BEACHWOOD, Ohio, May 15, 2013 /PRNewswire/ -- DDR Corp.
(NYSE: DDR) today announced an agreement to acquire a portfolio of
prime power centers from its existing joint venture with Blackstone
Real Estate Partners VII (Blackstone). The acquisition, which is
expected to close in the fourth quarter of 2013 subject to
customary closing conditions, will significantly increase DDR's
cash flow generated by very high quality, large format prime power
centers located in top MSA's in the
United States.
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)
The joint venture between Blackstone and DDR currently owns 44 shopping
centers, and DDR has executed a purchase and sale agreement to
acquire Blackstone's 95% common
equity ownership interest in 30 of these shopping centers for
$1.46 billion. DDR intends to fund
this acquisition through a combination of the assumption of
$398 million in existing debt, nearly
$150 million from the repayment of
preferred equity and mezzanine loans previously funded by DDR and
proceeds from the issuance of common equity and unsecured debt. As
part of the consideration, DDR has the right, subject to certain
conditions, to issue common shares to Blackstone in an amount not to exceed
$250 million.
The portfolio being purchased is comprised primarily of market
dominant prime power centers located in the top 40 MSA's of
the United States, and includes
all ten properties that DDR has a current right of first offer to
acquire, such as fortress shopping centers Shoppers World in
Boston, Woodfield Village Green in
Chicago, Fairfax Towne Center in
Washington DC, and Riverdale Village in Minneapolis. The 14 properties not being
acquired will remain in the venture owned 95% by Blackstone and 5% by DDR, and DDR will
continue to manage and lease those properties pursuant to its
existing agreements with Blackstone.
The properties to be acquired include power centers DDR has
acquired, developed, leased and managed through various ventures
since 1995. The portfolio features very strong trade area
demographics with an average household income of $91,000 and population of 543,000 people, 14% and
21%, respectively, above the current DDR prime portfolio. The
acquisition greatly improves DDR's pro rata MSA exposure with
approximately 50% of the portfolio value generated by power centers
located in top 20 MSA's in the United
States, and approximately 80% of the value coming from the
top 40 MSA's. Average base rent is $13.81 per square foot, 5% below the DDR prime
portfolio, which creates organic growth opportunities when rents
can be marked to market. The portfolio is comprised of 11.8 million
total square feet, is 95% leased, and consists of large format
centers with an average size of approximately 400,000 square feet,
20% larger than the average DDR prime power center. In addition to
growth opportunities from marking rents to market, DDR intends to
leverage its operating platform to create incremental value in the
coming years through redevelopment and remerchandising projects,
tenant downsizings and center expansions.
Consistent with DDR's long-term strategic objectives, the
acquisition will be prudently capitalized with permanent equity and
long-term debt. The $398 million of
assumed debt is comprised of mortgage debt with a weighted average
interest rate of 5.9% and a weighted average maturity of three
years, including a $260 million loan
maturing in 2015 with an interest rate of 6.4% secured by four high
quality shopping centers with a current LTV of approximately 50%.
The acquisition also provides opportunities to unencumber 21 of the
30 assets and to significantly improve the quality and scale of the
Company's portfolio of wholly-owned, unencumbered power centers. As
a result of this transaction and strong year-to-date operating
metrics, the Company is revising 2013 guidance for Operating FFO at
this time to a range between $1.08 and
$1.11 per diluted share.
"We are very pleased to add these outstanding assets to our
wholly-owned portfolio," stated Daniel B.
Hurwitz, chief executive officer of DDR. "It was our goal to
accomplish this upon the initial formation of the venture with
Blackstone, and we thank them for
being outstanding partners. We look forward to our continued
relationship."
"This acquisition will significantly advance many of our
strategic objectives, and is yet another example of our ability to
mitigate risk on attractive investment activity through prudent
underwriting and funding," commented David
J. Oakes, president and chief financial officer of DDR. "The
acquisition will be funded responsibly, and will position us well
for strong relative growth in cash flow generated by high quality
shopping centers over the long term."
