United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] For the quarterly period ended September 30, 2000
-or-
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 0-24763
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 59-3429602
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
(904) 356-7000
(Registrant's telephone number, including area code)
Unchanged
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
<PAGE>
Part I
Item 1. Financial Statement
REGENCY CENTERS, L.P.
Consolidated Balance Sheets
September 30, 2000 and December 31, 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Assets
Real estate investments:
Land $ 556,249,608 538,881,578
Buildings and improvements 1,752,120,588 1,722,813,591
--------------- ---------------
2,308,370,196 2,261,695,169
Less: accumulated depreciation 111,055,462 81,294,400
--------------- ---------------
2,197,314,734 2,180,400,769
Properties in development 258,683,760 167,300,893
Operating properties held for sale 124,098,255 -
Investments in real estate partnerships 66,159,432 66,938,784
--------------- ---------------
Net real estate investments 2,646,256,181 2,414,640,446
Cash and cash equivalents 32,611,193 50,964,920
Notes receivable 37,962,720 15,673,125
Tenant receivables, net of allowance for uncollectible accounts of
$3,257,390 and $1,883,547 at September 30, 2000 and
and December 31, 1999 28,366,032 30,884,172
Deferred costs, less accumulated amortization of
$8,506,700 and $5,498,619 at September 30, 2000
and December 31, 1999 16,844,767 11,272,866
Other assets 7,588,032 7,273,925
--------------- ---------------
$ 2,769,628,925 2,530,709,454
=============== ===============
Liabilities and Partners' Capital
Liabilities:
Notes payable 843,733,544 713,787,207
Unsecured line of credit 305,000,000 247,179,310
Accounts payable and other liabilities 38,066,173 47,981,987
Tenants' security and escrow deposits 8,019,289 7,566,967
--------------- ---------------
Total liabilities 1,194,819,006 1,016,515,471
--------------- ---------------
Limited partners' interest in consolidated partnerships 6,386,271 11,108,994
--------------- ---------------
Partners' Capital:
Series A preferred units, par value $50: 1,600,000 units
issued and outstanding at September 30, 2000 and December 31, 1999 78,800,000 78,800,000
Series B preferred units, par value $100: 850,000 units
issued and outstanding at September 30, 2000 and December 31, 1999 82,799,720 82,799,720
Series C preferred units, par value $100: 750,000 units
issued and outstanding at September 30, 2000 and December 31, 1999 73,058,577 73,058,577
Series D preferred units, par value $100: 500,000 units
issued and outstanding at September 30, 2000 and December 31, 1999 49,157,977 49,157,977
Series E preferred units, par value $100: 700,000 units
issued and outstanding at September 30, 2000 68,221,978 -
Series F preferred units, par value $100: 240,000 units
issued and outstanding at September 30, 2000 23,400,000 -
General partner; 55,525,424 and 55,535,928 units outstanding
at September 30, 2000 and December 31, 1999 1,162,273,135 1,179,400,122
Limited partners; 1,470,682 and 1,863,604 units outstanding
at September 30, 2000 and December 31, 1999 30,712,261 39,868,593
--------------- ---------------
Total partners' capital 1,568,423,648 1,503,084,989
--------------- ---------------
Commitments and contingencies
$ 2,769,628,925 2,530,709,454
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Operations
For the Three Months ended September 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues:
Minimum rent $ 61,836,311 55,853,324
Percentage rent 312,048 285,074
Recoveries from tenants 17,197,337 13,870,288
Service operations revenue 6,021,017 4,014,664
Equity in income of investments in
real estate partnerships 2,804,787 1,218,075
--------------- ---------------
Total revenues 88,171,500 75,241,425
--------------- ---------------
Operating expenses:
Depreciation and amortization 13,702,244 12,184,080
Operating and maintenance 11,283,875 10,019,568
General and administrative 4,996,685 4,795,323
Real estate taxes 8,623,109 7,440,862
Other expenses 830,000 375,000
--------------- ---------------
Total operating expenses 39,435,913 34,814,833
--------------- ---------------
Interest expense (income):
Interest expense 17,356,132 14,672,670
Interest income (1,144,983) (479,652)
--------------- ---------------
Net interest expense 16,211,149 14,193,018
--------------- ---------------
Income before minority interests, gain and
provision on real estate investments 32,524,438 26,233,574
--------------- ---------------
Gain on sale of operating properties - -
Minority interest of limited partners (186,203) 83,702
--------------- ---------------
Net income 32,338,235 26,317,276
Preferred unit distributions (7,977,919) (2,334,376)
--------------- ---------------
Net income for common unitholders $ 24,360,316 23,982,900
=============== ===============
Net income per common unit:
Basic $ 0.43 0.40
=============== ===============
Diluted $ 0.43 0.40
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Operations
For the Nine Months ended September 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues:
Minimum rent $ 178,625,353 146,693,434
Percentage rent 1,320,012 1,068,779
Recoveries from tenants 48,641,418 36,706,100
Service operations revenue 15,387,761 9,755,287
Equity in income of investments in
real estate partnerships 2,865,450 3,354,278
--------------- ---------------
Total revenues 246,839,994 197,577,878
--------------- ---------------
Operating expenses:
Depreciation and amortization 40,117,111 32,151,239
Operating and maintenance 31,018,696 25,486,950
General and administrative 13,253,951 13,576,216
Real estate taxes 24,160,988 18,888,961
Other expenses 1,749,715 900,000
--------------- ---------------
Total operating expenses 110,300,461 91,003,366
--------------- ---------------
Interest expense (income):
Interest expense 49,316,059 40,519,525
Interest income (2,776,206) (1,572,470)
--------------- ---------------
Net interest expense 46,539,853 38,947,055
--------------- ---------------
Income before minority interests, gain and
provision on real estate investments 89,999,680 67,627,457
--------------- ---------------
Gain on sale of operating properties 18,310 -
Provison for loss on operating properties held for sale (6,909,625) -
Minority interest of limited partners (666,517) (663,331)
--------------- ---------------
Net income 82,441,848 66,964,126
Preferred unit distributions (21,232,432) (5,584,378)
--------------- ---------------
Net income for common unitholders $ 61,209,416 61,379,748
=============== ===============
Net income per common unit:
Basic $ 1.06 1.15
=============== ===============
Diluted $ 1.06 1.15
