SOURCE: Developers Diversified

August 20, 2007 08:30 ET

Developers Diversified Announces Sale of Two Value-Add Shopping Center Assets to Macquarie DDR Trust

CLEVELAND, OH--(Marketwire - August 20, 2007) - Developers Diversified (NYSE: DDR), the leading owner, manager and developer of market-dominant shopping centers in the U.S., today announced the sale of two retail assets to the Company's joint venture with Macquarie DDR Trust (ASX: MDT) ("MDT"), an Australian Listed Property Trust sponsored by Macquarie Bank Limited (ASX: MBL), an international investment bank and leading advisor and manager of specialized real estate funds in Australia. The aggregate purchase price for the properties was $26.8 million, which equates to a cap rate of 7.1%. The assets were recently acquired by Developers Diversified as part of its acquisition of Inland Retail Real Estate Trust, Inc. and both offer redevelopment potential during the next several years.

Property Name        Location     Owned       %     Redevelopment Activity
                      (MSA)        GLA      Leased

1.  Piedmont Plaza   Orlando, FL  148,075  90.3%    Reconfigure center to
                                                    accommodate junior
                                                    anchors and additional
                                                    small shop space
2.  Winterpark Palms Orlando, FL  112,292  97.3%    Expand existing Publix
                                                    and add small shop
                                                    space

Developers Diversified retains a 14.5% ownership interest in the properties acquired by MDT. The Company remains responsible for day-to-day operations of the properties and receives ongoing fees for property management, leasing and construction management, nominal one-time fees, and base asset management fees. Developers Diversified will also receive a promoted interest above a 10.0% leveraged IRR. The promoted interest will be calculated based on the implied value of the assets at stabilization.

Scott A.Wolstein, Developers Diversified's Chairman and Chief Executive Officer, commented, "We are pleased to announce this asset sale, which further expands our relationship with MDT and is consistent with our investment strategy as well as the goals of a key long-term partner to make more value-added investments. This transaction preserves our equity capital, enhances our long-term fee revenues, and includes provisions to recognize promoted income on the value created through redevelopment."

David J. Oakes, Developers Diversified's Executive Vice President of Finance and Chief Investment Officer, added, "This transaction formally establishes MDT as a potential partner for value-add projects in the future. We expect to continue to engage in a significant volume of redevelopment activity, a portion of which is subject to a right of first offer by MDT covering $220 million of assets. Through this pipeline, we will continue to review additional opportunities that will create value for both our shareholders and those of MDT."

Including the assets described above, MDT owns 81 community center assets across the U.S., representing over $2.8 billion in total asset value.

Developers Diversified owns and manages approximately 740 retail operating and development properties in 45 states, plus Puerto Rico and Brazil, totaling approximately 155 million square feet. The Company is a self-administered and self-managed real estate investment trust (REIT) operating as a fully integrated real estate company which acquires, develops and leases shopping centers. Additional information about Developers Diversified is available on the Internet at http://www.ddr.com.

Developers Diversified Realty Corporation considers portions of this information to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause the results of the Company to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as oversupply of space or a reduction in demand for real estate in the area, competition from other available space, dependence on rental income from real property, the loss of a major tenant, constructing properties or expansions that produce a desired yield on investment or inability to enter into definitive agreements with regard to our financing arrangements or our failure to satisfy conditions to the completion of these arrangements. For more details on the risk factors, please refer to the Company's Form on 10-K as of December 31, 2006.

Contact Information

  • Contact:
    Michelle M. Dawson
    Vice President of Investor Relations
    Developers Diversified Realty
    Main: (216) 755-5500
    E-mail: Email Contact