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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 23, 1998
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-12298 59-3191743
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (904)356-7000
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Regency Realty Corporation (the "Company") and Pacific Retail Trust ("PRT")
entered into an Agreement and Plan of Merger (the "Merger Agreement") dated as
of September 23, 1998, pursuant to which the Company and PRT will merge, with
the Company being the surviving corporation. The press release announcing the
Merger Agreement is filed herewith as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99.1 Text of Press Release relating to the Merger
Agreement dated September 23, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REGENCY REALTY CORPORATION
(Registrant)
September 24, 1998 By: /s/ J. Christian Leavitt
J. Christian Leavitt
Vice President and Treasurer
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EXHIBIT LIST
99.1 Text of Press Release relating to the Merger Agreement
dated September 23, 1998
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Regency Realty Corporation
Press Release
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE CONTACT: BRUCE M. JOHNSON
(904) 351-0604
- --------------------------------------------------------------------------------
REGENCY REALTY AND PACIFIC RETAIL TRUST ANNOUNCE MERGER AGREEMENT
Transaction Creates First National Operating, Ownership
and Service Company Focused on
Grocery-Anchored Infill Retail Centers
JACKSONVILLE, Fla. (September 24, 1998) - Regency Realty (NYSE: REG)
announced today that it has agreed to merge with Pacific Retail Trust, a
Dallas-based private real estate investment trust, creating the leading national
platform of grocery-anchored, infill retail centers in the United States. The
combined company will have total assets of approximately $2.2 billion and will
own 192 retail centers in 22 states totaling 22.2 million square feet of space.
"In addition to many strategic benefits of the merger, there are solid
financial reasons for the merger of Regency and Pacific Retail, including
immediate and long-term accretion," according to Martin E. Stein, Jr., the
Chairman and Chief Executive Officer of Regency. "We believe that 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." Mr. Stein said he anticipates the combined
companies will realize savings of approximately $5.1 million in overhead and
financing costs by the year 2000. Regency also expects to attain higher growth
in funds from operations (FFO) per share than would have been achieved by the
individual entities.
The merger, which is subject to approval of the shareholders of each
company, is expected to be completed by year-end. Security Capital U.S. Realty
(SC-USREALTY), the largest shareholder of both Pacific Retail and Regency, has
agreed to vote its shares in favor of the merger. The merged companies will
operate under the Regency Realty name and will trade on the New York Stock
Exchange under the ticker symbol "REG". The company will be headquartered in
Jacksonville, Fla., and will have regional offices in Atlanta, Cincinnati,
Denver, Dallas, Los Angeles, St. Louis and San Francisco.
For each share of Pacific Retail common stock, a Pacific shareholder will
receive 0.48 shares of Regency common stock. Regency will assume the outstanding
debt of Pacific Retail, which totaled approximately $300 million as of September
18, 1998. Based on Regency's September 18 closing price, the total value of the
transaction is approximately $2.0 billion. The transaction has been structured
as a tax-free merger. The merged companies will maintain Regency's current
dividend, as well as its dividend policy.
The merged companies will have a 13-person board of directors, including
four independent directors named by Regency, three directors to be named by
Pacific Retail, three directors to be named by SC-USREALTY, and three members of
management. Mr. Stein will be the Chairman and CEO of the combined company.
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Mary Lou Rogers will become President and Chief Operating Officer of
Regency upon completion of the merger. Ms. Rogers is currently a director of
Regency and a trustee of Pacific Retail, as well as a Managing Director at
Security Capital Group, where she has been responsible for overseeing all
retail-related operating initiatives. Prior to joining Security Capital Group in
1997, Ms. Rogers was senior vice president and regional director of stores
Northeast for Macy's Department Stores.
Leading national platform of grocery-anchored retail centers
Pacific Retail's investment strategy mirrors that of Regency. "Through its
disciplined investment process, Pacific Retail has acquired a portfolio of
high-quality neighborhood retail centers that are located in protected,
fast-growing western markets in terms of population, employment and household
income," Mr. Stein commented. "Regency will continue to utilize proprietary
research to identify investment opportunities in markets and submarkets which
exhibit strong economic fundamentals and have high barriers to entry in order to
create compelling long-term value for our shareholders. Regency will be the
first company to have a national focus of operating, owning and providing
third-party services for grocery-anchored retail centers."
Pacific Retail's portfolio includes 69 neighborhood shopping centers
operating or under development which are anchored by several of the leading
grocers in the western United States. Regency will also benefit from the
addition of a talented pool of professionals from Pacific Retail. "This
management team will include 18 senior officers that bring operating,
acquisition, marketing and development experience as well as local expertise in
key markets throughout the western United States," said Mr. Stein. "The combined
strength of our management team, operating system, high-quality national
portfolio and customer-driven development provides an exceptionally strong
foundation for sustainable growth."
