Regency Centers (REG) Reports Decline in Same Property NOI
I'm looking at the Regency Centers (REG) supplemental information release for third quarter 2009. For the quarter ended September 30, 2009, same property net operating income (NOI) declined 6.5%.
When I started talking about the REG/REG-E pair trade, I concluded that "my key disconnect with [RBC's bullish stance on REG was that] they expect NOI growth and I would consider them lucky just to maintain present levels."
So... NOI is dropping, just as a reasonable person would suspect. The key drivers of NOI are the rents and occupancy of their shopping centers. These are determined by the supply and demand for retail space. Supply increased during the credit bubble and demand is decreasing due to the crash.
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These are determined by the supply and demand for retail space. Supply increased during the credit bubble and demand is decreasing due to the crash.
Combined with heavy debt and falling property values, it'll be a death spiral for some REITs.
Yes.
I think REG survives (which is why I like the preferred), but it is overvalued.
I am short KIM again now, although in general I do not like to hold any position around earnings. I've done a few short trades in it over the last few months; all have ended profitably, but it's been at times a wild ride. In general it is a yield play -- I cannot see why they trade at such a yield premium to their peers.
For the same reason I went long GRT a couple of days ago. Did you happen to notice the crazy price/volume spike in GRT just a few minutes before the close on Monday? Not to mention the unaccountably heavy selling beforehand. News came out that BX had agreed to invest in a couple of their malls. But did it come out before the market close?? Very fishy, to say the least -- the whole day's trading. Those who bought in the 2.20s (like me) got a 40% return in a matter of minutes. As of yesterday there was still no press release on the GRT site about the BX transaction.
If you like GRT, you should take a look at its preferreds which yield ~15%.
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