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REGENCY CENTERS CORPORATION

(REG)
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Delayed Nasdaq  -  04:00:00 2023-01-30 pm EST
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REGENCY CENTERS CORP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/04/2022 | 10:44am EST

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, risk factors described in our SEC filings. When considering an
investment in our securities, you should carefully read and consider these
risks, together with all other information in our most recent Annual Report on
Form 10-K, subsequent Quarterly Reports on Form 10-Q and our other filings with
and submissions to the SEC. If any of the events described in the 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 and to the
extent required by law.

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 our 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, rather they supplement GAAP measures by
providing additional information we believe to be useful to our shareholders.
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.

Defined Terms

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

Core Operating Earnings is an additional performance measure we use because the
computation of Nareit Funds from Operations ("Nareit FFO") includes certain
non-comparable items that affect our period-over-period performance. Core
Operating Earnings excludes from Nareit FFO: (i) transaction related income or
expenses, (ii) gains or losses from the early extinguishment of debt, (iii)
certain non-cash components of earnings derived from above and below market rent
amortization, straight-line rents, and amortization of mark-to-market debt
adjustments, and (iv) other amounts as they occur. We provide reconciliations of
both Net income attributable to common stockholders to Nareit FFO and Nareit FFO
to Core Operating Earnings.

Development Completion is a property in development that is deemed complete upon
the earlier 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. Once deemed complete, the property is
termed a Retail Operating Property the following calendar year.

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Fixed Charge Coverage Ratio is defined as Operating EBITDAre 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 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 percent leased, 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 EBITDAre 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
EBITDAre to Operating EBITDAre.

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 our reported
results under GAAP. We believe presenting our Pro-rata share of assets,
liabilities, operating results, and other metrics, along with certain 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:


o

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 and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and

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o

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.

Redevelopment Completion is a property in redevelopment that is deemed complete
upon the earlier of: (i) 90% of total estimated project costs have been incurred
and percent leased equals or exceeds 95% for the Company owned GLA related to
the project, or (ii) the property features at least two years of anchor
operations, if applicable.

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 September 30, 2022, had full or partial ownership interests in
404 retail properties. Our properties are high-quality neighborhood and
community shopping centers primarily anchored by market leading grocers and
principally located in suburban markets within the country's most desirable
metro areas and contain approximately 51.1 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. and its
wholly-owned subsidiaries, and through our co-investment partnerships. As of
September 30, 2022, the Parent Company owns approximately 99.6% of the
outstanding common partnership units of the Operating Partnership.

Our mission is to create thriving environments for retailers and service
providers to connect with surrounding neighborhoods and communities. Our vision
is to elevate quality of life as an integral thread in the fabric of our
communities. Our portfolio includes thriving properties merchandised with highly
productive grocers, restaurants, service providers, and best-in-class retailers
that connect to their neighborhoods, communities, and customers.

Our values:

We are our people: Our people are our greatest asset, and we believe a talented team from differing backgrounds and experiences make us better.

We do what is right: We act with unwavering standards of honesty and integrity.

We connect with our communities: We promote philanthropic ideas and strive for the betterment of our neighborhoods by giving our time and financial support.

We are responsible: Our duty is to balance purpose and profit, being good stewards of capital and the environment for the benefit of all our stakeholders.

We strive for excellence: When we are passionate about what we do, it is reflected in our performance.

We are better together: When we listen to each other and our customers, we will succeed together.


Our goals are to:

Own and manage a portfolio of high-quality neighborhood and community shopping
centers primarily anchored by market leading grocers and principally located in
suburban trade areas in the country's most desirable metro areas. We expect that
this strategy will result in 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 net operating income
("NOI");

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Maintain an industry leading and disciplined development and redevelopment platform to create exceptional retail centers that deliver higher returns as compared to acquisitions;

Support our business activities with a conservative capital structure, including a strong balance sheet with sufficient liquidity to meet our capital needs together with a carefully constructed debt maturity profile;

Implement leading environmental, social, and governance practices through our Corporate Responsibility Program;

Engage and retain an exceptional and diverse team that is guided by our strong
values, while fostering an environment of innovation and continuous improvement;
and

Create shareholder value by increasing earnings and dividends per share that generate total returns at or near the top of our shopping center peers.

Risks and Uncertainties


The success of our tenants in operating their businesses and their corresponding
ability to pay rent continue to be significantly influenced by many current
economic challenges, which impact their cost of doing business, including, but
not limited to, the impact of inflation, labor shortages, supply chain
constraints, and increasing energy prices and interest rates. Additionally,
macroeconomic and geopolitical risks create challenges that may exacerbate
current market conditions in the United States. The policies implemented by the
U.S. government to address these issues, including raising interest rates, could
result in adverse impacts on the U.S. economy, including a slowing of growth and
potentially a recession, thereby impacting consumer spending, our tenants'
businesses, and/or decreasing future demand for space in our shopping centers.
Refer to Item 1, Note 1 to Unaudited Consolidated Financial Statements.

Please also refer to the Company's Annual Report on Form   10-K   for the year
ended December 31, 2021, including, without limitation, the Risk Factors
discussed in Item 1A of Part I thereof, and the Risk Factors described in Part
II, Item 1A of this Form 10-Q.

Executing on our Strategy


During the nine months ended September 30, 2022, we had Net income attributable
to common stockholders of $387.6 million, which includes gains on sale of real
estate of $106.5 million, as compared to $293.6 million during the nine months
ended September 30, 2021.