Remerchandising and development pipeline expected to fuel future growth
According to Ms. Rogers, Regency will focus on internal growth through its
remerchandising and development strategies. "We expect to raise customer loyalty
and help retailers to increase their sales through our retail services and
marketing," she said. The company has recently introduced a "preferred customer"
initiative, identifying 79 top retailers with which the company seeks to forge
close relationships and build multiple leasing opportunities. "With our national
platform, Regency will also be able to identify and build relationships with the
leading retail shop tenants of the future. The synergies of these initiatives
are expected to add significant value to our shopping centers and contribute to
attractive returns for shareholders," said Ms. Rogers.
"With our expanded geographic presence and proprietary customer- and
market-based research, Regency plans to create a national brand by providing
unparalleled customer service to grocery anchors and shop retailers," Ms. Rogers
pointed out. "By establishing close relationships with the leading supermarket
chains and consistently attracting the right mix of retail tenants, our centers
are positioned to generate high daily traffic from convenience-oriented
consumers. Our centers are anchored by the #1 or #2 grocers in our target
markets. We believe that a portfolio dominated by these strong anchors will
distinguish Regency from other public companies and ensure that our centers have
a sustainable competitive advantage in their trade areas. Regency will also
distinguish itself by offering third-party services to national retailers. The
result should be higher tenant sales, higher rents, lower vacancies and less
downtime, all which translate into sustainable NOI growth."
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According to Ms. Rogers, the combined development pipelines of the two
entities will also be a major contributor to Regency's growth story. Regency's
customer-driven development pipeline will grow to $444 million when it combines
with Pacific Retail. "Our customer-driven development program is without peer in
the grocery-anchored shopping center business," said Ms. Rogers. "Both companies
have established relationships with the top grocers and principal retailers in
their target markets which will support our growing development program."
Regency is dedicated to being the leading national operating, ownership,
and service company focused on grocery-anchored infill retail shopping centers.
Currently, the company owns 125 retail properties operating or under development
totaling 14.1 million square feet of retail space in 14 states. Operating as a
fully integrated real estate company, Regency Realty Corporation is a qualified
real estate investment trust that is self administered and self managed. See
company information and press releases on Regency's web site at
www.RegencyRealty.com.
# # #
In addition to historical information, this press release contains
forward-looking statements under the federal securities law. These statements
are based on current expectations, estimates and projections about the industry
and markets in which Regency and Pacific Retail operate, managements' beliefs
and assumptions. Forward-looking statements are not guarantees of future
performance and involve certain credit risks and uncertainties, which are
difficult to predict. Actual operating results may be affected by changes in
national and local economic conditions, competitive market conditions, weather,
obtaining governmental approvals and meeting development schedules, and
therefore, may differ materially from what is expressed or forecasted in this
press release.
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REGENCY REALTY
The Merger of
Regency Realty and Pacific Retail Trust
The First National Operating, Ownership
and Services Company Focused on
Grocery-Anchored Infill Retail Centers
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REGENCY REALTY
In addition to historical information, this presentation contains
forward-looking statements under the Federal Securities Law. These
statements are based on current expectations, estimates, and propositions
about the industry and markets in which Pacific Retail Trust and Regency
Realty operate, management's beliefs and assumptions made by management.
Forward-looking statements are not guarantees of future performance and
involve certain credit risks and uncertainties, which are difficult to
predict.
Actual operating results may be affected by changes in national and local
economic conditions, competitive market conditions, weather, obtaining
government approvals, and meeting development schedules, and therefore may
differ materially from what is expressed or forecasted in the presentation.
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REGENCY REALTY
Compelling Rationale for the Merger
* Financial Impact
* National Platform
* Management Team
Regency Realty is Now the First National Operating,
Ownership and Services Company Focused on
Grocery-Anchored Infill Retail Centers
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REGENCY REALTY
Financial Impact
* Doubles total book assets to $2.2 billion
* Reduces debt from 35.8% to 30.7% (as of June 30)
* Provides $600 million of credit capacity
* Increased FFO/share growth
- Immediate and long-term accretion
- Operating/financial synergies ($5.1 million annually)
- National customer-driven development pipeline ($444 million)
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REGENCY REALTY
Transaction Summary
* Share Exchange Ratio 0.48 : 1.0
* Name Regency Realty Corporation
* Total Market Capitalization(1) $1.996 Billion
* Total Book Assets $2.184 Billion
* Board Composition 4 Independent from Regency, 3
Independent from Pacific Retail,
3 from Management, 3 from Security
Capital U.S. Realty
* Senior Management Martin Stein, Jr. - Chairman and
Chief Executive Officer
Mary Lou Rogers - President and
Chief Operating Officer
* Headquarters Jacksonville, Florida
* Regional Headquarters Atlanta, Cincinnati, Denver, Dallas,
Los Angeles, St. Louis, San Francisco
(1) Equity market capitalization based on $21.75 price per Regency share.
