Developers Diversified Clarifies Divestiture Plans

Contrary to a recent news report suggesting that Developers Diversified Realty Corp. has an unusually high number of retail properties on the chopping block, a spokesperson for the REIT told CPN that the approximately 37 assets currently available for disposition reflect “an ongoing culling of our portfolio” and dispositions in groups of one and two properties.  The spokesperson also clarified that some of these properties have been on the market for over a year.  Non-core assets for DDR, the spokesperson explained, include remote locations, where distance from other properties makes management and leasing less efficient, and fully-leased centers, especially smaller ones, that don’t have much growth potential.  In a conference call yesterday regarding the company’s fourth-quarter results, David Oakes, DDR’s chief investment officer and executive vice president, finance, said, “We expect much of our development investment to be funded by asset sales, and we continue to expect to be a net seller of assets in 2008.”  The fourth-quarter 2007 operating results show that funds from operations per diluted share increased 11.1 percent to $3.79 and net income per diluted share increased 2.2 percent to $1.85 for calendar 2007 compared to the prior year.  Executed leases during the fourth quarter totaled approximately 2.2 million square feet, including 138 new leases totaling 800,000 square feet and 265 renewals totaling 1.4 million square feet.  On a cash basis, base rental rates in the fourth quarter increased 32.5 percent on new leases, 6.3 percent on renewals and 10.5 percent overall. Same store net operating income for the year increased 2.4 percent over the prior year. The occupancy rate on the core portfolio leased percentage at year’s end was 96.0 percent. In a prepared statement, DDR CEO Scott Wolstein said, “Although we are highly focused on the current uncertainty in the capital markets and economy, we are encouraged by the simple facts that consumers are still shopping, tenants are still opening new locations, and private capital is still investing in retail real estate.”  Developers Diversified Realty is a self-administered, self-managed REIT that owns and manages more than 740 retail operating and development properties in 45 states, Puerto Rico, Brazil, Russia and Canada, totaling approximately 163 million square feet.