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IRT Property Company
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On October 29, 2002, IRT Property Company reported in a press release that it
had entered into an Agreement and Plan of Merger on October 28, 2002 with Equity
One, Inc., a Maryland real estate investment trust. A copy of this press release
follows:
Press Release
OCTOBER 29, 2002
INVESTOR CONTACT AT EQUITY ONE:
Howard Sipzner, CFO (305) 947-1664, ext. 110, hsipzner@equityone.net
INVESTOR CONTACT AT IRT:
James G. Levy, EVP & CFO (770) 955-4406, investorrelations@irtproperty.com
MEDIA CONTACTS AT THORP & COMPANY:
Abbe Solomon (305) 446-2700, ext. 111, asolomon@thorpco.com
David Schull (305) 446-2700, ext. 108, dschull@thorpco.com
EQUITY ONE AND IRT PROPERTY COMPANY ANNOUNCE PROPOSED MERGER
COMBINED COMPANY WILL BE ONE OF THE LARGEST SHOPPING CENTER REITS IN THE
SOUTHEAST WILL HAVE $1.56 BILLION TOTAL MARKET CAPITALIZATION, $766 MILLION
EQUITY MARKET CAPITALIZATION WILL OWN 181 PROPERTIES
TOTALING 18.7 MILLION SQUARE FEET
NORTH MIAMI BEACH, FL AND ATLANTA, GA, OCTOBER 29, 2002 - Equity One Inc. (NYSE:
EQY) and IRT Property Company (NYSE: IRT) announced today that they have entered
into a definitive merger agreement pursuant to which Equity One will acquire
IRT. In the merger, each IRT shareholder may elect to receive for each share of
IRT common stock either $12.15 in cash or 0.9 shares of Equity One common stock,
or a combination thereof. The terms of the merger agreement further provide that
the holders of no more than 50% of IRT's outstanding common stock may receive
cash.
Assuming a 50% cash election and yesterday's $13.59 closing price for Equity One
common stock, the transaction values IRT at $730 million, including the
assumption by Equity One of $297 million of IRT debt and transaction costs.
Equity One has secured binding commitments to finance the cash consideration.
Equity One intends to fund a portion of the cash consideration through the
private placement of up to 6.9 million shares of Equity One common stock to
existing, affiliated investors at a price of $13.30 per share subject to pro
rata upward adjustment to a maximum of $13.50 per share as the number of IRT
shares converted into Equity One common stock rises from 50% to approximately
55.8%. Equity One intends to fund the balance of the cash consideration from
existing and new credit facilities, all of which are currently in place or
commitments for which have been obtained.
"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 IRT'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 One'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:
FLORIDA TEXAS GEORGIA OTHER STATES TOTAL
--------------- -------------- --------------- -------------- ---------------
SF SF SF SF SF
Number (000s) Number (000s) Number (000s) Number (000s) Number (000s)
------ ------ ------ ------ ------ ------ ------ ----- ------ -----
Supermarket-anchored 59 6,895 18 1,522 14 1,777 31 2,800 122 12,994
Drug store and
necessity retail
anchored 15 1,468 14 1,467 6 563 17 1,916 52 5,414
Other properties 6 81 - - - - 1 188 7 269
-- ----- -- ----- -- ----- -- ----- --- ------
TOTAL 80 8,444 32 2,989 20 2,340 49 4,904 181 18,677
--------------------------------------------------------------------------------
Note: "Other States" total number of properties includes Louisiana (16),
North Carolina (14), South Carolina (4), Tennessee (4), Arizona (3),
Virginia (3), Alabama (3), Mississippi (1) and Kentucky (1).
"This transaction will enhance our dominant position in Florida," noted Doron
Valero, Equity One'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 IRT'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
One'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
IRT'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 One's and IRT's
shareholders and other customary conditions. The Board of Directors of each of
IRT and Equity One has unanimously approved the transaction. Additionally,
holders of approximately 75% of Equity One's common stock and approximately 8%
of IRT's common stock have agreed to vote their shares in favor of the
transactions contemplated by the merger (including the Equity One private
placement). The Equity One holders will be released from their voting
agreements and IRT's Board of Directors may withdraw its merger recommendation
if immediately prior to the shareholder meetings to approve the merger, Equity
One's weighted average stock price for the 30 prior trading days is less than
$12.06 or less than $11.00 for the three prior trading days. In addition, the
Equity One shareholders may withdraw their voting support if IRT's weighted
average stock price for the 30 prior trading days is less than $10.935 or less
than $9.935 for the three prior trading days. The merger agreement also
provides for IRT to designate one member to serve on Equity One's Board of
Directors through the 2005 shareholder meeting.
