NEW YORK Equity One Inc (EQY.N) said on Sunday it would buy Capital Shopping Centers Group Plc's CSCG.L U.S. unit in a $258.3 million deal, helping the U.S. shopping center owner expand into California.
The transaction, done via a joint venture deal with Capital Shopping, will give the British company 4.1 million shares of Equity One common stock and 10.9 million joint venture units.
Capital Shopping may redeem its units in the joint venture for Equity One common stock on a one-for-one basis or cash, at Equity One's option.
At Equity One's closing stock price of $17.22 on Friday, these common shares and joint venture units are worth $258.3 million.
Equity One said it will assume about $330 million of mortgage debt, including its proportionate share of debt held by its joint ventures, and valued the transaction at about $600 million.
The deal, which is scheduled to close late in the third quarter, is expected to add modestly to Equity One's funds from operations in the first year, before one-time transaction expenses and non-cash purchase accounting adjustments.
Equity One said it expects to incur one-time transaction expenses of about 5 cents per share in 2010.
Excluding those expenses and given the timing of closing, Equity One said it reaffirmed its prior 2010 outlook for funds from operations of $1 to $1.08 per share.
The Capital Shopping Centers unit, Capital and Counties USA Inc, has a portfolio of 15 properties in California totaling 2.6 million square feet.
Northern California will become Equity One's second largest market after South Florida once the deal is completed.
Equity One said 70 percent of the portfolio consists of retail assets. The rest includes medical office, office, undeveloped land and multifamily properties located in the Bay Area and Los Angeles.
Equity One said it intends to dispose of a majority of these non-core assets.
(Reporting by Paritosh Bansal; Editing by Leslie Adler)