Regency has a long and successful development track record. Since 2000 we have developed 195 shopping centers, including those currently in-process, representing an investment at completion of $3 billion. As leasing in our current in-process projects grows to 95 percent from 75 percent, this embedded growth will result in NOI returns in excess of 8 percent from the current level of nearly 6 percent.

Clearly, retailers will not return to prior growth levels for the foreseeable future. While this means fewer opportunities, it also means fewer competitors and significantly lower land prices, putting Regency in an enviable position as one of the few viable developers for retailers and land sellers.

We may decide in 2009 to pursue a few select, compelling acquisition and development opportunities. These may involve land already owned, commitments to key customers or a distressed seller. We've increased our return and profit margin guidelines and put in place tougher underwriting standards. We believe companies with strong balance sheets and the expertise to take advantage of them will see some extraordinary opportunities; already, we are evaluating distressed situations that can be structured to greatly reduce risk in ways we have not seen in 20 years.

For example, in southern California we are working on an opportunity to develop a project in a dense, infill market with 460,000 people within three miles. The project is fully entitled, with the best-in-class anchor retailers, all of which are signed. The shop space is very limited, and already 77 percent leased.

But again, these opportunities, no matter how good, will not be undertaken at the expense of the balance sheet.

Related Link:

  • Regency's Development Overview