DDR Reports A 6.0% Increase In Operating FFO Per Diluted Share To $1.23 For The Year Ended December 31, 2015

Feb 11, 2016, 17:00 ET from DDR Corp.

BEACHWOOD, Ohio, Feb. 11, 2016 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the fourth quarter and year ended December 31, 2015. 

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

Financial Highlights

  • Fourth quarter operating funds from operations attributable to common shareholders ("Operating FFO") increased $1.9 million to $114.1 million, or $0.31 per diluted share, compared to $112.2 million, or $0.31 per diluted share, for the prior-year comparable period.
  • Fourth quarter net income attributable to common shareholders was $87.9 million, or $0.24 per diluted share, compared to net loss of $16.3 million, or $0.05 per diluted share, for the prior-year comparable period.

Significant Quarterly Activity

  • Generated same-store net operating income growth of 3.4% on a pro rata basis
  • Executed 290 new leases and renewals for 2.5 million square feet
  • Generated new leasing spreads of 24.5% and renewal leasing spreads of 7.0%, both on a pro rata basis
  • Increased the portfolio leased rate by 20 basis points to 96.0% at December 31, 2015, from 95.8% at September 30, 2015, on a pro rata basis
  • Closed on a new joint venture with Blackstone that acquired six shopping centers with a total investment of $96 million at DDR's share
  • Acquired one prime power center in Orlando for $67 million
  • Sold nine operating assets and three non-operating assets totaling $211 million at DDR's share
  • Issued $400 million aggregate principal amount of 4.25% senior unsecured notes due 2026 and redeemed $350 million of senior convertible notes

2015 Year-End Highlights

  • Generated Operating FFO of $1.23 per diluted share for the full year 2015, an increase of 6.0% compared to 2014
  • Acquired 10 shopping centers and three outparcels for $326 million at DDR's share
  • Sold 66 operating assets and eight non-operating assets for $569 million at DDR's share
  • Executed 1,330 new leases and renewals for 10.9 million square feet in 2015
  • The portfolio leased rate was 96.0% at December 31, 2015 and 2014, on a pro rata basis
  • Increased the annualized base rent per occupied square foot by 4.1% on a pro rata basis to $14.76 at December 31, 2015, from $14.15 at December 31, 2014
  • Generated new leasing spreads for the full year 2015 of 22.0% and renewal leasing spreads of 7.0%, both on a pro rata basis

"I am pleased to report another year of positive results and portfolio improvement.  I am extremely proud of the efforts of our team in 2015.  Our portfolio evolution is evident in our operating statistics, as same-store net operating income grew 3.1% in 2015, above the high end of our original guidance range. The operating figures translated into strong earnings and dividend growth in excess of 6% and 10%, respectively, which highlights our team's focus on best positioning DDR for long-term growth," commented David J. Oakes, president and chief executive officer of DDR. 

2016 Guidance
There has been no change in guidance since the initial release on January 4, 2016.  The Company continues to estimate Operating and NAREIT defined FFO for 2016 between $1.19 and $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 and (iv) 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 and year ended December 31, 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 367 value-oriented shopping centers representing 115 million square feet in 38 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, February 12, 2016, 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










4Q15


4Q14


12M15


12M14

Revenues:








Minimum rents (1)

$179,154


$181,081


$719,737


$688,556

Percentage rent

2,675


2,459


6,267


5,231

Recoveries

58,703


59,040


246,719


230,987

Ancillary income

5,525


5,824


19,038


24,288

Other revenues (2)

473


153


3,339


4,706



246,530


248,557


995,100


953,768

Expenses (3):








Operating and maintenance

33,893


35,355


144,611


142,336

Real estate taxes

36,271


34,729


149,082


138,771



70,164


70,084


293,693


281,107










Net operating income

176,366


178,473


701,407


672,661










Other income (expense):








Fee income

8,258


8,211


32,971


31,907

Interest income

7,510


6,989


29,213


15,927

Interest expense (4)

(59,203)


(61,014)


(241,727)


(237,120)

Depreciation and amortization

(102,575)


(106,732)


(402,045)


(402,825)

General and administrative (5)

(17,920)


(25,606)


(73,382)


(84,484)

Other income (expense), net (6)

(439)


(1,221)


(1,739)


(12,262)

Impairment charges (7)

0


(11,055)


(279,021)


(29,175)