The transaction will be accounted for under the purchase method of accounting
and is being structured as a tax-free merger with acceptable tax opinions being
a condition to closing.
Equity One has committed to declare at least a $0.27 dividend per share in the
first quarter following the closing of the merger. This translates to a 3.4%
increase for those IRT shareholders who elect to receive Equity One common
stock.
IRT will be required to pay a $15 million break-up fee to Equity One in the
event that IRT enters into an agreement for a superior transaction or if, under
certain circumstances, its Board of Directors withdraws its recommendation for
the transaction.
Raymond James & Associates, Inc. is acting as exclusive advisor to IRT for the
merger transaction. CIBC World Markets Corp. is acting as exclusive financial
advisor to Equity One for the merger transaction. In addition, Legg Mason Wood
Walker Incorporated has provided a fairness opinion to a special committee of
Equity One's independent directors with respect to the equity private
placement.
CONFERENCE CALL INFORMATION
Equity One's and IRT's management teams will discuss the proposed merger during
IRT's third-quarter 2002 earnings call at 11 a.m. EST today. The number to call
for this conference call is (800) 946-0782. A replay of the conference call
will be available until November 1, 2002, by dialing (888) 203-1112 and
entering passcode, 126042. The conference call can be accessed on the IRT or
Equity One web sites at www.irtproperty.com or www.equityone.net, and at
www.streetevents.com,
http://www.firstcallevents.com/service/ajwz366225881gf12.html or
www.companyboardroom.com.
ABOUT IRT PROPERTY COMPANY
A self-administered equity real estate investment trust, Atlanta-based IRT
specializes in Southeastern United States shopping centers. Anchor tenants
include Publix, Kroger, Harris Teeter, Wal-Mart and other popular national and
regional chain stores. The portfolio of 92 shopping-center investments and one
industrial property totals approximately 10.0 million square feet. For
additional information, please visit the company's Web site at
www.irtproperty.com.
ABOUT EQUITY ONE
Equity One Inc. is a North Miami Beach, Fla.-based real estate investment trust
that acquires, renovates, develops and manages neighborhood shopping centers
anchored by national and regional supermarket chains and other
necessity-oriented retailers such as drug stores or discount retail stores.
Equity One's 8.7 million-square-foot portfolio consists of 88 properties
primarily located in metropolitan areas of Florida and Texas, encompassing 56
supermarket-anchored shopping centers, eight drug store-anchored shopping
centers, 18 other retail-anchored shopping centers, three commercial properties
and three retail developments, as well as non-controlling interests in three
unconsolidated joint ventures. For additional information, please visit the
company's Web site at www.equityone.net.
FORWARD LOOKING STATEMENTS
Certain matters discussed in this press release constitute forward-looking
statements within the meaning of the federal securities laws. Although Equity
One and IRT believe that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, they can give no assurance
that their expectations will be achieved. Factors that could cause actual
results to differ materially from current expectations include changes in
macro-economic conditions and the demand for office space in the markets in
which each has a substantial presence; the continuing financial success of
Equity One's and IRT's current and prospective tenants; Equity One's ability to
merge successfully the operations of IRT into the Equity One organization;
Equity One's ability to realize economies of scale; and other risks, which are
described in Equity One's Form 10-K, which is on file with the Securities and
Exchange Commission.
Investors and security holders are urged to read the joint proxy
statement/prospectus regarding the business combination transaction referenced
in this press release, when it becomes available, because it will contain
important information. The joint proxy statement/prospectus will be filed with
the Securities and Exchange Commission by Equity One, Inc. and IRT Property
Company, respectively. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when it is available) and other documents
filed by Equity One and IRT with the Commission at the Commission's web site at
www.sec.gov. The joint proxy statement/prospectus and these other documents (as
well as information as to the directors of Equity One and IRT and their
respective interests in the matters described herein) may also be obtained for
free (a) from Equity One by directing a request to Equity One, 1696 N.E. Miami
Gardens Dr., North Miami Beach, FL 33179, Attention: Investor Relations,
telephone: 305-947-1664 and (b) from IRT by directing a request to IRT Property
Company, 200 Galleria Parkway, Suite 1400, Atlanta, GA 30339, Attention:
Investors Relations, telephone: 770-955-4406.