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C+CT

DDR to spin Puerto Rico properties, other assets off into new $3 billion REIT

December 15, 2017

DDR Corp. plans to spin off a portfolio of 50 assets, comprised of 38 U.S. retail centers and the entirety of its Puerto Rico portfolio, into a separate publicly-traded REIT to be named Retail Value Trust (RVT). DDR Corp. values the RVT portfolio at $3 billion.

DDR's management team says the portfolio transformation simplifies DDR, improves its focus, and maintains its scale and balance sheet strength.  It also hives off the REIT's top-performing properties from ones in lesser locations, observers say. DDR will be left with 236 centers.

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. 

"DDR has made enormous strides to-date improving portfolio quality through an industry-leading disposition program," said David Lukes, president and CEO of DDR, in a prepared statement. "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."

Three of DDR's current directors will leave DDR's board to join RVT's board upon completion of the transaction. RVT's board is expected to have a majority of independent members.

By Brannon Boswell

Executive Editor, Commerce + Communities Today

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