DDR Highlights Execution of Strategic Objectives in 2013 and Provides 2014 Guidance
BEACHWOOD, Ohio, Jan. 6, 2014 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today highlighted the achievement of its 2013 strategic objectives and released guidance for 2014.
In 2013, DDR continued its sector-leading operational performance as the Company leased over 10 million square feet for the fifth consecutive year and increased the portfolio leased rate to 95.1%, the highest level since 2008. With an active portfolio management platform in place, the Company continued to make significant progress repositioning the portfolio with total acquisition and disposition activity of $2.8 billion. DDR continued to prudently fund investments and opportunistically raise capital in an effort to advance the Company's objectives of further strengthening the balance sheet, extending debt duration, improving credit metrics, and increasing the size and quality of the unencumbered asset pool.
Daniel B. Hurwitz, chief executive officer, commented, "We are extremely pleased with the continued progress made toward achieving our stated strategic objectives. Our operating platform, once again, produced at a very high level and allowed for robust earnings growth over the prior year, and our transactional and redevelopment activity continued to upgrade the quality of the portfolio. We remain intensely focused on continuing to grow shareholder value through consistently strong operating results and prudent capital allocation decisions."
In 2013, the Company completed $2.8 billion of capital transactions and consolidated financing activities including the following:
- Completed $2.33 billion of prime shopping center acquisitions and $433 million of non-prime dispositions. DDR's share of 2013 acquisitions and dispositions was $1.92 billion and $296 million, respectively.
- Acquired the remaining 95% interest in 30 prime power centers from its existing joint venture with Blackstone Real Estate Partners VII ("Blackstone") for $1.46 billion.
- Issued $827 million of common equity at an average price of $18.76 per share to fund the net investment in prime shopping centers.
- Issued $150 million, 6.25% Class K preferred stock to redeem $150 million, 7.375% Class H preferred stock.
- Issued $300 million, 10-year, 3.375% senior unsecured notes, with net proceeds used to fund the acquisition of prime shopping centers from an existing joint venture with Blackstone.
- Issued $300 million, 7-year, 3.5% senior unsecured notes, with net proceeds used to repay debt under its unsecured revolving credit facility.
- Opportunistically accessed attractively priced long-term debt with the proactive refinancing of the Company's credit facilities and secured term loan in advance of maturity. The new $815 million unsecured revolving credit facilities and $400 million secured term loan mature in 2018 and pricing was reduced by 20 basis points on average.
- Paid an annual cash dividend of $0.54 per common share, an increase of 12.5% from 2012.
The Company also achieved the following operational accomplishments in 2013:
- Generated full year same-store net operating income growth in excess of 3% for the third consecutive year.
- Increased the percentage of net operating income generated from the Company's prime portfolio to over 90%.
- Signed over 1,700 leases for the third consecutive year.
- Achieved blended leasing spreads greater than 8%.
- Transitioned premier tenants such as Nordstrom Rack, Whole Foods, L.A. Fitness, and Five Below into the Company's top 50 tenants by annual base rent.
- Acquired 46 prime assets and disposed of 80 non-prime and non-income producing assets.
- Increased the amount of unencumbered NOI by 17% since year-end 2012.
- Achieved consensus investment grade ratings; S&P and Fitch currently rate DDR's senior unsecured debt BBB-, while Moody's recently upgraded DDR's senior unsecured debt to Baa2.
Based on 2013 results and current market conditions, the Company is providing the following guidance for 2014:
- Generate operating FFO per diluted share of $1.17 to $1.21, an increase of 5.4% to 9.0% over the midpoint of the latest 2013 guidance.
- Generate same-store NOI growth of 2.5% to 3.5%, exclusive of major redevelopment activity.
- Increase year-end portfolio leased rate by at least 75 basis points.
- Acquire $250 million of prime shopping centers.
- Dispose of $200 million of non-prime operating assets.
- Dispose of $30 million of non-income producing assets.
- Bring at least $100 million of development and redevelopment investment on line at a projected cash-on-cost return of at least 10%, primarily weighted toward the second half of the year.
- G&A expenses as a percentage of total revenues of approximately 5%.
- Assumed exchange rate of 2.25 Brazilian Real per U.S. Dollar.
- Annual dividend of $0.62 per common share, representing 15% growth over 2013.
- Opportunistic capital raising activity to improve liquidity, further extend debt duration, and improve credit metrics.
The outlined assumptions associated with 2014 guidance allow for self-funded growth, continued delevering through EBITDA growth, and an increased common dividend that represents a yield of 4.0% based on the most recent closing price. The Company's 2014 guidance range highlights strong year-over-year growth of 5.4% to 9.0% and builds upon 7.8% operating FFO growth from 2012 to 2013 at the latest guidance midpoint, further reinforcing the strong growth prospects offered by high-quality power centers, active portfolio management, favorable supply/demand fundamentals, and an industry-leading operating platform.
About DDR Corp.
DDR is an owner and manager of 417 value-oriented shopping centers representing 114 million square feet in 39 states, Puerto Rico and Brazil. The Company's assets are concentrated in high barrier-to-entry markets with stable populations and high growth potential and its portfolio 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, as well as on Twitter, LinkedIn and Facebook.
DDR 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 oversupply 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; and the success of our capital recycling strategy. 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, 2012, 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.
SOURCE DDR Corp.