Shopping center REIT Kimco Realty has announced it will acquire rival REIT Weingarten Realty Investors for roughly $3.87 billion. The combined company is expected to have a pro forma equity market cap of $12 billion and a pro forma total enterprise value of $20.5 billion.
Kimco's portfolio consists of open-air, grocery-anchored shopping centers and mixed-use assets, and Weingarten Realty is a grocery-anchored Sun Belt shopping center owner, manager and developer.
Under the terms of the agreement, each Weingarten common share will be converted into 1.408 newly issued shares of Kimco common stock plus $2.89 in cash. Based on the closing stock price for Kimco on April 14, 2021, this represents a total consideration of approximately $30.32 per Weingarten share. On a pro forma basis, following the closing of the transaction, Kimco shareholders are expected to own approximately 71% of the combined company's equity, and Weingarten shareholders are expected to own approximately 29%. The parties currently expect the transaction to close during the second half of 2021, subject to customary closing conditions, including the approval of both Kimco and Weingarten shareholders. This strategic transaction was unanimously approved by the Board of Directors of Kimco and the Board of Trust Managers of Weingarten.
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The merger will create a national portfolio of 559 open-air grocery-anchored shopping centers and mixed-use assets comprising about 100 million square feet of gross leasable area. These properties are largely concentrated in the top major metropolitan markets in the US.
The acquisition "reflects our conviction in the grocery-anchored shopping center category, which has performed well throughout the pandemic and provides last mile locations that are more valuable than ever due to their hybrid role as both shopping destinations and omnichannel fulfillment epicenters," says Kimco CEO Conor Flynn in prepared remarks. "It also gives us even greater density in the Sun Belt markets we are targeting as well as visibility into the trends shaping necessity-based retail."
Barclays and Lazard are acting as financial advisors, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Kimco. J.P. Morgan is acting as exclusive financial advisor, and Dentons is acting as legal advisor to Weingarten.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
