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 DDR Reports Fourth Quarter And Year End 2016 Operating Results
   Monday, February 13, 2017 4:01:00 PM ET

DDR Corp. (DDR ) today announced operating results for the fourth quarter and year ended December 31, 2016.

Financial Highlights

-- Fourth quarter net income attributable to common shareholders was $28.1 million, or $0.08 per diluted share

-- Fourth quarter operating funds from operations attributable to common shareholders ("Operating FFO") was $111.1 million or $0.30 per diluted share

Significant Quarterly Activity

-- Named William T. Ross, a seasoned veteran of the retail real estate industry, as chief operating officer to oversee asset and property management

-- Appointed Jane E. DeFlorio, an experienced investment banker with broad retail expertise, as a director

-- Generated same store net operating income growth, excluding Puerto Rico, of 2.5% on a pro rata basis

-- Executed 272 new leases and renewals for 1.9 million square feet

-- Generated new leasing spreads of 21.3% and renewal leasing spreads of 8.3%, both on a pro rata basis and excluding Puerto Rico

-- Achieved a portfolio leased rate of 95.0% at December 31, 2016, compared to 95.4% at September 30, 2016, on a pro rata basis

-- Sold 24 assets and three land parcels for $532 million during the quarter, totaling $497 million at DDR’s share

2016 Year-End Highlights

-- Net income attributable to common shareholders for the year ended December 31, 2016, was $37.6 million, or $0.10 per diluted share, which compares to a net loss of $94.5 million, or $0.27 per diluted share for the prior year

-- Generated Operating FFO of $1.28 per diluted share for the full year 2016, an increase of 4.1% compared to 2015

-- Acquired two shopping centers for $148 million at DDR’s share

-- Sold 50 assets and nine land parcels for $833 million at DDR’s share

-- Executed 1,221 new leases and renewals for 9.0 million square feet in 2016

-- Generated new leasing spreads for the full year 2016 of 25.0% and renewal leasing spreads of 8.4%, both on a pro rata basis and excluding Puerto Rico

-- Increased the annualized base rent per occupied square foot by 4.7% on a pro rata basis to $15.46 at December 31, 2016, from $14.76 at December 31, 2015

"I am pleased to report another strong quarter of executing on our stated near-term goals of asset sales, leverage reduction and organizational advancement. As we look forward, we are highly focused on completing the Company’s transition and positioning the portfolio, balance sheet, and organization for years to come," commented Thomas F. August, president and chief executive officer.

About DDR Corp. DDR is an owner and manager of 319 value-oriented shopping centers representing 106 million square feet in 35 states and Puerto Rico. The Company owns a high-quality portfolio of open-air shopping centers in major metropolitan areas that provide a highly compelling shopping experience and merchandise mix for retail partners and consumers. The Company actively manages its assets with a focus on creating 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 The Company will hold its quarterly conference call tomorrow, February 14, 2017, at 11:00 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, www.ddr.com/events. A copy of the Company’s Supplemental package is available on the Company’s website at www.ddr.com.

Non-GAAP Measures FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is 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 generally defined and calculated by the Company as net income (loss), 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 (loss) from joint ventures and equity income (loss) 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’s calculation of FFO is consistent 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 supplemental 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 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. 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 above.

FFO, Operating FFO, NOI 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 this release and the accompanying financial supplement.

