DDR Reports Second Quarter 2016 Operating Results

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 6/11/2026


July 26, 2016 5:00 PM UTC

BEACHWOOD, Ohio, July 26, 2016 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the second quarter ended June 30, 2016. 

(Logo: http://photos.prnewswire.com/prnh/20131217/DDRLOGO )

Financial Highlights

  • Second quarter net income attributable to common shareholders was $35.5 million, or $0.10 per diluted share, compared to net income of $13.0 million, or $0.03 per diluted share, for the prior-year comparable period.
  • Second quarter operating funds from operations attributable to common shareholders ("Operating FFO") increased $11.0 million to $122.4 million, or 6.5%, to $0.33 per diluted share, compared to $111.4 million, or $0.31 per diluted share, for the prior-year comparable period.

Significant Quarterly Activity

  • Generated same store net operating income growth of 3.1% on a pro rata basis
  • Executed 338 new leases and renewals for 2.3 million square feet
  • Generated new leasing spreads of 27.7% and renewal leasing spreads of 7.0%, both on a pro rata basis
  • Increased the portfolio leased rate by 10 basis points to 96.1% at June 30, 2016, from 96.0% at December 31, 2015 and 95.8% at June 30, 2015, on a pro rata basis
  • Increased the annualized base rent per occupied square foot by 3.8% on a pro rata basis to $14.92 at June 30, 2016, from $14.37 at June 30, 2015
  • Sold three operating assets for $45 million and three land parcels for $13 million, totaling $58 million at DDR's share

"While I have only been at DDR for a short time, I am not surprised by this quarter's strong operational results given the quality of the portfolio, the people, and the progress made at this Company in recent years.  We look forward to delivering many more quarters of similar performance as we strive to build a track record of outperformance," commented Thomas F. August, President and Chief Executive Officer.  

2016 Guidance The Company is revising its 2016 Operating FFO and NAREIT defined FFO guidance estimate to a range of $1.23 to $1.26 per diluted share from a range of $1.20 to $1.25 per diluted share.  The Company's full year disposition guidance of between $600 and $800 million at DDR's pro rata share remains unchanged, but will be weighted to the second half of the year.

About DDR Corp. DDR is an owner and manager of 349 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, July 27, 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.

Non-GAAP Disclosures FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry and a widely accepted measure of real estate investment trust ("REIT") performance.  Management believes that both 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. 

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 and related investments, 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 computes FFO in accordance with the NAREIT definition.  The Company calculates Operating FFO by excluding certain non-operating charges and gains.  Operating FFO is useful to investors as the Company removes non-comparable charges and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio.  Other real estate companies may calculate FFO and Operating FFO in a different manner. 

The Company also uses net operating income ("NOI"), a non-GAAP financial measure, as a performance measure.  NOI is calculated as property revenues less property-related expenses.  The Company believes NOI provides useful information to investors regarding the Company's financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.  The Company presents NOI information herein on a same store basis or "SSNOI." The Company believes SSNOI provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted below.

The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income and expenses, lease termination income, management fee expense, fair market value of leases, expense recovery adjustments and provisions for uncollectible amounts and/or recoveries thereof.  SSNOI also excludes activity associated with development and major redevelopment; and includes assets owned in comparable periods (15 months for quarter comparisons).  SSNOI excludes all non-property and corporate level revenue and expenses.  Other real estate companies may calculate NOI and SSNOI in a different manner. 

This press release includes financial statements presented at DDR's pro rata share.  The amounts shown in the columns labeled "Consolidated'' reflect the line items contained in the Company's consolidated financial statements in accordance with generally accepted accounting principles ("GAAP").  The amounts in the columns labeled ''Share of JVs'' were computed by applying to each financial statement line item the effective ownership interest used to arrive at DDR's share of net income or loss during the period when applying the equity method of accounting to each of the Company's unconsolidated joint ventures.  Other companies may calculate their pro rata interest differently, limiting the usefulness of the amounts as comparative measures.  The Company provides DDR share information because the Company believes it assists investors and analysts in estimating the effective interest in DDR's unconsolidated joint ventures when read in conjunction with the Company's reported results under GAAP. 

FFO, Operating FFO and SSNOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP as indicators of the Company's operating performance or as alternatives to cash flow as a measure of liquidity. 

Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the non-GAAP measures section.

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; any impact on strategy or results from the transition in leadership; and the finalization of the financial statements for period ended June 30, 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

2Q16

2Q15

Consolidated

Share of JVs

Total DDR Share (Non-GAAP)

Consolidated

Share of JVs

Total DDR Share (Non-GAAP)

Revenues:

Minimum rents (1)

$178,064

$13,666

$191,730

$179,363

$14,275

$193,638

Percentage rent

1,654

113

1,767

1,372

74

1,446

Recoveries

61,376

4,321

65,697

62,021

4,529

66,550

Other property revenues (2)

4,762

157

4,919

6,176

1,107

7,283

245,856

18,257

264,113

248,932

19,985

268,917

Expenses (3):

Operating and maintenance

34,588

2,684

37,272

36,029

2,866

38,895

Real estate taxes

37,276

2,542

39,818

37,797

2,650

40,447

71,864

5,226

77,090

73,826

5,516

79,342

Net operating income (4)

173,992

13,031

187,023

175,106

14,469

189,575

Other income (expense):

Fee income

11,465

(955)

10,510

8,391

(1,007)

7,384

Interest income

9,446

(415)

9,031

7,211

(321)

6,890

Interest expense (5)

(54,012)

(5,278)

(59,290)

(61,287)

(5,589)

(66,876)

Depreciation and amortization

(97,698)

(5,635)

(103,333)

(99,300)

(6,115)

(105,415)

General and administrative (6)

(18,499)

0

(18,499)

(19,271)

0

(19,271)

Other income (expense), net (7)

2,081

(56)

2,025

2,368

(33)

2,335

Income before earnings from JVs and other

26,775

692

27,467

13,218

1,404

14,622

Equity in net income of JVs

1,117

(1,117)

0

1,642

(1,642)

0

Basis differences of JVs

0

403

403

0

307

307

Loss on sale and change in control

0

0

0

(6,507)

0

(6,507)

Tax expense

(245)

0

(245)

(573)

0

(573)

Gain on disposition of real estate, net

13,721

22

13,743

11,267

(69)

11,198

Net income

41,368

0

41,368

19,047

0

19,047

Non-controlling interests

(310)

0

(310)

(449)

0

(449)

Net income DDR

41,058

0

41,058

18,598

0

18,598

Preferred dividends

(5,594)

(5,594)

Net income Common Shareholders

35,464

13,004

Depreciation and amortization of real estate

95,626

97,239

Equity in net income of JVs

(1,117)

(1,642)

JVs' FFO

6,426

7,502

Non-controlling interests

76

248

Gain on disposition of depreciable real estate, net

(16,154)

(11,312)

FFO Common Shareholders

120,321

105,039

Non-operating items, net (9)

2,120

6,357

Operating FFO

$122,441

$111,396

FFO per share – Diluted (10)

$0.33

$0.29

Operating FFO per share – Diluted (10)

$0.33

$0.31

DDR Corp. Income Statement:  Consolidated Interests

$ in thousands, except per share

6M16

6M15

Consolidated

Share of JVs

Total DDR Share (Non-GAAP)

Consolidated

Share of JVs

Total DDR Share (Non-GAAP)

Revenues:

Minimum rents (1)

$355,431

$27,311

$382,742

$360,060

$29,353

$389,413

Percentage rent

3,590

141

3,731

2,757

174

2,931

Recoveries

122,975

8,549

131,524

126,101

9,200

135,301

Other property revenues (2)

10,105

312

10,417

10,764

1,478

12,242

492,101

36,313

528,414

499,682

40,205

539,887

Expenses (3):

Operating and maintenance

71,096

5,401

76,497

74,755

6,012

80,767

Real estate taxes

73,810

5,141

78,951

75,426

5,406

80,832

144,906

10,542

155,448

150,181

11,418

161,599

Net operating income

347,195

25,771

372,966

349,501

28,787

378,288

Other income (expense):

Fee income

19,643

(1,890)

17,753

16,466

(1,977)

14,489

Interest income

18,496

(828)

17,668

14,372

(636)

13,736

Interest expense (5)

(111,909)

(10,576)

(122,485)

(124,307)

(11,515)

(135,822)

