Form 8-K
Index to Financial Statements

 

SECURITIES AND EXCHANGE COMMISSION

UNITED STATES

Washington, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) June 13, 2005

 


 

REGENCY CENTERS CORPORATION

(Exact name of registrant as specified in its charter)

 

Florida   001-12298   59-3191743

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

121 West Forsyth Street, Suite 200 Jacksonville, Florida       32202
(Address of principal executive offices)       (Zip Code)

 

Registrant’s telephone number including area code: (904)598-7000

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230 .425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 

 


Index to Financial Statements
Item 8.01 Other Events

 

The Company expects to file shelf registration statements on Form S-3 to register securities during June 2005. In connection with the expected filings, the Company is reclassifying the operations of certain sales of properties that occurred subsequent to December 31, 2004 into discontinued operations within its consolidated financial statements that were previously filed under Form 10-K as of and for the year ended December 31, 2004.

 

The Company’s properties generally have operations and cash flows that can be clearly distinguished from the rest of the Company. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“Statement 144”), the operations and gains on sales reported in discontinued operations include those properties that were sold or held for sale, and for which operations and cash flows can be clearly distinguished. Held for sale includes only those properties available for immediate sale in their present condition and for which management believes it is probable that a sale of the property will be completed within one year. The operations from properties sold or held for sale have been eliminated from ongoing operations and the Company will have no continuing involvement after disposition. Prior periods are reclassified to reflect the operations of properties sold or held for sale as discontinued operations.

 

During the three months ended March 31, 2005, the Company sold one property for net proceeds of $27.8 million which had not been classified as held for sale at December 31, 2004 because completion of the sale was not yet considered probable. On March 31, 2005, the Company reclassified two properties as held for sale which were subsequently sold for net proceeds of $16.7 million. In accordance with Statement 144, the Company is reclassifying the operations of these three properties from continuing operations into discontinued operations for the years ended December 31, 2004, 2003 and 2002 in the attached financial statements. The reclassified amounts for 2004, 2003 and 2002 are approximately $841,000, $271,000 and $355,000, respectively. These reclassifications represent 0.6%, 0.2% and 0.3%, respectively of net income for each year. The reclassified amounts will have no impact on net income for common stockholders or net income for common stockholders per share as previously reported.

 

The Company is not revising Management’s Discussion and Analysis (MD&A) included in Form 10K as of and for the year ended December 31, 2004 given the insignificance of the reclassified amounts. The Company believes that the reclassifications do not have a material effect on the Company’s previously filed MD&A relative to its financial condition and results of operations for the years ended 2004, 2003 and 2002 and has not included any of those elements of its previously filed Form 10K in the attached financial statements.

 

 

1


Index to Financial Statements
Item 9.01 Financial Statements and Exhibits

 

Financial Statements

 

Regency’s 2004 consolidated financial statements reflecting the reclassifications discussed above together with the report of KPMG LLP are listed on the index immediately preceding the consolidated financial statements at the end of this report.

 

Exhibits

 

23. Consent of KPMG LLP.

 

 

2


Index to Financial Statements

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

       

REGENCY CENTERS CORPORATION

(registrant)

Date: June 13, 2005       By:   /s/ J. Christian Leavitt
               

J. Christian Leavitt, Senior Vice President,

Finance and Principal Accounting Officer

 

 

3


Index to Financial Statements

Regency Centers Corporation

 

Index to Financial Statements

 

Regency Centers Corporation

    

Reports of Independent Registered Public Accounting Firm

   F-2

Consolidated Balance Sheets as of December 31, 2004 and 2003

   F-5

Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002

   F-6

Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the years ended December 31, 2004, 2003 and 2002

   F-7

Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002

   F-8

Notes to Consolidated Financial Statements

   F-10

Financial Statement Schedule

    

Schedule III - Regency Centers Corporation Combined Real Estate and Accumulated Depreciation - December 31, 2004

   S-1

 

All other schedules are omitted because they are not applicable or because information required therein is shown in the consolidated financial statements or notes thereto.

 

F-1


Index to Financial Statements

Report of Independent Registered Public Accounting Firm

 

The Stockholders and Board of Directors

Regency Centers Corporation:

 

We have audited the accompanying consolidated balance sheets of Regency Centers Corporation and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule III. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Regency Centers Corporation and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004 in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Regency Centers Corporation’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 14, 2005 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

 

/s/ KPMG LLP

 

 

March 14, 2005, except as to Notes 3 and 9 which are as of June 10, 2005

 

F-2


Index to Financial Statements

Report of Independent Registered Public Accounting Firm

 

The Stockholders and Board of Directors

Regency Centers Corporation:

 

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Regency Centers Corporation maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Regency Centers Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

In our opinion, management’s assessment that Regency Centers Corporation maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Regency Centers Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

F-3


Index to Financial Statements

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Regency Centers Corporation and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2004, and related Financial Statements Schedule and our report dated March 14, 2005 expressed an unqualified opinion on those consolidated financial statements and related Financial Statements Schedule.

 

 

 

 

/s/    KPMG LLP

 

 

 

 

 

Jacksonville, Florida

March 14, 2005

 

F-4


Index to Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Balance Sheets

December 31, 2004 and 2003

(in thousands, except share data)

 

     2004

    2003

 
Assets               

Real estate investments at cost (notes 2, 4 and 11):

              

Land

   $ 806,207     738,101  

Buildings and improvements

     1,915,655     1,914,075  
    


 

       2,721,862     2,652,176  

Less: accumulated depreciation

     338,609     285,665  
    


 

       2,383,253     2,366,511  

Properties in development

     426,216     369,474  

Operating properties held for sale

     4,916     4,200  

Investments in real estate partnerships (note 4)

     179,677     140,496  
    


 

Net real estate investments

     2,994,062     2,880,681  

Cash and cash equivalents

     95,320     29,869  

Notes receivable

     25,646     70,782  

Tenant receivables, net of allowance for uncollectible accounts of $3,393 and $3,353 at December 31, 2004 and 2003, respectively

     60,911     57,041  

Deferred costs, less accumulated amortization of $25,735 and $29,493 at December 31, 2004 and 2003, respectively

     41,002     35,804  

Acquired lease intangible assets, net (note 5)

     14,172     10,205  

Other assets

     12,711     13,847  
    


 

     $ 3,243,824     3,098,229  
    


 

Liabilities and Stockholders’ Equity               

Liabilities:

              

Notes payable (note 6)

   $ 1,293,090     1,257,777  

Unsecured line of credit (note 6)

     200,000     195,000  

Accounts payable and other liabilities

     102,443     94,280  

Acquired lease intangible liabilities, net (note 5)

     5,161     6,115  

Tenants’ security and escrow deposits

     10,049     9,358  
    


 

Total liabilities

     1,610,743     1,562,530  
    


 

Preferred units (note 8)

     101,762     223,526  

Exchangeable operating partnership units

     30,775     26,544  

Limited partners’ interest in consolidated partnerships

     1,827     4,651  
    


 

Total minority interest

     134,364     254,721  
    


 

Stockholders’ equity (notes 7, 8, 9 and 10):

              

Preferred stock, $.01 par value per share, 30,000,000 shares authorized; 800,000 and 300,000 shares issued and outstanding at December 31, 2004 and 2003, respectively, liquidation preference $250 per share

     200,000     75,000  

Common stock $.01 par value per share, 150,000,000 shares authorized; 67,970,538 and 64,956,077 shares issued at December 31, 2004 and 2003, respectively

     680     650  

Treasury stock at cost, 5,161,559 and 5,048,120 shares held at December 31, 2004 and 2003, respectively

     (111,414 )   (111,414 )

Additional paid in capital

     1,494,312     1,394,361  

Accumulated other comprehensive (loss) income

     (5,291 )   175  

Distributions in excess of net income

     (79,570 )   (77,794 )
    


 

Total stockholders’ equity

     1,498,717     1,280,978  
    


 

Commitments and contingencies (notes 11 and 12)

              
     $ 3,243,824     3,098,229  
    


 

 

See accompanying notes to consolidated financial statements.

 

F-5


Index to Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Statements of Operations

For the years ended December 31, 2004, 2003 and 2002

(in thousands, except per share data)

 

     2004

    2003

    2002

 

Revenues:

                    

Minimum rent (note 11)

   $ 284,270     263,035     250,584  

Percentage rent

     4,083     4,544     5,160  

Recoveries from tenants

     80,469     75,866     71,604  

Management fees and commissions

     10,663     6,419     4,617  

Equity in income of investments in real estate partnerships

     10,194     11,276     5,765  
    


 

 

Total revenues

     389,679     361,140     337,730  
    


 

 

Operating expenses:

                    

Depreciation and amortization

     80,556     71,407     64,767  

Operating and maintenance

     53,511     50,405     47,024  

General and administrative

     30,282     24,229     22,757  

Real estate taxes

     40,206     37,282     35,395  

Other expenses

     8,043     4,993     (1,802 )
    


 

 

Total operating expenses

     212,598     188,316     168,141  
    


 

 

Other expense (income)

                    

Interest expense, net of interest income of $3,128, $2,357, and $2,333 in 2004, 2003 and 2002, respectively

     80,915     82,822     83,729  

Gain on sale of operating properties and properties in development

     (39,387 )   (48,717 )   (20,905 )

Provision for loss on operating properties

     810     —       950  

Other income

     —       —       (2,384 )
    


 

 

Total other expense

     42,338     34,105     61,390  
    


 

 

Income before minority interests

     134,743     138,719     108,199  

Minority interest of preferred units

     (19,829 )   (29,826 )   (33,475 )

Minority interest of exchangeable operating partnership units

     (2,127 )   (2,478 )   (1,831 )

Minority interest of limited partners

     (319 )   (501 )   (492 )
    


 

 

Income from continuing operations

     112,468     105,914     72,401  

Discontinued operations, net:

                    

Operating income from discontinued operations

     4,984     8,886     22,032  

Gain on sale of operating properties and properties in development

     18,875     15,989     16,091  
    


 

 

Income from discontinued operations

     23,859     24,875     38,123  
    


 

 

Net income

     136,327     130,789     110,524  

Preferred stock dividends

     (8,633 )   (4,175 )   (2,858 )
    


 

 

Net income for common stockholders

   $ 127,694     126,614     107,666  
    


 

 

Income per common share – basic (note 9):

                    

Continuing operations

   $ 1.69     1.71     1.19  

Discontinued operations

     0.39     0.42     0.66  
    


 

 

Net income for common stockholders per share

   $ 2.08     2.13     1.84  
    


 

 

Income per common share – diluted (note 9):

                    

Continuing operations

   $ 1.69     1.70     1.19  

Discontinued operations

     0.39     0.42     0.65  
    


 

 

Net income for common stockholders per share

   $ 2.08     2.12     1.84  
    


 

 

 

See accompanying notes to consolidated financial statements.

