CLEVELAND-Locally based Developers Diversified Realty is selling more than six million shares of its common stock to Morgan Stanley & Co. The $250-million deal would make Morgan Stanley the second largest single shareholder in the company. DDR agreed to sell Morgan Stanley 5.45 million shares. As the sole underwriter in the transaction, Morgan Stanley also has an overallotment option for an additional 817,500 shares. If exercised, it would bring to total sale to just under 6.3 million shares. The only holder of more shares is Capital Research and Management Co., which holds about 7.5 million shares or about 7.3% of the company’s 102.3 million outstanding shares.The sale is being made pursuant to DDR’s existing shelf registration statement previously filed with and declared effective by the Securities and Exchange Commission. Proceeds from the offering will initially be used by DDR to repay amounts outstanding on its revolving credit facilities in preparation for its $1.1-billion portfolio acquisition from Caribbean Property Group. The five-million-sf acquisition was announced in November and is scheduled to close in the first quarter 2005. DDR owns and manages approximately 460 retail operating and development properties totaling 102 million sf of real estate in 44 states. The Morgan Stanley announcement was made after close of trading on Wednesday. In afternoon trading Thursday, shares of DDR have fallen $1.05 or about 2.3% to $44.80 on twice the average volume.

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