Developers Diversified Realty Enters into Forward Sale Agreements With Respect to Its Common Shares

Mar 01, 2011, 16:22 ET from Developers Diversified Realty Corporation

BEACHWOOD, Ohio, March 1, 2011 /PRNewswire/ -- Developers Diversified Realty Corporation (NYSE: DDR) today announced that it has entered into an agreement in connection with the sale of 9,500,000 of its common shares in a public offering.  The offering will consist of 4,750,000 common shares to be borrowed and sold by Citigroup Global Markets Inc. (or an affiliate thereof) and 4,750,000 common shares to be borrowed and sold by Morgan Stanley & Co., Incorporated (or an affiliate thereof) ("the Forward Equity Sale").

In connection with the offering of its common shares, Developers Diversified has entered into forward sale agreements with Citigroup Global Markets Inc. and Morgan Stanley & Co., Incorporated. Pursuant to the terms of the forward sale agreements, and subject to its right to elect cash settlement, Developers Diversified has agreed to sell, upon physical settlement of such forward sale agreements, an aggregate of 9,500,000 of its common shares to Citigroup Global Markets Inc. and Morgan Stanley & Co., Incorporated.

Developers Diversified will not receive any proceeds from the sale of its common shares until settlement of the forward sale agreements, which is expected to occur on April 4, 2011.

The Company anticipates using the net proceeds it receives from the Forward Equity Sale plus $60 million from the exercise of warrants to purchase the Company's common shares by Mr. Alexander Otto and certain members of his family (the "Otto Family") for the redemption of $180 million of the Company's 8% Class G Preferred Shares.  Any excess proceeds will be used for general corporate purposes.  The Company has been advised that the Otto Family will exercise their warrants on or about March 18, which entitles them to purchase 10 million of the Company's common shares at $6.00 per share.

A preliminary prospectus supplement and accompanying prospectus relating to the underwritten offering will be filed with the Securities and Exchange Commission. A copy of the preliminary prospectus supplement and accompanying prospectus relating to the underwritten offering may be obtained from:

Citigroup Global Markets Inc., Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, NY 11220, Attention: Prospectus Department, Telephone: (877) 858-5407

Morgan Stanley & Co., Incorporated, 180 Varick Street, 2nd Floor, New York, NY 10014, Attention: Prospectus Dept., prospectus@morganstanley.com or (866) 718-1649

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor will there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale is not permitted.  A registration statement relating to these securities has been filed with the Securities and Exchange Commission and is effective.

About Developers Diversified Realty

Developers Diversified owns and manages approximately 570 retail operating and development properties in 41 states, Brazil, Canada and Puerto Rico. Totaling approximately 132 million square feet, the Company's shopping center portfolio features open-air, value-oriented neighborhood and community centers, mixed-use centers and lifestyle centers located in prime markets with stable populations and high-growth potential. Developers Diversified is the largest landlord in Puerto Rico and owns a premier portfolio of regional malls primarily clustered around Sao Paulo, Brazil. Developers Diversified is a self-administered and self-managed REIT operating as a fully integrated real estate company.

Developers Diversified Realty Corporation considers portions of this information to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, the exercise of the warrants by the Otto Family and the net proceeds, if any, received by the Company in connection with the Forward Equity Sale.  The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Developers Diversified - Financial

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