BEACHWOOD, Ohio, July 31, 2013 /PRNewswire/ -- DDR Corp.
(NYSE: DDR) today announced operating results for the second
quarter ended June 30, 2013.
(Logo: http://photos.prnewswire.com/prnh/20110912/CL65938LOGO
)
SIGNIFICANT SECOND QUARTER ACTIVITY
- Generated Operating FFO of $0.27
per diluted share, an increase of 8.0% compared to second quarter
of 2012
- Executed 461 new leases and renewals for 2.8 million square
feet
- Increased the portfolio leased rate by 20 basis points to 94.6%
at June 30, 2013 from 94.4% at
March 31, 2013 and by 90 basis points
from 93.7% at June 30, 2012
- Generated positive leasing spreads, with new leases up 12.0% at
100% ownership and 12.8% on a pro rata basis, and renewals up 7.0%
at 100% ownership and 7.7% on a pro rata basis; blended spreads
were up 7.9% at 100% ownership and 8.6% on a pro rata basis
- Generated same store net operating income growth of 3.1% at
100% ownership and 3.0% on a pro rata basis as compared to the
prior year
- Opened Belgate Shopping Center, a 100% leased,
900,000-square-foot prime power center located in Charlotte,
North Carolina, anchored by IKEA,
Walmart and a complementary line-up of junior anchors including
Marshalls, ULTA, Old Navy, Petco, World
Market, Hobby Lobby and Shoe Carnival
- Acquired $106 million of prime
assets
- Completed the disposition of $64
million of non-prime assets; DDR's pro rata gross proceeds
were $60 million
- Issued $45 million of common
shares to fund the net investment in prime assets
- Issued $150 million of 6.250%
Class K preferred shares, the net proceeds of which were used to
redeem $150 million of 7.375% Class H
preferred shares
- Entered into an agreement to acquire 30 prime assets from its
existing joint venture with an affiliate of The Blackstone Group
L.P. ("Blackstone"), which is
expected to close in the fourth quarter of 2013
- Issued $300 million of 3.375%
senior unsecured notes due 2023 and entered into forward sale
agreements to sell 39.1 million common shares for gross proceeds of
$739 million to fund the Blackstone transaction. The Company
expects to settle the forward sale agreements no later than
October 31, 2013
"We are very pleased with the consistently strong performance of
our assets during the quarter and year-to-date. The day-to-day
momentum within the portfolio combined with opportunistic
transactional activity and support from the capital markets has
enabled continued execution of our strategic objectives for the
benefit of all stakeholders," commented DDR's chief executive
officer, Daniel B.
Hurwitz.
FINANCIAL HIGHLIGHTS
The Company's second quarter
Operating Funds From Operations attributable to common shareholders
("Operating FFO") increased to $86.1
million, or $0.27 per diluted
share, which compares to $71.6
million, or $0.25 per diluted
share, for the prior-year comparable period. The increase in
Operating FFO for the three-month period ended June 30, 2013, as compared to the same period in
2012, primarily is due to organic growth and shopping center
acquisitions, partially offset by asset dispositions.
Funds From Operations attributable to common shareholders
("FFO") for the three-month period ended June 30, 2013, increased to $80.0 million, or $0.25 per diluted share, which compares to
$78.1 million, or $0.27 per diluted share, for the prior-year
comparable period. The increase in FFO for the three-month
period ended June 30, 2013, as
compared to the same period in 2012, primarily is due to the same
factors impacting Operating FFO, as well as a reduction in
impairment charges of non-depreciable assets and the loss on debt
retirement related to the Company's repurchase of unsecured senior
notes partially offset by the write-off of the original issuance
costs from the redemption of the Company's 7.375% Class H
cumulative redeemable preferred shares ("Class H Preferred Shares")
in 2013 and the gain on change in control of interests recorded in
2012.
Operating FFO for the six-month period ended June 30, 2013 increased to $172.1 million, or $0.54 per diluted share, which compares to
$138.4 million, or $0.49 per diluted share, for the prior-year
comparable period. The increase in Operating FFO for the
six-month period ended June 30, 2013,
as compared to the same period in 2012, primarily is due to the
same factors impacting Operating FFO for the three-month
period.
FFO for the six-month period ended June
30, 2013 increased to $162.5
million, or $0.51 per diluted
share, which compares to $137.8
million, or $0.49 per diluted
share, for the prior-year comparable period. The increase in
FFO for the six-month period ended June 30,
2013, as compared to the same period in 2012, primarily is
due to the same factors impacting FFO for the three-month
period.