Income (loss) before earnings from equity method

   investments and other items

11,997


(11,955)


(234,323)


(45,371)










Equity in net (loss) income of joint ventures

(5,486)


748


(3,135)


10,989

Impairment of joint venture investments

(1,909)


(21,552)


(1,909)


(30,652)

Gain on sale and change in control of interests, net

0


183


7,772


87,996

Income from discontinued operations (8)

0


21,471


0


89,398

Tax expense

(285)


(742)


(6,286)


(1,855)

Gain on disposition of real estate, net of tax

89,417


415


167,571


3,060

Net income (loss)

93,734


(11,432)


(70,310)


113,565

Non-controlling interests (9)

(268)


732


(1,858)


3,717

Net income (loss) attributable to DDR

93,466


(10,700)


(72,168)


117,282

Write-off of preferred share original issuance costs

0


0


0


(1,943)

Preferred dividends

(5,594)


(5,594)


(22,375)


(24,054)

Net income (loss) attributable to Common Shareholders

87,872


(16,294)


(94,543)


91,285

FFO:








Net income (loss) attributable to common shareholders

87,872


(16,294)


(94,543)


91,285

Depreciation and amortization of real estate investments

100,582


105,887


393,847


410,172

Equity in net loss (income) of joint ventures

5,486


(748)


3,135


(10,989)

Impairment of depreciable joint venture investments

1,909


0


1,909


0

Joint ventures' FFO

6,465


5,836


27,579


30,344

Non-controlling interests (OP units)

69


223


635


732

Impairment of depreciable real estate

0


7,555


179,748


19,412

Gain on disposition of depreciable real estate, net

(85,728)


(21,565)


(164,010)


(181,319)

FFO attributable to Common Shareholders

116,655


80,894


348,300


359,637

Non-operating items, net (10)

(2,533)


31,311


97,890


60,756

Operating FFO

$114,122


$112,205


$446,190


$420,393

FFO per share Diluted (11)

$0.32


$0.22


$0.96


$1.00

Operating FFO per share Diluted (11)

$0.31


$0.31


$1.23


$1.16




























DDR Corp.

Balance Sheet:  Consolidated Interests










$ in thousands














At Year End







4Q15


4Q14

Assets:








Land





$2,184,145


$2,208,468

Buildings





6,965,632


7,087,040

Fixtures and tenant improvements





743,037


645,035







9,892,814


9,940,543

Less: Accumulated depreciation





(2,062,899)


(1,909,585)







7,829,915


8,030,958

Construction in progress and land





235,385


395,242

Real estate, net





8,065,300


8,426,200










Investments in and advances to joint ventures




72,576


109,538

Preferred equity interest





395,156


305,310

Cash





22,416


20,937

Restricted cash





10,104


11,375

Notes receivable, net





42,534


56,245

Receivables, including straight-line rent, net




129,089


132,661

Other assets, net (12), (13)





359,913


457,146

Total Assets





9,097,088


9,519,412










Liabilities and Equity:








Revolving credit facilities





210,000


29,009

Unsecured debt (13)





3,149,188


2,752,394

Unsecured term loan (13)





397,934


347,883

Mortgage and other secured debt (13)




1,382,415


2,082,938







5,139,537


5,212,224

Dividends payable





68,604


61,468

Other liabilities (14)





425,478


448,192

Total Liabilities





5,633,619


5,721,884










Preferred shares





350,000


350,000

Common shares





36,529


36,071

Paid-in capital





5,466,511


5,438,778

Accumulated distributions in excess of net income




(2,391,793)


(2,047,212)

Deferred compensation obligation





15,537


16,609

Accumulated other comprehensive income




(6,283)


(7,352)

Less: Common shares in treasury at cost




(15,316)


(16,646)

Non-controlling interests





8,284


27,280

Total Equity





3,463,469


3,797,528










Total Liabilities and Equity





$9,097,088


$9,519,412











DDR Corp.

