New merger of shopping center forces to pump investments, jobs into Greater Miami
By Paola Iuspa
The merger of North Miami Beach's real estate investment trust Equity One and Atlanta-based owner, operator and developer of neighborhood community shopping centers IRT Property Co. should bring new investment capital and jobs.
Two days after acquiring IRT, Equity One officials said Friday they plan to expand their headquarters and the company's portfolio in Miami-Dade. With last week's merger, Equity One controls 180 properties in the Southwest and Southeast, totaling about 18.4 million square feet and including 121 supermarket-anchored shopping centers, 11 drug store-anchored shopping centers and 40 other retail-anchored shopping centers.
Chaim Katzman, Equity One's chairman and chief executive, said he plans to build an office building at the Shops at Skylake, 1650 NE Miami Gardens Drive. The group currently operates from an office in that center, which is one of Equity One's eight shopping centers in Dade.
The new building would accommodate 75 employees, up from the 45-member staff the firm had before the consolidation, he said. While only a few former IRT employees will move here from Atlanta, he said, most of the openings will be filled by new hires. The expanded company will retain the name Equity One, with US headquarters in North Miami Beach.
The merger escalates the local company's borrowing capacity and line of credit, increasing its purchasing power.
Because IRT transferred its investment-grade bond rating to Equity One, it will be able to borrow at low interest, Mr. Katzman said. Before the transaction, his group did not have any bond rating from Wall Street.
In addition, Equity One just acquired $340 million in unsecured revolving credit with Wells Fargo, which will provide cost-effective funding for the group's ongoing business operations, he said. A revolving credit allows a company to incur additional debt before the original obligation is canceled. Mr. Katzman said the company's increased capacity to invest would reflect a planned Miami-Dade property portfolio expansion.
"We are bullish about buying land and properties in Miami-Dade," he said. "This is one of the safest markets. It is fast-growing and land is scarce," which increases the value of the firm's properties. About 10% of the recently merged company's total asset value of $1.5 billion comes from the Miami-Dade shopping centers, Mr. Katzman said.
Some of the company's properties in Miami-Dade include Bird Ludlam Shopping Center, 6710 Bird Road; Plaza Alegre, 14630 SW 26th St.; Meadows Shopping Center, 4260 SW 152nd Ave.; and West Lake Plaza, 15000 SW 72nd Ave. Equity One is in the process of building a shopping center on about 10 acres in an upcoming residential neighborhood in Homestead at Southwest 228th Street and 137th Avenue.
Industry experts said the merger, announced in October, seems to benefit both companies.
"It is a great mix of assets and human resources," said Mark Lasman, a broker with Marcus & Millichap Real Estate Investment Brokerage Co., a provider of investment real estate brokerage services. "It is very positive and I am sure Wall Street will favor it."
One reason IRT and Equity One joined forces was to help increase profits for stockholders.
Tom McAuley, former chairman and chief executive officer of IRT, said the merger was a strategic move to make the new company's shares more desirable to institutional investors. Combining Equity One's and IRT's market capitalization brought the total value of the company to about $1 billion, he said. The market capitalization, or the total value of a company, is found by multiplying the number of outstanding shares of common stock by the current share price.
Mr. Katzman said the newlywed company's market capitalization is about $800 million, after subtracting pending debt.
Prior to the merger, Equity One traded on the New York Stock Exchange at about $460 million capitalization, according to the firm's website. ITR traded at about $750 million, Mr. McAuley said.
Corporate officials hope the union will fuel the firm's share price, as investors often look to trade in companies with more than $1 billion in market capitalization.
"The size makes a more attractive investment for stockholders by them being able to buy and sell the stock," said Mr. McAuley, who left the company after the merger.
Another reason for merging was to solidify the presence of both groups in the Southeast and Southwest regions of the country, he said.
Before the consolidation, Equity One was an important player Florida and Texas and IRT in Georgia and Louisiana. It also owned 29 properties in Florida, Mr. McAuley said.
"A geographical concentration," he said, "will increase efficiency in the management and leasing of the company's portfolio."