Laura Clark - Investor Relations Hap Stein - Chairman and Chief Executive Officer Lisa Palmer - President and Chief Financial Officer Mac Chandler - Executive Vice President, Investments Jim Thompson - Executive Vice President, Operations.

Katy Mcconnell - Citigroup Nick Yulico - UBS George Hoglund - Jefferies Ki Bin Kim - SunTrust Vincent Chao - Deutsche Bank Samir Khanal - Evercore ISI Craig Schmidt - Bank of America Wes Golladay - RBC Capital Markets.

Greetings and welcome to the Regency Centers Corporation Second Quarter 2017 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Laura Clark. Thank you. You may begin..

Good morning and welcome to Regency’s second quarter 2017 earnings conference call. Speaking today on the call are Hap Stein, our Chairman and CEO; Lisa Palmer, our President and CFO; Mac Chandler, EVP of Investments; and Jim Thompson, EVP of Operations. I would like to start by stating that we may discuss forward-looking statements on this call.

Such statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to our filings with the SEC, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

On today’s call, we will also reference certain non-GAAP financial measures. We have provided a reconciliation of these measures to their comparable GAAP measures in our earnings release and financial supplements, which can be found on our Investor Relations website at regencycenters.com. I will now turn the call over to Hap..

Thanks, Laura. Good morning, everyone and thank you for joining us. Yesterday afternoon, we reported another quarter of solid operating results, our high quality portfolio shopping centers located in affluent and dense infill trade areas continues to perform well. Leasing levels are nearly 96% with small shop leasing surpassing 92%.

These healthy fundamentals produce year-to-date same property NOI growth of 3.5% and fortify future sustainable growth. When combined with our development and redevelopment expertise, fortress balance sheet, and exceptional team, all of which were only made stronger with the integration of Equity One.

We are well-positioned to achieve our strategic objectives and create value for our shareholders. At the same time, we remain very mindful that the retail landscape continues to change, including the ongoing evolution of the grocery industry.

Amazon’s announced purchase of Whole Foods reinforces our conviction that a well-located bricks and mortar presence that is convenient to the customer is a critical component to the success of any omni-channel platform.

The best grocers, which anchor the vast majority of our centers, are more focused than ever on advancing their own technology, pricing and shopping experiences to service their customers and grow revenues and profits.

They benefit from extensive and irreplaceable platforms in our target markets with average sales of over $650 per square foot and healthy occupancy cost below 2%. We will certainly not be immune to the changes occurring in the retail business and are keenly focused on the disruptors facing us today and those that we might face in the future.

We have a proven track record of successfully navigating and even profiting from industry challenges and we will continue to adapt and make decisions that will enable our retail centers to not only survive, but prosper over the long-term.

We are prepared to own, operate and invest in a world where the bifurcation between the winning and losing grocers and retailers will accelerate as will the growing separation between the better shopping centers and everything else.

That said, Regency’s unequaled national portfolio, where the best-in-class retailers will want to locate the physical stores, disciplined capital allocation strategy and experienced elite team position us extremely well for the future. I will now turn the call over to Jim..

Thank you, Hap and good morning. The quality of our portfolio and our team is truly evident in our second quarter results. Portfolio occupancy remains at historically high levels that we experienced a slight dip in overall occupancy driven by one anticipated anchor move-out. Our same property portfolio remains at nearly 96% leased.

What I am especially pleased about is our shop occupancy, which jumped back above 92% and represents an impressive 30 basis point increase sequentially.

We continued to experience steady demand for space from a wide variety of tenants across many categories, which include value retailers, fast casual restaurants, fitness operators, pet stores and service users among others.

While retailers are being more deliberate and selective with their expansion plans, they continue to seek out the better locations, many of which are at our well merchandised centers. Leasing spreads on new deals in the quarter were 14% highlighted by strong anchor spreads of 26% and shop rent spreads over 12%.

Regarding bankruptcies, our exposure to store closures remains minimal. Announced 2017 store closures represent only 20 stores in our portfolio of over 9,000 tenants. We have successfully re-leased or in lease negotiations for 95% of the anchor spaces we have received back over the past 18 months.

