JACKSONVILLE, FL—Regency Centers Corp. and Equity One Inc. said Monday afternoon that they would merge in a stock-for-stock deal valued at approximately $4.6 billion. The combined company, which will trade under the Regency name and REG stock ticker, is expected to have a pro forma equity market capitalization of approximately $11.7 billion and a total market cap of $15.6 billion, making it the largest REIT by equity value in the shopping center index.

Post-merger, Regency will encompass a national portfolio of 429 properties—including 112 acquired in the merger—totaling more than 57 million square feet, with locations mainly in high density infill and affluent trade areas. Its five largest areas of Southern and Northern California; Southeast Florida; New York; and the Washington, DC/Baltimore corridor together will represent more than 50% of total annualized rent, increasing density by more than 30% and demographic purchasing power by 15%.

The top 10 tenants of the combined company, including category-leading grocers and retailers such as Publix, Kroger, Whole Foods and TJX, will represent approximately 18% of total ABR. No single tenant will represent more than approximately 3%.

“Bringing together these two highly complementary businesses creates a best-in-class platform capable of delivering sustained growth and value creation over the long-term,” says Martin Stein, Jr., chairman and CEO of Regency. “Shareholders of both companies are poised to benefit from an expanded presence in top metro areas, a higher organic growth profile, expanded development and redevelopment program and greater tenant diversity.” Equity One CEO David Lukes calls the combination “a transformative event for both companies.”

Stein will continue as head of the combined company, with a number of other key Regency officers continuing in their current roles. Among them are president and CFO Lisa Palmer, EVP of development Mac Chandler, and EVP of operations James Thompson.

Chaim Katzman, current chairman of Equity One and Gazit-Globe's designee on the Regency board, will serve as non-executive vice chairman of the combined company. Tel Aviv-based Gazit-Globe owns about 34% of New York City-based Equity One's stock, and will also be the largest shareholder in the post-merger Regency,controlling about 13.2% of the REIT's shares.

Under the terms of the agreement, each share of Equity One common stock will be converted into 0.45 shares of newly issued Regency common stock. On a pro forma basis, following the closing of the transaction, Regency shareholders are expected to own approximately 62% of the combined company's equity, and former Equity One shareholders will own about 38%.

J.P. Morgan Securities LLC is acting as financial advisor to Regency, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor. For Equity One, Barclays is acting as lead financial advisor, Citigroup Global Markets Inc. is acting as co-financial advisor and Kirkland & Ellis LLP is acting as legal advisor. The merger is expected to close in the first quarter or early in Q2 of 2017.

Instant Insights /

Regency, Equity One to Merge for Largest Shopping Center REIT

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