Good morning. My name is Cynthia and I will be your conference facilitator today. At this time, I would like welcome everyone to the Regency Centers Corporation first quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Lisa Palmer, Senior Vice President, Capital Markets. Please go ahead, Madam.

Thank you, Cynthia. Good morning, everyone. On the call this morning are Martin Stein, Chairman and CEO; Mary Lou Fiala, President and COO; Bruce Johnson, Chief Financial Officer; Brian Smith, Chief Investment Officer; Chris Levitts, Senior Vice President and Treasurer; and Jamie Shelton, Vice President of Real Estate Accounting. Before we start, I would like to address forward-looking statements that may be addressed on this call. Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes, and results may differ materially from those expressed in these forward-looking statements. Please refer to the documents filed by Regency Centers Corporation with the SEC, specifically the most recent report on our Form 10-K and our 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. I will now turn the call over to Bruce.

Thank you, Lisa and good morning to you all. Regency posted strong results in the first quarter, which will provide positive momentum in the increasingly more challenging environment. As you will hear from the rest of the team, Regency is proactively taking measures across all areas of our business to address these challenges. Our top three priorities remain maintaining 95% occupancy in the operating portfolio, achieving 95% occupancy in the in-process developments, and preserving a strong balance sheet with ample funding capacity. We carefully track funding sources in relation to funding requirements. Significant progress has been made ensuring that Regency has a substantial amount of capital to fund the development program and other compelling opportunities which may arise. In March, we closed an additional three-year bank facility in the amount of $341.5 million. With this, the company now has credit facilities that total over $941 million. Loan maturities through the end of 2009 that are directly on Regency's balance sheet total only $78 million. Regency's commitment to a strong balance sheet and more than sufficient funding capacity allows us to continue to capitalize on attractive investment opportunities. It is important to remember that our co-investment partnerships have relatively low leverage. In fact, debt to current estimated values is only 52%. Even if cap rates were to rise to 7.5%, loans to value ratio would only be 57%. Although the CMVS market is not a viable option today, insurance companies are still making loans on quality projects with relatively low loan-to-value ratios. We have turned to the insurance companies to place $286 million of mortgages during the last 12 months. More recently, in April we locked a $62.5 million nine-year interest only mortgage with a coupon of 6%. Contributions to partnerships and sales of developments and operating property dispositions remain critical…

Thank you, Bruce. Good morning. Regency's operating portfolio results were strong in the first quarter with same-store growth of 3.1% and rent growth of 12.6%. Occupancy remained solid at 94.9%, as 1.7 million square feet of space was leased or renewed in our operating and development portfolio. As I said on the last call, our top priority is to maintain occupancy at 95%. As evidenced by an 88% renewal rate for the quarter we are proactively working with our retailers on renewals to help achieve this goal. Impressively, [inaudible] rate growth on these renewals was 10% and in line with the previous three quarters. Although we clearly are pleased with this quarter’s results, the economy has softened and we are seeing modest stress in our portfolio. Consumer confidence continues to deteriorate. The majority of consumers believe that their wealth is less than it was even a year ago. Their home values have dropped and the value of their 401K or stock portfolio are diminished. Negative economic outlooks and political uncertainty dominate the evening news and create fear. These economic lows are made all too real each week as consumers fill their gas tanks or grocery shop where the price of grains, eggs, and poultry are up over 20%. The result is a jittery consumer that is waiting on the sidelines to spend their money. This decreased demand is impacting some of our retailers and as a result, we expect small shop attrition will impact occupancy and same-store growth. Additionally, downtime in the portfolio has increased to 8.2 months and we expect termination fees to be half of what they were last year. It’s the combination of these factors that will cause same-store growth to moderate with full year expected growth of 2.4% to 2.8%. Although retail sales were up over…