 

F-6


Index to Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)

For the years ended December 31, 2004, 2003 and 2002

 

     Preferred
Stock


    Common
Stock


    Treasury
Stock


    Additional
Paid In
Capital


    Accumulated
Other
Comprehensive
Income (Loss)


    Distributions
in Excess of
Net Income


    Stock
Loans


    Total
Stockholders’
Equity


 

Balance at December 31, 2001

   $ 34,696     610     (67,346 )   1,327,579     —       (68,226 )   (8,262 )   1,219,051  

Common stock issued as compensation and stock options exercised, net

     —       16     (43 )   14,232     —       —       —       14,205  

Tax benefit for issuance of stock options

     —       —       —       1,202     —       —       —       1,202  

Common stock redeemed under stock loans

     —       (2 )   (7,585 )   (419 )   —       —       8,262     256  

Common stock issued for partnership units exchanged

     —       1     —       1,287     —       —       —       1,288  

Common stock issued for preferred stock exchanged

     (24,190 )   10     —       24,180     —       —       —       —    

Reallocation of minority interest

     —       —       —       (253 )   —       —       —       (253 )

Repurchase of common stock

     —       —       (2,725 )   —       —       —       —       (2,725 )

Cash dividends declared:

                                                  

Preferred stock

     —       —       —       —       —       (2,858 )   —       (2,858 )

Common stock ($2.04 per share)

     —       —       —       —       —       (118,970 )   —       (118,970 )

Net income

     —       —       —       —       —       110,524     —       110,524  
    


 

 

 

 

 

 

 

Balance at December 31, 2002

   $ 10,506     635     (77,699 )   1,367,808     —       (79,530 )   —       1,221,720  

Comprehensive Income (note 7):

                                                  

Net income

     —       —       —       —       —       130,789     —       130,789  

Change in fair value of derivative instruments

     —       —       —       —       175     —       —       175  
                                                

Total comprehensive income

     —       —       —       —       —       —       —       130,964  

Common stock issued as compensation and stock options exercised, net

     —       9     (429 )   8,362     —       —       —       7,942  

Tax benefit for issuance of stock options

     —       —       —       1,682     —       —       —       1,682  

Treasury stock issued for common stock offering

     —       —       117,216     6,279     —       —       —       123,495  

Common stock issued for partnership units exchanged

     —       1     —       3,615     —       —       —       3,616  

Common stock issued for Series 2 preferred stock exchanged (note 8)

     (10,506 )   5     —       10,501     —       —       —       —    

Series 3 preferred stock issued (note 8)

     75,000     —       —       (2,705 )   —       —       —       72,295  

Reallocation of minority interest

     —       —       —       (1,181 )   —       —       —       (1,181 )

Repurchase of common stock (note 8)

     —       —       (150,502 )   —       —       —       —       (150,502 )

Cash dividends declared:

                                                  

Preferred stock

     —       —       —       —       —       (4,175 )   —       (4,175 )

Common stock ($2.08 per share)

     —       —       —       —       —       (124,878 )   —       (124,878 )
    


 

 

 

 

 

 

 

Balance at December 31, 2003

   $ 75,000     650     (111,414 )   1,394,361     175     (77,794 )   —       1,280,978  

Comprehensive Income (note 7):

                                                  

Net income

     —       —       —       —       —       136,327     —       136,327  

Loss on settlement of derivative instruments

     —       —       —       —       (5,895 )   —       —       (5,895 )

Amortization of loss on derivative instruments

     —       —       —       —       429     —       —       429  
                                                

Total comprehensive income

     —       —       —       —       —       —       —       130,861  

Common stock issued as compensation and stock options exercised, net

     —       12     —       18,633     —       —       —       18,645  

Tax benefit for issuance of stock options

     —       —       —       4,376     —       —       —       4,376  

Common stock issued for partnership units exchanged

     —       3     —       7,151     —       —       —       7,154  

Common stock issued in stock offering, net of costs (note 8)

     —       15     —       67,395     —       —       —       67,410  

Series 4 preferred stock issued (note 8)

     125,000     —       —       (4,288 )   —       —       —       120,712  

Reallocation of minority interest

     —       —       —       6,684     —       —       —       6,684  

Cash dividends declared:

                                                  

Preferred stock

     —       —       —       —       —       (8,633 )   —       (8,633 )

Common stock ($2.12 per share)

     —       —       —       —       —       (129,470 )   —       (129,470 )
    


 

 

 

 

 

 

 

Balance at December 31, 2004

   $ 200,000     680     (111,414 )   1,494,312     (5,291 )   (79,570 )   —       1,498,717  
    


 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

F-7


Index to Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Statements of Cash Flows

For the years ended December 31, 2004, 2003 and 2002

(in thousands)

 

     2004

    2003

    2002

 

Cash flows from operating activities:

                    

Net income

   $ 136,327     130,789     110,524  

Adjustments to reconcile net income to net cash provided by operating activities:

                    

Depreciation and amortization

     81,936     75,023     74,417  

Deferred loan cost and debt premium amortization

     1,739     1,099     1,636  

Stock based compensation

     14,432     11,327     9,517  

Minority interest of preferred units

     19,829     29,826     33,475  

Minority interest of exchangeable operating partnership units

     2,579     3,044     2,797  

Minority interest of limited partners

     319     501     492  

Equity in income of investments in real estate partnerships

     (10,194 )   (11,276 )   (5,765 )

Net gain on sale of properties

     (60,539 )   (65,877 )   (40,083 )

Provision for loss on operating properties

     810     1,969     4,369  

Other income

     —       —       (2,384 )

Distributions from operations of investments in real estate partnerships

     13,342     8,341     5,522  

Hedge settlement

     (5,720 )   —       —    

Changes in assets and liabilities:

                    

Tenant receivables

     (5,849 )   (6,590 )   (863 )

Deferred leasing costs

     (6,199 )   (11,021 )   (12,917 )

Other assets

     1,449     1,245     (10,885 )

Accounts payable and other liabilities

     (574 )   11,735     (15,795 )

Tenants’ security and escrow deposits

     214     510     699  
    


 

 

Net cash provided by operating activities

     183,901     180,645     154,756  
    


 

 

Cash flows from investing activities:

                    

Acquisition of real estate

     (60,358 )   (86,780 )   (57,056 )

Development of real estate

     (340,217 )   (328,920 )   (245,011 )

Proceeds from sale of real estate investments

     317,178     237,033     427,808  

Repayment of notes receivable, net

     64,009     117,643     37,363  

Investments in real estate partnerships

     (66,299 )   (14,881 )   (46,019 )

Distributions received from investments in real estate partnerships

     47,369     26,902     11,784  
    


 

 

Net cash (used in) provided by investing activities

     (38,318 )   (49,003 )   128,869  
    


 

 

Cash flows from financing activities:

                    

Net proceeds from common stock issuance

     81,662     127,428     9,932  

Repurchase of common stock

     —       (150,502 )   (2,725 )

Redemption of preferred units

     (125,000 )   (155,750 )   —    

Redemption of exchangeable operating partnership units

     (20,402 )   (1,794 )   (83 )

Contributions (distributions) from limited partners in consolidated partnerships

     373     (10,676 )   (384 )

Distributions to exchangeable operating partnership unit holders

     (2,509 )   (2,900 )   (3,157 )

Distributions to preferred unit holders

     (16,593 )   (25,954 )   (33,475 )

Dividends paid to common stockholders

     (129,470 )   (124,878 )   (118,970 )

Dividends paid to preferred stockholders

     (8,633 )   (4,175 )   (2,858 )

Net proceeds from issuance of preferred stock

     120,712     72,295     —    

Repayment of fixed rate unsecured notes

     (200,000 )   —       —    

Proceeds from issuance of fixed rate unsecured notes, net

     148,646     —       249,625  

Proceeds (repayment) of unsecured line of credit, net

     5,000     115,000     (294,000 )

Proceeds from notes payable

     84,223     30,822     7,082  

Repayment of notes payable, net

     (8,176 )   (22,840 )   (58,306 )

Scheduled principal payments

     (5,711 )   (4,099 )   (5,630 )

Deferred loan costs

     (4,254 )   (197 )   (2,082 )
    


 

 

Net cash used in financing activities

     (80,132 )   (158,220 )   (255,031 )
    


 

 

Net increase (decrease) in cash and cash equivalents

     65,451     (26,578 )   28,594  

Cash and cash equivalents at beginning of the year

     29,869     56,447     27,853  
    


 

 

Cash and cash equivalents at end of the year

   $ 95,320     29,869     56,447  
    


 

 

 

F-8


Index to Financial Statements

REGENCY CENTERS CORPORATION

Consolidated Statements of Cash Flows

For the years ended December 31, 2004, 2003 and 2002

(in thousands)

 

     2004

   2003

   2002

Supplemental disclosure of cash flow information - cash paid for interest (net of capitalized interest of $11,228, $13,106 and $13,753 in 2004, 2003 and 2002, respectively)

   $ 85,416    84,531    78,450
    

  
  

Supplemental disclosure of non-cash transactions:

                

Mortgage debt assumed by purchaser on sale of real estate

   $ 44,684    13,557    4,570
    

  
  

Common stock issued for partnership units exchanged

   $ 7,154    3,616    1,288
    

  
  

Mortgage loans assumed for the acquisition of real estate

   $ 61,717    15,342    46,747
    

  
  

Real estate contributed as investments in real estate partnerships

   $ 31,312    24,100    29,486
    

  
  

Exchangeable operating partnership units issued for the acquisition of real estate

   $ 38,400    —      —  
    

  
  

Notes receivable taken in connection with sales of operating properties, properties in development and out-parcels

   $ 3,255    131,794    61,489
    

  
  

Change in fair value of derivative instrument

   $ —      175    —  
    

  
  

Common stock redeemed to pay off stock loans

   $ —      —      6,089
    

  
  

 

See accompanying notes to consolidated financial statements.

 

F-9


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

1. Summary of Significant Accounting Policies

 

  (a) Organization and Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Regency Centers Corporation and partnerships in which it has a majority ownership or controlling interest (the “Company” or “Regency”). All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

 

The Company owns approximately 98% of the outstanding common units (“Units”) of Regency Centers, L.P. (“RCLP”). Regency invests in real estate through its partnership interest in RCLP. Generally all of the acquisition, development, operating and financing activities of Regency, including the issuance of Units and preferred units, are executed by RCLP. The equity interests of third parties held in RCLP or its majority owned partnerships are included in the consolidated financial statements as preferred units, exchangeable operating partnership units or limited partners’ interest in consolidated partnerships. The Company is a qualified real estate investment trust (“REIT”), which began operations in 1993.

 

  (b) Revenues

 

The Company leases space to tenants under agreements with varying terms. Leases are accounted for as operating leases with minimum rent recognized on a straight-line basis over the term of the lease regardless of when payments are due. Accrued rents are included in tenant receivables.

 

Substantially all of the lease agreements contain provisions that grant additional rents based on tenants’ sales volume (contingent or percentage rent) and reimbursement of the tenants’ share of real estate taxes, insurance and common area maintenance (“CAM”) costs. Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Recovery of real estate taxes, insurance and CAM costs are recognized as the respective costs are incurred in accordance with the lease agreements.

 

The Company accounts for profit recognition on sales of real estate in accordance with Statement of Financial Accounting Standards (“SFAS”) Statement No. 66, “Accounting for Sales of Real Estate.” In summary, profits from sales will not be recognized by the Company unless a sale has been consummated; the buyer’s initial and continuing investment is adequate to demonstrate a commitment to pay for the property; the Company has transferred to the buyer the usual risks and rewards of ownership; and the Company does not have substantial continuing financial involvement with the property.

 

The Company has been engaged by joint ventures to provide asset and property management services for their shopping centers. The fees are market based and generally calculated as a percentage of either revenues earned or the estimated values of the properties and are recognized as services are provided.

 

F-10


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (c) Real Estate Investments

 

Land, buildings and improvements are recorded at cost. All specifically identifiable costs related to development activities are capitalized into properties in development on the consolidated balance sheet. The capitalized costs include pre-development costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, direct employee costs, and other costs incurred during the period of development.

 

The Company incurs costs prior to land acquisition including acquisition contract deposits, as well as legal, engineering and other external professional fees related to evaluating the feasibility of developing a shopping center. These pre-acquisition development costs are included in properties in development. If the Company determines that the development of a shopping center is no longer probable, any pre-development costs previously incurred are immediately expensed. At December 31, 2004 and 2003, the Company had capitalized pre-development costs of $10.5 million and $8.8 million, respectively.

 

The Company’s method of capitalizing interest is based upon applying its weighted average borrowing rate to that portion of the actual development costs expended. The Company ceases cost capitalization when the property is available for occupancy upon substantial completion of tenant improvements. In no event would the Company capitalize interest on the project beyond 12 months after substantial completion of the building shell.

 

Maintenance and repairs that do not improve or extend the useful lives of the respective assets are reflected in operating and maintenance expense.

 

Depreciation is computed using the straight-line method over estimated useful lives of up to 40 years for buildings and improvements, term of lease for tenant improvements, and three to seven years for furniture and equipment.

 

The Company allocates the purchase price of assets acquired (net tangible and identifiable intangible assets) and liabilities assumed based on their relative fair values at the date of acquisition pursuant to the provisions SFAS No. 141, “Business Combinations” (“Statement 141”). Statement 141 provides guidance on allocating a portion of the purchase price of a property to intangible assets. The Company’s methodology for this allocation includes estimating an “as-if vacant” fair value of the physical property, which is allocated to land, building and improvements. The difference between the purchase price and the “as-if vacant” fair value is allocated to intangible assets. There are three categories of intangible assets to be considered: (i) value of in-place leases, (ii) above and below-market value of in-place leases and (iii) customer relationship value.

