Site Centers Corp. · NYSE:SITC
Site Centers — DDR — Merger or Acquisition (December 2017)
31 slides from Site Centers's merger presentation, Dec 14, 2017
Slide 1: DDR Corp. Strategic Transformation Investor Presentation
D D R C O R P. STRATEGIC TRANSFORMATION INVESTOR PRESENTATION DECEMBER 2017
Slide 2: Safe Harbor
SAFE HARBOR DDR Corp. considers portions of the information in this presentation to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectation for fut
Slide 3: Transaction Overview—New DDR and RVT Business Plans
TRANSACTION OVERVIEW—NEW DDR AND RVT BUSINESS PLANS TWO DISTINCT COMPANIES WITH TWO DISTINCT STRATEGIES MM 31 SF (PRO-RATA) $1.35BN MORTGAGE PROCEEDS EXTERNAL MANAGEMENT AGREEMENT 16 MM SF NEW DDR Maximize earnings, NAV, and cash flow growth through releasing, redevelopment, and opportunistic invest
Slide 4: Transaction Overview—Significant Portfolio Repositioning
TRANSACTION OVERVIEW—SIGNIFICANT PORTFOLIO REPOSITIONING INCREASED EXPOSURE TO GROWTH AND REDEVELOPMENT ASSETS New DDR’s portfolio specifically curated asset-by-asset to provide exposure to high-quality, high-growth assets most appropriate for the public markets Smaller pool of remaining durable ass
Slide 5: Transaction Overview—Improved Relative and Absolute Positioning
TRANSACTION OVERVIEW—IMPROVED RELATIVE AND ABSOLUTE POSITIONING GREEN STREET ADVISORS TAP SCORE 65 66 65 +7% 64 63 62 61 60 59 58 DDR—3Q2017 NEW DDR 80 75 70 65 60 55 50 BRX ROIC DDR KIM RPAI WRI NEW DDR REG UE FRT AKR AVERAGE HOUSEHOLD INCOME $99K $100K $98K +17% $96K $94K $92K $90K $88K $86K $84K
Slide 6: Transaction Overview—New DDR and RVT Operating Metrics
TRANSACTION OVERVIEW—NEW DDR AND RVT OPERATING METRICS Transaction separates highest growth Continental U.S. assets from a pool of highly saleable properties currently being discounted by the public markets (1) RETAIL DDR NEW DDR VALUE TRUST 47 31 MM 16 SF (PRO-RATA) MM SF (PRO-RATA) MM SF 3Q2017 Pr
Slide 7: Transaction Overview—Expected Dividend Characteristics
TRANSACTION OVERVIEW—EXPECTED DIVIDEND CHARACTERISTICS 75% AFFO PAYOUT RATIO NEW DDR No change to quarterly DDR dividend expected prior to spin New quarterly dividend rate expected to be at least $0.10/sh Enhanced cash retention for redevelopment and opportunistic investments Reset payout ratio expe
Slide 8: Transaction Overview—Estimated Timeline // Sources and Uses
TRANSACTION OVERVIEW—ESTIMATED TIMELINE // SOURCES AND USES Closing $1.35BN of Public mortgage Form 10 Filing & Review Spin Complete Announcement secured by 50 RVT assets DEC JAN FEB MAR APR MAY JUN JUL Completion of previously announced $900MM disposition plan SOURCES (4Q2017-4Q2018) Mortgage Proce
Slide 9: New DDR Overview
NEW DDR OVERVIEW 9
Slide 10: New DDR—Significant Portfolio Repositioning
NEW DDR—SIGNIFICANT PORTFOLIO REPOSITIONING INCREASED EXPOSURE TO GROWTH AND REDEVELOPMENT ASSETS New DDR’s portfolio specifically curated asset-by-asset to provide exposure to high-quality, high-growth assets most appropriate for the public markets Smaller pool of remaining durable assets have top-
Slide 11: New DDR—Portfolio Diversity
