Greetings, and welcome to the Regency Centers' First Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Laura Clark, Senior Vice President, Capital Markets. Thank you. You may begin.

Good morning, and welcome to Regency's first quarter 2019 earnings conference call. Joining me today are Hap Stein, our Chairman and CEO; Lisa Palmer, our President and CFO; Mac Chandler, EVP of Investments; Jim Thompson, EVP of Operations; Mike Mas, Managing Director of Finance and Chris Leavitt, SVP and Treasurer. On today's call, we may discuss forward-looking statements. Such statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to our filings with the SEC, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. We will also reference certain non-GAAP financial measures. We provided a reconciliation of these measures to their comparable GAAP measures in our earnings release and financial supplements, which can be found on our Investor Relations website. Before turning the call over to Hap, I want to touch on the earnings and accounting disclosure changes effective this quarter. These include updates to NAREIT FFO and the treatment of gains on sale and impairments of land, as well as accounting changes from the adoption of the new leasing standard, and are summarized in our earnings release and quarterly supplemental. We hope that these details will facilitate this accounting and reporting transition. Hap?

Thanks, Laura. Good morning, everyone. As you'll hear from Jim, Mac and Lisa, we feel good about this quarter's performance, operating fundamentals and the outlook for the business. We remain confident that Regency is extremely well positioned to successfully navigate threats and prosper from opportunities, by intentionally managing and leasing our high-quality portfolio and executing on our value-add development and redevelopment program, and self-funding capital allocation strategy, all while maintaining our strong and conservative balance sheet. Before turning it over to Jim, I'd like to touch on why we really like having grocers at 80% of our centers. This begins with the fact that the grocers in our portfolio include the top operators in the country and are producing sales that average $650 per square foot and benefit from low occupancy cost. At the same time, the grocery business has always been highly competitive and is evolving at an even more accelerated pace. Still having a physical store located close to the customer in the best centers, has and remains the centerpiece of their business model. Importantly, it is the store that provides the best opportunity for the grocer to win the customer through a compelling combination of service, experience and value. Several examples include Publix's impressive top and bottom line growth, results from the focus on paramount importance of their employees who are critical to creating a pleasant shopping experience. Opening new stores and renovating existing ones remains a critical component of this strategy. It is also worth noting that Publix continues to be one of the top buyers of shopping centers. Kroger has a heightened focus on integrating technology and strategic partnerships to better service their existing customers and create new ones. Their ClickList, Restock Kroger and alliances with Ocado and Walgreens are among the more notable initiatives. Grocers like Whole Foods, Trader Joe's, Sprout's, HEB and Wegmans achieve extremely high levels of in-store sales, as a result of the compelling and often unique shopping experiences. And each is expanding their store base with no change to the size of the store footprints. Albertsons/Safeway is investing well over $1 billion annually in the core business. They're likewise focused on the customer experience, including re-merchandising with more organic and gourmet offerings, as well as using technology to support multi-channel customer satisfaction. Importantly, Albertsons again, experienced improved financial performance in 2018, with consecutive sales and EBITDA growth, better margins and a $1.5 billion reduction in debt. Furthermore, Regency's Albertsons locations are in highly desirable trade areas, where the center benefits from its competitive position. The majority are in West Coast markets where the Albertsons/Safeway banner is the market leader. The bottom line is that our grocery anchors are proven operators that are evolving for their customers and generating significant daily traffic to our centers, including the added convenience of buy online, pickup in store. Jim?

