BEACHWOOD, Ohio, July 31, 2012 /PRNewswire/ -- DDR Corp. (NYSE:
DDR) today announced operating results for the second quarter ended
June 30, 2012.
(Logo:
http://photos.prnewswire.com/prnh/20110912/CL65938LOGO)
SIGNIFICANT SECOND QUARTER ACTIVITY
- Generated Operating FFO of $0.25
per diluted share, an increase of 9% compared to second quarter of
2011
- Executed 426 new leases and renewals for 2.7 million square
feet
- Increased the portfolio leased rate 40 basis points
sequentially to 94.1% at June 30,
2012 from 93.7% at March 31,
2012 and 110 basis points year-over-year from 93.0% at
June 30, 2011
- Including the assets acquired on June
20, 2012 in the Blackstone joint venture, the revised
portfolio leased rate at June 30,
2012 was 93.7%
- Generated positive leasing spreads, with new leases up 10.7% at
100% ownership and 22.2% on a pro rata basis, and renewals up 6.1%
at 100% ownership and 5.8% on a pro rata basis; blended
spreads were up 6.8% at 100% ownership and 8.3% on a pro rata
basis
- Generated same store net operating income growth of 3.9% at
100% ownership and 3.1% on a pro rata basis
- Completed $70 million in
acquisitions of two prime shopping centers
- Completed $80.5 million of
non-prime asset sales, of which DDR's pro rata share of the
proceeds was $75.1 million
- Closed on a new unconsolidated joint venture with an affiliate
of The Blackstone Group L.P. for $1.4
billion that acquired 46 previously managed but unowned
shopping centers
- Issued 23.8 million common shares for gross proceeds of
$315 million to fund the Company's
share of the Blackstone joint venture and other prime asset
acquisitions
"We are very pleased with the consistency of our financial and
operating performance in a very volatile macroeconomic
environment. We expect this progress to continue as our
portfolio exhibits a high level of resilience and growth,"
commented DDR's president and chief executive officer, Daniel B. Hurwitz.
FINANCIAL HIGHLIGHTS
The Company's second quarter Operating Funds From
Operations applicable to common shareholders ("Operating FFO")
increased to $71.6 million, or
$0.25 per diluted share, before
$6.5 million of net adjustments,
which compares to $64.4 million, or
$0.23 per diluted share, before
$11.9 million of net adjustments for
the prior-year comparable period. The increase in Operating
FFO for the three-month period ended June
30, 2012, as compared to the same period in 2011, is
primarily due to organic growth and the acquisition of nine
shopping center assets in 2011 and 2012 partially offset by asset
dispositions.
Funds From Operations applicable to common shareholders ("FFO")
for the three-month period ended June 30,
2012, increased to $78.1
million, or $0.27 per diluted
share, which compares to FFO of $52.6
million, or $0.19 per diluted
share, for the prior-year comparable period. The increase in
FFO for the three-month period ended June
30, 2012, as compared to the same period in 2011, is
primarily due to the gain on change in control of interests related
to the Company's acquisition of two assets from an unconsolidated
joint venture partially offset by the loss on debt extinguishment
related to the Company's repurchase of a portion of its 9.625%
unsecured notes in 2012.
FFO for the six-month period ended June
30, 2012 was $137.8 million,
or $0.49 per diluted share, which
compares to FFO of $145.5 million, or
$0.45 per diluted share, for the
prior-year comparable period. The decrease in FFO for the
six-month period ended June 30, 2012,
as compared to the same period in 2011, is primarily due to the
same factors impacting FFO as explained above in addition to the
effect of the valuation adjustment associated with the warrants
that were exercised in full for cash in the first quarter of
2011.
Net loss applicable to common shareholders for the three-month
period ended June 30, 2012, was
$44.5 million, or $0.16 per diluted share, which compares to net
loss of $26.9 million, or
$0.10 per diluted share, for the
prior-year comparable period. Net loss applicable to common
shareholders for the six-month period ended June 30, 2012, was $66.5
million, or $0.24 per diluted
share, which compares to net loss of $2.1
million, or $0.09 per diluted
share, for the prior-year comparable period. The increase in
net loss applicable to common shareholders for the three- and
six-month periods ended June 30,
2012, as compared to the same periods in 2011, is primarily
due to the same factors impacting FFO as explained above as well as
an increase in impairment charges in the second quarter of
2012.
