# Regency Centers Corp: Form 10-Q for the period ended Jun 30, 2020

- Company: [Regency Centers Corp](/companies/reg.md) (CIK 910606)
- Form: 10-Q
- Filed: 2020-08-04
- Accepted by EDGAR: Aug 4, 2020, 13:17 ET
- Period: 2020-06-30
- Accession: 0001564590-20-035935
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/910606/000156459020035935/reg-10q_20200630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/910606/000156459020035935/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2020-04-01 to 2020-06-30 | $231.1m | us-gaap:Revenues |
| Revenue | 6 months, 2020-01-01 to 2020-06-30 | $514.8m | us-gaap:Revenues |
| Interest expense | 3 months, 2020-04-01 to 2020-06-30 | $40.4m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2020-01-01 to 2020-06-30 | $77.8m | us-gaap:InterestExpense |
| Net income | 3 months, 2020-04-01 to 2020-06-30 | $19.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2020-01-01 to 2020-06-30 | −$6.3m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months, 2020-04-01 to 2020-06-30 | 169,971,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2020-01-01 to 2020-06-30 | 168,781,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2020-01-01 to 2020-06-30 | $217.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 6 months, 2020-01-01 to 2020-06-30 | $200.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2020-01-01 to 2020-06-30 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2020-06-30 | $11.39bn | us-gaap:Assets |
| Total liabilities | at 2020-06-30 | $5.19bn | us-gaap:Liabilities |
| Long-term debt | at 2020-06-30 | $4.29bn | us-gaap:LongTermDebt |
| Shareholders' equity | at 2020-06-30 | $6.12bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 110,767 characters.

### Forward-Looking Statements

Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Regency’s future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance,” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained, and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.

Our operations are subject to a number of risks and uncertainties including, but not limited to, those listed below. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our other filings and submissions to the SEC, which provide much more information and detail on the risks described below. If any of the events described in the following risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected. Forward-looking statements are only as of the date they are made, and Regency undertakes no duty to update its forward-looking statements except as required by law. These risks and events include, without limitation:

### Risk Factors Related to the COVID-19 Pandemic

- Pandemics or other health crises, such as the COVID-19 pandemic, may adversely affect our tenants’ financial condition, the profitability of our properties, our access to the capital markets and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

### Risk Factors Related to the Retail Industry

- Economic and market conditions may adversely affect the retail industry and consequently reduce our revenues and cash flow, and increase our operating expenses.
- Shifts in retail sales and delivery methods between brick and mortar stores, e-commerce, home delivery, and curbside pick-up may adversely impact our revenues and cash flows.
- Changing economic and detail market conditions in geographic areas where our properties are concentrated may reduce our revenues and cash flow.
- Our success depends on the success and continued presence of our “anchor” tenants.
- A significant percentage of our revenues are derived from smaller “shop space” tenants and our net income may be adversely impacted if our smaller shop tenants are not successful.
- We may be unable to collect balances due from tenants in bankruptcy.

### Risk Factors Related to Real Estate Investments and Operations

- We are subject to numerous laws and regulations that may adversely affect our operations or expose us to liability.
- Our real estate assets may decline in value and be subject to impairment losses which may reduce our net income.
- We face risks associated with development, redevelopment and expansion of properties.
- We face risks associated with the development of mixed-use commercial properties.
- We face risks associated with the acquisition of properties.
- We face risks if we expand into new markets.
- We may be unable to sell properties when desired because of market conditions.
- Certain of the properties in our portfolio are subject to ground leases; if we are unable to renew a ground lease, purchase the fee simple interest, or are found to be in breach of a ground lease, we may be adversely affected.
- Climate change may adversely impact our properties directly and may lead to additional compliance obligations and costs as well as additional taxes and fees.
- Geographic concentration of our properties makes our business more vulnerable to natural disasters, severe weather conditions and climate change.
- An uninsured loss or a loss that exceeds the insurance coverage on our properties may subject us to loss of capital and revenue on those properties
- Loss of our key personnel may adversely affect our business and operations.
- We face competition from numerous sources, including other REITs and other real estate owners.
- Costs of environmental remediation may reduce our cash flow available for distribution to stock and unit holders.
- Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unexpected expenditures.
- The unauthorized access, use, theft or destruction of tenant or employee personal, financial or other data or of Regency’s proprietary or confidential information stored in our information systems or by third parties on our behalf could impact our reputation and brand and expose us to potential liability and loss of revenues.

### Risk Factors Related to Our Partnership and Joint Ventures

- We do not have voting control over all of the properties owned in our co-investment partnerships and joint ventures, so we are unable to ensure that our objectives will be pursued.
- The termination of our partnerships may adversely affect our cash flow, operating results, and our ability to make distributions to stock and unit holders.

### Risk Factors Related to Funding Strategies and Capital Structure

- Our ability to sell properties and fund acquisitions and developments may be adversely impacted by higher market capitalization rates and lower NOI at our properties which may dilute earnings.
- We may acquire properties or portfolios of properties through tax-deferred contribution transactions, which may result in stockholder dilution and limit our ability to sell such assets.
- We depend on external sources of capital, which may not be available in the future on favorable terms or at all.
- Our debt financing may adversely affect our business and financial condition.
- Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition.
- Increases in interest rates would cause our borrowing costs to rise and negatively impact our results of operations.
- Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not perform and that the hedge will not yield the economic benefits we anticipate, which may adversely affect us.
- The interest rates on our Unsecured Credit facilities as well as on our variable rate mortgages and interest rate swaps might change based on changes to the method in which LIBOR or its replacement rate is determined.

### Risk Factors Related to our Company and the Market Price for Our Securities

- Changes in economic and market conditions may adversely affect the market price of our securities.
- There is no assurance that we will continue to pay dividends at historical rates.
- Enhanced focus on corporate responsibility and sustainability, specifically related to environmental, social and governance matters, may impose additional costs and expose us to new risks.

### Risk Factors Related to Laws and Regulations

- If the Parent Company fails to qualify as a REIT for federal income tax purposes, it would be subject to federal income tax at regular corporate rates.
- Recent changes to the U.S. tax laws may have a significant negative impact on the overall economy, our tenants, our investors, and our business.
- Dividends paid by REITs generally do not qualify for reduced tax rates.
- Certain foreign stockholders may be subject to U.S. federal income tax on gain recognized on a disposition of our common stock if we do not qualify as a “domestically controlled” REIT.
- Legislative or other actions affecting REITs may have a negative effect on us.
- Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
- Restrictions on the ownership of the Parent Company's capital stock to preserve its REIT status may delay or prevent a change in control.
- The issuance of the Parent Company's capital stock may delay or prevent a change in control.

### Non-GAAP Measures

In addition to the required Generally Accepted Accounting Principles (“GAAP”) presentations, we use certain non-GAAP performance measures as we believe these measures improve the understanding of the Company's operational results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations or future prospects of the Company.

The following terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results:

- *Development Completion* is a property in development that is deemed complete upon the earliest of: (i) 90% of total estimated net development costs have been incurred and percent leased equals or exceeds 95%, or (ii) the property features at least two years of anchor operations, or (iii) three years have passed since the start of construction. Once deemed complete, the property is termed a Retail Operating Property the following calendar year.
- *Fixed Charge Coverage Ratio* is defined as Operating EBITDA*re* divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders.
- *NAREIT EBITDAre* is a measure of REIT performance, which the National Association of Real Estate Investment Trusts (“NAREIT”) defines as net income, computed in accordance with GAAP, excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) gains on sales of real estate, (v) impairments of real estate, and (vi) adjustments to reflect the Company's share of unconsolidated partnerships and joint ventures.
- *NAREIT Funds from Operations (“NAREIT FFO”)* is a commonly used measure of REIT performance, which NAREIT defines as net income, computed in accordance with GAAP, excluding gains on sales and impairments of real estate, net of tax, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute NAREIT FFO for all periods presented in accordance with NAREIT's definition.

Companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since NAREIT FFO excludes depreciation and amortization and gains on sale and impairments of real estate, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations. We provide a reconciliation of Net Income Attributable to Common Stockholders to NAREIT FFO.

- *Net Operating Income (“NOI”)* is the sum of base rent, percentage rent, recoveries from tenants, other lease income, and other property income, less operating and maintenance expenses, real estate taxes, ground rent, and uncollectible lease income. NOI excludes straight-line rental income and expense, above and below market rent and ground rent amortization, tenant lease inducement amortization, and other fees. We also provide disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.
- A *Non-Same Property* is any property, during either calendar year period being compared, that was acquired, sold, a Property in Development, a Development Completion, or a property under, or being positioned for, significant redevelopment that distorts comparability between periods. Non-retail properties and corporate activities, including the captive insurance program, are part of Non-Same Property.
- *Operating EBITDAre* begins with NAREIT EBITDA*re* and excludes certain non-cash components of earnings derived from above and below market rent amortization and straight-line rents. We provide a reconciliation of Net income to NAREIT EBITDA*re* to Operating EBITDA*re.*
- *Pro-Rata* information includes 100% of our consolidated properties plus our economic share (based on our ownership interest) in our unconsolidated real estate investment partnerships.

We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with the Company’s reported results under GAAP. We believe presenting our Pro-rata share of assets, liabilities, operating results, and certain metrics, along with other non GAAP measures, makes comparisons of other REITs' operating results to ours more meaningful. The Pro-rata information provided is not, nor is it intended to be, presented in accordance with GAAP. The Pro-rata supplemental details of assets and liabilities and supplemental details of operations reflect our proportionate economic ownership of the assets, liabilities, and operating results of the properties in our portfolio.

The Pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the assets, liabilities, and operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the Pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which generally provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our Pro-rata share.

The presentation of Pro-rata information has limitations which include, but are not limited to, the following:

- The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting or allocating noncontrolling interests, and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and
- Other companies in our industry may calculate their Pro-rata interest differently, limiting the comparability of Pro-rata information.

Because of these limitations, the Pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the Pro-rata information as a supplement.

- *Property In Development* includes properties in various stages of ground-up development.
- *Property In Redevelopment* includes Retail Operating Properties under redevelopment or being positioned for redevelopment. Unless otherwise indicated, a Property in Redevelopment is included in the Same Property pool.
- *Retail Operating Property* is any retail property not termed a Property in Development. A retail property is any property where the majority of the income is generated from retail uses.
- *Same Property* is a Retail Operating Property that was owned and operated for the entirety of both calendar year periods being compared. This term excludes Properties in Development, prior year Development Completions, and Non-Same Properties. Properties in Redevelopment are included unless otherwise indicated.

### Overview of Our Strategy

Regency Centers Corporation began its operations as a publicly-traded REIT in 1993, and as of June 30, 2020, had full or partial ownership interests in 415 retail properties primarily anchored by market leading grocery stores. Our properties are principally located in affluent and infill trade areas of the United States, and contain 52.2 million square feet (“SF”) of gross leasable area (“GLA”). All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P., our wholly-owned subsidiaries, and through our co-investment partnerships.

As of June 30, 2020, the Parent Company owns approximately 99.6% of the outstanding common partnership units of the Operating Partnership.

Our mission is to be the preeminent national owner, operator, and developer of shopping centers, creating places that provide a thriving environment for outstanding retailers and service providers to connect with the surrounding neighborhoods and communities.

