10-K 1 reg10-k123118.htm 10-K Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018
or
o
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)
Commission File Number 0-24763 (Regency Centers, L.P.)

REGENCY CENTERS CORPORATION
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
FLORIDA (REGENCY CENTERS CORPORATION)
 regcover10k123116a07.jpg
59-3191743
DELAWARE (REGENCY CENTERS, L.P.)
59-3429602
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
One Independent Drive, Suite 114
Jacksonville, Florida 32202
(904) 598-7000
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Regency Centers Corporation
Title of each class
 
Name of each exchange on which registered
Common Stock, $.01 par value
 
The Nasdaq Stock Market LLC
Regency Centers, L.P.
Title of each class
 
Name of each exchange on which registered
None
 
N/A
________________________________
Securities registered pursuant to Section 12(g) of the Act:
Regency Centers Corporation: None
Regency Centers, L.P.: Units of Partnership Interest
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Regency Centers Corporation    YES    x    NO    o    Regency Centers, L.P.    YES    x    NO    o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
Regency Centers Corporation    YES    o    NO    x    Regency Centers, L.P.    YES    o    NO    x
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.
Regency Centers Corporation    YES    x    NO    o    Regency Centers, L.P.    YES    x    NO    o


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Regency Centers Corporation    YES    x    NO    o    Regency Centers, L.P.    YES    x    NO    o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Regency Centers Corporation    o    Regency Centers, L.P    o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Regency Centers Corporation:
Large accelerated filer
x
Accelerated filer
o
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 
Regency Centers, L.P.:
Large accelerated filer
o
Accelerated filer
x
Emerging growth company
o
Non-accelerated filer
o
Smaller reporting company
o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Regency Centers Corporation    YES    o    NO    o    Regency Centers, L.P.    YES    o    NO    o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Regency Centers Corporation    YES    o    NO    x    Regency Centers, L.P.    YES    o    NO    x
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants' most recently completed second fiscal quarter.
Regency Centers Corporation    $10.4 billion    Regency Centers, L.P.    N/A
The number of shares outstanding of the Regency Centers Corporation’s common stock was 167,506,148 as of February 13, 2019.
Documents Incorporated by Reference
Portions of Regency Centers Corporation's proxy statement in connection with its 2019 Annual Meeting of Stockholders are incorporated by reference in Part III.
 




EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2018 of Regency Centers Corporation and Regency Centers, L.P. Unless stated otherwise or the context otherwise requires, references to “Regency Centers Corporation” or the “Parent Company” mean Regency Centers Corporation and its controlled subsidiaries; and references to “Regency Centers, L.P.” or the “Operating Partnership” mean Regency Centers, L.P. and its controlled subsidiaries. The term “the Company”, "Regency Centers" or “Regency” means the Parent Company and the Operating Partnership, collectively.
The Parent Company is a real estate investment trust (“REIT”) and the general partner of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units (“Units”). As of December 31, 2018, the Parent Company owned approximately 99.8% of the Units in the Operating Partnership. The remaining limited Units are owned by investors. As the sole general partner of the Operating Partnership, the Parent Company has exclusive control of the Operating Partnership's day-to-day management.
The Company believes combining the annual reports on Form 10-K of the Parent Company and the Operating Partnership into this single report provides the following benefits:
•
Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•
Eliminates duplicative disclosure and provides a more streamlined and readable presentation; and
•
Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
Management operates the Parent Company and the Operating Partnership as one business. The management of the Parent Company consists of the same individuals as the management of the Operating Partnership. These individuals are officers of the Parent Company and employees of the Operating Partnership.
The Company believes it is important to understand the key differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. Except for $500 million of unsecured public and private placement debt, the Parent Company does not hold any indebtedness, but guarantees all of the unsecured debt of the Operating Partnership. The Operating Partnership is also the co-issuer and guarantees the $500 million of unsecured public and private placement debt of the Parent Company. The Operating Partnership holds all the assets of the Company and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partners' capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Parent Company and those of the Operating Partnership. The Operating Partnership's capital includes general and limited common Partnership Units. The limited partners' units in the Operating Partnership owned by third parties are accounted for in partners' capital in the Operating Partnership's financial statements and outside of stockholders' equity in noncontrolling interests in the Parent Company's financial statements.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements, controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company.
As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Therefore, while stockholders' equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.




TABLE OF CONTENTS
 
Item No.
 
Form 10-K
Report Page
 
 
 
 
PART I
 
 
 
 
1.
 
 
 
1A.
 
 
 
1B.
 
 
 
2.
 
 
 
3.
 
 
 
4.
 
 
 
 
PART II
 
 
 
 
5.
 
 
 
6.
 
 
 
7.
 
 
 
7A.
 
 
 
8.
 
 
 
9.
 
 
 
9A.
 
 
 
9B.
 
 
 
 
PART III
 
 
 
 
10.
 
 
 
11.
 
 
 
12.
 
 
 
13.
 
 
 
14.
 
 
 
 
PART IV
 
 
 
 
15.
 
 
 
 
SIGNATURES
 
 
 
 
16.





Forward-Looking Statements
In addition to historical information, information in this Form 10-K contains forward-looking statements as defined under federal securities laws. These forward-looking statements include statements about anticipated changes in our revenues, the size of our development and redevelopment program, earnings per share and unit, returns and portfolio value, and expectations about our liquidity. These statements are based on current expectations, estimates and projections about the real estate industry and markets in which the Company 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. Known risks and uncertainties are described further in the Item 1A. Risk Factors below. The following discussion should be read in conjunction with the accompanying Consolidated Financial Statements and Notes thereto of Regency Centers Corporation and Regency Centers, L.P. appearing elsewhere herein. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of uncertain events.
PART I
Item 1. Business
Regency Centers began its operations as a publicly-traded REIT in 1993, and, as of December 31, 2018, had full or partial ownership interests in 425 properties primarily anchored by market leading grocery stores. Our properties are principally located in affluent and infill trade areas of the United States, and contain 53.6 million square feet ("SF") of gross leasable area ("GLA"). Our ownership share of this GLA is 43.4 million square feet, including our share of the partially owned properties. All of our operating, investing, and financing activities are performed through the Operating Partnership, our wholly-owned subsidiaries, and through our co-investment partnerships.
On March 1, 2017, Regency completed its merger with Equity One Inc. ("Equity One"), whereby Equity One merged with and into Regency, with Regency continuing as the surviving public company. As part of the merger, Regency acquired 121 properties representing 16.0 million SF of GLA, including 8 properties held through co-investment partnerships.
Our mission is to be the preeminent national owner, operator, and developer of shopping centers connecting outstanding retailers and service providers with surrounding neighborhoods and communities. Our goals are to:

•
Own and manage a portfolio of high-quality neighborhood and community shopping centers anchored by market leading grocers and located in affluent suburban and near urban trade areas in the country’s most desirable metro areas. We expect that this combination will produce highly desirable and attractive centers with best-in-class retailers. These centers should command higher rental and occupancy rates resulting in excellent prospects to grow net operating income ("NOI");

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

•
Support our business activities with a strong balance sheet; and

•
Engage a talented, dedicated team of employees, who are guided by Regency’s strong values and special culture, which are aligned with shareholder interests.
Key strategies to achieve our goals are to:

•
Increase earnings per share and dividends and generate total shareholder returns at or near the top of our shopping center peers.

•
Sustain same property NOI growth at or near the top of our shopping center peers;

•
Develop and redevelop high quality shopping centers at attractive returns on investment;

•
Maintain a conservative balance sheet providing financial flexibility to cost effectively fund investment opportunities and debt maturities on a favorable basis, and to weather economic downturns; and

•
Attract and motivate an exceptional team of employees who operate efficiently and are recognized as industry leaders.


1


Corporate Responsibility
Regency’s vision is to be the preeminent national owner, operator and developer of shopping centers, connecting outstanding retailers and service providers with its neighborhoods and communities while practicing best-in-class corporate responsibility. Our corporate responsibility report highlights our commitment to stakeholders and the critical role Regency's core values have on how we practice corporate responsibility. We are committed to transparent reporting on sustainability and corporate responsibility efforts in accordance with the guidelines of the Global Reporting Initiative. A copy of our corporate responsibility report is available on our website, www.regencycenters.com.
Sustainability
We believe sustainability is in the best interest of our tenants, investors, employees, and the communities in which we operate and are committed to reducing our environmental impact, including energy and water use, greenhouse gas emissions, and waste. We believe this commitment is not only the right thing to do, but also supports the Company in achieving key strategic objectives in operations and development. We are committed to transparency with regard to our sustainability performance, risks and opportunities, and will continue to enhance disclosure using industry accepted reporting frameworks. More information about our sustainability strategy, goals, performance, and formal disclosures are available on our website at www.regencycenters.com.
Competition
We are among the largest owners of shopping centers in the nation based on revenues, number of properties, GLA, and market capitalization. There are numerous companies and individuals engaged in the ownership, development, acquisition, and operation of shopping centers that compete with us in our targeted markets, including grocery store chains that also anchor some of our shopping centers. This results in competition for attracting tenants, as well as the acquisition of existing shopping centers and new development sites. We believe that our competitive advantages are driven by:
•
our locations within our market areas;
•
the design and high quality of our shopping centers;
•
the strong demographics surrounding our shopping centers;
•
our relationships with our anchor tenants and our side-shop and out-parcel retailers;
•
our practice of maintaining and renovating our shopping centers; and
•
our ability to source and develop new shopping centers.
Employees
Our corporate headquarters are located at One Independent Drive, Suite 114, Jacksonville, Florida. We presently maintain 22 market offices nationwide, including our corporate headquarters, where we conduct management, leasing, construction, and investment activities. We have 446 employees throughout the United States and we believe that our relations with our employees are good.
Compliance with Governmental Regulations
Under various federal, state and local laws, ordinances and regulations, we may be liable for the cost to remove or remediate certain hazardous or toxic substances at our shopping centers. These laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. The cost of required remediation and the owner's liability for remediation could exceed the value of the property and/or the aggregate assets of the owner. The presence of such substances, or the failure to properly remediate such substances, may adversely affect our ability to sell or lease the property or borrow using the property as collateral. Although we have a number of properties that could require or are currently undergoing varying levels of environmental remediation, known environmental remediation is not currently expected to have a material financial impact on us due to insurance programs designed to mitigate the cost of remediation, various state-regulated programs that shift the responsibility and cost to the state, and existing accrued liabilities for remediation.