 

The value of in-place leases is estimated based on the value associated with the costs avoided in originating leases comparable to the acquired in-place leases as well as the value associated with lost rental and recovery revenue during the assumed lease-up period. The value of in-place leases is amortized to expense over the estimated weighted-average remaining lease lives.

 

F-11


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (c) Real Estate Investments (continued)

 

Above-market and below-market in-place lease values for acquired properties are recorded based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimates of fair market lease rates for the comparable in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The value of above-market leases is amortized as a reduction of base rental revenue over the remaining terms of the respective leases. The value of below-market leases is accreted as an increase to base rental revenue over the remaining terms of the respective leases, including renewal options.

 

The Company allocates no value to customer relationship intangibles if it has pre-existing business relationships with the major retailers in the acquired property because the customer relationships associated with the acquired property provide no incremental value over the Company’s existing relationships.

 

The Company follows the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“Statement 144”). In accordance with Statement 144, operating properties held for sale includes only those properties available for immediate sale in their present condition and for which management believes it is probable that a sale of the property will be completed within one year. Operating properties held for sale are carried at the lower of cost or fair value less costs to sell. Depreciation and amortization are suspended during the held-for-sale period.

 

The Company reviews its real estate portfolio for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based upon expected undiscounted cash flows from the property. The Company determines impairment by comparing the property’s carrying value to an estimate of fair value based upon varying methods such as i) estimating future cash flows, ii) determining resale values by market, or iii) applying a capitalization rate to net operating income using prevailing rates in a given market. These methods of determining fair value can fluctuate significantly as a result of a number of factors, including changes in the general economy of those markets in which the Company operates, tenant credit quality and demand for new retail stores. In the event a property is permanently impaired, the Company will write down the asset to fair value for “held-and-used” assets and to fair value less costs to sell for “held-for-sale” assets. During 2004, 2003 and 2002 the Company recorded a provision for loss of approximately $810,000, $2.0 million and $4.4 million, based upon the criteria described above. The provision for loss on properties subsequently sold to third parties is included as part of discontinued operations.

 

The Company’s properties generally have operations and cash flows that can be clearly distinguished from the rest of the Company. In accordance with Statement 144, the operations and gains on sales reported in discontinued operations include those operating properties and properties in development that were sold and for which operations and cash flows can be clearly distinguished. The operations from these properties have been eliminated from ongoing operations and the Company will not have continuing involvement after disposition. Prior periods have been restated to reflect the operations of these properties as discontinued operations. The operations and gains on sales of operating properties sold to real estate partnerships in which the Company has continuing involvement are included in income from continuing operations.

 

F-12


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (d) Income Taxes

 

The Company believes it qualifies, and intends to continue to qualify, as a REIT under the Internal Revenue Code (the “Code”). As a REIT, the Company is allowed to reduce taxable income by all or a portion of its distributions to stockholders. As distributions have exceeded taxable income, no provision for federal income taxes has been made in the accompanying consolidated financial statements (except as required for the Company’s Taxable REIT Subsidiary as discussed below).

 

Earnings and profits, which determine the taxability of dividends to stockholders, differs from net income reported for financial reporting purposes primarily because of differences in depreciable lives and cost bases of the shopping centers, as well as other timing differences.

 

The net book basis of real estate assets exceeds the tax basis by approximately $103.9 million and $113.2 million at December 31, 2004 and 2003, respectively, primarily due to the difference between the cost basis of the assets acquired and their carryover basis recorded for tax purposes.

 

The following summarizes the tax status of dividends paid during the respective years:

 

     2004

    2003

    2002

 

Dividend per share

   $ 2.12     2.08     2.04  

Ordinary income

     82.00 %   74.04 %   71.00 %

Capital gain

     6.00 %   .49 %   1.00 %

Return of capital

     3.00 %   12.84 %   22.00 %

Unrecaptured Section 1250 gain

     9.00 %   7.16 %   4.00 %

Qualified 5-year gain

     —       —       2.00 %

Post-May 5 gain

     —       5.47 %   —    

 

Regency Realty Group, Inc. (“RRG”), a wholly-owned subsidiary of RCLP, is a Taxable REIT Subsidiary as defined in Section 856(l) of the Code. RRG is subject to federal and state income taxes and files separate tax returns. Income tax expense consists of the following for the years ended December 31, 2004, 2003 and 2002 which is included in either other expenses or discontinued operations (in thousands):

 

     2004

    2003

    2002

 

Income tax expense (benefit)

                    

Current

   $ 10,730     4,179     4,054  

Deferred

     (1,978 )   (1,230 )   (4,445 )
    


 

 

Total income tax expense (benefit)

   $ 8,752     2,949     (391 )
    


 

 

 

F-13


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (d) Income Taxes (continued)

 

Income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 34% to pretax income as follows for the years ended December 31, 2004, 2003 and 2002 (in thousands):

 

     2004

   2003

    2002

 

Computed expected tax expense (benefit)

   $ 5,759    3,539     (84 )

Increase in income taxes resulting from state taxes

     913    308     (41 )

All other items

     2,080    (898 )   (266 )
    

  

 

Total income tax expense (benefit)

   $ 8,752    2,949     (391 )
    

  

 

 

RRG had net deferred tax assets of $8.9 million and $6.9 million at December 31, 2004 and 2003, respectively. The majority of the deferred tax assets relate to deferred interest expense and tax costs capitalized on projects under development. No valuation allowance was provided and the Company believes it is more likely than not that the future benefits associated with these deferred assets will be realized.

 

  (e) Deferred Costs

 

Deferred costs include deferred leasing costs and deferred loan costs, net of accumulated amortization. Such costs are amortized over the periods through lease expiration or loan maturity. Deferred leasing costs consist of internal and external commissions associated with leasing the Company’s shopping centers. Net deferred leasing costs were $30.8 million and $28.0 million at December 31, 2004 and 2003, respectively. Deferred loan costs consist of initial direct and incremental costs associated with financing activities. Net deferred loan costs were $10.2 million and $7.8 million at December 31, 2004 and 2003, respectively.

 

  (f) Earnings per Share and Treasury Stock

 

Basic net income per share of common stock is computed based upon the weighted average number of common shares outstanding during the period. Diluted net income per share also includes common share equivalents for stock options and exchangeable operating partnership units. See note 9 for the calculation of earnings per share (“EPS”).

 

Repurchases of the Company’s common stock (net of shares retired) are recorded at cost and are reflected as Treasury stock in the consolidated statements of stockholders’ equity. Outstanding shares do not include treasury shares.

 

  (g) Cash and Cash Equivalents

 

Any instruments which have an original maturity of 90 days or less when purchased are considered cash equivalents. Cash distributions of normal operating earnings from investments in real estate partnerships and cash received from the sales of development properties are included in cash flows from operations in the consolidated statements of cash flows.

 

F-14


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (h) Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

  (i) Stock-Based Compensation

 

The Company follows the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure” (“Statement 148”). Statement 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, Statement 148 amends the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation” (“Statement 123”), to require more prominent and frequent disclosures in financial statements about the effects of stock-based compensation. As permitted under Statement 123 and Statement 148, the Company currently follows the accounting guidelines pursuant to Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“Opinion 25”), for stock-based compensation and furnishes the pro-forma disclosures as required under Statement 148.

 

On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“Statement 123(R)”), which is a revision of Statement 123. Statement 123(R) supersedes Opinion 25. Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Pro-forma disclosure is no longer an alternative. Statement 123(R) must be adopted no later than July 1, 2005.

 

Statement 123(R) permits companies to adopt its requirements using one of two methods:

 

1. The “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of Statement 123(R) that remain unvested on the effective date.

 

2. The “modified retrospective” method includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement 123 for purposes of pro-forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

 

The Company adopted Statement 123R using the modified prospective method on January 1, 2005.

 

F-15


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (i) Stock-Based Compensation (continued)

 

As permitted by Statement 123, the Company currently accounts for share-based payments to employees using Opinion 25’s intrinsic value method and generally recognizes no compensation cost for employee stock options. Accordingly, the adoption of Statement 123(R)’s fair value method will have an impact on its results of operations in 2005. Had the Company adopted Statement 123(R) in prior periods, the impact of that standard would have approximated the impact of Statement 123 in the disclosure of pro-forma net income and earnings per share described below.

 

The Company has a Long-Term Omnibus Plan (the “Plan”) under which the Board of Directors may grant stock options and other stock-based awards to officers, directors and other key employees. The Plan allows the Company to issue up to 5.0 million shares in the form of common stock or stock options, but limits the issuance of common stock excluding stock options to no more than 2.75 million shares. At December 31, 2004, there were approximately 4.3 million shares available for grant under the Plan either through options or restricted stock of which 2.0 million shares are limited to common stock awards other than stock options. The Plan also limits outstanding awards to no more than 12% of outstanding common stock.

 

Stock options are granted under the Plan with an exercise price equal to the stock’s fair market value at the date of grant. All stock options granted have ten-year lives, contain vesting terms of one to five years from the date of grant and may have certain dividend equivalent and stock option “reload” rights. The “reload” rights allow for an option holder to receive new options each time existing options are exercised if the existing options are exercised under specific criteria provided for in the Plan. In January 2005, the Company offered to acquire the “reload” rights of existing stock options from the option holders by issuing them additional stock options that will vest 25% per year and be expensed over a four-year period beginning in 2005 in accordance with Statement 123(R). As a result of the offer, on January 18, 2005, the Company granted 771,645 options with an exercise price of $51.36, the fair value on the date of grant, and substantially all of the “reload” rights on existing stock options were cancelled.

 

Restricted stock granted under the Plan generally vests over a period of four years, although certain grants cliff-vest after eight years, but contain provisions that allow for accelerated vesting over a shorter term if certain performance criteria are met. Compensation expense is measured at the grant date and recognized ratably over the vesting period. The Company considers the likelihood of meeting the performance criteria in determining the amount to expense on a periodic basis. In general, such criteria have been met, thus expense is recognized at a rate commensurate with the actual vesting period. Restricted stock grants also have certain dividend rights under the Plan, which are expensed in a manner similar to the underlying stock.

 

F-16


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (i) Stock-Based Compensation (continued)

 

The following table represents restricted stock granted in January 2005, 2004 and 2003, respectively, for each of the following performance years:

 

     2004

   2003

   2002

Fair value of stock at date of grant

   $ 51.36    39.97    31.27
    

  
  

4-year vesting grant

     246,375    219,787    232,758

8-year vesting grant

     —      64,649    103,592
    

  
  

Total stock grants

     246,375    284,436    336,350
    

  
  

 

The 4-year stock grants vest at the rate of 25% per year and the 8-year stock grants cliff-vest after eight years, but have the ability for accelerated vesting under the terms described above. Based upon restricted stock vesting in 2004, 2003 and 2002, the Company recorded compensation expense of $11.8 million, $7.5 million and $5.6 million, respectively, including the dividends vesting on restricted stock. During 2004, 2003 and 2002, the Company recorded compensation expense for dividend equivalents related to stock options of $2.2 million, $3.5 million and $3.2 million respectively, related to unexercised stock options. The Company also incurs stock based compensation related to fees paid to it Board of Directors, and non-exempt employee anniversaries.

