In a change in direction from prior management, DDR Corp.’s David Lukes-led team has formed a $1.05 billion joint venture with an affiliate of New York City-based Madison International Realty to recapitalize a DDR investment fund that owns 52 shopping centers.
The Madison affiliate, Madison International Real Estate Liquidity Fund VI, replaces investors in DDR Domestic Retail Fund I that was nearing its 10-year term, the Beachwood shopping center real estate investment trust announced on Wednesday, June 14.
DDR said the Madison fund acquired 80% of the portfolio, while DDR continues to own 20%, the same as previously. DDR will continue to provide management and leasing services for the portfolio, which primarily consists of grocery-anchored shopping centers in Florida and the south. Three other shopping centers from the fund will be held in another joint venture formed with the prior partners, DDR said.
The recapitalization includes the repayment of all the mortgage debt outstanding held by the prior partnership with a new $707 million mortgage secured by the assets. DDR’s share of the mortgage is $141 million.
DDR’s prior CEO, Thomas F. August, had last year discussed the sale of the portfolio to wind down the fund launched in 2007.
In the release, Lukes, DDR’s new president and CEO, said, “The recapitalized venture will continue to drive our return on invested equity, demonstrates the…
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