Regency Affiliates Initiates Stock Buyback While Suspending Dividends

Regency Affiliates Initiates a Stock Buyback Program

On June 25, 2025, Regency Affiliates, Inc. (OTC Pink: RAFI) made a significant announcement regarding its financial strategy. The company plans to initiate a stock buyback program worth up to $1 million, while simultaneously suspending its quarterly dividend payments. This decision was articulated by Laurence Levy, the Chairman, CEO, and CFO of Regency, who emphasized the intent to enhance shareholder value and increase earnings per share through this strategic shift.

The stock buyback is set to commence on June 26, 2025, utilizing either open-market purchases or privately negotiated transactions. Levy underscored that the current climate made the buyback a more effective allocation of cash compared to maintaining the existing dividend program, which Regency has offered for several years.

Business Operations Update

Self-Storage Facilities in Harrisburg

Regency owns a portfolio of five self-storage facilities located in Harrisburg, Pennsylvania, which were acquired for a total of $35 million. Most of this amount, approximately $25.3 million, was financed through a ten-year non-recourse debt, initially featuring a four-year interest-only period that concluded in May 2020. Currently, Regency is under a thirty-year amortization plan with a fixed interest rate of 5% per annum, set to mature on May 6, 2026. Mr. Levy expressed satisfaction regarding the stable occupancy rates and consistent cash flows stemming from these facilities.

In line with its funding efforts, a subsidiary of Regency took out a $5 million loan from a third party on October 8, 2024, aimed at acquiring the interests of a minority partner from the self-storage facilities and also to facilitate general corporate purposes, including share repurchases. This loan accrues interest at a rate of 10% per annum and is repayable in full by May 7, 2026. The loan is secured against Regency's membership interests in its self-storage venture and includes certain covenants and provisions.

Security West Complex Update

Apart from self-storage, Regency holds a 50% partnership interest in the Security West Complex, insured by a substantial 34.3 acres situated in Woodlawn, Maryland. Since the property has been vacant since November 2023, management is exploring alternative uses, including the development of a data center. Agreements within the partnership have been amended to allow for a new management fee structure tied to the project’s ultimate success. The site has received constructive feedback from a local utility company regarding the availability of power to facilitate such developments.

In light of ongoing endeavors, Regency, along with its partners, is facing legal challenges related to tax income allocation. The company has actively opted into a tax court case to contest proposed IRS adjustments, indicating a robust stance in legal matters.

Future Outlook

Regency has expressed its commitment to continuously assess investment opportunities while pursuing cost efficiencies. The company's management aims to grow by investing in long-term businesses that align with their investment goals. Despite the challenges, Regency's diversified investment strategy and thoughtful restructuring of its cash deployment strategies, including the recent stock buyback initiative, demonstrate its focus on enhancing shareholder returns.

Conclusion

In summary, Regency Affiliates, Inc.'s decision to initiate a stock buyback while suspending its dividend payments signifies a strategic shift aimed at maximizing shareholder value. As it navigates financial challenges and explores new growth opportunities, Regency remains dedicated to optimizing its asset portfolio and reinforcing its operational efficiency.