Back to GetFilings.com



United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549

FORM 10-Q

(Mark One)

[X] For the quarterly period ended September 30, 2003

-or-

[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the transition period from ________ to ________

Commission File Number 1-12298

REGENCY CENTERS CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)

Florida 59-3191743
------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
---------------------------
(Address of principal executive offices) (Zip Code)

(904) 598-7000
--------------
(Registrant's telephone number, including area code)

Unchanged
---------
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No[ ]


(Applicable only to Corporate Registrants)
------------------------------------------

As of November 12, 2003, there were 59,734,842 shares outstanding of the
Registrant's common stock.






REGENCY CENTERS CORPORATION
Consolidated Balance Sheets
September 30, 2003 and December 31, 2002
(unaudited)



2003 2002
---- ----

Assets
Real estate investments at cost:
Land $ 715,731,924 715,255,513
Buildings and improvements 1,964,626,055 1,973,501,081
------------------ -----------------
2,680,357,979 2,688,756,594
Less: accumulated depreciation 284,678,878 244,595,928
------------------ -----------------
2,395,679,101 2,444,160,666
Properties in development 345,614,496 276,085,435
Operating properties held for sale - 5,658,905
Investments in real estate partnerships 133,316,456 125,482,151
------------------ -----------------
Net real estate investments 2,874,610,053 2,851,387,157

Cash and cash equivalents 45,888,449 56,447,329
Notes receivable 77,586,149 56,630,876
Tenant receivables, net of allowance for uncollectible accounts
of $4,100,974 and $4,258,891 at September 30, 2003
and December 31, 2002, respectively 42,391,111 47,983,160
Deferred costs, less accumulated amortization of
$31,721,996 and $25,588,464 at September 30, 2003
and December 31, 2002, respectively 34,299,656 37,367,196
Other assets 20,861,456 19,112,148
------------------ -----------------
$ 3,095,636,874 3,068,927,866
================== =================

Liabilities and Stockholders' Equity
Liabilities:
Notes payable $ 1,281,818,308 1,253,524,045
Unsecured line of credit 196,000,000 80,000,000
Accounts payable and other liabilities 91,959,394 83,977,263
Tenants' security and escrow deposits 9,413,884 8,847,603
------------------ -----------------
Total liabilities 1,579,191,586 1,426,348,911
------------------ -----------------

Preferred units 223,525,891 375,403,652
Exchangeable operating partnership units 28,207,552 30,629,974
Limited partners' interest in consolidated partnerships 15,388,919 14,825,256
------------------ -----------------
Total minority interest 267,122,362 420,858,882
------------------ -----------------

Stockholders' equity:
Series 3 cumulative redeemable preferred stock, $.01 par value per share,
300,000 shares authorized, issued and outstanding
at September 30, 2003; liquidation preference $250 per share 75,000,000 -
Series 2 cumulative convertible preferred stock and paid in capital,
$.01 par value per share, 1,502,532 shares authorized; 450,400
shares issued and outstanding at December 31, 2002 - 10,505,591
Common stock $.01 par value per share, 150,000,000 shares
authorized, 64,644,295 and 63,480,417 shares issued
at September 30, 2003 and December 31, 2002, respectively 646,443 634,804
Treasury stock at cost, 5,033,860 and 3,923,381 shares held at
September 30, 2003 and December 31, 2002, respectively (111,033,978) (77,698,485)
Additional paid in capital 1,386,400,386 1,367,808,138
Accumulated other comprehensive income (loss) (1,677,256) -
Distributions in excess of net income (100,012,669) (79,529,975)
------------------ -----------------
Total stockholders' equity 1,249,322,926 1,221,720,073
------------------ -----------------

Commitments and contingencies
$ 3,095,636,874 3,068,927,866
================== =================


See accompanying notes to consolidated financial statements


2


REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
For the Three Months ended September 30, 2003 and 2002
(unaudited)



2003 2002
---- ----

Revenues:
Minimum rent $ 69,903,822 68,695,823
Percentage rent 737,231 533,119
Recoveries from tenants 21,054,968 20,234,787
Service operations revenue 13,357,686 8,301,507
Equity in income of investments in
real estate partnerships 1,589,891 1,302,058
------------------ -----------------
Total revenues 106,643,598 99,067,294
------------------ -----------------

Operating expenses:
Depreciation and amortization 18,997,852 17,722,077
Operating and maintenance 13,233,389 12,752,053
General and administrative 6,294,558 6,075,285
Real estate taxes 10,184,943 9,779,978
Other expenses 310,847 267,328
------------------ -----------------
Total operating expenses 49,021,589 46,596,721
------------------ -----------------

Other expense (income)
Interest expense, net of interest income of $335,212
and $835,815 in 2003 and 2002, respectively 21,320,301 21,381,435
Loss on sale of operating properties - 56,754
Provision for loss on operating and development properties - 160,000
------------------ -----------------
Total other expense (income) 21,320,301 21,598,189
------------------ -----------------

Income before minority interests 36,301,708 30,872,384

Minority interest preferred unit distributions (7,256,251) (8,368,752)
Minority interest of exchangeable partnership units (678,720) (548,272)
Minority interest of limited partners (113,013) (125,174)
------------------ -----------------

Income from continuing operations 28,253,724 21,830,186

Discontinued operations, net:
Operating income from discontinued operations 442,575 3,104,608
Gain on sale of operating properties and properties in development 2,469,313 2,514,275
------------------ -----------------
Income from discontinued operations 2,911,888 5,618,883
------------------ -----------------

Net income 31,165,612 27,449,069

Preferred stock dividends (1,396,875) (758,628)
------------------ -----------------

Net income for common stockholders $ 29,768,737 26,690,441
================== =================

Income per common share - Basic:
Continuing operations $ 0.47 0.36
Discontinued operations $ 0.05 0.10
------------------ -----------------
Net income for common stockholders per share $ 0.52 0.46
================== =================

Income per common share - Diluted:
Continuing operations $ 0.46 0.36
Discontinued operations $ 0.05 0.10
------------------ -----------------
Net income for common stockholders per share $ 0.51 0.46
================== =================


See accompanying notes to consolidated financial statements


3


REGENCY CENTERS CORPORATION
Consolidated Statements of Operations
For the Nine Months ended September 30, 2003 and 2002
(unaudited)



2003 2002
---- ----

Revenues:
Minimum rent $ 209,338,256 198,629,445
Percentage rent 1,504,869 1,464,154
Recoveries from tenants 61,228,673 57,476,965
Service operations revenue 26,606,097 12,436,245
Equity in income of investments in
real estate partnerships 5,909,959 4,187,268
------------------ -----------------
Total revenues 304,587,854 274,194,077
------------------ -----------------

Operating expenses:
Depreciation and amortization 56,200,672 50,209,070
Operating and maintenance 39,829,768 36,037,364
General and administrative 16,438,446 15,584,804
Real estate taxes 30,190,318 28,761,472
Other expenses 1,572,171 678,555
------------------ -----------------
Total operating expenses 144,231,375 131,271,265
------------------ -----------------

Other expense (income)
Interest expense, net of interest income of $1,613,078
and $2,280,523 in 2003 and 2002, respectively 62,890,764 62,411,095
Gain on sale of operating properties - (1,437,471)
Provision for loss on operating properties 1,968,520 2,524,480
Other income - (2,383,524)
------------------ -----------------
Total other expense (income) 64,859,284 61,114,580
------------------ -----------------

Income before minority interests 95,497,195 81,808,232

Minority interest preferred unit distributions (24,744,881) (25,106,256)
Minority interest of exchangeable partnership units (1,662,975) (1,400,646)
Minority interest of limited partners (317,136) (360,158)
------------------ -----------------

Income from continuing operations 68,772,203 54,941,172

Discontinued operations:
Operating income from discontinued operations 813,002 13,537,227
Gain on sale of operating properties and properties in development 6,496,755 7,237,550
------------------ -----------------
Income from discontinued operations 7,309,757 20,774,777
------------------ -----------------

Net income 76,081,960 75,715,949

Preferred stock dividends (2,756,755) (2,275,884)
------------------ -----------------

Net income for common stockholders $ 73,325,205 73,440,065
================== =================

Income per common share - Basic:
Income from continuing operations $ 1.12 0.90
Discontinued operations $ 0.12 0.36
------------------ -----------------
Net income for common stockholders per share $ 1.24 1.26
================== =================

Income per common share - Diluted:
Income from continuing operations $ 1.11 0.90
Discontinued operations $ 0.12 0.36
------------------ -----------------
Net income for common stockholders per share $ 1.23 1.26
================== =================


See accompanying notes to consolidated financial statements


4


REGENCY CENTERS CORPORATION
Consolidated Statement of Stockholders' Equity
For the Nine Months ended September 30, 2003
(unaudited)



Additional
Series 2 and 3 Common Treasury Paid In
Preferred Stock Stock Stock Capital
------------------------------ --------------- -------------------

Balance at December 31, 2002 $ 10,505,591 634,804 (77,698,485) 1,367,808,138
Comprehensive Income:
Net income - - - -
Change in fair value of derivative instruments - - - -

Total comprehensive income - - - -
Common stock issued as
compensation or purchased by
directors or officers - 4,497 (532) 7,422,677
Common stock issued for exercise
of stock options - 2,200 - 1,494,596
Common stock surrendered for payment of taxes (49,077) (5,589,211)
Treasury stock issued for common
stock offering - - 117,216,000 6,359,877
Common stock issued for
partnership units exchanged - 438 - 1,163,106
Common stock issued for Series 2
preferred stock exchanged (10,505,591) 4,504 - 10,501,087
Series 3 preferred stock issued 75,000,000 - - (2,705,033)
Repurchase of common stock - - (150,501,884) -
Reallocation of minority interest - - - (54,851)
Cash dividends declared:
Preferred stock ($1.39 per share) - - - -
Common stock ($1.56 per share) - - - -
----------------- ----------- --------------- -------------------
Balance at
September 30, 2003 $ 75,000,000 646,443 (111,033,978) 1,386,400,386
================= =========== =============== ===================





Accumulated
Other Distributions Total
Comprehensive in Excess of Stockholders'
Income (Loss) Net Income Equity
--------------------------------------------------------

Balance at December 31, 2002 - (79,529,975) 1,221,720,073
Comprehensive Income:
Net income 76,081,961 76,081,961
Change in fair value of derivative instruments (1,677,256) - (1,677,256)
------------------
Total comprehensive income - - 74,404,705
Common stock issued as
compensation or purchased by
directors or officers - - 7,426,642
Common stock issued for exercise
of stock options - - 1,496,796
Common stock surrendered for payment of taxes (5,638,288)
Treasury stock issued for common
stock offering - - 123,575,877
Common stock issued for
partnership units exchanged - - 1,163,544
Common stock issued for Series 2
preferred stock exchanged - - -
Series 3 preferred stock issued - - 72,294,967
Repurchase of common stock - - (150,501,884)
Reallocation of minority interest - - (54,851)
Cash dividends declared:
Preferred stock ($1.39 per share) - (2,756,755) (2,756,755)
Common stock ($1.56 per share) - (93,807,900) (93,807,900)
----------------- --------------- ------------------
Balance at
September 30, 2003 (1,677,256) (100,012,669) 1,249,322,926
================= =============== ==================



See accompanying notes to consolidated financial statements.


