What made real estate investment trust RPT stock jump 20% on Monday?

Kimco Realty Corp (NYSE: KIM) says it will buy peer RPT Realty (NYSE: RPT) for $2.0 billion including debt. Shares of the latter are up 20% at writing.

Kimco deal values RPT stock at a premium

The all-stock deal that is expected to complete in early 2024 translates to $11.34 per share or 0.6049 shares of Kimco Realty for each share of RPT.

Boards of both companies have already approved the transaction. Conor Flynn – the Chief Executive of Kimco Realty said in a press release today:

This transaction presents opportunity for us to deepen our presence in key Coastal and Sun Belt markets. Approx. 70% of RPT’s portfolio aligns with our key strategic markets.

Kimco expects the merger to immediately boost its funds from operations. Shares of the commercial real estate investment trust are also in the green on Monday.

Kimco will add 56 shopping centres to its portfolio

Note that the announced agreement is subject to customary closing conditions including shareholders’ approval. According to Brian Harper – the Chief Executive of RPT Realty:

We believe aligning with Kimco is in the best interest of our stakeholders, given the multiple synergies that can be realised as a combined company.

Kimco shareholders will own 92% of the joint company that is projected to command a market cap of about $13 billion. Its portfolio will add another 56 open-air shopping centres after the deal closes.

Last month, Kimco Realty Corp said its same-property net operating income went up 2.3% on a year-over-year basis in the second quarter of this year.