2024-03-25 14:42:46 ET
Summary
- Regency Centers Corporation delivered 3.2% net operating income growth in 2023, with a marginally lower 2.25% increase expected in 2024.
- Rising occupancy and positive releasing spreads will continue to drive net operating income higher.
- I estimate the market cap rate at 6.1%, with redevelopment opportunities delivered at ?8% yields set to be value creative.
- Refinancing existing debt at market rates will impact core operating earnings by only 7.7%.
- I highlight a diversification opportunity with a smaller European peer.
Introduction
Regency Centers Corporation ( REG ) has underperformed the Vanguard Real Estate Index Fund ETF Shares ( VNQ ) in 2024, with investors potentially disappointed by the slowdown in net operating income growth projected for this year:
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Regency Centers: A High-Single Digit Return With Moderate Leverage