Our second quarter results very limited exposure to bankruptcies and store rationalizations as well as our success in re-leasing locations that do close collectively demonstrate the differentiation of the Regency platform and leaves us confident in our ability to produce sector leading NOI growth and operating fundamentals.

I will now turn the call over to Mac..

Thanks, Jim. Our development and redevelopment activity remains robust as we sourced compelling opportunities within our target markets and portfolio. Our in-process projects now exceed $600 million of developments and redevelopments with the expected returns of nearly 7.5% creating significant value that will drive future growth.

During the second quarter, we started Mellody Farm, a $100 million ground-up development located within a highly affluent suburb of Chicago. The 250,000 square foot center is anchored by strong lineup featuring Whole Foods, REI, Nordstrom Rack and HomeGoods. Pre-leasing the best-in-class restaurants and service providers is off to an impressive start.

Our development team is making significant progress on several exciting redevelopment projects within the portfolio. At Costa Verde in La Jolla, California, we are progressing with our approvals to densify the shopping center to take advantage of the vibrant growth in University Town Center.

At Market Common Clarendon, located in Metro Washington DC, we are working well with the community towards repositioning the existing office building to attract the new retail and creative office tenants that will enhance the overall center.

We also continue to make progress within our now integrated Equity One portfolio, including Westwood Shopping Center located in Bethesda, the Collection at Harvard Square in Cambridge and Potrero Center in San Francisco, just to name a few. I look forward to sharing further details on these as well as other exciting opportunities on the future calls.

Turning to disposition activity, demand for the properties we are selling remained steady across all markets. As a reminder, we would use disposition proceeds to fund our new investment activities. As our development and redevelopment spending ramps up through the remainder of 2017, our disposition should as well.

We are maintaining our previous guidance of $100 million to $200 million of dispositions. In regards to acquisitions, we remain under contract with the Northeast opportunity we have mentioned in the past. This is an acquisition of an exceptional ground-up development that we will close upon construction completion and anchor rent commitment.

This opportunity may close late this year, but appears more likely to close early next year. Lastly, we are currently evaluating several compelling acquisition opportunities located entirely to target markets. In any of these opportunities, we could further enhance our portfolio quality and NOI growth profile.

I would now like to turn the call over to Lisa..

Thank you, Matt and good morning all. In addition to solid operating results from our high-quality portfolio and an impressive roster of in-process developments, we made enhancements to our already sector leading balance sheet by extending our maturity duration and lowering our overall effective interest rate.

During the quarter, we completed a successful reopening of our 10-year and 30-year unsecured notes that we originally issued in January. We opportunistically raised $300 million across the two tranches to retire high coupon mortgage debt, preferred stock and pay-down our line of credit balance.

While this offering was completed in the weeks following the news of the Amazon Whole Foods merger, which as most of you know led to significant volatility in the equity markets. It is important to note that we experienced minimal impact to demand or pricing.

We were extremely gratified by the support shown from the fixed income investment community for Regency’s platform and our high quality and well located portfolio.

A quick note on the merger/integration, the team has made exceptional progress highlighted by our operating results including a meaningful increase in shop space percent leased during the quarter. We are well on our way to achieving the $27 million in merger related synergies that we have originally projected.

Turning to guidance, as a result of retiring secured mortgages, we incurred one-time costs of approximately $12 million in the second quarter. We will also expense the non-cash preferred issuance charges of approximately $2.5 million in the third quarter. This is related to the redemption of those deferred securities.

These one-time items will reduce net income and NAREIT FFO per share by approximately $0.09 for the full year as reflected in our revised guidance. And additionally we have revised our net interest expense guidance to reflect these transactions.

As Mac discussed, our disposition timing is tied to our investment spending needs and the majority of our dispositions are now expected to occur in the second half of the year.

Due to this later than originally projected timing and therefore greater than expected contribution to NOI from these target dispositions, we have increased the bottom end of our core FFO guidance range.

And also related to investment spending we have extended the maturity of our outstanding forward equity issuance to the end of the year as this better aligns the timing of the forward equity with our future funding needs.

And finally given the solid results in the quarter and year-to-date, we are reaffirming our 2017 same-property NOI guidance as we expect this positive momentum to continue for the remainder of the year. That concludes our prepared remarks and we now welcome your questions..