Net loss attributable to common shareholders for the three-month
period ended June 30, 2013, was
$36.0 million, or $0.11 per diluted share, which compares to net
loss of $44.5 million, or
$0.16 per diluted share, for the
prior-year comparable period. Net loss attributable to common
shareholders for the six-month period ended June 30, 2013, was $36.8
million, or $0.12 per diluted
share, which compares to net loss of $66.5
million, or $0.24 per diluted
share, for the prior-year comparable period. The decrease in
net loss attributable to common shareholders for the three- and
six-month periods ended June 30,
2013, as compared to the same periods in 2012, primarily is
due to the same factors impacting FFO.
LEASING & PORTFOLIO OPERATIONS
The following
results for the three-month period ended June 30, 2013, highlight continued strong leasing
activity throughout the portfolio:
- Executed 190 new leases aggregating approximately 0.9 million
square feet and 271 renewals aggregating 1.9 million square
feet
- Generated positive leasing spreads for the second quarter, with
new leases up 12.0% at 100% ownership and 12.8% on a pro rata
basis, and renewals up 7.0% at 100% ownership and 7.7% on a pro
rata basis; blended spreads were up 7.9% at 100% ownership and 8.6%
on a pro rata basis
- The portfolio leased rate increased to 94.6% at June 30, 2013, as compared to 94.4% at
March 31, 2013 and 93.7% at
June 30, 2012
- Same store net operating income ("NOI") increased by 3.1% at
100% ownership for the three-month period ended June 30, 2013 as compared to the prior-year
comparable period and 3.0% on a pro rata basis
In May 2013, the Company opened
Belgate Shopping Center, a 100% leased, 900,000-square-foot prime
power center located in Charlotte, North
Carolina, anchored by IKEA, Walmart and a complementary
line-up of junior anchors including Marshalls, ULTA, Old Navy,
Petco, World Market, Hobby Lobby and Shoe Carnival. The project,
which was initially acquired in June
2012, was completed ahead of schedule with a total net
projected cost of $20 million.
ACQUISITIONS & FINANCINGS
In May 2013, the Company entered into a purchase
agreement to acquire its partner's 95% interest in a portfolio of
30 prime shopping centers. The acquisition, which is expected
to close in the fourth quarter of 2013, is subject to customary
closing conditions. The portfolio is comprised primarily of
market dominant prime power centers located in top 40 MSA's and
includes Shoppers World in Boston,
Woodfield Village Green in Chicago, Fairfax Towne Center in Washington DC, and Riverdale Village in Minneapolis. The
properties have been owned, developed, leased and managed through
various ventures since 1995. The portfolio is comprised of
11.8 million total square feet, is 95% leased, and consists of
large format centers with an average size of approximately 400,000
square feet, 20% larger than the average DDR prime power center.
In April 2013, the Company
acquired its partner's 85% interest in five prime unencumbered
power centers for $94 million.
The Company funded its investment primarily with proceeds from
asset sales and the issuance of common equity. The
acquisitions include The Walk at Highwoods Preserve (Tampa, FL), Douglasville Pavilion
(Atlanta, GA), Commonwealth Center
and Chesterfield Crossing (Richmond,
VA) and Jefferson Plaza
(Newport News, VA). The 1.3
million square foot, 98% leased portfolio is anchored by national
high credit quality retailers such as Walmart, Target, Costco, Home
Depot, T.J. Maxx, Ross Dress for Less, PetSmart, The Fresh Market,
and Pier One.
In the second quarter of 2013, the Company originated
$28.5 million of mezzanine loans on
two retail assets in Chicago. These loans are secured by a
development project and a stabilized prime shopping center.
The interest rates are 9.5% and 9.0%, respectively.
In the second quarter of 2013, the Company issued 2.5 million
new common shares at a weighted-average price of $17.83 per share, generating gross proceeds of
$45 million, which were used to
partially fund the acquisition of five prime assets.
In May 2013, the Company issued
$300 million aggregate principal
amount of 3.375% senior unsecured notes due May 2023. The Company also entered into
forward sale agreements to issue 39.1 million common shares at a
price of $18.90 per share. The
Company expects to settle the forward sale agreements no later than
October 31, 2013. The net
proceeds from these two financings are expected to be used to fund
the Blackstone acquisition.