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statement of Changes in Capital
For the Nine Months Ended September 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Preferred General Limited Total
Units Partner Partners Capital
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Balance December 31, 1999 $ 283,816,274 1,179,400,122 39,868,593 1,503,084,989
Net income 21,232,432 59,361,322 1,848,094 82,441,848
Proceeds from the issuance of
preferred units, net 91,621,978 - - 91,621,978
Cash distributions for dividends (83,844,867) (2,539,871) (86,384,738)
Preferred unit distribution (21,232,432) - - (21,232,432)
Purchase of Regency stock and
corresponding units - (11,088,419) - (11,088,419)
Other contributions, net - 6,135,479 - 6,135,479
Units issued for acquisition
of real estate or investments in
real estate partnerships - 88,924 1,632,020 1,720,944
Units converted for cash (1,396,946) (1,396,946)
Units issued as a result of common
stock issued by Regency - 3,520,945 - 3,520,945
Units exchanged for common
stock of Regency - 9,274,877 (9,274,877) -
Reallocation of limited partners interest - (575,248) 575,248 -
---------------- ----------------- ------------------ -------------------
Balance September 30, 2000 $ 375,438,252 1,162,273,135 30,712,261 1,568,423,648
================ ================= ================== ===================
</TABLE>
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 82,441,848 66,964,126
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 40,117,111 32,151,239
Deferred financing cost and debt premium amortization 229,756 31,379
Services provided by Regency in exchange for units 3,498,469 2,036,322
Minority interest of limited partners 666,517 663,331
Equity in income of investments in real estate partnerships (2,865,450) (3,354,278)
Gain on sale of operating properties (18,310) -
Provision for loss on operating properties held for sale 6,909,625 -
Changes in assets and liabilities:
Tenant receivables 4,224,506 (10,546,128)
Deferred costs (4,628,009) (3,059,125)
Other assets (1,431,084) 559,800
Tenants' security and escrow deposits 304,610 698,441
Accounts payable and other liabilities (10,271,714) 5,679,389
---------------- ----------------
Net cash provided by operating activities 119,177,875 91,824,496
---------------- ----------------
Cash flows from investing activities:
Acquisition and development of real estate, net (238,288,025) (143,384,452)
Acquisition of Pacific, net of cash acquired - (9,046,230)
Acquisition of partners' interest in investments in real estate
partnerships, net of cash acquired (1,402,371) -
Investment in real estate partnerships (49,515,795) (23,714,109)
Capital improvements (11,098,401) (9,290,763)
Proceeds from sale of operating properties 7,491,870 -
Repayment of notes receivable 15,673,125 -
Distributions received from investments in real estate partnership - 704,474
---------------- ----------------
Net cash used in investing activities (277,139,597) (184,731,080)
---------------- ----------------
Cash flows from financing activities:
Cash contributions from the issuance of Regency stock
and exchangeable partnership units 22,476 105,809
Repurchase of Regency stock and corresponding units (11,088,419) -
Purchase of limited partner's interest in consolidated partnership (2,527,264) -
Redemption of partnership units (1,396,946) (1,377,523)
Net distributions to limited partners in consolidated partnerships (2,861,975) (940,763)
Distributions to preferred unit holders (21,232,432) (5,584,378)
Cash distributions for dividends (86,384,738) (71,906,428)
Other contributions (distributions), net 6,135,479 (2,598,880)
Net proceeds from from fixed rate unsecured loans 149,728,500 249,845,300
Net proceeds from issuance of preferred units 91,621,978 205,250,000
Proceeds (repayment) of unsecured line of credit, net 57,820,690 (245,051,875)
Proceeds from mortgage loans 8,118,953 2,555,836
Repayment of mortgage loans (40,881,096) (24,428,472)
Scheduled principal payments (4,785,445) (4,308,910)
Deferred financing costs (2,681,766) (4,346,828)
---------------- ----------------
Net cash provided by financing activities 139,607,995 97,212,888
---------------- ----------------
Net (decrease) increase in cash and cash equivalents (18,353,727) 4,306,304
Cash and cash equivalents at beginning of period 50,964,920 15,536,926
---------------- ----------------
Cash and cash equivalents at end of period $ 32,611,193 19,843,230
================ ================
</TABLE>
<PAGE>
REGENCY CENTERS, L.P.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
(unaudited)
-continued-
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Supplemental disclosure of cash flow information - cash paid for
interest (net of capitalized interest of approximately
$8,873,000 and $7,485,000 in 2000 and 1999, respectively) $ 56,602,340 40,939,225
================ ================
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of Pacific and real estate $ 19,947,565 411,184,783
================ ================
Exchangeable operating partnership units and common stock
issued for investments in real estate partnerships $ 329,948 1,949,020
================ ================
Exchangeable operating partnership units and common stock
issued for the acquisition of partners' interest in investments
in real estate partnerships $ 1,287,111 -
================ ================
Exchangeable operating partnership units, preferred and common
stock issued for the acquisition of Pacific and real estate $ 103,885 790,822,490
================ ================
Other liabilities assumed to acquire Pacific $ - 13,897,643
================ ================
Notes receivable taken in connection with sales of development
properties $ 37,962,720 -
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
1. Summary of Significant Accounting Policies
(a) Organization and Principles of Consolidation
Regency Centers, L.P. ("RCLP" or "Partnership") is the primary
entity through which Regency Realty Corporation ("Regency" or
"Company"), a self-administered and self-managed real estate
investment trust ("REIT"), conducts substantially all of its
business and owns substantially all of its assets.
The Partnership was formed in 1996 for the purpose of acquiring
certain real estate properties. The historical financial
statements of the Partnership reflect the accounts of the
Partnership since its inception, together with the accounts of
certain predecessor entities (including Regency Centers, Inc., a
wholly-owned subsidiary of Regency through which Regency owned a
substantial majority of its properties), which were merged with
and into the Partnership as of February 26, 1998. At September 30,
2000, Regency owns approximately 97% of the outstanding common
units ("Units") of the Partnership.