LEASING & PORTFOLIO OPERATIONS
The following results for the three-month period ended
June 30, 2012, highlight continued
strong leasing activity throughout the portfolio:
- Executed 200 new leases aggregating 0.9 million square feet and
226 renewals aggregating approximately 1.8 million square feet
- The portfolio leased rate was 94.1% at June 30, 2012, as compared to 93.7% at
March 31, 2012 and 93.0% at
June 30, 2011 on a comparable
basis
- The portfolio leased rate at June 30,
2012, including the 46 assets acquired on June 20, 2012 by the Blackstone joint venture,
was 93.7%
- On a cash basis, rental rates for new leases increased by 10.7%
at 100% ownership and 22.2% on a pro rata basis, and renewals by
6.1% at 100% ownership and 5.8% on a pro rata basis. Overall,
blended spreads were up 6.8% at 100% ownership and 8.3% on a pro
rata basis.
- Same store net operating income ("NOI") increased by 3.9% at
100% ownership for the three-month period ended June 30, 2012 as compared to the prior-year
comparable period and 3.1% on a pro rata basis
- Total portfolio average annualized base rent per occupied
square foot as of June 30, 2012 was
$13.80, as compared to $13.46 at June 30,
2011
ACQUISITIONS & FINANCINGS
In June 2012, affiliates of
the Company and The Blackstone Group L.P. ("Blackstone") closed a
joint venture which acquired a portfolio of 46 shopping centers
previously owned by EPN Group. An affiliate of Blackstone
owns 95% of the common equity of the joint venture, and the
remaining 5% interest is owned by an affiliate of the
Company. The transaction is valued at approximately
$1.4 billion. The joint venture
assumed approximately $635 million of
senior non-recourse debt and entered into an additional
$320 million of non-recourse debt
with a five-year term. In addition, the Company funded the joint
venture with $150 million in
preferred equity with a fixed distribution rate of 10%, as well as
its $17 million common equity
funding. The Company will continue to provide leasing and
property management services and will have the right of first offer
to acquire 10 of the assets under specified conditions. The
Company funded its investment with proceeds from the equity forward
sale agreements entered into in January
2012 and settled in June 2012
for net proceeds of $231.2
million.
In April 2012, the Company
acquired its unconsolidated joint venture partner's 50% ownership
interest in two prime power centers located in Portland, Oregon and Phoenix, Arizona for an aggregate purchase
price of $70 million.
Tanasbourne Town Center in Portland, Oregon, is a large-format power
center totaling 566,000 square feet. The shopping center is
anchored by national tenants including Target, Nordstrom Rack, Bed Bath & Beyond, Ross
Dress For Less, Michaels, Old Navy and Petco. Arrowhead
Crossing in Phoenix, Arizona, is a
large-format power center totaling 412,000 square feet. The
shopping center is anchored by national tenants including
Nordstrom Rack, DSW, T.J.Maxx, HomeGoods, Staples and Hobby Lobby.
The Company funded its $70
million investment with proceeds from the issuance of 4.8
million common shares at an average price of $14.64 per share through its at-the-market common
equity program. At closing, approximately $104 million of mortgage debt was repaid and the
two assets are part of the Company's large unencumbered pool.
The Company recorded an aggregate gain of approximately
$39.3 million in connection with the
step-up of its investment basis to fair value due to the change in
control that occurred.
In June 2012, the Company issued
$300 million aggregate principal
amount of 4.625% senior unsecured notes due July 2022.
Proceeds from the issuance were used to repay the 5.375% senior
unsecured notes with an aggregate principal amount of $223.5 million at par scheduled to mature in
October 2012 and repay amounts
outstanding on the revolving credit facilities.
During the three- and six-month periods ended June 30, 2012, the Company repurchased
$34.5 million and $60.0 million, respectively, aggregate principal
amount of its outstanding 9.625% senior unsecured notes with a
maturity date of March 2016 at a
premium to par, resulting in a loss on debt retirement of
$7.9 million and $13.5 million, respectively.
On August 1, 2012, the Company
expects to issue $200.0 million of
its newly designated 6.50% Class J cumulative redeemable preferred
shares at a price of $25.00 per
depositary share. In addition, in July
2012, the Company announced the redemption of its 7.50%
Class I cumulative redeemable preferred shares at a redemption of
price of $25.00 per depositary share
plus accrued and unpaid dividends of $0.1875 per depositary share. The proceeds
from the issuance of the Class J shares are expected to be
primarily used to redeem the Class I shares, which is expected to
close on August 20, 2012.
