Stein calls the acquisition "unique and a terrific opportunity to acquire an outstanding portfolio of infill centers with excellent prospects for growth." The acquisition "also allows us to profitably expand into new markets such as the suburbs of New York City and Minneapolis, and to enhance our presence in the key target markets of Chicago, Philadelphia and Washington, DC while substantially growing our joint venture program."

Stein says the acquired portfolio consists of 48% of the centers located in the metropolitan Washington, DC/Baltimore area and Northern and Southern California; 83% of the properties is grocery anchored, with "nearly 80% of those tenants ranked in the top three in terms of market share in their respective markets." The average household income in the portfolio is about $82,000. Population density within three miles of the centers averages more than 110,000 residents.

The transaction has been approved by each partner's board of directors. The venture plans to fund the acquisition through a combination of assumed debt, new debt financing and equity.

Stein says the venture's target leverage will be 60% and the debt will initially be comprised of the assumption of about $900 million of secured property debt and about $800 million of bridge financing provided by affiliates of Wachovia Capital Markets LLC and JP Morgan Chase Bank.

The majority of the existing mortgages are expected to be refinanced within the first six months. Proceeds from the refinancings "will generate enough funds to fully repay the bridge," Stein says.

Regency plans to fund its 35% equity, which is about $400 million, by drawing on its line of credit and with about $275 million of bridge financing provided by Wells Fargo Bank. On a leverage-neutral basis, Regency expects accretion to earnings of 4% to 6% in 2005 and long-term accretion of 2% to 3%.

This is not the first joint-venture deal between Regency and Macquarie. Their last deal was the $399-million acquisition of 25 centers, with the Oregon Public Employees Retirement Fund, from Branch Properties in August. The two companies formed their initial JV in 2001 and currently own 27 centers.