We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Christy McElroy of Citigroup. Please proceed with your question..

Good morning. This is Katy Mcconnell on for Christy.

Could you provide some more color on the new development projects out of this quarter as far as pre-leasing demand and yield expectations relative to the rest of the pipeline and then just given halfway through this anchor, can you talk about any changes you expect in terms of the store build out following the merger?.

Sure Katy, this is Mac. I would be happy to take that. We are very pleased with the progress of that project. We have been working this project for a number of years. The return looks very solid at a 6.9% return. And that’s in part because of the team we have had on place.

We were able to obtain a $20 million and attract four very good quality solid tenants. Whole Foods is our anchor of submission, REI, HomeGoods and Nordstrom Rack are supporting it. Whole Foods is doing everything we have asked them to do. They are – they will be prepared to commence with their store once we deliver it.

We are still upgrading at this point. But the shop leasing is going well. We have had a lot of demand. We are negotiating over 25,000 square foot – square feet in leases right now. So we like the progress, it’s still very early. But all signs point to a successful project.

And I think that’s commensurate with the quality and the type of tenancy that we are looking for in other developments..

Okay, great..

And regarding the impact on Whole Foods from the purchase by Amazon, we feel that it should be very positive for Whole Foods. We expect it would remove any uncertainty about new store openings. It appears like it’s going to allow Whole Foods to reduce their cost and be more price competitive.

And obviously, Amazon’s direct and indirect industry presence will continue to grow. They are paying over $40 million a store, so we don’t expect them to do anything that would appear this wonderful brand Whole Foods has. So we don’t expect it to be convert them to 40,000 square-foot warehouse.

But I am sure they are going to use some of the store to – for pick-up, delivery etcetera from an Amazon standpoint. And lastly I think it reinforces our conviction about the importance of retailers being able to conveniently service their customers through bricks-and-mortar. It is and it remains the most efficient way to deliver the last mile..

Great.

And are you seeing that other grocers are thinking about new development projects differently today as a result of the Amazon deal?.

No, I mean it’s still early in the process. But we are working with several best in class grocers who are expanding and they are sticking to their expansion plans sometimes in market where they exist, sometimes new markets, but we haven’t seen a shift in strategy or execution at this point..

Okay, great. Thank you..

Thank you, Christy, Katy sorry..

Our next question comes from Nick Yulico of UBS. Please proceed with your question..

Yes. Thanks.

Just wanted to see at this point of the year what could push you to top or low end of your same-store NOI guidance?.

To your point that we are fairly halfway through the year and as you know at 3.5% year-to-date same-property NOI guidance puts us – I mean [indiscernible] same-property NOI growth puts us just below the midpoint of our guidance.

So for this latter half of the year to even get to the midpoint would suggest that we are expecting some acceleration which is the case as redevelopments come online and also more a rent paying occupancy from the bankruptcy the bankrupt boxes from last year that we leased.

So that plus if we have less than expected tenant fallout would put us towards the high end of the range. And the low end of the range would be if we have more than expected tenant fallout. But we have – we believe we have a fair amount of tenant fallout assumed in our guidance..

Okay, that’s helpful.

And then on the – in the disposition market, I am wondering if you had noticed any changes there that may encourage you to sell even more assets?.

No, I wouldn’t say that. I would say certainly nothing would change our plan. For the better properties, the higher quality ones, we don’t think cap rates have changed really in the last couple of quarters they have held very solid. There is still a lot of competition for the best assets.

For as you dropdown on the quality scale, cap rates have expanded on the real small markets and the weaker properties. But all-in-all, it’s pretty steady out there. There is a lot of demand. Buyers are able to get equity and source debt and pretty solid all we are at and [indiscernible] for the product we have..

And I would like to reinforce how we think about dispositions as part of our business model. Disposition are a source of capital for us. First, we have free cash flow which is projected to be north of $150 million for this year to fund our development spend. After that we will use dispositions.

And as we spoke about in our prepared remarks, we have been able to use our free cash for our development spend to this point and we will be selling properties to fund the remainder throughout the year. And to the extent we do have an acquisitions team in place. We don’t incorporate new acquisitions into our guidance.

But to the extent that we are able to find a compelling opportunity we would increase our disposition guidance to fund that especially in light of the equity market today..

