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DDR Reports a 6.2% Increase in Operating FFO Per Diluted Share to $1.03 for the Year Ended December 31, 2012

BEACHWOOD, Ohio, Feb. 12, 2013 /PRNewswire/ -- DDR Corp. (NYSE: DDR) today announced operating results for the fourth quarter ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20110912/CL65938LOGO )

SIGNIFICANT 2012 ACTIVITY

  • Generated Operating FFO of $1.03 per diluted share for the full year 2012 and $0.27 per diluted share for the fourth quarter, an increase of 6.2% compared to the full year 2011
  • Executed 1,958 new leases and renewals for 11.3 million square feet in 2012, which includes 471 new leases and renewals for 2.4 million square feet in the fourth quarter
  • Increased the portfolio leased rate by 60 basis points to 94.2% at December 31, 2012, from 93.6% at December 31, 2011 and by 20 basis points from 94.0% at September 30, 2012
  • Generated positive leasing spreads for the full year 2012, with new leases up 9.7% at 100% ownership and 13.6% on a pro rata basis, and renewals up 6.1% at 100% ownership and 6.0% on a pro rata basis; blended spreads were up 6.7% at 100% ownership and 7.0% on a pro rata basis
  • Generated same store net operating income growth of 4.0% at 100% ownership and 3.4% on a pro rata basis for the full year 2012 as compared to 2011
  • Generated same store net operating income growth of 4.3% at 100% ownership and 4.4% on a pro rata basis for the fourth quarter as compared to the fourth quarter of 2011
  • Acquired $760 million of prime assets on a pro rata basis in 2012 of which $151 million were acquired in the fourth quarter
  • Issued $511 million of common equity to fund the net investment in prime assets in 2012 of which 4.8 million shares were issued in the fourth quarter for gross proceeds of $75 million
  • Completed the disposition of $347 million of non-prime assets in 2012 of which $255 million were sold in the fourth quarter; DDR's pro rata share of the gross proceeds was $143 million, $62 million of which was in the fourth quarter

"We continue to be pleased with our performance metrics, access to capital and overall tenant operating and financial strength within our portfolio.  We expect these positive trends to continue in 2013," 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 $84.0 million, or $0.27 per diluted share, which compares to $72.1 million, or $0.26 per diluted share, for the prior-year comparable period.  The increase in Operating FFO for the three-month period ended December 31, 2012, as compared to the same period in 2011, is primarily due to organic growth and shopping center acquisitions and related investments partially offset by asset dispositions.

Funds From Operations attributable to common shareholders ("FFO") for the three-month period ended December 31, 2012, increased to $61.8 million, or $0.20 per diluted share, which compares to $47.4 million, or $0.17 per diluted share, for the prior-year comparable period.  The increase in FFO for the three-month period ended December 31, 2012, as compared to the same period in 2011, is primarily due to the same factors impacting Operating FFO as well as lower impairment charges on non-depreciable assets partially offset by higher transaction costs and a loss on change in control and sale of interests.

Operating FFO for the year ended December 31, 2012 increased to $305.3 million, or $1.03 per diluted share, which compares to $267.1 million, or $0.97 per diluted share, for the prior year.  The increase in Operating FFO for the year ended December 31, 2012, is primarily due to the same factors impacting Operating FFO for the three-month period.

FFO for the year ended December 31, 2012 increased to $312.4 million, or $1.06 per diluted share, which compares to $227.6 million, or $0.75 per diluted share, for the prior year.  The increase in FFO for the year ended December 31, 2012, is primarily due to the same factors impacting FFO for the three-month period as well as gains on change in control and sale of interests partially offset by the loss on debt retirement related to the Company's repurchase of a portion of its 9.625% unsecured senior notes in 2012 and the effect of the valuation adjustment associated with the warrants that were exercised in full for cash in the first quarter of 2011.

Net loss attributable to common shareholders for the three-month period ended December 31, 2012, was $7.0 million, or $0.02 per diluted share, which compares to net loss of $1.8 million, or $0.01 per diluted share, for the prior-year comparable period.  Net loss attributable to common shareholders for the year ended December 31, 2012, was $60.3 million, or $0.21 per diluted share, which compares to net loss of $53.8 million, or $0.28 per diluted share, for the prior year.  The increase in net loss attributable to common shareholders for the three-month period and year ended December 31, 2012, is primarily due to the same factors impacting FFO as well as higher impairment charges on depreciable assets and depreciation expense.