During the nine months ended September 30, 2022:

Our Pro-rata same property NOI, excluding termination fees, increased 2.5%, as
compared to the nine months ended September 30, 2021, primarily attributable to
continued improvement in collections of lease income from cash basis tenants,
combined with improvements in base rent from increases in year over year
occupancy rates, contractual rent steps in existing leases, and positive rent
spreads on new and renewal leases.

We executed 1,474 new and renewal leasing transactions representing 5.6 million
Pro-rata SF during the nine months ended September 30, 2022 as compared to 1,489
leasing transactions representing 5.1 million Pro-rata SF during the nine months
ended September 30, 2021. Rent spreads for the trailing twelve months ended
September 30, 2022, were positive 8.8%. Rent spreads are calculated on all
executed leasing transactions for comparable Retail Operating Property space,
including spaces vacant greater than twelve months.

At September 30, 2022, December 31, 2021, and September 30, 2021 our total property portfolio was 94.6%, 94.1%, and 93.5% leased, respectively. At September 30, 2022, December 31, 2021, and September 30, 2021 our Same Property portfolio was 94.7%, 94.3%, and 93.8% leased, respectively.

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

Estimated Pro-rata project costs of our current in process development and redevelopment projects total $398.4 million at September 30, 2022 as compared to $307.3 million at December 31, 2021.

Redevelopment projects completed during 2022 represent $20.8 million of estimated net project cost with a weighted average incremental stabilized yield of 9%.



                                       30
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We maintain a conservative balance sheet in order to provide liquidity and financial flexibility to cost effectively fund investment opportunities and debt maturities:

During April 2022, we settled and issued 984,618 common shares under forward
sale agreements at a weighted average price of $64.59, before any underwriting
discount and offering expenses. Net proceeds received at settlement were
approximately $61.3 million and were used to fund acquisitions.

During June 2022, we executed multiple trades to repurchase 1,294,201 common
shares under the Authorized Repurchase Program for a total of $75.4 million at a
weighted average price of $58.25 per share. All repurchased shares were retired
on the respective settlement dates.

We have no unsecured debt maturities until 2024 and a manageable level of secured mortgage maturities during the next twelve months, including mortgages within our real estate partnerships.

At September 30, 2022, our Pro-rata net debt-to-operating EBITDAre ratio on a trailing twelve month basis was 5.0x as compared to 5.1x at December 31, 2021.

Property Portfolio


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

(GLA in thousands)                        September 30, 2022   December 31, 2021
Number of Properties                             308                  302
GLA                                             38,647               37,864
% Leased - Operating and Development            94.7%                94.0%
% Leased - Operating                            94.9%                94.1%
Weighted average annual effective rent
per square foot ("PSF"), net of tenant
concessions.                                    $23.71               $23.17


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


(GLA in thousands)                        September 30, 2022   December 31, 

2021

Number of Properties                              96                  103
GLA                                             12,468               13,300
% Leased - Operating and Development            93.3%                93.9%
% Leased -Operating                             93.4%                93.9%
Weighted average annual effective rent
PSF, net of tenant concessions                  $23.10               $22.37


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:

                          September 30, 2022   December 31, 2021
% Leased - All Properties       94.6%                94.1%
Anchor space                    96.9%                97.0%
Shop space                      90.8%                89.2%




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


                                                 Nine months ended September 30, 2022
                                                                                Tenant
                                                                               Allowance          Leasing
                             Leasing           SF (in         Base Rent      and Landlord       Commissions
                          Transactions       thousands)          PSF           Work PSF             PSF
Anchor Leases
New                                  17              498     $     14.74     $       15.12     $        5.57
Renewal                              88            2,592           16.39              0.87              0.17
Total Anchor Leases                 105            3,090     $     16.12     $        3.17     $        1.04
Shop Space
New                                 419              802     $     37.62     $       36.41     $       11.93
Renewal                             950            1,737           35.98              1.69              0.89
Total Shop Space Leases           1,369            2,539     $     36.50     $       12.66     $        4.37
Total Leases                      1,474            5,629     $     25.31     $        7.45     $        2.55



                                                 Nine months ended September 30, 2021
                                                                                Tenant
                                                                               Allowance          Leasing
                             Leasing           SF (in         Base Rent      and Landlord       Commissions
                          Transactions       thousands)          PSF           Work PSF             PSF
Anchor Leases
New                                  19              366     $     12.02     $       35.69     $        4.93
Renewal                              92            2,219           14.64              0.65              0.19
Total Anchor Leases                 111            2,585     $     14.27     $        5.61     $        0.86
Shop Space
New                                 415              726     $     34.01     $       26.58     $        8.79
Renewal                             963            1,763           34.01              1.81              0.78
Total Shop Space Leases           1,378            2,489     $     34.01     $        9.04     $        3.11
Total Leases                      1,489            5,074     $     23.95     $        7.29     $        1.96


The weighted average annual base rent ("ABR") per square foot on signed shop
space leases during 2022 was $36.50 PSF, which is higher than the ABR rent per
square foot of all shop space leases due to expire during the next 12 months of
$34.42 PSF. New and renewal rent spreads on a trailing twelve month basis were
positive at 8.8% as compared to prior rents on those same spaces.

The success of our tenants in operating their businesses and their corresponding
ability to pay us rent continue to be significantly impacted by many current
economic challenges, which impact their cost of doing business, including, but
not limited to, inflation, labor shortages, supply chain constraints, and
increasing energy prices and interest rates. Additionally, macroeconomic and
geopolitical risks create challenges that may exacerbate current market
conditions in the United States.

