DDR Reports Operating FFO Per Diluted Share Of $0.28 For The Quarter Ended September 30, 2013

BEACHWOOD, Ohio, Nov. 4, 2013 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the third quarter ended September 30, 2013.

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SIGNIFICANT THIRD QUARTER ACTIVITY

• Generated Operating FFO of $0.28 per diluted share, an increase of 3.7% compared to third quarter of 2012
• Revised guidance upward to $1.10 to $1.12 of Operating FFO per diluted share based on strong year-to-date operating results
• Executed 443 new leases and renewals for 3.0 million square feet
• Increased the portfolio leased rate by 20 basis points to 94.8% at September 30, 2013 from 94.6% at June 30, 2013 and by 80 basis points from 94.0% at September 30, 2012
• Generated positive leasing spreads, with new leases up 12.3% at 100% ownership and 14.5% on a pro rata basis, and renewals up 7.4% at 100% ownership and 7.0% on a pro rata basis; blended spreads were up 8.4% at 100% ownership and 8.6% 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 as compared to the prior year
• Acquired $259 million of wholly-owned prime shopping centers
• Closed on a new unconsolidated joint venture with Blackstone that acquired a portfolio of seven prime power centers with a total value of $332 million
• Completed the disposition of $138 million of non-prime assets; DDR's pro rata gross proceeds were $104 million

"We are very pleased with the consistent execution of our strategic initiatives and the solid operating results produced during the third quarter. We are optimistic regarding future performance and look forward to continued momentum," commented DDR's chief executive officer, Daniel B. Hurwitz. 

FINANCIAL HIGHLIGHTS
The Company's third quarter Operating Funds From Operations attributable to common shareholders ("Operating FFO") increased to $90.0 million, or $0.28 per diluted share, which compares to $82.9 million, or $0.27 per diluted share, for the prior-year comparable period.  The increase in Operating FFO for the three-month period ended September 30, 2013, as compared to the same period in 2012, primarily is due to organic growth as well as shopping center acquisitions, partially offset by asset dispositions.

Funds From Operations attributable to common shareholders ("FFO") for the three-month period ended September 30, 2013 decreased to $89.9 million, or $0.28 per diluted share, which compares to $112.7 million, or $0.37 per diluted share, for the prior-year comparable period.  The decrease in FFO for the three-month period ended September 30, 2013, as compared to the same period in 2012, primarily is due to the gain on change in control of interests recorded in 2012 partially offset by organic growth and net shopping center acquisition activity. 

Operating FFO for the nine-month period ended September 30, 2013 increased to $262.2 million, or $0.82 per diluted share, which compares to $221.3 million, or $0.76 per diluted share, for the prior-year comparable period.  The increase in Operating FFO for the nine-month period ended September 30, 2013, as compared to the same period in 2012, primarily is due to the same factors impacting Operating FFO for the three-month period.

FFO for the nine-month period ended September 30, 2013 increased to $252.4 million, or $0.79 per diluted share, which compares to $250.5 million, or $0.86 per diluted share, for the prior-year comparable period.  The increase in FFO for the nine-month period ended September 30, 2013, as compared to the same period in 2012, 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 loss attributable to common shareholders for the three-month period ended September 30, 2013 was $7.0 million, or $0.02 per diluted share, which compares to net income of $13.3 million, or $0.04 per diluted share, for the prior-year comparable period.  Net loss attributable to common shareholders for the nine-month period ended September 30, 2013 was $43.7 million, or $0.14 per diluted share, which compares to net loss of $53.2 million, or $0.19 per diluted share, for the prior-year comparable period.  The change in net loss attributable to common shareholders for both the three- and nine-month periods ended September 30, 2013, as compared to the same periods in 2012, primarily is due to the same factors impacting FFO for such period.

LEASING & PORTFOLIO OPERATIONS
The following results for the three-month period ended September 30, 2013, highlight continued strong leasing activity throughout the portfolio:

• Executed 210 new leases aggregating approximately 0.9 million square feet and 233 renewals aggregating approximately 2.1 million square feet
• Generated positive leasing spreads for the third quarter, with new leases up 12.3% at 100% ownership and 14.5% on a pro rata basis, and renewals up 7.4% at 100% ownership and 7.0% on a pro rata basis; blended spreads were up 8.4% at 100% ownership and 8.6% on a pro rata basis
• The portfolio leased rate increased to 94.8% at September 30, 2013, as compared to 94.6% at June 30, 2013 and 94.0% at September 30, 2012
• Same store net operating income ("NOI") increased by 3.3% at 100% ownership for the three-month period ended September 30, 2013 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 September 30, 2013 was $14.00, as compared to $13.79 at September 30, 2012

ACQUISITIONS & FINANCINGS
In July 2013, the Company acquired two regional power centers in Orlando, Florida and Atlanta, Georgia, with a combined gross leasable area of 1.4 million square feet for a gross purchase price of $258.5 million.  The Company assumed two mortgages aggregating $139.4 million.

In August 2013, a joint venture between consolidated affiliates of the Company and Blackstone acquired a portfolio of seven prime shopping centers totaling approximately 2.4 million square feet for $332 million.  An affiliate of Blackstone owns 95% of the common equity of the joint venture, and the remaining 5% interest is owned by the Company.  The joint venture assumed $207 million of mortgage debt and entered into $28 million of additional mortgage debt.  In addition, the Company's investment includes $30 million in preferred equity with a fixed distribution rate of 9%.  The Company provides leasing and management services and has the right of first offer to acquire four of the assets under specified conditions. 

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 with Blackstone Real Estate Partners VII L.P. ("Blackstone").  The investment was funded through a combination of proceeds from the issuance of new common equity, unsecured debt, preferred equity and mezzanine loan repayments, and the assumption of existing mortgage debt. 

DISPOSITIONS 
In the third quarter of 2013, the Company sold 11 consolidated operating shopping centers, aggregating approximately 1.1 million square feet, and non-income producing assets generating gross proceeds of approximately $66.8 million.  The Company recorded an aggregate net gain of approximately $10.6 million related to asset sales in the third quarter of 2013.  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 $71.1 million, of which the Company's pro rata share was $37.0 million.

2013 GUIDANCE
As a result of strong year-to-date operating metrics, the Company is revising 2013 guidance for Operating FFO to a range between $1.10 and $1.12 per diluted share from $1.08 to $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 (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 September 30, 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 431 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, as well as on Twitter, LinkedIn, Facebook and Pinterest.

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, November 5, 2013, at 10:00 a.m. Eastern Time.  To participate, please dial 800.798.2864 (domestic), or 617.614.6206 (international) at least ten minutes prior to the scheduled start of the call.  When prompted, provide the passcode: 34370884.  Access to the live call and replay will also be available through the Company's website.  The replay will be available through November 12, 2013.

SOURCE DDR