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NEW YORK CITY-"Equity One is starting on a new road," said Chaim Katzman, chairman and chief executive officer of Equity One during an investor conference call discussing the firm's joint venture transaction with Investcorp, valued at $402 million. The pair entered into an 80/20 partnership for 30 Equity One-owned properties, totaling approximately 2.9 million sf in Texas. Equity One will maintain the minority interest and a subsidiary will handle management and leasing activities under a separate 15-year deal.

"We expect this will the first in this line of deals," Katzman said. "This was the right way to do it--sell a stable portfolio of properties and redeploy in other markets." Those other markets include the Northeast and the Southeast. The firm has already made $100 million of investments to date this year, and anticipates at least $100 million more of acquisitions.

Equity anticipates net proceeds will be $327 million. The deal is on track to close in the middle of the second quarter.. The firm expects to realize between $400,000 and $600,000 annually thanks to the management contracts and additional fees. Equity One still has two additional properties in Texas. The transaction includes the joint venture's receipt of approximately $323 million of committed property financing. Upon the closing of the transaction, Equity One expects to record an estimated gain on the sale of approximately $92 million, including approximately $5 million of gains on the sale of various undepreciated land parcels.

If all goes as expected, Equity One expects to pay a special dividend of up to $1.50 per share of common stock to its stockholders, the firm will use the balance of the proceeds to fund a combination of currently pending and potential investment activities and to pay down existing debt.

According to an Investcorp spokesperson, the company will not be issuing any information on the deal and is not speaking separately about the transaction. The firm did not take part in Equity One's investor call.

Instant Insights /

UPDATE: Equity Switches Focus to Northeast, Southeast

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