Ohio-based Developers Diversified Realty (DDR) has decided to take over the management of the 15 shopping centers it owns in Puerto Rico effective Aug. 15. This was indicated in a letter DDR sent to the managers of the local malls. Currently, these shopping centers are managed by PMI.

As a result of this move, PMI executives could be out of a job next month. PMI executives had been managing the malls before former owner Caribbean Property Group sold them to DDR in 2004 for more than $1 billion. After acquiring the properties, DDR did indicate it would eventually be taking over the malls’ management.

Michelle Mahue, DDR vice president of Investor Relations, said back in November 2004 there would be a transition period of about three years during which PMI would remain responsible for managing the properties and leasing the retail spaces to locally based companies.

She also said DDR would handle leasing to companies outside Puerto Rico and all accounting and decision-making, which includes approving property expenditures and leasing decisions. After the transition period, DDR would take over leasing to locally based companies as well (CB, Nov. 11, 2004).

One of the reasons local sources give for the change in management—occurring about a year earlier than expected—is that DDR believes salaries of local executives are too high. “They aren’t willing to pay the salaries local execs were commanding,” one industry insider said.

Another source revealed DDR has indicated PMI executives who are retained will be paid at least the same salary they make now. “There could be a catch here, though. DDR may pay the same salaries, but could increase the workload,” guessed a local source, who added DDR is already conducting interviews to hire people for its local offices. DDR’s local offices are in Bayamón’s Plaza Río Hondo.

DDR executives weren’t available for comment as of press time. Its local malls are: Plaza del Atlántico in Arecibo, Plaza del Sol in Bayamón, Plaza Río Hondo in Bayamón, Plaza del Norte in Hatillo, Señorial Plaza in San Juan, Rexville Plaza in Bayamón, Plaza Escorial in Carolina, Plaza Cayey, Plaza Fajardo, Plaza Wal-Mart in Guayama, Plaza Palma Real in Humacao, Plaza Isabela, Camino Real in San Germán, Plaza del Oeste in San Germán and Plaza Vega Baja.

PMI employs between 40 and 45 people in Puerto Rico.