Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Regency’s future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance,” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be attained, and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.

Our operations are subject to a number of risks and uncertainties including, but not limited to, risk factors described in our SEC filings. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and our other filings and submissions to the SEC. If any of the events described in the risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected. Forward-looking statements are only as of the date they are made, and Regency undertakes no duty to update its forward-looking statements except as required by law.

Non-GAAP Measures

In addition to the required Generally Accepted Accounting Principles (“GAAP”) presentations, we use certain non-GAAP performance measures as we believe these measures improve the understanding of the Company's operational results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP, rather they supplement GAAP measures by providing additional information we believe to be useful to our shareholders. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations or future prospects of the Company.

Defined Terms

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



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



Development Completion is a property in development that is deemed complete upon the 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.



Fixed Charge Coverage Ratio is defined as Operating EBITDAre divided by the sum of the gross interest and scheduled mortgage principal paid to our lenders.



Nareit EBITDAre is a measure of REIT performance, which the National Association of Real Estate Investment Trusts (“Nareit”) defines as net income, computed in accordance with GAAP, excluding (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) gains on sales of real estate, (v) impairments of real estate, and (vi) adjustments to reflect the Company's share of unconsolidated partnerships and joint ventures.



Nareit Funds from Operations is a commonly used measure of REIT performance, which Nareit defines as net income, computed in accordance with GAAP, excluding gains on sales and impairments of real estate, net of tax, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute Nareit FFO for all periods presented in accordance with Nareit's definition.

Companies use different depreciable lives and methods, and real estate values historically fluctuate with market conditions. Since Nareit FFO excludes depreciation and amortization and gains on sale and impairments of real estate, it provides a performance measure that, when compared year over year, reflects the impact on operations from trends in percent leased, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Thus, Nareit FFO is a supplemental non-GAAP financial measure of our operating performance, which does not represent cash generated from operating activities in accordance with GAAP; and, therefore, should not be considered a substitute measure of cash flows from operations. We provide a reconciliation of Net Income Attributable to Common Stockholders to Nareit FFO.



Net Operating Income (“NOI”) is the sum of base rent, percentage rent, recoveries from tenants, other lease income, and other property income, less operating and maintenance expenses, real estate taxes, ground rent, and uncollectible lease income. NOI excludes straight-line rental income and expense, above and below market rent and ground rent amortization, tenant lease inducement amortization, and other fees. We also provide disclosure of NOI excluding termination fees, which excludes both termination fee income and expenses.



A Non-Same Property is any property, during either calendar year period being compared, that was acquired, sold, a Property in Development, a Development Completion, or a property under, or being positioned for, significant redevelopment that distorts comparability between periods. Non-retail properties and corporate activities, including the captive insurance program, are part of Non-Same Property.



Operating EBITDAre begins with Nareit EBITDAre and excludes certain non-cash components of earnings derived from above and below market rent amortization and straight-line rents. We provide a reconciliation of Net income to Nareit EBITDAre to Operating EBITDAre.



Pro-Rata information includes 100% of our consolidated properties plus our economic share (based on our ownership interest) in our unconsolidated real estate investment partnerships.

We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with the Company’s reported results under GAAP. We believe presenting our Pro-rata share of assets, liabilities, operating results, and certain metrics, along with other non GAAP measures, makes comparisons of other REITs' operating results to ours more meaningful. The Pro-rata information provided is not, nor is it intended to be, presented in accordance with GAAP. The Pro-rata supplemental details of assets and liabilities and supplemental details of operations reflect our proportionate economic ownership of the assets, liabilities, and operating results of the properties in our portfolio.

The Pro-rata information is prepared on a basis consistent with the comparable consolidated amounts and is intended to more accurately reflect our proportionate economic interest in the assets, liabilities, and operating results of properties in our portfolio. We do not control the unconsolidated investment partnerships, and the Pro-rata presentations of the assets and liabilities, and revenues and expenses do not represent our legal claim to such items. The partners are entitled to profit or loss allocations and distributions of cash flows according to the operating agreements, which generally provide for such allocations according to their invested capital. Our share of invested capital establishes the ownership interests we use to prepare our Pro-rata share.

The presentation of Pro-rata information has limitations which include, but are not limited to, the following:

The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and

Other companies in our industry may calculate their Pro-rata interest differently, limiting the comparability of Pro-rata information.

Because of these limitations, the Pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the Pro-rata information as a supplement.



Property In Development includes properties in various stages of ground-up development.



Property In Redevelopment includes Retail Operating Properties under redevelopment or being positioned for redevelopment. Unless otherwise indicated, a Property in Redevelopment is included in the Same Property pool.



Retail Operating Property is any retail property not termed a Property in Development. A retail property is any property where the majority of the income is generated from retail uses.



Same Property is a Retail Operating Property that was owned and operated for the entirety of both calendar year periods being compared. This term excludes Properties in Development, prior year Development Completions, and Non-Same Properties. Properties in Redevelopment are included unless otherwise indicated.

Overview of Our Strategy

Regency Centers Corporation began its operations as a publicly-traded REIT in 1993, and as of September 30, 2021, had full or partial ownership interests in 402 retail 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 50.6 million square feet (“SF”) of gross leasable area (“GLA”). All of our operating, investing, and financing activities are performed through our Operating Partnership, Regency Centers, L.P. and its wholly-owned subsidiaries, and through our co-investment partnerships. As of September 30, 2021, the Parent Company owns approximately 99.6% of the outstanding common partnership units of the Operating Partnership.

Our mission is to be the preeminent national owner, operator, and developer of shopping centers, creating places that provide a thriving environment for outstanding retailers and service providers to connect with the surrounding neighborhoods and communities.

Our goals are to:



Own and manage a portfolio of high-quality neighborhood and community shopping centers primarily 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;



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 conservative capital structure, including a strong balance sheet;



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



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



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

COVID-19 Update

Refer to Item 1, Note 1 to Unaudited Consolidated Financial Statements. Please also refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional discussion of the impact of the COVID-19 pandemic on the Company’s business including, without limitation, refer to the Risk Factors discussed in Item 1A of Part I thereof.

Results of Executing on our Strategy

During the nine months ended September 30, 2021 and 2020, respectively, we had Net income attributable to common stockholders of $293.6 million, as compared to $6.4 million. Results for the nine months ended September 30, 2020 included a $132.1 million Goodwill impairment charge and $93.9 million of uncollectible Lease income, primarily as a result of the COVID-19 pandemic

During the nine months ended September 30, 2021:



Our Pro-rata same property NOI, excluding termination fees, increased 16.4%, as compared to the nine months ended September 30, 2020, primarily attributable to improved collections of lease income during 2021.



We executed 1,489 new and renewal leasing transactions representing 5.1 million Pro-rata SF, with positive trailing twelve month rent spreads of 2.3% in the nine months ended September 30, 2021 as compared to 1,010 leasing transactions representing 3.9 million Pro-rata SF with positive trailing twelve month spreads of 5.7% in the nine months ended September 30, 2020. Rent spreads are calculated on comparable Retail Operating Property spaces, including spaces vacant greater than 12 months.



At September 30, 2021, our total property portfolio was 93.5% leased, while our Same Property portfolio was 93.8% leased, as compared to 92.3% leased and 92.9% leased, respectively, at December 31, 2020.

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



Estimated Pro-rata project costs of our current in process development and redevelopment projects total $327.3 million as compared to $319.3 million at December 31, 2020.



Redevelopment projects completed during 2021 represent $46.5 million of estimated net project cost with an incremental stabilized yield of 8%.

We maintain a conservative balance sheet providing liquidity and financial flexibility to cost effectively fund investment opportunities and debt maturities:



On January 15, 2021, we repaid our $265 million term loan and settled its related interest rate swap.



On February 9, 2021, we entered into an Amended and Restated Credit Agreement, which among other items, i) maintains our previous level of borrowing capacity of $1.25 billion, ii) includes a $125 million sublimit for swingline loans and $50 million available for issuance of letters of credits, iii) extends the maturity date to March 23, 2025, and iv) provides for two six-month extension options. The existing financial covenants under the Line remained unchanged. As of September 30, 2021, our borrowing capacity under the Line was $1.2 billion.