DISPOSITIONS
The Company sold 15 consolidated assets, aggregating
approximately 2.1 million square feet, in the second quarter of
2012, generating gross proceeds of approximately $60.4 million. In addition, the Company
sold $13.3 million of consolidated
non-income producing assets. The Company recorded an
aggregate net gain of approximately $8.4
million related to asset sales in the second quarter of
2012.
In the second quarter of 2012, the Company's unconsolidated
joint ventures sold one asset generating gross proceeds of
approximately $6.8 million, of which
the Company's proportionate share was $1.4
million. The aggregate gain on sale in the second
quarter of 2012 was approximately $0.2
million, of which the Company's proportionate share was
immaterial.
2012 GUIDANCE
There has been no change in Operating FFO per share
guidance since the last update provided on May 1, 2012. The Company continues to
estimate Operating FFO for 2012 between $1.00 and $1.04 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 (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 above. The Company
computes FFO in accordance with the NAREIT definition as affirmed
by NAREIT on October 31, 2011.
Other real estate companies may calculate FFO and Operating FFO in
a different manner. FFO excluding the net non-operating items
detailed above 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,
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, 2012. 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, 2011, 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
DDR is an owner and manager of 459 value-oriented shopping
centers representing 117 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.
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, 2012, at 10:00 a.m. Eastern Daylight Time. To
participate, please dial 866.202.4367 (domestic), or 617.213.8845
(international) at least ten minutes prior to the scheduled start
of the call. When prompted, provide the passcode:
41337639. Access to the live call and replay will also be
available through the Company's website. The replay will be
available through August 8, 2012.
DDR
Corp.
Financial Highlights
(In Thousands)
|
|
|
|
|
|
|
|
|
|
Three-Month Periods
Ended
June 30,
|
|
Six-Month Periods
Ended
June 30,
|
Revenues:
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Minimum rents (A)
|
$
133,861
|
|
$
124,703
|
|
$
263,735
|
|
$
249,193
|
Percentage and overage rents
(A)
|
655
|
|
734
|
|
2,110
|
|
2,488
|
Recoveries from tenants
|
42,158
|
|
41,757
|
|
85,021
|
|
85,212
|
Ancillary and other property income
|
6,713
|
|
6,792
|
|
12,817
|
|
13,604
|
Management, development and other fee
income
|
11,222
|
|
11,891
|
|
22,976
|
|
23,642
|
Other (B)
|
134
|
|
1,049
|
|
714
|
|
2,170
|
|
194,743
|
|
186,926
|
|
387,373
|
|
376,309
|
Expenses:
|
|
|
|
|
|
|
|
Operating and maintenance
|
30,979
|
|
33,810
|
|
64,377
|
|
68,227
|
Real estate taxes
|
25,631
|
|
25,195
|
|
50,779
|
|
49,950
|
Impairment charges (C)
|
80,227
|
|
811
|
|
82,363
|
|
4,667
|
General and administrative
|
19,131
|
|
17,979
|
|
38,144
|
|
47,357
|
Depreciation and amortization
|
63,561
|
|
52,888
|
|
122,977
|
|
105,080
|
|
219,529
|
|
130,683
|
|
358,640
|
|
275,281
|
Other
income (expense):
|
|
|
|
|
|
|
|
Interest income
|
2,328
|
|
2,419
|
|
4,168
|
|
5,218
|
Interest expense (D)
|
(54,617)
|
|
(56,239)
|
|
(110,587)
|
|
(112,633)
|
