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Organization and Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
Organization and Significant Accounting Policies |
1. | Organization and Significant Accounting Policies
General Regency Centers Corporation (the “Parent Company”) began its operations as a Real Estate Investment Trust (“REIT”) in 1993 and is the general partner of Regency Centers, L.P. (the “Operating Partnership”). The Parent Company primarily engages in the ownership, management, leasing, acquisition, and development and redevelopment of shopping centers through the Operating Partnership, and has no other assets other than through its investment in the Operating Partnership, and its only liabilities are $500 million of unsecured public and private placement notes, which are co-issued and guaranteed by the Operating Partnership. The Parent Company guarantees all of the unsecured debt of the Operating Partnership. As of June 30, 2020, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 300 properties and held partial interests in an additional 115 properties through unconsolidated Investments in real estate partnerships (also referred to as “joint ventures” or “investment partnerships”). COVID-19 Pandemic On March 11, 2020, the novel coronavirus disease (“COVID-19”) was declared a pandemic (“COVID-19 pandemic”) by the World Health Organization as the disease spread throughout the world. During March 2020, COVID-19 began to appear in and spread throughout the United States resulting in federal, state and local government agencies issuing regulatory orders enforcing social distancing and limiting group gatherings in order to further prevent the spread. While restrictions vary by state, generally, businesses deemed essential to the public were able to operate while non-essential businesses were not. Grocer tenants that anchor over 80% of our operating centers are considered essential businesses and the majority have remained open and operational to serve the residents of their communities. Many restaurants are also considered essential, although the social distancing and group gathering limitations can significantly limit, or in some cases, prevent dine-in activity. Non-restaurant retailers have been, likewise, potentially restricted by limitations, especially to the extent they were not determined to be essential businesses. As a result, many retailers have had to evaluate alternate means of providing their goods and services to the public or, in the case of non-essential tenants, to close as a result of this pandemic. During the three months ended June 30, 2020, state and local governments began to ease restrictions, allowing many retailers to reopen or increase occupancy of their stores from previously imposed limits. Although many retailers have reported initially strong sales results upon reopening, the risk of diminished sales and future closures may occur as the virus remains active and continues to spread which may negatively impact customers’ willingness to shop and dine at retail centers. In many areas of the country, increased numbers of cases have been reported resulting in some states and municipalities re-imposing previously-lifted restrictions in an attempt to control the further spread of the virus, and may introduce further restrictions in the future which would have an unfavorable impact on the economy and our tenants. In addition, government support programs designed to assist businesses, including certain of our tenants, may not be continued or renewed. To the extent such tenants used funds from these programs to pay rent, a discontinuance or non-renewal of such programs could impact the ability of such tenants to pay rent, which could adversely impact us. If tenants are unable to sustain their businesses, the Company may lose existing tenants which will result in reduced lease income and occupancy. Further, suitable replacement tenants may also be difficult to identify for an extended period and the terms of leases with those replacement tenants may not be as favorable as the terms of existing leases. Since the COVID-19 pandemic and resulting restrictions began, the Company has been closely monitoring its cash collections which have significantly declined, most notably from tenants whose businesses are classified as non-essential. Approximately 72% of base rent billed for the three months ended June 30, 2020 has been collected through July 31, 2020. The COVID-19 pandemic has also resulted in certain tenants requesting concessions from rent obligations, including deferrals, abatements and requests to negotiate future rents, while some tenants have been unable to reopen or have not honored the terms of their existing lease agreements. The Company has entered into over 600 mutually acceptable agreements, representing $16.4 million of pro-rata base rent or 1.8% of annual base rent, with tenants within our consolidated real estate portfolio and our unconsolidated real estate investment partnerships, to enable them to defer a portion of their rental payments and repay them over future periods. The Company expects to continue to work with other tenants, which may result in further rent concessions as determined to be necessary and appropriate. While the deferred rent is currently expected to be paid by the tenants in accordance with the terms of their agreements, due to the uncertainty surrounding the COVID-19 pandemic, there can be no assurances that all such deferred rent will ultimately be paid, or paid within the timeframes negotiated and agreed upon. See note 7, Leases, for further information. The Company has long had a business continuity and disaster recovery plan which has been successfully implemented in the past. This experience enabled the Company to continue operating productively during the COVID-19 pandemic while its employees work safely