These economic conditions could adversely impact our volume of leasing activity,
leasing spreads, and financial results generally, as well as negatively affect
the business and financial results of our tenants. The aggregate impacts of
these current economic challenges may also negatively affect the overall market
for retail space, resulting in decreased demand for space in our centers. This,
in turn, could result in pricing pressure on rents that we are able to charge to
new or renewing tenants, such that future rent spreads could be adversely
impacted. Further, we may experience higher costs for tenant buildouts, as costs
of materials and labor may increase and supply and availability of both may
become more limited.


                                       32
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Significant Tenants and Concentrations of Risk


We seek to reduce our operating and leasing risks 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 with ABR greater
than 2%, of which four of the top five are grocers:

                                          September 30, 2022
                                            Percentage of
                             Number of        Company-      Percentage of
Tenant                         Stores       owned GLA (1)      ABR (1)
Publix                               67         7.1%            3.3%
Kroger Co.                           53         7.3%            3.1%
Albertsons Companies, Inc.           46         4.7%            3.0%
Amazon/Whole Foods                   36         2.9%            2.7%
TJX Companies, Inc.                  63         3.6%            2.6%


(1)

Includes Regency's Pro-rata share of Unconsolidated Properties and excludes those owned by anchors.

Bankruptcies and Credit Concerns


Our management team devotes significant time to researching and monitoring
consumer preferences and trends, customer shopping behaviors, changes in
delivery methods, shifts to e-commerce, and changing demographics in order to
anticipate the challenges and opportunities impacting our industry. We seek to
mitigate these potential impacts through maintaining a high quality portfolio,
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 suburban trade areas with compelling
demographic populations benefiting from high levels of disposal income. The
potential for a recession and the severity and duration of any economic downturn
could negatively impact our existing tenants and their ability to continue to
meet their lease obligations, which could result in increased bankruptcy
filings.

Although base rent is set forth in 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 re-lease 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. Tenants who are currently in bankruptcy and continue to occupy
space in our shopping centers represent an aggregate of 0.1% of our annual base
rent on a pro-rata basis.

Results from Operations

Comparison of the three months ended September 30, 2022 and 2021:

Our revenues changed as summarized in the following table:

                                              Three months ended September 30,
(in thousands)                                   2022                   2021              Change
Lease income
Base rent                                  $        207,555                192,433           15,122
Recoveries from tenants                              69,376                 62,234            7,142
Percentage rent                                       1,884                  1,271              613
Uncollectible lease income                            1,110                  9,198           (8,088 )
Other lease income                                    3,426                  4,145             (719 )
Straight-line rent                                    6,921                  7,565             (644 )
Above / below market rent amortization                5,484                  6,457             (973 )
Total lease income                         $        295,756                283,303           12,453
Other property income                                 2,466                  4,401           (1,935 )
Management, transaction, and other fees               5,767                 19,671          (13,904 )
Total revenues                             $        303,989                307,375           (3,386 )




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Lease income increased $12.5 million, on a net basis, driven by the following contractually billable components of rent to the tenants per the lease agreements:

$15.1 million increase from billable Base rent, as follows:


o

$5.6 million increase from acquisitions of operating properties as well as from rent commencements at development properties; and


o
$11.1 million net increase from same properties, including a $3.1 million
increase related to our acquisition and resulting consolidation of the eleven
properties previously held in the USAA and RegCal partnerships, and a $8.0
million net increase in the remaining same properties due to increases from
occupancy, rent steps in existing leases, and positive rental spreads on new and
renewal leases; offset by

o

$1.6 million decrease from the sale of operating properties.

$7.1 million increase from Recoveries from tenants, which represents 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, primarily from the following:


o

$2.3 million increase from acquisition of operating properties and rent commencing at development properties; and


o

$5.3 million net increase from same properties due to increases in recoverable expenses; offset by


o

$520,000 decrease from the sale of operating properties.

$613,000 increase in percentage rent primarily due to improvements in tenant sales.

$8.1 million decrease from changes in Uncollectible lease income.


o
During 2022, Uncollectible lease income was a net positive $1.1 million driven
by the $2.6 million collection of prior period reserves on cash basis tenants
and $288,000 positive impact of lease modification agreements, offset by the
$1.7 million reserve recognized on current period billings.

o

During 2021, Uncollectible lease income was a net positive $9.2 million driven by $13.7 million collection of prior period reserves on cash basis tenants exceeding $4.5 million reserve recognized on current period billings.

$719,000 decrease in Other lease income primarily due to a decrease in lease termination fees.

$644,000 decrease in Straight-line rent.


o

During 2022, Straight-line rent was $6.9 million, driven by $3.3 million of new straight-line rents and $3.9 million of reinstated straight-line rents from returning tenants to accrual basis of accounting, offset by $313,000 of uncollectible straight-line rents on cash basis tenants.


o

During 2021, Straight-line rent was $7.6 million driven by $3.9 million of new straight-line rents and $5.0 million of reinstated straight-line rents from returning tenants to accrual basis of accounting, offset by $1.3 million of uncollectible straight-line rents on cash basis tenants.

$973,000 decrease in Above and below market rent primarily from same properties driven by the timing of lease activity on acquired in-place tenant leases.

Other property income decreased $1.9 million primarily due to a decrease in settlements, which were higher during 2021.


