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Basch Report
Jax Daily Record Thursday, Aug. 12, 202105:00 AM EST

Regency Centers optimistic amid COVID spike; Fortegra parent may revisit IP

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The shopping center owner says retailer demand is strong; Dream Finders earnings rise.
by: Mark Basch Contributing Writer

Shopping center operator Regency Centers Corp. is seeing customer traffic back to pre-pandemic levels, company officials said last week.

Even with the recent spike in COVID-19 cases, they are optimistic the Jacksonville-based company’s retail tenants can handle it.

“Our portfolio of foot traffic is now back to at least 100% of pre-COVID levels in nearly all of our markets,” CEO Lisa Palmer said Aug. 6 in Regency’s quarterly conference call with investment analysts.

“Retailer demand is healthy. This is reflected in our strong leasing activity and we’re seeing fewer tenant failures and, therefore, lower move-out activity than we expected,” she said.

However, Palmer said the company is cautious.

“We are all keenly aware of rising virus cases in many cities across the country as we experience another wave of the pandemic. New mask and vaccine restrictions are emerging, with the risk of perhaps even the return of capacity restrictions in some markets,” she said.

“But with the knowledge and experience that we and our tenants have gained over the last year and a half, we feel good about where we stand long term and our ability to weather additional storms,” she said.

Palmer also said the company expects any new restrictions to be short-term.

Regency’s portfolio of 403 properties across the country, largely grocery-anchored shopping centers, was 92.5% leased as of June 30.

While many retailers fell behind on rent a year ago, Regency said it had collected 96% of second-quarter rents as of Aug. 2.

Regency’s funds from operations (earnings excluding some noncash items) were 99 cents a share in the second quarter, compared with 61 cents in the second quarter of 2020 when the pandemic had its strongest impact on businesses.

Treace Medical also monitoring COVID spike

Treace Medical Concepts Inc. also is monitoring the COVID resurgence and the impact it could have on its business.

Ponte Vedra-based Treace Medical produces a surgical system to treat bunions. Demand for elective medical procedures fell sharply a year ago as health care resources were devoted to COVID, so a resurgence could impact demand for bunion surgery again.

“We are closely monitoring the impact of the delta variant, including potential changes in hospital responses and the impact they may have on elective procedures,” CEO John Treace said in the company’s conference call last week.

“Notwithstanding, we remain cautiously optimistic and are increasing our full-year 2021 revenue guidance to $95 million, up from our prior guidance of $87 million to $92 million,” he said.

Treace Medical reported second-quarter revenue of $20.7 million nearly tripled the 2020 second-quarter results, but also was 10% higher than the first quarter of this year when conditions were closer to normal.

“All in, we are pleased to see continued growth in the second quarter and early into the third quarter, which is generally a soft quarter for elective procedures,” Treace said.

Treace Medical, which completed its initial public offering in April, had a net loss of $5.1 million, or 10 cents a share, in the quarter.

Dream Finders earnings rise

The other Northeast Florida-based company to complete an IPO this year, Dream Finders Homes Inc., reported higher second-quarter earnings despite supply chain disruptions affecting homebuilders.

Dream Finders said  Aug. 10 that net income jumped 144% to $29 million, or 31 cents a share.

Revenue rose 83% to $365 million and home closings rose 91% to 996 in the quarter, helped in part by acquisitions.

In the Jacksonville market, home closings rose by 18 to 265 and the average sales price rose by 15% to $351,496.

“Price appreciation in our homes sold has flowed through to our margins, which are outpacing the industry-wide headwinds we are facing in the supply chain,” CEO Patrick Zalupski said in a news release.

“Our operations have been impacted by numerous supply chain disruptions that - in our opinion - ultimately stemmed from suppliers’ start and stop production schedules, resulting from COVID-19,” he said.

“The homebuilding industry is resilient, and our suppliers and trade partners are working hard to address these issues.”

Fortegra parent may revisit IPO

Law enforcement products company Cadre Holdings Inc. postponed its planned stock sale last week, becoming the third Jacksonville-based company this year to call off an IPO.

Southeastern Grocers Inc., parent of Winn-Dixie and three other supermarket chains, canceled its IPO in January and specialty insurance company Fortegra Group Inc. withdrew its IPO in April.

Fortegra’s parent company, Tiptree Inc., reported earnings last week and an investor asked in its conference call if the company plans to try a Fortegra IPO again.

“I will tell you that it is very much something that we are continuing to consider,” Tiptree Executive Chairman Michael Barnes said.

Barnes said the decision comes down to Fortegra meeting growth objectives without needing additional capital from an IPO.

“But right now, as I think we communicated previously, we believe Fortegra can continue to meet its growth objectives being part of Tiptree for the time being,” he said.

Tiptree said Fortegra’s second-quarter revenue rose 52.9% to $252.3 million and its adjusted earnings rose 56.8% to $14.1 million.

Black Knight grows with acquisitions

Black Knight Inc. said last week its second-quarter organic revenue grew 11% but helped by acquisitions, total revenue rose 23% to $361.3 million.

The Jacksonville-based mortgage technology company’s adjusted earnings rose by 5 cents a share to 57 cents.

“We’re able to achieve these results due to the strength of our integrated end-to-end platforms and strong execution of our growth strategies,” said CEO Anthony Jabbour.

“We believe M&A is a great tool to supplement our internal innovations, which is why we have completed six acquisitions since March of 2020,” he said.

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