-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ImWwx5zHGFdTdXqyXhOhQkj7lii2/R13xKBMVRh8g4dEPIjbMgRhQA9BpfkgqdL8 uzJpGrzYmD5WUk3ZrfMbDA== /in/edgar/work/20000814/0000910606-00-000009/0000910606-00-000009.txt : 20000921 0000910606-00-000009.hdr.sgml : 20000921 ACCESSION NUMBER: 0000910606-00-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGENCY CENTERS LP CENTRAL INDEX KEY: 0001066247 STANDARD INDUSTRIAL CLASSIFICATION: [6500 ] IRS NUMBER: 593429602 STATE OF INCORPORATION: FL FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24763 FILM NUMBER: 697705 BUSINESS ADDRESS: STREET 1: 121 W FORSYTH STREET STREET 2: SUITE 200 CITY: JACKSONVILLE STATE: FL ZIP: 32202 BUSINESS PHONE: 9043567000 MAIL ADDRESS: STREET 1: 121 W FORSYTH ST STREET 2: STE 200 CITY: JACKSONVILLE STATE: FL ZIP: 32202 10-Q 1 0001.txt JUNE 30, 2000 FORM 10-Q United States SECURITIES AND EXCHANGE COMMISSION Washington DC 20549 FORM 10-Q (Mark One) [X] For the quarterly period ended June 30, 2000 -or- [ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________ to ________ Commission File Number 0-24763 REGENCY CENTERS, L.P. (Exact name of registrant as specified in its charter) Delaware 59-3429602 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 121 West Forsyth Street, Suite 200 Jacksonville, Florida 32202 (Address of principal executive offices) (Zip Code) (904) 356-7000 (Registrant's telephone number, including area code) Unchanged (Former name,former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] REGENCY CENTERS, L.P. Consolidated Balance Sheets June 30, 2000 and December 31, 1999 (unaudited)
2000 1999 ------ ------ Assets Real estate investments Land $ 558,246,567 538,881,578 Buildings and improvements 1,741,266,665 1,722,813,591 --------------- -------------- 2,299,513,232 2,261,695,169 Less: accumulated depreciation 98,667,448 81,294,400 --------------- -------------- 2,200,845,784 2,180,400,769 Properties in development 223,775,833 167,300,893 Operating properties held for sale 67,031,998 - Investments in real estate partnerships 37,159,178 66,938,784 --------------- -------------- Net real estate investments 2,528,812,793 2,414,640,446 Cash and cash equivalents 34,137,423 50,964,920 Notes receivable 24,349,824 15,673,125 Tenant receivables, net of allowance for uncollectible accounts of $2,278,852 and $1,883,547 at June 30, 2000 and and December 31, 1999 27,695,633 30,884,172 Deferred costs, less accumulated amortization of $7,443,698 and $5,498,619 at June 30, 2000 and December 31, 1999 12,814,929 11,272,866 Other assets 7,059,741 7,273,925 --------------- -------------- $ 2,634,870,343 2,530,709,454 =============== ============== Liabilities and Partners' Capital Liabilities: Notes payable 687,633,803 713,787,207 Unsecured line of credit 340,000,000 247,179,310 Accounts payable and other liabilities 44,564,746 47,981,987 Tenants' security and escrow deposits 7,960,873 7,566,967 --------------- -------------- Total liabilities 1,080,159,422 1,016,515,471 --------------- -------------- Limited partners' interest in consolidated partnerships 9,211,036 11,108,994 --------------- -------------- Partners' Capital: Series A preferred units, par value $50: 1,600,000 units issued and outstanding at June 30, 2000 December 31, 1999 78,800,000 78,800,000 Series B preferred units, par value $100: 850,000 units issued and outstanding at June 30, 2000 and December 31, 1999 82,799,720 82,799,720 Series C preferred units, par value $100: 750,000 units issued and outstanding at June 30, 2000 and December 31, 1999 73,058,577 73,058,577 Series D preferred units, par value $100: 500,000 units issued and outstanding at June 30, 2000 and December 31, 1999 49,157,977 49,157,977 Series E preferred units, par value $100: 700,000 units issued and outstanding at June 30, 2000 68,242,763 - General partner; 55,515,282 and 55,535,928 units outstanding at June 30, 2000 and December 31, 1999 1,160,730,001 1,179,400,122 Limited partners; 1,552,325 and 1,863,604 units outstanding at June 30, 2000 and December 31, 1999 32,710,847 39,868,593 --------------- -------------- Total partners' capital 1,545,499,885 1,503,084,989 --------------- -------------- Commitments and contingencies $ 2,634,870,343 2,530,709,454 =============== ==============
See accompanying notes to consolidated financial statements. REGENCY CENTERS, L.P. Consolidated Statements of Operations For the Three Months ended June 30, 2000 and 1999 (unaudited)
2000 1999 ------ ------ Revenues: Minimum rent $ 58,980,010 55,273,317 Percentage rent 400,249 455,734 Recoveries from tenants 15,671,057 14,347,440 Service operations revenue 7,112,340 3,845,576 Equity in (loss) income of investments in real estate partnerships (302,851) 1,395,100 --------------- -------------- Total revenues 81,860,805 75,317,167 --------------- -------------- Operating expenses: Depreciation and amortization 13,632,191 11,460,840 Operating and maintenance 9,939,643 9,174,876 General and administrative 3,761,187 5,143,534 Real estate taxes 7,893,385 7,076,589 Other expenses 919,715 375,000 --------------- -------------- Total operating expenses 36,146,121 33,230,839 --------------- -------------- Interest expense (income): Interest expense 17,232,670 16,168,053 Interest income (801,856) (639,929) --------------- -------------- Net interest expense 16,430,814 15,528,124 --------------- -------------- Income before minority interests, gain and provision on real estate investments 29,283,870 26,558,204 Gain on sale of operating properties 18,310 - Provision for loss on operating properties held for sale (6,909,625) - Minority interest of limited partners (236,881) (486,094) --------------- -------------- Net income 22,155,674 26,072,110 Preferred unit distributions (6,942,014) (1,625,001) --------------- -------------- Net income for common unitholders $ 15,213,660 24,447,109 =============== ============== Net income per common unit: Basic $ 0.26 0.41 =============== ============== Diluted $ 0.26 0.41 =============== ==============
See accompanying notes to consolidated financial statements REGENCY CENTERS, L.P. Consolidated Statements of Operations For the Six Months ended June 30, 2000 and 1999 (unaudited)
