DDR to Redevelop 4 Malls - Analyst Blog
October 11 2011 - 8:30AM
Zacks
DDR Corp. (DDR), a
real estate investment trust (REIT), has recently announced its
plans to redevelop four shopping centers as part of its long-term
strategy to follow a significant redevelopment program to fuel its
growth engine. These include the expansion of its existing stores
in Ohio and Puerto Rico and the addition of two new stores for
Wal-Mart Stores Inc. (WMT) in Florida.
DDR is expected to invest
approximately $20 million for the redevelopment of these assets.
The projects will be funded with retained cash flow and recycled
capital from the continued sale of non-core assets. The company
expects the redevelopment projects to yield a return on investment
of over 10%.
Wal-Mart intends to build a 160,000
square foot store on an undeveloped five-acre land parcel adjacent
to ‘The Shops at Midtown Miami’ – a 645,000 square foot mixed-use
center in Miami, Florida, owned by DDR. At the same time, the
retailer plans to open an 85,000 square foot store at ‘Tarpon
Square’ – a 199,447 square foot retail property in Tarpon Springs,
Florida, also owned by DDR.
DDR Corp. has long been minimizing
ground-up development spending in its domestic portfolio, and
instead started allocating capital to the lease-up of existing
projects. These redevelopments have created a growth opportunity
for the company’s existing assets without the level of risk or
capital required for new development. This in turn has enabled DDR
to de-lever the balance sheet and generate considerable cash flow
for portfolio reinvestment as well as increase the cash
distribution to its shareholders.
Headquartered in Beachwood, Ohio,
DDR Cop. 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, DDR
Corp. 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 DDR Corp. for the long term. The company
presently has a Zacks #3 Rank, which translates into a short-term
‘Hold’ rating.
DDR CORP (DDR): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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