Regency Centers Corp. agreed to acquire Equity One Inc. for about $5 billion in a deal that would create one of the nation's largest shopping center investors.

As part of the all-stock deal, announced late Monday, each share of New York-based Equity One would convert into 0.45 share of new Regency Centers stock. That amounts to $31.44 per Equity One share based on Regency Centers' closing price Monday.

Shares of Equity One, which closed at $27.87, subsequently surged 15% when The Wall Street Journal reported news of the impending deal.

Regency Centers, based in Jacksonville, Fla., had a market value of$7.4 billion as of the close of trading Monday.

Both companies are so-called real-estate investment trusts that own and operate grocery store-anchored retail centers. The merger would create a portfolio of 429 properties stretching across more than 57 million square feet and located mainly in high-density and affluent areas, the companies said.

Merging Regency Centers and Equity One would generate about $27 million in annual cost savings by 2018, the companies said.

Before recent pullbacks, shares of Regency Centers, Equity One and other REITs have performed strongly as investors have been drawn to their relatively rich payouts amid historically low interest rates. That has given such companies the currency to do stock-based acquisitions that create scale and efficiency.

So far this year, real estate is the second-busiest sector for mergers and acquisitions globally, with more than $300 billion of transactions announced, according toDealogic.

There have been more than $50 billion in deals just among REITs, which can include apartment complexes, hotels and other types of businesses. REITs typically manage properties, collect rent and pass profits onto shareholders.

In August, MAA agreed to buy Post Properties Inc. for about $4 billion in a deal creating the biggest multifamily REIT by total units, with about 105,000 across 317 properties.

As a result of the deal announced Monday, Regency Centers' board would expand to include 12 directors?two designated by Equity One and one by Israeli real-estate company Gazit-Globe, which owns about 34% of Equity One and has agreed to vote for the deal. Regency Centers Chairman and Chief Executive Martin Stein Jr. would maintain those roles at the combined company.

Regency Centers investors are expected to own about 62% of the new company, with Equity One shareholders owning the rest.

Both companies' shareholders must approve the deal, which is expected to close in the first or early second quarter of next year.

Write to Dana Mattioli at dana.mattioli@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

(END) Dow Jones Newswires

November 14, 2016 21:25 ET (02:25 GMT)

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