The Partnership's ownership interests are represented by Units, of
which there are six series of preferred Units, common Units owned
by the limited partners and common Units owned by Regency. Each
outstanding common Unit owned by a limited partner is
exchangeable, on a one share per one Unit basis, for the common
stock of Regency or for cash at Regency's election.
The accompanying consolidated financial statements include the
accounts of the Partnership, its wholly owned subsidiaries, and
its majority owned or controlled subsidiaries and partnerships.
All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
The financial statements reflect all adjustments which are of a
normal recurring nature, and in the opinion of management, are
necessary to properly state the results of operations and
financial position. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted although management believes that the disclosures are
adequate to make the information presented not misleading. The
financial statements should be read in conjunction with the
financial statements and notes thereto included in the
Partnership's December 31, 1999 Form 10-K filed with the
Securities and Exchange Commission.
(b) Investments in Real Estate Partnerships
The Partnership accounts for all investments in which it owns less
than 50% and does not have controlling financial interest using
the equity method.
(c) Reclassifications
Certain reclassifications have been made to the 1999 amounts to
conform to classifications adopted in 2000.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
2. Acquisition and Development of Shopping Centers
On August 3, 2000, the Partnership acquired the non-owned portion of two
properties in one joint venture for $2.5 million in cash. The net assets
of the joint venture were and continue to be consolidated by the
Partnership. Prior to acquiring the non-owned portion, the joint venture
partner's interest was reflected as limited partners' interest in
consolidated partnerships in the Partnership's financial statements.
On June 30, 2000 the Partnership acquired the non-owned portion of nine
properties in five joint ventures, previously accounted for using the
equity method, for $4.4 million in cash, common stock and Units. As a
result, these joint ventures are wholly-owned by the Partnership and are
consolidated for financial reporting purposes.
On February 28, 1999, the Company acquired Pacific Retail Trust
("Pacific") for approximately $1.157 billion. The operating results of
Pacific are included in the Partnership's consolidated financial
statements from the date each property was acquired. The following
unaudited pro forma information presents the consolidated results of
operations as if Pacific had occurred on January 1, 1999. Such pro forma
information reflects adjustments to 1) increase depreciation, interest
expense, and general and administrative costs, 2) adjust the weighted
average common units issued to acquire the properties. Pro forma revenues
would have been $145.0 million as of September 30, 1999. Pro forma net
income for common unitholders would have been $44.4 million as of
September 30, 1999. Pro forma basic net income per unit and pro forma
diluted net income per unit would have been $.73 and $.73, respectively
as of September 30, 1999. This data does not purport to be indicative of
what would have occurred had the Pacific acquisition been made on January
1, 1999, or of results which may occur in the future.
3. Operating Properties Held for Sale
Operating properties held for sale include properties held for investment
that no longer fit the Company's long-term investment strategies and
properties acquired or developed with the intent to sell. These
properties are carried at the lower of cost or fair value less the
estimated cost to sell. Depreciation and amortization are suspended
during the period held for sale. During the second quarter, the
Partnership recorded a provision for loss on operating properties held
for sale of $6.9 million.
4. Segments
The Partnership was formed, and currently operates, for the purpose of 1)
operating and developing Partnership owned retail shopping centers
(Retail segment), and 2) providing services including property management
and commissions earned from third parties, and development related
profits and fees earned from the sales of shopping centers and build to
suit properties to third parties (Service operations segment). The
Partnership's reportable segments offer different products or services
and are managed separately because each requires different strategies and
management expertise. There are no material inter-segment sales or
transfers.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
4. Segments
The accounting policies of the segments are the same as those described
in note 1. The revenues, diluted FFO, and assets for each of the
reportable segments are summarized as follows for the nine month periods
ended September 30, 2000 and 1999. Assets not attributable to a
particular segment consist primarily of cash and deferred costs.
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues:
Retail segment $ 231,452,233 187,822,591
Service operations segment 15,387,761 9,755,287
----------------- ----------------
Total revenues $ 246,839,994 197,577,878
================= =================
Funds from Operations:
Retail segment net operating income $ 176,290,860 143,446,678
Service operations segment income 15,387,761 9,755,287
Adjustments to calculate diluted FFO:
Interest expense (49,316,059) (40,519,525)
Interest income 2,776,206 1,572,470
General and administrative and other (15,003,666) (14,476,216)
Non-real estate depreciation (970,908) (661,600)
Minority interests of limited partners (666,517) (663,331)
Minority interests in depreciation
and amortization (411,774) (433,578)
Share of joint venture depreciation
and amortization 1,102,167 461,768
Distributions on preferred units (21,232,432) (5,584,378)
----------------- -----------------
Funds from Operations - diluted 107,955,638 92,897,575
----------------- -----------------
Reconciliation to net income for common unitholders:
Real estate related depreciation
and amortization (39,164,513) (31,489,637)
Minority interests in depreciation
and amortization 411,774 433,578
Share of joint venture depreciation
and amortization (1,102,167) (461,768)
Provision for loss on operating properties
held for sale (6,909,625) -
Gain on sale of operating properties 18,310 -
----------------- -----------------
Net income available for common unitholders $ 61,209,417 61,379,748
================= =================
Sept. 30, December 31,
Assets (in thousands): 2000 1999
---------------------- ---- ----
Retail segment $ 2,365,793 2,344,092
Service operations segment 346,792 123,233
Cash and other assets 57,044 63,384
----------------- -----------------
Total assets $ 2,769,629 2,530,709
================= =================
</TABLE>
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
5. Notes Payable and Unsecured Line of Credit
The Partnership's outstanding debt at September 30, 2000 and December 31,
1999 consists of the following (in thousands):
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Notes Payable:
Fixed rate mortgage loans $ 291,233 331,716
Variable rate mortgage loans 32,438 11,376
Fixed rate unsecured loans 520,063 370,696
-------------- --------------
Total notes payable 843,734 713,788
Unsecured line of credit 305,000 247,179
-------------- --------------
Total $ 1,148,734 960,967
============== ==============
</TABLE>
On August 29, 2000 the Partnership completed a $150 million unsecured
debt offering with an interest rate of 8.45%. The notes were priced at
99.819%, are due on September 1, 2010 and are guaranteed by the Company.
