Kimco Realty, a publicly traded real estate investment trust (REIT) listed on the NYSE under the ticker symbol “KIM,” has reached an agreement to acquire RPT Realty, a company operating open-air shopping centers in major U.S. markets. The transaction is an all-stock deal valued at approximately $2 billion, inclusive of assumed debt and preferred stock, revealed the company yesterday.
Kimco expects the acquisition to have an immediate positive impact on funds from operations (FFO) and net operating income (NOI), as well as strengthening its presence in key Coastal and Sun Belt properties. According to Kimco CEO Conor Flynn, approximately 70% of RPT’s portfolio overlaps with Kimco’s strategic markets. Additionally, the substantial pipeline of signed, but not yet open leases and the significant mark-to-market leasing spread of 20% or more across RPT’s portfolio will drive higher growth for the combined company.
Under the terms of the agreement, RPT shareholders will receive 0.6049 shares of Kimco for each RPT share they own, resulting in an estimated value of approximately $11.34 per RPT share based on Kimco’s closing share price on August 25. This represents a 19% premium to RPT’s closing price on that same day.
In premarket trading on Monday, RPT’s stock surged 12% while Kimco’s stock saw a modest increase of 0.2%.
The transaction is expected to be finalized in early 2024.
Kimco’s portfolio will expand to include an additional 56 open-air shopping centers, totaling 13.3 million square feet of gross leasable area. This will bring Kimco’s total portfolio to 528 properties.
Kimco anticipates initial cost savings synergies of around $34 million from the acquisition. The company also believes the deal will not impact its leverage position.
A conference call regarding the transaction is scheduled for 8:30 AM ET.