Shopping mall operator Regency Centers Corp said on Thursday it has agreed to buy Urstadt Biddle Properties Inc in an all-stock deal valued at about $1.4 billion, including the assumption of debt and preferred stock.

The move will help Regency expand its footprint in grocery-anchored shopping centers in suburban trade areas in the United States.

The deal comes at a time when prominent investors including hedge fund and private equity managers are shying away from real estate amid uncertainty over interest rates, recession fears and the threat of a U.S. debt default.

Regency's CEO Lisa Palmer said "the portfolio that Urstadt Biddle has carefully assembled over more than 50 years offers a highly aligned demographic and merchandising profile."

Under the deal terms, Urstadt stockholders will receive 0.347 of a newly-issued REG share for each Class A Common (UBA) and Common (UBP) share they own.

This translates to $20.40 per share, and represents a premium of about 21% to Urstadt's last close.

Regency shareholders will own about 93% of the combined company, while Urstadt Biddle shareholders will own the rest.

The combined company is expected to have an equity market capitalization of about $11 billion and total enterprise value of about $16 billion.

The combined portfolio will comprise of 481 total properties, the companies said in a statement.

The deal is expected to close late in the third quarter or early in the fourth quarter of 2023.

RBC Capital Markets and Wells Fargo Securities are acting as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Regency Centers.