Kite Realty Group Trust (NYSE: KRG) and Retail Properties of America have agreed to merge. Through a $2.79 billion all-stock deal, the combination will bring together 185 open-air shopping centers with about 32 million square feet of leasable space. This will reportedly become one of the biggest U.S. shopping centers in metropolitan areas in states including Texas and Florida.
Each common share of Retail Properties will be converted into 0.623 newly issued shares of Kite stock, translating into $12.98 a share. However, the closure of the deal is dependent on the shareholder’s approval from both companies. Indianapolis-based Kite Realty’s shareholders will own 40% of the combined companies’ equity and all of Retail Properties’ debt. The Illinois-based Retail Properties take the balance of the equity.
The creation of a combined company comes at a time when open-air shopping centers are thriving. According to Kite, since COVID 19 struck, consumers had been solidifying their use of physical brick-and-mortar locations for online orders and as destinations.
Meanwhile, Kite’s CEO, John Kite, reported, “This merger further demonstrates our conviction in open-air retail centers as essential shopping destinations and last-mile fulfilment centers.”
The Complementary Geographic Footprint Will Add Opportunities to Attract Leading Retailers
One thing is sure that retail consumers are quickly realizing the easiness open after shopping centers offer. The CEO of Retail Properties of America Inc., Steven P. Grimes, affirms that joining forces is the right long-term decision the two companies had made. This would increase their footprint and also help improve their portfolio and quality.
The acquisition by Kite Realty Group is not the first and will not be last. Three months ago, Kimco Realty Corp. acquired Weingarten Realty Investors for $3.87 billion in a cash-and-stock deal. The terms of the agreement dictate that each of Weingarten’s shareholders receives 1.408 newly-issued shares of Kimco and $2.89 in cash.
The acquisition will add to Weingarten’s collection of 159 high-quality, open-air grocery- shopping centers. It will also enhance asset diversification and quality. In addition, the combination brings together some big tenants and retailers such as Whole Foods and Walmart WMT, Kroger KR, Ross Stores ROST, and TJX Companies TJX.