LEASING & PORTFOLIO OPERATIONS   
The following results for the full year and fourth quarter of 2012, highlight continued strong leasing activity throughout the portfolio:

  • Executed 189 new leases aggregating 0.7 million square feet and 282 renewals aggregating approximately 1.7 million square feet in the fourth quarter   
  • Generated positive leasing spreads for the fourth quarter, with new leases up 11.7% at 100% ownership and 14.3% on a pro rata basis, and renewals up 6.8% at both 100% ownership and on a pro rata basis; blended spreads were up 7.6% at 100% ownership and 7.8% on a pro rata basis  
  • The portfolio leased rate was 94.2% at December 31, 2012, as compared to 94.0% at September 30, 2012 and 93.6% at December 31, 2011  
  • Same store net operating income ("NOI") increased by 4.0% at 100% ownership for the full year 2012 and 4.3% for the fourth quarter as compared to the same periods in 2011 and 3.4% and 4.4% on a pro rata basis for the full year and fourth quarter 2012, respectively

ACQUISITIONS  
In the fourth quarter of 2012, the Company acquired two prime power centers located in North Carolina. The Company funded these acquisitions through a combination of proceeds from asset sales and the issuance of new common equity and the senior unsecured notes.

Carolina Pavilion, in Charlotte, North Carolina, was purchased for $106 million. This 94% leased 852,000 square foot prime power center features anchor tenants such as Target, Kohl's, Nordstrom Rack, Ross Dress for Less, buybuy BABY, Bed Bath & Beyond, Jo-Ann Fabric and Craft Stores and AMC Theatres. In addition, new leasing activity with national anchors including PetSmart and Golfsmith will soon fill 85,000 square feet of currently vacant space.

Poyner Place, in Raleigh, North Carolina, was purchased for $45 million. This 96% leased 434,000 square foot prime power center is anchored by Target, Ross Dress for Less, Old Navy, World Market, Shoe Carnival and Pier 1 Imports.

FINANCINGS    
In January 2013, the Company refinanced its primary $750 million unsecured revolving credit facility arranged by J.P. Morgan Securities LLC and Wells Fargo Securities, LLC.  The $65 million unsecured revolving credit facility provided solely by PNC Bank, National Association was refinanced to match the terms of the primary facility.  The Company also refinanced its $400 million secured term loan arranged by KeyBanc Capital Markets and RBC Capital Markets.

The 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 capacity.  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 borrower options 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.

The Company accessed its at-the-market common equity program and issued 4.8 million new common shares during the fourth quarter of 2012 at an average price of $15.50, generating gross proceeds of $75 million.

In addition in December 2012, the Company closed $365 million of new long-term financings, comprised of a $265 million mortgage loan and a $100 million increase in the unsecured term loan that initially closed in January 2012.  The mortgage is a 3.5% fixed rate, seven-year loan collateralized by four prime shopping centers.  DDR had previously entered into interest rate swap contracts that fix LIBOR on the $100 million of additional unsecured term loan proceeds resulting in a fixed interest rate of 2.98%.  Proceeds from these financings were primarily used to repay a $350 million mortgage loan, secured by six prime shopping centers, that was set to mature in April 2013 with a 5% fixed rate.  

In November 2012, the Company issued $150 million aggregate principal amount of 4.625% senior unsecured notes due July 2022 at a premium to par of 109.2% and yield-to-maturity of 3.46%. 

DISPOSITIONS    
The Company sold five consolidated operating shopping centers, aggregating approximately 0.4 million square feet, in the fourth quarter of 2012, generating gross proceeds of approximately $13.7 million.  In addition, the Company sold $60.6 million of non-income producing assets.  The Company recorded an aggregate net gain of approximately $0.4 million related to asset sales in the fourth quarter of 2012. 

In the fourth quarter of 2012, the Company's unconsolidated joint ventures sold five assets generating gross proceeds of approximately $219.4 million ($51.5 million at DDR's share).  The aggregate gain on sale in the fourth quarter of 2012 was approximately $50.8 million ($10.7 million at DDR's share).  The joint venture disposition activity included the sale by Sonae Sierra Brasil of its 10% ownership interest in Patio Brasil, its 51% interest in Shopping Penha, and its 30% interest in Tivoli Shopping, for approximately $103 million ($34 million at DDR's share).  Sonae Sierra Brasil will continue to manage Shopping Penha and Tivoli Shopping for at least three years.

