BEACHWOOD, Ohio, DDR Corp. (NYSE: DDR) the owner and manager of 396 value-oriented shopping centers including Tucson Spectrum and representing 108-million-square-feet in 39 states and Puerto Rico announced Thursday the commencement of a multi-year proactive lease termination initiative aimed at recapturing high-quality anchor store locations across its portfolio.
Through this initiative, DDR is collaborating with retailers in the books, electronics, toys, office and traditional department store categories to right-size their real estate footprints by regaining control of locations in advance of natural lease expiration, where the Company can remerchandise its prime assets with market-share-winning tenants while realizing mark-to-market rental upside of 30-40%.
During the first phase of this initiative, DDR has identified 90 anchor locations, representing 3.3-million-square-feet of prime retail space that meet the Company's criteria for accretive recapture. Of these leases, DDR has finalized terms to recapture 21 locations, representing 550,000-square-feet primarily located in Boston, Cleveland, Denver, Orlando, Phoenix, Raleigh and San Antonio.
"This initiative demonstrates our ability to create organic growth opportunities for our best-in-class retail partners regardless of current portfolio leased rate," said Paul Freddo, senior executive vice president of leasing and development for DDR. "Recapturing below-market leases represents an incremental growth opportunity to upgrade asset-level merchandise mix and NOI growth profiles, while simultaneously expanding redevelopment opportunities that will further enhance the quality of our portfolio."
Demand for new store growth from retailers such as Nordstrom Rack, Sprouts Farmers Market, Ulta, Whole Foods, Five Below, HomeGoods, Fresh Market, Marshalls, Trader Joe's, White House Black Market, Gap Factory, Shoe Carnival, PetSmart and Carter's represent a select group of merchants that DDR is in discussions with to backfill the recaptured locations. While 2014 will represent the initial period of acquisition, due to typical retailer black-out periods, the benefits of the remerchandising and mark-to-market opportunities will commence the second half of 2015.
The Company's assets are concentrated in high barrier-to-entry markets with stable populations and high growth potential and its portfolio is actively managed to create long-term shareholder value. DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company.