DDR Reports Second Quarter 2016 Operating Results

BEACHWOOD, Ohio, July 26, 2016 /PRNewswire/ -- DDR Corp. 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.

 

 

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SOURCE DDR Corp.