 

The following table represents the assumptions used for the Black-Scholes option-pricing model for options granted in the respective year:

 

     2004

    2003

    2002

 

Per share weighted average fair value of stock options

   $ 4.75     2.23     1.94  

Expected dividend yield

     4.0 %   5.5 %   6.8 %

Risk-free interest rate

     2.9 %   2.2 %   2.0 %

Expected volatility

     19.0 %   16.0 %   19.1 %

Expected life in years

     2.1     2.4     2.5  

 

F-17


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (i) Stock-Based Compensation (continued)

 

The Company applies Opinion 25 in accounting for its Plan, and accordingly, no compensation cost has been recognized for its stock options in the consolidated financial statements. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under Statement 123, the Company’s net income for common stockholders would have been reduced to the pro-forma amounts indicated below (in thousands except per share data):

 

     2004

   2003

   2002

Net income for common stockholders as reported:

   $ 127,694    126,614    107,666

Add: stock-based employee compensation expense included in reported net income

     14,425    11,327    9,517

Deduct: total stock-based employee compensation expense determined under fair value based methods for all awards

     21,067    15,455    13,470
    

  
  

Pro-forma net income

   $ 121,052    122,486    103,713
    

  
  

Earnings per share:

                

Basic – as reported

   $ 2.08    2.13    1.85
    

  
  

Basic – pro-forma

   $ 1.98    2.06    1.78
    

  
  

Diluted – as reported

   $ 2.08    2.12    1.84
    

  
  

Diluted – pro-forma

   $ 1.97    2.05    1.77
    

  
  

 

  (j) Consolidation of Variable Interest Entities

 

In December 2003, the FASB issued Interpretation No. 46 (“FIN 46”) (revised December 2003 (“FIN 46R”)), “Consolidation of Variable Interest Entities”, which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FIN 46, which was issued in January 2003. FIN 46R was applicable immediately to a variable interest entity created after January 31, 2003 and as of the first interim period ending after March 15, 2004 to those variable interest entities created before February 1, 2003 and not already consolidated under FIN 46 in previously issued financial statements. The Company did not create any variable interest entities after January 31, 2003. The Company has adopted FIN 46R, analyzed the applicability of this interpretation to its structures and determined that they are not party to any significant variable interest entities.

 

F-18


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (k) Segment Reporting

 

The Company’s business is investing in retail shopping centers through direct ownership or through joint ventures. The Company actively manages its portfolio of retail shopping centers and may from time to time make decisions to sell lower performing properties, or developments not meeting its long-term investment objectives. The proceeds of sales are reinvested into higher quality retail shopping centers through acquisitions or new developments, which management believes will meet its planned rate of return. It is management’s intent that all retail shopping centers will be owned or developed for investment purposes. The Company’s revenue and net income are generated from the operation of its investment portfolio. The Company also earns incidental fees from third parties for services provided to manage and lease retail shopping centers owned through joint ventures.

 

The Company’s portfolio is located throughout the United States; however, management does not distinguish or group its operations on a geographical basis for purposes of allocating resources or measuring performance. The Company reviews operating and financial data for each property on an individual basis, therefore, the Company defines an operating segment as its individual properties. No individual property constitutes more than 10% of the Company’s combined revenue, net income or assets, and thus the individual properties have been aggregated into one reportable segment based upon their similarities with regard to both the nature of the centers, tenants and operational processes, as well as long-term average financial performance. In addition, no single tenant accounts for 10% or more of revenue and none of the shopping centers are located outside the United States.

 

  (l) Derivative Financial Instruments

 

The Company adopted SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS No. 149 (“Statement 133”) on January 1, 2001. Statement 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Gains or losses resulting from changes in the values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company’s use of derivative financial instruments is normally to mitigate its interest rate risk on a related financial instrument or forecasted transaction through the use of interest rate swaps or rate locks.

 

Statement 133 requires that changes in fair value of derivatives that qualify as cash flow hedges be recognized in other comprehensive income (“OCI”) while the ineffective portion of the derivative’s change in fair value be recognized immediately in earnings. Upon the settlement of a hedge, gains and losses associated with the transaction are recorded in OCI and amortized over the underlying term of the hedge transaction. Historically all of the Company’s derivative instruments qualify for hedge accounting.

 

To determine the fair value of derivative instruments, the Company uses standard market conventions and techniques such as discounted cash flow analysis, option pricing models and termination costs at each balance sheet date. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized.

 

F-19


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (m) Financial Instruments with Characteristics of Both Liabilities and Equity

 

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“Statement 150”). Statement 150 affects the accounting for certain financial instruments, which requires companies having consolidated entities with specified termination dates to treat minority owners’ interests in such entities as liabilities in an amount based on the fair value of the entities. Although Statement 150 was originally effective July 1, 2003, the FASB has indefinitely deferred certain provisions related to classification and measurement requirements for mandatorily redeemable financial instruments that become subject to Statement 150 solely as a result of consolidation, including minority interests of entities with specified termination dates. As a result, Statement 150 has no impact on the Company’s consolidated statements of operations for the year ended December 31, 2004.

 

At December 31, 2004, the Company held a majority interest in two consolidated entities with specified termination dates of 2017 and 2049. The minority owners’ interests in these entities are to be settled upon termination by distribution or transfer of either cash or specific assets of the underlying entities. The estimated fair value of minority interests in entities with specified termination dates was approximately $5.1 million at December 31, 2004 as compared to their carrying value of $851,088. The Company has no other financial instruments that are affected by Statement 150.

 

  (n) Reclassifications

 

Certain reclassifications have been made to the 2003 and 2002 amounts to conform to classifications adopted in 2004.

 

2. Real Estate Investments

 

During 2004, the Company acquired five operating properties from third parties for $164.4 million. The purchase price included the assumption of $61.7 million in debt, the issuance of 920,562 exchangeable operating partnership units valued at $38.4 million, and cash. During 2003, the Company acquired four operating properties from third parties for $75.4 million. The Company also acquired a redevelopment property for $26.4 million. In accordance with Statement 141, acquired lease intangible assets of $6.3 million and $7.9 million for in-place leases were recorded for the acquisitions in 2004 and 2003, respectively. The acquisitions were accounted for as purchases and the results of their operations are included in the consolidated financial statements from the respective dates of acquisition, and neither was considered significant to the Company’s operations in the current or preceding periods.

 

F-20


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

3. Discontinued Operations

 

All of the amounts described in the following paragraph have been reclassified from the previously filed consolidated financial statements to reflect the reclassification to discontinued operations for dispositions or properties held for sale through March 31, 2005. During the three months ended March 31, 2005, the Company sold one property for net proceeds of $27.8 million which had not been classified as held for sale at December 31, 2004 because completion of the sale was not yet considered probable. On March 31, 2005, the Company reclassified two properties as held for sale which were subsequently sold for net proceeds of $16.7 million. During 2004, the Company sold 100% of its interest in 17 properties for net proceeds of $130.5 million. The combined operating income from these properties and from properties held for sale including related gains are included in discontinued operations.

 

In accordance with Statement 144, the Company is reclassifying the operations of the properties sold or held for sale during the three months ended March 31, 2005 from continuing operations into discontinued operations for the years ended December 31, 2004, 2003 and 2002 in the consolidated statements of operations. The reclassified amounts for 2004, 2003 and 2002 are approximately $841,000, $271,000 and $355,000, respectively.

 

After the effects of the above reclassification, the revenues from properties in discontinued operations were $12.1 million, $25.1 million and $50.7 million for the years ended December 31, 2004, 2003 and 2002, respectively. The operating income from these properties was $5.0 million, $8.9 million and $22.0 million for the years ended December 31, 2004, 2003 and 2002, respectively. Operating income and gains on sales included in discontinued operations are shown net of minority interest of exchangeable operating partnership units totaling $451,407, $566,106 and $965,503 for the years ended December 31, 2004, 2003 and 2002, respectively.

 

4. Investments in Real Estate Partnerships

 

The Company accounts for all investments in which it owns 50% or less and does not have a controlling financial interest using the equity method. The Company’s combined investment in these partnerships was $179.7 million and $140.5 million at December 31, 2004 and 2003, respectively. Any difference between the carrying amount of these investments and the underlying equity in net assets is amortized to equity in income of investments in real estate partnerships over the depreciable lives of the properties and other intangible assets which range in lives from 10 to 40 years. Net income, which includes all operating results, as well as gains and losses on sales of properties within the joint ventures, is allocated to the Company in accordance with the respective partnership agreements. Such allocations of net income are recorded in equity in income of investments in real estate partnerships in the accompanying consolidated statements of operations. Investments in real estate partnerships are primarily comprised of joint ventures where Regency invests with three co-investment partners, as further described below. In addition to earning its pro-rata share of net income in each of the partnerships, these co-investment partners pay the Company fees for asset management, property management, and acquisition and disposition services. During 2004, 2003 and 2002, the Company received fees from these joint ventures of $9.3 million, $5.6 million, and $3.5 million, respectively.

 

The Company co-invests with the Oregon Public Employees Retirement Fund in three joint ventures (collectively “Columbia”) in which it has ownership interests of 20% or 30%. As of December 31, 2004, Columbia owned 18 shopping centers, had total assets of $496.9 million, and net income of $23.8 million. The Company’s share of Columbia’s total assets and net income was $111.5 million and $4.1 million, respectively. During 2004, Columbia acquired eight shopping centers from unrelated parties for a purchase price of $250.8 million. The Company contributed $31.9 million for its proportionate share of the purchase price. Columbia sold three shopping centers during 2004 for $74.0 million to unrelated parties with a gain of $10.0 million. During 2003, Columbia acquired two shopping centers for $39.1 million from unrelated parties and sold one shopping center to an unrelated party for $46.2 million with a gain of $9.3 million. There were no properties sold by Columbia during 2002.

 

F-21


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

4. Investments in Real Estate Partnerships (continued)

 

The Company co-invests with Macquarie CountryWide Trust of Australia (“MCW”), in two joint ventures (collectively, “MCWR”) in which it has an ownership interest of 25%. As of December 31, 2004, MCWR owned 51 shopping centers, had total assets of $734.6 million, and net income of $12.1 million. Regency’s share of MCWR’s total assets and net income was $183.6 million and $3.5 million, respectively. During 2004, MCWR acquired 23 shopping centers from unrelated parties for a purchase price of $274.5 million. The Company contributed $34.8 million for its proportionate share of the purchase price. In addition, MCWR acquired three properties from the Company valued at $69.7 million, for which it received cash of $63.7 million. MCWR sold one shopping center during 2004 to an unrelated party for $12.8 million with a gain of $190,559.

 

During 2003, MCWR acquired 12 shopping centers from the Company valued at $232.9 million, for which it received cash of $79.4 million, and short-term notes receivable of $95.3 million. MCWR repaid the notes during 2003 and 2004. During 2003, MCWR sold two shopping centers to third parties for $20.1 million. There were no properties sold by MCWR during 2002.

 

On February 14, 2005, Regency and MCW entered into a contract with CalPERS/First Washington to acquire 101 shopping centers operating in 17 states, located primarily in the Washington D.C./Baltimore metro area as well as northern and southern California (“FW Portfolio”). The contract purchase price is $2.74 billion. The portfolio of shopping centers will be owned in a new joint venture (“MCWR II”) between Regency and MCW in which the Company will have an ownership interest of 35%. The acquisition is expected to close during the second quarter of 2005. The Company expects to account for its investment in the venture as an unconsolidated investment in real estate partnerships. The Company has executed a bank commitment to provide the financing for its share of the purchase price discussed further in note 6.

 

In December 2004, the Company formed a new joint venture with the California State Teachers’ Retirement System (“RegCal”) in which it has a 25% ownership interest. As of December 31, 2004, RegCal owned four shopping centers, had total assets of $126.4 million, and net income of $70,608. Regency’s share of RegCal’s total assets and net income was $31.6 million and $17,652, at December 31, 2004, respectively. During 2004, RegCal acquired four properties from the Company valued at $124.5 million, assumed debt of $34.8 million and the Company received net proceeds of $73.9 million.

 

Recognition of gains from sales to joint ventures is recorded on only that portion of the sales not attributable to the Company’s ownership interest. The gains and operations are not recorded as discontinued operations because of Regency’s continuing involvement in these shopping centers. Columbia, MCWR and RegCal intend to continue to acquire retail shopping centers, some of which they may acquire directly from the Company. For those properties acquired from third parties, the Company is required to contribute its pro-rata share of the purchase price to the partnerships.

 

With the exception of Columbia, MCWR, and RegCal, all of which intend to continue expanding their investments in shopping centers, the investments in real estate partnerships represent single asset entities formed for the purpose of developing and owning retail shopping centers.

 

F-22


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

4. Investments in Real Estate Partnerships (continued)

 

On November 30, 2004, the Company sold a 50% interest in Valleydale, LLC, a single asset entity, to an affiliate of Publix Supermarkets for $12.8 million and transferred its residual 50% investment interest to unconsolidated investments in real estate partnerships.

