Developers Diversified Realty Corporation (DDR), a real estate investment trust (REIT), has recently offered $300 million of senior unsecured notes scheduled to mature in 2016, at a price of 99.42% with a yield to maturity of 9.75%.
Developers Diversified expects to raise net proceeds of approximately $295 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 to reduce outstanding debt under its revolving credit facility.
Developers Diversified had earlier decided to sell 30 million shares and issue additional warrants to purchase up to 10 million shares to the Otto family, a shopping center developer in Germany. Although both debt and equity financing will provide the much-needed cash, they could potentially leverage the balance sheet and dilute earnings.
Headquartered in Beachwood, Ohio, Developers Diversified acquires, owns, develops, leases, and manages shopping centers and business centers across 45 states in the U.S., along with Puerto Rico, Brazil, Russia, and Canada. At the end of the second quarter of 2009, the company owned and managed 690 retail operating (including joint ventures) and development properties spanning approximately 151 million square feet.
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