Our goals are to:

- Own and manage a portfolio of high-quality neighborhood and community shopping centers anchored by market leading grocers and located in affluent suburban and near urban trade areas in the country’s most desirable metro areas. We expect that this combination will produce highly desirable and attractive centers with best-in-class retailers. These centers should command higher rental and occupancy rates resulting in excellent prospects to grow NOI;
- Maintain an industry leading and disciplined development and redevelopment platform to deliver exceptional retail centers at higher returns as compared to acquisitions;
- Support our business activities with a conservative capital structure, including a strong balance sheet;
- Attain best-in-class environmental, social, and governance practices;
- Engage an exceptional and diverse team that is guided by our strong values and special culture, while fostering an environment of innovation and continuous improvement; and
- Increase earnings per share and dividends and generate total returns at or near the top of our shopping center peers.

### COVID-19 Pandemic

On March 11, 2020, a novel coronavirus disease (“COVID-19”) was declared a pandemic (“COVID-19 pandemic”) by the World Health Organization as the disease spread throughout the world. During March 2020, COVID-19 began to appear in and spread throughout the United States resulting in federal, state and local government agencies issuing regulatory orders enforcing social distancing and limiting group gatherings in order to further prevent the spread. While restrictions vary by state, generally, businesses deemed essential to the public are able to operate while non-essential businesses are not. Grocer tenants that anchor over 80% of our operating centers are considered essential businesses and the majority have remained open and operational to serve the residents of their communities. Many restaurants are also considered essential, although the social distancing and group gathering limitations can significantly reduce, or in some cases, prevent dine-in activity. Many non-restaurant retailers have been, likewise, restricted by these limitations, especially to the extent they were not determined to be essential business. As a result, many retailers have had to evaluate alternate means of providing their goods and services to the public or, in the case of non-essential tenants, to close as a result of this pandemic.

We have long had a business continuity and disaster recovery plan which has been successfully implemented in the past. This experience enabled us to continue operating productively during the COVID-19 pandemic while our employees work safely from home, as their roles permit, during the early stages of the COVID-19 pandemic. We have maintained, and expect to continue to maintain, our financial reporting systems as well as our internal controls over our financial reporting and disclosure controls and procedures. We have since developed and executed our office reopening plan allowing employees, in our current stage, the option to work from home or the office. We have implemented CDC-approved protocols and developed detailed plans to prioritize the well-being of our employees, and encourage our tenants to similarly follow all rules and guidelines. All employees are required to complete training before returning to the office and are subject to a daily health check in order to work in the office. In addition, to maximize social distancing, we have implemented split scheduling allowing for greater distance between employee work stations. We will continue to make necessary adjustments to our plans as facts and circumstances change and evolve.

Our financial results for the six months ended June 30, 2020 have been significantly impacted by the COVID-19 pandemic resulting in a Net loss attributable to common stockholders, including a Goodwill impairment charge and changes in our expected collectibility of Lease income which also reduces our non-GAAP measures. On March 30, 2020, we withdrew our fiscal 2020 guidance previously provided on February 12, 2020. During March, we strengthened our liquidity position through the settlement of our 2019 forward equity sales under our then-current ATM program at a weighted average sales price of $67.99 per share generating $125.8 million in net proceeds. Additionally, during May, we issued $600 million of 10 year senior unsecured public notes at 3.70%, which priced at

99.805%. The proceeds of the offering were used to increase liquidity, including repaying the outstanding balance on our Line, and we expect to use the remaining proceeds for general corporate purposes, including the repayment in September 2020 of our $300 million 3.75% Notes due 2022. As of June 30, 2020, we have a remaining borrowing capacity of $1.2 billion on our Line.

The profitability of our properties depends, in part, on the willingness of customers to visit our tenants’ businesses. Although our tenant base includes essential businesses, such as grocery stores, which have been able to continue to operate and serve their customers, many non-essential businesses are experiencing significant declines in customer traffic or have temporarily closed their stores in reaction to government regulatory orders or efforts to support social distancing. The effects from store closures and social distancing practices have had a significant adverse financial impact to certain of our non-essential business tenants, including their ability to pay their rent obligations. Many retail businesses, both essential and non-essential, are taking additional measures to ensure the health and safety of their customers, the cost of which further impacts their profitability. The COVID-19 pandemic is still evolving, making the broader implications on our future results of operations and overall financial performance uncertain at this time. Although much of our lease income is derived from contractual rent payments, our tenants’ ability to meet their lease obligations has been negatively impacted by the disruptions and uncertainties of the COVID-19 pandemic.

During the three months ended June 30, 2020, state and local governments began to ease restrictions, allowing many retailers to reopen or increase occupancy of their stores from previously imposed limits. Although many retailers have reported initially strong sales results upon reopening, the risk of diminished sales and future closures may occur as the virus remains active and continues to spread, which may negatively impact customers’ willingness to shop and dine at retail centers. In many areas of the country, increased numbers of cases have been reported resulting in some states and municipalities re-imposing previously-lifted restrictions in an attempt to control the further spread of the virus, and may introduce further restrictions in the future which would have an unfavorable impact on the economy and the businesses of many of our tenants. In addition, government support programs designed to assist businesses, including certain of our tenants, may not be continued or renewed. To the extent such tenants used funds from these programs to pay rent, a discontinuance or non-renewal of such programs could impact the ability of such tenants to pay rent, which could adversely impact us. If tenants are unable to sustain their businesses, we may lose existing tenants which will result in reduced lease income and occupancy. Further, suitable replacement tenants may also be difficult to find for an extended period and the terms of our leases with those replacement tenants may not be as favorable to us as the terms of our agreements with our existing tenants.

Since the COVID-19 pandemic and resulting restrictions began, the Company has been closely monitoring its cash collections which have significantly declined, most notably from tenants whose businesses are classified as non-essential. Approximately 72% of the base rent billed for the three months ended June 30, 2020 has been collected through July 31, 2020. The COVID-19 pandemic has resulted in certain tenants requesting concessions from rent obligations, including deferrals, abatements, and requests to renegotiate future rents, while some tenants have been unable to reopen or have not honored the terms of their existing lease agreements. Since the COVID-19 pandemic began, we have entered into over 600 mutually acceptable agreements with tenants, representing $16.4 million of rent or 1.8% of annual base rent, within our consolidated real estate portfolio and our unconsolidated real estate investment partnerships, to enable them to defer a portion of their rental payments and repay them over future periods. We expect to continue to work with other tenants, which may result in further rent concessions, as determined to be necessary and appropriate. While we believe the deferred rent will be paid by the tenants in accordance with the terms of their agreements, due to the uncertainty surrounding the COVID-19 pandemic, there can be no assurances that all such deferred rent will ultimately be paid, or paid within the timeframes negotiated and agreed upon.

The duration and severity of the health crisis in the United States and the speed at which the country, states and localities are able to safely reopen and remain open, will significantly impact the overall economy, our retail tenants, and therefore our results of operations. As such, the effects of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial position until future periods and could result in a further materially adverse impact to our financial condition and results of operations. See also Part II, Item 1A. Risk Factors for further discussion.

### Executing on our Strategy

#### During the six months ended June 30, 2020:

We had Net (loss) attributable to common stockholders of $(6.3) million, including a $132.1 million Goodwill impairment charge, as compared to Net income attributable to common stockholders of $142.2 million during the six months ended June 30, 2020 and 2019, respectively.

Our same property NOI:

- Our pro-rata same property NOI, excluding termination fees, declined 10.3%, primarily attributable to uncollectible Lease income in this current COVID-19 pandemic environment. Approximately 72% of pro-rata base rent billed for the three months ended June 30, 2020 has been collected through July 31, 2020.
- We executed 602 new and renewal leasing transactions representing 2.6 million pro-rata SF, with trailing twelve month rent spreads of 7.0% on comparable retail operating property spaces.
- At June 30, 2020, our total property portfolio was 94.0% leased, while our same property portfolio was 94.5% leased.

We continued our development and redevelopment of high quality shopping centers:

- We currently have a total of 17 properties in process of development or redevelopment.
- Due to the impacts of the COVID-19 pandemic, in-process projects in certain markets have stopped or have slowed significantly due to municipal orders requiring persons not engaged in essential business to remain at home, due to health concerns and labor limitations, or while we evaluate current market conditions. We are continuing to assess the impact of these delays to our in-process projects as well as the feasibility of our pipeline projects and non-essential capital expenditures in order to prioritize cash flow, increase liquidity, and preserve financial flexibility.

We maintained a conservative balance sheet providing liquidity and financial flexibility to respond to these uncertain economic times and to cost effectively fund investment opportunities and debt maturities:

- During March, we settled our forward equity sales under our ATM program that we entered into during 2019 by delivering 1,894,845 shares of common stock and receiving $125.8 million in net proceeds. We used these proceeds for working capital and general corporate purposes. Under our current ATM equity offering program, we may sell up to $500 million of common stock at prices determined by the market at the time of sale.
- In order to further strengthen our financial position and balance sheet, to enhance our financial liquidity, and to provide financial flexibility to continue our business initiatives amid the evolving effects of the COVID-19 pandemic, in May 2020, we issued $600 million of 10 year senior unsecured public notes at 3.70%, which priced at 99.805%. The proceeds of the offering were used to increase liquidity, including repaying the outstanding balance on our Line, and we expect the remaining proceeds will be used for general corporate purposes, including early repayment of a portion of our outstanding debt.
- On August 3, 2020, the Operating Partnership notified U.S. Bank National Association, as trustee, of its intent to redeem on September 2, 2020 the entire $300 million outstanding of 3.75% Notes due 2022. The redemption price will be determined in accordance with the applicable indenture and is expected to be approximately $325.1 million including accrued and unpaid interest through the proposed redemption date and a make-whole amount as defined in such indenture.
- As of June 30, 2020, we have a borrowing capacity of $1.2 billion on our Line.
- At June 30, 2020, our pro-rata net debt-to-operating EBITDA*re* ratio on a trailing twelve month basis was 5.6x.