In April 2013, the Company issued
$150 million of 6.250% Class K
cumulative redeemable preferred shares at a price of $25.00 per depositary share. In addition,
the Company redeemed $150 million of
its Class H Preferred Shares at a redemption price of $25.1127 per depositary share (the sum of
$25.00 per depositary share and
dividends per share of $0.1127
prorated to the redemption date). The Company recorded a
non-cash charge of $5.2 million to
net income attributable to common shareholders in the second
quarter of 2013 related to the prorated write-off of the Class H
Cumulative Redeemable Preferred Shares' original issuance
costs.
DISPOSITIONS
In the second quarter of 2013, the
Company sold 10 consolidated operating shopping centers,
aggregating approximately 0.5 million square feet, plus non-income
producing assets generating gross proceeds of approximately
$59.3 million. The Company's
unconsolidated joint ventures sold one operating shopping center
aggregating approximately 0.1 million square feet generating gross
proceeds of approximately $5.1
million. The Company's pro rata share of the gross
proceeds was $60 million and it
recorded an aggregate net loss of approximately $3.6 million related to asset sales in the second
quarter of 2013.
2013 GUIDANCE
There has been no change in Operating
FFO per share guidance since the last update provided on
May 15, 2013, when the Company raised
the bottom end of the range from $1.07 to
$1.08. The Company continues to estimate Operating FFO
for 2013 between $1.08 and $1.11 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 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, (iv)
extraordinary items and (v) 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 above. 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 in the
financial highlights section of the Company's quarterly
supplement.
SAFE HARBOR
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,
our ability to successfully complete the proposed acquisition of
properties from the Blackstone
joint venture, 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; the
success of our capital recycling strategy; and the finalization of
the financial statements for the three-month period ended
June 30, 2013. 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.
ABOUT DDR CORP.
DDR is an owner and manager of 435
value-oriented shopping centers representing 115 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, Facebook and Pinterest.
CONFERENCE CALL INFORMATION & SUPPLEMENTAL
MATERIALS
A copy of the Company's Supplemental
Financial/Operational package is available to all interested
parties upon request to Samir
Khanal, 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,
August 1, 2013, at 10:00 a.m. Eastern Time. To participate,
please dial 877.415.3181 (domestic), or 857.244.7324
(international) at least ten minutes prior to the scheduled start
of the call. When prompted, provide the passcode:
80759747. Access to the live call and replay will also be
available through the Company's website. The replay will be
available through August 8, 2013.
DDR Corp.
Financial Highlights
(In Thousands)
|
|
|
|
|
|
Three-Month
Periods
Ended June
30,
|
|
Six-Month
Periods
Ended June
30,
|
Revenues:
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Minimum
rents
|
$ 146,988
|
|
$ 130,803
|
|
$ 290,154
|
|
$ 257,671
|
Percentage and
overage rents
|
720
|
|
613
|
|
2,469
|
|
1,994
|
Recoveries from
tenants
|
46,813
|
|
41,284
|
|
93,711
|
|
83,300
|
Ancillary and other
property income
|
7,477
|
|
6,640
|
|
13,158
|
|
12,641
|
