JERICHO AND NEW YORK CITY, N.Y. — Kimco Realty (NYSE: KIM) has entered into a definitive merger agreement with RPT Realty (NYSE: RPT) under which Kimco will acquire RPT Realty in an all-stock transaction. Both REITs are based in New York — Kimco in Jericho and RPT in Manhattan — and own and operate open-air and grocery-anchored shopping centers, as well as mixed-use assets. Kimco valued the transaction at approximately $2 billion, including the assumption of debt and preferred stock.
The merger will add 56 open-air shopping centers, including 43 wholly owned and 13 joint venture assets, to Kimco’s existing portfolio of 528 properties. The affected portfolio spans 13.3 million square feet of gross leasable area.
GIC, a sovereign wealth fund based in Singapore, is RPT Realty’s largest joint venture partner and plans to continue its dual ownership with the combined company post-merger.
Conor Flynn, CEO of Kimco, says that roughly 70 percent of RPT Realty’s portfolio aligns with Kimco’s strategic markets. This includes Mary Brickell Village, a mixed-use development in Miami that RPT Realty purchased last year for $216 million. Kimco plans to remerchandise and redevelop portions of the center, as well as add it to the company’s Signature Series brand.
“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,” says Flynn. “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.”
Kimco has identified properties within RPT Realty’s Midwest holdings that do not match Kimco’s ownership philosophy. The firm expects to sell off those assets over time, as well as redevelop centers that it plans to hold for the long-term.
Brian Harper, president and CEO of RPT Realty, says that the acquisition is in the best interest of RPT Realty shareholders as the firm will be able to realize multiple synergies as a combined company under the Kimco banner.
“We also believe this transaction delivers an attractive share price premium that offers our shareholders the opportunity to participate in a larger, more liquid and diversified company that is well positioned to deliver long-term value,” says Harper.
Under the terms of the merger agreement, RPT Realty shareholders will receive about 0.6 of a newly issued Kimco share for each RPT Realty share they own, representing a total consideration of approximately $11.34 per RPT share, which is based on Kimco’s closing share price of $18.75 on Friday, Aug. 25. The price also represents a 19 percent premium to RPT’s closing share price on Aug. 25 ($9.57).
Over the past year, Kimco’s stock price has decreased about 12.5 percent and RPT Realty’s stock price has fallen slightly — 2.7 percent.
At closing, Kimco stockholders and RPT Realty shareholders are expected to own approximately 92 percent and 8 percent of the combined company, respectively.
In addition to RPT Realty’s portfolio, Kimco is also acquiring the company’s 6 percent stake in a 49-property net lease joint venture.
The board of directors of Kimco and the board of trustees of RPT Realty both unanimously approved the transaction. The acquisition is expected to close in the beginning of 2024, subject to RPT Realty shareholder approval and other customary closing conditions. There are no anticipated changes to Kimco’s executive management team or board of directors.
J.P. Morgan is acting as financial advisor to Kimco, and Wachtell, Lipton, Rosen & Katz is acting as the company’s legal advisor. Lazard is acting as financial advisor to RPT Realty, and Goodwin Procter LLP is acting as its legal advisor. Communication advisors include ICR LLC for Kimco and Prosek Partners for RPT.
Upon closing, Kimco expects to have a pro-forma equity market capitalization of approximately $13 billion and a total enterprise value of approximately $22 billion.
— John Nelson