Blog Coverage Regency Centers Announces Acquisition of Equity One to Form One of the Biggest REIT in the Retail Segment

LONDON, UK / ACCESSWIRE / November 16, 2016 / Active Wall St. blog coverage looks at the headline from Regency Centers Corp. (NYSE: REG) and Equity One Inc. (NYSE: EQY) as the company announced the acquisition of Equity One, Inc. (NYSE: EQY) on November 14, 2016, to form the largest shopping center REIT by market cap. The all-stock deal is set to create a merged REIT with a total market capitalization of $15.6 billion. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Regency is an owner, operator and developer of grocery-anchored neighbourhood and community centers, with a portfolio of 307 retail properties located throughout the US. Equity One, on the other hand, is based in North Miami Beach, Florida and owns and operates a portfolio of 122 properties, totalling approximately 12.3 million square feet nationwide.

Commenting on the merger, Martin E. "Hap" Stein, Jr., Chairman and CEO of Regency said:

"Through this transaction we are creating the nation's preeminent shopping center REIT with excellent embedded growth potential. Importantly, we expect the transaction to be accretive to core FFO per share while preserving a sector-leading balance sheet, with greater financial flexibility to support growth initiatives."

David Lukes, Chief Executive Officer of Equity One said:

"The alignment of our respective portfolios, development/redevelopment pipelines, industry-leading operations, and access to a lower cost of capital, opens us to new avenues of growth that will benefit all shareholders."

Terms of the acquisition

At the end of the deal Equity One will merge into Regency and cease to exist. The merged REIT will continue to operate as Regency and trade on NYSE under the ticker "REG". As per terms of the merger agreement, each share of Equity One will be converted into 0.45 share of the new REIT. On finalization of the deal, Regency's shareholders will own approximately 62% of the merged REIT and Equity One's shareholders will own the balance 38%. Gazit-Globe, Israel's largest real estate development company owns 34.3 % of Equity One and has already given its approval for the merger. The Board of Directors of both companies have already approved the deal and is expected to close in H1 2017. The closing of the deal is subject to necessary shareholders' approval and fulfilment of all closing conditions.

The "new" Regency shopping center REIT

Once the deal is finalized the new REIT will operate from the current Regency headquarters at Jacksonville, Florida. Current Chairman and CEO of Regency will continue at the helm in the new company. The new Regency's Board of Directors will have three new additions of which two Directors will be chosen by Equity One and one Director will represent Gazit-Globe. Gazit-Globe will be the largest shareholder in the merged company and will hold approximately 13.2% of the shares.

The merged REIT will have a national portfolio of 429 properties covering an area of more than 57 million square feet, including co-investment partnerships. The properties are majorly located in high density in-fill and affluent trade areas.

Synergies due to the merger

The combined company with a portfolio of complimentary assets will have an enhanced presence in both the real estate and capital markets. The combined company expects to realize approximately $27 million in annual run-rate cost savings by 2018. The cost savings are primarily related to the elimination of duplicative corporate and property-level operating costs. The combined company expects to realize additional synergies from economies of scale, increased operational efficiencies. The combined company plans to have better cash flows at the property level as it plans to streamline rents and contractual rental increases, increased occupancy etc. The combined company will also inherit trained and skilled talent from Equity One.

The M&A activity in the real estate sector has been the highest in the current year. According to Dealogic, as of September 30, 2016, real estate is the third busiest industry for mergers and acquisitions with more than $247 billion of transactions globally. In August 2016, REIT Mid-America Apartment Communities had acquired REIT Post Properties in a $3.88 billion deal.

Stock Performance

Regency Centers' stock dropped by 4.22%, closing Tuesday's session at $66.91 on volume of 3.61 million shares. The company's shares gained 0.92% since the beginning of the year. Additionally, the stock has advanced 5.07% in the last twelve months. The company's shares are trading at a PE ratio of 62.30 and have a dividend yield of 2.99%. The stock currently has a market cap of $7.04 billion.

At the close of trading session on November 15, 2016, Equity One's stock price jumped 6.82% to end the day at $29.77. A total volume of 7.70 million shares were exchanged during the session, which was above the 3-month average volume of 707.36 thousand shares. The company's share price has gained 17.84% in the past twelve months and 12.15% on YTD basis. The stock currently has a market cap of $4.33 billion. The company's shares have a dividend yield of 2.96%.

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