Regency Centers to Buy Urstadt Biddle for $1.4B

Shopping center. Image by Anja via pixabay

Regency Centers Corp., a national owner, operator and developer of shopping centers, has entered into a merger agreement with Urstadt Biddle Properties Inc., a self-administered equity REIT, to acquire the company in an all-stock transaction valued at $1.4 billion. Upon closing, the combined company is anticipated to have a total enterprise value of approximately $16 billion.

Urstadt Biddle owns or has equity interests in 5.3 million square feet of space across 77 properties. The merger brings the combined company’s portfolio to a total of 481 properties comprising more than 56 million square feet of gross leasable area.

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The deal increases Regency’s square footage of grocery-anchored shopping centers in suburban trade areas, broadens its national presence, increases the overall tenant roster and allows for further utilization of the company’s operating platform.

Expected to close in the late third quarter or early fourth quarter of this year, the merger brings some $9 million in annual cost savings benefits, while maintaining liquidity and balance sheet strength for the combined company.

Wells Fargo Securities and RBC Capital Markets are Regency’s financial advisors. Wachtell, Lipton, Rosen & Katz is the legal advisor for Regency while Hogan Lovells US LLP is the legal advisor for Urstadt Biddle. Eastdil Secured and Deutsche Bank are Urstadt Biddle’s financial advisors in the deal.

Terms of the merger agreement

The purchase of Urstadt Biddle will include the assumption of its debt and preferred stock. The merger brings the combined company to an expected pro forma equity market capitalization of approximately $11 billion.

The Boards of Directors of both companies have approved the merger. Under the agreement, Urstadt Biddle’s stockholders will receive 0.347 of a newly issued REG share for each Class A Common (UBA) and Common (UBP) share they own. According to Regency’s closing share price on May 17th, this translates into an estimated total consideration of approximately $20.40 per share.

Upon closing, shareholders of Regency and Urstadt Biddle will own approximately 93 percent and 7 percent, respectively, of the combined company.

The transaction’s completion is subject to the receipt of approval of UBA and UBP shareholders, among other customary factors. There is an agreement of the stockholders holding 68 percent of UBP’s voting rights to vote in favor of the merger.

Recently, the commercial real estate industry has seen several brokerage level M&A deals as companies try to remain competitive amid economic uncertainty. Some of the companies in these transactions include KLNB, the Divaris Group and SSH Real Estate. While several experts explained to Commercial Property Executive that now is a great time to make a merger deal happen, acquiring the right financing is becoming increasingly tricky.