Will Grocery Anchors Continue to Power Regency Centers' Growth?

Regency Centers’ REG portfolio has a high-quality open-air shopping center portfolio, with more than 85% grocery-anchored neighborhood and community centers with average grocery sales delivering more than $825 per square foot.

This focus on building a premium portfolio of grocery-anchored shopping centers is a strategic fit because such centers are usually necessity-driven and attract dependable traffic supporting smaller retailers in the center. Grocers’ strong performance can be attributed to factors like leveraging technology to streamline operations, offering multiple channels for customers, fulfilling online orders within the store network and consumer prioritization of essential goods throughout cycles.

Moreover, Regency’s premium shopping centers are situated in affluent suburban areas and near the urban trade areas where consumers have high spending power, enabling it to attract top grocers and retailers. Regency’s tenant roster has numerous industry-leading grocers such as Publix, Kroger, Albertsons Companies, TJX Companies, Inc. and Amazon/Whole Foods. Six of Regency’s top 10 tenants are high-performing grocers. The focus on necessity, service, convenience and value retailers serving the essential needs of the communities provides Regency with a strategic advantage.

In the fourth quarter of 2025, REG’s results reflected healthy leasing activity. The retail REIT executed approximately 1.7 million square feet of comparable new and renewal leases at a blended cash rent spread of 12%. A significant part of this was contributed by grocery with leases signed with Whole Foods, Sprouts and Trader Joe's, among others. As of Dec. 31, 2025, REG derived 20% of its annualized base rent from grocery.

As of Dec. 31, 2025, Regency is developing two shopping centers anchored by grocery stores – Oak Valley Village in Southern California, Target and Sprouts and Lone Tree Village in Denver, King Soopers. These projects are part of REG’s ground development pipeline. The company is also redeveloping existing centers by adding or upgrading grocery anchors. The newly acquired Long Island property will be redeveloped with Whole Foods as the anchor tenant.

How Do Kimco Realty and Realty Income Focus on Essential Tenants?

Kimco Realty’s KIM focus on providing essential, necessity-based goods and services to the local communities helps it navigate the rising e-commerce trends. With seven out of the top 10 tenants being grocers, Kimco achieved 86% of its annualized base rent from its grocery-anchored portfolio as of Dec. 31, 2025.

Realty Income’s O major four industries (representing 33.1% of the total portfolio annualized base rent as of Dec. 31, 2025) — grocery stores (11%), convenience stores (9.6%), home improvement (6.4%) and dollar stores (6.1%) — sell essential goods and continued to thrive even during the pandemic. A focus on these industries is likely to generate steady rental revenues for the company.

REG’s Price Performance, Valuation and Estimates

Shares of REG have risen 12.5% in the past three months compared with the industry’s growth of 13.7%.

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From a valuation standpoint, REG trades at a forward 12-month price-to-FFO of 15.67, below the industry at 16.01. It carries a Value Score of D.

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The Zacks Consensus Estimate for REG’s 2026 funds from operations per share has been revised upward by a cent to $4.84 over the past month.

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At present, Regency Centers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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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