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Kimco/RPT: Signs of More Retail REIT Consolidation to Come?

RJ Hottovy
Sep 1, 2023
Kimco/RPT: Signs of More Retail REIT Consolidation to Come?

The big news in commercial real estate this week was the announcement that Kimco Realty plans to acquire RPT Realty in a $2B all-stock deal. The transaction–which is expected to close in early 2024–will extend Kimco’s lead as the largest publicly traded owner and operator of open-air, grocery-anchored shopping centers in the U.S. Collectively, the combined company will have almost 600 mostly open-air shopping centers–528 for Kimco and 56 for RPT (43 wholly-owned and 13 joint venture assets)--spanning 103M square feet of gross leasable area.

There are several obvious reasons why this is a positive transaction for Kimco. First, it expands the company’s presence in several key markets, as roughly 70% of RPT’s portfolio overlap with Kimco’s strategic markets in Coastal and Sun Belt markets (below). Kimco management highlighted Tampa, Miami, Atlanta, and Boston as notable markets with increased scale. Kimco also plans to divest a group of RPT properties in the Midwest that it views as not consistent with its strategy.


According to Placer’s Migration Trends tool, three of these markets (Tampa, Atlanta, and Boston) were among the Top 25 markets in terms of population growth from 2019 to 2022 (below).

Moreover, the trade areas for Kimco and RPT’s respective properties complement each other well. Both company’s properties generally over-index to higher-income households (below) in suburban settings.


This transaction will also expand Kimco’s portfolio of grocery-anchored shopping centers in key markets, with RPT helping to nearly double the percentage of grocery-anchored centers in Boston and raising the percentage in Atlanta and Tampa.

Source: Kimco Acquisition of RPT Realty Investor Presentation

While grocery store operators have been weathering a change in behavior as consumers seek out value–something we’ve discussed several times this year–grocery anchored centers have generally seen the strongest visitation trends by property type according to our data.

Beyond geographic overlap, property type fit, and a tenant base of well-capitalized national retailers, this deal also brings additional net operating income (NOI) and cost synergies. According to the transaction press release, “The transaction is expected to be immediately accretive to key financial and operating metrics, including initial cost savings synergies of approximately $34M. Kimco is well positioned to unlock embedded value in the portfolio by increasing portfolio occupancy, marking leases to market, realizing the 330-basis point spread in RPT’s existing signed not open (“SNO”) lease pipeline, and creating value through future redevelopment opportunities to drive future NOI growth.”

While the aforementioned geographic, property type, tenant mix, NOI and cost synergies are important, we believe this deal largely comes down to scale advantages. As shopping centers continue to evolve post-pandemic, scale becomes increasingly important (and likely explains why we’ll see additional deals in this relatively fragmented category in the years to come). Having the right tenant mix is obviously important to mall owners and operators, but many operators have become reliant on a smaller number of tenants to drive visits as they reallocate square footage to mixed-use purposes. As such, it’s become important for operators to cultivate the brand intangible assets of their properties themselves and find ways to leverage scale across its portfolio. We’ve seen several examples using our visitation data where operators embarking in community engagement strategies or using loyalty programs have helped to drive visits not only to their centers, but also helped their tenants outperform their direct peers in many cases.

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RJ Hottovy

Head of Analytical Research,

R.J. Hottovy, CFA has covered the restaurant, retail, and e-commerce sectors for 20 years as an equity analyst and strategist for Morningstar, William Blair & Co., and Deutsche Bank. R.J. also brings a wealth of experience with early-stage investments as a committee member for the IrishAngels / Vitalize venture capital group. Over the past three years, he advised over 50 food service companies on more than $200 million in early-stage capital raises and M&A transactions.

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