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CLEVELAND–One company’s downturn can be another company’s boon, as Developers Diversified Realty Corp. is finding opportunities in investments, leasing and retail sales, executives said at the company’s first-quarter conference call.

Undercapitalized local developers unable to complete the financing or leasing of their projects have approached Developers Diversified about investments and partnerships, said Daniel B. Hurwitz, president and COO. The results could be several hundred-million dollars in investments.

“We have not added any projects yet, but we have a number that look promising,” Hurwitz said. “Pending retailer interest in the projects [at the ICSC RECon meeting] in Las Vegas, we might add some in the second quarter.”

But the moves would not be full joint ventures, and would be more akin to an investment that could be exited at a later time.

“We essentially are a bridge between the private capital and the developer,” said Scott Wolstein, chairman and CEO. “We’ve done this quite a lot in the past.”

Nor is the company look to acquire major portfolios, a la last year’s acquisition of Inland Retail Real Estate Trust, as the company remains conservative, Wolstein said. Developers Diversified expects to sell some projects in the second half.

In addition, the slowdown has made the company’s existing development pipeline even more attractive to the retailers that continue to expand. Leasing agents have already booked more than 800 meetings at the RECon meeting, largely with an eye to 2009 leases.

“While demand has decreased, supply has decreased more,” Hurwitz said.

And the consumer cutback in spending favors the value-oriented tenants typically found in the company’s projects, Wolstein added.

“Many of our tenants do well in tougher economies, and find opportunities to gain market share,” Wolstein said.

For the quarter, net income was $32.9 million, compared to $48.7 million the previous year. FFO applicable to common shareholders was $99.6 million, compared with $106.2 million last year. The core portfolio leased percentage was 95.8%. Same-store net operating income increased 2.0% over the prior-year comparable period.

Developers Diversified Realty Corporation currently owns and manages over 740 retail operating and development properties in 45 states, Puerto Rico, Brazil, Russia and Canada, totaling approximately 162 million sf.

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