Beachwood, Ohio — DDR has signed a letter of intent to sell its 50% ownership interest in Sonae Sierra Brazil BV Sarl, a Luxembourg company, to Alexander Otto and his affiliates for $343.6 million. DDR’s interest in SSB BV Sarl represents the company’s entire investment in Brazil. The gross proceeds of $346.6 million include $283 million from the negotiated price of R$26.00 per share of SSB, a 67% premium to the closing price on the IBOVESPA as of March 7, and DDR’s stake in Parque Dom Pedro, valued at $60.7 million. Plans call for the sale to close within the next 30 days.
The SSB portfolio consists of ten regional malls totaling 4.6 million sq. ft. During DDR’s period of investment, four of the ten malls were developed, three of which were recently opened. DDR’s original investment in 2006 was $147.6 million, with an additional $52.6 million funded from 2007 through 2009. At the expected sale price, DDR’s IRR on its investment in Brazil is in excess of 10%. As a result of the sale, DDR’[s pro rata share of NOI from consolidated assets will increase from 89% to 93%.
DDR intents to use the proceeds from the sale for general corporate purposes, including reinvestment in prime shopping center acquisitions and redevelopments in major U.S. markets.
As a result of the timing difference between this transaction and the reinvestment of the proceeds, as well as an acceleration of domestic disposition plans, DDR is lowering 2014 operating FFO guidance from $1.17 to $1.21 per diluted share, to $1.14 to $1.18 per diluted share, representing year-over-year growth of 5% at the midpoint.