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DDR Partners With Blackstone in $1.98B ARCP Portfolio Purchase

Blackstone Adds Beachwood, OH-Based Shopping Center REIT As Minority Partner In Multi-Tenant Center Sale
June 12, 2014
In their third joint venture, DDR Corp. (NYSE: DDR) and an affiliate of Blackstone Real Estate Partners VII have partnered to acquire a 76-center portfolio owned by American Realty Capital Properties Inc. (NASDAQ: ARCP).

The JV adds DDR to the mix as a 5% joint venture partner following ARCP's previous announcement last month that it intended to sell its multi-tenant retail portfolio to Blackstone.

The JV has signed a purchase and sale agreement to acquire the portfolio for nearly $1.98 billion, including assumed debt of $461 million and approximately $800 million of new financings.

Blackstone owns 95% of the common equity of the joint venture and an affiliate of DDR owns the remaining 5%. DDR will also invest up to $300 million in preferred equity in the joint venture, and has agreed to provide leasing and management services.

The 16.4 million-square-foot portfolio, which is 95% leased, includes mainly power centers in Los Angeles, Houston, Denver, Chicago, Atlanta, Phoenix and Washington, D.C.

Major tenants include Whole Foods, Trader Joe's, The Fresh Market, Costco, Target, Walmart, Kohl's, PetSmart, Dick's Sporting Goods, Bed Bath & Beyond, T.J. Maxx and Marshalls. The portfolio also contains eight vacant junior anchor boxes, more than 100 available small shop units, and more than 20 outparcels for future expansion.

The average base rent per square foot is 6% below DDR’s current portfolio, which DDR viewed as potential rent growth opportunity for the JV.

Goldman, Sachs & Co. and KeyBanc Capital Markets served as advisors to DDR on the transaction. The acquisition is anticipated to close in the third quarter of this year.
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