Developers Diversified and Coventry Real Estate Advisors Announce the Acquisition of Phoenix, AZ Shopping Center
CLEVELAND, March 4 /PRNewswire-FirstCall/ -- Developers Diversified Realty (NYSE: DDR) and Coventry Real Estate Advisors ("Coventry") announced the formation of a partnership to redevelop Phoenix Spectrum Mall, a 1,145,000 square foot shopping center in Phoenix, Arizona. Grossman Company Properties also will own a minority interest in the partnership. The property is approximately 88% leased and is anchored by Wal*Mart, Costco, Dillard's, Petsmart, Ross Dress for Less, Hometown Buffet, Walgreen's, Bank of America and Harkins Theater.
Phoenix Spectrum Mall was originally built in 1961 as an enclosed regional mall with three department store anchors. The property was expanded in 1973 and 1977 to add the theater and the Dillard's Department store, respectively, as well as several small shop tenants. The property was partially redeveloped in 1995, when one of the original anchors was demolished and replaced by Wal*Mart. In 2000, another anchor department store was demolished and replaced by Costco, and in 2003, the Wal*Mart store was expanded to a 250,000 square foot supercenter. The partnership will pursue additional redevelopment at this property, which will significantly modify the current layout.
The property, which is located two miles north of downtown Phoenix along Bethany Home Road, a major east/west thoroughfare, has an outstanding urban infill location. The population count within a three-mile radius of Phoenix Spectrum Mall is over 200,000, which increases to approximately 465,000 within a five-mile radius. The average household income within these three and five- mile trade areas is over $52,000.
Including Phoenix Spectrum Mall, Developers Diversified owns and manages over 3.0 million square feet in the Phoenix market, including Foothills Towne Center, Arrowhead Crossing, Paradise Village Gateway and Deer Valley Towne Center.
Phoenix Spectrum Mall is the third investment of the 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 Developers Diversified have agreed to jointly acquire value-added retail properties in the U.S. The Fund invests in a variety of well-located retail properties that present opportunities for value creation, such as retenanting, market repositioning, redevelopment or expansion.
Developers Diversified co-invests 20% in each joint venture and is responsible for the day-to-day management of the properties. Pursuant to the terms of the joint venture, Developers Diversified earns fees for property management, leasing and construction management plus a promoted interest, along with Coventry, after return of capital to investors.
Developers Diversified owns and manages over 360 retail operating and development properties totaling over 82 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.
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.
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 Developers Diversified 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 Developers Diversified 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 Annual Report on Form 10-K for the year-end December 31, 2002.