NEW DDR—PORTFOLIO DIVERSITY HIGH QUALITY DISCOUNTERS AND GROCERS ANCHOR THE MAJORITY OF NEW DDR CENTERS Assets with traditional / specialty grocers account for 40% of New DDR’s portfolio with average reported sales of $641/ft Including mass merchants with a grocery component, 70% of New DDR’s portfo
Slide 12: New DDR—Portfolio Map
NEW DDR—PORTFOLIO MAP TOP 12 MARKETS ACCOUNT FOR 70% OF CONSOLIDATED ADJUSTED 2018E NOI Boston, MA 6% Chicago, IL 7% Columbus, OH 6% New York, NY 8% Denver, CO 6% Washington, DC 3% Charlotte, NC 6% Los Angeles, CA 4% Phoenix, AZ 7% Atlanta, GA 8% Orlando, FL 5% Miami, FL 5% MSA % of Consolidated Adj
Slide 13: New DDR—Substantially Improved Operating Metrics
NEW DDR—SUBSTANTIALLY IMPROVED OPERATING METRICS DDR NEW DDR(1) MM 47 SF MM 31 SF (PRO-RATA) (PRO-RATA) 3Q2017 Properties (Including JVs) 143 (286) 93 (236) 3Q2017 Pro-Rata Real Estate Gross Book Value (2) $9.4BN $6.3BN 3Q2017 Adjusted NOI (3) $164MM $109MM Consolidated ABR PSF (4) $16.30 $17.42 FY
Slide 14: New DDR—Redevelopment Property Example: Fairfax Towne Center
NEW DDR—REDEVELOPMENT PROPERTY EXAMPLE FAIRFAX TOWNE CENTER WASHINGTON, DC $19.95 Rent PSF 87 GSA TAP Score $148K 3-Mile HH Income DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N I N V E S T O R P R E S E N TAT I O N 14
Slide 15: New DDR—Growth Property Example: Cotswold Village
NEW DDR—GROWTH PROPERTY EXAMPLE COTSWOLD VILLAGE CHARLOTTE, NC $22.36 Rent PSF 78 GSA TAP Score $126K 3-Mile HH Income DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N I N V E S T O R P R E S E N TAT I O N 15
Slide 16: New DDR—Durable Property Example: Gateway Center
NEW DDR—DURABLE PROPERTY EXAMPLE GATEWAY CENTER BOSTON, MA $16.18 Rent PSF 79 GSA TAP Score $97K 3-Mile HH Income DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N I N V E S T O R P R E S E N TAT I O N 16
Slide 17: New DDR—Further Balance Sheet Improvements
NEW DDR—FURTHER BALANCE SHEET IMPROVEMENTS Transaction Expected to Result in a Stronger DDR Balance Sheet Debt / Adjusted EBITDA (excluding preferred stock) of ~6.0x in 2H2018 Weighted average maturity of 10.2 years including preferred stock (5.5 years excluding) No unsecured maturities until 2021 F
Slide 18: Retail Value Trust Overview
RETAIL VALUE TRUST OVERVIEW 18
Slide 19: Retail Value Trust—Operating Metrics
RETAIL VALUE TRUST—OPERATING METRICS VALUE RETAIL TRUST CONTINENTAL ASSETS U.S. PUERTO ASSETS RICO 16 4 MM 4 SF MM SF 12 MM SF 12 Properties 50 38 12 Pro-Rata Real Estate Gross Book Value $3.1BN $2.0BN $1.1BN 3Q2017 Adjusted NOI (1) $55MM $37MM $18MM Consolidated ABR PSF (2) $15.32 $13.62 $20.60 FY
Slide 20: Retail Value Trust—Higher Quality Pool vs. Recent Dispositions
RETAIL VALUE TRUST—HIGHER QUALITY POOL VS. RECENT DISPOSITIONS DDR has sold over $3BN of assets since 2015, including $992MM through October 2017 at a 7.8% cap rate, highlighting liquidity in the shopping center sector and demand for well-leased assets. The RVT Continental U.S. asset pool is measura
Slide 21: Retail Value Trust—Select Asset Overview
RETAIL VALUE TRUST—SELECT ASSET OVERVIEW HIGHER QUALITY AND MORE LIQUID PORTFOLIO THAN ASSETS SOLD TO DATE BEAVER CREEK SEABROOK GRESHAM SILVER SPRING MARKETPLACE CROSSINGS COMMONS STATION SQUARE AT TOWNE CENTRE RALEIGH BOSTON PORTLAND HARRISBURG DALLAS MSA MSA MSA MSA MSA 321K 175K 342K 343K 174K O
