United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] For the quarterly period ended June 30, 2003
-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 1-12298
REGENCY CENTERS CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-3191743
------- ----------
(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) 598-7000
(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[ ]
Indicate by check mark whether the registrant is an accelerated filer (as de
fined in Rule 12b-2 of the Exchange Act). Yes [X] No[ ]
(Applicable only to Corporate Registrants)
As of August 8, 2003, there were 55,885,179 shares outstanding of the
Registrant's common stock.
REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
(unaudited)
June 30, December 31,
2003 2002
---- ----
Assets
Real estate investments at cost:
Land $ 732,184,833 715,255,513
Buildings and improvements 2,011,795,946 1,973,501,081
----------------- -----------------
2,743,980,779 2,688,756,594
Less: accumulated depreciation 273,193,132 244,595,928
----------------- -----------------
2,470,787,647 2,444,160,666
Properties in development 288,396,034 276,085,435
Operating properties held for sale 10,685,396 5,658,905
Investments in real estate partnerships 131,599,044 125,482,151
----------------- -----------------
Net real estate investments 2,901,468,121 2,851,387,157
Cash and cash equivalents 45,926,882 56,447,329
Notes receivable 11,400,667 56,630,876
Tenant receivables, net of allowance for uncollectible accounts
of $3,968,360 and $4,258,891 at June 30, 2003
and December 31, 2002, respectively 32,449,975 47,983,160
Deferred costs, less accumulated amortization of $29,814,279 and
$25,588,464 at June 30, 2003 and December 31, 2002, respectively 36,439,470 37,367,196
Other assets 17,004,287 19,112,148
----------------- -----------------
$ 3,044,689,402 3,068,927,866
================= =================
Liabilities and Stockholders' Equity
Liabilities:
Notes payable $ 1,257,822,840 1,253,524,045
Unsecured line of credit 228,000,000 80,000,000
Accounts payable and other liabilities 74,589,988 83,977,263
Tenants' security and escrow deposits 9,393,165 8,847,603
----------------- -----------------
Total liabilities 1,569,805,993 1,426,348,911
----------------- -----------------
Preferred units 302,325,891 375,403,652
Exchangeable operating partnership units 26,985,381 30,629,974
Limited partners' interest in consolidated partnerships 16,697,663 14,825,256
----------------- -----------------
Total minority interest 346,008,935 420,858,882
----------------- -----------------
Stockholders' equity:
Series 3 cumulative redeemable preferred stock, $.01 par value per share,
300,000 shares authorized, issued and outstanding
at June 30, 2003; liquidation preference $250 per share 75,000,000 -
Series 2 cumulative convertible preferred stock and paid in capital,
$.01 par value per share: 1,502,532 shares authorized; 450,400
shares issued and outstanding at December 31, 2002;
liquidation preference $20.83 per share - 10,505,591
Common stock $.01 par value per share: 150,000,000 shares
authorized; 64,504,010 and 63,480,417 shares issued
at June 30, 2003 and December 31, 2002, respectively 645,040 634,804
Treasury stock; 8,585,717 and 3,923,381 shares held at
June 30, 2003 and December 31, 2002, respectively, at cost (228,249,977) (77,698,485)
Additional paid in capital 1,380,288,224 1,367,808,138
Distributions in excess of net income (98,808,813) (79,529,975)
----------------- -----------------
Total stockholders' equity 1,128,874,474 1,221,720,073
----------------- -----------------
Commitments and contingencies
$ 3,044,689,402 3,068,927,866
================= =================
See accompanying notes to consolidated financial statements
2
REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
For the Three Months ended June 30, 2003 and 2002
(unaudited)
2003 2002
---- ----
Revenues:
Minimum rent $ 70,253,844 65,965,120
Percentage rent 460,837 338,004
Recoveries from tenants 19,458,337 18,609,279
Service operations revenue 9,311,296 2,420,368
Equity in income of investments in
real estate partnerships 1,984,089 1,819,700
------------------ ------------------
Total revenues 101,468,403 89,152,471
------------------ ------------------
Operating expenses:
Depreciation and amortization 18,670,025 16,618,214
Operating and maintenance 13,435,961 12,274,526
General and administrative 6,165,875 5,221,559
Real estate taxes 9,849,357 9,406,449
Other expenses 677,699 350,249
------------------ ------------------
Total operating expenses 48,798,917 43,870,997
------------------ ------------------
Other expense (income):
Interest expense, net of interest income of $385,200
and $602,530 in 2003 and 2002, respectively 20,902,459 21,166,320
Provision for loss on operating properties 1,968,520 2,364,480
Other income - (2,383,524)
------------------ ------------------
Total other expense 22,870,979 21,147,276
------------------ ------------------
Income before minority interests 29,798,507 24,134,198
Minority interest preferred units (6,706,251) (8,368,752)
Minority interest of exchangeable operating partnership units (542,962) (386,298)
Minority interest of limited partners (140,415) (125,873)
------------------ ------------------
Income from continuing operations 22,408,879 15,253,275
Discontinued operations, net:
Operating (loss) income from discontinued operations (71,136) 4,938,368
Gain on sale of operating properties and properties in development 4,654,152 2,798,574
------------------ ------------------
Income from discontinued operations 4,583,016 7,736,942
------------------ ------------------
Net income 26,991,895 22,990,217
Preferred stock dividends (1,359,880) (758,628)
------------------ ------------------
Net income for common stockholders $ 25,632,015 22,231,589
================== ==================
Income per common share - Basic:
Income from continuing operations $ 0.35 0.25
Discontinued operations $ 0.08 0.13
------------------ ------------------
Net income for common stockholders per share $ 0.43 0.38
================== ==================
Income per common share - Diluted:
Income from continuing operations $ 0.34 0.25
Discontinued operations $ 0.08 0.13
------------------ ------------------
Net income for common stockholders per share $ 0.42 0.38
================== ==================
See accompanying notes to consolidated financial statements
3
REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
For the Six Months ended June 30, 2003 and 2002
(unaudited)
2003 2002
---- ----
Revenues:
Minimum rent $ 139,434,434 130,086,563
Percentage rent 767,638 931,035
Recoveries from tenants 40,173,705 37,311,177
Service operations revenue 13,248,411 4,134,738
Equity in income of investments in
real estate partnerships 4,320,068 2,885,210
------------------ ------------------
Total revenues 197,944,256 175,348,723
------------------ ------------------
Operating expenses:
Depreciation and amortization 37,202,820 32,543,397
Operating and maintenance 26,596,379 23,347,831
General and administrative 10,300,774 9,211,154
Real estate taxes 20,005,375 19,016,729
Other expenses 1,104,438 709,592
------------------ ------------------
Total operating expenses 95,209,786 84,828,703
------------------ ------------------
Other expense (income):
Interest expense, net of interest income of $1,277,866
and $1,444,168 in 2003 and 2002, respectively 41,570,463 41,029,660
Gain on sale of operating properties - (1,494,225)
Provision for loss on operating properties 1,968,520 2,364,480
Other income - (2,383,524)
------------------ ------------------
Total other expense 43,538,983 39,516,391
------------------ ------------------
Income before minority interests 59,195,487 51,003,629
Minority interest preferred units (17,488,630) (16,737,504)
Minority interest of exchangeable operating partnership units (984,255) (847,846)
Minority interest of limited partners (204,123) (234,985)
------------------ ------------------
Income from continuing operations 40,518,479 33,183,294
Discontinued operations, net:
Operating income from discontinued operations 370,428 10,362,248
Gain on sale of operating properties and properties in development 4,027,440 4,721,338
------------------ ------------------
Income from discontinued operations 4,397,868 15,083,586
------------------ ------------------
Net income 44,916,347 48,266,880
Preferred stock dividends (1,359,880) (1,517,256)
------------------ ------------------
Net income for common stockholders $ 43,556,467 46,749,624
================== ==================
Income per common share - Basic:
Income from continuing operations $ 0.65 0.55
Discontinued operations $ 0.07 0.26
------------------ ------------------
Net income for common stockholders per share $ 0.72 0.81
================== ==================
Income per common share - Diluted:
Income from continuing operations $ 0.65 0.54
Discontinued operations $ 0.07 0.26
------------------ ------------------
Net income for common stockholders per share $ 0.72 0.80
================== ==================
See accompanying notes to consolidated financial statements
4
REGENCY CENTERS CORPORATION
Consolidated Statement of Stockholders' Equity
For the Six Months ended June 30, 2003
Additional Distributions Total
Series 2 and 3 Common Treasury Paid In in Excess of Stockholders'
Preferred Stock Stock Stock Capital Net Income Equity
--------------- --------- --------------- --------------- ------------- ---------------
Balance at
December 31, 2002 $ 10,505,591 634,804 (77,698,485) 1,367,808,138 (79,529,975) 1,221,720,073
Common stock issued as
compensation or purchased by
directors or officers - 4,213 (532) 5,532,512 - 5,536,193
Common stock issued for exercise
of stock options, net of shares
cancelled - 1,081 (49,077) (3,248,443) - (3,296,439)
Common stock issued for
partnership units exchanged - 438 - 1,163,105 - 1,163,543
Common stock issued for Series 2
preferred stock exchanged (10,505,591) 4,504 - 10,501,087 - -
Series 3 preferred stock issued 75,000,000 - - (2,605,193) - 72,394,807
Repurchase of common stock - - (150,501,883) - - (150,501,883)
Reallocation of minority interest - - - 1,137,018 - 1,137,018
Cash dividends declared:
Common stock ($1.04 per share) - - - - (64,195,185) (64,195,185)
Net income - - - - 44,916,347 44,916,347
------------- ---------- --------------- --------------- ------------- ---------------
Balance at
June 30, 2003 $ 75,000,000 645,040 (228,249,977) 1,380,288,224 (98,808,813) 1,128,874,474
============= ========== =============== =============== ============= ===============
See accompanying notes to consolidated financial statements.