The net proceeds of the offering were used to reduce the balance of
the unsecured line of credit (the "Line").
During July, 2000, the Partnership modified the terms of its Line by
reducing the commitment to $625 million. The Line matures in March 2002,
but may be extended annually for one-year periods. Borrowings under the
Line bear interest at a variable rate based on LIBOR plus a 1% spread
(7.625% at September 30, 2000) compared to LIBOR plus a 1.075% spread
(6.5125% at September 30, 1999), and is dependent on the Company
maintaining its investment grade rating. The Partnership is required to
comply and is in compliance with certain financial and other covenants
customary with this type of unsecured financing. The Line is used
primarily to finance the acquisition and development of real estate, but
is also available for general working capital purposes.
On April 15, 1999, the Partnership completed a $250 million unsecured
debt offering in two tranches. The Partnership issued $200 million 7.4%
notes due April 1, 2004, priced at 99.922% to yield 7.42%, and $50
million 7.75% notes due April 1, 2009, priced at 100%, each guaranteed
by the Company. The net proceeds of the offering were used to reduce the
balance of the Line.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
5. Notes Payable and Unsecured Line of Credit (continued)
As of September 30, 2000, scheduled principal repayments on notes payable
and the Line were as follows (in thousands):
<TABLE>
<CAPTION>
Scheduled
Scheduled Payments by Year Principal Term Loan Total
Payments Maturities Payments
____________ ____________ ____________
<S> <C> <C> <C>
2000 $ 1,462 5,985 7,447
2001 5,631 69,445 75,076
2002 (includes the Line) 4,955 349,094 354,049
2003 4,946 13,302 18,248
2004 5,342 199,890 205,232
Beyond 5 Years 36,604 441,782 478,386
Net unamortized debt premiums - 10,296 10,296
--------------- -------------- ----------------
$ 58,940 1,089,794 1,148,734
Total =============== ============== ================
</TABLE>
Unconsolidated partnerships and joint ventures had mortgage loans payable
of $14.9 million at September 30, 2000, and the Partnership's
proportionate share of these loans was $6.2 million.
The fair value of the Partnership's notes payable and Line are estimated
based on the current rates available to the Partnership for debt of the
same remaining maturities. Variable rate notes payable and the Line are
considered to be at fair value since the interest rates on such
instruments reprice based on current market conditions. Notes payable
with fixed rates, that have been assumed in connection with acquisitions,
are recorded in the accompanying financial statements at fair value. The
Partnership considers the carrying value of all other fixed rate notes
payable to be a reasonable estimation of their fair value based on the
fact that the rates of such notes are similar to rates available to the
Partnership for debt of the same terms.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
6. Regency's Stockholders' Equity and Partners' Capital
Allocation of profits and losses and distributions to unitholders are
made in accordance with the partnership agreement. Distributions to
Limited Partners are made in the same amount as the dividends declared
and paid on Regency common stock. Distributions to the General Partner
are made at the General Partner's discretion.
The following represent equity transactions initiated by Regency and the
Partnership.
On September 8, 2000, the Partnership issued $24 million of 8.75% Series
F Cumulative Redeemable Preferred Units ("Series F Preferred Units") to
an institutional investor in a private placement. The issuance involved
the sale of 240,000 Series F Preferred Units for $100.00 per unit. The
Series F Preferred Units, which may be called by the Partnership at par
on or after September 8, 2005, have no stated maturity or mandatory
redemption, and pay a cumulative, quarterly dividend at an annualized
rate of 8.75%. At any time after September 8, 2010, the Series F
Preferred Units may be exchanged for shares of 8.75% Series F Cumulative
Redeemable Preferred Stock ("Series F Preferred Stock") of the Company at
an exchange rate of one share of Series F Preferred Stock for one Series
F Preferred Unit. The Series F Preferred Units and Series F Preferred
Stock are not convertible into common stock of the Company. The net
proceeds of the offering were used to reduce the Line.
On May 25, 2000, the Partnership issued $70 million of 8.75% Series E
Cumulative Redeemable Preferred Units ("Series E Preferred Units") to an
institutional investor in a private placement. The issuance involved the
sale of 700,000 Series E Preferred Units for $100.00 per unit. The Series
E Preferred Units, which may be called by the Partnership at par on or
after May 25, 2005, have no stated maturity or mandatory redemption, and
pay a cumulative, quarterly dividend at an annualized rate of 8.75%. At
any time after May 25, 2010, the Series E Preferred Units may be
exchanged for shares of 8.75% Series E Cumulative Redeemable Preferred
Stock ("Series E Preferred Stock") of the Company at an exchange rate of
one share of Series E Preferred Stock for one Series E Preferred Unit.
The Series E Preferred Units and Series E Preferred Stock are not
convertible into common stock of the Company. The net proceeds of the
offering were used to reduce the Line.
During 1999, the Board of Directors authorized the repurchase of
approximately $65.0 million of the Company's outstanding shares through
periodic open market transactions or privately negotiated transactions.
The Company completed the program by purchasing 3.25 million shares in
the first quarter of 2000.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
7. Earnings Per Unit
The following summarizes the calculation of basic and diluted earnings
per unit for the three month periods ended September 30, 2000 and 1999,
respectively (in thousands except per share data):
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Basic Earnings Per Unit (EPU) Calculation:
-----------------------------------------
Weighted average units outstanding 55,490 58,568
============ ============
Net income for common unitholders $ 24,360 23,983
Less: dividends paid on Series 1 and Series 2
Preferred stock (699) (677)
------------ ------------
Net income for Basic and Diluted EPU $ 23,661 23,306
============ ============
Basic EPU $ .43 .40
============ ============
Diluted Earnings Per Unit (EPU) Calculation:
--------------------------------------------
Weighted average units outstanding for
Basic EPU 55,490 58,568
Incremental units to be issued under common
stock options using the Treasury method 103 5
------------ ------------
Total diluted units 55,593 58,573
============ ============
Diluted EPU $ .43 .40
============ ============
</TABLE>
The Series 1 and Series 2 Preferred stock dividends of Regency are
deducted from net income in computing earnings per unit since the
properties acquired with these preferred shares were contributed to the
Partnership. Accordingly, the payment of Series 1 and Series 2
Preferred stock dividends are deemed to be preferential to the
distributions made to common unitholders.