During May and June 2021, we entered into forward sale agreements under our ATM program through which we will issue 2,316,760 shares of our common stock at an average offering price of $64.59 before underwriting discount and offering expenses. During September 2021, the Company settled and issued 1,332,142 shares under such forward sale agreements at a weighted average price of $63.71, before underwriting discounts and offering expenses. Net proceeds received at settlement were approximately $82.5 million, which were used to fund the acquisition of USAA's partnership interest in a seven property portfolio. The remaining unsettled shares under the forward sale agreements must be settled within one year of their trade dates, which range from June 6, 2022 to June 11, 2022. Proceeds from the remaining issuance of shares are expected to be approximately $64 million before underwriting discounts and offering expenses and used to fund new investments which may include acquisitions of operating properties, fund developments and redevelopments, or for general corporate purposes.



At September 30, 2021, our Pro-rata net debt-to-operating EBITDAre ratio on a trailing twelve month basis was 5.0x as compared to 6.0x at December 31, 2020.

Property Portfolio

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


(GLA in thousands)	September 30, 2021	December 31, 2020
Number of Properties	298	297
GLA	37,235	37,029
% Leased – Operating and Development	93.4%	92.2%
% Leased – Operating	93.5%	92.3%
Weighted average annual effective rent per square foot ("PSF"), net of tenant concessions.	$23.09	$22.90

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


(GLA in thousands)	September 30, 2021	December 31, 2020
Number of Properties	104	114
GLA	13,365	14,883
% Leased – Operating and Development	93.8%	93.3%
% Leased –Operating	93.7%	93.2%
Weighted average annual effective rent PSF, net of tenant concessions	$22.34	$21.84

For the purpose of the following disclosures of occupancy and leasing activity, “anchor space” is considered space greater than or equal to 10,000 SF and “shop space” is less than 10,000 SF. The following table summarizes Pro-rata occupancy rates of our combined Consolidated and Unconsolidated shopping center portfolio:


	September 30, 2021	December 31, 2020
% Leased – All Properties	93.4%	92.3%
Anchor space	96.4%	95.1%
Shop space	88.5%	87.5%

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


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


	Nine months ended September 30, 2020
	Leasing Transactions		SF (in thousands)		Base Rent PSF		Tenant Allowance and Landlord Work PSF		Leasing Commissions PSF
Anchor Leases
New		10		192	$	13.47	$	12.40	$	4.99
Renewal		77		2,075		13.11		0.45		0.29
Total Anchor Leases		87		2,267	$	13.14	$	1.46	$	0.69
Shop Space
New		239		365	$	37.35	$	33.71	$	11.30
Renewal		684		1,269		32.36		2.00		0.54
Total Shop Space Leases		923		1,634	$	33.48	$	9.08	$	2.94
Total Leases		1,010		3,901	$	21.66	$	4.65	$	1.63

The weighted average base rent per square foot on signed shop space leases during 2021 was $34.01 PSF, which is higher than the weighted average annual base rent per square foot of all shop space leases due to expire during the next 12 months of $33.43 PSF. While new and renewal rent spreads were positive at 2.3% as compared to prior rents on those same spaces, future rent spreads could be negatively impacted if the COVID-19 pandemic results in oversupply of vacant retail in the markets in which we operate. This may result in decreased demand for retail space in our centers, which could result in pricing pressure on rents.

Significant Tenants and Concentrations of Risk

We seek to reduce our operating and leasing risks through geographic diversification and by avoiding dependence on any single property, market, or tenant. Based on percentage of annualized base rent, the following table summarizes our most significant tenants, of which the top four are grocers:


	September 30, 2021
Tenant	Number of Stores		Percentage of Company- owned GLA (1)	Percentage of Annualized Base Rent (1)
Publix		68	7.4%	3.5%
Kroger		53	7.5%	3.3%
Albertsons Companies		45	4.6%	3.0%
Amazon/Whole Foods		35	2.8%	2.6%
TJX Companies		60	3.4%	2.5%


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

Bankruptcies and Credit Concerns

The impact of bankruptcies may increase significantly if tenants occupying our centers are unable to recover from the disruptions caused by, or the continuing challenges from, the COVID-19 pandemic, which could materially adversely impact Lease income. During 2020, we experienced an increase in the number of tenants filing for bankruptcy, but filings have slowed thus far in 2021, and a number of tenants have emerged from bankruptcy after reorganization. However, the potential severity of future variants of COVID-19, evolving challenges of operating with mask and vaccine mandates, and the emerging impacts of labor shortages and supply chain disruptions may adversely impact our tenants.

Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally have the legal right to reject any or all of their leases and close related stores. Any unsecured claim we hold against a bankrupt tenant for unpaid rent might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to adjudicate our claim and to re-lease the vacated space. In the event that a tenant with a significant number of leases in our shopping centers files bankruptcy and cancels its leases, we could experience a significant reduction in our revenues.

Our management team devotes significant time to researching and monitoring retail trends, consumer preferences, customer shopping behaviors, changes in retail delivery methods, shifts to e-commerce, and changing demographics in order to anticipate the challenges and opportunities impacting the retail industry. As the economy recovers from the effects of the ongoing pandemic, our tenants may be adversely impacted by challenges such as rising costs, labor shortages, supply chain constraints, and reduced in-store sales, which could have an adverse effect on our results from operations. We seek to mitigate these potential impacts through tenant diversification, replacing weaker tenants with stronger operators, anchoring our centers with market leading grocery stores that drive customer traffic, and maintaining a presence in dense infill trade areas with populations benefitting from high levels of disposal income.

The Company closely monitors its rent collections, which had significantly declined in the initial months of the pandemic, most notably from tenants whose businesses were classified as non-essential and were therefore subject to strict capacity restrictions. Rent collections through November 1, 2021 have continued to improve over initial pandemic levels with approximately 98% of billed base rent collected for the three months ended September 30, 2021. The COVID-19 pandemic has continued to result in certain tenants requesting concessions from rent obligations, including deferrals, abatements and requests to negotiate future rents, while some tenants have been unable to reopen or have not honored the terms of their existing lease agreements. The Company expects to continue to work with tenants, which may result in further rent concessions or legal actions as determined to be necessary and appropriate. There can be no assurances that all such deferred rent will ultimately be collected, or collected within the timeframes agreed upon. Whether vaccination rates will continue to rise, whether state and local authorities impose new mandated closures or capacity restrictions, and whether current vaccines prove to be effective against variants of the COVID-19 virus will also influence the success of tenants and their ability to pay us rent.

We closely monitor the operating performance of tenants in our shopping centers as well as those retailers experiencing significant changes to their business models, such as reduced customer traffic in their stores. Retailers who are unable to withstand these and other business pressures, such as significant cash flow declines or debt maturities, may file for bankruptcy. As a result of our research

and findings, we may reduce new leasing, suspend leasing, or curtail allowances for construction of leasehold improvements within certain retail categories or to a specific retailer in order to reduce our risk of loss from bankruptcies and store closings.

Results from Operations

Comparison of the three months ended September 30, 2021 and 2020:

Our revenues changed as summarized in the following table:


	Three months ended September 30,
(in thousands)	2021		2020		Change
Lease income	$	283,303		234,541		48,762
Other property income		4,401		2,261		2,140
Management, transaction, and other fees		19,671		6,142		13,529
Total revenues	$	307,375		242,944		64,431

Lease income increased $48.8 million, on a net basis, driven by the following contractually billable components of rent to the tenants per the lease agreements:



$35.3 million increase from favorable changes in Uncollectible lease income.

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

During 2020, the Uncollectible lease income charge of $26.1 million was driven by reserves recognized on cash basis tenants due to lower cash collections during the onset of the pandemic.

While we expect collections to remain below pre-pandemic levels in the near-term, we continue to experience sequential improvement in our collection rates. Approximately 98% of base rent billed for the three months ended September 30, 2021, has been collected through November 1, 2021. Future lease income could be negatively impacted by ongoing negotiations to assist tenants with their ability to remain operational as the impacts of the pandemic continue to evolve.



