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The transaction will deepen Kimco’s presence in Coastal and Sun Belt markets, commented Kimco CEO Conor Flynn. Image courtesy of Kimco Realty
Kimco Realty has entered into a merger agreement to acquire RPT Realty in an all-stock transaction valued at approximately $2 billion, including preferred stock and debt assumption. This acquisition will bring Kimco’s pro forma equity market capitalization to $13 billion and its total enterprise value to $22 billion.
JP Morgan is acting as financial advisor and Wachtell, Lipton, Rosen & Katz as legal advisor on behalf of Kimco. On RPT’s side Lazard serves as financial advisor and Goodwin Procter LLP as legal advisor. The deal is expected to close in the beginning of 2024.
Following the merger, Kimco’s portfolio will expand with the addition of 56 open-air shopping centers, of which 43 are wholly owned and 13 are joint venture assets, comprising a total of 13.3 million square feet, along with a 6 percent stake in a 49-property net lease joint venture. RPT’s assets are nearly 90 percent grocery-anchored, and the transaction is expected to provide initial cost savings synergies of about $34 million. The acquisition serves to further Kimco’s strategy of expanding its presence in Coastal and Sun Belt markets. To that end, the company has identified a number of midwestern assets that it plans to divest over time. Kimco currently owns a portfolio of 528 properties.
More deal details
Following the acquisition, shareholders will receive 0.6049 of newly issued Kimco shares for each RPT share they own, representing approximately $11.34 per RPT share, a 19 percent premium to RPT’s closing share price on August 25th. Kimco stockholders and RPT shareholders will own 92 and 8 percent of the combined company, respectively.
Kimco CEO Conor Flynn stated in prepared remarks that 70 percent of RTP’s portfolio aligns with the company’s strategy, while also mentioning the advantageous 20 percent or greater mark-to-market leasing spread in the portfolio. RPT President & CEO Brian Harper added that the merger represents the best interests of stakeholders, emphasizing the share price premium and the better positioning for long-term value.
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