<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1998
----------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 1-11690 34-1723097
- --------------------------------------------------------------------------------
(State or other Jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
34555 Chagrin Boulevard, Moreland Hills, Ohio 44022
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code (440) 247-4700
--------------------
N/A
- --------------------------------------------------------------------------------
(Former name of former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
- --------------------------------------------
On July 1, 1998, the Company acquired nine shopping centers, an office building
and nine additional expansion, development or redevelopment projects located in
the Western United States as well as the operating/management company from
Hermes Associates, LTD. ("Hermes" or "The Family Center Properties"). Combined,
the Family Center Properties currently have approximately 2.8 million square
feet of total gross leasable area and were acquired at a estimated purchase
price of approximately $300 million. The Hermes operating company has no third
party revenue producing contracts but rather supports the management of The
Family Center Properties. Information regarding the nine acquired properties is
attached as SCHEDULE A.
The acquisition of, or investment in, the acquired properties were, pursuant to
an agreement for the sale and purchase of these properties or interests therein
between each selling entity and the Company. The factors considered by the
Company in determining the price to be paid for the properties and related
operating companies included their historical and/or expected cash flow, nature
of the tenants and terms of leases in place, occupancy rates, opportunities for
alternative and/or new tenancies, current operating costs and taxes on the
properties and anticipated changes therein under Company ownership, the outlots
and expansion areas available, the physical condition and locations of the
properties, the anticipated effect on the Company's financial results (including
particularly Funds From Operations) and the ability to sustain and potentially
increase its distributions to Company shareholders, and other factors. The
Company took into consideration capitalization rates at which it believes other
properties have recently sold, but determined the price it was willing to pay
primarily on the factors discussed above related to the properties themselves
and their fit with the Company's operations. Separate independent appraisals
were not obtained in connection with the acquisition of the properties by the
Company. The Company, after investigation of the properties, is not aware of any
material factors, other than those enumerated above, that would cause the
financial information reported, where available, to not be necessarily
indicative of future operating results.
Item 5. Other Events
- --------------------
In addition on July 2, 1998, the Company acquired from an affiliate of OPUS
Corporation, the Phase II development of a 156,000 square foot shopping center
in Tanasbourne, Oregon at a purchase price of approximately $21.9 million.
Information regarding the acquired property is attached as SCHEDULE A.
The acquisition of the acquired property was pursuant to an agreement for the
sale and purchase of the property between the selling entity and the Company.
The factors considered by the Company in determining the price to be paid for
the property included its historical and/or expected cash flow, nature of the
tenants and terms of leases in place, occupancy rates, opportunities for
alternative and/or new tenancies, current operating costs and taxes on the
properties and anticipated changes therein under Company ownership, the outlots
and expansion areas available, the physical condition and location of the
property, the anticipated effect on the Company's financial results (including
particularly Funds From Operations) and the ability to sustain and potentially
increase its distributions to Company shareholders, and other factors. The
Company took into consideration capitalization rates at which it believes other
shopping centers have recently sold, but determined the price it was willing to
pay primarily on the factors discussed above related to the property itself and
the fit with the Company's operations. Separate independent appraisals were not
obtained in connection with the acquisition of the property by the Company. The
Company, after investigation of the property, is not aware of any material
factors, other
<PAGE> 3
than those enumerated above, that would cause the financial information
reported, where available, to not be necessarily indicative of future operating
results.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ---------------------------------------------------------------------------
Substantially the same information required by paragraph (a) of Item 7 - the
financial statements of acquired properties; paragraph (b) of Item 7 - The Pro
Forma Financial information and paragraph (c) of Item 7 - the Exhibits, have
been previously reported by the Company in its Form 8-K dated April 28, 1998.
In accordance with General Instruction B3 to Form 8-K, such information is not
reported in this Form 8-K.
A statement of revenue and certain expenses was not presented for the
Tanasbourne, Oregon shopping center in the April 28, 1998 Form 8-K because the
property was under development and, accordingly, the related operating
information would not be meaningful.
<PAGE> 4
<TABLE>
<CAPTION>
SCHEDULE A
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Company
Date of Owned Percent Year
Shopping Center Acquisition Square Feet Occupied Completed* Principal Tenants
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cineplex Odeon, Future Shop, Gart Sports, Shopko,
Family Center at Midvalley Bently Square, Circuit City, Media Play, Office Max,
Taylorsville, UT July 1, 1998 848,043 98.87% 1982 Petsmart, Bed Bath & Beyond, Barnes&Noble, TJ Maxx
Family Center at Fort Union Smith's, Mervyn's, Office Max, Deseret Book,
Midvale, UT July 1, 1998 657,077 90.49% 1973 Babies R Us, Walmart, Future Shop,Media Play
Family Center at Riverdale Walmart, Gart Sports, Office Max, Circuit City,
Riverdale, UT July 1, 1998 772,227 98.76% 1991 Media Play, Target, Babies R Us
Hermes Building
Salt Lake City, UT July 1, 1998 53,749 100.00% 1986
Family Center at Orem
Orem, UT July 1, 1998 161,503 100.00% 1992 Kids R Us, Media Play, Office Depot
Family Center at Ogden
Ogden, UT July 1, 1998 170,219 93.19% 1977 Harmon's Supermarket
Family Center at 33rd Street
Salt Lake City, UT July 1, 1998 39,090 100.00% 1978
Family Place at Logan
Logan, UT July 1, 1998 19,200 100.00% 1973
Family Center at Las Vegas
Las Vegas, NV July 1, 1998 61,615 94.32% 1973
Family Center at Rapid City
Rapid City, UT July 1, 1998 35,544 84.70% 1978
Office Depot, Haggan
Tanasbourne Town Center July 2, 1998 155,892 96.0% 1995 Supermarket, Barnes & Noble,
Portland, OR Mervyn's
</TABLE>
*Represents year in which initial building was completed
Several expansions may have occurred subsequent to this date.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
Date July 14, 1998 /s/ William H. Schafer
------------------------ -------------------------------------
William H. Schafer
Vice President and Chief Financial Officer