 

In August 2004, Regency sold its membership interest in the Hermosa Venture 2002, LLC to the partner. In March 2004, the only two shopping centers owned by the OTR/Regency Texas Realty Holdings, L.P., an unconsolidated joint venture in which Regency had a 30% equity interest, were sold to an unrelated party for $28.3 million, resulting in a gain of $8.2 million. The Company received $17.2 million, which represents a $4.3 million distribution for the Company’s 30% equity interest and $12.9 million for the repayment of a loan. The Company recognized a $1.2 million gain included in equity in income of investments in real estate partnerships in the accompanying consolidated statements of operations. The Company has no remaining investment or commitment in either of these two joint ventures.

 

The Company’s investments in real estate partnerships as of December 31, 2004 and 2003 consist of the following (in thousands):

 

     Ownership

   2004

   2003

Macquarie CountryWide-Regency (MCWR)

   25%    $ 65,134    30,347

Macquarie CountryWide Direct (MCWR)

   25%      8,001    8,724

Columbia Regency Retail Partners (Columbia)

   20%      41,380    40,267

Cameron Village LLC (Columbia)

   30%      21,612    —  

Columbia Regency Partners II (Columbia)

   20%      3,107    —  

RegCal, LLC (RegCal)

   25%      13,232    —  

Other investments in real estate partnerships

   27% - 50%      27,211    61,158
         

  

Investments in Real Estate Partnerships

        $ 179,677    140,496
         

  

 

Summarized financial information for the unconsolidated investments on a combined basis, is as follows (in thousands):

 

     December 31,
2004


   December 31,
2003


Balance Sheet:

           

Investment in real estate, net

   $ 1,325,850    727,530

Acquired lease intangibles, net

     74,261    45,252

Other assets

     39,506    39,408
    

  

Total assets

   $ 1,439,617    812,190
    

  

Notes payable

   $ 665,517    322,238

Other liabilities

     24,471    14,102

Partners’ equity

     749,629    475,850
    

  

Total liabilities and equity

   $ 1,439,617    812,190
    

  

 

Unconsolidated investments in real estate partnerships had notes payable of $665.5 million as of December 31, 2004 and the Company’s proportionate share of these loans was $168.1 million. The Company does not guarantee any debt of these partnerships and is responsible for only its pro-rata share based upon its ownership percentage.

 

F-23


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

4. Investments in Real Estate Partnerships (continued)

 

The revenues and expenses for the unconsolidated investments on a combined basis are summarized as follows for the years ended December 31, 2004, 2003 and 2002 (in thousands):

 

     2004

   2003

   2002

Statements of Operations:

                

Total revenues

   $ 110,939    76,157    42,073

Total expenses

     82,127    50,315    25,151

Gain on sale of real estate

     18,977    13,760    3,844
    

  
  

Net income

   $ 47,789    39,602    20,766
    

  
  

 

5. Acquired Lease Intangibles:

 

Acquired lease intangible assets are net of accumulated amortization of $2.6 million and $405,327 at December 31, 2004 and 2003, respectively. These assets have a remaining weighted average amortization period of six years. The aggregate amortization expense from acquired leases was $2.2 million, $368,231 and $37,096 for the years ended December 31, 2004, 2003 and 2002, respectively. Acquired lease intangible liabilities are net of previously accreted minimum rent of $1.9 million and $953,964 at December 31, 2004 and 2003, respectively and have a remaining weighted average amortization period of six years.

 

The estimated aggregate amortization and accretion amounts from acquired lease intangibles for each of the next five years are as follows (in thousands):

 

Year Ending December 31,


   Amortization
Expense


   Minimum
Rent


2005

   $ 3,569    954

2006

     3,569    954

2007

     2,404    954

2008

     1,070    954

2009

     981    954

 

6. Notes Payable and Unsecured Line of Credit

 

The Company’s outstanding debt at December 31, 2004 and 2003 consists of the following (in thousands):

 

     2004

   2003

Notes Payable:

           

Fixed rate mortgage loans

   $ 275,726    217,001

Variable rate mortgage loans

     68,418    41,629

Fixed rate unsecured loans

     948,946    999,147
    

  

Total notes payable

     1,293,090    1,257,777

Unsecured line of credit

     200,000    195,000
    

  

Total

   $ 1,493,090    1,452,777
    

  

 

F-24


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

6. Notes Payable and Unsecured Line of Credit (continued)

 

On April 1, 2004, RCLP completed the sale of $150 million of ten-year senior unsecured notes. The 4.95% notes are due April 15, 2014 and were priced at 99.747% to yield 4.982%. The proceeds of the offering were used to partially repay the $200 million of 7.4% notes maturing on April 1, 2004 and the remaining balance due was funded from the unsecured line of credit. As a result of two forward-starting interest rate swaps totaling $144.2 million initiated in 2003 in anticipation of this transaction, the effective interest rate is 5.47%. On March 31, 2004, the interest rate swaps were settled for $5.7 million, which is recorded in OCI and will be amortized over the ten-year term of the notes to interest expense. The swaps qualified for hedge accounting under Statement 133; therefore, the change in fair value and its settlement was recorded in OCI.

 

On March 26, 2004, the Company closed on the amended and restated unsecured revolving line of credit (the “Line”). Under the new agreement, the Company reduced the Line commitment from $600 million to $500 million. The Line has a three-year term with a one-year extension option at an interest rate of LIBOR plus .75% which is a reduction of 10 basis points from the prior agreement. At December 31, 2004, the balance on the Line was $200 million. Interest rates paid on the Line, which are based on LIBOR plus .75%, were 3.1875% at December 31, 2004 and LIBOR plus .85% or 1.975% at December 31, 2003. The spread paid on the Line is dependent upon the Company maintaining specific investment-grade ratings. The Company is also required to comply, and is in compliance, with certain financial covenants such as Minimum Net Worth, Total Liabilities to Gross Asset Value (“GAV”) and Secured Indebtedness to GAV and other covenants customary with this type of unsecured financing. The Line is used primarily to finance the development of real estate, but is also available for general working-capital purposes.

 

On February 15, 2005, the Company executed a commitment letter related to the Line which will temporarily modify certain Line covenants related to borrowing capacity and leverage, and will also add a temporary bridge loan for $275 million (“Bridge Commitment”). The temporary modifications will expire and the Bridge Commitment will mature nine months after the closing of the FW Portfolio into MCWR II. The Bridge Commitment combined with existing borrowing capacity under the Line will provide sufficient cash for Regency’s equity investment into MCWR II. These borrowings will raise the Company’s debt to assets leverage ratio above current levels, which could exceed currently allowable Line covenants. The temporary modification to the leverage covenant is intended to keep Regency from defaulting on the Line during the term that the Bridge Commitment is outstanding. The Company intends to payoff the Bridge Commitment within the nine month term through a combination of issuing equity and selling shopping centers under our capital recycling program.

 

Mortgage loans are secured by certain real estate properties and may be prepaid, but could be subject to a yield-maintenance premium. Mortgage loans are generally due in monthly installments of interest and principal and mature over various terms through 2017. Variable interest rates on mortgage loans are currently based on LIBOR plus a spread in a range of 125 to 150 basis points. Fixed interest rates on mortgage loans range from 5.01% to 9.50%.

 

F-25


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

6. Notes Payable and Unsecured Line of Credit (continued)

 

The fair value of the Company’s notes payable and Line are estimated based on the current rates available to the Company for debt of the same remaining maturities. Notes payable with variable interest rates and the Line are considered to be at fair value, since the interest rates on such instruments reprice based on current market conditions. Fixed rate loans assumed in connection with real estate acquisitions are recorded in the accompanying financial statements at fair value.

 

Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities, the fair value of long-term debt is $1.6 billion.

 

As of December 31, 2004, scheduled principal repayments on notes payable and the Line were as follows (in thousands):

 

Scheduled Payments by Year


   Scheduled
Principal
Payments


   Term Loan
Maturities


   Total
Payments


2005

   $ 4,042    176,175    180,217

2006

     3,775    21,083    24,858

2007 (includes the Line)

     3,542    262,255    265,797

2008

     3,388    19,617    23,005

2009

     3,458    53,089    56,547

Beyond 5 Years

     17,795    921,338    939,133

Unamortized debt premiums

     —      3,533    3,533
    

  
  

Total

   $ 36,000    1,457,090    1,493,090
    

  
  

 

7. Derivative Financial Instruments

 

The Company is exposed to capital market risk, such as changes in interest rates. In order to manage the volatility relating to interest rate risk, the Company may enter into interest rate hedging arrangements from time to time. The Company does not utilize derivative financial instruments for trading or speculative purposes.

 

During 2003, the Company entered into two forward-starting interest rate swaps of $96.5 million and $47.7 million. The Company designated the $144.2 million swaps as cash flow hedges to fix the rate on a refinancing in April 2004. On March 31, 2004, the Company settled the swaps with a payment to the counter-party for $5.7 million. The swaps qualify for hedge accounting under Statement 133, therefore the losses associated with the swaps have been included in OCI. The unamortized balance of OCI is being amortized over the ten year term of the loan hedged as additional interest expense.

 

F-26


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

8. Stockholders’ Equity and Minority Interest

 

  (a) Preferred Stock

 

On August 31, 2004, the Company received proceeds from a $125 million offering of 5 million depositary shares representing 500,000 shares of Series 4 Cumulative Redeemable Preferred Stock. The depositary shares are perpetual preferred stock, not convertible into common stock of the Company, are redeemable at par upon Regency’s election on or after August 31, 2009, pay a 7.25% annual dividend, and have a liquidation value of $25 per depositary share. The proceeds from this offering were used to redeem $85 million of Series B 8.75% Preferred Units and $40 million of Series C 9.0% Preferred Units.

 

On April 3, 2003, the Company received proceeds from a $75 million offering of 3 million, depositary shares representing 300,000 shares of Series 3 Cumulative Redeemable Preferred Stock. The depositary shares are perpetual preferred stock, are not convertible into common stock of the Company, are redeemable at par upon Regency’s election on or after April 3, 2008, pay a 7.45% annual dividend, and have a liquidation value of $25 per depositary share.

 

The terms of the Series 3 and Series 4 Preferred Stock do not contain any unconditional obligations that would require the Company to redeem the securities at any time or for any purpose.

 

During 2003, the holder of the Series 2 preferred stock converted all of its remaining 450,400 preferred shares into common stock at a conversion ratio of 1:1.

 

  (b) Common Stock

 

On August 24, 2004, the Company sold 1.5 million shares of common stock in an underwritten public offering and the net proceeds of approximately $67 million were used to reduce the balance of the Line.

 

On August 18, 2003, the Company issued 3.6 million shares of common stock at $35.96 per share in an underwritten public offering. The net proceeds of $123.5 million were used to redeem the $80 million Series A Preferred Units and the remainder was used to reduce the balance of the Line.

 

Prior to June 24, 2003, Security Capital Group Inc. owned 34,273,236 shares, representing 56.6% of Regency’s outstanding common stock. On June 24, 2003 Security Capital (1) sold Regency common stock through (a) an underwritten public offering and (b) the sale of 4,606,880 shares to Regency at the public offering price of $32.56 per share and (2) agreed to sell the balance of its Regency shares pursuant to forward sales contracts with underwriters. Security Capital settled all of the forward sales contracts in September and December 2003, and as a result, Security Capital no longer owns any Regency shares. Security Capital terminated its Stockholders Agreement with Regency on June 24, 2003 and is now subject to the same 7% ownership limit in Regency’s articles of incorporation that applies to other shareholders.

 

F-27


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

  (c) Preferred Units

 

The Company, through RCLP, has issued Cumulative Redeemable Preferred Units (“Preferred Units”) in various amounts since 1998. The issues were sold primarily to institutional investors in private placements for $100 per unit. The Preferred Units, which may be called by RCLP at par after certain dates, have no stated maturity or mandatory redemption, and pay a cumulative, quarterly dividend at fixed rates. At any time after ten years from the date of issuance, the Preferred Units may be exchanged by the holder for Cumulative Redeemable Preferred Stock (“Preferred Stock”) at an exchange rate of one share for one unit. The Preferred Units and the related Preferred Stock are not convertible into common stock of the Company. At December 31, 2004 and 2003, the face value of total Preferred Units issued was $104 million and $229 million with an average fixed distribution rate of 8.13% and 8.88%, respectively.

