CLEVELAND, OH-Developers Diversified Realty Corp. experienced “intense tenant demand for space” during the first quarter, according to Scott Wolstein, chairman and CEO of the locally based owner/developer of community shopping centers. As a result, the blend of rates for new leases and renewals rose 16.2%.

The company executed leases for approximately 1.4 million sf during the quarter, which included 96 new leases and 177 renewals. Base rent rates for new leases jumped 28.4%, while rates on renewals rose 11.3%. This took the average annualized base rent per occupied sf in the DDR portfolio to $11.50 per sf as of March 31 this year, versus an average of $11.27 per sf at the same time a year ago.

By the end of this year’s opening quarter, the portfolio, including properties owned through JVs, was 96.1% leased. This includes tenants that have signed leases but have not yet taken occupancy. Based on tenants in place and paying rent as of March 31, the portfolio was 95.2% occupied.

Two expansions and redevelopments were completed during the quarter at an aggregate cost of $6.1 million, and the pace of expansion, redevelopment and new construction quickens throughout the year. According to DDR’s first-quarter financial report, the company is currently expanding and redeveloping eight centers at a projected cost of approximately $40.5 million.

In addition, three of its JVs are expanding and redeveloping centers in three locations at a projected incremental cost of about $58.1 million. Add to that eight new shopping centers that are under construction for a projected aggregate cost of $480.7 million. They are expected to reach completion between 2006 and 2007 and add 4.3 million sf to the DDR portfolio. Construction will begin this year on another four new centers, and three DDR JVs also have new projects underway.

This March, DDR implemented the accordion feature of its secured term loan agreement with KeyBank Capital Markets and Banc of America Securities. It raises the loan agreement to $400 million, up from $220 million.

Meanwhile, funds from operations totaled $86.2 million for first quarter, down 13% from $99.1 million in first-quarter 2005. And net income for this year’s first quarter fell to $35.9 million, down from $91.8 million for the same quarter a year ago. The declines are a reflection of a significantly lower gain on the sale of real estate assets during the most recent quarter compared with the same timeframe the previous year.

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