$11.0 million increase in straight-line rent from a lower charge for uncollectible straight-line rent in 2021 due to fewer new cash basis tenants identified as compared to 2020, as well as re-establishing $5.0 million of straight-line rent receivable related to certain tenants converting back to accrual basis as collections from them are now considered probable.



$1.5 million increase from contractual Recoveries from tenants, which represents the tenants’ Pro-rata share of the operating, maintenance, insurance and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased, on a net basis, primarily from the following:

$2.1 million net increase from same properties due to an increase in operating expense as activity at our centers returns to normal operating levels; offset by

$678,000 decrease from the sale of operating properties.



$1.2 million increase from billable Base rent, as follows:

$434,000 net increase from rent commencements at development properties;

$2.2 million increase from our acquisition and consolidation of seven properties previously held in the USAA partnership; and

$1.0 million net increase from same properties due to increases from rent steps in existing leases and rental rate growth; offset by

$2.3 million decrease from the sale of operating properties.



$761,000 increase in Other lease income, from greater lease termination fees.



$1.4 million net decrease in Above and below market rent primarily from same properties driven by 2020 tenant move-outs and the timing of lease term modifications.

Other property income increased $2.1 million primarily due to an increase in settlements.

Management, transaction and other fees increased $13.5 million, including $13.6 million of promote income recognized in consideration for exceeding return thresholds resulting from our performance as managing member of the USAA partnership.

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


	Three months ended September 30,
(in thousands)	2021		2020		Change
Depreciation and amortization	$	75,459		84,808		(9,349	)
Operating and maintenance		43,468		41,345		2,123
General and administrative		17,789		19,582		(1,793	)
Real estate taxes		35,779		35,938		(159	)
Other operating expenses		812		1,208		(396	)
Total operating expenses	$	173,307		182,881		(9,574	)

Depreciation and amortization costs decreased, on a net basis, as follows:



$8.7 million decrease primarily attributable to:

$2.8 million decrease related to various acquired lease intangibles becoming fully amortized;

$2.8 million decrease related to early tenant move-outs recognized in 2020;

$3.1 million decrease primarily attributable to higher depreciation in 2020 related to redevelopment projects; and



$640,000 decrease from the sale of operating properties.

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



$317,000 net increase from acquisitions of operating properties and development properties; and



$2.5 million increase from same properties primarily attributable to market rate increases in insurance costs and an increase in costs associated with general property maintenance as well as tenant waste removal and water usage as our centers return to normal operating levels; offset by



$647,000 decrease from the sale of operating properties.

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



$2.0 million net decrease due to changes in the value of participant obligations within the deferred compensation plan, attributable to changes in market values of those investments, reflected within Net investment income; and



$1.1 million decrease due to more development overhead capitalization based on the status and progress on development and redevelopment projects during the year; offset by



$1.3 million net increase in compensation costs primarily driven by incentive compensation.

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


	Three months ended September 30,
(in thousands)	2021			2020			Change
Interest expense, net
Interest on notes payable	$	36,628			39,238			(2,610	)
Interest on unsecured credit facilities		558			1,929			(1,371	)
Capitalized interest		(1,147	)		(1,141	)		(6	)
Hedge expense		109			1,023			(914	)
Interest income		(155	)		(255	)		100
Interest expense, net	$	35,993			40,794			(4,801	)
Provision for impairment of real estate, net of tax		(20	)		—			(20	)
Gain on sale of real estate, net of tax		(6,719	)		(3,237	)		(3,482	)
Early extinguishment of debt		—			19,358			(19,358	)
Net investment income		209			(2,046	)		2,255
Total other expense (income)	$	29,463			54,869			(25,406	)

The $4.8 million net decrease in Interest expense is primarily driven by the following changes:



$2.6 million net decrease in Interest on notes payable from the redemption of $300 million senior unsecured notes in September 2020 and the repayment of several mortgages;



$1.4 million decrease in Interest on unsecured credit facilities primarily related to the January 2021 repayment of the $265 million term loan and reduced Line balance; and



$914,000 decrease in Hedge expense as two of our previously settled forward swaps fully amortized in 2020.

During the three months ended September 30, 2021, we recognized gains on sale of $6.7 million for two land parcels and a portion of an operating property. During the three months ended September 30, 2020, we recognized gains on sale of $3.2 million from four land parcels and the receipt of property insurance proceeds.

During the three months ended September 30, 2020, we had $19.4 million of debt extinguishment costs related to the redemption of our $300 million 3.75% notes due to mature in 2022.

Net investment income decreased $2.3 million primarily driven by changes in unrealized gains and losses of plan assets held in the non-qualified deferred compensation plan. There is an offsetting charge in General and administrative costs related to participant obligations within the deferred compensation plans.

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


		Three months ended September 30,
(in thousands)	Regency's Ownership	2021		2020			Change
GRI - Regency, LLC (GRIR)	40.00%	$	10,080		5,796			4,284
New York Common Retirement Fund (NYC)	30.00%		266		285			(19	)
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%		562		266			296
Columbia Regency Partners II, LLC (Columbia II)	20.00%		702		248			454
Columbia Village District, LLC	30.00%		372		(41	)		413
RegCal, LLC (RegCal)	25.00%		530		341			189
US Regency Retail I, LLC (USAA) (1)	20.01%		81		208			(127	)
Other investments in real estate partnerships	35.00% - 50.00%		1,650		1,013			637
Total equity in income of investments in real estate partnerships		$	14,243		8,116			6,127


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

The $6.1 million increase in our equity in income of investments in real estate partnerships is largely attributable to favorable uncollectible lease income along with re-instating straight-line rent on certain tenants returning to accrual basis during the three months ended September 30, 2021.

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


	Three months ended September 30,
(in thousands)	2021			2020			Change
Net income	$	118,848			13,310			105,538
Income attributable to noncontrolling interests		(1,442	)		(622	)		(820	)
Net income attributable to common stockholders	$	117,406			12,688			104,718
Net income attributable to exchangeable operating partnership units		(519	)		(57	)		(462	)
Net income attributable to common unit holders	$	117,925			12,745			105,180

Comparison of the nine months ended September 30, 2021 and 2020:

Our revenues changed as summarized in the following table:


	Nine months ended September 30,
(in thousands)	2021		2020		Change
Lease income	$	826,390		731,630		94,760
Other property income		9,428		7,001		2,427
Management, transaction, and other fees		33,419		19,084		14,335
Total revenues	$	869,237		757,715		111,522

Lease income increased $94.8 million, driven primarily by the following contractually billable components of rent to the tenants per the lease agreements:



$84.1 million increase from favorable changes in Uncollectible lease income.

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

During 2020, the Uncollectible lease income charge of $66.0 million was driven by reserves recognized on cash basis tenants due to lower cash collections during the onset of the pandemic.



$25.3 million increase in straight-line rent from a lower charge for uncollectible straight-line rent in 2021 due to fewer new cash basis tenants identified as compared to 2020 as well as re-establishing $5.0 million straight-line rent receivable related to certain tenants converting back to accrual basis as collections from them are now considered probable.



$6.9 million increase from contractual Recoveries from tenants, which represents the tenants’ Pro-rata share of the operating, maintenance, insurance and real estate tax expenses that we incur to operate our shopping centers. Recoveries from tenants increased, on a net basis, primarily from the following:

$576,000 increase from rent commencing at development properties and acquisitions of operating properties; and

$8.1 million net increase from same properties due to an increase in operating expense and higher recovery of prior year expenses, offset by lower expected recovery rates on current year expenses due to occupancy declines; offset by

$1.7 million decrease from the sale of operating properties.



$1.2 million increase in Other lease income primarily from an increase in termination and easement fees, temporary tenants, and income from electric vehicle charging stations.



$12.6 million net decrease in Above and below market rent primarily from same properties driven by 2020 tenant move-outs and the timing of lease term modifications.