Thanks, Mary Lou. This was a good quarter for the development teams on all fronts -- pipeline activity, new starts, leasing, construction costs, and in-process returns. As for starts, we added two new developments totaling $29 million with expected returns in excess of 9%. One of these starts is the second phase of Suncoast Crossing. This project is a good example of strong projects beating soft markets -- in this case, Florida. The combined center is now extremely well-anchored by two of the best retailers in the country in Target and Kohl’s. The $1.1 billion in-process portfolio also performed well as a whole. Forty-eight projects are in development with same-store construction costs down $3 million on a quarter-to-quarter basis. The Pacific region projects in particular are enjoying very pleasant surprises when it comes to construction costs. Four projects were stabilized during the quarter and moved off our in-process list. These four completions had an average return on costs of 11.3%. Returns on the in-process projects are eight basis points lower than last quarter on an after JV basis. However, on an apples-to-apples basis, where we add back the completed projects and remove new starts, the returns are actually two basis points better than last quarter. In the first quarter, we leased 232,000 square feet in our developments. This is 30% more space than we leased in the first quarter of 2007 for the same size portfolio, and in doing so we also beat our own leasing plan by about 10%. By all accounts, this is a solid showing in any kind of market. We expect these projects to continue to perform and believe we can end the year with them 85% leased. As Mary Lou pointed out, there gains were accomplished under circumstances that have certainly become more challenging. With…

Thank you, Brian and thank you, Mary Lou, thank you, Bruce, and thank you, Lisa. As you heard from the team, Regency made significant progress in the first quarter. Notable accomplishments include bolstering an already strong balance sheet and reliable access to capital to the closing of a term loan an additional line of credit that brings the company’s total back facilities to over $940 million. Regency now has access to over $2.2 billion of committed capacity from our banks, our balance sheet, from our co-investment partnerships. High quality operating portfolio produced consistent growth in net operating income yet again of over 3%, and double-digit [rent growth], generating momentum that will sustain results in the more challenging environment ahead. The development program continues to build financial value. Progress was made on the $1.1 billion of in-process developments, which are expected to generate close to a 9% development return and almost $300 million of future value, assuming a 6.6% cap rate. We appear to be well-positioned to start $400 million to $500 million of well-conceived new developments with proven tenant demand. At the same time, as good as recent results look in the rearview mirror, the road ahead promises to include some pretty nasty bumps from both the economy and capital markets. In the more discretionary retail categories, tenant demand for space continues to temper. In my view, it very well could be at least two years before retail sales recover to a level that would translate into a return to robust demand for new store locations. There have been some improvements in the capital markets, like the tightening of spreads on corporate debentures. And while the worst of the financial crisis is probably behind us, the capital markets are not totally out of the woods and are still a long…

(Operator Instructions) We will take our first question from Christy McElroy from Banc of America.

Mary Lou, you talked about small shop attrition a little bit. Can you provide some more color on what tenants you are worried about and have you seen incrementally more distress among some of the local and regional tenants?

We are seeing about the same kind of move-outs that we historically have in terms of square footage, but what we are seeing is a lot of them are coming more from the mom and pops, under capitalized retailers. We looked at it by market, we’ve looked at it by sector and it really is -- there’s no trend that I can sit here and say it’s this category versus another category. But that’s really -- it’s the mom and pop or the franchisee that is in a business that just can’t afford to make it, that they may have been decent operators in very strong economic times but just can’t sustain it or just give up. And the reason why we are tempering our growth is because of the fact that even though we don’t have greater move-outs, it’s taking us longer to find retailers to fill that space. So it’s the mom and pops, it’s across the board, and it’s the small franchisee who just doesn’t have the capital to stay in business, or it is too much work and they are giving up.

And then with the grocery stores having held up fairly well in this environment, is there a distinction that you are seeing in the performance of some of the higher end, higher priced grocers, like Whole Foods? Are they seeing an impact on sales growth from consumers trying to stretch their dollars further?

Not yet. I mean, we see the high-end grocers continuing to perform at high-single-digits and then the traditional grocers performing more in the mid-single-digits. So it’s -- you know, it’s a strong category. I think it’s a combination of the prices going up in food inflation, as well as the fact that people staying home and not going out to eat and entertaining as much. So it’s really been the nesting that happens during a recession, as well as the cost of goods.

Thank you.

We’ll take our next question from Christeen Kim with Deutsche Bank.

Thanks. Mary Lou, just a follow-up on the longer down time -- you mentioned 8.2 months. What is that up from?

