* Deal worth $2.1 bln, including debt
* Inland Diversified to get between 1.650 -1.707 Kite Realty
* Each Inland share worth $10.50, based on Kite's Friday
close of $6.15
* Kite Realty to sell Inland's multi-family assets
* Shares rise more than 5 pct
By Mridhula Raghavan
Feb 10 Kite Realty Group Trust said it
would buy Inland Diversified Real Estate Trust Inc for $1.2
billion in stock to boost its shopping center portfolio and help
it enter new markets in the United States.
Shares of Kite Realty rose more than 5 percent in morning
The deal is the latest by a U.S. real estate investment
trust (REIT) to shift focus to shopping centers, which are more
profitable than other commercial properties, such as those
leased to single tenants.
Simon Property Group, the largest owner of U.S.
malls and outlet centers, said in December it would spin off its
strip center business and smaller enclosed malls to focus on
larger retail properties.
Indianapolis, Indiana-based Kite Realty said on Monday the
deal would help it enter Las Vegas and expand in new regions in
New York and New Jersey among other states.
Kite Realty said the deal, expected to close in the second
or third quarter, would also bring more stores of tenants such
as Dick's Sporting Goods, Bed Bath & Beyond Inc
and Lowe's Companies Inc into its portfolio.
Inland Diversified shareholders could get between 1.650 and
1.707 Kite Realty shares for each Inland share held, based on
Kite Realty's average trading price for ten days ending on the
third day before Inland Diversified's stockholder meeting.
Based on Kite Realty's closing share price of $6.15 on
Friday, each Inland Diversified share would be valued at $10.50.
Kite Realty said it would also assume Inland Diversified's
debt of almost $1 billion, giving the deal an enterprise value
of about $2.1 billion, net of cash.
Kite Realty said it would pay down some of the debt by
selling three of Inland Diversified's multi-family residential
units as well as some securities owned by Inland Diversified.
In December, Inland Diversified agreed to sell its
single-tenant net-leased portfolio to Realty Income Corp
for $503 million.
Kite Realty said it expected the deal to be neutral to its
estimated funds from operations per share for 2014.
Bank of America Merrill Lynch and Barclays were the
financial advisers to Kite Realty, while Wells Fargo Securities
was Inland Diversified's adviser.
Kite Realty's legal adviser was Hogan Lovells US LLP and
Inland Diversified was advised by Alston & Bird LLP.
Shares of Kite Realty were up 4.3 percent at $6.42 in late
morning trade on the New York Stock Exchange.