Regency Centers Corp. (REG), a leading operator and developer of grocery-anchored and community shopping centers across the U.S., has recently announced the opening of three new shopping centers, representing a combined investment of $41 million. Spanning 263,000 square feet of retail space, the properties include ‘Market at Colonnade’ in Raleigh, North Carolina, ‘NorthGate Village’ in Greeley, Colorado and ‘Harris Crossing’ in Wake Forest, North Carolina.
‘Market at Colonnade’ is a 57,503 square foot neighborhood center anchored by Whole Foods Market – the world’s largest retailer of natural and organic foods with stores throughout North America and the U.K. The shopping mall serves some of the most affluent neighborhoods and is the first retail project in the region that is designed and constructed to meet high environmental standards.
‘NorthGate Village’, a 139,912 square foot neighborhood center, is anchored by a King Soopers – one of the two supermarket brands of The Kroger Co. (KR) in the U.S. ‘Harris Crossing’, a 65,150 square foot neighborhood center, is anchored by Harris Teeter – a leading supermarket chain.
With the introduction of these centers, Regency presently has 29 in-process projects located in 13 states across the country. The significant development pipeline is a testimony of the fact that the current retail sentiment is positive. The company expects to develop about $600 million to $700 million worth of projects within the next five years.
The development climate is anticipated to remain favorable with lower land and construction costs due to distressed selling by owners who could not refinance their loans. Regency would like to capitalize on this opportunity as it does not rely upon external financing for construction purposes and has a full-service development team in function.
Regency seeks to own assets in high-income in-fill markets that are tenanted by market-dominant grocers, category-leading anchors, specialty retailers and restaurants. As of December 31, 2010, Regency owned 396 retail properties, including properties held in joint ventures, spanning 53.1 million square feet.
With properties in high-barrier markets, Regency’s retail strip center portfolio is among the best in the sector, which allows it to continually perform at the top-end of its peer group. The company’s dominant anchor tenants are grocery stores, a segment that is comparatively less affected in a challenging economy. Consequently, Regency has a relatively steady source of revenue.
We maintain our long-term ‘Neutral’ recommendation on Regency, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.
KROGER CO (KR): Free Stock Analysis Report
REGENCY CTRS CP (REG): Free Stock Analysis Report
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