Good day, and welcome to the Regency Centers Corporation Fourth Quarter 2012 Earnings Conference Call. Today's call is being recorded. And at this time, I'd like to turn the conference over to Mr. Mike Mas. Please go ahead, sir.

Thank you. Good morning, and thank you for joining us. On the call this morning are Hap Stein, Brian Smith, Lisa Palmer, and Chris Leavitt. Before we start, I'd like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Regency Centers Corporation with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. Hap?

Thank you, Mike. Good morning, everyone, and thank you for joining us on the call today. We believe the steps we've taken over the last several years to enhance our portfolio, our development program and balance sheet are positioning us to consistently perform up to Regency standards. 2012, the hard work and focus of our dedicated team were clearly evident in the operating and financial results. You will hear from Lisa and Brian in detail, but I want to highlight the many notable accomplishments. The performance of the leasing team was exceptional, pushing same property operating portfolio to 94.5% leased. We started to exhibit pricing power as evidenced by rent growth of 5.5% including nearly 20% on new leases. These factors, which were aided by robust demand, health of our tenants and lessening supply of available space produce same property NOI growth of 4%. Development team started 4 and completed 9 irreplaceable shopping centers, and transformed another 5 centers through redevelopment, adding an estimated $75 million of value. Transaction team continued to enhance the quality of the overall portfolio. They sold more than $450 million of shopping centers that no longer met Regency's risk, strategic or NOI growth objectives. We also acquired high-quality shopping centers with compelling, future growth profiles. The capital markets' team further fortified Regency's solid balance sheet and access to capital. These efforts combined to produce core FFO per share of nearly 7%, most important of all, an increase in total shareholder return of more than 30%. To be sure, we recognize that a single year's positive results do not define Regency's standard for success. This is particularly the case in light of our view that economic growth, while positive, will likely be slow for the foreseeable future, and our tenants will continue to operate in an…

Thank you, Hap. Good morning, everyone. As Hap stated, our results for the fourth quarter and for the full year were very good. With core FFO of $0.63 per share for the quarter and $2.56 per share for the year. Being $0.03 above the high end of our most guidance was a result of exceeding expectations in November and December. Primarily, first, federal leasing; second, lower move-outs; third, lower real estate tax expense. And all those combined produced higher recovery rates. Same property NOI growth, excluding termination fees, was 4% for the year. Almost of all this growth was attributable to base rent, which was largely the result of occupancy gains primarily from non-anchor spaces combined with built-in contractual rent steps. In the fourth quarter, we recognized an impairment charge of $50 million triggered by the decision to sell Deer Springs Town Center and exit the Las Vegas market. Given the difficulty of efficiently leasing and managing this large single asset in a state where we have no plans to grow, we believe it makes sense to exit the market at this time. I'd also like to briefly explain the fourth quarter income tax expense. We employed tax planning strategies in our taxable REIT subsidiary at year end to maximize the benefits of a net operating loss. These strategies generated taxable gains and a related noncash income tax expense. As Hap mentioned and as we've previously communicated, we made significant progress in 2012 executing our portfolio enhancement strategy. This is positioning Regency for better long-term sustainable growth. However, in the short-term, being a net seller in 2012 will have a dilutive impact on '13. But even with that being said, the strong leasing and better-than-expected moveouts in December will result in higher-than-expected average occupancy in 2013. As such, we've increased…

Thank you, Lisa, and good morning. The fourth quarter was a near-perfect way to cap off what was a very good year in all aspects of our portfolio. Strong leasing momentum continued to drive the business. We signed more new leases in the operating portfolio than any year on record, taking the same property portfolio to 94.5% leased. Moveouts in 2012 were the lowest they've been since 2007, and a significant portion of this occupancy gain came from small shop space. In fact, our percent leased for spaces less than 10,000 square feet increased 170 basis points in 2012 and currently stands greater than 88% leased. In addition, the average rent assigned for small shops increased for the seventh consecutive quarter. Given the strength of our leasing pipeline, we continued lack of new supply coming online in the slow but steady upward trajectory of the macroeconomy and remain optimistic that our goal of 95% leased is well within our sites and there's certainly no reason we should stop there. What makes this even more satisfying is the fact that we increased occupancy, while simultaneously improving both the tenant caliber and merchandising mix in our shopping centers. We did this not only by leveraging our considerable relationships with strong national tenants, but also with well-capitalized, innovative and exciting local and regional concepts that are considered fixtures in their local communities. As we all know, the grocery business is very competitive and a dynamic one. With that in mind, I'd like to provide a quick update on SUPERVALU. After recently meeting with them, we are more comfortable in our belief that our exposure to store closures remains limited and our initial impression of the recently announced transaction is that it reduces uncertainty and may even improve their long-term operating prospects. Continuing on…