You know, it’s only up from eight months last year but 12 to 18 months ago, we had that thing down to about 7 months, so over the past year-and-a-half, it’s significantly gone up. So we are seeing it trend up a little bit every quarter but it has definitely gone up. It is just taking longer to replace those tenants.

Brian, you also mentioned that you guys did about 30% more development leasing than Q107, despite a more difficult operating environment. Could you provide a little bit more color? Is it just the nature of the projects in the pipeline right now?

I think it is. I think we are probably working twice as hard to get the same amount done but the projects are strong and in almost every situation, we do have the dominant locations. For example, Deer Springs in Las Vegas, Las Vegas is a market where residential growth has slowed. We’re north Las Vegas, right on the beltway with a major expressway that leads to downtown, with the best anchors and so that’s -- when people make decisions to go somewhere, they are going to be selective and we just are fortunate that some of these projects are the ones that went out in that kind of competition.

Great. Thanks, guys.

We’ll take our next question from Jay Habermann with Goldman Sachs.

Good morning. Here with Tom as well. You mentioned the $500 million plus or so of assets that are stabilized but not yet sold or contributed and I’m just wondering -- I mean, given the cautious views on the capital markets, et cetera, are you going to consider resizing the absolute size of the development portfolio over the next couple of years, I mean, given your sort of cautious views over that timeframe? And also what gives you confidence about those margins and I guess the $150 million of gains, again given sort of the wide bid/ask spread between buyers and sellers?

Well, in regard to the margins, I think as we’ve indicated in the past, we’re using relatively conservative cap rate assumptions in the mid to upper sixes. We know what returns are and we are using cap rates in the 6.5% to 6.7% range as far as the margins we are estimating there. We obviously, as Bruce indicated, are very carefully making sure that we have capital sources out into the future for new developments and any other investment opportunities that are there. Capital is extremely precious today and we want to make sure that the capital is available to fund our growth. And as far as right-sizing the development pipeline, I think you mentioned related to capital as one reason to do it, and another reason to do it may be even related to risk. And I think as Brian has indicated, the quality of the pipeline has never been better and the underwriting has really never been more conservative. I think he indicated that we have taken our side shop space percentage down from 30% to 14%. We are dealing with best-in-class operators and I think as he said and I said, not only are we being more conservative but our anchor tenants are being more conservative, so you have kind of a double self-selection process. So I still think -- let me say this; I think that the pipeline is even more -- as attractive as the in-process developments are, the pipeline is even more compelling. And returns seem to be, on the face of it, going up a little bit. We’ll see on that.

It’s Tom here with Jay. I was hoping you could elaborate a little bit on the $21 million to $23 million promote you expect to book at the end of the year. If you could just go over the logistics of how exactly that promote will be recognized, whether that is going to be from the sales of some assets currently in your co-investment partnerships. And also, what the potential for slippage on that promote is into 1Q09 if market conditions don’t materially improve over the back half of the year.

No properties need to be sold for us to be able to recognize that promote. We simply will have to value each property individually and then as long as the returns are over an IRR threshold, we receive the promote. So there will be no slippage either into the first quarter of ’09.

And I think as Lisa indicated, we’ve used reasonably conservative -- in our view, conservative cap rate assumptions. And another important thing that she mentioned was the fact that the properties will be individually valued. And in this market, we are still seeing individual properties, cap rates on individual properties being a lot stickier as far as going up than cap rates on larger transactions, which is where you have a lot of investors for investments in size staying on the sidelines.

And with our co-investment partnerships, really in three of the four major ones, we basically just have a cycle of when the promote is recognized and in this one, this happens to be the seven-year timeframe of when it is going to be valued and a promote recognized

Thank you.

We’ll take our next question from Paul Morgan with Friedman, Billings, Ramsey.

Good morning. On the comments about cutting the shop space percentage from 28% to 30% to 14% for the shadow pipeline, what kind of impact does that have on your yields?

