DDR, Blackstone Form JV for $2 Billion Shopping Centers Buy - Analyst Blog

By
A A A

The real estate investment trust (REIT), DDR Corp. ( DDR ) collaborated with an affiliate of The Blackstone Group L.P. ( BX ) to buy 76 shopping centers for $1.975 billion. In particular, they have formed a joint venture, their third one, to acquire the properties that are currently under American Realty Capital Properties, Inc. 's ( ARCP ) ownership. In this JV, Blackstone owns 95% stake while an affiliate of DDR owns the rest.

Spanning 16.4 million square foot, the 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 ) and Bed Bath & Beyond Inc. ( BBBY ) and several other reputed ones and are currently 95.1% leased.

These properties offer DDR scope for growth and their trade area demographics are in-line with DDR's prime average while average base rent per square foot is 6% below DDR's current prime portfolio. It also has more than 30 potential contenders for "Project Accelerate" that calls for bringing back below market spaces from underperforming retailers.

Notably, the purchase price includes assumed debt of $461 million and around $800 million of new financings. Moreover, up to a maximum of $300 million in preferred equity in the joint venture would be invested by DDR and the company has also decided to offer customary leasing and management services.

Similar to the past deals, DDR would enjoy the right of first offer to purchase 10 of the assets under specific conditions. This purchase is expected to be accomplished in the third quarter of 2014 and then disposition of non-prime assets are expected to take place as part of portfolio management measures.

Going forward, we believe that the strategic acquisition of assets along with strengthening of the tenant base promises strong growth prospects for DDR. On the other hand, for American Realty, the divestiture is strategized to finance the recently disclosed buyout of the $1.5 billion Red Lobster real estate portfolio.

DDR currently holds a Zacks Rank #3 (Hold).


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

DDR CORP (DDR): Free Stock Analysis Report

BLACKSTONE GRP (BX): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

BED BATH&BEYOND (BBBY): Free Stock Analysis Report

AMER REALTY CAP (ARCP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DDR , BX , TGT , BBBY , ARCP

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

100,376,898
  • $17.62 ▲ 0.51%
83,231,837
  • $25.62 ▲ 1.91%
75,739,329
  • $111.78 ▼ 0.77%
65,297,937
  • $36.37 ▼ 1.76%
59,053,093
  • $47.66 ▲ 0.29%
53,482,350
  • $2.59 ▼ 0.38%
51,504,284
  • $7.34 ▲ 2.37%
51,434,656
  • $8.14 ▲ 6.96%
As of 12/19/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com