DDR Ddr Corp.

BEACHWOOD, Ohio, Feb. 12, 2014 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the fourth quarter and year ended December 31, 2013.

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SIGNIFICANT FOURTH QUARTER ACTIVITY

• Generated Operating FFO of $0.29 per diluted share for the fourth quarter, an increase of 7.4% compared to the fourth quarter of 2012
• Executed 384 new leases and renewals for 2.5 million square feet
• Increased the portfolio leased rate by 30 basis points to 95.1% at December 31, 2013 from 94.8% at September 30, 2013
• Generated positive leasing spreads with new leases up 13.9% at 100% ownership and 20.7% on a pro rata basis, and renewals up 8.0% at 100% ownership and 7.9% on a pro rata basis; blended spreads were up 9.2% at 100% ownership and 10.0% on a pro rata basis
• Generated same store net operating growth of 3.4% at 100% ownership and 3.1% on a pro rata basis compared to the prior year
• Acquired sole ownership of 30 prime power centers from an existing joint venture with Blackstone Real Estate Partners VII for $1.46 billion
• Issued $300 million of 3.50% senior unsecured notes due 2021
• Closed on the forward issuance of $664 million of common equity to fund the net investment in prime assets
• Completed the disposition of $184 million of non-prime assets; DDR's pro rata gross proceeds were $98 million

2013 YEAR-END HIGHLIGHTS

• Generated Operating FFO of $1.11 per diluted share for the full year 2013, an increase of 7.8% compared to 2012
• Executed 1,719 new leases and renewals for 10.3 million square feet in 2013
• Increased the portfolio leased rate by 90 basis points from 94.2% at December 31, 2012
• Generated positive leasing spreads for the full year 2013, with new leases up 12.2% at 100% ownership and 14.9% on a pro rata basis, and renewals up 7.4% at 100% ownership and 7.6% 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 for the full year 2013 as compared to 2012
• Increased the total portfolio average annualized base rent per occupied square foot to $14.18 as of December 31, 2013 as compared to $13.66 at December 31, 2012

"We are extremely pleased with the consistent operating performance of our portfolio which led to high quality growth in 2013 and we expect operating metrics to accelerate further in 2014," commented DDR's chief executive officer, Daniel B. Hurwitz. 

FINANCIAL HIGHLIGHTS
The Company's fourth quarter Operating Funds From Operations attributable to common shareholders ("Operating FFO") increased to $104.5 million, or $0.29 per diluted share, which compares to $84.0 million, or $0.27 per diluted share, for the prior-year comparable period.  The increase in Operating FFO for the three-month period ended December 31, 2013, as compared to the same period in 2012, primarily is due to organic growth as well as shopping center acquisition transactions, partially offset by asset dispositions.

Funds From Operations attributable to common shareholders ("FFO") for the three-month period ended December 31, 2013 increased to $120.2 million, or $0.33 per diluted share, which compares to $61.8 million, or $0.20 per diluted share, for the prior-year comparable period.  The increase in FFO for the three-month period ended December 31, 2013, as compared to the same period in 2012, primarily is due to organic growth and net shopping center acquisition activity as well as the gain on change in control of interests recorded in the fourth quarter of 2013. 

Operating FFO for the year ended December 31, 2013 increased to $366.7 million, or $1.11 per diluted share, which compares to $305.3 million, or $1.03 per diluted share, for the prior year.  The increase in Operating FFO for the year ended December 31, 2013, primarily is due to the same factors impacting Operating FFO for the three-month period.

FFO for the year ended December 31, 2013 increased to $372.5 million, or $1.13 per diluted share, which compares to $312.4 million, or $1.06 per diluted share, for the prior year.  The increase in FFO for the year ended December 31, 2013, primarily is due to the same factors impacting FFO for the three-month period, 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 in 2012.

Net income attributable to common shareholders for the three-month period ended December 31, 2013 was $0.6 million, or $0.00 per diluted share, which compares to net loss of $7.0 million, or $0.02 per diluted share, for the prior-year comparable period.  Net loss attributable to common shareholders for the year ended December 31, 2013 was $43.1 million, or $0.14 per diluted share, which compares to net loss of $60.3 million, or $0.21 per diluted share, for the prior year.  The change in net loss attributable to common shareholders for the three-month period and year ended December 31, 2013, is primarily due to the same factors impacting FFO.