2000 1999 ------ ------ Revenues: Minimum rent $ 116,789,042 90,840,110 Percentage rent 1,007,964 783,705 Recoveries from tenants 31,444,081 22,835,812 Service operations revenue 9,366,744 5,740,623 Equity in income of investments in real estate partnerships 60,663 2,136,203 --------------- -------------- Total revenues 158,668,494 122,336,453 --------------- -------------- Operating expenses: Depreciation and amortization 26,414,867 19,967,159 Operating and maintenance 19,734,821 15,467,382 General and administrative 8,257,266 8,780,893 Real estate taxes 15,537,879 11,448,099 Other expenses 919,715 525,000 --------------- -------------- Total operating expenses 70,864,548 56,188,533 --------------- -------------- Interest expense (income): Interest expense 31,959,927 25,846,855 Interest income (1,631,223) (1,092,818) --------------- -------------- Net interest expense 30,328,704 24,754,037 --------------- -------------- Income before minority interests, gain and provision on real estate investments 57,475,242 41,393,883 Gain on sale of operating properties 18,310 - Provision for loss on operating properties held for sale (6,909,625) - Minority interest of limited partners (480,314) (747,033) --------------- -------------- Net income 50,103,613 40,646,850 Preferred unit distributions (13,254,513) (3,250,002) --------------- -------------- Net income for common unitholders $ 36,849,100 37,396,848 =============== ============== Net income per common unit: Basic $ 0.64 0.75 =============== ============== Diluted $ 0.64 0.75 =============== ==============
See accompanying notes to consolidated financial statements REGENCY CENTERS, L.P. Consolidated Statement of Changes in Capital For the Six Months Ended June 30, 2000 (unaudited)
Preferred General Limited Total Units Partner Partners Capital ----------- ----------- ------------ ------------ Balance December 31, 1999 $ 283,816,274 1,179,400,122 39,868,593 1,503,084,989 Net income 13,254,513 35,663,606 1,185,494 50,103,613 Proceeds from the issuance of preferred units, net 68,242,763 - - 68,242,763 Cash distributions for dividends (55,894,598) (1,812,630) (57,707,228) Preferred unit distribution (13,254,513) - - (13,254,513) Purchase of Regency stock and corresponding units - (10,634,695) - (10,634,695) Other contributions, net - 1,142,605 - 1,142,605 Units issued for acquisition of real estate or investments in real estate partnerships - 88,924 1,632,020 1,720,944 Units issued as a result of common stock issued by Regency - 2,801,407 - 2,801,407 Units exchanged for common stock of Regency - 8,737,878 (8,737,878) - Reallocation of limited partners interest - (575,248) 575,248 - ---------------- ----------------- ------------------ ------------------ Balance June 30, 2000 $ 352,059,037 1,160,730,001 32,710,847 1,545,499,885 ================ ================= ================== ===================
REGENCY CENTERS, L.P. Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2000 and 1999 (unaudited)
2000 1999 ------ ------ Cash flows from operating activities: Net income $ 50,103,613 40,646,850 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,414,867 19,967,159 Deferred financing cost and debt premium amortization 201,369 (82,187) Services provided by Regency in exchange for units 2,778,735 1,713,727 Minority interest of limited partners 480,314 747,033 Equity in income of investments in real estate partnerships (60,663) (2,136,203) Gain on sale of operating properties (18,310) - Provision for loss on operating properties held for sale 6,909,625 - Changes in assets and liabilities: Tenant receivables 3,394,905 (8,445,600) Deferred leasing commissions (2,967,981) (1,868,040) Other assets (541,146) 901,448 Tenants' security deposits 246,194 77,215 Accounts payable and other liabilities (2,273,140) 8,848,048 ---------------- ---------------- Net cash provided by operating activities 84,668,382 60,369,450 ---------------- ---------------- Cash flows from investing activities: Acquisition and development of real estate, net (134,998,735) (73,955,630) Acquisition of Pacific, net of cash acquired - (9,046,230) Acquisition of partners' interest in investments in real estate partnerships, net of cash acquired (1,402,371) - Investment in real estate partnerships (23,320,328) (10,104,935) Capital improvements (5,711,716) (6,421,178) Proceeds from sale of operating properties 7,491,870 - Repayment of notes receivable 15,673,125 - Distributions received from real estate partnership investments - 704,474 ---------------- ---------------- Net cash used in investing activities (142,268,155) (98,823,499) ---------------- ---------------- Cash flows from financing activities: Cash contributions from the issuance of Regency stock and exchangeable partnership units 22,672 70,809 Repurchase of Regency stock and corresponding units (10,634,695) - Net distributions to limited partners in consolidated partnerships (2,378,272) (458,450) Distributions to preferred unit holders (13,254,513) (3,250,002) Cash distributions for dividends (57,707,228) (42,204,292) Other contributions (distributions), net 1,142,605 (7,494,502) Net proceeds from from fixed rate unsecured loans - 249,845,300 Net proceeds from issuance of preferred units 68,242,763 - Proceeds (repayment)of unsecured line of credit, net 92,820,690 (145,351,875) Proceeds from mortgage loans 6,734,632 - Repayment of mortgage loans (44,216,378) (15,000,200) Deferred financing costs - (3,565,034) ---------------- ---------------- Net cash provided by financing activities 40,772,276 32,591,754 ---------------- ---------------- Net decrease in cash and cash equivalents (16,827,497) (5,862,295) Cash and cash equivalents at beginning of period 50,964,920 15,536,926 ---------------- ---------------- Cash and cash equivalents at end of period $ 34,137,423 9,674,631 ================ ================
REGENCY CENTERS, L.P. Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2000 and 1999 (unaudited) -continued-
2000 1999 ------ ------ Supplemental disclosure of cash flow information - cash paid for interest (net of capitalized interest of approximately $5,960,000 and $3,935,000 in 2000 and 1999, respectively) $ 31,229,274 19,808,946 ================ ================ Supplemental disclosure of non-cash transactions: Mortgage loans assumed for the acquisition of Pacific and real estate $ - 411,184,783 ================ ================ Exchangeable operating partnership units and common stock issued for investments in real estate partnerships $ 329,948 1,949,020 ================ ================ Exchangeable operating partnership units and common stock issued for the acquisition of partners' interest in investments in real estate partnerships $ 1,287,111 - ================ ================ Exchangeable operating partnership units, preferred and common stock issued for the acquisition of Pacific and real estate $ 103,885 790,822,490 ================ ================ Other liabilities assumed to acquire Pacific $ - 13,897,643 ================ ================ Properties in development sold in exchange for notes receivable $ 24,349,824 - ================ ===============