Income Statement:  Unconsolidated Interests at 100%









$ in thousands










4Q15


4Q14


12M15


12M14

Revenues:








Minimum rents

$95,265


$99,018


$392,657


$359,140

Percentage rent

1,106


858


2,431


1,909

Recoveries

29,087


27,256


119,321


91,917

Other revenues

1,875


1,700


10,288


32,798



127,333


128,832


524,697


485,764

Expenses:








Operating and maintenance

31,376


28,810


125,589


112,800

Real estate taxes

17,509


17,040


70,368


54,891



48,885


45,850


195,957


167,691










Net operating income

78,448


82,982


328,740


318,073










Other income (expense):








Interest expense

(33,003)


(42,306)


(140,701)


(171,803)

Depreciation and amortization

(49,648)


(44,485)


(207,816)


(151,651)

Impairment charges

(52,252)


(20,983)


(52,700)


(21,583)

Tax expense

0


0


0


(6,565)

Other income (expense), net

(6,020)


(15,285)


(7,193)


(18,249)



(140,923)


(123,059)


(408,410)


(369,851)










Loss from continuing operations

(62,475)


(40,077)


(79,670)


(51,778)

Gain (loss) from discontinued operations

0


3,151


0


(13,955)

Gain on disposition of discontinued operations, net

0


26,797


0


55,020

Gain on disposition of real estate, net

21,385


6,283


17,188


10,116

Non-controlling interests

0


0


0


(2,022)

Net loss attributable to unconsolidated joint ventures

(41,090)


(3,846)


(62,482)


(2,619)

Depreciation and amortization of real estate investments

49,648


46,647


207,816


164,668

Impairment of depreciable real estate

52,252


20,983


52,700


32,675

Gain on disposition of depreciable real estate, net

(21,385)


(33,080)


(17,188)


(65,045)

FFO

39,425


30,704


180,846


129,679

FFO at DDR's ownership interests

6,465


5,836


27,579


30,344

Operating FFO at DDR's ownership interests

6,667


6,771


27,829


31,414










Net (loss) income at DDR's ownership interests

(6,694)


(264)


(5,289)


9,218

Basis differences

1,208


1,012


2,154


1,771

Equity in net (loss) income of joint ventures

($5,486)


$748


($3,135)


$10,989




DDR Corp.

Balance Sheet:  Unconsolidated Interests at 100%









$ in thousands














At Year End







4Q15


4Q14

Assets:








Land





$1,343,889


$ 1,439,849

Buildings





3,551,227


3,854,585

Fixtures and tenant improvements





191,581


200,696







5,086,697


5,495,130

Less: Accumulated depreciation





(817,235)


(773,256)







4,269,462


4,721,874

Land held for development and construction in progress


52,390


55,698

Real estate, net





4,321,852


4,777,572

Cash and restricted cash





58,916


100,812

Receivables, including straight-line rent, net




52,768


80,508

Other assets, net




318,546


376,540

Total Assets





4,752,082


5,335,432










Liabilities and Equity:








Mortgage debt





3,177,603


3,534,553

Notes and accrued interest payable to DDR




1,556


144,831

Other liabilities





219,799


276,998

Total Liabilities





3,398,958


3,956,382










Redeemable preferred equity





395,156


305,310

Accumulated equity





957,968


1,073,740

Total Liabilities and Equity





$4,752,082


$5,335,432




DDR Corp.

Financial Statements:  Footnotes





$ in millions, except per share




Includes discontinued operations

4Q15


4Q14


12M15


12M14










(1)

Minimum rents:









Straight-line rent, net

$1.5


$1.9


$5.3


$5.9


Below-market rent, net

0.7


0.4


2.9


1.3


Ground lease revenue

9.5


9.2


37.4


33.7










(2)

Other revenues:









Lease termination fees

0.5


0.0


2.8


4.1


Other miscellaneous

0.0


0.1


0.5


0.6










(3)

Operating expenses:









Recoverable expenses (2014 excludes sold assets)

(64.2)


(64.1)


(268.3)


(251.7)


Non-recoverable expenses (2014 excludes sold assets)

(6.0)


(6.0)


(25.4)


(29.4)


Straight-line ground rent expense

(0.1)


(0.3)


(0.5)


(1.1)


Expensed costs of suspended developments

(0.1)


(0.5)


(0.5)


(1.3)










(4)

Non-cash interest expense:









Convertible debt accretion

(1.0)


(2.9)


(9.9)


(11.4)


Debt fair value amortization

1.6


5.4


14.4


17.9


Loan cost amortization

(2.3)


(2.5)


(9.6)


(12.0)


Interest expense (capitalized)

1.5


2.0


6.7


8.7










(5)

General and administrative expenses:









Executive separation charges

(0.3)


(5.4)


(2.6)


(5.6)


Stock compensation expenses

(1.4)


(1.9)


(6.6)


