BEACHWOOD, OH—DDR Corp. and an affiliate of Madison International Realty said Wednesday afternoon they had recapitalized a $1.05-billion joint venture as it reaches its 10-year term. The JV covers 52 shopping centers previously owned by DDR and various institutional investors through the DDR Domestic Retail Fund I.
Madison International Real Estate Liquidity Fund VI, an investment fund managed by Madison International Realty, acquired 80% of the JV's common equity, while a DDR affiliate retained 20%. The new ownership structure is consistent with the JV structure prior to the recap. DDR will continue to provide leasing and management services.
The portfolio, totaling seven million square feet and concentrated in the Southeast, consists primarily of grocery anchored shopping centers. Originally, DDR Domestic Retail Fund I encompassed 63 assets, 54 of which came into the DDR fold through its $6.2-billion acquisition of Inland Retail Real Estate Trust in February 2007, a few months prior to the formation of the JV. DDR and its JV partners began marketing the now 55-asset portfolio for sale last fall.
Three properties of the 55 previously held by the partnership have been excluded from the recap and will be held in a separate JV by DDR and its prior partners in DDR Domestic Retail Fund I. The recap includes the repayment of all outstanding mortgage debt previously held by the partnership with a new $707-million mortgage loan secured by the 52 assets.
“This venture is an exceptional opportunity and an excellent fit with our investment strategy,” says Ronald Dickerman, founder and president of Madison International. “Madison's investment will allow existing partners to exit, Madison to expand its retail footprint and DDR to continue its value creation strategy.”
Dickerman cites the “growing populations and favorable demographics” of the Southeastern markets in which the portfolio is located. At DDR, president and CEO David Lukes says the capitalized venture “will continue to drive our return on invested equity, demonstrates the sustainability of our joint venture business and provides us the ability to add value to a property type with which this management team has extensive experience.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