Thank you, Brian and Lisa. Like I said, one good year doesn't automatically translate into many. It doesn't define Regency's standard for success. But I'm extremely gratified with what we've accomplished and feel very good about where we're headed. Our team of talented people has worked extremely hard and is poised to have continued success in building shareholder value in 2013. We now welcome your questions.

[Operator Instructions] And we'll go to Michael Mueller first, from JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: I guess, first, on the Blackstone-preferred investment. And what's embedded in guidance in terms of the timing of either having calling that or having it redeemed?

We're currently assuming that we go the full term basically which would be December 31 of '13. Michael W. Mueller - JP Morgan Chase & Co, Research Division: Okay, okay. And then, I guess, second question. Brian, to your comments about you still have about 3% of the portfolio targeted for sale. About how long of a time period do you think that covers to go through that 3%?

It all depends. Those are the hardest assets to sell, so it all depends on the demand for them and all. But I would think that we would be out of that in a couple of years.

But we're -- and also...

And then it will be ongoing. There'll always be some assets that will be at the bottom of the portfolio that will be part of the annual recycling process.

I think, I know, Mike, you've been covering this for a long time. For many years, our strategy has been portfolio enhancement or capital recycling, and to sell what we always said was the bottom 3% of the portfolio every year.

And we'll go next to Christy McElroy, UBS.

Brian, I just wanted to follow up on the Q4 acquisitions you talked about. What percentage of the deals that you looked at were ones in which sellers were motivated to sell before year end for tax reasons? I know you mentioned they were off-market. And how would you characterize the current environment for acquisition opportunities?

A lot of activity, I think, in the last probably 4, 5 months of the year, it was related to people who wanted to sell it before they saw the tax rates go up. And I think that was a definite factor in the increased activity. I'd say, in current environment right now, Christy, it's probably too early to tell. There's been some speculation that people now are not willing to sell because of the higher taxes. But I just -- I don't think there's enough data out there yet to know. So we kind of view it right now as status quo and we are seeing some pretty good opportunities.

Okay. And then, Lisa, I guess this is a question for you. Did Paseo del Sol drive the entire developmental gain in the quarter? And how much of that gain flowed through to FFO and core FFO?

It was most of it. The gains -- on our guidance page anyway, we have one line that we've netted of other transaction costs as well. All of the gains flowed through FFO, but none through core FFO.

And why did that gain, why did that center, why did that qualify as a development gain instead of a gain on operating property? It looks like it was built in 2004.

We just completed it last year.

And we'll go next to Jeff Donnelly with Wells Fargo.

Actually, the first question on in-process development. Can you just talk about what's happening with the, I guess, rents and construction cost because I was noticing that on Grand Ridge, the yield pulled back a little bit sequentially from Q3 into Q4 with costs up and it -- Erwin Mill, similarly the yield dropped despite the anchor opening, moving up a little bit. Is there something that's specific to just -- for those projects? Or is there something else going on that maybe has a broader implication?

I'd say, Jeff, it's specific to Grand Ridge. In fact, this morning I was looking at -- if you look at the 12 ground-up construction projects excluding the redevelopments but including phases on the projects, so that's 12, and the total costs are up across that whole portfolio about 2%, which is $3.4 million and $3.9 million of that is Grand Ridge. So the other 11 properties actually came in $500,000 lower. So what's going on with Grand Ridge -- and Grand Ridge may not end up being $3.9 million because we still have $2 million of the contingency that we didn't tap, we just increased the cost. What's going on in Grand Ridge is that, that's in one of those very, very difficult to entitle markets. I've said this before, but the last property that's developed up there, was developed 20 years ago, that took 12 years to entitle. And what happened is the city just demanded a lot of upgrades that weren't in the original budget. Everything from enhanced lighting, landscaping, expanded plaza, areas and the like. There was a little bit of probably a miss on our part. We originally had the big boxes price -- I think it was $120 a square foot and then our pricing down in northern California for the same tenants came in lower, so we reduced the price when we did the original budget. And in fact, they came in where they were originally targeted at $120. So long answer to a short conclusion, which is it's all related to Grand Ridge.

