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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 June 30, 2017
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)
389822789_regencylogocolora04.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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
x
Accelerated filer
o
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 

Regency Centers, L.P.:
Large accelerated filer
o
Accelerated filer
x
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Regency Centers Corporation              YES  o    NO   o                    Regency Centers, L.P.              YES  o    NO  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 170,104,317 as of August 7, 2017.
 




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2017 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”,"Regency Centers" 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 June 30, 2017, the Parent Company owned all of the Preferred Units of the Operating Partnership and approximately 99.8% of the Units in the Operating Partnership. The remaining limited Units are owned by investors. 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 key 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. Except for the $500 million of unsecured public and private placement debt assumed with the Equity One merger on March 1, 2017, the Parent Company does not have any other indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the debt of the Parent Company. 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 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 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 the 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. Although the Parent Company is the issuer of the combined $500 million of unsecured public and private notes, the Operating Partnership is a co-issuer and guarantor of these notes. 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 June 30, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended June 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended June 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Equity for the periods ended June 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended June 30, 2017 and 2016
 
 
 
Regency Centers, L.P.:
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016
 
 
 
 
Consolidated Statements of Operations for the periods ended June 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Comprehensive Income for the periods ended June 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Capital for the periods ended June 30, 2017 and 2016
 
 
 
 
Consolidated Statements of Cash Flows for the periods ended June 30, 2017 and 2016
 
 
 
 
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
June 30, 2017 and December 31, 2016
(in thousands, except share data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,690,171

 
1,660,424

Buildings and improvements
 
5,779,172

 
3,092,197

Properties in development
 
373,962

 
180,878

 
 
10,843,305

 
4,933,499

Less: accumulated depreciation
 
1,225,474

 
1,124,391

 
 
9,617,831

 
3,809,108

Properties held for sale
 
19,600

 

Investments in real estate partnerships
 
376,800

 
296,699

Net real estate investments
 
10,014,231

 
4,105,807

Cash and cash equivalents
 
97,266

 
13,256

Restricted cash
 
7,435

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $10,898 and $9,021 at June 30, 2017 and December 31, 2016, respectively
 
125,372

 
111,722

Deferred leasing costs, less accumulated amortization of $88,612 and $83,529 at June 30, 2017 and December 31, 2016, respectively
 
70,653

 
69,000

Acquired lease intangible assets, less accumulated amortization of $98,447 and $56,695 at June 30, 2017 and December 31, 2016, respectively
 
540,119

 
118,831

Trading securities held in trust
 
29,839

 
28,588

Other assets
 
307,429

 
37,079

Total assets
$
11,192,344

 
4,488,906

Liabilities and Equity
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,944,995

 
1,363,925

Unsecured credit facilities
 
563,031

 
278,495

Accounts payable and other liabilities
 
246,462

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $39,696 and $23,538 at June 30, 2017 and December 31, 2016, respectively
 
653,695

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
50,126

 
28,868

Total liabilities
 
4,458,309

 
1,864,404

Commitments and contingencies
 

 

Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $0.01 par value per share, 30,000,000 shares authorized; 3,000,000 Series 7 shares issued and outstanding at June 30, 2017, and 13,000,000 Series 6 and 7 shares issued and outstanding at December 31, 2016, with liquidation preferences of $25 per share
 
75,000

 
325,000

Common stock, $0.01 par value per share, 220,000,000 and 150,000,000 shares authorized; 170,102,787 and 104,497,286 shares issued at June 30, 2017 and December 31, 2016, respectively
 
1,701

 
1,045

Treasury stock at cost, 359,784 and 347,903 shares held at June 30, 2017 and December 31, 2016, respectively
 
(18,105
)
 
(17,062
)
Additional paid in capital
 
7,772,791

 
3,294,923

Accumulated other comprehensive loss
 
(16,435
)
 
(18,346
)
Distributions in excess of net income
 
(1,122,666
)
 
(994,259
)
Total stockholders’ equity
 
6,692,286

 
2,591,301

Noncontrolling interests:
 
 
 
 
Exchangeable operating partnership units, aggregate redemption value of $21,918 and $10,630 at June 30, 2017 and December 31, 2016, respectively
 
10,955

 
(1,967
)
Limited partners’ interests in consolidated partnerships
 
30,794

 
35,168

Total noncontrolling interests
 
41,749

 
33,201

Total equity
 
6,734,035

 
2,624,502

Total liabilities and equity
$
11,192,344

 
4,488,906

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 June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
195,992

