Equity One Inc. and IRT Property Company announced that they have entered into a definitive merger agreement pursuant to which Equity One will acquire IRT.
'IRT and Equity One operate in the same region and focus on the same asset class,' said Chaim Katzman, Chairman and CEO of Equity One. 'This transaction will more than double our shopping-center portfolio and will create one of the largest retail REITs focused on the southeast, solidifying our leadership in the supermarket-anchored shopping-center sector. IRT has 30 years of experience building a stable portfolio in the southeast, while Equity One has a proven track record developing and managing a growth-oriented portfolio in Florida and Texas through the acquisition and development of properties, as well as the sourcing and integration of major portfolios. We will more than double our equity market float, will expand our equity research coverage and hope to maintain IRTÂ's investment-grade rating, thereby providing both equity and debt investors with a compelling opportunity.'
Thomas H. McAuley, Chairman and CEO of IRT, added: 'This is an opportunity for us to combine our strengths and long-term business relationships in southeastern markets with Equity OneÂ's proven ability in the acquisition, development and management of supermarket-anchored shopping centers in Florida and Texas. Moreover, the merger will give IRT shareholders the opportunity to take cash or continue as an investor with a 3.4% increase in their dividend. This transaction creates a much larger company, better tenant diversification and a platform to increase shareholder value.'
Following the merger, Equity One will own 181 properties in 12 states. as follows:
'This transaction will enhance our dominant position in Florida,' noted Doron Valero, Equity OneÂ's President and Chief Operating Officer, 'bringing our total holdings in the state to 80 properties encompassing 8.4 million square feet. At the same time, we are increasing our geographic diversification by entering new markets throughout the southeast. We expect to pursue additional investment opportunities in our existing and newly-added markets, with an emphasis on supermarket-anchored centers. We welcome IRTÂ's high quality management and employees to our team, and look forward to a smooth integration process.'
Commenting on the economics of the proposed transaction, Howard Sipzner, Equity OneÂ's Treasurer and Chief Financial Officer, stated, 'Assuming a 50% stock election, we expect the transaction to be approximately 4% accretive to our previously issued guidance for 2003 funds from operations of $1.43 to $1.47 per diluted share, assuming limited synergies. We further expect to maintain overall leverage below 50%, and at least a 2.6 times EBITDA to interest coverage ratio and a 2.2 times fixed charge coverage ratio. Our valuation of IRTÂ's real estate holdings indicates a 2003 capitalization rate of 9.75%.'
Completion of the transaction, which is expected to take place in the first quarter of 2003, is subject to the approval of Equity OneÂ's and IRTÂ's shareholders and other customary conditions. The Board of Directors of each of IRT and Equity One has unanimously approved the transaction.
For more information please visit www.irtproperty.com or www.equityone.net.
(source: IRT and Equity One)