US-based Developers Diversified Realty has completed the formation of DDR Markaz, a joint venture transaction with an investor group led by Kuwait Financial Center Markaz, a Kuwaiti publicly traded company.
Developers Diversified contributed seven retail properties to the joint venture. The properties have an aggregate gross asset value of approximately $169 million, which equates to a cap rate of 8.9 percent. In connection with its formation, DDR Markaz secured $110 million of fixed rate financing. Proceeds from the transaction will be used to repay variable rate indebtedness.
Developers Diversified will maintain a 20 percent ownership in the properties and continue day-to-day management of the assets. The company will earn fees for asset management, property management, leasing, outparcel sales, construction management and dispositions.
Pursuant to the terms of the joint venture agreement, Developers Diversified will also earn a promote of 20 percent above a 12 percent internal rate of return. Developers Diversified expects to report a gain of approximately $25 million on the contribution of the assets to the joint venture.
Million Deutsche Bank, acting through its wholly-owned affiliate German American Capital Corporation, provided the joint venture with $110 million of non-recourse, five-year, CMBS financing at a fixed interest rate of approximately four percent. Macquarie Capital Partners initiated the joint venture transaction and acted as exclusive financial advisor to Developers Diversified.
Established in 1974, Markaz is is a full-fledged investment company that offers a range of investment management and corporate finance services to institutions and high net worth individuals. Markaz is one of the largest investment companies registered with the Central Bank of Kuwait. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
