Greetings, and welcome to the Regency Centers Corp. Third Quarter 2016 Earnings Conference Call. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mike Mas. Thank you, you may begin.

Good morning and welcome to Regency's third quarter 2016 earnings conference call. Joining me today are Hap Stein, our Chairman and CEO; Lisa Palmer our President and Chief Financial Officer; Mac Chandler, Executive Vice President of Development; Jim Thompson, Executive Vice President of Operations; and Chris Leavitt, Senior Vice President and Treasurer. Before we begin, 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 that could cause actual results to differ from those contained in the forward-looking statements. In addition, on today's call we will reference certain non-GAAP financial measures. More information regarding these non-GAAP financial measures can be found in Company documents filed with the SEC. Further with respect to our supplemental disclosure, please note the change in presentation of certain financial statements which now reflect updated SEC guidelines on pro-rata disclosure. Finally, we request the callers observe a two question limit during the Q&A portion of our call to allow everyone a chance to participate. If you have additional questions, please rejoin the queue. I will now turn the call over to Hap.

Thanks Mike. Good morning and thank you for joining us. Our best-in-class team continues to perform at a high level executing on our tried and true strategy that has consistently delivered impressive results in every facet of our business. First, our operating portfolio, which by all relevant measures, is recognized as one of the best in the industry, is nearly 96% leased. This was achieved in the phase of recent bankruptcies and anchor move-outs and shop leasing remains vibrant and move-out louder. Further, the anchor vacancies present our team with opportunities for upgrades over the prior tenants. Our development and redevelopment pipeline is looking even more visible. Further positioning us to deliver on an average of more than $200 of annual new starts of high quality shopping centers at very attractive returns. Third, reinforced by our recent capital market's activity over the past few months, we will benefit from a sector-leading balance sheet that affords us complex ability to capitalize on compelling investment opportunities and whether and even profit from future disruptions in the capital markets. And finally our talented and B team is focused on executing our proven business model that capitalizes on this distinguishing assets and in turn creating shareholder value, consistent gains and core earnings and net asset value per share. Mac Chandler will now provide an update on development. Mac?

Thanks Hap, and good morning. Despite a highly competitive development landscape, Regency's industry leading development team continues to source and execute on compelling opportunities while enhance our high quality portfolio. Our newest start, the Village at Tustin Legacy is evidenced of our ability to extract significant value within our target markets resulting from a sharp shooter advantage. This ground-up development is located in the highly affluent in Orange County within the master plan community of Tustin Legacy. The project will benefit from in place and growing triggers and graphics including a population of 200,000 and average income of than 100,000. You can see this in our previous as we are already 80% leased and committed after only three months of site construction. I’m confident in high caliber retailers and distinctive fresh look design that will enhance Regency’s already from your presence in Orange County. Before turning over the call to Lisa, I wanted to touch on future development expectations. With good visibility into our fourth quarter start of what we will be an exceptional Whole Foods, Nordstrom Rack anchor development in the Northeast, and great or better on several other projects in our pipeline. We have raised the top end of our portfolio development guidance to 265 million. It looks like this momentum will continue into 2017 which will result in another year of delivering high quality developments and redevelopment at substantial spreads to where these projects were trade. Lisa?

Thank you, Mac. Good morning all. We continue to demonstrate the inherent strength of our high quality portfolio despite the headwinds from previously announced bankruptcies. The same property portfolio is 96% leased with shop space again contributing gains and nearing an impressive 93% leased. Same-property NOI growth for the quarter was just under 3% moderating as we expected and also as we communicated on the last earnings call but still a very strong 3.4% year-to-date. Further with more visibility into the fourth quarter, we tightened the same-property NOI guidance range with a new range of 3% to 3.4%. It is important to note however that we’ll continue to absorb the impact from bankrupt tenants in the fourth quarter and also in the first half of 2017 as we work to release these anchor boxes. Given this impact while I am not offering formal guidance at this time, it is reasonable to expect 2017 same-property NOI growth to more closely approximate growth from the latter half of this year. I did want to provide more detail behind our rent growth for this quarter. We executed a short term anchor renewal with ongoing landlord recapture rates at our recent Market Common acquisition. This will allow us to significantly upgrade the merchandizing upon expiration or recapture of additional space and further by taking this course of action we’re able to preserve income in the near term for a tenant that we had underwritten to base rate. We may take control of the space and we will be able to improve the future growth profile of the center. We do not feel landlord leverage softening at our centers. Even after the impact from this strategic renewal, total rent growth year-to-date is approaching 11%. Additionally our new shop rent growth remained very strong at 14% for the quarter. Overall the leasing environment remains healthy and with our premier real estate and with limited supply, we continue to able to push rents and negotiate mid-term rent steps to solidify embedded growth. I’ll conclude by touching on the updated guidance ranges for NAREIT and core FFO. With more certainly surrounding bankruptcies and move-outs we increased the low end of both ranges by $0.03 and raised the top end of these by a penny. Thank you for listening. We now welcome your questions.