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 deleveraging strategy; any impact or results from the Company’s portfolio transition or any change in strategy; and the finalization of the financial statements for the three months and year ended December 31, 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
                                                             4Q16      4Q15       12M16        12M15
    Revenues:
    Minimum rents (1)                                        $167,933  $179,154   $701,208     $719,737
    Percentage rent                                          2,827     2,675      7,610        6,267
    Recoveries                                               55,701    58,703     238,419      246,719
    Other property revenues (2)                              5,707     5,998      22,270       22,377
                                                             232,168   246,530    969,507      995,100
    Expenses (3):
    Operating and maintenance                                28,812    33,893     131,177      144,611
    Real estate taxes                                        35,197    36,271     145,907      149,082
                                                             64,009    70,164     277,084      293,693
    Net operating income                                     168,159   176,366    692,423      701,407
    Other income (expense):
    Fee income                                               8,093     8,258      36,298       32,971
    Interest income                                          9,254     7,510      37,054       29,213
    Interest expense (4)                                     (51,740)  (59,203)   (217,589)    (241,727)
    Depreciation and amortization                            (99,468)  (102,575)  (389,519)    (402,045)
    General and administrative (5)                           (20,941)  (17,920)   (76,101)     (73,382)
    Other income (expense), net (6)                          (148)     (439)      3,322        (1,739)
    Impairment charges (7)                                   (6,029)   0          (110,906)    (279,021)
    Income (loss) before earnings from JVs and other         7,180     11,997     (25,018)     (234,323)
    Equity in net income (loss) of JVs                       1,618     (5,486)    15,699       (3,135)
    Impairment of joint venture investments                  0         (1,909)    0            (1,909)
    (Loss) gain on sale and change in control                0         0          (1,087)      7,772
    Tax expense                                              (680)     (285)      (1,781)      (6,286)
    Gain on disposition of real estate, net                  25,916    89,417     73,386       167,571
    Net income (loss)                                        34,034    93,734     61,199       (70,310)
    Non-controlling interests                                (293)     (268)      (1,187)      (1,858)
    Net income (loss) DDR                                    33,741    93,466     60,012       (72,168)
    Preferred dividends                                      (5,594)   (5,594)    (22,375)     (22,375)
    Net income (loss) Common Shareholders                    28,147    87,872     37,637       (94,543)
    Depreciation and amortization of real estate             97,356    100,582    381,170      393,847
    Equity in net (income) loss of JVs                       (1,618)   5,486      (15,699)     3,135
    Impairment of depreciable joint venture investments      0         1,909      0            1,909
    JVs’ FFO                                                 6,868     6,465      26,025       27,579
    Non-controlling interests                                76        69         303          635
    Impairment of depreciable real estate                    6,029     0          110,906      179,748
    Gain on disposition of depreciable real estate, net      (25,698)  (85,728)   (74,182)     (164,010)
    FFO Common Shareholders                                  111,160   116,655    466,160      348,300
    Non-operating items, net (8)                             (74)      (2,533)    2,232        97,890
    Operating FFO                                            $111,086  $114,122   $468,392     $446,190
    FFO per share - Diluted (9)                              $0.30     $0.32      $1.27        $0.96
    Operating FFO per share - Diluted (9)                    $0.30     $0.31      $1.28        $1.23
DDR Corp.
Balance Sheet:  Consolidated Interests
    $ in thousands
                                                                                  At Year End
                                                                                  4Q16         4Q15
    Assets:
    Land                                                                          $1,990,406   $2,184,145
    Buildings                                                                     6,412,532    6,965,632
    Fixtures and tenant improvements                                              735,685      743,037
                                                                                  9,138,623    9,892,814
    Depreciation                                                                  (1,996,176)  (2,062,899)
                                                                                  7,142,447    7,829,915
    Construction in progress and land                                             105,435      235,385
    Real estate, net                                                              7,247,882    8,065,300
    Investments in JVs                                                            60,793       72,576
    Receivable - preferred equity interest                                        393,338      395,156
    Cash                                                                          30,430       22,416
    Restricted cash                                                               8,795        10,104
    Notes receivable, net                                                         49,503       42,534
    Receivables, net                                                              121,367      129,089
