Macquarie DDR Trust - Mervyns announces restructure

30 July 2008

One of Macquarie DDR Trust’s (ASX: MDT) tenants, Mervyns has announced it has filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code to restructure its debt and re-align its business operations.

Mervyns have stated publicly that they will remain open for business and expect to have adequate cash for their post-petition operations. Please refer to Mervyns website (www.mervyns.com) for details.

Macquarie DDR confirms that Mervyns is fully up-to-date with rental payments for all leases and that management will continue to monitor the position closely. Mervyns currently makes up 10.6 per cent of Macquarie DDR’s portfolio.

Developers Diversified Realty and Macquarie DDR formed a 50:50 joint venture in 2005 for the US$407.2 million selective purchase of 37 well located Mervyns assets in regions with strong demographics. After the purchase, the venture leased the assets back to Mervyns for 15 years at an annual rent of approximately US$30 million (MDT share, US$15 million) which makes up 10.6 per cent of Macquarie DDR’s annual base rental income.

As part of the acquisition, a US$25 million (US$12.5 million, MDT share) letter of credit was established to minimise the impact of a Mervyns bankruptcy or the termination of all the leases. This letter of credit will under certain circumstances such as this filing, subject to the joint venture also setting aside an amount for this purpose, provide funds to cover re-tenanting costs, including fit-outs. The Trust has not yet sought to draw any amounts under its letter of credit and will determine in due course the appropriate action to take.

Of the 37 Mervyns sites in the Trust’s portfolio, 26 are in California, five in Arizona, five in Nevada and one inTexas. Also, 26 properties are part of larger open air shopping centres, three of the assets are free standing and the remaining eight adjoin malls.

Macquarie DDR Trust is a listed property trust with assets totalling A$2.2 billion.As at 30 June 2008, approximately A$31 billion of real estate assets are managed globally by Macquarie Real Estate and its associates, across a portfolio of listed and unlisted real estate trusts, unlisted development funds and real estate investment syndicates. Macquarie's real estate investment management expertise has been recognised internationally, voted No. 1 in Investment Management in Asia, Australia, China, Hong Kong, Singapore and the US in the 2007 Euromoney Liquid Real Estate Awards.

Developers Diversified owns and manages over 740 retail properties in 45 states, plus Puerto Rico, Brazil, Russia and Canada totalling over 163 million square feet. Developers Diversified is a self-administered and self-managed real estate investment trust (REIT) operating as a fully integrated real estate company which acquires, develops, leases and manages shopping centres.Additional information about Developers Diversified is available athttp://www.ddr.com.

For further information please call 1300 365 585 or email  reits@macquarie.com

Due care and attention has been exercised in the preparation of forecast information, however, forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of MDML. Actual results may vary from any forecasts and any variation may be materially positive or negative.