Because of this overlap, Kite does not appear to be trading up in terms of portfolio demographics, as seen below. We view the merger as Kite's way of doubling down on its strategy of "skating to where the puck is going to be." With significant overlaps between the two portfolios, Kite not only gets to bolster its presence in existing markets but also picks up new exposure to key gateway cities. RPAI Shopping Center in Southlake, Texas (source: Pelion - Real Estate Intelligence) Our Take Kite Shopping Center in Orlando, Florida (source: Pelion - Real Estate Intelligence) RPAI's Property Count by Top 30 Cities Compared to Kite (source: Pelion - Real Estate Intelligence) RPAI's Property Count by Top 15 States Compared to Kite (source: Pelion - Real Estate Intelligence) Post-transaction, Kite's concentration will be diluted down to 58%, which Kite's management does not view in a negative light, given that it enables entry into other strategic markets like Seattle, Washington DC, and New York City. RPAI has 46% of its ABR exposed to these markets while Kite has 78%. ![]() While RPAI and Kite share a number of geographies, they do differ quite significantly in terms of ABR exposure to what Kite refers to as "warmer and cheaper" states. Kite and RPAI Property Map (source: Pelion - Real Estate Intelligence) Texas is RPAI's biggest market, making up 34% of its ABR. The portfolio is 92.3% occupied at ABR PSF of $19.76, slightly higher than Kite. ![]() RPAI Property Count by State (source: Pelion - Real Estate Intelligence)Ĭompared to Kite, RPAI has a larger footprint with 102 operating properties and 20M in owned GLA. RPAI Property Map (source: Pelion - Real Estate Intelligence) Source: Alphabridge research RPAI Overview Kite's biggest market is Florida, making up 27% of its ABR. 90.5% of its portfolio is currently leased with 75% of ABR coming from centers with a grocer component. Kite currently has 83 operating properties spanning 12M in owned GLA with ABR PSF of $18.53. ![]() and the consummation with RPAI will likely alleviate this discount. We believe this is partly due to its concentrated, smaller footprint compared to the likes of Kimco ( KIM ), Brixmor ( BRX ), etc. Despite this sector-leading collection rate that speaks to its portfolio quality, Kite has been and continues to trade at a relative discount to its peers. We have since been bullish on the stock with the view that demand for last-mile, open-air retail space will accelerate, given the open-air nature of Kite's assets and the shift towards decentralized distribution, as well as interstate immigration in the U.S. Kite piqued our interest back in July 2020 when the company reported sector-leading collection rates at a time when the pandemic was most acutely felt across the industry. ![]() Kite Property Count by State (source: Pelion - Real Estate Intelligence) Kite Property Map (source: Pelion - Real Estate Intelligence) Kite and RPAI Stock Performance Since the Pandemic Kite Overview The consummation will make Kite the largest pure-play, Sun Belt-focused shopping center REIT. We view this transaction as Kite's way of doubling down on its conviction of "skating to where the puck is going to be" and a sound strategic move to gain exposure to new markets while bolstering presence in existing ones. ( RPAI), creating a $7.5B REIT with 185 open-air shopping centers spanning 32 million sq. Kite ( NYSE: KRG) announced in July that it is merging with Retail Properties of America, Inc. Klaus Vedfelt/DigitalVision via Getty Images
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