5


REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months ended September 30, 2003 and 2002
(unaudited)



2003 2002
---- ----

Cash flows from operating activities:
Net income $ 76,081,960 75,715,949
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 56,278,855 54,158,411
Deferred loan cost and debt premium amortization 1,570,772 1,127,586
Stock based compensation 8,688,129 6,188,453
Minority interest preferred units 24,744,881 25,106,256
Minority interest of exchangeable operating partnership units 1,841,955 1,922,411
Minority interest of limited partners 317,136 360,158
Equity in income of investments in real estate partnerships (5,909,959) (4,187,268)
Gain on sale of operating properties (6,655,829) (8,856,794)
Provision for loss on operating properties 1,968,520 2,524,480
Other income - gain on early extinguishment of debt - (2,383,524)
Distributions from operations of investments in real estate partnerships 8,303,411 3,652,021
Changes in assets and liabilities:
Tenant receivables 5,592,050 5,498,346
Deferred leasing costs (7,308,922) (8,224,925)
Other assets (615,569) (6,407,285)
Accounts payable and other liabilities (7,663,930) (15,717,379)
Tenants' security and escrow deposits 566,281 870,593
------------------ ------------------
Net cash provided by operating activities 157,799,741 131,347,489
------------------ ------------------

Cash flows from investing activities:
Acquisition and development of real estate (269,345,695) (242,066,967)
Proceeds from sale of real estate 138,830,142 265,119,869
Repayment of notes receivable, net 48,332,147 37,357,641
Investment in real estate partnerships (10,259,572) (24,447,654)
Distributions received from investments in real estate partnerships 18,360,644 9,650,753
------------------ ------------------
Net cash (used in) provided by investing activities (74,082,334) 45,613,642
------------------ ------------------

Cash flows from financing activities:
Net proceeds from common stock issuance 125,072,674 9,932,137
Repurchase of common stock (150,501,884) (2,725,000)
Redemption of preferred partnership units (155,750,000) -
Redemption of exchangeable operating partnership units (973,505) (83,232)
Net distributions to limited partners in consolidated partnerships 246,527 (238,000)
Distributions to exchangeable operating partnership unit holders (2,182,180) (2,342,688)
Distributions to preferred unit holders (20,872,642) (25,106,256)
Dividends paid to common stockholders (93,807,900) (88,895,874)
Dividends paid to preferred stockholders (2,756,755) (2,275,884)
Net proceeds from issuance of Series 3 preferred stock 72,294,967 -
Net proceeds from fixed rate unsecured notes - 249,625,000
Proceeds (repayment) of unsecured line of credit, net 116,000,000 (244,000,000)
Proceeds from notes payable 30,821,695 -
Repayment of notes payable, net (7,255,541) (45,589,300)
Scheduled principal payments (4,358,163) (4,164,277)
Deferred loan costs (253,580) (2,081,247)
------------------ ------------------
Net cash used in financing activities (94,276,287) (157,944,621)
------------------ ------------------

Net (decrease) increase in cash and cash equivalents (10,558,880) 19,016,510

Cash and cash equivalents at beginning of period 56,447,329 27,853,264
------------------ ------------------

Cash and cash equivalents at end of period $ 45,888,449 46,869,774
================== ==================



6


REGENCY CENTERS CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months ended September 30, 2003 and 2002
(unaudited)
continued



2003 2002
---- ----


Supplemental disclosure of cash flow information - cash paid for interest
(net of capitalized interest of $9,778,187 and
$11,020,043 in 2003 and 2002, respectively) $ 71,370,633 63,557,496
================== ==================

Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of real estate $ 15,341,889 46,747,196
================== ==================

Notes receivable taken in connection with sales of operating properties
and properties in development $ 69,287,420 7,952,700
================== ==================

Real estate contributed as investment in real estate partnerships $ 18,328,829 12,612,410
================== ==================

Mortgage debt assumed by purchaser on sale of real estate $ 5,253,767 -
================== ==================

Change in fair value of derivative instrument $ 1,677,256 -
================== ==================

Common stock redeemed to pay off stock loans $ - 6,089,273
================== ==================




See accompanying notes to consolidated financial statements.


7


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


1. Summary of Significant Accounting Policies

(a) Organization and Principles of Consolidation

The accompanying consolidated financial statements include the
accounts of Regency Centers Corporation, its wholly-owned
qualified REIT subsidiaries, and partnerships in which it has
voting control (the "Company" or "Regency"). All significant
intercompany balances and transactions have been eliminated in
the consolidated financial statements. The Company owns
approximately 98% of the outstanding common units ("Units") of
Regency Centers, L.P. ("RCLP"). Regency invests in real estate
through its partnership interest in RCLP. Generally all of the
acquisition, development, operations and financing activity of
Regency, including the issuance of Units or preferred units, are
executed by RCLP. The equity interests of third parties held in
RCLP and the majority owned or controlled partnerships are
included in the consolidated financial statements as preferred or
exchangeable operating partnership units and limited partners'
interest in consolidated partnerships. The Company is a qualified
real estate investment trust ("REIT"), which began operations in
1993.

The financial statements reflect all adjustments that are of a
normal recurring nature, and in the opinion of management, are
necessary to properly state the results of operations and
financial position. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United
States of America have been condensed or omitted although
management believes that the disclosures are adequate to make the
information presented not misleading. The financial statements
should be read in conjunction with the financial statements and
notes thereto included in the Company's December 31, 2002 Form
10-K filed with the Securities and Exchange Commission.

(b) Revenues

The Company leases space to tenants under agreements with varying
terms. Leases are accounted for as operating leases with minimum
rent recognized on a straight-line basis over the term of the
lease regardless of when payments are due. Accrued rents are
included in tenant receivables.

Substantially all of the lease agreements contain provisions that
grant additional rents based on tenants' sales volume (contingent
or percentage rent) and reimbursement of the tenants' share of
real estate taxes and certain common area maintenance ("CAM")
costs. Percentage rents are recognized when the tenants achieve
the specified targets as defined in their lease agreements and
recovery of real estate taxes and CAM costs are recognized when
earned.

Service operations revenue includes management fees, commission
income, and gains or losses from the sale of land and development
properties without significant operations. Service operations
revenue does not include gains or losses from the sale of
operating properties. The Company accounts for profit recognition
on sales of real estate in accordance with the FASB Statement No.
66,



8


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


(b) Revenues (continued)

"Accounting for Sales of Real Estate." In summary, profits from
sales will not be recognized by the Company unless a sale has
been consummated; the buyer's initial and continuing investment
is adequate to demonstrate a commitment to pay for the property;
the Company has transferred to the buyer the usual risks and
rewards of ownership; and the Company does not have substantial
continuing involvement with the property.

(c) Real Estate Investments

Land, buildings and improvements are recorded at cost. All direct
and indirect costs related to development activities are
capitalized. Included in these costs are interest and real estate
taxes incurred during construction as well as estimates for the
portion of internal costs that are incremental, and deemed
directly or indirectly related to development activity.
Maintenance and repairs that do not improve or extend the useful
lives of the respective assets are reflected in operating and
maintenance expense.

Depreciation is computed using the straight-line method over
estimated useful lives of up to forty years for buildings and
improvements, term of lease for tenant improvements, and three to
seven years for furniture and equipment.

On January 1, 2002, the Company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("Statement
144"). In accordance with Statement 144, operating properties
held for sale includes only those properties available for
immediate sale in their present condition and for which
management believes it is probable that a sale of the property
will be completed within one year. Operating properties held for
sale are carried at the lower of cost or fair value less costs to
sell. Depreciation and amortization are suspended during the
period held for sale.

The Company reviews its real estate portfolio for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Regency determines
whether impairment has occurred by comparing the property's
carrying value to an estimate of the future undiscounted cash
flows. In the event impairment exists, assets are written down to
fair value for held and used assets and fair value less costs to
sell for held for sale assets. During the second quarter of 2003,
the Company recorded a provision for loss of approximately $2
million to adjust three operating properties to their estimated
fair value. The fair values of the operating properties were
determined by using prices for similar assets in their respective
markets.

The Company's properties generally have operations and cash flows
that can be clearly distinguished from the rest of the Company.
In accordance with Statement 144, the operations and gains on
sales reported in discontinued operations include those operating
properties and properties in development for which operations and
cash flows can be clearly distinguished. The operations from
these properties have been eliminated from ongoing operations and
the Company will not have continuing involvement after
disposition. Prior periods have been restated to reflect the
operations of these properties as discontinued operations. The
operations and gains on sales of operating properties sold to
real estate partnerships in which the Company has some continuing
involvement are included in income from continuing operations.



