Regency Latest Firm to Seek Cash Through Stock Offering, Closing $310M

Joining the brigade of real estate companies that are relying on the sale of shares to pay off debt during the lending market’s deep freeze, shopping center REIT Regency Centers has closed its offering of 10 million shares of common stock for net proceeds totaling approximately $310.5 million.Regency priced the shares in the public offering at $32.50. The company originally planned to sell 7.7 million shares of common stock with an option for underwriters to acquire an additional 1.55 million, but ultimately offered 8.7 million, plus 1.3 million for optional purchase by underwriters. Regency plans to use the funds from the offering to repay indebtedness and for general corporate purposes. Like most companies in the retail real estate business, the downturn in the economy and widespread job loss has taken its toll on Regency. The company’s net income plummeted over 33 percent in 2008, and over the last 12 months, its stock has gone from a high of $81.75 to as low as 20.72. In its annual report, the company noted that, “the current economic recession is resulting in a higher level of retail store closings and is limiting the demand for leasing space in our shopping centers resulting in a decline in our occupancy percentages and rental revenues.” In the face of the hostile credit market, other real estate companies, not just retail REITs, are relying on the sale of common stock to garner funds for paying down debt. Among those who took this route in April are industrial REIT Duke Realty, which announced plans for a $500 million stock offering, and distribution facility REIT ProLogis, which raised $1 billion in an offering. An owner, operator and developer of grocery-anchored and community shopping centers, Jacksonville, Fla.-based Regency had a portfolio of 413 properties in its portfolio totaling 55.3 million square feet across the United States as of the close of the first quarter of 2009.