2


Executive Officers
Our executive officers are appointed each year by our Board of Directors. Each of our executive officers has been employed by us for more than five years.
Name
Age
Title
Executive Officer in Position Shown Since
Martin E. Stein, Jr.
66
Chairman and Chief Executive Officer
1993
Lisa Palmer
51
President and Chief Financial Officer
2016 (1)
Dan M. Chandler, III
51
Executive Vice President of Investments
2016 (2)
James D. Thompson
63
Executive Vice President of Operations
2016 (3)
(1) Ms. Palmer assumed the responsibilities of President, effective January 1, 2016 in addition to her responsibilities as Chief Financial Officer, which position she has held since January 2013. Prior to that, Ms. Palmer served as Senior Vice President of Capital Markets since 2003 and has been with the Company since 1996.
(2) Mr. Chandler assumed the role of Executive Vice President of Investments on January 1, 2016 and previously served as Managing Director since 2006. Prior to that, Mr. Chandler served in various investment officer positions since the merger with Pacific Retail Trust in 1999.
(3) Mr. Thompson assumed the role of Executive Vice President of Operations on January 1, 2016 and previously served as our Managing Director - East since our initial public offering in 1993. Prior to that time, Mr. Thompson served as Executive Vice President of our predecessor real estate division beginning in 1981.
Company Website Access and SEC Filings
Our website may be accessed at www.regencycenters.com. All of our filings with the Securities and Exchange Commission ("SEC") can be accessed free of charge through our website promptly after filing; however, in the event that the website is inaccessible, we will provide paper copies of our most recent annual report on Form 10-K, the most recent quarterly report on Form 10-Q, current reports filed or furnished on Form 8-K, and all related amendments, excluding exhibits, free of charge upon request. These filings are also accessible on the SEC's website at www.sec.gov. The content of our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
General Information
Our registrar and stock transfer agent is Broadridge Corporate Issuer Solutions, Inc. ("Broadridge"), Philadelphia, PA. We offer a dividend reinvestment plan ("DRIP") that enables our shareholders to reinvest dividends automatically, as well as to make voluntary cash payments toward the purchase of additional shares. For more information, contact Broadridge toll free at (855) 449-0975 or our Shareholder Relations Department at (904) 598-7000.
On October 25, 2018, the Company's Board approved the transfer of the Company's common stock from listing on The New York Stock Exchange ("NYSE") to The NASDAQ Global Select Market ("NASDAQ"). The last day of trading on the NYSE was November 12, 2018. The Company's common stock commenced trading on NASDAQ on November 13, 2018, and continues to trade under the stock symbol "REG".
Our independent registered public accounting firm is KPMG LLP, Jacksonville, Florida. Our legal counsel is Foley & Lardner LLP, Jacksonville, Florida.
Annual Meeting of Shareholders
Our 2019 annual meeting of shareholders will be held at the Ponte Vedra Inn and Club, 200 Ponte Vedra Blvd., Ponte Vedra Beach, Florida, at 2:45 p.m. on Tuesday, May 7, 2019.

3


Defined Terms
In addition to the required Generally Accepted Accounting Principles ("GAAP") presentations, we use certain non-GAAP performance measures as we believe these measures improve the understanding of the Company's operational results. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
The following terms, as defined, are commonly used by management and the investing public to understand and evaluate our operational results:
•
Same Property is a Retail Operating Property that was owned and operated for the entirety of both calendar year periods being compared. This term excludes all developments and Non-Same Properties.
•
Non-Same Property is a property acquired, sold, or a Development Completion during either calendar year period being compared. Non-retail properties and corporate activities, including the captive insurance program, are part of Non-Same Property.
•
Retail Operating Property is any retail property not termed a Property in Development. A retail property is any property where the majority of the income is generated from retail uses.
•
Property In Development includes properties in various stages of development and redevelopment including active pre-development activities.
•
Development Completion is a property in development that is deemed complete upon the earliest of: (i) 90% of total estimated net development costs have been incurred and percent leased equals or exceeds 95%, or (ii) the property features at least two years of anchor operations, or (iii) three years have passed since the start of construction. Once deemed complete, the property is termed a Retail Operating Property the following calendar year.
•
Pro-Rata information includes 100% of our consolidated properties plus our economic share (based on our ownership interest) in our unconsolidated real estate investment partnerships.
We manage our entire real estate portfolio without regard to ownership structure, although certain decisions impacting properties owned through partnerships require partner approval. Therefore, we believe presenting our pro-rata share of certain operating metrics, along with other non-GAAP measures, makes comparisons of other REITs' operating results to the Company's more meaningful.
The pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our pro-rata share.
The presentation of pro-rata information has limitations which include, but are not limited to, the following:
•
The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting or allocating noncontrolling interests, and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and
•
Other companies in our industry may calculate their pro-rata interest differently, limiting the comparability of pro-rata information.
Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata information as a supplement.
•
NAREIT EBITDAre is a measure of REIT performance, which the National Association of Real Estate Investment Trusts ("NAREIT") defines as net income, computed in accordance with GAAP, excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) gains and losses from sales of depreciable property, (v)

4


operating real estate impairments, and (vi) adjustments to reflect the Company's share of unconsolidated partnerships and joint ventures.
•
Operating EBITDAre (previously Adjusted EBITDA) begins with the NAREIT EBITDAre and excludes certain non-cash components of earnings derived from above and below market rent amortization and straight-line rents.
•
Fixed Charge Coverage Ratio is defined as Operating EBITDAre divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders.
•
Net Operating Income ("NOI") is the sum of base rent, percentage rent, and recoveries from tenants and other income, less operating and maintenance, real estate taxes, ground rent, and provision for doubtful accounts. NOI excludes straight-line rental income and expense, above and below market rent and ground rent amortization, tenant lease inducement amortization, and other fees. The Company also provides disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.
•
NAREIT Funds from Operations ("NAREIT FFO") is a commonly used measure of REIT performance, which NAREIT defines as net income, computed in accordance with GAAP, excluding gains and losses from sales of depreciable property, net of tax, excluding operating real estate impairments, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute NAREIT FFO for all periods presented in accordance with NAREIT's definition. Many companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since NAREIT FFO excludes depreciation and amortization and gains and losses from depreciable property dispositions, and impairments, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, NAREIT FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations. The Company provides a reconciliation of Net Income (Loss) Attributable to Common Stockholders to NAREIT FFO.

5



Item 1A. Risk Factors
Risk Factors Related to the Retail Industry
Economic and market conditions may adversely affect the retail industry and consequently reduce our revenues and cash flow, and increase our operating expenses.
Our properties are leased primarily to retail tenants from whom we derive most of our revenue in the form of minimum rent, expense recoveries and other income. Therefore, our performance and operating results are directly linked to the economic and market conditions occurring in the retail industry. We are subject to the risks that, upon expiration, leases for space in our properties are not renewed by existing tenants, vacant space is not leased to new tenants, or tenants demand new lease terms, including costs for renovations or concessions. The market for leasing retail space in our properties may be adversely affected by any of the following:
•
changes in national, regional and local economic conditions;
•
deterioration in the competitiveness and creditworthiness of our retail tenants;
•
increased competition from the use of e-commerce by retailers and consumers as well as other concepts such as super-stores and warehouse clubs;
•
tenant bankruptcies and subsequent rejections of our leases;
•
reductions in consumer spending and retail sales;
•
reduced tenant demand for retail space;
•
oversupply of retail space;
•
reduced consumer demand for certain retail categories;
•
consolidation within the retail sector;
•
increased operating costs;
•
perceptions by retailers and shoppers of the safety, convenience and attractiveness of our properties;
•
casualties, natural disasters and terrorist attacks; and
•
armed conflicts against the United States.
To the extent that any of these conditions occur they are likely to impact the retail industry, our retail tenants, the demand and market rents for retail space, the occupancy levels of our properties, our ability to sell, acquire or develop properties, our operating results and our cash available for distributions to stock and unit holders.
The integration of bricks and mortar stores and e-commerce by retailers and a continued shift in retail sales towards e-commerce may adversely impact our revenues and cash flows.
Retailers are increasingly impacted by e-commerce and changes in customer buying habits, including the delivery or curbside pick-up of items ordered online. Retailers are considering these e-commerce trends when making decisions regarding their bricks and mortar stores and how they will compete and innovate in a rapidly changing e-commerce environment. Many retailers in our shopping centers provide services or sell goods, which have historically been less likely to be purchased online; however, the continuing increase in e-commerce sales in all retail categories may cause retailers to adjust the size or number of retail locations in the future or close stores. Our grocer tenants are incorporating e-commerce concepts through home delivery, which could reduce foot traffic at our centers. This shift may adversely impact our occupancy and rental rates, which would impact our revenues and cash flows. Changes in shopping trends as a result of the growth in e-commerce may also impact the profitability of retailers that do not adapt to changes in market conditions. These conditions may adversely impact our results of operations and cash flows if we are unable to meet the needs of our tenants or if our tenants encounter financial difficulties as a result of changing market conditions.
Our business is dependent on perceptions by retailers and shoppers of the safety, convenience and attractiveness of our retail properties.
We are dependent on perceptions by retailers or shoppers of the safety, convenience and attractiveness of our retail properties. If retailers and shoppers perceive competing retail properties and other retailing options to be safer, more convenient, or of a higher quality, our revenues may be adversely affected.
Changing economic and retail market conditions in geographic areas where our properties are concentrated may reduce our revenues and cash flow.
Economic conditions in markets where our properties are concentrated can greatly influence our financial performance. During the year ended December 31, 2018, our properties in California, Florida, and Texas accounted for 28.1%,

6


20.1%, and 7.1%, respectively, of our NOI from Consolidated Properties plus our pro-rata share from Unconsolidated Properties ("pro-rata basis"). Our revenues and cash flow may be adversely affected by this geographic concentration if market conditions, such as supply of or demand for retail space, deteriorate more significantly in California, Florida, or Texas compared to other geographic areas.
Our success depends on the success and continued presence of our “anchor” tenants.
Anchor Tenants ("Anchor Tenants" or "Anchors" occupying 10,000 square feet or more) occupy large stores in our shopping centers, pay a significant portion of the total rent at a property and contribute to the success of other tenants by attracting shoppers to the property. We derive significant revenues from anchor tenants such as Publix, Kroger Co., Albertsons Companies, Inc., Whole Foods, and TJX Companies, who accounted for 3.2%, 3.0%, 2.8%, 2.4%, and 2.3%, respectively, of our total annualized base rent on a pro-rata basis, for the year ended December 31, 2018. Our net income and cash flow may be adversely affected by the loss of revenues and additional costs in the event a significant anchor tenant:
•
becomes bankrupt or insolvent;
•
experiences a downturn in its business;
•
materially defaults on its leases;
•
does not renew its leases as they expire;
•
renews at lower rental rates and/or requires a tenant improvement allowance; or
•
renews, but reduces its store size, which results in down-time and additional tenant improvement costs to the landlord to re-lease the vacated space.

