Regency Centers Amends And Restates Credit Facility

Regency Centers Corporation REG amended and restated $1.25-billion unsecured revolving credit facility. The move is encouraging down the line for the company's operational efficiency as it enhances the financial flexibility of the Retail REIT.

Specifically, the move helped in increasing the size of the facility to $1.25 billion from $1 billion. Also, the maturity date gets extended to Mar 23, 2022. Plus, the facility enjoys options for extension of maturity for two additional six-month periods.

In addition, the interest rate on the borrowings would be at an annual rate of LIBOR plus 87.5 basis points, conditioned upon the company's credit ratings, compared with a rate of 92.5 basis points under its earlier facility. Moreover, there is an annual facility fee of 15 basis points, which is subject to the company's credit ratings, applicable to the total $1.25-billion facility.

Further, Regency enjoys a large pool of unencumbered assets and shares a good relationship with lenders. In fact, as of Dec 31, 2017, 85.7% of its wholly-owned real estate assets were unencumbered. With a high percentage of such assets, the company can enjoy accessibility to secured and unsecured debt markets and maintain availability on the line. The company's debt maturity profile is well laddered with limited near-term maturities.

However, the market is witnessing a shift in retail shopping from brick-and-mortar stores to internet sales. Particularly, the recent effort of online retailers to go deeper into the grocery business has emerged as a concern for this REIT that focuses on building a premium portfolio of grocery-anchored shopping centers.

This is because the shift in retail shopping to internet sales is adversely affecting the retail tenants' sales, leading to retailers reconsidering their footprint and opting for store closures, thereby resulting in lesser demand for retail real estate space. Moreover, retailers unable to cope with competition are filing for bankruptcies. In fact, move outs, store closures and bankruptcies of retailers are likely to affect the company's performance in the near term.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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