Developers Diversified Realty Affiliate to Act as Liquidation Agent on Burnham Pacific's Remaining Portfolio
Agreement Adds Additional 5.4 Million Square Feet on West Coast to Total Assets Managed
CLEVELAND, Sept. 12 /PRNewswire/ -- Developers Diversified Realty Corp. (NYSE: DDR) and Coventry Real Estate Partners (Coventry) announced today they were selected by Burnham Pacific Properties, Inc. (NYSE: BPP) to serve as BPP's liquidation agent pursuant to its recently announced plan of liquidation. DDR and Coventry will perform these liquidation agent services through their affiliate, DDR Real Estate Services, Inc. ("DDRRES"). DDRRES' appointment as liquidation agent follows DDR's announcement on September 6, 2000 that a joint venture consisting of DDR, Prudential Real Estate Investors and Coventry had agreed to purchase a portfolio of west coast retail properties from BPP for $355 million.
During the two year liquidation period, DDRRES will be responsible and earn fees for the management, leasing, and construction management of BPP's remaining real estate portfolio. DDRRES may also receive an incentive fee if certain minimum liquidating dividend thresholds to common shareholders are achieved. All corporate administrative, reporting and legal functions will continue to be undertaken entirely by BPP. The Liquidation Services Agreement was approved by BPP's Board of Directors and is subject to BPP's shareholder approval. DDRRES expects to assume management responsibilities for the portfolio and begin the liquidation process following BPP's shareholder meeting, which is scheduled for October 18, 2000.
Scott Wolstein, Chairman and CEO of Developers Diversified, commented, "We are gratified Burnham's board entrusted us with the responsibility of maximizing the proceeds generated from liquidating its real estate assets for the benefit of the company's shareholders. The Board's confidence displayed at this critical point underscores our ability to realize value in retail assets."
The role of liquidation agent, coupled with the asset portfolio purchase, provides DDR and Coventry significant market presence on the west coast. DDR will incorporate its owned and managed west coast assets into its operating platform with the creation of a regional leasing and development office located in southern California.
Portfolio Analysis
The liquidation portfolio is comprised primarily of community centers and supermarket-anchored strip centers, located in southern California and the San Francisco area. Following closing of the asset portfolio acquisition and liquidation services arrangement with BPP, DDR will own or operate 263 centers, or 56.9 million square feet of retail properties, making it the second largest retail REIT based on assets under management. DDR will own or operate 81 properties or 17.0 million square feet in the western U.S., thus increasing the company's portfolio diversification throughout the U.S. The assets in the liquidation pool have a tenant base similar to DDR's existing portfolio, further strengthening DDR's relationships with tenants already participating in the company's National Tenant Account Program.
DDR Western Portfolio Based on GLA (000s)(a)
DDR BPP BPP DDR
Region
Current Acquisition
Liquidation
Pro Forma
Pacific
Northwest 308 447
350 1,105
Other
1,958 --
34
1,992
Total
6,358
3,120 4,687 14,165
(a) Owned and operating portfolio; does
not include development properties.
DDR
Total Operating Portfolio Based on Percent of GLA(a)
DDR DDR Pro Forma DDR
Pro Forma
Region
Current BPP
Acquisition BPP
Acq. & Liquidation
West
17%
24%
32%
South
East
26%
24%
21%
North
East
11% 10%
9%
(a) Owned and operating portfolio; does
not include development properties.
DDR
Total Operating Portfolio Based on Percent of GLA(a)
Tenant
DDR DDR Pro Forma DDR
Pro Forma
Type
Current BPP
Acquisition BPP Acq.
& Liquidation
National
62% 61%
59%
Regional
26% 26%
26%
Local
7%
8%
10%
Vacant
5%
5%
5%
(a) Owned and operating portfolio; does
not include development properties.
Developers Diversified Realty currently owns and manages 206 shopping centers in 40 states totaling 47.7 million square feet of real estate under management. DDR is a self-administered and self-managed real estate investment trust (REIT) operating as a fully integrated real estate company which develops leases and manages shopping centers. You can learn more about DDR on the internet at www.ddrc.com.
Coventry Real Estate Partners is the general partner of a value-added investment program, Retail Value Investment Program ("RVIP"), focused on the acquisition, redevelopment and repositioning of retail properties and portfolios. RVIP, jointly capitalized by DDR and Prudential Real Estate Investors, currently owns or has under construction approximately 4 million square feet of retail real estate with a value of over $400 million. Additionally, RVIP recently announced an agreement to acquire 14 properties from BPP totaling approximately 2.9 million square feet for $355 million.
Developers Diversified Realty Corporation considers portions of this information to be forward-looking statements within the meaning of Section 7A of the Securities Exchange Act of 1933 and Section 21E if 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 or the loss of a major tenant.
SOURCE Developers Diversified Realty Corporation 9/12/2000