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Developers Diversified PR returns to local retail market to operate 9 shopping centers

The $550 million sale of nine shopping centers formerly owned by Retail Value Inc. has brought Developers Diversified PR back to the island 15 years after first establishing operations.

That transaction, which closed in August 2021, has also meant the return of developer Scott Wolstein, who will oversee the portfolio, whose performance — he believes — can be restored to what it was before Hurricane María hit in 2017.

“We think it’s a good time to re-enter the market. The market has taken a few shots across the bow with the hurricanes and COVID-19, so the assets’ current performance isn’t what it used to be, and that gives us an opportunity to really drive some earnings growth, which we intend to do,” he said in an interview with News is my Business.

Despite all the economic challenges seen in recent years, Wolstein believes there are circumstances providing “some tailwinds” to the industry, such as the arrival of “very wealthy Americans who are moving down to Puerto Rico to a better, more friendly tax environment, which is driving a lot of construction that creates jobs.”

Also, he believes the broader picture of the aftermath of the pandemic across the globe, which is likely to shift some manufacturing activity from China to this hemisphere “and with so much of that being done in Puerto Rico, I think there’s a chance that the island may benefit from that,” Wolstein said.

Wolstein, who has a successful history in Puerto Rico, now returns with the new Developers Diversified PR acquiring the properties he first purchased more than 15 years ago.  He and his father founded the original Developers Diversified Realty in 1992. They expanded into Puerto Rico in 2005. At the time, Wolstein was CEO of the shopping center company known today as Site Centers.

Wolstein is an investor and the manager on behalf of a broader group of private investors. He is responsible for the day-to-day operations of the portfolio that is 93% leased. Developers Diversified PR’s anchors include Walmart, Sam’s Club, Bed Bath & Beyond, JCPenney, Best Buy, Caribbean Cinemas, The Home Depot, TJMaxx and Marshalls Mega Stores, among others. 

Developers Diversified PR owns and manages nine shopping centers across Puerto Rico: Plaza del Sol, Plaza del Norte, Plaza Río Hondo, Plaza Escorial, Plaza Isabela, Plaza del Atlántico, Plaza Cayey, Plaza Fajardo and Plaza Walmart.

“Economies are cyclical, and we think there are better days ahead. In retail, you don’t really have to guess because you know…you get the sales information, you know how they’re performing, and the sales performance [at the shopping centers] isn’t that different than it was before the hurricane,” he said.

“There’s really no reason why we can’t restore the occupancy and performance to what they were before,” he said, acknowledging that the net operating income of the properties is “far below what it used to be. But if we can restore it to what it once was, it’ll be a very successful investment.”

While the shopping centers are at about 93% occupied, Wolstein said there are still several big boxes left vacant when Sears and Kmart stores closed.  

“The exit of those boxes creates redevelopment opportunities. However, I don’t see any big retailer coming back to fill that 100,000 square-foot space any time soon,” he said, saying a retailer like Target will not be coming to the island, in response to a question by this media outlet.

“I’m not aware of anybody looking to come to Puerto Rico that isn’t already here. We do believe that those that are here will expand their footprint in response to business demand for new stores, like Burlington and TJMaxx,” he said, adding that those large empty locations can also be filled with entertainment options and multiple tenants that split the space.

Author Details
Author Details
Business reporter with 27 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.
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