DDR, Madison International Recap $1B Retail Portfolio
- Jun 20, 2017
DDR Corp., of Beachwood, Ohio, and an affiliate of Madison International Realty, of New York City, have agreed to recapitalize a $1 billion, 52–shopping center joint venture previously owned by DDR and various partners through the DDR Domestic Retail Fund I, the two companies announced last week.
In the transaction, Madison International Real Estate Liquidity Fund VI, an investment fund managed by Madison International Realty, acquired 80 percent of the joint venture’s common equity and a DDR affiliate retained 20 percent. The companies described this ownership structure as “consistent with the structure of the joint venture prior to the recapitalization” and as a long-term strategic partnership.
DDR will continue to provide leasing and management services.
Originally formed in 2007, the portfolio totals 7 million square feet and consists primarily of grocery-anchored shopping centers, predominantly in Florida and the Southeast.
Three properties previously held by the partnership were excluded from the recapitalization and are being held in a separate joint venture with the previous partners of DDR Domestic Retail Fund I, including DDR.
The recapitalization includes the repayment of all outstanding mortgage debt previously held by the partnership, through a new $707 million mortgage loan ($141 million at DDR’s share) secured by the 52 assets.
“This venture is an exceptional opportunity and an excellent fit with our investment strategy. Madison’s investment will allow existing partners to exit, Madison to expand its retail footprint, and DDR to continue its value creation strategy,” Ronald Dickerman, founder & president of Madison International, said in a prepared statement.
He noted that the assets are destination grocery-anchored centers in markets “with growing populations and favorable demographics.”
Madison International declined to provide Commercial Property Executive with further information.
A self-administered and self-managed REIT, DDR owns and manages 309 value-oriented shopping centers totaling 103 million square feet in 35 states and Puerto Rico.
Madison International provides JV and preferred equity capital for CRE owners and investors seeking an exit strategy, or where existing sponsors seek to sell a portion of their ownership position and take on a partner.