DDR to Host Dick's Sporting Stores - Analyst Blog
March 14 2012 - 12:55PM
Zacks
DDR Corp. (DDR), a real estate investment trust
(REIT), has recently announced its plans to host Dick's
Sporting Goods (DKS), the largest U.S. based full-line
sporting goods retailer, in two of its shopping centers in Utah.
The strategic move is aimed at improving the overall quality of the
company portfolio by revamping the merchandise mix and credit
quality of cash flows at the shopping centers and replacing the
underperforming stores with a category-leading retailer.
The shopping centers in which Dick’s Sporting will open its
outlet include ‘The Family Center at Orem’ – a 282,000 square-foot
prime shopping center; and ‘The Family Center at Fort Union’ – a
670,000 square-foot mall in Utah. The retailer will open a 54,000
square-foot store in ‘The Family Center at Orem’ and a 49,000
square-foot store in ‘The Family Center at Fort Union.’ Both the
stores are expected to open in fall 2012.
With the present lease agreement, DDR has strengthened its
long-term relationship with the sporting goods retailer. In the
past two years, the company has completed six leases with Dick's
Sporting spanning approximately 300,000 square feet of space in
Florida, Michigan, Minnesota, New Jersey and Utah. In addition,
Dick's Sporting has consistently been a top-ten tenant of DDR in
terms of average base rent and gross leasable area.
DDR 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.
We maintain our Neutral recommendation on DDR 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
DICKS SPRTG GDS (DKS): Free Stock Analysis Report
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