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DDR Corp's Streamlining Operations to Eliminate 65 Positions
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Retail REIT, DDR Corp. is currently streamlining its organizational structure, which would lead to the elimination of 65 existing positions, including nine at the officer level. Further, the company declared the appointment of Conor Fennerty as Senior Vice President, Capital Markets, who shall be responsible for capital raise as well as management of DDR’s planning and analysis functions. Fennerty last served as Vice President, Senior Analyst at BlackRock, Inc. (BLK - Free Report) .
The restructuring comes as a strategic move, given that it is aimed at raising efficiencies, achieving appropriate staffing level, centralizing key operational decision making and bringing down operating costs.
Specifically, as a result of the streamlining efforts, the company is expected to experience a stabilized annual reduction of around $6 million in recurring general and administrative expenses. This is exclusive of a one-time charge of about $7.2 million to earnings related to the transition, with around $2 million to be recognized in first-quarter 2017 and the rest in second-quarter 2017.
Notably, shares of DDR underperformed the Zacks categorized REIT and Equity Trust – Retail industry in the past three months. Over this time frame, DDR’s shares descended around 17.7%, while the industry incurred a loss of 5.6%.
In spite of the upbeat consumer confidence and an improving economy, we note that mall traffic continues to decline owing to a change in shopping patterns. Online purchases have taken precedence over in-store purchase. These have made retailers reconsider their footprint and eventually opt for store closures in recent times. In addition, retailers unable to cope with competition have been filing bankruptcies. This comes as a pressing concern for retail REITs like DDR as this trend has been considerably curtailing demand for the retail real estate space.
However, with a solid portfolio, aggressive capital recycle program and strategic efforts to streamline its business, DDR is anticipated to navigate through the present challenges and ride on the growth curve. The stock currently has a Zacks Rank #3 (Hold).
CoreSite Realty currently has a long-term growth rate of 19.15%.
Piedmont Office Realty’s estimates for 2017 moved north by nearly 0.6% to $1.73, over the past 60 days.
The Zacks Consensus Estimate for Urban Edge Properties’ funds from operations (FFO) per share for 2017 of $1.37 reflects 7.9% year-over-year growth.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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DDR Corp's Streamlining Operations to Eliminate 65 Positions
Retail REIT, DDR Corp. is currently streamlining its organizational structure, which would lead to the elimination of 65 existing positions, including nine at the officer level. Further, the company declared the appointment of Conor Fennerty as Senior Vice President, Capital Markets, who shall be responsible for capital raise as well as management of DDR’s planning and analysis functions. Fennerty last served as Vice President, Senior Analyst at BlackRock, Inc. (BLK - Free Report) .
The restructuring comes as a strategic move, given that it is aimed at raising efficiencies, achieving appropriate staffing level, centralizing key operational decision making and bringing down operating costs.
Specifically, as a result of the streamlining efforts, the company is expected to experience a stabilized annual reduction of around $6 million in recurring general and administrative expenses. This is exclusive of a one-time charge of about $7.2 million to earnings related to the transition, with around $2 million to be recognized in first-quarter 2017 and the rest in second-quarter 2017.
Notably, shares of DDR underperformed the Zacks categorized REIT and Equity Trust – Retail industry in the past three months. Over this time frame, DDR’s shares descended around 17.7%, while the industry incurred a loss of 5.6%.
In spite of the upbeat consumer confidence and an improving economy, we note that mall traffic continues to decline owing to a change in shopping patterns. Online purchases have taken precedence over in-store purchase. These have made retailers reconsider their footprint and eventually opt for store closures in recent times. In addition, retailers unable to cope with competition have been filing bankruptcies. This comes as a pressing concern for retail REITs like DDR as this trend has been considerably curtailing demand for the retail real estate space.
However, with a solid portfolio, aggressive capital recycle program and strategic efforts to streamline its business, DDR is anticipated to navigate through the present challenges and ride on the growth curve. The stock currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the REIT space include CoreSite Realty Corporation (COR - Free Report) , Piedmont Office Realty Trust, Inc. (PDM - Free Report) and Urban Edge Properties (UE - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CoreSite Realty currently has a long-term growth rate of 19.15%.
Piedmont Office Realty’s estimates for 2017 moved north by nearly 0.6% to $1.73, over the past 60 days.
The Zacks Consensus Estimate for Urban Edge Properties’ funds from operations (FFO) per share for 2017 of $1.37 reflects 7.9% year-over-year growth.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>