As proposed, Developers Diversified would sell the portfolio to the partnership for $161.5 million, reducing its stake in the assets to 10% while gaining the fee-based income for asset management, property management and leasing. In addition, Developers Diversified will receive a promoted interest above a 9.5% leveraged threshold return.
The assets sold to the partnership are Beaver Creek Commons, a 452,383-sf center in Raleigh, NC that is anchored by Super Target and Lowe's; Mt. Nebo Point, a 362,832-sf center in Pittsburgh anchored by Sam's Club and Target; and Centerton Square, a 710,159-sf center in Philadelphia anchored by Costco and Target. Developers Diversified estimates its pre-tax merchant-build gain on the sale to the JV at $50 million.
Dividend Capital is a non-listed REIT that currently has approximately $772 million invested in 24 real property assets totaling approximately 5.2 million sf and various real estate securities and debt related investments. Developers Diversified is a publicly traded company that owns and manages 162 million sf spread among 800 retail properties. The partnership is a first for the two companies.
The investment by Dividend Capital comes on the heels of another nine-figure acquisition in March. In that deal, Dividend Capital acquired 1.9 million sf in six industrial properties for $105.7 million. Located in Atlanta, Chicago, Indianapolis, Dallas and central Pennsylvania, the properties are 100% leased. Also that month, it paid $21.9 million for a 102,000-sf office building in Little Rock, AR that is 100% leased to the FBI through 2021.
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