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 as affirmed by NAREIT on October 31, 2011.  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 and year ended December 31, 2012.  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, 2011, 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     
DDR is an owner and manager of 454 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, February 13, 2013, at 10:00 a.m. Eastern Time.  To participate, please dial 866.362.4831 (domestic), or 617.597.5347 (international) at least ten minutes prior to the scheduled start of the call.  When prompted, provide the passcode: 96140797.  Access to the live call and replay will also be available through the Company's website.  The replay will be available through February 20, 2013.

DDR Corp.
Financial Highlights
(In Thousands)




Three-Month Periods

Ended December 31,


Years Ended

December 31,

Revenues:

2012


2011


2012


2011

Minimum rents (A)

$  142,328


$  126,626


$  542,900


$  498,079

Percentage and overage rents (A)

2,702


2,573


5,117


6,057

Recoveries from tenants

46,453


37,896


174,097


163,123

Ancillary and other property income

8,011


7,787


27,665


28,527

Management, development and other fee income

10,579


12,296


43,706


47,148

Other (B)

797


2,179


6,890


6,895


210,870


189,357


800,375


749,829

Expenses:








Operating and maintenance

32,856


29,507


128,821


128,873

Real estate taxes

28,091


22,842


104,256


97,382

Impairment charges (C)

20,615


17,077


105,395


67,912

General and administrative

19,753


19,911


76,444


85,221

Depreciation and amortization

65,159


57,957


248,781


215,928


166,474


147,294


663,697


595,316

Other income (expense):








Interest income 

5,970


2,154


15,799


9,832

Interest expense (D)

(56,148)


(56,245)


(221,424)


(224,024)

Gain (loss) on debt retirement, net (E)


45


(13,495)


(89)

Gain on equity derivative instruments




21,926

Other income (expense), net (F)

(10,737)


(177)


(17,880)


(5,002)


(60,915)


(54,223)


(237,000)


(197,357)

Loss before earnings from equity method investments and other
      items 

(16,519)


(12,160)


 

(100,322)


 

(42,844)

Equity in net income (loss) of joint ventures (G)

18,284


(2,217)


35,250


13,734

Impairment of joint venture investments (C)


(1,250)


(26,671)


(2,921)

(Loss) gain on change in control and sale of interests, net (H)

(1,866)


2,461


78,127


25,170

Tax expense of taxable REIT subsidiaries and state franchise and
      income taxes

(350)


(19)


(1,160)


(1,025)

Loss from continuing operations

(451)


(13,185)


(14,776)


(7,886)

Income (loss) from discontinued operations (I)

813


19,740


(16,416)


(18,590)

Income (loss) before (loss) gain on disposition of real estate

362


6,555


(31,192)


(26,476)

(Loss) gain on disposition of real estate, net of tax

(298)


(1,380)


5,863


7,079

Net income (loss)

64


5,175


(25,329)


(19,397)

(Income) loss attributable to non-controlling interests

(68)


31


(493)


3,543

Net (loss) income attributable to DDR

$           (4)


$      5,206


$   (25,822)


$   (15,854)

Write-off of preferred share original issuance costs (J)



(5,804)


(6,402)

Preferred dividends

(7,030)


(6,967)


(28,645)


(31,587)

Net loss attributable to common shareholders

$    (7,034)


$    (1,761)


$  (60,271)


$   (53,843)

Funds From Operations ("FFO"):








Net loss attributable to common shareholders

$    (7,034)


$    (1,761)


$  (60,271)


$   (53,843)

Depreciation and amortization of real estate investments

63,577


58,081


242,822


221,278

Equity in net (income) loss of joint ventures (G)

(18,284)


2,217


(35,250)


(13,734)

Impairment of depreciable joint venture investments


1,250


26,671


1,285

Joint ventures' FFO (G)

13,142


14,234


53,603


57,604

Non-controlling interests (OP Units)

48


32


191


88

Impairment of depreciable real estate assets, net of non-controlling interests

18,566


29,037


96,319


62,683

Gain on disposition of depreciable real estate, net

(8,178)