$10.2 million decrease from billable Base rent, as follows:

$5.9 million net decrease from same properties due to the loss of rents from tenant move-outs and deferral agreements that required lease modification treatment; and

$6.4 million decrease from the sale of operating properties; offset by

$2.2 million increase from our acquisition and consolidation of seven properties previously held in the USAA partnership.

Other property income increased $2.4 million primarily due to an increase in insurance claim settlements.

Management, transaction and other fees increased $14.3 million, including $13.6 million of promote income recognized in consideration for exceeding return thresholds resulting from our performance as managing member of the USAA partnership.

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


	Nine months ended September 30,
(in thousands)	2021		2020		Change
Depreciation and amortization	$	226,935		259,161		(32,226	)
Operating and maintenance		135,616		123,746		11,870
General and administrative		58,263		54,489		3,774
Real estate taxes		107,392		108,618		(1,226	)
Other operating expenses		2,687		5,025		(2,338	)
Total operating expenses	$	530,893		551,039		(20,146	)

Depreciation and amortization costs decreased, on a net basis, as follows:



$30.5 million decrease primarily attributable to:

$10.9 million decrease relate to various acquired lease intangibles becoming fully amortized;

$8.3 million decrease related to early tenant move-outs recognized in 2020;

$11.3 million decrease primarily attributable to higher depreciation in 2020 related to development and redevelopment projects;



$2.0 million decrease from the sale of operating properties; offset by,



$273,000 increase from acquisitions of operating properties and corporate assets;

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



$2.7 million net increase from acquisitions of operating properties and development properties;



$9.2 million increase from same properties primarily attributable to market rate increases in insurance costs and an increase in utility costs and general property maintenance as our centers return to normal operating levels.

General and administrative costs increased, on a net basis, primarily as follows:



$3.5 million net increase in compensation costs primarily driven by incentive compensation; and



$1.2 million net increase due to changes in the value of participant obligations within the deferred compensation plan, attributable to changes in market values of those investments, reflected within Net investment income; offset by



$1.3 million decrease due to more development overhead capitalization based on the status and progress of development and redevelopment projects during the year.

Real estate taxes decreased $1.2 million from the sale of operating properties.

Other operating expenses decreased $2.3 million primarily due to lower development pursuit costs.

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


	Nine months ended September 30,
(in thousands)	2021			2020			Change
Interest expense, net
Interest on notes payable	$	110,252			111,297			(1,045	)
Interest on unsecured credit facilities		1,636			8,051			(6,415	)
Capitalized interest		(3,012	)		(3,590	)		578
Hedge expense		328			4,219			(3,891	)
Interest income		(463	)		(1,372	)		909
Interest expense, net	$	108,741			118,605			(9,864	)
Goodwill impairment		—			132,128			(132,128	)
Provision for impairment of real estate, net of tax		115			1,014			(899	)
Gain on sale of real estate, net of tax		(38,198	)		(48,690	)		10,492
Early extinguishment of debt		—			19,358			(19,358	)
Net investment loss (income)		(3,275	)		(1,482	)		(1,793	)
Total other expense (income)	$	67,383			220,933			(153,550	)

The $9.9 million net decrease in Interest expense is primarily driven by the following changes:



$1.0 million net decrease in Interest on notes payable from the payoff of $300 million of senior unsecured notes in September 2020 together with the repayment of several mortgages, offset by the issuance of $600 million of senior unsecured notes in May 2020;



$6.4 million decrease in Interest on unsecured credit facilities primarily related to the January 2021 repayment of the $265 million term loan and a lower average outstanding balance on the Line; and



$3.9 million decrease in Hedge expense as two of our previously settled forward swaps hedging our ten-year notes fully amortized in 2020.

During the nine months ended September 30, 2020, we recognized $132.1 million of Goodwill impairment, due to the significant adverse market and economic impacts of the COVID-19 pandemic.

During the nine months ended September 30, 2021, we recognized gains on sale of $38.2 million from three land parcels, five operating properties, and a portion of an operating property. During the nine months ended September 30, 2020, we recognized gains on sale of $48.7 million from seven land parcels, three operating properties, and receipt of property insurance proceeds.

During the nine months ended September 30, 2020, we had $19.4 million of debt extinguishment costs related to the redemption of our $300 million 3.75% notes due to mature in 2022.

Net investment income increased $1.8 million primarily driven by realized gains, and partially by changes in unrealized gains and losses of plan assets held in the non-qualified deferred compensation plan. There is an offsetting charge in General and administrative costs related to participant obligations within the deferred compensation plans.

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


		Nine months ended September 30,
(in thousands)	Regency's Ownership	2021			2020		Change
GRI - Regency, LLC (GRIR)	40.00%	$	26,014			15,995		10,019
New York Common Retirement Fund (NYC)	30.00%		127			532		(405	)
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%		1,494			745		749
Columbia Regency Partners II, LLC (Columbia II)	20.00%		1,702			779		923
Columbia Village District, LLC	30.00%		1,058			481		577
RegCal, LLC (RegCal)	25.00%		1,486			879		607
US Regency Retail I, LLC (USAA) (1)	20.01%		631			604		27
Other investments in real estate partnerships	35.00% - 50.00%		(6,168	)		2,343		(8,511	)
Total equity in income of investments in real estate partnerships		$	26,344			22,358		3,986


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

The $4.0 million increase in our equity in income of investments in real estate partnerships is largely attributable to favorable uncollectible lease income along with re-instating straight-line rent on certain tenants returning to accrual basis during the three months ended September 30, 2021, including the following:



$10.0 million increase within GRIR primarily due to continued improvement in tenant rent collections; offset by



$8.5 million decrease within Other investments in real estate partnerships from a $9.2 million impairment of a single property partnership, which sold in August.

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


	Nine months ended September 30,
(in thousands)	2021			2020			Change
Net income	$	297,305			8,101			289,204
Income attributable to noncontrolling interests		(3,753	)		(1,699	)		(2,054	)
Net income attributable to common stockholders	$	293,552			6,402			287,150
Net income attributable to exchangeable operating partnership units		(1,315	)		(29	)		(1,286	)
Net income attributable to common unit holders	$	294,867			6,431			288,436

Supplemental Earnings Information

We use certain non-GAAP performance measures, in addition to certain performance metrics determined under GAAP, as we believe these measures improve the understanding of the Company's operating results. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We provide Pro-rata financial information because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with the Company’s reported results under GAAP. We believe presenting our Pro-rata share of operating results, along with other non-GAAP measures, may assist in comparing the Company’s operating results to other REITs. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change. See “Non-GAAP Measures” at the beginning of this Management's Discussion and Analysis.

We do not consider non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is they may exclude significant expense and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expense and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures are provided. Non-GAAP financial measures should not be relied upon in evaluating the financial condition, results of operations or future prospects of the Company.

Pro-Rata Same Property NOI:

Our Pro-rata same property NOI, excluding termination fees, changed from the following major components:


	Three months ended September 30,								Nine months ended September 30,
(in thousands)	2021		2020			Change			2021		2020			Change
Base rent (1)	$	215,056		213,692			1,364		$	641,735		647,215			(5,480	)
Recoveries from tenants (1)		69,277		68,157			1,120			217,557		208,788			8,769
Percentage rent (1)		1,411		1,092			319			6,311		6,030			281
Termination fees (1)		2,032		1,353			679			4,408		5,515			(1,107	)
Uncollectible lease income		10,374		(28,464	)		38,838			19,333		(73,431	)		92,764
Other lease income (1)		2,707		2,384			323			8,318		7,099			1,219
Other property income		3,722		1,548			2,174			7,455		4,845			2,610
Total real estate revenue		304,579		259,762			44,817			905,117		806,061			99,056
Operating and maintenance		44,739		42,660			2,079			138,446		127,755			10,691
Termination expense		—		—			—			—		25			(25	)
Real estate taxes		39,591		39,713			(122	)		120,667		120,266			401
Ground rent		2,793		2,900			(107	)		8,686		8,961			(275	)
Total real estate operating expenses		87,123		85,273			1,850			267,799		257,007			10,792
Pro-rata same property NOI	$	217,456		174,489			42,967		$	637,318		549,054			88,264
Less: Termination fees		2,032		1,353			679			4,408		5,490			(1,082	)
Pro-rata same property NOI, excluding termination fees	$	215,424		173,136			42,288		$	632,910		543,564			89,346
Pro-rata same property NOI growth, excluding termination fees							24.4	%							16.4	%


(1)	Represents amounts included within Lease income in the accompanying Consolidated Statements of Operations that are contractually billable to the tenants per the terms of the lease agreements.

