Regency CentersCorp.'s exposure to two of its sporting goods tenants is likely to affectthe company's same-property NOI in the near term, executives said during an earningscall.
The recently announced bankruptcies of Sports Authority and EasternMountain Sports could put five locations at risk, President and CFO Lisa Palmersaid during the call, telling an analyst that at least one store was on the closurelist.
Owing to the potential impact of such tenant bankruptcies, coupledwith higher comparable same-store sales and common-area-maintenance reconciliations,the company expects same-property NOI to moderate throughout the balance of theyear, especially during the second quarter, Palmer said.
The shopping center REIT, however, maintained its same-propertyNOI growth guidance for the full year in the range of 2.75% to 3.5%. The expectationsassume, among other things, "a combination of accepted and rejected leasesbut do not include a scenario for full loss of rent at every location," theexecutive noted.
Notwithstanding such near-term NOI growth concerns, CEO MartinStein Jr. said during the call, the quality of Regency's real estate should allowthe company to capitalize on long-term growth opportunities, including strong demandfrom "quality" quick-serve restaurants, health and fitness users, specialtyand traditional grocers, discount-apparel retailers and pet stores.
"[R]eplacing a struggling operator with a more productiveone has been and always will be better for our long-term work NOI growth rate,"Stein said.
Palmer also provided an update on the company's capital marketsactivity, including a completed shopping center acquisition and two planned purchases.The company increased its acquisition guidance for the full year to "higherof $340 million," Palmer told an analyst during the call's Q&A portion.That compares to an earlier guidance of only up to $18 million worth of acquisitions,according to the company's earningsrelease.
The company, in particular, acquired the Garden City Park shoppingcenter on Long Island during the first quarter, expanding the company's footholdin New York and offering substantial upside through redevelopment. Per the earningsrelease, the gross purchase price for the unencumbered asset was $17.3 million.
Regency is poised to acquire the retail component of an "iconic"mixed-use asset in metro Washington, D.C., with AvalonBay Communities Inc. expected to own and operate thesite's residential portion. Regency is also acquiring a property outside of Seattle,which will expand the company's Northwest portfolio.
"Combined, these acquisitions should approximate $325 millionin total purchase price and we expect to close on each before the end of the secondquarter," Palmer said.