10/31/2013 | By Sarah Borchersen-Keto
As Regency Centers Corp. (NYSE: REG), a national owner, operator and developer of grocery-anchored community shopping centers, marks the 20th anniversary of its initial public offering (IPO), its top priority is to grow net operating income by pushing occupancy levels above 95 percent and increasing rents more than 10 percent, according to the company’s chairman and CEO, Martin “Hap” Stein Jr.
In an interview with REIT.com, Stein said Regency plans to continue progress in “expertly and opportunistically” creating a fortress balance sheet. Additionally, Regency’s focus, according to Stein, is on finishing transactions currently in the pipeline and on finding “other great opportunities to be anchored by grocers like Whole Foods.”
Regency Centers’ 20 target markets include key coastal sites in California, as well as locations in Texas, Florida, the Raleigh-Durham region of North Carolina, the Northeast and metropolitan Chicago. Regency’s latest development in the Chicago area – Glen Gate, a 102,876-square-foot center located in the affluent North Shore suburb of Glenview, Ill. – underscores the company’s strategy of locating in densely populated areas with above-average incomes. The shopping center will be anchored by a Mariano’s Fresh Market and is expected to open in fall 2014. Regency currently has more than 300,000 square feet of retail shopping centers under construction in metropolitan Chicago.“We like the Chicago market a lot,” Stein says.
Looking ahead, Stein says Regency will focus on development “that creates terrific infill shopping centers.” He points to another recent transaction, the acquisition of Fellsway Plaza in Medford, Mass., through a joint venture with Charter Realty & Development Corp., as the type of deal that is consistent with its infill strategy. Stein notes that Fellsway Plaza, a neighborhood center anchored by a recently constructed Stop & Shop, offers a “very unique opportunity” in the supply-constrained Boston region and that he is anticipating “substantial” NOI growth from the development.
Stein says he attributes Regency’s success to “an intense focus on being the best-in-class grocery-anchored shopping center company in everything we do.” That starts, he says, with owning a high-quality portfolio with “sustainable competitive advantages,” such as merchandising that’s able to attract “great tenants, occupancy, and pricing power.”
Regency’s leading grocery tenants, such as Whole Foods, Kroger and Trader Joe’s, see average sales volume well above $500 per square foot, according to Stein, and are generating almost 20,000 shopper visits a week. Meanwhile, average household income is close to $100,000 within a three-mile radius of Regency properties, which is “substantially above” Regency’s peer shopping centers, he notes.
Since Regency’s 1993 IPO, the company has delivered total annual shareholder returns of 12 percent. “We’re committed to exceeding our peer averages if we’re going to be a best-in-class shopping center company,” Stein replies when asked if such returns are likely to continue.