DCF Studio

    REG · NMS · Real Estate

    Regency Centers Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 25.23

    Market price

    USD 72.95

    Implied upside

    -65.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages just 0.00% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 26.49% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 25.23-65.4%
    Exit multiple
    USD 91.53+25.5%
    Market price
    USD 72.95

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m386m773mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 1.7bnUSD 1.8bnUSD 2.0bnUSD 2.1bnUSD 2.3bn+8.3%
    EBITUSD 617.5mUSD 668.6mUSD 723.9mUSD 783.8mUSD 848.6m+8.3%
    NOPATUSD 617.5mUSD 668.6mUSD 723.9mUSD 783.8mUSD 848.6m+8.3%
    Add depreciation & amortisationUSD 416.6mUSD 451.0mUSD 488.3mUSD 528.7mUSD 572.4m+8.3%
    Less capital expenditureUSD -445.6mUSD -482.5mUSD -522.4mUSD -565.6mUSD -612.4m+8.3%
    Less increase in working capitalUSD -26.2mUSD -28.3mUSD -30.7mUSD -33.2mUSD -36.0m+8.3%
    Free cashflow to firmUSD 562.3mUSD 608.8mUSD 659.2mUSD 713.7mUSD 772.7m+8.3%
    Discount factor0.96030.88560.81660.75310.6945-
    Present valueUSD 540.0mUSD 539.1mUSD 538.3mUSD 537.5mUSD 536.6m-0.2%
    Present Value Of The ForecastUSD 2.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.871Reported 0.807, pulled toward 1.0 (Blume)
    Cost of equity9.79%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 13.6bn71.9% of capital
    Total debtUSD 5.3bn28.1% of capital, book value as a proxy
    Tax rate0.0%Effective, capped at statutory
    WACC8.44%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 25.23

    73% of EV

    Forecast FCFF, final year
    USD 772.7m
    Capex at depreciation, working capital in reinvestment
    USD 848.6m
    Less reinvestment at g/ROIC (29.6% of NOPAT)
    USD -251.4m
    Capitalised
    USD 597.2m
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    USD 10.3bn
    Terminal value, discounted
    USD 7.2bn
    Enterprise value
    USD 9.8bn
    Less net debt
    USD 5.2bn
    Equity value
    USD 4.6bn

    Exit at 19.5x EBITDA

    Value per shareUSD 91.53

    88% of EV

    Terminal value, undiscounted
    USD 27.8bn
    Terminal value, discounted
    USD 19.3bn
    Enterprise value
    USD 22.0bn
    Less net debt
    USD 5.2bn
    Equity value
    USD 16.7bn

    Spread between methods: 114%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.44%42.0342.3042.5742.8543.12
    7.44%32.2832.5032.7332.9633.18
    8.44%24.8525.0425.2325.4325.62
    9.44%19.0119.1819.3419.5019.67
    10.44%14.3014.4514.5914.7314.87

    Outlined: this model. Green text: above today's price of 72.95. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year8.3%25.0%+16.7pp
    EBIT margin36.7%68.4%+31.7pp
    Discount rate8.4%4.7%-3.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.