Thanks Hap. Performance in operating fundamentals were solid in the first quarter with nearly 3% NOI growth in the same property portfolio, driven entirely by base rent. Our tenants are healthy, demonstrated by historically high collection rates, which translates into very low bad debt. Rent growth is stabilized in the high single-digits, and we continue to have a lot of success incorporating mid-term rent steps into our leases, which is a key component of our strategic objective to average 3% same property NOI growth. Our same property portfolio still sits at a strong 95% leased. The sequential decline this quarter was primarily due by the closure of two Sears locations, but we are very excited about the redevelopment opportunities to upgrade the merchandising mix and overall appeal of the centers. Our shop space is 91.5% leased, which I want to note is among the highest in the sector. This quarter, shop occupancy was impacted by a couple of things. First, an expected seasonal trend of slightly higher move-outs as is typical in the first quarter. Second, lease execution timing is taking longer as tenants remain discerning and deliberate in their leasing decisions. And lastly, we continue to execute on our proactive asset management and center repositioning, which includes recapture shop space in conjunction with our redevelopment assets, which is causing a negative impact of 50 basis points to our shop space percent leased this quarter. And we continue to take an aggressive approach to upgrade the quality of the merchandising, especially at those properties acquired in the merger. All that said, many successful local, regional and national retailers continue to look for new locations in high-quality centers and the depth and velocity of our leasing pipeline remains healthy. We feel good about the level of tenant interest, where we are seeing demand across all regions within expanding REIT categories like off-price, fitness, restaurants, entertainment and grocery users for both anchor and side shop spaces. We believe tenants are making thoughtful business decisions as they commit to opening new stores. Looking forward, we believe as the year progresses, occupancy will increase as our team executes on our redevelopments and re-anchoring opportunities, supported by this robust pipeline of tenant interest. Mac?

Thanks Jim. We had another successful quarter executing on our capital allocation strategy. This starts with the $170 million of annual free cash flow after capital and dividends, enabling us to fully fund our development and redevelopments on extremely favorable cost-effective basis. This clearly differentiates Regency's business model. The inherent quality of our portfolio and the free cash flow, allows us to be selective with capital recycling as we identify compelling investment opportunities that can be executed on a basis that are tax efficient and mitigates adverse impacts to earnings. In the first quarter, we sold seven shopping centers for a total of $137 million. As we previously communicated, this sales activity funded prior-year share repurchases, as well as investments in the high-growth premier acquisitions. A prime example is Melrose Market, an exceptional center near downtown Seattle acquired in the first quarter with excellent growth prospects. Also during the quarter, we acquired an additional interest in Town and Country Los Angeles. Our total interest is now approximately 20% and we have the opportunity to increase this to 35% and possibly even more. We cannot be more excited about the value creation opportunities for this shopping center, anchored by Whole Foods and CVS, and located across from one of the top-performing malls in the country, The Grove. Redevelopment of this asset, which is expected to start in late 2020 or early '21, will include 80,000 square feet of new retail in place of the former K-Mart box, plus 325 mid-rise apartments to be developed by Holland Partners on a 99-year ground lease. The vibrancy, tenancy and density of this site is an incredibly attractive addition to our portfolio. This quarter, to provide more visibility into these types of future opportunities, we've added new supplemental disclosure regarding select operating properties with near-term redevelopment opportunities. This includes the Abbot in Cambridge, which started subsequent to quarter-end; Westwood in Bethesda; and Costa Verde in San Diego. We hope this new disclosure provides more transparency into the depth of our pipeline and the incremental value that will be generated as we execute our plan. Our developments and redevelopments are performing well at nearly 90% leased with strong leasing momentum and yielding a blended 7.5% return and margins that remain well above cap rates for comparable high-quality shopping centers. On top of our in-process projects, we have a pipeline of future development and redevelopment opportunities that should enable us to meet our objective at $1.25 billion in starts and deliveries over the next five years and create significant value. Lisa?