5
REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2003 and 2002
(unaudited)
2003 2002
---- ----
Cash flows from operating activities:
Net income $ 44,916,347 48,266,880
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 37,762,851 35,345,863
Deferred loan cost and debt premium amortization 1,063,333 579,760
Stock based compensation 5,770,037 4,061,109
Minority interest preferred units 17,488,630 16,737,504
Minority interest of exchangeable operating partnership units 1,091,938 1,233,018
Minority interest of limited partners 204,123 234,985
Equity in income of investments in real estate partnerships (4,320,068) (2,885,210)
Gain on sale of operating properties (4,126,054) (6,336,126)
Provision for loss on operating properties 1,968,520 2,364,480
Other income - gain on early extinguishment of debt - (2,383,524)
Distributions from operations of investments in real estate partnerships 4,928,871 2,445,123
Changes in assets and liabilities:
Tenant receivables 14,715,870 4,846,288
Deferred leasing costs (5,404,589) (5,743,087)
Other assets 3,389,085 (909,558)
Accounts payable and other liabilities (23,070,267) (8,864,235)
Tenants' security and escrow deposits 771,372 492,752
----------------- -----------------
Net cash provided by operating activities 97,149,999 89,486,022
----------------- -----------------
Cash flows from investing activities:
Acquisition and development of real estate (156,511,018) (122,942,817)
Proceeds from sale of real estate 97,849,071 152,570,119
Investments in real estate partnerships (6,476,771) (19,452,091)
Capital improvements (6,501,585) (8,065,785)
Proceeds from sale of investments in real estate partnerships - 2,388,319
Repayment of notes receivable, net 45,230,209 15,147,713
Distributions received from investments in real estate partnerships 10,303,375 5,901,647
----------------- -----------------
Net cash (used in) provided by investing activities (16,106,719) 25,547,105
----------------- -----------------
Cash flows from financing activities:
Net proceeds from common stock issuance 968,460 3,500,499
Repurchase of common stock (150,501,883) (2,725,000)
Partial redemption of preferred units (75,750,000) -
Redemption of exchangeable operating partnership units (973,504) (83,232)
Net distributions to limited partners in consolidated partnerships (89,000) -
Distributions to exchangeable operating partnership unit holders (1,462,466) (1,593,543)
Distributions to preferred unit holders (14,816,391) (16,737,504)
Dividends paid to common stockholders (62,835,305) (59,106,146)
Dividends paid to preferred stockholders (1,359,880) (1,517,256)
Net proceeds from issuance of Series 3 preferred stock 72,394,807 -
Net proceeds from fixed rate unsecured notes - 249,625,000
Proceeds (repayment) of unsecured line of credit, net 148,000,000 (194,000,000)
Repayment of notes payable (2,257,943) (46,339,199)
Scheduled principal payments (2,880,622) (2,615,870)
Deferred loan costs - (2,070,986)
----------------- -----------------
Net cash used in financing activities (91,563,727) (73,663,237)
----------------- -----------------
Net (decrease) increase in cash and cash equivalents (10,520,447) 41,369,890
Cash and cash equivalents at beginning of period 56,447,329 27,853,264
----------------- -----------------
Cash and cash equivalents at end of period $ 45,926,882 69,223,154
================= =================
6
REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2003 and 2002
(unaudited)
continued
2003 2002
---- ----
Supplemental disclosure of cash flow information - cash paid for interest (net
of capitalized interest of $6,192,236 and $7,870,311
in 2003 and 2002, respectively) $ 41,799,073 34,747,465
================= =================
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of real estate $ 15,341,889 6,400,000
================= =================
Real estate contributed as investment in real estate partnerships $ 12,646,495 3,887,445
================= =================
Real estate contributed from limited partners' in consolidated partnerships $ 1,757,284 -
================= =================
Mortgage debt assumed by purchaser on sale of real estate $ 5,253,767 -
================= =================
Notes receivable taken in connection with sales of operating properties
and properties in development $ - 4,852,700
================= =================
See accompanying notes to consolidated financial statements.
7
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
1. Summary of Significant Accounting Policies
(a) Organization and Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Regency Centers Corporation, its wholly-owned
qualified REIT subsidiaries, and partnerships in which it has
voting control (the "Company" or "Regency"). All significant
intercompany balances and transactions have been eliminated in
the consolidated financial statements. The Company owns
approximately 98% of the outstanding common units ("Units") of
Regency Centers, L.P. ("RCLP"). Regency invests in real estate
through its partnership interest in RCLP. Generally all of the
acquisition, development, operations and financing activity of
Regency, including the issuance of Units or preferred units, are
executed by RCLP. The equity interests of third parties held in
RCLP and the majority owned or controlled partnerships are
included in the consolidated financial statements as preferred or
exchangeable operating partnership units and limited partners'
interest in consolidated partnerships. The Company is a qualified
real estate investment trust ("REIT"), which began operations in
1993.
The financial statements reflect all adjustments that 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 accounting principles generally accepted in the United
States of America 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 Company's December 31, 2002 Form
10-K filed with the Securities and Exchange Commission.
(b) Revenues
The Company leases space to tenants under agreements with varying
terms. Leases are accounted for as operating leases with minimum
rent recognized on a straight-line basis over the term of the
lease regardless of when payments are due. Accrued rents are
included in tenant receivables. Minimum rent has been adjusted to
reflect the effects of recognizing rent on a straight-line basis.
Substantially all of the lease agreements contain provisions that
provide additional rents based on tenants' sales volume
(contingent or percentage rent) and reimbursement of the tenants'
share of real estate taxes and certain common area maintenance
("CAM") costs. Percentage rents are recognized when the tenants
achieve the specified targets as defined in their lease
agreements and recovery of real estate taxes and CAM costs are
recognized when earned.
Service operations revenue includes management fees, commission
income, and gains or losses from the sale of land and development
properties without significant operations. Service operations
revenue does not include gains or losses from the sale of
operating properties. The Company accounts for profit recognition
on sales of real estate in accordance with the Financial
Accounting Standards Board ("FASB") Statement No. 66,
8
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
(b) Revenues (continued)
"Accounting for Sales of Real Estate." In summary, profits from
sales will not be recognized by the Company unless a sale has
been consummated; the buyer's initial and continuing investment
is adequate to demonstrate a commitment to pay for the property;
the Company has transferred to the buyer the usual risks and
rewards of ownership; and the Company does not have substantial
continuing involvement with the property.
(c) Real Estate Investments
Land, buildings and improvements are recorded at cost. All direct
and indirect costs related to development activities are
capitalized. Included in these costs are interest and real estate
taxes incurred during construction as well as estimates for the
portion of internal costs that are incremental, and deemed
directly or indirectly related to development activity.
Maintenance and repairs that do not improve or extend the useful
lives of the respective assets are reflected in operating and
maintenance expense.
Depreciation is computed using the straight-line method over
estimated useful lives of up to forty years for buildings and
improvements, term of lease for tenant improvements, and three to
seven years for furniture and equipment.
On January 1, 2002, the Company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("Statement
144"). In accordance with Statement 144, operating properties
held for sale includes only those properties available for
immediate sale in their present condition and for which
management believes it is probable that a sale of the property
will be completed within one year. Operating properties held for
sale are carried at the lower of cost or fair value less costs to
sell. Depreciation and amortization are suspended during the
period held for sale.
The Company reviews its real estate portfolio for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Regency determines
whether impairment has occurred by comparing the property's
carrying value to an estimate of the future undiscounted cash
flows. In the event impairment exists, assets are written down to
fair value for held and used assets and fair value less costs to
sell for held for sale assets. During the second quarter, the
Company recorded a provision for loss of $2 million related to
adjusting three operating properties down to estimated fair
value. The fair values of the operating properties were
determined by using prices for similar assets in their respective
markets.
The Company's properties generally have operations and cash flows
that can be clearly distinguished from the rest of the Company.
In accordance with Statement 144, the operations and gains on
sales reported in discontinued operations include those operating
properties and properties in development for which operations and
cash flows can be clearly distinguished. The operations from
these properties have been eliminated from ongoing operations and
the Company will not have continuing involvement after
disposition. Prior periods have been restated to reflect the
operations of these properties as discontinued operations. The
operations and gains on sales of operating properties sold to
real estate partnerships in which the Company has some continuing
involvement are reported as income from continuing operations.
9
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
(d) Deferred Costs
Deferred costs include deferred leasing costs, leasing
intangibles acquired in business combinations and deferred loan
costs, net of amortization. Such costs are amortized over the
periods through lease expiration or loan maturity. Deferred
leasing costs consist of internal and external commissions
associated with leasing the Company's shopping centers. Leasing
intangibles represent costs associated with the allocation of
purchase price value to in-place leases of acquired properties.
Net deferred leasing costs and leasing intangibles were $27.3
million and $26.5 million at June 30, 2003 and December 31, 2002,
respectively. Deferred loan costs consist of initial direct and
incremental costs associated with financing activities. Net
deferred loan costs were $9.1 million and $10.9 million at June
30, 2003 and December 31, 2002, respectively.
(e) Earnings per Share and Treasury stock
Basic net income per share of common stock is computed based upon
the weighted average number of common shares outstanding during
the year. Diluted net income per share also includes common share
equivalents for stock options, exchangeable operating partnership
units, and preferred stock when dilutive. See note 6 for the
calculation of earnings per share.
Repurchases of the Company's common stock (net of shares retired)
are recorded at cost and are reflected as Treasury stock in the
consolidated statements of stockholders' equity. Outstanding
shares do not include treasury shares.
(f) Stock-Based Compensation
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure" ("Statement
148"). Statement 148 provides alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition,
Statement 148 amends the disclosure requirements of Statement No.
123, "Accounting for Stock-Based Compensation" ("Statement 123"),
to require more prominent and frequent disclosures in financial
statements about the effects of stock-based compensation. The
transition guidance and annual disclosure provisions of Statement
148 are effective for fiscal years ending after December 15, 2002
and the interim disclosure provisions are effective for periods
beginning after December 15, 2002. As permitted under Statement
123 and Statement 148, the Company will continue to follow the
accounting guidelines pursuant to Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees"
("Opinion 25"), for stock-based compensation and to furnish the
pro forma disclosures as required under Statement 148.
The Company applies Opinion 25 in accounting for its stock-based
compensation plans, and accordingly, no compensation cost has
been recognized for its stock options in the consolidated
financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its
stock-based employee awards under Statement 123, the Company's
net income for common stockholders for the three month and six
month periods ended June 30, 2003 and 2002 would have been
reduced to the pro forma amounts indicated on the following page
(in thousands except per share data):
10
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
(f) Stock-Based Compensation (continued)
For the three months ended
June 30,
2003 2002
---- ----
Net income for common stockholders
as reported: $ 25,632 22,232
Add: stock-based employee compensation
expense included in reported net income 2,901 2,049
Deduct: total stock-based employee
compensation expense determined under
fair value based methods for all awards 3,520 3,071
-------------- ---------------
Pro forma net income $ 25,013 21,210
============== ===============
Earnings per share:
Basic - as reported $ 0.43 0.38
============== ===============
Basic - pro forma $ 0.42 0.36
============== ===============
Diluted - as reported $ 0.42 0.38
============== ===============
Diluted - pro forma $ 0.41 0.36
============== ===============
For the six months ended
June 30,
2003 2002
---- ----
Net income for common stockholders
as reported: $ 43,556 46,750
Add: stock-based employee compensation
expense included in reported net income 5,770 4,061
Deduct: total stock-based employee
compensation expense determined under
fair value based methods for all awards 7,615 6,105
-------------- ---------------
Pro forma net income $ 41,711 44,706
============== ===============
Earnings per share:
Basic - as reported $ 0.72 0.81
============== ===============
Basic - pro forma $ 0.69 0.77
============== ===============
Diluted - as reported $ 0.72 0.80
============== ===============
Diluted - pro forma $ 0.69 0.77
============== ===============
(g) Consolidation of Variable Interest Entities
In January 2003, the FASB issued Interpretation No. 46
"Consolidation of Variable Interest Entities" ("Interpretation
46"), which is intended to clarify the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements", to
certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from
other parties, or variable interest entities, as defined in
11
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
(g) Consolidation of Variable Interest Entities (continued)
the interpretation. Interpretation 46 requires that certain
variable interest entities be consolidated into the majority
variable interest holder's financial statements and is applicable
immediately to all variable interest entities created after
January 31, 2003, and as of the first interim period beginning
after June 15, 2003 to those variable interest entities created
before February 1, 2003. The Company did not create any variable
interest entities after January 31, 2003. The Company has
completed its evaluation of the applicability of this
interpretation to its structures created before February 1, 2003
and its adoption will not have a material effect on the financial
statements.
(h) Segment reporting
The Company's business is investing in retail shopping centers
through direct ownership or through joint ventures. The Company
actively manages its portfolio of retail shopping centers and may
from time to time make decisions to sell lower performing
properties, or developments not meeting its long-term investment
objectives. The proceeds of sales are invested into higher
quality retail shopping centers through acquisitions or new
developments, which management believes will meet its planned
rate of return. It is management's intent that all retail
shopping centers will be owned or developed for investment
purposes. The Company's revenue and net income is generated from
the operation of its investment portfolio. The Company will also
earn incidental fees from third parties for services provided to
manage and lease retail shopping centers owned through joint
ventures.
The Company's portfolio is located throughout the United States;
however, management does not distinguish or group its operations
on a geographical basis for purposes of allocating resources or
measuring performance. The Company reviews operating and
financial data for each property on an individual basis,
therefore, the Company defines its operating segment as its
individual properties. No individual property constitutes more
than 10% of the Company's combined revenue, net income or assets,
and thus the individual properties have been aggregated into one
reportable segment based upon their similarities with regard to
both the nature of the centers, tenants and operational
processes, as well as, long-term average financial performance.