 
109,945

$
337,232

 
217,619

Percentage rent
 
1,456

 
453

 
4,362

 
2,156

Recoveries from tenants and other income
 
57,256

 
35,874

 
102,535

 
69,362

Management, transaction, and other fees
 
6,601

 
6,140

 
13,307

 
12,904

Total revenues
 
261,305

 
152,412

 
457,436

 
302,041

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
92,230

 
40,299

 
152,284

 
79,015

Operating and maintenance
 
36,105

 
23,709

 
65,868

 
46,394

General and administrative
 
16,746

 
16,350

 
34,419

 
32,649

Real estate taxes
 
28,871

 
16,769

 
50,321

 
32,639

Other operating expenses (note 2)
 
6,616

 
2,440

 
78,129

 
4,747

Total operating expenses
 
180,568

 
99,567

 
381,021

 
195,444

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
35,407

 
24,401

 
62,606

 
48,544

Provision for impairment
 

 

 

 
1,666

Early extinguishment of debt
 
12,404

 

 
12,404

 

Net investment (income) loss, including unrealized (gains) losses of ($11) and ($863), and ($275) and $892 for the three and six months ended June 30, 2017 and 2016, respectively
 
(887
)
 
(602
)
 
(1,984
)
 
(446
)
Total other expense (income)
 
46,924

 
23,799

 
73,026

 
49,764

Income from operations before equity in income of investments in real estate partnerships
 
33,813

 
29,046

 
3,389

 
56,833

Equity in income of investments in real estate partnerships
 
12,240

 
11,050

 
21,583

 
23,971

Income tax expense of taxable REIT subsidiary
 
246

 

 
296

 

Income from operations
 
45,807

 
40,096

 
24,676

 
80,804

Gain on sale of real estate, net of tax
 
4,366

 
548

 
4,781

 
13,417

Net income
 
50,173

 
40,644

 
29,457

 
94,221

Noncontrolling interests:
 
 
 
 
 
 
 
 
Exchangeable operating partnership units
 
(104
)
 
(64
)
 
(85
)
 
(150
)
Limited partners’ interests in consolidated partnerships
 
(576
)
 
(504
)
 
(1,247
)
 
(853
)
Income attributable to noncontrolling interests
 
(680
)
 
(568
)
 
(1,332
)
 
(1,003
)
Net income attributable to the Company
 
49,493

 
40,076

 
28,125

 
93,218

Preferred stock dividends and issuance costs
 
(1,125
)
 
(5,266
)
 
(12,981
)
 
(10,531
)
Net income attributable to common stockholders
$
48,368

 
34,810

$
15,144

 
82,687


 
 
 
 
 
 
 
 
Income per common share - basic
$
0.28

 
0.36

$
0.10

 
0.85

Income per common share - diluted
$
0.28

 
0.35

$
0.10

 
0.84

See accompanying notes to consolidated financial statements.

2




REGENCY CENTERS CORPORATION
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
$
50,173

 
40,644

$
29,457

 
94,221

Other comprehensive income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(3,805
)
 
(9,846
)
 
(3,873
)
 
(26,631
)
Reclassification adjustment of derivative instruments included in net income
 
3,071

 
2,500

 
5,726

 
4,952

Unrealized gain on available-for-sale securities
 
11

 
73

 
43

 
37

Other comprehensive (loss) income
 
(723
)
 
(7,273
)
 
1,896

 
(21,642
)
Comprehensive income
 
49,450

 
33,371

 
31,353

 
72,579

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
680

 
568

 
1,332

 
1,003

Other comprehensive (loss) income attributable to noncontrolling interests
 
(80
)
 
(128
)
 
(15
)
 
(297
)
Comprehensive income attributable to noncontrolling interests
 
600

 
440

 
1,317

 
706

Comprehensive income attributable to the Company
$
48,850

 
32,931

$
30,036

 
71,873

See accompanying notes to consolidated financial statements.