Okay. Thanks every one..

Our next question comes from George Hoglund of Jefferies. Please proceed with your question..

Yes.

Can you just provide a little bit of color on the change in development yields on the countryside shops in Point Royale?.

Sure I would be happy to. Our countryside shops the difference in yield is settled backtrack. But really the increase is in costs. And so last quarter we had written it as the first phase of the project.

Now we have underwritten it to increase it by approximately $5 million to include a second phase of the project which is something we are going to go ahead with. So that’s the difference, it’s not cost first, it’s a scope increase and it’s not optional phase. Point Royale is a little bit different.

Point Royale, the difference in yield has to do with, in the prior quarter we posted a return on a non-incremental basis, so on this quarter we posted as an incremental basis.

So it’s the incremental NOI divided by the project costs, which didn’t materially change, that consistent with how we underwrite all projects and unfortunately last quarter we had used a different Equity One’s underwriting criteria for that one..

Just a little more color, I think as you heard us speak to in the prior calls and Mac specifically talked about it. We took of a really hard look at every in process Equity One redevelopment that we bought on March 1 and re-underwrote if you will with applying Regency’s underwriting.

And we just have different methods and as Mac said unfortunately in the supplemental last quarterly we applied their original underwriting rather than our own even though we have already done the work, so it’s just an oversight..

You might have also noticed that the projected cost of Serramonte came down about $5 million. Now that we have a chance to really full get arms around that..

Yes. Thanks. I appreciate the color.

And then can you just also talked about either a watch list or whether sort of categories you may be looking at more closely for the back half of the years any things kind of on your radar has changed in the past couple of months?.

Georges, this is Jim I will answer that one. No real surprises on the watch list on this year’s toys are us, the Office Depot, Stables categories.

But we continued to closely monitor other deteriorating categories, yesterday’s apparel, casual dining and obviously the general department stores, but at the end of the day we continued to strategically evaluate those spaces, we have proactive re-leasing spots in place and we collect, we are prepared should we get that space back to react appropriately..

Yes. And more often than not, a couple of things happen. Sometimes when the store closures, we have the kind of locations that are the must keep locations. Secondly, we have longer term leases.

And thirdly more often than not bad news and abating good news, so not that we are immune, not that we are not – can’t be negatively impacted, but more often than not long-term it’s a positive thing for the merchandising the portfolio..

Thank you..

Thanks George..

Your next question comes from Ki Bin Kim of SunTrust. Please proceed with your question..

Thank you. Good morning.

Could you talk a little bit more about some of the longer term projects that Equity One had Westwood Complex, Potrero Center, I know I jumped in the gun here, but any early thoughts on scope or yields on those projects and maybe you tie that into kind of changing landscape in retail and how that impacts your views on those projects?.

Sure, we would be happy to take that. Look, let’s take one at a time. Westwood is a project that we are very excited about and we are digging that very carefully in [indiscernible] with existing giant who would love to be part of a redevelopment property. So we are change – we have changed sort of the mix of the project to reflect market conditions.

And right now we are evaluating that considering selling some air rights to builders who want to do town homes, apartments or seniors or some combination of the three. So it’s slightly different mix. We are probably suggesting less retail than Equity One had proposed. But we really we think at the end of the day, this is dynamic location.

With a giant that has very well that will be part whatever future project that we ultimately decide on. And we also think because of the underlying entitlements, we should be in a position to start that project late next year. So coming together, but we don’t have at this time anymore to announcing that.

I will say let’s jump to Potrero, that one is one of the longer range project. In any event it’s going to take 3 years to 5 years to entitle it even with the great underlying entitlements that. We changed architects in that project and worked in the midst of setting all the different potentials. There is tremendous amount of density available to us.

And we are not quite ready to make any announcements on that one. That’s gong to take longer for us to ultimately program and ultimately approve. So I would plan on something like that for 3 years to 5 years from starting. Our recollection at Cambridge, that’s more of a near-term project, it takes three steps to get the entitlements.

We are through the first step and that we are working on the second step which is the planning commission. That should be in a position to start late next year as well. And that’s a little more straightforward where we know it’s going to be a combination of retail and office.

