Developers Diversified Portfolio Hits 77M SF

PHILADELPHIA-With the proposed merger of Atlanta-based JDN Realty Corp., intoCleveland, OH-based Developers Diversified Realty, DDR will own or manage 442shopping centers, encompassing 77 million sf in 44 states. In addition, under the proposed terms, DDR will also gain 21 JDN properties under development and a development pipeline of 17 more, representing 3 million sf with a total estimated cost of $220 million, taking DDR’s total market capitalization to in excess of $5 billion.

The deal, expected to close early next year, is structured at 439 million in shares of common and preferred stock and DDR’s assumption of approximately $580 million in debt.

Scott Wolstein, DDR’s chairman and chief executive officer, says during a conference call that the merger agreement “will increase the asset base of DDR’s portfolio by 30% or $1 billion.”

He adds the acquisition “will expand our relationships with the nation’s leading retailers.” DDR’s top 10 tenants, which include Wal-Mart, Sam’s Club, Lowe’s, and TGX, are also top tenants at JDN properties.

The purchase includes more than 60 acres of land, primarily outparcels, valued at $80 million. Wolstein sees an opportunity “to raise capital through the sale of land and non-core assets,” he says.

Craig Macnab, acting chief executive of JDN, says Lazard Freres had assisted in the evaluation of more than 40 acquirers before the DDR agreement was reached as “the most advantageous for JDN shareholders.” Goldman Sachs is DDR’s financial advisor.