Regency Centers Hits 52-Week High - Analyst Blog

Shares of Regency Centers Corporation REG reached a 52-week high of $55.94 during the trading session on Friday, Jun 20, 2014, thanks to increased investors' expectation following the company's efforts to boost shopping experience at its properties, solid first-quarter results and abatement of fears of interest rate hike, at least for the short term, following the Fed's meeting.

The closing price of $55.85 of this retail real estate investment trust (REIT) represents a robust year-to-date return of over 23%. The average trading volume for the session was nearly 0.7 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving retail market fundamentals and the company's efforts to leverage on it, healthy operating portfolio performance, favorable interest rate environment and expected long-term growth of 5.6%.

Growth Drivers

Regency is making concerted efforts to improve the quality of its properties to draw in shoppers. As part of these efforts, the company recently added ULTA Salon, Cosmetics & Fragrance, Inc. ULTA and 18|8 as tenants at 4S Commons Town Center in San Diego, CA, in order to provide its shoppers with a better salon experience.

Moreover, in recent times, the company disclosed the redevelopment of a community center – Kings Park Shopping Center – based in Burke, VA to expand the center and enhance customers' shopping experience (read: Regency Refurbishes VA Asset to Boost Footfall). We expect such measures to aid Regency in increasing the footfall at its properties.    

Continuing with its winning streak, Regency reported a positive earnings surprise of 6.15% in first-quarter 2014. The company's first-quarter core funds from operations (core FFO) per share of 69 cents exceeded the Zacks Consensus Estimate by 4 cents and the year-ago quarter figure by 5 cents. Higher revenue growth aided the company's results and this retail REIT raised its outlook for 2014.

Regency, which has surprised in the last four quarters as well, primarily focuses on building a premium portfolio of grocery-anchored shopping centers. Such centers are usually necessity driven and drive a dependable traffic. Additionally, the outlook boosts investors' confidence in the stock.

Estimates Revision Show Potency

Over the last 30 days, 5 estimates moved north for 2014 while 3 estimates climbed up for 2015. However, there were no southward revisions in estimates for 2014 while only one estimate moved down for 2015. Currently, the Zacks Consensus Estimate for 2014 FFO per share stands at 2.72 while that for 2015 is 2.86, reflecting a 3.32% and a 5.25% increase, respectively.

Other Stocks to Consider

Apart from Regency, other REITs that reached 52-week highs on Jun 20 include LaSalle Hotel Properties LHO, Weingarten Realty Investors WRI and Equity LifeStyle Properties, Inc. ELS.


Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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