Jericho, N.Y. and Houston — Kimco Realty Corp. (NYSE: KIM) has announced plans to acquire fellow retail REIT Weingarten Realty Investors (NYSE: WRI) for roughly $3.9 billion. The combined company is expected to have a pro forma equity market capitalization of $12 billion and a pro forma total enterprise value of $20.5 billion.
The merger will create a national operating portfolio of 559 open-air, grocery-anchored shopping centers — one of the darlings of commercial real estate during the COVID-19 pandemic — and mixed-use assets comprising 100 million square feet of gross leasable area.
In its reasoning for the acquisition, Kimco cited enhanced asset diversification and quality; expanded geographic reach in high-growth, first-ring suburbs of core markets; greater tenant diversity; a more compelling value creation pipeline; operational savings and corporate synergies; earnings accretion and NOI growth opportunities; and an increase in the company’s financial strength and flexibility.
“We believe this transaction is a win-win for shareholders of both companies, who will benefit from the upside potential associated with owning the preeminent open-air, grocery-anchored shopping center and mixed-use real estate REIT in the U.S.,” says Conor Flynn, Kimco’s CEO.
“This combination 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. 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.”
Under 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.
Following the acquisition, the size of Kimco’s board of directors will be expanded to nine with the addition of one member of the existing board of trust managers at Weingarten. Milton Cooper will continue to serve as executive chairman of the board of directors and Mary Hogan Preusse will continue to serve as lead independent director for the combined company.
The combined company will utilize Kimco’s headquarters in Jericho following the merger. The company will also retain the Kimco name and will continue to trade under the ticker symbol KIM. Kimco shareholders are expected to own approximately 71 percent of the combined company’s equity, with Weingarten shareholders expected to own approximately 29 percent. The transaction is set to close during the second half of 2021.
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.
Kimco Realty Corp. is one of North America’s largest publicly traded owners and operators of open-air, grocery-anchored shopping centers and mixed-use assets. The company’s stock price closed on Wednesday, April 14, at $19.48 per share, up from $10.53 last year.
Houston-based Weingarten Realty Investors is an owner, manager and developer of shopping centers. As of Dec. 31, 2020, the company owned or operated 159 properties across 15 states under long-term leases. The company’s stock closed on Thursday, April 14, at $27.34, up from $16.32 last year.