There's a little bit of pressure though on construction cost right now.

And then, I guess, Brian, and how are you sourcing new development? Is it from land on the books, in new purchases? And if I could just toss one in for Lisa. I might have missed it. Can you just repeat the reason why the write-down on Deer Springs?

Who do want to answer first?

Yes. I'll let you decide.

That was a clever bifurcate. Okay. The -- I'll start the developments. The developments are sourced the way we will always have. And we've got people out in the markets that in some cases have been working on properties for years, trying to get them. And then we do have 400 or 200 acres of land held for development, some of that we'll be tapping. So if you look at what we expect to do in 2013, one of those, and the large one will come out of land held, and all the other ones -- and the one that we've actually been pursuing, working on for 19 years. Other than that, they're all recently sourced opportunities.

And for Deer Springs, as Brian talked about, we do have another 3% of the portfolio that we've identified that we'd like to sell. But as he said, the sale of those is really uncertain. What's different about Deer Springs is that we're -- we think it's more likely than not that we will sell it at some time in the next -- call it next several years, specifically because we want to exit the market and we have accepted that we will take a price at which we've written it down to. And because it's very difficult to manage and lease such a large asset, when we don't have a local office.

Then we'll go next to Andrew Rosivach with Goldman Sachs.

I just had a question on CapEx. If I take your disclosure on Page 13 and I back it away from FFO and I take away the straight line, it's actually coming up with a number that's lower than your dividend. But that's also not fair because obviously you're upping occupancy and that takes a lot of CapEx as well. So do you have any idea of the sense of what are your kind of true run rate CapEx would be? And if you put that in, will you be covering your dividend?

I'll let Brian address the CapEx run rate. But first, let me -- we had a lot of noncash expenses this year with preferred issuance cost write-offs. We also redid our term loan and our line and that also was from noncash expenses. So we did cover our dividend this year. I would expect that we're going to be covering it in the future as well. But I'll let Brian answer the CapEx run rate question.

Yes. Our white box, which are really driving it, as you said, is related to a lot of things. One, which is the highest volumes of leasing. In 2012, it was $0.60 a square foot and we think in 2013, we'll reduce that by about 1/3, get it down to $0.40 a foot and it will be even lower in 2014. What's going on there is not only have we done a lot of leasing in 2011 and '12 but a lot of leasing was to restaurants which required some upgrades and building renovation, but also a lot of anchor activity, releasing of anchor space, where we had to, in some cases, replace and fix buildings where we you had an anchor in there for 20 years. In some cases, we had to combine small shop spaces to create a much larger space which is very expensive. And then we had several examples of larger spaces being subdivided where you got to do all kinds of work to the building so that's what's really driving it.

And said in another way, our routine building improvements should run about $0.55 a square foot. Brian indicated our white boxing in 2012 was $0.60. We expect it to be closer to $0.40 a foot and then we would expect in '14 it would be at an even be lower level.

[Operator Instructions] We'll go next to Paula Poskon with Robert W. Baird. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: Just a question for Lisa on guidance. How much redevelopment investment is embedded in guidance, if any? And where do you guys see the most opportunity for redevelopment in your portfolio?

I'll let Brian address the opportunities. We expect that we should be able to do up to about $15 million of redevelopments per year. We'd love to do more but all the stars have to align for that to happen, and so really difficult to get done. But I'll still let Brian talk about what we have coming this year.

This year, we may -- in 2013, we've already got the one going for $8 million, and that's just an example of an older center. This is typical where we're actually going to get over $700,000 of increased revenue from the redevelopment of 2 anchors. We turned down a Walgreens, we turned a Publix in rebuilding. We've also got the Balboa Mesa redevelopment coming, which we acquired last year. And then, I guess, the source going forward as Lisa said, you probably figured there's maybe $15 million that would come from the existing portfolio. But we also have the additional phases of a lot of the developments that when we went in the -- since 2009, we rightsized them. For example, later this year, we would hope to expand the Lee Airport Park in Annapolis, which is 100% leased or close to it. And then we've got the expansion of the Golden Hills property in California. So, and then one other one we'd likely to do at the end of this year would be Woodway Collection where the anchor is at the end of its term and we'll replace the anchor and do a full redevelopment.

