Balanced View on Regency - Analyst Blog

On Apr 17, 2014, we issued an updated research report on retail real estate investment trust (REIT) Regency Centers Corporation REG.

Regency posted results on Feb 12. Continuing its winning streak, it reported a positive earnings surprise of 3.1% in fourth-quarter 2013. Specifically, the company's fourth-quarter core FFO per share of 66 cents exceeded the Zacks Consensus Estimate by 2 cents and the year-ago quarter figure by 3 cents.

Higher revenue growth and improved core portfolio fundamentals aided the results. This retail REIT also raised its quarterly dividend by 1.6%.

Regency primarily focuses on building a premium portfolio of grocery-anchored shopping centers. Such centers are usually necessity driven and internet resistant in nature and drive a dependable traffic. This drives value and mitigates operating risks. Additionally, the dividend increase enhances investor confidence in the stock.

Yet, a significant impending development and redevelopment pipeline increases its operational risks, while stiff competition limits any robust demand for its properties. Also, anticipation of rise in interest rates and geographical concentration of its assets remains a concern.

Over the last 30 days, the Zacks Consensus Estimate for FFO per share has remained stable at $2.69 for 2014. For 2015, it moved up by 2 cents to $2.85. The stock currently has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Investors interested in the retail REIT industry may consider stocks like Acadia Realty Trust AKR, General Growth Properties, Inc. GGP and Simon Property Group Inc. SPG. All these stocks have a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.