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REGENCY REALTY
Financial Summary(1)
In thousands
(except per share data) Regency Pacific Combined
------- ------- --------
Total Book Assets $1,139,258 $1,045,040 $2,184,298
Equity Market Capitalization(2) $646,454 $677,744 $1,324,198
Common Shares Outstanding(3) 29,722 64,918 60,883
Preferred Stock $80,000 $31,303 $111,303
Line of Credit Outstanding $89,731 $173,600 $263,331
Term Debt $317,796 $90,236 $408,032
Total Debt/Total Book Assets 35.8% 25.3% 30.7%
Dividend Per Share $1.76 $0.76 $1.76
Fully Diluted FFO Per Share(4) $2.25 $1.01 NA
Payout Ratio 78.2% 75.3% 75 - 78%
(1) As of June 30, 1998.
(2) Equity market capitalization based on $21.75 price per Regency share.
(3) Includes redeemable operating partnership units outstanding, but excludes
Pacific's preferred stock which is convertible 1:1.
(4) Regency Realty FFO based on First Call consensus estimate.
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REGENCY REALTY
National Platform
* National customer service capability in owned/developed centers
- Grocery anchors
- Shop retailers
* Additional fee service revenue from national retailers
* Proprietary national consumer and real estate research identifies new
breakthrough retail tenants and concepts to roll-out nationally
* National scope generates enhanced rental income
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REGENCY REALTY
* 192 Centers Operating or Under Development
* $2.2 Billion Total Assets
* 22.2 Million Square Feet
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REGENCY REALTY
Capital Allocation by Market
% of
Committed $ of Committed
Market GLA Investment(1) Total GLA Investment
------ --- ------------- --------- ----------
Southern California 2,486,531 $347,757,701 10.2% 14.2%
Northern California 1,259,905 191,997,799 5.2% 7.8%
Pacific Northwest 1,406,804 188,494,096 5.8% 7.7%
Colorado/Arizona 1,197,043 104,111,994 4.9% 4.2%
Texas 3,724,736 358,005,912 15.2% 14.6%
Midwest 2,589,631 244,860,418 10.6% 10.0%
Mid-Atlantic 520,479 48,576,019 2.1% 2.0%
Southeast 5,396,266 519,377,514 22.1% 21.2%
Florida 5,842,915 450,081,670 23.9% 18.3%
--------- ----------- ---- ----
24,424,310 $2,453,263,123 100.0% 100.0%
========== ============== ===== =====
As of 6/30/98
(1) Includes future contract commitments.
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REGENCY REALTY
Key Drivers for Generating FFO per Share Growth
* Experienced management team
* Research-based retail operating system
* Focused grocery-anchored infill strategy
* Customer-driven development program
* Research-based capital allocation/strong balance sheet
* National platform neighborhood shopping centers
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REGENCY REALTY
Creating Value through Regency's Preferred
Customer Initiative (PCI) Program
* Multiple Locations with 79 Leading Retailers Nationwide
* Regency's PCI Program Builds a National Brand
* National Roll-Out of Innovative New Retail Concepts
Hallmark Fantastic Great Clips Mail Boxes Blockbuster
32 Stores Sams 27 Stores Etc. 52 Stores
11 Stores 58 Stores
Radio GNC Subway Starbucks Baskin
Shack 40 Stores 40 Stores 14 Stores Robbins
25 Stores 19 Stores
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REGENCY REALTY
Management Team
* Combined national management team provides unmatched expertise
- Retail and real estate research
- Operating
- Marketing
- Acquisition
- Development
* Senior management team - history of close working relationships
- Stein took company public, grew from 5 to 124 centers
- Rogers has participated on both boards (18 months)
* Investment, compensation and budgeting committees
* Led effort to create retail operating system for both firms
(unique to industry)
* Combined team of 403 professionals continues to operate in 7 existing
regional offices
* Seamless management integration of similar cultures
- Financial policies and systems
- Research-driven investment strategy
- Compensation strategy
- Personnel policies
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REGENCY REALTY
Management Team Martin E. Stein, Jr. - Chairman and Chief Executive
Officer. Mr. Stein has been with the Regency Realty Corporation and its
predecessor, the Regency Group, Inc., since 1976. He has served in various
property management, leasing and executive positions. Mr. Stein was appointed
President and Chief Executive Officer in 1988 and Chairman of the Board in 1997.
