Equity One Inc. (EQY), a real estate investment trust (REIT) engaged in the ownership, management, and development of neighborhood and community shopping centers in the U.S., recently announced plans to acquire Capital & Counties USA Inc., a REIT which owns and operates a portfolio of retail, office and mixed-use properties in Northern and Southern California, for $600 million. The deal signifies a probable redemption in investor confidence for all types of commercial properties.
Under the terms of the deal, a new joint venture would be formed to manage the 15 acquired properties spanning across 2.6 million square feet of commercial real estate market space. Equity One will have 77% ownership stake in the joint venture. About 70% of the acquired properties consist of retail assets primarily in the San Francisco Bay Area, with the remaining being medical office, office, undeveloped land and multifamily properties located in the Bay Area and Los Angeles region.
The strategic deal was part of the long-term plan of Equity One to enter the California market, diversify its geographic and tenant base, and expand its redevelopment pipeline. Upon completion of the transaction in the third quarter of 2010, Northern California would emerge as the second largest market after South Florida for Equity One, representing approximately 16% of its asset value.
A similar deal was also inked recently by Kimco Realty Corporation (KIM), which formed a joint venture with BIG Shopping Centers, an Israeli publicly traded company, to acquire high-quality neighborhood and community shopping centers throughout the U.S. Kimco had the controlling stake in the joint venture with 50.1% ownership interests, while BIG had a 49.9% ownership stake. Consequently, Kimco performed as the operating partner of the joint-venture and earned asset management, property management and other customary fees.
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