Some anchors have the right to vacate their space and may prevent us from re-tenanting by continuing to comply and pay rent in accordance with their lease agreement. Vacated anchor space, including space owned by the anchor, can reduce rental revenues generated by the shopping center in other spaces because of the loss of the departed anchor's customer drawing power. If a significant tenant vacates a property, co-tenancy clauses in select lease contracts may allow other tenants to modify or terminate their rent or lease obligations. Co-tenancy clauses have several variants: they may allow a tenant to postpone a store opening if certain other tenants fail to open their stores; they may allow a tenant to close its store prior to lease expiration if another tenant closes its store prior to lease expiration; or more commonly, they may allow a tenant to pay reduced levels of rent until a certain number of tenants open their stores within the same shopping center.
A significant percentage of our revenues are derived from smaller shop space tenants and our net income may be adversely impacted if our smaller shop tenants are not successful.
A significant percentage of our revenues are derived from smaller shop space tenants ("Shop Space Tenants" occupying less than 10,000 square feet). Shop Space Tenants may be more vulnerable to negative economic conditions as they have more limited resources than Anchor Tenants. Shop Space Tenants may be facing reduced sales as a result of an increase in competition including from e-commerce retailers. Certain Shop Space Tenants are incorporating e-commerce into their business strategies and may seek to reduce their store sizes upon lease expiration as they adjust to and implement alternative distribution channels. The types of Shop Space Tenants vary from retail shops and restaurants to service providers. If we are unable to attract the right type or mix of Shop Space Tenants into our centers, our revenues and cash flow may be adversely impacted.
At December 31, 2018, Shop Space Tenants represent approximately 35.3% of our GLA leased at average base rents of $33.75 per square foot ("PSF"). A one-percent decline in our shop space occupancy may result in a reduction to minimum rent of approximately $4.8 million.
We may be unable to collect balances due from tenants in bankruptcy.
Although minimum rent and recoveries from tenants are supported by long-term lease contracts, tenants who file bankruptcy have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to recover our claim and to re-lease the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and rejects its leases, we may experience a significant reduction in our revenues and may not be able to collect all pre-petition amounts owed by the bankrupt tenant.

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Risk Factors Related to Real Estate Investments and Operations
We are subject to numerous laws and regulations that may adversely affect our operations or expose us to liability.
Our properties are subject to numerous federal, state, and local laws and regulations, some of which may conflict with one another or be subject to varying judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, competition laws, rules and agreements, landlord-tenant laws, property tax regulations, changes in real estate assessments and other laws and regulations generally applicable to business operations. Noncompliance with such laws and regulations, and any associated litigation may expose us to liability.
Our real estate assets may decline in value and be subject to impairment losses which may reduce our net income.
Our real estate properties are carried at cost unless circumstances indicate that the carrying value of these assets may not be recoverable. We evaluate whether there are any indicators, including property operating performance and general market conditions, such that the value of the real estate properties (including any related tangible or intangible assets or liabilities, including goodwill) may not be recoverable. Through the evaluation, we compare the current carrying value of the asset to the estimated undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Our estimated cash flows are based on several key assumptions, including rental rates, costs of tenant improvements, leasing commissions, anticipated holding periods, and assumptions regarding the residual value upon disposition, including the exit capitalization rate. These key assumptions are subjective in nature and may differ materially from actual results. Changes in our disposition strategy or changes in the marketplace may alter the holding period of an asset or asset group, which may result in an impairment loss and such loss may be material to the Company's financial condition or operating performance. To the extent that the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of carrying value over fair value.
The fair value of real estate assets is subjective and is determined through the use of comparable sales information and other market data if available, or through use of an income approach such as the direct capitalization method or the traditional discounted cash flow approach. Such cash flow projections take into account expected future operating income, trends and prospects, as well as the effects of demand, competition and other relevant criteria, and therefore are subject to management judgment. Changes in these factors may impact the determination of fair value. In estimating the fair value of undeveloped land, we generally use market data and comparable sales information.
These subjective assessments have a direct impact on our net income because recording an impairment charge results in an immediate negative adjustment to net income, which may be material. There can be no assurance that we will not record impairment charges in the future related to our assets.
We face risks associated with development, redevelopment and expansion of properties.
We actively pursue opportunities for new retail development, or existing property redevelopment or expansion. Development and redevelopment activities require various government and other approvals for entitlements and any delay in such approvals may significantly delay this process. We may not recover our investment in development or redevelopment projects for which approvals are not received. We are subject to other risks associated with these activities, including the following risks:
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we may be unable to lease developments to full occupancy on a timely basis;
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the occupancy rates and rents of a completed project may not be sufficient to make the project profitable;
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actual costs of a project may exceed original estimates, possibly making the project unprofitable;
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delays in the development or construction process may increase our costs;
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construction cost increases may reduce investment returns on development and redevelopment opportunities;
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we may abandon development opportunities and lose our investment due to adverse market conditions;
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the size of our development pipeline may strain our labor or capital capacity to complete developments within targeted timelines and may reduce our investment returns;
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a reduction in the demand for new retail space may reduce our future development activities, which in turn may reduce our net operating income;
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changes in the level of future development activity may adversely impact our results from operations by reducing the amount of internal general overhead costs that may be capitalized;
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an expansion of our development and acquisition focus to include more complex redevelopments and mixed use properties in very dense urban locations could absorb resources and potentially result in inconsistent deliveries, adversely impacting annual NOI and earnings growth;
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mixed use properties may include differing tenant profiles or mixes, more complex entitlement processes, and/or multi-story buildings, outside our traditional expertise, which could impact annual NOI and earnings growth; and

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•
we may develop or redevelop mixed use centers with partners for the residential or office components, making us dependent upon that partner's ability to perform and to agree on major decisions that impact our investment returns of the project.
We face risks associated with the acquisition of properties.
Our investment strategy includes investing in high-quality shopping centers that are leased to market-dominant grocers, category-leading anchors, specialty retailers, or restaurants located in areas with high barriers to entry and above average household incomes and population densities. The acquisition of properties and/or real estate entities entails risks that include, but are not limited to, the following, any of which may adversely affect our results of operations and cash flows:
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properties we acquire may fail to achieve the occupancy or rental rates we project, within the time frames we estimate, which may result in the properties' failure to achieve the investment returns we project;
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our investigation of an entity, property or building prior to our acquisition, and any representation we may have received from such seller, may fail to reveal various liabilities including defects and necessary repairs, which may increase our costs;
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our estimate of the costs to improve, reposition or redevelop a property may prove to be too low, or the time we estimate to complete the improvement, repositioning or redevelopment may be too short, either of which may result in the property failing to achieve our projected return, either temporarily or permanently;
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we may not recover our costs from an unsuccessful acquisition;
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our acquisition activities may distract or strain our management capacity; and
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we may not be able to successfully integrate an acquisition into our existing operations platform.
We face risks if we expand into new markets.
If opportunities arise, we may acquire or develop properties in markets where we currently have no presence. Each of the risks applicable to acquiring or developing properties in our current markets are applicable to acquiring, developing and integrating properties in new markets. In addition, we may not possess the same level of familiarity with the dynamics and conditions of the new markets we may enter, which may adversely affect our operating results and investment returns in those markets.
We may be unable to sell properties when desired because of market conditions.
Our properties, including their related tangible and intangible assets, represent the majority of our total consolidated assets and they may not be readily convertible to cash. As a result, our ability to sell one or more of our properties including properties held in joint venture in response to changes in economic, industry, or other conditions may be limited. The real estate market is affected by many factors, such as general economic conditions, availability and terms of financing, interest rates and other factors, including supply and demand for space, that are beyond our control. There may be less demand for lower quality properties that we have identified for ultimate disposition in markets with uncertain economic or retail environments, and where buyers are more reliant on the availability of third party mortgage financing. If we want to sell a property, we can provide no assurance that we will be able to dispose of it in the desired time period or at all or that the sales price of a property will be attractive at the relevant time or even exceed the carrying value of our investment. Moreover, if a property is mortgaged, we may not be able to obtain a release of the lien on that property without the payment of a substantial prepayment penalty, which may restrict our ability to dispose of the property, even though the sale might otherwise be desirable.
Certain properties we own have a low tax basis, which may result in a taxable gain on sale. We intend to utilize 1031 exchanges to mitigate taxable income; however, there can be no assurance that we will identify properties that meet our investment objectives for acquisitions. In the event that we do not utilize 1031 exchanges, we may be required to distribute the gain proceeds to shareholders or pay income tax, which may reduce our cash flow available to fund our commitments.
Certain of the properties in our portfolio are subject to ground leases; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we may be materially and adversely affected.
We have 29 properties in our portfolio that are either partially or completely on land subject to ground leases with third parties. Accordingly, we only own a long-term leasehold or similar interest in those properties. If we are found to be in breach of a ground lease, we may lose our interest in the improvements and the right to operate the property that is subject to the ground lease. In addition, unless we can purchase a fee interest in the underlying land or extend the terms of these leases before or upon their expiration, as to which no assurance can be given, we will lose our interest in the improvements and the right to operate such properties. The existing lease terms, including renewal options, were taken into consideration when making our investment decisions. The purchase price and subsequent improvements are being depreciated over the shorter of the remaining