### Property Portfolio

The following table summarizes general information related to the Consolidated Properties in our portfolio:

*(GLA in thousands)*

|  | June 30, 2020 | December 31, 2019 |
| --- | ---: | ---: |
| Number of Properties | 300 | 303 |
| Properties in Development and Redevelopment | 13 | 16 |
| GLA | 37,229 | 37,556 |
| % Leased – Operating and Development | 93.9% | 94.7% |
| % Leased – Operating | 94.1% | 94.9% |
| Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions. | $22.73 | $22.38 |

The following table summarizes general information related to the Unconsolidated Properties owned in co-investment partnerships in our portfolio:

*(GLA in thousands)*

|  | June 30, 2020 | December 31, 2019 |
| --- | ---: | ---: |
| Number of Properties | 115 | 116 |
| Properties in Development and Redevelopment | 4 | 6 |
| GLA | 14,952 | 15,050 |
| % Leased – Operating and Development | 94.2% | 95.2% |
| % Leased –Operating | 94.2% | 95.2% |
| Weighted average annual effective rent PSF, net of tenant concessions | $21.78 | $21.69 |

36

For the purpose of the following disclosures of occupancy and leasing activity, “anchor space” is considered space greater than or equal to 10,000 SF and “shop space” is less than 10,000 SF. The following table summarizes pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping center portfolio:

|  | June 30, 2020 | December 31, 2019 |
| --- | ---: | ---: |
| % Leased – All Properties | 93.9% | 94.8% |
| Anchor space | 96.6% | 97.3% |
| Shop space | 89.4% | 90.6% |

During the COVID-19 pandemic, a number of tenants at our properties either were required or elected to temporarily close. Some of these tenants may be unable to sustain their business models in this environment and may fail in the presence of COVID-19 restrictions and concerns. As such, our occupancy rates could decline in future periods as the pandemic continues to impact our tenants. If conditions do not sufficiently and sustainably improve for these tenants, they may be unable to pay deferred or future contractual base rent and recoveries owed to us when due or otherwise. Given the decline in employment and gross domestic product, many retail tenants will experience economic challenges beyond those caused by COVID-19 pandemic restrictions that may leave them unable to pay rent or renew leases. In addition, if any of our tenants are unable to continue as going concerns as a result of the current economic conditions, we may lose existing tenants which will result in reduced lease income and occupancy at our centers. We may also be unable to find suitable replacement tenants for an extended period or at all and the terms of our leases with those replacement tenants may not be as favorable to us as the terms of our agreements with our existing tenants.

The following table summarizes leasing activity, including our pro-rata share of activity within the portfolio of our co-investment partnerships:

| Anchor Leases | Six months ended June 30, 2020 Leasing Transactions | SF (in thousands) | Base Rent PSF | Tenant Allowance and Landlord Work PSF | Leasing Commissions PSF |
| --- | ---: | ---: | ---: | ---: | ---: |
| New | 5 | 130 | $10.92 | $4.68 | $5.53 |
| Renewal | 52 | 1,489 | 13.04 | 0.62 | 0.36 |
| Total Anchor Leases | 57 | 1,619 | $12.87 | $0.95 | $0.77 |
| Shop Space |  |  |  |  |  |
| New | 140 | 208 | $39.59 | $40.50 | $13.33 |
| Renewal | 405 | 739 | 32.03 | 0.85 | 0.51 |
| Total Shop Space Leases | 545 | 947 | $33.69 | $9.56 | $3.32 |
| Total Leases | 602 | 2,566 | $20.55 | $4.12 | $1.71 |

| Anchor Leases | Six months ended June 30, 2019 Leasing Transactions | SF (in thousands) | Base Rent PSF | Tenant Allowance and Landlord Work PSF | Leasing Commissions PSF |
| --- | ---: | ---: | ---: | ---: | ---: |
| New | 12 | 220 | $21.17 | $47.71 | $5.34 |
| Renewal | 52 | 1,460 | 12.69 | 0.90 | 0.10 |
| Total Anchor Leases | 64 | 1,680 | $13.80 | $7.04 | $0.78 |
| Shop Space |  |  |  |  |  |
| New | 227 | 403 | $32.64 | $29.43 | $8.89 |
| Renewal | 449 | 770 | 32.05 | 1.09 | 0.55 |
| Total Shop Space Leases | 676 | 1,173 | $32.25 | $10.82 | $3.41 |
| Total Leases | 740 | 2,853 | $21.39 | $8.59 | $1.86 |

The weighted average base rent per square foot on signed shop space leases during 2020 was $33.69, which is greater than the weighted average annual base rent per square foot of all shop space leases due to expire during the next 12 months of $33.26. As compared to prior rents on these same spaces, new and renewal rent spreads were positive for anchor and shop space leases. However, future rent spreads could be negatively impacted if the COVID-19 pandemic results in oversupply of vacant retail in the markets in which we operate.

Since the COVID-19 pandemic impacted the United States, new leasing activity has significantly declined as businesses delay executing leases amidst the immediate and uncertain future economic impacts. This, coupled with potential retail failures, may result in decreased demand for retail space in our centers, which could result in pricing pressure on base rent. Additionally, delays in construction of tenant improvements due to shelter-in-place orders continues in certain markets, and it may take longer before new tenants are able to open and commence rent payments.

#### Significant Tenants and Concentrations of Risk

We seek to reduce our operating and leasing risks through geographic diversification and by avoiding dependence on any single property, market, or tenant. Based on percentage of annualized base rent, the following table summarizes our most significant tenants, of which the top four are grocers and considered essential businesses in this current COVID-19 pandemic environment:

| Tenant | June 30, 2020 Number of Stores | Percentage of Company- owned GLA (1) | Percentage of Annualized Base Rent (1) |
| --- | ---: | ---: | ---: |
| Publix | 68 | 6.6% | 3.3% |
| Kroger | 55 | 6.7% | 3.0% |
| Albertsons Companies | 46 | 4.3% | 2.8% |
| Whole Foods | 34 | 2.5% | 2.5% |
| TJX Companies | 63 | 3.2% | 2.5% |

(1) Includes Regency's pro-rata share of Unconsolidated Properties and excludes those owned by anchors.

#### Bankruptcies and Credit Concerns

The impact of bankruptcies may increase significantly if tenants occupying our centers are unable to withstand and recover from the disruptions caused by the COVID-19 pandemic, which could materially adversely impact Lease income and could result in greater legal expenses within General and administrative expenses. Since the pandemic began, we have seen an increase in the number of tenants filing for bankruptcy. Our management team devotes significant time to researching and monitoring retail trends, consumer preferences, customer shopping behaviors, changes in retail delivery methods, shifts to e-commerce, and changing demographics in order to anticipate the challenges and opportunities impacting the retail industry. Amidst the COVID-19 pandemic there is a greater focus on whether tenants are considered essential or non-essential retail, which for now directly impacts the retailer’s ability to operate and generate sufficient cash flows to meet their operating expenses, including lease payments. Tight credit markets could negatively impact consumer spending and, along with large-scale business failures, have an adverse effect on our results from operations. We seek to mitigate these potential impacts through tenant diversification, replacing weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive customer traffic, and maintaining a presence in affluent suburbs and dense infill trade areas. During the COVID-19 pandemic, we have and may continue to agree to defer rent or grant other concessions for certain tenants impacted by temporary closures.

We closely monitor the operating performance and rent collections of tenants in our shopping centers as well as those retailers experiencing significant changes to their business models as a result of reduced customer traffic in their stores and increased competition from e-commerce sales. Retailers who are unable to withstand these and other business pressures, such as significant cash flow declines or debt maturities, may file for bankruptcy. As a result of our research and findings, we may reduce new leasing, suspend leasing, or curtail allowances for construction of leasehold improvements within certain retail categories or to a specific retailer in order to reduce our risk from bankruptcies and store closings.

Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to adjudicate our claim and to release the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its leases, we could experience a significant reduction in our revenues. As of June 30, 2020, tenants who are currently in bankruptcy and continue to occupy space in our shopping centers represent an aggregate of 2.0% of our annual base rent on a pro-rata basis. We anticipate tenant bankruptcies will continue to increase in future periods depending on the length and severity of the COVID-19 pandemic impacts.

### Results from Operations

#### COVID-19 Pandemic: three months ended June 30, 2020 and 2019

The health crisis caused by the COVID-19 pandemic in the United States, and resulting economic disruption, began during the first quarter of 2020 and continues to be an evolving situation. Our country’s efforts have been focused on addressing the health crisis and encouraging or requiring social distancing to prevent the spread of the virus, through various forms of federal, state, and local government actions. While restrictions vary by state, generally, businesses deemed essential to the public were able to operate while non-essential businesses were not. Grocer tenants that anchor over 80% of our operating centers are considered essential businesses and the majority have remained open and operational to serve the residents of their communities. Many restaurants are also considered essential, although the social distancing and group gathering limitations may prevent in-store or dine-in activity, forcing some of these retailers to evaluate alternate means of providing essential goods and services to the public or, like non-essential tenants, closing during this pandemic. During the three months ended June 30, 2020, governments began to ease restrictions, allowing many retailers to reopen or increase occupancy of their stores from previously imposed limits. Although many retailers have reported initially strong sales results upon reopening, the risk of diminished sales and future closures exists as the virus remains active and continues to spread.

The broader and longer-term implications of COVID-19 on our future results of operations and overall financial performance are uncertain at this time as efforts to develop a vaccine and more broadly reopen the country and economy continue. The impact of this COVID-19 pandemic has been significant to many of our tenants and their ability to pay rent, thereby directly impacting our results of operations and cash flows during 2020. This has resulted in certain tenants requesting concessions from rent obligations, including deferrals, abatements and requests to negotiate future rents, while some tenants have been unable to reopen or have not honored the terms of their existing lease agreements. Since the COVID-19 pandemic began, we have entered into over 600 mutually acceptable agreements with tenants, representing $16.4 million of rent or 1.8% of annual base rent, in our consolidated real estate portfolio and our unconsolidated real estate investment partnerships, to enable them to defer a portion of their rental payments and repay them over future periods. We expect to continue to work with other tenants, which may result in further rent concessions as we determine to be necessary and appropriate. Our results of operations may further deteriorate or improve based on efforts to contain this virus, our tenants’ ability to sustain their businesses, or our ability to find replacement tenants. All adjustments considered necessary to reflect the current estimated economic impact of this COVID-19 pandemic to our results of operations have been reflected herein.

#### Comparison of the three months ended June 30, 2020 and 2019:

Our revenues changed as summarized in the following table:

*(in thousands)*

|  | Three months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Lease income | $222,552 | 266,236 | (43,684) |
| Other property income | 2,435 | 2,194 | 241 |
| Management, transaction, and other fees | 6,126 | 7,442 | (1,316) |
| Total revenues | $231,113 | 275,872 | (44,759) |

Lease income decreased $43.7 million, driven by the following contractually billable components of rent to the tenants per the lease agreements:

$48.0 million decrease from increased Uncollectible lease income, consisting of $12.8 million increase from uncollectible Straight-line rent receivables and $35.2 million increase from uncollectible tenant receivables. The COVID-19 pandemic has been most impactful to those tenants considered non-essential, even more so to those struggling before the pandemic. The current economic environment has resulted in changes in our expectations of collecting certain tenant receivables and their related future rent steps previously recognized through straight-line rent.

$3.6 million net increase in Above and below market rent primarily from same properties driven by timing of lease term modifications.

$644,000 increase from billable Base rent, as follows:

- $448,000 increase from rent commencing at development properties;
- $2.2 million increase from acquisitions of operating properties; and
- $1.0 million net increase from same properties due to increases from rent steps in existing leases and rental rate growth, reduced by the loss of rents from bankruptcies, offset by
- $3.0 million decrease from the sale of operating properties.

$509,000 increase in Other lease income from higher lease termination fees.

$718,000 decrease in Percentage rent due to timing of billings.

$304,000 increase in recoveries from tenants, which represent amounts contractually billable to tenants per the terms of the lease for their reimbursements to us for the tenants’ pro-rata share of the operating, maintenance, insurance, and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased, on a net basis, as follows:

- $1.0 million increase from development properties;
- $730,000 net increase from acquisition of operating properties; offset by
- $939,000 decrease from the sale of operating properties; and
- $520,000 decrease from same properties due to $2.1 million increase in real estate tax recoveries, driven by an increase in tax assessments, offset by $2.6 million decrease in CAM recoveries, driven by a net decrease in recoverable costs.