Since Regency Realty's Initial Public Offering in 1993, the company has grown
its total market capitalization from $170 million to over $1 billion.
Mary Lou Rogers - President and Chief Operating Officer. Prior to the
merger, Ms. Rogers was a Managing Director of Security Capital Group
Incorporated where, for the past 18 months, she has been responsible for the
development of retail operating systems for the firm's retailing-related
initiatives. She has also served on the Board of Directors of both Regency and
Pacific Retail Trust. Prior to joining Security Capital, Ms. Rogers was a Senior
Vice President and Director of Stores for Macy's East/Federated Department
Stores responsible for 19 Macy's stores in five states. Previously, Ms. Rogers
was a Senior Vice President of Henri Bendel and Senior Vice President and
Regional Director of stores for Federated's Burdines Division.
James G. Buis - Managing Director - Investments (Southwest). Prior to the
merger, Mr. Buis was a Managing Director of Pacific Retail Trust where he was
responsible for development. Prior to joining Pacific Retail, Mr. Buis was
Executive Vice President of Madison Property Corporation. From 1989 to 1993, Mr.
Buis was Senior Vice President of Rosewood Property Company. From 1979 to 1989,
Mr. Buis was a Senior Partner with Lincoln Property Company, a privately held
real estate company where he had overall responsibility for acquisitions,
development, marketing and management of its Retail Division. From 1972 to 1979,
Mr. Buis was a retail broker with Hank Dickerson & Company Realtors in Dallas.
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REGENCY REALTY
Management Team
John S. Delatour - Managing Director - Operations (West). Prior to the
merger, Mr. Delatour was a Managing Director with Pacific Retail Trust where he
was responsible for marketing and operations. Prior to joining Pacific Retail,
from 1983 to 1996, Mr. Delatour was with Lincoln Property Company, where he
ultimately served as Senior Vice President of Retail Operations responsible for
management, leasing and development. Prior to joining Lincoln Property, he was
an accountant with Peat, Marwick, Mitchell & Co.
Robert C. Gillander, Jr. - Managing Director - Investments (Atlantic). Mr.
Gillander joined Regency Realty in 1979 and has served in a variety of positions
including retail development, leasing and property management. Most recently Mr.
Gillander has served as a Managing Director and has focused on acquisitions,
development, build-to-suit and retailer services. Prior to joining Regency, Mr.
Gillander was an accountant at Coopers and Lybrand, specializing in real estate
clients.
Bruce M. Johnson - Managing Director and Chief Financial Officer. Mr.
Johnson joined Regency Realty in 1979 and has served in a variety of positions
including commercial development and has been responsible for financing
Regency's investments. Mr. Johnson became Regency's Chief Financial Officer in
1993. Prior to joining Regency, Mr. Johnson was Vice President of Barnett
Winston Trust, where he was responsible for asset management and disposition of
a diversified real estate portfolio.
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REGENCY REALTY
Management Team
Brian Smith - Managing Director - Investments (Pacific). Prior to the
merger, Mr. Smith was a Managing Director with Pacific Retail Trust where he was
responsible for development. Prior to joining Pacific Retail, Mr. Smith was
Senior Vice President of Lowe Enterprises, Inc. From 1984 to 1994, Mr. Smith was
Executive Vice President and Managing Director for the Trammell Crow Company
where he had overall responsibility for acquisitions, development, marketing and
management of its Pacific Retail Division.
James D. Thompson - Managing Director - Operations (East). Mr. Thompson
joined Regency Realty in 1981 and has served in a variety of positions including
project development and asset management. Most recently Mr. Thompson has served
as a Managing Director and has been responsible for the operations, construction
and due diligence of Regency's portfolio. Prior to joining Regency, Mr. Thompson
was a Commercial Loan Officer at Atlantic Bancorp.
Lee S. Wielansky - Managing Director - Investments (Midwest). Prior to
joining Regency, Mr. Wielansky was President and a Founding Partner of Midland
Development Group in St. Louis. Midland was the nation's largest developer of
Kroger anchored shopping centers. Before founding Midland, Mr. Wielansky served
as Senior Vice President/Partner of Leo Eisenberg & Co., Inc. and earlier headed
the brokerage division of Sachs Properties.