<PAGE>
REGENCY CENTERS, L.P.
Notes to Consolidated Financial Statements
September 30, 2000
(unaudited)
7. Earnings Per Unit (continued)
The following summarizes the calculation of basic and diluted earnings
per unit for the nine month periods ended September 30, 2000 and 1999,
respectively (in thousands except per share data):
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Basic Earnings Per Unit (EPU) Calculation:
-----------------------------------------
Weighted average units outstanding 55,517 50,686
============ ============
Net income for common unitholders $ 61,209 61,380
Less: dividends paid on Class B common stock
Series 1 and Series 2 Preferred stock (2,098) (2,987)
------------ ------------
Net income for Basic and Diluted EPU $ 59,111 58,393
============ ============
Basic EPU $ 1.06 1.15
============ ============
Diluted Earnings Per Unit (EPU) Calculation:
-------------------------------------------
Weighted average units outstanding for
Basic EPU 55,517 50,686
Incremental units to be issued under common
stock options using the Treasury method 45 4
------------ ------------
Total diluted units 55,562 50,690
============ ============
Diluted EPU $ 1.06 1.15
============ ============
</TABLE>
The Class B common stock dividends for 1999 are deducted from income in
computing earnings per unit since the proceeds of this offering were
transferred to and reinvested by the Partnership. In addition, the
Series 1 and Series 2 Preferred stock dividends are also deducted from
net income in computing earnings per unit since the properties acquired
with these preferred shares were contributed to the Partnership.
Accordingly, the payment of Class B common, Series 1 and Series 2
Preferred stock dividends are deemed to be preferential to the
distributions made to common unitholders.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the accompanying
Consolidated Financial Statements and Notes thereto of Regency Centers, L.P.
appearing elsewhere within.
Organization
Regency Realty Corporation ("Regency" or "Company") is a qualified real estate
investment trust ("REIT") which began operations in 1993. The Company invests in
real estate primarily through its general partnership interest in Regency
Centers, L.P., ("RCLP" or "Partnership"), an operating partnership in which the
Company currently owns approximately 97% of the outstanding common partnership
units ("Units"). Of the 235 properties included in the Company's portfolio at
September 30, 2000, 217 properties were owned either fee simple or through
partnership interests by the Partnership. At September 30, 2000, the Company had
an investment in real estate of approximately $2.9 billion of which $2.8 billion
was owned by the Partnership.
Shopping Center Business
The Partnership's principal business is owning, operating and developing grocery
anchored neighborhood infill retail shopping centers. The Partnership's
properties summarized by state and in order by largest holdings including their
gross leasable areas (GLA) follows:
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
Location # Properties GLA % Leased * # Properties GLA % Leased *
-------- ------------ -------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Florida 43 5,148,915 93.1% 39 4,859,031 93.7%
California 38 4,661,349 97.9% 36 3,858,628 98.2%
Texas 32 4,089,891 94.3% 29 3,849,549 94.2%
Georgia 25 2,551,943 94.8% 25 2,539,556 91.8%
Ohio 12 1,706,295 97.4% 13 1,822,854 98.1%
North Carolina 13 1,302,751 98.0% 12 1,241,639 97.9%
Washington 10 1,180,009 98.7% 9 1,066,962 98.1%
Colorado 10 897,788 98.7% 10 903,502 98.0%
Oregon 8 738,460 94.3% 7 616,070 94.2%
Arizona 6 454,574 99.6% 2 326,984 99.7%
Tennessee 4 423,326 99.6% 3 271,697 98.9%
Missouri 2 369,045 95.8% 1 82,498 95.8%
Kentucky 2 304,347 90.7% 2 305,307 91.8%
Virginia 3 297,965 95.1% 2 197,324 96.1%
Michigan 3 251,212 94.7% 3 250,655 98.7%
Delaware 1 228,169 98.6% 1 232,754 96.3%
Illinois 1 178,601 86.4% 1 178,600 85.9%
South Carolina 2 162,056 98.2% 2 162,056 98.8%
New Jersey 1 88,867 - - - -
Wyoming 1 87,771 - 1 75,000 -
----------- ------------- ------------- ----------- ------------- -----------
Total 217 25,123,334 95.7% 198 22,840,666 95.5%
=========== ============= ============= =========== ============= ===========
</TABLE>
* Excludes properties under construction
The Partnership is focused on building a platform of grocery anchored
neighborhood shopping centers because grocery stores provide convenience
shopping of daily necessities, foot traffic for adjacent local tenants, and
should withstand adverse economic conditions. The Partnership's current
investment markets have continued to offer strong stable economies, and
accordingly, the Partnership expects to realize growth in net income as a result
of increasing occupancy in the portfolio, increasing rental rates, development
and acquisition of shopping centers in targeted markets, and redevelopment of
existing shopping centers.
<PAGE>
The following table summarizes the four largest grocery tenants (based on
annualized base rent) occupying the Partnership's shopping centers at September
30, 2000:
<TABLE>
<CAPTION>
Grocery Anchor Number of % of % of Annualized Avg Remaining
Stores * Total GLA Base Rent Lease Term
--------------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Kroger 57 13.2% 11.8% 16 yrs
Safeway 41 5.9% 5.2% 12 yrs
Publix 37 6.8% 4.8% 13 yrs
Albertsons 18 2.8% 2.4% 13 yrs
* Includes grocery owned stores
</TABLE>
Periodically, the Company identifies operating shopping centers that no longer
meet its long-term investment standards. Once identified, these properties are
segregated on the balance sheet as operating properties held for sale, and are
carried at the lower of cost or fair value less estimated selling costs.
