Coventry Real Estate Advisors Announces the Acquisition of First Property in Connection With the Formation of Coventry Real Estate Fund II
CLEVELAND, July 1 /PRNewswire-FirstCall/ -- Developers Diversified Realty Corporation (NYSE: DDR) and Coventry Real Estate Advisors ("Coventry") today announced the joint acquisition of the first property in connection with Coventry's formation of Coventry Real Estate Fund II (the "Fund"). The Fund was formed with several institutional investors and Coventry serves as the investment manager. The Fund and DDR have agreed to jointly acquire value-added retail properties in the U.S. Coventry Real Estate Advisors is seeking to raise up to $250 million of equity to invest exclusively in joint ventures with DDR. The Fund will invest in a variety of well-located retail properties that present opportunities for value creation, such as retenanting, market repositioning, redevelopment or expansion.
DDR will co-invest 20% in each joint venture and will be responsible for day-to-day management of the properties. Pursuant to the terms of the joint venture, DDR will earn fees for property management, leasing and construction management plus a promoted interest, along with Coventry, above a 10% preferred return after return of capital to investors. Scott A. Wolstein, DDR's Chairman and Chief Executive Officer commented, "We are pleased to announce the completion of the first funding of this important transaction. The formation of the Fund fulfills the Company's long-term investment strategy by enabling us to capture today's extraordinarily strong institutional interest in our property type. This demand from institutional capital sources allows us to leverage our equity at highly favorable cap rates, generate fees and earn a disproportionately greater share of the long-term increase in value at the asset level."
Ward Parkway Shopping Center
The first property acquired by the joint venture is a 750,000 square foot shopping center located in suburban Kansas City, Missouri that was purchased for approximately $48.5 million. Ward Parkway was built in 1959 as a three-anchor regional enclosed mall, and redevelopment began in 2001. A portion of the property has been converted to an open-air center. The property is anchored by Target, Dillard's, AMC Theater, Pier One Imports, SteinMart, Dick's Sporting Goods, 24-Hour Fitness and T.J. Maxx. DDR will complete the remainder of the redevelopment by converting approximately 150,000 square feet of enclosed mall space to an open-air format. The property offers additional opportunities to add value through the leasing and development of an outparcel and 12 acres of excess land.
Peter Henkel, President of Coventry, stated, "We are happy to reach the first step in our goal of forming the Fund and are anxious to work together with our new capital partners. Ward Parkway represents an excellent opportunity to build upon our successful track record of identifying, acquiring and creating value in retail real estate properties across the country. With the Fund's first closing and its first acquisition complete, we are looking forward to finalizing our capital raising efforts so that we can take full advantage of the many investment opportunities before us."
Coventry Real Estate Advisors is an investment manager offering a broad array of services to institutional investors in the value-added retail property sector. Coventry acquires under-performing retail properties where identifiable opportunities exist to enhance free cash flow and create substantial value through leasing, redevelopment and intensive management. You can learn more about Developers Diversified on the internet at www.coventryadvisors.com.
Developers Diversified owns and manages approximately 400 retail operating and development properties totaling nearly 87 million square feet of real estate in 44 states. Developers Diversified 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 Developers Diversified on the internet at www.ddr.com.