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life of the ground leases or the useful life of the underlying assets. If we were to lose the right to operate a property due to a breach or not exercising renewal options of the ground lease, we would be unable to derive income from such property, which would impair the value of our investments, and adversely affect our financial condition, results of operations and cash flows.
Geographic concentration of our properties makes our business vulnerable to natural disasters, severe weather conditions and climate change. An uninsured loss or a loss that exceeds the insurance coverage on our properties may subject us to loss of capital and revenue on those properties.
A significant number of our properties are located in areas that are susceptible to earthquakes, tropical storms, hurricanes, tornadoes, wildfires, sea-level rise, and other natural disasters. As of December 31, 2018, 25% of the total insured value of our portfolio is located in the state of California, including a number of properties in the San Francisco Bay and Los Angeles areas. Additionally, 19% and 6% of the total insured value of our portfolio is located in the states of Florida and Texas, respectively. Recent intense weather conditions may cause property insurance premiums to increase significantly in the future. We recognize that the frequency and / or intensity of extreme weather events, sea-level rise, and other climatic changes may continue to increase, and as a result, our exposure to these events may increase. These weather conditions may disrupt our business and the business of our tenants, which may affect the ability of some tenants to pay rent and may reduce the willingness of tenants or residents to remain in or move to these affected areas. Therefore, as a result of the geographic concentration of our properties, we face risks, including higher costs, such as uninsured property losses and higher insurance premiums, and disruptions to our business and the businesses of our tenants.
We carry comprehensive liability, fire, flood, terrorism, rental loss, and environmental insurance for our properties with policy specifications and insured limits customarily carried for similar properties. Some types of losses, such as losses from named wind storms, earthquakes, terrorism, or wars may have limited coverage or be excluded from insurance coverage. Although we carry specific insurance coverage for named windstorm and earthquake losses, the policies are subject to deductibles up to 2% to 5% of the total insured value of each property, up to a $10 million maximum deductible per occurrence for each of these perils, with limits of $300 million per occurrence for all perils except earthquake, which has a total annual aggregate limit of $300 million. Terrorism coverage is limited to $200 million per occurrence related to property damage. Liability claims are limited to $151 million per occurrence. Should a loss occur at any of our properties that is subject to a substantial deductible or is in excess of the property or casualty insurance limits of our policies, we may lose part or all of our invested capital and revenues from such property, which may have a material adverse impact on our operating results, financial condition, and our ability to make distributions to stock and unit holders.
To the extent climate change causes adverse changes in weather patterns, our properties in certain markets may experience increases in storm intensity and rising sea‑levels. Climate change may result in volatile or decreased demand for retail space at certain of our properties or, in extreme cases, our inability to operate certain properties at all. Climate change may also have indirect effects on our business by increasing the cost of insurance on favorable terms, or making insurance unavailable. Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or increase taxes and fees assessed on us or our properties. At this time, there can be no assurance that climate change will not have a material adverse effect on us.
Terrorist activities or violence occurring at our properties also may directly affect the value of our properties through damage, destruction or loss. Insurance for such acts may be unavailable or cost more resulting in an increase to our operating expenses and adversely affect our results of operations. To the extent that our tenants are affected by such attacks and threats of attacks, their businesses may be adversely affected, including their ability to continue to meet obligations under their existing leases.
Loss of our key personnel may adversely affect our business and operations.
The success of our business depends, in part, on the leadership and performance of our executive management team and key employees, and our ability to attract, retain and motivate talented employees may significantly impact our future performance. Competition for these individuals is intense, and we cannot be assured that we will retain all of our executive management team and other key employees or that we will be able to attract and retain other highly qualified individuals for these positions in the future. Losing any one or more of these persons may have a material adverse effect on us.
We face competition from numerous sources, including other REITs and other real estate owners.
The ownership of shopping centers is highly fragmented. We face competition from other public REITs, large private investors, institutional investors, and from numerous small owners in the acquisition, ownership, and leasing of shopping centers. We also compete to develop shopping centers with other REITs engaged in development activities as well as with local, regional, and national real estate developers. This competition may:

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reduce the number of properties available for acquisition or development;
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increase the cost of properties available for acquisition or development; and
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hinder our ability to attract and retain tenants, leading to increased vacancy rates and/or reduced rents.
If we cannot successfully compete in our targeted markets, our cash flow, and therefore distributions to stock and unit holders, may be adversely affected.
Costs of environmental remediation may reduce our cash flow available for distribution to stock and unit holders.
Under various federal, state, and local laws, an owner or manager of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on the property. These laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances. The cost of any required remediation may exceed the value of the property and/or the aggregate assets of the owner or the responsible party. The presence of, or the failure to properly remediate, hazardous or toxic substances may adversely affect our ability to sell or lease a contaminated property or to use the property as collateral for a loan. We can provide no assurance that we are aware of all potential environmental liabilities; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; that our properties will not be affected by tenants or nearby properties or other unrelated third parties; and that future uses or conditions, or changes in environmental laws and regulations will not result in additional material environmental liabilities to us.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unintended expenditures.
All of our properties are required to comply with the Americans with Disabilities Act (“ADA”), which generally requires that buildings be made accessible to people with disabilities. Compliance with ADA requirements may require removal of access barriers, and noncompliance may result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While the tenants to whom we lease space in our properties are obligated by law to comply with the ADA provisions, and typically under tenant leases are obligated to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs may be adversely affected. In addition, we are required to operate the properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental entities and become applicable to the properties. We may be required to make substantial capital expenditures to comply with these requirements, and these expenditures may have a material adverse effect on our ability to meet our financial obligations and make distributions to our stock and unit holders.
The unauthorized access, use, theft or destruction of tenant or employee personal, financial or other data or of Regency’s proprietary or confidential information stored in our information systems or by third parties on our behalf could impact our reputation and brand and expose us to potential liability and loss of revenues.
Many of our information technology systems (including those we use for administration, accounting, and communications, as well as the systems of our co-investment partners and other third-party business partners and service providers, whether cloud-based or hosted in proprietary servers) contain personal, financial or other information that is entrusted to us by our tenants and employees. Many of our information technology systems also contain proprietary Regency information and other confidential information related to our business. We are frequently subject to attempts to compromise our information technology systems. To the extent we or a third party were to experience a material breach of our or such third party’s information technology systems that result in the unauthorized access, theft, use, destruction or other compromises of tenants’ or employees' data or confidential information of the Company stored in such systems, including through cyber-attacks or other external or internal methods, such a breach may damage our reputation and cause us to lose tenants and revenues, generate third party claims and the potential disruption to our business and plans. Such security breaches also could result in a violation of applicable U.S. privacy and other laws, and subject us to private consumer, business partner, or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability, and we may not be able to recover these expenses from our service providers, responsible parties, or insurance carriers.
The techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time. The Company manages cyber risk by evaluating the impact of a potential cyber breach on our business and determining the level of investment in the prevention, detection and response to a breach. We continue to make significant investments in technology, third-party services and personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss.

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Risk Factors Related to Our Partnerships and Joint Ventures
We do not have voting control over properties owned in our co-investment partnerships and joint ventures, so we are unable to ensure that our objectives will be pursued.
We have invested substantial capital as a partner in a number of partnerships and joint ventures to acquire, own, lease, develop or redevelop properties. These activities are subject to the same risks as our investments in our wholly-owned properties. These investments, and other future similar investments may involve risks that would not be present were a third party not involved, including the possibility that partners or other owners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions. Partners or other owners may have economic or other business interests or goals that are inconsistent with our own business interests or goals, and may be in a position to take actions contrary to our policies or objectives.
These investments, and other future similar investments, also have the potential risk of creating impasses on decisions, such as a sale or financing, because neither we nor our partner or other owner has full control over the partnership or joint venture. Disputes between us and partners or other owners might result in litigation or arbitration that may increase our expenses and prevent management from focusing their time and efforts on our business. Consequently, actions by, or disputes with, partners or other owners might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we risk the possibility of being liable for the actions of our partners or other owners. These factors may limit the return that we receive from such investments or cause our cash flows to be lower than our estimates.
The termination of our partnerships may adversely affect our cash flow, operating results, and our ability to make distributions to stock and unit holders.
If partnerships owning a significant number of properties were dissolved for any reason, we could lose the asset, property management, leasing and construction management fees from these partnerships, which may adversely affect our operating results and our cash available for distribution to stock and unit holders.
Risk Factors Related to Funding Strategies and Capital Structure
Higher market capitalization rates and lower NOI at our properties may adversely impact our ability to sell properties and fund developments and acquisitions, and may dilute earnings.
As part of our funding strategy, we sell operating properties that no longer meet our investment standards or those with a limited future growth profile. These sales proceeds are used to fund the construction of new developments, redevelopments, and repay debt and acquisitions. An increase in market capitalization rates or a decline in NOI may cause a reduction in the value of centers identified for sale, which would have an adverse impact on the amount of cash generated. In order to meet the cash requirements of our development program, we may be required to sell more properties than initially planned, which may have a negative impact on our earnings. Additionally, the sale of properties resulting in significant tax gains may require higher distributions to our stockholders or payment of additional income taxes in order to maintain our REIT status. We intend to utilize 1031 exchanges to mitigate taxable income, however there can be no assurance that we will identify properties that meet our investment objectives for acquisitions.
We depend on external sources of capital, which may not be available in the future on favorable terms or at all.
To qualify as a REIT, the Parent Company must, among other things, distribute to its stockholders each year at least 90% of its REIT taxable income (excluding any net capital gains). Because of these distribution requirements, we may not be able to fund all future capital needs with income from operations. We therefore will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market's perception of our growth potential and our current and potential future earnings. Our access to debt depends on our credit rating, the willingness of creditors to lend to us and conditions in the capital markets. In addition to finding creditors willing to lend to us, we are dependent upon our joint venture partners to contribute their pro rata share of any amount needed to repay or refinance existing debt when lenders reduce the amount of debt our partnerships and joint ventures are eligible to refinance.
In addition, our existing debt arrangements also impose covenants that limit our flexibility in obtaining other financing. Additional equity offerings may result in substantial dilution of stockholders' interests and additional debt financing may substantially increase our degree of leverage.
Without access to external sources of capital, we would be required to pay outstanding debt with our operating cash flows and proceeds from property sales. Our operating cash flows may not be sufficient to pay our outstanding debt as it comes due and real estate investments generally cannot be sold quickly at a return we believe is appropriate. If we are required to

