CLEVELAND-Developers Diversified Realty Corp. is forming DDR Domestic Retail Fund I, a fully-seeded commingled fund. The fund will acquire a portfolio consisting of 63 shopping centers with a total of 8.3 million sf from Developers Diversified and its affiliates.

The properties in the portfolio have a value of approximately $1.5 billion and the transaction has a cap rate of approximately 6.2%. “About 80% of the value came from assets that were acquired through the Inland acquisition,” says Michelle Dawson, vice president of investor relations for Developers Diversified. A total of 52 of the shopping center properties were transferred to the fund on Friday. M3 Capital Partners LLC was the financial adviser for the formation of the fund.

Developers Diversified and a group of institutional investors have committed about $539 million of equity to the fund, according to a released statement from the company. The fund was financed with a $885 million secured 10-year loan with 5.6% fixed rate debt for the 52 properties transferred Friday and a total of $84 million of assumed debt for the 11 properties still to be transferred with a weighted average interest rate of 4.94%.

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