Kimco Wraps Up $2B Purchase of RPT Realty
In its first big move of the new year, Kimco Realty has completed the acquisition of New York-based RPT Realty in an all-stock deal valued at $2 billion. The deal further solidifies Kimco’s status as North America’s largest publicly traded owner and operator of grocery-anchored shopping centers.
The purchase adds 56 open-air centers—43 of which being wholly owned—comprising 13.3 million square feet of gross leasable area, to Kimco’s existing portfolio of 527 properties. The newly added assets include Mary Brickell Village, a large grocery-anchored mixed-use property in Miami that RPT Realty acquired in the fall of 2022 for $216 million, and Northborough Crossing, a 645,785-square-foot, Wegmans-anchored shopping center in Northborough, Mass., with major retailers including BJ’s Wholesale Club, Dick’s Sporting Goods, Kohl’s and TJ Maxx.
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When the planned acquisition was announced in late August, analysts Haendel St. Juste and Ravi Vaidya of Mizuho Securities USA noted adding Mary Brickell Village to its portfolio should help Kimco achieve its target to generate 15 percent of its NOI from mixed-use properties by 2025.
The all-stock transaction also involves the assumption of debt and preferred stock. Deal benefits include earnings accretion stemming from initial cost savings synergies of approximately $34 million; of the total, about 85 percent are expected to be obtained in 2024. In addition, the acquisition will generate increased scale in high-growth target markets, expanded partnership opportunities and preservation of balance sheet strength.
The deal will also further Kimco’s strategy to expand its presence in Coastal and Sun Belt markets. The REIT plans to divest some Midwest assets but has not yet identified properties to be sold. As of September 30, Kimco owned interests in shopping centers and mixed-use assets totaling 90 million square feet.
Growing the GIC joint venture
One partnership of particular interest to Kimco is the joint venture RPT formed in December 2019 with Singapore sovereign wealth fund GIC to invest more than $300 million in open-air shopping centers in the U.S. At that time, GIC acquired a minority stake in five RPT-owned retail assets in Florida, Missouri and Michigan and committed up to $200 million of additional capital for future investments.
When the merger agreement was announced in August, Adam Gallistel, head of Americas real estate for GIC, stated the joint venture with RPT had been successful and they were looking forward to combining GIC’s extensive history of real estate investing with Kimco’s deep expertise as a leading owner and operator of open-air shopping centers and mixed-use assets to continue delivering on the strong long-term opportunities in the space.
J.P. Morgan acted as exclusive financial advisor, while Wachtell, Lipton, Rosen & Katz served as legal advisor to Kimco in the current deal. Lazard was the exclusive financial advisor and Goodwin Procter LLP was legal advisor to RPT.