[Operator Instructions] Our first question comes from Jeremy Metz from UBS. Please go ahead.

Hi guys, good morning. You talked about more visibility on the development front and you obviously took the high end of your development starts up and you mentioned you're thinking your private seller level in 2017. Are you more broadly seeing any bigger shifts in tenant mindset towards new development at this point?

This is Mac Jeremy. I wouldn't say a different set of mindset. I think it’s been consistent over the last several years we’ve had a very healthy pipeline working with best-in-class tenants like Wegmans, Whole Foods, Publix, Kroger and our pipeline historically and when we look out forward it's filled with projects like that. So we have opportunities every broadcast but we haven’t seen a shift in the quality of the projects or the location. It seems to be really consistent with our strategy historically we’re going forward. So no broad shifts there.

Okay. And then just on the shop leasing, we've heard about some of the fast casual dollar stores are pairing back openings. Can you talk about what you're seeing on the ground there and the leasing front of that segment. Maybe how much higher you think you can drive that 93% in the next 12 to 18 months?

Jeremy, it's Jim Thompson. Obviously we’re seeing very robust small shop leasing. We expect there is still some runway there. We're seeing continued good growth. I think the sectors that continue to be active are the fitness, the food although there is some saturation in that category we’re seeing the new been replacing old and it’s kind of a normal cycle. We’re aligning ourselves as we always do with who we consider the best-in-class in that sector and continuing to freshen the portfolio.

Just, sorry just -- in terms of how much more you can even get out of that 93% increase, can we go to 94% to 95% here?

We try - as hard as we can but…

I trained Jim, well he is not going to give you a formal – we've talked about this before, the quality of our portfolio is so much better today than it was ten years ago. And ten years ago we reached just north of 92% on the shop space percent leased. We're obviously north of that today. So it's really uncertain, but we continue to see strong demand for the space and even more importantly over the past, really two years the number of move-outs in our small shop space continued to decline as a percent of space, right. This year we’re projecting move-outs of just about a million square feet and - which is almost - it’s a little bit higher than last year, but that's almost offer for anchors. I mean our move-outs out in the small shop space is so small. So as long as we can continue to do some new leasing, I would expect that we're going to continue to see that small shop lease tick up.

And the focus is not just on filling the space, but it’s also on a quality of tenant and the merchant - new ability to merchant - as a merchant.

Thank you.

Our next question is from Christy McElroy from Citigroup. Please go ahead.

Hi, good morning, everyone. Just a follow-up on that question, Lisa, I think you mentioned shop rent growth of about 14% in Q3, or that might have been the year-to-date number. As you, you know, get close to that 93% number and potentially beyond, presumably you're getting to some of that tougher lease space. What should we expect in terms of potential impact of that on releasing spreads as you see -- you've said you're likely to go higher.

This is a great question Christy, and that’s why it becomes a lot harder to project. But with the limited supply in the environment and with the quality of our portfolio in the high percent lease even with that being potentially lower quality space, we still anticipate that leverages more in outcome and then and there. So we still believe that even with that we should continue to see high single-digits to low double-digit rent growth moving forward.

And those rents in those spaces were starting from a lower based, so…

Okay. Then in thinking about that decelerated pace of same store growth into 2017 that you talked about, presumably that's predominately impacted by some of the re-tenanting that you're doing with the stores that's already in other boxes. How should we think about this trajectory? Should that pace be slower in the first half versus the second half as you're replacing some of that down time and re-leasing that space? How should we think about that pace?

Absolutely, because if you think about when those came offline, we had a lot of that income in the first half of the year. And assuming we are able to release those relatively quickly, even if we do that, we still were getting some until the latter half of the year, so the first half will certainly be lower than the second half of next year.

[Indiscernible] in timing - and finding better tenants to fill the spaces.