Future lease income could be impacted by ongoing negotiations to assist tenants with their ability to remain operational as this pandemic subsides. These may impact the timing and collectibility of income and take the form of rent deferrals, concessions, or abatements, among other possible agreements. Approximately 72% of the base rent billed for the three months ended June 30, 2020 has been collected through July 31, 2020.

Management, transaction, and other fees decreased $1.3 million primarily from decreases in construction management, property management, and development fees from projects within our unconsolidated partnerships. Decreases in property receipts and leasing activity during this pandemic have negatively impacted our property management and leasing fee income earned from our unconsolidated partnerships, and are expected to continue while the depressed economic impact of the pandemic continues.

Changes in our operating expenses are summarized in the following table:

*(in thousands)*

|  | Three months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Depreciation and amortization | $85,058 | 93,589 | (8,531) |
| Operating and maintenance | 40,032 | 42,759 | (2,727) |
| General and administrative | 21,202 | 18,717 | 2,485 |
| Real estate taxes | 36,793 | 33,506 | 3,287 |
| Other operating expenses | 2,480 | 1,533 | 947 |
| Total operating expenses | $185,565 | 190,104 | (4,539) |

Depreciation and amortization costs decreased, on a net basis, as follows:

- $884,000 net increase from acquisitions of operating properties, development properties, and corporate assets; offset by
- $8.2 million decrease from same properties, primarily attributable to additional 2019 depreciation and amortization at redevelopment properties and for early tenant move-outs; and
- $1.2 million decrease from the sale of operating properties.

Operating and maintenance costs decreased, on a net basis, as follows:

- $480,000 increase from operations commencing at development properties; and
- $462,000 increase from acquisitions of operating properties; offset by
- $3.1 million net decrease from same properties driven by decreases in common area maintenance costs during the shutdowns, offset by increases in insurance premiums; and
- $592,000 decrease from the sale of operating properties.

General and administrative costs increased, on a net basis, as follows:

- $2.9 million increase in the value of participant obligations within the deferred compensation plan, attributable to changes in market values of those investments, reflected within Net investment income; and
- $1.6 million increase due to less development overhead capitalization based on the status and progress on development and redevelopment projects during the year coupled with delays in new developments during the pandemic; offset by
- $591,000 decrease in compensation costs primarily driven by lower incentive compensation; and
- $1.3 million decrease in other expenses related to lower travel and conference costs amidst the pandemic.

Real estate taxes increased, on a net basis, as follows:

- $1.2 million increase from acquisitions of operating properties and from development properties where capitalization ceased as tenant spaces became available for occupancy; and
- $2.5 million increase within the same property portfolio from changes in assessed values across our portfolio; offset by
- $469,000 decrease from the sale of operating properties.

Other operating expenses increased $947,000, attributable to increased development pursuit costs during 2020.

The following table presents the components of other expense (income):

*(in thousands)*

| Interest expense, net | Three months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Interest on notes payable | $37,493 | 31,473 | 6,020 |
| Interest on unsecured credit facilities | 3,185 | 4,775 | (1,590) |
| Capitalized interest | (1,274) | (980) | (294) |
| Hedge expense | 1,546 | 2,149 | (603) |
| Interest income | (575) | (244) | (331) |
| Interest expense, net | $40,375 | 37,173 | 3,202 |
| Provision for impairment of real estate, net of tax | 230 | 10,441 | (10,211) |
| Gain on sale of real estate, net of tax | (7,448) | (442) | (7,006) |
| Net investment income | (4,359) | (966) | (3,393) |
| Total other expense (income) | $28,798 | 46,206 | (17,408) |

The $3.2 million net increase in Interest expense is driven by the following changes:

- $6.0 million increase in Interest on notes payable from the new issuance of $600 million senior unsecured notes in May 2020, offset by
- $1.6 million decrease in Interest on unsecured credit facilities primarily related to the 2019 repayment of a $300 million term loan, net of additional interest in 2020 on short-term borrowings on the Line in advance of the new senior unsecured note issued in May.

The $10.2 million decrease in Provision for impairment of real estate is due to the timing of specific transactions. During the three months ended June 30, 2020, we recognized $230,000 loss on sale of one land parcel. During the three months ended June 30, 2019, we recognized $10.4 million of impairment losses on two operating properties.

During the three months ended June 30, 2020, we recognized gains on sale of $7.4 million for two land parcels, one operating property, and the receipt of property insurance proceeds. During the three months ended June 30, 2019, we recognized gains on sale of $442,000 from one land parcel and the receipt of property insurance proceeds.

Net investment income increased $3.4 million primarily driven by changes in unrealized gains and losses of plan assets held in the non-qualified deferred compensation plan. There is an offsetting adjustment in General and administrative costs related to participant obligations within the deferred compensation plans.

Our equity in income of investments in real estate partnerships decreased as follows:

*(in thousands)*

| Regency's Ownership | Three months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| GRI - Regency, LLC (GRIR) 40.00% | $1,430 | 10,297 | (8,867) |
| New York Common Retirement Fund (NYC) 30.00% | 74 | 365 | (291) |
| Columbia Regency Retail Partners, LLC (Columbia I) 20.00% | 73 | 328 | (255) |
| Columbia Regency Partners II, LLC (Columbia II) 20.00% | 75 | 357 | (282) |
| Cameron Village, LLC (Cameron) 30.00% | 211 | 304 | (93) |
| RegCal, LLC (RegCal) 25.00% | 200 | 345 | (145) |
| US Regency Retail I, LLC (USAA) 20.01% | 114 | 224 | (110) |
| Other investments in real estate partnerships (1) 35.00% - 50.00% | 647 | 908 | (261) |
| Total equity in income of investments in real estate partnerships | $2,824 | 13,128 | (10,304) |

(1) Includes our investment in the Town and Country shopping center, which we owned 18.38% during 2019. In January 2020, we purchased an additional 16.62% interest, bringing our total ownership interest to 35%.

The $10.3 million decrease in our equity in income of investments in real estate partnerships is largely attributed to the following:

- $8.9 million decrease within GRI primarily due to the following:
- $5.9 million decrease from higher uncollectible lease income attributable to the impact of the COVID-19 pandemic on tenants; and
- $2.0 million decrease driven by additional gains recognized during 2019 on the sale of operating real estate.
- All of our investments in real estate partnerships experienced higher amounts of uncollectible lease income, negatively impacting our equity in income.

The following represents the remaining components that comprised net income attributable to the common stockholders and unit holders:

*(in thousands)*

|  | Three months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Net income | $19,574 | 52,690 | (33,116) |
| Income attributable to noncontrolling interests | (528) | (962) | 434 |
| Net income attributable to common stockholders | $19,046 | 51,728 | (32,682) |
| Net income attributable to exchangeable operating partnership units | (87) | (109) | 22 |
| Net income attributable to common unit holders | $19,133 | 51,837 | (32,704) |

42

#### Comparison of the six months ended June 30, 2020 and 2019:

Our revenues changed as summarized in the following table:

*(in thousands)*

|  | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Lease income | $497,089 | 543,539 | (46,450) |
| Other property income | 4,740 | 4,176 | 564 |
| Management, transaction, and other fees | 12,942 | 14,415 | (1,473) |
| Total revenues | $514,771 | 562,130 | (47,359) |

Lease income decreased $46.5 million, driven by the following contractually billable components of rent to the tenants per the lease agreements:

$54.8 million decrease from increased Uncollectible lease income consisting of $16.4 million increase from uncollectible Straight-line rent receivables and $38.4 million increase from uncollectible tenant receivables. The COVID-19 pandemic has been most impactful to those tenants considered non-essential, even more so to those struggling before the pandemic. The current economic environment has resulted in changes in our expectations of collecting certain tenant receivables and their related future rent steps previously recognized through straight-line rent.

$3.0 million net increase in Above and below market rent primarily from same properties driven by timing of lease term modifications.

$3.4 increase from billable Base rent, as follows:

- $1.1 million increase from rent commencing at development properties;
- $5.6 million increase from acquisitions of operating properties; and
- $3.0 million net increase from same properties due to increases from rent steps in existing leases and rental rate growth, reduced by the loss of rents from bankruptcies, offset by
- $6.2 million decrease from the sale of operating properties.

$2.5 million net increase from billable Recoveries from tenants, which represent amounts contractually billable to tenants per the terms of the lease for their reimbursements to us for the tenants’ pro-rata share of the operating, maintenance, insurance and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased, on a net basis, as follows:

- $1.2 million increase from rent commencing at development properties;
- $2.1 million increase from acquisitions of operating properties; and
- $835,000 increase from same properties due to $2.7 million increase in real estate tax recoveries, driven by an increase in tax assessments, offset by $1.8 million decrease in CAM recoveries driven by a net decrease in recoverable costs; offset by
- $1.7 million decrease from the sale of operating properties.

Future lease income could be impacted by ongoing negotiations to assist tenants with their ability to remain operational as this pandemic subsides. These may impact the timing of collection and the collectibility of tenant receivables and take the form of additional rent deferrals or rent abatements. Approximately 72% of the base rent billed for the three months ended June 30, 2020, has been collected through July 31, 2020. Further, tenants that cannot sustain their business may be unable to pay rent or renew leases, which may not be as readily replaceable as the pool of potential future tenants also deteriorates in this economic environment. Future declines in occupancy would result in reduced lease income from both lower base rent and recoveries from tenants of CAM, real estate taxes and insurance costs at our centers.

Management, transaction, and other fees decreased $1.5 million primarily from decreases in development, construction management, and property management fees from projects within our unconsolidated partnerships. Decreases in property receipts and leasing activity during this pandemic have negatively impacted our property management and leasing fee income earned from our unconsolidated partnerships, and are expected to continue while the depressed economic impact of the pandemic continues.

Changes in our operating expenses are summarized in the following table:

*(in thousands)*

|  | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Depreciation and amortization | $174,353 | 190,783 | (16,430) |
| Operating and maintenance | 82,401 | 83,397 | (996) |
| General and administrative | 34,907 | 40,017 | (5,110) |
| Real estate taxes | 72,680 | 67,661 | 5,019 |
| Other operating expenses | 3,817 | 2,667 | 1,150 |
| Total operating expenses | $368,158 | 384,525 | (16,367) |

Depreciation and amortization costs decreased, on a net basis, as follows:

- $1.1 million increase as we began depreciating costs at development properties where tenant spaces were completed and became available for occupancy; and
- $2.6 million increase from acquisitions of operating properties and corporate assets; offset by
- $16.5 million decrease from same properties, primarily attributable to additional 2019 depreciation and amortization at redevelopment properties and for early tenant move-outs; and
- $3.6 million decrease from the sale of operating properties.

Operating and maintenance costs decreased, on a net basis, as follows:

- $915,000 increase from operations commencing at development properties; and
- $1.3 million increase from acquisitions of operating properties; offset by
- $2.1 million net decrease from same properties driven primarily by decreases in common area maintenance costs incurred during the pandemic shutdowns, coupled with a decrease in lease termination expense, offset by increases in insurance premiums; and
- $1.1 million decrease from the sale of operating properties.