The shopping centers being acquired include:
|
|
|
Total
|
|
|
|
GLA
|
Center
|
MSA
|
ST
|
(000s)
|
|
|
|
|
Riverdale
Village
|
Minneapolis
|
MN
|
941
|
Shoppers
World
|
Boston
|
MA
|
778
|
Woodfield
Village Green
|
Chicago
|
IL
|
674
|
Great
Northern Plaza
|
Cleveland-Akron
|
OH
|
669
|
FlatAcres
/ Parker Pavilions
|
Denver
|
CO
|
631
|
MacArthur
Marketplace
|
Dallas-Fort Worth
|
TX
|
599
|
Belden
Park Crossings
|
Cleveland-Akron
|
OH
|
594
|
Connecticut Commons
|
Hartford
|
CT
|
566
|
Midway
Marketplace
|
Minneapolis
|
MN
|
487
|
Pioneer
Hills
|
Denver
|
CO
|
479
|
Merriam
Town Center
|
Kansas
City
|
KS
|
474
|
Marketplace of Brown Deer
|
Milwaukee
|
WI
|
405
|
Marketplace At Towne Center
|
Dallas-Fort Worth
|
TX
|
404
|
Overland
Pointe Marketplace
|
Kansas
City
|
KS
|
382
|
Grandville
Marketplace
|
Grand
Rapids
|
MI
|
351
|
Township
Marketplace
|
Pittsburgh
|
PA
|
299
|
Harbison
Court
|
Columbia
|
SC
|
298
|
Carillon
Place
|
Naples
|
FL
|
283
|
Shoppers
World Brookfield
|
Milwaukee
|
WI
|
265
|
Lake
Walden Square
|
Tampa
|
FL
|
257
|
Turner
Hill Marketplace
|
Atlanta
|
GA
|
255
|
Fairfax
Towne Center
|
Washington
DC
|
VA
|
253
|
Lake
Brandon Village
|
Tampa
|
FL
|
244
|
Riverchase
Promenade
|
Birmingham
|
AL
|
228
|
Piedmont
Plaza
|
Orlando
|
FL
|
208
|
Jo-Ann
Plaza
|
Buffalo
|
NY
|
203
|
Cool
Springs Pointe
|
Nashville
|
TN
|
201
|
McKinney
Marketplace
|
Dallas-Fort Worth
|
TX
|
184
|
Frisco
Marketplace
|
Dallas-Fort Worth
|
TX
|
108
|
Shops At
Turner Hill
|
Atlanta
|
GA
|
32
|
|
|
|
11,752
|
About DDR Corp.
DDR is an owner and manager of 445 value-oriented shopping
centers representing 116 million square feet in 39 states,
Puerto Rico and Brazil. The Company's assets are concentrated
in high barrier-to-entry markets with stable populations and high
growth potential and its portfolio is actively managed to create
long-term shareholder value. DDR is a self-administered and
self-managed REIT operating as a fully integrated real estate
company, and is publicly traded on the New York Stock Exchange
under the ticker symbol DDR. Additional information about the
Company is available at www.ddr.com.
Safe Harbor
DDR considers portions of the information in this press release
to be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended, with respect to the
Company's expectation for future periods. Although the
Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
it can give no assurance that its expectations will be
achieved. For this purpose, any statements contained herein
that are not historical fact may be deemed to be forward-looking
statements. There are a number of important factors that
could cause our results to differ materially from those indicated
by such forward-looking statements, including, among other factors,
our ability to successfully complete the proposed acquisition of
properties from the Blackstone
joint venture, local conditions such as oversupply of space or a
reduction in demand for real estate in the area; competition from
other available space; dependence on rental income from real
property; the loss of, significant downsizing of or bankruptcy of a
major tenant; constructing properties or expansions that produce a
desired yield on investment; our ability to buy or sell assets on
commercially reasonable terms; our ability to complete acquisitions
or dispositions of assets under contract; our ability to secure
equity or debt financing on commercially acceptable terms or at
all, including in connection with the proposed acquisition of
properties from the Blackstone
joint venture; our ability to enter into definitive agreements with
regard to our financing and joint venture arrangements or our
failure to satisfy conditions to the completion of these
arrangements; and the success of our capital recycling
strategy. For additional factors that could cause the results
of the Company to differ materially from those indicated in the
forward-looking statements, please refer to the Company's Form 10-K
for the year ended December 31, 2012,
as amended. The Company undertakes no obligation to publicly
revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof.
SOURCE DDR Corp.