See accompanying notes to consolidated financial statements. REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 1. Summary of Significant Accounting Policies (a) Organization and Principles of Consolidation Regency Centers, L.P. ("RCLP" or "Partnership") is the primary entity through which Regency Realty Corporation ("Regency" or "Company"), a self-administered and self-managed real estate investment trust ("REIT"), conducts substantially all of its business and owns substantially all of its assets. The Partnership was formed in 1996 for the purpose of acquiring certain real estate properties. The historical financial statements of the Partnership reflect the accounts of the Partnership since its inception, together with the accounts of certain predecessor entities (including Regency Centers, Inc., a wholly-owned subsidiary of Regency through which Regency owned a substantial majority of its properties), which were merged with and into the Partnership as of February 26, 1998. At June 30, 2000, Regency owns approximately 97% of the outstanding common units ("Units") of the Partnership. The Partnership's ownership interests are represented by Units, of which there are five series of preferred Units, common Units owned by the limited partners and common Units owned by Regency. Each outstanding common Unit owned by a limited partner is exchangeable, on a one share per one Unit basis, for the common stock of Regency or for cash at Regency's election. The accompanying consolidated financial statements include the accounts of the Partnership, its wholly owned subsidiaries, and its majority owned or controlled subsidiaries and partnerships. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. The financial statements reflect all adjustments which are of a normal recurring nature, and in the opinion of management, are necessary to properly state the results of operations and financial position. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted although management believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's December 31, 1999 Form 10-K filed with the Securities and Exchange Commission. (b) Investments in Real Estate Partnerships The Partnership accounts for all investments in which it owns less than 50% and does not have controlling financial interest, using the equity method. (c) Reclassifications Certain reclassifications have been made to the 1999 amounts to conform to classifications adopted in 2000. REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 2. Acquisition and Development of Shopping Centers On June 30, 2000 the Partnership acquired the non-owned portion of nine joint ventures, previously accounted for using the equity method, for $4.4 million in cash, common stock and Units. As a result, these joint ventures are wholly-owned by the Partnership and are consolidated for financial reporting purposes. On February 28, 1999, the Company acquired Pacific Retail Trust ("Pacific") for approximately $1.157 billion. The operating results of Pacific are included in the Partnership's consolidated financial statements from the date each property was acquired. The following unaudited pro forma information presents the consolidated results of operations as if Pacific had occurred on January 1, 1999. Such pro forma information reflects adjustments to 1) increase depreciation, interest expense, and general and administrative costs, 2) adjust the weighted average common units issued to acquire the properties. Pro forma revenues would have been $145.0 million as of June 30, 1999. Pro forma net income for common unitholders would have been $44.4 million as of June 30, 1999. Pro forma basic net income per unit would have been $.73 as of June 30, 1999. Pro forma diluted net income per unit would have been $.73 as of June 30, 1999. This data does not purport to be indicative of what would have occurred had the Pacific acquisition been made on January 1, 1999, or of results which may occur in the future. 3. Operating Properties Held for Sale Periodically, the Partnership identifies operating properties that do not fit its long term investment strategies and markets these assets for sale. Operating properties held for sale are carried at the lower of cost or fair value less cost to sell. Depreciation and amortization are suspended during the period held for sale. At June 30, 2000, the Partnership had six properties under contract for sale, and recorded a provision for loss on the sale of $6.9 million. Under the terms of the contract, which is rescindable, the sale is expected to close during the fourth quarter of 2000. REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 4. Segments The Partnership was formed, and currently operates, for the purpose of 1) operating and developing Partnership owned retail shopping centers (Retail segment), and 2) providing services including property management, leasing, brokerage, and construction and development management for third-parties (Service operations segment). The Partnership's reportable segments offer different products or services and are managed separately because each requires different strategies and management expertise. There are no material inter-segment sales or transfers. The Partnership assesses and measures operating results starting with Net Operating Income for the Retail segment and Income for the Service operations segment and converts such amounts into a performance measure referred to as Funds From Operations ("FFO"). The operating results for the individual retail shopping centers have been aggregated since all of the Partnership's shopping centers exhibit highly similar economic characteristics as neighborhood shopping centers, and offer similar degrees of risk and opportunities for growth. FFO as defined by the National Association of Real Estate Investment Trusts consists of net income (computed in accordance with generally accepted accounting principles) excluding gains (or losses) from debt restructuring and sales of income producing property held for investment, plus depreciation and amortization of real estate, and adjustments for unconsolidated investments in real estate partnerships and joint ventures. The Partnership further adjusts FFO by distributions made to holders of Units that results in a diluted FFO amount. The Partnership considers diluted FFO to be the industry standard for reporting the operations of real estate investment trusts ("REITs"). Adjustments for investments in real estate partnerships are calculated to reflect diluted FFO on the same basis. While management believes that diluted FFO is the most relevant and widely used measure of the Partnership's performance, such amount does not represent cash flow from operations as defined by generally accepted accounting principles, should not be considered an alternative to net income as an indicator of the Partnership's operating performance, and is not indicative of cash available to fund all cash flow needs. Additionally, the Partnership's calculation of diluted FFO, as provided below, may not be comparable to similarly titled measures of other REITs. REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 4. Segments (continued) The accounting policies of the segments are the same as those described in note 1. The revenues, diluted FFO, and assets for each of the reportable segments are summarized as follows for the six month periods ended June 30, 2000 and 1999. Assets not attributable to a particular segment consist primarily of cash and deferred costs.
