Exclusive - Kite Realty in bid to merge with WP Glimcher: sources

By Mike Stone

(Reuters) - Kite Realty Group Trust (KRG.N), a U.S. shopping centre developer and landlord, has been in negotiations to merge with similarly sized peer WP Glimcher Inc (WPG.N), according to people familiar with the matter.

The combination of Kite and WP Glimcher, with respective market capitalizations of $2.3 billion and $2 billion, would give them more scale to resist pressure to lower rents, as the growing popularity of online retailers reduces mall profits.

The companies still have significant issues to resolve for any deal to materialise, and there is no certainty that any agreement will be reached, the people said this week, asking not to be identified because the matter is not public.

Kite and WP Glimcher declined to comment.

WP Glimcher shares ended up 8.2 percent at $11.39 on Wednesday, and Kite shares dropped 1.6 percent to $27.39.

Columbus, Ohio-based WP Glimcher owns, manages and develops retail properties, including regional malls and community centres. It has 118 shopping centres with tenants ranging from Saks OFF Fifth (HBC.TO) and JCPenney Company Inc (JCP.N).

Kite, based in Indianapolis, has stakes in 121 shopping centres in 20 U.S. states.

WP Glimcher is the product of Washington Prime Group's $2 billion acquisition of Glimcher Realty Trust last year. Washington Prime was spun out of Simon Property Group Inc (SPG.N) in 2014.

Kite has a track record of buying other real estate companies to redevelop their portfolio. In 2014, Kite acquired Inland Diversified Real Estate Trust Inc for $1.2 billion.

(Reporting by Mike Stone in New York; Editing by Chizu Nomiyama and Richard Chang)