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Basch Report
Jax Daily Record Thursday, Feb. 18, 202105:10 AM EST

Regency Centers: 97% of tenants open

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The mall owner still is concerned about a “reverse course” scenario of pandemic reclosures.
by: Mark Basch Contributing Writer

Nearly a year after the COVID-19 pandemic forced widespread business shutdowns, Regency Centers Corp. says 97% of the tenants in its shopping centers are open.

However, the Jacksonville-based company is remaining cautious in its outlook in case a “reverse-course” scenario forces closures again in 2021.

“Despite a rise in cases in most markets and increased restrictions in some, we have been encouraged by continued improvement in our operating results and this is driven by further meaningful progress on rent collections,” CEO Lisa Palmer said last week during Regency’s quarterly conference call with analysts.

Regency reported fourth-quarter funds from operations of 76 cents a share, down from $1 the previous year. 

That was an improvement from its FFO of 61 cents in the second quarter and 60 cents in the third quarter of 2020 as the impact of the pandemic affected its tenants.

The results beat the consensus forecast of 72 cents by analysts surveyed by Zacks Investment Research.

FFO measures earnings excluding certain noncash charges and is a commonly used analytic for evaluating the performance of real estate investment companies.

Regency had collected 92% of fourth-quarter rents as of Feb. 8 at its 411 properties across the country, many of which are grocery-anchored shopping centers.

“The hardest hit categories however, especially in the more restricted markets, are still lagging,” Palmer said.

“Many entertainment, fitness, sit-down restaurants, and personal service centers are still either not allowed to open or are operating with severe capacity restrictions. This has had the greatest impact on our local small shop operators,” she said.

Regency’s properties were 92.3% leased at the end of 2020. All but two of its 19 properties in the Jacksonville market exceeded 90% occupancy.

The exceptions were the Mandarin Landing center anchored by Whole Foods in South Jacksonville at 89.1% and the South Beach Regional center anchored by Home Depot and Trader Joe’s in Jacksonville Beach at 85.8%.

A Stein Mart store in the Jacksonville Beach center on Florida A1A north of Butler Boulevard closed in October as that Jacksonville-based retailer went out of business.

Office Depot closed its store in Mandarin Landing on San Jose Boulevard north of Interstate 295 in November.

Regency also reported its planned East San Marco center anchored by a Publix supermarket is 74% leased as construction begins on the property at 2039 Hendricks Ave. 

It announced Feb. 16 that OrangeTheory Fitness also will lease there but did not name any others.

The company’s report said it expects to start collecting rents from East San Marco in the second half of 2022.

Regency is projecting 2021 funds from operations of $2.96 to $3.14 a share, up from $2.95 in 2020 but still below 2019’s $3.89.

The company is looking at three possible scenarios for this year’s earnings: The reverse course scenario in which the pandemic forces a return to business shutdowns and restrictions; a status quo scenario; and a continued improvement scenario in which restrictions are lifted and more government stimulus helps business.

“While we do have a greater sense of optimism and that is inherent in our continued improvement scenario, it is still too early in the year to eliminate our reverse course scenario,” Palmer said.

“As we do move through the year, we will have a lot more clarity and visibility and we will refine our expectations accordingly.”

Pandemic flattens growth at FIS

Fidelity National Information Services Inc., or FIS, said organic revenue growth was flat in the fourth quarter as the pandemic affected consumer spending trends.

The Jacksonville-based financial technology company expects better growth in 2021.

FIS reported adjusted earnings of $1.62 a share in the fourth quarter, 5 cents higher than the previous year, with revenue little changed at $3.3 billion.

Earnings were 6 cents higher than the consensus forecast of analysts, according to Zacks.

Revenue for all of 2020 rose 21% to $12.552 billion, mainly because of the company’s acquisition of Worldpay Inc. in mid-2019. 

FIS said excluding the impact of acquisitions and foreign currency exchange rates, revenue fell 1% organically.

The company projects 2021 revenue at $13.5 billion to $13.7 billion with adjusted earnings of $6.20 to $6.40 a share, up from $5.46 in 2020.

“Once we lap the COVID pandemic comps in late Q1, we expect revenue growth to accelerate materially, beginning with the second quarter and driving us to our full year expectations,” Chief Financial Officer James Woodall said during the company’s conference call with analysts last week.

FIS reported growth in its banking and capital markets solutions businesses last year. 

However, that was offset by an organic decline in its merchant division, which includes the payments technology business of Worldpay. The drop in consumer spending affects that business.

CSX Corp. raises dividend again

CSX Corp. said last week it is raising its quarterly dividend payments by 2 cents a share, from 26 cents to 28 cents.

This is the fifth straight year CSX’s board of directors has raised the quarterly dividend by 2 cents. It left the dividend unchanged throughout 2016.

Kraft Heinz mum on Maxwell House

The Kraft Heinz Co. agreed last week to sell its Planters nuts business to Hormel Foods Corp., the food company’s second big divestiture in the last six months.

But two years after reports surfaced that Kraft Heinz was considering selling its Maxwell House coffee business, the company remains quiet about that division.

As Kraft Heinz reported fourth-quarter earnings last week, it gave no information on its coffee business at all.

The lone remaining U.S. Maxwell House plant is the Downtown Jacksonville facility at 735 E. Bay St., which employs about 200 people.

The plant has been operating at that site since 1924.

The company announced the $3.35 billion sale of its nuts business as it announced earnings. 

It said the sale includes two Planters production facilities and one Corn Nuts plant and employees will continue to operate as usual under Hormel’s ownership.

“Strategically, this will sharpen our focus and investment on parts of our portfolio with greater growth prospects and competitive advantage,” Chief Financial Officer Paulo Basilio said during Kraft Heinz’s quarterly conference call, according to a transcript posted by the company.

“Also, recall that we announced the divestiture of our Natural Cheese business last September. Taken together, these two divestitures improve our mix and growth trajectory,” he said.

Kraft Heinz said the nuts businesses produced about $1.1 billion in sales last year. Total sales for the company were $26.2 billion.

Consulting Solutions continues growth

Jacksonville-based Consulting Solutions continued its growth with the acquisition last week of TEK Connexion, a Chicago-based provider of technology services and workforce solutions.

This is the sixth acquisition for the technology staffing and solutions company since it was acquired by investment firm White Wolf Capital LLC in 2016.

As a private company, Consulting Solutions does not publicly report financial data and it did not disclose details of the TEK acquisition.

The company said in November it was included in a ranking of the fasting growing staffing firms by Staffing Industry Analysts, a list covering firms that generated at least $100 million in annual U.S. staffing revenue. 

However, Consulting Solutions did not say where it ranked and Staffing Industry Analysts did not publicly release its full list. 

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