2000 1999 ---- ---- Revenues: Retail segment $ 149,301,750 116,595,830 Service operations segment 9,366,744 5,740,623 ----------------- ---------------- Total revenues $ 158,668,494 122,336,453 ================= ================ Funds from Operations: Retail segment net operating income $ 114,047,360 89,680,349 Service operations segment income 9,366,744 5,740,623 Adjustments to calculate diluted FFO: Interest expense (31,959,927) (25,846,855) Interest income 1,631,223 1,092,818 General and administrative an d other (9,176,981) (9,305,893) Non-real estate depreciation (600,781) (391,511) Minority interests of limited partners (480,314) (747,033) Minority interests in depreciation and amortization (299,828) (359,452) Share of joint venture depreciation and amortization 933,589 286,549 Distributions on preferred units (13,254,513) (3,250,002) ---------------- --------------- Funds from Operations - diluted 70,206,572 56,899,593 ---------------- --------------- Reconciliation to net income for common unitholders: Real estate related depreciation and amortization (25,832,396) (19,575,648) Minority interests in depreciation and amortization 299,828 359,452 Share of joint venture depreciation and amortization (933,589) (288,549) Provision for loss on operating properties held for sale (6,909,625) - Gain on sale of operating properties 18,310 - -------------- --------------- Net income available for common unitholders $ 36,849,100 37,396,848 ============== =============== June 30, December 31, Assets (in thousands): 2000 1999 ---------------------- ---- ---- Retail segment $ 2,401,461 2,344,092 Service operations segment 179,397 123,233 Cash and other assets 54,012 63,384 -------------- -------------- Total assets $ 2,634,870 2,530,709 ============== ==============
REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 5. Notes Payable and Unsecured Line of Credit The Partnership's outstanding debt at June 30, 2000 and December 31, 1999 consists of the following (in thousands):
2000 1999 ---- ---- Notes Payable: Fixed rate mortgage loans $ 286,090 331,716 Variable rate mortgage loans 31,087 11,376 Fixed rate unsecured loans 370,457 370,696 ------------- ------------ Total notes payable 687,634 713,788 Unsecured line of credit 340,000 247,179 ------------- ------------ Total $ 1,027,634 960,967 ============= ============
During July, 2000, the Partnership modified the terms of its unsecured line of credit (the "Line") by reducing the commitment to $625 million. The Line matures in March 2002, but may be extended annually for one-year periods. Borrowings under the Line bear interest at a variable rate based on LIBOR plus a 1% spread (7.6875% at June 30, 2000), and is dependent on the Company maintaining its investment grade rating. The Partnership is required to comply and is in compliance with certain financial and other covenants customary with this type of unsecured financing. The Line is used primarily to finance the acquisition and development of real estate, but is also available for general working capital purposes. On April 15, 1999, the Partnership completed a $250 million unsecured debt offering in two tranches. The Partnership issued $200 million 7.4% notes due April 1, 2004, priced at 99.922% to yield 7.42%, and $50 million 7.75% notes due April 1, 2009, priced at 100%. The net proceeds of the offering were used to reduce the balance of the Line. As of June 30, 2000, scheduled principal repayments on notes payable and the Line were as follows (in thousands):
Scheduled Principal Term Loan Total Scheduled Payments by Year Payments Maturities Payments ------------ ------------ ----------- 2000 $ 2,876 6,004 8,880 2001 5,621 68,063 73,684 2002 (includes the Line) 4,943 384,098 389,041 2003 4,933 13,303 18,236 2004 5,327 199,882 205,209 Beyond 5 Years 36,888 284,912 321,800 Net unamortized debt premiums - 10,784 10,784 ------------- ------------- ------------- $ 60,588 967,046 1,027,634 Total ============= ============= ==============
REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 5. Notes Payable and Unsecured Line of Credit (continued) Unconsolidated partnerships and joint ventures had mortgage loans payable of $15.0 million at June 30, 2000, and the Partnership's proportionate share of these loans was $6.2 million. The fair value of the Partnership's notes payable and Line are estimated based on the current rates available to the Partnership for debt of the same remaining maturities. Variable rate notes payable and the Line are considered to be at fair value since the interest rates on such instruments reprice based on current market conditions. Notes payable with fixed rates, that have been assumed in connection with acquisitions, are recorded in the accompanying financial statements at fair value. The Partnership considers the carrying value of all other fixed rate notes payable to be a reasonable estimation of their fair value based on the fact that the rates of such notes are similar to rates available to the Partnership for debt of the same terms. 6. Regency's Stockholders' Equity and Partners' Capital Allocation of profits and losses and distributions to unitholders are made in accordance with the partnership agreement. Distributions to Limited Partners are made in the same amount as the dividends declared and paid on Regency common stock. Distributions to the General Partner are made at the General Partner's discretion. The following represent equity transactions initiated by Regency and the Partnership. The proceeds from such transactions are the primary source of capital from which the Partnership acquires and develops new real estate. On May 25, 2000, the Partnership issued $70 million of 8.75% Series E Cumulative Redeemable Preferred Units ("Series E Preferred Units") to an institutional investor in a private placement. The issuance involved the sale of 700,000 Series E Preferred Units for $100.00 per unit. The Series E Preferred Units, which may be called by the Partnership at par on or after May 25, 2005 have no stated maturity or mandatory redemption, and pay a cumulative, quarterly dividend at an annualized rate of 8.75%. At any time after May 25, 2010, the Series E Preferred Units may be exchanged for shares of 8.75% Series E Cumulative Redeemable Preferred Stock ("Series E Preferred Stock") of the Company at an exchange rate of one share of Series E Preferred Stock for one Series E Preferred Unit. The Series E Preferred Units and Series E Preferred Stock are not convertible into common stock of the Company. The net proceeds of the offering were used to reduce the Line. During 1999, the Board of Directors authorized the repurchase of approximately $65.0 million of the Company's outstanding shares through periodic open market transactions or privately negotiated transactions. At June 30, 2000, the Company had completed the program by purchasing 3.25 million shares of which the majority of the funds came from the Partnership. REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 7. Earnings Per Unit The following summarizes the calculation of basic and diluted earnings per unit for the three month periods ended June 30, 2000 and 1999, respectively (in thousands except per share data):