Acquisition and Development of Shopping Centers
The Partnership has implemented a growth strategy dedicated to developing
high-quality shopping centers and build to suit properties. This development
process can require 12 to 36 months from initial land or redevelopment
acquisition through construction and leaseup and finally stabilized income,
depending upon the size and type of project. Generally, anchor tenants begin
operating their stores prior to construction completion of the entire center,
resulting in rental income during the development phase. At September 30, 2000,
the Partnership had 57 projects under construction or undergoing major
renovations, which when complete will represent an investment of $598.9 million.
Total cost necessary to complete these developments is estimated to be $240.0
million and will be expended through 2001. These developments are approximately
63% complete and 70% leased.
On August 3, 2000, the Partnership acquired the non-owned portion of two
properties in one joint venture for $2.5 million in cash. The net assets of the
joint venture were and continue to be consolidated by the Partnership. Prior to
acquiring the non-owned portion, the joint venture partner's interest was
reflected as limited partners' interest in consolidated partnerships in the
Partnership's financial statements.
On June 30, 2000, the Partnership acquired the non-owned portion of nine
properties in five joint ventures, previously accounted for using the equity
method, for $4.4 million in cash, common stock and Units. As a result, these
joint ventures are wholly-owned by the Partnership and are consolidated for
financial reporting purposes.
On February 28, 1999, the Company acquired Pacific Retail Trust ("Pacific") for
approximately $1.157 billion. At the date of the acquisition, Pacific was
operating or had under development 71 retail shopping centers representing 8.4
million SF of gross leaseable area.
Liquidity and Capital Resources
Management anticipates that cash generated from operating activities will
provide the necessary funds on a short-term basis for its operating expenses,
interest expense and scheduled principal payments on outstanding indebtedness,
recurring capital expenditures necessary to properly maintain the shopping
centers, and distributions to share and unit holders. Net cash provided by
operating activities was $119.2 million and $91.8 million for the nine months
ended September 30, 2000 and 1999, respectively. The Partnership incurred
recurring and non-recurring capital expenditures (non-recurring expenditures
pertain to immediate building improvements on new acquisitions and anchor tenant
improvements on new leases) of $11.1 million and $9.3 million, during the nine
months ended September 30, 2000 and 1999, respectively. The Partnership paid
scheduled principal payments of $4.8 million and $4.3 million during the nine
months ended September 30, 2000 and 1999, respectively. The Partnership paid
distributions of $23.8 million and $7.9 million, during the nine months ended
September 30, 2000 and 1999, respectively, to its common and preferred
unitholders.
Management expects to meet long-term liquidity requirements for term debt
payoffs at maturity, non-recurring capital expenditures, and acquisition,
renovation and development of shopping centers from: (i) excess cash generated
from operating activities, (ii) working capital reserves, (iii) additional debt
borrowings, and (iv) additional equity raised in the public or private markets.
Net cash used in investing activities was $277.0 million and $184.7 million,
during 2000 and 1999, respectively, primarily for the acquisition and
development of shopping centers, and build to suit projects. Net cash provided
by financing activities was $139.6 and $97.2 million for the nine months ended
September 30, 2000 and 1999, respectively.
<PAGE>
During 1999, the Board of Directors authorized the repurchase of approximately
$65.0 million of the Company's outstanding shares through periodic open market
transactions or privately negotiated transactions. The Company completed the
program by purchasing 3.25 million shares in the first quarter of 2000.
The Partnership's outstanding debt at September 30, 2000 and December 31, 1999
consists of the following (in thousands):
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Notes Payable:
Fixed rate mortgage loans $ 291,233 331,716
Variable rate mortgage loans 32,438 11,376
Fixed rate unsecured loans 520,063 370,696
-------------- --------------
Total notes payable 843,734 713,788
Unsecured line of credit 305,000 247,179
-------------- --------------
Total $ 1,148,734 960,967
============== ==============
</TABLE>
On September 8, 2000, the Partnership issued $24 million of 8.75% Series F
Cumulative Redeemable Preferred Units ("Series F Preferred Units") to an
institutional investor in a private placement. The issuance involved the sale of
240,000 Series F Preferred Units for $100.00 per unit. The Series F Preferred
Units, which may be called by the Partnership at par on or after September 8,
2005 have no stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at an annualized rate of 8.75%. At any time after September
8, 2010, the Series F Preferred Units may be exchanged for shares of 8.75%
Series F Cumulative Redeemable Preferred Stock ("Series F Preferred Stock") of
the Company at an exchange rate of one share of Series F Preferred Stock for one
Series F Preferred Unit. The Series F Preferred Units and Series F Preferred
Stock are not convertible into common stock of the Company. The net proceeds of
the offering were used to reduce the Line.
On August 29, 2000 the Partnership completed a $150 million unsecured debt
offering with an interest rate of 8.45%. The notes were priced at 99.819%,
are due on September 1, 2010 and are guaranteed by the Company. The net
proceeds of the offering were used to reduce the balance of the unsecured line
of credit (the "Line").
During July 2000, the Partnership modified the terms of its Line by reducing the
commitment to $625 million and extending the term. The Line matures in March
2002, but may be extended annually for one-year periods. Borrowings under the
Line bear interest at a variable rate based on LIBOR plus 1% (7.625% at
September 30, 2000) compared to LIBOR plus a 1.075% spread (6.5125% at September
30, 1999), which is dependent on the Company maintaining its investment grade
rating. The Partnership is required to comply and is in compliance with certain
financial and other covenants customary with this type of unsecured financing.
The Line is used primarily to finance the acquisition and development of real
estate, but is also available for general working capital purposes.
