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Dividend Capital, DDR Form Joint Venture

DENVER-The locally based non-listed REIT forms a 90-10 venture with the Cleveland-based owner of community centers, which sells it 1.5 million sf and gains the fee-based management and leasing assignments.

By Brian K. Miller | Updated on April 26, 2007

DENVER-Locally headquartered Dividend Capital Total Realty Trust is acquiring 90% of a 1.5-million-sf (675,000 sf owned), three-property retail portfolio through a new joint venture with Developers Diversified, the Cleveland-based owner of community centers. The transaction is expected to close next month.

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.

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