Regency Affiliates Announces Increase In Quarterly Dividend

NEW YORK, Sept. 5, 2017

Management Comments

"We are pleased to declare a quarterly dividend of 6.25 cents per common share which represents an increase of approximately 2.5% in our quarterly dividend," commented Laurence Levy, Chairman and Chief Executive of Regency. "We continue to be comfortable with this dividend level particularly as we benefit from the cash flows generated by our indirect 50% investment in Mobile Energy and our ownership of the portfolio of self-storage assets in and around Harrisburg, Pennsylvania. These assets continue to perform well and generate strong, predictable cash flow.

"Mobile Energy owns and operates an energy facility located in Mobile, Alabama. The facility supplies co-generated steam and electricity for use in Kimberly-Clark's mill operations under a 15 year agreement signed in 2004. This investment currently generates approximately $2.8 million of cash distributions per annum for Regency after debt amortization at the project level. In April 2017, Kimberly-Clark announced that it will invest $75 million to construct a new on-site cogeneration energy plant at its mill. The construction of the new plant is expected to take place over a two-year period. We are engaged in identifying other potential customers for the facility's output or alternative uses for the facility and we are actively working with our Mobile Energy partners at Detroit Edison to maximize cash flow for the remainder of our contract. As it presently stands, at the expected conclusion of the Kimberly-Clark contract in April 2019, Mobile Energy is expected to have fully discharged its debt out of operating cash flow and is projected to hold additional operating cash balances supplemented by operating and financial cash reserves which are expected to be released at the expiration of the contract.

"Our self-storage assets consist of five stand-alone self-storage facilities in the Harrisburg, Pennsylvania vicinity, which we acquired in April 2016 for a total purchase price of $35.0 million. $25.3 million of the purchase price was financed via non-recourse ten-year debt financing with a four year interest only period and thirty year amortization schedule thereafter. The facilities were purchased via a joint venture with SSCP Management LLC ("SSCP"). Pursuant to the terms of the joint venture, Regency earns a 7.5% per annum preferred distribution on its $11.2 million capital contribution. Surplus cash flow after the preferred distribution is allocated 80% to Regency and 20% to SSCP. Regency received its fifth distribution from the joint venture in August 2017 in the amount of $210,576 reflecting the 7.5% per annum preferred distribution plus additional cash flow driven by the strong operating performance of the investment for the quarter ended June 30, 2017. We are pleased with the strong improvement in occupancy and related cash flows at our self-storage facilities.

"Regency also holds a 50% limited partnership interest in Security Land and Development Company Limited Partnership, which owns real estate occupied by the United States Social Security Administration under a lease expiring in October 2018. The mortgage balance will be amortized to approximately $19.0 million on September 30, 2017, down from $98.5 million at the lease commencement on June 24, 2003.

"The delay in releasing our financial statements is primarily attributable to delays in GAAP financial reporting at our self-storage operating subsidiary. Primarily as a result of this GAAP financial statement reporting deficiency, Regency elected to change the manager of its self-storage assets to CubeSmart, effective August 1, 2017. CubeSmart, a NYSE listed company with a market capitalization exceeding $6 billion, manages over 800 self-storage facilities, including over 350 facilities owned by third parties. The transition is complete and, to date, we have been impressed with CubeSmart's analytical and reporting capabilities and management of our self-storage assets. With the on-boarding of CubeSmart, Regency anticipates resuming financial reporting before the end of September 2017 with all prior unreported periods completed by the end of the year.