Loss on debt retirement, net
(E)
|
(7,892)
|
|
—
|
|
(13,495)
|
|
—
|
Gain on equity derivative instruments
|
—
|
|
—
|
|
—
|
|
21,926
|
Other expense, net (F)
|
(3,657)
|
|
(6,347)
|
|
(5,259)
|
|
(5,007)
|
|
(63,838)
|
|
(60,167)
|
|
(125,173)
|
|
(90,496)
|
(Loss)
income before earnings from equity method investments
and other items
|
(88,624)
|
|
(3,924)
|
|
(96,440)
|
|
10,532
|
Equity in
net income of joint ventures (G)
|
3,232
|
|
16,567
|
|
11,480
|
|
18,541
|
Impairment
of joint venture investments (C)
|
—
|
|
(1,636)
|
|
(560)
|
|
(1,671)
|
Gain on
change in control of interests (H)
|
39,348
|
|
981
|
|
39,348
|
|
22,710
|
Tax
expense of taxable REIT subsidiaries and state franchise
and income taxes
|
(371)
|
|
(392)
|
|
(549)
|
|
(718)
|
(Loss)
income from continuing operations
|
(46,415)
|
|
11,596
|
|
(46,721)
|
|
49,394
|
Income
(loss) from discontinued operations (I)
|
3,801
|
|
(27,175)
|
|
(11,439)
|
|
(28,733)
|
(Loss)
income before gain on disposition of real estate
|
(42,614)
|
|
(15,579)
|
|
(58,160)
|
|
20,661
|
Gain on
disposition of real estate, net of tax
|
5,234
|
|
2,310
|
|
5,899
|
|
1,449
|
Net (loss)
income
|
(37,380)
|
|
(13,269)
|
|
(52,261)
|
|
22,110
|
Income
attributable to non-controlling interests
|
(120)
|
|
(114)
|
|
(296)
|
|
(181)
|
Net
(loss) income attributable to DDR
|
$
(37,500)
|
|
$
(13,383)
|
|
(52,557)
|
|
21,929
|
Write-off of preferred share original issuance
costs
|
—
|
|
(6,402)
|
|
—
|
|
(6,402)
|
Preferred dividends
|
(6,967)
|
|
(7,085)
|
|
(13,934)
|
|
(17,653)
|
Net
loss applicable to common shareholders
|
$
(44,467)
|
|
$
(26,870)
|
|
$
(66,491)
|
|
$
(2,126)
|
Funds
From Operations ("FFO"):
|
|
|
|
|
|
|
|
Net loss applicable to common shareholders
|
$
(44,467)
|
|
$
(26,870)
|
|
$
(66,491)
|
|
$
(2,126)
|
Depreciation and amortization of real estate
investments
|
61,697
|
|
54,919
|
|
120,144
|
|
108,723
|
Equity in net income of joint ventures
(G)
|
(3,232)
|
|
(16,567)
|
|
(11,480)
|
|
(18,541)
|
Impairment of depreciable joint venture
investments
|
—
|
|
—
|
|
560
|
|
35
|
Joint ventures' FFO (G)
|
12,633
|
|
14,781
|
|
26,618
|
|
29,528
|
Non-controlling interests (OP Units)
|
48
|
|
16
|
|
96
|
|
32
|
Impairment of depreciable real estate assets, net of
non-
controlling
interests
|
54,714
|
|
20,256
|
|
72,054
|
|
22,239
|
(Gain) loss on disposition of depreciable real
estate, net
|
(3,320)
|
|
6,021
|
|
(3,680)
|
|
5,621
|
FFO applicable to common
shareholders
|
78,073
|
|
52,556
|
|
137,821
|
|
145,511
|
Non-operating items, net (J)
|
(6,461)
|
|
11,864
|
|
597
|
|
(17,901)
|
Operating FFO
|
$
71,612
|
|
$
64,420
|
|
$
138,418
|
|
$
127,610
|
|
|
|
|
|
|
|
|
Earnings per share – Diluted
(K)
|
$
(0.16)
|
|
$
(0.10)
|
|
$
(0.24)
|
|
$
(0.09)
|
Funds From Operations – Diluted
(K)
|
$
0.27
|
|
$
0.19
|
|
$
0.49
|
|
$
0.45
|
Operating Funds From Operations – Diluted
(K)
|
$
0.25
|
|
$
0.23
|
|
$
0.49
|
|
$
0.47
|
|
|
|
|
|
Selected Balance Sheet Data
|
|
|
|
|
June
30, 2012
|
|
December 31, 2011
|
Assets:
|
|
|
|
Real
estate and rental property:
|
|
|
|
Land
|
$
1,839,912
|
|
$
1,844,125
|
Buildings
|
5,424,300
|
|
5,461,122
|
Fixtures and tenant improvements
|
406,988
|
|
379,965
|
|
7,671,200
|
|
7,685,212
|
Less:
Accumulated depreciation
|
(1,573,528)
|
|
(1,550,066)
|
|
6,097,672
|
|
6,135,146
|
Land held
for development and construction in progress
|
580,553
|
|
581,627
|
Real
estate held for sale, net