(55,675)


(11,705)


(47,751)

FFO attributable to common shareholders

61,837


47,415


312,380


227,610

Non-operating items, net (K)

22,160


24,680


(7,062)


39,497

Operating FFO

$    83,997


$    72,095


$  305,318


$  267,107









Earnings per share – Diluted (L)

$      (0.02)


$      (0.01)


$      (0.21)


$      (0.28)

Funds From Operations – Diluted (L)

$        0.20


$        0.17


$       1.06


$        0.75

Operating Funds From Operations – Diluted (L)

$        0.27


$        0.26


$       1.03


$        0.97

 

DDR Corp.
Financial Highlights
(In Thousands)


Selected Balance Sheet Data





December 31, 2012


December 31, 2011

Assets:




Real estate and rental property:




Land

$ 1,900,401


$ 1,844,125

Buildings

5,773,961


5,461,122

Fixtures and tenant improvements

489,626


379,965


8,163,988


7,685,212

Less: Accumulated depreciation

(1,670,717)


(1,550,066)


6,493,271


6,135,146

Land held for development and construction in progress

475,123


581,627

Real estate held for sale, net


2,290

Real estate, net

6,968,394


6,719,063





Investments in and advances to joint ventures

613,017


353,907

Cash

31,174


41,206

Restricted cash

23,658


30,983

Notes receivable, net

68,718


93,905

Receivables, including straight-line rent, net

126,228


117,463

Other assets, net

224,648


112,898


$ 8,055,837


$ 7,469,425





Liabilities & Equity:




Indebtedness:




Revolving credit facilities

$   147,905


$   142,421

Unsecured debt

2,147,097


2,139,718

Unsecured term loan

350,000


Mortgage and other secured debt

1,674,141


1,822,445


4,319,143


4,104,584

Dividends payable

44,210


29,128

Other liabilities

326,024


257,821

Total liabilities

4,689,377


4,391,533





Preferred shares

405,000


375,000

Common shares

31,524


27,711

Paid-in-capital

4,629,257


4,138,812

Accumulated distributions in excess of net income

(1,694,822)


(1,493,353)

Deferred compensation obligation

15,556


13,934

Accumulated other comprehensive income

(27,925)


(1,403)

Less:  Common shares in treasury at cost

(16,452)


(15,017)

Non-controlling interests

24,322


32,208

Total equity

3,366,460


3,077,892


$ 8,055,837


$ 7,469,425

 

DDR Corp.
Financial Highlights


(A)  

The increase in base and percentage rental revenues for the year ended December 31, 2012, is as follows (in millions): 

 



Increase
(Decrease)

Acquisition of shopping centers


$ 32.7

Comparable portfolio properties


8.3

Development or redevelopment properties


(0.8)



$ 40.2

 

Revenue resulting from the recognition of straight-line rents, including discontinued operations, is as follows (in millions):

 



Years Ended
December 31,



2012


2011

Straight-line rents


$ 4.1


$ 0.9

 

(B) 

Other revenues were comprised of the following (in millions):

 



Three-Month Periods
Ended December 31,


Years Ended
December 31,



2012


2011


2012


2011

Lease termination fees


$ 0.6


$ 2.0


$ 6.4


$ 5.9

Financing fees


0.1


0.1


0.1


0.4

Other miscellaneous


0.1


0.1


0.4


0.6



$ 0.8


$ 2.2


$ 6.9


$ 6.9

 

(C) 

   The Company recorded impairment charges on the following (in millions): 







 

Three-Month Periods
Ended December 31,


Years Ended
December 31,



2012


2011


2012


2011










Land held for development


$  2.1


$ 14.0


$   10.1


$   54.2

Undeveloped land



3.1


20.1


9.0

Assets marketed for sale


18.5



72.6


4.7

Other shopping center assets




2.6


Total continuing operations


20.6


17.1


105.4


67.9










Sold assets



29.0


21.1


57.9

Total discontinued operations



29.0


21.1


57.9

Joint venture investments



1.3


26.7


2.9

Total impairment charges


$ 20.6


$ 47.4


$ 153.2


$ 128.7

 

DDR Corp.
Financial Highlights

(D)  

The Company recorded the following in connection with its outstanding convertible debt (in millions):

 



Three-Month Periods
Ended December 31,


Years Ended

December 31,



2012


2011


2012


2011

Non-cash interest expense related to
      amortization of the debt discount


$ 2.6


$ 3.4


$ 10.9


$ 14.9

 

(E)   

For the year ended December 31, 2012, the Company repurchased $60.0 million aggregate principal amount of its 9.625% unsecured senior notes at a premium to par value.

