CLEVELAND-Developers Diversified is close to making its first investment in China, paying $40 million in a joint-venture deal with Australian partner Macquarie Bank Limited for a portion of a multi-use project. "We think it will lead to several more opportunities in the near future," said Scott Wolstein, the company's chairman and chief executive officer, during DDR's Q4 conference call.

The REIT also will be busy at home. DDR has $1.7 billion of projects in its pipeline over the next three-to-four years, Wolstein said. Further development and acquisition possibilities could also come from over-leveraged private developers that could have financing difficulties, he surmises. "I expect we will be the beneficiary of that."

DDR currently has eight shopping centers under construction. At a cost of $428.6 million, they located are in Miami; Nampa, ID; McHenry, IL; Chesterfield, MI; Horseheads, NY; Apex, NC; Pittsburgh; and San Antonio. Those centers are scheduled to open this year or in 2007. Executives expect four more to come online this year, and DDR completed four new centers last year.

Last year DDR sold nearly $600 million in assets to fund its development pipeline. The company currently has interests in about 500 shopping centers in the US and Puerto Rico, where Wolstein said the firm also expects to grow.

During the conference call, Wolstein revealed that his company did not look hard at acquiring a stake in grocer Alberstons, which is being purchased by a group of companies including retail-REIT Kimco Realty Trust. Wolstein says the industry is likely to see more of these deals in the future. "I think you'll see more of the same," he says. "There's going to be a continued transfer of market share from the traditional grocers."

DDR's FFO per share for the quarter, which ended Dec. 31, was 74 cents, up 7.2% from the same year-ago period. However, net income decreased 52.6%, to $35.1 million, due to a decrease on the gain of real estate sales compared to the prior year. DDR's portfolio was 96.4% leased, up from 95.4%.