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CLEVELAND-Developers Diversified Realty has agreed to sell 30 million shares to the Otto Family. The binding purchase agreement was made with Alexander Otto who will make the purchase with members of his family. The Otto Family, owners of ECE Projektmanagement of Germany, will also be able to purchase an additional 10 million common shares.

The Otto Family will purchase the shares in two sets. It will pay $3.50 per share for the first 15 million and then $4.00 for the second million. The total purchase price is $112.5 million. After that the company has a five-year warrant to purchase an additional 10 million shares at $6.00 per share. If that were to go through, the Otto Family will pay $172.5 million.

“We believe that we have found the ideal strategic investor for our company. The Otto Family’s business acumen in shopping center development and management, as well as their vast retail holdings, will provide a distinctive synergy as we share our retail real estate expertise,” says Scott Wolstein, Developers Diversified’s CEO.

“This investment provides a unique opportunity for our company to tap into an expanded pool of real estate, retail and financial expertise, and to share best practices on a national and international level. In addition, the transaction would provide us with significant capital for debt reduction, thus allowing us to meet our continued objective of reducing leverage and improving liquidity,” Wolstein says.

A special shareholders meeting will be held in April to gain the necessary approvals to move forward with this transaction. When the purchase completes, the Otto family will own 36 million shares of Developers Diversified, therefore holding more than 20% of the available common stock.

According to a release on the deal, “An affiliate of the Otto Family also has provided the (Developers Diversified) with a commitment to make a five-year, fixed rate, secured mortgage loan to the company in an amount of $60 million. The company intends to use proceeds from these strategic investments to reduce leverage and enhance liquidity.”

Otto’s company is considered one of Europe’s leading developing and managing companies for inner-city shopping centers. Its portfolio includes 111 malls with nearly 37 million square feet of space. Otto is also the largest shareholder of the German MDAX listed company Deutsche EuroShop AG. This firm’s portfolio includes 16 shopping centers in Central Europe valued at more than $2.0 billion.

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