Thank you, Mac and good morning, everyone. 2019 is off to another good start with first quarter results in line with our expectations. I'd like to begin with additional color around our same property NOI and earnings guidance. We are maintaining same property NOI guidance in the range of 2% to 2.5%, and while we do not provide quarterly guidance, I think it's important to note that we expect next quarter to come in below 2%, primarily due to the two Sears closures and timing of reconciliations. As we have previously communicated, our 2019 same property guidance range does fall below our 3% strategic objective due to the closure of these Sears locations, as well as a muted contribution from redevelopment. However, we feel confident in our ability to achieve our 3% objective over the long term. Turning to earnings, we had two non-recurring items in the first quarter resulting in a negative $0.03 per share impact to NAREIT FFO. The first item was an early redemption charge of $0.06 per share related to the prepayment of our 2021 bonds, following a successful 30-year bond offering executed during the quarter. This offering further enhanced our financial flexibility and increased the duration of our average maturities to over 10 years, while maintaining our weighted average interest rate. In addition, we incurred a positive non-cash impact of $0.03 per share related to the recognition of below-market rent intangibles for two anchor boxes that we got back during the quarter, where we are upgrading both spaces at a much higher rate. With these two impacts, we have updated our FFO and non-cash guidance accordingly. Excluding these impacts, the midpoint of our FFO guidance is unchanged. Importantly, in the first quarter, we grew core operating earnings by 3.4%, when adjusted for the lease accounting…

[Operator Instructions] Our first question is coming from Christy McElroy of Citi. Please go ahead.

Just with regard to same store NOI, so - it seemed like base rent growth was driving much of that overall same store growth in Q1. Just with occupancy down year-over-year outside of the usual contractual rent growth, could you maybe just sort of walk us through the main drivers of that base rent growth and how you see that trending through the balance of the year?

This is Lisa. We still - the model that we always share really, and - that was also as part of our initial earnings guidance maybe during the year, is still an accurate reflection of that. So 1.3% growth will come from contractual rent steps. And that is obviously in that base rent line item. Then you have another piece of that coming from rent spreads. And so that's been in the high single-digits. So that will add another, call it, 100 basis points. So that gets you to the 2.3%. And then the Sears impact, we did get two months of Sears income in the first quarter, so that's actually also in that line item. And then going through the rest of the year, that's going to become more of a drag.

Right, okay.

So while we had 2.8% for quarter one, that is actually going to decline through the rest of the year.

And then, Jim, I just wanted to follow up on your comment about lease execution timing taking longer. Is this sort of more of the theme of what we've been seeing in recent years, or is this sort of a more recent change that you've observed and if it is more recent, why do you think - what do you think is driving that?

Christy, I think it's a continuation of the theme we've talked about. I think as retailers mature, it's actually side-shop retailers, the survivors are various state business people, they're very cautious and deliberate about what they do. And as they make those kind of commitments, they're being very deliberate. So we are seeing more of that time to execution than - it's becoming more apparent I think than maybe we used to see it, but it's been out there.

Okay. Just wanted to make sure this wasn't something new. Thank you.

It's - yeah, it's not a sea change, but it's kind of - incremental.

Our next question is coming from Rich Hill of Morgan Stanley. Please go ahead.

Lisa, maybe this is a follow-up question for you on modeling. It looked like two line items that we were focused on, other rental income was maybe a little bit lower than we were expecting on annualized basis and then ground rent expense was maybe a little bit higher than we were expecting. I know these things can be lumpy, but I'm curious that there is - this is just timing related, or there's anything that we should be thinking about going forward.

No, when you - if we think about the full year - for the remainder of - the projections for the remainder of the year, the primary line item that's going to drive same property NOI growth is base rent. And there is going to be timing impacts and reconciliations from other income from all of those other line items. But at the end of the year, when you look at the individual line items, the driver will be base rent. And as I said to Christy, while its 2.9% on my number, so yes 2.8%. While it's 2.9% growth in the first quarter, we're going to see Sears continue to drag. So Sears was only a 10 basis point impact in the first quarter. That's going to be growing to 40 bips for the full year. And then just as we talked about in the beginning of the year, as we talk about in the beginning of every year, the most uncertain part of our business are unplanned move-outs and they are also immediately impactful. And you saw from our numbers that we had move-outs in the first quarter, which is very typical, as Jim mentioned from a seasonal perspective. We did not have those burn-ups in the past two years, and so we were able to raise that kind of a low rent after the first quarter, which we're not able to do this year, because we did actually experience those move-outs.

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

Just given the higher and earlier pace of dispositions, I'm wondering if the intention is to slow the disposition process for the rest of the year or may you raise the target going forward?