General and administrative costs decreased, on a net basis, as follows:

- $3.7 million decrease in the value of participant obligations within the deferred compensation plan, attributable to changes in market values of those investments, reflected within Net investment income;
- $1.6 million decrease in compensation costs primarily driven by lower incentive compensation; and
- $1.7 million decrease in other expenses related to lower travel and conference costs amidst the pandemic; offset by
- $1.9 million increase due to less development overhead capitalization based on the status and progress on development and redevelopment projects during the year coupled with delays in new developments during the pandemic.

Real estate taxes increased, on a net basis, as follows:

- $960,000 increase from development properties where capitalization ceased as tenant spaces became available for occupancy;
- $1.1 million increase from acquisitions of operating properties; and
- $3.9 million increase within the same property portfolio from changes in assessed values across our portfolio; offset by
- $887,000 decrease from the sale of operating properties.

Other operating expenses increased $1.1 million, attributable to increased development pursuit costs offset by lower environmental remediation costs.

The following table presents the components of other expense (income):

*(in thousands)*

| Interest expense, net | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Interest on notes payable | $72,058 | 63,986 | 8,072 |
| Interest on unsecured credit facilities | 6,122 | 9,318 | (3,196) |
| Capitalized interest | (2,449) | (1,996) | (453) |
| Hedge expense | 3,196 | 4,264 | (1,068) |
| Interest income | (1,116) | (647) | (469) |
| Interest expense, net | $77,811 | 74,925 | 2,886 |
| Goodwill impairment | 132,128 | — | 132,128 |
| Provision for impairment, net of tax | 1,014 | 12,113 | (11,099) |
| Gain on sale of real estate, net of tax | (45,453) | (16,932) | (28,521) |
| Early extinguishment of debt | — | 10,591 | (10,591) |
| Net investment loss (income) | 564 | (3,320) | 3,884 |
| Total other expense (income) | $166,064 | 77,377 | 88,687 |

Interest expense, net, changed $2.9 million as follows:

- The $8.1 million net increase in Interest on notes payable results from the issuance of $600 million senior unsecured notes in May 2020, the issuance of $425 million senior unsecured notes in August 2019, partially offset by the redemption of the $250 million senior unsecured notes in April 2019, and mortgage payoffs at several properties during 2019; partially offset by,
- The $3.2 million decrease in Interest on unsecured credit facilities results from the 2019 repayment of a $300 million term loan using proceeds from a $300 million senior unsecured note issuance.
- The $1.1 million decrease in Hedge expense results from the maturity of a forward swap in 2019.

During the six months ended June 30, 2020, we recognized $132.1 million of Goodwill impairment, due to the significant market and economic impacts of the COVID-19 pandemic. The market disruptions triggered evaluation of reporting unit fair values for goodwill impairment. Of our 269 reporting units with goodwill, 87 reporting units were determined to have fair values lower than carrying value. As such, goodwill impairment losses totaling $132.1 million were recognized for the amount that the carrying amount of the reporting unit, including goodwill, exceeded its fair value, limited to the total amount of goodwill allocated to that reporting unit.

During the six months ended June 30, 2020, we recognized $1.0 million resulting from impairment of one operating property and the sale of one land parcel. During the six months ended June 30, 2019, we recognized $12.1 million of impairment losses on four operating properties, based on actual or expected sales price.

During the six months ended June 30, 2020, we recognized gains of $45.4 million from the sale of three land parcels, three operating properties, receipt of property insurance proceeds, and the re-measurement gain from the acquisition of controlling interest in a previously held equity investment. During the three months ended June 30, 2019, we recognized gains of $16.9 million from the sale of two operating properties and three land parcels.

During the six months ended June 30, 2019, we redeemed unsecured notes and repaid one mortgage, all prior to original maturity, resulting in $10.6 million of debt extinguishment costs.

Net investment loss (income) changed by $3.9 million primarily driven by changes in unrealized gains and losses of plan assets held in the non-qualified deferred compensation plan. There is an offsetting adjustment in General and administrative costs related to participant obligations within the deferred compensation plans.

The following table presents the components of other expense (income):

*(in thousands)*

|  | Regency's Ownership | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: | ---: |
| GRI - Regency, LLC (GRIR) | 40.00% | $10,199 | 21,032 | (10,833) |
| New York Common Retirement Fund (NYC) | 30.00% | 248 | 636 | (388) |
| Columbia Regency Retail Partners, LLC (Columbia I) | 20.00% | 479 | 731 | (252) |
| Columbia Regency Partners II, LLC (Columbia II) | 20.00% | 531 | 840 | (309) |
| Cameron Village, LLC (Cameron) | 30.00% | 522 | 560 | (38) |
| RegCal, LLC (RegCal) | 25.00% | 538 | 2,964 | (2,426) |
| US Regency Retail I, LLC (USAA) | 20.01% | 396 | 479 | (83) |
| Other investments in real estate partnerships | 35.00% - 50.00% | 1,329 | 16,713 | (15,384) |
| Total equity in income of investments in real estate partnerships |  | $14,242 | 43,955 | (29,713) |

(1) Includes our investment in the Town and Country shopping center, which we owned 18.38% during 2019. In January 2020, we purchased an additional 16.62% interest, bringing our total ownership interest to 35%.

The $29.7 million decrease in our equity in income of investments in real estate partnerships is largely attributed to the following:

- $10.8 million decrease within GRI primarily due to the following:
- $5.0 million decrease driven by additional gains recognized during 2019 on the sale of operating real estate;
- $6.7 million decrease from higher uncollectible lease income attributable to the expected impact of the COVID-19 pandemic on tenants.
- $2.4 million decrease within RegCal primarily due to a $2.3 million gain recognized during 2019 on the sale of an operating property within the partnership; and
- $15.4 million decrease within Other investments in real estate partnerships primarily due to a $15.0 million gain recognized during 2019 on the sale of a single operating property.

The following represents the remaining components that comprised net income attributable to the common stockholders and unit holders:

*(in thousands)*

|  | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Net (loss) income | $(5,209) | 144,183 | (149,392) |
| Income attributable to noncontrolling interests | (1,077) | (2,009) | 932 |
| Net (loss) income attributable to common stockholders | $(6,286) | 142,174 | (148,460) |
| Net loss (income) attributable to exchangeable operating partnership units | 28 | (299) | 327 |
| Net (loss) income attributable to common unit holders | $(6,314) | 142,473 | (148,787) |

### Supplemental Earnings Information

We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the Company's operating results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with the Company’s reported results under GAAP. We believe presenting our Pro-rata share of operating results, along with other non-GAAP measures, may assist in comparing the Company’s operating results to other REITs. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change. See “Non-GAAP Measures” at the beginning of this Management's Discussion and Analysis.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by

GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations or future prospects of the Company.

### Pro-Rata Same Property NOI:

Our pro-rata same property NOI, excluding termination fees, changed from the following major components:

*(in thousands)*

|  | Three months ended June 30, 2020 | 2019 | Change | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Base rent (1) | $209,613 | 208,876 | 737 | $420,703 | 417,808 | 2,895 |
| Recoveries from tenants (1) | 66,606 | 67,599 | (993) | 135,011 | 134,508 | 503 |
| Percentage rent (1) | 1,035 | 1,622 | (587) | 4,811 | 5,411 | (600) |
| Termination fees (1) | 2,012 | 1,504 | 508 | 4,150 | 1,961 | 2,189 |
| Uncollectible lease income | (39,205) | (766) | (38,439) | (42,718) | (1,384) | (41,334) |
| Other lease income (1) | 2,169 | 2,479 | (310) | 4,673 | 4,675 | (2) |
| Other property income | 1,567 | 1,814 | (247) | 3,154 | 3,358 | (204) |
| Total real estate revenue | 243,797 | 283,128 | (39,331) | 529,784 | 566,337 | (36,553) |
| Operating and maintenance | 39,876 | 41,937 | (2,061) | 81,867 | 82,615 | (748) |
| Termination expense | 25 | 500 | (475) | 25 | 500 | (475) |
| Real estate taxes | 39,036 | 36,447 | 2,589 | 77,311 | 73,501 | 3,810 |
| Ground rent | 2,533 | 2,646 | (113) | 5,132 | 5,393 | (261) |
| Total real estate operating expenses | 81,470 | 81,530 | (60) | 164,335 | 162,009 | 2,326 |
| Pro-rata same property NOI | $162,327 | 201,598 | (39,271) | $365,449 | 404,328 | (38,879) |
| Less: Termination fees | 1,987 | 1,004 | 983 | 4,125 | 1,461 | 2,664 |
| Pro-rata same property NOI, excluding termination fees | $160,340 | 200,594 | (40,254) | $361,324 | 402,867 | (41,543) |
| Pro-rata same property NOI growth, excluding termination fees |  |  | -20.1% |  |  | -10.3% |

(1) Represents amounts included within Lease income in the accompanying Consolidated Statements of Operations that are contractually billable to the tenants per the terms of the lease agreements.

Billable Base rent increased $736,000 and $2.9 million during the three and six months ended June 30, 2020, driven by increases in rent spreads and contractual rent steps, offset by decreases from bankruptcy impacts.

Termination fees increased $510,000 and $2.2 million during the three and six months ended June 30, 2020, due to termination fees from several tenants at various properties, both wholly owned and within our partnerships.

Uncollectible lease income increased $38.4 million and $41.3 million during the three and six months ended June 30, 2020, due to changes in collection expectations of our lease income due to the impact of the COVID-19 pandemic on our tenants.

Operating and maintenance expenses decreased $2.1 million and $748,000 during the three and six months ended June 30, 2020, due to decreases in recoverable operating costs attributable to the pandemic shut-downs, offset by increases in insurance costs.

Real estate taxes increased $2.6 million and $3.8 million during the three and six months ended June 30, 2020, due to changes in assessed values at properties across our portfolio.

### Same Property Rollforward:

Our same property pool includes the following property count, pro-rata GLA, and changes therein:

*(GLA in thousands)*

|  | Three months ended June 30, 2020 Property Count | GLA | 2019 Property Count | GLA |
| --- | ---: | ---: | ---: | ---: |
| Beginning same property count | 399 | 40,568 | 401 | 40,904 |
| Disposed properties | (1) | (48) | — | — |
| SF adjustments (1) | — | 2 | — | 62 |
| Ending same property count | 398 | 40,522 | 401 | 40,966 |

*(GLA in thousands)*

|  | Six months ended June 30, 2020 Property Count | GLA | 2019 Property Count | GLA |
| --- | ---: | ---: | ---: | ---: |
| Beginning same property count | 396 | 40,525 | 399 | 40,866 |
| Acquired properties owned for entirety of comparable periods | 5 | 315 | 6 | 415 |
| Developments that reached completion by beginning of earliest comparable period presented | 3 | 553 | 3 | 358 |
| Disposed properties | (3) | (427) | (7) | (766) |
| SF adjustments (1) | — | 1 | — | 93 |
| Properties under or being repositioned for redevelopment | (3) | (445) | — | — |
| Ending same property count | 398 | 40,522 | 401 | 40,966 |

(1) SF adjustments arise from remeasurements or redevelopments.

