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Organization and Significant Accounting Policies | 9 Months Ended
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Sep. 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 $200 million of unsecured 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 September 30, 2020, the Parent Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned 299 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”). 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. 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 the ongoing COVID-19 pandemic, U.S. federal, state, and local governments have continued to mandate various actions to reduce or prevent the spread of COVID-19, which continues to directly impact many of the Company’s tenants whose businesses may be considered non-essential. While essential businesses, such as grocery stores that anchor over 80% of the Company’s operating centers, have thus far been able to continue to operate and serve their customers, non-essential businesses continue to experience significant declines in customer traffic, when compared to previous years, or have temporarily closed their stores in reaction to legally enforceable governmental orders or overall efforts to support social distancing. As a result, many retailers have had to evaluate alternative means of providing their goods and services to their customers or, in the case of many non-essential tenants, to close. The COVID-19 pandemic continues to evolve, making the broader implications on the Company’s future results of operations and overall financial performance uncertain at this time. While much of the Company’s lease income is derived from contractual rent payments, the tenants’ ability to meet their lease obligations have been negatively impacted by the disruptions and uncertainties of the COVID-19 pandemic. The tenants’ ability to respond to these disruptions, including changes in their customers’ shopping habits and behaviors, will influence the tenants’ ability to survive and ultimately fulfill their lease obligations. Although many of the Company’s tenants have reported initially improved sales results upon reopening, the risk of diminished sales and future closures exists as the virus remains active and continues to spread which could result in a resurgence in COVID-19 cases and reinstituted government mandated closures. Due to the COVID-19 pandemic, certain tenants have requested rent concessions or have sought to renegotiate future rents based on changes to the economic environment. Other tenants have chosen not to reopen or honor the terms of their existing lease agreements. The Company is closely monitoring its cash collections from tenants which, for many businesses classified as non-essential, have significantly declined since the start of the COVID-19 pandemic and resulting restrictions. Approximately 86% of pro-rata base rent billed for the three months ended September 30, 2020, has been collected through October 31, 2020. Since the COVID-19 pandemic began, the Company has executed approximately 1,300 rent deferral agreements within its consolidated real estate portfolio and its unconsolidated real estate investment partnerships. This deferred rent represents, on a weighted average basis, deferral periods of approximately 3 months, with repayment periods of approximately 9.2 months beginning in December 2020. The Company expects to continue to work with other tenants, which may result in further rent deferrals, concessions or abatements. As a result, there can be no assurance that cash flows from operations will be sufficient to fund the Company’s dividend payments without the benefit of other sources of capital or changes to its current dividend policy. New leasing activity has declined and is expected to remain at lower levels into 2021 as businesses delay executing leases amidst the immediate and uncertain future economic impacts of the COVID-19 pandemic. This, coupled with tenant failures, may result in decreased demand for space in our centers, which could result in pricing pressure on rents. Additionally, with delays in construction for tenant improvements due to the impacts of the pandemic, it may take longer before new tenants are able to open and commence rent payments. T he Company’s ability to successfully start or complete tenant buildouts, new ground up development, or redevelopment of existing properties w as adversely impacted by governmental orders shutting down construction activities. The Company also experienced i mpacts on its ability to source materials for construction and labor shortages impacting its ability to complete construction projects on anticipated schedules. In the event a surge in new cases resulting in additional lockdowns occurs, s imilar impact s to the Company’s supply chain may arise which could have a material adverse effect on the Company’s business, financial condition and results of operation. The Company continue s to closely monitor and assess the capital requirements of all in process and planned developments, redevelopme nts, and capital expenditures. The Company is carefully proceeding in a targeted manner on a project-by-project basis which has resulted in delaying, phasing or curtailing certain in-process and planned development, redevelopment and capital expenditure projects. On March 30, 2020, the Company withdrew its fiscal 2020 guidance previously provided. The duration and severity of the health crisis in the United States and the speed at which the country, states and localities are able to safely reopen and remain open, will continue to materially impact the overall economy, retail tenants, and therefore the Company’s results of operations, financial condition and cash flows. As such, the impact from the COVID-19 pandemic may not be fully reflected in the Company’s results of operations and overall financial position until future periods and could result in a further materially adverse impact to the Company’s financial condition and results of operations. 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 expects to continue to maintain, its financial reporting systems as well as its internal controls over financial reporting and disclosure 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 recommended protocols and developed detailed plans to prioritize the well-being of its employees, and encourages its tenants to similarly follow all rules and guidelines. All Company employees are required to complete training before returning to the office. 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 September 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 September 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) |  | September 30, 2020 |  |  | December 31, 2019 |
Assets |  |  |  |  |  |  |  |
Net real estate investments (1) |  | $ | 129,881 |  |  |  | 325,464 |
Cash, cash equivalents and restricted cash (1) |  |  | 5,456 |  |  |  | 57,269 |
Liabilities |  |  |  |  |  |  |  |
Notes payable |  |  | 7,329 |  |  |  | 17,740 |
Equity |  |  |  |  |  |  |  |
Limited partners’ interests in consolidated partnerships |  |  | 28,827 |  |  |  | 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 September 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 September 30, |  |  | Nine months ended September 30, |
(in thousands) |  | Timing of satisfaction of performance obligations |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Other property income |  | Point in time |  | $ | 2,261 |  |  |  | 2,780 |  |  | $ | 7,001 |  |  |  | 6,956 |
Management, transaction and other fees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property management services |  | Over time |  |  | 3,598 |  |  |  | 3,648 |  |  |  | 10,830 |  |  |  | 11,076 |
Asset management services |  | Over time |  |  | 1,657 |  |  |  | 1,803 |  |  |  | 5,250 |  |  |  | 5,341 |
Leasing services |  | Point in time |  |  | 708 |  |  |  | 1,239 |  |  |  | 1,948 |  |  |  | 2,702 |
Other transaction fees |  | Point in time |  |  | 179 |  |  |  | 663 |  |  |  | 1,056 |  |  |  | 2,649 |
Total management, transaction, and other fees |  |  |  | $ | 6,142 |  |  |  | 7,353 |  |  | $ | 19,084 |  |  |  | 21,768 |
The accounts receivable for management services, which are included within Tenant and other receivables in the accompanying Consolidated Balance Sheets, are $9.8 million and $11.6 million, as of September 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 nine months ended September 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 nine months ended September 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 requiring modified disclosures at September 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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