DDR CORP BEACHWOOD, Ohio, April 28, 2016 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the first quarter ended March 31, 2016.
(Logo: http://photos.prnewswire.com/prnh/20131217/DDRLOGO )
Financial Highlights
-- First quarter operating funds from operations attributable to common
shareholders ("Operating FFO") increased $7.1 million to $114.2 million,
or $0.31 per diluted share, compared to $107.1 million, or $0.30 per
diluted share, for the prior-year comparable period.
-- First quarter net income attributable to common shareholders was $40.0
million, or $0.11 per diluted share, compared to net loss of $249.4
million, or $0.69 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 301 new leases and renewals for 1.9 million square feet
-- Generated new leasing spreads of 19.5% and renewal leasing spreads of
8.7%, both on a pro rata basis
-- Increased the portfolio leased rate by 10 basis points to 96.1% at March
31, 2016, from 96.0% at December 31, 2015 and 95.8% at March 31, 2015,
on a pro rata basis
-- Increased the annualized base rent per occupied square foot by 4.0% on a
pro rata basis to $14.86 at March 31, 2016, from $14.29 at March 31,
2015
-- Acquired one prime power center in Phoenix, Arizona, for $61 million
-- Sold 16 operating assets and three land parcels totaling $224 million at
DDR's share
-- Repaid $240 million, 9.625% unsecured notes at maturity in March 2016
"I am extremely pleased with our operational and transactional execution in the first quarter. The portfolio evolution is nearly completed as we remain on track for our disposition guidance, and the results of these transactional efforts were on display as same-store NOI was strong at 3.4%," commented David J. Oakes, president and chief executive officer of DDR.
2016 Guidance
The Company is raising the lower end of the range of its 2016 Operating FFO and NAREIT defined FFO to a revised estimated range of $1.20 to $1.25 per diluted share from a range of $1.19 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 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.
About DDR Corp.
DDR is an owner and manager of 352 value-oriented shopping centers representing 113 million square feet in 37 states and Puerto Rico. The Company's assets are concentrated in high barrier-to-entry markets with stable population 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.
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, April 29, 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.
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; redevelopment and construction activities may not achieve a desired return 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 March 31, 2016. 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, 2015. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
DDR Corp.
Income Statement: Consolidated Interests
$ in thousands, except per share 1Q16 1Q15
---- ----
Consolidated Share of JVs Prorata Consolidated Share of JVs Prorata
------------ ------------ ------- ------------ ------------ -------
Revenues:
Minimum rents (1) $177,367 $13,645 $191,012 $180,697 $15,078 $195,775
Percentage rent 1,936 27 1,963 1,385 100 1,485
Recoveries 61,599 4,228 65,827 64,080 4,671 68,751
Other property revenues (2) 5,343 155 5,498 4,589 371 4,960
----- --- ----- ----- --- -----
246,245 18,055 264,300 250,751 20,220 270,971
Expenses (3):
Operating and maintenance 36,508 2,717 39,225 38,726 3,146 41,872
Real estate taxes 36,534 2,598 39,132 37,629 2,756 40,385
------ ----- ------ ------ ----- ------
73,042 5,315 78,357 76,355 5,902 82,257
Net operating income 173,203 12,740 185,943 174,396 14,318 188,714
Other income (expense):
Fee income 8,178 (935) 7,243 8,074 (982) 7,092
Interest income 9,050 (413) 8,637 7,161 (316) 6,845
Interest expense (4) (57,897) (5,298) (63,195) (63,020) (5,926) (68,946)
Depreciation and amortization (96,902) (5,549) (102,451) (103,015) (7,098) (110,113)
General and administrative (5) (17,876) 0 (17,876) (18,595) 0 (18,595)
Other income (expense), net (6) 1,773 (48) 1,725 (3,428) (49) (3,477)
Impairment charges (7) 0 0 0 (279,021) (90) (279,111)
--- --- --- -------- --- --------
Income before earnings from JVs and other 19,529 497 20,026 (277,448) (143) (277,591)
Equity in net income of JVs 14,421 (14,421) 0 61 (61) 0
Basis differences of JVs 0 3,229 3,229 0 177 177
Gain on change in control 0 0 0 14,279 0 14,279
Tax expense (458) 0 (458) (4,900) 0 (4,900)
Gain on disposition of real estate, net 12,381 10,695 23,076 25,094 27 25,121
------ ------ ------ ------ --- ------
Net income (loss) 45,873 0 45,873 (242,914) 0 (242,914)
Non-controlling interests (300) 0 (300) (873) 0 (873)
---- --- ---- ---- --- ----
Net income (loss) DDR 45,573 0 45,573 (243,787) 0 (243,787)
Preferred dividends (5,594) (5,594)
------ ------
Net income (loss) Common Shareholders 39,979 (249,381)
Depreciation and amortization of real estate 94,854 100,867
Equity in net income of JVs (14,421) (61)
JVs' FFO 6,150 7,017
Non-controlling interests 76 249
Impairment of depreciable real estate 0 179,748
Gain on disposition of depreciable real (12,096) (25,236)
estate, net
FFO Common Shareholders 114,542 13,203
Non-operating items, net (8) (314) 93,930
---- ------
Operating FFO $114,228 $107,133
FFO per share - Diluted (9) $0.31 $0.04
Operating FFO per share - Diluted (9) $0.31 $0.30
DDR Corp.
