DDR JV Closes Mervyns Deal

CLEVELAND-A joint venture of Developers Diversified Realty and Macquarie Bank Limited has closed on the acquisition of 32 operating Mervyns department stores for $319.1 million. The partnership Macquarie DDR Trust is buying the units from Capital Partners Inc., Cerberus Capital Management, LP, and Lubert-Adler and Klaff Partners, the private firms that own Mervyns.

About 70% of the stores are in open-air centers, while the rest are on enclosed mall sites. Of the 2.7 million sf in the portfolio, about two million sf is in California, and the rest lies in Arizona and Nevada.

When the deal was announced last month DDR chairman and CEO Scott Wolstein outlined three possibilities for the future of the stores: they will continue operation as Mervyn’s stores, they could get bought out by another retailer, or pending the failure of the chain, DDR could redevelop the properties into other retail uses, such as splitting the stores into developments with multiple retailers.