DDR Reports A 6.9% Increase In Operating FFO Per Diluted Share To $0.31 For The Quarter Ended September 30, 2015

Oct 27, 2015

BEACHWOOD, Ohio, Oct. 27, 2015 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the third quarter ended September 30, 2015

(Logo: http://photos.prnewswire.com/prnh/20131217/DDRLOGO )

Financial Highlights

  • Third quarter operating funds from operations attributable to common shareholders ("Operating FFO") increased $7.3 million to $113.5 million, or $0.31 per diluted share, compared to $106.2 million, or $0.29 per diluted share, for the prior-year comparable period.
  • Third quarter net income attributable to common shareholders was $54.0 million, or $0.15 per diluted share, compared to net income of $63.0 million, or $0.17 per diluted share, for the prior-year comparable period.

Significant Quarterly Activity

  • Generated same store net operating income growth of 3.2% on a pro rata basis
  • Executed 382 new leases and renewals for 2.9 million square feet
  • Increased the annualized base rent per occupied square foot by 4.0% on a pro rata basis to $14.54 at September 30, 2015 from $13.98 at September 30, 2014
  • Generated new leasing spreads of 12.3% and renewal leasing spreads of 7.1%, both on a pro rata basis
  • The portfolio leased rate was 95.8% at September 30, 2015 and June 30, 2015 on a pro rata basis
  • Sold 21 assets totaling $145 million at DDR's share
  • In October 2015, issued $400 million of 4.25% senior unsecured notes due February 2026
  • In October 2015, called for redemption $350 million of senior convertible notes

"I am proud to report another strong and consistent quarter of same store NOI and earnings growth as our high quality portfolio and the efforts of our team continue to produce impressive results," commented David J. Oakes , president and chief executive officer of DDR. 

2015 Guidance

  • The Company is revising its 2015 guidance for Operating FFO to a range of $1.21 to $1.24 per diluted share from a range of $1.20 to $1.25 per diluted share.

Non-GAAP Disclosures
FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry and a widely accepted measure of real estate investment trust ("REIT") performance.  Management believes that FFO and Operating FFO provide additional indicators of the financial performance of a REIT.  The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.  Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with generally accepted accounting principles ("GAAP"), is necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income computed in accordance with GAAP as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity.

FFO is defined and calculated by the Company as net income, adjusted to exclude:  (i) preferred share dividends, (ii) gains and losses from disposition of depreciable real estate property, which are presented net of taxes, (iii) impairment charges on depreciable real estate property and related investments, (iv) extraordinary items and (v) certain non-cash items.  These non-cash items principally include real property depreciation and amortization of intangibles, equity income from joint ventures and equity income from non-controlling interests and adding the Company's proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis.  The Company calculates Operating FFO by excluding the non-operating charges and gains described below.  The Company computes FFO in accordance with the NAREIT definition.  Other real estate companies may calculate FFO and Operating FFO in a different manner.  Operating FFO is useful to investors as the Company removes these charges and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio.  A reconciliation of net income (loss) to FFO and Operating FFO is presented herein.

Safe Harbor
DDR Corp. considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods.  Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.  For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements.  There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as supply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant; constructing properties or expansions that produce a desired yield on investment; our ability to buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements or our failure to satisfy conditions to the completion of these arrangements; the success of our capital recycling strategy; and the finalization of the financial statements for the three months ended September 30, 2015.  For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company's Form 10-K for the year ended December 31, 2014, as amended.  The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

About DDR Corp.
DDR is an owner and manager of 378 value-oriented shopping centers representing 116 million square feet in 41 states and Puerto Rico.  The Company's portfolio is comprised primarily of large-format power centers located in top markets across the United States, and is actively managed to create long-term shareholder value.  DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol DDR.  Additional information about the Company is available at www.ddr.com.

Conference Call and Supplemental Information
A copy of the Company's Supplemental package is available upon request to Brooke Vanek at the Company's corporate office, 3300 Enterprise Parkway, Beachwood, Ohio 44122 or at www.ddr.com.

The Company will hold its quarterly conference call tomorrow, October 28, 2015, at 10:00 a.m. Eastern Time.  To participate, please dial 877.249.1119 (domestic) or 412.542.4143 (international) at least ten minutes prior to the scheduled start of the call.  The conference call webcast will be recorded and available for replay through the Investors portion of DDR's website, http://ir.ddr.com/events.cfm.

 

 

 

DDR Corp.

