UPDATE: Citigroup Initiates Retail Properties of America with Buy, $10 PT; Shopping REIT Opportunity

Citigroup initiates its coverage on Retail Properties of America

with a Buy rating and a price target of $10. Citigroup notes, "We are initiating coverage of RPAI with a Buy rating and overweight in our REIT model portfolio. RPAI is a ‘value' name in the shopping centre REIT space, trading at an 8.4% current implied cap rate, 12.3x forward AFFO and a ~19% discount to NAV vs. peers DDR and KIM, trading at ~5% premiums to NAV. A discount for RPAI is warranted given higher leverage at higher interest rates, a high proportion of noncore assets, an unproven management team in the public markets, uncovered but high dividend, phased in liquidity of existing retail shareholders, and potential risks from the original private REIT structure." RPAI closed at $9.11 on Monday.