3





REGENCY CENTERS CORPORATION
Consolidated Statements of Equity
For the six months ended June 30, 2017 and 2016
(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, 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
 

 

 

 

 

 
93,218

 
93,218

 
150

 
853

 
1,003

 
94,221

Other comprehensive loss
 

 

 

 

 
(21,345
)
 

 
(21,345
)
 
(34
)
 
(263
)
 
(297
)
 
(21,642
)
Deferred compensation plan, net
 

 

 
2,815

 
(2,815
)
 

 

 

 

 

 

 

Restricted stock issued, net of amortization
 

 
2

 

 
6,802

 

 

 
6,804

 

 

 

 
6,804

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

 

 

 
(7,876
)
 

 

 
(7,876
)
 

 

 

 
(7,876
)
Common stock issued under dividend reinvestment plan
 

 

 

 
547

 

 

 
547

 

 

 

 
547

Common stock issued, net of issuance costs
 

 
21

 

 
149,767

 

 

 
149,788

 

 

 

 
149,788

Contributions from partners
 

 

 

 

 

 

 

 

 
8,600

 
8,600

 
8,600

Distributions to partners
 

 

 

 
(350
)
 

 

 
(350
)
 

 
(2,394
)
 
(2,394
)
 
(2,744
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(10,531
)
 
(10,531
)
 

 

 

 
(10,531
)
Common stock/unit ($1.00 per share)
 

 

 

 

 

 
(97,608
)
 
(97,608
)
 
(154
)
 

 
(154
)
 
(97,762
)
Balance at June 30, 2016
 
$
325,000

 
995

 
(16,843
)
 
2,888,583

 
(80,038
)
 
(950,941
)
 
2,166,756

 
(2,013
)
 
37,282

 
35,269

 
2,202,025

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
$
325,000

 
1,045

 
(17,062
)
 
3,294,923

 
(18,346
)
 
(994,259
)
 
2,591,301

 
(1,967
)
 
35,168

 
33,201

 
2,624,502

Net income
 

 

 

 

 

 
28,125

 
28,125

 
85

 
1,247

 
1,332

 
29,457

Other comprehensive income
 

 

 

 

 
1,911

 

 
1,911

 
1

 
(16
)
 
(15
)
 
1,896

Deferred compensation plan, net
 

 

 
(1,043
)
 
1,044

 

 

 
1

 

 

 

 
1

Restricted stock issued, net of amortization
 

 
2

 

 
7,169

 

 

 
7,171

 

 

 

 
7,171

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

 
(1
)
 

 
(18,332
)
 

 

 
(18,333
)
 

 

 

 
(18,333
)
Common stock issued under dividend reinvestment plan
 

 

 

 
607

 

 

 
607

 

 

 

 
607

Common stock issued, net of issuance costs
 

 
654

 

 
4,470,816

 

 

 
4,471,470

 

 

 

 
4,471,470

Restricted stock issued upon Equity One merger
 

 
1

 

 
7,950

 

 

 
7,951

 

 

 

 
7,951

Redemption of preferred stock
 
(250,000
)
 

 

 
8,614

 

 
(8,614
)
 
(250,000
)
 

 

 

 
(250,000
)
Contributions from partners
 

 

 

 

 

 

 

 
13,100

 
341

 
13,441

 
13,441

Distributions to partners
 

 

 

 

 

 

 

 

 
(5,946
)
 
(5,946
)
 
(5,946
)
Cash dividends declared:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
(4,367
)
 
(4,367
)
 

 

 

 
(4,367
)
Common stock/unit ($1.04 per share)
 

 

 

 

 

 
(143,551
)
 
(143,551
)
 
(264
)
 

 
(264
)
 
(143,815
)
Balance at June 30, 2017
 
$
75,000

 
1,701

 
(18,105
)
 
7,772,791

 
(16,435
)
 
(1,122,666
)
 
6,692,286

 
10,955

 
30,794

 
41,749

 
6,734,035

See accompanying notes to consolidated financial statements.