Depreciation and amortization

(194,600)

(11,184)

(205,784)

(202,315)

(13,214)

(215,529)

General and administrative (6)

(36,375)

0

(36,375)

(37,866)

0

(37,866)

Other income (expense), net (7)

3,854

(104)

3,750

(1,060)

(94)

(1,154)

Impairment charges (8)

0

0

0

(279,021)

(90)

(279,111)

Income before earnings from JVs and other

46,304

1,189

47,493

(264,230)

1,261

(262,969)

Equity in net income of JVs

15,538

(15,538)

0

1,703

(1,703)

0

Basis differences of JVs

0

3,632

3,632

0

484

484

Gain on sale and change in control

0

0

0

7,772

0

7,772

Tax expense

(703)

0

(703)

(5,473)

0

(5,473)

Gain on disposition of real estate, net

26,102

10,717

36,819

36,361

(42)

36,319

Net income (loss)

87,241

0

87,241

(223,867)

0

(223,867)

Non-controlling interests

(610)

0

(610)

(1,322)

0

(1,322)

Net income (loss) DDR

86,631

0

86,631

(225,189)

0

(225,189)

Preferred dividends

(11,188)

(11,188)

Net income (loss) Common Shareholders

75,443

(236,377)

Depreciation and amortization of real estate

190,480

198,106

Equity in net income of JVs

(15,538)

(1,703)

JVs' FFO

12,576

14,519

Non-controlling interests

152

497

Impairment of depreciable real estate

0

179,748

Gain on disposition of depreciable real estate, net

(28,250)

(36,548)

FFO Common Shareholders

234,863

118,242

Non-operating items, net (9)

1,807

100,287

Operating FFO

$236,670

$218,529

FFO per share – Diluted (10)

$0.64

$0.33

Operating FFO per share – Diluted (10)

$0.65

$0.60

DDR Corp. Balance Sheet:  Consolidated Interests

$ in thousands

At Period End

2Q16

4Q15

Consolidated

Share of JVs

Total DDR Share (Non-GAAP)

Consolidated

Share of JVs

Total DDR Share (Non-GAAP)

Assets:

Land

$2,137,889

$174,406

$2,312,295

$2,184,145

$181,843

$2,365,988

Buildings

6,893,792

471,139

7,364,931

6,965,632

491,662

7,457,294

Fixtures and tenant improvements

756,617

30,764

787,381

743,037

31,105

774,142

9,788,298

676,309

10,464,607

9,892,814

704,610

10,597,424

Depreciation

(2,115,084)

(152,440)

(2,267,524)

(2,062,899)

(152,035)

(2,214,934)

7,673,214

523,869

8,197,083

7,829,915

552,575

8,382,490

Construction in progress and land

161,663

7,048

168,711

235,385

5,654

241,039

Real estate, net

7,834,877

530,917

8,365,794

8,065,300

558,229

8,623,529

Investments in JVs

65,186

2,330

67,516

72,576

636

73,212

Preferred equity interest

400,203

0

400,203

395,156

0

395,156

Cash

17,981

8,956

26,937

22,416

7,815

30,231

Restricted cash

9,173

727

9,900

10,104

803

10,907

Notes receivable, net

47,294

0

47,294

42,534

0

42,534

Receivables, net

124,878

7,213

132,091

129,089

8,151

137,240

Other assets, net (11)

321,994

19,900

341,894

359,913

21,598

381,511

Total Assets

8,821,586

570,043

9,391,629

9,097,088

597,232

9,694,320

Liabilities and Equity:

Revolving credit facilities

265,000

0

265,000

210,000

0

210,000

Unsecured debt

2,911,277

0

2,911,277

3,149,188

0

3,149,188

Unsecured term loan

398,167

0

398,167

397,934

0

397,934

Secured debt

1,364,363

425,166

1,789,529

1,382,415

441,918

1,824,333

4,938,807

425,166

5,363,973

5,139,537

441,918

5,581,455

Dividends payable

75,078

0

75,078

68,604

0

68,604

Other liabilities (12)