And also, I want to amplify that a little bit and connect the dots back to Andrew's question about CapEx. The anticipated amount of starts from a redevelopment where we have visible, attractive returns on invested capital is in the neighborhood of $15 million. And that absolutely is a top priority, to the extent we can expand that, that would be great. But we've also, and I think we break that out separately, but we anticipate spending about another $15 million a year over and above routine building improvements where we think that we can enhance the look of the shopping center, do a facade redo and that we think that although the returns aren't immediately visible, that we would expect we're going to get at an even higher lift from our growth and net operating income.

And to clarify from a disclosure standpoint, the expansions and redevelopments that Brian was speaking about, we do disclose in our developments status page and we have it down at the bottom. So any expansions that we would do of existing centers would show there, would not be part of the CapEx disclosure. The major renovation CapEx disclosure is on a separate page, but we also -- but we do disclose both in detail.

[Operator Instructions] We go next to Cedrik Lachance with Green Street Advisors.

Lisa, I just want to go back to your answer on the Whole Foods being included in -- as the development profit at the Whole Foods sale. My understanding is that the Whole Foods itself opened in '09, so how does it end up qualifying as a merchant building gain at the end '12?

We've -- it was -- some -- it was completed and moved into the operating portfolio in 4Q of 2011. And so basically, our internal policy -- is if it's sold within 1 year of completion, it would be included in the gain. Remember, Cedrik, we do exclude it from core FFO.

So, so it was built [ph]. So I guess I misread that somewhere. So it was open in 2011.

I was -- we completed it at...

We said that one of the other things is although right now, it's just the Whole Foods, the original intent of that, there was an office building on the corner and we were planning on redeveloping that. Either tearing it down, converting it to a drugstore or something like putting out another pad out there. And the entitlement process in Santa Barbara is an incredibly burdensome and lengthy one. And finally, what we ended up doing is selling off the property. So all we were left with, was the Whole Foods, which then went into the operating portfolio.

Okay, that works. And then in regards to the redevelopment discussion from earlier. How much of that redevelopment spend contributes to same-store NOI growth, let's say, in 2013? Does it account for 50 basis points of the 2% to 3%? Can you try to give me a range in there?

I don't -- I'm not sure -- I'll have to get back to you on '13. In '12, it was -- I think, I believe it was about 20 basis points. Because just as -- remember, Brian talked about it, he gave Woodway as an example. That's one, where we're going to have the anchor down for a period of time. So at the same time that your getting the benefit of those that you're completing, you're being -- you're having the dilution from those that you're taking off-line. We're happy to give you that number. I'll follow-up.

Okay. No problem. And I guess final question. Have you been using the ATM in the fourth quarter?

We did not use it in the fourth quarter.

[Operator Instructions] We have a follow-up from Jeff Donnelly with Wells Fargo.

I was just curious to get your updated thoughts on SUPERVALU and Fresh & Easy. And kind of how you are you guys thinking about those situations?

Well, Fresh & Easy, we assume they're gone. So we're actively in discussions with people, with replacement tenants for those spaces. Unfortunately, we've only got 2 operating and they're both in Northern California and they should be -- there's a lot of demand for those spaces. SUPERVALU, as I kind of indicated in the remarks, really no change. I think we said last quarter that having looked at all the properties, looked at what we could do with them if we got all the spaces back. We felt there are only a handful of ones that might take some time to release. Since then we met with the representatives who share with us their -- the profitability and the sales for all the stores and they were literally just a few that were either at breakeven or at a loss. And one of those is the term expires in 2015 and the rent to $2.60 a foot, so we're more than happy to get that one back. Another one is adjacent to a large retailer who would want to expand in that space. So honestly, there's just a couple, I think, that could be -- we just feel as comfortable as we can be that we're not going to be impacted that much.

And just in general, I think, as Brian indicated earlier, we're not involved based upon that kind of secondhand knowledge which we are following very closely. The operators of Albertsons have done a good job with that chain, the SUPERVALU people and investors are pretty optimistic about what they can do with the chain. It obviously still is a very competitive industry, it remains to be seen. But I do think that there's a better chance for a turnaround. And there's a lot more clarity there.

That's helpful. And actually, just to circle back on Deer Springs. I guess, my question before is -- I was maybe more surprised by the magnitude of the write-down, just I was surprised that it wouldn't have been tripped before because it's a pretty substantial write-down when you think of it, particularly on a per square foot value relative to the size of the asset. Has that something to do with where you guys think Las Vegas retail is currently valued?