 

On November 11, 2004, the Company renegotiated the distribution rate on the $50 million Series D Preferred Units from 9.125% to 7.45%. On September 3, 2004, the Company redeemed $85 million of Series B 8.75% Preferred Units and $40 million of Series C 9.0% Preferred Units from proceeds of the Series 4 Preferred stock offering described above. At the time of the redemptions, $3.2 million of previously deferred costs related to the original preferred units’ issuance were recognized in the consolidated statements of operations as a component of minority interest of preferred units.

 

During 2003, the Company redeemed $80 million of Series A 8.125% Preferred Units, which was funded from proceeds from the stock offering completed on August 18, 2003 and described above. At the time of the redemption, $1.2 million of costs related to the preferred units were recognized in the consolidated statements of operations as a component of minority interest of preferred units. Also during 2003, the Company redeemed $35 million of Series C 9% Preferred Units and $40 million of Series E 8.75% Preferred Units. The redemptions were portions of each series and the Company paid a 1% premium on the face value of the redeemed units totaling $750,000. At the time of redemption, the premium and $1.9 million of previously deferred costs related to their original issuance were recognized in the consolidated statements of operations as a component of minority interest of preferred units. The redemption of the Series C and E units was funded from proceeds from the Line.

 

Terms and conditions of the Preferred Units outstanding as of December 31, 2004 are summarized as follows:

 

Series

  Units
Outstanding


  Issue
Price


  Amount
Outstanding


  Distribution
Rate


    Callable by
Company


  Exchangeable
by Unit holder


Series D   500,000   $ 100.00   $ 50,000,000   7.450 %   09/29/09   01/01/14
Series E   300,000   $ 100.00     30,000,000   8.750 %   05/25/05   05/25/10
Series F   240,000   $ 100.00     24,000,000   8.750 %   09/08/05   09/08/10
   
       

             
    1,040,000         $ 104,000,000              
   
       

             

 

F-28


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

9. Earnings per Share

 

The following summarizes the calculation of basic and diluted earnings per share for the three years ended December 31, 2004, 2003 and 2002, respectively. Amounts have been reclassified from the previously filed consolidated financial statements to reflect the reclassification to discontinued operations for dispositions or properties held for sale through March 31, 2005. (in thousands except per share data):

 

 

     2004

   2003

   2002

Numerator:

                

Income from continuing operations

   $ 112,468    105,914    72,401

Discontinued operations

     23,859    24,875    38,123
    

  
  

Net income

     136,327    130,789    110,524

Less: Preferred stock dividends

     8,633    4,175    2,858
    

  
  

Net income for common stockholders – basic

     127,694    126,614    107,666

Add: Convertible Preferred stock dividends

     —      —      582

Add: Minority interest of exchangeable operating partnership units – continuing operations

     —      2,478    1,831

Add: Minority interest of exchangeable operating partnership units – discontinued operations

     —      566    966
    

  
  

Net income for common stockholders – diluted

   $ 127,694    129,658    111,045
    

  
  

Denominator:

                

Weighted average common shares outstanding for basic EPS

     61,264    59,411    58,193

Exchangeable operating partnership units

     —      1,436    1,523

Incremental shares to be issued under common stock options using the Treasury method

     217    395    378

Convertible series 2 preferred stock

     —      —      344
    

  
  

Weighted average common shares outstanding for diluted EPS

     61,481    61,242    60,438
    

  
  

Income per common share – basic

                

Income from continuing operations

   $ 1.69    1.71    1.19

Discontinued operations

     0.39    0.42    0.66
    

  
  

Net income for common stockholders per share

   $ 2.08    2.13    1.85
    

  
  

Income per common share – diluted

                

Income from continuing operations

   $ 1.69    1.70    1.19

Discontinued operations

     0.39    0.42    0.65
    

  
  

Net income for common stockholders per share

   $ 2.08    2.12    1.84
    

  
  

 

In 2004, the exchangeable operating partnership units were anti-dilutive to EPS, therefore, the units and the related minority interest of exchangeable operating partnership units are excluded from the calculation of EPS.

 

 

F-29


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

10. Stock Option Plan

 

Under the Plan, the Company may grant stock options to its officers, directors and other key employees. Options are granted at fair market value on the date of grant, vest 25% per year, and expire after ten years. Stock option grants also receive dividend equivalents for a specified period of time equal to the Company’s dividend yield less the average dividend yield of the S&P 500 as of the grant date. Dividend equivalents are funded in Regency common stock, and vest at the same rate as the options upon which they are based.

 

The following table reports stock option activity during the periods indicated:

 

     Number of
Shares


    Weighted
Average
Exercise Price


Outstanding, December 31, 2001

   3,682,962     $ 23.94
    

 

Granted

   1,710,093       30.19

Forfeited

   (177,819 )     24.07

Exercised

   (2,117,376 )     23.68
    

 

Outstanding, December 31, 2002

   3,097,860       27.47
    

 

Granted

   1,622,143       34.97

Forfeited

   (7,789 )     22.95

Exercised

   (2,215,924 )     27.73
    

 

Outstanding, December 31, 2003

   2,496,290       32.13
    

 

Granted

   1,904,373       45.89

Forfeited

   (6,493 )     28.63

Exercised

   (2,719,007 )     34.27
    

 

Outstanding, December 31, 2004

   1,675,163     $ 44.32
    

 

 

The following table presents information regarding all options outstanding at December 31, 2004:

 

Number of
Options
Outstanding


  Weighted
Average
Remaining
Contractual
Life (in years)


 

Range of Exercise

Prices


  Weighted
Average
Exercise
Price


101,984   5.86   $ 19.81 – 29.45   $ 25.05
603,650   4.58     29.90 – 44.40     39.53
969,529   4.18     44.94 – 54.52     49.32

 
 

 

1,675,163   4.43   $ 19.81 – 54.52   $ 44.32

 
 

 

 

F-30


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

10. Stock Option Plan (continued)

 

The following table presents information regarding options currently exercisable at December 31, 2004:

 

Number of
Options
Exercisable


 

Range of
Exercise

Prices


  Weighted
Average
Exercise
Price


57,882   $ 19.81 – 29.45   $ 24.30
588,650     29.90 – 44.40     39.78
969,529     44.94 – 54.52     49.32

 

 

1,616,061   $ 19.81 – 54.52   $ 44.95

 

 

 

11. Operating Leases

 

The Company’s properties are leased to tenants under operating leases with expiration dates extending to the year 2031. Future minimum rents under noncancelable operating leases as of December 31, 2004, excluding tenant reimbursements of operating expenses and excluding additional contingent rentals based on tenants’ sales volume are as follows (in thousands):

 

Year Ending December 31,


   Amount

2005

   $ 283,876

2006

     266,018

2007

     232,843

2008

     198,000

2009

     159,719

Thereafter

     1,041,260
    

Total

   $ 2,181,716
    

 

The shopping centers’ tenant base includes primarily national and regional supermarkets, drug stores, discount department stores and other retailers and, consequently, the credit risk is concentrated in the retail industry. There were no tenants that individually represented 10% or more of the Company’s combined minimum rent.

 

The Company has shopping centers that are subject to non-cancelable long-term ground leases where a third party owns and has leased the underlying land to Regency to construct and/or operate a shopping center. In addition, the Company has non-cancelable operating leases pertaining to office space where it conducts its business. The following table summarizes the obligations under non-cancelable operating leases as of December 31, 2004 (in thousands):

 

Year Ending December 31,


   Amount

2005

   $ 2,944

2006

     2,791

2007

     1,814

2008

     1,339

2009

     998

 

F-31


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

12. Contingencies

 

The Company is involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, is expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

13. Market and Dividend Information (Unaudited)

 

The Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “REG”. The Company currently has approximately 18,000 shareholders. The following table sets forth the high and low prices and the cash dividends declared on the Company’s common stock by quarter for 2004 and 2003:

 

     2004

   2003

Quarter Ended


   High
Price


   Low
Price


   Cash
Dividends
Declared


   High
Price


   Low
Price


   Cash
Dividends
Declared


March 31

   $ 46.73    38.90    .53    33.53    30.40    .52

June 30

     47.35    34.52    .53    35.72    32.41    .52

September 30

     47.70    41.98    .53    36.95    34.09    .52

December 31

     55.40    46.03    .53    40.43    35.56    .52

 

F-32


Index to Financial Statements

Regency Centers Corporation

 

Notes to Consolidated Financial Statements

 

December 31, 2004

 

14. Summary of Quarterly Financial Data (Unaudited)

 

Presented below is a summary of the consolidated quarterly financial data for the years ended December 31, 2004 and 2003. Amounts have been reclassified from the previously filed consolidated financial statements to reflect the reclassification to discontinued operations for dispositions or properties held for sale through March 31, 2005. (in thousands except per share data):

 

     First
Quarter


    Second
Quarter


    Third
Quarter


    Fourth
Quarter


 

2004:

                          

Revenues as originally reported

   $ 95,810     95,935     98,991     107,024  

Reclassified to discontinued operations

     (3,357 )   (3,059 )   (974 )   (691 )
    


 

 

 

Adjusted revenues

   $ 92,453     92,876     98,017     106,333  
    


 

 

 

Net income for common stockholders

   $ 21,420     25,059     35,569     45,646  
    


 

 

 

Net income per share:

                          

Basic

   $ .36     .41     .58     .73  
    


 

 

 

Diluted

   $ .35     .41     .58     .73  
    


 

 

 

2003:

                          

Revenues as originally reported

   $ 95,119     94,041     94,847     99,226  

Reclassified to discontinued operations

     (6,875 )   (5,827 )   (5,284 )   (4,107 )
    


 

 

 

Adjusted revenues

   $ 88,244     88,214     89,563     95,119  
    


 

 

 

Net income for common stockholders

   $ 17,924     25,632     29,769     53,289  
    


 

 

 

Net income per share:

                          

Basic

   $ .30     .43     .52     .89  
    


 

 

 

Diluted

   $ .30     .42     .51     .89  
    


 

 

 

 

F-33


Index to Financial Statements

REGENCY CENTERS CORPORATION

 

Combined Real Estate and Accumulated Depreciation

December 31, 2004

 

    Initial Cost

 

Cost
Capitalized

Subsequent to
Acquisition (a)


    Total Cost

  Accumulated
Depreciation


 

Total Cost

Net of

Accumulated
Depreciation


  Mortgages

    Land

  Building &
Improvements


    Land

  Building &
Improvements


  Properties
held for
Sale


  Total

     

ALDEN BRIDGE

  12,937   10,146   1,902     13,810   11,175   —     24,985   1,311   23,674   10,105

ANTHEM MARKETPLACE

  6,846   13,563   (111 )   6,846   13,452   —     20,298   596   19,702   14,870

ASHBURN FARM MARKET CENTER

  9,869   4,747   (11 )   9,835   4,770   —     14,605   791   13,814   —  

ASHFORD PLACE

  2,804   9,944   (399 )   2,584   9,765   —     12,349   2,577   9,772   3,883

AVENTURA SHOPPING CENTER

  2,751   9,318   961     2,751   10,279   —     13,030   5,262   7,768   —  

BECKETT COMMONS

  1,625   5,845   4,839     1,625   10,684   —     12,309   1,486   10,823   —  

BELLEVIEW SQUARE

  8,132   8,610   8     8,132   8,618   —     16,750   192   16,558   9,894

BENEVA VILLAGE SHOPS

  2,484   8,851   887     2,484   9,738   —     12,222   1,596   10,626   —  

BERKSHIRE COMMONS

  2,295   8,151   281     2,295   8,432   —     10,727   2,529   8,198   —  

BETHANY PARK PLACE

  4,605   5,792   (230 )   4,290   5,877   —     10,167   1,864   8,303   —  

BLOOMINGDALE

  3,862   14,101   615     3,862   14,716   —     18,578   2,746   15,832   —  

BLOSSOM VALLEY

  7,804   10,321   419     7,804   10,740   —     18,544   1,623   16,921   —  

BOLTON PLAZA

  2,660   6,209   1,821     2,635   8,055   —     10,690   2,448   8,242   —  

BOULEVARD CENTER

  3,659   9,658   661     3,659   10,319   —     13,978   1,607   12,371   —  

BOYNTON LAKES PLAZA

  2,783   10,043   1,376     2,783   11,419   —     14,202   2,089   12,113   —  

BRIARCLIFF LA VISTA

  694   2,463   775     694   3,238   —     3,932   1,166   2,766   —  

BRIARCLIFF VILLAGE

  4,597   16,304   8,125     4,597   24,429   —     29,026   6,185   22,841   12,069

