Developers Diversified Realty Corporation (NYSE: DDR) is a real estate investment trust that specializes in leasing shopping centers. The company makes money by charging its tenants a fixed rental rate in addition to taking a percentage of their overall revenues. Like most REITs, DDR is vulnerable to economic downturns. Tough economic conditions can lead tenants with expiring leases to choose not to renew or to renew at lower rental rates. Moreover, if the company's tenants make less money, it lowers the variable percentage of the DDR's revenue. The company's focus on "value retailers" like Wal-Mart Stores (WMT) however, provides it with a degree of insulation from downward economic cycles. During economic downturns, these companies tend to fair better than their midrange competitors because consumers tend to downgrade from premium and midrange offerings to less expensive options during periods of economic weakness. DDR's properties are also primarily off mall and have benefited over the last decade from a shift in consumer shopping preferences from mall locations to off-mall locations.

DDR is a pioneer amongst REITs in the use of joint ventures. DDR prefers using joint ventures in order to raise capital because it protects DDR from movements in capital markets. Thus, DDR partners itself with cash laden investors in order to undertake larger projects which DDR manages. This approach has allowed DDR to become one of the fastest growing REITS and allows the firm to collect management fees. DDR is involved in 10 partnerships totaling $3B in funding. These ventures account for a third of the DDR property portfolio. ^[1]

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