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deleverage our business with operating cash flows and proceeds from property sales, we may be forced to reduce the amount of, or eliminate altogether, our distributions to stock and unit holders or refrain from making investments in our business.
Our debt financing may adversely affect our business and financial condition.
Our ability to make scheduled payments or to refinance our indebtedness will depend primarily on our future performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond our control. In addition, we do not expect to generate sufficient operating cash flow to make balloon principal payments on our debt when due. If we are unable to refinance our debt on acceptable terms, we may be forced (i) to dispose of properties, which might result in losses, or (ii) to obtain financing at unfavorable terms, either of which may reduce the cash flow available for distributions to stock and unit holders. If we cannot make required mortgage payments, the mortgagee may foreclose on the property securing the mortgage.
Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition.
Our unsecured notes, unsecured term loans, and unsecured line of credit contain customary covenants, including compliance with financial ratios, such as ratio of total debt to gross asset value and fixed charge coverage ratio. Fixed charge coverage ratio is defined as earnings before interest, taxes, depreciation and amortization ("EBITDA") divided by the sum of interest expense and scheduled mortgage principal paid to our lenders plus dividends paid to our preferred stockholders, if any. These covenants may limit our operational flexibility and our acquisition activities. Moreover, if we breach any of the covenants in our debt agreements, and do not cure the breach within the applicable cure period, our lenders may require us to repay the debt immediately, even in the absence of a payment default. Many of our debt arrangements, including our unsecured notes, unsecured term loans, and unsecured line of credit are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other material debt obligations. As a result, any default under our debt covenants may have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations, and the market value of our stock.
The interest rates on our Unsecured Credit facilities as well as on our variable rate mortgages and interest rate swaps might change based on changes to the method in which LIBOR or its replacement rate is determined.
LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market, and is widely used as a reference for setting the interest rate on loans globally. We have Unsecured Credit facilities, variable rate mortgages, and interest rate swaps with variable interest rates or options for such that are based upon an annual rate of LIBOR plus a spread. LIBOR rates charged on such debt and swaps change monthly.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. The Alternative Reference Rates Committee ("ARRC"), a steering committee comprised of large U.S. financial institutions, has proposed replacing USD-LIBOR with a new index calculated by short term repurchase agreements - the Secured Overnight Financing Rate ("SOFR"). The replacement for LIBOR at this time is still uncertain.
If LIBOR ceases to exist, the Administrative Agent under our line of credit may, to the extent practicable (and with our consent but subject to certain objection rights on the part of the line lenders) establish a replacement rate for LIBOR, which must be determined generally in accordance with similar situations in other transactions in which it is serving as administrative agent or otherwise consistent with market practice generally). Establishing a replacement rate for LIBOR in this manner may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on the line if LIBOR was available in its current form. Our other debt based upon LIBOR will experience similar types of adjustments. Such adjustments could have an adverse impact on our financing costs.
Increases in interest rates would cause our borrowing costs to rise and negatively impact our results of operations.
Although a significant amount of our outstanding debt has fixed interest rates, we do borrow funds at variable interest rates under our credit facilities and term loans. As of December 31, 2018, 4.9% of our outstanding debt was variable rate debt. Increases in interest rates would increase our interest expense on any variable rate debt to the extent we have not hedged our exposure to changes in interest rates. In addition, increases in interest rates will affect the terms under which we refinance our existing debt as it matures, to the extent we have not hedged our exposure to changes in interest rates. This would reduce our future earnings and cash flows, which may adversely affect our ability to service our debt and meet our other obligations and also may reduce the amount we are able to distribute to our stock and unit holders.

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Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate, which may adversely affect us.
From time to time, we manage our exposure to interest rate volatility by using interest rate hedging arrangements that involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements, and that these arrangements may not be effective in reducing our exposure to interest rate changes. There can be no assurance that our hedging arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our results of operations. Should we desire to terminate a hedging agreement, there may be significant costs and cash requirements involved to fulfill our obligations under the hedging agreement. Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
We may acquire properties or portfolios of properties through tax-deferred contribution transactions, which may result in stockholder dilution and limit our ability to sell such assets.
We may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in our operating partnership, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we may deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions may limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions.
Risk Factors Related to our Company and the Market Price for Our Securities
Changes in economic and market conditions may adversely affect the market price of our securities.
The market price of our debt and equity securities may fluctuate significantly in response to many factors, many of which are out of our control, including:
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actual or anticipated variations in our operating results;
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changes in our funds from operations or earnings estimates;
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publication of research reports about us or the real estate industry in general and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REIT's;
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the ability of our tenants to pay rent and meet their other obligations to us under current lease terms and our ability to re-lease space as leases expire;
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increases in market interest rates that drive purchasers of our stock to demand a higher dividend yield;
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changes in market valuations of similar companies;
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adverse market reaction to any additional debt we incur in the future;
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any future issuances of equity securities;
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additions or departures of key management personnel;
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strategic actions by us or our competitors, such as acquisitions or restructurings;
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actions by institutional stockholders;
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changes in our dividend payments;
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potential tax law changes on REITs;
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speculation in the press or investment community; and
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general market and economic conditions.
These factors may cause the market price of our securities to decline, regardless of our financial condition, results of operations, business or prospects. It is impossible to ensure that the market price of our securities, including our common stock, will not fall in the future. A decrease in the market price of our common stock may reduce our ability to raise additional equity in the public markets. Selling common stock at a decreased market price would have a dilutive impact on existing stockholders.
There is no assurance that we will continue to pay dividends at historical rates.
Our ability to continue to pay dividends at historical rates or to increase our dividend rate will depend on a number of factors, including, among others, the following:
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our financial condition and results of future operations;
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the terms of our loan covenants; and
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our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.

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If we do not maintain or periodically increase the dividend on our common stock, it may have an adverse effect on the market price of our common stock and other securities.
Corporate responsibility, specifically related to environmental, social and governance factors, may impose additional costs and expose us to new risks.
Regency, as well as investors, are focused on corporate responsibility, specifically related to environmental, social and governance factors. Some investors may use these factors to guide their investment strategies. Third-party providers of corporate responsibility ratings and reports on companies have increased to meet growing investor demand for measurement of corporate responsibility performance. Although we have scored highly in these metrics to date, there can be no assurance that we will continue to score highly in the future. In addition, the criteria by which companies are rated may change, which could cause us to perform worse than in the past. We may face reputational damage in the event our corporate responsibility procedures or standards do not meet the standards set by various constituencies. Furthermore, should our competitors outperform us in such metrics, potential or current investors may elect to invest with our competition instead. The occurrence of any of the foregoing could have an adverse effect on the price of our shares and our business, financial condition and results of operations, including increased capital expenditures and or increased operating expenses.
Risk Factors Related to Laws and Regulations
If the Parent Company fails to qualify as a REIT for federal income tax purposes, it would be subject to federal income tax at regular corporate rates.
We believe that the Parent Company qualifies for taxation as a REIT for federal income tax purposes, and we plan to operate so that we can continue to meet the requirements for taxation as a REIT. If the Parent Company continues to qualify as a REIT, it generally will not be subject to federal income tax on income that we distribute to our stockholders. Many REIT requirements, however, are highly technical and complex. The determination that the Parent Company is a REIT requires an analysis of various factual matters and circumstances, some of which may not be totally within our control and some of which involve questions of interpretation. For example, to qualify as a REIT, at least 95% of our gross income must come from specific passive sources, like rent, that are itemized in the REIT tax laws. There can be no assurance that the Internal Revenue Service (“IRS”) or a court would agree with the positions we have taken in interpreting the REIT requirements. We are also required to distribute to our stockholders at least 90% of our REIT taxable income, excluding capital gains. We will be subject to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. The fact that we hold many of our assets through co-investment partnerships and their subsidiaries further complicates the application of the REIT requirements. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings, that make it more difficult for the Parent Company to remain qualified as a REIT.
Also, unless the IRS granted relief under certain statutory provisions, the Parent Company would remain disqualified as a REIT for four years following the year it first failed to qualify. If the Parent Company failed to qualify as a REIT (currently and/or with respect to any tax years for which the statute of limitations has not expired), we would have to pay significant income taxes, reducing cash available to pay dividends, which would likely have a significant adverse effect on the value of our securities. In addition, we would no longer be required to pay any dividends to stockholders in order to maintain our REIT status. Although we believe that the Parent Company qualifies as a REIT, we cannot be assured that the Parent Company will continue to qualify or remain qualified as a REIT for tax purposes.
Even if the Parent Company qualifies as a REIT for federal income tax purposes, we are required to pay certain federal, state, and local taxes on our income and property. For example, if we have net income from “prohibited transactions,” that income will be subject to a 100% tax. In general, prohibited transactions include sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we have undertaken a significant number of asset sales in recent years, we do not believe that those sales should be considered prohibited transactions, but there can be no assurance that the IRS would not contend otherwise.
New legislation, as well as new regulations, administrative interpretations, or court decisions may be introduced, enacted, or promulgated from time to time, that may change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is adverse to our stockholders.