Balance Sheet: Consolidated Interests
$ in thousands At Period End
1Q16 4Q15
---- ----
Consolidated Share of JVs Prorata Consolidated Share of JVs Prorata
------------ ------------ ------- ------------ ------------ -------
Assets:
Land $2,145,471 $174,406 $2,319,877 $2,184,145 $181,843 $2,365,988
Buildings 6,908,815 470,734 7,379,549 6,965,632 491,662 7,457,294
Fixtures and tenant improvements 744,059 29,574 773,633 743,037 31,105 774,142
------- ------ ------- ------- ------ -------
9,798,345 674,714 10,473,059 9,892,814 704,610 10,597,424
Depreciation (2,060,005) (147,979) (2,207,984) (2,062,899) (152,035) (2,214,934)
---------- -------- ---------- ---------- -------- ----------
7,738,340 526,735 8,265,075 7,829,915 552,575 8,382,490
Construction in progress and land 174,736 5,916 180,652 235,385 5,654 241,039
------- ----- ------- ------- ----- -------
Real estate, net 7,913,076 532,651 8,445,727 8,065,300 558,229 8,623,529
Investments in JVs 68,422 2,335 70,757 72,576 636 73,212
Preferred equity interest 398,410 0 398,410 395,156 0 395,156
Cash 23,720 9,146 32,866 22,416 7,815 30,231
Restricted cash 10,515 949 11,464 10,104 803 10,907
Notes receivable, net 42,592 0 42,592 42,534 0 42,534
Receivables, net 125,473 6,595 132,068 129,089 8,151 137,240
Other assets, net (10) 353,419 21,028 374,447 359,913 21,598 381,511
------- ------ ------- ------- ------ -------
Total Assets 8,935,627 572,704 9,508,331 9,097,088 597,232 9,694,320
Liabilities and Equity:
Revolving credit facilities 350,000 0 350,000 210,000 0 210,000
Unsecured debt 2,910,307 0 2,910,307 3,149,188 0 3,149,188
Unsecured term loan 398,050 0 398,050 397,934 0 397,934
Secured debt 1,373,316 425,419 1,798,735 1,382,415 441,918 1,824,333
--------- ------- --------- --------- ------- ---------
5,031,673 425,419 5,457,092 5,139,537 441,918 5,581,455
Dividends payable 75,042 0 75,042 68,604 0 68,604
Other liabilities (11) 389,991 18,833 408,824 425,478 19,686 445,164
------- ------ ------- ------- ------ -------
Total Liabilities 5,496,706 444,252 5,940,958 5,633,619 461,604 6,095,223
JVs share of equity 0 22,255 22,255 0 20,393 20,393
Preferred shares 350,000 0 350,000 350,000 0 350,000
Common shares 36,537 0 36,537 36,529 0 36,529
Paid-in capital 5,470,030 0 5,470,030 5,466,511 0 5,466,511
Distributions in excess of net income (2,421,296) 106,197 (2,315,099) (2,391,793) 115,235 (2,276,558)
Deferred compensation 15,471 0 15,471 15,537 0 15,537
Other comprehensive income (5,485) 0 (5,485) (6,283) 0 (6,283)
Common shares in treasury at cost (14,854) 0 (14,854) (15,316) 0 (15,316)
Non-controlling interests 8,518 0 8,518 8,284 0 8,284
----- --- ----- ----- --- -----
Total Equity 3,438,921 128,452 3,567,373 3,463,469 135,628 3,599,097
Total Liabilities and Equity $8,935,627 $572,704 $9,508,331 $9,097,088 $597,232 $9,694,320
DDR Corp.
Income Statement: Unconsolidated Interests at 100%
$ in thousands
1Q16 1Q15
---- ----
Revenues:
Minimum rents $96,575 $103,737
Percentage rent 331 589
Recoveries 29,969 30,859
Other property revenues 1,035 2,415
----- -----
127,910 137,600
Expenses:
Operating and maintenance 18,999 20,695
Real estate taxes 18,657 18,271
------ ------
37,656 38,966
Net operating income 90,254 98,634
Other income (expense):
Interest expense (33,322) (40,903)
Depreciation and amortization (49,035) (56,737)
Impairment charges 0 (448)
Preferred share expense (8,264) (6,314)
Other (expense) income, net (5,811) (6,069)
------ ------
(6,178) (11,837)
Gain (loss) on disposition of real estate, net 53,483 (213)
------ ----
Net income (loss) attributable to unconsolidated JVs 47,305 (12,050)
Depreciation and amortization 49,035 56,737
Impairment of depreciable real estate 0 448
(Gain) loss on disposition of depreciable real estate, net (53,483) 213
------- ---
FFO 42,857 45,348
FFO at DDR's ownership interests 6,150 7,017
Operating FFO at DDR's ownership interests 6,150 7,022
DDR Corp.