from home, as roles permit, during the early stages of the COVID-19 pandemic. The Company has maintained, and expect to continue to maintain, its financial reporting systems as well as its internal controls over financial reporting and discl osure controls and procedures. The Company has since developed and executed its office reopening plan allowing employees, in the current stage, the option to work from home or the office. The Company has implemented CDC-approved protocols and developed detailed plans to prioritize the well-being of its employees, and encourage s its tenants to similarly follow all rules and guidelines. All employees are required to complete training before returning to the office and are subject to a daily health check in order to work in the office. In order to maximize social distancing, the Company has implemented in-office split scheduling allowing for greater distance b etween employee work stations. The Company will continue to make necessary adjustments to its plans as facts and circumstances change and evolve. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. These adjustments are considered to be of a normal recurring nature, except for the goodwill impairment, discussed in Note 4, resulting from the market and economic impacts of the COVID-19 pandemic. Consolidation The Company consolidates properties that are wholly-owned and properties where it owns less than 100%, but which it has control over the activities most important to the overall success of the partnership. Control is determined using an evaluation based on accounting standards related to the consolidation of Variable Interest Entities ("VIEs") and voting interest entities. Ownership of the Operating Partnership The Operating Partnership’s capital includes general and limited common Partnership Units. As of June 30, 2020, the Parent Company owned approximately 99.6% of the outstanding common Partnership Units of the Operating Partnership, with the remaining limited common Partnership Units held by third parties (“Exchangeable operating partnership units” or “EOP units”). Each EOP unit is exchangeable for cash or one share of common stock of the Parent Company, at the discretion of the Parent Company, and the unit holder cannot require redemption in cash or other assets. The Parent Company has evaluated the conditions as specified under Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity as it relates to exchangeable operating partnership units outstanding and concluded that it has the right to satisfy the redemption requirements of the units by delivering unregistered common stock. Accordingly, the Parent Company classifies EOP units as permanent equity in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity and Comprehensive Income. The Parent Company serves as general partner of the Operating Partnership. The EOP unit holders have limited rights over the Operating Partnership such that they do not have the power to direct the activities of the Operating Partnership. As such, the Operating Partnership is considered a VIE, and the Parent Company, which consolidates it, is the primary beneficiary. The Parent Company’s only investment is the Operating Partnership. Net income and distributions of the Operating Partnership are allocable to the general and limited common Partnership Units in accordance with their ownership percentages. Real Estate Partnerships As of June 30, 2020, Regency had a partial ownership interest in 125 properties through partnerships, of which 10 are consolidated. Regency's partners include institutional investors and other real estate developers and/or operators (the “Partners” or “limited partners”). Regency has a variable interest in these entities through its equity interests, with Regency the primary beneficiary in certain of these real estate partnerships. As such, Regency consolidates the partnerships for which it is the primary beneficiary and reports the limited partners’ interests as Noncontrolling interests. For those partnerships which Regency is not the primary beneficiary and does not control, but has significant influence, Regency recognizes its investment in them using the equity method of accounting. The assets of these partnerships are restricted to the use of the partnerships and cannot be used by general creditors of the Company. And similarly, the obligations of the partnerships can only be settled by the assets of these partnerships or additional contributions by the partners. The major classes of assets, liabilities, and non-controlling equity interests held by the Company's consolidated VIEs, exclusive of the Operating Partnership, are as follows:
(in thousands) |  | June 30, 2020 |  |  | December 31, 2019 |
Assets |  |  |  |  |  |  |  |
Net real estate investments (1) |  | $ | 130,889 |  |  |  | 325,464 |
Cash, cash equivalents and restricted cash (1) |  |  | 4,340 |  |  |  | 57,269 |
Liabilities |  |  |  |  |  |  |  |
Notes payable |  |  | 7,318 |  |  |  | 17,740 |
Equity |  |  |  |  |  |  |  |
Limited partners’ interests in consolidated partnerships |  |  | 30,277 |  |  |  | 30,655 |
| (1) | Included in the December 31, 2019, balances were real estate assets and cash held in Section 1031 like-kind exchanges, of which none remained at June 30, 2020. |
Revenues and Other Receivables Other property income includes incidental income from the properties and is generally recognized at the point in time that the performance obligation is met. All income from contracts with the Company's real estate partnerships is included within Management, transaction and other fees on the Consolidated Statements of Operations. The primary components of these revenue streams, the timing of satisfying the performance obligations, and amounts recognized are as follows:
|  |  |  | Three months ended June 30, |  |  | Six months ended June 30, |
