Newswire Mann Report

Kite Realty Group Trust, Retail Properties of America Announce $7.5B Merger

RPAI's Ella at Carillon (Photo via PRNewswire)

Open-air shopping center companies Kite Realty Group Trust and Retail Properties of America Inc. have announced plans to merge, creating a top-five shopping center REIT by enterprise value of $7.5 billion. Plans call for RPAI to merge into a subsidiary of KRG, with KRG continuing as the surviving public company.

The merger will create an operating portfolio of 185 open-air shopping centers comprised of approximately 32 million square feet of owned gross leasable area. These properties are primarily located in warmer metro markets in the United States with 70% of centers by annualized base rent (ABR) having a grocery component. About 40% of the ABR is located in Texas and Florida. The portfolio also will have what it calls a “meaningful” presence in Washington, D.C; New York City and Seattle.

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. KRG anticipates assuming all RPAI debt and has obtained a financing commitment to provide 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.

“This merger marks a momentous day for KRG and our shareholders,” said John A. Kite, chairman and CEO of Kite Realty Group. “The combination of our firms brings together two high-quality, complementary portfolios. The combined company will have durable cash flows, operational upside and external value creation opportunities. The financial benefits of the transaction include immediate earnings accretion, while maintaining a strong balance sheet. This merger further demonstrates our conviction in open-air retail centers as essential shopping destinations and last mile fulfillment centers. We are energized about the future of this combined company.”