Mac and I are looking at each other. So our argument is who's going to answer it. So I'll take it from a guidance perspective and Mac can add color in terms of the market in general. So just a reminder that the dispositions - these early dispositions are really funding last year's share buyback. So with regards to - I'll let Mac take it from there. But again, just a reminder that the early dispositions are funding the share buyback and when you look at our guidance, you can see what we're expecting for the remainder of the year. However, we're always potentially going to be opportunistic. And with that, I'll hand it over to Mac.

Yes, I don't have a whole lot to add at that point, but I would say that we have executed in accordance with our expectations. We are meeting our prices, cap rates are stable for these assets and I'd say that the buyer pool is a little bit deeper than maybe we've seen in the last quarter or two. So we feel confident about our ability to meet our plan for the rest of the year.

And then just a follow-up on - I wondered how, the push on contractual rents. I know your rent was around 1.3% and you're targeting 1.5%, but how are the retailers reacting to slightly higher contractual bumps?

We continue, Craig, to have really, really good success in implementing those embedded steps. I think 90% of our shop space around about 2.5% average. Annual rent step and it's - you combine that with our rent growth of 8.8% and that's kind of - as lease outline, that's kind of key to the bedrock of our sustainable NOI growth.

And I mean, is it the quality of the portfolio that's allowing you to push this or it's just something else?

I think certainly the quality. And it's just a - I mentioned we fight, we fight hard for in the field and we have continued to have good success in doing that.

Okay.

And a big part of the time, issue is that we are selective in leasing to and even though you may be getting pushback from the tenants, we're negotiating hard to achieve the kind of the tenants that we want and the terms that we want.

Our next question is coming from Samir Khanal of Evercore ISI. Please go ahead with your question.

So I guess, Lisa, can you remind us how much cushion you have left to account for unexpected vacancies at this time as part of guidance? I think - correct me if I'm wrong, please, but I think initially it was about 100 basis points of credit loss reserve?

So, fact - I'll give you some of the facts first.

Yes.

We have known - the significant known bankruptcies impacting 2019 are Sears and Toys "R" Us. And the impact in the first quarter was 30 basis points and the full-year impact is going to be 60 basis points. I don't like to think of cushion, if you will, with regards to bankruptcies. And again, I'll just bring it back to the most uncertain part of the business going forward or the move-outs. We have a great leasing pipeline that we have a lot of visibility to. We certainly have full visibility to all of the redevelopments that are in process and in managing that really well. What we don't know are the unplanned move-outs. So with that, our guidance of 2% to 2.5% is incorporating, what we believe to be a prudent level of move-outs that's really consistent with prior years.

And I guess one for Hap. You've done a great job on the leasing front on the shop space over the last few years, but that's a segment that did have an impact for you and your peers as well, sort of in the last downturn. I guess, how do we think about that segment? If we do go into slow down, let's say in the future, whether it's 24 months or 18 months that sort of time frame, what steps are you taking to minimize the impact as you continue to lease space in that segment?

Well, I would say a couple of things. Number one, and this has continued to happen, as there's been kind of a self-policing or self rationalization in that. The tenants today that survive the downturn in '08 and '09 are better operators and that's been the continued - continued to be the step of this - the case. In addition to that, we are much more selective through a fresh-look initiative, through credit analysis and who --trying to get the best local, regional and national operators in there. And we feel very good about our lineup of side shop retailers. So does that mean we're going to be totally immune to the next downturn when it occurs? No, but I think we're much better positioned going into whatever the economic conditions may - that we may face in the future.

Our next question is coming from Derek Johnston of Deutsche Bank. Please go ahead with your question.

Given your free cash flow, it does enable a healthy pipeline of redevelopment opportunities. And I believe around $1.2 billion to $1.5 billion has been discussed over the next five years. So the question is, how do you think about your development pipeline versus your redevelopment pipeline in terms of priority with capital spend? And is it more of a win where the municipal entitlement shake out or something else?

