Equity One and IRTProperty Company Announce Proposed Merger

Oct. 29, 2002
Combined Company Will Be One of the Largest Shopping Center Reits in the Southeast


    Will Have $1.56 Billion Total Market Capitalization,
    $766 Million Equity Market Capitalization

    Will Own 181 Properties Totaling 18.7 Million Square Feet

    Equity One Inc. (NYSE:EQY) and IRT Property Company (NYSE:IRT) announced today that they have entered into a definitive merger agreement pursuant to which Equity One will acquire IRT.
    In the merger, each IRT shareholder may elect to receive for each share of IRT common stock either $12.15 in cash or 0.9 shares of Equity One common stock, or a combination thereof. The terms of the merger agreement further provide that the holders of no more than 50% of IRT's outstanding common stock may receive cash.
    Assuming a 50% cash election and yesterday's $13.59 closing price for Equity One common stock, the transaction values IRT at $730 million, including the assumption by Equity One of $297 million of IRT debt and transaction costs.
    Equity One has secured binding commitments to finance the cash consideration. Equity One intends to fund a portion of the cash consideration through the private placement of up to 6.9 million shares of Equity One common stock to existing, affiliated investors at a price of $13.30 per share subject to pro rata upward adjustment to a maximum of $13.50 per share as the number of IRT shares converted into Equity One common stock rises from 50% to approximately 55.8%. Equity One intends to fund the balance of the cash consideration from existing and new credit facilities, all of which are currently in place or commitments for which have been obtained.
    "IRT and Equity One operate in the same region and focus on the same asset class," said Chaim Katzman, Chairman and CEO of Equity One. "This transaction will more than double our shopping-center portfolio and will create one of the largest retail REITs focused on the southeast, solidifying our leadership in the supermarket-anchored shopping-center sector. IRT has 30 years of experience building a stable portfolio in the southeast, while Equity One has a proven track record developing and managing a growth-oriented portfolio in Florida and Texas through the acquisition and development of properties, as well as the sourcing and integration of major portfolios. We will more than double our equity market float, will expand our equity research coverage and hope to maintain IRT's investment-grade rating, thereby providing both equity and debt investors with a compelling opportunity."
    Thomas H. McAuley, Chairman and CEO of IRT, added: "This is an opportunity for us to combine our strengths and long-term business relationships in southeastern markets with Equity One's proven ability in the acquisition, development and management of supermarket-anchored shopping centers in Florida and Texas. Moreover, the merger will give IRT shareholders the opportunity to take cash or continue as an investor with a 3.4% increase in their dividend. This transaction creates a much larger company, better tenant diversification and a platform to increase shareholder value."
    Following the merger, Equity One will own 181 properties in 12 states as follows:

          FLORIDA     TEXAS       GEORGIA       STATES      TOTAL
              SF           SF           SF           SF           SF
      Number(000s) Number(000s) Number(000s) Number(000s) Number(000s)
anchored  59 6,895   18  1,522   14  1,777    31  2,800   122  12,994

store and
anchored  15 1,468   14  1,467    6    563    17  1,916    52   5,414

ties       6    81    -      -   -       -     1    188     7     269
Total     80 8,444   32  2,989   20  2,340    49  4,904   181  18,677

    Note: "Other States" total number of properties includes Louisiana (16), North Carolina (14), South Carolina (4), Tennessee (4), Arizona (3), Virginia (3), Alabama (3), Mississippi (1) and Kentucky (1).

    "This transaction will enhance our dominant position in Florida," noted Doron Valero, Equity One's President and Chief Operating Officer, "bringing our total holdings in the state to 80 properties encompassing 8.4 million square feet. At the same time, we are increasing our geographic diversification by entering new markets throughout the southeast. We expect to pursue additional investment opportunities in our existing and newly-added markets, with an emphasis on supermarket-anchored centers. We welcome IRT's high quality management and employees to our team, and look forward to a smooth integration process."
    Commenting on the economics of the proposed transaction, Howard Sipzner, Equity One's Treasurer and Chief Financial Officer, stated, "Assuming a 50% stock election, we expect the transaction to be approximately 4% accretive to our previously issued guidance for 2003 funds from operations of $1.43 to $1.47 per diluted share, assuming limited synergies. We further expect to maintain overall leverage below 50%, and at least a 2.6 times EBITDA to interest coverage ratio and a 2.2 times fixed charge coverage ratio. Our valuation of IRT's real estate holdings indicates a 2003 capitalization rate of 9.75%."
    Completion of the transaction, which is expected to take place in the first quarter of 2003, is subject to the approval of Equity One's and IRT's shareholders and other customary conditions. The Board of Directors of each of IRT and Equity One has unanimously approved the transaction. Additionally, holders of approximately 75% of Equity One's common stock and approximately 8% of IRT's common stock have agreed to vote their shares in favor of the transactions contemplated by the merger (including the Equity One private placement). The Equity One holders will be released from their voting agreements and IRT's Board of Directors may withdraw its merger recommendation if immediately prior to the shareholder meetings to approve the merger, Equity One's weighted average stock price for the 30 prior trading days is less than $12.06 or less than $11.00 for the three prior trading days. In addition, the Equity One shareholders may withdraw their voting support if IRT's weighted average stock price for the 30 prior trading days is less than $10.935 or less than $9.935 for the three prior trading days. The merger agreement also provides for IRT to designate one member to serve on Equity One's Board of Directors through the 2005 shareholder meeting.
    The transaction will be accounted for under the purchase method of accounting and is being structured as a tax-free merger with acceptable tax opinions being a condition to closing.
    Equity One has committed to declare at least a $0.27 dividend per share in the first quarter following the closing of the merger. This translates to a 3.4% increase for those IRT shareholders who elect to receive Equity One common stock.
    IRT will be required to pay a $15 million break-up fee to Equity One in the event that IRT enters into an agreement for a superior transaction or if, under certain circumstances, its Board of Directors withdraws its recommendation for the transaction.
    Raymond James & Associates, Inc. is acting as exclusive advisor to IRT for the merger transaction. CIBC World Markets Corp. is acting as exclusive financial advisor to Equity One for the merger transaction. In addition, Legg Mason Wood Walker Incorporated has provided a fairness opinion to a special committee of Equity One's independent directors with respect to the equity private placement.

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