Management,
development and other fee income
|
10,191
|
|
11,222
|
|
20,912
|
|
22,976
|
Other
(A)
|
4,898
|
|
132
|
|
5,526
|
|
707
|
|
217,087
|
|
190,694
|
|
425,930
|
|
379,289
|
Expenses:
|
|
|
|
|
|
|
|
Operating and
maintenance
|
34,290
|
|
30,151
|
|
67,567
|
|
62,750
|
Real estate
taxes
|
27,677
|
|
24,883
|
|
55,146
|
|
49,412
|
Impairment charges
(B)
|
34,439
|
|
42,101
|
|
37,525
|
|
42,132
|
General and
administrative
|
20,117
|
|
19,131
|
|
39,877
|
|
38,144
|
Depreciation and
amortization
|
69,887
|
|
62,247
|
|
138,331
|
|
120,315
|
|
186,410
|
|
178,513
|
|
338,446
|
|
312,753
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
income
|
5,797
|
|
2,328
|
|
13,674
|
|
4,168
|
Interest expense
(C)
|
(55,816)
|
|
(53,685)
|
|
(110,240)
|
|
(108,722)
|
Loss on debt
retirement, net
|
—
|
|
(7,892)
|
|
—
|
|
(13,495)
|
Other income
(expense), net (D)
|
1,895
|
|
(3,656)
|
|
(1,006)
|
|
(5,233)
|
|
(48,124)
|
|
(62,905)
|
|
(97,572)
|
|
(123,282)
|
Loss before earnings
from equity method
investments and other items
|
(17,447)
|
|
(50,724)
|
|
(10,088)
|
|
(56,746)
|
Equity in net (loss)
income of joint ventures
|
(1,191)
|
|
3,232
|
|
1,763
|
|
11,480
|
Impairment of joint
venture investments (B)
|
—
|
|
—
|
|
—
|
|
(560)
|
Gain on change in
control of interests
|
1,066
|
|
39,348
|
|
1,066
|
|
39,348
|
Tax expense of
taxable REIT subsidiaries and state
franchise and income taxes
|
(1,716)
|
|
(367)
|
|
(2,083)
|
|
(544)
|
Loss from continuing
operations
|
(19,288)
|
|
(8,511)
|
|
(9,342)
|
|
(7,022)
|
Loss from
discontinued operations (E)
|
(2,305)
|
|
(34,103)
|
|
(5,700)
|
|
(51,138)
|
Loss before (loss)
gain on disposition of real estate
|
(21,593)
|
|
(42,614)
|
|
(15,042)
|
|
(58,160)
|
(Loss) gain on
disposition of real estate, net of tax
|
(1,525)
|
|
5,234
|
|
(1,582)
|
|
5,899
|
Net loss
|
(23,118)
|
|
(37,380)
|
|
(16,624)
|
|
(52,261)
|
Income attributable
to non-controlling interests
|
(195)
|
|
(120)
|
|
(386)
|
|
(296)
|
Net loss
attributable to DDR
|
$ (23,313)
|
|
$ (37,500)
|
|
$
(17,010)
|
|
$ (52,557)
|
Write-off of
preferred share original issuance
costs
(F)
|
(5,246)
|
|
—
|
|
(5,246)
|
|
—
|
Preferred
dividends
|
(7,475)
|
|
(6,967)
|
|
(14,505)
|
|
(13,934)
|
Net loss
attributable to common
shareholders
|
$ (36,034)
|
|
$ (44,467)
|
|
$
(36,761)
|
|
$ (66,491)
|
Funds From
Operations ("FFO"):
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
$ (36,034)
|
|
$ (44,467)
|
|
$
(36,761)
|
|
$ (66,491)
|
Depreciation and
amortization of real estate
investments
|
68,122
|
|
61,697
|
|
135,138
|
|
120,144
|
Equity in net loss
(income) of joint ventures
|
1,191
|
|
(3,232)
|
|
(1,763)
|
|
(11,480)
|
Impairment of
depreciable joint venture
investments
|
—
|
|
—
|
|
—
|
|
560
|
Joint ventures'
FFO
|
12,146
|
|
12,633
|
|
24,372
|
|
26,618
|
Non-controlling
interests (OP Units)
|
54
|
|
48
|
|
108
|
|
96
|
Impairment of
depreciable real estate assets
|
32,422
|
|
54,714
|
|
40,101
|
|
72,054
|
Loss (gain) on
disposition of depreciable real
estate, net
|
2,063
|
|
(3,320)
|
|
1,285
|
|
(3,680)
|
FFO attributable
to common
shareholders
|
79,964
|
|
78,073
|
|
162,480
|
|
137,821
|
Non-operating items,
net (G)
|
6,130
|
|
(6,461)
|
|
9,666
|
|
597
|
Operating
FFO
|
$
86,094
|
|
$
71,612
|
|
$ 172,146
|
|
$138,418
|
|
|
|
|
|
|
|
|
Earnings per share –
Diluted (H)
|
$
(0.11)
|
|
$
(0.16)
|
|
$ (0.12)
|
|
$
(0.24)
|
Funds From Operations
– Diluted (H)
|
$
0.25
|
|
$
0.27
|
|
$
0.51
|
|
$
0.49
|
Operating Funds From
Operations – Diluted (H)
|
$
0.27
|
|
$
0.25
|
|
$
0.54
|
|
$
0.49
|
DDR Corp.
