) penned a letter of intent withMr. Alexander Otto and his
affiliates to sell its stake in the Luxembourg-based firm - Sonae
Sierra Brazil BV Sarl. The move will mark the total exit of the
company from Brazilian market. Including the impact of this deal,
DDR lowered its operating FFO per share guidance for 2014.
In particular, DDR is offloading its 50% stake in Sonae Sierra
Brazil BV Sarl for $343.6 million. The proceeds comprise DDR's
share in the Parque Dom Pedro shopping center worth $60.7
million; and R$26.00 per share of Sonae Sierra Brasil worth
$283.0 million - which represented a 67% premium to the company's
closing price on the IBOVESPA on Mar 7. The deal is anticipated
to close in the next 30 days, upon fulfillment of customary
Notably, DDR's stake in Sonae Sierra Brazil signifies its
total investment in the Brazilian market. This retail real estate
investment trust (REIT) plans to use the generated proceeds from
this above market price sale deal for meeting several corporate
needs such as reinvestment in premium shopping centers in major
As a matter of fact, the portfolio of Sonae Sierra Brasil - a
joint venture of DDR and Sonae Sierra Brazil BV Sarl - comprised
10 regional malls that span a total of 4.6 million square feet.
With the sale of these assets, DDR's net operating income (on pro
rata basis) from consolidated assets portfolio is anticipated to
rise to 93% from 89%.
Considering the time difference between the above-mentioned
sale deal, re-usage of the generated fund and doubled U.S. assets
divestiture guidance, DDR cut its 2014 operating FFO per share
outlook to the range of $1.14 to $1.18, from $1.17 to $1.21. In
particular, DDR now expects to dispose $400 million assets in
2014 (earlier being $200 million), in addition to this Brazilian
assets divestiture deal.
The divestiture of stake in the Brazilian market is strategic
fit and depicts the efficient capital allocation strategy of DDR.
It will help in reducing currency and development risk and aid in
expansion in premium US market. This will pave way for top line
growth in future.
DDR currently holds a Zacks Rank #3 (Hold). Some better-ranked
stocks in the REIT-Equity Trust - Retail industry include
Simon Property Group Inc.
General Growth Properties, Inc
National Retail Properties, Inc.
). All stocks carry a Zacks Rank #2 (Buy).
DDR CORP (DDR): Free Stock Analysis Report
GENL GRWTH PPTY (GGP): Free Stock Analysis
NATL RETAIL PPT (NNN): Free Stock Analysis
SIMON PROPERTY (SPG): Free Stock Analysis
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