Derek, this is Mac. We look at both opportunities really equally in many ways. They're different in the sense that a development is a ground-up - a development opportunity comes out of the ground, and it's new income for the very first time. We continue to look for those and with our unique platform, we've been successful at finding these opportunities. For redevelopment, what we like about them is, they're in locations where we already know the trade area, we know it extremely well and we can time those redevelopments to start when market conditions give us the green light. So, the returns are pretty similar, these days, but we like both sets of opportunities. I would say one is a priority over the other or agnostic. And our teams are very much engaged to find both types of opportunities, but to us they are investments and they have strong returns whether they're incremental returns in a redevelopment or just straight up returns from the ground-up.

And like as you mentioned, I think the key thing is as you go through the math, $170 million of free cash flow on a - essentially leverage neutral basis is going to fund $250 million, $300 million of annual development starts and deliveries. And so we're very well positioned to fund those developments and redevelopments, which are very compelling on an extremely favorable basis.

Just secondly, are you seeing increased traction and true proof-of-concept at this point from digitally native and multi-channel focused retailers? I mean, are we at the point where we can firmly say this isn't a fad or a beta test and the demand uptake should ramp over the next several years?

I'm happy to take that one. I don't think it's a fad. I think you're clearly seeing those tenants who have begun to engage more bricks-and-mortar, who came out of the digital native background and you're seeing it more and more. I guess, the question would be, over time is, what's the depth of their store count, how broad, will they go nationally and how many stores will they do per market. So that strategy is playing itself out and we'll continue to monitor that. But one advantage of these digital native platforms is, they really know their trade areas well through their data and through their - through their research. And so they actually have told us in many ways, they have greater reliability on a new store than a traditional bricks-and-mortar store and as a result, often they can pay more rent because of the probability of success. So anyway, we see that happening and the depth of that is, is what's to be determined.

And I have something else to - just to remind ourselves, everybody on the call, if Amazon paid $40 million plus a door for Whole Foods, we will be part of very successful native digital retailer who is expanding very aggressively from a bricks-and-mortar standpoint. So I think that is happening. And I think that these native digital retailers are finding the importance of physical locations.

And because this is something we talk about so often, I just - I think it's important to remember and note that, one, there is no debate among any of the retailers whether they're digitally native or whether they're bricks-and-mortar native. That'd be - the most profitable way to get their goods to their customers, is to have the customers walk in the store; and two, the new customer acquisition costs are much lower also with bricks-and-mortar than they are just digitally. And they've all acknowledged that and recognized that. And I think their strategies are reflecting that as well.

[Operator Instructions] Our next question is coming from Jeff Donnelly of Wells Fargo. Please proceed with your question.

Maybe this branches up an earlier question, but concerning grocery and your underwriting process there, I'm just curious how you guys are informing yourself on how that landscape is going to evolve in the coming years and what do you feel are going to be the key points of differentiation? I mean, is it a decision that runs more to the site, is it like real estate than the retailer or is a little more nuance than that?

The answer to you is, the retailer - the answer is yes. The retailer matters and the site matters. And going back to the site is what you want to have is a location where - if bad news happens and we hope it doesn't, it becomes good news from a merchandising and from replacement standpoint and from a rent standpoint. Like today, I think the good retailers want to be in the better sites and good retailers, including the better grocers, want to be in the better sites where they're going to generate significant traffic. And I think it's kind of a self-rationalization process. But I think that we want to do - as I indicated, we have and been part of our history and our track record of working and partnering with the best-in-class operators that get, that have strong balance sheets and ability to invest in the business, and in effect, pay the rent that we'd like to get in the better locations. And you look at, whether it's Whole Foods or Publix or HEB or Kroger, Sprout's, these are all strong retailers that are continuing to evolve. They know how to provide customer experience, they know how to differentiate themselves. And I - all those factors are critically important to us because what we want to do is, if they do it, we got the right - if we have the right retailer and you have the right grocery anchor, then we're going to be able to track the better side shop retailers, which is also critical to our business model.