2000 1999 ---- ---- Basic Earnings Per Unit (EPU) Calculation: Weighted average units outstanding 55,507 58,040 ============ =========== Net income for common unitholders $ 15,214 24,447 Less: dividends paid on Class B common stock Series 1 and Series 2 Preferred stock (699) (931) ============ =========== Net income for Basic and Diluted EPU $ 14,514 23,516 ============ =========== Basic EPU $ .26 .41 ============ =========== Diluted Earnings Per Unit (EPU) Calculation: -------------------------------------------- Weighted average units outstanding for Basic EPU 55,507 58,040 Incremental units to be issued under common stock options using the Treasury method 32 6 ------------ ----------- Total diluted units 55,539 58,046 ============ =========== Diluted EPU $ .26 .41 ============ ===========
The Class B common stock dividends for 1999 are deducted from income in computing earnings per unit since the proceeds of this offering were transferred to and reinvested by the Partnership. In addition, the Series 1 and Series 2 Preferred stock dividends are also deducted from net income in computing earnings per unit since the properties acquired with these preferred shares were contributed to the Partnership. Accordingly, the payment of Class B common, Series 1 and Series 2 Preferred stock dividends are deemed to be preferential to the distributions made to common unitholders. REGENCY CENTERS, L.P. Notes to Consolidated Financial Statements June 30, 2000 (unaudited) 7. Earnings Per Unit (continued) The following summarizes the calculation of basic and diluted earnings per unit for the six month periods ended June 30, 2000 and 1999, respectively (in thousands except per share data):
2000 1999 ---- ---- Basic Earnings Per Unit (EPU) Calculation: Weighted average units outstanding 55,503 46,659 =========== =========== Net income for common unitholders $ 36,849 37,397 Less: dividends paid on Class B common stock Series 1 and Series 2 Preferred stock (1,399) (2,309) =========== ========== Net income for Basic and Diluted EPU $ 35,450 35,088 =========== ========== Basic EPU $ .64 .75 =========== ========== Diluted Earnings Per Unit (EPU) Calculation: -------------------------------------------- Weighted average units outstanding for Basic EPU 55,503 46,659 Incremental units to be issued under common stock options using the Treasury method 16 3 ---------- ----------- Total diluted units 55,519 46,662 ========== =========== Diluted EPU $ .64 .75 ========== ===========
The Class B common stock dividends for 1999 are deducted from income in computing earnings per unit since the proceeds of this offering were transferred to and reinvested by the Partnership. In addition, the Series 1 and Series 2 Preferred stock dividends are also deducted from net income in computing earnings per unit since the properties acquired with these preferred shares were contributed to the Partnership. Accordingly, the payment of Class B common, Series 1 and Series 2 Preferred stock dividends are deemed to be preferential to the distributions made to common unitholders. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers, L.P. appearing elsewhere within. Organization Regency Realty Corporation ("Regency" or "Company") is a qualified real estate investment trust ("REIT") which began operations in 1993. The Company invests in real estate primarily through its general partnership interest in Regency Centers, L.P., ("RCLP" or "Partnership"), an operating partnership in which the Company currently owns approximately 97% of the outstanding common partnership units ("Units"). Of the 222 properties included in the Company's portfolio at June 30, 2000, 204 properties were owned either fee simple or through partnership interests by the Partnership. At June 30, 2000, the Company had an investment in real estate of approximately $2.8 billion of which $2.6 billion was owned by the Partnership. Shopping Center Business The Partnership's principal business is owning, operating and developing grocery anchored neighborhood infill retail shopping centers. The Partnership's properties summarized by state and in order by largest holdings including their gross leasable areas (GLA) follows:
June 30, 2000 December 31, 1999 ------------- ------------------- Location # Properties GLA %Leased * # Properties GLA % Leased * -------- ------------ ---------- ------------ ------------ ------------ ----------- Florida 41 5,061,282 93.9% 39 4,859,031 93.7% California 35 4,036,765 98.0% 36 3,858,628 98.2% Texas 29 3,886,593 94.3% 29 3,849,549 94.2% Georgia 25 2,551,965 96.6% 25 2,539,556 91.8% Ohio 12 1,706,522 97.1% 13 1,822,854 98.1% North Carolina 13 1,303,095 98.1% 12 1,241,639 97.9% Washington 9 1,097,542 99.0% 9 1,066,962 98.1% Colorado 10 897,788 98.4% 10 903,502 98.0% Oregon 7 671,220 93.4% 7 616,070 94.2% Arizona 5 419,924 98.6% 2 326,984 99.7% Kentucky 2 305,307 90.4% 2 305,307 91.8% Virginia 3 297,964 95.1% 2 197,324 96.1% Tennessee 3 271,697 100.0% 3 271,697 98.9% Michigan 3 251,200 94.7% 3 250,655 98.7% Delaware 1 232,754 95.4% 1 232,754 96.3% Illinois 1 178,600 86.4% 1 178,600 85.9% South Carolina 2 162,056 97.0% 2 162,056 98.8% Wyoming 1 87,925 - 1 75,000 - Missouri 1 82,498 95.8% 1 82,498 95.8% New Jersey 1 80,867 - - - - ------------- ------------ ------------ ---------- ------------ ----------- Total 204 23,583,564 95.9% 198 22,840,666 95.5% ============= ============ ============ ========== ============ ===========
* Excludes properties under construction The Partnership is focused on building a platform of grocery anchored neighborhood shopping centers because grocery stores provide convenience shopping of daily necessities, foot traffic for adjacent local tenants, and should withstand adverse economic conditions. The Partnership's current investment markets have continued to offer strong stable economies, and accordingly, the Partnership expects to realize growth in net income as a result of increasing occupancy in the portfolio, increasing rental rates, development and acquisition of shopping centers in targeted markets, and redevelopment of existing shopping centers. The following table summarizes the four largest grocery tenants occupying the Partnership's shopping centers at June 30, 2000:
Grocery Anchor Number of % of % of Annualized Avg Remaining Stores Total GLA Base Rent Lease Term --------------- --------------- ----------- --------------- ------------- Kroger 54 13.3% 11.6% 16 yrs Publix 36 7.0% 4.8% 13 yrs Safeway 29 6.0% 5.1% 12 yrs Albertsons 12 2.6% 2.2% 14 yrs
Winn Dixie announced the closing of a number of its stores related to its corporate restructuring. The Partnership has 11 stores or 2.3% of total GLA. Winn Dixie notified the Partnership that currently, only one store that is located in a Regency shopping center will be closed. This shopping center is currently under contract for sale and is recorded on the balance sheet as operating properties held for sale. Periodically, the Partnership identifies operating shopping centers that no longer meet its long-term investment standards. Once identified, these properties are segregated on the balance sheet as operating properties held for sale, and are carried at the lower of cost or fair value less estimated selling costs. Acquisition and Development of Shopping Centers The Partnership has implemented a growth strategy dedicated to developing high-quality shopping centers and build to suit properties. This development process can require 12 to 36 months from initial land or redevelopment acquisition through construction and leaseup and finally stabilized income, depending upon the size and type of project. Generally, anchor tenants begin operating their stores prior to construction completion of the entire center, resulting in rental income during the development phase. At June 30, 2000, the Partnership had 54 projects under construction or undergoing major renovations, which when complete will represent an investment of $484.1 million. Total cost necessary to complete these developments is estimated to be $159.9 million and will be expended through 2001. These developments are approximately 69% complete and 76% leased. Of the developments currently in process, 25 projects were started during 2000, which when complete will represent an investment of $160 million, and currently have an estimated cost to complete of $92.6 million. On June 30, 2000 the Partnership acquired the non-owned portion of nine joint ventures, previously accounted for using the equity method, for $4.4 million in cash, common stock and Units. As a result, these joint ventures are wholly-owned by the Partnership and are consolidated for financial reporting purposes. On February 28, 1999, the Company acquired Pacific Retail Trust ("Pacific") for approximately $1.157 billion. At the date of the acquisition, Pacific was operating or had under development 71 retail shopping centers representing 8.4 million SF of gross leaseable area. Liquidity and Capital Resources Management anticipates that cash generated from operating activities will provide the necessary funds on a short-term basis for its operating expenses, interest expense and scheduled principal payments on outstanding indebtedness, recurring capital expenditures necessary to properly maintain the shopping centers, and distributions to share and unit holders. Net cash provided by operating activities was $84.7 million and $60.4 million for the six months ended June 30, 2000 and 1999, respectively. The Partnership incurred recurring and non-recurring capital expenditures (non-recurring expenditures pertain to immediate building improvements on new acquisitions and anchor tenant improvements on new leases) of $5.7 million and $6.4 million, during the six months ended June 30, 2000 and 1999, respectively. The Partnership paid scheduled principal payments of $3.3 million and $2.7 million during the six months ended June 30, 2000 and 1999, respectively. The Partnership paid distributions of $15.1 million and $4.7 million, during the six months ended June 30, 2000 and 1999, respectively, to its common and preferred unitholders. Management expects to meet long-term liquidity requirements for term debt payoffs at maturity, non-recurring capital expenditures, and acquisition, renovation and development of shopping centers from: (i) excess cash generated from operating activities, (ii) working capital reserves, (iii) additional debt borrowings, and (iv) additional equity raised in the public markets. Net cash used in investing activities was $142.3 million and $98.8 million, during 2000 and 1999, respectively, primarily for the acquisition and development of shopping centers, and build to suit projects. Net cash provided by financing activities was $40.8 and $32.6 million for the six months ended June 30, 2000 and 1999, respectively. During 1999, the Board of Directors authorized the repurchase of approximately $65.0 million of the Company's outstanding shares through periodic open market transactions or privately negotiated transactions. At June 30, 2000, the Company had completed the program by purchasing 3.25 million shares of which the majority of the funds came from the Partnership. The Partnership's outstanding debt at June 30, 2000 and December 31, 1999 consists of the following (in thousands):
2000 1999 ---- ---- Notes Payable: Fixed rate mortgage loans $ 286,090 331,716 Variable rate mortgage loans 31,087 11,376 Fixed rate unsecured loans 370,457 370,696 -------------- -------------- Total notes payable 687,634 713,788 Unsecured line of credit 340,000 247,179 -------------- -------------- Total $ 1,027,634 960,967 ============== ==============
During July 2000, the Partnership modified the terms of its unsecured line of credit (the "Line") by reducing the commitment to $625 million and extending the term. The Line matures in March 2002, but may be extended annually for one-year periods. Borrowings under the Line bear interest at a variable rate based on LIBOR plus 1% (7.6875% at June 30, 2000), which is dependent on the Company maintaining its investment grade rating. The Partnership is required to comply and is in compliance with certain financial and other covenants customary with this type of unsecured financing. The Line is used primarily to finance the acquisition and development of real estate, but is also available for general working capital purposes. On April 15, 1999, the Partnership completed a $250 million unsecured debt offering in two tranches. The Partnership issued $200 million 7.4% notes due April 1, 2004, priced at 99.922% to yield 7.42%, and $50 million 7.75% notes due April 1, 2009, priced at 100%. The net proceeds of the offering were used to reduce the balance of the Line. As of June 30, 2000, scheduled principal repayments on notes payable and the Line for the next five years were as follows (in thousands):