9


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


(d) Deferred Costs

Deferred costs include deferred leasing costs, leasing
intangibles acquired in business combinations and deferred loan
costs, net of amortization. Such costs are amortized over the
periods through lease expiration or loan maturity. Deferred
leasing costs consist of internal and external commissions
associated with leasing the Company's shopping centers. Leasing
intangibles represent the allocation of purchase price to
in-place leases of properties acquired. Net deferred leasing
costs and leasing intangibles were $25.7 million and $26.5
million at September 30, 2003 and December 31, 2002,
respectively. Deferred loan costs consist of initial direct and
incremental costs associated with financing activities. Net
deferred loan costs were $8.6 million and $10.9 million at
September 30, 2003 and December 31, 2002, respectively.

(e) Earnings per Share and Treasury stock

Basic net income per share of common stock is computed based upon
the weighted average number of common shares outstanding during
the year. Diluted net income per share also includes common share
equivalents for stock options, exchangeable operating partnership
units, and preferred stock when dilutive. See note 7 for the
calculation of earnings per share.

Repurchases of the Company's common stock (net of shares retired)
are recorded at cost and are reflected as Treasury stock in the
consolidated statements of stockholders' equity. Outstanding
shares do not include treasury shares.

(f) Stock-Based Compensation

In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure" ("Statement
148"). Statement 148 provides alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition,
Statement 148 amends the disclosure requirements of Statement No.
123, "Accounting for Stock-Based Compensation" ("Statement 123"),
to require more prominent and frequent disclosures in financial
statements about the effects of stock-based compensation. The
transition guidance and annual disclosure provisions of Statement
148 are effective for fiscal years ending after December 15, 2002
and the interim disclosure provisions are effective for periods
beginning after December 15, 2002. As permitted under Statement
123 and Statement 148, the Company will continue to follow the
accounting guidelines pursuant to Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees"
("Opinion 25"), for stock-based compensation and to furnish the
pro forma disclosures as required under Statement 148.

The Company applies Opinion 25 in accounting for its stock-based
compensation plans, and accordingly, no compensation cost has
been recognized for its stock options in the consolidated
financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its
stock-based employee awards under Statement 123, the Company's
net income for common stockholders for the three month and nine
month periods ended September 30, 2003 and 2002 would have been
reduced to the pro forma amounts indicated on the following page
(in thousands except per share data):


10


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


(f) Stock-Based Compensation (continued)



For the three months ended
September 30,
2003 2002
---- ----

Net income for common stockholders
as reported: $ 29,769 26,690
Add: stock-based employee compensation
expense included in reported net income 2,918 2,127
Deduct: total stock-based employee
compensation expense determined under
fair value based methods for all awards 4,149 3,149
-------------- ---------------
Pro forma net income $ 28,538 25,668
============== ===============

Earnings per share:
Basic - as reported $ 0.52 0.46
============== ===============
Basic - pro forma $ 0.50 0.44
============== ===============

Diluted - as reported $ 0.51 0.46
============== ===============
Diluted - pro forma $ 0.49 0.44
============== ===============

For the nine months ended
September 30,
2003 2002
---- ----
Net income for common stockholders
as reported: $ 73,325 73,440
Add: stock-based employee compensation
expense included in reported net income 8,688 6,188
Deduct: total stock-based employee
compensation expense determined under
fair value based methods for all awards 11,763 9,254
-------------- ---------------
Pro forma net income $ 70,250 70,374
============== ===============

Earnings per share:
Basic - as reported $ 1.24 1.26
============== ===============
Basic - pro forma $ 1.18 1.21
============== ===============

Diluted - as reported $ 1.23 1.26
============== ===============
Diluted - pro forma $ 1.18 1.21
============== ===============



11


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


(g) Consolidation of Variable Interest Entities

In January 2003, the FASB issued Interpretation No. 46
"Consolidation of Variable Interest Entities" ("Interpretation
46"), which is intended to clarify the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements", to
certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other
parties, or variable interest entities, as defined in the
interpretation. Interpretation 46 requires that certain variable
interest entities be consolidated into the majority variable
interest holder's financial statements and is applicable
immediately to all variable interest entities created after
January 31, 2003, and as of the first interim period ending after
December 15, 2003 to those variable interest entities created
before February 1, 2003 and not already consolidated under
Interpretation 46 in previously issued financial statements . The
Company did not create any variable interest entities after
January 31, 2003. The Company is continuing its analysis of the
applicability of this interpretation to its structures created
before February 1, 2003 and does not believe its adoption will
have a material effect on the financial statements.

(h) Segment reporting

The Company's business is investing in retail shopping centers
through direct ownership or through joint ventures. The Company
actively manages its portfolio of retail shopping centers and may
from time to time make decisions to sell lower performing
properties, or developments not meeting its long-term investment
objectives. The proceeds of sales are invested into higher quality
retail shopping centers through acquisitions or new developments,
which management believes will meet its planned rate of return. It
is management's intent that all retail shopping centers will be
owned or developed for investment purposes. The Company's revenue
and net income is generated from the operation of its investment
portfolio. The Company will also earn incidental fees from third
parties for services provided to manage and lease retail shopping
centers owned through joint ventures.

The Company's portfolio is located throughout the United States;
however, management does not distinguish or group its operations
on a geographical basis for purposes of allocating resources or
measuring performance. The Company reviews operating and financial
data for each property on an individual basis, therefore, the
Company defines its operating segment as its individual
properties. No individual property constitutes more than 10% of
the Company's combined revenue, net income or assets, and thus the
individual properties have been aggregated into one reportable
segment based upon their similarities with regard to both the
nature of the centers, tenants and operational processes, as well
as, long-term average financial performance. In addition, no
single tenant accounts for 10% or more of revenue and none of the
shopping centers are located outside the United States.



12


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


(i) Derivative Financial Instruments

The Company adopted SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" as amended ("Statement 133"),
on January 1, 2001. Statement 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value.
Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The
Company uses derivative financial instruments such as interest
rate swaps to mitigate its interest rate risk on a related
financial instrument. Statement 133 requires that changes in fair
value of derivatives that qualify as cash flow hedges be
recognized in other comprehensive income (loss) while the
ineffective portion of the derivative's change in fair value be
recognized immediately in earnings.

To determine the fair value of derivative instruments, the Company
uses standard market conventions and techniques such as discounted
cash flow analysis, option pricing models and termination costs at
each balance sheet date. All methods of assessing fair value
result in a general approximation of value, and such value may
never actually be realized.

(j) Financial Instruments with Characteristics of both Liabilities and
Equity

In May 2003, the FASB issued Statement of Accounting Standards No.
150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" ("Statement 150").
Statement 150 affects the accounting for certain financial
instruments, including requiring companies having consolidated
entities with specified termination dates to treat minority
owners' interests in such entities as liabilities in an amount
based on the fair value of the entities. Although Statement 150
was originally effective July 1, 2003, the FASB has indefinitely
deferred certain provisions related to classification and
measurement requirements for mandatorily redeemable financial
instruments that become subject to Statement 150 solely as a
result of consolidation including minority interests of entities
with specified termination dates. As a result, Statement 150 has
no impact on the Company's Consolidated Statements of Operations
for the three month and nine month periods ended September 30,
2003.

At September 30, 2003, the Company held a majority interest in six
consolidated entities with specified termination dates ranging
from 2007 to 2049. The minority owners' interests in these
entities are to be settled upon termination by distribution of
either cash or specific assets of the underlying entities. The
estimated fair value of minority interests in entities with
specified termination dates was approximately $24.8 million at
September 30, 2003. The Company has no other financial instruments
that currently are affected by Statement 150.

(k) Reclassifications

Certain reclassifications have been made to the 2002 amounts to
conform to classifications adopted in 2003.


13


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


2. Discontinued Operations

During 2003, the Company sold 100% of its interest in eight operating
properties for proceeds of $57.6 million and the combined operating
income and gain of $7.3 million on these sales are included in
discontinued operations. The revenues from properties included in
discontinued operations, including properties sold in 2003 and 2002, as
well as, operating properties held for sale, were $2.5 million and $24.2
million for the nine months ended September 30, 2003 and 2002,
respectively. The operating income from these properties was $813,002 and
$13.5 million for the nine months ended September 30, 2003 and 2002,
respectively. Operating income and gains on sales included in
discontinued operations are shown net of minority interest of
exchangeable operating partnership units totaling $178,981 and $521,765
for the nine months ended September 30, 2003 and 2002, respectively.

3. Investments in Real Estate and Real Estate Partnerships

During 2003, the Company acquired two grocery-anchored shopping centers
for $35 million. The 2003 acquisitions were accounted for as purchases
and the results of their operations are included in the consolidated
financial statements from the date of the acquisition. Acquisitions
(either individually or in the aggregate) were not significant to the
operations of the Company in the periods in which they were acquired or
the period preceding the acquisition.

The Company allocates the purchase price of acquired properties to land,
buildings, and identifiable intangible assets based on their fair values.
The total value of intangible assets is measured based on the difference
between the purchase price paid for the property and the value of the
property on an "as-if vacant" basis. Management's estimates of "as-if
vacant" value are based on replacement costs for similar properties and
consideration of carrying costs such as real estate taxes, insurance, and
other operating expenses and lost rentals during expected lease-up
periods. Total intangible assets are allocated to (i) above or
below-market lease intangibles, (ii) at-market lease intangibles
(in-place leases) and (iii) customer relationship value, if any. Above or
below-market lease intangibles are recorded based on the present value of
the difference between the contractual amounts to be received on acquired
leases and the estimated amounts that would be received for similar
leases at current market terms. Above- and below-market lease intangibles
are amortized to rental income over the remaining non-cancelable terms of
the respective leases. The remaining amount of total intangible assets is
assigned to the value of in-place leases and is amortized to expense over
the initial term of the respective leases.

The Company accounts for all investments in which it owns 50% or less and
does not have a controlling financial interest using the equity method.
The Company's combined investment in these partnerships was $133.3
million and $125.5 million at September 30, 2003 and December 31, 2002,
respectively. Net income, which includes all operating results, as well
as gains and losses on sales of properties within the joint ventures, is
allocated to the Company in accordance with the respective partnership
agreements. Such allocations of net income are recorded in equity in
income of investments in real estate partnerships in the accompanying
consolidated statements of operations.

