DDR Acts on Spin-Off, Announces Distribution Dates for RVI

Making progress with its spin-off, DDR Corp.’s DDR board of directors declared record and distribution dates for the previously announced spin-off of a portfolio of 49 assets, consisting of 37 continental U.S. assets and entire Puerto Rico assets into a separate publicly-traded company — Retail Value Inc. (“RVI”) (Read more: DDR to Spin-Off Sellable Properties Into a New Company)

The spin-off will be effected by distributing 100% shares of SpinCo to DDR common shareholders. The distribution is expected to take place on Jul 1, 2018, following which RVI will be managed by one or more subsidiaries of DDR as an independent publicly-traded company.   

DDR shareholders, holding 10 common shares of DDR at the close of business on Jun 26, will receive one RVI common share. However, since fractional shares of RVI will not be distributed, DDR common shareholders will receive cash in lieu of any such fractional shares that would be entitled to receive from the distribution.

The company filed RVI’s Registration Statement on Form 10 with the SEC on Jun 4, 2018. Also, prior to the distribution date, RVI is expected to receive approval for its common share listing under the ticker “RVI” on the NYSE.

Prior to distribution, RVI common shares will be publicly traded through “when issued” trading, under the ticker symbol “RVI WI”. Regular trading of the company shares will commence from Jul 2, 2018.

The split-up is seen as a business strategy to create two separate companies with distinct strategies. Post spin-off, DDR will own 236 properties exhibiting top-tier demographics, and offering maximum scope for growth and redevelopment. On the other hand, RVT is expected to liquidate its entire portfolio within two to three years in order to realize the private market values for the company’s properties which are currently discounted by public markets.

This Zacks Rank #3 (Hold) company has outperformed its industry in the past six months. Shares of DDR have gained 2%, as against the industry’s loss of 7.9%.

Stocks Worth a Look

A few better-ranked stocks from the same space are Arbor Realty Trust ABR, Lamar Advertising Company LAMR and Prologis, Inc. PLD. All three stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share has risen 14.4% to $1.03 in a month’s time. Its shares have returned 15.5% over the past year.

Lamar’s FFO per share estimates for the current year remained unchanged at $5.34 in the past month. Its shares have gained1.1% in the past year.

Prologis’ FFO per share estimates for 2018 have inched up 0.7% to $2.98 over the past month. Its shares have appreciated 17.3% over the past year.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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