Developers Diversified Announces Progress on De-Leveraging Initiatives and Provides Updates on Recent Company Activities
CLEVELAND, OH, Sep 21, 2009 (MARKETWIRE via COMTEX News Network) -- Developers Diversified Realty (NYSE: DDR) today announces progress on de-leveraging initiatives and provides the following updates on recent company activities:
-- Equity sale to Otto Family: The second tranche of 15 million common
shares was sold to the Otto family for $60 million on September 18, 2009,
completing the transaction announced in February 2009 to sell 30 million
shares to the Otto Family. An additional 1.8 million common shares were
also issued, representing dividends paid since the date of the agreement.
Warrants for an additional five million common shares were issued at the
time of closing at $6.00 per share as per the agreement. The warrants,
aggregating 10 million in total, may be exercised at the discretion of the
Otto Family any time within five years of issuance. Additional information
about the Otto Family and the common share sale can be found in a press
release dated February 23, 2009.
-- New director appointment: In conjunction with the closing of the second
tranche of equity described above, the Company's Board of Directors elected
Dr. Thomas Finne as a new director. Dr. Finne was appointed to the
Dividend Declaration Committee. The Board of Directors now consists of 11
members, four of whom (Dr. Thomas Finne, Mr. James Boland, Mr. Daniel
Hurwitz and Dr. Volker Kraft) have joined the Board in the past six months.
-- Equity issuance: Between August 10 and September 17, the Company sold
approximately 18.4 million common shares for approximately $157 million
through the common equity program established through BNY Mellon Capital
Markets, LLC, completing the $200 million program established in late 2008.
-- Asset sales: Year to date, the Company has generated over $439 million in
gross proceeds from asset sales, $260 million of which closed during the
third quarter. In conjunction with the sales this year, $151 million of
mortgage debt was eliminated. The Company's share of proceeds year to date
is $289 million gross and $230 million net of mortgage debt eliminated.
The Company has an additional $192 million of assets under contract for
sale or subject to letter of intent, most of which are expected to close in
2009.
-- Senior unsecured note purchases: In addition to the tender offers for
unsecured notes that retired $250 million aggregate principal amount of
debt on September 14 and 17, the Company purchased $38.7 million of its
convertible senior unsecured notes in the third quarter at a weighted
average 84% of par. Including the notes tendered in the tender offer and
notes bought on the open market, the total discount to par achieved was
approximately $28 million for the third quarter and approximately $164
million year to date.
-- Macquarie DDR Trust joint venture: The Company has liquidated its entire
equity interest in Macquarie DDR Trust (ASX: MDT). In addition, the
Company anticipates that the redemption of its interest in the DDR
Macquarie Fund in exchange for 100% ownership in three assets will occur
early in the fourth quarter, subject to the receipt of approvals from MDT
unitholders. Once the redemption is complete, the Company will no longer
share in over $1 billion of mortgage debt owed by the DDR Macquarie Fund.
-- Mortgage financing: As previously disclosed, the Company continues to
make progress on two large mortgage financings, each secured by a pool of
assets, and now expects that if both were completed, proceeds would exceed
the original guidance of $600 million. The Company expects to close on the
first new mortgage loan of approximately $400 million early in the fourth
quarter. The Company is working to structure a large portion of the loans
to be TALF-eligible.
-- Operating FFO guidance lowered: As a result of these transactions that
have reduced leverage well in excess of prior guidance, the Company has
lowered 2009 operational guidance, excluding certain non-recurring and one-
time items, to $1.90-$2.00 per share from $2.00-$2.15 per share.
David Oakes, Senior Executive Vice President of Finance and Chief Investment Officer, commented, "The above transactions and financings represent our continued commitment to improve liquidity, lower leverage and simplify our structure. We are pleased by what we have accomplished thus far in 2009 and we look forward to continuing to execute upon the capital plan that we have previously outlined."
