DDR Acquires Two Prime Power Centers for $151 million in the Fourth
Quarter and Closes $2.1 billion of Acquisitions in 2012
BEACHWOOD, Ohio, Jan. 3, 2013 /PRNewswire/ -- DDR Corp.
(NYSE: DDR) today announced the acquisition of two prime power
centers for $151 million and the
disposition of $255 million of
non-prime operating assets ($62
million at DDR's share) during the fourth quarter of 2012.
For the full year 2012, the Company closed $2.1 billion of acquisitions ($760 million at DDR's share) and disposed of
$347 million of non-prime operating
assets ($143 million at DDR's share).
In addition, the Company sold $61
million of non-income producing assets during the quarter
and $107 million ($96 million at DDR's share) for the year. DDR
issued $75 million of common equity
in the fourth quarter and $511
million in 2012 to fund the net acquisition of market
dominant power centers and to further reduce overall leverage.
Prime acquisitions in 2012 have an average leased rate of 94% with
average trade area household income of $83,000 and population of 548,000 people.
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Fourth quarter acquisition activity:
Fourth quarter acquisitions consist of two prime power centers
located in North Carolina that
closed in late December. The Company funded these acquisitions
through a combination of proceeds from asset sales, new common
equity, and the November unsecured notes issuance. The Company
accessed its at-the-market common equity program and issued 4.8
million new common shares during the quarter at an average price of
$15.50, generating gross proceeds of
$75 million. The acquired properties
are not encumbered by mortgage debt, and were added to DDR's
growing, high quality unencumbered asset pool.
DDR purchased Carolina Pavilion, from Blackstone Real Estate
Partners VII, located in Charlotte, North
Carolina, for $106 million.
The 94% leased, 852,000 square foot prime power center features
anchor tenants such as Target, Kohl's, Nordstrom Rack, Ross
Dress for Less, buybuy BABY, Bed Bath & Beyond, Jo-Ann
Fabric and Craft Stores and AMC Theatres. In addition, new leasing
activity with national anchors including PetSmart and Golfsmith
will soon fill 85,000 square feet of currently vacant space. The
prime power center has an average trade area household income of
$82,000 and a trade area population
of 812,000 people.
Poyner Place, in Raleigh, North
Carolina, was purchased for $45
million. This 434,000 square foot prime power center is 96%
leased, anchored by Target, Ross
Dress for Less, Old Navy, World Market, Shoe Carnival, and
Pier 1 Imports. Trade area demographics include an average
household income of $78,000 and
population of 367,000 people.
Fourth quarter disposition activity:
During the quarter, DDR disposed of seven non-prime operating
assets for aggregate proceeds of $255
million ($62 million at DDR's
share). For the full year, the Company disposed of
$347 million of non-prime operating
assets, of which DDR's share is $143
million. In addition, the Company sold $61 million of non-income producing assets during
the quarter and $107 million
($96 million at DDR's share) for the
year. An additional $96 million of
non-prime assets ($90 million at
DDR's share) are currently under contract for sale, including
$31 million of non-income producing
assets.
Other transactions activity:
Additionally, the Company's joint venture Sonae Sierra Brasil completed the sale of its
10% ownership interest in Patio Brasil, its 51% interest in
Shopping Penha, and 30% interest in Tivoli Shopping, for
$103 million ($34 million at DDR's share). Sonae Sierra
Brasil will continue to manage and lease Shopping Penha and Tivoli
Shopping for at least three years.
Also, DDR reached agreement to recapture a 150,000 square foot
store from Macy's in Pasadena,
California. Gaining control of this highly desirable space
will allow DDR to commence a significant redevelopment of Paseo
Colorado, a 566,000 square foot prime shopping center with average
trade area household income of $96,200 and trade area population of nearly
1,000,000 people.
DDR issued $150 million of
unsecured notes at a yield to maturity of 3.5% in November through
the reopening of its $300 million ten
year senior unsecured notes. In December, DDR closed $365 million of new long-term financings,
comprised of a $265 million mortgage
loan and a $100 million increase in
the unsecured term loan that initially closed in January 2012. The mortgage is a seven-year loan
with New York Life, is secured by four prime shopping centers, and
interest is fixed for the term at 3.95%. DDR has entered into
interest rate swap contracts that fix LIBOR on the $100 million of additional unsecured term loan
proceeds resulting in a fixed interest rate of 2.98% for its term
through 2019. Proceeds from these financings were used to repay the
$350 million mortgage loan, secured
by six prime shopping centers, that was set to mature in
April 2013 with a 5% fixed rate. As a
result of this refinancing, two high quality prime power centers
have been added to the Company's unencumbered asset pool in
addition to the prime power centers acquired in the fourth quarter.
Only $41 million of consolidated
maturities remain in 2013.
David J. Oakes, president and
chief financial officer of DDR, commented, "We continued to
prudently grow and improve our portfolio in 2012 through selective
acquisitions of dominant power centers and the sale of non-prime
assets. In addition, net investment activity well in excess of our
budget was primarily funded with half a billion dollars of equity
issuance, allowing our balance sheet to continue to improve along
with our portfolio. All of these activities should improve our near
and long term growth rates in EBITDA, Net Asset Value and Funds
From Operations as well as further reduce our risk profile. We
expect that growth in 2013 will come from further lease-up, off
market acquisitions and the active management of our assets."
About DDR
DDR is an owner and manager of 459 value-oriented shopping
centers representing 116 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.
Safe Harbor
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 buy or sell assets on
commercially reasonable terms; our ability to complete acquisitions
or dispositions of assets under contract; 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, 2011, 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.