On Oct 4, 2013, we reinstated our long-term Neutral
). The decision reflects the company's strategic transactions in
third-quarter 2013 disclosed recently, decent second-quarter
performance and an impressive balance sheet position.
Why the Reiteration?
DDR has been following an aggressive capital recycling program
through strategic asset management to boost its well-diversified
portfolio of premium assets. In tune with this, DDR recently
disclosed the completion of strategic transactions worth $729
million in third-quarter 2013. This included acquisitions worth
$591 million and divestitures valued at $138 million.
In addition, this retail real estate investment trust (REIT)
generally inks long-term leases and has a strong tenant base of
well-capitalized, industry leading retailers such as
Wal-Mart Stores Inc.
The TJX Companies, Inc.
). Consequently, the company remains protected from short-term
market swings that weighs on other players in the industry.
Moreover, DDR's second-quarter 2013 core funds from operations
(FFO) of 27 cents came 8% higher than the year-ago figure and in
line with the Zacks Consensus Estimate. This was aided by organic
growth and acquisition of prime assets.
However, stiff competition from other players in the market
and rise in interest rates remains a threat for DDR's
profitability. In addition, increase in Internet sales, which can
adversely affect the demand for DDR's retail spaces remain our
Over the last 30 days, the Zacks Consensus Estimate for 2013
and 2014 FFO per share remained unchanged at $1.09 and $1.20,
respectively. Consequently, DDR now carries a Zacks Rank #3
DDR is scheduled to report its third-quarter 2013 earnings on
Nov 4, 2013, after the closing bell. The Zacks Consensus Estimate
for core FFO per share for the upcoming quarter is pegged at 28
cents per share, depicting a year-over-year increase of
Other Stock to Consider
Another retail REIT that is currently performing better is
The Macerich Co.
), which has a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
DDR CORP (DDR): Free Stock Analysis Report
MACERICH CO (MAC): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis
WAL-MART STORES (WMT): Free Stock Analysis
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