OAK BROOK, IL-Kite Realty Group Trust, an Indianapolis-based shopping center owner, reports it has agreed to acquire locally-based Inland Diversified Realty Trust in a stock-for-stock deal valued at about $1.2 billion.

The transaction, expected to close in the second or third quarter of this year, increases Kite's retail portfolio from 74 to 131 properties with the total portfolio size going from 10.1 million owned square feet to 20.3 million owned square feet.

The transaction values Inland Diversified stock at approximately $10.50 a share. Kite Realty estimates the combined company will have a total equity market capitalization of approximately $2.1 billion and an enterprise value of approximately $3.9 billion, based on the closing trading price of Kite Realty's common shares on Feb. 7, 2014.

Upon completion of the merger, Kite will own properties in 26 states and will enter new markets including Westchester County, NY with the addition of the 365,905-square-foot City Center in downtown White Plains, NY and Salt Lake City with the 165,722-square-foot Draper Crossing shopping center in Draper, UT.

Inland Diversified's portfolio of 57 retail properties was 95.3% leased as of Dec. 31, 2013.

“Inland Diversified has assembled a very well located, high quality portfolio,” says Kite Realty Chairman and CEO John A. Kite, who will serve as chairman and CEO of the combined company “The asset and tenant quality and strong demographic profile will be a great complement to our portfolio.”