Retail REIT, Regency Centers Corporation REG has got the nod from shareholders for its proposed merger with Equity One, Inc. EQY, with the former remaining as the surviving public company of the merger. This merger is likely to close on Mar 1, 2017.
The move would create a national portfolio of 429 properties, mainly grocery-anchored, covering over 57 million square feet, including co-investment partnerships, according to an earlier declaration from the company.
Per the merger agreement, each share of Equity One common stock would be converted into 0.45 of a newly issued share of Regency common stock. (Read more: Regency Centers, Equity One's Ratings Affirmed by Moody's)
Following the deal completion, on a pro forma basis, Regency’s shareholders are estimated to own around 62% of the combined company’s equity; while the prior Equity One shareholders are projected to enjoy about 38% ownership.
Notably, Regency has considerable experience in the retail real estate industry, with 225 shopping centers’ development since 2000, denoting an investment at completion of over $3.5 billion. The company has a solid portfolio of 307 retail properties.
On the other hand, Equity One’s portfolio aggregated 122 properties, including 98 retail properties and five non-retail properties, and its retail occupancy excluding developments and redevelopments was 95.4% and included national, regional and local tenants as of Sep 30, 2016. Their merger would, therefore, aid in creating a prominent grocery-anchored shopping center REIT with enhanced concentration in higher density, in-fill metro areas.
Currently, Regency has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Also, shares of Regency outperformed the Zacks categorized REIT and Equity Trust – Retail industry over the past three months. During that time frame, the shares of the company gained 6.7%, whereas the industry rose by 2.8%.
Investors interested in the REIT industry may consider stocks like EPR Properties EPR and Urban Edge Properties UE. Both the stocks carry a Zacks Rank #2 (Buy).
EPR Properties, currently, has long-term growth rate of 8.3%. Moreover, the Zacks Consensus Estimate for Urban Edge Properties’ funds from operations (FFO) per share for 2017 of $1.37 reflects growth of 7.9% from the prior year.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.
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