SOURCE: Developers Diversified

April 26, 2007 08:20 ET

Developers Diversified to Form Joint Venture With Dividend Capital Total Realty Trust

CLEVELAND, OH -- (MARKET WIRE) -- April 26, 2007 -- Developers Diversified (NYSE: DDR), the leading owner, manager and developer of market-dominant community centers in the U.S., announced that it expects to form a joint venture with Dividend Capital Total Realty Trust, a diversified non-listed real estate investment trust (REIT). Developers Diversified has entered into an agreement to initially sell a portfolio of three assets to the joint venture, subject to satisfaction of customary closing conditions. The expected aggregate purchase price of the 1.5 million square foot (675,000 square foot owned) portfolio will be $161.5 million.

The anticipated sale is expected to generate initial pre-tax merchant build gains of approximately $50 million, which will be included in Developers Diversified's second quarter FFO. These merchant build gains were anticipated in the Company's previously announced 2007 FFO guidance.

The joint venture is expected to close in May. Upon closing, the joint venture will be owned 90% by Dividend Capital Total Realty Trust and 10% by Developers Diversified. Pursuant to the terms of the joint venture agreement, Developers Diversified will receive asset management and property management fees, plus fees on leasing and ancillary income. In addition, Developers Diversified will receive a promoted interest above a 9.5% leveraged threshold return.

Scott Wolstein, Developers Diversified's Chairman and Chief Executive Officer, commented, "We are pleased to announce this joint venture with Dividend Capital Total Realty Trust. This transaction establishes a relationship with a well-capitalized and growing company with a talented management team. We are able to retain day-to-day management of high quality, stabilized community center assets while expanding our fee management business, which will both preserve capital and enhance our returns on equity."

Portfolio Information

Property Name            MSA           Total SF      Anchor Tenants

1. Beaver Creek      Raleigh, NC       452,383    Super Target, Lowe's,
   Commons                                        Office Max,
                                                  Linens 'N Things

2. Mt. Nebo Point    Pittsburgh, PA    362,832    Sam's Club, Target,
                                                  Sportsman's Warehouse

3. Centerton Square  Philadelphia, PA  710,159    Bed Bath & Beyond,
                                                  DSW Shoe Warehouse,
                                                  Jo-Ann Stores, T.J. Maxx,
                                                  Sports Authority,
                                                  Target, Costco, Wegmans

Dividend Capital Total Realty Trust

Dividend Capital Total Realty Trust, a Denver-based REIT, invests in a diversified portfolio of high-quality direct real estate, real estate securities and debt related investments. The company currently has a total of approximately $772 million invested in a diversified portfolio comprised of 24 real property assets totaling approximately 5.2 million square feet, as well as various real estate securities and debt related investments.

Developers Diversified

Developers Diversified owns and manages 800 retail operating and development properties in 45 states, plus Puerto Rico and Brazil, totaling 162 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

FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry. Management believes that FFO provides an additional indicator of the financial performance of a REIT. The Company also believes that FFO more appropriately measures the core operations of the Company and provides a benchmark to its peer group. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income computed in accordance with GAAP as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity.

Developers Diversified 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
    Ph: 216.755.5500
    Email: Email Contact