Financial Highlights
(In Thousands)
|
|
|
|
|
Selected Balance
Sheet Data
|
|
|
|
|
June 30,
2013
|
|
December 31,
2012
|
Assets:
|
|
|
|
Real estate and
rental property:
|
|
|
|
Land
|
$
1,887,999
|
|
$
1,900,401
|
Buildings
|
5,868,717
|
|
5,773,961
|
Fixtures and tenant
improvements
|
522,103
|
|
489,626
|
|
8,278,819
|
|
8,163,988
|
Less: Accumulated
depreciation
|
(1,757,530)
|
|
(1,670,717)
|
|
6,521,289
|
|
6,493,271
|
Land held for
development and construction in progress
|
480,771
|
|
475,123
|
Real estate held for
sale, net
|
1,852
|
|
—
|
Real estate,
net
|
7,003,912
|
|
6,968,394
|
|
|
|
|
Investments in and
advances to joint ventures
|
597,182
|
|
613,017
|
Cash
|
41,718
|
|
31,174
|
Restricted
cash
|
23,524
|
|
23,658
|
Notes receivable,
net
|
71,076
|
|
68,718
|
Receivables,
including straight-line rent, net
|
113,669
|
|
126,228
|
Other assets,
net
|
281,638
|
|
224,648
|
|
$
8,132,719
|
|
$
8,055,837
|
|
|
|
|
Liabilities &
Equity:
|
|
|
|
Indebtedness:
|
|
|
|
Revolving credit
facilities
|
$
34,662
|
|
$
147,905
|
Unsecured
debt
|
2,450,592
|
|
2,147,097
|
Unsecured term
loan
|
350,000
|
|
350,000
|
Mortgage and other
secured debt
|
1,609,170
|
|
1,674,141
|
|
4,444,424
|
|
4,319,143
|
Dividends
payable
|
49,971
|
|
44,210
|
Other
liabilities
|
310,048
|
|
326,024
|
Total
liabilities
|
4,804,443
|
|
4,689,377
|
|
|
|
|
Preferred
shares
|
405,000
|
|
405,000
|
Common
shares
|
32,006
|
|
31,524
|
Paid-in-capital
|
4,714,508
|
|
4,629,257
|
Accumulated
distributions in excess of net income
|
(1,817,540)
|
|
(1,694,822)
|
Deferred compensation
obligation
|
16,442
|
|
15,556
|
Accumulated other
comprehensive income
|
(30,367)
|
|
(27,925)
|
Less: Common
shares in treasury at cost
|
(15,362)
|
|
(16,452)
|
Non-controlling
interests
|
23,589
|
|
24,322
|
Total
equity
|
3,328,276
|
|
3,366,460
|
|
$
8,132,719
|
|
$
8,055,837
|
|
DDR Corp.
Financial Highlights
|
|
(A) Other
revenues were comprised of the following (in millions):
|
|
|
|
Three-Month
Periods
Ended June 30,
|
|
Six-Month
Periods
Ended June
30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Lease termination
fees
|
|
$ 4.7
|
|
$ —
|
|
$ 5.2
|
|
$ 0.5
|
Other
miscellaneous
|
|
0.2
|
|
0.1
|
|
0.3
|
|
0.2
|
|
|
$ 4.9
|
|
$0.1
|
|
$ 5.5
|
|
$0.7
|
(B) The Company
recorded impairment charges on the following (in
millions):
|
|
|
|
Three-Month
Periods
Ended June 30,
|
|
Six-Month
Periods
Ended June
30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
Land held for
development
|
|
$
—
|
|
$
6.4
|
|
$
—
|
|
$
6.4
|
Undeveloped
land
|
|
2.6
|
|
19.1
|
|
2.6
|
|
19.1
|
Assets marketed for
sale
|
|
31.8
|
|
16.6
|
|
34.9
|
|
16.6
|
Total continuing
operations
|
|
34.4
|
|
42.1
|
|
37.5
|
|
42.1
|
|
|
|
|
|
|
|
|
|
Sold assets or assets
held for sale
|
|
0.5
|
|
38.1
|
|
5.1
|
|
55.5
|
Total discontinued
operations
|
|
0.5
|
|
38.1
|
|
5.1
|
|
55.5
|
Joint venture
investments
|
|
—
|
|
—
|
|
—
|
|
0.6
|
Total impairment
charges
|
|
$ 34.9
|
|
$ 80.2
|
|
$ 42.6
|
|
$ 98.2
|
(C) The Company
recorded the following in connection with its outstanding
convertible debt (in millions):
|
|
|
Three-Month
Periods
Ended June 30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Non-cash interest
