DDR Acquires Two Power Centers - Analyst Blog

DDR Corp. (DDR) recently announced the purchase of 50% ownership interest in two high-quality power centers from its joint venture partner. The two power centers; located in Portland, Oregan and Phoenix, Arizona, respectively; were bought for approximately $70 million.The transaction was funded through investment proceeds generated from the offering of 4.8 million shares.

Following the acquisition, DDR gained full control of the two power centers, and the company managed to repay a debt of $140 million.  The power centers will be integrated into the company’s unencumbered asset portfolio.

Tanasbourne Town Center, located in Portland, Oregon, is a large power center, spanning 566,000 square feet and is currently 97% leased. Arrowhead Crossing, located in Phoenix, Arizona, is a power center totaling 412,000 square feet and is currently 96% leased.

Both the power centers enjoy high barriers to entry with household income of over $84,000 and $73,000, respectively. The power centers are anchored by national tenants and serve a population of approximately 376,000 and 582,000, respectively, within a seven-mile radius.

These acquisitions are expected to be beneficial for the company as it enables the company to expand its portfolio of fully-owned prime assets. Moreover, financing the acquisitions through share offering improves the cash flow position of the company and further strengthens the balance sheet and provides long-term value to its shareholders

Headquartered in Beachwood, Ohio, DDR is a real estate investment trust (REIT), which acquires, owns, develops, leases and manages shopping centers and business centers across 39 states in the U.S., along with Puerto Rico and Brazil.

The company has a well-diversified portfolio concentrated mostly in the high growth areas of the country. With a focus on best-in-class retailers in strategic locations, the portfolio drives value and mitigates operating risks by generating a relatively steady revenue stream.

DDR carries a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Kimco Realty Corporation (KIM) also retains a Zacks #3 Rank.

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