Welcome to the Regency Centers Corporation First Quarter 2015 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Mike Mas, Senior Vice President of Capital Markets. Thank you, Mr. Mas. You may begin.

Good morning and welcome to Regency's first quarter 2015 earnings conference call. Joining me today are Hap Stein, our Chairman and CEO; Brian Smith, our President and COO; Lisa Palmer, our Chief Financial Officer; and Chris Leavitt, Senior Vice President and Treasurer. Before we start, I would like to point out two additional disclosure items in our supplement. First, the added disclosure of the impact of redevelopment on same property NOI growth, on pages 7 and 11. And second, an added reconciliation of net income to AFFO on page 10. Because AFFO definitions can differ, our intent is to highlight for our shareholders certain non-cash income and expense items, as well as capital expenditures. I would also 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 that could cause actual results to differ from those contained in the forward-looking statements. We also request that callers observe a two question limit during the question and answer portion of our call in order to give everyone a chance to participate. If you have additional questions, please rejoining the queue. I will now turn the call over to Hap.

Thank you, Mike. Good morning, everyone and thank you for joining us. We had another really good quarter and the results speak for themselves. So I'll be brief before passing you along to Lisa and to Brian. The combination of successful execution of the four main components of our strategy will continue to distinguish Regency. First, our high quality portfolio is well positioned to sustain superior NOI growth. This is supported by another strong quarter of operating results, including NOI growth that exceeded 4% and follows three full years at this level. Second, we're making progress on a visible pipeline that supports our ability to deliver $100 million to $200 million of development and redevelopment starts and deliveries in 2015 and in future years. In a few minutes, Brian will share with you more details on our efforts to create great shopping centers and compelling value. Third, our balance sheet remain strong. And as Lisa will discuss, we're astutely enhancing it through organic earnings growth, cost-effective match funding and opportunistic capital markets activity. And most importantly our talented team remains highly engaged, with developing and employing best-in-class operating systems and continues to successfully execute this strategy. That said, we understand this is a marathon and gold medals are not handed out for short-term results. I have no doubt that Regency's exceptional team will continue to differentiate our company with high levels of performance in each of the key aspects of our strategy, delivered consistently over extended periods of time. Lisa will now walk you through our results.

Thank you, Hap and good morning, everyone. Our first-quarter results were very strong. Core FFO per share was $0.74, representing an increase of more than 7% over the first quarter of 2015. Same property NOI growth excluding termination fees was 4.4% which includes a net positive impact from redevelopment of 120 basis points. Although we benefited from move-out levels that were lower than we typically experience in the first quarter of the year and also better than expected percentage rent, base rent growth of 4.2%, driven by last year's robust leasing and double-digit rent spreads continues to be the largest contributing factor to same property NOI growth. The low move-out volumes in the first quarter, along with the additional percentage rent, will have a positive impact on full-year results, allowing us to raise the low end of our guidance ranges for same property NOI growth by 20 basis points and Core FFO per share by $0.02. With respect to G&A, our first quarter is moderately higher than the projected remaining quarterly run rate. Development and leasing capitalization are expected to increase modestly through the year as leasing activity and development starts increase, providing a quarterly net G&A run rate closer to $15 million over the remaining three quarters. We continue to expect that we'll finish the year within the original range provided of $60 million to $63.5 million. As Hap said, maintaining and further enhancing Regency's conservative balance sheet is a critical component of our strategy. We'll rely heavily on organic earnings growth as we generate results like we have over the past several quarters. We'll also continued to match fund our new investments, with the primary source of capital for development and acquisitions being the sale of lower growth properties. And importantly, when matching an acquisition, the disposition will have a comparable cap rate as the acquisition, but a lower growth profile. Also, when the use and pricing make compelling sense, we will opportunistically use equity as a funding source, like we did with the forward offering completed in January. As a reminder, the forward structure allows us to drawdown proceeds and issue the shares through the end of the year at the per share closing price on the offering date of $67.40. We expect one of the identified uses for the equity offering which is the acquisition of University Commons in Boca Raton, Florida, to close in the third quarter. We will drawdown the necessary proceeds at that time, effectively matching our capital needs with the funding source from both a cost and timing perspective. We will also settle a piece of the forward offering to address a portion of our unsecured bond maturity in August and to fund develop and spend throughout 2015. Brian?