expense related to
amortization of the debt discount
|
$ 2.7
|
|
$ 2.5
|
|
$ 5.3
|
|
$ 5.7
|
(D) Other income
(expenses) were comprised of the following (in
millions):
|
|
|
Three-Month
Periods
Ended June 30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Transaction and other
income (expenses)
|
$ —
|
|
$ (2.5)
|
|
$ (0.6)
|
|
$ (3.1)
|
Litigation-related
expenses
|
(0.4)
|
|
(0.8)
|
|
(0.7)
|
|
(1.5)
|
Debt extinguishment
gain (costs), net
|
2.3
|
|
(0.4)
|
|
0.3
|
|
(0.6)
|
|
$ 1.9
|
|
$ (3.7)
|
|
$ (1.0)
|
|
$ (5.2)
|
(E) The operating
results related to assets classified as discontinued operations are
summarized as follows (in millions):
|
|
|
Three-Month
Periods
Ended June
30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenues from
operations
|
$
1.8
|
|
$
5.7
|
|
$
4.5
|
|
$
13.9
|
|
|
|
|
|
|
|
|
Operating
expenses
|
0.6
|
|
1.9
|
|
1.4
|
|
5.4
|
Impairment
charges
|
0.5
|
|
38.1
|
|
5.1
|
|
55.5
|
Interest,
net
|
0.4
|
|
1.3
|
|
1.0
|
|
3.2
|
Depreciation and
amortization
|
0.5
|
|
1.7
|
|
1.2
|
|
4.2
|
Total
expenses
|
2.0
|
|
43.0
|
|
8.7
|
|
68.3
|
Loss before (loss)
gain on disposition of real estate
|
(0.2)
|
|
(37.3)
|
|
(4.2)
|
|
(54.4)
|
(Loss) gain on
disposition of real estate, net
|
(2.1)
|
|
3.2
|
|
(1.5)
|
|
3.3
|
Net loss
|
$ (2.3)
|
|
$ (34.1)
|
|
$ (5.7)
|
|
$ (51.1)
|
(F) In May 2013, the
Company redeemed $150 million of its Class H Preferred Shares. The
Company recorded a non-cash charge of $5.2 million to net income
attributable to common shareholders in the second quarter of 2013
related to the prorated write-off of the Preferred Shares' original
issuance costs.
|
|
(G) The gains and
charges excluded from Operating FFO for the three- and six-month
periods ended June 30, 2013 and 2012, respectively, are summarized
as follows (in millions):
|
|
|
Three-Month
Periods
Ended June
30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Non-cash impairment
charges – non-depreciable
consolidated assets
|
$ 2.6
|
|
$ 25.5
|
|
$ 2.6
|
|
$ 25.5
|
Loss on debt
retirement, net
|
—
|
|
7.9
|
|
—
|
|
13.5
|
Other expense
(income), net – transaction costs, litigation
costs and debt extinguishment (gain) costs
|
(1.6)
|
|
3.7
|
|
1.5
|
|
5.4
|
Equity in net
(income) loss of joint ventures – currency
adjustments, debt extinguishment and other
expenses
|
(0.5)
|
|
0.9
|
|
(0.3)
|
|
1.0
|
Non-cash loss (gain)
on disposition of non-depreciable real
estate, net
|
1.5
|
|
(5.2)
|
|
1.8
|
|
(5.5)
|
Non-cash gain on
change in control of interests
|
(1.1)
|
|
(39.3)
|
|
(1.1)
|
|
(39.3)
|
Non-cash write-off of
preferred share original issuance
costs
|
5.2
|
|
—
|
|
5.2
|
|
—
|
Total adjustments
from FFO to Operating FFO
|
$ 6.1
|
|
$ (6.5)
|
|
$ 9.7
|
|
$ 0.6
|
(H) The Company's per
share information is as follows:
|
|
|
At June
30,
|
|
2013
|
|
2012
|
Common shares
outstanding
|
320.1
|
|
301.3
|
OP Units outstanding
("OP Units")
|
0.4
|
|
0.4
|
|
Three-Month
Periods
Ended June
30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$ (0.11)
|
|
$ (0.16)
|
|
$ (0.12)
|
|
$ (0.24)
|
Diluted
|
$ (0.11)
|
|
$ (0.16)
|
|
$ (0.12)
|
|
$ (0.24)
|
Basic – average
shares outstanding
|
317.0
|
|
280.4
|
|
315.1
|
|
277.8
|
Diluted – average
shares outstanding
|
