DDR Ddr Corp.

BEACHWOOD, Ohio, April 30, 2013 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the first quarter ended March 31, 2013.

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SIGNIFICANT FIRST QUARTER ACTIVITY

• Generated Operating FFO of $0.27 per diluted share, an increase of 12.5% compared to the first quarter of 2012
• Executed 431 new leases and renewals for 2.1 million square feet
• Increased the portfolio leased rate by 20 basis points to 94.4% at March 31, 2013, from 94.2% at December 31, 2012 and by 70 basis points from 93.7% at March 31, 2012
• Generated positive leasing spreads, with new leases up 10.7% at 100% ownership and 11.9% on a pro rata basis, and renewals up 7.0% at 100% ownership and 7.5% on a pro rata basis; blended spreads were up 7.6% at 100% ownership and 8.4% on a pro rata basis
• Generated same store net operating income growth of 3.3% at 100% ownership and 3.1% on a pro rata basis as compared to the prior year
• Acquired $81 million of prime assets
• Issued $40 million of common shares to fund the net investment in prime assets
• Completed the disposition of $46 million of non-prime assets; DDR's pro rata gross proceeds was $35 million
• Refinanced two unsecured revolving credit facilities with an aggregate availability of $815 million and a $400 million secured term loan
• Issued $150 million of 6.250% preferred shares, the net proceeds of which will be used to redeem $150 million of 7.375% preferred shares

"We are pleased to report continued growth in Operating FFO while simultaneously improving the quality of our portfolio and enhancing balance sheet flexibility," commented DDR's chief executive officer, Daniel B. Hurwitz. 

FINANCIAL HIGHLIGHTS
The Company's first 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 $66.8 million, or $0.24 per diluted share, in the prior year.  The increase in Operating FFO for the three-month period ended March 31, 2013, as compared to 2012, primarily is due to organic growth and shopping center acquisitions.

Funds From Operations attributable to common shareholders ("FFO") for the three-month period ended March 31, 2013, increased to $82.5 million, or $0.26 per diluted share, which compares to $59.7 million, or $0.21 per diluted share, in the prior year.  The increase in FFO for the three-month period ended March 31, 2013, as compared to the same period in 2012, primarily is due to the same factors impacting Operating FFO as well as the loss on debt retirement recorded in the first quarter of 2012 related to the Company's repurchase of a portion of its 9.625% unsecured senior notes.

Net loss attributable to common shareholders for the three-month period ended March 31, 2013, was $0.7 million, or $0.00 per diluted share, which compares to net loss of $22.0 million, or $0.08 per diluted share, in the prior year.  The increase in net income attributable to common shareholders for the three-month period ended March 31, 2013, as compared to net income for the same period in 2012 primarily is due to the same factors impacting FFO as well as lower impairment charges on depreciable assets.

LEASING & PORTFOLIO OPERATIONS
The following results for the three-month period ended March 31, 2013, highlight continued strong leasing activity throughout the portfolio:

• Executed 198 new leases aggregating 0.9 million square feet and 233 renewals aggregating approximately 1.2 million square feet 
• Generated positive leasing spreads for the first quarter, with new leases up 10.7% at 100% ownership and 11.9% on a pro rata basis, and renewals up 7.0% at 100% ownership and 7.5% on a pro rata basis; blended spreads were up 7.6% at 100% ownership and 8.4% on a pro rata basis
• The portfolio leased rate increased to 94.4% at March 31, 2013, as compared to 93.7% at March 31, 2012 and 94.2% at December 31, 2012
• Same store net operating income ("NOI") increased by 3.3% at 100% ownership for the three-month period ended March 31, 2013 as compared to the prior year and 3.1% on a pro rata basis

ACQUISITIONS
In the first quarter of 2013, the Company acquired two prime assets located in Dallas, Texas and Oakland, California.  The acquisitions were funded primarily with proceeds from asset sales as well as common shares issued in March 2013.

DDR acquired Marketplace at Highland Village, a 400,000 square foot prime power center, in Dallas, Texas, for $40 million.  The trade area demographics include an average household income of over $100,000 and population of 237,000 people, and features anchor tenants such as Walmart, T.J. Maxx, HomeGoods, Petco, LA Fitness, and Office Depot.  Highland Village is 90% leased, 85% of its revenue is generated by national retailers, and the Company will leverage its operating platform to create additional value through lease up as well as the recapture and downsizing of space that can be marked to market.