    Other assets, net (10)                                                        285,410      359,913
    Total Assets                                                                  8,197,518    9,097,088
    Liabilities and Equity:
    Revolving credit facilities                                                   0            210,000
    Unsecured debt                                                                2,913,217    3,149,188
    Unsecured term loan                                                           398,399      397,934
    Secured debt                                                                  1,182,352    1,382,415
                                                                                  4,493,968    5,139,537
    Dividends payable                                                             75,245       68,604
    Other liabilities (11)                                                        382,293      425,478
    Total Liabilities                                                             4,951,506    5,633,619
    Preferred shares                                                              350,000      350,000
    Common shares                                                                 36,630       36,529
    Paid-in capital                                                               5,487,212    5,466,511
    Distributions in excess of net income                                         (2,632,327)  (2,391,793)
    Deferred compensation                                                         15,149       15,537
    Other comprehensive income                                                    (4,192)      (6,283)
    Common shares in treasury at cost                                             (14,957)     (15,316)
    Non-controlling interests                                                     8,497        8,284
    Total Equity                                                                  3,246,012    3,463,469
    Total Liabilities and Equity                                                  $8,197,518   $9,097,088
DDR Corp.
Income Statement:  Unconsolidated Interests at 100%
    $ in thousands
                                                             4Q16      4Q15       12M16        12M15
    Revenues:
    Minimum rents                                            $96,587   $95,265    $386,978     $392,657
    Percentage rent                                          1,435     1,106      2,842        2,431
    Recoveries                                               29,323    29,087     118,479      119,321
    Other property revenues                                  1,544     1,875      5,066        10,288
                                                             128,889   127,333    513,365      524,697
    Expenses:
    Operating and maintenance                                16,819    18,921     71,799       76,556
    Real estate taxes                                        17,989    17,509     73,185       70,368
                                                             34,808    36,430     144,984      146,924
    Net operating income                                     94,081    90,903     368,381      377,773
    Other income (expense):
    Interest expense                                         (32,735)  (33,003)   (132,943)    (140,701)
    Depreciation and amortization                            (49,187)  (49,648)   (195,198)    (207,816)
    Impairment charges                                       0         (52,252)   (13,598)     (52,700)
    Preferred share expense                                  (8,411)   (6,743)    (33,418)     (25,991)
    Other (expense) income, net                              (5,554)   (11,732)   (23,513)     (30,235)
                                                             (1,806)   (62,475)   (30,289)     (79,670)
    Gain on disposition of real estate, net                  3,006     21,385     57,261       17,188
    Net income (loss) attributable to unconsolidated JVs     1,200     (41,090)   26,972       (62,482)
    Depreciation and amortization                            49,187    49,648     195,198      207,816
    Impairment of depreciable real estate                    0         52,252     13,598       52,700
    Gain on disposition of depreciable real estate, net      (2,688)   (21,385)   (56,943)     (17,188)
    FFO                                                      47,699    39,425     178,825      180,846
    FFO at DDR’s ownership interests                         6,868     6,465      26,025       27,579
    Operating FFO at DDR’s ownership interests (8)           $6,866    $6,667     $26,049      $27,829
DDR Corp.
Balance Sheet:  Unconsolidated Interests at 100%
    $ in thousands
                                                                                  At Year End
                                                                                  4Q16         4Q15
    Assets:
    Land                                                                          $1,287,675   $1,343,889
    Buildings                                                                     3,376,720    3,551,227
    Improvements                                                                  203,824      191,581
                                                                                  4,868,219    5,086,697
    Depreciation                                                                  (884,356)    (817,235)
                                                                                                         3,983,863    4,269,462
                 Construction in progress and land                                                       56,983       52,390
                 Real estate, net                                                                        4,040,846    4,321,852
                 Cash and restricted cash                                                                50,378       58,916
                 Receivables, net                                                                        50,685       52,768
