Regency Centers Announces Partnership Change & Guidance Revision

JACKSONVILLE, Fla.--(BUSINESS WIRE)-- Regency Centers Corporation (NYSE:REG) announced today that its co-investment partner, Macquarie CountryWide Trust (MCW), has agreed to sell its interest in Macquarie CountryWide-Regency II, LLC (MCW II), an existing co-investment partnership between MCW and Regency.

In conjunction with the sale, Regency has an option to increase its ownership in MCW II from 25 to 40%.

Separately, Regency also revised second quarter and full year 2009 Funds from Operations (FFO) guidance to reflect the adverse impacts of the current economic environment.

Sale of MCW Partnership Interest

Global Retail Investors LLC (GRI), a joint venture between the California Public Employees' Retirement System (CalPERS) and an affiliate of First Washington Realty, Inc., has agreed to purchase the majority of MCW's interest in MCW II. Regency has an option to purchase the remainder of MCW's interest.

Formed in 2005, MCW II currently owns 86 retail shopping centers that have been valued at $1.73 billion for this transaction.

Contracts have been signed for a phased sale process that will result in multiple closings over the next 24 months.

The first phase involves the sale of 45% of the partnership to GRI. Closing is expected by the end of July 2009 upon completion of documentation of lender consents on certain property-level loans.

The second phase involves the sale of an additional 15% of the partnership to GRI. This second phase is scheduled to close upon receipt of lender consents for the balance of the property-level loans.

Regency has two options to acquire additional interests in the partnership by up to 15% in total. One option allows Regency to purchase up to an additional 10% interest in the portfolio from MCW. This option must be exercised within 21 months of the initial closing.

If Regency chooses not to exercise the additional 10% option, the option would be available to GRI. If GRI does not purchase the remaining 10%, MCW can initiate a distribution in kind to recover its remaining 10% equity value.

The other option allows Regency to purchase up to an additional 5% interest in the partnership from MCW. This option must be exercised by the later of March 31, 2010, or GRI's second phase closing. In the event that Regency does not exercise the 5% option, GRI must acquire the additional 5% interest.

Assuming Regency exercises all of its options, Regency's ownership in MCW II will increase to 40% and GRI would own 60% of the partnership. Regency will remain the managing member of the partnership and retain management and leasing responsibilities.

Regency will receive a disposition fee from MCW equal to: 1% of the gross sales price paid by GRI for MCW's partnership interest and a 7.7% discount on its purchase options. If the options are not exercised by Regency, Regency will receive cash payments of up to $17 million.

"This transaction is 'bittersweet' given our special relationship with MCW that has developed and grown over many years," says Regency Centers CEO Martin E. Stein (top right photo)

"At the same time, we are excited to have the opportunity to partner with CalPERS and First Washington.

"This transaction will have substantial benefits for Regency including a partnership with an outstanding institutional investor, an option to increase our ownership in a high quality portfolio of shopping centers, maintaining the size of the portfolio's current foot print, and profitable on-going fee income."

Contact: Regency Centers Corporation, Jacksonville, FL. Lisa Palmer, 904-598-7636 http://www.regencycenters.com/