Thank you, Lisa. Good morning, everyone. Our portfolio is performing better than ever which is apparent in our consistently strong results. We continue to focus on leasing to high-performing gross re-anchors, best-in-class operators and unique restaurants and retailers that differentiate and activate our shopping centers. And in doing so expand our trade areas and increased shopper traffic. Our centers are located on great quarters in affluent suburbs and infiltrate areas with substantial purchasing power and barriers to entry. This combination provide sustainable, competitive advantages that allow us to capitalize on landlord-favored market and leverage the high quality real estate in our portfolio. This portfolio strength is demonstrated by our same property NOI growth that once again exceeded 4%. The health of our tenant base is evident in percentage rent that surpassed expectations, due to higher than forecasted sales volumes. It's also apparent in our rent growth which has approached or exceeded double digits for some time now. This quarter, rent growth on new leases was nearly 30%, coming entirely from shop space. Another indication of our portfolio strength and tenant health is a low level of move-outs which were well below our expectations for the first quarter and have trended at low levels for the past four quarters. In fact, as a percentage of occupied space, this was the lowest quarter of move-outs that we have on record which is particularly noteworthy, given the typical seasonality of higher move-outs in the first quarter of the year. As Lisa said, this will have a positive impact on earnings which allows us to improve our outlook for the remainder of the year. I'm also pleased with the strides that our industry step developing team is making on our pipeline which gives me confidence in our ability to meet our development and redevelopment…

[Operator Instructions]. Our first question comes from the line of Jeff Donnelly with Wells Fargo. Please proceed with your question.

Thank you for the additional disclosure around the redevelopment contribution to NOI. Can you tell us what embedded in your 2015 NOI guidance from the redevelopment contribution?

I can give you an exact number I can give you a range. When you think about what we expect to do on an ongoing basis, a target of somewhere between $30 million and $50 million of redevelopments annually that should add with our disclosed returns of 7% to 10% -- that should add somewhere in the range of 50 to 100 basis points annually to our growth rate and in 2015 we're on the higher end of that.

Maybe just a follow-up, it might be kind of that two parter. The last call I think you guys were talking about having like a 92% objective for occupancy on your small shop leasing it pullback in the quarter what I suspect is a seasonal step back. Are you guys still confident in that objective? I noticed the same thing with kind of your leasing spreads were a little lower, is it just sort of a one-time blip that's more seasonal? Just curious what your take was?

Yes, Jeff, it is seasonal we lost ten basis points in total occupancy and usually for the first quarter we lose about 24 so less than half of what we usually lose in the first quarter. In the small shops we lost 30 basis points and that's also about half of what we normally lose in the first quarter. So we're not worried about the leasing it's actually very strong, we’ve got of lots of demand, our pipeline is right where it's been in other quarters last four quarter rolling average, so it all looks good.

And I would add, Jeff, if you look back to [indiscernible] first quarter 2015 over first quarter 2014 we actually did more leasing transactions in the first quarter of this year than we did last year it was primarily in the small shop space, so the actual square footage was just a little bit lower like 70,000 square feet lower and then also our new lease rent growth for the quarter for spaces they get less than 12 months to close to 30% so that did not decelerate.

Thank you. Our next question comes from the line of Craig Schmidt with Bank of America. Please proceed with your question.

Where do you guys expect cap rates for openers centers to trend? Do you think they'll further compress in 2015? Or, what do you see going forward?

Craig we haven't been very good about predicting that, I wish I had position to do it. But what's happening right now is after been steady what I would say for the last while, last several quarters, at 5% I think with the continued influx of private capital and particularly foreign capital we're seeing those cap rates go down. I would say the average now is easily 44.75% to 5% depending on growth and IRR is now dipping below 6.5%. There is a couple of transactions that are out there right now I think both give good examples they're both very expensive one is over $100 million and other one and is in the $90 million range and those look like they are going to be going in the mid-4%'s and IRR is going to be down below low 6s it just very competitive out there.

From our perspective, once again, as Lisa alluded to, our strategy, anything we're going to be buying is going to be match funded so if we happen to be buying a lower cap rate deal, we’re going be selling a lower cap rate center but the center that we're selling is going to have a much lower growth profile and upside prospects than what we're going to be buying.

Okay. And this is more of an industrywide question than just to focus on Regency. What you see as the biggest impediments to seeing an increasing ground-up development in the strip category?

Well, there are several things that are making it really tough. I mean first of all, for the next -- for the short-term the grocery pipelines are pretty full. I mean there is obviously a of over hang out there, if you look at Chicago you've still got 29 vacant Dominic's I think on the West Coast you still have concerns on the part of grocers -- not concerns but there may be opportunities to pick up some Haggens. So I think unless you have a really, really good grocer anchored opportunity for the grocers they are not going to go for it which I think is healthy for the industry and I think when you look at the projects that we're doing makes you feel better about them. I think just the areas that we're looking where the retailers are looking, they are still focused on the in-fill, the denser closed-end locations and those are just very, very difficult to do. I have a lot of capital to do it, nobody seems to be venturing out into emerging areas. And land prices, land prices continue in those areas to get higher. I think for example at La Floresta, if that were to come on to the market today I think the land price would be more than double what we paid for and the returns would probably be closer to 6% than where we're at mid-7s.

And that’s our whole food center in Northern Orange County.

Thank you. Our next question comes from the line of Christine McElroy with Citi. Please proceed with your question.

I just wanted to follow-up on Jeff's question on small shop occupancy, I think last year just a clarification last year, you thought about a 200 basis point move higher from trough in Q1 to peak in Q4 in that lease rate. So I'm wondering given that you had the lower move-out to Q1, sort of what your expectations are for that small shop lease trajectory for 2015 and you didn't change your overall occupancy forecast for yearend, but does that Q1 activity sort of give you more confidence in the higher end of the range at this point?

I think at least in terms of where we think small shop occupancy can go I don't think we've changed our opinion on that at all. I think we can get to 92% I think we can get above that. As I mentioned, Christy, the demand is definitely still there, the biggest thing that's been holding us back, frankly besides first quarter, is just a lack of move-out. I mean it helps our occupancy but it doesn't help us with new leasing. So I think we can continue to get there with the demand that we're experiencing, it's just a question of how high it goes.

And when you get there.

Okay. And regarding Juanita Tate Marketplace I'm wondering can you discuss the nature of that cell and the pre-negotiated yield? And will that $7 million gain on sale in Q2 flow-through FFO in the second quarter since it was recently completed or will that be considered an operating property?

I will handle the first part and then let Lisa, handle the second part of that quick question, Christy but some history is really relevant here on Juanita Tate. That deal literally started 21 years ago when I was at a prior company. There is a local nonprofit community organization called Concerned Citizens for South Central Los Angeles and they very much needed and wanted to have a grocery anchored neighborhood center in their community. There was nothing around, there was no fresh food offerings, they had no idea how to do it they had this land under contract and so I worked with them for a couple of years to show them the development process, try to help them get through it. When I moved over to Regency, the predecessor company two or three years later and it was just clear they weren't going to be able to get through this. So we took the project on our sales, but, the area back then, 20 years ago was nowhere near the area it is today. It has evolved into a much better area. And frankly the concern back then was once we developed it, we knew it would be successful, the demand was huge and the supply of competing centers didn't exist, but we were frankly concerned about the safety of our property managers going to the property. So, the only way at that time we were interested in doing this is if we had a commitment to sell it up front. Concerned citizens of South Central Los Angeles always wanted to be part of the project and they always wanted to maintain ownership of the end of the day so we negotiated this and at that time the development returns were in the neighborhood of 12.5% and we negotiated about a 25% profit margin, I think it was 10 cap presale that we negotiated. It obviously took far longer than you can imagine, anybody could imagine, just the difficulty of developing in real urban areas and so what we did is we continue to adjust the spread to maintain pretty much the profit margin but we would love today to own this. I mean if we were starting all over this would be a property we would want to own, we frankly were hoping that the deal would fallout but we gave our word, we had a commitment to this nonprofit and we're honoring it.

And it certainly doesn't represent a change in strategy to margin development.

And with regards to whether it's in or out of FFO in the spirit of trying to adhere even more closely to NAREIT defined it will now be part of FFO, so we will not be including any gains on sale of properties.

Thank you. Your next question comes from the line of Jay Carlington with Green Street Advisors. Please proceed with your question.

So just a follow-up on that, if it was pre-negotiated, why wasn't it disclosed?

While I think you never knew for sure if it was going to happen. I mean Concerned Citizens themselves does not have any financial strength so they had a partner up with somebody for the long-term ownership in the purchase of it and one of the grants the Section 104 grant had to be approved by the redevelopment agency to transfer to the new buyer. So it was unclear whether that was going to happen and as I said we were kind of hoping it would fallout, there was just too low level of certainty.

I know just switching gears here. So I guess granted your one disposition this quarter was extremely small but looking at that at a 9% cap and then you take into account Juanita Tate and Auburn Village call it a low 7% and mid6%'s you're looking at blended cap rate of low 7%'s or high 6%'s on those sales. So how do we think about that in the context of matched funding with university commons at a 5% cap?

