DDR Buys Out Blackstone in 30-Asset JV

BEACHWOOD, OH-DDR on Wednesday said it would buy out the Blackstone Group's share of a joint venture that owns 30 power centers across 17 states in a deal worth $1.46 billion. Locally based DDR said it would fund the acquisition in part through a common stock offering, which it priced Thursday morning.

DDR's common stock offering, expected to close on or around May 21, entails 34 million shares priced at $18.90 each for a total of $642.6 million. The underwriters will have a 30-day option to buy up to 5.1 million additional common shares. To help fund the acquisition of Blackstone's interest in the 30-property portfolio, DDR is also assuming $398 million in existing debt, and the deal also offers the company an opportunity to unencumber 21 of the shopping centers, according to a release.

The JV with Blackstone also includes 14 other retail properties not included in the sale agreement announced Wednesday; New York City-based Blackstone will maintain 95% ownership of those centers. “We are very pleased to add these outstanding assets to our wholly-owned portfolio,” DDR CEO Daniel Hurwitz says in the release. “It was our goal to accomplish this upon the initial formation of the venture with Blackstone, and we thank them for being outstanding partners. We look forward to our continued relationship.”

Largest of the properties in the 11.8-million-square-foot portfolio DDR is selling to Blackstone is the 941,336-square-foot Riverdale Village in the Twin Cities suburb of Coon Rapids, MN. It also includes the following: Shoppers World in Framingham, MA; Woodfield Village Green in Schaumburg, IL; Great Northern Plaza in North Olmsted, OH; FlatAcres/Parker Pavilions in Parker, CO; MacArthur Marketplace in Irving, TX;

Belden Park Crossings in North Canton, OH; Connecticut Commons in Plainville, CT; Midway Marketplace, St. Paul, MN; Pioneer Hills, Aurora, CO; Merriam Town Center in Merriam, KS; Marketplace of Brown Deer, Brown Deer, WI; Marketplace at Towne Center, Mesquite, TX; Overland Pointe Marketplace, Overland Park, KS; Grandville Marketplace, Grandville, MI; Township Marketplace, Monaca, PA;

Harbison Court, Columbia, SC; Carillon Place, Naples, FL; Shoppers World Brookfield, Brookfield, WI; Lake Walden Square, Plant City, FL; Turner Hill Marketplace, Lithonia, GA; Fairfax Towne Center, Fairfax, VA; Lake Brandon Village, Brandon, FL; Riverchase Promenade, Birmingham, AL; Piedmont Plaza, Apopka, FL; Jo-Ann Plaza, Clarence, NY; Cool Springs Pointe, Brentwood, TN; McKinney Marketplace, McKinney, TX; Frisco Marketplace, Frisco, TX; and Shops at Turner Hill, Lithonia, GA.

All 30 are properties that DDR has acquired, managed and developed through various entities since 1995. The portfolio is 95% leased and averages 400,000 square feet per property, about 20% larger than the average for DDR centers.

Average base rent is $13.81 per square foot, or 5% below the DDR prime portfolio, “which creates organic growth opportunities when rents can be marked to market,” the release states. Additionally, DDR says it intends to create incremental value in the coming years through redevelopment and remerchandising projects, tenant downsizings and center expansions.