Well, it is going to have some -- there is going to some trade-off. I think it is going to give us a little bit of return for less risk. Right now we are expecting in 2008 that our pipeline returns will be just a shade under 9%, although I did mention that all the increased opportunities we are seeing is allowing us to be more selective and enhance our returns. In 2009, we are looking for that return to go up to about 9.35% and in 2010, about 9.9%. That’s before partner participation but after partner participation, still 9.6% in 2010. As Hap indicated, it remains to be seen if all that materializes. There will always be cost pressures and things that could bring down the return but the trend is really favorable.

It’s going up despite the fact that there is going to be some offsetting drag from the lower shop space allocation?

Right. We’ve got cost working in our favor in a lot of those -- it is helping some.

Okay, my other question is on, Hap, you provided some color in recent quarters on cap rates and I just wanted to get a sense from you what you’ve seen so far this year in terms of cap rates and maybe -- obviously with not a lot of transaction activity maybe how far apart you think the, how wide the bid/ask spread is at this point and what might happen and how far cap rates need to move to kind of clear the market at this -- right now.

Well, there’s not a lot of transactions that are happening out there, number one. Number two, there still appears to be, especially for A properties in better markets, enough demand on an individual property basis, as I said, and I think those cap rates -- Brian, 6.5%, 6% to 6.75% depending on the market for A properties, 6% to 6.75% today. So there’s been -- individual cap rates have been pretty sticky. I think where you seeing -- where investors truly are staying on the sideline is on larger transactions and for core properties, large transactions, there just doesn’t seem to be very much capital [all up there], but as far as individual property transactions, cap rates have been for A properties pretty sticky. I’d say B properties, depending on the market, et cetera, 7.25% to 7.75% and your guess is as good as mine as far as C properties.

Are sellers just kind of taking off the market properties that aren’t getting the bids or is it just they are not even -- there is not really much even going on in the market at all?

I think there is -- just to finalize that thought on the question, transactions for better properties, A quality properties are happening on an individual, one-off basis typically. You are seeing some of that occur for B properties. As Bruce said, we expect to close, and more to come on the next call, on this mid-Atlantic portfolio that we’ve had on the market and it really does appear like that portfolio is going clear in the second quarter of this year.

We’ll take our next question from Ambika Goel with Citigroup.

On your development profits that are embedded within your guidance, it appears based upon reported 1Q and then guidance for 2Q FFO that gains are going to be back-end loaded. Given that you have about $500 million of stabilized developments that you can sell and an open-end fund that can buy those assets, what is the reason for making those development sales back-end loaded? And are there any contingencies that we should be concerned about that that guidance may not be attainable?

Two of the properties are contributions to the open-end fund in which the anchor, we have signed leases from the anchor. The anchor, just because of the timing of the construction of the space, just hasn’t moved in. And I think it is more related to factors like that than anything else. I mean, Lisa, I don’t know if you’ve got any other color to give.

Basically it’s -- we need them to be rent-paying and the rent is scheduled to commence in the third quarter.

And they also aren’t as large as -- to meet the open-end fund requirements in terms of size. In certain cases, we have a -- in another case we have a partner buy-out that we can’t commence -- we can’t do until August of this year, so they are reasons like that, Ambika, that whether it’s tenant move-in date where they are going to be rent-paying and occupied, or partnered by our factories like that. We’re not looking for drama.

Okay, so just to clarify this -- correct me if I’m wrong but there’s about $200 million of development sales that will have to occur in the back-half of ’08 and you are saying about half of those projects are going to be -- are related to anchors that haven’t opened yet, but leases are signed?

No, I mean, I think that that’s an overstatement. Because they are the community shopping centers that we are selling to the fund, they tend to be larger, so each individual transaction will have larger gains than a typical grocery-anchored shopping center that we sell. Like last year when we did Vista Village in the first quarter, the gain on that was close to $20 million. So they are individual transactions that are larger and as Hap explained, there’s really only two of those projects that we just talked about, the one with the buyout and the one where the -- and it’s not -- it’s just a smaller, junior anchor that is not rent-paying yet. So there is not risk I think is what you are alluding to in terms of that they may not move in and may not begin paying rent. There’s just -- they are larger transactions so there is fewer of them but again the risk is pretty minimal.

