$1.6 billion in securities affected
New York, May 07, 2013 -- Moody's Investors Service, ("Moody's") affirmed
the Baa2 senior unsecured and Baa3 preferred equity ratings of Regency
Centers and revised the shopping center REIT's rating outlook to
positive from stable, which reflects Regency's improving credit
profile, in particular stronger cash flow metrics and more manageable
development pipeline.
The following ratings were affirmed with a positive outlook:
Regency Centers Corporation -- Baa3 preferred stock; (P)Baa3
preferred stock shelf.
Regency Centers, LP -- Baa2 senior unsecured; (P)Baa2
senior unsecured shelf.
RATINGS RATIONALE
"It is Moody's belief that Regency, with its improving
credit profile, has positioned itself to participate more meaningfully
in an economic recovery," said Chris Wimmer, a vice
president and senior analyst with Moody's.
According to Moody's, net debt has declined to 5.8x
EBITDA at year end 2012 from 6.8x at year end 2010; as well,
fixed charge coverage has improved to 2.3x from 2.0x over
the same period. Moody's expects further improvement.
Moreover, Moody's believes that Regency's emphasis on
non-discretionary retail anchors, primarily grocers and pharmacies,
reduces risk and enabled the REIT to better weather the recession.
Citing some rating concerns, Moody's indicated that some leverage
metrics remain high for the rating, especially when including joint
venture debt attributable to Regency, specifically 52% effective
leverage (debt plus preferred over gross assets) and 6.2x net debt/
EBITDA. Likewise, fixed charge coverage, while experiencing
gradual improvement, is low for the current rating. Finally,
development exposure has been a concern in the past, but is less
so now.
Moody's indicated that the rating could move up with strong operational
performance leading to fixed charge coverage including JVs consistently
above 2.5x, coupled with effective leverage below 50%
(including JVs and funds), and development less than 20%
of gross assets.
Conversely, lower ratings would likely result from effective leverage
including JVs near 60% or net debt/EBITDA greater than 7x,
coupled with a development pipeline over 20% of gross assets over
several quarters. A decline in all-in fixed charge coverage
including JVs below 2.0x would put downward pressure on the company'
In its last rating action for Regency Centers, Moody's affirmed
the REIT's Baa2 senior unsecured rating with a stable outlook in
January 2011.
Regency Centers Corporation [NYSE: REG] is a shopping center
real estate investment trust headquartered in Jacksonville, Florida
which owns, operates, and develops grocery-anchored
and community shopping centers. At December 31, 2012,
Regency owned 348 retail properties, including those held in co-investment
partnerships. Including tenant-owned square footage,
the portfolio encompassed 46.3 million square feet located in top
markets throughout the United States.
The principal methodology used in this rating was Global Rating Methodology
for REITs and Other Commercial Property Firms published in July 2010.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Christopher Wimmer, CFA
Vice President - Senior Analyst
Commercial Real Estate Finance
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Nicholas Levidy
MD - Structured Finance
Commercial Real Estate Finance
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's revises Regency Centers outlook to positive