 

(F)  

Other income (expense) was comprised of the following (in millions):

 


Three-Month Periods
Ended December 31,


Years Ended

December 31,


2012


2011


2012


2011

Transaction and other (expenses)
     income

$  (4.8)


$   1.0


$  (7.7)


$   0.4

Litigation-related expenses

(1.2)


(0.3)


(4.8)


(2.3)

Loss on sale or reserve of mezzanine 
     note receivable

(4.3)



(4.3)


(5.0)

Debt extinguishment costs, net

(0.4)


(0.9)


(1.1)


(0.7)

Settlement of lease liability obligation




2.6


$ (10.7)


$  (0.2)


$ (17.9)


$ (5.0)

 

(G)  

At December 31, 2012 and 2011, the Company had investments in joint ventures, excluding consolidated joint ventures, in 206 and 177 shopping center properties, respectively. 

 

(H)   

In the fourth quarter of 2012, the Company sold its interest in a joint venture investment with the Coventry II Fund.  The Company also sold a portion of its interest in a previously consolidated joint venture that owns land held for development in Canada.  The Company recorded a net loss related to these sales.  In addition in 2012, the Company acquired its partners' interests in five shopping centers.  The Company accounted for these transactions as step acquisitions.  Due to the change in control that occurred, the Company recorded an aggregate gain for the year ended 2012 associated with the difference between the Company's carrying value and fair value of the previously held equity interest.

 

DDR Corp.
Financial Highlights

(I)  

The operating results related to assets classified as discontinued operations are summarized as follows (in millions):

 


Three-Month Periods

Ended December 31,


Years Ended

December 31,


2012


2011


2012


2011

Revenues from operations

$ 0.6


$  8.6


$   9.3


$  49.0









Operating expenses

0.3


3.3


4.2


19.7

Impairment charges


29.0


21.1


57.9

Interest, net

0.1


2.1


2.0


13.2

Debt extinguishment costs, net


7.7



7.2

Depreciation and amortization

0.1


2.4


2.3


14.4

Total expenses

0.5


44.5


29.6


112.4

Income (loss) before disposition of real estate

0.1


(35.9)


(20.3)


(63.4)

Gain on deconsolidation of interests




4.7

Gain on disposition of real estate, net

0.7


55.6


3.9


40.1

Net income (loss)

$ 0.8


$ 19.7


$ (16.4)


$ (18.6)

 

(J)  

In August 2012, the Company redeemed all of its Class I Preferred Shares.  The Company recorded a non-cash charge of $5.8 million to net loss available to common shareholders in the third quarter of 2012 related to the write-off of the original issuance costs. 

 

DDR Corp.
Financial Highlights

(K)

The gains and charges excluded from Operating FFO for the three-month periods and years ended December 31, 2012 and 2011, respectively, are summarized as follows (in millions):

 


Three-Month Periods

Ended December 31,


Years Ended

December 31,


2012


2011


2012


2011

Non-cash impairment charges – non-
     depreciable consolidated assets

$  2.1


$ 17.1


$ 30.2


$ 63.2

Loss on debt retirement, net



13.5


0.1

Other expense (income), net – transaction
     costs, loss on sale/reserve of 
     mezzanine note receivable, litigation 
     costs, debt extinguishment costs and
     lease liability settlement gain

10.7


0.2


17.9


5.0

Equity in net (income) loss of joint 
     ventures – currency adjustments,
     transaction and other expenses

(0.2)


(0.5)


0.6


(1.2)

Non-cash impairment of joint venture
     investments on non-depreciable assets




1.6

Non-cash loss (gain) on disposition of 
     non-depreciable real estate, net

0.3


1.4


(5.5)


0.9

Executive separation charges


1.4


1.0


12.4

Non-cash gain on equity derivative
     instruments (Otto Family warrants)




(21.9)

Debt extinguishment costs, (gain) on 
     deconsolidation of interests, and loss 
     on sales – discontinued operations