### NAREIT FFO:

Our reconciliation of net income attributable to common stock and unit holders to NAREIT FFO is as follows:

*(in thousands, except share information)*

| Reconciliation of Net income (loss) to NAREIT FFO | Three months ended June 30, 2020 | 2019 | Six months ended June 30, 2020 | 2019 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) attributable to common stockholders | $19,046 | 51,728 | $(6,286) | 142,174 |
| Adjustments to reconcile to NAREIT FFO: (1) |  |  |  |  |
| Depreciation and amortization (excluding FF&E) | 92,756 | 100,168 | 189,388 | 204,665 |
| Goodwill impairment | — | — | 132,128 | — |
| Provision for impairment of real estate | 230 | 10,441 | 1,014 | 12,113 |
| Gain on sale of real estate, net of tax | (7,464) | (2,410) | (45,416) | (39,462) |
| Exchangeable operating partnership units | 87 | 109 | (28) | 299 |
| **NAREIT FFO attributable to common stock and unit holders** | $104,655 | 160,036 | $270,800 | 319,789 |

(1) Includes Regency's pro-rata share of unconsolidated investment partnerships, net of pro-rata share attributable to noncontrolling interest.

### Same Property NOI Reconciliation:

Our reconciliation of Net income (loss) attributable to common stockholders to Same Property NOI, on a pro-rata basis, is as follows:

*(in thousands)*

|  | Three months ended June 30, 2020 | 2019 | Six months ended June 30, 2020 | 2019 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) attributable to common stockholders | $19,046 | 51,728 | $(6,286) | 142,174 |
| Less: |  |  |  |  |
| Management, transaction, and other fees | 6,126 | 7,442 | 12,942 | 14,415 |
| Other (1) | (1,424) | 8,355 | 12,386 | 27,325 |
| Plus: |  |  |  |  |
| Depreciation and amortization | 85,058 | 93,589 | 174,353 | 190,783 |
| General and administrative | 21,202 | 18,717 | 34,907 | 40,017 |
| Other operating expense | 2,480 | 1,533 | 3,817 | 2,667 |
| Other expense (income) | 28,798 | 46,206 | 166,064 | 77,377 |
| Equity in income (loss) of investments in real estate excluded from NOI (2) | 16,878 | 11,976 | 32,361 | 6,347 |
| Net income attributable to noncontrolling interests | 528 | 962 | 1,077 | 2,009 |
| Pro-rata NOI | $169,288 | 208,914 | $380,965 | 419,634 |
| Less non-same property NOI (3) | 6,961 | 7,316 | 15,516 | 15,306 |
| Pro-rata same property NOI | $162,327 | 201,598 | $365,449 | 404,328 |

(1) Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interest.

(2) Includes non-NOI income earned and expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.

(3) Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities.

### Liquidity and Capital Resources

#### General

We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. We continuously monitor the capital markets and evaluate our ability to issue new debt or equity, to repay maturing debt, or to fund our capital commitments.

Except for $500 million of unsecured public and private placement debt, our Parent Company has no capital commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating Partnership is a co-issuer and a guarantor of the $500 million of outstanding debt of our Parent Company. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units.

As the COVID-19 pandemic and its related impacts continue to evolve, we have taken the following steps to ensure sufficient liquidity and financial flexibility:

- We settled our forward equity sales under our previous ATM program and received proceeds of approximately $125.8 million in March.
- We renewed our ATM equity offering program in May which provides for the sale of $500 million of common stock. As of June 30, 2020, all $500 million of common stock remained available for issuance.
- We issued $600 million of new 10 year senior unsecured public notes in May and received proceeds of $598.8. A portion of the proceeds were used to repay the outstanding balance on our Line, and the remaining proceeds will be used for general corporate purposes, including the redemption in September 2020 of our $300 million 3.75% unsecured Notes due 2022.
- We have a borrowing capacity on our Line of $1.2 billion and $583.4 million of unrestricted cash available to us as of June 30, 2020.

We also continue to closely monitor and assess the capital requirements of all in process and planned developments, redevelopments, and capital expenditures. We are carefully proceeding in a targeted manner on a project-by-project basis, resulting in the delay, phasing or curtailment of certain in-process and planned development, redevelopment and capital expenditure projects. We have no unsecured debt maturities until 2022 and a manageable level of secured mortgage maturities during 2020 and 2021, including those mortgages within our joint ventures.

We continually evaluate alternative financing options, and we believe we can obtain financing on reasonable terms; however, there can be no assurance that additional financing or capital will be available, or that the terms will be acceptable or advantageous to us. Based upon our available cash balance, sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs for the next 12 months.

In addition to our $583.4 million of unrestricted cash, we have the following additional sources of capital available:

*(in thousands)*

| ATM equity program | June 30, 2020 |
| --- | ---: |
| Original offering amount | $500,000 |
| Available capacity | $500,000 |
| **Line of Credit** |  |
| Total commitment amount | $1,250,000 |
| Available capacity (1) | $1,240,237 |
| Maturity (2) | March 23, 2022 |

(1) Net of letters of credit.

(2) The Company has the option to extend the maturity for two additional six-month periods.

Dividends are determined by our Board of Directors. On July 29, 2020, our Board of Directors declared a common stock dividend of $0.595 per share, payable on August 24, 2020, to shareholders of record as of August 14, 2020. While future dividends will be determined at the discretion of our Board of Directors, we plan to continue paying an aggregate amount of distributions to our stock and unit holders that, at a minimum, meet the requirements to continue qualifying as a REIT for federal income tax purposes.

We have historically generated sufficient cash flow from operations to fund our dividend distributions. During the six months ended June 30, 2020 and 2019, we generated cash flow from operations of $217.4 million and $289.3 million, respectively, and paid $200.9 million and $195.7 million in dividends to our common stock and unit holders, respectively. We are closely monitoring our tenant cash collections which, for many businesses classified as non-essential, have significantly declined since the start of the COVID-19 pandemic and resulting restrictions. Approximately 72% of pro-rata base rent billed for the three months ended June 30, 2020 has been collected through July 31, 2020. We currently expect this trend to continue through 2020, although we expect collections to improve through the year as restrictions lift and businesses reopen. However, there can be no assurance that our cash flow from operations will be sufficient to fund our dividend without the benefit of other sources of capital or changes to our historic dividend levels, including the potential payment of dividends with Regency stock, while remaining in compliance with minimum REIT distributions.

We currently have 17 development and redevelopment projects in various stages of construction, along with a pipeline of potential projects for future development or redevelopment. Due to the impacts of the COVID-19 pandemic, in-process projects in certain markets have stopped or slowed significantly due to government restrictions, health concerns, or labor limitations. As the effects of the COVID-19 pandemic remain uncertain, we continue to evaluate the pandemic’s impacts to our in-process projects as well as the feasibility of our pipeline projects and non-essential capital expenditures, including project scope, investment, tenancy, timing and return on investment. In order to maximize positive cash flow, increase liquidity, and preserve financial flexibility, we have curtailed certain projects, delayed some to a future period when retail space demand returns to a more favorable level, and, where practicable, activated targeted phasing of development and redevelopments. We estimate that we will require capital during the next twelve months of approximately $290 million to fund construction and related costs for committed tenant improvements and in-process development and redevelopment, to repay maturing debt, and to make capital contributions to our co-investment partnerships. The $600 million unsecured public bond offering in May, coupled with proceeds from settling our forward ATM sales and available $1.2 billion on our Line, strengthen our financial position to be able to fund our expected operating and capital expenditures amid the uncertainty of operating cash flows during this pandemic and recovery period. We expect to generate the necessary cash to fund our capital needs from cash flow from operations, borrowings from our Line, proceeds from the sale of real estate, mortgage loan and unsecured bank financing, and when the capital markets are favorable, proceeds from the sale of equity or the issuance of new unsecured debt. If we start new developments or redevelopments, commit to new acquisitions, prepay debt prior to maturity, or repurchase shares of our common stock, our cash requirements will increase.

We endeavor to maintain a high percentage of unencumbered assets. As of June 30, 2020, 88.8% of our wholly-owned real estate assets were unencumbered. Such assets allow us to access the secured and unsecured debt markets and to maintain availability on the Line. Our trailing twelve month Fixed charge coverage ratio, including our pro-rata share of our partnerships, was 4.0 times and 4.3 times for the periods ended June 30, 2020 and December 31, 2019, respectively, and our pro-rata net debt-to-operating EBITDA*re* ratio on a trailing twelve month basis was 5.6x and 5.4x, respectively, for the same periods. We expect that these ratios may worsen during 2020 as a result of the impacts from the COVID-19 pandemic.

Our Line, Term Loan, and unsecured loans require that we remain in compliance with various covenants, which are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. We are in compliance with these covenants at June 30, 2020, and expect to remain in compliance.

#### Summary of Cash Flow Activity

The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:

*(in thousands)*

|  | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $217,419 | 289,323 | (71,904) |
| Net cash used in investing activities | (28,126) | (13,510) | (14,616) |
| Net cash provided by (used in) financing activities | 282,503 | (283,639) | 566,142 |
| Net increase (decrease) in cash and cash equivalents and restricted cash | $471,796 | (7,826) | 479,622 |
| Total cash and cash equivalents and restricted cash | $587,358 | 37,364 | 549,994 |

#### Net cash provided by operating activities:

Net cash provided by operating activities decreased $71.9 million due to:

- $77.6 million decrease in cash from operating income, largely resulting from lower rent collections attributable to the impact of the COVID-19 pandemic on our tenants. Of the uncollected rents, we currently expect approximately half will not be collectible and the other half either has been or may be subject to rent concessions. We continue to negotiate with our tenants on repayment periods and since the pandemic began, we have executed over 600 rent deferrals, representing $16.4 million of rent or 1.8% of annual base rent, within our consolidated and unconsolidated real estate portfolio. This deferred rent represents a weighted average deferral period of approximately 3 months, with weighted average repayment periods of approximately 10 months. While we believe the deferred rent will be paid by the tenants in accordance with the terms of their agreements, due to the uncertainty surrounding the COVID-19 pandemic, there can be no assurances that all such deferred rent will ultimately be paid, or paid within the timeframes negotiated and agreed upon. The duration and severity of the COVID-19 pandemic will continue to impact our ability to generate cash flow from operations; offset by,
- $5.7 million increase from cash paid in 2019 to settle treasury rate locks put in place to hedge changes in interest rates on a 30 year fixed rate debt offering.

