Retail REITs Focused On Grocery-Anchored Centers Close $1.4B Merger
Regency Centers Corp. on Friday completed its acquisition of Urstadt Biddle Properties in a $1.4B all-stock transaction.
The previously announced deal will merge the two REITs’ portfolios of shopping centers, which are largely grocery-anchored. The combined company has a pro forma market capitalization of more than $11B and a total enterprise value of $16B, according to Jacksonville, Florida-based Regency Centers.
Greenwich, Connecticut-based Urstadt Biddle had 75 properties as of March, primarily in the New York metropolitan area. That represents a small yet significant portion of the 56M SF and 480 properties Regency says it now owns.
The acquisition of Urstadt Biddle will help Regency grow its footprint of “high-quality, grocery-anchored shopping centers in premier suburban trade areas,” Regency said in a news release.
Urstadt Biddle’s properties are attractive to retailers given their affluent suburban locations, Dane Bowler, chief investment officer with 2nd Market Capital Advisory Corp., said in a March analysis on Seeking Alpha.
Regency's shopping venues serve markets with a median household income of more than $125K across its portfolio, according to its website.
“The portfolio that Urstadt Biddle has carefully assembled over the more than 50 years offers a highly aligned demographic and merchandising profile to Regency,” Regency Centers CEO Lisa Palmer said in a statement.
Urstadt Biddle was founded in 1969 as an affiliate of Merrill Lynch then called Hubbard Real Estate Investments, CoStar reported. Charles J. Urstadt joined the company as a director in 1975 and became its CEO in 1989, eventually narrowing the REIT's focus to grocery-anchored shopping centers in affluent New York neighborhoods, according to the article.
Regency operates open-air and neighborhood grocery-anchored centers across the U.S. coasts and its midsection. The REIT cited an increase in tenant demand for its spaces during a May earnings call, even as some retailers like Bed Bath & Beyond fell into bankruptcy and shuttered stores.
REIT mergers have been sparse this year compared to the $83B in REIT merger transactions last year, CoStar reported using data from REIT trade group Nareit.
Deals this year include affiliates of Centerbridge Partners and Singapore's GIC Real Estate acquiring industrial REIT Indus Realty Trust in an $868M deal, as well as operational expense-focused REITs Global Net Lease and Necessity Retail REIT merging in a $4B all-stock transaction, per CoStar.
Even though high interest rates and economic uncertainty have slowed the flow of mergers and acquisitions, investors view grocery-anchored shopping centers as a safe bet, CoStar reported, citing more frequent visits and higher foot traffic for necessities like food than other types of shopping centers.
