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SITE Centers Corp. is set to sell its 15 percent stake in the DDRTC joint venture to its partner, TIAA-CREF, based on a gross fund value of $1.14 billion. The transaction is expected to close in early 2020 at which time SITC will no longer provide operational services for the portfolio.

“This transaction materially improves SITE Centers’ portfolio quality and same store NOI growth profile, and I am excited about reinvesting this capital post-closing,” said David Lukes, president and CEO of SITE Centers. “Based on continued robust operations, we currently expect 2019 OFFO to come in at the high end of our previously provided guidance range, and we remain on track with regard to the business plan and strategy outlined at our 2018 Investor Day presentation.”

The 22 property DDRTC portfolio, totaling 7.6 million square feet, was acquired in 2007 and consists primarily of large-format centers located predominately in the Southeast United States with average three-mile population and household income 40 percent and 15 percent lower, respectively, than the SITE Centers’ consolidated portfolio. The expected sale includes the repayment or assumption of outstanding mortgage debt previously held by the partnership, which totaled $299.2 million as of June 30, 2019. Fee income from the DDRTC joint venture is expected to total approximately $9 million-$10 million in 2019. Assuming no new joint ventures are entered into, the Company expects 2020 joint venture fee income to total approximately $16million-$20 million.

Operating metrics determined for the company at its effective ownership interest as well as for the stand-alone DDRTC joint venture are as follows:

 

     

2017

   

2018

   

2019 6M YTD

SITE SS NOI (pro rata share)

   

0.7%

   

2.3%

   

3.8%

DDRTC SS NOI (100%)

   

-1.7%

   

-0.9%

   

3.2%

                 

 

SITE Blended Rent Spreads (pro rata share)

   

8.4%

   

8.2%

   

7.9%

DDRTC Blended Rent Spreads (100%)

   

6.5%

   

0.6%

   

3.5%

                 

 

SITE Base Rent PSF (pro rata share)

   

$17.20

   

$17.86

   

$17.98

DDRTC Base Rent PSF (100%)

   

$14.25

   

$14.58

   

$14.67