7.7


0.2


2.1

Non-cash loss (gain) on change in control 
     and sale of interests, net

9.3


(2.5)


(70.8)


(25.2)

Non-controlling interest – portion of
     impairment charges allocated to 
     outside partners


(0.1)



(3.9)

Non-cash write-off of preferred share 
     original issuance costs



5.8


6.4

Total adjustments from FFO 
     to Operating FFO

$ 22.2


$ 24.7


$ (7.1)


$ 39.5


 

DDR Corp.
Financial Highlights

(L)   

The Company's per share information is as follows:

 


At December 31,


2012


2011

Common shares outstanding

315.1


276.9

OP Units outstanding ("OP Units")

0.4


0.4

 



Three-Month Periods
Ended December 31,


Years Ended
December 31,


2012


2011


2012


2011











Earnings per common share:









Basic

$  (0.02)


$  (0.01)


$  (0.21)


$  (0.20)


Diluted

$  (0.02)


$  (0.01)


$  (0.21)


$  (0.28)


Basic – average shares outstanding

307.9


274.7


291.7


270.3


Diluted – average shares outstanding

307.9


274.7


291.7


271.5


Dividends Declared:

$  0.12


$  0.08


$  0.48


$  0.22











FFO per share:









Basic

$  0.20


$  0.17


$  1.06


$  0.84


Diluted

$  0.20


$  0.17


$  1.06


$  0.75


Weighted average common shares 
          outstanding

310.0


277.0


293.6


272.1


Assumed conversion of OP Units

0.4


0.4


0.4


0.4


FFO Weighted average common 
          shares and OP Units – Basic

310.4


277.4


294.0


272.5


Assumed conversion of dilutive 
          securities

0.4


0.7


1.3


1.9


FFO Weighted average common 
          shares and OP Units – Diluted

310.8


278.1


295.3


274.4











Operating FFO:









Diluted

$  0.27


$  0.26


$  1.03


$  0.97


Operating FFO Weighted average common shares and OP Units –  Diluted

310.8


278.1


295.3


274.4


 

 

DDR Corp.
Summary Results of Combined Unconsolidated Joint Ventures
(In Thousands)

 


Combined condensed income statements






Three-Month Periods
Ended December 31,


Years Ended
December 31,


2012


2011


2012


2011

Revenues:








Minimum rents (A)

$ 137,098


$  118,310


$ 508,250


$  466,820

Percentage and overage rents

856


865


1,958


2,387

Recoveries from tenants

32,573


25,502


116,660


105,939

Other

17,818


23,489


78,942


84,832


188,345


168,166


705,810


659,978

Expenses:








Operating and maintenance

43,162


37,423


173,122


150,988

Real estate taxes

21,443


15,140


76,418


66,685

Impairment charges (B)

9,562


208,843


10,402


208,843


74,167


261,406


259,942


426,516

Net operating income (loss)

114,178


(93,240)


445,868


233,462

Depreciation and amortization of real 
        estate investments

54,270


42,197


203,412


171,634

Interest expense

60,670


55,294


237,138


217,676

(Loss) income before other items

(762)


(190,731)


5,318


(155,848)

Income tax expense

(6,715)


(11,818)


(25,444)


(38,598)

Loss from continuing operations

(7,477)


(202,549)


(20,126)


(194,446)

Discontinued operations:








Loss from operations (B)

(1,651)


(252)


(52,619)


(64,056)

Gain on debt forgiveness




2,976

Gain (loss) on disposition, net

10,449


(2,595)


11,739


18,705

Income (loss) before gain on disposition of 
     assets

1,321


(205,396)


(61,006)


(236,821)

Gain on disposition of assets, net

40,352


1,751


54,582


1,733

Net income (loss)

$   41,673


$ (203,645)


$   (6,424)


$ (235,088)

Non-controlling interests

(23,306)


(4,568)


(42,995)


(16,132)

Net income (loss) attributable to 
     unconsolidated joint ventures

$   18,367


$ (208,213)


$ (49,419)


$ (251,220)

Net income (loss) at DDR's ownership
     interests (C)

$   21,774


$   (27,219)


$   33,512


$  (12,979)

FFO at DDR's ownership interests (D)

$   13,142


$     14,234


$   53,603


$    57,604

Operating FFO at DDR's ownership 
     interests (D)