15


Recent changes to the U.S. tax laws may have a significant negative impact on the overall economy, our tenants, our investors, and our business.
The Tax Cuts and Jobs Act made significant changes to the Internal Revenue Code of 1986, as amended (the "Code"). While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Code may have unanticipated effects on us or our stockholders, including our taxable income, the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a REIT. The long-term impact of the Tax Cuts and Jobs Act on the overall economy, government revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this stage of the new law’s implementation. Furthermore, the Tax Cuts and Jobs Act may negatively impact certain of our tenants’ operating results, financial condition, and future business plans. The Tax Cuts and Jobs Act may also result in reduced government revenues, and therefore reduced government spending, which may negatively impact some of our tenants that rely on government funding. There can be no assurance that the Tax Cuts and Jobs Act will not negatively impact our operating results, financial condition, and future business operations.
Dividends paid by REITs generally do not qualify for reduced tax rates.
Subject to limited exceptions, dividends paid by REITs (other than distributions designated as capital gain dividends, qualified dividends or returns of capital) are not eligible for reduced rates for qualified dividends paid by "C" corporations and are taxable at ordinary income tax rates. The more favorable rates applicable to regular corporate qualified dividends may cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which may adversely affect the value of the shares of REITs, including the shares of our capital stock.
Under the recently passed Tax Cuts and Jobs Act, the rate brackets for non-corporate taxpayer’s ordinary income are adjusted, the top tax rate is reduced from 39.6% to 37% (excluding the 3.8% Medicare tax on net investment income), and ordinary REIT dividends are taxed at even lower effective rates. Under the Tax Cuts and Jobs Act, for taxable years beginning after December 31, 2017 and before January 1, 2026, distributions from REITs that are treated as dividends but are not designated as qualified dividends or capital gain dividends are generally taxed as ordinary income after deducting 20% of the amount of the dividend in the case of non-corporate stockholders. At the maximum ordinary income tax rate of 37% applicable for taxable years beginning after December 31, 2017 and before January 1, 2026, the maximum tax rate on ordinary REIT dividends for non-corporate stockholders is generally 29.6% (plus the 3.8% Medicare tax on net investment income).
Foreign stockholders may be subject to U.S. federal income tax on gain recognized on a disposition of our common stock if we do not qualify as a "domestically controlled" REIT.
A foreign person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests is generally subject to U.S. federal income tax on any gain recognized on the disposition. This tax does not apply, however, to the disposition of stock in a REIT if the REIT is "domestically controlled." In general, we will be a domestically controlled REIT if at all times during the five-year period ending on the applicable stockholder’s disposition of our stock, less than 50% in value of our stock was held directly or indirectly by non-U.S. persons. If we were to fail to qualify as a domestically controlled REIT, gain recognized by a foreign stockholder on a disposition of our common stock would be subject to U.S. federal income tax unless our common stock was traded on an established securities market and the foreign stockholder did not at any time during a specified testing period directly or indirectly own more than 10% of our outstanding common stock.
Legislative or other actions affecting REITs may have a negative effect on us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, may adversely affect Regency or our investors. We cannot predict how changes in the tax laws might affect Regency or our investors. New legislation, Treasury Regulations, administrative interpretations or court decisions may significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, may change, making an investment in such other entities more attractive relative to an investment in a REIT.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code limit our ability to hedge our liabilities. Generally, income from a hedging transaction that constitutes “qualifying income” for purposes of the 75% or 95% gross income tests applicable to REITs, does not constitute “gross income” for purposes of the 75% or 95% gross income tests, provided that we properly identify the

16


hedging transaction pursuant to the applicable sections of the Code and Treasury Regulations. To the extent that we enter into other types of hedging transactions, or fail to make the proper tax identifications, the income from those transactions is likely to be treated as non-qualifying income for purposes of both gross income tests. As a result of these rules, we may need to limit our use of otherwise advantageous hedging techniques or implement those hedges through a taxable REIT subsidiary ("TRS").
Changes in accounting standards may impact our financial results.
The Financial Accounting Standards Board ("FASB"), in conjunction with the SEC, has several key projects recently completed that will impact how we currently account for our material transactions, including lease accounting. Accounting Standards Codification ("ASC") Topic 842, Leases, will be adopted by the Company on January 1, 2019 and, as further described in note 1(o), is expected to have an impact on our financial statements when adopted to require all of our operating leases for office, ground and equipment leases to be recorded on our balance sheet. Also, we will no longer capitalize internal leasing compensation costs and legal costs associated with leasing activities under the new standard, which will result in an increase in our general and administrative costs and a direct reduction to our net income.
Restrictions on the ownership of the Parent Company's capital stock to preserve its REIT status may delay or prevent a change in control.
Ownership of more than 7% by value of our outstanding capital stock is prohibited, with certain exceptions, by the Parent Company's articles of incorporation, for the purpose of maintaining its qualification as a REIT. This 7% limitation may discourage a change in control and may also (i) deter tender offers for our capital stock, which offers may be attractive to our stockholders, or (ii) limit the opportunity for our stockholders to receive a premium for their capital stock that might otherwise exist if an investor attempted to assemble a block in excess of 7% of our outstanding capital stock or to affect a change in control.
The issuance of the Parent Company's capital stock may delay or prevent a change in control.
The Parent Company's articles of incorporation authorize our Board of Directors to issue up to 30,000,000 shares of preferred stock and 10,000,000 shares of special common stock and to establish the preferences and rights of any shares issued. The issuance of preferred stock or special common stock may have the effect of delaying or preventing a change in control. The provisions of the Florida Business Corporation Act regarding affiliated transactions may also deter potential acquisitions by preventing the acquiring party from consummating a merger or other extraordinary corporate transaction without the approval of our disinterested stockholders.

Item 1B. Unresolved Staff Comments
None.

17



Item 2. Properties
The following table is a list of the shopping centers, summarized by state and in order of largest holdings, presented for Consolidated Properties (excludes properties owned by unconsolidated co-investment partnerships):
 
 
December 31, 2018
 
December 31, 2017
Location
 
Number of Properties
 
GLA (in thousands)
 
Percent of Total GLA
 
Percent Leased
 
Number of Properties
 
GLA (in thousands)
 
Percent of Total GLA
 
Percent Leased
Florida
 
90

 
10,745

 
28.3
%
 
94.7
%
 
96

 
11,255

 
29.1
%
 
94.7
%
California
 
54

 
8,168

 
21.5
%
 
96.6
%
 
56

 
8,549

 
22.1
%
 
96.5
%
Texas
 
23

 
3,019

 
8.0
%
 
97.3
%
 
23

 
3,018

 
7.8
%
 
97.4
%
Georgia
 
21

 
2,048

 
5.4
%
 
95.5
%
 
21

 
2,047

 
5.3
%
 
95.2
%
Connecticut
 
14

 
1,453

 
3.8
%
 
95.6
%
 
14

 
1,458

 
3.8
%
 
96.9
%
Colorado
 
14

 
1,146

 
3.0
%
 
96.2
%
 
14

 
1,146

 
3.0
%
 
97.2
%
New York
 
11

 
1,367

 
3.6
%
 
97.8
%
 
9

 
1,198

 
3.1
%
 
99.0
%
North Carolina
 
10

 
895

 
2.3
%
 
96.8
%
 
10

 
895

 
2.3
%
 
97.0
%
Massachusetts
 
9

 
907

 
2.4
%
 
98.9
%
 
9

 
907

 
2.3
%
 
99.1
%
Ohio
 
8

 
1,205

 
3.2
%
 
99.4
%
 
8

 
1,196

 
3.1
%
 
99.5
%
Virginia
 
8

 
1,332

 
3.5
%
 
83.8
%
 
8

 
1,420

 
3.7
%
 
86.3
%
Washington
 
7

 
825

 
2.2
%
 
99.4
%
 
7

 
825

 
2.1
%
 
99.4
%
Oregon
 
7

 
741

 
2.0
%
 
96.1
%
 
7

 
741

 
1.9
%
 
94.8
%
Illinois
 
6

 
1,075

 
2.8
%
 
91.2
%
 
6

 
1,069

 
2.8
%
 
88.3
%
Louisiana
 
5

 
753

 
2.0
%
 
92.8
%
 
5

 
753

 
1.9
%
 
94.2
%
Missouri
 
4

 
408

 
1.1
%
 
100.0
%
 
4

 
408

 
1.1
%
 
99.7
%
Maryland
 
3

 
372

 
1.0
%
 
85.4
%
 
3

 
372

 
1.0
%
 
86.6
%
Tennessee
 
3

 
318

 
0.8
%
 
99.1
%
 
3

 
317

 
0.8
%
 
97.6
%
Pennsylvania
 
3

 
317

 
0.8
%
 
98.1
%
 
3

 
317

 
0.8
%
 
93.2
%
Indiana
 
1

 
254

 
0.7
%
 
98.4
%
 
1

 
254

 
0.7
%
 
97.7
%
Delaware
 
1

 
232

 
0.6
%
 
95.6
%
 
1

 
232

 
0.6
%
 
95.6
%
New Jersey
 
1

 
218

 
0.6
%
 
96.9
%
 
1

 
218

 
0.6
%
 
86.7
%
Michigan
 
1

 
97

 
0.3
%
 
100.0
%
 
1

 
97

 
0.3
%
 
98.6
%
South Carolina
 
1

 
51

 
0.1
%
 
94.8
%
 
1

 
51

 
0.1
%
 
71.2
%
Total
 
305

 
37,946

 
100.0
%
 
95.5
%
 
311

 
38,743

 
100.0
%
 
95.5
%
Certain Consolidated Properties are encumbered by mortgage loans of $525.2 million, excluding debt issuance costs and premiums and discounts, as of December 31, 2018.
The weighted average annual effective rent for the consolidated portfolio of properties, net of tenant concessions, is $21.51 and $21.01 PSF as of December 31, 2018 and 2017, respectively.

18


The following table is a list of the shopping centers, summarized by state and in order of largest holdings, presented for Unconsolidated Properties (includes properties owned by unconsolidated co-investment partnerships):
 
 
December 31, 2018
 
December 31, 2017
Location
 
Number of Properties
 
GLA (in thousands)
 
Percent of Total GLA
 
Percent Leased
 
Number of Properties
 
GLA (in thousands)
 
Percent of Total GLA
 
Percent Leased
California
 
22

 
3,017

 
19.3
%
 
94.2
%
 
21

 
2,791

 
18.4
%
 
97.0
%
Virginia
 
17

 
2,403

 
15.4
%
 
94.8
%
 
18

 
2,554

 
16.9
%
 
94.3
%
Maryland
 
11

 
1,184

 
7.6
%
 
96.2
%
 
11

 
1,184

 
7.8
%
 
95.8
%
Florida
 
10

 
1,045

 
6.7
%
 
98.8
%
 
10

 
1,040

 
6.9
%
 
97.4
%
North Carolina
 
9

 
1,417

 
9.1
%
 
94.1
%
 
8

 
1,326

 
8.8
%
 
91.6
%
Texas
 
7

 
933

 
6.0
%
 
98.2
%
 
7

 
933

 
6.2
%
 
97.4
%
Washington
 
7

 
859

 
5.5
%
 
95.1
%
 
5

 
621

 
4.1
%
 
96.5
%
Colorado
 
6

 
854

 
5.5
%
 
93.2
%
 
5

 
836

 
5.5
%
 
96.2
%
Pennsylvania
 
6

 
666

 
4.2
%
 
94.4
%
 
6

 
666

 
4.4
%
 
95.7
%
Minnesota
 
5

 
665

 
4.2
%
 
99.0
%
 
5

 
674

 
4.4
%
 
98.3
%
Illinois
 
4

 
671

 
4.3
%
 
97.1
%
 
4

 
671

 
4.4
%
 
95.5
%
New Jersey
 
4

 
353

 
2.3
%
 
96.4
%
 
3

 
287

 
1.9
%
 
98.2
%
Massachusetts
 
2

 
726

 
4.6
%
 
98.4
%
 
2

 
726

 
4.8
%
 
95.7
%
Indiana
 
2

 
139

 
0.9
%
 
100.0
%
 
2

 
139

 
0.9
%
 
99.1
%
District of Columbia
 
2

 
40

 
0.3
%
 
84.4
%
 
2

 
40

 
0.3
%
 
91.8
%
Connecticut
 
1

 
186

 
1.2
%
 
80.1
%
 
1

 
186

 
1.2
%
 
100.0
%
New York
 
1

 
141

 
0.9
%
 
100.0
%
 
1

 
141

 
0.9
%
 
100.0
%
Oregon
 
1

 
93

 
0.6
%
 
100.0
%
 
1

 
93

 
0.6
%
 
98.4
%
Georgia
 
1

 
86

 
0.5
%
 
83.8
%
 
1

 
86

 
0.6
%
 
97.5
%
South Carolina
 
1

 
80

 
0.5
%
 
100.0
%
 
1

 
80

 
0.5
%
 
100.0
%
Delaware
 
1

 
64

 
0.4
%
 
90.1
%
 
1

 
64

 
0.4
%
 
90.1
%
    Total
 
120

 
15,622

 
100.0
%
 
95.4
%
 
115

 
15,138

 
100.0
%
 
95.6
%
Certain Unconsolidated Properties are encumbered by non-recourse mortgage loans of $1.6 billion, excluding debt issuance costs and premiums and discounts, as of December 31, 2018.
The weighted average annual effective rent for the unconsolidated portfolio of properties, net of tenant concessions, is $21.46 and $20.63 PSF as of December 31, 2018 and 2017, respectively.