BUCKHEAD COURT

  1,738   6,163   1,778     1,628   8,051   —     9,679   2,052   7,627   —  

BUCKLEY SQUARE

  2,970   5,126   376     2,970   5,502   —     8,472   1,003   7,469   —  

CAMBRIDGE SQUARE SHOPPING CTR

  792   2,916   1,391     792   4,307   —     5,099   949   4,150   —  

CARMEL COMMONS

  2,466   8,903   3,538     2,466   12,441   —     14,907   2,367   12,540   —  

CARRIAGE GATE

  741   2,495   1,872     741   4,367   —     5,108   1,859   3,249   —  

CASA LINDA PLAZA

  4,515   30,809   640     4,515   31,449   —     35,964   4,780   31,184   —  

CENTERPLACE OF GREELEY

  378   —     —       378   —     —     378   —     378   —  

CHAMPIONS FOREST

  2,666   8,679   (20 )   2,584   8,741   —     11,325   1,358   9,967   —  

CHASEWOOD PLAZA

  1,675   11,391   12,153     4,612   20,607   —     25,219   5,998   19,221   —  

CHERRY GROVE

  3,533   12,710   2,472     3,533   15,182   —     18,715   2,629   16,086   —  

CHESHIRE STATION

  10,182   8,443   (421 )   9,896   8,308   —     18,204   1,528   16,676   —  

COCHRAN’S CROSSING

  13,154   10,066   2,194     13,154   12,260   —     25,414   1,377   24,037   —  

COOPER STREET

  2,079   10,682   84     2,079   10,766   —     12,845   1,605   11,240   —  

COSTA VERDE

  12,740   25,261   473     12,740   25,734   —     38,474   5,165   33,309   —  

COURTYARD SHOPPING CENTER

  1,762   4,187   (82 )   5,867   —     —     5,867   —     5,867   —  

CROMWELL SQUARE

  1,772   6,285   507     1,772   6,792   —     8,564   1,702   6,862   —  

CUMMING 400

  2,375   8,421   1,277     2,375   9,698   —     12,073   2,301   9,772   —  

DELK SPECTRUM

  2,985   11,049   338     2,985   11,387   —     14,372   2,054   12,318   —  

DIABLO PLAZA

  5,300   7,536   425     5,300   7,961   —     13,261   1,317   11,944   —  

DICKSON TN

  675   1,568   —       675   1,568       2,243   204   2,039    

DUNWOODY HALL

  1,819   6,451   5,705     2,529   11,446   —     13,975   2,488   11,487   —  

DUNWOODY VILLAGE

  2,326   7,216   8,425     3,336   14,631   —     17,967   2,911   15,056   —  

EAST POINTE

  1,868   6,743   172     1,730   7,053   —     8,783   1,495   7,288   4,316

EAST PORT PLAZA

  3,257   11,611   (1,718 )   3,257   9,893   —     13,150   996   12,154   —  

EAST TOWNE SHOPPING CENTER

  2,957   4,881   —       2,957   4,881   —     7,838   274   7,564   —  

EL CAMINO

  7,600   10,852   544     7,600   11,396   —     18,996   1,851   17,145   —  

EL CERRITO PLAZA

  2,109   —     —       2,109   —     —     2,109   —     2,109   —  

EL NORTE PKWY PLAZA

  2,834   6,332   745     2,834   7,077   —     9,911   1,108   8,803   —  

ENCINA GRANDE

  5,040   10,379   612     5,040   10,991   —     16,031   1,706   14,325   —  

FENTON MARKETPLACE

  3,020   10,153   (350 )   2,615   10,208   —     12,823   882   11,941   —  

FLEMING ISLAND

  3,077   6,292   4,920     3,077   11,212   —     14,289   1,608   12,681   2,668

FOLSOM PRAIRIE CITY CROSSING

  3,944   11,258   1,753     4,164   12,791   —     16,955   1,079   15,876   —  

FORT BEND CENTER

  6,966   4,197   (308 )   6,690   4,165   —     10,855   522   10,333   —  

 

S-1


Index to Financial Statements

REGENCY CENTERS CORPORATION

 

Combined Real Estate and Accumulated Depreciation

December 31, 2004

 

    Initial Cost

 

Cost
Capitalized

Subsequent to
Acquisition (a)


    Total Cost

  Accumulated
Depreciation


 

Total Cost

Net of

Accumulated
Depreciation


  Mortgages

    Land

  Building &
Improvements


    Land

  Building &
Improvements


  Properties
held for
Sale


  Total

     

FRANKFORT CROSSING SHPG CTR

  8,325   6,067   905     7,874   7,423   —     15,297   811   14,486   —  

FRIARS MISSION

  6,660   27,277   431     6,660   27,708   —     34,368   4,009   30,359   15,827

GARDEN SQUARE

  2,074   7,615   608     2,136   8,161   —     10,297   1,568   8,729   —  

GARNER

  5,591   19,897   1,911     5,591   21,808   —     27,399   3,438   23,961   —  

GATEWAY SHOPPING CENTER

  51,719   4,545   73     51,765   4,572   —     56,337   153   56,184   22,615

GELSON’S WESTLAKE MARKET PLAZA

  2,332   8,316   3,265     3,145   10,768   —     13,913   530   13,383   —  

GILROY

  18,735   31,679   —       18,735   31,679   —     50,414   788   49,626   49,000

GLENWOOD VILLAGE

  1,194   4,235   709     1,194   4,944   —     6,138   1,251   4,887   —  

GRANDE OAK

  5,569   5,900   (609 )   4,976   5,884       10,860   720   10,140    

KROGER NEW ALBANY CENTER

  2,770   6,379   1,231     3,844   6,536   —     10,380   1,431   8,949   7,479

HANCOCK

  8,232   24,249   3,186     8,232   27,435   —     35,667   4,305   31,362   —  

HARPETH VILLAGE FIELDSTONE

  2,284   5,559   3,747     2,284   9,306   —     11,590   1,616   9,974   —  

HERITAGE LAND

  12,390   —     —       12,390   —     —     12,390   —     12,390   —  

HERITAGE PLAZA

  —     23,676   1,736     —     25,412   —     25,412   4,049   21,363   —  

HERSHEY

  7   807   1     7   808   —     815   83   732   —  

HILLCREST VILLAGE

  1,600   1,798   78     1,600   1,876   —     3,476   278   3,198   —  

HILLTOP VILLAGE

  3,867   5,036   —       3,867   5,036   —     8,903   398   8,505   —  

HINSDALE

  4,218   15,040   2,099     5,734   15,623   —     21,357   2,548   18,809   —  

HYDE PARK

  9,240   33,340   5,442     9,768   38,254   —     48,022   7,313   40,709   —  

INGLEWOOD PLAZA

  1,300   1,862   176     1,300   2,038   —     3,338   343   2,995   —  

KELLER TOWN CENTER

  2,294   12,239   424     2,294   12,663       14,957   1,816   13,141   —  

KERNERSVILLE PLAZA

  1,742   6,081   552     1,742   6,633   —     8,375   1,134   7,241   4,678

KINGSDALE SHOPPING CENTER

  3,867   14,020   5,833     4,028   19,692   —     23,720   3,708   20,012   —  

LAKE PINE PLAZA

  2,008   6,909   641     2,008   7,550   —     9,558   1,297   8,261   5,274

LAKESHORE

  1,618   5,371   312     1,618   5,683   —     7,301   1,037   6,264   3,285

LEBANON/LEGACY CENTER

  3,906   7,391   —       3,906   7,391   —     11,297   557   10,740   —  

LEETSDALE MARKETPLACE

  3,420   9,934   128     3,420   10,062   —     13,482   1,510   11,972   —  

LITTLETON SQUARE

  2,030   8,255   125     2,030   8,380   —     10,410   1,239   9,171   —  

LLOYD KING CENTER

  1,779   8,855   229     1,779   9,084   —     10,863   1,430   9,433   —  

LOEHMANNS PLAZA GEORGIA

  3,982   14,118   1,264     3,982   15,382   —     19,364   3,955   15,409   —  

LOEHMANNS PLAZA CALIFORNIA

  5,420   8,679   406     5,420   9,085   —     14,505   1,494   13,011   —  

MACARTHUR PARK REPURCHASE

  1,930   —     —       1,930   —     —     1,930   —     1,930   —  

MAINSTREET SQUARE

  1,274   4,492   (850 )   —     —     4,916   4,916   —     4,916   —  

MARINERS VILLAGE

  1,628   5,908   2,757     1,751   8,542   —     10,293   1,513   8,780   —  

MARKET AT PRESTON FOREST

  4,400   10,753   92     4,400   10,845   —     15,245   1,566   13,679   —  

MARKET AT ROUND ROCK

  2,000   9,676   158     2,000   9,834   —     11,834   1,500   10,334   6,507

MARKETPLACE ST PETE

  1,287   4,663   636     1,287   5,299   —     6,586   1,275   5,311   —  

MARTIN DOWNS VILLAGE CENTER

  2,000   5,133   4,352     2,438   9,047   —     11,485   3,222   8,263   —  

MARTIN DOWNS VILLAGE SHOPPES

  700   1,208   3,643     817   4,734   —     5,551   1,444   4,107   —  

MAXTOWN ROAD (NORTHGATE)

  1,753   6,244   111     1,753   6,355   —     8,108   1,150   6,958   4,712

MAYNARD CROSSING

  4,066   14,084   1,336     4,066   15,420   —     19,486   2,646   16,840   10,498

MCMINNVILLE MARKET CENTER

  1,511   5,775   —       1,511   5,775   —     7,286   95   7,191    

MEMORIAL BEND SHOPPING CENTER

  3,256   11,547   2,660     3,366   14,097   —     17,463   3,853   13,610   6,517

MILLHOPPER

  1,073   3,594   1,717     1,073   5,311   —     6,384   2,420   3,964   —  

MOCKINGBIRD COMMON

  3,000   9,676   458     3,000   10,134   —     13,134   1,662   11,472   —  

MONUMENT JACKSON CREEK

  2,999   6,476   12     2,999   6,488   —     9,487   1,369   8,118   —  

MORNINGSIDE PLAZA

  4,300   13,120   223     4,300   13,343   —     17,643   2,065   15,578   —  

MURRAY LANDING

  3,655   4,587   —       3,655   4,587   —     8,242   335   7,907    

MURRAYHILL MARKETPLACE

  2,600   15,753   2,086     2,670   17,769   —     20,439   2,954   17,485   9,000

NASHBORO

  1,824   7,168   474     1,824   7,642   —     9,466   1,110   8,356   —  

 

S-2


Index to Financial Statements

REGENCY CENTERS CORPORATION

 

Combined Real Estate and Accumulated Depreciation

December 31, 2004

 

    Initial Cost

 

Cost
Capitalized

Subsequent to
Acquisition (a)


    Total Cost

  Accumulated
Depreciation


 

Total Cost

Net of

Accumulated
Depreciation


  Mortgages

    Land

  Building &
Improvements


    Land

  Building &
Improvements


  Properties
held for
Sale


  Total

     

NEWBERRY SQUARE

  2,341   8,467   1,507     2,341   9,974   —     12,315   3,344   8,971   —  

NEWLAND CENTER

  12,500   12,221   (1,974 )   12,500   10,247   —     22,747   2,148   20,599   —  

NORTH HILLS

  4,900   18,972   191     4,900   19,163   —     24,063   2,835   21,228   6,982

NORTHLAKE VILLAGE I

  2,662   9,685   757     2,662   10,442   —     13,104   1,176   11,928   6,378

OAKBROOK PLAZA

  4,000   6,366   172     4,000   6,538   —     10,538   1,174   9,364   —  

OCEAN BREEZE

  1,250   3,341   4,293     1,527   7,357   —     8,884   2,348   6,536   —  

OLD ST AUGUSTINE PLAZA

  2,047   7,355   1,576     2,107   8,871   —     10,978   2,264   8,714   —  

PACES FERRY PLAZA

  2,812   9,968   2,265     2,812   12,233   —     15,045   3,035   12,010   —  

PALM TRAILS PLAZA

  2,439   5,819   (142 )   2,022   6,094   —     8,116   1,067   7,049   —  

PANTHER CREEK

  14,414   12,079   2,134     14,414   14,213   —     28,627   1,587   27,040   10,315