Management, transaction, and other fees decreased $13.9 million primarily due to
$13.6 million of promote income recognized during 2021 for our performance as
managing member of the USAA partnership.


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


                                   Three months ended September 30,
(in thousands)                        2022                   2021           

Change

Depreciation and amortization   $         80,270                 75,459        4,811
Operating and maintenance                 49,577                 43,468        6,109
General and administrative                20,273                 17,789        2,484
Real estate taxes                         37,926                 35,779        2,147
Other operating expenses                     949                    812          137
Total operating expenses        $        188,995                173,307       15,688

Depreciation and amortization costs increased $4.8 million, on a net basis, as follows:

$4.1 million increase from acquisitions of operating properties and corporate assets, as well as from development properties where tenant spaces became available for occupancy; and

$871,000 increase from same properties, primarily related to redevelopment projects; offset by

$124,000 decrease from the sale of operating properties.

Operating and maintenance costs increased $6.1 million, on a net basis, as follows:

$2.7 million net increase from acquisitions of operating properties, from development properties, and from hurricane related clean up; and

$3.8 million increase from same properties primarily attributable to an increase
in costs associated with general property maintenance and tenant utilities as
our centers return to customary pre-pandemic operating levels, as well as
additional management fees; offset by

$405,000 decrease from the sale of operating properties.

General and administrative costs increased $2.5 million, on a net basis, as follows:

$2.2 million increase in compensation costs, primarily driven by performance based incentive compensation;

$672,000 increase due to lower development overhead capitalization based on the status and progress of our development and redevelopment projects; and

$569,000 net increase in other corporate overhead costs primarily driven by travel and entertainment returning to more customary pre-pandemic levels; offset by

$860,000 net decrease due to changes 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.

Real estate taxes increased $2.1 million, on a net basis, from acquisitions of operating properties, as well as from same properties, primarily from the consolidation of the properties previously held in the USAA and RegCal partnerships.

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

                                             Three months ended September 30,
(in thousands)                                  2022                  2021              Change
Interest expense, net
Interest on notes payable                  $        37,187                36,628              559
Interest on unsecured credit facilities                524                   558              (34 )
Capitalized interest                                (1,171 )              (1,147 )            (24 )
Hedge expense                                          109                   109                -
Interest income                                       (288 )                (155 )           (133 )
Interest expense, net                      $        36,361                35,993              368
Provision for impairment of real estate,
net of tax                                               -                   (20 )             20
Gain on sale of real estate, net of tax               (220 )              (6,719 )          6,499
Net investment loss (income)                         1,215                   209            1,006
Total other expense (income)               $        37,356                29,463            7,893




                                       35
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During the three months ended September 30, 2022, we recognized a gain on sale
of $220,000 for one land parcel. During the three months ended September 30,
2021, we recognized gains on sale of $6.7 million from two land parcels and a
portion of an operating property.

Net investment loss increased $1.0 million primarily driven by changes in realized and unrealized gains and losses during 2022 on investments held in the non-qualified deferred compensation plan and our captive insurance company. There is an offsetting $860,000 benefit in General and administrative costs related to participant obligations within the deferred compensation plans.


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

                                                        Three months ended September 30,
                                       Regency's
(in thousands)                         Ownership           2022                  2021             Change
GRI - Regency, LLC (GRIR)               40.00%        $         8,876                10,080         (1,204 )
New York Common Retirement Fund
(NYC) (1)                               30.00%                    (49 )                 266           (315 )
Columbia Regency Retail Partners,
LLC (Columbia I)                        20.00%                    452                   562           (110 )
Columbia Regency Partners II, LLC
(Columbia II)                           20.00%                    388                   702           (314 )
Columbia Village District, LLC          30.00%                    454                   372             82
RegCal, LLC (RegCal) (2)                25.00%                    124                   530           (406 )
US Regency Retail I, LLC
(USAA) (3)                              20.01%                      -                    81            (81 )
Other investments in real estate
partnerships                        31.00% - 50.00%               964                 1,650           (686 )
Total equity in income of investments in real
estate partnerships                                   $        11,209       

14,243 (3,034 )

(1)

On May 25, 2022, the NYC partnership sold its remaining two properties and distributed sales proceeds to its members. Dissolution will follow final distributions, which are expected in 2023.

(2)

On April 1, 2022, we acquired our partner's 75% share in four properties held in
the RegCal partnership for a total purchase price of $88.5 million; therefore,
results following the date of acquisition are included in consolidated results.
A single operating property remains within RegCal, LLC, at September 30, 2022.

(3)

On August 1, 2021, we acquired our partner's 80% interest in the seven properties held in the USAA partnership; therefore, results following the date of acquisition are included in consolidated results.

The $3.0 million decrease in our equity in income of investments in real estate partnerships is largely attributable to the following changes:

$1.2 million decrease within GRIR, primarily due to positive impact in 2021 of collections of previously reserved rents and reinstatement of straight-line rents;

$315,000 decrease within NYC as all properties were sold prior to the three months ended September 30, 2022;

$406,000 decrease within RegCal as five of the six properties were sold prior to the three months ended September 30, 2022; and

$686,000 decrease within Other investments in real estate partnerships, primarily from the gain on sale of a single property partnership that occurred during 2021.