In addition, no single tenant accounts for 10% or more of revenue
and none of the shopping centers are located outside the United
States.
(i) Reclassifications
Certain reclassifications have been made to the 2002 amounts to
conform to classifications adopted in 2003.
2. Discontinued Operations
During 2003, the Company sold 100% of its interest in five operating
properties for proceeds of $39.1 million and the combined net income and
gain on these sales of $4.4 million is included in discontinued
operations. The revenues from properties included in discontinued
operations, including properties sold in 2003 and 2002, as well as,
operating properties held for sale, were $1.8 million and $18 million for
the six months ended June 30, 2003 and 2002, respectively. The operating
income from these properties was $370,428 and $10.4 million for the six
months ended June 30, 2003 and 2002, respectively. Operating income and
gains on sales included in
12
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
2. Discontinued Operations (continued)
discontinued operations are shown net of minority interest of
exchangeable operating partnership units totaling $107,683 and $385,173
for the six months ended June 30, 2003 and 2002, respectively. The
revenues for the two properties categorized as held for sale were
$736,091 and $976,077 as of June 30, 2003 and 2002, respectively. The
operating (loss) income for the properties held for sale was ($13,292)
and $487,559 as of June 30, 2003 and 2002, respectively. It is
anticipated that these properties will be sold in the third quarter of
2003.
3. Investments in Real Estate and Real Estate Partnerships
During 2003, the Company acquired two grocery-anchored shopping centers
for $35 million. The 2003 acquisitions were accounted for as purchases
and the results of their operations are included in the consolidated
financial statements from the date of the acquisition. Acquisitions
(either individually or in the aggregate) were not significant to the
operations of the Company in the periods in which they were acquired or
the period preceding the acquisition.
The Company accounts for all investments in which it owns 50% or less and
does not have a controlling financial interest using the equity method.
The Company's combined investment in these partnerships was $131.6
million and $125.5 million at June 30, 2003 and December 31, 2002,
respectively. Net income, which includes all operating results, as well
as gains and losses on sales of properties within the joint ventures, is
allocated to the Company in accordance with the respective partnership
agreements. Such allocations of net income are recorded in equity in
income of investments in real estate partnerships in the accompanying
consolidated statements of operations.
The Company has a 25% equity interest in Macquarie CountryWide-Regency,
LLC ("MCWR"), a joint venture with an affiliate of Macquarie CountryWide
Trust of Australia, a Sydney, Australia-based property trust focused on
investing in grocery-anchored shopping centers. As of June 30, 2003, MCWR
acquired five shopping centers from the Company for $55.3 million, for
which the Company received net proceeds of $37.1 million. Since the
Company has a continuing involvement in these properties, the development
gains recognized by the Company on these sales represents gain
recognition on only that portion of the sale to MCWR not owned by the
Company and are not included in discontinued operations. The gains on
these sales of $5.9 million are recorded in service operations revenue in
the Company's consolidated statements of operations.
The Company also has a 20% equity interest in Columbia Regency Retail
Partners, LLC ("Columbia"), a joint venture with the Oregon State
Treasury that was formed for the purpose of investing in retail shopping
centers. During the second quarter, Columbia purchased a shopping center
for $20 million.
With the exception of Columbia and MCWR, both of which intend to continue
expanding their investment in shopping centers, the investments in real
estate partnerships represent single asset entities formed for the
purpose of developing or owning retail based commercial real estate.
13
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
3. Investments in Real Estate and Real Estate Partnerships (continued)
The Company's investments in real estate partnerships as of June 30, 2003
and December 31, 2002 consist of the following (in thousands):
Ownership 2003 2002
--------- ---- ----
Columbia Regency Retail Partners, LLC 20% $ 46,301 42,413
RRG-RMC Tracy, LLC 50% 23,640 23,269
Macquarie CountryWide-Regency, LLC 25% 23,535 22,281
OTR/Regency Texas Realty Holdings, L.P. 30% 16,024 15,992
Tinwood, LLC 50% 10,478 10,983
Regency Woodlands/Kuykendahl, Ltd. 50% 8,682 7,973
Jog Road, LLC 50% 2,939 2,571
---------------------------
$ 131,599 125,482
===========================
Summarized financial information for the unconsolidated investments on a
combined basis, is as follows (in thousands):
June 30, December 31,
2003 2002
---- ----
Balance Sheet:
Investment in real estate, net $ 621,061 553,118
Other assets 19,165 15,721
---------------- ---------------
Total assets $ 640,226 568,839
================ ===============
Notes payable $ 204,534 167,071
Other liabilities 13,062 10,386
Equity and partners' capital 422,630 391,382
---------------- ---------------
Total liabilities and equity $ 640,226 568,839
================ ===============
Unconsolidated partnerships and joint ventures had notes payable of
$204.5 million at June 30, 2003 and the Company's proportionate share of
these loans was $49.5 million.
The revenues and expenses on a combined basis are summarized as follows
for the three months ended June 30, 2003 and 2002:
2003 2002
---- ----
Statement of Operations:
Total revenues $ 17,110 11,200
Total expenses 10,975 5,538
------------------- ------------------
Net income $ 6,135 5,662
=================== ==================
The revenues and expenses on a combined basis are summarized as follows
for the six months ended June 30, 2003 and 2002:
2003 2002
---- ----
Statement of Operations:
Total revenues $ 33,356 20,472
Total expenses 20,552 10,048
------------------- ------------------
Net income $ 12,804 10,424
=================== ==================
14
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
4. Notes Payable and Unsecured Line of Credit
The Company's outstanding debt at June 30, 2003 and December 31, 2002
consists of the following (in thousands):
2003 2002
---- ----
Notes Payable:
Fixed rate mortgage loans $ 234,373 229,551
Variable rate mortgage loans 24,389 24,998
Fixed rate unsecured loans 999,061 998,975
--------------- ---------------
Total notes payable 1,257,823 1,253,524
Unsecured line of credit 228,000 80,000
--------------- ---------------
Total $ 1,485,823 1,333,524
=============== ===============
Interest rates paid on the unsecured line of credit (the "Line"), which
are based on LIBOR plus .85%, were 1.9125% and 2.2880% at June 30, 2003
and December 31, 2002, respectively. The spread that the Company pays on
the Line is dependent upon maintaining specific investment grade ratings.
The Company 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.
Mortgage loans are secured by certain real estate properties, and may be
prepaid, but could be subject to a yield-maintenance premium. Mortgage
loans are generally due in monthly installments of interest and principal
and mature over various terms through 2019. Variable interest rates on
mortgage loans are currently based on LIBOR plus a spread in a range of
130 to 150 basis points. Fixed interest rates on mortgage loans range
from 6.64% to 9.5%.
During the second quarter, the Company assumed debt with a fair value of
$13.3 million related to the acquisition of a property, which includes a
debt premium of $797,303 based upon the above market interest rate of the
debt instrument. The debt premium is being amortized over the terms of
the related debt instrument.
As of June 30, 2003, 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
-------------------------- ----------------------------------------------
2003 $ 2,862 20,802 23,664
2004 (includes the Line) 5,253 450,558 455,811
2005 4,060 147,630 151,690
2006 3,377 24,043 27,420
2007 2,787 25,647 28,434
Beyond 5 Years 19,707 772,858 792,565
Unamortized debt premiums - 6,239 6,239
----------------------------------------------
Total $ 38,046 1,447,777 1,485,823
==============================================
15
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
5. Stockholders' Equity and Minority Interest
(a) The Company, through RCLP, has issued Cumulative Redeemable
Preferred Units ("Preferred Units") in various amounts since
1998. The issues were sold primarily to institutional investors
in private placements for $100 per unit. The Preferred Units,
which may be called by RCLP at par after certain dates, have no
stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at fixed rates. At any time after ten years
from the date of issuance, the Preferred Units may be exchanged
by the holder for Cumulative Redeemable Preferred Stock
("Preferred Stock") at an exchange rate of one share for one
unit. The Preferred Units and the related Preferred Stock are
not convertible into common stock of the Company. The net
proceeds of these offerings were used to reduce the Line. At
June 30, 2003 and December 31, 2002 the face value of total
Preferred Units issued was $309 million and $384 million,
respectively with an average fixed distribution rate of 8.68% and
8.72%, respectively.
During the first quarter of 2003, the Company redeemed $35
million of Series C 9% Preferred Units and $40 million of Series
E 8.75% Preferred Units. The redemptions were portions of each
series and the Company paid a 1% premium on the face value of the
redeemed units totaling $750,000. The redemption was funded from
proceeds from our Line.
Terms and conditions of the Preferred Units outstanding as of
June 30, 2003 are summarized as follows:
Units Issue Amount Distribution Callable Exchangeable
Series Outstanding Price Outstanding Rate by Company by Unitholder
- -----------------------------------------------------------------------------------------------------------------------
Series A 1,600,000 $ 50.00 $ 80,000,000 8.125% 06/25/03 06/25/08
Series B 850,000 100.00 85,000,000 8.750% 09/03/04 09/03/09
Series C 400,000 100.00 40,000,000 9.000% 09/03/04 09/03/09
Series D 500,000 100.00 50,000,000 9.125% 09/29/04 09/29/09
Series E 300,000 100.00 30,000,000 8.750% 05/25/05 05/25/10
Series F 240,000 100.00 24,000,000 8.750% 09/08/05 09/08/10
--------------- -----------------
3,890,000 $ 309,000,000
=============== =================
(b) Until June 24, 2003, Security Capital beneficially owned
34,273,236 shares, representing 56.6% of the voting stock
outstanding of Regency. On June 24, 3002, Security Capital sold
common stock through (1) an underwritten public offering (the
"Secondary Offering"), and (2) the sale of shares to Regency
pursuant to a Purchase and Sale Agreement dated June 11, 2003
(the "Purchase and Sale Agreement"), and also agreed to sell the
balance of the shares pursuant to forward sales contracts.
Security Capital sold 9,666,356 shares of common stock in the
Secondary Offering. On June 24, 2003, it also sold 4,606,880
shares of common stock to Regency at the public offering price of
$32.56 per share pursuant to the Purchase and Sale Agreement. The
purchase price of $150 million was funded from the Company's
Line. Currently, Security Capital owns 20,000,000 shares of
common stock (constituting approximately 35.8% of Regency's
outstanding common stock) all of which are subject to forward
sales contracts. Upon settlement of all of the forward sales
contracts, which provide for settlement at various times during
the first half of 2004, or earlier at the election of Security
Capital, Security Capital will
16
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
5. Stockholders' Equity and Minority Interest (continued)
(b) no longer own any shares of Regency common stock, unless Security
Capital elects to settle one or more of the forward contracts in
cash rather than by delivery of shares of common stock.
Concurrently with the closing of the Secondary Offering and the
sale of common stock to Regency, Security Capital and Regency
terminated the Stockholders Agreement dated as of July 10, 1996,
as amended. This termination was pursuant to an Agreement
Relating to Disposition of Shares dated as of June 11, 2003 (the
"Disposition Agreement"). Under the Disposition Agreement,
Security Capital also agreed that, following the closing of the
Secondary Offering, it will vote any shares of common stock that
are subject to forward contracts and over which it has voting
power in the same proportion as shares are voted by other
shareholders of Regency. In addition, Security Capital agreed
that, if it settles forward contracts in cash rather than shares,
within 100 trading days thereafter, it will sell a sufficient
number of shares so that it will no longer beneficially own
shares with a value in excess of 7% of the total value of
Regency's capital stock.
Security Capital also agreed in the Disposition Agreement to
waive the special ownership limit created for it in Regency's
articles of incorporation. Once Security Capital reduces its
ownership to 7% or less after the forward contracts settle in
2004, it will be subject to the same 7% ownership limit in
Regency's articles of incorporation that applies to other
shareholders.
