REGENCY CENTERS CORP (REG) stock intrinsic value fair value estimate & owner earnings analysis

Regency Centers owns grocery-anchored neighborhood shopping centers, mostly in affluent suburbs. California, Florida and the New York metro area supplied 24.8%, 19.7% and 12.6% of annual base rent at the end of 2025. The rent roll is spread across many tenants. The largest is Publix at 2.9% of base rent, followed by TJX and Albertsons at 2.7% each. Weekly supermarket trips bring steady traffic to the smaller shops around each grocer. That traffic has kept these centers well leased: the portfolio was 96.1% leased at year-end 2025, and new and renewal leases signed in 2025 were at rents 10.8% above the old ones (9.5% in 2024). How we measured earnings. We start from operating cash flow and subtract stock pay and the recurring cost of keeping the centers leased and in repair. That cost is the company's own "building and tenant improvements" spending ($121 million in 2025) plus leasing commissions ($19 million). We do not count straight-line rent, an accounting accrual that is not cash in the year it is booked. Development and redevelopment spending ($314 million in 2025, including land, capitalized interest and capitalized staff costs) is treated as optional growth investment. It is left out of the earnings figure, and so is any growth it might bring. The company's annual report does not disclose returns on these projects, so we cannot check whether they earn more than their cost. This version is stricter than our earlier one, which counted leasing commissions and straight-line rent as cash. That lowered earnings by about 5% in every year. On that basis, earnings per share were about $3.40 in 2023, $3.51 in 2024 and $3.79 in 2025, measured after interest. Because we value the business before its lenders and then subtract the debt, we add back cash interest ($179 million in 2025). We also count the roughly 3.8 million partnership units that can be exchanged for shares. That gives cash flow before interest of $4.22, $4.37 and $4.72 per share for 2023 to 2025. We start from the middle year, $4.37, because 2023 to 2025 covers the business as it now stands after the August 2023 Urstadt Biddle merger. We left out 2020 and 2021 because pandemic rent deferrals and their later collection distorted both years. The 2025 figure is not inflated by the $72 million gain on a partnership property distribution, which never passed through cash flow. Base case (about $62.95 per share). Cash flow rose about 8% before interest in 2025. We assume 5% growth in the first year, which still leaves the level below what 2025 actually delivered. The support is a full year of rent from centers bought in 2025 with $104 million of cash and 2.8 million new partnership units. Next come 3% in year two and 2.25% a year through year ten. That growth comes from rent steps written into existing leases and from re-leasing at higher rents, which the company has done year after year. Occupancy is already near its peak, so we give no credit for higher occupancy. After year ten we hold cash flow flat. The land and buildings keep earning because upkeep is already charged, but we do not assume further growth. On these assumptions the business is worth about $16.8 billion. Bear case (about $48.20). Occupancy slips back toward the roughly 93 to 94% of the 2020 downturn, as tenant failures return. Cash flow does not grow in year one and falls 3% in year two. After that it grows only 1% a year, from contractual rent steps, with re-leasing gains eaten by move-outs, and it stays flat after year ten. The business is worth about $14.0 billion. Bull case (about $80.01). The 2025 cash level holds and the 2025 acquisitions add a further 3% in year one. Growth then runs at 3% a year through year ten, in line with recent same-property results (5.3% in 2025, excluding lease termination fees) and continued double-digit rent increases on new and renewal leases. Growth slows to 1.5% a year in years eleven to twenty and stays flat after that. The business is worth about $20.0 billion. What the company owes. As of March 31, 2026, borrowings were about $5.06 billion at face value. That includes $3.9 billion of unsecured notes due from 2026 to 2049 and about $750 million of property mortgages. Most of this debt is fixed at rates well below today's, with about 4.2% as the weighted average on the unsecured notes. Examples are the $425 million of 2.95% notes due 2029 and the $600 million of 3.70% notes due 2030. We credit the business with the value of paying below-market rates until each issue matures, about $0.31 billion. We also subtract $225 million of preferred stock, which is paid ahead of common shareholders, and $130 million owed to outside partners in jointly owned centers. We add back about $0.1 billion of cash the business does not need, for a net claim of about $5.02 billion. That leaves shareholders about $9.0 billion in the bear case, $11.8 billion in the base case and $15.0 billion in the bull case, spread over about 187 million shares and exchangeable units. Cash flow before interest was about $870 million in 2025, several times the roughly $180 million interest bill. Even if all the debt were refinanced near 6%, interest would be about $300 million, which every case can carry. The largest near-term maturities are $525 million of 3.60% notes due February 2027 and $300 million of 4.125% notes due March 2028. Renewing those at higher rates is already built into the net debt figure. An unsecured credit line running to March 2028 was only $30 million drawn in March 2026. Changes from our earlier analysis. Our earlier estimate of roughly $69, $104 and $135 per share valued cash flow after interest but did not subtract the debt. That treated about $5 billion of borrowing, most of it at rates far below today's, as if it would roll over forever on today's terms. It was the main reason for the higher numbers. The earlier version also counted leasing commissions and straight-line rent as cash, and it assumed mid-single-digit growth with no end date. The lower figures come mostly from subtracting the debt, then from the stricter earnings measure. Some parts moved the other way: we now credit the value of the cheap fixed-rate debt, and the bull case reflects the higher cash level the company actually reached in 2025. What would make this wrong. On the upside, the development and redevelopment program, which spent $140 million to $314 million a year over 2023 to 2025, could earn well above its cost. If so, the business is worth more than our cases show, because none of that value is included. On the downside, a wave of grocer or big-box tenant failures, or a loss of rent growth in California or Florida where more than 44% of rent is earned, would push results toward the bear case.