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

                                              Three months ended September 30,
(in thousands)                                  2022                   2021              Change
Net income                                 $        88,847                 118,848         (30,001 )
Income attributable to noncontrolling
interests                                           (1,269 )                (1,442 )           173
Net income attributable to common
stockholders                               $        87,578                 117,406         (29,828 )
Net income attributable to exchangeable
operating partnership units                           (379 )                  (519 )           140
Net income attributable to common unit
holders                                    $        87,957                 117,925         (29,968 )





                                       36
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Results from Operations

Comparison of the nine months ended September 30, 2022 and 2021:

Our revenues changed as summarized in the following table:

                                               Nine months ended September 30,
(in thousands)                                   2022                   2021              Change
Lease income
Base rent                                  $        611,160                570,602           40,558
Recoveries from tenants                             205,614                193,079           12,535
Percentage rent                                       7,583                  5,386            2,197
Uncollectible lease income                           12,156                 18,093           (5,937 )
Other lease income                                   10,561                 11,172             (611 )
Straight-line rent                                   18,405                  9,598            8,807
Above / below market rent amortization               16,786                 18,460           (1,674 )
Total lease income                         $        882,265                826,390           55,875
Other property income                                 8,290                  9,428           (1,138 )
Management, transaction, and other fees              18,950                 33,419          (14,469 )
Total revenues                             $        909,505                869,237           40,268

Lease income increased $55.9 million, on a net basis, driven by the following contractually billable components of rent to the tenants per the lease agreements:

$40.6 million increase from billable Base rent, as follows:


o

$1.4 million net increase from rent commencements at development properties;


o

$14.5 million increase from acquisitions of operating properties; and


o
$30.6 million net increase from same properties, including a $11.7 million
increase related to our acquisition and resulting consolidation of the eleven
properties previously held in the USAA and RegCal partnerships, and a $18.9
million net increase in the remaining same properties due to increases from
occupancy, rent steps in existing leases, and positive rental spreads on new and
renewal lease; offset by

o

$5.9 million decrease from the sale of operating properties.

$12.5 million increase from Recoveries from tenants, which represents 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, primarily from the following:


o

$6.2 million increase from acquisition of operating properties and rent commencing at development properties; and


o

$8.0 million net increase from same properties due to increases in recoverable expenses; offset by


o

$1.7 million decrease from the sale of operating properties.

$2.2 million increase in percentage rent primarily due to improvements in tenant sales.

$5.9 million decrease from favorable changes in Uncollectible lease income.


o
During 2022, Uncollectible lease income was a net positive $12.2 million driven
by $16.9 million collection of prior period reserves on cash basis tenants and
$2.1 million positive impact of lease modification agreements, offset by the
$6.8 million reserve recognized on current period billings.

o

During 2021, Uncollectible lease income was a net positive $18.1 million driven by $37.7 million collection of prior period reserves on cash basis tenants exceeding the $19.6 million reserve recognized on 2021 billings.

$8.8 million increase in Straight-line rent.


o
During 2022, Straight-line rent was $18.4 million, driven by $9.9 million of new
straight-line rents and $10.7 million of reinstated straight-line rents from
returning tenants to accrual basis of accounting, offset by $2.2 million of
uncollectible straight-line rents on cash basis tenants.

                                       37
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o

During 2021, Straight-line rent was $9.6 million driven by $9.8 million of new straight-line rents and $5.0 million of reinstated straight-line rents from returning tenants to accrual basis of accounting, offset by $5.2 million of uncollectible straight-line rents on cash basis tenants.

$1.7 million decrease in Above and below market rent primarily from same properties driven by the timing of lease activity on acquired in-place tenant leases.

Other property income decreased $1.1 million primarily due to a decrease in settlements, which were higher during 2021.


Management, transaction, and other fees decreased $14.5 million primarily due to
$13.6 million of one-time promote income recognized during 2021 for our
performance as managing member of the USAA partnership, as well as a decrease in
property management fees resulting from a smaller portfolio of properties held
within our co-investment partnerships following the sale of several properties
to third parties or the purchase and consolidation by Regency.

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


                                    Nine months ended September 30,
(in thousands)                        2022                   2021           

Change

Depreciation and amortization   $        237,462                226,935       10,527
Operating and maintenance                143,788                135,616        8,172
General and administrative                56,710                 58,263       (1,553 )
Real estate taxes                        111,495                107,392        4,103
Other operating expenses                   3,739                  2,687        1,052
Total operating expenses        $        553,194                530,893       22,301

Depreciation and amortization costs increased $10.5 million, on a net basis, as follows:

$549,000 increase from development properties where tenant spaces became available for occupancy, offset by decreases in corporate asset depreciation;

$10.3 million increase from acquisitions of operating properties; and

$2.0 million increase from same properties, primarily related to redevelopment projects; offset by

$2.3 million decrease from the sale of operating properties.

Operating and maintenance costs increased $8.2 million, on a net basis, as follows:

$509,000 increase from development properties where tenant spaces became available for occupancy;

$4.1 million increase from acquisitions of operating properties; and

$7.1 million increase from same properties primarily attributable to higher insurance premiums as well as an increase in costs associated with general property maintenance as our centers return to customary operating levels; offset by

$3.5 million decrease from the sale of operating properties.

General and administrative costs decreased $1.6 million, on a net basis, as follows:

$10.7 million net decrease due to changes 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; offset by

$5.7 million net increase in compensation costs primarily driven by performance based incentive compensation and annual base salary increases;

$2.3 million net increase in other corporate overhead costs primarily driven by travel and entertainment costs returning to customary levels; and

$1.1 million increase due to lower development overhead capitalization based on the timing and progress of our development and redevelopment projects.

