Cleveland-based Developers Diversified Realty (NYSE: DDR) and Atlanta-based JDN Realty Corp. (NYSE: JDN) have entered into a $1.02 billion merger agreement, based on Friday, Oct. 4 closing prices, $584 million in assumed debt and $50 million of preferred stock. Both boards have unanimously approved the transaction.
The deal provides for each JDN shareholder to receive 0.518 shares of DDR stock per JDN share. After the deal closes in 1st-quarter 2003, DDR will have a total market capitalization of more than $5 billion.
Following the merger, DDR will own or manage 442 shopping centers in 44 states with 77 million sq. ft. of space, including 15 million sq. ft. from the JDN merger. DDR will also acquire 20 properties with about 7 million sq. ft. of space now under development by JDN, as well as a development pipeline of 17 properties with 3 million sq. ft, for a total estimated cost of $220 million.
"We expect this transaction to be approximately 5% accretive to consensus estimates of funds from operations (FFO) for 2003 on a leverage neutral basis, with further accretion as JDN's development projects become fully operational in 2004," said DDR's president and COO, David Jacobstein. "We expect an overall capitalization rate on the transaction of approximately 9.8%, or 10.6% after adjusting for the impact of approximately $80 million in non-income producing land and outparcels."