(in thousands) |  | Timing of satisfaction of performance obligations |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Other property income |  | Point in time |  | $ | 2,435 |  |  |  | 2,194 |  |  | $ | 4,740 |  |  |  | 4,176 |
Management, transaction and other fees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property management services |  | Over time |  |  | 3,353 |  |  |  | 3,665 |  |  |  | 7,232 |  |  |  | 7,428 |
Asset management services |  | Over time |  |  | 1,756 |  |  |  | 1,760 |  |  |  | 3,594 |  |  |  | 3,538 |
Leasing services |  | Point in time |  |  | 529 |  |  |  | 705 |  |  |  | 1,239 |  |  |  | 1,463 |
Other transaction fees |  | Point in time |  |  | 488 |  |  |  | 1,312 |  |  |  | 877 |  |  |  | 1,986 |
Total management, transaction, and other fees |  |  |  | $ | 6,126 |  |  |  | 7,442 |  |  | $ | 12,942 |  |  |  | 14,415 |
The accounts receivable for management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $9.2 million and $11.6 million, as of June 30, 2020 and December 31, 2019, respectively. Recent Accounting Pronouncements The following table provides a brief description of recent accounting pronouncements and expected impact on our financial statements:
Standard |  | Description |  | Date of adoption |  | Effect on the financial statements or other significant matters
Recently adopted: |  |  |  |  |  |
Accounting Standards Update (“ASU”) 2016-13, June 2016, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |  | This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU applies to how the Company evaluates impairments of any available-for-sale debt securities and any non-operating lease receivables, including lease receivables arising from leases classified as sales-type or direct finance leases. |  | January 2020 |  | The Company has completed its evaluation and adoption of this standard, which resulted in changes in evaluating impairment of its available-for-sale debt securities. Declines in fair value below amortized cost resulting from credit related factors will be reflected in earnings, within Net investment income in the accompanying Consolidated Statements of Operations. Changes in value from market related factors continue to be recognized in Other comprehensive income (“OCI”). The Company’s investments in available-for-sale debt securities are invested in investment grade quality holdings or U.S. government backed securities, and are well diversified. During the six months ended June 30, 2020, the Company did not recognize any allowance for credit loss. Additionally, the Company’s non-operating lease receivables experienced no credit losses during the six months ended June 30, 2020, and the Company has no other financial instruments, such as lease receivables arising from sales-type or direct finance leases, subject to this ASU.
ASU 2018-19, November 2018, Codification Improvements to Topic 326, Financial Instruments - Credit Losses |  | This ASU clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. |  | January 2020 |  | The Company has completed its evaluation and adoption of this standard with no additional changes in its accounting for operating leases and related receivables.
ASU 2018-13, August 2018, Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement |  | This ASU modifies the disclosure requirements for fair value measurements within the scope of Topic 820, Fair Value Measurements, including the removal and modification of certain existing disclosures, and the addition of new disclosures. |  | January 2020 |  | The Company has completed its evaluation and adoption of this new standard. The Company does not have any assets or liabilities measured to fair value using Level 3 measurements at June 30, 2020.
Standard |  | Description |  | Date of adoption |  | Effect on the financial statements or other significant matters
ASU 2018-15, August 2018, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. |  | The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The ASU provides further clarification of the appropriate presentation of capitalized costs, the period over which to recognize the expense, the presentation within the Statements of Operations and Statements of Cash Flows, and disclosure requirements. |  | January 2020 |  | The Company has completed its evaluation and adoption of this standard. Qualifying implementation costs incurred in a cloud computing arrangement that is a service contract are no longer expensed as incurred but rather are deferred within Other assets and amortized to earnings, within General and administrative expense in the accompanying Consolidated Statements of Operations, over the term of the arrangement. Cash flows attributable to the service arrangements, including implementation thereof, are reflected as Operating cash flows within the Consolidated Statements of Cash Flows.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |  | In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. |  | March 2020 through December 31, 2022 |  | The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. As additional index changes in the market occur, the Company will evaluate the impact of the guidance and may apply other elections as applicable.
Not yet adopted: |  |  |  |  |  |
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |  | The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes, and also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. Notable changes of potential impact include income-based franchise taxes and interim period recognition of enacted changes in tax laws or rates. |  | January 2021 |  | The Company is evaluating this update and does not expect it to have a material impact to its financial condition, results of operations, cash flows or related footnote disclosures.

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
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