DDR Buying 110 Retail Assets for $2B

The seller is Benderson Development Company Inc. of University Park, FL, one of the largest private developer, owner and operators of community centers in North America. As part of the transaction, Benderson is retaining a 2% interest in certain assets.

DDR says it will fund the acquisition using a combination of assumed debt, new debt financing, asset sales and equity from both public and private sources. One of those sources may likely be Macquarie DDR Trust, the company's Australian Listed Property Trust joint venture. DDR says the transaction price represents an 8% cap rate on a pro-forma basis without the benefit of straight line rents.

The acquisition will instantly boost DDR's presence in New York, where it currently owns less than 100,000 sf. DDR currently owns 2.7 million sf in New Jersey. The portfolio's largest tenants, based on revenue, are Tops Market (Ahold USA), Wal-Mart/Sam's Club, Home Depot and Dick's Sporting Goods.

Once the sale is closed, DDR will own or manage over 470 operating and development retail properties in 44 states comprising over 100 million sf of space, while Benderson will own about 23 million sf of commercial space, including office buildings, industrial parks, residential communities, storage complexes, hotels, and retail shopping centers. Benderson has another eight million sf in its development pipeline.

DDR says is expects the transaction to generate approximately $0.35 per share in additional Funds From Operation (FFO) on an annualized, pro forma, leverage neutral basis. As a result, the company is revising its 2004 year-end guidance to approximately $3 per share, and increasing its quarterly dividend by $0.05 per common share (or 10.9%) to $0.51 per share, commencing with its third quarter dividend, which is scheduled to be paid in October 2004.

The acquisition was announced after the close of trading Wednesday; however, shares of DDR ended the day at $40.40, up $0.36 cents on the day. The price marks a new 52-week high.