And maybe just as a follow-up on that, I mean, do you think it's become clear that a lot of the changes or a lot of the concepts that people are exploring, like bigger format, smaller formats, online order and pickup in store, is that you've seen a better model emerge or is that sort of yet to be determined, do you think?

So here is what's so interesting, is that Kroger's ideal format is 100,000 square feet, HEB is 110,000 square feet to 120,000 square feet, Publix is in the 50,000 square foot range, Whole Foods range is from 40,000 square feet to 60,000 square feet, Trader Joe's is in the 15,000 foot range. So it varies and I think they've all been able to, in effect, continue to perfect their model. I think it's an evolutionary process, but what's - one of the more interesting things that we've noted is, their formats have not really shrunk, I mean other than to fit into infill locations. So, I think they've all adopted, they've all got strategies from the formatting standpoint Jeff, that they think makes sense and the proof has been in the pudding with their performance.

If I could, maybe just a question for you, Lisa. It may be a more conceptual question, I guess on leverage. There's some property sectors out there, not retail, but - that have seen their acceptable levels of leverage shift lower in the last 10 years to 20 years as these companies who are public, the fixed income and equity investors become less tolerant to volatility or severity. Regency clearly has a great balance sheet, but retail has had its challenges and we've seen leverage shift lower. But it's also happened during a time when the economy has been relatively resilient, we haven't really faced recession. Do you - I guess, how do you think about where leverage could go in the future to the extent we have a recession that adds more pressure. Do you foresee a time where the leverage in retail could actually continue to shift lower than it is today?

First off, we're really comfortable with our balance sheet today. We're not just comfortable, we're really proud of it. We've made significant progress on improving and strengthening the balance sheet, whether it be just with the level of debt that we have and also with the tenure of the debt that we have. With that said, we've been pretty transparent that our target level of net debt to EBITDA today is 5 times, then we're slightly above that. So we're going to continue to try to drive that down through organic growth and opportunistic actions when they're available to us. We are always monitoring our capacity levels, our commitments to developments, to acquisitions and we ensure that if we ever were to go into the crisis that we had in 2009 when there was zero access to the capital markets for a period of time, that we can actually survive not just - that was for about four months, we could actually for an excess of a year. So we're going to continue to maintain that and really focus on that. At the same time, I don't like to think of it as pressure in a recession, I'd like to think that we've positioned ourselves to take advantage of opportunities, because that is the one thing that in hindsight, right hindsight is 2020, had we been in a position then that we are today, there are opportunities that were presented to us that we were not able to capitalize on. And today, we will be able to capitalize on those. And oftentimes, and I've heard Hap say this right, it's - when the blood is in the water is when we won't be able to count.

Our next question is coming from Wes Golladay of RBC Capital Markets. Please go ahead with your question.

Can you just comment on the tenant interest from the retail side to be part of these mixed-use projects, the live, work, play. Is it growing, any particular category stand out, and do they have a preference for being extra residential or office?

I'm happy to answer that - that one. This is Mac here. We are definitely seeing tenants who are interested in these mixed-use locations and in part because of the quality of the locations. These tend to be of higher densities, better incomes, better access to transit. The office component is a very powerful one and our restaurant tenants really react positively to office. Because I understand they have to be in our project, but if it's across the street or within a quarter of a mile where people can walk, that really is a big boost to restaurant lunch traffic and also evening traffic, and just having people on site apartments help too as well. It certainly helps with just active food court in the evenings. But one apartment is not enough to make a big difference. You need a sizable amount of density within a walking distance. But it's also the place making that you often find more in a mixed-use environment than you do in a very traditional environment. And that is something else that the retailers would resonate to. They want environment where the customers choose this location over other ones, because it's a opportunity to shop, and to dine, to linger, to patronize, and we all know that the longer a customer spends on site, the more they are likely to spend. So there's definitely interest there. We are seeing that more and more.

[Operator Instructions] Our next question is coming from Mike Mueller of JPMorgan. Please go ahead.

