DDR-Glimcher Completes Asset Swap

DDR Corp. (DDR - Analyst Report), a real estate investment trust (REIT), has recently completed the asset swap transaction that was announced earlier in September 2011 with one of its peers Glimcher Realty Trust (GRT - Snapshot Report). The asset swap was part of the respective corporate strategy to better align the portfolio with the other’s operating platform. The transaction is expected to be accretive to earnings of both the participating companies.

In concurrence with the agreement, DDR sold Town Center Plaza – an open-air mall spanning 650,000 square feet in Kansas City, Kansas to Glimcher for $139 million. In exchange, Glimcher sold Polaris Towne Center – a 700,000 square-foot shopping center in Columbus, Ohio, to DDR for $80 million. DDR intends to utilize the additional proceeds from the asset swap to develop prime retail properties in core markets.

Town Center Plaza is anchored by leading retailers such as Macy's, Inc. (M - Analyst Report) and Dick's Sporting Goods Inc. (DKS - Analyst Report). With 95% occupancy and a high sales productivity of over $400 per square foot, the retail property is expected to enhance the overall quality of Glimcher's mall portfolio. In addition, the business module of Town Center Plaza is well aligned with Glimcher's core competencies and would enable it to capitalize on its deep tenant relationships within the mall sector.

Polaris Towne Center is a market-dominant shopping center anchored by prime retailers such as Target Corp. (TGT - Analyst Report), Lowe's Companies Inc. (LOW - Analyst Report), and The Kroger Co. (KR - Analyst Report). The property is the seventh of its kind that is owned by DDR in the Columbus MSA (metropolitan statistical area), thereby strengthening its leading position in the market.

The asset swap transaction involving the simultaneous sale and purchase of retail properties is expected to be mutually beneficial given the core competencies of each company, the efficacy of each operating platform, and the long-term value creation potential of each asset.

Headquartered in Beachwood, Ohio, DDR acquires, owns, develops, leases and manages shopping centers and business centers across 41 states in the U.S., along with Puerto Rico and Brazil. By the end of third quarter 2011, DDR owned and managed 538 retail operating (primarily open-air, value-oriented shopping centers) and development properties spanning approximately 134 million square feet.

We maintain our ‘Neutral’ recommendation on DDR for the long term. The company presently has a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.