#### Net cash used in investing activities:

Net cash used in investing activities changed by $14.6 million as follows:

*(in thousands)*

| Cash flows from investing activities: | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Acquisition of operating real estate | $(16,867) | (19,302) | 2,435 |
| Advance deposits refunded (paid) on acquisition of operating real estate | 100 | (11,000) | 11,100 |
| Real estate development and capital improvements | (107,852) | (80,032) | (27,820) |
| Proceeds from sale of real estate investments | 115,614 | 83,460 | 32,154 |
| Issuance of notes receivable | (440) | — | (440) |
| Investments in real estate partnerships | (42,088) | (32,970) | (9,118) |
| Return of capital from investments in real estate partnerships | 23,235 | 46,740 | (23,505) |
| Dividends on investment securities | 140 | 264 | (124) |
| Acquisition of investment securities | (7,062) | (11,498) | 4,436 |
| Proceeds from sale of investment securities | 7,094 | 10,828 | (3,734) |
| Net cash used in investing activities | $(28,126) | (13,510) | (14,616) |

Significant changes in investing activities include:

- We acquired one operating property for $16.9 million during 2020 and three operating properties for $19.3 million during the same period in 2019.
- We paid deposits of $11.0 million during 2019 toward the acquisition of operating properties, which were acquired later in 2019.
- We invested $27.8 million more in 2020 than the same period in 2019 on real estate development, redevelopment, and capital improvements, as further detailed in a table below.
- We sold three operating properties and four land parcels in 2020 and received proceeds of $115.6 million, including proceeds from repayment of a short-term note issued at closing and repaid during the same period, compared to four operating properties and three land parcels in 2019 for proceeds of $83.5 million.
- We invested $42.1 million in our real estate partnerships during 2020, including:
- $16.0 million to fund our share of acquiring an additional equity interest in one partnership,
- $15.8 million to fund our share of debt refinancing, and
- $10.3 million to fund our share of development and redevelopment activities.

During the same period in 2019, we invested $33.0 million, including:

- $21.3 million to fund our share of development and redevelopment activities,
- $9.7 million to fund our share of acquiring an additional equity interest in one partnership,
- $2.1 million to fund our share of debt refinancing.
- Return of capital from our unconsolidated real estate partnerships includes sales or financing proceeds. During the six months ended June 30, 2020 we received $23.2 million from our share of proceeds from debt refinancing activities. During the same period in 2019, we received $46.7 million, including $37.4 million from the sale of three operating properties and $9.3 million from our share of proceeds from debt refinancing activities.
- Acquisition of securities and proceeds from sale of securities pertain to investment activities held in our captive insurance company and our deferred compensation plan.

We plan to continue developing and redeveloping shopping centers for long-term investment, although in the midst of the COVID-19 pandemic we are re-evaluating all in-process and pipeline development and redevelopment projects for feasibility resulting in curtailment, delay or phasing of projects, as well as, limiting capital expenditures not immediately necessary as the economic situation continues to unfold. During 2020, we deployed capital of $107.9 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:

*(in thousands)*

| Capital expenditures: | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Land acquisitions for development | $— | 5,206 | (5,206) |
| Building and tenant improvements | 22,969 | 25,073 | (2,104) |
| Redevelopment costs | 66,244 | 15,955 | 50,289 |
| Development costs | 8,323 | 26,062 | (17,739) |
| Capitalized interest | 1,980 | 1,399 | 581 |
| Capitalized direct compensation | 8,336 | 6,337 | 1,999 |
| Real estate development and capital improvements | $107,852 | 80,032 | 27,820 |

- During 2019, we acquired two land parcels for new development projects. We had no such land parcel acquisitions during 2020.
- Building and tenant improvements decreased $2.1 million in 2020, primarily related to the timing of capital projects.
- Redevelopment expenditures are higher in 2020 due to the timing, magnitude, and number of projects currently in process. Subject to capital availability, we intend to continuously improve our portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing building expansion, facade renovation, new out-parcel building construction, and redevelopment related tenant improvement costs. The size and magnitude of each redevelopment project varies with each redevelopment plan. The timing and duration of these projects could also result in volatility in NOI.
- Development expenditures are lower in 2020 due to the progress during 2019 towards completion of our development projects currently in process, coupled with delays in new development starts amidst the pandemic. At June 30, 2020 we had three consolidated development projects that were either under construction or in lease up, one of which is being further evaluated for timing and economics due to the COVID-19 pandemic. At December 31, 2019 we had three development

projects that were either under construction or lease up. See the tables below for more details about our development projects.

- Interest is capitalized on our development and redevelopment projects and is based on cumulative actual costs expended. We cease interest capitalization when the property is no longer being developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor opens for business. If we reduce our development and redevelopment activity, the amount of interest that we capitalize may be lower than historical averages.
- We have a staff of employees who directly support our development program, which includes redevelopment of our existing properties. Internal compensation costs directly attributable to these activities are capitalized as part of each project. In light of the current economic environment, we expect that our development activity could be significantly lower than our recent historical averages. As a result, we expect the amount of internal costs for development activities that may be capitalized could be significantly lower, reducing our financial results.

In light of the continuing and changing environment from the COVID-19 pandemic, management continues to review on a project-by-project basis the impacts to project scope, investment, tenancy, timing, and return on investments on all-in process and pipeline projects to determine the most appropriate future direction of each project. As a result, some projects have been curtailed, delayed, or phased due to the COVID-19 the pandemic.

The following table summarizes our development projects:

*(in thousands, except cost PSF)*

| Property Name Developments In-Process | Market | Start Date | Estimated Stabilization Year (1) | June 30, 2020 Estimated / Actual Net Development Costs (2) (3) | GLA (3) | Cost PSF of GLA (2) (3) | % of Costs Incurred |
| --- | --- | --- | --- | ---: | ---: | ---: | ---: |
| Carytown Exchange Phase I | Richmond, VA | Q4-18 | 2022 | $17,187 | 45 | $378 | 68% |
| The Village at Hunter's Lake | Tampa, FL | Q4-18 | 2021 | 22,051 | 72 | 306 | 75% |

(1) Estimated Stabilization Year represents the estimated first full calendar year that the project will reach our expected stabilized yield.

(2) Includes leasing costs and is net of tenant reimbursements.

(3) Estimated Net Development Costs and GLA reported based on Regency’s ownership interest in the partnership at completion.

The following table summarizes our redevelopment projects in process and completed:

*(in thousands, except cost PSF)*

| Property Name Redevelopments In-Process | Market | GLA (3) | Ownership | Start Date | Estimated Stabilization Year (1) | June 30, 2020 Estimated Incremental Project Costs (2) (3) | % of Costs Incurred |
| --- | --- | ---: | ---: | --- | --- | ---: | ---: |
| West Bird Plaza | Miami, FL | 99 | 100% | Q4-19 | 2022 | $10,338 | 22% |
| Point 50 | Metro, DC | 48 | 100% | Q4-18 | 2022 | 17,363 | 71% |
| Bloomingdale Square | Tampa, FL | 252 | 100% | Q3-18 | 2022 | 20,839 | 89% |
| The Abbot Phase I | Boston, MA | 65 | 100% | Q2-19 | TBD | 33,532 | 58% |
| Market Common Clarendon Office Phase I | Metro, DC | 130 | 100% | Q4-18 | TBD | 36,386 | 68% |
| Various Properties | Various | 1,984 | 20% - 100% | Various | Various | 34,608 | 58% |
| **Redevelopments Completed** |  |  |  |  |  |  |  |
| Pablo Plaza | Jacksonville, FL |  | 100% | Q4-18 | 2022 | $14,627 |  |
| Various Properties | Various |  | 40% - 100% | Various | Various | 17,025 |  |

(1) Estimated Stabilization Year represents the estimated first full calendar year that the project will reach our expected stabilized yield.

(2) Includes leasing costs and is net of tenant reimbursements.

(3) Estimated Net Development Costs and GLA reported based on Regency’s ownership interest in the partnership at completion.

#### Net cash provided by (used in) financing activities:

Net cash flows from financing activities changed by $566.1 million during 2020, as follows:

*(in thousands)*

| Cash flows from financing activities: | Six months ended June 30, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Net proceeds from common stock issuances | $125,616 | — | 125,616 |
| Repurchase of common shares in conjunction with equity award plans | (5,405) | (6,148) | 743 |
| Common shares repurchased through share repurchase program | — | (32,778) | 32,778 |
| Distributions to limited partners in consolidated partnerships, net | (1,644) | (968) | (676) |
| Dividend payments and operating partnership distributions | (200,881) | (195,655) | (5,226) |
| Repayment of unsecured credit facilities, net | (220,000) | (25,000) | (195,000) |
| Proceeds from debt issuance | 598,830 | 298,983 | 299,847 |
| Debt repayment, including early redemption costs | (9,019) | (318,739) | 309,720 |
| Payment of loan costs | (5,056) | (3,343) | (1,713) |
| Proceeds from sale of treasury stock, net | 62 | 9 | 53 |
| Net cash provided by (used in) financing activities | $282,503 | (283,639) | 566,142 |

Significant financing activities during the six months ended June 30, 2020 and 2019, include the following:

- We received proceeds of $125.8 million in March 2020 upon settling our forward equity sales under our ATM program entered into during 2019.
- We repurchased for cash a portion of the common stock granted to employees for stock based compensation to satisfy employee tax withholding requirements, which totaled $5.4 million and $6.1 million during 2020 and 2019, respectively.
- We paid $32.8 million during 2019 to repurchase 563,229 common shares through our share repurchase program that were executed in December 2018 but not settled until January 2019.
- We paid $5.2 million more in dividends as a result of an increase in our cumulative year to date dividend rate from $1.17 per share during 2019, to $1.19 per share during 2020.
- We had the following debt related activity during 2020:
- We repaid, net of draws, $220.0 million on our Line.
- We received net proceeds of $598.8 million upon issuance, in May, of senior unsecured public notes.
- We paid $9.0 million for other debt repayments, including:
- $3.9 million to repay a mortgage maturity, and
- $5.1 million in principal mortgage payments,
- We paid $5.1 million of loan costs in connection with our public note offering above.
- We had the following debt related activity during 2019:
- We repaid, net of draws, $25 million on our Line.
- We received proceeds of $299 million upon issuance, in March, of senior unsecured public notes.
- We paid $318.7 million in other debt repayments, including:
- $259.6 million, including a make-whole premium, to redeem our senior unsecured public notes,
- $53.7 million to repay two mortgage maturities, and
- $5.4 million in principal mortgage payments.
- We paid $3.3 million of loan costs in connection with our public note offering above.

### Investments in Real Estate Partnerships

The following table is a summary of the unconsolidated combined assets and liabilities of these co-investment partnerships and our pro-rata share:

*(dollars in thousands)*

| Combined June 30, 2020 | December 31, 2019 | Regency's Share (1) June 30, 2020 | December 31, 2019 |
| --- | ---: | ---: | ---: |
| Number of Co-investment Partnerships 16 | 16 |  |  |
| Regency’s Ownership 35% - 50% | 18.38% - 50% |  |  |
| Number of Properties 115 | 116 |  |  |
| Assets $3,130,109 | 3,158,884 | $1,106,255 | 1,079,366 |
| Liabilities 1,718,722 | 1,718,242 | 588,667 | 570,491 |
| Equity 1,411,387 | 1,440,642 | 517,588 | 508,875 |
| Negative investment in US Regency Retail I, LLC (2) |  | 4,037 | 3,943 |
| Basis difference |  | (47,340) | (43,296) |
| Investments in real estate partnerships |  | $474,285 | 469,522 |

(1) Pro-rata financial information is not, and is not intended to be, a presentation in accordance with GAAP. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on our operations, which includes such items on a single line presentation under the equity method in our consolidated financial statements.

(2) The USAA partnership has distributed proceeds from debt financing and real estate sales in excess of Regency's carrying value of its investment, resulting in a negative investment balance, which is classified within Accounts payable and other liabilities in the Consolidated Balance Sheets.

