Regency Centers 2026 Q2 Earnings Call

Please go ahead. Good morning, and welcome to Regency Centers' second quarter 2026 earnings conference call.

Joining me today are Lisa Palmer, President and Chief Executive Officer; Mike Mas, Chief Financial Officer; Alan Roth, East Region President and Chief Operating Officer; and Nick Wibbenmeyer, West Region President and Chief Investment Officer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, including forward earnings guidance and future market conditions. These are based on the current beliefs and expectations of management and are subject to various risks and uncertainties. It is possible that actual results may differ materially from those suggested by these forward-looking statements we may make.

Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically in our most recent Form 10-K and 10-Q filings. In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our investor relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance. Our caution on forward-looking statements also applies to these presentation materials. As a reminder, given the number of participants we have on the call today, we respectfully ask that you limit your questions to one. Please rejoin the queue if you have additional follow-up questions.

Lisa? Thank you, Christy. Good morning, everyone, and thank you for joining us.

Our team delivered another excellent quarter, extending the positive momentum we've built over the past several years. We generated strong NOI and earnings growth driven by sustained operating fundamentals and a disciplined capital allocation strategy. These results reflect the quality of our portfolio, the strength of our platform, and most importantly, the remarkable execution of our team. Across our portfolio, leasing demand trends remain robust, supported by the strength of our tenant base and their continued expansion plans. Our grocery-anchored neighborhood and community centers continue to benefit from a durable tenant mix of necessity, service, convenience, and value retailers. While the resilience of our consumer base is supported by the compelling demographic profile of the suburban trade areas we serve.

We believe this positions us well to perform consistently through shorter-term periods of macro uncertainty, as well as longer-term across all economic cycles. We also continue to execute on our capital allocation strategy with momentum across our entire investments platform, including development, redevelopment, and acquisitions. Our national ground-up development program is one of Regency's most important differentiators. In an environment of continued low new supply and a scarcity of high-quality available space, our ability to source, execute, and deliver successful projects across our target markets is not only a driver of meaningful NOI growth, it also creates value in ways that no one else in our sector is replicating. Rather than relying solely on acquiring centers at market prices to drive external growth, we are building premier shopping centers at yields that represent substantial spreads to market cap rates.

This platform and our ability to consistently drive value above our cost to build allows us to generate earnings accretion while also growing NAV. Mike will go into more detail, but our favorable year-to-date performance and enhanced visibility into the second half of the year gives us the confidence to raise our full-year forecasts for same-property and total NOI growth. We now expect core operating earnings per share growth to exceed 5%. Before I close, I'd also like to briefly mention our recently released corporate responsibility report, which highlights meaningful progress across our priorities. Corporate responsibility has long been a foundational strategy for our company. Its principles are deeply ingrained in our culture and day-to-day operations, the initiatives continue to generate real cost savings and ancillary revenue growth. In summary, I'm energized by our business today and the opportunities ahead.

Our high-quality portfolio located in the strongest suburban trade areas, our leading national development platform, our fortress balance sheet, most importantly, again, the best team in the business, all set us apart. I'm confident in our ability to deliver durable, sustainable growth and long-term value for our shareholders.

Alan? Thank you, Lisa, and good morning, everyone.

We delivered another outstanding operating quarter, driving overall leased and shop occupancy to new highs while maintaining robust rent growth reflective of the fundamental strength across our portfolio. These positive results collectively contributed to same-property NOI growth of 3.8% in the quarter, with base rent growth serving as the primary driver. Our same-property leased rate is now nearly 97%, as we are pushing both anchor and shop leasing higher, supported by continued strong tenant demand and a retention rate of 84%. This is a direct reflection of the favorable leasing environment, coupled with limited availability of high-quality space. Commenced occupancy was also up 20 basis points in the quarter as we continue to successfully convert our SNO pipeline into rent-paying tenants.

Our pipeline of newly executed leases provides us with visibility of further upside in commenced occupancy, which will remain an important component of future same-property NOI growth. Leasing is active and broad-based across nearly every category and region in which we operate. Grocers, health and wellness concepts, restaurants, personal services, and value-oriented retailers continue to expand. At the same time, quality space is in short supply, both within our portfolio and throughout our markets, providing our teams significant leverage in lease negotiations, and they are doing an excellent job capturing that opportunity. This is translating into strong rent growth, with cash rent spreads above 10% in the quarter and GAAP spreads of nearly 20%. We also continue to successfully embed annual rent escalators into nearly all of our newly executed leases, one of the primary drivers of sustainable base rent growth well into the future.

This fundamental backdrop is also supporting our ability to boost expense recoveries. We are seeing our recovery rates benefit significantly from higher commenced occupancy, as well as improved lease terms. We saw the power of this in the second quarter as we completed our expense reconciliations for the prior year with market conditions and the quality of our leases driving success. Building on some of Lisa's comments, our centers benefit from both trade-up and trade-down behavior, sitting at the intersection of convenience, offering value and everyday essentials. Tenant sales growth is widespread throughout the portfolio, foot traffic is showing steady increases, and accounts receivables remain below historical averages, confirming a very healthy tenant base. Our team remains focused on capitalizing on strong tenant demand and favorable supply dynamics, creating opportunities to drive NOI higher while further strengthening the merchandising quality in our portfolio.

That combination of strong fundamentals and disciplined execution gives us confidence in our ability to continue driving NOI growth. With that, I'll hand it over to Nick.