|
502
|
|
2,290
|
Real
estate, net
|
6,678,727
|
|
6,719,063
|
|
|
|
|
Investments in and advances to joint
ventures
|
562,413
|
|
353,907
|
Cash
|
18,505
|
|
41,206
|
Restricted
cash
|
23,791
|
|
30,983
|
Notes
receivable, net
|
62,498
|
|
93,905
|
Receivables, including straight-line rent,
net
|
103,788
|
|
117,463
|
Other
assets, net
|
134,226
|
|
112,898
|
|
$
7,583,948
|
|
$
7,469,425
|
|
|
|
|
Liabilities & Equity:
|
|
|
|
Indebtedness:
|
|
|
|
Revolving credit facilities
|
$
5,895
|
|
$
142,421
|
Unsecured debt
|
1,977,512
|
|
2,139,718
|
Unsecured term loan
|
250,000
|
|
—
|
Mortgage and other secured debt
|
1,862,378
|
|
1,822,445
|
|
4,095,785
|
|
4,104,584
|
Dividends payable
|
40,852
|
|
29,128
|
Other liabilities
|
226,183
|
|
257,821
|
Total liabilities
|
4,362,820
|
|
4,391,533
|
|
|
|
|
Preferred
shares
|
375,000
|
|
375,000
|
Common
shares
|
30,135
|
|
27,711
|
Paid-in-capital
|
4,437,806
|
|
4,138,812
|
Accumulated distributions in excess of net
income
|
(1,627,030)
|
|
(1,493,353)
|
Deferred
compensation obligation
|
13,824
|
|
13,934
|
Accumulated other comprehensive income
|
(30,875)
|
|
(1,403)
|
Less: Common shares in treasury at
cost
|
(12,731)
|
|
(15,017)
|
Non-controlling interests
|
34,999
|
|
32,208
|
Total equity
|
3,221,128
|
|
3,077,892
|
|
$
7,583,948
|
|
$
7,469,425
|
|
|
(A) The increase in base and
percentage rental revenues for the six-month period ended June 30,
2012
is as follows (in millions):
|
|
|
Increase
(Decrease)
|
Comparable
portfolio properties
|
|
$
2.4
|
Acquisition of shopping centers
|
|
11.7
|
Development or redevelopment properties
|
|
(1.5)
|
|
|
$
12.6
|
Revenue
resulting from the recognition of straight-line rents, including
discontinued operations, is as follows (in millions):
|
|
|
|
Six-Month Periods
Ended June 30,
|
|
|
2012
|
|
2011
|
Straight-line rents
|
|
$
1.7
|
|
$
0.1
|
|
(B) Other revenues were comprised of
the following (in millions):
|
|
|
|
Three-Month Periods
Ended June 30,
|
|
Six-Month Periods
Ended
June 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Lease
termination fees
|
|
$
—
|
|
$
0.8
|
|
$
0.5
|
|
$
1.3
|
Financing
fees
|
|
—
|
|
0.2
|
|
—
|
|
0.6
|
Other
miscellaneous
|
|
0.1
|
|
—
|
|
0.2
|
|
0.3
|
|
|
$
0.1
|
|
$
1.0
|
|
$
0.7
|
|
$
2.2
|
|
(C) The Company recorded impairment
charges on the following (in millions):
|
|
|
|
Three-Month Periods
Ended June 30,
|
|
Six-Month Periods
Ended June 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Land held
for development
|
|
$
6.4
|
|
$
—
|
|
$
6.4
|
|
$
—
|
Undeveloped land
|
|
19.1
|
|
—
|
|
19.1
|
|
3.9
|
Assets
marketed for sale
|
|
54.7
|
|
0.8
|
|
56.9
|
|
0.8
|
Total continuing operations
|
|
80.2
|
|
0.8
|
|
82.4
|
|
4.7
|
|
|
|
|
|
|
|
|
|
Sold
assets or assets held for sale
|
|
—
|
|
19.4
|
|
15.2
|
|
21.4
|
Total discontinued
operations
|
|
—
|
|
19.4
|
|
15.2
|
|
21.4
|
Joint
venture investments
|
|
—
|
|
1.6
|
|
0.6
|
|
1.6
|
Total
impairment charges
|
|
$
80.2
|
|
$
21.8
|
|
$
98.2
|
|
$
27.7
|
|
(D) 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,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Non-cash
interest expense related to
amortization of the debt discount
|
|
$
2.5
|
|
$
3.8
|
|
$
5.7
|
|
$
7.6
|
|
(E) For the three and six months
ended June 30, 2012, the Company repurchased $34.5 million and
$60.0 million, respectively, of its 9.625% unsecured senior notes
at a premium to par value.