Income Statement:  Consolidated Interests 

 










$ in thousands, except per share










3Q15


3Q14


9M15


9M14

Revenues:








Minimum rents (1)

$180,523


$171,893


$540,583


$507,475

Percentage rent

835


507


3,592


2,772

Recoveries

61,915


58,116


188,016


171,947

Ancillary income

4,646


6,326


13,513


18,465

Other revenues (2)

968


919


2,866


4,552



248,887


237,761


748,570


705,211

Expenses (3):








Operating and maintenance

35,963


36,404


110,718


106,982

Real estate taxes

37,385


34,981


112,811


104,042



73,348


71,385


223,529


211,024










Net operating income

175,539


166,376


525,041


494,187










Other income (expense):








Fee income

8,248


7,594


24,713


23,696

Interest income

7,331


2,652


21,703


8,938

Interest expense (4)

(58,217)


(56,774)


(182,524)


(176,106)

Depreciation and amortization

(97,155)


(97,270)


(299,470)


(296,093)

General and administrative (5)

(17,596)


(19,540)


(55,462)


(58,878)

Other income (expense), net (6)

(240)


(2,758)


(1,300)


(11,041)

Impairment charges (7)

0


(1,448)


(279,021)


(18,119)

Income (loss) before earnings from equity method investments and other items

17,910


(1,168)


(246,320)


(33,416)










Equity in net income of joint ventures

648


3,620


2,351


10,241

Impairment of joint venture investments

0


0


0


(9,100)

Gain on sale and change in control of interests, net

0


3,984


7,772


87,814

Income from discontinued operations (8)

0


57,569


0


67,926

Tax (expense) benefit

(528)


214


(6,001)


(1,113)

Gain on disposition of real estate, net of tax

41,793


2,262


78,154


2,645

Net income (loss)

59,823


66,481


(164,044)


124,997

Non-controlling interests (9)

(268)


2,125


(1,590)


2,985

Net income (loss) attributable to DDR

59,555


68,606


(165,634)


127,982

Write-off of preferred share original issuance costs

0


0


0


(1,943)

Preferred dividends

(5,594)


(5,594)


(16,781)


(18,460)

Net income (loss) attributable to Common Shareholders

53,961


63,012


(182,415)


107,579

FFO:








Net income (loss) attributable to common shareholders

53,961


63,012


(182,415)


107,579

Depreciation and amortization of real estate investments

95,159


99,542


293,265


304,286

Equity in net income of joint ventures

(648)


(3,620)


(2,351)


(10,241)

Joint ventures' FFO

6,595


8,387


21,114


24,507

Non-controlling interests (OP units)

69


223


566


509

Impairment of depreciable real estate

0


365


179,748


11,856

Gain on disposition of depreciable real estate, net

(41,734)


(57,105)


(78,282)


(159,753)

FFO attributable to Common Shareholders

113,402


110,804


231,645


278,743

Non-operating items, net (10)

136


(4,589)


100,423


29,445

Operating FFO

$113,538


$106,215


$332,068


$308,188

FFO per share - Diluted (11)

$0.31


$0.31


$0.64


$0.77

Operating FFO per share - Diluted (11)

$0.31


$0.29


$0.91


$0.85



















DDR Corp.

Balance Sheet:  Consolidated Interests 


$ in thousands





At Period End







3Q15


4Q14

Assets:








Land





$2,187,720


$2,208,468

Buildings





6,931,911


7,087,040

Fixtures and tenant improvements





709,548


645,035







9,829,179


9,940,543

Less: Accumulated depreciation





(2,038,635)


(1,909,585)







7,790,544


8,030,958

Construction in progress and land





326,196


395,242

Real estate, net





8,116,740


8,426,200










Investments in and advances to joint ventures





393,520


414,848

Cash





21,040


20,937

Restricted cash





41,920


11,375

Notes receivable, net





47,430


56,245

Receivables, including straight-line rent, net





131,209


132,661

Other assets, net (12)





403,620


479,629

Total Assets





9,155,479


9,541,895










Liabilities and Equity:








Revolving credit facilities





395,000


29,009

Unsecured debt





3,118,656


2,765,893

Unsecured term loan





300,000


350,000

Mortgage and other secured debt





1,409,921


2,089,805







5,223,577


5,234,707

Dividends payable





68,059


61,468

Other liabilities (13)





425,507


448,192

Total Liabilities





5,717,143


5,744,367










Preferred shares





350,000


350,000

Common shares





36,223


36,071

Paid-in-capital





5,467,413


5,438,778

Accumulated distributions in excess of net income





(2,416,655)


(2,047,212)

Deferred compensation obligation





15,516


16,609

Accumulated other comprehensive income





(6,662)


(7,352)

Less: Common shares in treasury at cost





(16,039)


(16,646)

Non-controlling interests





8,540


27,280

Total Equity





3,438,336


3,797,528










Total Liabilities and Equity





$9,155,479


$9,541,895



















DDR Corp.

