Developers Diversified Realty (NYSE: DDR), the leading owner,
manager and developer of market-dominant shopping centers in the
United States, today announced that it has entered into a binding
purchase agreement with Mr. Alexander Otto for the sale to Mr. Otto
and certain members of his family ("Otto Family") of 30 million of
the Company's common shares and warrants entitling the Otto Family
to purchase an additional 10 million of the Company's common
shares. When completed, the share purchase will increase the Otto
Family's ownership from 6 million shares to 36 million shares,
which is in excess of 20% of the common shares outstanding, making
the family the Company's largest individual shareholder. An
affiliate of the Otto Family also has provided the Company with a
commitment to make a five-year, fixed rate, secured mortgage loan
to the Company in an amount of $60 million. The Company intends to
use proceeds from these strategic investments to reduce leverage
and enhance liquidity.
Alexander Otto and other members of his family are the owners of
ECE Projektmanagement of Germany, Europe's leading firm in
developing and managing inner-city shopping centers. ECE manages
111 malls with a total sales area of approximately 37 million
square feet and is active in 15 Central and Eastern European
countries. In addition, Alexander Otto is the largest shareholder
of the German MDAX listed company Deutsche EuroShop AG, which owns
16 shopping centers in Central Europe with an asset value of over
$2.0 billion and market capitalization of over $900 million.
The Otto Family has already been active in the North American
real estate and retail industries for decades. With the Paramount
Group, Alexander Otto and his family control one of the largest
privately owned real estate, acquisition, redevelopment and
management firms on the East Coast. The portfolio of the Paramount
Group includes several high-rise buildings in New York City and
Washington, DC. In the metropolitan area of Toronto, the Otto
Family's Sagitta Group owns apartment buildings and industrial
parks. In regard to North American retail, the Otto Family
currently owns Crate and Barrel.
The shares will be purchased in two tranches at a price of $3.50
per share for the first 15 million shares at the first closing and
$4.00 per share for the second 15 million shares at the second
closing. The Otto Family will be entitled to any dividends declared
from the date of the purchase agreement. The share purchase prices
represent a premium of approximately 33% and 52%, respectively, to
the closing market price of the Company's shares on Friday,
February 20, 2009.
The Otto Family will also be issued five-year warrants for the
purchase of up to 10 million shares at a price of $6.00 per share,
reflecting a premium of approximately 128% to the closing market
price of the Company's shares on Friday, February 20, 2009.
Warrants for 5 million shares will be issued upon each of the two
closings.
Scott Wolstein, Developers Diversified's Chairman and Chief
Executive Officer, stated, "We believe that we have found the ideal
strategic investor for our company. The Otto Family's business
acumen in shopping center development and management, as well as
their vast retail holdings, will provide a distinctive synergy as
we share our retail real estate expertise. This investment provides
a unique opportunity for our company to tap into an expanded pool
of real estate, retail and financial expertise, and to share best
practices on a national and international level. In addition, the
transaction would provide us with significant capital for debt
reduction, thus allowing us to meet our continued objective of
reducing leverage and improving liquidity."
In commenting on the transaction, Alexander Otto stated, "Our
first shopping center was built in 1969 in Germany. Today, we
continue our heritage of breathing new life into the city center
retail trade with properties in 15 countries across Central and
Eastern Europe. We view Developers Diversified Realty as a valuable
investment and a key stepping stone for our global expansion and
partnership initiatives. We look forward to joining forces with
this outstanding team."
The sale of the common shares and the issuance of the warrants
pursuant to the purchase agreement are subject to the receipt by
the Company of shareholder approval of the common share issuance
under the applicable NYSE rules, shareholder approval of amendments
to the Company's articles of incorporation and the appointment of
up to two directors nominated by the Otto Family to the Company's
board of directors, as well as the satisfaction or waiver of
customary closing conditions, government approvals, and other
closing conditions, including the receipt by the Company of
additional debt financing. Assuming the Otto Family maintains
certain share ownership levels, the Company has agreed that the
Otto Family may continue to nominate up to two directors to the
Company's board of directors. The Company currently expects to hold
a special meeting of shareholders in April 2009 to obtain the
requisite shareholder approval. The first closing will occur upon
receipt of requisite shareholder approval and the second closing
must occur within six months of shareholder approval. The Otto
Family may choose to purchase all of the common shares at the first
closing.
Forward-looking Statements
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
21E 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.
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;
the loss or significant downsizing of a major tenant; constructing
properties or expansions that produce a desired yield on
investment; our ability to sell assets on commercially reasonable
terms including those under contract and those subject to a letter
of intent; our ability to secure equity or debt financing on
commercially acceptable terms or at all; our ability to enter into
definitive agreements with regard to our financing and joint
venture arrangements or our failure to satisfy conditions to the
completion of these arrangements; our ability to obtain the
required approvals of the DDR shareholders for the sale of common
shares and the issuance of warrants contemplated by the purchase
agreement; and our ability to satisfy various other conditions to
any closing of the sale of common shares contemplated by the
purchase agreement. For additional factors that could cause the
results of the Company to differ materially from these indicated in
the forward-looking statements, please refer to the Company's
Annual Report on Form 10-K for the year ended December 31, 2007.
The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that
arise after the date hereof.
Additional Information and Where to Find It
In connection with the proposed transaction, the Company will be
filing a proxy statement with the SEC. DDR SHAREHOLDERS ARE
ENCOURAGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. The final proxy statement will be mailed to DDR
shareholders, and DDR shareholders will be able to obtain the
documents free of charge at the SEC's web site, www.sec.gov, or
from Developers Diversified Realty Corporation, Investor Relations,
3300 Enterprise Parkway, Beachwood, Ohio 44122, or call (216)
755-5500.
Participants In Solicitation
DDR and its directors and executive officers and other members
of management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information concerning DDR's participants is set forth in the proxy
statement dated April 3, 2008 for DDR's 2008 annual meeting of
shareholders as filed with the SEC on Schedule 14A. Additional
information regarding the interests of participants of DDR in the
solicitation of proxies in respect of the proposed transaction will
be included in the proxy statement and other relevant materials to
be filed with the SEC when they become available.
A registration statement relating to the common shares and
warrants to be sold pursuant to the purchase agreement has been
filed with and declared effective by the Securities and Exchange
Commission. The offering may be made only by means of a prospectus
supplement and the accompanying prospectus. The common shares and
warrants to be sold pursuant to the purchase agreement are only
being offered to the parties to the purchase agreement, as well as
their permitted assigns.
This press release shall not constitute an offer to sell, or the
solicitation of an offer to buy, any of the securities, nor shall
there be any sale of these securities, in any state in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
Contact: Francine Glandt Vice President of Capital Markets
Developers Diversified Realty Main: (216) 755-5500 E-mail: Email
Contact Robert Heinemann Director Corporate Communications ECE
Projektmanagement Phone: 0049 40 60606-6353 E-mail: Email
Contact
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