SOURCE: Developers Diversified Realty

August 08, 2005 19:37 ET

Developers Diversified Realty Announces Sale of Office and Industrial Portfolio

CLEVELAND, OH -- (MARKET WIRE) -- August 8, 2005 -- Developers Diversified Realty (NYSE: DDR) announced it has entered into an agreement to sell 25 office and industrial properties to Brascan Real Estate Opportunity Fund (BREOF), an investment fund launched by Brascan Corporation (NYSE: BNN) (TSX: BNN) for $177 million, comprised of $170 million in cash and $7 million in subordinated equity. The transaction is expected to close in late September. Proceeds from the sale will be used to fund Developers Diversified's acquisition of the real estate underlying 36 open and operating Mervyns stores, which the Company also announced today.

Developers Diversified acquired the office and industrial buildings that are under contract through its merger with American Industrial Properties in May 2001. The American Industrial Properties portfolio consisted of 31 industrial buildings, six office properties, two retail properties and approximately 24 acres of raw land.

Since the merger, Developers Diversified sold seven properties and one land parcel with gross proceeds aggregating over $32 million. This transaction disposes of all remaining industrial and office assets from the American Industrial Properties transaction, except for one property held in a joint venture, one property (comprised of three individual assets) which the Company is precluded to sell by the terms of the issuance of Developers Diversified operating partnership units in connection with the original acquisition, and one very small property located in the Company's hometown. The Company will continue to own and operate the two retail properties located in Denver, CO, and Daytona Beach, FL.

Scott Wolstein, Developers Diversified's Chief Executive Officer and Chairman of the Board, commented, "I am pleased to announce the pending sale of a substantial portion of our office and industrial assets. This disposition demonstrates our patience and focus on an orderly disposition that has ultimately realized full value for these properties. Based on an analysis of our investment in American Industrial Properties, we estimate that we have earned an unleveraged return of approximately 10%, or a leveraged return of approximately 16%."

Developers Diversified will conduct a conference call and an audio webcast on Tuesday, August 9, 2005, at 10:30 a.m. EDT. To access the conference call, dial 888-396-2356 at least ten minutes prior to the scheduled start of the call. When prompted, provide the access code: 16504431. The conference call will be recorded and available for replay beginning at 12:30 p.m., August 9, 2005 and will be available until 11:59 p.m., September 8, 2005. To access the conference call recording, please call 888-286-8010 and use the access code: 58450771. The conference call will be webcast by CCBN, www.ccbn.com, and can be accessed via the DDR web site, www.ddr.com.

Including the Mervyns portfolio acquisition, Developers Diversified owns or manages over 500 operating and development retail properties in 44 states, plus Puerto Rico, comprising over 110 million square feet. 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.

Brascan Real Estate Opportunity Fund was established by Brascan Corporation to invest opportunistically in commercial real estate in North America. Brascan Corporation is an asset management company, with a focus on property, power and infrastructure assets. The Company has $40 billion of assets under management, including 70 premier office properties and over 130 power generating plants. The Company is listed on the New York and Toronto stock exchanges under the symbol BNN. For more information, please visit the Company's web site at www.brascancorp.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, 2004.


               OFFICE AND INDUSTRIAL DISPOSITION PORTFOLIO

                                                       OFFICE/
         PROPERTY NAME              CITY      STATE  INDUSTRIAL      GLA
1   Gateway West                   Phoenix     AZ    Industrial    155,587
2   Washington Business Park       Phoenix     AZ    Industrial    137,121
3   Winter Park Business Center    Orlando     FL    Industrial    119,883
4   1881 Pine Street               St. Louis   MO    Office        107,548
5   Meridian Street Warehouse      Dallas      TX    Industrial     72,072
6   Valwood II Business Center     Dallas      TX    Industrial     52,452
7   Beltline Business Center       Dallas      TX    Office         60,245
8   Carpenter Center               Dallas      TX    Industrial     46,473
9   Northgate II - 5, 6, 7, 8      Dallas      TX    Industrial    237,063
10  Northgate III
    - 7, 8, 9, 10, A, C            Dallas      TX    Industrial    257,700
11  Shady Trail Business Center    Dallas      TX    Industrial     68,043
12  Valley View Com. Park          Dallas      TX    Industrial    139,398
13  Carrier Place                  Dallas      TX    Industrial     83,520
14  DFW North                      Dallas      TX    Industrial     74,704
15  Commerce Center                Houston     TX    Industrial    296,400
16  Commerce Park North            Houston     TX    Industrial     88,314
17  Plaza Southwest                Houston     TX    Industrial    151,898
18  Technipark Ten Service Center  Houston     TX    Industrial     71,647
19  Westchase Park                 Houston     TX    Industrial     47,702
20  Gateway - 5, 6                 Dallas      TX    Industrial     79,029
21  Parkway Tech Center            Dallas      TX    Industrial     69,547
22  Greenbrier Technology Center   Norfolk     VA    Industrial     95,458
23  Greenbrier Circle              Norfolk     VA    Industrial    230,097
24  Norfolk Commerce Center
    - I, III, IV                   Norfolk     VA    Industrial   327, 711
25  Northwest Business Park
    - I, II, III                   Milwaukee   WI    Industrial    143,114

Contact Information

  • Contact:
    Michelle M. Dawson
    Vice President - Investor Relations
    Developers Diversified Realty
    216.755.5455