19


The following table summarizes the largest tenants occupying our shopping centers for Consolidated Properties plus our pro-rata share of Unconsolidated Properties, as of December 31, 2018, based upon a percentage of total annualized base rent (GLA and dollars in thousands):
Tenant
 
GLA
 
Percent of Company Owned GLA
 
Annualized Base Rent
 
Percent of Annualized Base Rent
 
Number of Leased Stores
Publix
 
2,839
 
6.5%
 
$
29,341

 
3.2%
 
70
Kroger Co.
 
2,855
 
6.6%
 
27,632

 
3.0%
 
56
Albertsons Companies, Inc.
 
1,833
 
4.2%
 
25,871

 
2.8%
 
47
Whole Foods
 
1,053
 
2.4%
 
21,845

 
2.4%
 
32
TJX Companies
 
1,282
 
3.0%
 
21,277

 
2.3%
 
59
CVS
 
662
 
1.5%
 
14,222

 
1.6%
 
57
Ahold/Delhaize
 
563
 
1.3%
 
13,202

 
1.4%
 
16
Bed Bath & Beyond
 
594
 
1.4%
 
9,956

 
1.1%
 
22
Nordstrom
 
320
 
0.7%
 
8,755

 
1.0%
 
9
Ross Dress For Less
 
551
 
1.3%
 
8,548

 
0.9%
 
25
PETCO
 
352
 
0.8%
 
8,443

 
0.9%
 
43
L.A. Fitness Sports Club
 
423
 
1.0%
 
8,389

 
0.9%
 
12
Trader Joe's
 
258
 
0.6%
 
8,039

 
0.9%
 
26
JAB Holding Company (1)
 
181
 
0.4%
 
6,733

 
0.7%
 
62
Starbucks
 
140
 
0.3%
 
6,697

 
0.7%
 
101
Wells Fargo Bank
 
132
 
0.3%
 
6,620

 
0.7%
 
52
Gap
 
196
 
0.5%
 
6,592

 
0.7%
 
15
Walgreens
 
288
 
0.7%
 
6,412

 
0.7%
 
27
Target
 
570
 
1.3%
 
6,365

 
0.7%
 
6
Bank of America
 
119
 
0.3%
 
6,167

 
0.7%
 
40
JPMorgan Chase Bank
 
108
 
0.2%
 
5,940

 
0.7%
 
34
H.E.B.
 
344
 
0.8%
 
5,844

 
0.6%
 
5
Kohl's
 
612
 
1.4%
 
5,645

 
0.6%
 
8
Dick's Sporting Goods
 
340
 
0.8%
 
5,388

 
0.6%
 
7
Ulta
 
169
 
0.4%
 
5,049

 
0.6%
 
19
Top 25 Tenants
 
16,784
 
38.7%
 
278,972
 
30.4%
 
850
 
 
 
 
 
 
 
 
 
 
 
(1) JAB Holding Company includes Panera, Einstein Bros Bagels, Peet's' Coffee & Tea, and Krispy Kreme
Our leases for tenant space under 10,000 square feet generally have initial terms ranging from three to seven years. Leases greater than 10,000 square feet generally have initial lease terms in excess of five years, mostly comprised of anchor tenants. Many of the anchor leases contain provisions allowing the tenant the option of extending the term of the lease at expiration. Our leases typically provide for the payment of fixed minimum rent, the tenant's pro-rata share of real estate taxes, insurance, and common area maintenance (“CAM”) expenses, and reimbursement for utility costs if not directly metered.

20


The following table summarizes pro-rata lease expirations for the next ten years and thereafter, for our Consolidated and Unconsolidated Properties, assuming no tenants renew their leases (GLA and dollars in thousands):
Lease Expiration Year
 
Number of Tenants with Expiring Leases
 
Pro-rata Expiring GLA
 
Percent of Total Company GLA
 
In Place Base Rent Expiring Under Leases
 
Percent of Base Rent
 
Pro-rata Expiring Average Base Rent
(1)
 
549

 
321

 
0.8
%
 
$
8,569

 
1.0
%
 
$
26.72

2019
 
1,014

 
3,146

 
7.7
%
 
65,555

 
7.4
%
 
20.84

2020
 
1,335

 
4,815

 
11.9
%
 
103,395

 
11.7
%
 
21.47

2021
 
1,301

 
5,102

 
12.6
%
 
105,970

 
11.9
%
 
20.77

2022
 
1,271

 
5,535

 
13.6
%
 
121,984

 
13.8
%
 
22.04

2023
 
1,136

 
4,456

 
11.0
%
 
106,188

 
12.0
%
 
23.83

2024
 
620

 
3,573

 
8.8
%
 
78,781

 
8.9
%
 
22.05

2025
 
373

 
1,888

 
4.6
%
 
49,747

 
5.6
%
 
26.35

2026
 
325

 
1,972

 
4.8
%
 
48,486

 
5.4
%
 
24.59

2027
 
291

 
1,892

 
4.7
%
 
42,762

 
4.8
%
 
22.60

2028
 
359

 
2,182

 
5.4
%
 
50,727

 
5.7
%
 
23.25

Thereafter
 
351

 
5,738

 
14.1
%
 
104,319

 
11.8
%
 
18.18

Total
 
8,925

 
40,620

 
100.0
%
 
$
886,483

 
100.0
%
 
$
21.82

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Leases currently under month-to-month rent or in process of renewal.
During 2019, we have a total of 1,014 leases expiring, representing 3.1 million square feet of GLA. These expiring leases have an average base rent of $20.84 PSF. The average base rent of new leases signed during 2018 was $27.15 PSF. During periods of recession or when occupancy is low, tenants have more bargaining power, which may result in rental rate declines on new or renewal leases. In periods of recovery and/or when occupancy levels are high, landlords have more bargaining power, which generally results in rental rate growth on new and renewal leases. Based on current economic trends and expectations, the quality and mix of tenants in our centers, and pro-rata percent leased of 95.6%, we expect average base rent on new and renewal leases during 2019 to meet or exceed average rental rates on leases expiring in 2019. Exceptions may arise in certain geographic areas or at specific shopping centers based on the local economic situation, competition, location, quality, and size of the space being leased, among other factors. Additionally, significant changes or uncertainties affecting micro- or macroeconomic climates may cause significant changes to our current expectations.


21


See the following property table and also see Item 7, Management's Discussion and Analysis, for further information about our Consolidated and Unconsolidated Properties.

Property Name
 
(1)
CBSA
 
State
 
(2)
Owner-ship Interest
 
Year Acquired
 
Year Constructed or Last Major Renovation
 
Mortgages or Encumbrances (in 000's)
 
Gross Leasable Area
(GLA) (in 000's)
 
(3)
Percent Leased
 
(4)
Average Base Rent (Per Sq Ft)
 
(5)
Grocer(s) & Major Tenant(s) >35,000 SF
200 Potrero
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2017
 
1928
 
$—
 
31
 
100.0%
 
$12.98
 
--
4S Commons Town Center
 
San Diego-Carlsbad
 
CA
 
85%
 
2004
 
2004
 
85,000
 
240
 
100.0%
 
33.67
 
Ralphs, Jimbo's...Naturally!
Amerige Heights Town Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2000
 
2000
 
—
 
89
 
100.0%
 
29.75
 
Albertsons, (Target)
Balboa Mesa Shopping Center
 
San Diego-Carlsbad
 
CA
 
 
 
2012
 
1969
 
—
 
207
 
100.0%
 
25.83
 
Von's Food & Drug, Kohl's
Bayhill Shopping Center
 
San Francisco-Oakland-Hayward
 
CA
 
40%
 
2005
 
1990/2018
 
19,964
 
122
 
95.7%
 
25.02
 
Mollie Stone's Market
Blossom Valley
 
San Jose-Sunnyvale-Santa Clara
 
CA
 
20%
 
1999
 
1990
 
22,300
 
93
 
96.7%
 
26.77
 
Safeway
Brea Marketplace (6)
 
Los Angeles-Long Beach-Anaheim
 
CA
 
40%
 
2005
 
1987
 
45,026
 
352
 
99.2%
 
19.24
 
Sprout's Markets, Target, 24 Hour Fitness
Circle Center West
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2017
 
1989
 
9,864
 
64
 
100.0%
 
27.67
 
--
Clayton Valley Shopping Center
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2003
 
2004
 
—
 
260
 
91.5%
 
22.29
 
Grocery Outlet, Orchard Supply Hardware
Corral Hollow
 
Stockton-Lodi
 
CA
 
25%
 
2000
 
2000
 
—
 
167
 
100.0%
 
17.48
 
Safeway, Orchard Supply & Hardware
Costa Verde Center
 
San Diego-Carlsbad
 
CA
 
 
 
