Kimco Realty, a commercial real estate investment trust, announced that it would acquire RPT Realty in an all-stock transaction of about $2 billion.
Investors in RPT Realty will receive 0.6049 newly-issued Kimco stock for every share they own, or $11.34; this represents a 19% premium over RPT’s closing price on August 25.
Following the deal’s announcement, RPT’s shares increased by about 15% in premarket trading.
The acquisition of RPT Realty expands Kimco’s grocery-anchored shopping centres in the United States, which already includes tenants like Dollar Tree, Ross Stores, and TJ Maxx.
Conor Flynn, CEO of Kimco, stated in a statement that the deal will expand Kimco’s presence in the Coastal and Sun Belt markets.
The deal will immediately add Kimco’s funds from operations (FFO), expected to close at the beginning of 2024.
Kimco beat expectations for second-quarter revenue in July owing to higher rental rates and unwavering demand for space in its grocery-anchored shopping centres.
“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,” said 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 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.”
Brian Harper, President and CEO of RPT, added, “Since joining RPT five years ago, the team and I have worked tirelessly to create long-term stakeholder value by curating the portfolio towards Coastal and Sun Belt markets, while delivering exceptional leasing results and prudently managing the balance sheet. After carefully considering the merits of this transaction, we believe that aligning with Kimco, a leader in the grocery-anchored shopping center space, is in the best interest of our stakeholders, given the multiple synergies that can be realized as a combined company. 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.”