398,909

20,367

419,276

425,478

19,686

445,164

Total Liabilities

5,412,794

445,533

5,858,327

5,633,619

461,604

6,095,223

JVs share of equity

0

22,340

22,340

0

20,393

20,393

Preferred shares

350,000

0

350,000

350,000

0

350,000

Common shares

36,551

0

36,551

36,529

0

36,529

Paid-in capital

5,473,632

0

5,473,632

5,466,511

0

5,466,511

Distributions in excess of net income

(2,455,319)

102,170

(2,353,149)

(2,391,793)

115,235

(2,276,558)

Deferred compensation

15,425

0

15,425

15,537

0

15,537

Other comprehensive income

(5,157)

0

(5,157)

(6,283)

0

(6,283)

Common shares in treasury at cost

(14,919)

0

(14,919)

(15,316)

0

(15,316)

Non-controlling interests

8,579

0

8,579

8,284

0

8,284

Total Equity

3,408,792

124,510

3,533,302

3,463,469

135,628

3,599,097

Total Liabilities and Equity

$8,821,586

$570,043

$9,391,629

$9,097,088

$597,232

$9,694,320

DDR Corp. Income Statement:  Unconsolidated Interests at 100%

$ in thousands

2Q16

2Q15

6M16

6M15

Revenues:

Minimum rents

$96,960

$98,437

$193,535

$202,174

Percentage rent

573

353

904

942

Recoveries

30,312

30,603

60,281

61,462

Other property revenues

1,045

3,673

2,080

6,088

128,890

133,066

256,800

270,666

Expenses:

Operating and maintenance

18,644

18,620

37,643

39,315

Real estate taxes

18,329

17,470

36,986

35,741

36,973

36,090

74,629

75,056

Net operating income (4)

91,917

96,976

182,171

195,610

Other income (expense):

Interest expense

(33,319)

(33,593)

(66,641)

(74,496)

Depreciation and amortization

(49,021)

(51,482)

(98,056)

(108,219)

Impairment charges

0

0

0

(448)

Preferred share expense

(8,305)

(6,415)

(16,569)

(12,729)

Other (expense) income, net

(6,319)

(6,126)

(12,130)

(12,195)

(5,047)

(640)

(11,225)

(12,477)

Gain (loss) on disposition of real estate, net

114

(1,358)

53,597

(1,571)

Net (loss) income attributable to unconsolidated JVs

(4,933)

(1,998)

42,372

(14,048)

Depreciation and amortization

49,021

51,482

98,056

108,219

Impairment of depreciable real estate

0

0

0

448

(Gain) loss on disposition of depreciable real estate, net

(114)

1,358

(53,597)

1,571

FFO

43,974

50,842

86,831

96,190

FFO at DDR's ownership interests

6,426

7,502

12,576

14,519

Operating FFO at DDR's ownership interests

$6,446

$7,501

$12,596

$14,523

DDR Corp. Balance Statement:  Unconsolidated Interests at 100%

$ in thousands

At Period End

2Q16

4Q15

Assets:

Land

$1,306,704

$1,343,889

Buildings

3,449,494

3,551,227

Improvements

192,647

191,581

4,948,845

5,086,697

Depreciation

(840,227)

(817,235)

4,108,618

4,269,462

Land held for development and construction in progress

58,654

52,390

Real estate, net

4,167,272

4,321,852

Cash and restricted cash

69,815

58,916

Receivables, net

48,568

52,768

Other assets, net

286,501

318,546

Total Assets

4,572,156

4,752,082

Liabilities and Equity:

Mortgage debt

3,118,908

3,177,603

Notes and accrued interest payable to DDR

2,555

1,556

Other liabilities

223,109

219,799

Total Liabilities

3,344,572

3,398,958

Redeemable preferred equity

400,203

395,156

Accumulated equity

827,381

957,968

Total Liabilities and Equity

$4,572,156

$4,752,082

DDR Corp. Financial Statements:  Footnotes

$ in millions, except per share

2Q16

2Q15

6M16

6M15

(1)

Minimum rents:

Straight-line rent, net

$1.3

$0.7

$2.6

$2.1

Below-market rent, net

1.1

0.9

1.4

1.2

Ground lease revenue

10.2

9.3

20.3

18.4

(2)

Other property revenues:

Lease termination fees

0.3

1.4

1.5

1.6

(3)

Operating expenses:

Recoverable expenses

(65.0)

(67.0)

(131.1)

(137.2)

Non-recoverable expenses

(6.9)

