One of the leading retail real estate investment trusts
) - recently provided an update on its portfolio repositioning
activities carried on in the second-quarter 2013. In consistence
with its capital-recycling program, the company completed
strategic transactions worth $175 million.
During the quarter, DDR acquired one of its joint venture (JV)
partners' 85% interest in 5 chief power centers in Atlanta, Tampa
and Richmond - among the top 50 MSAs (Metropolitan Statistical
Areas) of the U.S. The premium assets - The Walk at Highwoods
Preserve, Douglasville Pavilion, Commonwealth Center,
Chesterfield Crossing and Jefferson Plaza - were bought for $94
million. These centers were managed and leased by DDR over the
past six years.
The portfolio that spans 1.3 million square feet is currently
98% occupied by industry leading global retailers -including T.J.
The Home Depot, Inc.
The Fresh Market, Inc.
). On the other hand, the small shop space represents only 13% of
total gross leasable area.
The unencumbered acquired properties can benefit from a
population of over 330,000 with an average trade area household
income of $74,000. The above-mentioned buyouts were financed
through proceeds from asset divestitures and new common equity.
In particular, DDR issued 2.5 million new shares during the
quarter at an average price of $17.83 and generated gross
proceeds of $45 million through the offering.
During the quarter, the company divested 11 non-core and 4
non-income generating assets and obtained gross proceeds of $64
million, of which DDR's share was $60 million. Currently, DDR has
around $118 million worth of non-core assets under contracts for
sale, which include non-income producing properties of $48
We are encouraged with DDR's long-term strategy of
repositioning its overall portfolio by upgrading the quality of
shopping centers and improving the balance sheet by reducing
leverage. In particular, the addition of upscale assets and
mortgage free assets to its high-end assets pool, along with
strengthening of the tenant base, promises steady rental revenues
for DDR in the future.
The company is expected to release its second-quarter 2013
results on Jul 31, 2013. The Zacks Consensus Estimate for
second-quarter funds from operations (FFO) is currently pegged at
27 cents per share, depicting an estimated year-over-year growth
DDR currently carries a Zacks Rank #3 (Hold).
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.
DDR CORP (DDR): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
FRESH MARKET (TFM): Free Stock Analysis
TARGET CORP (TGT): Free Stock Analysis Report
To read this article on Zacks.com click here.