Regency Centers Corporation (REG), a leading operator and developer of grocery-anchored and community shopping centers across the U.S., recently purchased Glen Oak Plaza, a 62,443 square feet retail center in Chicago, for $18 million. The mall is currently 97% leased and is anchored by drugstore chain Walgreen Co. (WAG) and specialty grocer store Trader Joe.
The acquisition was in line with the long-term strategy of the company to own assets in high-income in-fill markets that are tenanted by market-dominant grocers, category-leading anchors, specialty retailers and restaurants. Regency Centers acquired the property from a Chicago-area family real estate partnership.
The average household income in the markets where Regency Centers has a significant presence is over $90,000, nearly 30% higher than the national average. As of June 30, 2010, the company owned 398 retail properties (including joint ventures), out of which 16 retail centers totaling over 2.2 million square feet are located in the Chicago area.
Regency Centers maintains a conservative capital structure and follows a self-funding capital strategy to fund its growth, which includes disposal of non-strategic assets and a continued focus on industry-leading co-investment partnership programs.
In addition, the company’s dominant anchor tenants are grocery stores, which are comparatively less affected during recession. Consequently, Regency Centers has a relatively steady source of revenue. We maintain our Neutral recommendation on Regency Centers, which currently has Zacks #3 Rank that translates into a short-term ‘Hold’ rating.
