DDR Sells 85% of Five Centers to JV With Macquarie Bank

CLEVELAND-Developers Diversified Realty is selling majority interest in several more properties to Macquarie DDR Trust, its joint venture with the Sydney-based international investment bank Macquarie Bank Ltd. In the latest deal, DDR sold and 85.5% interest in five community shopping centers for $170.4 million, which equates to a 7.3% capitalization rate for the Australia listed property trust. DDR officials say another three-property transaction is expected to close within the next two months.When all six properties are exchanged, Macquarie DDR Trust will own 14 million sf in 35 community centers across the US. DDR is responsible for all day-to-day operations of the properties and receives fees for property management, leasing, construction management, financing and due diligence. DDR also receives base asset management fees and incentive fees based on the overall performance of the JV relative to the S&P/ASX 200. In the latest deal, Macquarie DDR Trust acquired interest in DDR centers in Connecticut, Florida and Wisconsin. In Connecticut, it acquired Connecticut Commons in Plainville. The 567,000-sf community center is anchored by Lowe’s Home Improvement and Kohl’s. In Florida, the trust acquired Lake Brandon Village and Lake Brandon Plaza in Brandon. The two centers comprise 440,000 sf (leasable). Anchor tenants include Lowe’s Home Improvement (unowned), Sports Authority, Linens ‘n Things, PetsMart and Publix Supermarket.In Wisconsin, the trust acquired the Market Place and Brown Deer Center in Brown Deer. The two centers comprise 410,000 sf. Anchor tenants include Pick ‘N Save, Marshall’s Mega Store, Kohl’s, Michaels, OfficeMax, T.J. Maxx and Old Navy. The three centers which the trust expects to acquire from DDR over the next two months are located in Parker, CO; McDonough, GA; and Grandville, MI. Beyond that, many more deals are expected between DDR and the trust, a source at DDR tells GlobeSt.com. “This is something we anticipate will be a growth vehicle over the long term,” says the source.Formed in November 2003, Macquarie DDR Trust is an infinite life trust. It generates at least $40 million in equity each year because Australians are required to set aside money for retirement, according to the DDR source. With the exception of a large portfolio purchase from Benderson in April 2004, all of the trust’s acquisitions have come from DDR’s consolidated portfolio, which currently totals 108 million sf in 470 retail properties in 44 states and Puerto Rico.