Okay. So that is the biggest impact? There's not anything else in there we should be thinking about in terms of drivers?

No.

Okay. Thank you.

Our next question comes from Craig Schmidt from Bank of America. Please go ahead.

Yes, I wanted to get your opinion on Lidl, the German discounter. From their point of view it sounds like they are trying to make a pretty aggressive push into the Southeast and the mid-Atlantic. On the other hand, when I talk to people on the ground, they seem somewhat skeptical. What's your take on their entry into the U.S.?

Craig, this is Mac. We have seen some evidence on the ground, either on ground expanding and they’re well capitalized and appear to have a very aggressive appetite. But they're also quite secretive at the same time. So you don’t see a lot of broad announcements as to where they’re going. We haven't talking to them, about one type that we own in the City of Texas and the conversations ebb and flow as they with any other retailer. So I think there is quite a bit of room before we can really give you on assessment of how they are as a competitor and a threat, and a player, but clearly they are making some moves here and they're trying to do it in a big way. That's about as much as a big return. Jim anything to add?

That’s really - we know they're tied up in and have purchased sites. They really haven’t opened anything yet. So it’s very difficult, but they’re clearly our force overseas, so they are an operator.

Okay.

And I think if you look to the Fresh & Easy history, as Mac said, this is too early for us to project out all our GAAP results, because I think they all thought they would do well prior to opening because you heard about how they did their market research and they had their people living in the U.S. and studying consumer behavior and something it's just unknown of how that will translate to hear.

The only I might add is their model is more about all the model, which is very low price, high value and that typically hasn't affected us as much as some of the higher end or mid-market groceries. We're just in more affluent higher locations so in that sense, they’re something to keep.

I guess I tend to lean toward that view. When I look at what's happening in the U.K. and some of the established supermarkets there, how they've been impacted by their reach into that country, I just wanted to hear what you were thinking, so thank you.

Our next question is from Jay Carlington from Green Street Advisors. Please go ahead.

Good morning, guys. Just to go back to the leasing spreads we're beating up here a little bit. Is there any noise in there, whether it's from re-tenanting in the sports stores or anything? Because it seems like a decent pull and trying to get a handle on the sequential deceleration we've seen over the past couple of quarters there.

You mean beyond what we mentioned in the prepared remarks?

Correct. Yes, the 5A, the mid single digit range that we see versus the low double digits the last couple of quarters. It's a decent pull, so I'm trying to get a sense if there's any -- if the rent increases that you're pushing through just aren't as aggressive any more.

No, I mean I would again just reiterate what we did say in the prepared remarks, that when you do exclude that one lease that had a pretty significant impact. So when you do exclude that then we are in the double-digits for rent growth. So that’s – I mean I think that’s you can’t just ignore that and that was a strategic renewal, newly acquired property that we had underwritten to vacate and we felt really good about being able to reserve some of the income in the short-term while we worked to capture some of the other space back, so we can remerchandize a larger portion of the center. So I think that that’s really important. And beyond that, I think it’s also important to know the actual absolute, so it’s a mix as it often is the absolute rent for our leases that we sign this quarter. I think it’s the highest in 12 months. If – I am not looking at the supplemental, if I recall correctly, I think the rent was $24 and last quarter it was a little low $20 again from memory, but that’s still much higher than we’ve seen. So it is a little bit of mix issue as well.

Okay. I probably missed that in the prepared. Maybe just a quick follow-up. Is there any sense -- I know the retailers don't give you sales but is there a sense of what their OCRs look like today versus a couple of years ago?

We really don’t get a lot of sales data, I mean I looked at Jim or Mac for just maybe any informal feedback that they’re receiving in the field, but we don’t have that many tenants that report. So those – that do typically tend to be the anchors and we’re seeing them continue to have even our grocers have healthy...

Pretty healthy growth here.

Yes, a healthy sale increases.

I think you could see in the renewals, if tenants weren’t able to absorb their rent, they wouldn’t be able to exercise their renewals that they are. They feel confident about their business, so they can make the ratios work and that’s probably the best way to see it play out.

And you see pick up and move out.

Okay, all right. Thank you.

Our next question comes from Ki Bin Kim from SunTrust Robinson Humphrey. Please go ahead.

Thank you. Going back to your development-start guidance, it's a pretty wide gap. What is the two large processes that you're contemplating and when you said next year might look very similar to this year? Does that mean the midpoint, or the range should be similar next year, as well?

