

 
5,795

 
4,825

Total operating expenses
 
98,228

 
89,467

 
293,675

 
268,262

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
21,945

 
25,099

 
70,489

 
78,407

Provision for impairment
 

 

 
1,666

 

Early extinguishment of debt
 
13,943

 

 
13,943

 
(61
)
Net investment (income) loss, including unrealized (gains) losses of ($383) and $1,296, and ($888) and $1,771 for the three and nine months ended September 30, 2016 and 2015, respectively
 
(821
)
 
1,190

 
(1,268
)
 
190

Loss on derivative instruments
 
40,586

 

 
40,586

 

Total other expense
 
75,653

 
26,289

 
125,416

 
78,536

Income (loss) from operations before equity in income of investments in real estate partnerships
 
(21,113
)
 
26,312

 
35,719

 
76,798

Equity in income of investments in real estate partnerships
 
22,647

 
5,667

 
46,618

 
17,991

Income from operations
 
1,534

 
31,979

 
82,337

 
94,789

Gain on sale of real estate, net of tax
 
9,580

 
27,755

 
22,997

 
34,215

Net income
 
11,114

 
59,734

 
105,334

 
129,004

Limited partners’ interests in consolidated partnerships
 
(527
)
 
(643
)
 
(1,380
)
 
(1,619
)
Net income attributable to the Partnership
 
10,587

 
59,091

 
103,954

 
127,385

Preferred unit distributions
 
(5,266
)
 
(5,266
)
 
(15,797
)
 
(15,797
)
Net income attributable to common unit holders
$
5,321

 
53,825

$
88,157

 
111,588


 
 
 
 
 
 
 
 
Income per common unit - basic
$
0.05

 
0.57

$
0.88

 
1.18

Income per common unit - diluted
$
0.05

 
0.57

$
0.88

 
1.18

See accompanying notes to consolidated financial statements.

8




REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Net income
$
11,114

 
59,734

$
105,334

 
129,004

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
1,294

 
(15,768
)
 
(25,338
)
 
(11,274
)
Reclassification adjustment of derivative instruments included in net income
 
43,111

 
2,155

 
48,063

 
6,654

Unrealized gain (loss) on available-for-sale securities
 
53

 
(43
)
 
90

 
(73
)
Other comprehensive income (loss)
 
44,458

 
(13,656
)
 
22,815

 
(4,693
)
Comprehensive income
 
55,572

 
46,078

 
128,149

 
124,311

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
527

 
643

 
1,380

 
1,619

Other comprehensive income (loss) attributable to noncontrolling interests
 
91

 
86

 
(172
)
 
(127
)
Comprehensive income attributable to noncontrolling interests
 
618

 
729

 
1,208

 
1,492

Comprehensive income attributable to the Partnership
$
54,954

 
45,349

$
126,941

 
122,819

See accompanying notes to consolidated financial statements.


9





REGENCY CENTERS, L.P.
Consolidated Statements of Capital
For the nine months ended September 30, 2016 and 2015
 (in thousands)
(unaudited)
 
 
General Partner
Preferred and
Common Units
 
Limited
Partners
 
Accumulated
Other
Comprehensive Loss
 
Total
Partners’
Capital
 
Noncontrolling
Interests in
Limited Partners’
Interest in
Consolidated
Partnerships
 
Total
Capital
Balance at December 31, 2014
$
1,964,340

 
(1,914
)
 
(57,748
)
 
1,904,678

 
31,804

 
1,936,482

Net income
 
127,181

 
204

 

 
127,385

 
1,619

 
129,004

Other comprehensive loss
 

 
(7
)
 
(4,559
)
 
(4,566
)
 
(127
)
 
(4,693
)
Contributions from partners
 

 

 

 

 
454

 
454

Distributions to partners
 
(136,974
)
 
(223
)
 

 
(137,197
)
 
(2,792
)
 
(139,989
)
Preferred unit distributions
 
(15,797
)
 

 

 
(15,797
)
 

 
(15,797
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
10,441

 

 

 
10,441

 

 
10,441

Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
(7,858
)
 

 

 
(7,858
)
 

 
(7,858
)
Balance at September 30, 2015
 
1,941,333

 
(1,940
)
 
(62,307
)
 
1,877,086

 
30,958

 
1,908,044

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
 
2,112,802

 
(1,975
)
 
(58,693
)
 
2,052,134

 
30,486

 
2,082,620

Net income
 
103,789

 
165

 

 
103,954

 
1,380

 
105,334

Other comprehensive loss
 

 
33

 
22,954

 
22,987

 
(172
)
 
