Kimco Pens $2B Merger Deal With RPT Realty, Boosts Coastal And Sun Belt Markets Footprints

Kimco Realty Corp KIM penned a merger agreement to acquire RPT Realty RPT in an all-stock transaction for around $2 billion, including the assumption of debt and preferred stock.

The price represents a consideration of about $11.34 per RPT share based on Kimco's closing share price on August 25, 2023, a 19% premium to RPT's closing share price on August 25, 2023. 

Per the terms, RPT shareholders will receive 0.6049 for newly issued KIM shares for each RPT share.

The acquisition will add 56 open-air shopping centers comprising a gross leasable area of 13.3 million square feet to KIM's existing portfolio of 528 properties. 

Post-deal closure, Kimco expects the combined company to have a pro forma equity market capitalization of around $13 billion and a total enterprise value of about $22 billion.

KIM and RPT shareholders are expected to hold around 92% and 8% of the combined company, respectively. 

The transaction, unanimously approved by the board of directors of Kimco and the board of trustees of RPT, is expected to close at the beginning of 2024, subject to customary closing conditions.

Apart from the deal, KIM will acquire RPT's 6% stake in a 49-property net lease joint venture. 

"This transaction presents another exciting opportunity for our company to deepen our presence in key Coastal and Sun Belt markets, while accelerating our growth at an attractive valuation. 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 is immediately accretive to FFO and the addition of these properties further positions Kimco as the country's premier owner and operator of open-air, grocery-anchored shopping centers and mixed-use assets," said Conor Flynn, CEO.

The acquisition is expected to garner initial cost savings synergies of around $34 million.

As of June 30, 2023, cash and cash equivalent stood at $851.3 million, and an unsecured revolving credit facility of $2.0 billion. 

Last week, KIM disclosed the acquisition of Stonebridge at Potomac Town Center in Virginia for $172.5 million. 

Price Action: KIM shares are trading higher by 1.49% at $19.03, and RPT is up 20.1% at $11.49 on the last check Monday.