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Regency centered on acquisitions
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| Regency centered on acquisitions - by Nick D'Amore Through multiple funding strategies and extensive research, Regency Centers has amassed an impressive national portfolio of shopping centers with an equally noteworthy and highly successful tenant roster. In a constant state of buying and selling centers, the company has initiated an open-ended, infinite-life fund to finance acquisitions. During March, the company finalized a fund (named Regency Retail Partners, LP) with an additional $232 million of capital commitments, for a total equity of $564 million. The amount also includes the contribution of phases one and two of Vista Village into the fund at a valuation of $61 million. The 184,000-square-foot 100% leased center is located in Vista, Calif. and is anchored by Krikorian Theaters, Staples, Sprouts Market and Linens ‘N Things. Regency acts as the general partner of the fund and will receive asset management, property management and leasing fees. The fund is expected to total $1.4 billion and will be used primarily to acquire completed, company-developed and multi-anchored community centers with GLAs of 250,000 square feet. The company estimates that the $564 million currently in the fund will be able to finance the acquisition of shopping centers for the next three years. The fund will have the exclusive right to acquire all Regency-developed community centers. The sites must be at least 95% leased and occupied; at least 10 years, on average, must be remaining on the lease term for anchor tenants during which the tenants are required to pay rent. The centers also cannot be located within three miles of a non-fund-owned Regency shopping center. About $300 million will be allocated toward acquiring completed projects from third-party developers. The company also acquires existing centers, mostly through joint ventures, with $150 million to $250 million directed toward joint venture acquisitions this year. The fund will not be used to develop centers. For development, the company incorporates a corporate recycling program wherein Regency uses revenue generated from the sales of centers to develop new ones. When acquiring sites, the company prefers stabilized neighborhood or community centers anchored by best-in-class grocers or other national retailers and located in areas with demographics meeting or exceeding the MSA averages. The potential acquisitions must have high barriers to entry and be located in major metropolitan areas nationwide. The company also prefers centers that will potentially enhance property cash flow through expansion, re-merchandising or redevelopment. Regency does not have a maximum dollar amount for acquisitions and will typically acquire centers priced at a minimum of $10 million. The company is an all-cash buyer with the ability structure tax-advantaged transactions. An in-house due diligence team facilitates quick closings. Among the company’s more noteworthy centers is its first lifestyle development, Shops at Highland Village, slated to open this fall. The mixed-use center is located at the intersection of FM 407 and FM 2499 in Highland Village, Texas and features 322,000 square feet of retail and restaurants and 32,000 square feet of office space. The project will be the lifestyle component of a two-million-square-foot. retail center and will be anchored by Barnes & Noble and AMC Theaters. In addition, the company’s portfolio includes Silver Spring Square, a 486,812-square-foot center located at the intersection of Carlisle Pike and Lambs Gap Road in Silver Spring, Pa. The development is Regency’s first Wegmans-anchored center, with Target co-anchoring. Wegmans is slated to open during October. Cotenants include Bed Bath & Beyond, Ross Dress for Less and Best Buy. The company has also revamped Cameron Village, located at the intersection of Clark Avenue and Oberlin Road in Raleigh, N.C. and built in 1949 as the first regional shopping center in the Southeast. Fast-forward almost 60 years and the 629,146-square-foot center is anchored by Harris Teeter, Eckerd and The Fresh Market and cotenanted by Ann Taylor and Talbots. The center also features Cameron Canvas, which showcases artwork throughout the year. With its centers primarily anchored by grocery stores, the company is extremely selective about the location of the centers and which grocery stores will work best within the area’s demographics. About 90% of the grocers anchoring Regency’s centers are in the top three in terms of market share in their respective trade areas and average sales of more than $460 per square foot, which is 23% higher than the national average. In addition, Regency boasts high occupancy rates and equally high renewal rates, averaging 76% during the last six years. The impressive numbers are the result of the company’s successful strategy of locating centers in areas with dense populations, consciously tenanting the projects with the top retailers in the categories that best suit Regency’s neighborhood or community shopping centers. About 75% of the company’s portfolio includes national and regional chains. The company estimates that nearly 11% of the U.S. population lives within three miles of a Regency shopping center. Regency’s portfolio of shopping centers totals 405 projects with a total GLA of 53.5 million square feet. The properties have a total cap of $7.4 billion with a total cost before depreciation of $3.9 billion. Joan and Martin E. Stein, Sr. formed the company in 1963 and went public during October 1993, becoming a real estate investment trust listed on the New York Stock Exchange. In 1996, the company completed a strategic alliance with Security Capital and acquired Branch Properties, LP the following year. During 1998, Regency acquired Midland Group, the largest developer of Kroger-anchored shopping centers in the U.S., and a year later, merged with Pacific Retail Trust, a $1.1 billion private real estate company and one of the largest owners, operators and developers of grocery-anchored infill centers in the West. The company currently operates in 20 offices nationwide with more than 400 employees. Besides acquiring centers, Regency is also the exclusive tenant representative for Stein Mart, having procured 150 of the 265 Stein Mart stores in operation since 1992. In addition, the company represents Shoe Carnival, Books-A-Million, CompUSA and Costco and has brokered 45 locations for these chains. For more information, contact Regency Center, One Independent
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