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In the US, major big box retail REIT DDR Corp saw its price stabilise on Friday post the impact of Hurricane Maria and its major damage to Puerto RicoDDR holds around 10% of its portfolio in Puerto Rico and is the largest retail landlord on the island with 12 shopping centres, and has been investigating ways to exit this large position for some time.  The impact of the hurricane on Puerto Rico has been described as “devastating”, with the whole island without power immediately post the storm, major damage and flooding evident, and at least 10 people killed.

DDR has made a brief statement on Friday reporting that it is in the process of assessing the damage to its assets but extensive damage to roads and infrastructure could see this assessment take weeks.  DDR has reported that it maintains property, casualty, flood and business interruption insurance at its properties in Puerto Rico.

DDR’s share price has declined last week post the hurricane and its damage as investors expressed caution about the potential impact to earnings and asset values.  Confirmation of the property and business continuity insurance will likely provide some confidence, although it will mean that DDR will be unlikely to be able to exit its portfolio in Puerto Rico now for some time – potentially years – and the long term impact on discretionary spending as residents recover will not be known for some time. An offsetting potential benefit to the DDR Properties is that there will be a requirement for substantial restocking of goods by residents as they replace furniture and clothing lost in the Hurricane, and DDRs properties could provide an important conduit for this.

Disclosure: The Fat Prophets Contrarian Fund declares a holding in DDR Corp.

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