The Company has a 25% equity interest in Macquarie CountryWide-Regency,
LLC ("MCWR"), a joint venture with an affiliate of Macquarie CountryWide
Trust of Australia, a Sydney, Australia-based property trust focused on
investing in grocery-anchored shopping centers. During the nine months
ended, September 30, 2003, MCWR acquired eight shopping centers from the
Company for $158.7 million, for which the Company received net proceeds
of $59.2 million. The Company


14


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


3. Investments in Real Estate and Real Estate Partnerships (continued)

holds a note receivable of $69.3 million related to the sale of three of
the assets in September 2003. The note receivable has an interest rate of
LIBOR plus 1.5% and matures on December 31, 2003. Since the Company has a
continuing involvement in these properties, the development gains
recognized by the Company on these sales represents gain recognition on
only that portion of the sale to MCWR not owned by the Company and are
not included in discontinued operations. The gains on these sales of
$16.3 million are recorded in service operations revenue in the Company's
consolidated statements of operations.

The Company also has a 20% equity interest in Columbia Regency Retail
Partners, LLC ("Columbia"), a joint venture with the Oregon State
Treasury that was formed for the purpose of investing in retail shopping
centers. During the current year, Columbia has acquired one shopping
center for $20 million.

With the exception of Columbia and MCWR, both of which intend to continue
expanding their investment in shopping centers, the investments in real
estate partnerships represent single asset entities formed for the
purpose of developing or owning retail based commercial real estate.

The Company's investments in real estate partnerships as of September 30,
2003 and December 31, 2002 consist of the following (in thousands):



Ownership 2003 2002
--------- ---- ----


Columbia Regency Retail Partners, LLC 20% $ 39,628 42,413
Macquarie CountryWide-Regency, LLC 25% 31,770 22,281
RRG-RMC Tracy, LLC 50% 23,449 23,269
OTR/Regency Texas Realty Holdings, L.P. 30% 16,071 15,992
Tinwood, LLC 50% 10,232 10,983
Regency Woodlands/Kuykendahl, Ltd. 50% 6,528 7,973
Jog Road, LLC 50% 3,000 2,571
Hermosa Venture 2002, LLC 27% 2,638 -
------------- -------------
$ 133,316 125,482
============= =============


Summarized financial information for the unconsolidated investments on a
combined basis, is as follows (in thousands):



September 30, December 31,
2003 2002
---- ----

Balance Sheet:
Investment in real estate, net $ 692,862 553,118
Other assets 53,156 15,721
-------------------- -------------------
Total assets $ 746,018 568,839
==================== ===================

Notes payable $ 298,132 167,071
Other liabilities 16,493 10,386
Equity and partners' capital 431,393 391,382
-------------------- -------------------
Total liabilities and equity $ 746,018 568,839
==================== ===================


Unconsolidated partnerships and joint ventures had notes payable of $298
million at September 30, 2003 and the Company's proportionate share of
these loans was $58.1 million.


15


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


3. Investments in Real Estate and Real Estate Partnerships (continued)

The revenues and expenses on a combined basis are summarized as follows
for the three months ended September 30, 2003 and 2002:



2003 2002
---- ----

Statement of Operations:
Total revenues $ 18,835 9,815
Total expenses 13,384 5,278
------------------- ------------------
Net income $ 5,451 4,537
=================== ==================

The revenues and expenses on a combined basis are summarized as follows
for the nine months ended September 30, 2003 and 2002:

2003 2002
---- ----
Statement of Operations:
Total revenues $ 52,257 28,346
Total expenses 33,955 13,455
------------------- ------------------
Net income $ 18,302 14,891
=================== ==================



4. Notes Payable and Unsecured Line of Credit

The Company's outstanding debt at September 30, 2003 and December 31,
2002 consists of the following (in thousands):



2003 2002
---- ----

Notes Payable:
Fixed rate mortgage loans $ 233,378 229,551
Variable rate mortgage loans 49,336 24,998
Fixed rate unsecured loans 999,104 998,975
--------------- ---------------
Total notes payable 1,281,818 1,253,524
Unsecured line of credit 196,000 80,000
--------------- ---------------
Total $ 1,477,818 1,333,524
=============== ===============



Interest rates paid on the unsecured line of credit (the "Line"), which
are based on LIBOR plus .85%, were 1.975% and 2.2880% at September 30,
2003 and December 31, 2002, respectively. The spread that the Company
pays on the Line is dependent upon maintaining specific investment grade
ratings. The Company is required to comply, and is in compliance with,
certain financial and other covenants customary with this type of
unsecured financing. The Line is used primarily to finance the
acquisition and development of real estate, but is also available for
general working capital purposes.

Mortgage loans are secured by certain real estate properties, and may be
prepaid, but could be subject to a yield-maintenance premium. Mortgage
loans are generally due in monthly installments of interest and principal
and mature over various terms through 2023. Variable interest rates on
mortgage loans are currently based on LIBOR plus a spread in a range of
130 to 150 basis points. Fixed interest rates on mortgage loans range
from 5.65% to 9.5%.


16


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


4. Notes Payable and Unsecured Line of Credit (continued)

In June 2003, the Company assumed debt with a fair value of $13.3 million
related to the acquisition of a property, which includes a debt premium
of $797,303 based upon the above market interest rate of the debt
instrument. The debt premium is being amortized over the term of the
related debt instrument.

As of September 30, 2003, scheduled principal repayments on notes payable
and the Line were as follows (in thousands):



Scheduled
Principal Term Loan Total
Scheduled Payments by Year Payments Maturities Payments
-------------------------- -------------- --------------- ---------------


2003 $ 1,293 20,671 21,964
2004 (includes the Line) 5,344 418,604 423,948
2005 4,156 172,732 176,888
2006 3,476 24,094 27,570
2007 2,891 25,696 28,587
Beyond 5 Years 24,725 768,291 793,016
Unamortized debt premiums - 5,845 5,845
-------------- --------------- ---------------
Total $ 41,885 1,435,933 1,477,818
============== =============== ===============


5. Derivative Financial Instruments

The Company is exposed to capital market risk, such as changes in
interest rates. In order to manage the volatility relating to interest
rate risk, the Company may enter into interest rate hedging arrangements
from time to time. The Company does not utilize derivative financial
instruments for trading or speculative purposes. The Company accounts for
derivative instruments under Statement of Financial Accounting Standard
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
as amended ("Statement 133").

In July and September, 2003, the Company entered into two
forward-starting interest rate swaps of $96.5 million and $47.7 million,
respectively. The Company designated the $144.2 million swaps as hedges
to effectively fix the rate on a refinancing expected in April 2004. The
fair value of the swaps was a liability of $1.7 million as of September
30, 2003, and is recorded in accounts payable and other liabilities in
the accompanying balance sheet. The swaps qualify for hedge accounting
under Statement 133; therefore, changes in fair value are recorded in
other comprehensive income (loss). No hedge ineffectiveness has been
incurred and recognized to date on these swaps. Amounts reported in
accumulated other comprehensive income (loss) related to these swaps will
be reclassified to interest expense as interest payments are made on the
forecasted refinancing.



17


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


6. Stockholders' Equity and Minority Interest

(a) The Company, through RCLP, has issued Cumulative Redeemable
Preferred Units ("Preferred Units") in various amounts since
1998. The issues were sold primarily to institutional investors
in private placements for $100 per unit. The Preferred Units,
which may be called by RCLP at par after certain dates, have no
stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at fixed rates. At any time after ten years
from the date of issuance, the Preferred Units may be exchanged
by the holder for Cumulative Redeemable Preferred Stock
("Preferred Stock") at an exchange rate of one share for one
unit. The Preferred Units and the related Preferred Stock are not
convertible into common stock of the Company. The net proceeds of
these offerings were used to reduce the Line. At September 30,
2003 and December 31, 2002, the face value of total Preferred
Units issued was $229 million and $384 million, respectively with
an average fixed distribution rate of 8.88% and 8.72%,
respectively.

During the third quarter of 2003, the Company redeemed $80
million of Series A 8.125% Preferred Units which was funded from
proceeds from the stock offering completed on August 18, 2003 and
described below. At the time of the redemption, $1.2 million of
previously deferred costs related to the original preferred
units' issuance were recognized in the consolidated statements of
operations as a component of minority interest preferred unit
distributions. During the first quarter of 2003, the Company
redeemed $35 million of Series C 9% Preferred Units and $40
million of Series E 8.75% Preferred Units. The redemptions were
portions of each series and the Company paid a 1% premium on the
face value of the redeemed units totaling $750,000. At the time
of redemption, the premium and $1.9 million of previously
deferred costs related to the original preferred units' issuance
were recognized in the consolidated statements of operations as a
component of minority interest preferred unit distributions. The
redemption of the Series C and E units was funded from proceeds
from the Line.

Terms and conditions of the Preferred Units outstanding as of
September 30, 2003 are summarized as follows:



Units Issue Amount Distribution Callable Exchangeable
Series Outstanding Price Outstanding Rate by Company by Unitholder
- ----------------------------------------------------------------------------------------------------------------------------


Series B 850,000 100.00 85,000,000 8.750% 09/03/04 09/03/09
Series C 400,000 100.00 40,000,000 9.000% 09/03/04 09/03/09
Series D 500,000 100.00 50,000,000 9.125% 09/29/04 09/29/09
Series E 300,000 100.00 30,000,000 8.750% 05/25/05 05/25/10
Series F 240,000 100.00 24,000,000 8.750% 09/08/05 09/08/10
--------------- -----------------
2,290,000 $ 229,000,000
=============== =================


(b) On August 18, 2003, we issued 3,600,000 shares of common stock at
$35.96 per share in a public offering.

Until June 24, 2003, Security Capital beneficially owned
34,273,236 shares, representing 56.6% of the voting stock
outstanding of Regency. On June 24, 2003, Security Capital sold
common stock through (1) an underwritten public offering (the
"Secondary Offering"), and (2) the sale of shares to Regency
pursuant to a Purchase and Sale Agreement dated


18


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


6. Stockholders' Equity and Minority Interest (continued)


(b) June 11, 2003 (the "Purchase and Sale Agreement"), and also
agreed to sell the balance of the shares pursuant to forward
sales contracts.