On May 25, 2000, the Partnership issued $70 million of 8.75% Series E Cumulative
Redeemable Preferred Units ("Series E Preferred Units") to an institutional
investor in a private placement. The issuance involved the sale of 700,000
Series E Preferred Units for $100.00 per unit. The Series E Preferred Units,
which may be called by the Partnership at par on or after May 25, 2005 have no
stated maturity or mandatory redemption, and pay a cumulative, quarterly
dividend at an annualized rate of 8.75%. At any time after May 25, 2010, the
Series E Preferred Units may be exchanged for shares of 8.75% Series E
Cumulative Redeemable Preferred Stock ("Series E Preferred Stock") of the
Company at an exchange rate of one share of Series E Preferred Stock for one
Series E Preferred Unit. The Series E Preferred Units and Series E Preferred
Stock are not convertible into common stock of the Company. The net proceeds of
the offering were used to reduce the Line.
On April 15, 1999, the Partnership completed a $250 million unsecured debt
offering in two tranches. The Partnership issued $200 million 7.4% notes due
April 1, 2004, priced at 99.922% to yield 7.42%, and $50 million 7.75% notes due
April 1, 2009, priced at 100%, each guaranteed by the Company. The net
proceeds of the offering were used to reduce the balance of the Line.
<PAGE>
As of September 30, 2000, scheduled principal repayments on notes payable and
the Line for the next five years were as follows (in thousands):
<TABLE>
<CAPTION>
Scheduled
Principal Term Loan Total
Scheduled Payments by Year Payments Maturities Payments
-------------------------- ---------- ------------ -----------
<S> <C> <C> <C>
2000 $ 1,462 5,985 7,447
2001 5,631 69,445 75,076
2002 (includes the Line) 4,955 349,094 354,049
2003 4,946 13,302 18,248
2004 5,342 199,890 205,232
Beyond 5 Years 36,604 441,782 478,386
Net unamortized debt premiums - 10,296 10,296
--------------- -------------- ---------------
Total $ 58,940 1,089,794 1,148,734
=============== ============== ===============
</TABLE>
Unconsolidated partnerships and joint ventures had mortgage loans payable of
$14.9 million at September 30, 2000, and the Partnership's proportionate share
of these loans was $6.2 million.
The Company qualifies and intends to continue to qualify as a REIT under the
Internal Revenue 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. While the Company intends to continue to pay dividends to
its stockholders, the Company and the Partnership will reserve such amounts of
cash flow as it considers necessary for the proper maintenance and improvement
of the real estate portfolio, while still maintaining the Company's
qualification as a REIT.
The Partnership intends to continue to acquire and develop shopping centers and
expects to meet the related capital requirements from borrowings on the Line.
The Partnership expects to repay the Line from time to time from additional
public and private equity or debt offerings, such as those transactions
previously completed. Because such acquisition and development activities are
discretionary in nature, they are not expected to burden the Partnership's
capital resources currently available for liquidity requirements. The
Partnership expects that cash provided by operating activities, unused amounts
available under the Line, and cash reserves are adequate to meet liquidity
requirements and costs necessary to complete properties in development.
Results from Operations
Comparison of the nine months ended September 30, 2000 to 1999
Revenues increased $49.3 million or 24.9% to $246.8 million in 2000. The
increase was due to the Pacific acquisition, revenues from new developments that
began operating after September 30, 1999, and from same property growth in
rental rates and occupancy increases. Minimum rent increased $31.9 million or
21.8%, and recoveries from tenants increased $11.9 million or 32.5%. At
September 30, 2000, the Partnership was operating or developing 217 shopping
centers of which 169 centers were considered stabilized and 95.7% leased.
Service operations revenue includes fees earned as part of the Partnership's
service operations segment and includes property management and commissions
earned from third parties, and development related profits and fees earned from
the sales of shopping centers and build to suit properties to third parties.
Service operations revenue increased by $5.6 million to $15.4 million in 2000,
or 57.7%. The increase was primarily due to a $8.1 million increase in
development related profits and fees, offset by a $2.5 million reduction in
property management fees.
Operating expenses increased $19.3 million or 21.2% to $110.3 million in 2000.
Combined operating and maintenance and real estate taxes increased $10.8 million
or 24.4% during 2000 to $55.2 million The increase was due to the Pacific
acquisition, expenses incurred by new developments that began operating after
September 30, 1999, and general increases in costs on the stabilized properties.
General and administrative expenses were $13.3 million during 2000 vs. $13.6
million in 1999 or 2.4% lower as a result of increased capitalization of direct
costs incurred during 2000 related to development activities. Depreciation and
amortization increased $8.0 million during 2000 or 24.8% primarily due to the
Pacific acquisition and developments that began operating after September 30,
1999.
Operating properties held for sale include properties held for investment
that no longer fit the Company's long-term investment strategies and properties
acquired or developed with the intent to sell. These properties are carried at
the lower of cost or fair value less the estimated cost to sell. Depreciation
and amortization are suspended during the period held for sale. During the
second quarter, the Partnership recorded a provision for loss on operating
properties held for sale of $6.9 million.
<PAGE>
Interest expense increased to $49.3 million in 2000 from $40.5 million in 1999,
or 21.7%. The increase was due to higher LIBOR rates, higher average balances on
the Line, the assumption of $402.6 million of debt of Pacific, the financing
cost of new developments that began operating after September 30, 1999, and the
higher fixed interest rate of the $250 million debt offering completed in April,
1999.
Preferred unit distributions increased $15.6 million to $21.2 million during
2000 as a result of the preferred units issued in 1999 and 2000. Weighted
average fixed rates of the preferred units were 8.72% at September 30, 2000 vs.
8.71% at September 30, 1999.
Net income for common unit holders was $61.2 million in 2000 vs. $61.4
million in 1999, a $170,000 or .3% decrease primarily a result of the provision
for loss on operating properties held for sale and the other reasons as
described above. Diluted earnings per unit in 2000 was $1.06 vs. $1.15 in 1999 a
result of the increased weighted average units in 2000 issued in 1999 in
connection with the acquisition of Pacific and the reduction in net income for
common unitholders related to the increase in preferred unit distributions.
Comparison of the three months ended September 30, 2000 to 1999
Revenues increased $12.9 million or 17.2% to $88.2 million in 2000. Minimum rent
increased $6.0 million or 10.7%, and recoveries from tenants increased $3.3
million or 24%. The increase was due to revenues from new developments that
began operating after September 30, 1999, and from same property growth in
rental rates and occupancy increases as described in the nine month comparison.