Income Statement:  Unconsolidated Interests at 100% 










$ in thousands










3Q15


3Q14


9M15


9M14

Revenues:








Minimum rents

$95,218


$78,647


$297,392


$260,122

Percentage rent

383


318


1,325


1,051

Recoveries

28,772


21,469


90,234


64,661

Other revenues

2,325


7,900


8,413


31,141



126,698


108,334


397,364


356,975

Expenses:








Operating and maintenance

30,558


22,287


94,213


84,032

Real estate taxes

17,118


12,596


52,859


37,852



47,676


34,883


147,072


121,884










Net operating income

79,022


73,451


250,292


235,091










Other income (expense):








Interest expense

(33,202)


(37,667)


(107,698)


(129,514)

Depreciation and amortization

(49,949)


(31,435)


(158,168)


(107,165)

Impairment charges

0


0


(448)


(600)

Tax expense

0


0


0


(6,565)

Other income (expense), net

(589)


(173)


(1,173)


(2,964)



(83,740)


(69,275)


(267,487)


(246,808)










(Loss) income from continuing operations

(4,718)


4,176


(17,195)


(11,717)

Loss from discontinued operations

0


(12,906)


0


(17,090)

Gain on disposition of discontinued operations, net

0


4,713


0


28,224

(Loss) gain on disposition of real estate, net

(2,626)


3,833


(4,197)


3,833

Non-controlling interests

0


0


0


(2,023)

Net (loss) income attributable to unconsolidated joint ventures

(7,344)


(184)


(21,392)


1,227

Depreciation and amortization of real estate investments

49,949


35,574


158,168


118,020

Impairment of depreciable real estate

0


11,093


448


11,693

Loss (gain) on disposition of depreciable real estate, net

2,626


(8,546)


4,197


(31,965)

FFO

45,231


37,937


141,421


98,975

FFO at DDR's ownership interests

6,595


8,387


21,114


24,507

Operating FFO at DDR's ownership interests

6,639


8,387


21,162


24,643










Net income at DDR's ownership interests

336


3,316


1,406


9,483

Basis differences

312


304


945


758

Equity in net income of joint ventures

$648


$3,620


$2,351


$10,241



















DDR Corp.

Balance Sheet:  Unconsolidated Interests at 100% 










$ in thousands





At Period End







3Q15


4Q14

Assets:








Land





$1,319,519


$1,439,849

Buildings





3,457,212


3,854,585

Fixtures and tenant improvements





183,108


200,696







4,959,839


5,495,130

Less: Accumulated depreciation





(799,161)


(773,256)







4,160,678


4,721,874

Land held for development and construction in progress





52,215


55,698

Real estate, net





4,212,893


4,777,572

Cash and restricted cash





62,751


100,812

Receivables, including straight-line rent, net





52,903


80,508

Other assets, net





299,625


394,751

Total Assets





4,628,172


5,353,643










Liabilities and Equity:








Mortgage debt





3,116,584


3,552,764

Notes and accrued interest payable to DDR





2,926


144,831

Other liabilities





198,804


276,998

Total Liabilities





3,318,314


3,974,593










Redeemable preferred equity





310,763


305,310

Accumulated equity





999,095


1,073,740

Total Liabilities and Equity





$4,628,172


$5,353,643



















DDR Corp.
Financial Statements:  Footnotes 

 


$ in millions, except per share







Includes discontinued operations

3Q15


3Q14


9M15


9M14










(1)

Minimum rents:









Straight-line rent, net

$1.6


$1.5


$3.8


$4.0


Below-market rent, net

1.0


0.3


2.2


0.8


Ground lease revenue

9.5


8.5


27.9


24.5










(2)

Other revenues:









Lease termination fees

0.7


0.7


2.3


4.1


Other miscellaneous

0.3


0.2


0.6


0.5










(3)

Operating expenses:









Recoverable expenses (2014 excludes sold assets)

(67.7)


(64.0)


(206.2)


(189.3)


Non-recoverable expenses (2014 excludes sold assets)

(5.6)


(7.4)


(17.3)


(21.7)


Straight-line ground rent expense

(0.1)


(0.2)


(0.4)


(0.8)


Expensed costs of suspended developments

(0.1)


(0.1)


(0.4)


(0.8)










(4)

Non-cash interest expense:









Convertible debt accretion

(3.0)


(2.9)


(8.9)


(8.5)


Debt fair value amortization

3.0


4.1


12.7


12.5


Loan cost amortization

(2.4)


(3.1)


(7.3)


(9.5)


Interest expense (capitalized)

1.9


2.7


5.1


6.6










(5)