Balance Sheet: Unconsolidated Interests at 100%
$ in thousands
At Period End
1Q16 4Q15
---- ----
Assets:
Land $1,306,704 $1,343,889
Buildings 3,446,655 3,551,227
Improvements 184,497 191,581
------- -------
4,937,856 5,086,697
Depreciation (807,415) (817,235)
-------- --------
4,130,441 4,269,462
Land held for development and construction in progress 54,846 52,390
------ ------
Real estate, net 4,185,287 4,321,852
Cash and restricted cash 69,576 58,916
Receivables, net 45,077 52,768
Other assets, net 304,255 318,546
------- -------
Total Assets 4,604,195 4,752,082
Liabilities and Equity:
Mortgage debt 3,119,992 3,177,603
Notes and accrued interest payable to DDR 2,577 1,556
Other liabilities 212,237 219,799
------- -------
Total Liabilities 3,334,806 3,398,958
Redeemable preferred equity 398,410 395,156
Accumulated equity 870,979 957,968
------- -------
Total Liabilities and Equity $4,604,195 $4,752,082
DDR Corp.
Financial Statements: Footnotes
$ in millions, except per share
1Q16 1Q15
---- ----
(1) Minimum rents:
Straight-line rent, net $1.3 $1.4
Below-market rent, net 0.3 0.3
Ground lease revenue 10.1 9.1
(2) Other property revenues:
Lease termination fees 1.2 0.2
(3) Operating expenses:
Recoverable expenses (66.1) (70.2)
Non-recoverable expenses (6.9) (6.2)
Straight-line ground rent expense (0.1) (0.3)
Expensed costs of suspended developments (0.1) (0.1)
(4) Non-cash interest expense:
Debt fair value amortization 1.6 5.3
Loan cost amortization (2.2) (2.5)
Interest expense (capitalized) 1.2 1.6
(5) General and administrative expenses:
Stock compensation expenses (1.6) (2.2)
Internal leasing expenses (2.1) (2.0)
Construction administrative costs (capitalized) 2.0 2.4
(6) Other income (expense):
Transactions and other, net (1.8) (0.1)
Debt extinguishment, net (0.0) (3.3)
(7) Impairment charges:
Assets marketed for sale (0.0) (179.7)
Land previously held for development (0.0) (99.3)
(8) Non-operating items excluded from Operating FFO:
Non-cash impairment charges - non-depreciable assets 0.0 99.3
Transaction, debt extinguishment, litigation, other, net 0.0 3.9
Non-cash gain on sale and change in control of interests, net 0.0 (14.3)
Tax expense (primarily Puerto Rico restructuring) 0.0 4.4
(Gain) loss on sale of non-depreciable real estate, net (0.3) 0.6
(0.3) 93.9
DDR Corp.
Financial Statements: Footnotes
$ in millions, except per share
1Q16 1Q15
---- ----
(9) Outstanding per share information:
Common shares (at quarter end) 365.4 361.0
OP units (at quarter end) 0.4 1.4
Total shares and units (at quarter end) 365.8 362.4
Weighted average shares and units - Basic - EPS 364.7 359.8
Assumed conversion of dilutive securities 0.3 0.0
Weighted average shares and units - Diluted - EPS 365.0 359.8
Weighted average shares and units - Basic - FFO & OFFO 365.7 362.4
Assumed conversion of dilutive securities 0.3 0.6
Weighted average shares and units - Diluted - FFO & OFFO 366.0 363.0
Earnings per common share - Basic & Diluted $0.11 $(0.69)
FFO per share - Basic & Diluted $0.31 $0.04
Operating FFO per share - Diluted $0.31 $0.30
Common stock dividends declared, per share $0.19 $0.1725
(10) Intangible assets, net (at quarter and year end) 295.8 311.0
(11) Below-market leases, net (at quarter and year end) 155.2 155.3
Additional financial information:
Capital expenditures (DDR share):
Retenanting $8.4 $12.0
Maintenance - total 1.0 1.5
Maintenance PSF of owned GLA - non reimbursable 0.01 0.02
Miscellaneous (DDR share):
Est. value of land owned adjacent to existing centers $26
Cost basis of headquarters (non-income producing) 40
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SOURCE DDR Corp.
