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