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DDR Corp. (DDR - Analyst Report), a real estate investment trust (REIT), has recently announced its plans to team-up with Anna’s Linens – a leading retailer of home-furnishing items, in three of its shopping centers in Puerto Rico. Anna's Linens is the second such retailer after Five Below – a premier retailer of trendy merchandise priced below $5, which has announced its partnership with DDR in 2012 to help expand into a new market.

The shopping centers in which Anna’s Linens will open its outlet include Plaza Rio Hondo – a 538,000 square-foot enclosed mall in the city of Bayamon; Plaza del Atlantico – a 225,000 square-foot enclosed mall in Arecibo; and Rexville Plaza – a 132,000 square-foot retail property in Bayamon.

Anna's Linens will occupy 5,600 square feet of space in Plaza Rio Hondo, which is expected to open in 2012. In Plaza del Atlantico, the retailer is slated to occupy three consolidated small shop units, which are also expected to open in 2012. In Rexville Plaza, Anna's Linens will occupy two consolidated small shop units spanning 6,800 square feet, which are expected to open in early 2013.

With limited new construction on anvil in Puerto Rico, the new and redeveloped properties of DDR are expected to meet the increased demand of high-quality space in the island for large retailers like Anna’s Linens.

DDR has long been minimizing ground-up development spending in its domestic portfolio, and instead started allocating capital to the lease-up of existing projects. These redevelopments have created a growth opportunity for the company’s existing assets without the level of risk or capital required for new development. This in turn has enabled DDR to de-lever the balance sheet and generate considerable cash flow for portfolio reinvestment as well as increase the cash distribution to its shareholders.

We maintain our Neutral recommendation on DDR for the long term. The company presently has a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank (short-term Hold) for Kimco Realty Corporation (KIM - Analyst Report), one of the competitors of DDR.

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