Scheduled Principal Term Loan Total Scheduled Payments by Year Payments Maturities Payments ----------------------------- ----------- ----------- ----------- 2000 $ 2,876 6,004 8,880 2001 5,621 68,063 73,684 2002 (includes the Line) 4,943 384,098 389,041 2003 4,933 13,303 18,236 2004 5,327 199,882 205,209 Beyond 5 Years 36,888 284,912 321,800 Net unamortized debt premiums - 10,784 10,784 ------------- ------------ ------------- Total $ 60,588 967,046 1,027,634 ============= ============ =============
Unconsolidated partnerships and joint ventures had mortgage loans payable of $15.0 million at June 30, 2000, and the Partnership's proportionate share of these loans was $6.2 million. The Company qualifies and intends to continue to qualify as a REIT under the Internal Revenue Code. As a REIT, the Company is allowed to reduce taxable income by all or a portion of its distributions to stockholders. As distributions have exceeded taxable income, no provision for federal income taxes has been made. While the Company intends to continue to pay dividends to its stockholders, the Company and the Partnership will reserve such amounts of cash flow as it considers necessary for the proper maintenance and improvement of the real estate portfolio, while still maintaining the Company's qualification as a REIT. The Partnership intends to continue to acquire and develop shopping centers and expects to meet the related capital requirements from borrowings on the Line. The Partnership expects to repay the Line from time to time from additional public and private equity or debt offerings, such as those transactions previously completed. Because such acquisition and development activities are discretionary in nature, they are not expected to burden the Partnership's capital resources currently available for liquidity requirements. The Partnership expects that cash provided by operating activities, unused amounts available under the Line, and cash reserves are adequate to meet liquidity requirements and costs necessary to complete properties in development. Results from Operations Comparison of the six months ended June 30, 2000 to 1999 Revenues increased $36.3 million or 29.7% to $158.7 million in 2000. The increase was due to the Pacific acquisition, revenues from new developments that began operating after June 30, 1999, and from same property growth in rental rates and occupancy increases. Minimum rent increased $25.9 million or 28.6%, and recoveries from tenants increased $8.6 million or 37.7%. At June 30, 2000, the Partnership was operating or developing 204 shopping centers of which 168 centers were considered stabilized and 95.9% leased. Other non-rental revenues includes fees earned as part of the Partnership's service operations segment and includes property management and commissions earned from third parties, and development related profits and fees earned from the sales of shopping centers and build to suit properties to third parties. Other non-rental revenues increased by $3.6 million to $9.4 million in 2000, or 65.0%. The increase was primarily due to a $5.6 million increase in development related profits and fees, offset by a $1.9 million reduction in property management fees. Operating expenses increased $14.7 million or 26.1% to $70.9 million in 2000. Combined operating and maintenance, and real estate taxes increased $8.4 million or 31.0% during 2000 to $35.3 million The increase was due to the Pacific acquisition, and expenses incurred by new developments that began operating after June 30, 1999, and general increases in costs on the stabilized properties. General and administrative expenses were $8.3 million during 2000 vs. $8.8 million in 1999 or 6.0% lower as a result of increased capitalization of direct costs incurred during 2000 related to development activities. Depreciation and amortization increased $26.4 million during 2000 or 32.3% primarily due to the Pacific acquisition and developments that began operating after June 30, 1999. In June 2000, the Partnership identified six operating properties that do not meet its long-term investment standards, and accordingly classified these properties as operating properties held for sale on its balance sheet and ceased the depreciation and amortization of these assets. In July 2000, the Partnership entered into a rescindable contract, and reduced the carrying value of these properties to the lower of cost or fair value, net of selling costs. The reduction resulted in a $6.9 million provision for loss on operating properties held for sale that was charged against net income at June 30, 2000. Under the terms of the contract, the sale is expected to be completed during the fourth quarter 2000. Interest expense increased to $32.0 million in 2000 from $25.8 million in 1999, or 23.6%. The increase was due to higher Libor rates, higher average balances on the Line, the assumption of $402.6 million of debt of Pacific, the financing cost of new developments that began operating after June 30, 1999, and the higher fixed interest rate of the $250 million debt offering completed in April, 1999. Weighted average interest rates increased approximately 1% during 2000. Preferred unit distributions increased $10.0 million to $13.3 million during 2000 as a result of the preferred units issued in September 1999 and May 2000. Weighted average fixed rates of the preferred units were 8.72% at June 30, 2000 vs. 8.13% at June 30, 1999. Net income for common unit holders was $36.8 million in 2000 vs. $37.4 million in 1999, a $.6 million or 1.4% decrease primarily a result of the provision for loss on operating properties held for sale and the other reasons as described above. Diluted earnings per unit in 2000 was $.64 vs. $.75 in 1999 a result of the decline in net income and the increased weighted average units in 2000 issued in 1999 in connection with the acquisition of Pacific. Comparison of the three months ended June 30, 2000 to 1999 Revenues increased $6.5 million or 8.7% to $81.9 million in 2000. Minimum rent increased $3.7 million or 6.7%, and recoveries from tenants increased $1.3 million or 9.2%. The increase was due to revenues from new developments that began operating after June 30, 1999, and from same property growth in rental rates and occupancy increases as described in the six month comparison. Other