LEASING & PORTFOLIO OPERATIONS
The following results for the full year and fourth quarter of 2013 highlight continued strong leasing activity throughout the portfolio: 

• Executed 778 new leases aggregating 3.4 million square feet and 941 renewals aggregating approximately 6.9 million square feet, of which 180 new leases aggregating approximately 0.8 million square feet and 204 renewals aggregating approximately 1.7 million square feet were executed in the fourth quarter 
• Generated positive leasing spreads for the full year 2013, with new leases up 12.2% at 100% ownership and 14.9% on a pro rata basis, and renewals up 7.4% at 100% ownership and 7.6% on a pro rata basis; blended spreads were up 8.3% at 100% ownership and 8.9% on a pro rata basis
• Generated positive leasing spreads for the fourth quarter, with new leases up 13.9% at 100% ownership and 20.7% on a pro rata basis, and renewals up 8.0% at 100% ownership and 7.9% on a pro rata basis; blended spreads were up 9.2% at 100% ownership and 10.0% on a pro rata basis 
• The portfolio leased rate increased to 95.1% at December 31, 2013, as compared to 94.8% at September 30, 2013 and 94.2% at December 31, 2012  
• Same store net operating income ("NOI") increased by 3.3% at 100% ownership for the full year 2013 and 3.4% for the fourth quarter as compared to the same periods in 2012 and 3.1% on a pro rata basis for both the full year and fourth quarter of 2013  
• Total portfolio average annualized base rent per occupied square foot as of December 31, 2013 was $14.18, as compared to $13.66 at December 31, 2012

ACQUISITIONS & FINANCINGS
In October 2013, the Company acquired sole ownership of a portfolio of 30 prime power centers that were previously owned by an existing joint venture ("BRE JV") with Blackstone Real Estate Partners VII L.P. ("Blackstone") for $1.46 billion ($1.54 billion at 100%).  The investment was funded through a combination of proceeds from the issuance of new common equity and unsecured debt that priced in May, preferred equity and mezzanine loan repayments, and the assumption of existing mortgage debt.  The Company recorded a gain on change in control and sale of interests of $18.8 million related to the transaction.

In November 2013, the Company issued $300 million aggregate principal amount of 3.50% senior unsecured notes due January 2021.  Proceeds from the issuance were used to repay mortgage debt assumed from the acquisition of assets from the BRE JV.

DISPOSITIONS
In the fourth quarter of 2013, the Company sold 11 consolidated operating shopping centers, aggregating approximately 0.9 million square feet, and consolidated non-income producing assets generating gross proceeds of approximately $81.8 million.  The Company recorded an aggregate net gain of approximately $4.2 million related to these asset sales.  During the same period, the Company's unconsolidated joint ventures sold five operating shopping centers, aggregating approximately 1.1 million square feet, and non-income producing assets generating gross proceeds of approximately $102.6 million, of which the Company's pro rata share was $15.7 million.  An aggregate net gain of approximately $7.9 million was recorded related to these asset sales, of which the Company's pro rata share was $1.9 million. 

2014 GUIDANCE
There has been no change in Operating FFO per share guidance since the initial release provided on January 6, 2014.  The Company continues to estimate Operating FFO for 2014 between $1.17 and $1.21 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, 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 and year ended December 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 416 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, as well as on Twitter, LinkedIn and Facebook.

CONFERENCE CALL INFORMATION & SUPPLEMENTAL MATERIALS
A copy of the Company's Supplemental Financial/Operational package is available to all interested parties 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, February 13, 2014, at 10:00 a.m. Eastern Time.  To participate, please dial 877.703.6110 (domestic), or 857.244.7309 (international) at least ten minutes prior to the scheduled start of the call.  When prompted, provide the passcode: 55843186.  Access to the live call and replay will also be available through the Company's website.  The replay will be available through February 20, 2014.

SOURCE DDR Corp.