Security Capital sold 9,666,356 shares of common stock in the
Secondary Offering. On June 24, 2003, it also sold 4,606,880
shares of common stock to Regency at the public offering price of
$32.56 per share pursuant to the Purchase and Sale Agreement. The
purchase price of $150 million was funded from the Company's
Line. Currently, Security Capital owns 12,186,667 shares of
common stock (constituting approximately 20.4% of Regency's
outstanding common stock) all of which are subject to forward
sales contracts. Upon settlement of all of the forward sales
contracts, which provide for settlement at various times during
the first half of 2004, or earlier at the election of Security
Capital, they will no longer own any shares of Regency common
stock, unless Security Capital elects to settle one or more of
the forward contracts in cash rather than by delivery of shares
of common stock.


Concurrently with the closing of the Secondary Offering and the
sale of common stock to Regency, Security Capital and Regency
terminated the Stockholders Agreement dated as of July 10, 1996,
as amended. This termination was pursuant to an Agreement
Relating to Disposition of Shares dated as of June 11, 2003 (the
"Disposition Agreement"). Under the Disposition Agreement,
Security Capital also agreed that, following the closing of the
Secondary Offering, it will vote any shares of common stock that
are subject to forward contracts and over which it has voting
power in the same proportion as shares are voted by other
shareholders of Regency. In addition, Security Capital agreed
that, if it settles forward contracts in cash rather than shares,
within 100 trading days thereafter, it will sell a sufficient
number of shares so that it will no longer beneficially own
shares with a value in excess of 7% of the total value of
Regency's capital stock.


Security Capital also agreed in the Disposition Agreement to
waive the special ownership limit created for it in Regency's
articles of incorporation. Once Security Capital reduces its
ownership to 7% or less after the forward contracts settle in
2004, it will be subject to the same 7% ownership limit in
Regency's articles of incorporation that applies to other
shareholders.


(c) During the first quarter of 2003, the holder of the Series 2
preferred stock converted all of its remaining 450,400 preferred
shares into common stock at a conversion ratio of 1:1.

(d) On April 3, 2003, the Company received proceeds from a $75
million offering of 3,000,000 depositary shares representing
300,000 shares of Series 3 Cumulative Redeemable Preferred Stock.
The depositary shares are not convertible into common stock of
the Company and are redeemable at par upon Regency's election on
or after April 3, 2008, pay a 7.45% annual dividend and have a
liquidation value of $25 per depositary share. The proceeds from
this offering were used to reduce the Line.


19


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


7. Earnings per Share

The following summarizes the calculation of basic and diluted earnings
per share for the three months ended September 30, 2003 and 2002 (in
thousands except per share data):



2003 2002
---- ----

Numerator:
Income from continuing operations $ 28,254 21,830
Discontinued operations 2,912 5,619
------------------ ------------------
Net income 31,166 27,449
Less: Preferred stock dividends 1,397 759
------------------ ------------------
Net income for common stockholders - Basic 29,769 26,690
Add: Minority interest of exchangeable operating
partnership units - continuing operations 679 549
Minority interest of exchangeable operating
partnership units - discontinued operations 71 141
------------------ ------------------
Net income for common stockholders - Diluted $ 30,519 27,380
================== ==================

Denominator:
-------------
Weighted average common shares
outstanding for Basic EPS 57,647 58,344
Exchangeable operating partnership units 1,432 1,513
Incremental shares to be issued under common
stock options using the Treasury stock method 363 313
------------------ ------------------
Weighted average common shares outstanding
for Diluted EPS 59,442 60,170
================== ==================

Income per common share - Basic
Income from continuing operations $ 0.47 0.36
Discontinued operations $ 0.05 0.10
------------------ ------------------
Net income for common stockholders
per share $ 0.52 0.46
================== ==================

Income per common share - Diluted
Income from continuing operations $ 0.46 0.36
Discontinued operations $ 0.05 0.10
------------------ ------------------
Net income for common stockholders
per share $ 0.51 0.46
================== ==================


The Series 2 preferred stock is not included in the above calculation for
periods prior to the conversion in the first quarter of 2003 and the
fourth quarter of 2002 because its effects were anti-dilutive.



20


Regency Centers Corporation

Notes to Consolidated Financial Statements

September 30, 2003


7. Earnings per Share (continued)

The following summarizes the calculation of basic and diluted earnings
per share for the nine months ended September 30, 2003 and 2002 (in
thousands except per share data):



2003 2002
---- ----

Numerator:
Income from continuing operations $ 68,772 54,941
Discontinued operations 7,310 20,775
------------------ ------------------
Net income 76,082 75,716
Less: Preferred stock dividends 2,757 2,276
------------------ ------------------
Net income for common stockholders - Basic 73,325 73,440
Add: Minority interest of exchangeable operating
partnership units - continuing operations 1,663 1,400
Minority interest of exchangeable operating
partnership units - discontinued operations 179 522
------------------ ------------------
Net income for common stockholders - Diluted $ 75,167 75,362
================== ==================

Denominator:
-------------
Weighted average common shares
outstanding for Basic EPS 59,302 58,084
Exchangeable operating partnership units 1,464 1,524
Incremental shares to be issued under common
stock options using the Treasury stock method 395 172
------------------ ------------------
Weighted average common shares outstanding
for Diluted EPS 61,161 59,780
================== ==================

Income per common share - Basic
Income from continuing operations $ 1.12 0.90
Discontinued operations $ 0.12 0.36
------------------ ------------------
Net income for common stockholders
per share $ 1.24 1.26
================== ==================

Income per common share - Diluted
Income from continuing operations $ 1.11 0.90
Discontinued operations $ 0.12 0.36
------------------ ------------------
Net income for common stockholders
per share $ 1.23 1.26
================== ==================


The Series 2 preferred stock is not included in the above calculation for
periods prior to the conversion in the first quarter of 2003 and the
fourth quarter of 2002 because its effects were anti-dilutive.


21


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

In addition to historical information, the following information
contains forward-looking statements under the federal securities laws. These
statements are based on current expectations, estimates and projections about
the industry and markets in which Regency operates, and management's beliefs and
assumptions. Forward-looking statements are not guarantees of future performance
and involve certain known and unknown risks and uncertainties that could cause
actual results to differ materially from those expressed or implied by such
statements. Such risks and uncertainties include, but are not limited to,
changes in national and local economic conditions; financial difficulties of
tenants; competitive market conditions, including pricing of acquisitions and
sales of properties and out-parcels; changes in expected leasing activity and
market rents; timing of acquisitions, development starts and sales of properties
and out-parcels; weather; the ability to obtain governmental approvals; and
meeting development schedules. The following discussion should be read in
conjunction with the accompanying Consolidated Financial Statements and Notes
thereto of Regency Centers Corporation ("Regency" or "Company") appearing
elsewhere within.

Organization
- ------------

Regency is a qualified real estate investment trust ("REIT"), which
began operations in 1993. We invest in retail shopping centers through our
partnership interest in Regency Centers, L.P. ("RCLP"), an operating partnership
in which Regency currently owns approximately 98% of the outstanding common
partnership units ("Common Units"). Regency's acquisition, development,
operations and financing activities, including the issuance of Common Units or
Cumulative Redeemable Preferred Units ("Preferred Units"), are generally
executed by RCLP.

Shopping Center Business
- ------------------------

We are a national owner, operator and developer of grocery-anchored
neighborhood retail shopping centers. A list of our shopping centers including
those partially owned through joint ventures, summarized by state and in order
of largest holdings, including their gross leasable areas ("GLA") follows:



September 30, 2003 December 31, 2002
------------------ -----------------
Location # Properties GLA % Leased # Properties GLA % Leased
-------- ------------ --- -------- ------------ --- --------

Florida 50 5,934,025 94.1% 53 6,193,550 91.9%
California 46 5,489,582 94.5% 43 5,125,030 99.1%
Texas 41 5,310,463 89.1% 40 5,123,197 93.6%
Georgia 23 2,256,018 94.2% 24 2,437,712 93.9%
Ohio 14 1,901,537 89.7% 14 1,901,684 91.4%
Colorado 14 1,622,717 87.3% 15 1,538,570 98.0%
North Carolina 10 1,050,043 98.8% 12 1,225,201 97.6%
Virginia 8 1,008,792 98.9% 7 872,796 96.8%
Washington 9 1,020,514 96.2% 9 986,374 98.9%
Oregon 8 841,998 92.3% 9 822,115 93.7%
Alabama 8 698,235 87.0% 7 644,896 94.3%
Arizona 5 501,005 94.4% 6 525,701 96.3%
Tennessee 6 444,234 98.0% 6 444,234 95.3%
Illinois 3 408,211 95.9% 2 300,477 96.1%
South Carolina 5 339,926 94.0% 5 339,256 99.1%
Kentucky 3 319,875 96.2% 2 304,659 96.6%
Michigan 4 368,260 86.9% 3 279,265 92.6%
Delaware 2 240,418 99.5% 2 240,418 99.0%
New Jersey 1 88,993 86.6% 1 88,993 -
Missouri 1 82,498 92.9% 1 82,498 92.9%
Pennsylvania 1 6,000 100.0% 1 6,000 100.0%
---------------------------------------------------------------------------------------------------
Total 262 29,933,344 92.9% 262 29,482,626 91.5%
===================================================================================================



22


We are focused on building a portfolio of grocery-anchored
neighborhood shopping centers that are positioned to withstand adverse economic
conditions by providing consumers with convenient shopping for daily necessities
and adjacent local tenants with foot traffic. Regency's current investment
markets are stable, and we expect to realize growth in net income as a result of
increasing occupancy in the portfolio, increasing rental rates, development and
acquisition of shopping centers in targeted markets, and redevelopment of
existing shopping centers.

