Developers Diversified Realty has agreed to buy15 Puerto Rican retail real estate assets, totaling nearly 5 million sq. ft. from Caribbean Property Group LLC. The deal, valued at approximately $1.15 billion, is expected to close during the first quarter of 2005.
To finance the acquisition, DDR will use $300 million generated by the joint venture sales of neighborhood grocery anchored centers from its existing portfolio. DDR also will assume $660 million of debt in connection with the acquisition, of which 85% may be paid off within six months of closing. DDR will finance the remainder through additional asset sales, new debt financing and private equity.
The CPG portfolio — which is located entirely in Puerto Rico — is 97% leased. Its largest tenants, based on revenues, include Wal-Mart/Sam's Club, Pueblo grocery store, Kmart, Footlocker and Novus footwear.
"This acquisition represents the largest portfolio of assets controlled by a single owner in Puerto Rico. This dominant presence has significant benefits given the island's population density, its outstanding retail sales and its substantial physical barriers to new supply," says Scott Wolstein, DDR chairman and CEO.