                                       38
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Real estate taxes increased $4.1 million, on a net basis, as follows:

$738,000 increase from developments where capitalization ceased and spaces became available for occupancy;

$3.3 million increase from acquisitions of operating properties; and

$1.4 million net increase at same properties including $2.1 million increase
related to our acquisition and resulting consolidation of the eleven properties
previously held in the USAA and RegCal partnerships, offset by $718,000 decrease
at various properties within the portfolio from lower assessed values; offset by

$1.3 million decrease from the sale of operating properties.

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

                                               Nine months ended September 30,
(in thousands)                                   2022                   2021              Change
Interest expense, net
Interest on notes payable                  $         111,547               110,252            1,295
Interest on unsecured credit facilities                1,500                 1,636             (136 )
Capitalized interest                                  (2,985 )              (3,012 )             27
Hedge expense                                            328                   328                -
Interest income                                         (592 )                (463 )           (129 )
Interest expense, net                      $         109,798               108,741            1,057
Provision for impairment of real estate,
net of tax                                                 -                   115             (115 )
Gain on sale of real estate, net of tax             (106,459 )             (38,198 )        (68,261 )
Net investment loss (income)                           9,177                (3,275 )         12,452
Total other expense (income)               $          12,516                

67,383 (54,867 )



The $1.1 million net increase in Interest expense is primarily driven by an
increase in mortgage interest expense from assumed loans on recently acquired
properties. We expect that refinancing our debt at maturity or borrowing on our
variable rate Line, in the current interest rate environment, could result in
higher interest expense in future periods if rates remain elevated.

During the nine months ended September 30, 2022, we recognized gains on sale of
$106.5 million for four land parcels and one operating property. During the nine
months ended September 30, 2021, we recognized gains on sale of $38.2 million
from three land parcels, five operating properties, and a portion of an
operating property.

Net investment income decreased $12.5 million primarily driven by realized and
unrealized losses during 2022 of investments held in the non-qualified deferred
compensation plan and our captive insurance company. There is an offsetting
$10.7 million benefit in General and administrative costs related to participant
obligations within the deferred compensation plans.

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

                                                         Nine months ended September 30,
                                       Regency's
(in thousands)                         Ownership           2022                  2021             Change
GRI - Regency, LLC (GRIR)               40.00%        $        27,280                26,014          1,266
New York Common Retirement Fund
(NYC) (1)                               30.00%                  9,162                   127          9,035
Columbia Regency Retail Partners,
LLC (Columbia I)                        20.00%                  1,396                 1,494            (98 )
Columbia Regency Partners II, LLC
(Columbia II)                           20.00%                  1,307                 1,702           (395 )
Columbia Village District, LLC          30.00%                  1,154                 1,058             96
RegCal, LLC (RegCal) (2)                25.00%                  4,374                 1,486          2,888
US Regency Retail I, LLC
(USAA) (3)                              20.01%                      -                   631           (631 )
Other investments in real estate
partnerships                        35.00% - 50.00%             3,182                (6,168 )        9,350
Total equity in income of
investments in real estate
partnerships                                          $        47,855                26,344         21,511


(1)

On May 25, 2022, the NYC partnership sold its remaining two properties and distributed sales proceeds to its members. Dissolution will follow final distributions, which are expected in 2023.

(2)

We acquired our partner's 75% share in four properties held in the RegCal
partnership for a total purchase price of $88.5 million on April 1, 2022;
therefore results following the date of acquisition are included in consolidated
results. A single operating property remains within RegCal, LLC, at September
30, 2022.

(3)

We acquired our partner's 80% interest in the seven properties held in the USAA partnership on August 1, 2021; therefore results following the date of acquisition are included in consolidated results.

                                       39
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The $21.5 million increase in our equity in income of investments in real estate partnerships is largely attributable to the following changes:

$1.3 million increase within GRIR primarily due to an increase in base rent across the portfolio from higher occupancy and rent growth combined with continued improvements in tenant rent collections and re-instating straight-line rent on certain tenants returning to accrual basis of accounting;

$9.0 million increase within NYC, primarily due to gains on the sale of two operating properties during 2022, as well as an increase due to the loss on sale of an operating property during 2021;

$2.9 million increase within RegCal, primarily due to a gain on sale of one operating property during 2022; and

$9.4 million increase within Other investments in real estate partnerships, primarily from the impairment of a single property partnership that sold during 2021.

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

                                               Nine months ended September 30,
(in thousands)                                   2022                   2021              Change
Net income                                 $        391,650                297,305           94,345
Income attributable to noncontrolling
interests                                            (4,048 )               (3,753 )           (295 )
Net income attributable to common
stockholders                               $        387,602                293,552           94,050
Net income attributable to exchangeable
operating partnership units                          (1,694 )               (1,315 )           (379 )
Net income attributable to common unit
holders                                    $        389,296                294,867           94,429



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 our 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 our
reported results under GAAP. We believe presenting our Pro-rata share of
operating results, along with other non-GAAP measures, may assist in comparing
our 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, rather they supplement GAAP measures by
providing additional information we believe to be useful to shareholders. 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.