Looking at the past four quarters, it looks like your renewal spreads have increased each quarter. At the same time, the new leasing spreads have gone down each quarter. And I know the new spreads will bounce around more, but is there anything we should be looking into as a trend as it relates to the renewal spreads increasing?

It's - like it's primarily just related to mix. We feel that we've really settled in actually with - in terms of a stabilized level of rent spreads on both renewals and you're absolutely right on new. We could have one transaction that can really drive that. And if you have a 40-year lease essentially that rolls and expires, that can have a significant impact on the percentage.

Our next question is coming from Ki Bin Kim of Suntrust Robinson Humphrey. Please go ahead.

So I wanted to ask you about how you guys balance and how you think about merchandising mix versus rent. And obviously, you are underwriting businesses all the time, but are you - is there a change in that where it's not just underwriting the business to see if it's a good business and it was Internet-resistant, but trying to even gauge just the management teams at those retailers are forward-thinking enough, dynamic and they're thinking enough where they can be relevant and viable for 10 years down the road. So how do you think about all those things?

Ki Bin, that kind of goes to the core of our fresh-look philosophy. We are really looking for retailers who get it, who do make a difference, do create that special vibe that can drive traffic and help their neighbor tenants. It's a key ingredient to the way we look at our business and the future of the leasing. We think we do a pretty good job of that and it is kind of an interesting struggle that you always have on rent versus SKUs versus credit and that whole mix has to come together, and you make a decision on who you think is going to add the most value to your shopping center and that's kind of how we go about it.

So you made a comment earlier that retailers are maybe taking a little bit longer to decide where to go. Do you - on the flip side, do you think landlords like yourselves are also thinking about - a little bit more about who you bring into your centers and is that a bigger consideration?

I'm not sure I understood that.

I mean, in terms of the - us being more selective, is that really the question?

Basically.

Jim mentioned it when he first opened the last answer with fresh-look. It's actually nothing new for us. I mean, we've been really focused on it for several - more than several years now, because the - as the retail environment has been changing and with that pace of change really accelerating, we are really - we try to get in front of it and we understand that people have so many choices today and they can - they don't have to come to our shopping centers. So we need to ensure that we're making our shopping centers a place where they want to come and want to shop, it's convenient and not only is it convenient, but Jim used the word vibe, it's place making. It has to be a good experience. Our retailers mentioned that our grocers are focusing on the same thing. Once they are inside of the four walls, it has to be a good experience. Because if it's not, they're not going to come. And we really have begun - I mean, we began focusing on that several years ago and being much more selective with the merchandising mix and the retailers and tenants that we're leasing to.

Our next question is coming from Chris Lucas of CapitalOne Securities. Please go ahead.

Just a quick one. On tenant follow-up for the quarter, was that in line with expectations better or worse?

I'll repeat the earlier answer. Every year we come into the year and we do expect to have a seasonal decline in occupancy for - I've been in the business for 23 years. And I think for maybe three of those, we haven't had it. So it was in line with our assumptions. We were kind of hoping that maybe we'd outperform that and we did. So we're still really comfortable with our guidance of 2% to 2.5%. And we have - we essentially still have the same assumptions moving forward for the rest of the year in terms of having a consistent level of move-outs that we - similar to what we've experienced in the past two years to three years.

And Lisa, on that move-out rate, any themes this year versus prior year's that maybe differentiated this year's outcome?

I'm sorry, Chris, you're a little muffled.

Themes on move-outs.

I'm sorry.

Yes. No, it is obviously something that we looked at really closely and not only just this year, but we also even - we looked at kind of what's the mix of our tenants that are in our centers and also that are moving out of our centers and what we are leasing to. And amazingly, it is consistent. We still have the same percentage of restaurants, soft goods, service and certainly it is actually a little bit surprising to me when we looked at it.

At this time, I'd like to turn the floor back over to Mr. Stein for closing comments.

We appreciate your time and interest in Regency, and hope that you guys have a wonderful weekend. Thank you very much.

Ladies and gentlemen, thank you for your participation, this concludes today's conference. You may disconnect your lines at this time and have a wonderful day.