Billable Base rent increased $1.4 million during the three months ended September 30, 2021, due to rent steps in existing leases and rental rate growth. Billable Base rent decreased $5.5 million during the nine months ended September 30, 2021, due to loss of rents from occupancy declines and deferral agreements that required lease modification treatment, partially offset by rent steps in existing leases.

Recoveries from tenants increased $1.1 million and $8.8 million during the three and nine months ended September 30, 2021, due to higher operating expenses in the current year and higher recovery rates from our tenants.

Termination fees decreased $1.1 million during the nine months ended September 30, 2021, primarily due to strategic changes in anchor merchandising mix during 2020.

Uncollectible lease income decreased $38.8 million and $92.8 million during the three and nine months ended September 30, 2021, primarily driven by collection of previously reserved amounts and improvements in current period collection rates.

Other lease income increased $1.2 million during the nine months ended September 31, 2021, primarily due to an increase in easement fees earned and rent from temporary tenants.

Other property income increased $2.2 million and $2.6 million during the three and nine months ended September 30, 2021, primarily due to an increase in settlements.

Operating and maintenance increased $2.1 million and $10.7 million during the three and nine months ended September 30, 2021, due primarily to an increase in insurance premiums, property maintenance, legal and vacancy costs, and tenant reimbursable costs.

Same Property Rollforward:

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


	Three months ended September 30,
	2021					2020
(GLA in thousands)	Property Count		GLA			Property Count		GLA
Beginning same property count		394		40,918			398		40,522
Acquired properties owned for entirety of comparable periods (1)		—		546			—		—
Disposed properties		—		—			—		—
SF adjustments (2)		—		(152	)		—		—
Ending same property count		394		41,312			398		40,522


	Nine months ended September 30,
	2021						2020
(GLA in thousands)	Property Count			GLA			Property Count			GLA
Beginning same property count		393			40,228			396			40,525
Acquired properties owned for entirety of comparable periods presented (1)		2			924			5			315
Developments that reached completion by the beginning of earliest comparable period presented		6			683			3			553
Disposed properties		(7	)		(407	)		(3	)		(427	)
SF adjustments (2)		—			(116	)		—			1
Properties under or being repositioned for redevelopment		—			—			(3	)		(445	)
Ending same property count		394			41,312			398			40,522


(1)	2021 includes an adjustment arising from the acquisition of our partner's 80% share of the seven properties held in the USAA partnership, 20% of which was already included in our same property pool.
(2)	SF adjustments arise from remeasurements or redevelopments.

Nareit FFO and Core Operating Earnings:

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


	Three months ended September 30,						Nine months ended September 30,
(in thousands, except share information)	2021			2020			2021			2020
Reconciliation of Net income to Nareit FFO
Net income attributable to common stockholders	$	117,406			12,688		$	293,552			6,402
Adjustments to reconcile to Nareit FFO: (1)
Depreciation and amortization (excluding FF&E)		81,928			92,188			247,599			281,576
Goodwill impairment		—			—			—			132,128
Provision for impairment of real estate		(505	)		—			10,586			1,014
Gain on sale of real estate, net of tax		(6,737	)		(3,235	)		(38,584	)		(48,651	)
Exchangeable operating partnership units		519			57			1,315			29
Nareit FFO attributable to common stock and unit holders	$	192,611			101,698		$	514,468			372,498
Reconciliation of Nareit FFO to Core Operating Earnings
Nareit Funds From Operations	$	192,611			101,698			514,468			372,498
Adjustments to reconcile to Core Operating Earnings (1):
Not Comparable Items
Early extinguishment of debt		—			19,358			—			19,358
Promote income		(13,589	)		—			(13,589	)		—
Certain Non Cash Items
Straight line rent		(4,004	)		(4,098	)		(10,294	)		(11,828	)
Uncollectible straight line rent		(4,376	)		8,316			159			31,574
Above/below market rent amortization, net		(6,390	)		(7,546	)		(18,098	)		(30,433	)
Debt premium/discount amortization		(368	)		(303	)		(460	)		(1,115	)
Core Operating Earnings	$	163,884			117,425		$	472,186			380,054


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

Same Property NOI Reconciliation:

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


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2021		2020		2021			2020
Net income attributable to common stockholders	$	117,406		12,688	$	293,552			6,402
Less:
Management, transaction, and other fees		19,671		6,142		33,419			19,084
Other (1)		15,125		4,982		31,184			17,368
Plus:
Depreciation and amortization		75,459		84,808		226,935			259,161
General and administrative		17,789		19,582		58,263			54,489
Other operating expense		812		1,208		2,687			5,025
Other expense (income)		29,463		54,869		67,383			220,933
Equity in income of investments in real estate excluded from NOI (2)		11,023		14,527		49,267			46,888
Net income attributable to noncontrolling interests		1,442		622		3,753			1,699
Pro-rata NOI	$	218,598		177,180	$	637,237			558,145
Less non-same property NOI (3)		1,142		2,691		(81	)		9,091
Pro-rata same property NOI	$	217,456		174,489	$	637,318			549,054


(1)	Includes straight-line rental income and expense, net of reserves, above and below market rent amortization, other fees, and noncontrolling interest.
(2)	Includes non-NOI income earned and expenses incurred at our unconsolidated real estate partnerships, including those separated out above for our consolidated properties.
(3)	Includes revenues and expenses attributable to non-same property, sold property, development property, and corporate activities.

Liquidity and Capital Resources

General

We use cash flows generated from operating, investing, and financing activities to strengthen our balance sheet, finance our development and redevelopment projects, fund our investment activities, and maintain financial flexibility. A significant portion of our cash from operations is distributed to our common shareholders in the form of dividends in order to maintain our status as a REIT.

Except for $200 million of private placement debt, our Parent Company has no other commitments other than its guarantees of the commitments of our Operating Partnership. All remaining debt is held by our Operating Partnership or by our co-investment partnerships. The Operating Partnership is a co-issuer and a guarantor of the $200 million of outstanding debt of our Parent Company. The Parent Company will from time to time access the capital markets for the purpose of issuing new equity and will simultaneously contribute all of the offering proceeds to the Operating Partnership in exchange for additional partnership units.

We continuously monitor our tenant rent collections. Our rent collection experience since the pandemic began has been lower than historical pre-pandemic averages, but has substantially improved since its low in the second quarter of 2020. During the three months ended September 30, 2021, billed base rent collections were 98% through November 1, 2021. Although improving, collection rates are expected to remain lower than historical pre-pandemic averages for the foreseeable future. The success of tenants and their ability to pay rent, continues to be significantly influenced by challenges such as rising costs, labor shortages, supply chain constraints, reduced sales, store closures as well as capacity restrictions, and impacts from variants of COVID-19, including the effectiveness of vaccines.

We draw on multiple financing sources to fund our long-term capital needs, including the capital requirements of our in process and planned developments, redevelopments, and capital expenditures, and the repayment of debt. We expect to meet these needs by using a combination of the following: cash flow from operations after funding our dividend, proceeds from the sale of real estate, mortgage loan and unsecured bank financing, distributions received from our co-investment partnerships, and when the capital markets are favorable, proceeds from the sale of equity or the issuance of new unsecured debt. We continually evaluate alternative financing options, and we believe we can obtain financing on reasonable terms.

We have no unsecured debt maturities until 2024 and a manageable level of secured mortgage maturities during the next 12 months, including those mortgages within our joint ventures. Based upon our available cash balance, sources of capital, our current credit ratings, and the number of high quality, unencumbered properties we own, we believe our available capital resources are sufficient to meet our expected capital needs for the next 12 months.