non-rental revenues includes fees earned as part of the Partnership's service operations segment and includes property management and commissions earned from third parties, and development related profits and fees earned from the sales of shopping centers and build to suit properties to third parties. Other non-rental revenues increased by $3.3 million to $7.1 million in 2000, or 85.8%. The increase was primarily due to a $3.7 million increase in development related profits and fees, offset by a $.4 million reduction in property management fees. Operating expenses increased $2.9 million or 8.8% to $36.1 million in 2000. Combined operating and maintenance, and real estate taxes increased $1.6 million or 9.8% during 2000 to $17.8 million. The increase was due primarily to expenses incurred by new developments that began operating after June 30, 1999 and general increases in operating costs on the stabilized properties. General and administrative expenses were $3.8 million in 2000 vs. $5.1 million or 26.8% lower as a result of increased capitalization of direct costs incurred during 2000 related to development activities. Depreciation and amortization increased $2.2 million during 2000 or 19.0% primarily related to developments that began operating after June 30, 1999. In June 2000, the Partnership identified six operating properties that do not meet its long-term investment standards, and accordingly classified these properties as operating properties held for sale on its balance sheet and ceased the depreciation and amortization of these assets. In July 2000, the Partnership entered into a rescindable contract, and reduced the carrying value of these properties to the lower of cost or fair value, net of selling costs. The reduction resulted in a $6.9 million provision for loss on operating properties held for sale that was charged against net income at June 30, 2000. Interest expense increased to $17.2 million in 2000 from $16.2 million in 1999 or 6.6%. The increase was due to higher Libor rates, higher average balances on the Line, and the financing cost of new developments that began operating after June 30, 1999. Weighted average interest rates increased approximately 1% during 2000. Preferred unit distributions increased $5.3 million to $6.9 million during 2000 as a result of the preferred units issued in September 1999 and May 2000. Weighted average fixed rates of the preferred units were 8.72% at June 30, 2000 vs. 8.13% at June 30, 1999. Net income for common unit holders was $15.2 million in 2000 vs. $24.4 million in 1999, a $9.2 million or 37.8% decrease primarily a result of the provision for loss on operating properties held for sale and the other reasons as described above. Diluted earnings per unit in 2000 was $.26 vs. $.41 in 1999, a result of the decline in net income. New Accounting Standards and Accounting Changes The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities " (FAS 133), which is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. FAS 133 establishes accounting and reporting standards for derivative instruments and hedging activities. FAS 133 requires entities to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The Partnership does not believe FAS 133 will materially effect its financial statements. Environmental Matters The Partnership like others in the commercial real estate industry is subject to numerous environmental laws and regulations. The operation of dry cleaning plants at the Partnership's shopping centers is its principal environmental concern. The Partnership believes that the dry cleaners are operating in accordance with current laws and regulations and has established procedures to monitor their operations. The Partnership has approximately 38 properties that will require or are currently undergoing varying levels of environmental remediation. These remediations are not expected to have a material financial effect on the Company or the Partnership due to financial statement reserves and various state-regulated programs that shift the responsibility and cost for remediation to the state. Based on information presently available, no additional environmental accruals were made and management believes that the ultimate disposition of currently known matters will not have a material effect on the financial position, liquidity, or operations of the Company or Partnership. Inflation Inflation has remained relatively low during 2000 and 1999 and has had a minimal impact on the operating performance of the shopping centers, however, substantially all of the Partnership's long-term leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Partnership to receive percentage rentals based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses are often related to increases in the consumer price index or similar inflation indices. In addition, many of the Partnership's leases are for terms of less than ten years, which permits the Partnership to seek increased rents upon re-rental at market rates. Most of the Partnership's leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Partnership's exposure to increases in costs and operating expenses resulting from inflation. Item 3. Quantitative and Qualitative Disclosures About Market Risk Market Risk The Partnership is exposed to interest rate changes primarily as a result of its Line and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Partnership's real estate investment portfolio and operations. The Partnership's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives the Partnership borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The Partnership has not been party to any market risk sensitive instruments during the reporting period ending June 30, 2000 and does not plan to enter into derivative or interest rate transactions for speculative purposes. Part II Item 6 Exhibits and Reports on Form 8-K: (a) Exhibits: 27.1 Financial Data Schedule (b) Reports on Form 8-K. None SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 10, 2000 REGENCY CENTERS, L..P. By: /s/ J. Christian Leavitt --------------------------- Senior Vice President and Chief Accounting Officer EX-27 2 0002.txt ARTICLE 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM REGENCY CENTERS, L.P. FORM 10-Q FOR THE PERIOD ENDED 6/30/00 0001066247 REGENCY CENTERS, L.P. 1 6-MOS DEC-31-2000 JUN-30-2000 34,137,423 0 29,974,485 2,278,852 0 0 2,627,480,241 98,667,448 2,634,870,343 0 0 0 0 0 1,545,499,885 2,634,870,343 0 158,668,494 0 35,272,700 26,414,867 0 31,959,927 50,103,613 0 50,103,613 0 0 0 36,849,100 0.64 0.64
-----END PRIVACY-ENHANCED MESSAGE-----