SOURCE: Developers Diversified

May 18, 2006 18:19 ET

Developers Diversified and Coventry Real Estate Advisors Acquire Three Value-Add Retail Real Estate Investments

CLEVELAND, OH -- (MARKET WIRE) -- May 18, 2006 -- Developers Diversified (NYSE: DDR), the nation's leading owner, manager and developer of market-dominant community centers, and Coventry Real Estate Advisors ("Coventry") announced three separate acquisitions of value-add retail assets representing a total purchase price of $226 million. Developers Diversified's 20% joint venture co-investment with the Coventry Real Estate Fund II (the "Fund") totals $41 million for the three investments.

--  Tri-County Mall, a 1.3 million square foot regional mall located in
    Cincinnati, OH. The total investment for the Tri-County Mall redevelopment
    is expected to be approximately $220 million.
    
--  Fairplain Plaza, a 325,000 square foot community center located in
    Benton Harbor, MI, was acquired for $26 million. The total investment for
    the Fairplain Plaza redevelopment is expected to be approximately $35.8
    million.
    
--  Watters Creek at Montgomery Farm, a 34-acre site designated for a
    mixed-use lifestyle development located in suburban Dallas, TX, was
    acquired for $7.6 million. The total investment for the Watters Creek
    development is expected to be approximately $88 million.
    
Tri-County Mall; Cincinnati, OH

Tri-County Mall, a 1.3 million square foot regional mall anchored by Dillard's, Macy's and Sears, is the dominant shopping center in Cincinnati's primary retail corridor. The new joint venture will focus on the redevelopment of the fourth anchor box, a 160,000 square foot former J.C. Penney, with inline retail and restaurant uses.

Located in a northern suburb, adjacent to Interstate 275 and near the intersection with Interstate 75, the Property is easily accessible throughout the Cincinnati metropolitan region. The 10-mile trade area offers outstanding demographics, with over 630,000 residents earning an average household income of $72,000.

The Coventry/DDR joint venture entity owns a majority interest in the Property and Thor Equities, the previous owner of the Property, owns a minority interest.

Fairplain Plaza; Benton Harbor, MI

Fairplain Plaza is a 325,000 square foot community shopping center located in Benton Harbor, MI. Tenants include Target, Office Depot, T.J. Maxx, Old Navy, Dunham's Sports, Pier One and Rite Aid. The center was partially redeveloped in 2001 and is 69% occupied. The Coventry/DDR joint venture intends to complete the redevelopment, retenant the existing retail space and develop adjacent land parcels. Kohl's is under construction with a new, 89,000 square foot store at the center, and several other community center tenants have expressed strong interest in locating at the property.

Fairplain Plaza is the dominant community center in the Benton Harbor-St. Joseph metropolitan area. Already a regional draw, once fully developed, Fairplain Plaza will be the largest non-mall retail property in the market. Over 120,000 residents live within 15 miles of the property, with an average household income of approximately $60,000.

The property is wholly owned by the Coventry/DDR joint venture.

Watters Creek at Montgomery Farm; Dallas (Allen), TX

Watters Creek at Montgomery Farm is a 34-acre site designated for a 700,000 square foot mixed-use lifestyle development in suburban Dallas, TX. The joint venture will build a 350,000 square foot shopping center that will serve as the town center to the 500-acre master-planned Montgomery Farm community. The first two residential subdivisions of Montgomery Farm are under construction. Ultimately, the community will include a dozen neighborhoods with 1,100 residential units and more than 250 acres of park area. Other uses at the project will include a parcel zoned for hotel development and office space above the streetfront retail.

Two retail anchors at the development have already been announced. Market Street-United, a specialty grocery chain, has committed to a 65,000 square foot location, and Borders will open a 24,000 square foot store. Over 20 specialty merchants, representing over 175,000 square feet, are currently in lease negotiations.

Watters Creek will be located along I-75 (Central Expressway) and Bethany Road, where traffic counts exceed 180,000 cars per day. Watters Creek has a prime location to serve the affluent suburbs of East Plano and North Richardson, as well as the rapidly growing communities of Allen and McKinney. Within the 10-mile trade area, there are nearly 670,000 residents with an average household income of over $100,000.

The Coventry/DDR joint venture entity owns a 50% interest in the Property and Trademark Property Company, the development partner, owns a 50% interest.

Coventry Real Estate Fund II

The Fund was formed with several institutional investors and Coventry serves as the investment manager. Including these three acquisitions, the Fund has invested in 10 value-add retail assets across the U.S., ranging from redevelopment of enclosed malls to forward commitments for new ground-up developments. The total anticipated investment for these projects is $870 million.

Pursuant to the terms of the individual joint venture agreements, Developers Diversified earns fees for services such as property management, leasing, and construction management, plus a promoted interest, along with Coventry, after return of capital to investors.

Developers Diversified owns and manages 500 retail operating and development properties totaling over 114 million square feet of real estate in 44 states. Developers Diversified is a self-administered and self-managed real estate investment trust (REIT) operating as a fully integrated real estate company which develops, leases and manages shopping centers. You can learn more about Developers Diversified on the Internet at www.ddr.com.

Coventry Real Estate Advisors is an investment manager offering a broad array of services to institutional investors in the value-added retail property sector. Coventry acquires under-performing retail properties where identifiable opportunities exist to enhance free cash flow and create substantial value through leasing, redevelopment and intensive management.

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 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although Developers Diversified 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 Developers Diversified 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 or the loss of a major tenant. For more details on the risk factors, please refer to the Company's Annual Report on Form 10-K for the year-end December 31, 2005.

Contact Information

  • Contact:
    Michelle M. Dawson
    Vice President of Investor Relations
    Developers Diversified Realty
    Main: (216) 755-5500
    Fax: (216) 755-1455
    E-mail: Email Contact

    Peter F. Henkel
    President & Chief Executive Officer
    Coventry Real Estate Advisors
    Main: (212) 699-4102
    Fax: (212) 699-4124
    E-mail: Email Contact