DDR Corp. (DDR) in collaboration with an affiliate of The Blackstone Group L.P. (BX) disclosed the completion of the acquisition of 71 shopping centers for $1.93 billion. Following this news, shares of the company rose 0.23% during the regular trading session on Oct 21.
The acquired assets are mainly prime power centers positioned in Los Angeles, Houston, Denver, Chicago, Atlanta, Washington D.C. and Phoenix. These power centers are occupied by high-quality retailers like Target Corp. (TGT), PetSmart, Trader Joe’s, Bed Bath & Beyond and several other reputed names.
These properties offer DDR scope for growth and their trade area demographics are in-line with the company's prime average while average base rent per square foot is 6% below DDR's current prime portfolio. It also has several potential contenders for "Project Accelerate" that calls for bringing back below market spaces from underperforming retailers.
Notably, in Jun 2014, DDR and Blackstone formed a joint venture (their third one) to acquire properties from American Realty Capital Properties, Inc. (ARCP). In this JV, Blackstone owns 95% stake while an affiliate of DDR owns the rest. As per the JV terms, DDR will offer customary leasing and management services and enjoys the right of first offer to purchase 10 of the assets under specific conditions.
DDR has invested around $20 million of common equity and $300 million of preferred equity shares (with a fixed dividend rate of 8.5%) in this JV. Moreover, this retail real estate investment trust (REIT) assumed its share of JV debt of $62 million, on a pro rata basis.
Going forward, we believe that the strategic acquisition of assets along with strengthening of the tenant base promises strong growth prospects for DDR. As a matter of fact, the company is currently continuing with its aggressive portfolio transformation initiatives to strengthen its position in top MSAs of the U.S. In relation to that, this month, DDR disclosed that it has made $699 million of transactions in the third quarter of 2014 (read: DDR Closes Deals Worth $699 in Q3, Boosts MSAs Presence). Such deals bode well for DDR’s future growth.
DDR is scheduled to announce third-quarter 2014 results on Oct 30.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment