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CLEVELAND-Developers Diversified Realty has closed on its acquisition of 15 open-air centers in Puerto Rico. The locally based shopping center REIT acquired the well-leased, five-million-sf portfolio from Caribbean Property Group for between $1.1 billion and $1.2 billion. "In an environment where constraints to new supply are prohibitive, consumer spending as a percent of income is significantly higher than that of the US and tenant demand for retail space is extraordinarily high, our position as the dominant retail landlord in Puerto Rico will create substantial long-term value for our shareholders," says DDR chairman/chief executive Scott Wolstein in a prepared statement released Thursday night. The initial financing for the transaction was provided by DDR's assumption of approximately $660 million of existing debt and line of credit borrowings on its $1-billion senior unsecured credit facility. Borrowing capacity on the credit facility was created by DDR's recent $250-million common equity issuance and approximately $300 million of proceeds generated by sales of neighborhood grocery anchored centers to joint ventures, including approximately $160 million of sales to Macquarie DDR Trust.The centers are in the cities of Arecibo, Carolina, Cayey, Fajardo, Guayama, Humacao, Isabela, San German, San Juan and Vega Baja. They range in size from 132,383 sf to 711,379 sf. Anchor tenants in the centers include Kmart, Sam's Club, Wal-Mart and the three Gap chains. The capitalization rate on the investment is 7.4% on a pro-forma basis, according to the company's November 2004 announcement that it had tied up the portfolio ( Click here for previous article).Including the Puerto Rico properties, DDR owns or manages approximately 470 retail properties in 44 states (plus Puerto Rico) comprising approximately 107 million sf.