The following table summarizes the four largest grocery-tenants
occupying our shopping centers, including those partially owned through joint
ventures at September 30, 2003:



Percentage of Percentage of
Grocery Number of Company- Annualized
Anchor Stores (a) owned GLA Base Rent
------ ---------- ------------- -------------


Kroger 61 12.0% 8.7%
Publix 54 8.4% 5.3%
Safeway 47 6.0% 4.7%
Albertsons 25 3.2% 2.4%


(a) Includes grocery-tenant-owned stores

Acquisition and Development of Shopping Centers
- -----------------------------------------------

We have implemented a growth strategy dedicated to developing and
acquiring high-quality shopping centers. Our development program makes a
significant contribution to our overall growth. Development is customer-driven,
meaning we generally have an executed lease from the grocery-anchor before we
begin construction. Developments serve the growth needs of our grocery and
specialty retail customers, result in modern shopping centers with long-term
leases from grocery and other anchors, and produce either attractive returns on
invested capital or profits from sale. This development process can require up
to 36 months from initial land or redevelopment acquisition through
construction, lease-up and stabilization, depending upon the size and type of
project. Generally, anchor tenants begin operating their stores prior to
construction completion of the entire center, resulting in rental income during
the development phase.

At September 30, 2003, we had 34 projects under construction or
undergoing major renovations, which, when completed, are expected to represent
an investment of $590.5 million before the estimated reimbursement of certain
tenant-related costs and projected sales proceeds from adjacent land and
out-parcels of $139.5 million. Costs necessary to complete these developments
will be $208.3 million, are generally already committed as part of existing
construction contracts, and will be expended through 2005. These developments
are approximately 65% complete and 81% pre-leased.

We have a 20% equity interest in and serve as property manager for
Columbia Regency Retail Partners, LLC ("Columbia"), a joint venture with the
Oregon State Treasury that was formed for the purpose of investing in retail
shopping centers. At September 30, 2003, Columbia owned 13 shopping centers and
had total assets of $311.1 million. Columbia has acquired one shopping center
for $20 million during 2003.

We have a 25% equity interest in and serve as property manager for
Macquarie CountryWide-Regency, LLC ("MCWR"), a joint venture with an affiliate
of Macquarie CountryWide Trust of Australia, a Sydney, Australia based
property trust focused on investing in grocery-anchored shopping centers.
During 2003, MCWR acquired eight shopping centers from the Company for $158.7
million, for which we received net proceeds of $59.2 million and a note
receivable of $69.3 million with a rate of LIBOR plus 1.5% maturing on
December 31, 2003. MCWR is currently in the process of placing third-party
fixed-rate mortgages on the properties, the proceeds of which will be used to
repay the note receivable. We recognized gains on these development sales of
$16.3 million recorded as service operations revenue. The recognition of gain
is recorded on only that portion of the sale to MCWR not attributable to our
25% joint venture interest. The gain is not recorded as discontinued
operations because of our continuing


23


involvement in these shopping centers. Also during 2003, MCWR sold a shopping
center to a third party for $9.4 million. At September 30, 2003, MCWR owned 23
shopping centers and had total assets of $333.8 million.

Columbia and MCWR intend to continue to acquire retail shopping
centers, some of which they may acquire directly from us. For those properties
acquired from third parties, Regency is required to provide its pro rata share
of the purchase price.

Liquidity and Capital Resources
- -------------------------------

We expect that the cash generated from revenues will provide the
necessary funds on a short-term basis to pay our operating expenses, interest
expense, scheduled principal payments on outstanding indebtedness, recurring
capital expenditures necessary to maintain our shopping centers properly, and
distributions to stock and unit holders. Net cash provided by operating
activities was $157.8 million and $131.3 million for the nine months ended
September 30, 2003 and 2002, respectively. During the first nine months of 2003
and 2002, respectively, we incurred capital expenditures of $11.4 million and
$12 million to improve our shopping center portfolio, paid scheduled principal
payments of $4.4 million and $4.2 million to our lenders, and paid dividends and
distributions of $119.6 million and $118.6 million to our share and unit
holders.

Although base rent is supported by long-term lease contracts, tenants
who file bankruptcy have the ability to cancel their leases and close the
related stores. In the event that a tenant with a significant number of leases
in our shopping centers files bankruptcy and cancels its leases, we could
experience a significant reduction in our revenues. We are not currently aware
of any current or pending bankruptcy of any of our tenants that would cause a
significant reduction in our revenues, and no tenant represents more than 10% of
our annual base-rental revenues.

We expect to meet long-term capital requirements for maturing preferred
units and debt, the acquisition of real estate, and the renovation or
development of shopping centers from: (i) cash generated from operating
activities after the payments described above, (ii) proceeds from the sale of
real estate, (iii) joint venturing of real estate, (iv) refinancing of debt, and
(v) equity raised in the private or public markets. Additionally, the Company
has the right to call and repay at par outstanding preferred units five years
after their issuance date, at the Company's discretion.

We are exposed to capital market risk, such as changes in interest
rates. In order to manage the volatility relating to interest rate risk, we may
enter into interest rate hedging arrangements from time to time. We do not
utilize derivative financial instruments for trading or speculative purposes. We
account for derivative instruments under Statement of Financial Accounting
Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities"
as amended ("Statement 133").

We have $200 million of 7.4% unsecured debt maturing April 1, 2004. In
July and September, 2003, we entered into two forward-starting interest rate
swaps of $96.5 million and $47.7 million, respectively. We designated the
aggregate $144.2 million swaps as a hedge to effectively fix the rate on
financing expected in April, 2004. The fair value of the swaps was a liability
of $1.7 million as of September 30, 2003, and is recorded in accounts payable
and other liabilities in the accompanying balance sheet. The swaps qualify for
hedge accounting under Statement 133; therefore, changes in fair value are
recorded in other comprehensive income (loss). No hedge ineffectiveness has been
incurred and recognized to date on these swaps. Amounts reported in accumulated
other comprehensive income (loss) related to these swaps will be reclassified to
interest expense as interest payments are made on the related debt.

On August 18, 2003, we issued 3,600,000 shares of common stock at
$35.96 per share in a public offering. The proceeds of $129.5 million were used
to pay offering costs, redeem $80 million or 100% of the Series A Preferred
Units and the balance to reduce the Line. At the time of the redemption, $1.2
million of previously deferred costs related to the original preferred units'
issuance were recognized in the consolidated statement of operations as a
component of minority interest preferred unit distributions.


24


On June 24, 2003, we purchased 4,606,880 shares of common stock for
$150 million from Security Capital pursuant to a Purchase and Sale Agreement
dated June 11, 2003. The purchase was funded from the Line and the shares are
held as Treasury shares.

On April 3, 2003, we received proceeds from a $75 million offering of
3,000,000 depositary shares representing Series 3 Cumulative Redeemable
Preferred Stock. The depositary shares are not convertible into common stock of
the Company and are redeemable at par upon Regency's election on or after April
3, 2008, pay a 7.45% annual dividend and have a liquidation value of $25 per
depositary share.

During the first quarter, we redeemed $35 million of Series C 9%
Preferred Units and $40 million of Series E 8.75% Preferred Units in a
negotiated transaction. The redemptions were portions of each series and we paid
a 1% premium on the face value of the redeemed units totaling $750,000 which is
recorded as minority interest preferred units. At the time of redemption, the
premium and $1.9 million of previously deferred costs related to the original
preferred units' issuance were recognized in the consolidated statement of
operations as a component of minority interest preferred unit distributions. The
redemption was funded from proceeds from the Line.

Our commitment to maintaining a high-quality portfolio dictates that we
continually assess the value of all of our properties and sell to third parties
those operating properties that no longer meet our long-term investment
standards. We may also sell a portion of an operating or development property to
one of our joint ventures, which may provide Regency with a capital source for
new development and acquisitions. By selling a property to a joint venture,
Regency owns less than 100% of the property, generally 20% to 50%, and shares
the risks and rewards of the property with its partner.

Proceeds from the sale or joint venturing of properties are included in
net investing activities on the Consolidated Statements of Cash Flows. During
2003 net proceeds from the sale or joint venturing of real estate was $138.8
million, compared to $265.1 million during the first nine months of 2002. Net
cash used in investing activities was $74.1 million for the nine months ended
September 30, 2003. Net cash provided by investing activities was $45.6 million
for the nine months ended September 30, 2002. Net cash used in financing
activities was $94.3 million and $157.9 million for the nine months ended
September 30, 2003 and 2002, respectively.

Outstanding debt at September 30, 2003 and December 31, 2002 consists of the
following (in thousands):



2003 2002
---- ----

Notes Payable:
Fixed-rate mortgage loans $ 233,378 229,551
Variable-rate mortgage loans 49,336 24,998
Fixed-rate unsecured loans 999,104 998,975
-------------- ---------------
Total notes payable 1,281,818 1,253,524
Unsecured line of credit 196,000 80,000
-------------- ---------------
Total $ 1,477,818 1,333,524
============== ===============


Mortgage loans are secured by certain real estate properties, and may
be prepaid, but could be subject to a yield-maintenance premium. Mortgage loans
are generally due in monthly installments of interest and principal, and mature
over various terms through 2023. Variable interest rates on mortgage loans are
currently based on LIBOR plus a spread in a range of 130 to 150 basis points.
Fixed interest rates on mortgage loans range from 5.65% to 9.5%.

Interest rates paid on the Line, which are based on LIBOR plus .85%, at
September 30, 2003 and December 31, 2002 were 1.975% and 2.288%, respectively.
The spread that we pay on the Line is dependent upon maintaining specific
investment-grade ratings. We are also required to comply, and are in compliance,
with certain financial and other covenants customary with this type of unsecured
financing.


25


The Line is used primarily to finance the acquisition and development
of real estate, but is also available for general working-capital purposes.

As of September 30, 2003, scheduled principal repayments on notes
payable and the Line were as follows (in thousands):



Scheduled
Principal Term-Loan Total
Scheduled Payments by Year Payments Maturities Payments
-------------------------- -------------- --------------- ---------------


2003 $ 1,293 20,671 21,964
2004 (includes the Line) 5,344 418,604 423,948
2005 4,156 172,732 176,888
2006 3,476 24,094 27,570
2007 2,891 25,696 28,587
Beyond five years 24,725 768,291 793,016
Unamortized debt premiums 0 5,845 5,845
-------------- --------------- ---------------
Total $ 41,885 1,435,933 1,477,818
============== =============== ===============


Unconsolidated partnerships and joint ventures in which we have an
investment had notes and mortgage loans payable of $298.1 million at September
30, 2003 and the Company's proportionate share of these loans was $58.1 million.

