Shares in America Inc.’s retail real estate RPAI,
rose 4.3% in pre-trading on Monday after the shopping mall real estate investment trust and REIT Kite Realty Group Trust KRG,
announced a merger agreement that values the shares of Retail Properties at a premium of 12.6% and implies a retail properties market capitalization of approximately $ 2.8 billion. The stock of Kite Realty was still inactive in pre-market trading. Under the terms of the transaction, each Retail Properties share will convert into 0.6230 newly issued Kite Realty shares. Based on Friday’s stock closing price, Retail Properties stock is valued at approximately $ 12.98 each. “The financial benefits of the transaction include instant earnings growth while maintaining a strong balance sheet,” said John Kite, chief executive of Kite Realty. “This merger underscores our belief in open-air retail centers as essential shopping destinations and last-mile fulfillment centers.” The deal is expected to close in the fourth quarter of 2021. The combined company will have a portfolio of 185 open-air shopping centers and an enterprise value of $ 7.5 billion. Shares of Retail Properties are up 34.6% year-to-date and Kite Realty is up 39.2%, while SPDR Real Estate Select Sector ETF XLRE,
has gained 26.5% and the S&P 500 SPX,
has increased by 15.2%.