(6.8)

(13.8)

(13.0)

Straight-line ground rent expense

(0.2)

(0.1)

(0.3)

(0.3)

Expensed costs of suspended developments

(0.1)

(0.2)

(0.2)

(0.3)

(4)

Same Store NOI:

Consolidated NOI

174.0

175.1

Less: Non-controlling interests

(0.4)

(0.4)

Unconsolidated NOI at DDR Share

13.0

14.5

186.6

189.2

Less: Non-Same Store NOI

(14.2)

(22.0)

Same Store NOI

172.4

167.2

% Increase at DDR share

3.1%

(5)

Non-cash interest expense:

Debt fair value amortization

1.6

4.5

3.1

9.8

Loan cost amortization

(2.1)

(2.4)

(4.3)

(5.0)

Interest expense (capitalized)

0.7

1.6

1.9

3.2

(6)

General and administrative expenses:

Executive separation charges

(0.0)

(1.7)

(0.0)

(2.3)

Stock compensation expenses

(1.7)

(1.5)

(3.3)

(3.6)

Internal leasing expenses

(2.0)

(1.7)

(4.1)

(3.7)

Construction administrative costs (capitalized)

1.9

2.2

3.9

4.6

(7)

Other income (expense):

Other income (primarily insurance recovery), net

2.1

(0.0)

3.9

(0.2)

Debt extinguishment, net

(0.0)

2.4

(0.0)

(0.9)

(8)

Impairment charges:

Assets marketed for sale

(0.0)

(0.0)

(0.0)

(179.7)

Land previously held for development

(0.0)

(0.0)

(0.0)

(99.3)

$ in millions, except per share

2Q16

2Q15

6M16

6M15

(9)

Non-operating items excluded from Operating FFO:

Impairment charges – non-depreciable assets

$0.0

$0.0

$0.0

$99.3

Executive separation charges

0.0

1.7

0.0

2.3

Transaction, debt extinguishment, litigation, other, net

0.0

(1.9)

0.0

1.5

Loss (gain) on sale and change in control of interests, net

0.0

6.5

0.0

(7.8)

Tax expense (primarily Puerto Rico restructuring), net

(0.3)

0.0

(0.3)

4.4

Loss on disposition of non-depreciable real estate, net

2.4

0.1

2.1

0.6

2.1

6.4

1.8

100.3

(10)

Outstanding per share information:

Common shares (at quarter end)

365.5

361.1

365.5

361.1

OP units (at quarter end)

0.4

1.4

0.4

1.4

Total shares and units (at quarter end)

365.9

362.5

365.9

362.5

Weighted average shares and units – Basic – EPS

365.0

360.1

364.9

359.9

Assumed conversion of dilutive securities

0.3

4.1

0.3

0.0

Weighted average shares and units – Diluted – EPS

365.3

364.2

365.2

359.9

Weighted average shares and units – Basic – FFO & OFFO

365.9

362.5

365.8

362.4

Assumed conversion of dilutive securities

0.3

0.4

0.3

0.5

Weighted average shares and units – Diluted – FFO & OFFO

366.2

362.9

366.1

362.9

Earnings per common share – Basic & Diluted

$0.10

$0.03

$0.21

$(0.66)

FFO per share – Basic & Diluted

$0.33

$0.29

$0.64

$0.33

Operating FFO per share – Diluted

$0.33

$0.31

$0.65

$0.60

Common stock dividends declared, per share

$0.19

$0.1725

$0.38

$0.345

(11)

Intangible assets, net (at quarter and year end)

271.5

311.0

(12)

Below-market leases, net (at quarter and year end)

152.2

155.3

Additional financial information:

Capital expenditures (DDR share):

Retenanting

$7.9

$10.7

$16.3

$22.7

Maintenance – reimbursable and non reimbursable

6.0

4.3

7.0

5.9

Maintenance PSF of owned GLA – non reimbursable

0.04

0.04

Miscellaneous (DDR share):

Est. value of land owned adjacent to existing centers

$26

Cost basis of headquarters (non-income producing)

40

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ddr-reports-second-quarter-2016-operating-results-300304368.html

SOURCE DDR Corp.


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Press Releases

Related Entities

Dividend, Bankruptcy, Earnings, Definitive Agreement