In addition to our $359.4 million of unrestricted cash, we have the following additional sources of capital available:


(in thousands)	September 30, 2021
Line of Credit
Total commitment amount	$	1,250,000
Available capacity (2)	$	1,240,619
Maturity (3)	March 23, 2025


(1)	During May and June 2021, we entered into forward sales agreements with respect to 2,316,760 shares that were executed in several tranches at a weighted average offering price of $64.59 per share before any underwriting discount and offering expenses. During September 2021, we settled 1,332,142 of the shares subject to forward sales agreements, receiving proceeds of $82.5 million. The remaining shares subject to forward sales agreements must be settled within approximately one year of their trade dates, which vary by agreement, and range from June 6, 2022 through June 11, 2022, and are expected to result in net proceeds of approximately $64.0 million.
(2)	Net of letters of credit.
(3)	The Company has the option to extend the maturity for two additional six-month periods.

The declaration of dividends is determined quarterly by our Board of Directors. On November 3, 2021 our Board of Directors declared a common stock dividend of $0.625 per share, payable on January 5, 2022, to shareholders of record as of December 16, 2021. While future dividends will be determined at the discretion of our Board of Directors, we plan to continue paying an aggregate amount of distributions to our stock and unit holders that, at a minimum, meet the requirements to continue qualifying as a REIT for federal income tax purposes. We have historically generated sufficient cash flow from operations to fund our dividend distributions. During the nine months ended September 30, 2021 and 2020, we generated cash flow from operations of $508.5 million and $374.6 million, respectively, and paid $303.3 million and $301.9 million in dividends to our common stock and unit holders, respectively.

We currently have development and redevelopment projects in various stages of construction, along with a pipeline of potential projects for future development or redevelopment. After funding our common stock dividend payment in October 2021, we estimate that we will require capital during the next twelve months of approximately $363.0 million. This required capital includes funding construction and related costs for committed tenant improvements and in-process development and redevelopment, making capital contributions to our co-investment partnerships, and repaying maturing debt. If we start new development or redevelopments, commit to property acquisitions, repay debt prior to maturity, declare future dividends, or repurchase shares of our common stock, our cash requirements will increase. If we refinance maturing debt, our cash requirements will decrease.

We endeavor to maintain a high percentage of unencumbered assets. As of September 30, 2021, 88.7% of our wholly-owned real estate assets were unencumbered. Such assets allow us to access the secured and unsecured debt markets and to maintain availability on the Line. Our trailing twelve month Fixed charge coverage ratio, including our Pro-rata share of our partnerships, was 4.2x and 3.6x for the periods ended September 30, 2021, and December 31, 2020, respectively, and our Pro-rata net debt-to-operating EBITDAre ratio on a trailing twelve month basis was 5.0x and 6.0x, respectively, for the same periods.

Our Line and unsecured loans require that we remain in compliance with various covenants, which are described in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. We are in compliance with these covenants at September 30, 2021, and expect to remain in compliance.

Summary of Cash Flow Activity

The following table summarizes net cash flows related to operating, investing, and financing activities of the Company:


	Nine months ended September 30,
(in thousands)	2021			2020			Change
Net cash provided by operating activities	$	508,478			374,589			133,889
Net cash used in investing activities		(1,571	)		(65,522	)		63,951
Net cash used in financing activities		(522,672	)		(143,753	)		(378,919	)
Net (decrease) increase in cash and cash equivalents and restricted cash	$	(15,765	)		165,314			(181,079	)
Total cash and cash equivalents and restricted cash	$	362,685			280,876			81,809

Net cash provided by operating activities:

Net cash provided by operating activities increased $133.9 million due to:



$136.4 million increase from higher rent collections, partially offset by,



$2.5 million decrease from cash paid in 2021 to settle interest rate swaps on our term loan which was repaid in January 2021.

Net cash used in investing activities:

Net cash used in investing activities changed by $64.0 million as follows:


	Nine months ended September 30,
(in thousands)	2021			2020			Change
Cash flows from investing activities:
Acquisition of operating real estate, net of cash acquired of $2,991 in 2021	$	(78,611	)		(16,867	)		(61,744	)
Advance deposits refunded on acquisition of operating real estate		500			100			400
Real estate development and capital improvements		(120,827	)		(149,293	)		28,466
Proceeds from sale of real estate		131,861			125,539			6,322
Issuance of notes receivable		(20	)		(551	)		531
Investments in real estate partnerships		(21,788	)		(47,957	)		26,169
Return of capital from investments in real estate partnerships		86,449			23,235			63,214
Dividends on investment securities		125			193			(68	)
Acquisition of investment securities		(22,422	)		(10,580	)		(11,842	)
Proceeds from sale of investment securities		23,162			10,659			12,503
Net cash used in investing activities	$	(1,571	)		(65,522	)		63,951

Significant changes in investing activities include:



We paid $78.6 million, net of cash acquired, to purchase seven operating properties during 2021, of which we previously held a 20% interest. We paid $16.9 million for the acquisition of one operating property during 2020.



We invested $28.5 million less in 2021 than the same period in 2020 on real estate development, redevelopment, and capital improvements, as further detailed in a table below.



We sold six operating properties, three land parcels, and a portion of an operating property in 2021 and received proceeds of $131.9 million compared to three operating properties and eight land parcels in 2020 for proceeds of $125.5 million.



We invested $21.8 million in our real estate partnerships during 2021, including:

$18.7 million to fund our share of debt payments, and

$3.1 million to fund our share of development and redevelopment activities.

During the same period in 2020, we invested $48.0 million, including:

$16.0 million to fund the acquisition of an additional equity interest in one partnership,

$15.8 million to fund our share of debt payments, and

$16.2 million to fund our share of development and redevelopment activities.



Return of capital from our unconsolidated real estate partnerships includes sales or financing proceeds. During the nine months ended September 30, 2021 we received $58.3 million from our share of proceeds from real estate sales and $28.1 million from our share of proceeds from debt refinancing activities. During the same period in 2020, we received $23.2 million from our share of proceeds from debt refinancing activities.



Acquisition of securities and proceeds from sale of securities pertain to investment activities held in our captive insurance company and our deferred compensation plan.

We plan to continue developing and redeveloping shopping centers for long-term investment. During 2021, we deployed capital of $120.8 million for the development, redevelopment, and improvement of our real estate properties, comprised of the following:


	Nine months ended September 30,
(in thousands)	2021		2020		Change
Capital expenditures:
Building and tenant improvements	$	34,030		35,475		(1,445	)
Redevelopment costs		61,176		86,979		(25,803	)
Development costs		14,897		13,816		1,081
Capitalized interest		2,963		2,915		48
Capitalized direct compensation		7,761		10,108		(2,347	)
Real estate development and capital improvements	$	120,827		149,293		(28,466	)



Building and tenant improvements decreased $1.4 million in 2021, primarily related to the timing of capital projects.



Redevelopment expenditures are lower in 2021 due to the timing and magnitude of projects currently in process. We intend to continuously improve our portfolio of shopping centers through redevelopment which can include adjacent land acquisition, existing building expansion, facade renovation, new out-parcel building construction, and redevelopment related tenant improvement costs. The size and magnitude of each redevelopment project varies with each redevelopment plan. The timing and duration of these projects could also result in volatility in NOI. See the tables below for more details about our redevelopment projects.



Development expenditures are higher in 2021 due to the progress towards completion of our development projects currently in process. See the tables below for more details about our development projects.



Interest is capitalized on our development and redevelopment projects and is based on cumulative actual costs expended. We cease interest capitalization when the property is no longer being developed or is available for occupancy upon substantial completion of tenant improvements, but in no event would we capitalize interest on the project beyond 12 months after the anchor opens for business. If we reduce our development and redevelopment activity, the amount of interest that we capitalize may be lower than historical averages.



