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Equity One Provides New Twist in Capital Shopping Centres Saga

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With one week to go before Simon Property Group's deadline to make a takeover offer for Capital Shopping Centres Group Plc, there is a new twist in the story. Yesterday afternoon, shopping center REIT Equity One announced the closing of an acquisition of Capital and Counties USA, Inc. (C&C USA) through a joint venture with Capital Shopping Centres.

This comes about a week after Simon announced that it had raised about $4.6 billion in debt to cover a potential acquisition of Capital Shopping Centres.

According to the terms of the deal:

Capital Shopping Centres will receive 4.1 million shares of Equity One common stock and 11.4 million joint venture units, after accounting for working capital adjustments. Capital Shopping Centres may redeem its units in the joint venture for Equity One common stock on a one-for-one basis, or cash, at Equity One's option. Equity One will assume approximately $243 million of mortgage debt, including its proportionate share of debt held by joint ventures and following the repayment of an $84 million mortgage secured by Serramonte Center which occurred simultaneously with the closing of this transaction.

In December 2010, C&C USA sold two non-core properties consisting of South Figueroa, a vacant land parcel in Los Angeles, and 625 Third Street, an office building in San Francisco, for net proceeds of approximately $16.9 million.

It's hard to say off the bat exactly this might affect Simon's pursuit of Capital. For one thing, it lessens Capital's overall debt load and gives it access to cash. Will that ultimately affect Simon's offer or provide ammunition for Capital to ward off the takeover bid?

At any rate, the story continues to move quickly. It's been just over a month since we first got wind of a potential deal here and it seems like we're rapidly moving towards a resolution within the next week.

For previous stories, check the links below.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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