Regency Centers Corporation

Greetings. Welcome to the Regency Centers Corporation second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note that this conference is being recorded. I will now turn the conference over to Christy McElroy, Senior Vice President, Capital Markets. Thank you. You may begin.

Good morning, and welcome to Regency Center's second quarter 2022 earnings conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer, Mike Moss, Chief Financial Officer, Jim Thompson, Chief Operating Officer, Chris Levitt, SVP and Treasurer, Alan Ross, Senior Managing Director of the East Region, and Nick Wibbenmeyer, Senior Managing Director of the West Region. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance. including forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. It's possible that actual results may differ materially from those suggested by the forward-looking statements we may make. Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically in our most recent Form 10-K and 10-Q filings. In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance. Our caution on forward-looking statements also applies to these presentation materials. Lisa?

Thank you, Christy. Good morning, everyone. Thank you for joining us today. We are pleased to report strong second quarter results reflecting a still healthy operating environment. Leasing demand continues to be strong, and tenant move outs remain light, driving occupancy and rent growth higher. We acknowledge the increasing macroeconomic headwinds, and in our view, that makes our results all the more notable. We know that we're not immune to the adverse impacts of inflation, interest rate increases, and recessionary risks, all of which could have implications for us, but we very much believe that we are extremely well positioned to weather any economic storm. For the remainder of this year, as a result of that, we are very confident in our forecast as reflected in our guidance increase. And looking beyond 2022, Regency's portfolio and balance sheet were built for times of greater uncertainty. Everything we've done over the last decade and every decision we've made positions the company not only to play offense and drive growth when times are good, But to successfully navigate challenging macroeconomic environments, we are designed to outperform through cycles, evident most recently in the resiliency of our performance through the pandemic and how quickly we were able to pivot back to offense and return to pre-pandemic levels of NOI, earnings per share, and leverage. Importantly, in the context of the current environment, the demographic profile of our trade areas is supportive of a consumer that has more cushion to absorb pressures from inflation and economic softness. And in times when tenant bankruptcies may be elevated, our locations tend to be among the best performing, limiting occupancy decline. Additionally, current positive momentum is a source of tailwinds into 2023 and beyond. First and foremost is our strong pipeline of leases. both executed and those in negotiation. Also, next year, we will see an even greater benefit from development and redevelopment NOI coming online. And finally, as we've been saying, our dense suburban neighborhoods and communities continue to benefit from structural tailwinds stemming from post-pandemic migration and hybrid work. Where we have begun to see some impact from the current environment is in the capital markets, but again, we are extremely well-positioned. The strength of our balance sheet and our low leverage afford us the luxury of not needing to raise capital when it's not advantageous to do so. And our dry powder and ready access to capital give us a competitive advantage should opportunities arise. A prime example of that was the execution of our share repurchases in the second half of June. We saw a window of opportunity to essentially buy our own high-quality properties in a mid-6% implied cap rate range. A meaningfully more attractive price than what we would pay for anything comparable in the private market today. We were uniquely positioned to take advantage of that dislocation given our balance sheet strength and liquidity position. We can't control the macro environment, but we can control our response to it. As we sit here today, we remain confident in our operational strategy and our balance sheet strength, regardless of the macro backdrop. Closing out, I'd like to comment briefly on ESG. As many of you know that have been covering Regency for a while, we take pride in having best-in-class, sector-leading environmental, social, and governance programs, across which we continue to meet or exceed our goals. We did publish our annual corporate responsibility report in late May and also announced an interim 2030 target for reducing absolute Scope 1 and 2 greenhouse gas emissions, which was endorsed by the Science-Based Targets Initiative. We also set a long-term net zero target of 2050. We don't take these commitments lightly. These targets were established after extensive work by our team to identify and analyze the impact of specific initiatives that will help us reach these goals, which includes further improvements in common area energy efficiency and continued growth in our on-site solar program. Corporate responsibility is a foundational strategy for Regency, and it has been for many years. It's part of our culture, and is as fundamental to what we do as is our commitment to portfolio quality and balance sheet strength. Jim?