                 Other assets, net                                                                       248,664      318,546
                 Total Assets                                                                            4,390,573    4,752,082
                 Liabilities and Equity:
                 Mortgage debt                                                                           3,034,399    3,177,603
                 Notes and accrued interest payable to DDR                                               1,584        1,556
                 Other liabilities                                                                       206,949      219,799
                 Total Liabilities                                                                       3,242,932    3,398,958
                 Redeemable preferred equity                                                             393,338      395,156
                 Accumulated equity                                                                      754,303      957,968
                 Total Liabilities and Equity                                                            $4,390,573   $4,752,082
DDR Corp.
Financial Statements:  Footnotes
$ in millions, except per share
                                                                                    4Q16      4Q15       12M16        12M15
(1)              Minimum rents:
                 Straight-line rent, net                                            $0.9      $1.5       $4.6         $5.3
                 Below-market rent, net                                             2.0       0.7        5.7          2.9
                 Ground lease revenue                                               10.3      9.5        40.9         37.4
(2)              Other property revenues:
                 Lease termination fees                                             0.4       0.5        3.5          2.8
(3)              Operating expenses:
                 Recoverable expenses                                               (59.2)    (64.2)     (253.2)      (268.3)
                 Non-recoverable expenses                                           (4.8)     (6.0)      (23.9)       (25.4)
                 Straight-line ground rent income (expense)                         0.6       (0.1)      0.3          (0.5)
                 Expensed costs of suspended developments                           (0.1)     (0.1)      (0.4)        (0.5)
(4)              Non-cash interest expense:
                 Debt fair value amortization                                       1.5       1.6        6.3          14.4
                 Loan cost amortization                                             (2.0)     (2.3)      (8.4)        (9.6)
                 Interest expense (capitalized)                                     0.4       1.5        3.1          6.7
(5)              General and administrative expenses:
                 Executive separation charges                                       (0.0)     (0.3)      (0.0)        (2.6)
                 Stock compensation expenses                                        (2.3)     (1.4)      (7.0)        (6.6)
                 Internal leasing expenses                                          (1.6)     (2.0)      (7.7)        (7.5)
                 Construction administrative costs (capitalized)                    2.4       2.1        8.1          9.1
(6)              Other income (expense):
                 Other income (primarily insurance recovery in 2016), net           (0.1)     (0.3)      3.8          (0.7)
                 Debt extinguishment, net                                           (0.0)     (0.1)      (0.5)        (1.0)
(7)              Impairment charges:
                 Assets marketed for sale                                           (6.0)     (0.0)      (110.9)      (179.7)
                 Land previously held for development                               (0.0)     (0.0)      (0.0)        (99.3)
(8)              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       0.3        0.0          2.6
                 Transaction, debt extinguishment, litigation, other, net           0.1       0.7        0.6          2.3
                 Joint ventures - transaction, currency, other                      0.0       0.2        0.0          0.2
                 Gain on sale and change in control of interests, net               0.0       0.0        0.0          (7.8)
                 Tax expense (primarily Puerto Rico restructuring), net             0.0       0.0        (0.3)        4.4
                 (Gain) loss on disposition of non-depreciable real estate, net     (0.2)     (3.7)      1.9          (3.1)
                                                                                    (0.1)     (2.5)      2.2          97.9
DDR Corp.
Financial Statements:  Footnotes
$ in millions, except per share
                                                                                    4Q16      4Q15       12M16        12M15
(9)              Outstanding per share information:
                 Common shares (at quarter end)                                     366.3     365.3      366.3        365.3
                 OP units (at quarter end)                                          0.4       0.4        0.4          0.4
                 Total shares and units (at quarter end)                            366.7     365.7      366.7        365.7
                 Weighted average shares and units - Basic - EPS                    366.0     362.7      365.3        360.9
                 Assumed conversion of dilutive securities                          0.1       2.5        0.3          0.0
                 Weighted average shares and units - Diluted - EPS                  366.1     365.2      365.6        360.9
                 Weighted average shares and units - Basic - FFO & OFFO             366.6     364.0      366.1        362.9
                 Assumed conversion of dilutive securities                          0.1       0.4        0.3          0.4
                 Weighted average shares and units - Diluted - FFO & OFFO           366.7     364.4      366.4        363.3
