) - a real estate investment trust (REIT) - recently provided an
update on its portfolio restructuring activities for the first
quarter of 2013. Continuing with its successful execution of the
capital recycling program, it completed $127 million worth of
strategic transactions in the quarter.
During the quarter, DDR acquired two premium assets in the 4th
largest MSA (Metropolitan Statistical Areas) of U.S. -Texas and
Calif. - for $81 million.
DDR purchased the first asset - Marketplace at Highland
Village - for $40 million. Positioned in Dallas, the property
spans 400,000 square foot and is 90% leased. Positioned at the
center of the Flower Mound/Highland Village submarket, the
shopping center generates 85% of its revenue from the U.S. retail
giants. These include
Wal-Mart Stores, Inc.
), T.J. Maxx, LA Fitness and
Office Depot Inc.
). With this upscale asset acquisition, DDR now boasts a solid
portfolio of 6 major power centers comprising 1.8 million square
feet in Dallas.
Whole Foods at Bay Place, the second asset, was acquired for
$41 million. The property is based in downtown Oakland and spans
57,000 square foot. The Class A acquisition features
WholeFoods Market Inc.
) property operating in a thickly populated high barrier-to-entry
urban infill location.
Both the assets were funded through a combination of proceeds
from asset dispositions and new common equity. The acquired
properties have an average trade area household income of $96,000
and population of 434,000 people. Notably, DDR issued 2.3 million
new shares during the quarter at an average price of $17.57
through its at-the-market common equity program. The company
generated gross proceeds of $40 million through the offering.
During the quarter, DDR sold 21 non-core and 2 non-income
producing assets and generated gross proceeds of $46 million.
Moreover, currently DDR has around $81 million worth of non-core
assets under contract for sale, which includes non-income
producing assets worth $27 million.
We remain impressed with DDR's long-term strategy of
restructuring the 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 kitty along with
strengthening of the tenant base promises steady rental
revenue.This will augur well for DDR's earnings going
DDR is expected to release its first-quarter 2013 results on
Apr 30, 2013. The Zacks Consensus Estimate for the first-quarter
FFO (fund from operations) is currently pegged at 27 cents per
DDR currently holds 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
OFFICE DEPOT (ODP): Free Stock Analysis
WHOLE FOODS MKT (WFM): Free Stock Analysis
WAL-MART STORES (WMT): Free Stock Analysis
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