Retail real estate investment trust (“REIT”) – DDR Corp. (DDR) – completed the year 2014 as a net seller of assets amid solid pricing for its properties. The company also announced the closing of $4.3 billion of transactions in 2014, comprising $2.64 billion of acquisitions and $1.63 billion of dispositions at 100%.
That also includes the purchase of 71 prime shopping centers for $1.94 billion and disposition of 41 non-prime operating assets aggregating $572 million in the fourth quarter.
In October, DDR, in a joint venture (JV) with the Blackstone Real Estate Partners VII affiliate, bought 70 shopping centers previously owned by American Realty Capital Properties Inc. (ARCP) for $376 million at the company's share. In the fourth quarter, another prime power center was also acquired by DDR for $15 million at the company's 95% share.
Fourth-quarter dispositions involved 41 non-prime operating assets and 7 land parcels and included portfolios held in JVs with Kuwait Financial Centre as well as Blackstone Real Estate Partners VII. Further, the company has six non-prime assets under contract for sale that amounts to a total expected volume of $63 million at the company's share.
For full-year 2014, DDR acquired 83 prime shopping centers for $1.06 billion at DDR's share and disposed 82 non-prime operating assets and 16 land parcels for $1.21 billion at DDR's share.
Notably, DDR has been following an aggressive capital-recycling program through strategic asset management, which is aimed at reducing currency and development risks, and aiding expansion in premium U.S. markets. The company is divesting its non-prime and non-income producing assets and using the proceeds for reinvestment in premium U.S. shopping centers.
Besides in 2014, DDR accomplished its departure from all markets outside of North America and its portfolio now comprises 32 wholly-owned non-prime assets, accounting for only around 2% of its gross asset value. We believe such efforts would pave the way for top-line growth in the long term. Recently, DDR has also announced an 11% dividend hike, which is encouraging.
DDR currently carries a Zacks Rank #3 (Hold). Investors interested in the retail REITs may consider better-ranked stocks like Kimco Realty Corp. (KIM) and The Macerich Co. (MAC). Both stocks have a Zacks Rank #2 (Buy).
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