                                       40
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Pro-Rata Same Property NOI:

Our Pro-rata same property NOI, with and without termination fees, changed from the following major components:

                                  Three months ended                          Nine months ended
                                     September 30,                              September 30,
(in thousands)                   2022             2021         Change        2022          2021         Change
Base rent                     $  224,521          216,092        8,429     $ 665,452       644,751       20,701
Recoveries from tenants           74,325           69,811        4,514       222,684       218,968        3,716
Percentage rent                    2,228            1,405          823         8,738         6,302        2,436
Termination fees                     902            2,031       (1,129 )       3,790         4,697         (907 )
Uncollectible lease income         1,389           10,271       (8,882 )      13,484        19,317       (5,833 )
Other lease income                 3,055            2,701          354         8,527         8,303          224
Other property income              1,857            3,720       (1,863 )       6,447         7,447       (1,000 )
Total real estate revenue        308,277          306,031        2,246       929,122       909,785       19,337
Operating and maintenance         48,556           45,070        3,486       144,437       139,218        5,219
Real estate taxes                 40,401           39,801          600       119,998       121,220       (1,222 )
Ground rent                        2,991            2,794          197         8,856         8,686          170
Total real estate operating
expenses                          91,948           87,665        4,283       273,291       269,124        4,167
Pro-rata same property NOI    $  216,329          218,366       (2,037 )   $ 655,831       640,661       15,170
Less: Termination fees               902            2,031       (1,129 )       3,790         4,697         (907 )
Pro-rata same property NOI,
excluding termination fees    $  215,427          216,335         (908 )   $ 652,041       635,964       16,077
Pro-rata same property NOI
growth, excluding
termination fees                                                  -0.4 %                                    2.5 %

Billable Base rent increased $8.4 million and $20.7 million, respectively, during the three and nine months ended September 30, 2022, due to rent steps in existing leases, positive rental spreads on new and renewal leases, and increases in occupancy.


Recoveries from tenants increased $4.5 million and $3.7 million, respectively,
during the three and nine months ended September 30, 2022, due to increases in
recoverable expenses and greater recovery rates from higher average occupancy.

Percentage rent increased $823,000 and $2.4 million, respectively, during the
three and nine months ended September 30, 2022, due to improvements in tenant
sales.

Termination fees decreased $1.1 million and $907,000 during the three and nine
months ended September 30, 2022, due to termination fees from several tenants at
various properties during 2021, both wholly owned and within our partnerships.

Uncollectible lease income decreased $8.9 million and $5.8 million, respectively, during the three and nine months ended September 30, 2022, primarily driven by the 2021 collection of previously reserved amounts, which have continued but to a lesser degree in 2022.


Other property income decreased $1.9 million and $1.0 million, respectively,
during the three and nine months ended September 30, 2022, primarily driven by a
decrease in settlements compared to 2021.

Operating and maintenance increased $3.5 million and $5.2 million, respectively, during the three and nine months ended September 30, 2022, due primarily to increases in insurance and other reimbursable costs.


Real estate taxes increased $600,000 and decreased $1.2 million, respectively,
during the three and nine months ended September 30, 2022, due to changes in
assessed values at properties across our portfolio.


                                       41
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Same Property Rollforward:


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

                                                    Three months ended September 30,
                                                  2022                             2021
                                        Property                         Property
(GLA in thousands)                       Count              GLA            Count           GLA
Beginning same property count                  390           41,446             394         40,918
Acquired properties owned for
entirety of comparable periods (1)               -                -               -            546
SF adjustments (2)                               -               10               -           (152 )
Ending same property count                     390           41,456             394         41,312



                                                    Nine months ended September 30,
                                                  2022                            2021
                                        Property                        Property
(GLA in thousands)                       Count             GLA            Count           GLA
Beginning same property count                  393          41,294             393         40,228
Acquired properties owned for
entirety of comparable periods
presented (1)                                    -             327               2            924
Developments that reached
completion by the beginning of
earliest comparable period
presented                                        1              72               6            683
Disposed properties                             (4 )          (191 )            (7 )         (407 )
SF adjustments (2)                               -             (46 )             -           (116 )
Ending same property count                     390          41,456          

394 41,312

(1)

Includes an adjustment to GLA arising from the acquisition of our partners' share of properties previously held in the RegCal and USAA partnerships, of which our previous ownership share was already included in our same property pool.

(2)

SF adjustments arising from remeasurements or redevelopments.

Nareit FFO and Core Operating Earnings:

Our reconciliation of net income attributable to common stock and unit holders to Nareit FFO and to Core Operating Earnings is as follows:


                                        Three months ended September 30,       Nine months ended September 30,
(in thousands, except share
information)                               2022                2021              2022                2021
Reconciliation of Net income to
Nareit FFO
Net income attributable to common
stockholders                            $   87,578                117,406     $   387,602               293,552
Adjustments to reconcile to Nareit
FFO: (1)
Depreciation and amortization
(excluding FF&E)                            86,405                 81,928         256,273               247,599
Provision for impairment of real
estate                                           -                   (505 )             -                10,586
Gain on sale of real estate, net of
tax                                           (202 )               (6,737 )      (119,301 )             (38,584 )
Exchangeable operating partnership
units                                          379                    519           1,694                 1,315
Nareit FFO attributable to common
stock and unit holders                  $  174,160                192,611     $   526,268               514,468
Reconciliation of Nareit FFO to Core
Operating Earnings
Nareit Funds From Operations            $  174,160                192,611     $   526,268               514,468
Adjustments to reconcile to Core
Operating Earnings (1):
Early extinguishment of debt                     -                      -             176                     -
Promote income                                   -                (13,589 )             -               (13,589 )
Certain Non Cash Items
Straight-line rent                          (3,140 )               (4,004 )        (9,152 )             (10,294 )
Uncollectible straight-line rent            (4,156 )               (4,376 )        (9,610 )                 159
Above/below market rent amortization,
net                                         (5,191 )               (6,390 )       (15,906 )             (18,098 )
Debt premium/discount amortization             (28 )                 (368 )          (185 )                (460 )
Core Operating Earnings                 $  161,645                163,884     $   491,591               472,186


(1)

Includes Regency's Pro-rata share of unconsolidated investment partnerships, net of Pro-rata share attributable to noncontrolling interest.

