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TIAA-CREFF joint venture pays $3B for 67 retail centers.

TIAA-CREF and Developers Diversified announced a joint venture to purchase a portfolio of 67 community retail centers for approximately $3.0 billion of total asset value.

"We believe that this joint venture shows that TIAA-CREF Global Real Estate can move nimbly on large and complex transactions and forge strong relationships with expert operators, such as Developers Diversified," said Tom Garbutt, managing director and head of TIAA-CREF's Global Real Estate unit.

"As a long-term investor, we believe the purchase of high quality properties such as the 67 community retail centers will be an attractive way to bring value to our clients."

The properties that the joint venture intends to acquire represent a portion of the assets that will be acquired by Developers Diversified upon the consummation of its merger with Inland Retail Real Estate Trust, Inc.

The execution of the merger agreement was announced on October 23, 2006 and the merger is expected to be completed in the first quarter of 2007.

Scott Wolstein, Developers Diversified's chairman and CEO, commented, "We're delighted to establish this strategic partnership with TIAA-CREF, which we consider to be a leader among institutional real estate investors. TIAA-CREF's early commitment to this portfolio acquisition underscores both their recognition of the quality of the real estate and our ability to create value through aggressive asset management."

Garbutt stated, "We believe that the attractive pricing and terms of this venture are a direct result of TIAA-CREF Global Real Estate's early participation in this transaction.

"We have been looking to strategically increase our retail exposure and we believe this purchase represents a unique opportunity to do so while focusing on opportunities for attractive rates of return for our investors."

Given Developers Diversified's size and experience, TIAA-CREF expects to receive added value from Developers Diversified's management through enhanced operating proficiency and strong tenant relationships.

An affiliate of TIAA will contribute 85% of the equity in the joint venture, and an affiliate of Developers Diversified will contribute 15% of the equity in the joint venture.

The properties in this portfolio are located predominately in Southeastern U.S. markets.
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Publication:Real Estate Weekly
Date:Nov 8, 2006
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