(c) During the first quarter of 2003, the holder of the Series 2
preferred stock converted all of its remaining 450,400 preferred
shares into common stock at a conversion ratio of 1:1.
(d) On April 3, 2003, the Company received proceeds from a $75
million offering of 3,000,000 depositary shares representing
300,000 shares of Series 3 Cumulative Redeemable Preferred Stock.
The depositary shares are not convertible into common stock of
the Company and are redeemable at par upon Regency's election on
or after April 3, 2008, pay a 7.45% annual dividend and have a
liquidation value of $25 per depositary share. The proceeds from
this offering were used to reduce the Line.
17
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
6. Earnings per Share
The following summarizes the calculation of basic and diluted earnings
per share for the three months ended June 30, 2003 and 2002 (in thousands
except per share data):
2003 2002
---- ----
Numerator:
----------
Income from continuing operations $ 22,409 15,253
Discontinued operations 4,583 7,737
------------------ ------------------
Net income 26,992 22,990
Less: Preferred stock dividends 1,360 758
------------------ ------------------
Net income for common stockholders - Basic 25,632 22,232
Add: Minority interest of exchangeable operating
partnership units - continuing operations 543 386
Minority interest of exchangeable operating
partnership units - discontinued operations 112 196
------------------ ------------------
Net income for common stockholders - Diluted $ 26,287 22,814
================== ==================
Denominator:
------------
Weighted average common shares
outstanding for Basic EPS 60,162 58,120
Exchangeable operating partnership units 1,463 1,520
Incremental shares to be issued under common
stock options using the Treasury stock method 386 459
------------------ ------------------
Weighted average common shares outstanding
for Diluted EPS 62,011 60,099
================== ==================
Income per common share - Basic
-------------------------------
Income from continuing operations $ 0.35 0.25
Discontinued operations $ 0.08 0.13
------------------ ------------------
Net income for common stockholders
per share $ 0.43 0.38
================== ==================
Income per common share - Diluted
---------------------------------
Income from continuing operations $ 0.34 0.25
Discontinued operations $ 0.08 0.13
------------------ ------------------
Net income for common stockholders
per share $ 0.42 0.38
================== ==================
The Series 2 preferred stock is not included in the above calculation for
periods prior to the conversion in the first quarter of 2003 and the
fourth quarter of 2002 because its effects were anti-dilutive.
18
Regency Centers Corporation
Notes to Consolidated Financial Statements
June 30, 2003
6. Earnings per Share (continued)
The following summarizes the calculation of basic and diluted earnings
per share for the six months ended June 30, 2003 and 2002 (in thousands
except per share data):
2003 2002
---- ----
Numerator:
----------
Income from continuing operations $ 40,518 33,183
Discontinued operations 4,398 15,084
------------------ ------------------
Net income 44,916 48,267
Less: Preferred stock dividends 1,360 1,517
------------------ ------------------
Net income for common stockholders - Basic 43,556 46,750
Add: Minority interest of exchangeable operating
partnership units - continuing operations 984 848
Minority interest of exchangeable operating
partnership units - discontinued operations 108 385
------------------ ------------------
Net income for common stockholders - Diluted $ 44,648 47,983
================== ==================
Denominator:
-------------
Weighted average common shares
outstanding for Basic EPS 60,167 57,953
Exchangeable operating partnership units 1,480 1,529
Incremental shares to be issued under common
stock options using the Treasury stock method 412 425
------------------ ------------------
Weighted average common shares outstanding
for Diluted EPS 62,059 59,907
================== ==================
Income per common share - Basic
Income from continuing operations $ 0.65 0.55
Discontinued operations $ 0.07 0.26
------------------ ------------------
Net income for common stockholders
per share $ 0.72 0.81
================== ==================
Income per common share - Diluted
Income from continuing operations $ 0.65 0.54
Discontinued operations $ 0.07 0.26
------------------ ------------------
Net income for common stockholders
per share $ 0.72 0.80
================== ==================
The Series 2 preferred stock is not included in the above calculation for
periods prior to the conversion in the first quarter of 2003 and the
fourth quarter of 2002 because its effects were anti-dilutive.
19
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
In addition to historical information, the following information
contains forward-looking statements under the federal securities laws. These
statements are based on current expectations, estimates and projections about
the industry and markets in which Regency operates, and management's beliefs and
assumptions. Forward-looking statements are not guarantees of future performance
and involve certain known and unknown risks and uncertainties that could cause
actual results to differ materially from those expressed or implied by such
statements. Such risks and uncertainties include, but are not limited to,
changes in national and local economic conditions; financial difficulties of
tenants; competitive market conditions, including pricing of acquisitions and
sales of properties and out-parcels; changes in expected leasing activity and
market rents; timing of acquisitions, development starts and sales of properties
and out-parcels; weather; the ability to obtain governmental approvals; and
meeting development schedules. The following discussion should be read in
conjunction with the accompanying Consolidated Financial Statements and Notes
thereto of Regency Centers Corporation ("Regency" or "Company") appearing
elsewhere within.
Organization
- ------------
Regency is a qualified real estate investment trust ("REIT"), which
began operations in 1993. We invest in retail shopping centers through our
partnership interest in Regency Centers, L.P. ("RCLP"), an operating partnership
in which Regency currently owns approximately 98% of the outstanding common
partnership units ("Common Units"). Regency's acquisition, development,
operations and financing activities, including the issuance of Common Units or
Cumulative Redeemable Preferred Units ("Preferred Units"), are generally
executed by RCLP.
Shopping Center Business
- ------------------------
We are a national owner, operator and developer of grocery-anchored
neighborhood retail shopping centers. A list of our shopping centers including
those partially owned through joint ventures, summarized by state and in order
of largest holdings, including their gross leasable areas ("GLA") follows:
June 30, 2003 December 31, 2002
Location # Properties GLA % Leased * # Properties GLA % Leased *
-------- ------------ --- ---------- ------------ --- ----------
Florida 52 6,100,705 93.6% 53 6,193,550 91.9%
California 45 5,450,014 98.6% 43 5,125,030 99.1%
Texas 41 5,311,782 93.4% 40 5,123,197 93.6%
Georgia 23 2,255,993 94.0% 24 2,437,712 93.9%
Ohio 14 1,901,604 90.0% 14 1,901,684 91.4%
Colorado 14 1,524,427 97.7% 15 1,538,570 98.0%
North Carolina 10 1,050,043 98.7% 12 1,225,201 97.6%
Virginia 8 1,017,101 99.4% 7 872,796 96.8%
Washington 9 986,374 99.1% 9 986,374 98.9%
Oregon 9 891,853 94.5% 9 822,115 93.7%
Alabama 8 698,235 95.2% 7 644,896 94.3%
Arizona 5 501,005 96.4% 6 525,701 96.3%
Tennessee 6 444,234 98.3% 6 444,234 95.3%
Illinois 3 408,211 95.4% 2 300,477 96.1%
South Carolina 5 339,926 99.1% 5 339,256 99.1%
Kentucky 2 301,025 96.9% 2 304,659 96.6%
Michigan 3 279,265 93.2% 3 279,265 92.6%
Delaware 2 240,418 99.5% 2 240,418 99.0%
New Jersey 1 88,993 - 1 88,993 -
Missouri 1 82,498 92.9% 1 82,498 92.9%
Pennsylvania 1 6,000 100.0% 1 6,000 100.0%
----------------- --------------- ---------------- ---------------- --------------- ---------------
Total 262 29,879,706 95.3% 262 29,482,626 94.8%
================= =============== ================ ================ =============== ===============
* Excludes pre-stabilized properties under development
20
We are focused on building a portfolio of grocery-anchored
neighborhood shopping centers that are positioned to withstand adverse economic
conditions by providing consumers with convenient shopping for daily necessities
and adjacent local tenants with foot traffic. Regency's current investment
markets are stable, and we expect 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 our shopping centers, including those partially owned through joint
ventures at June 30, 2003:
Percentage of Percentage of
Grocery Number of Company- Annualized Average Remaining
Anchor Stores (a) owned GLA Base Rent Lease Term
------- ---------- ------------- -------------- -----------------
Kroger 61 12.0% 8.7% 15 yrs
Publix 52 7.1% 4.9% 13 yrs
Safeway 46 6.0% 4.6% 11 yrs
Albertsons 25 3.2% 2.6% 15 yrs
(a) Includes grocery-tenant-owned stores
Acquisition and Development of Shopping Centers
- -----------------------------------------------
We have implemented a growth strategy dedicated to developing and
acquiring high-quality shopping centers. Our development program makes a
significant contribution to our overall growth. Development is customer-driven,
meaning we generally have an executed lease from the grocery-anchor before we
begin construction. Developments serve the growth needs of our grocery and
specialty retail customers, result in modern shopping centers with long-term
leases from grocery and other anchors, and produce either attractive returns on
invested capital or profits from sale. This development process can require up
to 36 months from initial land or redevelopment acquisition through
construction, lease-up and stabilization, 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, 2003, we had 32 projects under construction or undergoing
major renovations, which, when completed, are expected to represent an
investment of $561.1 million before the estimated reimbursement of certain
tenant-related costs and projected sales proceeds from adjacent land and
out-parcels of $120.2 million. Costs necessary to complete these developments
will be $241.7 million, are generally already committed as part of existing
construction contracts, and will be expended through 2005. These developments
are approximately 57% complete and 72% pre-leased.
Regency has a 20% equity interest in and serves as property manager for
Columbia Regency Retail Partners, LLC ("Columbia"), a joint venture with the
Oregon State Treasury that was formed for the purpose of investing in retail
shopping centers. At June 30, 2003, Columbia owned 13 shopping centers with a
net book value of $304.6 million.
Regency has a 25% equity interest in and serves as property manager for
Macquarie CountryWide-Regency, LLC ("MCWR"), a joint venture with an affiliate
of Macquarie CountryWide Trust of Australia, a Sydney, Australia-based
property trust focused on investing in grocery-anchored shopping centers. At
June 30, 2003, MCWR owned 20 shopping centers with a net book value of $225.2
million.
Columbia and MCWR intend to continue to acquire retail shopping
centers, some of which they may acquire directly from Regency. For those
properties acquired from third parties, Regency is required to provide its pro
rata share of the purchase price.
21
Liquidity and Capital Resources
- -------------------------------
We expect that the cash generated from revenues will provide the
necessary funds on a short-term basis to pay our operating expenses, interest
expense, scheduled principal payments on outstanding indebtedness, recurring
capital expenditures necessary to maintain our shopping centers properly, and
distributions to stock and unit holders. Net cash provided by operating
activities was $97.1 million and $89.5 million for the six months ended June 30,
2003 and 2002, respectively. During the first six months of 2003 and 2002,
respectively, we incurred capital expenditures of $6.5 million and $8.1 million
to improve our shopping center portfolio, paid scheduled principal payments of
$2.9 million and $2.6 million to our lenders, and paid dividends and
distributions of $80.5 million and $79.0 million to our share and unit holders.
Although base rent is supported by long-term lease contracts, tenants
who file bankruptcy have the right to cancel their leases and close the related
stores. 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. We are not currently aware of any current
or pending bankruptcy of any of our tenants that would cause a significant
reduction in our revenues, and no tenant represents more than 10% of our annual
base-rental revenues.
We expect to meet long-term capital requirements for maturing debt, the
acquisition of real estate, and the renovation or development of shopping
centers from: (i) cash generated from operating activities after the payments
described above, (ii) proceeds from the sale of real estate, (iii) joint
venturing of real estate, (iv) increases in debt, and (v) equity raised in the
private or public markets. Additionally, the Company has the right to call and
repay at par outstanding preferred units five years after their issuance date,
at the Company's discretion. The sources of repaying preferred units would
include those listed above.