4





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the six months ended June 30, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
$
29,457

 
94,221

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
152,284

 
79,015

Amortization of deferred loan cost and debt premium
 
4,769

 
4,831

(Accretion) and amortization of above and below market lease intangibles, net
 
(11,683
)
 
(1,176
)
Stock-based compensation, net of capitalization
 
13,826

 
5,189

Equity in income of investments in real estate partnerships
 
(21,583
)
 
(23,971
)
Gain on sale of real estate, net of tax
 
(4,781
)
 
(13,417
)
Provision for impairment
 

 
1,666

Early extinguishment of debt
 
12,404

 

Distribution of earnings from operations of investments in real estate partnerships
 
26,271

 
26,159

Deferred compensation expense
 
1,948

 
429

Realized and unrealized (gain) loss on investments
 
(1,951
)
 
(446
)
Changes in assets and liabilities:
 
 
 
 
Restricted cash
 
(1,228
)
 
(31
)
Accounts receivable, net
 
10,639

 
1,143

Straight-line rent receivables, net
 
(8,887
)
 
(3,071
)
Deferred leasing costs
 
(6,701
)
 
(5,386
)
Other assets
 
3,617

 
(1,718
)
Accounts payable and other liabilities
 
(23,850
)
 
(9,447
)
Tenants’ security, escrow deposits and prepaid rent
 
1,291

 
(2,693
)
Net cash provided by operating activities
 
175,842

 
151,297

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(345
)
 
(297,448
)
Advance deposits paid on acquisition of operating real estate
 
(100
)
 
(1,500
)
Acquisition of Equity One, net of cash acquired of $72,534
 
(648,957
)
 

Real estate development and capital improvements
 
(161,574
)
 
(75,320
)
Proceeds from sale of real estate investments
 
15,344

 
36,751

Issuance of notes receivable
 
(2,837
)
 

Investments in real estate partnerships
 
(3,064
)
 
(3,823
)
Distributions received from investments in real estate partnerships
 
30,612

 
25,746

Dividends on investment securities
 
128

 
137

Acquisition of securities
 
(9,853
)
 
(46,306
)
Proceeds from sale of securities
 
10,877

 
45,739

Net cash used in investing activities
 
(769,769
)
 
(316,024
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common stock issuance
 

 
149,788

Repurchase of common shares in conjunction with equity award plans
 
(18,998
)
 
(7,984
)
Proceeds from sale of treasury stock
 
76

 
904

Redemption of preferred stock and partnership units
 
(250,000
)
 

Distributions to limited partners in consolidated partnerships, net
 
(5,891
)
 
(2,214
)
Distributions to exchangeable operating partnership unit holders
 
(264
)
 
(154
)
Dividends paid to common stockholders
 
(142,944
)
 
(97,061
)
Dividends paid to preferred stockholders
 
(4,366
)
 
(10,531
)
Proceeds from issuance of fixed rate unsecured notes, net
 
953,115

 

Proceeds from unsecured credit facilities
 
905,000

 
295,000

Repayment of unsecured credit facilities
 
(620,000
)
 
(150,000
)
Proceeds from notes payable
 
124,088

 
20,000

Repayment of notes payable
 
(232,839
)
 
(41,584
)
Scheduled principal payments
 
(4,789
)
 
(3,062
)
Payment of loan costs
 
(11,832
)
 
(292
)
Early redemption costs
 
(12,419
)
 

Net cash provided by financing activities
 
677,937

 
152,810

Net increase (decrease) in cash and cash equivalents
 
84,010

 
(11,917
)
Cash and cash equivalents at beginning of the period
 
13,256

 
36,856

Cash and cash equivalents at end of the period
$
97,266

 
24,939


5





REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the six months ended June 30, 2017, and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest (net of capitalized interest of $3,290 and $1,766 in 2017 and 2016, respectively)
$
43,643

 
44,153

Cash received for income tax refunds, net of payments
$
899

 

Supplemental disclosure of non-cash transactions:
 
 
 
 
Exchangeable operating partnership units issued for acquisition of real estate
$
13,100

 

Real estate under capital lease obligation
$
6,000

 

Common stock issued under dividend reinvestment plan
$
607

 
547

Stock-based compensation capitalized
$
1,624

 
1,723

Contributions from limited partners in consolidated partnerships, net
$
286

 
8,420

Common stock issued for dividend reinvestment in trust
$
366

 
384

Contribution of stock awards into trust
$
1,372

 
1,488

Distribution of stock held in trust
$
640

 
4,060

Change in fair value of securities available-for-sale
$
43

 
37

Equity One Merger:
 
 
 
 
Notes payable assumed in Equity One merger, at fair value
$
757,399

 

Common stock exchanged for Equity One shares
$
(4,471,808
)
 

See accompanying notes to consolidated financial statements.

