BEACHWOOD, Ohio, Dec. 14, 2017 /PRNewswire/ -- DDR Corp. (the
"Company" or "DDR") (NYSE: DDR), a leading shopping center real
estate investment trust ("REIT"), today announced that the
Company's Board of Directors has unanimously approved a plan to
spin off a portfolio of 50 assets, comprised of 38 Continental U.S.
assets and the entirety of the Puerto
Rico portfolio into a separate publicly-traded REIT to be
named Retail Value Trust ("RVT").
DDR's management team selected the properties for the portfolio
of the remaining company ("New DDR") based on performance and
growth characteristics, resulting in the creation of a
high-quality, high-growth portfolio located entirely in the
Continental U.S. The portfolio transformation further
simplifies DDR, improves focus, and maintains scale and balance
sheet strength. New DDR expects to pursue a business strategy
of maximizing earnings and NAV per share growth through releasing,
redevelopment and opportunistic investment.
RVT expects to focus on realizing value in its portfolio through
operations and private market sales of its 38 Continental U.S.
assets and all 12 of DDR's Puerto
Rico assets with a combined gross book value of
approximately $3 billion as of
September 30, 2017. The
Continental U.S. assets are characterized by stable cash flows and
measurably higher quality and demographics than the $1.0 billion of assets DDR disposed so far in
2017. RVT will be externally managed by DDR for maximum cost
efficiency.
RVT will be capitalized with committed mortgage financing of
$1.35 billion expected to fund in
early 2018. Proceeds are expected to be used to repay debt at
DDR, positioning New DDR to achieve the previously stated goal of
6.0x Net Debt/Adjusted EBITDA in 2018.
"DDR has made enormous strides to-date improving portfolio
quality through an industry-leading disposition program," said
David Lukes, President and Chief
Executive Officer of DDR. "This transaction represents a final,
decisive step in our transformation process, resulting in top-tier
demographics and much greater exposure to long-term redevelopment
opportunities. We strongly believe that providing investors
the choice of compelling growth opportunities at New DDR and value
realization at RVT will be accretive to DDR shareholders."
TRANSACTION HIGHLIGHTS
- Increases Growth-Oriented Focus at DDR: Concentrates
DDR's core holdings in a higher growth portfolio with attractive
convenience and demographics. The portfolio will contain a
significant amount of lower-risk releasing and targeted
redevelopment opportunities for the accretive deployment of growth
capital.
- Maintains DDR's Balance Sheet Strength: The
spin-off and the Company's previously announced disposition program
are expected to improve the Company's compliance with all debt
covenants highlighted by a larger and higher quality unencumbered
asset pool.
- Provides Unique NAV-Realization Opportunity: RVT will
provide a unique opportunity for shareholders to realize private
market asset values for properties currently receiving an outsized
discount by the public markets inside of DDR today.
TRANSACTION DETAILS
An investor presentation
regarding the spin-off can be found on the Investor portion of
DDR's website at http://ir.ddr.com.
RVT intends to elect to be treated as a REIT for U.S. federal
income tax purposes. Shareholders of DDR will receive shares of RVT
via a taxable pro rata stock distribution. While New DDR's dividend
will be adjusted to reflect the smaller size of the Company, DDR
expects that shareholders will recognize the value of the
difference through regular dividends as well as return of capital
by RVT over time. DDR does not expect to make any change to
its recurring quarterly dividend prior to the spin of RVT.
It is expected that three of DDR's current Directors will leave
DDR's Board of Directors to join RVT's Board of Directors upon
completion of the transaction, to be replaced at New DDR in the
ordinary course. RVT's Board of Directors is expected to have a
majority of independent members.
RVT expects to confidentially file its initial Form 10
registration statement with the U.S. Securities and Exchange
Commission ("SEC") in the first quarter of 2018, and the spin-off
is expected to be completed during the summer of 2018.
The transaction is subject to certain conditions, including the
effectiveness of RVT's Form 10 registration statement and final
approval and declaration of the distribution by DDR's Board of
Directors. The transaction does not require shareholder
approval.
ADVISORS
Goldman Sachs & Co. LLC is acting as lead
financial advisor to DDR. Credit Suisse and Wells Fargo
Securities, LLC / Eastdil Secured, LLC are also serving as
financial advisors to DDR. Credit Suisse, JP Morgan, and
Wells Fargo are providing $1.35
billion of committed mortgage financing to support the
transaction. Jones Day is serving as
legal counsel to DDR.
CONFERENCE CALL DETAILS
The Company will hold a
conference call to discuss the transaction today at 5PM Eastern Time. To participate with access to
the slide presentation, please visit the Investors portion of DDR's
website, www.ddr.com/events, or for audio only, dial
1-888-317-6003 (U.S.), 1-866-284-3684 (Canada) or 1-412-317-6061 (international)
using pass code 5880050 at least ten minutes prior to the scheduled
start of the call. A replay of the conference call will also be
available at www.ddr.com/events for one year after the call.
ABOUT DDR
DDR is an owner and manager of 286
value-oriented shopping centers representing 97 million square
feet in 33 states and Puerto Rico. The Company owns a
high-quality portfolio of open-air shopping centers in major
metropolitan areas that provide a highly-compelling shopping
experience and merchandise mix for retail partners and
consumers. The Company actively manages its assets with a
focus on creating 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.
SAFE HARBOR
The Company 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 complete the spin-off in a timely
manner or at all, our ability to satisfy the various closing
conditions to the spin-off and the financing thereof or have such
conditions waived, our ability to obtain regulatory approvals
required to complete the spin-off in a timely manner or at all, the
expected tax treatment of the spin-off, the composition of the
spin-off portfolio, our ability to obtain third-party consents
required to transfer certain properties in connection with the
spin-off, the impact of the spin-off on our business and that of
RVT, and the Company's and RVT's ability to execute their
respective business strategies following the spin-off, including
the ability of RVT to dispose of assets. Other risks and
uncertainties that could cause our results to differ materially
from those indicated by such forward-looking statements include
property damage, expenses related thereto and other business and
economic consequences (including the potential loss of rental
revenues) resulting from extreme weather conditions in locations
where we own properties, and the ability to estimate accurately the
amounts thereof; sufficiency and timing of any insurance recovery
payments related to damages from extreme weather conditions; 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;
redevelopment and construction activities may not achieve a desired
return 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; the
success of our deleveraging strategy; and our ability to maintain
our REIT status.
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 most
recent reports on Form 10-K and Form 10-Q. The Company undertakes
no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date
hereof.
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SOURCE DDR Corp.