Kite Realty Group to Acquire Retail Properties of America In $7.5B Merger

Kite Realty Group Trust and Retail Properties of America have entered into a definitive merger agreement under which RPAI would merge into a subsidiary of KRG, with KRG continuing as the surviving public company. The transaction will create a top five shopping center REIT by enterprise value, with the combined company expected to have an equity market capitalization of $4.6 billion and a total enterprise value of $7.5 billion upon the closing, assuming a KRG share price of $20.83, which was the closing price on July 16, 2021. 

The combined company will have an operating portfolio of 185 open-air shopping centers comprising approximately 32 million square feet of owned gross leasable area. These properties are primarily located in “Warmer and Cheaper” metro markets in the US with 70% of centers by annualized base rent having a grocery component. 

Under the terms of the merger agreement, each RPAI common share will be converted into 0.6230 newly issued KRG common shares in a 100% stock-for-stock transaction. Based on the closing share price for KRG on July 16, 2021, this represents a 13% premium to RPAI’s closing stock price on July 16, 2021. On a pro forma basis, following the closing of the transaction, KRG shareholders are expected to own approximately 40% of the combined company’s equity and RPAI shareholders are expected to own approximately 60%. 

KRG anticipates assuming all RPAI debt and has secured a $1.1 billion term loan bridge facility in the event certain debt consents cannot be obtained prior to the closing of the transaction. 

The parties expect the transaction to close during the fourth quarter of 2021 subject to customary closing conditions, including the approval of both KRG and RPAI shareholders. The transaction was unanimously approved by the Board of Trustees of KRG and the Board of Directors of RPAI.