6





REGENCY CENTERS, L.P.
Consolidated Balance Sheets
June 30, 2017 and December 31, 2016
(in thousands, except unit data)
 
 
2017
 
2016
Assets
 
(unaudited)
 
 
Real estate investments at cost:
 
 
 
 
Land
$
4,690,171

 
1,660,424

Buildings and improvements
 
5,779,172

 
3,092,197

Properties in development
 
373,962

 
180,878

 
 
10,843,305

 
4,933,499

Less: accumulated depreciation
 
1,225,474

 
1,124,391

 
 
9,617,831

 
3,809,108

Properties held for sale
 
19,600

 

Investments in real estate partnerships
 
376,800

 
296,699

Net real estate investments
 
10,014,231

 
4,105,807

Cash and cash equivalents
 
97,266

 
13,256

Restricted cash
 
7,435

 
4,623

Tenant and other receivables, net of allowance for doubtful accounts and straight-line rent reserves of $10,898 and $9,021 at June 30, 2017 and December 31, 2016, respectively
 
125,372

 
111,722

Deferred leasing costs, less accumulated amortization of $88,612 and $83,529 at June 30, 2017 and December 31, 2016, respectively
 
70,653

 
69,000

Acquired lease intangible assets, less accumulated amortization of $98,447 and $56,695 at June 30, 2017 and December 31, 2016, respectively
 
540,119

 
118,831

Trading securities held in trust
 
29,839

 
28,588

Other assets
 
307,429

 
37,079

Total assets
$
11,192,344

 
4,488,906

Liabilities and Capital
 
 
 
 
Liabilities:
 
 
 
 
Notes payable
$
2,944,995

 
1,363,925

Unsecured credit facilities
 
563,031

 
278,495

Accounts payable and other liabilities
 
246,462

 
138,936

Acquired lease intangible liabilities, less accumulated amortization of $39,696 and $23,538 at June 30, 2017 and December 31, 2016, respectively
 
653,695

 
54,180

Tenants’ security, escrow deposits and prepaid rent
 
50,126

 
28,868

Total liabilities
 
4,458,309

 
1,864,404

Commitments and contingencies
 

 

Capital:
 
 
 
 
Partners’ capital:
 
 
 
 
Preferred units of general partner, $0.01 par value per unit, 3,000,000 and 13,000,000 units issued and outstanding at June 30, 2017 and December 31, 2016, respectively, liquidation preference of $25 per unit
 
75,000

 
325,000

General partner; 170,102,787 and 104,497,286 units outstanding at June 30, 2017 and December 31, 2016, respectively
 
6,633,721

 
2,284,647

Limited partners; 349,902 and 154,170 units outstanding at June 30, 2017 and December 31, 2016, respectively
 
10,955

 
(1,967
)
Accumulated other comprehensive loss
 
(16,435
)
 
(18,346
)
Total partners’ capital
 
6,703,241

 
2,589,334

Noncontrolling interests:
 
 
 
 
Limited partners’ interests in consolidated partnerships
 
30,794

 
35,168

Total noncontrolling interests
 
30,794

 
35,168

Total capital
 
6,734,035

 
2,624,502

Total liabilities and capital
$
11,192,344

 
4,488,906

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 June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Minimum rent
$
195,992

 
109,945

$
337,232

 
217,619

Percentage rent
 
1,456

 
453

 
4,362

 
2,156

Recoveries from tenants and other income
 
57,256

 
35,874

 
102,535

 
69,362

Management, transaction, and other fees
 
6,601

 
6,140

 
13,307

 
12,904

Total revenues
 
261,305

 
152,412

 
457,436

 
302,041

Operating expenses:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
92,230

 
40,299

 
152,284

 
79,015

Operating and maintenance
 
36,105

 
23,709

 
65,868

 
46,394

General and administrative
 
16,746

 
16,350

 
34,419

 
32,649

Real estate taxes
 
28,871

 
16,769

 
50,321

 
32,639

Other operating expenses (note 2)
 
6,616

 
2,440

 
78,129

 
4,747

Total operating expenses
 
180,568

 
99,567

 
381,021

 
195,444

Other expense (income):
 
 
 
 
 
 
 
 
Interest expense, net
 
35,407

 
24,401

 
62,606

 
48,544

Provision for impairment
 

 

 

 
1,666

Early extinguishment of debt
 
12,404

 

 
12,404

 

Net investment (income) loss, including unrealized (gains) losses of ($11) and ($863), and ($275) and $892 for the three and six months ended June 30, 2017 and 2016, respectively
 