We have $200 million of 7.4% unsecured debt maturing April 1, 2004. Our
risk management objective and strategy is to mitigate the risk of changes in our
interest-related cash outflows on a forecasted 10 year issuance of long-term
debt which will partially replace the amount maturing on April 1, 2004. We have
met this objective by entering into a $96.5 million interest rate swap that
began on July 17, 2003 and matures on April 1, 2004. The swap fixed rate is
4.745% and we are the fixed rate payor. We have designated this swap transaction
as a cash flow hedge of interest payments on the forecasted 10 year issuance and
it will be subject to SFAS No. 133/138, Accounting for Derivative Instruments
and Hedging Activities. The gain or loss that we realize on the swap at maturity
will be amortized as a component of interest expense over the term of the newly
issued 10 year debt.
On June 24, 2003, we purchased 4,606,880 shares of stock for $150
million from Security Capital pursuant to a Purchase and Sale Agreement dated
June 11, 2003. The purchase was funded from the Line and the shares are held as
Treasury shares..
On April 3, 2003, we received proceeds from a $75 million offering of
3,000,000 depositary shares representing Series 3 Cumulative Redeemable
Preferred Stock. The shares are redeemable at par at Regency's election on or
after April 3, 2008, pay a 7.45% annual dividend and have a liquidation value of
$25 per depositary share. The proceeds from this offering were used to reduce
the Line.
During the first quarter, we redeemed $35 million of Series C 9%
Preferred Units and $40 million of Series E 8.75% Preferred Units in a
negotiated transaction. The redemptions were portions of each series and we paid
a 1% premium on the face value of the redeemed units totaling $750,000 which is
recorded as minority interest preferred units. At the time of redemption, $1.9
million of previously deferred costs related to the original preferred units'
issuance were recognized in minority interest preferred units. The redemption
was funded from proceeds from the Line.
Our commitment to maintaining a high-quality portfolio dictates that we
continually assess the value of all of our properties and sell to third parties
those operating properties that no longer meet our long-term investment
standards. We may also sell a portion of an operating or development property to
one of our joint ventures, which may provide Regency with a capital source for
new development and acquisitions. By selling a property to a joint venture,
Regency owns less than 100% of the property, generally 20% to 50%, and shares
the risks and rewards of the property with its partner.
22
Proceeds from the sale or joint venturing of properties are included in
net investing activities on the Consolidated Statements of Cash Flows. During
2003 net proceeds from the sale or joint venturing of real estate was $97.8
million, compared to $152.6 million during the first six months of 2002. Net
cash used in investing activities was $16.1 million for the six months ended
June 30, 2003. Net cash provided by investing activities was $25.5 million for
the six months ended June 30, 2002. Net cash used in financing activities was
$91.6 million and $73.7 million for the six months ended June 30, 2003 and 2002,
respectively.
Outstanding debt at June 30, 2003 and December 31, 2002 consists of the
following (in thousands):
2003 2002
---- ----
Notes Payable:
Fixed-rate mortgage loans $ 234,373 229,551
Variable-rate mortgage loans 24,389 24,998
Fixed-rate unsecured loans 999,061 998,975
-------------- ---------------
Total notes payable 1,257,823 1,253,524
Unsecured line of credit 228,000 80,000
-------------- ---------------
Total $ 1,485,823 1,333,524
============== ===============
Mortgage loans are secured by certain real estate properties, and may
be prepaid, but could be subject to a yield-maintenance premium. Mortgage loans
are generally due in monthly installments of interest and principal, and mature
over various terms through 2019. Variable interest rates on mortgage loans are
currently based on LIBOR plus a spread in a range of 130 to 150 basis points.
Fixed interest rates on mortgage loans range from 6.64% to 9.5%.
Interest rates paid on the Line, which are based on LIBOR plus .85%, at
June 30, 2003 and December 31, 2002 were 1.9125% and 2.2880%, respectively. The
spread that we pay on the Line is dependent upon maintaining specific
investment-grade ratings. We are also required to comply, and are 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.
As of June 30, 2003, 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
-------------------------- -------------- --------------- ---------------
2003 $ 2,862 20,802 23,664
2004 (includes the Line) 5,253 450,558 455,811
2005 4,060 147,630 151,690
2006 3,377 24,043 27,420
2007 2,787 25,647 28,434
Beyond Five years 19,707 772,858 792,565
Unamortized debt premiums - 6,239 6,239
-------------- --------------- ---------------
Total $ 38,046 1,447,777 1,485,823
============== =============== ===============
Unconsolidated partnerships and joint ventures in which we have an
investment had notes and mortgage loans payable of $204.5 million at June 30,
2003 and the Company's proportionate share of these loans was $49.5 million.
RCLP has issued Preferred Units in various amounts since 1998, the net
proceeds of which we used to reduce the balance of the Line. RCLP sold the
issues primarily to institutional investors in private placements. The Preferred
Units, which may be called by RCLP after certain dates ranging from 2003 to
2005, have no stated maturity or mandatory redemption, and they pay a
cumulative, quarterly dividend at
23
fixed rates ranging from 8.125% to 9.125%. At any time after 10 years from the
date of issuance, the Preferred Units may be exchanged by the holders for
Cumulative Redeemable Preferred Stock ("Preferred Stock") at an exchange rate of
one share for one unit. The Preferred Units and the related Preferred Stock are
not convertible into Regency common stock. At June 30, 2003 and December 31,
2002 the face value of total Preferred Units issued was $309 million and $384
million, respectively with an average fixed distribution rate of 8.68% and
8.72%, respectively.
We intend to continue growing our portfolio through acquisitions and
developments, either directly or through our joint venture relationships.
Because acquisition and development activities are discretionary in nature, they
are not expected to burden the capital resources we have currently available for
liquidity requirements. Regency expects that cash provided by operating
activities, unused amounts available under the Line, and cash reserves are
adequate to meet liquidity requirements.
Critical Accounting Policies and Estimates
- ------------------------------------------
Knowledge about our accounting policies is necessary for a complete
understanding of our financial results, and discussions and analysis of these
results. The preparation of our financial statements requires that we make
certain estimates that impact the balance of assets and liabilities at a
financial statement date and the reported amount of income and expenses during a
financial reporting period. These accounting estimates are based upon our
judgments and are considered to be critical because of their significance to the
financial statements and the possibility that future events may differ from
those judgments, or that the use of different assumptions could result in
materially different estimates. We review these estimates on a periodic basis to
ensure reasonableness. However, the amounts we may ultimately realize could
differ from such estimates.
Capitalization of Costs - We have an investment services group with an
established infrastructure that supports the due diligence, land acquisition,
construction, leasing and accounting of our development properties. All direct
and indirect costs related to these activities are capitalized. Included in
these costs are interest and real estate taxes incurred during construction as
well as estimates for the portion of internal costs that are incremental, and
deemed directly or indirectly related to our development activity. If future
accounting standards limit the amount of internal costs that may be capitalized,
or if our development activity were to decline significantly without a
proportionate decrease in internal costs, we could incur a significant increase
in our operating expenses.
Valuation of Real Estate Investments - Our long-lived assets, primarily
real estate held for investment, are carried at cost unless circumstances
indicate that the carrying value of the assets may not be recoverable. We review
long-lived assets for impairment whenever events or changes in circumstances
indicate such an evaluation is warranted. The review involves a number of
assumptions and estimates used in determining whether impairment exists.
Depending on the asset, we use varying methods such as i) estimating future cash
flows, ii) determining resale values by market, or iii) applying a
capitalization rate to net operating income using prevailing rates in a given
market. These methods of determining fair value can fluctuate up or down
significantly as a result of a number of factors including changes in the
general economy of those markets in which we operate, tenant credit quality, and
demand for new retail stores. If we determine that impairment exists due to the
inability to recover an asset's carrying value, a provision for loss is recorded
to the extent that the carrying value exceeds estimated fair value.
Discontinued Operations - The application of current accounting
principles that govern the classification of any of our properties as held for
sale on the balance sheet, or the presentation of results of operations and
gains on the sale of these properties as discontinued, requires management to
make certain significant judgments. In evaluating whether a property meets the
criteria set forth in FASB Statement No. 144 "Accounting for the Impairment and
Disposal of Long-Lived Assets" (Statement 144), the Company makes a
determination as to the point in time that it can be reasonably certain that a
sale will be consummated. Given the nature of all real estate sales contracts,
not only those entered into by the Company, it is not unusual for such contracts
to allow potential buyers a period of time to evaluate the property prior to
formal acceptance of the contract. In addition, certain other matters critical
to the final sale, such as financing arrangements, often remain pending even
upon contract acceptance. As a result,
24
properties under contract may not close within the expected time period, if at
all. Due to these uncertainties, it is not likely that the Company can meet the
criteria of Statement 144 prior to the sale formally closing. Therefore, any
properties categorized as held for sale represent only those properties that
management has determined are probable to close within the requirements set
forth in Statement 144. The Company also makes judgments regarding the extent of
involvement it will have with a property subsequent to its sale, in order to
determine if the results of operations and gain/loss on sale should be reflected
as discontinued. Consistent with Statement 144, any property sold to an entity
in which the Company has significant continuing involvement (most often joint
ventures) are not considered to be discontinued. In addition, any property which
the Company sells to an unrelated third party, but retains a property or asset
management function, are also not considered discontinued. Thus, only properties
sold, or to be sold, to unrelated third parties for which the Company, in its
judgment, has no continuing involvement are classified as discontinued.
Income Tax Status - The prevailing assumption underlying the operation
of our business is that we will continue to operate so as to qualify as a REIT,
defined under the Internal Revenue Code. Certain income and asset tests are
required to be met on a periodic basis to ensure we continue to qualify as a
REIT. As a REIT, we are allowed to reduce taxable income by all or a portion of
our distributions to stockholders. As we evaluate each transaction entered into,
we determine the impact that these transactions will have on our REIT status.
Determining our taxable income, calculating distributions, and evaluating
transactions requires us to make certain judgments and estimates as to the
positions we take in our interpretation of the Internal Revenue Code. Because
many types of transactions are susceptible to varying interpretations under
federal and state income tax laws and regulations, our positions are subject to
change at a later date upon final determination by the taxing authorities.
Results from Operations
- -----------------------
Comparison of the six months ended June 30, 2003 to June 30, 2002
At June 30, 2003, we were operating or developing 262 shopping centers.
We identify our shopping centers as either development properties or stabilized
properties. Development properties are defined as properties that are in the
construction and initial lease-up process and are not yet fully leased (fully
leased generally means greater than 90% leased) or occupied. Stabilized
properties are those properties that are generally greater than 90% leased and,
if they were developed, are more than three years beyond their original
development start date. At June 30, 2003, we had 230 stabilized shopping centers
that were 95.3% leased.
Revenues increased $22.6 million, or 13%, to $197.9 million in 2003.
This increase was due primarily to our realization of a full year of revenues
from new 2002 developments and from growth in rental rates of the operating
properties. In 2003, rental rates grew by 9.3% from renewal leases and new
leases replacing previously occupied spaces in the stabilized properties.
Minimum rent increased $9.3 million, or 7%, and recoveries from tenants
increased $2.9 million, or 8%.
Service operations revenue includes management fees, commission income,
and gains or losses from the sale of land and development properties without
significant operations. Service operations revenue does not include gains or
losses from the sale of non-development operating properties. The Company
accounts for profit recognition on sales of real estate in accordance with
Financial Accounting Standards Board ("FASB") Statement No. 66, "Accounting for
Sales of Real Estate." Profits from sales of real estate will not be recognized
by the Company unless a sale has been consummated; the buyer's initial and
continuing investment is adequate to demonstrate a commitment to pay for the
property; the Company has transferred to the buyer the usual risks and rewards
of ownership; and the Company does not have substantial continuing involvement
with the property.
