DDR Completes $1.6 Billion of Strategic Transactions in Second Quarter 2012
BEACHWOOD, Ohio, July 2, 2012 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced that it completed $1.6 billion of acquisitions and dispositions during the second quarter of 2012. As previously announced, a joint venture formed by Blackstone's flagship real estate fund and DDR acquired the EDT Retail Portfolio on June 20 for $1.4 billion; and on April 3, DDR acquired its joint venture partner's 50% ownership interest in two prime shopping centers in Portland and Phoenix in a transaction valued at $140 million. Additionally, during the second quarter DDR disposed of $81 million of non-prime assets, and, as previously announced, issued approximately $315 million of common equity to fund acquisitions and lower leverage.
Second quarter transactions and capital raising activity have left the company with no remaining unsecured debt maturities until May 2015 and more than 95% availability on its $815 million lines of credit.
Second quarter acquisition activity:
DDR and Blackstone's flagship real estate fund acquired the EDT Retail Portfolio, consisting of 46 open-air, value oriented shopping centers, comprised of 10.6 million square feet of GLA that is currently 90% leased. The top ten tenants by base rent include the TJX Companies, Kohl's, PetSmart, Dick's Sporting Goods, Best Buy, Bed Bath & Beyond, JoAnn's, Old Navy, Walmart, and Home Depot. The portfolio features average trade area household income of approximately $88,000 and average trade area population of over 400,000 people. More than 94% of the portfolio's net operating income is generated from prime assets, and by capitalizing on its redevelopment and leasing platforms, DDR expects to increase the leased rate for the EDT Retail Portfolio to a level comparable to its prime portfolio. DDR's contribution to the venture was $17 million of common equity and $150 million of preferred equity with a fixed dividend rate of 10%. Blackstone owns 95% of the common equity of the joint venture and an affiliate of DDR owns the remaining 5%.
Additionally, DDR acquired its joint venture partner's interest in Tanasbourne Town Center, a 566,000 square foot prime power center located in Portland, Oregon, and Arrowhead Crossing a 412,000 square foot prime power center located in Phoenix, Arizona. These properties have leased rates over 95%, and are anchored by strong credit quality national tenants such as Target, Nordstrom Rack, Bed Bath & Beyond, Ross Dress For Less, DSW and T.J. Maxx. Tanasbourne Town Center enjoys household incomes over $84,000 and a population of 425,500 people within its trade area, and Arrowhead Crossing has household incomes over $74,000 and a population of 626,000 people within its trade area. All mortgage debt previously secured by Tanasbourne Town Center and Arrowhead Crossing was repaid at closing, and these properties are now included in the Company's high quality portfolio of unencumbered assets.
Second quarter disposition activity:
During the quarter, DDR disposed of 24 assets for aggregate proceeds of $81 million, of which DDR's share was $75 million. An additional $18 million of wholly-owned assets are currently under contract for sale. Through the first half of the year, DDR has disposed of $126 million of non-prime assets, of which its share was $109 million. The assets sold in 2012 have an average trade area household income of $63,000, which is 21% below DDR's prime portfolio, and average trade area population of 173,000 people, which is 46% below DDR's prime portfolio. The top five tenants by annual base rent at these sold assets were Rite Aid, Burlington Coat Factory, JCPenney, Kmart and Dollar Tree.
David J. Oakes, chief financial officer of DDR, commented, "We're very pleased to report another quarter of sector leading capital recycling activity. The quality of our portfolio has improved significantly, and funding acquisitions with common equity and proceeds from non-prime asset sales lowered our leverage and reduced our risk profile considerably. We are confident that these efforts will create significant long-term value for all stakeholders."
DDR is an owner and manager of 469 value-oriented shopping centers representing 119 million square feet in 39 states, Puerto Rico and Brazil. 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.
DDR 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 oversupply 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 sell assets on commercially reasonable terms; 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 our ability to continue to pay dividends on our common shares at the current or higher rates. 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, 2011. 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.