Exhibit 99.1
For Immediate Release
Contact: Michelle Mahue
Vice President of Investor Relations
Developers Diversified Realty
Ph: 216.755.5500
Email: mmahue@ddr.com
DEVELOPERS DIVERSIFIED ANNOUNCES
$1.15 BILLION ACQUISITION OF PUERTO RICAN
SHOPPING CENTER PORTFOLIO
Cleveland, OH - November 2, 2004 -- Developers Diversified Realty (NYSE: DDR)
announced it has entered into an agreement to purchase 15 Puerto Rican retail
real estate assets, totaling nearly 5.0 million square feet from Caribbean
Property Group, LLC ("CPG"). The transaction has a total value of approximately
$1.15 billion, which represents a 7.4% cap rate on a pro-forma basis without the
benefit of straightline rents. The transaction is expected to close during the
first quarter of 2005, subject to the Company's due diligence and standard
closing conditions.
To finance the acquisition, Developers Diversified intends to utilize
approximately $300 million in proceeds generated by the joint venture sales of
neighborhood grocery anchored centers from its existing portfolio. In addition,
the Company will assume approximately $660 million of debt in connection with
the acquisition from CPG, of which approximately 85% may be paid off within six
months of closing of the acquisition. The Company will finance the remainder of
the acquisition through a combination of sources, including additional asset
sales, new debt financing and private equity. Developers Diversified is in
discussions with the manager of Macquarie DDR Trust ("MDT") regarding certain
assets in the CPG portfolio, which meet MDT's investment criteria that MDT may
purchase in the future.
The CPG portfolio is located entirely in Puerto Rico. It is 97% leased and its
largest tenants, based on revenues, include Wal*Mart/Sam's Club, Pueblo
(grocery), Kmart, Footlocker, Novus (footwear), Caribbean Cinemas, Kress/Kress
Kids (discount apparel), Payless, Marianne/ Marianne Plus (women's apparel/plus
sizes), and Gap/Old Navy/Banana Republic.
Scott Wolstein, Developers Diversified's Chairman and Chief Executive Officer,
commented, "We are very pleased to announce this transaction, which provides
shareholders a highly accretive use of capital and an effective redeployment of
the proceeds generated from our joint venture sales of neighborhood grocery
anchored centers into a core portfolio of market dominant community center
assets that fully reflects our investment strategy. This acquisition represents
the largest portfolio of assets controlled by a single owner in Puerto Rico.
This dominant presence has significant benefits given the island's population
density, its outstanding retail sales and its substantial physical barriers to
new supply."
Wolstein continued, "The Puerto Rican outlets of many major retailers, including
Wal*Mart and Sam's Club, Sears, JC Penney, Kmart, Home Depot, Gap/Old Navy and
OfficeMax are among
the most productive stores in these retailers' portfolios. As a testimonial to
these retailers' success, more U.S. big box tenants and category killers, such
as Bed Bath & Beyond, Best Buy, Borders and Costco, have already moved into the
Puerto Rican market. This acquisition provides us with an opportunity with which
to strengthen our relationships with U.S. retailers interested in expanding into
Puerto Rico or enhancing their existing presence."
A detailed list of the properties is attached to this announcement. In addition,
a powerpoint presentation, which provides additional information on the
transaction and the individual properties, is available on the Company's web
site, www.ddr.com/cpg-powerpoint. Upon completion of the transaction, Developers
Diversified will control the largest U.S. open air community center portfolio
based on square footage, owning or managing over 470 operating and development
retail properties in 44 states, plus Puerto Rico, comprising 107 million square
feet.
PUERTO RICO OVERVIEW
The island of Puerto Rico has approximately 3,400 square miles and 4.0 million
residents, creating a population density greater than any of the 50 states and
has a higher absolute population than 24 states. Puerto Rico has significant
physical barriers to development, with mountains located on approximately 70% of
the land area and a substantial floodplain in the lower valley areas. A lack of
high-quality developable sites and high construction costs limit any significant
new retail development.
