Kimco Realty (NYSE: KIM), North America’s largest publicly-traded owner and operator of open-air, grocery-anchored shopping centers, has announced a definitive merger agreement with RPT Realty (NYSE: RPT). The all-stock transaction is valued at approximately $2 billion, including the assumption of debt and preferred stock. The merger is expected to increase Kimco Realty’s pro forma equity market capitalization to $13 billion and total enterprise value to $22 billion.

Terms of the Merger and Strategic Synergies

Under the merger agreement, RPT Realty shareholders will receive 0.6049 of a newly-issued Kimco Realty share for each RPT share, totaling around $11.34 per RPT Realty share. This represents a 19% premium based on Kimco Realty’s closing share price as of August 25, 2023. Both boards have unanimously approved the transaction, which is expected to close in early 2024. “This transaction deepens our presence in key Coastal and Sun Belt markets, and accelerates our growth,” said Conor Flynn, CEO of Kimco Realty.

Portfolio Additions and Future Growth

The merger will add 56 open-air shopping centers to Kimco Realty’s existing 528-property portfolio, strengthening its position as a leading owner and operator of open-air, grocery-anchored shopping centers. “We believe that aligning with Kimco is in the best interest of our stakeholders,” said Brian Harper, CEO of RPT Realty.

Impact on Shareholders and Long-Term Value

Upon the deal’s completion, Kimco Realty stockholders and RPT Realty shareholders are expected to own approximately 92% and 8% of the combined company, respectively. The merger promises not only an attractive share price premium for RPT Realty shareholders but also offers them the opportunity to participate in a more liquid and diversified company.

Embedded Growth Opportunities and Divestment Plans

The acquisition is aligned with Kimco Realty’s key strategic markets and is expected to drive higher growth for the combined entity. Kimco also plans to divest a limited group of Midwest properties from RPT Realty’s portfolio that do not align with its strategy over time.

Additional Remarks from Longstanding Partner

Adam Gallistel, Head of Americas Real Estate for GIC, spoke highly of the years of successful partnership with RPT and expressed excitement about the merger. “We’re excited to combine GIC’s extensive history of real estate investing with Kimco’s expertise,” said Gallistel.

Expected Closing and Advisor Involvement

The transaction is subject to RPT Realty shareholder approval and other customary closing conditions. The merger is a significant move for both Kimco Realty and RPT Realty, promising to reshape the landscape of publicly-traded open-air, grocery-anchored shopping centers in North America.

  Adam Gallistel, Brian Harper, Conor Flynn, Kimco Realty, Real estate industry news, RPT Realty, USA