Kimco Realty and Weingarten Realty have entered into a definitive agreement to merge in the second half of 2021. Weingarten would fold into Kimco, creating a company with an expected market capitalization of $12 billion and enterprise value of $20.5 billion, according to the companies.

Kimco’s description of its portfolio ticks a lot of positive boxes: open-air, grocery-anchored, close-in suburbs of major U.S. metros. As of the turn of the year, it owned interests in 400 properties totaling 70 million square feet. Of Weingarten’s 159 properties, 150 are in the Sun Belt, bolstering Kimco’s holdings in that booming half of the U.S. demographic map. The companies’ announcement cited Houston, Miami, Phoenix, Atlanta and Orlando as key examples. Weingarten both owns properties and operates them under long-term leases, sometimes directly and sometimes in joint ventures. The 159 properties in which Weingarten owned a stake at the end of 2020 total 30.2 million square feet, and Weingarten’s interest adds up to 20.7 million.

The combined 559-property portfolio will be about 100 million square feet. On a pro forma basis, Kimco shareholders are expected to own 71 percent of the combined company’s equity and Weingarten shareholders to own 29 percent. Each company’s board approved the deal unanimously, and the shareholders have yet to vote.

In the announcement of the planned merger, the companies heralded their combined scale in growth markets, plus their pipeline of redevelopment opportunities and a deleveraged balance sheet. “As a larger, lower-leveraged company, Kimco is expected to have more cost-effective access to capital and benefit from earnings enhancement as existing debt matures in the coming years,” the announcement stated. Tenant diversification also factors in; no tenant would represent more than 19.3 percent of the combined companies’ annualized base rent.

Kimco CEO Conor Flynn also cited opportunities for fulfillment out of Weingarten properties: “This combination reflects our conviction in the grocery-anchored shopping center category, which has performed well throughout the pandemic, and provides last-mile locations that are more valuable than ever due to their hybrid role as both shopping destinations and omnichannel fulfillment epicenters.”