Puerto Rico has long fostered a business friendly approach to investment,
offering businesses faster permitting, less regulation, favorable taxes and
lower operating expenses than on the mainland. Furthermore, as a Commonwealth of
the U.S., there are no additional foreign currency or political risks. Puerto
Rico offers a highly educated workforce, with a literacy rate of over 94% and a
college education rate of 56%, which is the 6th highest in the world.
In 2003, the island's GDP was $74.4 billion and was dominated by manufacturing,
which generated 42% of GDP. Pharmaceuticals represented more than one half of
this figure. Services, such as banking, finance and communications, are also
fueling economic growth. Tourism is a minor, but growing component, accounting
for 6% of GDP, and agriculture represented approximately 1%.
Retail sales in Puerto Rico have consistently increased at a long-term rate
comparable to that of the U.S. and consumer spending as a percent of consumer
income in Puerto Rico is more than double that of the U.S. As a result of these
spending patterns, the high population density on the island, and physical
barriers to entry, Puerto Rico offers an outstanding environment to retailers.
The major retail trade areas are mature and very dense. Due to the limited
supply of retail space, occupancy rates are high, averaging over 95%.
Developers Diversified currently owns and manages approximately 460 retail
operating and development properties in 44 states totaling approximately 102
million square feet of real estate. The Company is a self-administered and
self-managed real estate investment trust (REIT) operating as a fully integrated
real estate company which acquires, develops and leases shopping centers. You
can learn more about Developers Diversified on the internet at www.ddr.com.
Interested parties are invited to join Developers Diversified's executive
management team for a live conference at the Waldorf Astoria in New York, New
York on Thursday, November 4, 2004 at 10 a.m. EST. The conference can also be
accessed by dialing 1-800-884-5695 at least ten minutes prior to the scheduled
start of the conference. When prompted, provide the passcode: 10568096. Callers
will also be able to participate in the question and answer period of the
conference.
The conference will be recorded and available for replay beginning at 1:30 p.m.,
November 4, 2004 and will be available until 11:59 p.m., December 4, 2004. To
access the conference call recording, please call 888-286-8010 and use the
access code: 26012398. The conference call will be webcast by CCBN,
www.ccbn.com, and can be accessed via Developers Diversified's web site,
www.ddr.com.
Developers Diversified Realty Corporation considers portions of this information
to be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934,
both as amended, with respect to the Company's expectation for future periods.
Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. For this purpose, any
statements contained herein that are not historical fact may be deemed to be
forward looking statements. The acquisition is subject to standard closing
conditions. In addition, there are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including, among other factors, local
conditions such as oversupply of space or a reduction in demand for real estate
in the area, competition from other available space, dependence on rental income
from real property or the loss of a major tenant. For more details on the risk
factors, please refer to the Company's Form on 10-K as of December 31, 2003.