Service operations revenue includes fees earned as part of the Partnership's
service operations segment and includes property management and commissions
earned from third parties, and development related profits and fees earned from
the sales of shopping centers and build to suit properties to third parties.
Service operations revenue increased by $2.0 million to $6.0 million in 2000, or
50%. The increase was primarily due to a $2.6 million increase in development
related profits and fees, offset by a $600,000 reduction in property management
fees.
Operating expenses increased $4.6 million or 13.3% to $39.4 million in 2000.
Combined operating and maintenance and real estate taxes increased $2.4 million
or 14% during 2000 to $19.9 million. The increase was due primarily to expenses
incurred by new developments that began operating after September 30, 1999 and
general increases in operating costs on the stabilized properties. General and
administrative expenses were $5.0 million in 2000 vs. $4.8 million or 4.2%
increase. Depreciation and amortization increased $1.5 million during 2000 or
12.5% primarily related to developments that began operating after September 30,
1999.
Interest expense increased to $17.4 million in 2000 from $14.7 million in 1999
or 18.3%. The increase was due to higher LIBOR rates, higher average balances on
the Line, and the financing cost of new developments that began operating after
September 30, 1999.
Preferred unit distributions increased $5.6 million to $8.0 million during 2000
as a result of the preferred units issued in 1999 and 2000. Weighted average
fixed rates of the preferred units were 8.72% at September 30, 2000 vs. 8.71% at
September 30, 1999.
Net income for common unit holders was $24.4 million in 2000 vs. $24.0 million
in 1999, a $400,000 or 1.6% increase primarily a result of the reasons as
described above. Diluted earnings per unit in 2000 was $.43 vs. $.40 in 1999, a
result of the decrease in the weighted average number of units outstanding in
2000.
New Accounting Standards and Accounting Changes
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities " (FAS 133), which is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. FAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. FAS 133
requires entities to recognize all derivatives as either assets or liabilities
in the balance sheet and measure those instruments at fair value. FAS 133 will
have no impact to the financial statements as the Partnership has no derivative
instruments.
<PAGE>
Environmental Matters
The Partnership like others in the commercial real estate industry is subject to
numerous environmental laws and regulations. The operation of dry cleaning
plants at the Partnership's shopping centers is its principal environmental
concern. The Partnership believes that the dry cleaners are operating in
accordance with current laws and regulations and has established procedures to
monitor their operations. The Partnership has approximately 39 properties that
will require or are currently undergoing varying levels of environmental
remediation. These remediations are not expected to have a material financial
effect on the Company or the Partnership due to financial statement reserves and
various state-regulated programs that shift the responsibility and cost for
remediation to the state. Based on information presently available, no
additional environmental accruals were made and management believes that the
ultimate disposition of currently known matters will not have a material effect
on the financial position, liquidity, or operations of the Company or
Partnership.
Inflation
Inflation has remained relatively low during 2000 and 1999 and has had a minimal
impact on the operating performance of the shopping centers, although,
substantially all of the Partnership's long-term leases contain provisions
designed to mitigate the adverse impact of inflation. Such provisions include
clauses enabling the Partnership to receive percentage rentals based on tenants'
gross sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. Such
escalation clauses are often related to increases in the consumer price index or
similar inflation indices. In addition, many of the Partnership's leases are for
terms of less than ten years, which permit the Partnership to seek increased
rents upon re-rental at market rates. Most of the Partnership's leases require
the tenants to pay their share of operating expenses, including common area
maintenance, real estate taxes, insurance and utilities, thereby reducing the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
The Partnership is exposed to interest rate changes primarily as a result of its
Line and long-term debt used to maintain liquidity and fund capital expenditures
and expansion of the Partnership's real estate investment portfolio and
operations. The Partnership's interest rate risk management objective is to
limit the impact of interest rate changes on earnings and cash flows and to
lower its overall borrowing costs. To achieve its objectives the Partnership
borrows primarily at fixed rates and may enter into derivative financial
instruments such as interest rate swaps, caps and treasury locks in order to
mitigate its interest rate risk on a related financial instrument. The
Partnership has not been party to any market risk sensitive instruments during
the reporting period ending September 30, 2000 and does not plan to enter into
derivative or interest rate transactions for speculative purposes.
The Partnership's interest rate risk is monitored using a variety of techniques.
The table below presents the principal amounts maturing (in thousands), weighted
average interest rates of remaining debt, and the fair value of total debt (in
thousands), by year of expected maturity to evaluate the expected cash flows and
sensitivity to interest rate changes.
<TABLE>
<CAPTION>
Fair
2000 2001 2002 2003 2004 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate debt 7,413 42,671 49,049 18,248 205,232 478,387 801,000 811,296
Avg. interest rate for all 7.93% 7.92% 7.86% 7.84% 8.02% 8.19% - -
debt
Variable rate LIBOR debt 33 32,405 305,000 - - - 337,438 337,438
Avg. interest rate for all 7.60% 7.59% - - - - - -
debt
</TABLE>
<PAGE>
As the table incorporates only those exposures that exist as of September 30,
2000, it does not consider those exposures or positions which could arise after
that date. Moreover, because firm commitments are not presented in the table
above, the information presented therein has limited predictive value. As a
result, the Partnerships's ultimate realized gain or loss with respect to
interest rate fluctuations will depend on the exposures that arise during the
period, the Partnership's hedging strategies at that time, and interest rates.
<PAGE>
Part II
Item 2. Changes in Securities and Use of Proceeds
(c) See the third paragraph of Note 6 to the Consolidated Financial
Statements of the Partnership included in Part I, which is incorporated
herein by reference.
Item 6 Exhibits and Reports on Form 8-K:
(a) Exhibits:
3. Amendments 5 & 6 to Partnership Agreement
10. Material Contracts
Wells Fargo Second Amended and Restated Credit Agreement
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 13, 2000 REGENCY CENTERS, L..P.
By: /s/ J. Christian Leavitt
Senior Vice President
and Chief Accounting Officer
