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DDR Corp.
today
commented that the merger announcement involving Office Depot and OfficeMax
will have a positive overall effect on the Company's portfolio.
"Over the past three years we have leased over 34 million square feet across
our portfolio while simultaneously increasing rental rates and improving the
credit quality of cash flow," said Paul Freddo, senior executive vice
president of leasing and development for DDR. "With our continued increase in
portfolio leased rate, we are excited about the opportunity presented by the
Office Depot and OfficeMax merger, and we will maintain a close dialogue with
both retailers to assist them in their transition and pursue opportunities to
recapture valuable space."
DDR owns 50 OfficeMax stores totaling 1.2 million square feet with average
remaining lease term through February 2016, and 15 Office Depot stores
totaling approximately 365,000 square feet with average remaining lease term
through January 2017.
Between the two retailers, DDR owns 65 stores, of which 59 are located in
prime assets that are 95.5% leased, with an average trade area population of
448,000 and household incomes over $80,000. The average rent per square foot
for both retailers is currently $11.00 and approximately 30% below DDR's prime
portfolio average. With an average remaining lease term of nearly four years,
the Company has limited risk to cash flow interruption, and enjoys the
opportunity to recognize termination fee income and unique mark-to-market
opportunities in this supply constrained environment.
"Consolidation in the office supply sector has been highly anticipated and
based upon our market knowledge, store spacing, and store performance, we
expect the opportunity to recapture certain locations. If executed as
proposed, the merger will enable us to realize positive rental increases by
backfilling the newly available space with a variety of today's fastest
growing, high credit quality retailers, including T.J.Maxx, Marshalls,
HomeGoods, Ross Dress for Less, Bed Bath & Beyond, buybuy BABY, Cost Plus
World Market, Nordstrom Rack, and many others." concluded Mr. Freddo.
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