RCLP has issued Preferred Units in various amounts since 1998, the net
proceeds of which we used to reduce the balance of the Line. RCLP sold the
issues primarily to institutional investors in private placements. The Preferred
Units, which may be called by RCLP after certain dates ranging from 2004 to
2005, have no stated maturity or mandatory redemption, and they pay a
cumulative, quarterly dividend at fixed rates ranging from 8.75% to 9.125%. At
any time after 10 years from the date of issuance, the Preferred Units may be
exchanged by the holders for Cumulative Redeemable Preferred Stock ("Preferred
Stock") at an exchange rate of one share for one unit. The Preferred Units and
the related Preferred Stock are not convertible into Regency common stock. At
September 30, 2003 and December 31, 2002 the face value of total Preferred Units
issued was $229 million and $384 million, respectively with an average fixed
distribution rate of 8.88% and 8.72%, respectively.

We intend to continue growing our portfolio through acquisitions and
developments, either directly or through our joint venture relationships.
Because acquisition and development activities are discretionary in nature, they
are not expected to burden the capital resources we have currently available for
liquidity requirements. Regency expects that cash provided by operating
activities, unused amounts available under the Line, and cash reserves are
adequate to meet liquidity requirements.

Critical Accounting Policies and Estimates
- ------------------------------------------

Knowledge about our accounting policies is necessary for a complete
understanding of our financial results, and discussions and analysis of these
results. The preparation of our financial statements requires that we make
certain estimates that impact the balance of assets and liabilities at a
financial statement date and the reported amount of income and expenses during a
financial reporting period. These accounting estimates are based upon our
judgments and are considered to be critical because of their significance to the
financial statements and the possibility that future events may differ from
those judgments, or that the use of different assumptions could result in
materially different estimates. We review these estimates on a periodic basis to
ensure reasonableness. However, the amounts we may ultimately realize could
differ from such estimates.

Capitalization of Costs - We have an investment services group with an
established infrastructure that supports the due diligence, land acquisition,
construction, leasing and accounting of our development properties. All direct
and indirect costs related to these activities are capitalized. Included in
these costs are interest and real estate taxes incurred during construction as
well as estimates for the portion of internal costs that are incremental, and
deemed directly or indirectly related to our development activity. If future
accounting standards limit the amount of internal costs that may be capitalized,
or if our


26


development activity were to decline significantly without a proportionate
decrease in internal costs, we could incur a significant increase in our
operating expenses.

Valuation of Real Estate Investments - Our long-lived assets, primarily
real estate held for investment, are carried at cost unless circumstances
indicate that the carrying value of the assets may not be recoverable. We review
long-lived assets for impairment whenever events or changes in circumstances
indicate such an evaluation is warranted. The review involves a number of
assumptions and estimates used in determining whether impairment exists.
Depending on the asset, we use varying methods such as i) estimating future cash
flows, ii) determining resale values by market, or iii) applying a
capitalization rate to net operating income using prevailing rates in a given
market. These methods of determining fair value can fluctuate up or down
significantly as a result of a number of factors including changes in the
general economy of those markets in which we operate, tenant credit quality, and
demand for new retail stores. If we determine that impairment exists due to the
inability to recover an asset's carrying value, a provision for loss is recorded
to the extent that the carrying value exceeds estimated fair value.

Discontinued Operations - The application of current accounting
principles that govern the classification of any of our properties as held for
sale on the balance sheet, or the presentation of results of operations and
gains on the sale of these properties as discontinued, requires management to
make certain significant judgments. In evaluating whether a property meets the
criteria set forth in FASB Statement No. 144 "Accounting for the Impairment and
Disposal of Long-Lived Assets" ("Statement 144"), the Company makes a
determination as to the point in time that it can be reasonably certain that a
sale will be consummated. Given the nature of all real estate sales contracts,
not only those entered into by the Company, it is not unusual for such contracts
to allow potential buyers a period of time to evaluate the property prior to
formal acceptance of the contract. In addition, certain other matters critical
to the final sale, such as financing arrangements, often remain pending even
upon contract acceptance. As a result, properties under contract may not close
within the expected time period, if at all. Due to these uncertainties, it is
not likely that the Company can meet the criteria of Statement 144 prior to the
sale formally closing. Therefore, any properties categorized as held for sale
represent only those properties that management has determined are probable to
close within the requirements set forth in Statement 144. The Company also makes
judgments regarding the extent of involvement it will have with a property
subsequent to its sale, in order to determine if the results of operations and
gain/loss on sale should be reflected as discontinued. Consistent with Statement
144, any property sold to an entity in which the Company has significant
continuing involvement (most often joint ventures) are not considered to be
discontinued. In addition, any property which the Company sells to an unrelated
third party, but retains a property or asset management function, are also not
considered discontinued. Thus, only properties sold, or to be sold, to unrelated
third parties for which the Company, in its judgment, has no continuing
involvement are classified as discontinued.

Income Tax Status - The prevailing assumption underlying the operation
of our business is that we will continue to operate so as to qualify as a REIT,
defined under the Internal Revenue Code. Certain income and asset tests are
required to be met on a periodic basis to ensure we continue to qualify as a
REIT. As a REIT, we are allowed to reduce taxable income by all or a portion of
our distributions to stockholders. As we evaluate each transaction entered into,
we determine the impact that these transactions will have on our REIT status.
Determining our taxable income, calculating distributions, and evaluating
transactions requires us to make certain judgments and estimates as to the
positions we take in our interpretation of the Internal Revenue Code. Because
many types of transactions are susceptible to varying interpretations under
federal and state income tax laws and regulations, our positions are subject to
change at a later date upon final determination by the taxing authorities.

New Accounting Pronouncements
- -----------------------------

In January 2003, the FASB issued Interpretation No. 46 "Consolidation
of Variable Interest Entities" ("Interpretation 46"), which is intended to
clarify the application of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements", to certain entities in which equity investors do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties, or variable


27


interest entities, as defined in the interpretation. Interpretation 46 requires
that certain variable interest entities be consolidated into the majority
variable interest holder's financial statements and is applicable immediately
to all variable interest entities created after January 31, 2003, and as of the
first interim period ending after December 15, 2003 to those variable interest
entities created before February 1, 2003 and not already consolidated under
Interpretation 46 in previously issued financial statements. The Company did
not create any variable interest entities after January 31, 2003. The Company
is continuing its analysis of the applicability of this interpretation to its
structures created before February 1, 2003 and does not believe its adoption
will have a material effect on the financial statements.

In May 2003, the FASB issued Statement of Accounting Standards No. 150,
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" ("Statement 150"). Statement 150 affects the accounting
for certain financial instruments, including requiring companies having
consolidated entities with specified termination dates to treat minority owners
interests in such entities as liabilities in an amount based on the fair value
of the entities. Although Statement 150 was originally effective July 1, 2003,
the FASB has indefinitely deferred certain provisions related to classification
and measurement requirements for mandatorily redeemable financial instruments
that become subject to Statement 150 solely as a result of consolidation
including minority interests of entities with specified termination dates. As a
result, Statement 150 has no impact on the Company's consolidated statements of
operations for the three month and nine month periods ended September 30, 2003.

At September 30, 2003, the Company held a majority interest in six
consolidated entities with specified termination dates ranging from 2007 to
2049. The minority owners' interests in these entities are to be settled upon
termination by distribution of either cash or specific assets of the underlying
entities. The estimated fair value of minority interests in entities with
specified termination dates was approximately $24.8 million at September 30,
2003. The Company has no other financial instruments that currently are
affected by Statement 150.

Results from Operations
- -----------------------

Comparison of the nine months ended September 30, 2003 to September 30, 2002

At September 30, 2003, we were operating or developing 262 shopping
centers. We identify our shopping centers as either development properties or
stabilized properties. Development properties are defined as properties that are
in the construction and initial lease-up process and are not yet fully leased
(fully leased generally means greater than 90% leased) or occupied. Stabilized
properties are those properties that are generally greater than 90% leased and,
if they were developed, are more than three years beyond their original
development start date. At September 30, 2003, we had 228 stabilized shopping
centers that were 95.3% leased.

Revenues increased $30.4 million, or 11.1%, to $304.6 million in 2003.
This increase was due primarily to our realization of a full year of revenues
from new 2002 developments and from growth in rental rates of the operating
properties. In 2003, rental rates grew by 10% from renewal leases and new leases
replacing previously occupied spaces in the stabilized properties. Minimum rent
increased $10.7 million, or 5.4%, and recoveries from tenants increased $3.8
million, or 6.5%.

Service operations revenue includes management fees, commission income,
and gains or losses from the sale of land and development properties without
significant operations. Service operations revenue does not include gains or
losses from the sale of non-development operating properties. The Company
accounts for profit recognition on sales of real estate in accordance with FASB
Statement No. 66, "Accounting for Sales of Real Estate." Profits from sales of
real estate will not be recognized by the Company unless a sale has been
consummated; the buyer's initial and continuing investment is adequate to
demonstrate a commitment to pay for the property; the Company has transferred to
the buyer the usual risks and rewards of ownership; and the Company does not
have substantial continuing involvement with the property.


28


Service operations revenue increased $14.2 million to $26.6 million in
2003, or 113.9%. The increase was primarily due to a $10.8 million increase in
development profits during 2003 primarily from the sale of development
properties to MCWR joint venture, a $1.5 million increase in gains from the sale
of land and outparcels and a $1.8 million increase in management fees primarily
related to the increased assets of Columbia and MCWR joint ventures.

Operating expenses increased $13 million, or 9.9%, to $144.2 million in
2003. Combined operating, maintenance, and real estate taxes increased $5.2
million, or 8.1%, during 2003 to $70 million. The increase was primarily due to
new developments that incurred expenses for only a portion of the previous year,
and general increases in operating expenses on the stabilized properties.
General and administrative expenses were $16.4 million during 2003 compared with
$15.6 million in 2002, or 5.5% higher, as a result of general salary and benefit
increases. Depreciation and amortization increased $6 million during 2003
related to the construction completion of development properties and placing
them in service.