(7.7)


Internal leasing expenses

(2.0)


(1.6)


(7.5)


(7.1)


Construction administrative costs (capitalized)

2.1


2.5


9.1


9.9










(6)

Other income (expense):









Transactions and other, net

(0.3)


(0.8)


(0.7)


(9.7)


Litigation expenses

(0.0)


(1.0)


(0.0)


(3.2)


Debt extinguishment, net

(0.1)


0.6


(1.0)


0.6










(7)

Impairment charges:









Assets marketed for sale

(0.0)


(7.6)


(179.7)


(19.5)


Land previously held for development

(0.0)


(3.5)


(99.3)


(18.6)































DDR Corp.

Financial Statements:  Footnotes





$ in millions, except per share




Includes discontinued operations

4Q15


4Q14


12M15


12M14










(8)

Discontinued operations:









Revenues

n/a 


$3.2


n/a 


$39.5


Expenses

n/a 


(2.0)


n/a 


(21.0)


Impairments

n/a 


(0.0)


n/a 


(8.9)


Depreciation

n/a 


(1.4)


n/a 


(16.2)


Gain on disposition of real estate, net

n/a 


21.7


n/a 


96.0


Net income

n/a 


21.5


n/a 


89.4




Note:  Presented only for 2014 as DDR adopted 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)


0.9


(1.4)


2.8


Operating FFO attributable to non-controlling interests

(0.2)


(0.1)


(1.0)


(0.8)










(10)

Non-operating items excluded from Operating FFO:









Non-cash impairment charges – non-depreciable assets

0.0


25.0


99.3


49.3


Executive separation charges

0.3


5.4


2.6


5.6


Transaction, debt extinguishment, litigation, other, net

0.7


1.8


2.3


13.7


Joint ventures – transaction, currency, other

0.2


0.9


0.2


1.1


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

0.0


(0.3)


(7.8)


(4.3)


Tax expense (primarily Puerto Rico restructuring)

0.0


0.0


4.4


0.0


Gain on sale of non-depreciable real estate, net

(3.7)


(1.5)


(3.1)


(6.5)


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

0.0


0.0


0.0


1.9



(2.5)


31.3


97.9


60.8

(11)

Outstanding per share information:









Common shares (at quarter end)

365.3


360.7


365.3


360.7


OP units (at quarter end)

0.4


1.4


0.4


1.4


Total shares and units (at quarter end)

365.7


362.1


365.7


362.1


Weighted average shares and units – Basic – EPS

362.7


359.0


360.9


358.1


Assumed conversion of dilutive securities

2.5


0.0


0.0


0.0


Weighted average shares and units – Diluted – EPS

365.2


359.0


360.9


358.1


Weighted average shares and units – Basic – FFO & OFFO

364.0


361.9


362.9


360.6


Assumed conversion of dilutive securities

0.4


0.5


0.4


0.5


Weighted average shares and units – Diluted – FFO & OFFO

364.4


362.4


363.3


361.1


Earnings per common share – Basic & Diluted

$0.24


$(0.05)


$(0.27)


$0.25


FFO per share – Basic & Diluted

$0.32


$0.22


$0.96


$1.00


Operating FFO per share – Diluted

$0.31


$0.31


$1.23


$1.16


Common stock dividends declared, per share

$0.1725


$0.155


$0.69


$0.62













DDR Corp.

Financial Statements:  Footnotes









$ in millions, except per share








Includes discontinued operations

4Q15


4Q14


12M15


12M14










(12)

Intangible assets, net (at year end)





$311.0


$389.2










(13)

Loan costs, net (at year end)





23.8


22.5




Note:  DDR adopted new accounting guidance, which changed the presentation requirements retroactively.  Loan costs for term debt are now required to be presented as a direct deduction from the related debt liability rather than as an asset.










(14)

Below-market leases, net (at year end)





155.3


139.3










Additional financial information:


















Capital expenditures (DDR share):









Retenanting

$12.9


$8.5


$49.0


$39.0


Maintenance – total

2.9


5.2


16.2


14.4


Maintenance PSF of owned GLA – non reimbursable





0.13


0.14











Miscellaneous (DDR share):









Est. value of land owned adjacent to existing centers (at 12/31/15)





26.0




Cost basis of headquarters (non-income producing at 12/31/15)





40.0












 

SOURCE DDR Corp.



RELATED LINKS

http://www.ddr.com