Analyst Note| Kevin Brown |
The first quarter saw significant sequential improvement in retail operations for no-moat Regency Centers, giving us confidence in our $61 fair value estimate. Same-store occupancy of 92.2% was down 10 basis points in the first quarter compared to the fourth quarter of 2020, though that is better than our estimate of a 50-basis-point drop. Re-leasing spreads flattened out with just 0.2% growth on all leases, though that is roughly in line with our estimate. Rent collection saw modest improvement to 93% in the first quarter and Regency continues to collect on owed rent from 2020 with the company to date collecting 85%, 91%, and 93% for the second, third, and fourth quarters of 2020, respectively. While the uncollected rent caused same-store net operating income to decline 1.6% year over year, that is far better than the double-digit year-over-year declines seen the prior three quarters. As a result, Regency reported funds from operations of $0.86 in the first quarter, 5 cents below the $0.91 figure reported in the first quarter of 2020 but 13 cents over the $0.73 figure reported in the fourth quarter of 2020.