Service operations revenue increased $9.1 million to $13.2 million in
2003, or 220%. The increase was primarily due to a $5.8 million increase in
development sales during 2003, a $1.7 million increase in gains from the sale of
land and outparcels and a $1.6 million increase in management fees primarily
related to the Columbia and MCWR joint ventures.
25
Operating expenses increased $10.4 million, or 12%, to $95.2 million in
2003. Combined operating, maintenance, and real estate taxes increased $4.2
million, or 10%, during 2003 to $46.6 million. The increase was primarily due to
new developments that incurred expenses for only a portion of the previous year,
and general increases in operating expenses on the stabilized properties.
General and administrative expenses were $10.3 million during 2003 compared with
$9.2 million in 2002, or 12% higher, as a result of general salary and benefit
increases. Depreciation and amortization increased $4.7 million during 2003
related to higher acquisition and development activity.
We review our real estate portfolio for impairment whenever events or
changes in circumstances indicate that we may not be able to recover the
carrying amount of an asset. Regency determines whether impairment has occurred
by comparing the property's carrying value to an estimate of fair value based
upon methods described in our Critical Accounting Policies. In the event the
properties are impaired, we write down assets to fair value for "held-and-used"
assets and fair value less costs to sell for "held-for-sale" assets. During the
six months ended June 30, 2003 and 2002, we recorded a provision for loss of $2
million and $2.4 million, respectively.
Net interest expense increased to $41.6 million in 2003 from $41.0
million in 2002, or 1%. Weighted average interest rates on outstanding debt
declined to 6.58% at June 30, 2003 from 7.09% at June 30, 2002.
Income from discontinued operations was $4.4 million in 2003 primarily
due to the sale of five properties to unrelated parties with a combined gain on
sale of $4.3 million. The restated 2002 income from discontinued operations is
$15.1 million compared to $8.6 million originally reported in 2002 due to the
reclassification of $6.6 million of operating income for properties sold
subsequent to June 30, 2002 in compliance with the adoption of SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("Statement
144") in January 2002. Operating income and gains on sales from discontinued
operations are shown net of minority interest of exchangeable partnership units
totaling $107,683 and $385,173 for the six months ended June 30, 2003 and 2002,
respectively.
Net income for common stockholders was $43.6 million in 2003 compared
with $46.7 million in 2002, or a 7% decrease primarily due to reasons previously
discussed and a reduction of gain on sale of operating properties of $1.5
million and $2.4 million recorded in other income in 2002 resulting from the
early extinguishment of debt. Diluted earnings per share were $0.72 in 2003
compared with $.80 in 2002, or 10% lower.
Comparison of the three months ended June 30, 2003 to June 30, 2002
Revenues increased $12.3 million, or 14%, to $101.5 million in 2003.
Minimum rent increased $4.3 million, or 7%, and recoveries from tenants
increased $849,000, or 5%. This increase was due to revenues from 2002
developments and 2002 acquisitions not operating at June 30, 2002 along with
rental rate growth on the existing portfolio.
Service operations revenue increased $6.9 million to $9.3 million in
2003, or 285%. The increase was primarily due to a $6.7 million dollar increase
in development sales during 2003, and an $847,000 increase in management fees
primarily related to the Columbia and MCWR joint ventures, offset by a $628,000
decrease resulting from selling fewer outparcels during 2003 than in 2002.
Operating expenses increased $4.9 million, or 11%, to $48.8 million in
2003. Combined operating, maintenance, and real estate taxes increased $1.6
million, or 7%, during 2003 to $23.3 million. This increase is due to new
developments and acquisitions which were not operating at June 30, 2002. General
and administrative expenses were $6.2 million during 2003 compared with $5.2
million in 2002, or 18% higher, as a result of general salary and benefit
increases. Depreciation and amortization increased $2.1 million during 2003
related to higher acquisition and development activity.
During the second quarter of 2003 and 2002, we recorded a provision for
loss of $2 million and $2.4 million, respectively.
26
Net interest expense decreased to $20.9 in 2003 from $21.2 million in
2002, or 1%. Weighted average interest rates on outstanding debt declined to
6.58% at June 30, 2003 from 7.09% at June 30, 2002.
Income from discontinued operations was $4.6 for the three months ended
June 30, 2003 primarily due to the gain recorded on the sale of two properties.
The restated income from discontinued operations for the three months ended June
30, 2002 is $7.7 million compared to $3.8 million originally reported in 2002
due to the reclassification of $4 million of operating income for properties
sold subsequent to June 30, 2002 in compliance with the adoption of Statement
144. Operating (loss) income and gain on sales from discontinued operations are
shown net of minority interest of exchangeable partnership units totaling
$112,275 and $195,942 for the three months ended June 30, 2003 and 2002,
respectively.
Net income for common stockholders was $25.6 million in 2003 compared
with $22.2 million in 2002, or a 15% increase. Diluted earnings per share were
$0.42 in 2003 compared with $.38 in 2002, or 11% higher.
Environmental Matters
- ---------------------
Regency, like others in the commercial real estate industry, is subject
to numerous environmental laws and regulations. The operation of dry cleaning
plants at our shopping centers is the principal environmental concern. We
believe that the tenants who operate these plants do so in accordance with
current laws and regulations and have established procedures to monitor their
operations. Additionally, we use all legal means to cause tenants to remove dry
cleaning plants from our shopping centers. Where available, we have applied and
been accepted into state-sponsored environmental programs. We have a blanket
environmental insurance policy that covers Regency against third-party
liabilities and remediation costs on shopping centers that currently have no
known environmental contamination. We have also placed environmental insurance
on specific properties with known contamination in order to mitigate Regency's
environmental risk. We believe that the ultimate disposition of currently known
environmental matters will not have a material effect on Regency's financial
position, liquidity, or operations.
Inflation
- ---------
Inflation has remained relatively low and has had a minimal impact on
the operating performance of our shopping centers; however, substantially all of
our long-term leases contain provisions designed to mitigate the adverse impact
of inflation. Such provisions include clauses enabling us 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 our
leases are for terms of less than 10 years, which permits us to seek increased
rents upon re-rental at market rates. Most of our leases require tenants to pay
their share of operating expenses, including common area maintenance, real
estate taxes, and insurance and utilities, thereby reducing our exposure to
increases in costs and operating expenses resulting from inflation.
27
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risk
-----------
Regency is exposed to interest rate changes primarily as a result of
the line of credit and long-term debt used to maintain liquidity, fund capital
expenditures and expand Regency's real estate investment portfolio. Regency'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, Regency 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. Regency has no plans to enter into derivative or interest
rate transactions for speculative purposes.
Regency's interest rate risk is monitored using a variety of
techniques. The table below presents the principal cash flows (in thousands),
weighted average interest rates of remaining debt, and the fair value of total
debt (in thousands), by year of expected maturity to evaluate the expected cash
flows and sensitivity to interest rate changes.
Fair
2003 2004 2005 2006 2007 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
Fixed rate debt $ 14,121 212,965 151,690 27,420 28,434 792,565 1,227,195 1,277,078
Average interest rate for all debt 7.59% 7.62% 7.61% 7.62% 7.60% 7.62% - -
Variable rate LIBOR debt $ 9,543 242,846 - - - - 252,389 252,389
Average interest rate for all debt 2.04% 2.04% - - - - - -
As the table incorporates only those exposures that exist as of June
30, 2003, it does not consider those exposures or positions, which could arise
after that date. Moreover, because firm commitments are not presented in the
table above, the information presented therein has limited predictive value. As
a result, Regency's ultimate realized gain or loss with respect to interest rate
fluctuations will depend on the exposures that arise during the period, its
hedging strategies at that time, and interest rates.
Item 4. Controls and Procedures
Under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer, the Company has evaluated the effectiveness
of the design and operation of its disclosure controls and procedures as of the
end of the period covered by this quarterly report, and, based on their
evaluation, the Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer have concluded that these disclosure controls and procedures
are effective. There has been no significant change in our internal controls
over financial reporting identified in connection with the foregoing evaluation
that occurred during the last quarter and that has materially affected, or is
reasonably likely to material affect, our internal controls over financial
reporting.
28
Part II
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting for Regency Centers Corporation was held on May 6, 2003. The
matters to be acted on was the election of one Class III director and four Class
I directors to serve terms expiring at the annual meeting of shareholders to be
held in 2005 and 2006, respectively. The other matter was to consider and
approve the proposed amendment and restatement of Regency's 1993 Long Term
Omnibus Plan.
Each of the nominees was elected. The number of shares voted for or withheld as
to each nominee was as follows:
Election of one Class III Director
Nominee For Withheld
------- --- --------
Joseph E. Parsons 54,615,656 268,800
Election of four Class I Directors
Nominee For Withheld
------- --- --------
Mary Lou Fiala 54,621,016 233,440
C. Ronald Blankenship 54,615,456 239,000
Douglas S. Luke 52,665,112 2,189,344
Terry N. Worrell 54,621,216 233,240
The terms of the following incumbent directors continued beyond the meeting:
Martin E. Stein, Jr.
Raymond L. Bank
A. R. Carpenter, Jr.
J. Dix Druce
John C. Schweitzer
Thomas G. Wattles
In June 2003, Mr. Parsons resigned from the Board in connection with the sale by
Security Capital of its common stock in Regency.
The amendment and restatement of the 1993 Long Term Omnibus Plan was approved by
the affirmative vote of 50,454,889 shares, with 4,360,938 shares voted against
and 38,629 shares abstaining.
29
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Second Amendment to Credit Agreement dated as of March 31,
2003, by and among Regency Centers, L.P., Regency Realty
Group, Inc., Regency Centers Corporation, and Wells Fargo
Bank, National Association, as Agent.
10.2 Revolving Note dated as of April 1, 2002, by and among
Regency Centers, L.P., and Commercebank, N.A., in care of
Wells Fargo Bank, National Association, as Agent.
10.3 Bid Rate Note dated as of April 1, 2003, by and among
Regency Centers, L.P., Commercebank, N.A., in care of
Wells Fargo Bank, National Association, as Agent.
10.4 Revolving Note dated as of April 1, 2003, by and among
Regency Centers, L.P., Wachovia Bank, National
Association, in care of Wells Fargo Bank, National
Association, as Agent.
10.5 Purchase and Sale Agreement by and between Regency Centers
Corporation, Security Capital Group Incorporated and
Security Capital Shopping Mall Business Trust, dated as of
June 11, 2003, filed as Exhibit 99.2 to current report on
Form 8-K of Regency Centers Corporation dated June 11,
2003, and incorporated herein by reference.
10.6 Agreement Relating to Disposition of Shares by and between
Regency Centers Corporation and Security Capital Group
Incorporated, dated as of June 11, 2003, filed as Exhibit
99.3 to current report on Form 8-K of Regency Centers
Corporation dated June 11, 2003, and incorporated herein
by reference.
10.7 Regency Centers Corporation Amended and Restated Long Term
Omnibus Plan filed as Appendix 1 to Regency's Annual
Meeting Proxy Statement dated April 3, 2003 and
incorporated herein by reference.
31.1 Certification of Regency Centers Corporation's Chief
Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under
the Securities Act of 1934.
31.2 Certification of Regency Centers Corporation's Chief
Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under
the Securities Act of 1934.
31.3 Certification of Regency Centers Corporation's Chief
Operating Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under
the Securities Act of 1934.
32.1 Certification of Regency Centers Corporation's Chief
Executive Officer Pursuant to 18 U.S.C. Section 1350 (as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.2 Certification of Regency Centers Corporation's Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350 (as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.3 Certification of Regency Centers Corporation's Chief
Operating Officer Pursuant to 18 U.S.C. Section 1350 (as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
30
(b) Reports on Form 8-K
1. Current report on Form 8-K dated April 4, 2003 for
the purpose of filing exhibits under registration
statement no. 333-37911.
2. Current report on Form 8-K dated April 10, 2003 for
the purpose of reporting termination of the
standstill agreement between Regency Centers
Corporation and Security Capital Group Incorporated.
