On Monday, DDR Corp. (DDR), the Beachwood, OH-based retail real estate investment trust (“REIT”), priced $500 million of senior unsecured notes in an underwritten public offering. The company intends to utilize the proceeds for repayment of debt under its $350 million term loan and $750 million unsecured revolving credit facility, if available. DDR also wishes to use the funds for general corporate purposes, such as repayment of debt from time to time.
DDR, one of the major retail REITs in the U.S., is engaged in the acquisition, ownership, development, redevelopment, leasing and management of shopping centers in the high-growth areas of the country. In order to enhance its portfolio-mix, the company is continuously investing in assets while divesting its non-prime and non-income producing assets.
The latest $500 million offering of 3.625% notes is due for maturity on 2025. From Aug 1, 2015 onwards, payments of interest will be made semi-annually on Feb 1 and Aug 1 of each year. This public offering, subject to certain customary closing conditions, is likely to close on or around Jan 22, 2015.
Notably, for the full year 2014, DDR completed $2.64 billion worth of acquisitions and $1.63 billion worth of dispositions. For the Oct 2014 – Dec 2014 quarter, the company made $1.94 billion acquisitions and divested non-prime operating assets worth of $572 million. This kind of opportunistic investments requires a lot of funds and the pricing of senior notes is a step to strength the liquidity position of the company.
DDR currently holds a Zacks Rank #4 (Sell). Some top-ranked stocks in this space include The Macerich Company (MAC), CBL & Associates Properties Inc. (CBL) and Kimco Realty Corp. (KIM). All these stocks carry a Zacks Rank #2 (Buy).
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