DDR Still Looking Overseas

CLEVELAND-Fresh from its acquisition of a $150-million, joint-venture deal that gave it interests in nine centers in Brazil, Developers Diversified Realty is still looking for overseas opportunities. Company executives say they see a future in emerging markets such as Eastern Europe, where asset values are expected to increase.

But executives stress that they will be selective choosing foreign opportunities and will look for strong local partners to choose sites and take on equity. "I don't think you're going to see us investing billions of dollars in any single market," said Scott Wolstein, the firm's chairman and chief executive officer, during DDR's third-quarter conference call.

Additionally, management sees further opportunities after another large transaction, the $6.2-billion deal to buy the 307-center Inland Retail Real Estate Trust portfolio. Following the closing of that deal, DDR executives plan to sell non-strategic assets in its portfolio, team with joint-venture partners that want to buy interests in some of the centers and increase occupancy rates in the newly acquired assets.

DDR has about $3.5 billion in its immediate development and redevelopment pipeline, as well as preliminary plans to build an additional 20 to 25 assets at a cost of $1 billion to $1.5 billion. The new developments will be a mix of lifestyle, hybrid and mixed-use properties.

During the third quarter, which ended Sept. 30, the company sold $65 million in assets and has another $95 million in sales under contract. It also started two development projects, one in Mendocino, CA, and another in Bloomfield Hills, MI.

The company's FFO increased 12.2% during the period, to 83 cents per share, while net income rose 4.7%, to 45 cents. Same-store NOI climbed 3.2% over the same year-ago period.

DDR's occupancy increased to 96.1% from 95.8% during last year's third quarter. The locally-based firm owns and operates about 500 shopping centers in the US, Brazil and Puerto Rico.