3. Current report on Form 8-K dated May 6, 2003 for the
purpose of furnishing Regency Centers Corporation's
earnings release and supplemental information for the
three months ended March 31, 2003. **
4. Current report on Form 8-K dated June 11, 2003 for
the purpose of furnishing the joint press release of
Regency Centers Corporation and Security Capital
Group Incorporated relating to Security Capital's
proposed sale of Regency Centers Corporation common
stock.
5. Current report on Form 8-K dated June 13, 2003 for
the purpose of furnishing a press release announcing
Regency Centers Corporation's agreement to purchase
$150 million of Regency's common stock from Security
Capital Group Incorporated.**
6. Current report on Form 8-K dated June 18, 2003 for
the purpose of filing exhibits under registration
statement no. 333-105408.
7. Current report on Form 8-K dated June 24, 2003 for
the purpose of reporting a change of control of
Regency Centers Corporation.
** Furnished for information only, not deemed to be
"filed."
31
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 11, 2003 REGENCY CENTERS CORPORATION
By: /s/ J. Christian Leavitt
----------------------------------
Senior Vice President,
and Chief Accounting Officer
32
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated as
of March 31, 2003, by and among REGENCY CENTERS, L.P., a Delaware limited
partnership (the "Borrower"), REGENCY REALTY GROUP, INC., a Florida corporation
("RRG"), REGENCY CENTERS CORPORATION, a Florida corporation formerly known as
Regency Realty Corporation (the "Parent"), each of the other Guarantors
signatory hereto (the "Guarantors"), each of the Lenders signatory hereto, and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent (the "Agent").
WHEREAS, the Borrower, RRG, the Parent, the Lenders and the Agent are
parties to that certain Credit Agreement dated as of April 30, 2001 (as amended
and in effect immediately prior to the date hereof, the "Credit Agreement");
WHEREAS, the parties hereto desire to amend certain provisions of the
Credit Agreement on the terms and conditions contained herein and to consent to
the assignment by an existing Lender of portions of such Lender's Commitment to
each of Commercebank, N.A. and to Eastern Bank;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
Section 1. Specific Amendments to Credit Agreement. The parties hereto
agree that the Credit Agreement is amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by
restating the definition of "Borrowing Base" in its entirety as follows:
"Borrowing Base" means, without duplication, the sum of (i)
the aggregate Unencumbered Pool Values of all Stabilized Retail
Operating Properties divided by 1.75, plus (ii) the aggregate
Unencumbered Pool Values of Qualified Development Properties and
Pre-Stabilized Retail Operating Properties divided by 2.0, plus (iii)
the aggregate Unencumbered Pool Values of all Environmentally Impacted
Properties divided by 2.25. Notwithstanding anything set forth in this
definition to the contrary, (a) not more than 7.5% of the Borrowing
Base can be attributable to Environmentally Impacted Properties, (b)
not more than 20.0% of the Borrowing Base can be attributable to
Qualified Development Properties, Pre-Stabilized Retail Operating
Properties and Environmentally Impacted Properties and (c) not more
than 15.0% of the Borrowing Base can be attributable to Properties that
are not anchored by grocery store tenants (for purposes of this
definition, a Side Shop Center shall be considered to be anchored by a
grocery store tenant).
(b) Section 1.1 of the Credit Agreement is hereby further amended
by restating the definition of "L/C Commitment Amount" in its entirety as
follows:
"L/C Commitment Amount" means an amount equal to $25,000,000.
(c) Section 2.14 of the Credit Agreement is hereby amended by
restating subsection (b) thereof in its entirety as follows:
(b) Terms of Letters of Credit. At the time of issuance, the
amount, terms and conditions of each Letter of Credit, and of any
drafts or acceptances thereunder, shall be subject to approval by the
Agent and the Borrower. Notwithstanding the foregoing, in no event may
(i) the expiration date of any Letter of Credit extend beyond April 29,
2005; provided, however, the expiration date of a Letter of Credit may
not extend beyond April 30, 2004 if at the time of the issuance of such
Letter of Credit the Borrower would not have the right to extend the
Termination Date under the terms of Section 2.10., (ii) any Letter of
Credit have an initial duration in excess of one year or (iii) a Letter
of Credit be issued within 30 days of the Termination Date. The initial
Stated Amount of each Letter of Credit shall be at least $25,000.
(d) Section 8.1(g) of the Credit Agreement is hereby amended by
restating subsection (g) thereof in its entirety as follows:
(g) as soon as available and in any event within 50 days after
the end of the fourth fiscal quarter of the Borrower, the annual plan
of the Parent and its Consolidated Subsidiaries which plan shall at
least include capital and operating expense budgets, projections of
sources and applications of funds, a projected balance sheet, profit
and loss projections of the Parent and its Consolidated Subsidiaries
for each quarter of the next succeeding fiscal year and a update copy
of Schedule 7.6., all itemized in reasonable detail and shall also set
forth the pro forma calculations required (including any assumptions,
where appropriate) to establish whether or not the Parent, and when
appropriate its Consolidated Subsidiaries, will be in compliance with
the covenants contained in Sections 8.12. and 8.22., 8.24. and Article
IX. at the end of each fiscal quarter of the next succeeding fiscal
year;
Section 2. Effectiveness of Amendment. The effectiveness of Section 1
is subject to receipt by the Agent of each of the following in form and
substance satisfactory to the Agent:
(a) Counterparts of this Amendment executed by each of the parties
hereto; and
(b) Such other documents and instruments as the Agent may
reasonably request.
Section 3. Representations of the Borrower. The Borrower represents and
warrants to the Agent and the Lenders that:
- 2 -
(a) Authorization. Each Loan Party a party to this Amendment has
the right and power, and has taken all necessary action to authorize it, to
execute and deliver this Amendment and to perform its obligations hereunder in
accordance with its terms. The Borrower has the right and power, and has taken
all necessary action to authorize it, to perform its obligations under the
Credit Agreement, as amended by this Amendment, in accordance with its terms.
This Amendment has been duly executed and delivered by a duly authorized officer
of each such Loan Party and each of this Amendment and the Credit Agreement, as
amended by this Amendment, is a legal, valid and binding obligation of each Loan
Party a party thereto enforceable against such Loan Party in accordance with its
respective terms except as the same may be limited by bankruptcy, insolvency,
and other similar laws affecting the rights of creditors generally and the
availability of equitable remedies for the enforcement of certain obligations
contained herein or therein may be limited by equitable principles generally.
(b) Compliance with Laws, etc. The execution and delivery of this
Amendment by each Loan Party a party hereto and the performance of this
Amendment and the Credit Agreement, as amended by this Amendment, by each Loan
Party a party thereto in accordance with their respective terms, do not and will
not, by the passage of time, the giving of notice or otherwise: (i) require any
Government Approval or violate any Applicable Law relating to any such Loan
Party the failure to possess or to comply with which would have a Materially
Adverse Effect; (ii) conflict with, result in a breach of or constitute a
default under the any such Loan Party's organizational documents or any
indenture, agreement or other instrument to which any such Loan Party is a party
or by which it or any of its properties may be bound and the violation of which
could reasonably be expected to have a Materially Adverse Effect; or (iii)
result in or require the creation or imposition of any Lien upon or with respect
to any property now owned or hereafter acquired by any Loan Party other than
Permitted Liens.
(c) No Default. No Default or Event of Default has occurred and is
continuing as of the date hereof nor will exist immediately after giving effect
to this Amendment.
Section 4. Reaffirmation of Representations. Each Loan Party a party
hereto repeats and reaffirms all representations and warranties made by such
Loan Party to the Agent and the Lenders in the Credit Agreement and the other
Loan Documents to which it is a party on and as of the date hereof (and after
giving effect to this Amendment) with the same force and effect as if such
representations and warranties were set forth in this Amendment in full.
Section 5. Reaffirmation of Guaranty by Guarantors. Each Guarantor
hereby reaffirms its continuing obligations to the Agent and the Lenders under
the Guaranty, and agrees that the transactions contemplated by this Amendment
shall not in any way affect the validity and enforceability of such Guaranty, or
reduce, impair or discharge the obligations of such Guarantor thereunder.
Section 6. References to the Credit Agreement. Each reference to the
Credit Agreement in any of the Loan Documents (including the Credit Agreement)
shall be deemed to be a reference to the Credit Agreement, as amended by this
Amendment.
- 3 -
Section 7. Expenses. The Borrower shall reimburse the Agent upon demand
for all costs and expenses (including attorneys' fees) incurred by the Agent in
connection with the preparation, negotiation and execution of this Amendment and
the other agreements and documents executed and delivered in connection
herewith.
Section 8. Benefits. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
Section 10. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect.
Section 11. Effective Date. This Amendment shall not be effective until
its execution and delivery by all of the parties hereto whereupon its shall be
deemed effective as of the date first written above.
Section 12. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
Section 13. Definitions. All capitalized terms not otherwise defined
herein are used herein with the respective definitions given them in the Credit
Agreement.
Section 14. Consent to Assignment. The Borrower and each of the Lenders
party hereto hereby consent to the assignment by an existing Lender of portions
of such Lender's Commitment to each of Commercebank, N.A. and to Eastern Bank.
[Signatures on Next Page]
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Credit Agreement to be executed as of the date first above written.
BORROWER:
REGENCY CENTERS, L.P.
By: Regency Realty Corporation, its sole
general partner
By: /s/ John F. Euart Jr.
--------------------------------------
Name: John F. Euart
Title: Executive Vice President
GUARANTORS:
REGENCY REALTY CORPORATION
By: /s/ John F. Euart Jr.
--------------------------------------
Name: John F. Euart
Title: Executive Vice President
R&M WESTERN PARTNERSHIP, L.P.
By: Regency Realty Group, Inc., its
General Partner
By: /s/ John F. Euart Jr.
--------------------------------------
Name: John F. Euart
Title: Executive Vice President
[Signatures Continued on Next Page]
- 5 -
[Signature Page to Second Amendment to Credit Agreement dated
as of March ___, 2003 with Regency Centers, L.P.]
AGENT AND LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually and as the Agent
By: /s/ John S. Misiura
--------------------------------------
Name: John S. Misiura
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Cathy A. Casey
--------------------------------------
Name: Cathy A. Casey
Title: Director
COMMERZBANK AG, NEW YORK BRANCH
By: /s/ E. Marcus Perry
--------------------------------------
Name: E. Marcus Perry
Title: Assistant Vice President
By: /s/ David M. Schwarz
--------------------------------------
Name: David M. Schwarz
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Wayne P. Robertson
--------------------------------------
Name: Wayne P. Robertson
Title: Senior Vice President
[Signatures Continued on Next Page]
- 6 -
[Signature Page to Second Amendment to Credit Agreement
dated as of March __, 2003 with Regency Centers, L.P.]
AMSOUTH BANK
By: /s/ Lee Surtees
--------------------------------------
Name: Lee Surtees
Title: Commercial Banking Officer
JPMORGAN CHASE BANK,
a New York Banking Corporation formerly
known as The Chase Manhattan Bank
By: /s/ Kent A. Kaiser
--------------------------------------
Name: Kent A. Kaiser
Title: Senior Vice President
SOUTHTRUST BANK
By: /s/ Ann Peck
--------------------------------------
Name: Ann Peck
Title: Assistant Vice President
SUNTRUST BANK
By: /s/ Nancy B. Richards
--------------------------------------
Name: Nancy B. Richards
Title: Vice President
ING CAPITAL, LLC,
as successor to ING (U.S.) CAPITAL LLC
By: /s/ David A. Mazujian
--------------------------------------
Name: David A. Mazujian
Title: Managing Director
[Signatures Continued on Next Page]
- 7 -
[Signature Page to Second Amendment to Credit Agreement dated
as of March ___, 2003 with Regency Centers, L.P.]