The Company also acquired Whole Foods at Bay Place, a 57,000 square foot prime asset in Oakland, California, for $41 million.  This asset features a top-performing Whole Foods operating in a densely populated high barrier-to-entry urban infill location.  Trade area demographics include an average household income of approximately $90,000 and a population of 630,000 people.  The asset provides low risk current cash flow from a high credit tenant, consistent rent growth, and long-term NOI enhancement potential based on the quality of the location and future asset intensification opportunities.

In April 2013, the Company acquired its partner's 85% interest in five prime power centers for $94 million. The Company funded its investment primarily with proceeds from the issuance of common shares, proceeds from asset sales and corporate debt.  These prime power centers will be unencumbered.  The Company acquired its partner's interest in The Walk at Highwoods Preserve (Tampa, FL), Douglasville Pavilion (Atlanta, GA), Commonwealth Center and Chesterfield Crossing (Richmond, VA), and Jefferson Plaza (Norfolk, VA).  The five prime power centers aggregate 1.3 million of total square feet, are currently 98% leased, and are anchored by national tenants such as Walmart, Target, Costco, Home Depot, T.J. Maxx, Ross Dress for Less, PetSmart, Michael's, Fresh Market, Pier One and Cost Plus World Market.

FINANCINGS
In January 2013, the Company refinanced its two unsecured revolving credit facilities with an aggregate availability of $815 million and its $400 million secured term loan.  The Company's primary refinanced $750 million unsecured revolving credit facility has an initial maturity of April 2017 with borrower options to extend an additional year, and contains an accordion feature that provides for $1.25 billion of potential total availability.  Pricing on both refinanced revolving credit facilities was reduced and is currently set at LIBOR plus 140 basis points, a decrease of 25 basis points from the previous rate, and is determined based upon DDR's credit ratings from Moody's and S&P. Further, the annual facility fee for both revolving credit facilities has been reduced from 35 basis points to 30 basis points.

The refinanced secured term loan has an initial maturity of April 2017 with a borrower option to extend an additional year.  Pricing on the secured term loan is currently set at LIBOR plus 155 basis points, a decrease of 15 basis points from the previous rate, and is determined based upon DDR's credit ratings from Moody's and S&P.

In April 2013, the Company issued $150 million of its newly designated 6.250% Class K Cumulative Redeemable Preferred Shares at a price of $25.00 per depositary share.  In addition, the Company announced its intent to redeem $150 million of its Class H Cumulative Redeemable Preferred Shares at a redemption price of $25.1127 per depositary share (the sum of $25.00 per depositary share and dividends per depositary share of $0.1127 prorated to the redemption date).  The Company expects to record a non-cash charge of approximately $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.

The Company accessed its at-the-market common equity program and issued 2.3 million new common shares during the first quarter of 2013 at an average price of $17.57 per share, generating gross proceeds of $40 million, which were used to partially fund the acquisition of prime assets.  In April 2013, the Company issued an additional 2.5 million new common shares at an average price of $17.83 per share, generating gross proceeds of $45 million, to partially fund the acquisition of five prime assets.

DISPOSITIONS
The Company sold seven consolidated operating shopping centers aggregating approximately 0.4 million square feet in the first quarter of 2013, generating gross proceeds of approximately $24.7 million.  In addition, the Company sold $7.3 million of non-income producing assets.  The Company recorded an aggregate net gain of approximately $0.5 million related to asset sales in the first quarter of 2013. 

In the first quarter of 2013, the Company's unconsolidated joint ventures sold 15 assets, generating gross proceeds of approximately $14.5 million, of which the Company's proportionate share was $2.9 million.  The Company had previously written down its investment in these assets to zero.

2013 GUIDANCE
There has been no change in Operating FFO per share guidance since the last update provided on January 7, 2013.  The Company continues to estimate Operating FFO for 2013 between $1.07 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 (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.  Other real estate companies may calculate FFO and Operating FFO in a different manner.  FFO excluding the net non-operating items detailed in this release 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 March 31, 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 445 value-oriented shopping centers representing 116 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, May 1, 2013, at 10:00 a.m. Eastern Time.  To participate, please dial 800.299.8538 (domestic), or 617.786.2902 (international) at least ten minutes prior to the scheduled start of the call.  When prompted, provide the passcode: 87099285.  Access to the live call and replay will also be available through the Company's website.  The replay will be available through May 8, 2013.

SOURCE DDR Corp.