|
|
(F) Other income (expenses)
were comprised of the following (in millions):
|
|
Three-Month Periods
Ended June 30,
|
|
Six-Month Periods
Ended
June 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Litigation-related expenses
|
$
(0.8)
|
|
$
(1.2)
|
|
$
(1.6)
|
|
$
(2.2)
|
Loss on
sale of mezzanine note receivable
|
—
|
|
(5.0)
|
|
—
|
|
(5.0)
|
Debt
extinguishment costs, net
|
(0.4)
|
|
—
|
|
(0.6)
|
|
(0.2)
|
Settlement
of lease liability obligation
|
—
|
|
—
|
|
—
|
|
2.6
|
Transaction and other expenses
|
(2.5)
|
|
(0.1)
|
|
(3.1)
|
|
(0.2)
|
|
$
(3.7)
|
|
$
(6.3)
|
|
$
(5.3)
|
|
$
(5.0)
|
|
(G) At June 30, 2012 and
2011, the Company had investments in joint ventures, excluding
consolidated joint ventures, in 215 and 183 shopping center
properties, respectively.
|
|
(H) In the second quarter of 2012,
the Company acquired its partners' 50% interest in two shopping
centers. The Company accounted for this transaction as a step
acquisition. Due to the change in control that occurred, the
Company recorded an aggregate gain associated with the acquisition
related to the difference between the Company's carrying value and
fair value of the previously held equity interest.
|
|
(I) 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,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenues
from operations
|
$
1.7
|
|
$
12.6
|
|
$
5.8
|
|
$
26.5
|
|
|
|
|
|
|
|
|
Operating
expenses
|
0.3
|
|
5.2
|
|
2.4
|
|
11.0
|
Impairment
charges
|
—
|
|
19.4
|
|
15.2
|
|
21.4
|
Interest,
net
|
0.4
|
|
3.7
|
|
1.3
|
|
7.6
|
Depreciation and amortization
|
0.4
|
|
4.2
|
|
1.6
|
|
8.2
|
Total expenses
|
1.1
|
|
32.5
|
|
20.5
|
|
48.2
|
Income
(loss) before disposition of real estate
|
0.6
|
|
(19.9)
|
|
(14.7)
|
|
(21.7)
|
Gain
(loss) on disposition of real estate, net
|
3.2
|
|
(7.3)
|
|
3.3
|
|
(7.0)
|
Income
(loss) from discontinued operations
|
$
3.8
|
|
$
(27.2)
|
|
$
(11.4)
|
|
$
(28.7)
|
|
(J) The charges and gains excluded
from Operating FFO for the three- and six-month periods ended June
30, 2012 and 2011, respectively, are summarized as follows (in
millions):
|
|
|
Three-Month Periods
Ended
June 30,
|
|
Six-Month Periods
Ended
June 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Non-cash
impairment charges – non-
depreciable consolidated assets
|
$
25.5
|
|
$
—
|
|
$
25.5
|
|
$
3.8
|
Loss on
debt retirement, net
|
7.9
|
|
—
|
|
13.5
|
|
—
|
Other
expense (income), net – litigation
costs, debt extinguishment costs, lease
liability settlement gain, transaction
and other expenses
|
3.7
|
|
6.3
|
|
5.4
|
|
5.0
|
Equity in
net income of joint ventures –
currency adjustments, transaction and
other expenses
|
0.9
|
|
(0.4)
|
|
1.0
|
|
(0.8)
|
Non-cash
impairment of joint venture
investments on non-depreciable assets
|
—
|
|
1.6
|
|
—
|
|
1.6
|
Gain on
disposition of non-depreciable
real estate (land), net
|
(5.2)
|
|
(1.0)
|
|
(5.5)
|
|
—
|
Executive
separation charge
|
—
|
|
—
|
|
—
|
|
10.7
|
Non-cash
gain on equity derivative
instruments (Otto Family warrants)
|
—
|
|
—
|
|
—
|
|
(21.9)
|
Non-cash
gain on change in control of interests
|
(39.3)
|
|
(1.0)
|
|
(39.3)
|
|
(22.7)
|
Non-cash
write off of preferred share
original issuance costs
|
—
|
|
6.4
|
|
—
|
|
6.4
|
Total adjustments from FFO to Operating
FFO
|
$
(6.5)
|
|
$
11.9
|
|
$
0.6
|
|
$
(17.9)
|
|
|
|
|
|
|
|
|
|
|
|
(K) The Company's per share
information is as follows:
|
|
|
At June
30,
|
|
2012
|
|
2011
|
Common