General and administrative expenses:









Executive separation charges

(0.0)


(0.0)


(2.3)


(0.0)


Stock compensation expenses

(1.5)


(1.9)


(5.2)


(5.8)


Internal leasing expenses

(1.8)


(1.7)


(5.5)


(5.6)


Construction administrative costs (capitalized)

2.3


2.5


7.0


7.3










(6)

Other income (expense):









Transactions and other, net

(0.2)


(1.6)


(0.4)


(8.8)


Litigation expenses

(0.0)


(1.2)


(0.0)


(2.2)


Debt extinguishment, net

(0.0)


(0.0)


(0.9)


(0.0)










(7)

Impairment charges:









Assets marketed for sale

(0.0)


(0.4)


(179.7)


(11.9)


Land previously held for development

(0.0)


(1.4)


(99.3)


(15.1)



















DDR Corp.

Financial Statements:  Footnotes 

 


$ in millions, except per share








Includes discontinued operations

3Q15


3Q14

 


9M15


9M14


















(8)

Discontinued operations:









Revenues

n/a 


$10.8


n/a 


$36.4


Expenses

n/a 


(5.4)


n/a 


(19.0)


Impairments

n/a 


(0.4)


n/a 


(8.9)


Depreciation

n/a 


(4.5)


n/a 


(14.9)


Gain on disposition of real estate, net

n/a 


57.1


n/a 


74.3


Net income

n/a 


57.6


n/a 


67.9











Note: Presented for 2014 only as DDR adopted the new accounting guidance on January 1, 2015, which changed the definition for reporting.










(9)

Non-controlling interests:









FFO attributable to non-controlling interests

(0.2)


2.3


(1.2)


1.9


Operating FFO attributable to non-controlling interests

(0.2)


(0.3)


(0.8)


(0.7)










(10)

Non-operating items excluded from Operating FFO:









Non-cash impairment charges - non-depreciable assets

0.0


1.4


99.3


24.2


Executive separation charges

0.0


0.0


2.3


0.0


Transaction, debt extinguishment, litigation, other, net

0.1


2.8


1.6


12.1


Joint ventures - transaction, currency, other

0.0


0.0


0.0


0.1


Non-cash gain on sale and change in control of interests, net

0.0


(4.0)


(7.8)


(4.0)


Tax expense (primarily Puerto Rico restructuring)

0.0


0.0


4.4


0.0


(Gain) loss on sale of non-depreciable real estate, net

0.0


(4.8)


0.6


(4.9)


Non-cash write-off of preferred share original issuance costs

0.0


0.0


0.0


1.9



0.1


(4.6)


100.4


29.4

(11)

Outstanding per share information:









Common shares (at quarter end)

362.1


360.2


362.1


360.2


OP units (at quarter end)

0.4


1.4


0.4


1.4


Total shares and units (at quarter end)

362.5


361.6


362.5


361.6


Weighted average shares and units - Basic - EPS

361.1


358.0


360.3


357.8


Assumed conversion of dilutive securities

2.5


0.5


0.0


0.5


Weighted average shares and units - Diluted - EPS

363.6


358.5


360.3


358.3


Weighted average shares and units - Basic - FFO & OFFO

362.5


361.0


362.4


360.2


Assumed conversion of dilutive securities

0.4


0.5


0.5


0.5


Weighted average shares and units - Diluted - FFO & OFFO

362.9


361.5


362.9


360.7


Earnings per common share - Basic & Diluted

$0.15


$0.17


$(0.51)


$0.30


FFO per share - Basic & Diluted

$0.31


$0.31


$0.64


$0.77


Operating FFO per share - Diluted

$0.31


$0.29


$0.91


$0.85


Common stock dividends declared, per share

$0.1725


$0.155


$0.5175


$0.465










(12)

Intangible assets, net (at quarter and year end)





323.1


389.2










(13)

Below-market leases, net (at quarter and year end)





146.0


139.3



















DDR Corp.

Financial Statements:  Footnotes 

 










Additional financial information









3Q15


3Q14


9M15


9M14











Capital expenditures (DDR share):









Retenanting

$13.4


$9.8


$36.1


$30.5


Maintenance - total

7.4


6.0


13.3


9.2


Maintenance PSF of owned GLA - non reimbursable





0.09


0.10











Miscellaneous (DDR share):









Est. value of land owned adjacent to existing centers (at quarter end)





26.0




Cost basis of headquarters (non-income producing at quarter end)





40.0



 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ddr-reports-a-69-increase-in-operating-ffo-per-diluted-share-to-031-for-the-quarter-ended-september-30-2015-300167240.html

SOURCE DDR Corp.

 

 

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