And will redevelop some of the buildings and then raise and rebuild others to create a cohesive project in a terrific location. So larger that overall changes that on the landscape apartment. We are still very disciplined about the amount of shops that we propose, about the anchors that we suggest. And we are only working with the best in class tenant.

We have recognized that when you bring in other uses such as multifamily, it takes some time to find the right partner and we are patient about doing that. And we want to make sure our risk adjusted returns are appropriate.

But at this point we don’t have really good guidance on those returns because we are still evaluating a lot of different possibilities..

And I would just say Ki Bin that in our view and obviously I think you guys see through the headlines but at the same time the retail landscape has changed, it’s the changes accelerating, but we still feel that highly productive grocers, restaurants, service users, fitness, pet and working where there is room, big box users with best in class retailers like T.J.

Maxx, HomeGoods, Nordstrom, Ross and Ulta it remains a compelling combination that makes sense today and it’s going to make sense for the foreseeable future, but the retail landscape and our tenant mix is going to continue to change and evolve..

Okay. Thanks.

And what do you think it’s the end game in maybe 5 years of how the grocer landscape looks like and I almost don’t care what the grocers are saying to you, but more so what do you think, do you think this is less grocers in the market, at this time curious on how that looks like in your view?.

Well, number one, I think it does start with Kroger, Publix, H-E-B, Wegmans are really good operators. They have extensive irreplaceable platforms that are conveniently located to the customers.

And they are focusing on not only technology and click and collect, for instance, Kroger in 2015 had zero-click and collect locations they call a quick lift and they have I think its 700 today. So these changes are rolling these out. But they are also focused on enhancing pricing to be competitive.

And they realize that they got to provide an exciting store experience. But what’s going to happen is the weaker change are not going to be able to compete, not going to be able to invest the capital and the same time something stronger operators are to be unwilling to invest capital in the weaker locations.

So we feel, they are going to face challenges, but these changes when you think about it and you look at the challenges that Walmart, I mean Walmart 15 years ago had de minimis market share and they have what is 25% today and these chains are still surviving. They have adapted. They have got better.

So they will be 40,000 grocery store locations that are out there – our plan is that take 15%, 20%, 25% are going to be closed in the next 3 years to 5 years with the locations that we have are ones where $32 million in sales, $650 per square foot over where bad news is going to be good news..

And occupancy costs less than….

And what actually was cost less than 2%..

Okay. Thank you..

Our next question comes from Vincent Chao of Deutsche Bank. Please proceed with your question..

Hey, good morning everyone.

Just sticking with the grocer topic here for a second, I was just curious I mean Amazon buying Whole Foods, clearly is going to cause some changes in the overall space, it sounds like you are not really seeing any changes in execution or strategy as of yet, but just from your opinion amended do you think that and you mentioned the click and collect for the one retailer, but do you think on net that the grocers have invested enough in the sort of omnichannel world and are they going to play catch up for a while and do you think they have the margins to what sort of to pay for all that?.

Kroger has and I mean the comments that we made is that in general there are still supermarket, grocery chains that are expanding. Whether that’s in the case of Publix, in the case of Wegmans, they are continuing the pace.

In the case of Kroger they have announced that they are going to take the capital that has been invested in store expansion, investing that in technology. We think that’s a good thing for us, it may make the development opportunities that get less, we feel like we are going to get more than our fair share.

But I think they have recognize and are making significant investments. Sometimes it makes impact their store expansion, but they are going to invest in technology, so they cannot only compete with Amazon/Whole Foods, but they can also compete with Walmart, they can also compete with all these and they also can compete with Lido..

I think it’s important to note that my opinion I think shared by those around the table. The purchase of Whole Foods by Amazon didn’t change the end game. Amazon was intent on figuring out the grocery business. And the operators that operated in the grocery industry they knew that as well.

So they had already – there were already talking about it, already strategically thinking about how they can compete, how they cannot maintain their share, but also grow their share in this new ultra competitive environment. The only thing that changed is potentially the pace of that changed. And I think that they are aware of that.

And that when the announcement was made there was no doubt in my mind that every grocery operator called an immediate management meeting and sat down at the table and said what do we need to do differently, what we need to do faster.

But the things that they were already focused on competing in the in the world of e-commerce and so these are really sophisticated operators with irreplaceable platforms..

