Owners of Crate & Barrel, Paramount Group, and Leading European Mall Developer Invest in Shopping Center REIT
DDR to Close on First Tranche of Shares to Otto Family May 11, Following $125M in Closed Loans, published May 11, 2009
Developers Diversified Realty (NYSE:
DDR) secured new debt financings totaling $125 million. The first is a $40 million, two-year loan with a one-year extension option secured by a shopping center in New Jersey. The second financing is an $85 million, 10-year loan secured by four assets in Puerto Rico. The closing of these loans was key, as it was a condition that had to be satisfied in order for the company to close on the first tranche of 15 million common shares to Germany's Otto Family, which is scheduled to occur on May 11, 2009. DDR said gross proceeds from these transactions would total $177 million and would be used to repay debt and general corporate purposes.
Shareholders Approve Otto Family Transaction, Apr. 14, 2009
Developers Diversified Realty (NYSE:
DDR) has received shareholder approval of its transaction with Mr. Alexander Otto and members of his family (details described below.) DDR expects the first tranche of 15 million shares to be sold to the Otto Family within the next several weeks, concurrent with the REIT's closing on more than $120 million of new debt financing.
Original Story Published Feb. 23, 2009
Cleveland, OH-based national shopping center REIT, Developers Diversified Realty (NYSE:
DDR) entered into an agreement to sell 30 million of its common shares (as well as warrants to purchase an additional 10 million shares) to international retail real estate mogul, Alexander Otto and certain members of the Otto family.
The Otto family owns Germany's ECE Projektmanagement, a leading European developer and manager of inner-city shopping centers. ECE manages 111 malls totaling 37 million square feet in 15 Central and Eastern European countries. In addition, Alexander Otto is the largest shareholder of Deutsche EuroShop AG, which owns a $2 billion portfolio of 16 Central European shopping centers.
Additionally, the Otto Family, controls privately owned, New York City-based acquisition, redevelopment and management firm, the Paramount Group. Paramount owns several high-rise buildings in New York City and Washington, D.C. According to CoStar COMPS, the Paramount Group spent approximately 1.7 billion during 2008 to acquire four properties in the New York City area; including the Credit Lyonnais building on the Avenue of Americas and Penn Link at 440 Ninth.
DDR said the Otto family also owns home accessories chain, Crate & Barrel, which has grown to about 160 stores.
The Otto family is acquiring the stake in DDR at $3.50 per share for the first 15 million shares and $4.00 per share for the second 15 million shares (for a total of $112.5 million). These prices represents a premium of approximately 33% and 52%, respectively, to the closing market price of DDR's shares on Friday, February 20, 2009 -- this compares to a closing stock price of $37.12 per share on February 20, 2008. Lastly, five-year warrants were issued to the Otto family to purchase another 10 million shares at $6.00 per share (for a total of $6 million).
According to Yahoo Finance, FMR LLC is currently DDR's largest shareholder - it owns 17.28 million shares accounting for a 14.37% stake. Based on that, the Otto family's 40 million shares would account for approximately one-third ownership in DDR.
Scott Wolstein, DDR's chairman and CEO said, "This transaction would provide us with significant capital for debt reduction, thus allowing us to meet our continued objective of reducing leverage and improving liquidity."
Alexander Otto said, "We continue our heritage of breathing new life into the city center retail trade...We view [DDR] as a valuable investment and a key stepping stone for our global expansion and partnership initiatives."
This article appears in CoStar's Retail News Roundup: Mar. 1 to 7, 2009, CoStar's weekly column covering expansions, new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales, loans, shopping center development activity, personnel changes, sustainability, green building, and more in retail real estate.
This week in the Retail Roundup, CoStar reports on
expansions or new concepts at Limited Brands, Play N Trade, Aaron Rents, Forever 21, Appliance Direct, and Kohl's;
new retail development news in GA, HI, and FL;
acquisition, merger, loan or sale activity at Centro Properties Group;
closings, cutbacks or bankruptcies at Zale, J. Crew, Gap, Z Gallerie, Steve Madden, Fortunoff, and Sears;
personnel announcements at Centro;
green building at Staples, and more.