DDR In $1.15B Puerto Rico Deal

CLEVELAND-Developers Diversified Realty is making its first foray outside of the United States with the $1.15 billion acquisition of 15 open-air centers in Puerto Rico. The company is buying the properties, which total 5 million sf, from Caribbean Property Group at a capitalization rate of 7.4%. The parties expect the deal to close during next year’s first quarter.

DDR is funding the deal with $300 million from the proceeds of recent shopping center sales and the assumption of about $660 million in debt. The rest of the acquisition financing will come from additional asset sales, new debt financing and private equity. DDR will also discuss with joint venture partner Macquarie DDR Trust the possibility of investing in the centers.

The portfolio is 97% leased, and tenants in the centers include the three Gap chains, Kmart, Sam’s Club and Wal-Mart. “This acquisition provides us with an opportunity with which to strengthen our relationships with US retailers interested in expanding into Puerto Rico or enhancing their existing presence,” says Scott Wolstein, DDR’s chairman and CEO, in a statement.