1999
 
1988
 
—
 
179
 
89.5%
 
34.68
 
Bristol Farms
Culver Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2017
 
1950
 
—
 
217
 
95.7%
 
31.59
 
Ralphs, Best Buy, LA Fitness
Diablo Plaza
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
1999
 
1982
 
—
 
63
 
100.0%
 
40.11
 
(Safeway)
El Camino Shopping Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
1999
 
1995
 
—
 
136
 
97.7%
 
37.41
 
Bristol Farms, Trader Joe's
El Cerrito Plaza
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2000
 
2000
 
—
 
256
 
97.0%
 
29.83
 
(Lucky's), Trader Joe's
El Norte Pkwy Plaza
 
San Diego-Carlsbad
 
CA
 
 
 
1999
 
1984
 
—
 
91
 
97.0%
 
18.53
 
Von's Food & Drug
Encina Grande
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
1999
 
1965
 
—
 
106
 
100.0%
 
31.43
 
Whole Foods
Five Points Shopping Center
 
Santa Maria-Santa Barbara
 
CA
 
40%
 
2005
 
1960
 
25,495
 
145
 
98.7%
 
28.66
 
Smart & Final
Folsom Prairie City Crossing
 
Sacramento--Roseville--Arden-Arcade
 
CA
 
 
 
1999
 
1999
 
—
 
90
 
100.0%
 
20.90
 
Safeway
French Valley Village Center
 
Riverside-San Bernardino-Ontario
 
CA
 
 
 
2004
 
2004
 
—
 
99
 
98.6%
 
26.79
 
Stater Bros.
Friars Mission Center
 
San Diego-Carlsbad
 
CA
 
 
 
1999
 
1989
 
—
 
147
 
99.1%
 
35.09
 
Ralphs
Gateway 101
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2008
 
2008
 
—
 
92
 
100.0%
 
32.05
 
(Home Depot), (Best Buy), Target, Nordstrom Rack
Gelson's Westlake Market Plaza
 
Oxnard-Thousand Oaks-Ventura
 
CA
 
 
 
2002
 
2002
 
—
 
85
 
95.7%
 
27.98
 
Gelson's Markets
Golden Hills Plaza
 
San Luis Obispo-Paso Robles-Arroyo Grande
 
CA
 
 
 
2006
 
2006
 
—
 
244
 
97.5%
 
7.58
 
Lowe's
Granada Village
 
Los Angeles-Long Beach-Anaheim
 
CA
 
40%
 
2005
 
1965
 
50,000
 
226
 
98.8%
 
23.88
 
Sprout's Markets
Hasley Canyon Village
 
Los Angeles-Long Beach-Anaheim
 
CA
 
20%
 
2003
 
2003
 
16,000
 
66
 
100.0%
 
25.43
 
Ralphs
Heritage Plaza
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
1999
 
1981
 
—
 
230
 
100.0%
 
37.39
 
Ralphs
Jefferson Square
 
Riverside-San Bernardino-Ontario
 
CA
 
 
 
2007
 
2007
 
—
 
38
 
48.9%
 
16.07
 
--
Laguna Niguel Plaza
 
Los Angeles-Long Beach-Anaheim
 
CA
 
40%
 
2005
 
1985
 
—
 
42
 
100.0%
 
28.54
 
(Albertsons)
Marina Shores
 
Los Angeles-Long Beach-Anaheim
 
CA
 
20%
 
2008
 
2001
 
10,489
 
68
 
100.0%
 
36.21
 
Whole Foods
Mariposa Shopping Center
 
San Jose-Sunnyvale-Santa Clara
 
CA
 
40%
 
2005
 
1957/2018
 
19,309
 
127
 
97.7%
 
19.98
 
Safeway
Morningside Plaza
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
1999
 
1996
 
—
 
91
 
95.7%
 
23.12
 
Stater Bros.
Navajo Shopping Center
 
San Diego-Carlsbad
 
CA
 
40%
 
2005
 
1964
 
7,870
 
102
 
100.0%
 
14.55
 
Albertsons
Newland Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
1999
 
1985
 
—
 
152
 
100.0%
 
26.17
 
Albertsons

22



Property Name
 
(1)
CBSA
 
State
 
(2)
Owner-ship Interest
 
Year Acquired
 
Year Constructed or Last Major Renovation
 
Mortgages or Encumbrances (in 000's)
 
Gross Leasable Area
(GLA) (in 000's)
 
(3)
Percent Leased
 
(4)
Average Base Rent (Per Sq Ft)
 
(5)
Grocer(s) & Major Tenant(s) >35,000 SF
Oak Shade Town Center
 
Sacramento--Roseville--Arden-Arcade
 
CA
 
 
 
2011
 
1998
 
7,570
 
104
 
96.3%
 
22.67
 
Safeway
Oakbrook Plaza
 
Oxnard-Thousand Oaks-Ventura
 
CA
 
 
 
1999
 
1982
 
—
 
83
 
98.8%
 
20.83
 
Gelson's Markets
Parnassus Heights Medical
 
San Francisco-Oakland-Hayward
 
CA
 
50%
 
2017
 
1968
 
—
 
146
 
99.6%
 
83.75
 
Central Parking System
Persimmon Place
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2014
 
2014
 
—
 
153
 
100.0%
 
35.03
 
Whole Foods, Nordstrom Rack
Plaza Escuela
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2017
 
2002
 
—
 
155
 
98.8%
 
44.89
 
--
Plaza Hermosa
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
1999
 
1984
 
—
 
95
 
92.8%
 
26.11
 
Von's Food & Drug
Pleasant Hill Shopping Center
 
San Francisco-Oakland-Hayward
 
CA
 
40%
 
2005
 
1970
 
50,000
 
227
 
100.0%
 
22.77
 
Target, Burlington
Pleasanton Plaza
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2017
 
1981
 
—
 
163
 
76.8%
 
11.08
 
JCPenney
Point Loma Plaza
 
San Diego-Carlsbad
 
CA
 
40%
 
2005
 
1987
 
24,901
 
205
 
98.8%
 
22.70
 
Von's Food & Drug
Potrero Center
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2017
 
1968
 
—
 
227
 
83.5%
 
33.82
 
Safeway
Powell Street Plaza
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2001
 
1987
 
—
 
166
 
91.2%
 
34.56
 
Trader Joe's
Raley's Supermarket
 
Sacramento--Roseville--Arden-Arcade
 
CA
 
20%
 
2007
 
1964
 
—
 
63
 
100.0%
 
12.50
 
Raley's
Ralphs Circle Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2017
 
1983
 
—
 
60
 
100.0%
 
18.33
 
Ralphs
Rancho San Diego Village
 
San Diego-Carlsbad
 
CA
 
40%
 
2005
 
1981
 
21,468
 
153
 
94.6%
 
22.23
 
Smart & Final
Rona Plaza
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
1999
 
1989
 
—
 
52
 
100.0%
 
21.04
 
Superior Super Warehouse
San Carlos Marketplace
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2017
 
1999
 
—
 
154
 
100.0%
 
35.23
 
TJ Maxx, Best Buy
Scripps Ranch Marketplace
 
San Diego-Carlsbad
 
CA
 
 
 
2017
 
2017
 
27,000
 
132
 
100.0%
 
30.49
 
Vons
San Leandro Plaza
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
1999
 
1982
 
—
 
50
 
100.0%
 
36.54
 
(Safeway)
Seal Beach
 
Los Angeles-Long Beach-Anaheim
 
CA
 
20%
 
2002
 
1966
 
2,200
 
97
 
95.7%
 
25.62
 
Von's Food & Drug
Sequoia Station
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
1999
 
1996
 
—
 
103
 
100.0%
 
40.70
 
(Safeway)
Serramonte Center
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
2017
 
1968
 
—
 
1,074
 
97.4%
 
24.74
 
Macy's, Target, Dick's Sporting Goods, JCPenney, Dave & Buster's, Nordstrom Rack
Shoppes at Homestead
 
San Jose-Sunnyvale-Santa Clara
 
CA
 
 
 
1999
 
1983
 
—
 
113
 
100.0%
 
23.10
 
(Orchard Supply Hardware)
Silverado Plaza
 
Napa
 
CA
 
40%
 
2005
 
1974
 
9,639
 
85
 
99.0%
 
17.77
 
Nob Hill
Snell & Branham Plaza
 
San Jose-Sunnyvale-Santa Clara
 
CA
 
40%
 
2005
 
1988
 
12,867
 
92
 
100.0%
 
19.20
 
Safeway
South Bay Village
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2012
 
2012
 
—
 
108
 
100.0%
 
20.31
 
Wal-Mart, Orchard Supply Hardware
Talega Village Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2017
 
2007
 
—
 
102
 
100.0%
 
22.43
 
Ralphs
Tassajara Crossing
 
San Francisco-Oakland-Hayward
 
CA
 
 
 
1999
 
1990
 
—
 
146
 
99.3%
 
24.29
 
Safeway
The Hub Hillcrest Market
 
San Diego-Carlsbad
 
CA
 
 
 
2012
 
1990
 
—
 
149
 
95.2%
 
38.78
 
Ralphs, Trader Joe's
The Marketplace Shopping Ctr
 
Sacramento--Roseville--Arden-Arcade
 
CA
 
 
 
2017
 
1990
 
—
 
111
 
96.7%
 
24.80
 
Safeway
Town and Country Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
9.4%
 
2018
 
1962/1992
 
90,000
 
230
 
40.0%
 
38.88
 
Whole Foods
Tustin Legacy
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2016
 
2017
 
—
 
112
 
100.0%
 
31.57
 
Stater Bros.
Twin Oaks Shopping Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
40%
 
2005
 
1978/2018
 
9,507
 
98
 
98.2%
 
20.16
 
Ralphs
Twin Peaks
 
San Diego-Carlsbad
 
CA
 
 
 
1999
 
1988
 
—
 
208
 
100.0%
 
20.84
 
Target, Atlas International Market
Valencia Crossroads
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2002
 
2003
 
—
 
173
 
100.0%
 
26.63
 
Whole Foods, Kohl's
Village at La Floresta
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2014
 
2014
 
—
 
87
 
100.0%
 
33.89
 
Whole Foods
Von's Circle Center
 
Los Angeles-Long Beach-Anaheim
 
CA
 
 
 
2017
 
1972
 
7,699
 
151
 
100.0%
 
21.87
 
Von's, Ross Dress for Less
West Park Plaza
 
San Jose-Sunnyvale-Santa Clara
 
CA
 
 
 
1999
 
1996