Ki Bin, I’m going to repeat the question to Mac, I think he might have been distracted for one second. He makes sure that in about the wide range of development starts and what was that we had this year that is causing that to be a wide range?

Yes.

Really the big difference between this quarter and prior ones is we’ve been presented with an opportunity in the Northeast, very compelling opportunity, where an owner of the site has been working on it for 15 years entitling it. It’s really all about the five yard line and just about done. And we have an opportunity that we will really like to be able to step into and shuffle ready project if you would, that’s 50% preleased. So we don’t have 100% visibility to it occurring this calendar year, but it looks very positive and we want to make sure our guidance included that if it were to close this calendar year. Going forward to 2017, I’d say the range is similar with previous years of 125 – 225, but we would like $200 million, we would like to get it up to $300 million if we can find that right compelling opportunities that meet our disciplined approach. So that’s really the change behind this quarter.

Okay. And just a quick question on market rent growth, do you have a sense of, not leasing spreads, but what market rent growth has done in your portfolio in 2016, and maybe if you have a forecast of what you think market rent growth would be in 2017?

It’s been pretty modest market rent growth has been and I think our expectation is for to continue especially for high quality premier shopping centers.

If you just look at basically the act like the absolute dollars for rents that we’ve signed, I mean we are looking at double-digit increases. But again think about the universe of shopping centers and what a small percentage are owned by REITs. Those REITs ownerships tend – the own the highest quality and then the higher quality REITs owned the higher quality of the high quality. So I think what we’re seeing in our centers may not be a very good proxy for the entire market, so we do continue to see really healthy growth and again it comes back to 96% REITs when almost 93% REITs on our shop space. We have leverage and we’ll continue to arrive that while we have it because we know that it’s not going to last forever.

Okay. Thank you.

Our next question comes from George Hoglund from Jefferies. Please go ahead.

Good morning. Just wondering if you can comment on any recent trends in construction costs, how are they trending on a year-over-year basis?

Hi, George, this is Mac. So we watch it carefully and we’ve seen some of these changes and anticipated them. So we have been fortunate that our development budgets have all held. But we are seeing changes of say 3% to 6% depending on the market and really tied mostly to a shortage in high skilled labor, and that seems to be a common thread throughout. But I think we’re underwriting it appropriately, and we have been surprised by too much. But we always underwrite at inflation and escalation factor for projects that we know we’re going to start several years out. Hopefully that helps.

And geographically, are you seeing any significant differences?

Certainly the coastal markets, the increases are more. Seattle is the market probably only – certainly one of the top two or three house markets that could be little bit over there. San Francisco and certainly, Silicon Valley, actually there is a sort of big one. We’re not in New York metros, but I would imagine that playing out as well.

Okay. Thank you.

[Operator Instructions] And our next question comes from Chris Lucas from Capital One Securities. Please go ahead.

Good morning, everyone. The follow-up question on Ki Bin's question about the development starts. Is there a discrete number of projects that get you to the high end? I'm trying to understand what the scale or the likelihood is as we think about year-end starts?

Sure. Chris, there are three projects that we’re counting out that are ground up projects. We think we’re all going to happen, but we can’t say for sure because fixed development and there is some intergradient to actually come together here in the next month. But the one that we added is about 70 million that should give you some guidance. There is another one anchored by White Mint that we mentioned, we’re working on and third one anchored by Krogers. So there are three significant sized projects, certainly $70 million is little bit bigger than typical one.

There is a one – it’s not widely that they won’t happen. There may be a decent change they can get twist into first quarter of 2017. No guarantees they are going to happen for sure, but we feel very, very confident that that’s going to happen. It is development, but that can be get pushed into 2017.

Yes, and is that the timing issue regulatory-driven? Government approvals, or is there something else that may be impacting the timing?

All three, it’s actually regulatory approval.

Okay. And then just one quick question, on the timing or potential timing for the remaining 1.25 million shares under the Ford sales agreement, any sense in which we should be thinking about modeling those in?

Remember, we have until the middle of next year essentially to draw it down and we do have some visibility into potential acquisition in the first quarter of next year. I think anything prior to that at this point would be too conservative.

Okay, great. Thank you.

Thank you. I’d now like to turn the floor back over to management for any closing comments.

Thank you very much for your interest and time on the call. And enjoy the rest of the week and all the best. Thanks.