PARK PLACE SHOPPING CENTER

  2,232   7,974   403     2,232   8,377   —     10,609   1,328   9,281   —  

PASEO VILLAGE

  2,550   7,780   562     2,559   8,333   —     10,892   1,385   9,507   —  

PEACHLAND PROMENADE

  1,285   5,144   309     1,285   5,453   —     6,738   1,575   5,163   —  

PEARTREE VILLAGE

  5,197   8,733   10,768     5,197   19,501   —     24,698   3,884   20,814   11,547

PHENIX CROSSING

  1,544   —     —       1,544   —     —     1,544   —     1,544   —  

PIKE CREEK

  5,077   18,860   1,170     5,077   20,030   —     25,107   3,594   21,513   —  

PIMA CROSSING

  5,800   24,892   1,136     5,800   26,028   —     31,828   3,852   27,976   —  

PINE LAKE VILLAGE

  6,300   10,522   139     6,300   10,661   —     16,961   1,584   15,377   —  

PINE TREE PLAZA

  539   1,996   3,504     539   5,500   —     6,039   954   5,085   —  

PLAZA HERMOSA

  4,200   9,370   609     4,200   9,979   —     14,179   1,508   12,671   —  

POWELL STREET PLAZA

  8,248   29,279   226     8,248   29,505       37,753   2,250   35,503   —  

POWERS FERRY SQUARE

  3,608   12,791   4,499     3,608   17,290   —     20,898   4,278   16,620   —  

POWERS FERRY VILLAGE

  1,191   4,224   287     1,191   4,511   —     5,702   1,162   4,540   2,682

PRESTONBROOK

  4,704   10,762   (2,704 )   4,200   8,562   —     12,762   1,879   10,883   —  

PRESTON PARK

  6,400   46,896   2,652     6,400   49,548   —     55,948   7,276   48,672   —  

PRESTONWOOD PARK

  8,077   14,938   182     8,077   15,120   —     23,197   2,316   20,881   —  

REGENCY COURT

  3,571   12,664   (456 )   3,571   12,208   —     15,779   1,159   14,620   —  

REGENCY SQUARE BRANDON

  578   18,157   10,505     4,770   24,470   —     29,240   10,695   18,545   —  

RIVERMONT STATION

  2,887   10,445   164     2,887   10,609   —     13,496   2,034   11,462   —  

RONA PLAZA

  1,500   4,356   72     1,500   4,428   —     5,928   649   5,279   —  

RUSSELL RIDGE

  2,153   —     6,695     2,215   6,633   —     8,848   1,739   7,109   5,900

SAMMAMISH HIGHLAND

  9,300   7,553   136     9,300   7,689   —     16,989   1,174   15,815   —  

SAN LEANDRO

  1,300   7,891   225     1,300   8,116   —     9,416   1,286   8,130   —  

SANTA ANA DOWNTOWN

  4,240   7,319   837     4,240   8,156   —     12,396   1,406   10,990   —  

SEQUOIA STATION

  9,100   17,900   162     9,100   18,062   —     27,162   2,687   24,475   —  

SHERWOOD CROSSROADS

  2,731   3,612   1,692     2,731   5,304   —     8,035   388   7,647   —  

SHERWOOD MARKET CENTER

  3,475   15,898   92     3,475   15,990   —     19,465   2,489   16,976   —  

SHILOH SPRINGS

  4,968   7,859   4,461     5,739   11,549   —     17,288   3,733   13,555   —  

SHOPPES AT MASON

  1,577   5,358   64     1,577   5,422   —     6,999   949   6,050   3,458

SOUTH MOUNTAIN

  934   —     —       934   —     —     934   —     934   —  

SOUTH POINT PLAZA

  5,000   10,086   144     5,000   10,230   —     15,230   1,539   13,691   —  

SOUTHPOINT CROSSING

  4,399   11,116   957     4,399   12,073   —     16,472   1,903   14,569   —  

SOUTHCENTER

  1,300   12,251   210     1,300   12,461   —     13,761   1,812   11,949   —  

STARKE

  71   1,674   9     71   1,683   —     1,754   170   1,584   —  

STATLER SQUARE PHASE I

  2,228   7,480   783     2,228   8,263   —     10,491   1,506   8,985   4,842

STERLING RIDGE

  12,846   10,085   1,924     12,846   12,009   —     24,855   1,344   23,511   10,569

STRAWFLOWER VILLAGE

  4,060   7,233   352     4,060   7,585   —     11,645   1,194   10,451   —  

STROH RANCH

  4,138   7,111   968     4,280   7,937   —     12,217   1,587   10,630   —  

SUNNYSIDE 205

  1,200   8,703   281     1,200   8,984   —     10,184   1,394   8,790   —  

TALL OAKS VILLAGE CENTER

  1,858   6,736   75     1,858   6,811   —     8,669   479   8,190   6,261

 

S-3


Index to Financial Statements

REGENCY CENTERS CORPORATION

 

Combined Real Estate and Accumulated Depreciation

December 31, 2004

 

    Initial Cost

   

Cost
Capitalized

Subsequent to
Acquisition (a)


    Total Cost

  Accumulated
Depreciation


 

Total Cost

Net of

Accumulated
Depreciation


  Mortgages

    Land

  Building &
Improvements


      Land

  Building &
Improvements


    Properties
held for
Sale


  Total

     

TASSAJARA CROSSING

  8,560   14,900     166     8,560   15,066     —     23,626   2,223   21,403   —  

THE MARKET AT OPITZ CROSSING

  9,902   8,339     803     9,903   9,141     —     19,044   748   18,296   12,352

THE SHOPS

  3,293   2,320     822     3,293   3,142     —     6,435   200   6,235   4,714

THE SHOPS OF SANTA BARBARA

  9,477   1,323     6     9,477   1,329     —     10,806   354   10,452   7,916

THOMAS LAKE

  6,000   10,302     205     6,000   10,507     —     16,507   1,543   14,964   —  

TOWN CENTER AT MARTIN DOWNS

  1,364   4,985     145     1,364   5,130     —     6,494   1,046   5,448   —  

TOWN SQUARE

  438   1,555     6,948     883   8,058     —     8,941   1,293   7,648   —  

TRACE CROSSING

  4,356   4,896     —       4,356   4,896     —     9,252   417   8,835   8,438

TROPHY CLUB

  2,595   10,467     161     2,595   10,628     —     13,223   1,344   11,879   —  

TWIN PEAKS

  5,200   25,120     182     5,200   25,302     —     30,502   3,795   26,707   —  

UNION SQUARE SHOPPING CENTER

  1,579   5,934     454     1,579   6,388     —     7,967   1,452   6,515   —  

UNIVERSITY COLLECTION

  2,530   8,972     771     2,530   9,743     —     12,273   2,185   10,088   —  

VALENCIA CROSSROADS

  17,913   17,357     —       17,913   17,357     —     35,270   1,479   33,791   —  

VALLEY RANCH CENTRE

  3,021   10,728     35     3,021   10,763     —     13,784   1,610   12,174   —  

VENTURA VILLAGE

  4,300   6,351     223     4,300   6,574     —     10,874   990   9,884   —  

VILLAGE CENTER 6

  3,885   10,799     1,042     3,885   11,841     —     15,726   2,924   12,802   —  

VILLAGE IN TRUSSVILLE

  974   3,261     486     1,142   3,579     —     4,721   1,184   3,537   —  

VINEYARD SHOPPING CENTER

  2,802   3,916     —       2,802   3,916     —     6,718   426   6,292   —  

WALKER CENTER

  3,840   6,418     405     3,840   6,823     —     10,663   1,057   9,606   —  

WATERFORD TOWNE CENTER

  5,650   6,844     1,927     6,493   7,928     —     14,421   1,806   12,615   —  

WELLEBY

  1,496   5,372     2,223     1,496   7,595     —     9,091   2,289   6,802   —  

WELLINGTON TOWN SQUARE

  1,914   7,198     4,472     2,150   11,434     —     13,584   1,867   11,717   —  

WEST PARK PLAZA

  5,840   4,992     311     5,840   5,303     —     11,143   802   10,341   —  

WESTBROOK COMMONS

  3,366   11,928     863     3,366   12,791     —     16,157   1,208   14,949   —  

WESTCHESTER PLAZA

  1,857   6,456     871     1,857   7,327     —     9,184   1,656   7,528   5,052

WESTRIDGE

  9,516   10,789     —       9,516   10,789     —     20,305   453   19,852    

WESTLAKE VILLAGE CENTER

  7,043   25,744     888     7,043   26,632     —     33,675   4,463   29,212   —  

WHITE OAK - DOVER, DE

  2,147   2,927     138     2,143   3,069     —     5,212   366   4,846   —  

WILLA SPRINGS SHOPPING CENTER

  2,004   9,266     (117 )   2,143   9,010     —     11,153   1,086   10,067   —  

WINDMILLER PLAZA PHASE I

  2,620   11,190     1,338     2,619   12,529     —     15,148   2,046   13,102   —  

WOODCROFT SHOPPING CENTER

  1,418   5,211     547     1,418   5,758     —     7,176   1,369   5,807   —  

WOODMAN VAN NUYS

  5,499   6,834     346     5,499   7,180     —     12,679   1,132   11,547   4,806

WOODMEN PLAZA

  6,013   10,077     (40 )   6,644   9,406     —     16,050   2,651   13,399   —  

WOODSIDE CENTRAL

  3,499   8,845     117     3,499   8,962     —     12,461   1,326   11,135   —  

WORTHINGTON PARK CENTRE

  3,345   10,053     1,037     3,345   11,090     —     14,435   2,666   11,769   —  
                                  —     —     —      

OPERATING BUILD TO SUIT PROPERTIES

  4,315   (202 )   —       4,315   (202 )       4,113   3,810   303   —  
   
 

 

 
 

 
 
 
 
 
    788,453   1,719,495     218,830     806,207   1,915,655     4,916   2,726,778   338,609   2,388,169   315,409
   
 

 

 
 

 
 
 
 
 

(a) The negative balance for costs capitalized subsequent to acquisiton could include out-parcels sold, provision for loss recorded and development transfers subsequent to the initial costs.

 

S-4


Index to Financial Statements

REGENCY CENTERS CORPORATION

 

Combined Real Estate and Accumulated Depreciation

December 31, 2004

 

Depreciation and amortization of the Company’s investment in buildings and improvements reflected in the statements of operation is calculated over the estimated useful lives of the assets as follows:

 

Buildings and improvements                      up to 40 years

 

The aggregate cost for Federal income tax purposes was approximately $2.7 billion at December 31, 2004.

 

The changes in total real estate assets for the years ended December 31, 2004, 2003 and 2002:

 

     2004

    2003

    2002

 

Balance, beginning of year

   $ 2,656,376     2,692,503     2,673,164  

Developed or acquired properties

     322,659     238,964     402,035  

Sale of properties

     (261,098 )   (287,547 )   (397,203 )

Provision for loss on operating properties

     (810 )   (1,969 )   (4,369 )

Reclass accumulated depreciation to adjust building basis

     (1,010 )   440     (7,021 )

Reclass accumulated depreciation related to properties held for sale

     (997 )   (2,537 )   (3,409 )

Reclass accumulated depreciation related to properties held for sale recharacterized in 2002 to properties to be held and used

     —       —       10,772  

Improvements

     11,658     16,522     18,534  
    


 

 

Balance, end of year

   $ 2,726,778     2,656,376     2,692,503  
    


 

 

 

The changes in accumulated depreciation for the years ended December 31, 2004, 2003 and 2002:

 

     2004

    2003

    2002

 

Balance, beginning of year

   $ 285,665     244,596     202,325  

Sale of properties

     (16,152 )   (23,708 )   (23,593 )

Reclass accumulated depreciation to adjust building basis

     (1,010 )   440     (7,021 )

Reclass accumulated depreciation related to properties held for sale

     (997 )   (2,537 )   (3,409 )

Reclass accumulated depreciation related to properties held for sale recharacterized in 2002 to properties to be held and used

     —       —       10,772  

Depreciation for year

     71,103     66,874     65,522  
    


 

 

Balance, end of year

   $ 338,609     285,665     244,596  
    


 

 

 

S-5