$   12,982


$     13,780


$   54,220


$   56,390

 

DDR Corp.
Summary Results of Combined Unconsolidated Joint Ventures
(In Thousands)

 


Combined condensed balance sheets






December 31, 2012


December 31, 2011





Land

$ 1,569,548


$ 1,400,469

Buildings

4,681,462


4,334,097

Fixtures and tenant improvements

244,293


189,940


6,495,303


5,924,506

Less: Accumulated depreciation

(833,816)


(808,352)


5,661,487


5,116,154

Land held for development and construction in progress (E)

348,822


239,036

Real estate, net

6,010,309


5,355,190

Cash and restricted cash

467,200


308,008

Receivables, including straight-line rent, net

99,098


108,038

Other assets, net

427,014


177,251


$ 7,003,621


$ 5,948,487





Mortgage debt (F)

$ 4,246,407


$ 3,742,241

Notes and accrued interest payable to DDR

143,338


100,470

Other liabilities

342,614


214,370


4,732,359


4,057,081

Redeemable preferred equity

154,556


Accumulated equity

2,116,706


1,891,406


$ 7,003,621


$ 5,948,487

 

DDR Corp.
Summary Results of Combined Unconsolidated Joint Ventures 

 

(A)  

Revenue resulting from the recognition of straight-line rents, including discontinued operations, is as follows (in millions):

 



Three-Month Periods
Ended December 31,


Years Ended

 December 31,



2012


2011


2012


2011

Straight-line rents


$ 1.2


$ 1.0


$ 4.9


$ 4.6

DDR's proportionate share


0.1



0.8


0.9

 

(B) 

For the three-month period and year ended December 31, 2012, impairment charges were recorded primarily on an asset that is in the process of being marketed for sale of which the Company's proportionate share was not material.  For the three-month period and year ended December 31, 2011, impairment charges were recorded primarily on assets that were being recapitalized of which the Company's proportionate share of the charges was approximately $6.7 million.



(C)  

Adjustments to the Company's share of joint venture equity in net income primarily is related to basis differences impacting amortization and depreciation, impairment charges and (loss) gain on dispositions as follows (in millions): 

 


Three-Month Periods

Ended December 31,


Years Ended
December 31,


2012


2011


2012


2011

Net (loss) income

$ (3.5)


$ 25.0


$ 1.7


$ 26.7

 

(D)  

FFO and Operating FFO from unconsolidated joint ventures are summarized as follows (in millions):

 


Three-Month Periods

Ended December 31,


Years Ended

 December 31,


2012


2011


2012


2011

Net income (loss) attributable to 
     unconsolidated joint ventures

$  18.4


$ (208.2)


$ (49.4)


$ (251.2)

Depreciation and amortization of real 
     estate investments

71.0


44.2


228.7


182.7

Impairment of depreciable real estate 
     assets

9.6


209.4


57.2


272.5

(Gain) loss on sale of depreciable 
     real estate

(50.7)


2.6


(65.1)


(18.7)

FFO

$  48.3


$   48.0


$ 171.4


$  185.3

FFO at DDR ownership interests

$  13.1


$   14.2


$   53.6


$    57.6

Operating FFO at DDR's ownership 
     interests (1)

$  13.0


$   13.8


$   54.2


$    56.4

DDR joint venture distributions 
     received, net (2)

$   23.3


$    6.1


$   43.2


$    63.2



(1)

Excluded from Operating FFO is the Company's proportionate share of net activity related to foreign currency adjustments, transaction costs and other expenses as above in this press release.



(2)

Includes loan repayments in 2011 of $22.4 million from the Company's unconsolidated joint venture which has assets located in Brazil.





DDR Corp.
Summary Results of Combined Unconsolidated Joint Ventures

(E) Land held for development and construction in progress consists of the following (in millions):






December 31,
2012


December 31,
2011

Company's proportionate share

$ 100.9


$ 75.9

(F)  

Mortgage debt consists of the following (in millions):


December 31,
2012


December 31,
2011

Company's proportionate share

$ 724.9


$ 772.9

Non-recourse debt included above for which the 
     Company has written its investment down to zero 
     and is receiving no allocation of income, loss or 
     FFO

48.2


48.1

SOURCE DDR Corp.

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