The deal follows an announcement in January that the North Miami Beach-based company obtained rights from Centrefund Realty (US) Corp. to manage 11 shopping centers in Orlando, Tampa and Southeast and Southwest Florida.
Subject to shareholder approval, the real estate investment trust would trade 10.5 million in new common stock at an estimated value of $11.49 per share and assume about $157 million of Centrefund debt.
Once the deal closes in the third quarter, Equity One would own a partial interest in nine real estate partnerships that own or operate 28 properties primarily in Florida and Texas. The deal would double the total assets in the REIT to about $523 million or 61 properties with a total of about 6.5 million sf.
"The addition of (Centrefund's) assets to our portfolio reinforces our position as the third largest supermarket-anchored shopping center REIT in Florida and presents a unique opportunity to re-enter the Texas market in scale," Doron Valero, Equity One's president and chief operating officer, says in a prepared statement.
"We are particularly excited about the quality of (Centrefund's) Palm Beach County assets, which are situated in densely populated, high-growth areas, and with the upside potential from retenanting and new leasing in the Texas portfolio."
Once the deal closes, shareholders in Centrefund would own about 45.2% of Equity One common stock on a primary basis and 42.2% on a fully diluted based. Gazit-Globe (1982) Ltd., a publicly traded holding company based in Israel, is the principal shareholder in both companies. Chaim Katzman, chairman and CEO of Equity One, chairs both companies.
Structured as a tax-free transaction, the deal would allow Centrefund shareholders to demand that Equity One register the new common stock within nine months of the closing. The acquisition isn't expected to have an impact on Equity One's operating results for the remainder of the year, but would accrete about three cents a share on funds from operation in 2002.
"We will achieve much greater diversity in our tenant base, reducing the annual minimum rent we receive from our top 10 tenants from 34% to 23%," says Howard Sipzner, Equity One's chief financial officer, says in a statement.
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