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Most of DDR's hurricane-battered tenant base in Puerto Rico is paying rent again


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Most of DDR's hurricane-battered tenant base in Puerto Rico is paying rent again

DDR Corp. on Feb. 15 gave a clean bill of health for its Puerto Rico assets damaged and shuttered by Hurricane Maria in September 2017.

As of the end of January, 85% of the company's leased space on the island had been reopened, and 92% of the tenants were open for business and paying rent. Parking lots are full, foot traffic is heavy and sales volume is solid, COO Michael Makinen said Feb. 15 on the company's 2017 year-end earnings call.

During the Q&A segment, an analyst described the resurgence in monthly cash receipts in January as a "big bounceback," putting the company's operations on the island at or near July 2017 levels. "I would have thought you would have had more deceleration," the analyst said.

CFO Matthew Ostrower said the quick renewal of business in Puerto Rico has surprised many. "We've had a variety of people go to Puerto Rico and take a look at the assets. And whether they are sell-side analysts or buy-siders, or other people just with interest, the feedback is 'My goodness, I expected something really, really difficult.' ... The cash receipts show it. There is a rebound taking place on that island," he said.

The company's four properties in Puerto Rico comprise 946,155 square feet, according to S&P Global Market Intelligence data.

As part of its ongoing U.S. portfolio repositioning, DDR sold 14 shopping centers and land parcels during the 2017 fourth quarter for an aggregate sales price of $590.1 million, with $246.0 million at DDR's share. The total includes $48.6 million from the repayment of the company's preferred equity investment in its two joint ventures with Blackstone Group LP.

The company also repaid $104 million of mortgage debt set to mature in 2018 during the quarter.