Regency May Buy Pacific Retail Trust for $1.04 Billion

Regency Realty Corp. said Thursday that it has agreed to buy closely held Pacific Retail Trust for about $1.04 billion in stock and assumed debt, expanding its strip shopping-center holdings from the Southeast and Midwest to the West.

The purchase would boost Jacksonville, Fla.-based Regency’s holdings by more than 50% to 192 properties--most of which are anchored by grocery stores--with 22.2 million square feet of space in 22 states. The deal, which must be approved by shareholders, would include nearly 20 neighborhood shopping centers throughout Southern California.

The move is part of a trend sweeping the retail property business in which investors and developers team up to cut costs and attempt to gain leverage over retailers in negotiating leases.

“The merged company will have a stronger balance sheet and more than $600 million of credit capacity, which will enable Regency to take advantage of growth opportunities in its nationwide target markets,” Martin E. Stein Jr., Regency’s chairman and chief executive, said in a statement.

Under the terms of the agreement, Regency would pay 0.48 share for each share of Dallas-based Pacific Retail and assume $300 million of debt.

Regency shares rose 19 cents to close at $23.63 on the New York Stock Exchange.

Both companies are controlled by affiliates of real estate investor William Sander’s Security Capital Group Inc., one of the largest real estate investors in the United States. Security Capital--which would own 54% of the newly merged companies--controls about $20 billion worth of office buildings, manufactured home parks and other types of real estate.