CARRIBBEAN PROPERTY GROUP ACQUISITION PORTFOLIO
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PROPERTY NAME LOCATION GLA KEY TENANTS
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1 Plaza del Sol San Juan 711,379 Wal-Mart, Best Buy, Home Depot, Caribbean
Cinemas, Bed Bath & Beyond, Old Navy, Pep
Boys, Sally Beauty, Payless, Footlocker,
Lady Footlocker, Sunglass Hut, Lens
Crafters, GNC, Pizzeria Uno, Rave Girl,
Rave, Perfumania, Gap/Gap Kids, Banana
Republic, Ann Taylor Loft, Group USA,
Chili's, Motherhood Maternity, Mikasa,
Radio Shack, Verizon, Marianne, Pacific
Sunwear, Suncoast Video, Limited Too,
Johnny Rockets, KB Toys, 5-7-9
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2 Plaza del Norte Arecibo 671,000 Wal-Mart, J C Penney, Pueblo, Sears,
Cinevista Cinemas, Toys "R" Us, Kids "R"
Us, The Gap, 5-7-9, Blockbuster, GNC, Hot
Topic, Kids Footlocker, Lady Footlocker,
Zales, Pacific Sunwear, Payless,
Perfumania, Radio Shack, Rave Girl, Rave,
KB Toys, Sally Beauty, Shoe Zone, Marianne,
Motherhood Maternity
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3 Plaza Escorial Carolina 601,535 Wal-Mart, Sam's Club, Home Depot,
OfficeMax, Borders, Caribbean Cinemas,
David's Bridal, Footlocker, Payless, Old
Navy, Radio Shack, Group USA, Rave, Sally
Beauty, TGI Friday's, Vitamin World
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4 Plaza Rio Hondo San Juan 535,334 Capri, CompUSA, Kmart, Pueblo Xtra,
Caribbean Cinemas, Marshalls, Payless,
Walgreens, Radio Shack, Vitamin World, GNC,
Rave Girl, Claire's Boutique, Rave, Zales,
Kids Footlocker, Footlocker, Pacific
Sunwear, KB Toys, Gamestop, Cingular
Wireless, Blockbuster, Champs, 5-7-9
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5 Plaza Palma Real Humacao 441,834 Wal-Mart, J C Penney, Capri, Pueblo Xtra,
CineVista Theaters, Champs Sports, Chili's,
Footlocker, Lady Footlocker, One Price
Clothing, Payless, Pep Boys, GNC,
Perfumania, KB Toys, Radio Shack, Sally
Beauty
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6 Plaza Cayey Cayey 340,119 Wal-Mart Supercenter, Caribbean Cinemas,
Pep Boys, Footlocker, Sally Beauty, Radio
Shack, KB Toys, Payless, Always 99,
Perfumania, Baker Shoes, Rave, CitiBank,
Vitamin World
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7 Plaza Isabela Isabela 259,035 Wal-Mart, Pueblo Xtra, Caribbean Cinemas,
Footlocker, Pep Boys, Radio Shack, GNC, KB
Toys, One Price Clothing $7, Payless,
Marianne, Gamestop, Rainbow Shop, Sally
Beauty, Footaction
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</Table>
<Table>
8 Plaza Fajardo Fajardo 251,402 Wal-Mart, Walgreens, Pueblo Xtra, Champs
Sports, Footlocker, Lady Footlocker, Radio
Shack, GNC, Gordon's Jewelry, Payless,
Baker Shoes, 5-7-9, Rave, Rave Girl,
Footaction
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9/10 Plaza del Oeste/Camino Real San German 233,918 Kmart, Caribbean Cinemas, Pueblo Xtra, Pep
Boys, Blockbuster, Footlocker, GNC.
Marianne, Payless, Radio Shack, Rave, Sally
Beauty, KFC
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11 Plaza del Atlantico Arecibo 222,953 Big Kmart, Capri, Footlocker, Radio Shack,
Baker Shoes, Christie, KB Toys, Gamestop,
One Price Clothing, Payless, Pearle Vision
Express, Mastercuts, Rainbow, Shoe Zone
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12 Senorial Plaza San Juan 209,568 Big Kmart, Rave, Sally Beauty, Radio Shack,
Gamestop, GNC, Shoe Zone, Perfumania, First
Bank, Zales, Payless, One Price Clothing $7
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13 Plaza Vega Baja Vega Baja 184,938 Big Kmart, Pueblo Xtra, Walgreens,
Gamestop, Footlocker, Payless,
Marianne/Marianne Plus, Pearle Vision,
Rave, Shoe Zone
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14 Plaza Wal-Mart Guayama 163,599 Wal-Mart, Athletic Xpress, KB Toys,
Payless, Pearle Vision, Radio Shack,
Supercuts
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15 Rexville Plaza San Juan 132,383 Pueblo Xtra, Capri, Donato, Subway, Always
99, Rent-A-Center, Burger King
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