317.0
|
|
280.4
|
|
315.1
|
|
277.8
|
Dividends
Declared:
|
$ 0.135
|
|
$
0.12
|
|
$
0.27
|
|
$
0.24
|
|
|
|
|
|
|
|
|
FFO per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.25
|
|
$
0.28
|
|
$
0.51
|
|
$
0.49
|
Diluted
|
$
0.25
|
|
$
0.27
|
|
$
0.51
|
|
$
0.49
|
Weighted average
common shares outstanding
|
319.2
|
|
282.6
|
|
317.4
|
|
279.9
|
Assumed conversion of
OP Units
|
0.4
|
|
0.4
|
|
0.4
|
|
0.4
|
FFO Weighted average
common shares and OP
Units – Basic
|
319.6
|
|
283.0
|
|
317.8
|
|
280.3
|
Assumed conversion of
dilutive securities
|
0.5
|
|
2.6
|
|
0.5
|
|
2.5
|
FFO Weighted average
common shares and OP
Units –
Diluted
|
320.1
|
|
285.6
|
|
318.3
|
|
282.8
|
|
|
|
|
|
|
|
|
Operating
FFO:
|
|
|
|
|
|
|
|
Diluted
|
$
0.27
|
|
$
0.25
|
|
$
0.54
|
|
$
0.49
|
Operating FFO
Weighted average common shares
and OP Units –
Diluted
|
320.1
|
|
285.6
|
|
318.3
|
|
282.8
|
DDR Corp.
Summary Results of Combined Unconsolidated Joint Ventures
(In Thousands)
|
|
|
|
|
Combined condensed
income statements
|
|
|
|
|
|
Three-Month
Periods
Ended June
30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
|
|
|
Minimum
rents
|
$ 134,527
|
|
$ 115,350
|
|
$ 269,285
|
|
$ 230,263
|
Percentage and
overage rents
|
591
|
|
399
|
|
1,631
|
|
578
|
Recoveries from
tenants
|
32,981
|
|
24,481
|
|
66,826
|
|
49,151
|
Other
|
16,721
|
|
23,464
|
|
33,805
|
|
42,916
|
|
184,820
|
|
163,694
|
|
371,547
|
|
322,908
|
Expenses:
|
|
|
|
|
|
|
|
Operating and
maintenance
|
43,293
|
|
48,250
|
|
85,889
|
|
83,395
|
Real estate
taxes
|
21,729
|
|
16,183
|
|
44,020
|
|
32,100
|
Impairment charges
(A)
|
44,563
|
|
—
|
|
44,563
|
|
840
|
|
109,585
|
|
64,433
|
|
174,472
|
|
116,335
|
Net operating
income
|
75,235
|
|
99,261
|
|
197,075
|
|
206,573
|
Depreciation and
amortization of real estate
investments
|
59,045
|
|
41,863
|
|
124,345
|
|
81,550
|
Interest
expense
|
60,059
|
|
58,860
|
|
122,258
|
|
113,978
|
(Loss) income before
other items
|
(43,869)
|
|
(1,462)
|
|
(49,528)
|
|
11,045
|
Income tax
expense
|
(7,238)
|
|
(6,200)
|
|
(13,853)
|
|
(12,190)
|
Loss from continuing
operations
|
(51,107)
|
|
(7,662)
|
|
(63,381)
|
|
(1,145)
|
Discontinued
operations:
|
|
|
|
|
|
|
|
Loss from
operations
|
(87)
|
|
(8,287)
|
|
(62)
|
|
(10,534)
|
(Loss) gain on
disposition, net
|
(369)
|
|
247
|
|
(5,906)
|
|
107
|
Loss before gain
(loss) on disposition of
assets
|
(51,563)
|
|
(15,702)
|
|
(69,349)
|
|
(11,572)
|
Gain (loss) on
disposition of assets, net
|
164
|
|
(750)
|
|
643
|
|
13,102
|
Net (loss)
income
|
$ (51,399)
|
|
$ (16,452)
|
|
$ (68,706)
|
|
$
1,530
|
Non-controlling
interests
|
(6,695)
|
|
(4,600)
|
|
(13,914)
|
|
(13,534)
|
Net loss attributable
to unconsolidated joint
ventures
|
$ (58,094)
|
|
$ (21,052)
|
|
$ (82,620)
|
|
$ (12,004)
|
Net (loss) income at
DDR's ownership interests
|
$
(1,522)
|
|
$
3,171
|
|
$
1,528
|
|
$
13,351
|
Basis
differences
|
331
|
|
61
|
|
235
|
|
(1,871)
|
Equity in net (loss)
income of joint ventures
|
$
(1,191)
|
|
$
3,232
|
|
$
1,763
|
|
$
11,480
|
FFO at DDR's
ownership interests (B)
|
$
12,146
|
|
$
12,633
|
|
$
24,372
|
|
$
26,618
|
Operating FFO at
DDR's ownership interests (B)
|
$
11,640
|
|
$
13,556
|
|
$
24,082
|
|
$
27,659
|
DDR Corp.
