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103 days, 2 mergers, $3.4 billion!!

Regency/Urstadt Biddle

On May 18th, Regency Centers Corporation (Ticker:  REG) announced it is acquiring Urstadt Biddle Properties (Ticker:  UBA/UBP) in a $1.4 billion all-stock merger giving the combined company a pro forma equity market capitalization of approximately $11 billion and a total enterprise value of approximately $16 billion.  UBA/UBP shareholders received 0.347 of a newly-issued REG share for each UBA or UBP share they owned representing a total consideration of approximately $20.40/share based on Regency’s closing share price on May 17th, 2023 which represents a 20% premium to UBA’s closing share price on May 17th, 2023.  The merger eventually closed on August 18th.

Regency highlighted in its investor presentation that the merger:  1.  Grows the portfolio of high-quality, grocery-anchored shopping centers in premier suburban trade areas that benefit from supply constraints and compelling demographics; 2) UBP’s highly desirable New York Tri-State focused portfolio of neighborhood and community centers enhances Regency’s geographic diversification; and 3) Maintains a tenant roster of market-leading grocers and operators with strong credit profiles.

Following the REG/UBA merger, here is what the combined portfolio looks like:

Kimco/RPT Realty

Fast forward 103 days where Kimco Realty Corporation (Ticker:  KIM) announced it is acquiring RPT Realty (Ticker:  RPT) in a $2 billion all-stock merger giving the combined company a pro forma equity market capitalization of approximately $13 billion and a total enterprise value of approximately $22 billion.  RPT shareholders will receive 0.6049 of a newly-issued Kimco share for each RPT share they own representing a total consideration of approximately $11.34/RPT share based on Kimco’s closing share price on August 25, 2023 which represents a 19% premium to RPT’s closing share price on August 25, 2023.

The KIM/RPT merger press release noted that “The transaction will add 56 open-air shopping centers, including 43 wholly-owned and 13 joint venture assets, comprising 13.3 million square feet of gross leasable area, to Kimco’s existing portfolio of 528 properties. In addition, the Company will acquire RPT’s 6% stake in a 49-property net lease joint venture.”

KIM highlighted the strategic benefits which include:  1) Earnings accretion and Net Operating Income growth opportunities; 2) Increased scale in high-growth target markets; 3) Expanded partnership opportunities; 4) Positive financial benefit; and 5) Balance Sheet strength and liquidity.

Following the KIM/RPT merger, here is what the combined portfolio will look like:

So what prompted these mergers?  Both Regency and Kimco highlighted the dominance of its grocery-anchored shopping center tenants which have strong credit profiles.

Grocery-Anchored tenants across the portfolios include:

  • Albertsons/Safeway
  • Publix
  • Kroger
  • Whole Foods Market
  • Trader Joe’s
  • Ahold Delhaize

It’s also important to note some of the other anchor tenants that make up these shopping centers:

  • TJX
  • Home Depot
  • Ross Dress for Less
  • PetSmart
  • Burlington Coat Factory
  • Dick’s Sporting Goods
  • CVS
  • LA Fitness

The takeaway here is that shopping centers are in demand and being used by millions of customers daily.  Whether its stopping off to buy some paint or picking up dinner at the grocery store, these properties are constantly being used all-hours of the day and in many cases, these visits cannot be “replicated” online.

Something to PonderWith 2 Shopping Center REITs going away, what does this pose for the various shopping center REITs across the USA?  Will we be talking about another merger or 2 in the next few months as industry consolidation continues with some of these companies?

  1. American Assets Trust, Inc. (Ticker:AAT)
  2. Acadia Realty Trust (Ticker:AKR)
  3. Brixmor Property Group (Ticker:BRX)
  4. CTO Realty Growth, Inc. (Ticker:CTO)
  5. Federal Realty Investment Trust (Ticker: FRT)
  6. InvenTrust Properties Corp. (IVT)
  7. Kite Realty Group (Ticker:KRG)
  8. Retail Opportunity Investments Corp. (Ticker:ROIC)
  9. The Necessity Retail REIT (Ticker:RTL) –> Currently in a merger with Global Net Lease (Ticker:  GNL)
  10. SITE Centers (Ticker:SITC)
  11. Urban Edge Properties (Ticker:UE)
  12. Whitestone REIT (Ticker:WSR)
  13. Philips Edison & Company (Ticker:PECO)

Footnotes:
REG/UBA Merger Press Release:  https://investors.regencycenters.com/news-releases/news-release-details/regency-centers-acquire-urstadt-biddle-properties-all-stock

REG/UBA Merger Investor Presentation:  https://investors.regencycenters.com/static-files/518b9ea2-fcc3-40c8-bace-473f85f8da1a

KIM/RPT Merger Press Release:  https://s1.q4cdn.com/944058265/files/doc_news/2023/08/08-28-23-Kimco-to-Acquire-RPT-in-All-Stock-Transaction.pdf

KIM/RPT Merger Investor Presentation:  https://s1.q4cdn.com/944058265/files/doc_presentations/2023/08/Kimco-Realty-to-Acquire-RPT-Realty-Joint-Presentation.pdf

 

 

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