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DDR To Spin Off $3 Billion of Characteristics into New REIT

Silver Spring Square in Harrisburg, PA, is the biggest of the homes DDR is spinning off.

DDR Corp. (NYSE: DDR), a Cleveland-based shopping mall REIT, prepares to spin off a portfolio of 50 properties, including all its Puerto Rico portfolio, into a different publicly-traded REIT to be named Retail Worth Trust.

The brand-new REIT will work to realize value by running and eventually selling its 38 continental U.S. properties and all 12 of DDR’s Puerto Rico holdings with a combined gross book value of roughly $3 billion as of Sept. 30, 2017. It expects to offer the homes over the next 2 to 3 years.

Retail Worth Trust will be externally managed by DDR.

Retail Value Trust’s Continental U.S. assets are defined by steady capital and measurably higher quality and demographics than the $1 billion of properties DDR got rid of so far in 2017, the business stated.

Included in the portfolio are:
The 343,000-square-foot Silver Spring Square in Harrisburg, PA;
The 342,000-square-foot Gresham Station in Portland, OR;
The 321,000-square-foot Beaver Creek Crossings in Raleigh, NC;
The 175,000-square-foot Seabrook Commons in Boston; and
The 174,000-square-foot Market at Towne Center in Dallas.

“DDR has made massive strides to-date improving portfolio quality through an industry-leading disposition program,” said David Lukes, president and CEO of DDR. “This transaction represents a last, decisive step in our improvement procedure, leading to top-tier demographics and much greater direct exposure to long-term redevelopment chances. We strongly think that offering investors the choice of compelling growth opportunities at New DDR and value awareness at Retail Worth Trust will be accretive to DDR investors.”

DDR’s management group picked the residential or commercial properties to stay with (New DDR) based upon performance and development characteristics, leading to the production of a top quality, high-growth, portfolio situated completely in the Continental U.S. It will hold 236 properties, 70% which will be anchored by food- or grocery-related tenants. The portfolio will have a book worth of about $6.3 billion.

The New DDR anticipates to pursue a strategy of making the most of earnings and net possession value per share growth through launching, redevelopment and opportunistic financial investment.

Retail Value Trust will be capitalized with dedicated home loan financing of $1.35 billion anticipated to fund in early 2018. Profits are expected to be utilized to pay back financial obligation at DDR, positioning New DDR to accomplish the previously mentioned objective of 6.0 x Net Debt/Adjusted EBITDA in 2018.

Retail Worth Trust expects to confidentially submit its preliminary registration declaration with the U.S. Securities and Exchange Commission in the very first quarter of 2018, and the spin-off is expected to be completed during the summertime of 2018.

The spin-off makes mathematics sense if executed correctly, said Richard Hill and Ronald Kamdem, experts with Morgan Stanley & & Co.”We continue to see DDR as having the most upside from self-help capacity in our coverage given a strong management team and the quality of the top 75 properties in the portfolio,” the experts stated. “While we were initially underwhelmed by their $900 million disposition program announcement in 2Q17, we are incrementally more favorable as we view the Retail Value Trust spinoff as the ideal advance to unlocking the value of the U.S. assets with a complimentary call alternative on possessions in Puerto Rico.”

Goldman Sachs & & Co. is acting as lead financial consultant to DDR. Credit Suisse and Wells Fargo Securities/ Eastdil Guaranteed are also serving as monetary advisors to DDR. Credit Suisse, JP Morgan, and Wells Fargo are supplying $1.35 billion of committed home loan funding to support the transaction. Jones Day is serving as legal counsel to DDR.

Pension Offer Maximizes Sears to Offer 138 Characteristics

In its 3rd quarter revenues announced today, Sears Holdings Corp. (NASDAQ: SHLD)reported that it has worked out a deal with the federal government that will free up the possible sale of additional shops with a home worth of more than $400 million.

Earlier this month, the United States Pension Advantage Warranty Corp. and Sears reached a new agreement that requires Sears to pay $500 million into 2 pension plans, consisting of contributions currently made by Sears since August 2017. The pension cover about 100,000 individuals.

The brand-new contract changes a March 2016 contract between PBGC and Sears that restricted Sears from offering 138 stores in its portfolio.