22,815

Contributions from partners
 

 

 

 

 
8,675

 
8,675

Distributions to partners
 
(150,391
)
 
(229
)
 

 
(150,620
)
 
(5,224
)
 
(155,844
)
Preferred unit distributions
 
(15,797
)
 

 

 
(15,797
)
 

 
(15,797
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
9,967

 

 

 
9,967

 

 
9,967

Common units issued as a result of common stock issued by Parent Company, net of repurchases
 
542,514

 

 

 
542,514

 

 
542,514

Balance at September 30, 2016
$
2,602,884

 
(2,006
)
 
(35,739
)
 
2,565,139

 
35,145

 
2,600,284

See accompanying notes to consolidated financial statements.


10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2016 and 2015
(in thousands)
(unaudited)
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net income
$
105,334

 
129,004

Adjustments to reconcile net income to net cash provided by operating activities:
 

 

Depreciation and amortization
 
119,721

 
109,249

Amortization of deferred loan cost and debt premium
 
7,242

 
7,404

(Accretion) and amortization of above and below market lease intangibles, net
 
(2,296
)
 
(1,250
)
Stock-based compensation, net of capitalization
 
7,554

 
8,379

Equity in income of investments in real estate partnerships
 
(46,618
)
 
(17,991
)
Gain on sale of real estate, net of tax
 
(22,997
)
 
(34,215
)
Provision for impairment
 
1,666

 

Early extinguishment of debt
 
13,943

 
(61
)
Distribution of earnings from operations of investments in real estate partnerships
 
39,765

 
34,527

Settlement of derivative instruments
 

 
(7,267
)
Deferred compensation expense
 
1,249

 
(610
)
Realized and unrealized loss (gain) on investments
 
(1,268
)
 
189

Changes in assets and liabilities:
 

 

Restricted cash
 
(84
)
 
1,534

Accounts receivable, net
 
(4,269
)
 
(4,408
)
Straight-line rent receivables, net
 
(4,894
)
 
(6,274
)
Deferred leasing costs
 
(7,841
)
 
(8,268
)
Other assets
 
(59
)
 
(2,257
)
Accounts payable and other liabilities
 
12,607

 
10,230

Tenants’ security, escrow deposits and prepaid rent
 
(1,406
)
 
(1,152
)
Net cash provided by operating activities
 
217,349

 
216,763

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(333,220
)
 
(42,983
)
Advance deposits refunded (paid) on acquisition of operating real estate
 
1,250

 
(2,250
)
Real estate development and capital improvements
 
(146,773
)
 
(150,967
)
Proceeds from sale of real estate investments
 
83,675

 
93,727

Collection of notes receivable
 

 
1,000

Investments in real estate partnerships
 
(13,127
)
 
(18,644
)
Distributions received from investments in real estate partnerships
 
52,536

 
15,014

Dividends on investment securities
 
189

 
128

Acquisition of securities
 
(53,290
)
 
(25,675
)
Proceeds from sale of securities
 
54,176

 
22,296

Net cash used in investing activities
 
(354,584
)
 
(108,354
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common units issued as a result of common stock issued by Parent Company
 
549,545

 
946

Proceeds from sale of treasury stock
 
957

 
51

Acquisition of treasury stock
 
(29
)
 

Distributions (to) from limited partners in consolidated partnerships, net
 
(3,126
)
 
(2,352
)
Distributions to partners
 
(149,278
)
 
(136,231
)
Distributions to preferred unit holders
 
(15,797
)
 
(15,797
)
Repayment of fixed rate unsecured notes
 
(300,000
)
 
(350,000
)
Proceeds from issuance of fixed rate unsecured notes, net
 

 
248,160

Proceeds from unsecured credit facilities
 
395,000

 
445,000

Repayment of unsecured credit facilities
 
(295,000
)
 
(305,000
)
Proceeds from notes payable
 
20,223

 
3,325

Repayment of notes payable
 
(41,584
)
 
(76,027
)
Scheduled principal payments
 
(4,462
)
 
(4,384
)
Payment of loan costs
 
(1,954
)
 
(5,996
)
Early redemption costs
 
(13,214
)
 

Net cash provided by (used in) financing activities
 
141,281

 
(198,305
)
Net increase (decrease) in cash and cash equivalents
 
4,046

 
(89,896
)
Cash and cash equivalents at beginning of the period
 
36,856

 
113,776

Cash and cash equivalents at end of the period
$
40,902

 
23,880




11





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2016, and 2015
(in thousands)
(unaudited)
 
 
2016
 
2015
Supplemental disclosure of cash flow information: