DDR exits Brazil, sells stake in Sonae Sierra Brazil for $343.6 million
Publish Date: March 10, 2014
DDR Corp. has signed a letter of intent to sell its 50 percent ownership interest in Sonae Sierra Brasil BV Sarl, a Luxembourg company, to 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 percent 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.
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 percent. As a result of the sale, DDR's pro rata share of NOI from consolidated assets will increase from 89 percent to 93 percent.
"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," said DDR CEO Daniel B. Hurwitz, in a press release. "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."