We have a staff of employees who directly support our development program, which includes redevelopment of our existing properties. Internal compensation costs directly attributable to these activities are capitalized as part of each project. In light of the current pandemic environment and its impact on the retail industry, we expect that our development activity could be lower than pre-pandemic levels. As a result, we expect the amount of internal costs for development activities that may be capitalized could be lower than historical amounts.

The following table summarizes our development projects:


(in thousands, except cost PSF)					September 30, 2021
Property Name	Market	Ownership	Start Date	Estimated Stabilization Year (1)	Estimated / Actual Net Development Costs (2) (3)		GLA (3)		Cost PSF of GLA (2) (3)		% of Costs Incurred

Developments In-Process
Carytown Exchange - Phases I & II	Richmond, VA	64%	Q4-18	2023	$	29,174		74	$	394		72	%
East San Marco	Jacksonville, FL	100%	Q4-20	2024		19,519		59		331		40	%
Eastfield at Baybrook (4)	Houston, TX	50%	Q4-20	2022		2,337		55		42		89	%


(1)	Estimated Stabilization Year represents the estimated first full calendar year that the project will reach our expected stabilized yield.
(2)	Includes leasing costs and is net of tenant reimbursements.
(3)	Estimated Net Development Costs and GLA reported based on Regency’s ownership interest in the partnership at completion.
(4)	Estimated Net Development Costs for Eastfield at Baybrook Phase 1A is limited to our ownership interest in the value of the land and site improvements where we are committed to deliver a parcel to a grocer, under a lease agreement, to construct their building and improvements.

The following table summarizes our redevelopment projects in process and completed:


(in thousands, except cost PSF)					September 30, 2021
Property Name	Market	Ownership	Start Date	Estimated Stabilization Year (1)	Estimated Incremental Project Costs (2) (3)		GLA (3)		% of Costs Incurred

Redevelopments In-Process
The Crossing Clarendon	Metro, DC	100%	Q4-18	2024	$	57,929		129		59	%
The Abbot	Boston, MA	100%	Q2-19	2023		57,410		65		70	%
Sheridan Plaza	Hollywood, FL	100%	Q3-19	2022		12,115		507		76	%
West Bird Plaza	Miami, FL	100%	Q4-19	2022		10,338		99		86	%
Preston Oaks	Dallas, TX	100%	Q4-20	2023		22,327		103		64	%
Serramonte Center	San Francisco, CA	100%	Q4-20	2026		55,000		1,073		48	%
Westbard Square - Phase I	Bethesda, MD	100%	Q2-21	2025		37,038		123		11	%
Various Redevelopments	Various	40% - 100%	Various	Various		24,120		1,082		62	%

Redevelopments Completed
Bloomingdale Square	Tampa, FL	100%	Q3-18	2022	$	21,327		252		89	%
Point 50	Metro, DC	100%	Q4-18	2023		17,504		48		91	%
Various Properties	Various	40% - 100%	Various	Various		7,636		574		98	%


(1)	Estimated Stabilization Year represents the estimated first full calendar year that the project will reach our expected stabilized yield.
(2)	Includes leasing costs and is net of tenant reimbursements.
(3)	Estimated Net Development Costs and GLA reported based on Regency’s ownership interest in the partnership at completion.

Net cash used in financing activities:

Net cash flows from financing activities changed by $378.9 million during 2021, as follows:


	Nine months ended September 30,
(in thousands)	2021			2020			Change
Cash flows from financing activities:
Net proceeds from common stock issuances	$	82,510			125,608			(43,098	)
Repurchase of common shares in conjunction with equity award plans		(4,066	)		(5,512	)		1,446
Distributions to limited partners in consolidated partnerships, net		(3,272	)		(2,193	)		(1,079	)
Dividend payments and operating partnership distributions		(303,260	)		(301,904	)		(1,356	)
Repayment of unsecured credit facilities, net		(265,000	)		(220,000	)		(45,000	)
Proceeds from debt issuance		—			598,830			(598,830	)
Debt repayment, including early redemption costs		(22,212	)		(333,788	)		311,576
Payment of loan costs		(7,468	)		(5,063	)		(2,405	)
Proceeds from sale of treasury stock, net		96			269			(173	)
Net cash used in financing activities	$	(522,672	)		(143,753	)		(378,919	)

Significant financing activities during the nine months ended September 30, 2021 and 2020, include the following:



We received proceeds of $82.5 million, net of costs, in September 2021, upon partially settling our forward equity sales under our ATM program entered into during May and June 2021. We received $125.6 million, net of costs, in March 2020 upon settling our forward equity sales under our ATM program.



We repurchased for cash a portion of the common stock granted to employees for stock based compensation to satisfy employee tax withholding requirements, which totaled $4.1 million and $5.5 million during 2021 and 2020, respectively.



We paid $1.4 million more in dividends as a result of an increase in the number of shares of our common stock outstanding.



We paid $1.1 million more in distributions to limited partners in consolidated partnerships, net, in 2021 than in 2020 as newly developed properties began operations and distributions.



We had the following debt related activity during 2021:

We paid $265 million to repay our outstanding term loan, and

We paid $22.2 million for secured debt repayments, including:



$13.8 million to repay a mortgage maturity and,



$8.4 million in principal mortgage payments.

We paid $7.5 million of loan costs in connection with the renewal of our Line.



We had the following debt related activity during 2020:

We repaid, net of draws, $220 million on our Line.

We received net proceeds of $598.8 million upon issuance, in May, of senior unsecured public notes.

We paid $333.8 million in other debt repayments, including:



$321.7 million, including a make-whole premium, to redeem our senior unsecured public notes,



$3.9 million to repay a mortgage maturity, and



$8.2 million in principal mortgage payments.

We paid $5.1 million of loan costs in connection with our public note offering above.

Investments in Real Estate Partnerships

The following table is a summary of the unconsolidated combined assets and liabilities of our co-investment partnerships and our Pro-rata share:


	Combined				Regency's Share (1)
(dollars in thousands)	September 30, 2021		December 31, 2020		September 30, 2021			December 31, 2020
Number of Co-investment Partnerships		15		17
Regency’s Ownership	20% - 50%		20% - 50%
Number of Properties	104			114
Assets	$	2,793,429		3,067,227	$	1,003,943			1,086,874
Liabilities		1,563,899		1,687,587		556,348			577,001
Equity		1,229,530		1,379,640		447,595			509,873
Negative investment in US Regency Retail I, LLC (USAA) (2)						—			4,401
Basis difference						(67,891	)		(47,119	)
Investments in real estate partnerships					$	379,704			467,155


(1)	Pro-rata financial information is not, and is not intended to be, a presentation in accordance with GAAP. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on our operations, which includes such items on a single line presentation under the equity method in our consolidated financial statements.
(2)	On August 1, 2021, we acquired our partner’s 80% interest in the seven properties held in the USAA partnership. See note 2.

(1)

Pro-rata financial information is not, and is not intended to be, a presentation in accordance with GAAP. However, management believes that providing such information is useful to investors in assessing the impact of its investments in real estate partnership activities on our operations, which includes such items on a single line presentation under the equity method in our consolidated financial statements.

(2)

On August 1, 2021, we acquired our partner’s 80% interest in the seven properties held in the USAA partnership. See note 2.

Our equity method investments in real estate partnerships consist of the following:


(in thousands)	Regency's Ownership	September 30, 2021		December 31, 2020
GRI-Regency, LLC (GRIR)	40.00%	$	154,948		179,728
New York Common Retirement Fund (NYC)	30.00%		12,203		27,627
Columbia Regency Retail Partners, LLC (Columbia I)	20.00%		7,404		8,699
Columbia Regency Partners II, LLC (Columbia II)	20.00%		39,399		37,882
Columbia Village District, LLC	30.00%		5,480		10,108
RegCal, LLC (RegCal)	25.00%		25,341		25,908
Other investments in real estate partnerships	35.00% - 50.00%		134,929		177,203
Total Investment in real estate partnerships		$	379,704		467,155
US Regency Retail I, LLC (USAA) (1)	20.01%		—		(4,401	)
Net Investment in real estate partnerships		$	379,704		462,754


(1)	On August 1, 2021, we acquired our partner’s 80% interest in the seven properties held in the USAA partnership. See note 2.

