Fitch Ratings upgraded the Issuer Default Rating (IDR) of
) to 'BBB-' from 'BB+'. The outlook was changed to 'Stable' from
'Positive.' The rating upgrade follows the company's recent
disclosure regarding the acquisition of a portfolio of shopping
centers from its existing joint venture (JV) with
The Blackstone Group LP
DDR, in particular, agreed to buy Blackstone's stake in 30 of 44
shopping centers of the JV for $1.46 billion. The deal, which is
expected to close in the fourth quarter of 2013 subject to
customary closing conditions, is projected to substantially
enhance DDR's cash flow.
According to Fitch, the deal would help generate recurring cash
flow in excess of fixed-charges at a level consistent with an
investment-grade rating. Moreover, the rating agency noted
management's prudent focus on improving its credit profile,
decent liquidity and solid access to capital. The rating may be
further adjusted -- upward or downward -- based on the company's
leverage and fixed-charge coverage.
The rating upgrade of DDR is encouraging. In fact, this plays a
major role in preserving investor confidence in the stock and
helps boost its creditworthiness in the market.
As a matter of fact, this Blackstone portfolio deal adds premium
properties to DDR's wholly-owned portfolio, which are located in
regions with higher household income and greater population
density than DDR's current portfolio. These would include
Riverdale Village in Minneapolis, Shoppers World in Boston,
Woodfield Village Green in Chicago and Fairfax Towne Center in
Moreover, going forward, DDR has growth opportunities from
marking rents to market (with average base rent of $13.81 per
square foot, 5% below the DDR prime portfolio) as well as the
chance to add value through redevelopment and remerchandising
projects, tenant downsizing and center expansions.
DDR currently holds a Zacks Rank #3 (Hold). Two other retail REIT
stocks that are performing well and deserve a look include
Acadia Realty Trust
The Macerich Company
), both carrying a Zacks Rank #2 (Buy).
ACADIA RLTY TR (AKR): Free Stock Analysis
BLACKSTONE GRP (BX): Free Stock Analysis
DDR CORP (DDR): Free Stock Analysis Report
MACERICH CO (MAC): Free Stock Analysis Report
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