                 Earnings per common share - Basic & Diluted                        $0.08     $0.24      $0.10        $(0.27)
                 FFO per share - Basic & Diluted                                    $0.30     $0.32      $1.27        $0.96
                 Operating FFO per share - Diluted                                  $0.30     $0.31      $1.28        $1.23
                 Common stock dividends declared, per share                         $0.19     $0.1725    $0.76        $0.69
(10)             Intangible assets, net (at year end)                                                    241.6        311.0
(11)             Below-market leases, net (at year end)                                                  147.9        155.3
Additional financial information:
                 Capital expenditures (DDR share):
                 Retenanting                                                        $7.3      $12.9      $32.3        $49.0
                 Maintenance - reimbursable and non reimbursable                    2.4       2.9        17.4         16.2
                 Maintenance PSF of owned GLA - non reimbursable                                         0.14         0.13
                 Miscellaneous (DDR share):
                 Est. value of land owned adjacent to existing centers                                   $28
                 Cost basis of headquarters (non-income producing)                                       40
DDR Corp.
Reconciliation of Net Income Attributable to DDR to Same Store NOI (1)
$ in millions
                                                                                                         At DDR Share
                                                                                                         (Non-GAAP)
                                                                                    4Q16      4Q15       4Q16         4Q15
                 GAAP Reconciliation:
                 Net income attributable to DDR                                     $33.7     $93.5      $33.7        $93.5
                 Fee income                                                         (8.1)     (8.3)      (8.1)        (8.3)
                 Interest income                                                    (9.2)     (7.5)      (9.2)        (7.5)
                 Interest expense                                                   51.7      59.2       51.7         59.2
                 Depreciation and amortization                                      99.5      102.6      99.5         102.6
                 General and administrative                                         20.9      17.9       20.9         17.9
                 Other expense                                                      0.1       0.4        0.1          0.4
                 Impairment charges                                                 6.0       0.0        6.0          0.0
                 Equity in net (income) loss of joint ventures                      (1.6)     5.5        (1.6)        5.5
                 Impairment of joint venture investments                            0.0       1.9        0.0          1.9
                 Tax expense                                                        0.7       0.3        0.7          0.3
                 Gain on disposition of real estate                                 (25.9)    (89.4)     (25.9)       (89.4)
                 Income from non-controlling interests                              0.3       0.3        0.3          0.3
                 Consolidated NOI                                                   168.1     176.4      168.1        176.4
                 DDR’s consolidated JV                                              0.0       0.0        (0.4)        (0.4)
                 Consolidated NOI, net of non-controlling interests                 168.1     176.4      167.7        176.0
                 Net income (loss) from unconsolidated joint ventures               1.2       (41.1)     1.2          (6.7)
                 Interest expense                                                   32.7      33.0       5.2          5.5
                 Depreciation and amortization                                      49.2      49.7       5.7          6.1
                 Impairment charges                                                 0.0       52.3       0.0          10.5
                 Preferred share expense                                            8.4       6.7        0.4          0.3
                 Other expense, net                                                 5.6       11.7       1.0          1.2
                 Gain on disposition of real estate, net                            (3.0)     (21.4)     (0.1)        (3.4)
                 Unconsolidated NOI                                                 94.1      90.9       13.4         13.5
                 Total Consolidated + Unconsolidated NOI                            262.2     267.3      181.1        189.5
                 Less:  Non-Same Store NOI adjustments                              (21.6)    (33.3)     (15.6)       (27.2)
                 Total SSNOI                                                        240.6     234.0      165.5        162.3
                 Less:  Puerto Rico Same Store NOI                                  (22.9)    (23.2)     (22.9)       (23.2)
                 Total SSNOI excluding Puerto Rico                                  $217.7    $210.8     $142.6       $139.1
                 SSNOI % Increase                                                   2.8%                 2.0%
 SSNOI % Increase excluding Puerto Rico                             3.3%        2.5%
(1) Excludes major redevelopment activity; see Investments section for additional detail.  See calculation definition in the Non-GAAP Measures
    section.

PRER

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ddr-reports-fourth-quarter-and-year-end-2016-operating-results-300406414.html

SOURCE DDR Corp.

https://rt.prnewswire.com/rt.gif?NewsItemId=CL10809&Transmission_Id=201702131601PR_NEWS_USPR_____CL10809&DateId=20170213



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