US BANK NATIONAL ASSOCIATION
(FKA FIRSTAR BANK, NATIONAL ASSOCIATION)
By: /s/ Maureen A. Dunne
--------------------------------------
Name: Maureen A. Dunne
Title: Senior Vice President
CITIZENS BANK OF RHODE ISLAND
By: /s/ Craig E. Schermerhorn
--------------------------------------
Name: Craig E. Schermerhorn
Title: Vice President
CHEVY CHASE BANK, FSB
By: /s/ Frederick H. Denecke
--------------------------------------
Name: Frederick H. Denecke
Title: Vice President
BANK LEUMI USA
By:______________________________________
Name:_______________________________
Title:______________________________
[Signatures Continued on Next Page]
- 8 -
[Signature Page to Second Amendment to Credit Agreement dated
as of March ___, 2003 with Regency Centers, L.P.]
ISRAEL DISCOUNT BANK OF NEW YORK
By: /s/ Joel Eisenberg
---------------------------------
Name: Joel Eisenberg
Title: Vice President
By: /s/ Marc G. Cooper
---------------------------------
Name: Marc G. Cooper
Title: Vice President
ERSTE BANK, NEW YORK BRANCH
By: /s/ Greg Aptman
---------------------------------
Name: Greg Aptman
Title: Vice President
By: /s/ Bryan J. Lynch
----------------------------------
Name: Bryan J. Lynch
Title: First Vice President
- 9 -
REVOLVING NOTE
$135,000,000 April 1, 2003
FOR VALUE RECEIVED, the undersigned, REGENCY CENTERS, L.P., a Delaware
limited partnership (the "Borrower") hereby unconditionally promises to pay to
the order of WACHOVIA BANK, NATIONAL ASSOCIATION (the "Lender"), in care of
Wells Fargo Bank, National Association, as Agent (the "Agent"), to Wells Fargo
Bank, National Association, 2120 E. Park Place, Suite 100, El Segundo,
California 90245 or at such other address as may be specified by the Agent to
the Borrower, the principal sum of ONE HUNDRED THIRTY FIVE MILLION AND NO/100
DOLLARS ($135,000,000), or such lesser amount as may be the then outstanding and
unpaid balance of all Revolving Loans made by the Lender to the Borrower
pursuant to, and in accordance with the terms of, the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like
money, on the unpaid principal amount owing hereunder from time to time on the
dates and at the rates and at the times specified in the Credit Agreement.
This Revolving Note is one of the "Revolving Notes" referred to in the
Credit Agreement dated as of April 30, 2001 (as amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"), by and among
the Borrower, Regency Realty Group, Inc., Regency Centers Corporation, the
financial institutions party thereto and their assignees under Section 12.8
thereof, the Agent, and the other parties thereto, and is subject to, and
entitled to, all provisions and benefits thereof. Capitalized terms used herein
and not defined herein shall have the respective meanings given to such terms in
the Credit Agreement. The Credit Agreement, among other things, (a) provides for
the making of Revolving Loans by the Lender to the Borrower from time to time in
an aggregate amount not to exceed at any time outstanding the Dollar amount
first above mentioned, (b) permits the prepayment of the Loans by the Borrower
subject to certain terms and conditions and (c) provides for the acceleration of
the Revolving Loans upon the occurrence of certain specified events.
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
Time is of the essence for this Note.
This Revolving Note is given in replacement of a Revolving Note
previously delivered to the Lender under the Credit Agreement. THIS REVOLVING
NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY
OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH SUCH OTHER REVOLVING NOTE.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Note under seal as of the date written above.
REGENCY CENTERS, L.P.
By: Regency Centers Corporation, its sole
general partner
By: /s/ John F. Euart Jr.
----------------------------------
Name: John F. Euart Jr.
Title: Managing Director
STATE OF GEORGIA
COUNTY OF FULTON
BEFORE ME, a Notary Public in and for said County, personally appeared
John F. Euart Jr., known to me to be a person who, as Managing Director of
Regency Centers Corporation, as the general partner of Regency Centers, L.P.,
the entity which executed the foregoing Revolving Note, signed the same, and
acknowledged to me that he did so sign said instrument in the name and upon
behalf of said corporation as an officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed
my official seal, this 1st day of April, 2003.
/s/ Jackie Leonard
-------------------------------------------
Notary Public
My Commission Expires: 4/9/03
BID RATE NOTE
April 1, 2003
FOR VALUE RECEIVED, the undersigned, REGENCY CENTERS, L.P., a Delaware
limited liability company (the "Borrower"), hereby promises to pay to the order
of COMMERCEBANK, N.A. (the "Lender"), in care of Wells Fargo Bank, National
Association, as Agent (the "Agent"), to Wells Fargo Bank, National Association,
2120 E. Park Place, Suite 100, El Segundo, California 90245, or at such other
address as may be specified by the Agent to the Borrower, the aggregate unpaid
principal amount of Bid Rate Loans made by the Lender to the Borrower under the
Credit Agreement, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Bid Rate Loan, at such office at the rates and on the dates provided in the
Credit Agreement.
The date, amount, interest rate and maturity date of each Bid Rate Loan
made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, endorsed by the Lender on the schedule attached
hereto or any continuation thereof, provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing under the Credit
Agreement or hereunder in respect of the Bid Rate Loans made by the Lender.
This Note is one of the "Bid Rate Notes" referred to in the Credit
Agreement dated as of April 30, 2001 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by and among the
Borrower, Regency Realty Group, Inc., Regency Centers Corporation, the financial
institutions party thereto and their assignees under Section 12.8 thereof, the
Agent, and the other parties thereto, and evidences Bid Rate Loans made by the
Lender thereunder. Terms used but not otherwise defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Bid Rate
Loans upon the terms and conditions specified therein.
Except as permitted by Section 12.8. of the Credit Agreement, this Note
may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance with, the
laws of the State of GEORGIA.
The Borrower hereby waives presentment for payment, demand, notice of
demand, notice of non-payment, protest, notice of protest and all other similar
notices.
Time is of the essence for this Note.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Bid
Rate Note under seal as of the date first written above.
REGENCY CENTERS, L.P.
By: Regency Centers Corporation, its sole
general partner
By: /s/ John F. Euart Jr.
-----------------------------------
Name: John F. Euart Jr.
Title: Managing Director
STATE OF GEORGIA
COUNTY OF FULTON
BEFORE ME, a Notary Public in and for said County, personally appeared
John F. Euart Jr., known to me to be a person who, as Managing Director of
Regency Centers Corporation, as the general partner of Regency Centers, L.P.,
the entity which executed the foregoing Bid Rate Note, signed the same, and
acknowledged to me that he did so sign said instrument in the name and upon
behalf of said corporation as an officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed
my official seal, this 1st day of April, 2003.
/s/ Jackie Leonard
-------------------------------------------
Notary Public
My Commission Expires: 4/9/03
-2-
SCHEDULE OF BID RATE LOANS
This Note evidences Bid Rate Loans made under the within-described
Credit Agreement to the Borrower, on the dates, in the principal amounts,
bearing interest at the rates and maturing on the dates set forth below, subject
to the payments and prepayments of principal set forth below:
Principal Maturity Amount Unpaid
Date of Amount of Interest Date of Paid or Principal Notation
Loan Loan Rate Loan Prepaid Amount Made By
---- ---- ---- ---- ------- ------ -------
-3-
REVOLVING NOTE
$15,000,000 April 1, 2003
FOR VALUE RECEIVED, the undersigned, REGENCY CENTERS, L.P., a Delaware
limited partnership (the "Borrower") hereby unconditionally promises to pay to
the order of COMMERCEBANK, N.A. (the "Lender"), in care of Wells Fargo Bank,
National Association, as Agent (the "Agent"), to Wells Fargo Bank, National
Association, 2120 E. Park Place, Suite 100, El Segundo, California 90245 or at
such other address as may be specified by the Agent to the Borrower, the
principal sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000), or such
lesser amount as may be the then outstanding and unpaid balance of all Revolving
Loans made by the Lender to the Borrower pursuant to, and in accordance with the
terms of, the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like
money, on the unpaid principal amount owing hereunder from time to time on the
dates and at the rates and at the times specified in the Credit Agreement.
This Revolving Note is one of the "Revolving Notes" referred to in the
Credit Agreement dated as of April 30, 2001 (as amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"), by and among
the Borrower, Regency Realty Group, Inc., Regency Centers Corporation, the
financial institutions party thereto and their assignees under Section 12.8
thereof, the Agent, and the other parties thereto, and is subject to, and
entitled to, all provisions and benefits thereof. Capitalized terms used herein
and not defined herein shall have the respective meanings given to such terms in
the Credit Agreement. The Credit Agreement, among other things, (a) provides for
the making of Revolving Loans by the Lender to the Borrower from time to time in
an aggregate amount not to exceed at any time outstanding the Dollar amount
first above mentioned, (b) permits the prepayment of the Loans by the Borrower
subject to certain terms and conditions and (c) provides for the acceleration of
the Revolving Loans upon the occurrence of certain specified events.
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
Time is of the essence for this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Note under seal as of the date written above.
REGENCY CENTERS, L.P.
By: Regency Centers Corporation, its sole
general partner
By: /s/ John F. Euart Jr.
-----------------------------------
Name: John F. Euart Jr.
Title: Managing Director
STATE OF GEORGIA
COUNTY OF FULTON
BEFORE ME, a Notary Public in and for said County, personally appeared
John F. Euart Jr., known to me to be a person who, as Managing Director of
Regency Centers Corporation, as the general partner of Regency Centers, L.P.,
the entity which executed the foregoing Revolving Note, signed the same, and
acknowledged to me that he did so sign said instrument in the name and upon
behalf of said corporation as an officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed
my official seal, this 1st day of April, 2003.
/s/ Jackie Leonard
-------------------------------------------
Notary Public
My Commission Expires: 4/9/03
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Martin E. Stein, Jr., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Regency Centers
Corporation ("registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 11, 2003 /s/ Martin E. Stein, Jr.
------------------------------------
Martin E. Stein, Jr.
Chief Executive Officer
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Bruce M. Johnson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Regency Centers
Corporation ("registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 11, 2003 /s/ Bruce M. Johnson
------------------------------------
Bruce M. Johnson
Chief Financial Officer
Exhibit 31.3
Certification of Chief Operating Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Mary Lou Fiala, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Regency Centers
Corporation ("registrant");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 11, 2003 /s/ Mary Lou Fiala
------------------------------------
Mary Lou Fiala
Chief Operating Officer
EXHIBIT 32.1
Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. ss.1350
Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned
Chairman and Chief Executive Officer of Regency Centers Corporation (the
"Company"), hereby certify, based on my knowledge, that the Quarterly Report on
Form 10-Q of the Company for the quarter ended June 30, 2003 (the "Report")
fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934 and that information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Martin E. Stein, Jr.
- ------------------------
Martin E. Stein, Jr.
August 11, 2003
Exhibit 32.2
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. ss.1350
Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned
Managing Director and Chief Financial Officer of Regency Centers Corporation
(the "Company"), hereby certify, based on my knowledge, that the Quarterly
Report on Form 10-Q of the Company for the quarter ended June 30, 2003 (the
"Report") fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934 and that information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company.
/s/ Bruce M. Johnson
- --------------------
Bruce M. Johnson
August 11, 2003
Exhibit 32.3
Written Statement of the Chief Operating Officer
Pursuant to 18 U.S.C. ss.1350
Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned
President and Chief Operating Officer of Regency Centers Corporation (the
"Company"), hereby certify, based on my knowledge, that the Quarterly Report on
Form 10-Q of the Company for the quarter ended June 30, 2003 (the "Report")
fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934 and that information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Mary Lou Fiala
- -------------------
Mary Lou Fiala
August 11, 2003