shares outstanding
|
301.3
|
|
276.6
|
OP Units
outstanding ("OP Units")
|
0.4
|
|
0.4
|
|
Three-Month Periods
Ended
June 30,
|
|
Six-Month Periods
Ended
June 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.16)
|
|
$
(0.10)
|
|
$
(0.24)
|
|
$
(0.01)
|
|
Diluted
|
$
(0.16)
|
|
$
(0.10)
|
|
$
(0.24)
|
|
$
(0.09)
|
|
Basic – average shares outstanding
|
280.4
|
|
274.3
|
|
277.8
|
|
265.1
|
|
Diluted – average shares outstanding
|
280.4
|
|
276.1
|
|
277.8
|
|
269.2
|
|
Dividends Declared:
|
$
0.12
|
|
$
0.04
|
|
$
0.24
|
|
$
0.08
|
|
|
|
|
|
|
|
|
|
|
FFO per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.28
|
|
$
0.19
|
|
$
0.49
|
|
$
0.54
|
|
Diluted
|
$
0.27
|
|
$
0.19
|
|
$
0.49
|
|
$
0.45
|
|
Weighted average common shares outstanding
|
282.6
|
|
276.2
|
|
279.9
|
|
267.2
|
|
Assumed conversion of OP Units
|
0.4
|
|
0.4
|
|
0.4
|
|
0.4
|
|
FFO Weighted average common
shares and OP Units –
Basic
|
283.0
|
|
276.6
|
|
280.3
|
|
267.6
|
|
Assumed conversion of dilutive securities
|
2.6
|
|
1.8
|
|
2.5
|
|
4.1
|
|
FFO Weighted average common
shares and OP Units –
Diluted
|
285.6
|
|
278.4
|
|
282.8
|
|
271.7
|
|
|
|
|
|
|
|
|
|
|
Operating FFO:
|
|
|
|
|
|
|
|
|
Diluted
|
$
0.25
|
|
$
0.23
|
|
$
0.49
|
|
$
0.47
|
|
Operating FFO Weighted average
common shares and OP Units –
Diluted
|
285.6
|
|
278.4
|
|
282.8
|
|
271.7
|
|
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,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenues:
|
|
|
|
|
|
|
|
Minimum rents (A)
|
$
123,221
|
|
$
123,811
|
|
$
245,417
|
|
$
244,312
|
Percentage and overage rents
|
600
|
|
808
|
|
1,082
|
|
1,565
|
Recoveries from tenants
|
26,790
|
|
28,316
|
|
54,126
|
|
58,934
|
Other
|
23,846
|
|
22,801
|
|
43,558
|
|
39,302
|
|
174,457
|
|
175,736
|
|
344,183
|
|
344,113
|
Expenses:
|
|
|
|
|
|
|
|
Operating and maintenance
|
52,024
|
|
41,516
|
|
91,270
|
|
80,770
|
Real estate taxes
|
18,205
|
|
18,548
|
|
36,152
|
|
37,628
|
Impairment charges (B)
|
6,877
|
|
—
|
|
7,717
|
|
—
|
|
77,106
|
|
60,064
|
|
135,139
|
|
118,398
|
Net
operating income
|
97,351
|
|
115,672
|
|
209,044
|
|
225,715
|
Depreciation and amortization of real estate
investments
|
45,117
|
|
45,841
|
|
87,957
|
|
93,094
|
Interest expense
|
61,961
|
|
56,327
|
|
120,143
|
|
113,312
|
(Loss)
income before other items
|
(9,727)
|
|
13,504
|
|
944
|
|
19,309
|
Income tax
expense
|
(6,239)
|
|
(11,386)
|
|
(12,268)
|
|
(17,530)
|
(Loss)
income from continuing operations
|
(15,966)
|
|
2,118
|
|
(11,324)
|
|
1,779
|
Discontinued operations:
|
|
|
|
|
|
|
|
Income (loss) from operations
(B)
|
17
|
|
137
|
|
(355)
|
|
(213)
|
Gain on debt forgiveness
|
—
|
|
2,976
|
|
—
|
|
2,976
|
Gain on disposition, net
|
247
|
|
22,756
|
|
107
|
|
21,893
|
(Loss)
income before gain on disposition of assets
|
(15,702)
|
|
27,987
|
|
(11,572)
|
|
26,435
|
(Loss)
gain on disposition of assets, net
|
(750)
|
|
—
|
|
13,102
|
|
—
|
Net (loss)
income
|
$
(16,452)
|
|
$
27,987
|
|
$
1,530
|
|
$
26,435
|
Non-controlling interests
|
(4,600)
|
|
(2,619)
|
|
(13,534)
|
|
(4,994)
|
Net (loss)
income attributable to
unconsolidated joint ventures
|
$
(21,052)
|
|
$
25,368
|
|
$
(12,004)
|
|
$
21,441
|
Net income
at DDR's ownership interests (C)
|
$
3,171
|
|
$
16,532
|
|
$
13,351
|
|
$
20,439
|
FFO at
DDR's ownership interests (D)
|
$
12,633
|
|
$
14,781
|
|
$
26,618
|
|
$
29,528
|
|
|
|
|
|
Combined condensed balance sheets
|
|
|
|
|
|
June
30, 2012
