Developers Diversified-Glimcher Swap Assets - Analyst Blog
09 September 2011 - 12:30AM
Zacks
Developers Diversified
Realty Corporation (DDR), a real estate investment trust
(REIT), has recently decided to swap an asset with one of its peers
Glimcher Realty Trust (GRT), as part of its
strategy to better align the portfolio with the other’s operating
platform. The transaction, likely to close in fourth quarter 2011,
is expected to be accretive to earnings to both the participating
companies.
Developers Diversified would sell
Town Center Plaza – an open-air mall spanning 650,000 square feet
in Kansas City, Kansas, to Glimcher for $139 million. In exchange,
Glimcher would sell Polaris Towne Center – a 700,000 square-foot
shopping center in Columbus, Ohio, to Developers Diversified for
$80 million. Developers Diversified will utilize the additional
proceeds from the asset swap to develop prime retail
properties.
Town Center Plaza is anchored by
leading retailers such as Macy's, Inc. (M) and
Dick's Sporting Goods Inc. (DKS). With 95%
occupancy and a high sales productivity of over $400 per square
foot, the retail property is expected to enhance the overall
quality of Glimcher's mall portfolio. In addition, the business
module of Town Center Plaza aligns well with Glimcher's core
competencies and would enable it to capitalize on its deep tenant
relationships within the mall sector.
Polaris Towne Center is a
market-dominant shopping center anchored by prime retailers such as
Target Corp. (TGT), Lowe's Companies
Inc. (LOW), and The Kroger Co.
(KR). The property is the seventh of its kind that is owned
by Developers Diversified in the Columbus MSA (metropolitan
statistical area), thereby strengthening its leading position in
the market.
The asset swap involving the
simultaneous sale and purchase of retail properties is expected to
be mutually beneficial given the core competencies of both
companies, the efficacy of each operating platform, and the
long-term value creation potential of each asset.
Headquartered in Beachwood, Ohio,
Developers Diversified acquires, owns, develops, leases and manages
shopping centers and business centers across 41 states in the U.S.,
along with Puerto Rico and Brazil. At the end of second quarter
2011, Developers Diversified owned and managed 546 retail operating
(primarily open-air, value-oriented shopping centers) and
development properties spanning approximately 126 million square
feet.
We maintain our ‘Neutral’
recommendation on Developers Diversified for the long term. The
company presently has a Zacks #3 Rank, which translates into a
short-term ‘Hold’ rating.
DEV DIVERFD RLT (DDR): Free Stock Analysis Report
DICKS SPRTG GDS (DKS): Free Stock Analysis Report
GLIMCHER REALTY (GRT): Free Stock Analysis Report
KROGER CO (KR): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
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