Our equity method investments in real estate partnerships consist of the following:

*(in thousands)*

|  | Regency's Ownership | June 30, 2020 | December 31, 2019 |
| --- | ---: | ---: | ---: |
| GRI - Regency, LLC (GRIR) | 40.00% | $181,673 | 187,597 |
| New York Common Retirement Fund (NYC) (1) | 30.00% | 34,809 | 41,422 |
| Columbia Regency Retail Partners, LLC (Columbia I) | 20.00% | 9,175 | 9,201 |
| Columbia Regency Partners II, LLC (Columbia II) | 20.00% | 38,640 | 39,453 |
| Cameron Village, LLC (Cameron) | 30.00% | 10,662 | 10,641 |
| RegCal, LLC (RegCal) | 25.00% | 26,122 | 26,417 |
| Other investments in real estate partnerships (2) | 35.00% - 50.00% | 173,204 | 154,791 |
| Total Investment in real estate partnerships |  | $474,285 | 469,522 |
| US Regency Retail I, LLC (USAA) (3) | 20.01% | (4,037) | (3,943) |
| Net Investment in real estate partnerships |  | $470,248 | 465,579 |

(1) On January 1, 2020, the Company purchased the remaining 70% of a property owned by the NYC partnership, as discussed in note 2 to the financial statements, and therefore all earnings of this property are included in consolidated results from the date of acquisition and excluded from partnership earnings.

(2) Includes our investment in the Town and Country shopping center, which began with an initial 9.38% ownership percent in 2018, with an additional 9.0% interest acquired during 2019. In January 2020, we purchased our remaining 16.62% interest, bringing our total ownership interest to 35%.

(3) The USAA partnership has distributed proceeds from debt financing and real estate sales in excess of Regency's carrying value of its investment, resulting in a negative investment balance, which is classified within Accounts payable and other liabilities in the Consolidated Balance Sheets.

#### Notes Payable - Investments in Real Estate Partnerships

Scheduled principal repayments on notes payable held by our investments in real estate partnerships were as follows:

*(in thousands)*

| Scheduled Principal Payments and Maturities by Year: | June 30, 2020 Scheduled Principal Payments | Mortgage Loan Maturities | Unsecured Maturities | Total | Regency’s Pro-Rata Share |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2020 | $7,965 | 26,408 | — | 34,373 | 16,166 |
| 2021 | 11,217 | 306,989 | 15,635 | 333,841 | 111,018 |
| 2022 | 7,811 | 260,702 | — | 268,513 | 99,917 |
| 2023 | 3,196 | 171,608 | — | 174,804 | 65,137 |
| 2024 | 1,796 | 33,690 | — | 35,486 | 14,217 |
| Beyond 5 Years | 13,027 | 720,321 | — | 733,348 | 236,793 |
| Net unamortized loan costs, debt premium / (discount) | — | (9,726) | — | (9,726) | (3,239) |
| Total | $45,012 | 1,509,992 | 15,635 | 1,570,639 | 540,009 |

At June 30, 2020, our investments in real estate partnerships had notes payable of $1.6 billion maturing through 2034, of which 91.6% had a weighted average fixed interest rate of 4.1%. The remaining notes payable float with LIBOR and had a weighted average variable interest rate of 2.4%. These fixed and variable rate notes payable are all non-recourse, and our pro-rata share was $540.0 million as of June 30, 2020. As notes payable mature, we expect they will be repaid from proceeds from new borrowings and/or partner capital contributions.

We believe that our partners are financially sound and have sufficient capital or access thereto to fund future capital requirements. In the event that a co-investment partner was unable to fund its share of the capital requirements of the co-investment partnership, we would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call.

#### Management fee income

In addition to earning our pro-rata share of net income or loss in each of these co-investment partnerships, we receive fees, as shown below:

*(in thousands)*

|  | Three months ended June 30, 2020 | 2019 | Six months ended June 30, 2020 | 2019 |
| --- | ---: | ---: | ---: | ---: |
| Asset management, property management, leasing, and other transaction fees | $6,196 | 7,370 | $13,003 | 14,028 |

### Recent Accounting Pronouncements

See Note 1 to Consolidated Financial Statements.

### Environmental Matters

We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining primarily to chemicals historically used by certain current and former dry cleaning tenants, the existence of asbestos in older shopping centers, and older underground petroleum storage tanks. We believe that the few tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we endeavor to cause tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems, in accordance with the terms of our leases. We have a blanket environmental insurance policy for third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also placed environmental insurance, where appropriate, on specific properties with known contamination, in order to mitigate our environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.

As of June 30, 2020, we and our Investments in real estate partnerships had accrued liabilities of $8.7 million for our pro-rata share of environmental remediation. We believe that the ultimate disposition of currently known environmental matters will not have a material effect on our financial position, liquidity, or results of operations. We can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contamination; that our estimate of liabilities will not change as more information becomes available; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to us.

### Inflation/Deflation

Inflation has been historically low and has had a minimal impact on the operating performance of our shopping centers; however, inflation may become a greater concern in the future. Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation, which require tenants to pay their pro-rata share of operating expenses, including common-area maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. However, during deflationary periods or periods of economic weakness, minimum rents and percentage rents may decline as the supply of available retail space exceeds demand and consumer spending declines. Occupancy declines may also result in lower recovery rates of our operating expenses.

## Market risk

As filed, 724 characters.

We continuously monitor the capital markets and evaluate our ability to issue new debt, to repay maturing debt, or fund our commitments. Although the capital markets have experienced a high degree of volatility related to the COVID-19 global pandemic, we continue to believe that we will be able to successfully issue new secured or unsecured debt to fund maturing debt obligations. The degree to which such capital market volatility will adversely impact the interest rates on any new debt that we may issue is uncertain. Otherwise, there have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in item 7A of Part II of our Form 10-K for the year ended December 31, 2019.

## Controls and procedures

As filed, 3,423 characters.

### Controls and Procedures (Regency Centers Corporation)

Under the supervision and with the participation of the Parent Company's management, including its chief executive officer and chief financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, the Parent Company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Parent Company in the reports it files or submits is accumulated and communicated to management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Parent Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the first quarter of 2020 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. The Parent Company has incorporated the effects of COVID-19 related impacts into our control structure.

### Controls and Procedures (Regency Centers, L.P.)

Under the supervision and with the participation of the Operating Partnership's management, including the chief executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the chief executive officer and chief financial officer of its general partner concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Operating Partnership in the reports it files or submits is accumulated and communicated to management, including the chief executive officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred during the first quarter of 2020 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. The Operating Partnership has incorporated the effects of COVID-19 related impacts into our control structure.

## Risk factors

As filed, 6,276 characters.

In addition to the risk factors disclosed in item 1A. of Part I of our Form 10-K for the year ended December 31, 2019, the following additional risks have been identified during 2020:

***Pandemics or other health crises, such as the COVID-19 pandemic, may adversely affect our tenants’ financial condition, the profitability of our properties, our access to the capital markets and could have a material adverse effect on our business, results of operations, cash flows and financial condition.***

Whenever pandemics or other health crises occur, they are expected to adversely affect our tenants’ ability to conduct business as they have historically, directly impacting their financial condition and the profitability of our properties. Our business will be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis. The profitability of our properties depends, in part, on the willingness of customers to visit our tenants’ businesses. The risk, or public perception of the risk, of a pandemic or media coverage of infectious diseases is likely to cause individuals to avoid our properties, which would adversely affect customer traffic to our tenants’ businesses and our tenants’ ability to adequately staff their businesses. In addition, health crises are expected to adversely impact us by disrupting our tenants’ supply chains, thereby impacting their ability to deliver goods and services to their customers. Such events will adversely impact tenants’ sales and/or cause the temporary closure of our tenants’ businesses, which could severely disrupt their operations and have a material adverse effect on our business, financial condition and results of operations. Pandemics or other health crises may also cause great volatility in the capital markets. If capital is available, whether the terms of such capital are attractive compared to pre-pandemic terms may also be uncertain.

During the ongoing COVID-19 pandemic, U.S. federal, state, and local government actions to reduce or prevent the spread of COVID-19 placed restrictions on social gatherings, which directly impact many of our tenants whose businesses may be considered non-essential. While essential businesses, such as grocery stores, occupy a significant amount of space in our centers and thus far have been able to continue to operate and serve their customers, our tenants with non-essential businesses are experiencing significant declines in customer traffic or have temporarily closed their stores in reaction to legally enforceable governmental orders or overall efforts to support social distancing. The COVID-19 pandemic continues to evolve, making the broader implications on our future results of operations and overall financial performance uncertain at this time. While much of our lease income is derived from contractual rent payments, our tenants’ ability to meet their lease obligations have been negatively impacted by the disruptions and uncertainties of the COVID-19 pandemic. Although many retailers have reported initially strong sales results upon reopening, the risk of diminished sales and future closures exists as the virus remains active and continues to spread. The COVID-19 pandemic has resulted in certain tenants requesting rent concessions from monthly rent obligations and certain tenants seeking to renegotiate future rents based on changes to the economic environment, while some tenants have been unable to reopen or honor the terms of their existing lease agreements. We are closely monitoring our tenant cash collections which, for many businesses classified as non-essential, have significantly declined since the start of the COVID-19 pandemic and resulting restrictions. Approximately 72% of pro-rata base rent billed for the three months ended June 30, 2020 has been collected through July 31, 2020. Since the COVID-19 pandemic began, we have executed over 600 rent deferrals, within our consolidated real estate portfolio and our unconsolidated real estate investment partnerships. This deferred rent represents a weighted average deferral periods of approximately 3 months, with weighted average repayment periods of approximately 10 months. We expect to continue to work with other tenants, which may result in further rent deferrals, concessions or abatements. As a result, there can be no assurance that our cash flows from operations will be sufficient to fund our dividend payments without the benefit of other sources of capital or changes to our dividend policy.

New leasing activity is expected to also significantly decline as businesses delay executing leases amidst the immediate and uncertain future economic impacts of the COVID-19 pandemic. This, coupled with potential retail failures, may result in decreased demand for retail space in our centers, which could result in pricing pressure on base rent. Additionally, with the delays in construction for tenant improvements due to shelter-in-place orders, it may take longer before new tenants are able to open and commence rent payments.

In addition, our ability to successfully start or complete tenant buildouts, new ground up development or redevelopment of existing properties has been and is expected to continue to be adversely impacted by similar disruptions with respect to governmental orders shutting down construction activities, impacts on our ability to source materials for construction and labor shortages impacting our ability to complete construction projects on anticipated schedules. Such adverse impact to our supply chain could have a material adverse effect on our business, financial condition and results of operation.

The extent of the COVID-19 pandemic’s effect on our profitability and financial performance will depend on future developments including the duration, spread and intensity of the outbreak, all of which are uncertain and difficult to predict. The adverse impact on our business, results of operations, financial condition and cash flows could be material. Moreover, many of the risks described in the risk factors set forth in our 2019 Annual Report on Form 10-K may be more likely to impact us as a result of the COVID-19 pandemic and the responses to curb its spread.

Filed Aug 4, 2020.
Source: SEC EDGAR, the filing index for accession 0001564590-20-035935. Last ingested by Listed: Oct 24, 2026, 15:00 ET. No prices; not investment advice.