We review our real estate portfolio for impairment whenever events or
changes in circumstances indicate that we may not be able to recover the
carrying amount of an asset. Regency determines whether impairment has occurred
by comparing the property's carrying value to an estimate of fair value based
upon methods described in our Critical Accounting Policies. In the event the
properties are impaired, we write down assets to fair value for "held-and-used"
assets and fair value less costs to sell for "held-for-sale" assets. During the
nine months ended September 30, 2003 and 2002, we recorded a provision for loss
of approximately $2 million and $2.5 million, respectively.

Net interest expense increased to $62.9 million in 2003 from $62.4
million in 2002, or 0.8%. Weighted average interest rates on outstanding debt
declined to 6.6% at September 30, 2003 from 7.1% at September 30, 2002 related
to reductions in the LIBOR rate. Average fixed rates remained unchanged at 7.5%.
Average outstanding debt at September 30, 2003 was $1.406 billion vs. $1.424
billion in the prior year; however, average fixed rate debt increased $40
million, and average variable rate debt decreased $58 million.

Income from discontinued operations was $7.3 million in 2003 primarily
due to the sale of eight shopping centers to unrelated parties for $57.6 million
with a combined gain on sale of $6.5 million. In compliance with the adoption of
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
("Statement 144") in January 2002, if we sell an asset in the current year, we
are required to reclassify its operating income into discontinued operations for
2003 and 2002, which will result in a reclassification of amounts previously
reported as discontinued operations in 2002. The reclassified 2002 operating
income from discontinued operations was $20.8 million compared to $12.6 million
originally reported in 2002 due to the reclassification of $8.2 million of
operating income for properties sold subsequent to September 30, 2002. Operating
income and gains on sales from discontinued operations are shown net of minority
interest of exchangeable partnership units totaling $178,982 and $521,765 for
the nine months ended September 30, 2003 and 2002, respectively.

Net income for common stockholders was $73.3 million in 2003 compared
with $73.4 million in 2002, or a 0.2% decrease due to reasons discussed above, a
reduction in gains on sales of operating properties of $1.4 million and a $2.4
million early extinguishment of debt recorded in 2002 as other income. Diluted
earnings per share were $1.23 in 2003 compared with $1.26 in 2002, or 2.4% lower
related to the reduction in net income and an increase in weighted average
common shares of 1.4 million shares.

Comparison of the three months ended September 30, 2003 to September 30, 2002

Revenues increased $7.6 million, or 7.6%, to $106.6 million in 2003.
Minimum rent increased $1.2 million, or 1.8%, and recoveries from tenants
increased $820,181, or 4.1%. This increase was due to revenues from completed
developments and acquisitions that began operating after September 30, 2002
along with rental rate growth on the existing portfolio previously described.


29


Service operations revenue increased $5.1 million to $13.4 million in
2003, or 60.9%. The increase was primarily due to a $5.1 million dollar increase
in development sales during 2003, and a $172,753 increase in management fees
primarily related to the Columbia and MCWR joint ventures, offset by a $169,335
decrease resulting from selling fewer outparcels during 2003 than in 2002.

Operating expenses increased $2.4 million, or 5.2%, to $49.0 million in
2003. Combined operating, maintenance, and real estate taxes increased $886,301,
or 3.9%, during 2003 to $23.4 million. This increase is due to new developments
and acquisitions which were not operating at September 30, 2002. General and
administrative expenses were $6.3 million during 2003 compared with $6.1 million
in 2002, or 3.6% higher, as a result of general salary and benefit increases.
Depreciation and amortization increased $1.3 million during 2003 related to the
construction completion of development properties and placing them in service.

Income from discontinued operations was $2.9 million related to the
sale of three shopping centers during the third quarter for $18.7 million. The
reclassified operating income from discontinued operations for the three months
ended September 30, 2002 is $5.6 million compared to $2.9 million originally
reported in 2002 due to the reclassification of $2.7 million of operating income
for properties sold subsequent to September 30, 2002 in compliance with the
adoption of Statement 144. Operating (loss) income and gain on sales from
discontinued operations are shown net of minority interest of exchangeable
partnership units totaling $71,299 and $141,120 for the three months ended
September 30, 2003 and 2002, respectively.

Net income for common stockholders was $29.8 million in 2003 compared
with $26.7 million in 2002, or an 11.5% increase for the reasons previously
described. Diluted earnings per share were $.51 in 2003 compared with $.46 in
2002, or 10.9% higher related to the increase in net income.

Environmental Matters
- ---------------------

Regency, like others in the commercial real estate industry, is
subject to numerous environmental laws and regulations. The operation of dry
cleaning plants at our shopping centers is the principal environmental concern.
We believe that the tenants who operate these plants do so in accordance with
current laws and regulations and have established procedures to monitor their
operations. Additionally, we use all legal means to cause tenants to remove dry
cleaning plants from our shopping centers. Where available, we have applied and
been accepted into state-sponsored environmental programs. We have a blanket
environmental insurance policy that covers Regency against third-party
liabilities and remediation costs on shopping centers that currently have no
known environmental contamination. We have also placed environmental insurance
on specific properties with known contamination in order to mitigate Regency's
environmental risk. We believe that the ultimate disposition of currently known
environmental matters will not have a material effect on Regency's financial
position, liquidity, or operations.

No assurance can be given that existing environmental studies with
respect to our shopping centers reveal all potential environmental liabilities;
that any previous owner, occupant or tenant did not create any material
environmental condition not known to us; that the current environmental
condition of the shopping centers will not be affected by tenants and occupants,
by the condition of nearby properties, or by unrelated third parties; or that
changes in applicable environmental laws and regulations or their interpretation
will not result in imposition of additional environmental liability.





30


Inflation
- ---------

Inflation has remained relatively low and has had a minimal impact on
the operating performance of our shopping centers; however, substantially all of
our long-term leases contain provisions designed to mitigate the adverse impact
of inflation. Such provisions include clauses enabling us to receive percentage
rentals based on tenants' gross sales, which generally increase as prices rise;
and/or escalation clauses, which generally increase rental rates during the
terms of the leases. Such escalation clauses are often related to increases in
the consumer price index or similar inflation indices. In addition, many of our
leases are for terms of less than 10 years, which permits us to seek increased
rents upon re-rental at market rates. Most of our leases require tenants to pay
their share of operating expenses, including common area maintenance, real
estate taxes, and insurance and utilities, thereby reducing our exposure to
increases in costs and operating expenses resulting from inflation.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk
- -----------

Regency is exposed to interest rate changes primarily as a result of
the line of credit and long-term debt used to maintain liquidity, fund capital
expenditures and expand Regency's real estate investment portfolio. Regency's
interest rate risk management objective is to limit the impact of interest rate
changes on earnings and cash flows and to lower its overall borrowing costs. To
achieve its objectives, Regency borrows primarily at fixed rates and may enter
into derivative financial instruments such as interest rate swaps, caps and
treasury locks in order to mitigate its interest rate risk on a related
financial instrument. Regency has no plans to enter into derivative or interest
rate transactions for speculative purposes.

Regency's interest rate risk is monitored using a variety of
techniques. The table below presents the principal cash flows (in thousands),
weighted average interest rates of remaining debt, and the fair value of total
debt (in thousands), by year of expected maturity to evaluate the expected cash
flows and sensitivity to interest rate changes.



Fair
2003 2004 2005 2006 2007 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----

Fixed rate debt $ 12,517 213,059 151,888 27,570 28,587 793,016 1,226,637 1,311,575
Average interest rate for all debt 7.58% 7.61% 7.60% 7.60% 7.59% 7.61% - -

Variable rate LIBOR debt $ 9,447 210,889 25,000 - - - 245,336 245,336
Average interest rate for all debt 2.04% 2.53% - - - - - -



As the table incorporates only those exposures that exist as of
September 30, 2003, it does not consider those exposures or positions, which
could arise after that date. Moreover, because firm commitments are not
presented in the table above, the information presented therein has limited
predictive value. As a result, Regency's ultimate realized gain or loss with
respect to interest rate fluctuations will depend on the exposures that arise
during the period, its hedging strategies at that time, and interest rates.

Item 4. Controls and Procedures

Under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer, the Company has evaluated the effectiveness
of the design and operation of its disclosure controls and procedures as of the
end of the period covered by this quarterly report, and, based on their
evaluation, the Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer have concluded that these disclosure controls and procedures
are effective. There has been no significant change in our internal controls
over financial reporting identified in connection with the foregoing evaluation
that occurred during the last quarter and that has materially affected, or is
reasonably likely to material affect, our internal controls over financial
reporting.


31


Part II

Item 6. Exhibits and Reports on Form 8-K


(a) Exhibits


31.1 Certification of Regency Centers Corporation's Chief
Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under
the Securities Act of 1934.

31.2 Certification of Regency Centers Corporation's Chief
Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under
the Securities Act of 1934.

31.3 Certification of Regency Centers Corporation's Chief
Operating Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under
the Securities Act of 1934.

32.1 Certification of Regency Centers Corporation's Chief
Executive Officer Pursuant to 18 U.S.C. Section 1350 (as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)

32.2 Certification of Regency Centers Corporation's Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350 (as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)

32.3 Certification of Regency Centers Corporation's Chief
Operating Officer Pursuant to 18 U.S.C. Section 1350 (as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002)

(b) Reports on Form 8-K

1. Current report on Form 8-K dated August 12, 2003 for
the purpose of furnishing Regency Centers
Corporation's earnings release and supplemental
information for the three months ended June 30, 2003.
**

2. Current report on Form 8-K dated August 12, 2003 for
the purpose of filing exhibits under registration
statement no. 333-37911.

- -------------------------
** Furnished for information only, not deemed to be
"filed"






32






SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Date: November 12, 2003 REGENCY CENTERS CORPORATION



By: /s/ J. Christian Leavitt
------------------------------------
Senior Vice President,
and Chief Accounting Officer











33