And Kroger’s click lift and Albertson has a similar program, Publix has a similar program. But these like I indicated Kroger started rolling it out in 2015 this was something that they adapted from their acquisition of Harris Teeter. And that was obviously several years before Amazon’s announcement that they were going to buy Whole Foods.

Once again, we are not – the markets, the landscape is going to change, the landscape is going to be more challenging.

We are not going to be immune to some of the fall out, but we think that we are very well positioned to not only survive, but to for shopping centers, but to perform real well and there is going to be some opportunities there come out of this..

Sure, I wasn’t trying to suggest that I guests who have not been preparing for this, but to the extent that the does accelerate things that that was more the question?.

And it is I am sure [indiscernible] with what Lisa said based upon our conversations those meetings did take place..

Right, you would expect that to be the case.

Maybe different topic, not that every time when your peers buy the portfolio that you have to have looked at it maybe you did, maybe didn’t, but I was just curious in general, the Prime Store acquisitions that Federal had announced, just that strategy of may be going more specifically after a particular demographic or ethnic group, is that something that you guys are thinking about more seriously or and is there certain markets that that would make sense for you guys?.

Let me say this, we looked at that in past, it is a – and let me say this Federal is a very sophisticated and downward a very sophisticated capital allocators and we have got a tremendous amount of respect for them. And I am sure they will make good on this investment.

But we have looked at this in the past and we feel that the best rather having a separate strategy, the best way for us to continue to have shopping centers that are going to grow in a while and they are going to grow and perform as they stick with our strategy and we think part of that we have shopping centers that are in highly large percentage of the Hispanic American communities with large and such center for Asian percentages of Asian populations and we found there is a lot of similarities there and I think we are going to continue to execute on that basis.

Mac do you want to?.

Well, I would say just living in Los Angeles, we are very familiar with the properties there and the opportunity set. And I understand what they are doing, they are trying to get a little better growth and they may accomplish that.

But I don’t – I like the strategy we have on a one-off basis where we like neighborhoods with a lot of purchasing power with best in class tenants. So we can continue to execute what we are doing and we think we are – we have the best approach. Of course we feel very comfortable with..

Best for us..

It’s best for us..

Right, okay. Thank you..

Thank you..

Our next question comes from Samir Khanal of Evercore ISI. Please proceed with your question..

Good morning guys.

On the disposition that you have the $100 million to $200 million which remains unchanged and it looks like it’s towards the back half of the year, I mean are there any sort of my guess would be these are more sort of Equity One assets or are they one-off assets, are they sort of markets you are looking to exit?.

Well, I would sit there through one-off assets, it’s on our portfolio. We have several properties under contract and somewhat where we are negotiating with buyers. The way in which we select the properties to sell hasn’t changed over time.

There are properties where they may have limited growth, they may be in a market they may have some tenants at risk or just ones where we just don’t have the best believes that they will outperform the rest of the center. So we have seen good reaction from the buying community as you put properties under contract.

And the plan hasn’t changed, it’s to sell 1% to 2% of our assets. So it doesn’t look like we have sold much today and that’s the fact, but we have several properties where we are coming together in terms with buyers and we expect to execute and hit our guidance y the end of the year..

I think Hap and I were going to say the same thing, but it’s a mix of legacy Regency and Equity One properties..

Okay.

And then I guess my next question I have is on the Equity One portfolio sort of putting that portfolio side-by-side with yours, just from a internal growth standpoint, is there – where is the opportunity there, do you have opportunity maybe sort of increase just of the annual contractual rent bumps, is there an ability to sort of push occupancy maybe on the smaller shops side or even or maybe increase rent spreads at this point, so I guess where is the biggest opportunity just when you think about it sort of ex redevelopment internal growth standpoint here?.

If you recall when we initially talked about the strategic benefits of the combined portfolio when – and then when we closed on March 1, so we initially talked about it. One of the strategic benefits was an enhanced same-property NOI growth rate. It’s hard to exclude redevelopments because that is the piece of it.

And then on March 1 when we closed we significantly increased our same-property NOI growth guidance for the year. And that enhanced same property NOI growth for ‘17 and also for the next couple of years is coming from a variety of things.

