We are changing our long-term recommendation for Regency Centers (REG) to Underperform as we anticipate it to move well below the broader market. The prolonged recession has led to increased tenant bankruptcies, which in turn have led to a decline in occupancy and an increase in vacancy rates.
In addition, consumer discretionary spending continues to be under severe stress with a reduction in disposable income. However, Regency Centers is one of the largest retail-strip format REITs in the U.S. with properties in high income, high-barrier markets that are tenanted by leading national and regional retailers.
If REG can weather the storm, it may expect a reversal of fortunes in the future. For now, we have a 6-month target price of $30.00 per share.Zacks Investment Research