First, we didn't change our disposition guidance, so our guidance cap rate is still 6.5% to 7% number one. Number two as I said in my prepared remarks and hopefully we’ve been communicating for the past, gosh I don't know how many four to eight quarters. So the match funding strategy, the disposition of those -- the lower -- when you think of the Regency's quality, Regency's lower quality, it may not be lower quality to all, but Regency's lower quality shopping centers that funding our developments. So 6.5% to 7% cap rate on those dispositions basically are funding our developments where our returns are higher than that. So that's a positive spread. University Commons we would match fund that with the sale of a more comparable cap rate property in this case we actually match fund that with equity. So that's not in our disposition guidance because we're going to draw down on our forward equity to fund that acquisition.

Okay, that makes sense. And just to double check on the guidance the redevelopment development spend is it still 25% I think on redev and the rest on development?

I'm not certain that we've actually given that guidance. Just the spend or the start?

Just the dollar amount on the spending guidance that you’ve given. I think it's mentioned on the last call roughly 25% of that would be redevelopment but maybe that's not the case?

Yes. It might be a little north of that.

[Operator Instructions]. Our next question comes from the line of [indiscernible] with Capital One Securities. Please proceed with your question.

Just first on the active development pipeline it was stable quarter-over-quarter. How is the shadow development pipeline trending?

Well, as we mentioned in the prepared remarks it's going to be back end loaded. We expect we're going to do 100 million to 200 million of those probably $70 million is going to be redevelopment and we feel very good about those. So in order to hit the guidance we've got to do ground-up developments of between 30 million and a 130 million. We're working on nine projects that could happen in 2015. I think seven of those look real promising and a total of $140 million. So we currently have the properties and the opportunities, the real challenge is not will they happen so much the timing on these. And the reason for that is we've got some that are mixed-use where we’re dependent upon the multifamily or other use. Some of them are part of the master plan community where the developer has to perform certain responsibilities and [indiscernible]. And on the final one we're actually dependent on what happens on an adjacent parcels. So everything as I said feels real good, it's just a question of the timing, we hope they all come in the fourth quarter and that's my expectation.

And with regards to sort of leasing in the quarter I know there is some seasonality there but can you sort of talk about the renewal ratio as a percentage of overall expirations and how that was overall? What's for anchors and small shop?

The renewal rate was over 75% in total which is higher than average, the shop I think we were 66% and that's about average and the anchors were almost 90%.

Thank you. Our next question comes from the line of Jim Sullivan with Cowen Group. Please proceed with your question.

Hap, I'm curious we've been seeing more grocers take space in the past few years in both power centers. As well as open more stores in mixed-use urban locations. Given your very strong relationships with pressures how aggressive will you be considering either of these alternatives for future grocer unit growth and which is your preferred focus of the two? And when I say preferred focus, I'm not thinking in terms of power centers, it's not so much about ground up development but rather potentially value added acquisitions given the impact that putting a grocer in a power center can have on the value of the property?

Jim, I think that value added acquisition opportunities is next to redevelopments because they ultimately become redevelopments would be investment priority one so that's our primary focus on those that we think are going to make sense and have upside potential we're also expanding our net to include mixed-use projects that make sense, not necessarily the urban, dense urban vertical developments but with primary focus on horizontal and somewhat on the near urban with some amount of verticality to that.

So for example the kind of standalone grocer that we’re seeing go into some of the urban locations where it's just a grocer that kind of development is less appealing?

That is less appealing we like to have we're looking at an opportunity where we're on the ground floor with a grocer and then on adjacent building we have an opportunity to purchase the ground floor which will give us an opportunity to have and include shop space, retailers and restaurants and that's more our cup of tea where we think we can really add value on the side shop space next to a strong grocer and also have all the activity around and all the daytime population around the vertical development that’s either adjacent to or part of the development.

Thank you. Our next question comes from the line of Mike Mueller with JPMorgan. Please proceed with your question.

Yes, looking at the 2015 development start guidance the range the upper end of the yield expectation looks like it moved up a little bit, just wondering if you could just talk about that, was it just one project or just some view that yields could be a little bit higher going forward?

The guidance from last quarter was actually 7% to 8.5% I think the e-mail that you probably received our supplement from included a 7%, 8% range and it was corrected within two minutes of that distribution, so there has been a change to our expectations on yields.

There appear to be no further questions at this time. I would like to turn the floor back over to management for closing comments.

We appreciate you taking the time on the call and your interest in Regency and wish you have a great rest of the week and a great weekend. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.