Summary Results of Combined Unconsolidated Joint Ventures
(In Thousands)
|
|
|
|
|
Combined condensed
balance sheets
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
December 31,
2012
|
|
|
|
|
Land
|
$
1,529,795
|
|
$
1,569,548
|
Buildings
|
4,632,324
|
|
4,681,462
|
Fixtures and tenant
improvements
|
266,917
|
|
244,293
|
|
6,429,036
|
|
6,495,303
|
Less: Accumulated
depreciation
|
(881,857)
|
|
(833,816)
|
|
5,547,179
|
|
5,661,487
|
Land held for
development and construction in progress (C)
|
277,314
|
|
348,822
|
Real estate,
net
|
5,824,493
|
|
6,010,309
|
Cash and restricted
cash
|
368,948
|
|
467,200
|
Receivables,
including straight-line rent, net
|
101,938
|
|
99,098
|
Other assets,
net
|
380,154
|
|
427,014
|
|
$
6,675,533
|
|
$
7,003,621
|
|
|
|
|
Mortgage debt
(D)
|
$
4,141,601
|
|
$
4,246,407
|
Notes and accrued
interest payable to DDR
|
153,042
|
|
143,338
|
Other
liabilities
|
295,990
|
|
342,614
|
|
4,590,633
|
|
4,732,359
|
Redeemable preferred
equity
|
167,060
|
|
154,556
|
Accumulated
equity
|
1,917,840
|
|
2,116,706
|
|
$
6,675,533
|
|
$
7,003,621
|
DDR Corp.
Summary Results of Combined Unconsolidated Joint
Ventures
|
|
(A) For the three-
and six-month periods ended June 30, 2013, impairment charges were
recorded primarily on assets that are in the process of being
marketed for sale of which the Company's proportionate share was
approximately $4.7 million.
|
|
(B) FFO and Operating
FFO from unconsolidated joint ventures are summarized as follows
(in millions):
|
|
|
Three-Month
Periods
Ended June
30,
|
|
Six-Month
Periods
Ended June
30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net loss attributable
to unconsolidated joint ventures
|
$
(58.1)
|
|
$ (21.1)
|
|
$ (82.6)
|
|
$ (12.0)
|
Depreciation and
amortization of real estate investments
|
57.5
|
|
44.1
|
|
122.3
|
|
89.4
|
Impairment of
depreciable real estate assets
|
44.6
|
|
6.9
|
|
44.6
|
|
8.2
|
Loss (gain) on sale
of depreciable real estate
|
0.4
|
|
0.5
|
|
5.4
|
|
(13.2)
|
FFO
|
$
44.4
|
|
$
30.4
|
|
$
89.7
|
|
$
72.4
|
FFO at DDR ownership
interests
|
$
12.1
|
|
$
12.6
|
|
$
24.4
|
|
$
26.6
|
Operating FFO at
DDR's ownership interests (1)
|
$
11.6
|
|
$
13.5
|
|
$
24.1
|
|
$
27.6
|
DDR joint venture
distributions received, net
|
$
12.0
|
|
$
11.9
|
|
$
14.4
|
|
$
16.4
|
|
(1) Excluded from
Operating FFO is the Company's proportionate share of net activity
related to foreign currency adjustments, debt extinguishments and
other expenses as disclosed above in this press release.
|
(C) The Company's
proportionate share of land held for development
and construction in
progress is as follows (in millions):
|
|
|
June
30,
2013
|
|
December 31,
2012
|
Company's
proportionate share
|
$ 75.5
|
|
$ 100.9
|
(D) Mortgage debt
consists of the following (in millions):
|
|
|
June
30,
2013
|
|
December 31,
2012
|
Company's
proportionate share
|
$ 712.8
|
|
$ 724.9
|
Non-recourse debt
included above for which the Company
has written its investment down to zero and is receiving
no
allocation of income, loss or FFO
|
52.8
|
|
48.2
|
SOURCE DDR Corp.