|
|
December 31, 2011
|
|
|
|
|
Land
|
$
1,637,535
|
|
$
1,400,469
|
Buildings
|
5,255,495
|
|
4,334,097
|
Fixtures
and tenant improvements
|
209,608
|
|
189,940
|
|
7,102,638
|
|
5,924,506
|
Less:
Accumulated depreciation
|
(828,212)
|
|
(808,352)
|
|
6,274,426
|
|
5,116,154
|
Land held
for development and construction in progress
(E)
|
163,821
|
|
239,036
|
Real
estate, net
|
6,438,247
|
|
5,355,190
|
Cash and
restricted cash
|
440,293
|
|
308,008
|
Receivables, including straight-line rent,
net
|
102,514
|
|
108,038
|
Other
assets, net
|
323,692
|
|
177,251
|
|
$
7,304,746
|
|
$
5,948,487
|
|
|
|
|
Mortgage
debt (F)
|
$
4,573,716
|
|
$
3,742,241
|
Notes and
accrued interest payable to DDR
|
140,752
|
|
100,470
|
Other
liabilities
|
256,332
|
|
214,370
|
|
4,970,800
|
|
4,057,081
|
Redeemable
preferred equity
|
150,000
|
|
—
|
Accumulated equity
|
2,183,946
|
|
1,891,406
|
|
$
7,304,746
|
|
$
5,948,487
|
|
|
|
(A)
Revenue resulting from the recognition of straight-line rents,
including discontinued operations, is as follows (in
millions):
|
|
|
|
Three-Month Periods
Ended June 30,
|
|
Six-Month Periods
Ended
June 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Straight-line rents
|
|
$
1.1
|
|
$
1.2
|
|
$
2.0
|
|
$
2.6
|
DDR's
proportionate share
|
|
0.2
|
|
0.3
|
|
0.4
|
|
0.7
|
(B) For the three- and
six-month periods ended June 30, 2012, 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
not material.
|
|
(C)
Adjustments to the Company's share of joint venture equity in net
income primarily is related to basis differences impacting
amortization and depreciation, impairment charges and (loss) gain
on dispositions as follows (in millions):
|
|
Three-Month Periods
Ended June 30,
|
|
Six-Month Periods
Ended
June 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net
loss
|
$
—
|
|
$
—
|
|
$
(1.9)
|
|
$
(1.9)
|
(D) 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,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net (loss)
income attributable to unconsolidated joint ventures
|
$
(21.1)
|
|
$
25.4
|
|
$
(12.0)
|
|
$
21.4
|
Depreciation and amortization of real estate
investments
|
44.1
|
|
45.2
|
|
89.4
|
|
93.1
|
Impairment
of depreciable real estate assets
|
6.9
|
|
—
|
|
8.2
|
|
—
|
Loss
(gain) on sale of depreciable real estate
|
0.5
|
|
(22.8)
|
|
(13.2)
|
|
(21.9)
|
FFO
|
$
30.4
|
|
$
47.8
|
|
$
72.4
|
|
$
92.6
|
FFO at DDR
ownership interests
|
$
12.6
|
|
$
14.8
|
|
$
26.6
|
|
$
29.5
|
Operating
FFO at DDR's ownership interests (1)
|
$
13.5
|
|
$
14.4
|
|
$
27.6
|
|
$
28.7
|
DDR joint
venture distributions received, net (2)
|
$
11.9
|
|
$
18.8
|
|
$
16.4
|
|
$
45.7
|
(1) Excluded from Operating FFO is
the Company's proportionate share of net charges related to foreign
currency adjustments, transaction costs and gain on debt
forgiveness as disclosed earlier in this press release.
|
|
(2) Includes loan repayments in 2011
of $22.4 million from the Company's unconsolidated joint venture
which has assets located in Brazil.
|
|
(E) Land held for development and
construction in progress consists of the following (in
millions):
|
|
June
30,
2012
|
|
December 31,
2011
|
Company's
proportionate share
|
$
53.5
|
|
$
75.9
|
(F) Mortgage debt consists of the
following (in millions):
|
|
June
30, 2012
|
|
December 31, 2011
|
Company's
proportionate share
|
$
811.1
|
|
$
772.9
|
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
|
47.8
|
|
48.1
|
SOURCE DDR Corp.