One, Equity One had just done a very good job of acquiring properties that were – that had lease rent rolls essentially with leases below market and so there was just inherent upside as leases are rolling. And we are beginning to achieve some of that.

They had done a fantastic job in the very recent past of actually leasing up their shop space, but there is still room and as evidenced by our results this quarter, so some of it’s coming from there. And then they were great operators, but I am a little biased and I think we have got the best team in the business.

And I think that we can apply our expertise in the field to enhancing those contractual rent steps. And again increasing occupancy, so you obviously exclude redevelopment, but that’s also a piece of it because I also believe that that best team in the business applies to our ability to create value at these shopping centers.

And again the Equity One team had build a really nice portfolio of properties that essentially increased our menu of opportunities to create value. So all of that will continue to enhance our same-property NOI growth for – and for at least the next couple of years and then we will get to a much more stable, stabilized run rate..

Okay, thank you..

Thanks, Samir..

Our next question comes from Craig Schmidt of Bank of America. Please proceed with your question.

Great, thank you. I wanted to focus on the accelerating leasing volume you guys went from $1 million in the first quarter out of $1.7 million in the second quarter, incredible pickup.

I just wonder was it anchor small shops part of new projects or was it mainly re-leasing in existing properties?.

Craig, I mean, unfortunately didn’t restate all of our statistics for kind of the comparable larger portfolio. So, a lot of that is just from the fact that we are just larger. The only thing that was adjusted was the same property NOI table..

Okay, great and thank you.

And then on the Whole Foods that you own, I mean, there has been a lot of talk and speculation that they are going to use these stores as distribution in pickup and delivery, that may require some changes to the property? I assume that’s an opportunity for you to be able to charge higher rent for any kind of changes they want to make on property sale lease from you?.

I think we have been very accommodating to the grocery stores in the past as far as pickup and deliveries as long as there is not a significant amount of capital involved there and my sense is just reiterate this, because this will evolve over time, but the vast majority of the Whole Foods space is going to continue to be as Whole Foods is today.

I would also be – I would be very surprised if they didn’t – that wasn’t the case, but I’d also be surprised if they didn’t take a small portion of that space and devote it to distribution, pickup and delivery..

Okay, great. Thanks..

Thanks, Craig..

Thanks, Craig..

[Operator Instructions] Our next question comes from Wes Golladay of RBC Capital Markets. Please proceed with your question..

Hello, everyone. Looking at the development across commercial real estate, we are seeing delays on construction due to subcontractor issues and also in some cases finding the right inspector to show up on time. It looks you actually pulled forward the anchor opening of 1 year projects and yields are stable if not increasing.

So, wondering if you are not seeing this and how are you mitigating the other risk of delays?.

Mac and the team are really good. I think we are going to look [indiscernible] because unfortunately that is a fact of life these days. Cities have fewer inspectors than they used to and subcontractors have a wide array of job to bid on. So, I think we have budgeted well to account for it, but we haven’t been surprised by the events.

So, our schedules and our budgets presume this is going to happen. And I don’t see that will be changing in the future. So, it has been and still is and maybe even more so.

It’s scheduling, timing and cost controls are obviously major challenges all the time and historically have been from a construction standpoint and that’s still very, very much the case today. So, we obviously have a lot of focus and the team really has done a very nice job of addressing that issue..

Okay, thank you..

Thanks, Wes..

Our next question is a follow-up from Ki Bin Kim of SunTrust. Please proceed with your question..

Thanks. It’s a quick one.

Is selling the Barneys lease a 2018 or ‘19 event and maybe you can comment on the sales productivity in that store?.

We consider all assets as best as far as what goes on our distribution list and where those are prioritized and don’t specifically talk about any assets. And I would answer it that way, no matter what – no matter what assets you asked me about there.

I mean, we focus – and I will also say given we don’t want to be driven by the headlines, but given by what’s happening in the business today, you can be assured and you can imagine we have once again thoroughly vetted the full portfolio and we prioritized those assets that have the lowest growth prospects and it makes sense to sell..

Okay, thank you..

There are no further questions at this time. I would like to turn the call back over to management for closing comments..

We appreciate your time and interest in the company and hope that you have and enjoy wonderful weekend. Thank you so much=..

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day..