The new deal is anticipated to close in February 2018, after which Sears would be complimentary to monetize the homes.

Sears said it expects to raise $407 million through a sale of properties and funding protected by the properties, with any financing to be repaid from the sale earnings. The outlet store chain did not recognize the homes on the call.

“The just recently revealed agreement with the Pension Advantage Guaranty Corp. needs an initial in advance payment to the pension plans which will be secured by 138 properties launched to the company,” stated Rob Riecker, CFO of Sears Holdings. “As soon as complete, the estimated contributions of $550 million to the pension plans in 2018 and 2019 is removed (with the exception of a $20 million payment in July of 2018).”

“In addition we will be taking action in the near term with respect to specific upcoming debt maturities to offer the company with more monetary flexibility and improved liquidity,” Riecker added.

Sears reported a bottom line for the quarter of $558 million compared with a net loss of $748 million for the third quarter of 2016, an improvement of $190 million.

Total comparable store sales decreased 15.3% during the quarter. Kmart equivalent store sales reduced 13%, while Sears equivalent store sales decreased 17%.

It generated overall profits of $3.7 billion during the quarter compared to revenues of $5 billion in the previous year quarter, with store closures adding to over half of the decrease.

Earnings were also negatively affected by decreases in the number of pharmacies in open Kmart shops, in addition to the decrease in customer electronic devices assortments in both its Kmart and Sears stores.

Up until now in 2017, Sears has actually closed 330 shops and revealed it anticipates to close another 100 by the end of the 4th quarter.

RioCan to Sell 7 Canadian Tire-Anchored Characteristics in $200 Million Offer

Canada’s biggest real estate investment trust has shot on a $200 million offer, the very first move in a plan to offer $2 billion in possessions that will refocus RioCan REIT on 6 core markets.

Toronto-based RioCan will sell 7 retail homes to CT REIT, the realty arm of Canadian Tire, which is the anchor tenant of the properties being sold. The annualized income from the homes is $12 million, based upon the very first nine months of 2017.

RioCan chief executive Edward Sonshine informed CoStar News that the REIT’s scheduled property sale of 100 residential or commercial properties in secondary markets far from metropolitan cores cities that include Toronto, Vancouver, Edmonton, Calgary, Montreal and Ottawa is going “very well” and his company is selling properties in “plans,” the very first one being the deal with CT REIT.

In Ontario, the assets include the 210,000-square-foot Collingwood Centre; the 144,000-square-foot GoodLife Centre in St. Catharines; the 318,000-square-foot Orillia Square Shopping Center; the 148,000-square-foot Sudbury Location and the 126,000-square-foot Upper James Shopping Mall in Hamilton. The other two residential or commercial properties are the 73,000-square-foot Southwinds Crossing in Oliver, British Columbia, and the 264,000-square-foot Parkland Shopping Center in Yorkton, Saskatchewan.

” The first $500 million to $600 million will be exactly what I call direct offers,” stated Sonshine, adding a half dozen offers are in settlement. “When we announced this (in October), and this is why I’m so encouraged, is we were inundated with inbound calls from actual purchasers, not simply brokers.”

RioCan’s first $200 million transaction is expected to see the majority of the shopping malls close in December 2017, and the rest to close in the first quarter of 2018. The net proceeds are being used to pay for financial obligation, fund unit repurchases through a regular course issuer program and fund the trust’s advancement activities.

” I don’t believe our unit worth comes even near recognizing the value of our portfolio,” said Sonshine, in describing the buyback. His business likewise plans to spend $400 million on advancement every year for the next five years.

The CEO said the sale procedure is accelerating but it will most likely still take two years to sell all $2 billion in real estate being targeted, which is expected to deliver $1.5 billion in net profits but still leave RioCan the largest REIT in Canada.

CT REIT stated the 1,283,000 square feet of incremental gross leasable area being acquired features a weighted typical going-in cap rate of 6.3% and that the offer will be moneyed through credit centers.

