Regency Centers (REG) Gets Nod For Equity One Merger Deal

Retail REIT, Regency Centers Corporation (NYSE:REG) has got the nod from shareholders for its proposed merger with Equity One, Inc. (NYSE: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%.

Key Picks

Investors interested in the REIT industry may consider stocks like EPR Properties (NYSE:EPR) and Urban Edge Properties (NYSE: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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