Developers Diversified Announces Year-End Update and Guidance for 2010
January 12 2010 - 6:00PM
PR Newswire (US)
CLEVELAND, Jan. 12 /PRNewswire-FirstCall/ -- Developers Diversified
Realty Corporation (NYSE:DDR) today announced an update on 2009
accomplishments as well as its outlook for 2010. In 2009, the
Company completed the following transactions and financing
activities, totaling $2.0 billion of capital raised: -- Sold $320
million of common equity, $113 million to the Otto Group and $207
million through the continuous equity program -- Completed
approximately $590 million in asset sales, of which the Company's
share was approximately $380 million -- Purchased approximately
$816 million face value of its senior unsecured notes in the
aggregate through tender offers and through open market purchases
at a discount to par of approximately $172 million -- Issued $300
million face value of 9.625%, 7-year senior unsecured notes --
Redeemed its interest in the MDT US LLC joint venture -- Generated
approximately $250 million in retained capital -- Raised over $600
million in new mortgage capital, with a weighted average term of
5.6 years and a weighted average cost of 5.5% -- Repaid
approximately $350 million of consolidated mortgage debt with a
weighted average term of 2.2 years -- Eliminated approximately $1.3
billion of unconsolidated mortgage debt with a weighted average
term of 3.1 years (Company's pro-rata share was $312 million) In
addition, the Company accomplished the following operational
activities: -- Leased over 10.5 million square feet of retail space
-- Re-tenanted or sold over 30% of the 7.5 million square feet
vacated by bankrupt retailers in late 2008 and 2009 -- Increased
core portfolio leased rate to over 91% at year-end -- Improved
portfolio quality through the disposition of non-prime assets --
Reduced leasing capital expenditure per square foot by more than
25% from 2008 -- Reduced development expenditures by 65% from 2008
-- Increased portfolio ancillary income by 30% from 2008 to over
$30 million -- Opened Manauara Shopping mall in Brazil in April at
96% leased -- Decreased recurring general and administrative
expenses by approximately $3 million, or 3.5% from 2008 Through all
of these activities, plus free cash flow from operations, the
Company reduced total consolidated debt to $5.2 billion, an
approximate $700 million reduction from year-end 2008. In addition,
the Company extended its weighted average debt maturity to more
than three years. The Company's 2010 wholly-owned mortgage debt
maturities, excluding loans with extension options, now total
approximately $36 million and the Company's 2010 unsecured debt
maturities now total approximately $329 million. Approximately $530
million is currently available for borrowing on the Company's
revolving credit facilities. Excluding certain estimated
non-operating net charges, the Company expects 2009 operating funds
from operations to approximate between $1.83 and $1.85 per diluted
share. The decrease from 2009 funds from operations per share
guidance provided via press release on September 21, 2009, is due
in part to a loss on the sale of land and higher interest cost in
the fourth quarter. Including certain estimated non-operating net
charges, the Company expects 2009 funds from operations ("FFO") to
range between a loss of ($0.89) and ($0.92) per diluted share. The
net charges relate primarily to non-cash losses on equity
derivative instruments and impairment charges partially offset by
gains on the repurchase of debt. 2010 Guidance The Company expects
2010 FFO per diluted share to be approximately $1.05 - $1.15. The
assumptions that drive this guidance include the following: -- Same
store net operating income projected to be approximately flat --
Year-end leased rate increasing 100 basis points, resulting in a
leased rate above 92% -- $150 million of asset sales --
Approximately $84 million in general and administrative expenses
annually, a reduction of $10 million, or 11%, from 2008 --
Ancillary income increase of approximately 17% -- Common share
dividend to be paid at the minimum level required to maintain REIT
status -- Opportunistic capital raising activity to improve
liquidity, extend debt maturities and lower overall leverage In
addition, the Company projects that it will lower its debt to
EBITDA ratio, including its pro rata share of joint venture debt
and EBITDA, to the mid-8x range and projects that it will lower
this ratio on a consolidated basis to the mid-7x range. The Company
also expects that it will reduce total consolidated debt to
approximately $4.4 billion by year end 2010. In the Company's
continued effort to improve transparency and simplify its earnings
model, 2010 guidance and guidance going forward will not include
gains and losses on all asset sales and gains on the repurchase of
senior notes. Historically, these gains and losses have represented
more than 10% of FFO on an annual basis. Daniel B. Hurwitz,
President and Chief Executive Officer, commented, "While we are
pleased with what was accomplished in 2009, we acknowledge that
there is much more progress to be made. In 2010, we will continue
to focus on aggressively leasing vacant space, improving the
quality of our portfolio, prudently reducing leverage, and further
enhancing liquidity as we continue positioning our Company for
recovery and growth." Developers Diversified owns and manages
approximately 665 retail operating and development properties in 44
states, Brazil, Canada and Puerto Rico. Totaling approximately 147
million square feet, the Company's shopping center portfolio
features open-air, value-oriented neighborhood and community
centers, mixed-use centers and lifestyle centers located in prime
markets with stable populations and high-growth potential.
Developers Diversified is the largest landlord in Puerto Rico and
owns a premier portfolio of regional malls in and around Sao Paulo,
Brazil. Developers Diversified is a self-administered and
self-managed REIT operating as a fully integrated real estate
company. Additional information about the Company is available on
the Internet at http://www.ddr.com/. Developers Diversified Realty
Corporation considers portions of this information 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 sell assets on
commercially reasonable terms; 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 outcome of pending or
future litigation, including litigation with tenants or joint
venture partners; the completion of our financial statements for
the year ended December 31, 2009; and the assumptions underlying
our guidance for 2010 may be incorrect or may not occur. For
additional factors that could cause the results of the Company to
differ materially from these indicated in the forward-looking
statements, please refer to the Company's Form 10-K as of December
31, 2008. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date hereof. DATASOURCE: Developers
Diversified Realty Corporation CONTACT: Kate Deck, Investor
Relations Director, Developers Diversified, +1-216-755-5500, Web
Site: http://www.ddr.com/
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