” We are happy to be purchasing these well-located residential or commercial properties, each which is tenanted by Canadian Tire, and in many cases, other members of the Canadian Tire Household of Companies,” stated Ken Silver, president and CEO of CT REIT, in a statement. “With the insight we have into retail store efficiency in addition to the attractive basics of the marketplaces where these residential or commercial properties are located, we are exceptionally pleased with these additions to our growing portfolio.”

Garry Marr, Toronto Market Reporter CoStar Group.

Hong Kong, U.S. Business Partner to Buy Prime Workplace Characteristics

Venture To Invest $3 Billion In U.S. Gateway Workplace Market Over Three Years

Hong Kong-based Gemini Investments (Holdings) Ltd and Santa Fe, NM-based Rosemont Realty have actually formed a joint endeavor to obtain and handle institutional-quality workplace properties in leading U.S. markets.

The joint venture develops a major nationwide CRE entity, Gemini-Rosemont Real estate LLC, which will launch an aggressive three-year, $3 billion acquisition program with a technique improved Rosemont’s success targeting Class A buildings in gateway and specific secondary U.S. markets.

As part of the deal, a substantial portion of Rosemont’s existing profile, comprised of 135 structures totaling about 15.9 million square feet in 22 states, will be moved to Gemini Rosemont. The existing Rosemont group will continue to be in location to run the joint endeavor.

The other significant partners in the Gemini Rosemont endeavor are Dan Burrell, chairman and ceo The Burrell Group, LLC, and previous Rosemont CEO; existing Rosemont senior management; and Neutron Building Fund Limited, a property mutual fund.

“We see excellent chances to continue acquiring high-quality real estate in the united state market while likewise collecting value for our financiers, both existing and new,” said Michael Mahony, president of Gemini Rosemont, in a release. “The possibilities for this venture are tremendous.”

The new endeavor is part of a wave of Chinese investment in U.S. business homes. Gemini Investments is a financial investment arm of Sino-Ocean Land, among the biggest realty companies in China, with an equity market cap of over $4.3 billion.

Sino-Ocean has actually acquired and developed millions of square feet of business home in China and plans to make use of Gemini Investments as a vehicle for direct investment in the united state and other parts of the world. Gemini supposedly invested more than $100 million into its stake in Rosemont.

“Rosemont, with its extensive realty platform and exceptional efficiency history, was specifically the investment opportunity Gemini Investments was trying to find in order to buy the U.S. real estate market,” stated Li Ming, chairman of Sino-Ocean Land Holdings Limited and Gemini Investments.

$3.3 Billion Chambers Street Characteristics Exploring Possible Sale

News of Possible Sale of Suburban Office, Industrial REIT Surprises Financiers, Experts

The board of Chambers Street Characteristics, the $3.3 billion realty investment trust previously called CB Richard Ellis Realty Trust, is reported to be checking out a possible sale after getting takeover interest.

The news broke all of a sudden this week during at Chambers Street’s presentation at REITWeek 2015.

“As an openly traded company we’re constantly exploring alternatives, however I can’t discuss any speculation and market rumors,” interim CEO Martin Reid stated when asked about the possible sale during his discussion.

Reid, the business’s previous CFO, took control of in March after former CEO Jack Cuneo resigned suddenly from all his company positions.Share with Your Fans on Twitter Tweet”It is our opinion that

office structure in Cary, N.C., for $16.4 million. In December 2014, it sold four multi-tenant office possessions totaling 534,849 square feet for an aggregate rate of $66.3 million. And a month previously, sold two office equipments for aggregate profits of $44.9 million.

As of its discussion this week, Chambers Street still possessed 48 workplace homes totaling 7.9 million rentable square feet with an occupancy of 98.9 %.

Mitch Germain, a REIT medical analyst for JMP Securities, said he wasn’t shocked by the remark that the Chambers Street board is currently thinking about a sale because the shares have actually underperformed the more comprehensive REIT index because their May 21, 2013 listing, declining 12 % inned comparison to a 10 % increase in REITs over that time frame.

“We associate that (share rate underperformance) rather to portfolio mix, with majority of rents produced by single-tenant, suburban workplace,” Germain noted.

While there has actually been no definitive word on the possible suitor is, Germain stated that another REIT is the possible suitor, which he discovered unexpected because that particular REIT’s financiers “tend to have a lukewarm viewpoint towards suburban office.”