In tune with its capital-recycling program,
) recently disclosed the completion of strategic transactions
worth $729 million in third-quarter 2013. Notably, this retail
real estate investment trust (REIT) closed acquisitions worth
$591 million and divestitures worth $138 million in the third
quarter of 2013.
In particular, during the quarter, DDR bought two premium
regional power centers - Winter Garden Village in Orlando and
Cumming Town Center in Atlanta - for around $259 million during
the quarter. Winter Garden Village spans 1.1 million square foot
and Cumming Town Center, which is fully leased, stretches 311,000
In addition, DDR - through a joint venture formed with an
The Blackstone Group L.P.
) - completed the acquisition of a portfolio comprising 7 prime
shopping centers for $332 million. Spanning 2.4 million square
feet of GLA, the assets are located in supply constrained MSA's
(Metropolitan Statistical Areas) such as Los Angeles, San Diego,
Washington DC, Portland and Cincinnati. These shopping centers
are currently 93% leased.
These above-mentioned 9 prime shopping centers, located in
supply constrained top 50 MSA's, benefit from the average trade
area population of over 340,000 people. Moreover, the acquired
properties are occupied by high-quality retailers like
Best Buy Co., Inc.
), Dick's Sporting Goods and Petco. These buyouts were financed
through proceeds from asset divestitures, new common equity,
assumed debt and new mortgage debt.
During third-quarter 2013, DDR divested 16 non-prime and 6
non-income generating assets and obtained gross proceeds of $138
million, of which DDR's share was $104 million. Currently, DDR
has around $79 million worth of non-prime assets under contracts
for sale, which include non-income producing properties of $48
DDR's long-term strategy of repositioning its overall
portfolio by upgrading the quality of shopping centers
strengthens its position in top MSAs of U.S. In particular, the
successful execution of the company's capital recycling efforts
bodes well for its long-term growth. Moreover, the addition
of premium assets to its high-end assets pool, along with
strengthening of the tenant base, promises steady rental revenues
for DDR in the future.
Encouraged by its strong quarterly transactions, we look
forward to DDR's third-quarter 2013 result that is scheduled to
release on Nov 4, after the closing bell. The Zacks Consensus
Estimate for third-quarter funds from operations (FFO) is
currently pegged at 28 cents per share, depicting estimated
year-over-year growth of 3.21%.
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.
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