BEACHWOOD, Ohio, March 10, 2014 /PRNewswire/ -- DDR Corp.
(NYSE: DDR) today announced that it has signed a letter of intent
to sell its 50% ownership interest in Sonae Sierra Brazil BV Sarl
("SSB BV Sarl"), a Luxembourg Company, to Mr. Alexander Otto and his affiliates for
$343.6 million. DDR's interest in SSB
BV Sarl represents DDR's entire investment in Brazil. The
gross proceeds of $343.6 million
consist of $283.0 million from the
negotiated price of R$26.00 per share
of Sonae Sierra Brasil, a 67%
premium to the closing price on the IBOVESPA as of March 7, and DDR's stake in Parque Dom Pedro,
valued at $60.7 million. The closing
of the sale is expected to be completed in the next 30 days. The
transaction is subject to negotiation of a definitive purchase and
sale agreement and customary terms and conditions of closing.
(Logo: http://photos.prnewswire.com/prnh/20131217/DDRLOGO )
Sonae Sierra Brasil's portfolio
consists of ten regional malls totaling 4.6 million square feet.
During DDR's period of investment, four of the ten malls were
developed, three of which were recently opened. DDR's
original investment in 2006 was $147.6
million, with an additional $52.6
million funded from 2007 through 2009. At the expected sale
price, DDR's IRR on its investment in Brazil is in excess of 10%. As a result
of the sale, DDR's pro rata share of NOI from consolidated assets
will increase from 89% to 93%.
Daniel B. Hurwitz, chief
executive officer, commented, "We would like to thank our partners
in Sao Paulo and Portugal for their roles as outstanding
operating and managing partners for the last eight years. After
receiving interest and entering discussions with several strategic
buyers, we believed that this transaction was in the best interest
of both Sonae Sierra Brasil and DDR.
Our decision to exit Brazil at the
negotiated price is consistent with our intense focus on capital
allocation and our strategy to create value for shareholders by
reducing our risk profile, simplifying our structure, and
generating outsized investment returns as we remain focused on
investing in high quality domestic power centers."
The proceeds from the sale are expected to be used for general
corporate purposes, including for reinvestment in prime shopping
center acquisitions and redevelopments in major U.S. markets. As a
result of the timing difference between this transaction and the
reinvestment of the proceeds, as well as an acceleration of
domestic disposition plans, DDR is lowering 2014 operating FFO
guidance from $1.17 to $1.21 per
diluted share, to $1.14 to $1.18 per
diluted share, representing year-over-year growth of 5% at the
midpoint.
David J. Oakes, president and
chief financial officer, continued, "By exiting our investment in
Brazil, we reinforce our
commitment to lowering sovereign, currency, and development risk in
a transaction with little friction and with strategic merit for all
parties. In addition to the sale of our Brazilian investment,
current market conditions in the U.S. have presented us with the
opportunity to double our original disposition guidance from
$200 million to $400 million,
exclusive of Brazil. The current pricing on domestic
dispositions is favorable relative to original expectations and
allows us to continue the vigorous portfolio transformation that we
have executed on in the past five years."
About DDR Corp.
DDR is an owner and manager of 416
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, as well
as on Twitter, LinkedIn and Facebook.
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, our
ability to successfully complete the proposed sale of our 50%
ownership interest in SSB BV Sarl to Mr. Otto and his affiliates,
including entering into a binding purchase agreement with Mr.
Otto's affiliates and the satisfaction of the closing conditions
thereof; local conditions such as supply 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, 2013. 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