Developers Diversified Realty Corporation (DDR), a real estate investment trust (REIT), has recently offered 4.75% senior unsecured notes worth $300 million that are scheduled to mature in April 2018. The company has priced the notes at 99.315% of the face amount to yield 4.86% at maturity.
Developers Diversified expects to raise net proceeds of approximately $295.5 million, after deducting underwriting discounts and other expenses related to the offering. The company intends to utilize the cash to repay short-term debt and reduce outstanding debt under its revolving credit facility and secured term loan.
Earlier, during fourth quarter 2010, Developers Diversified had issued $350 million of 1.75% convertible senior notes due November 2040. At the same time, the company replaced a $1.25 billion credit facility maturing in June 2011 with a new $950 million unsecured facility provided by J.P. Morgan Securities LLC, a division of JPMorgan Chase & Co. (JPM), and Wells Fargo Securities, LLC, part of Wells Fargo & Company (WFC). The new facility has an uncommitted accordion feature to increase the credit facility to $1.2 billion and matures in February 2014.
The company also obtained a new $65 million unsecured revolving credit facility, which replaced its $75 million facility maturing in June 2011. The new credit facility matures in February 2014. Consequently, Developers Diversified was able to reduce its consolidated debt in 2010 from $5.2 billion to $4.3 billion.
Headquartered in Beachwood, Ohio, Developers Diversified acquires, owns, develops, leases and manages shopping centers and business centers across 41 states in the U.S., along with Puerto Rico, Brazil, Russia, and Canada. At the end of fourth quarter 2010, Developers Diversified owned and managed 570 retail operating (including joint ventures) and development properties spanning approximately 132 million square feet.
We maintain our ‘Neutral’ recommendation on Developers Diversified for the long term. The company presently has a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating.
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