DDR Announces $660 Million of Transactions in the Second Quarter 2014
BEACHWOOD, Ohio, July 1, 2014 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced that it closed on the acquisition of four prime power centers in the second quarter. The Company is also under contract to acquire one asset in Philadelphia and a portfolio of 76 assets from affiliates of American Realty Capital Properties, Inc. (NASDAQ: ARCP) in a joint venture with affiliates of Blackstone Real Estate Partners VII for $1.98 billion, of which $384 million is expected to be DDR's share.
The four large format prime power centers that the Company acquired in the second quarter are located in downtown Chicago, Sacramento, Cincinnati, and Colorado Springs. The assets feature strong demographic profiles across each trade area and average over 450,000 people with household incomes of $87,000. Of the aggregate $265 million purchase price, over $100 million is attributable to a 90% leased urban Chicago power center currently under development that features Dick's Sporting Goods, Nordstrom Rack, and T.J. Maxx. DDR previously served as a mezzanine lender on the asset, which included a right of first offer that allowed for an off-market acquisition that enabled DDR to gain control of the center prior to completion in order to leverage the Company's leasing platform to maximize value. DDR funded a portion of the acquisition with 1.04 million operating partnership units. The Company also acquired a power center in Sacramento where DDR leveraged its operating platform to create additional value through the acquisition of a below market ground lease upon closing, a prime power center anchored by Target and Costco in Cincinnati on off-market terms, and a prime power center in Colorado Springs adjacent to an existing Whole Foods-anchored DDR asset where synergies and leasing leverage can be realized.
During the second quarter, DDR also sold 11 operating assets and six land parcels for $51 million at the Company's share, and closed on the sale of its 50% ownership interest in Sonae Sierra Brazil BV Sarl for gross proceeds of $344 million. DDR has 25 assets totaling $369 million at 100% ownership, inclusive of $58 million of non-income producing assets, currently under contract for sale, representing a combined $355 million of proceeds at DDR's share. Of the domestic operating assets sold or under contract, 21 are small format neighborhood centers or single tenant assets averaging 116,000 square feet with a leased rate of approximately 82%.
Additionally, the Company closed on a $75 million non-recourse mortgage loan secured by Plaza Escorial, a 636,000-square-foot shopping center in Puerto Rico. The final loan terms, completed with a leading life insurance company, include a seven-year term and an interest rate of 3.59%.
"We are pleased to report the continued success of our portfolio transformation efforts amidst a strong pricing environment. We intend to remain net sellers this year, and will use the proceeds to reinvest in prime power centers in top MSAs at opportunistic pricing where our operating platform can create outsized returns. We will continue to seek attractive investments and remain judicious capital allocators as cap rates continue to compress," said David J. Oakes, president and chief financial officer of DDR.
About DDR Corp.
DDR is an owner and manager of 391 value-oriented shopping centers representing 108 million square feet in 39 states and Puerto Rico. The Company's assets are concentrated in high barrier-to-entry markets with stable populations and high growth potential and its portfolio is actively managed to create long-term shareholder value. DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol DDR. Additional information about the Company is available at www.ddr.com, as well as on Twitter, LinkedIn and Facebook.
DDR Corp. considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as supply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant; constructing properties or expansions that produce a desired yield on investment; our ability to buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract, including the ability of the joint venture between DDR and Blackstone to successfully complete the acquisition of the portfolio from American Realty Capital Properties, Inc.; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements or our failure to satisfy conditions to the completion of these arrangements; and the success of our capital recycling strategy. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company's Form 10-K for the year ended December 31, 2013, as amended. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
SOURCE DDR Corp.