Slide 22: Retail Value Trust—Portfolio Map
RETAIL VALUE TRUST—PORTFOLIO MAP GEOGRAPHICALLY DIVERSE AND FINANCEABLE POOL OF ASSETS RVT Assets DDR CORP. // STRAT E G I C T R A N S F O R M AT I O N I N V E S T O R P R E S E N TAT I O N 22
Slide 23: Retail Value Trust—Financing Details
RETAIL VALUE TRUST—FINANCING DETAILS PROCEEDS CHARACTERISTICS ADDITIONAL DETAILS $1.35BN committed mortgage financing Transaction demonstrates financing availability and quality of RVT asset pool Cross-collateralized Rate: TBD at closing Term: 5-years fully extended Loan expected to close in January
Slide 24: Appendix
APPENDIX 24
Slide 25: Retail Value Trust Property List
RETAIL VALUE TRUST PROPERTY LIST (GLA IN THOUSANDS) CONTINENTAL U.S. 100% DDR OWNERSHIP # Center MSA Location ST Owned GLA Total GLA ABR PSF Key Tenants 1 Palm Valley Pavilions West Phoenix Goodyear AZ 233 277 $17.93 Barnes & Noble, Best Buy, Ross Dress for Less, Total Wine & More 2 Tucson Spectrum
Slide 26: Retail Value Trust Property List (Continued)
RETAIL VALUE TRUST PROPERTY LIST (CONTINUED) (GLA IN THOUSANDS) CONTINENTAL U.S. 100% DDR OWNERSHIP # Center MSA Location ST Owned GLA Total GLA ABR PSF Key Tenants 25 Great Northern Plazas Cleveland North Olmsted OH 631 669 $13.78 Bed Bath & Beyond, Best Buy, Big Lots, Burlington, DSW, Home Depot,
Slide 27: Non-GAAP Financial Measures—Definitions
NON-GAAP FINANCIAL MEASURES—DEFINITIONS The Company uses Net Operating Income (“NOI”), a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated herein as property revenues less property expenses. The Company believes NOI provides useful information to investors regardin
Slide 28: Non-GAAP Reconciliation—Adjusted NOI
NON-GAAP RECONCILIATION—ADJUSTED NOI ($ IN THOUSANDS) Reconciliation of Net Income Attributable to DDR to Adjusted Net Operating Income (Adjusted NOI) At (Non DDR -GAAP) Share 3Q17 3Q17 GAAP RECONCILIATION Net Income Attributable to DDR $983 $983 Fee Income (7,291) (7,291) Interest Income (6,807) (6
Slide 29: Non-GAAP Reconciliation—Adjusted NOI (Continued)
NON-GAAP RECONCILIATION—ADJUSTED NOI (CONTINUED) ($ IN THOUSANDS) At (Non-GAAP) DDR Share 3Q17 3Q17 GAAP RECONCILIATION Net Income from Unconsolidated Joint Ventures 36,080 3,733 Interest Expense 24,276 3,675 Depreciation and Amortization 45,291 5,518 Impairment Charges 2,160 432 Hurricane Casualty
Slide 30: Non-GAAP Reconciliation—SSNOI
NON-GAAP RECONCILIATION—SSNOI ($ IN THOUSANDS) Reconciliation of Net Income Attributable to DDR to Same Store Net Operating Income (SSNOI) At (Non-GAAP) DDR Share 12M16 12M15 12M16 12M15 Net Income (Loss) Attributable to DDR $60,012 ($72,168) $60,012 ($72,168) Fee Income (36,298) (32,971) (36,298) (
Slide 31: Non-GAAP Reconciliation—SSNOI (Continued)
NON-GAAP RECONCILIATION—SSNOI (CONTINUED) ($ IN THOUSANDS) At (Non-GAAP) DDR Share 12M16 12M15 12M16 12M15 Net Income (Loss) from Unconsolidated Joint Ventures 26,972 (62,482) 11,322 (5,250) Interest Expense 132,943 140,701 21,135 22,592 Depreciation and Amortization 195,198 207,816 22,484 25,404 Im