And then just one short follow-up -- on that $500 million of assets that are stabilized, what is the expected NOI development yield on those projects? Because I guess you are suggesting that there would be higher than 9%, given that there are these larger projects. So I just wanted to see -- just to back into the profits, what is the development yield of those projects that are stabilized?

I’m sorry, you are talking about the 520 that are already stabilized?

Yes.

I would say it’s in the above 9%.

Yeah, above 9%.

Okay. Thank you.

We just want to confirm the number.

We’ll take our next question from Craig Schmidt with Merrill Lynch.

Thank you. This question again focuses on your sort of expecting the tougher environment taking the same-store NOI from 3.1 down to a range of 2.4 to 2.8 and likewise doing for the rental regrowth. That’s about a drop of 20%. I’m wondering what you think the drop will be for the community shopping center industry as a whole. I guess what I am getting at is what degree of protection the PCI program is going to be giving you here.

I think that if you look at some of the studies that have been done, they are saying occupancy could go down to on average another couple of percentage points. And I think that that’s very real. And I to think ours will not go down nearly as much as you’ve seen in the industry. We saw that in the early 2000s when some of our peers went below 90% and we were very well maintained between 94% and 95%. So I think it is going to obviously depend on the quality of the portfolio and the quality of the retailers. I think we will have a modest decline and actually we are looking at the end of the year average occupancy being about the same. It’s just during the year we’re going to have some downtime that it is just going to take us a little bit longer to get there than historical numbers. So I think we over time, we could moderate a little bit from where we are but not significantly and depending on the PCI program and the quality of your portfolio, I think you could drop as much as another couple of percent.

I think another factor in addition to PCI and the quality of the anchors and the quality of the locations is the fact that we’ve got 21 offices, which really does allow us to be close to our properties and be extremely hands-on.

Great. And then I guess as a follow-up, the slight tick-up in the yield for the two new developments, is that because of the greater scrutiny or just sort of randomness?

I think it’s random. I don’t think it has anything to do -- one of them is a third phase to a project, so you are dealing with mostly shop space. So you are going to get higher rents and higher returns on that anyway.

Okay. Thanks a lot.

We’ll take our next question from Jeffrey Donnelly with Wachovia.

Good morning, folks. I do want to clarify -- when you talk about reducing your exposure to shop tenants through your development pipeline, is that because you are exclusively shifting your development mix towards more of a power center product, I guess I’d call it, or are you developing some properties that are more in-fill but just not to their fullest potential, maybe leaving some space behind for a future date?

We are doing a lot more in-fill and we are not shifting our focus exclusively to those kind of projects, community center projects. In fact, if you look at 2008, we have by number about a third of our projects are grocery anchored and about two-thirds would be community centers. In 2009, the grocery anchored centers goes up to 58% and community to about 42%. So the mix is not changing. In fact, we have 29 grocers in the in-process portfolio right now and our pipeline is right now looking at 29. So there is really no shift.

So to be clear, it’s sort of a grocery-anchored center that just happens to have less shop space, but not so much undeveloped?

That’s right.

And then I guess for my follow-up, I guess my concern is that maybe in that pursuit of shoring up the visibility of your development yields, do you reduce your future growth prospects by forsaking yourself some of that shop space? I mean, can you talk about how you weigh that decision? Because I would think that you are developing into a product type that has maybe more exposure to a smaller handful of tenants and probably has higher cap rates vis-à-vis the more traditional stuff you had been billing.

One thing as it relates to community center portfolio, one of the reasons that the open-end fund makes sense for us as we contribute those larger projects that happen to have a lower growth profile, typically have that lower growth pile into the open-end fund. And we will continue to evaluate any development that we complete and find out whether it is suitable for Regency to own 100%, for one of our partnerships, or if it makes sense for a third-party sale. An interesting component of the pipeline is buying boxes and we bought three Merman’s boxes and we will ultimately sell all three of those boxes, which we very successfully released and redeveloped. And that also has an impact on the amount of shop space that is being picked. I mean, some of it is yes, we are being a lot more cautious but some of it has to do with the nature of what’s being developed.

Great, thanks.

We’ll take our next question from Michael Mueller with JPMorgan.