(887
)
 
(602
)
 
(1,984
)
 
(446
)
Total other expense (income)
 
46,924

 
23,799

 
73,026

 
49,764

Income from operations before equity in income of investments in real estate partnerships
 
33,813

 
29,046

 
3,389

 
56,833

Equity in income of investments in real estate partnerships
 
12,240

 
11,050

 
21,583

 
23,971

Income tax expense of taxable REIT subsidiary
 
246

 

 
296

 

Income from operations
 
45,807

 
40,096

 
24,676

 
80,804

Gain on sale of real estate, net of tax
 
4,366

 
548

 
4,781

 
13,417

Net income
 
50,173

 
40,644

 
29,457

 
94,221

Limited partners’ interests in consolidated partnerships
 
(576
)
 
(504
)
 
(1,247
)
 
(853
)
Net income attributable to the Partnership
 
49,597

 
40,140

 
28,210

 
93,368

Preferred unit distributions and issuance costs
 
(1,125
)
 
(5,266
)
 
(12,981
)
 
(10,531
)
Net income attributable to common unit holders
$
48,472

 
34,874

$
15,229

 
82,837


 
 
 
 
 
 
 
 
Income per common unit - basic
$
0.28

 
0.36

$
0.10

 
0.85

Income per common unit - diluted
$
0.28

 
0.35

$
0.10

 
0.84

See accompanying notes to consolidated financial statements.

8




REGENCY CENTERS, L.P.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
$
50,173

 
40,644

$
29,457

 
94,221

Other comprehensive income:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments:
 
 
 
 
 
 
 
 
Effective portion of change in fair value of derivative instruments
 
(3,805
)
 
(9,846
)
 
(3,873
)
 
(26,631
)
Reclassification adjustment of derivative instruments included in net income
 
3,071

 
2,500

 
5,726

 
4,952

Unrealized gain on available-for-sale securities
 
11

 
73

 
43

 
37

Other comprehensive (loss) income
 
(723
)
 
(7,273
)
 
1,896

 
(21,642
)
Comprehensive income
 
49,450

 
33,371

 
31,353

 
72,579

Less: comprehensive income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
576

 
504

 
1,247

 
853

Other comprehensive income (loss) attributable to noncontrolling interests
 
79

 
(117
)
 
(16
)
 
(263
)
Comprehensive income attributable to noncontrolling interests
 
655

 
387

 
1,231

 
590

Comprehensive income attributable to the Partnership
$
48,795

 
32,984

$
30,122

 
71,989

See accompanying notes to consolidated financial statements.

9





REGENCY CENTERS, L.P.
Consolidated Statements of Capital
For the six months ended June 30, 2017 and 2016
 (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, 2015
$
2,112,802

 
(1,975
)
 
(58,693
)
 
2,052,134

 
30,486

 
2,082,620

Net income
 
93,218

 
150

 

 
93,368

 
853

 
94,221

Other comprehensive loss
 

 
(34
)
 
(21,345
)
 
(21,379
)
 
(263
)
 
(21,642
)
Contributions from partners
 

 

 

 

 
8,600

 
8,600

Distributions to partners
 
(97,958
)
 
(154
)
 

 
(98,112
)
 
(2,394
)
 
(100,506
)
Preferred unit distributions
 
(10,531
)
 

 

 
(10,531
)
 

 
(10,531
)
Restricted units issued as a result of amortization of restricted stock issued by Parent Company
 
6,804

 

 

 
6,804

 

 
6,804

Common units redeemed as a result of common stock redeemed by Parent Company, net of issuances
 
142,459

 

 

 
142,459

 

 
142,459

Balance at June 30, 2016
 
2,246,794

 
(2,013
)
 
(80,038
)
 
2,164,743

 
37,282

 
2,202,025

 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
 
2,609,647

 
(1,967
)
 
(18,346
)
 
2,589,334

 
35,168

 
2,624,502

Net income
 
28,125

 
85

 

 
28,210

 
1,247

 
29,457

Other comprehensive income
 

 
1

 
1,911

 
1,912

 
(16
)
 
1,896

Deferred compensation plan, net
 
1

 

 

 
1

 

 
1

Contributions from partners
 

 
13,100

 

 
13,100

 
341

 
13,441

Distributions to partners
 
(143,551
)
 
