The real estate sector continues to bring forth innovations. In particular, a monumental collaboration is taking shape between two industry giants: Kimco Realty and RPT Realty. Kimco Realty is renowned for its vibrant open-air shopping centers spanning across North America, while RPT Realty is recognized for its strategically positioned commercial spaces in major US markets. This merger is destined to combine the forces and expertise of both entities, creating a potent force in the real estate landscape.
Examining the details of this merger, Kimco Realty is acquiring RPT Realty through a stock exchange operation valued at $2 billion, including the assumption of debt and preferred stock. Upon the transaction’s closure, Kimco expects to have a pro forma equity market capitalization of $13 billion and a total enterprise value of $22 billion. The deal has been priced at $11.34 per RPT share based on Kimco’s closing share price on August 25, 2023, representing a 19% premium to RPT’s closing share price on the same date.
The board of directors of Kimco and the board of trustees of RPT have both unanimously approved the transaction, which is expected to conclude in the beginning of 2024, subject to RPT shareholder approval and other customary closing conditions.
Here are all the details of the merger between Kimco Realty and RPT:
Both companies focus on open-air shopping centers, with Kimco zeroing in on centers featuring supermarkets and an increasing number of mixed-use destinations. The acquisition of RPT “will deepen our presence in key Coastal and Sun Belt markets, while accelerating our growth at an attractive valuation,” stated Conor Flynn, CEO of Kimco. “Approximately 70% of RPT’s portfolio aligns with our key strategic markets. Furthermore, their substantial pipeline of signed, but not yet open leases, and 20% or greater mark-to-market leasing spread across the portfolio, will drive higher growth for the combined company.”
The transaction will add 56 open-air shopping centers, including 43 wholly-owned and 13 joint venture assets, comprising 13.3 million square feet of gross leasable area, to Kimco’s existing portfolio of 528 properties. In addition, the company will acquire RPT’s 6% stake in a 49-property net lease joint venture. Kimco has also identified a limited group of Midwest properties within RPT’s portfolio that it expects to divest over time. The company also notes that RPT’s existing joint venture relationships, the largest of which is GIC, “provide significant opportunity for continued growth via investments in grocery-anchored shopping centers and mixed-use assets.”