Colonial to Buy Cornerstone

Colonial Properties Trust, Birmingham, Ala., is acquiring Cornerstone Realty Income Trust, Richmond, Va., for about $1.5 billion, including the assumption or refinance of about $850 million of Cornerstone's secured debt.Colonial is a diversified real estate investment trust with a portfolio of multifamily, office, and retail properties. "The combined company will have a total enterprise value in excess of $5 billion and possess one of the largest Sunbelt-focused multifamily platforms," said Thomas H. Lowder, Colonial's chairman and chief executive officer. The acquisition also provides geographic diversification for the REIT and expands its presence in some "high-growth" metropolitan areas, according to the REIT. Glade M. Knight, Cornerstone's chairman and CEO, is slated to join Colonial's board after the expected closing of the merger in the first quarter of 2005. Cornerstone shareholders can opt to receive either 0.2584 of a Colonial common share per Cornerstone share or 0.422 of Colonial preferred depositary shares, which have a $25 liquidation preference and a 7.62% dividend rate, Colonial said. Colonial common stock opened at $42 Monday and Cornerstone opened at $9.97, according to Yahoo! Finance.