In terms of the development contributions to the open end fund, what’s the exact cap rate floor for the fund? And is it turning out to be any sort of an issue today?

It’s basically -- it’s a ladder on a total dollar value, basically, so the first $225 million in the floor, they basically have to average 6.5% and then after that, it steps up to 6.6 and then it steps up to 6.7 and that’s the -- that is the ultimate floor. You know, the first four or five assets that we’ve contributed have actually been below that 6.5% so the next one we put in, we’ll probably have to make up that difference a little bit and in that case, it would make a difference. But beyond that, I think with where cap rates have gone and with the dollars that we save on transaction costs and the tax savings, it does not become an issue. We feel that we are getting full value.

And we’ve incorporated those factors into our projections.

Okay. Thanks.

We’ll take our next question from Jim Sullivan with Green Street Advisors.

Thanks. Brian, the leasing progress you made in the development pipeline seems to have been very concentrated in markets that are less severely impacted by the housing situation. And when I look at housing bubble markets, particularly Southern California and Florida, it looks like the vast majority of your developments did not achieve any leasing progress during the quarter. Are you seeing substantial differences in tenant demand in the housing bubble markets versus those less severely affected?

Yeah, California, I’ll speak to that one because that’s where the bulk of the big projects are. You living there, Jim, know that it depends where you are. The projects that we built more in the growth rates out in the Coachella Valley or the desert or the Inland Empire are the ones that are taking longer. They are definitely experiencing more of a slowdown as the housing stopped. Those that are more in the urban core, certainly Northern California, anywhere near the coast, are doing just fine. But yeah, we’ve certainly seen the slowdown in both Florida and -- North Las Vegas is another one, of course, though, that has -- I think is one of your bubble markets and that one we’ve seen very strong demand. In fact, that’s where the bulk of the leasing took place.

And despite the longer lease-up and some of the softness in tenant demand, you are still reasonably confident about hitting your pro formas with respect to yield?

I do. We adjust those every quarter and we take a look at it space by space and there have certainly been some projects that we’ve had to lower the rents and there’s been other projects that have outperformed. So I think we are in good shape, at least right now based on what we know for the returns and the income. The only issue is some of them are taking longer to reach stabilization than we would have expected.

Thank you.

We’ll take our next question from Chris Lucas with Robert W. Baird.

Good morning, everyone. Brian, could you just give a little more color on the construction costs in terms of what you’ve seen over the past year and what you are seeing in sort of your future expenditures?

Sure. Basically they are as I said, benign. I mean, we’re expecting cost increases going forward of about 5%. And some of the individual materials are down. The ones that obviously remained high would be the petroleum based products, like asphalt and PVC pipe and the like. The labor component, especially in the formerly hot markets, as Jim says, the bubble markets, are way down. So on a lot of our Pacific region projects, particularly California, we are seeing construction bids come in of 15% below what we had budgeted for those projects, which is accounting for those cost decreases. But if you strip out the real high growth markets where we are seeing big cost decreases, you are only looking at about on average 5% going forward.

And that’s cost increase in relation to budget.

Okay. Thank you. And then just a quick follow-up, again on the issue of the shadow pipeline and the lower shop space allocation, am I to understand that what the future will look like in terms of the projects, the allocation will be to larger spaces. But are you building out the complete FAR on the parcels that you have, or are you setting aside potentially some of that FAR for future phases of a particular project, but leaving your initial shop space allocation at a lower level?

The key thing is we build to the size of the market, not the size of the site. So just because we have 20 acres does not mean we are going to max out to 200,000 square feet. So in some cases, it so happens that we wish we had more space and we can only build what the land allows, in which case we’ve maxed it out. In other cases, there probably will be extra space that we will be able to take advantage of in later years.

Okay, great. Thanks a lot, guys.

At this time, there are no further questions. Mr. Stein, I will turn the conference back over to you for closing comments.

Once again, we appreciate your time. We appreciate your interest in Regency and hope that everybody has a great rest of the week and weekend ahead of them. Thank you very much.

Ladies and gentlemen, this will conclude today’s conference call. We do thank you for your participation and you may disconnect at this time.