JACKSONVILLE, FL-Regency Centers Corp. and an affiliate of Citigroup Global Markets Inc. have closed a forward sale stock deal that is expected to yield $174 million for the locally based REIT.
Regency is selling 3.75 million shares of its common stock to the Citigroup affiliate which is offering the shares in a forward sale agreement. Citigroup also has an option to buy to an additional 562,000 shares to cover over-allotments. If that happens, the number of shares offered under the forward sale contract will also be increased.
In a prepared statement, Regency chairman and CEO Martin E. Stein Jr. says his company is doing the deal at this time to partially repay the balance owed on a $275-million bridge loan. The bridge facility will be used to finance Regency's cash investment in its recent acquisition of the CalPERS/First Washington portfolio.
Settlement of the forward sale agreement is expected on or before Aug. 1. If Regency decides it does not need any or all of the proceeds, it has the option to cash settle or net stock settle the forward sale, Stein says.
"The use of the forward sale agreement ensures that the equity created by the CalPERS/First Washington portfolio acquisition is funded, and that proceeds are applied only when closing occurs," Stein says. He explains the deal with Citigroup "demonstrates Regency's continuing commitment to a strong balance sheet, while mitigating the share dilution that would result if we issued new shares prior to the actual closing of the CalPERS/First Washington portfolio."
Stein adds, "The forward sale agreement determines the price and number of shares to be delivered at settlement up front. This protects Regency's shareholders by eliminating equity market uncertainty." Citigroup Global Markets Inc. acted as sole book running manager for the offering.
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