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NEW HYDE PARK, NY-Kimco Realty Corp., based here, and Mid-Atlantic Realty Trust entered into a definitive merger agreement where Kimco will acquire all of the outstanding shares of MART for $21 per share in cash in a transaction in which MART will merge into a Kimco subsidiary. Following the acquisition, Kimco will bring its total interests to 684 properties comprising approximately 98 million sf of leasable space.

The transaction has a total equity value of approximately $444 million based upon MART’s approximately 21 million common shares and partnership units outstanding. Kimco will acquire the properties subject to MART’s net debt, which, as of March 31, was approximately $236 million. The merger is subject to approval by MART’s shareholders and to customary closing conditions, and is expected to close on or about September 15.

The Baltimore-based MART holds equity interests in 41 operating shopping centers in Maryland, Virginia, New York, Pennsylvania, Massachusetts and Delaware. Thirty six are wholly owned, while four are under redevelopment or expansion with a gross leasable area of approximately 4.7 million sf. Approximately 95% of the stabilized square footage is currently leased. There are also three shopping centers under development with a total estimated square footage of 183,500 and other commercial assets totaling approximately 856,000 sf as well as 80 acres of undeveloped land.

Kimco believes the acquisition will strengthen its presence in states where it currently owns interests in 114 properties. Following the closing of the acquisition, Kimco will own interests in 684 properties comprising approximately 98 million sf of leasable space.

The acquisition is not a bargain, according to a Lehman Brothers report. Lehman’s Stuart Axelrod says Kimco is expected to keep 20% of equity and find JV equity for remaining 80%. One property Lehman Brothers anticipates will be sold is the 625,000-sf Harford Mall in Virginia.

“Few REIT’s can match Kimco’s proven track record in converting misplaced credit-tainted real estate into earnings growth,” the report says of Kimco.

Kimco says it will target a substantial number of the properties for its strategic co-investment programs, while selected non-core assets will be immediately marketed for sale.

“We will evaluate each property and allocate them to Kimco’s strategic co-investment programs, perhaps even creating new ones,” says Kimco Chairman and CEO Milton Cooper. “This fits well with our strategy of growing our management business and generating solid investment returns for our partners while conserving our own equity capital.”

UBS Securities LLC acted as financial advisor to Kimco.Wachovia Securities LLC acted as financial advisor to MART. Goodwin Procter LLP acted as legal counsel to Kimco. Gordon, Feinblatt LLC of Baltimore and Hunton & Williams LLP acted as legal counsel to MART.

Initial funding for the transaction will be provided by Kimco’s $500 million revolving credit facility or other interim loan facilities. At the beginning of June, Kimco obtained a new $500 million revolving line of credit, expandable up to $600 million, to replace its existing $250 million revolving facility, which was scheduled to expire in August 2003. Eighteen banks are participating in the facility, which will be used for general corporate purposes.

For the twelve months ended December 31, 2002, Kimco’s net income increased 3.9% to $245.7 million from $236.5 million. During that timeframe, Kimco acquired interests in 107 shopping centers at a cost of approximately $1.4 billion.

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