Developers Diversified Realty Corp. (DDR), a leading real estate investment trust (REIT), has recently announced the introduction of two new retail stores of hhgregg, Inc. (HGG), a publicly owned white goods retailer, in Florida and Pennsylvania.

hhgregg opened a 36,459 square-foot store at Carillon Place, a 283,238 square feet shopping center in Naples, Florida. The company also opened a 28,152 square-foot retail store at Peach Street Square, a 676,245 square feet shopping center in Erie, Pennsylvania. Earlier in 2010, Developers Diversified had opened three new stores of hhgregg in Virginia, New Jersey and Delaware, and is presently the largest retail landlord of the latter.

Despite challenging market conditions, Developers Diversified had executed strong leasing activities during third quarter 2010. The company signed 191 new leases and 312 renewal leases spanning over 1.0 million square feet and 1.9 million square feet, respectively. The core portfolio of the company was 92.0% leased at the end of the quarter, compared to 90.9% in the prior-year quarter. We remain encouraged with the continued leasing activities of the company.

Developers Diversified acquires, owns, develops, redevelops, leases and manages shopping centers and business centers. The company owns and manages 590 retail operating (including joint ventures) and development properties spanning approximately 134 million square feet of real estate in 41 states in the U.S., Puerto Rico, Brazil and Canada.

Developers Diversified is currently continuing with its strategy of minimizing ground-up development spending in its domestic portfolio and allocating capital to the lease-up of existing projects, as it believes there may be opportunities to redevelop many of its existing assets. These redevelopments should create a growth opportunity for the company’s existing assets and create future value without the level of risk or capital required for a new development.

We maintain our Neutral rating on Developers Diversified for the long term. The company presently has a Zacks #3 Rank, which translates into a short-term “Hold” recommendation.

 
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