I could go into a much longer discussion on an accounting education, but I don't -- I think it would bore you. But you're adding [ph] impairment, there has to be a trigger basically in this to evaluate, to reevaluate for an impairment and the trigger here was the fact that we believe it's going to be more likely than not that we're going to sell it. That was what changed.

The other thing, Jeff, about it, what's interesting is when this was originally underwritten, it was underwritten to be a 700,000 square-foot property. And when the market turned, we built only what was under construction, and that was only 330,000 square feet. So there's 370,000 square feet that didn't even get built for about 37 acres worth of coverage, and I think that's one of the reasons why you're seeing such a big impairment.

And just to reiterate, it is not consistent with our in-fill disciplined future development strategy.

We'll go next to Nathan Isbee with Stifel, Nicolaus. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Brian, can you give a little more detail on the expected 4Q moveouts that didn't occur? Were those tenants close to maturity just re-upped? Or were those the tenants that decided to hang on?

They were tenants that appear to have decided to hang on. That's just -- the moveouts are always the hardest thing for us to plan on. We go through space by space and we take a look at what the property managers are saying based on the feedback from talking to the retailers. We look at what we want to do, we look at their sales. At the end of the day, in the fourth quarter, they just did not move out. Now, we wonder does that mean they're going to move out first quarter, and first quarter is not done so I don't have answer for you. But you would think that if they're going to go, they would limp through the holidays, extract as much sales as they could and then move out. But I would tell you right now that the January numbers indicate that they have not moved out and we are way ahead of plan in terms of moveouts for January. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. But you are assuming in your '13 guidance that they do move out at some point?

Yes. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then just -- can you remind...

I mean that's in the range we are, right? I mean, if that's what the same property growth of 2% to 3% would assume that -- I mean, that has a range of moveout but as well as our percent lease.

We didn't change that.

Right. And since I have the floor, and I have a really good team that e-mailed me the impact on redevelopment growth in '13. To answer Cedrik's question, it is approximately 20 basis points. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then can you just update us on the same space rent growth assumptions in your guidance? I noticed you took it out of the supplemental.

Yes. We didn't provide exact guidance even at our investor meeting in December. It's one of the most difficult things to forecast, but if you'll recall, at that time, Brian did indicate that we would expect that we would be in the mid- to high-single digits for 2013. There's more pricing power, so that would put us at slightly better than 2012.

We go next to Samit Parikh with ISI.

Just 2 questions, really, on funding. One, I know, I think, someone asked did you use the ATM in 4Q, can you tell us if you use any of the ATM in 1Q so far?

It would be a blackout period.

Oh yes, that's true. Okay, fair. Also, you sold the Whole Foods, right, that you the opened in 2009 and given sort of where cap rates are right now for this type of grocer, either single tenant or small grocery anchored centers and Publix buying everything they can. Do you think sort of selling maybe some of these assets that you developed, call it between 2006 and 2008, you have several of these smaller grocer anchor assets that may have some limited near-term growth, is a better funding strategy near-term than maybe using the ATM to fund your development?

Possibly, yes. And in fact, that clearly -- the sale of Paseo del Sol was an opportunistic sale because of -- that it was a cheaper cost of capital than selling our equity at the time, and that's why it's not a coincidence that we didn't tap the equity market in the fourth quarter.

Are you current -- are you in discussions right now? I mean, is there a discussion going on maybe with Publix or some of the other centers of Whole Foods? And are you seeing some sort of an updig [ph] increase in the appetite of maybe net lease investors to pay lower than your current cost -- lower than your current and pi [ph] cap rate type of cap rates for some of these assets that you'd be willing to part with?

No, not necessarily. And -- but I'll also remind you, too, that we do have this 3% that Brian talked about, which at this time, is a higher priority than some of the limited growth assets. But to the extent that we can sell the limited growth assets in lieu of tapping the equity markets, that's something that we will consider.

But we would not, just to be clear, we wouldn't sell the primary anchor in the shopping center because we think that's important to the long-term value even though that primary anchor obviously has less growth potential than the side shop and/or some of the secondary anchors.

With no additional questions in queue, I'd like to turn the call back to management for any additional or closing comments.

We appreciate your time and interest in Regency and wish everybody have a great day and a great Super Bowl weekend. Thank you very much.

And again, that does conclude today's call. Again, thank you for your participation. Have a good day.