Macquarie DDR Trust Adding 12 Centers for $460M

SYDNEY-The Australian Listed Property Trust created by locally based Macquarie Bank Limited and Cleveland-based Developers Diversified Realty is acquiring an 85.5% interest in 12 US shopping centers containing 18.8 million sf for $460 million.Seven of the properties are wholly owned by DDR and four of the properties are currently owned by Florida-based Benderson Development. The 12th property is owned by a joint venture that includes DDR. The transaction is expected to close during the second quarter of 2004, at which point the trust’s portfolio will aggregate over 11.1 million sf of total GLA valued at approximately $1.28 billion. DDR, which will retain a 14.5% interest in the properties it is selling, says it will use proceeds to help fund its recently announced $2.3-billion acquisition of 110 retail real estate assets (18.8 million sf) from Benderson.The trust was launched late last year with an 81% interest in a $730-million portfolio of 11 community centers (4.8 million sf GLA) that was sold to the trust by DDR. As part of the agreement, the trust had a two-year right of first offer on 20 pre-determined joint venture and wholly owned assets currently in the DDR portfolio. DDR is responsible for all day-to-day operations of the properties and receives fees for property management, leasing, construction management, acquisitions, due diligence, dispositions (including outparcel sales), and financing. DDR also will receive base asset management fees and incentive fees based on the performance of the trust.DDR announced its Benderson portfolio acquisition last month. The portfolio covers 11 states, but 80% of the space is located in New York and New Jersey. Average occupancy in the portfolio is 94%. That sale is expected to close sometime during the second quarter. In addition to using funds from the sale to the trust, DDR announced this week it has priced $150 million of Class I Cumulative Redeemable Preferred Shares. The Class I Preferred Shares have a $25 liquidation value per depositary share and will pay a 7.5% annual dividend. Morgan Stanley and Wachovia Securities acted as joint bookrunning managers for the offering. Co-managers on the transaction were A.G. Edwards & Sons, Inc., Citigroup, and Deutsche Bank Securities.