BMO sees Kimco merger with RPT as ‘attractive,’ immediately accretive to FFO

BMO Capital notes that Kimco Realty (KIM) and RPT Realty (RPT) announced an all-stock merger that is expected to be immediately accretive to FFO at a 19% premium to RPT’s last close with leasing upside. Kimco is paying an “attractive” low-8% implied cap rate for RPT, exclusive of significant longer-term development opportunities, the firm says. Kimco has a 70% geographic overlap with RPT, which has grown in the Sunbelt, and intends to sell-down RPT’s Midwest exposure. BMO also notes that with the merger, Kimco has the opportunity to expand its relationship with GIC and other joint venture partners across shopping center and net lease strategies. The firm has a Market Perform rating on Kimco’s shares with a price target of $20.50.