(264
)
 

 
(143,815
)
 
(5,946
)
 
(149,761
)
Preferred unit distributions
 
(4,367
)
 

 

 
(4,367
)
 

 
(4,367
)
Restricted units issued as a result of restricted stock issued by Parent Company, net of amortization
 
7,171

 

 

 
7,171

 

 
7,171

Preferred stock redemptions
 
(250,000
)
 

 

 
(250,000
)
 

 
(250,000
)
Common units issued as a result of common stock issued by Parent Company, net of repurchases
 
4,453,744

 

 

 
4,453,744

 

 
4,453,744

Restricted units issued as a result of restricted stock issued by Parent Company upon Equity One merger
 
7,951

 

 

 
7,951

 

 
7,951

Balance at June 30, 2017
$
6,708,721

 
10,955

 
(16,435
)
 
6,703,241

 
30,794

 
6,734,035

See accompanying notes to consolidated financial statements.

10





REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the six months ended June 30, 2017 and 2016
(in thousands)
(unaudited)
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
$
29,457

 
94,221

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

 

Depreciation and amortization
 
152,284

 
79,015

Amortization of deferred loan cost and debt premium
 
4,769

 
4,831

(Accretion) and amortization of above and below market lease intangibles, net
 
(11,683
)
 
(1,176
)
Stock-based compensation, net of capitalization
 
13,826

 
5,189

Equity in income of investments in real estate partnerships
 
(21,583
)
 
(23,971
)
Gain on sale of real estate, net of tax
 
(4,781
)
 
(13,417
)
Provision for impairment
 

 
1,666

Early extinguishment of debt
 
12,404

 

Distribution of earnings from operations of investments in real estate partnerships
 
26,271

 
26,159

Deferred compensation expense
 
1,948

 
429

Realized and unrealized (gain) loss on investments
 
(1,951
)
 
(446
)
Changes in assets and liabilities:
 

 

Restricted cash
 
(1,228
)
 
(31
)
Accounts receivable, net
 
10,639

 
1,143

Straight-line rent receivables, net
 
(8,887
)
 
(3,071
)
Deferred leasing costs
 
(6,701
)
 
(5,386
)
Other assets
 
3,617

 
(1,718
)
Accounts payable and other liabilities
 
(23,850
)
 
(9,447
)
Tenants’ security, escrow deposits and prepaid rent
 
1,291

 
(2,693
)
Net cash provided by operating activities
 
175,842

 
151,297

Cash flows from investing activities:
 
 
 
 
Acquisition of operating real estate
 
(345
)
 
(297,448
)
Advance deposits paid on acquisition of operating real estate
 
(100
)
 
(1,500
)
Acquisition of Equity One, net of cash acquired of $72,534
 
(648,957
)
 

Real estate development and capital improvements
 
(161,574
)
 
(75,320
)
Proceeds from sale of real estate investments
 
15,344

 
36,751

Issuance of notes receivable
 
(2,837
)
 

Investments in real estate partnerships
 
(3,064
)
 
(3,823
)
Distributions received from investments in real estate partnerships
 
30,612

 
25,746

Dividends on investment securities
 
128

 
137

Acquisition of securities
 
(9,853
)
 
(46,306
)
Proceeds from sale of securities
 
10,877

 
45,739

Net cash used in investing activities
 
(769,769
)
 
(316,024
)
Cash flows from financing activities:
 
 
 
 
Net proceeds from common units issued as a result of common stock issued by Parent Company
 

 
149,788

Repurchase of common shares in conjunction with equity award plans
 
(18,998
)
 
(7,984
)
Proceeds from sale of treasury stock
 
76

 
904

Redemption of preferred partnership units
 
(250,000
)
 

Distributions (to) from limited partners in consolidated partnerships, net
 
(5,891
)
 
(2,214
)
Distributions to partners
 
(143,208
)
 
(97,215
)
Distributions to preferred unit holders
 
(4,366
)
 
(10,531
)
Proceeds from issuance of fixed rate unsecured notes, net
 
953,115

 

Proceeds from unsecured credit facilities
 
905,000

 
295,000

Repayment of unsecured credit facilities
 
(620,000
)
 
(150,000
)
Proceeds from notes payable
 
124,088

 
20,000

Repayment of notes payable
 
(232,839
)
 
(41,584
)
Scheduled principal payments