                                       42
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Same Property NOI Reconciliation:

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


                                        Three months ended September 30,       Nine months ended September 30,
(in thousands)                             2022                2021              2022                2021
Net income attributable to common
stockholders                            $   87,578                117,406     $  387,602                293,552

Less:

Management, transaction, and other
fees                                         5,767                 19,671         18,950                 33,419
Other (1)                                   13,564                 15,125         38,295                 31,184
Plus:
Depreciation and amortization               80,270                 75,459        237,462                226,935
General and administrative                  20,273                 17,789         56,710                 58,263
Other operating expense                        949                    812          3,739                  2,687
Other expense (income)                      37,356                 29,463         12,516                 67,383
Equity in income of investments in
real estate excluded from NOI (2)           11,754                 11,023         23,767                 49,267
Net income attributable to
noncontrolling interests                     1,269                  1,442          4,048                  3,753
Pro-rata NOI                            $  220,118                218,598     $  668,599                637,237
Less non-same property NOI (3)               3,789                    232         12,768                 (3,424 )
Pro-rata same property NOI              $  216,329                218,366     $  655,831                640,661


(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. Also includes adjustments for
earnings at the four and seven properties we acquired from our former
unconsolidated RegCal and USAA partnerships in 2022 and 2021, respectively, in
order to calculate growth on a comparable basis for the periods presented.

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. A
significant portion of our cash from operations is distributed to our common
shareholders in the form of dividends in order to maintain our status as a REIT.

Except for $200 million of 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 $200 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.

We continually assess our available liquidity and our expected cash
requirements, which includes monitoring our tenant rent collections. We draw on
multiple financing sources to fund our long-term capital needs, including the
capital requirements of our in process and planned developments, redevelopments,
and capital expenditures, and the repayment of debt. We expect to meet these
needs by using a combination of the following: cash flow from operations after
funding our dividend, borrowings from our Line, proceeds from the sale of real
estate, mortgage loan and unsecured bank financing, distributions received from
our co-investment partnerships, and when the capital markets are favorable,
proceeds from the sale of equity or the issuance of new unsecured debt. We
continually evaluate alternative financing options, and we believe we can obtain
new financing on reasonable terms, although likely at higher interest rates than
that of our debt currently outstanding.

We have no unsecured debt maturities in 2023, $250 million of unsecured debt
maturing in 2024, and a manageable level of secured mortgage maturities during
the next 12 months, including those mortgages within our real estate
partnerships. 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 year.


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In addition to our $151.2 million of unrestricted cash, we have the following additional sources of capital available:


(in thousands)            September 30, 2022
ATM equity program
Original offering amount $            500,000
Available capacity       $            350,363
Line of Credit
Total commitment amount  $          1,250,000
Available capacity (1)   $          1,240,619
Maturity (2)                   March 23, 2025


(1)
Net of letters of credit.

(2)

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


The declaration of dividends is determined quarterly by our Board of Directors.
On November 2, 2022, our Board of Directors declared a common stock dividend of
$0.65 per share, payable on January 4, 2023, to shareholders of record as of
December 16, 2022. 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 nine months ended September 30, 2022 and
2021, we generated cash flow from operations of $528.2 million and $508.5
million, respectively, and paid $322.9 million and $303.3 million in dividends
to our common stock and unit holders, respectively.

We currently have development and redevelopment projects in various stages of
construction, along with a pipeline of potential projects for future development
or redevelopment. After funding our common stock dividend payment in October
2022, we estimate that we will require capital during the next twelve months of
approximately $361.8 million related to leasing, tenant improvements, in-process
developments and redevelopments, capital contributions to our co-investment
partnerships, and repaying maturing debt. These capital requirements are being
impacted by current levels of high inflation resulting in increased costs of
construction materials, labor, and services from third party contractors and
suppliers. In response, we have implemented mitigation strategies such as
entering into fixed cost construction contracts, pre-ordering materials, and
other planning efforts. Further, continued challenges from labor shortages and
supply chain disruptions may extend the time to completion of these projects.

If we start new developments or redevelopments, commit to property acquisitions,
repay debt prior to maturity, declare future dividends, or repurchase shares of
our common stock, our cash requirements will increase. If we refinance maturing
debt, our cash requirements will decrease. We expect to generate the necessary
cash to fund our long-term 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.

We endeavor to maintain a high percentage of unencumbered assets. As of
September 30, 2022, 89.4% 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 4.6x and 4.5x for the periods ended September 30, 2022, and December 31,
2021, respectively, and our Pro-rata net debt-to-operating EBITDAre ratio on a
trailing twelve month basis was 5.0x and 5.1x, respectively, for the same
periods.

Our Line 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,
2021. We are in compliance with all covenants at September 30, 2022, and expect
to remain in compliance. Please also refer to the Company's Annual Report on
Form   10-K   for the year ended December 31, 2021, including, without
limitation, the Risk Factors discussed in Item 1A of Part I thereof, and the
Risk Factors described in Part II, Item 1A of this Form 10-Q.


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