Notes Payable - Investments in Real Estate Partnerships

Scheduled principal repayments on notes payable held by our investments in real estate partnerships were as follows:


(in thousands)	September 30, 2021
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Mortgage Loan Maturities				Unsecured Maturities		Total			Regency’s Pro-Rata Share
2021	$	2,371		—				—		2,371			927
2022		7,736		254,893				7,300		269,929			98,932
2023		3,196		171,608				—		174,804			65,137
2024		1,796		33,690				—		35,486			14,217
2025		2,168		137,000				—		139,168			42,153
Beyond 5 Years		10,859		823,321		(1)		—		834,180			299,432
Net unamortized loan costs, debt premium / (discount)		—		(9,276	)			—		(9,276	)		(3,280	)
Total	$	28,126		1,411,236				7,300		1,446,662			517,518


(1)	On August 1, 2021, we acquired our partner’s 80% interest in the seven properties held in the USAA partnership, including the $84 million assumption of our partner’s share of mortgage loans. See note 2.

At September 30, 2021, our investments in real estate partnerships had notes payable of $1.4 billion maturing through 2034, of which 93.2% had a weighted average fixed interest rate of 3.7%. The remaining notes payable float with LIBOR and had a weighted average variable interest rate of 2.5%. These fixed and variable rate notes payable are all non-recourse, and our Pro-rata share was $517.5 million as of September 30, 2021. As notes payable mature, we expect they will be repaid from proceeds from new borrowings and/or partner capital contributions.

We believe that our partners are financially sound and have sufficient capital or access thereto to fund future capital requirements. In the event that a co-investment partner was unable to fund its share of the capital requirements of the co-investment partnership, we would have the right, but not the obligation, to loan the defaulting partner the amount of its capital call.

Management fee income

In addition to earning our Pro-rata share of net income or loss in each of these co-investment partnerships, we receive fees, as shown below:


	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2021			2020		2021			2020
Asset management, property management, leasing, and other transaction fees	$	19,662	(1)		6,130	$	33,392	(1)		19,134


(1)	In connection with our buy-out of the partner's interest in the USAA partnership, we received and recognized a promote fee of $13.6 million in consideration for exceeding return thresholds resulting from our performance as managing member.

Recent Accounting Pronouncements

See Note 1 to Unaudited Financial Statements.

Environmental Matters

We are subject to numerous environmental laws and regulations as they apply to our shopping centers pertaining primarily to specific chemicals historically used by certain current and former dry cleaning tenants and the existence of asbestos in older shopping centers. We believe that the few tenants who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. Generally, we endeavor to require tenants to remove dry cleaning plants from our shopping centers or convert them to more environmentally friendly systems, in accordance with the terms of our leases. We have a blanket environmental insurance policy for third-party liabilities and remediation costs on shopping centers that currently have no known environmental contamination. We have also secured environmental insurance, where appropriate, on a relatively small number of specific properties with known contamination, in order to mitigate our environmental risk. We monitor the shopping centers containing environmental issues and in certain cases voluntarily remediate the sites. We also have legal obligations to remediate certain sites and we are in the process of doing so.

As of September 30, 2021, we had accrued liabilities of $7.4 million for our Pro-rata share of environmental remediation, including our Investments in real estate partnerships. We believe that the ultimate remediation of currently known environmental matters will not have a material effect on our financial position, liquidity, or results of operations. We can give no assurance that existing environmental studies on our shopping centers have revealed all potential environmental contamination; that our estimate of liabilities will not change as more information becomes available; that any previous owner, occupant or tenant did not create any material environmental condition not known to us; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to us.

Inflation/Deflation

Although inflation has been historically low and has had a minimal impact on the operating performance of our shopping centers, inflation has recently increased in the United States. Changes in economic conditions and supply chain constraints have spurred a rise in wages and increased costs for materials. Further, monetary policy and stimulus steps by the federal government and the Federal Reserve, could lead to higher inflation rates or prolonged inflation, which could negatively impact our tenants, our operating costs, and our construction costs. Substantially all of our long-term leases contain provisions designed to mitigate the adverse impact of inflation on our operating centers, which require tenants to pay their Pro-rata share of operating expenses, including common-area maintenance, real estate taxes, insurance and utilities. In addition, many of our leases are for terms of less than ten years, which permits us to seek increased rents upon re-rental at market rates. During deflationary periods or periods of economic weakness, minimum rents and percentage rents may decline as the supply of available retail space exceeds demand and consumer spending declines. Occupancy declines may also result in lower recovery rates of our operating expenses.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We continuously monitor the capital markets and evaluate our ability to issue new debt, to repay maturing debt, or fund our commitments. Although the capital markets have experienced volatility related to the pandemic, we continue to believe, in light of our credit ratings, the capacity under our unsecured credit facility, and the number of high quality, unencumbered properties that we own which could collateralize borrowings, we will be able to successfully issue new secured or unsecured debt to fund maturing debt obligations. However, the degree to which such capital market volatility will adversely impact the interest rates on any new debt that we may issue is uncertain. Otherwise, there have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in item 7A of Part II of our Form 10-K for the year ended December 31, 2020.

Item 4. Controls and Procedures

Controls and Procedures (Regency Centers Corporation)

Under the supervision and with the participation of the Parent Company's management, including its chief executive officer and chief financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, the Parent Company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Parent Company in the reports it files or submits is accumulated and communicated to management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Parent Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the third quarter of 2021 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Controls and Procedures (Regency Centers, L.P.)

Under the supervision and with the participation of the Operating Partnership's management, including the chief executive officer and chief financial officer of its general partner, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the chief executive officer and chief financial officer of its general partner concluded that its disclosure controls and procedures were effective as of the end of the period covered by this quarterly report on Form 10-Q to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the

time period specified in the SEC's rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Operating Partnership in the reports it files or submits is accumulated and communicated to management, including the chief executive officer and chief financial officer of its general partner, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Operating Partnership's internal controls over financial reporting identified in connection with this evaluation that occurred during the third quarter of 2021 which have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various legal proceedings that arise in the ordinary course of our business. We are not currently involved in any litigation nor to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations. However, no assurances can be given as to the outcome of any threatened or pending legal proceedings.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in item 1A. of Part I of our Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table represents information with respect to purchases by the Parent Company of its common stock, by month, during the three months ended September 30, 2021.


Period	Total number of shares purchased (1)		Average price paid per share (1)		Total number of shares purchased as part of publicly announced plans or programs (2)		Maximum number or approximate dollar value of shares that may yet be purchased under the plans or programs (2)
July 1 through July 31, 2021		—	$	—		—	$	250,000,000
August 1 through August 31, 2021		286	$	66.39		—	$	250,000,000
September 1 through September 30, 2021		437	$	69.04		—	$	250,000,000


(1)	Represents shares repurchased to cover payment of withholding taxes in connection with restricted stock vesting by participants under Regency’s Long-Term Omnibus Plan.
(2)	On February 3, 2021, the Company's Board authorized a common share repurchase program under which the Company may purchase, from time to time, up to a maximum of $250 million of shares of its outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased will be retired. This program expires by its terms on February 3, 2023. The timing and actual number of shares purchased under the program depend upon marketplace conditions and other factors. The authorization remains subject to the discretion of the Board. Through September 30, 2021, no shares have been repurchased under this program.

(1)

Represents shares repurchased to cover payment of withholding taxes in connection with restricted stock vesting by participants under Regency’s Long-Term Omnibus Plan.

(2)

On February 3, 2021, the Company's Board authorized a common share repurchase program under which the Company may purchase, from time to time, up to a maximum of $250 million of shares of its outstanding common stock through open market purchases and/or in privately negotiated transactions. Any shares purchased will be retired. This program expires by its terms on February 3, 2023. The timing and actual number of shares purchased under the program depend upon marketplace conditions and other factors. The authorization remains subject to the discretion of the Board. Through September 30, 2021, no shares have been repurchased under this program.

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