Regency Centers Corp. REG is slated to report first-quarter 2025 results on April 29, after the closing bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Jacksonville, FL-based retail real estate investment trust (REIT) reported NAREIT FFO per share of $1.09, outpacing the Zacks Consensus Estimate of $1.07. Results reflected healthy leasing activity and a year-over-year improvement in the same property's net operating income and base rent.

Over the trailing four quarters, the company’s FFO per share exceeded the Zacks Consensus Estimate on all occasions, with the average beat being 3.13%. This is depicted in the graph below:

Regency Centers Corporation Price and EPS Surprise

Regency Centers Corporation price-eps-surprise | Regency Centers Corporation Quote

In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2025 performance.

US Retail Real Estate Market in Q1 2025

Per a Cushman & Wakefield CWK report, there has been a pullback in net absorption for the U.S. shopping center market, resulting in a negative shift in the first quarter. Although the national vacancy rate increased 20 basis points (bps) to 5.5% year over year, the vacancy rate remains near a historical low, with minimal new construction and most tenants having already right-sized their real estate needs. Asking rents for the U.S. shopping center market grew from the year-ago quarter.

The first quarter witnessed negative net absorption in the U.S. shopping center market, totaling 5.9 million square feet (msf). This represents the largest single-quarter decline since the third quarter of 2020. The decrease was due to negative net absorption observed in all four regions of the country. Neighborhood centers accounted for 75% of the pullback in demand.

The lack of new construction is also contributing to the scarcity, as only 2.2 msf of new shopping center space was delivered from the beginning of the year through April 14, 2025. As of the first quarter of 2025, there are only 10.6 msf under construction with an inventory of 4.32 billion square feet.

The reversal in net demand is leading to easing pressure on asking rents. The asking rents for U.S. shopping centers increased 2.3% year over year to $24.76 per square foot in the first quarter.

Factors at Play for Regency

Regency’s premium portfolio is situated in affluent suburban areas and near urban trade areas of the United States. With more people continuing to move to the suburbs due to post-pandemic migration and the hybrid work setup, Regency’s suburban shopping center portfolio is expected to have benefited.

Regency has a high-quality open-air shopping center portfolio, with more than 80% grocery-anchored neighborhood and community centers, which are necessity-driven by nature. The company has a good tenant mix, with several industry-leading grocers. These factors are likely to have helped it generate stable rental revenues during the first quarter.

The Zacks Consensus Estimate for REG’s first-quarter revenues is pegged at $381.3 million, which indicates an increase of 4.8% from the year-ago quarter’s reported figure.

The company’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised a cent upward to $1.14 in the past week. The figure implies growth of nearly 5.6% from the prior-year quarter’s reported number.

However, higher e-commerce adoption and elevated interest expenses are expected to cast a pall on its quarterly performance to some extent.

What Our Quantitative Model Predicts for Regency

Our proven model does not conclusively predict a surprise in terms of FFO per share for Regency this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Regency currently has an Earnings ESP of -0.78% and carries a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the REIT sector — EPR Properties EPR and Simon Property Group SPG — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

EPR, slated to release quarterly numbers on May 7, has an Earnings ESP of +1.96% and carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Simon Property, scheduled to report quarterly numbers on May 12, has an Earnings ESP of +0.46% and carries a Zacks Rank of 3. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report

Regency Centers Corporation (REG) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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