Developers Diversified Realty Corporation (NYSE: DDR), the nation's
leading owner, manager and developer of market-dominant shopping
centers, today reported operating results for the third quarter
ended September 30, 2008.
-- Funds From Operations ("FFO") per diluted share was $0.83 and net
income per diluted share was $0.23 for the three-month period ended
September 30, 2008, as compared to the prior-year comparable period of
$0.80 and $0.26, respectively. The increase in FFO per share for the three-
month period ended September 30, 2008, primarily represents solid operating
results from the Company's core properties. The decrease in net income per
share for the three-month period ended September 30, 2008, primarily
represents increased depreciation costs. There are several one-time items
included in this quarter's results such as the release of previously
established tax reserves offset by certain litigation related matters, the
loss on sale of one of the Company's business centers and the effect of
mark-to-market hedging adjustments at certain joint ventures. The net
impact of the items mentioned above is approximately zero.
-- FFO per diluted share was $2.48 and net income per diluted share was
$0.75 for the nine-month period ended September 30, 2008, as compared to
the prior-year comparable period of $2.97 and $1.59, respectively. The
decrease in FFO and net income per share for the nine-month period ended
September 30, 2008, is primarily related to a reduction in the amount of
transactional income recognized in 2008 as described below.
-- Executed leases during the third quarter totaled approximately 2.8
million square feet, including 176 new leases and 289 renewals.
-- On a cash basis, base rental rates increased 16.4% on new leases, 6.9%
on renewals and 8.9% overall.
-- Core portfolio leased percentage at September 30, 2008 was 94.5%.
-- Same store net operating income ("NOI") for the year increased 1.8%
over the prior-year comparable period.
Scott A. Wolstein, Developers Diversified's Chairman and Chief
Executive Officer, stated, "I'm pleased to announce this quarter's
financial results, which reflect consumers' continued shift to
value-oriented retailers. Our centers and our largest tenants have
been, and should continue to be, the relative winners, thereby
contributing to the consistency of our core operations. We see this
consumer trend reflected in our leasing volume, which set an
all-time company record in terms of number of new leases executed
in a quarter, and in our leasing spreads, which are comparable to
historic averages on an overall, blended basis."
Financial Results:
Net income applicable to common shareholders was $27.9 million,
or $0.23 per share (diluted and basic), for the three-month period
ended September 30, 2008, as compared to $32.7 million, or $0.26
per share (diluted) and $0.27 per share (basic), for the prior-year
comparable period.
For the three-month periods ended September 30, 2008 and 2007,
FFO per share was $0.83 (diluted and basic) and $0.80 (diluted and
basic), respectively. FFO applicable to common shareholders was
$100.0 million for the three-month period ended September 30, 2008,
as compared to $99.5 million for the three-month period ended
September 30, 2007.
Net income applicable to common shareholders was $90.2 million,
or $0.75 per share (diluted and basic), for the nine-month period
ended September 30, 2008, as compared to $192.9 million, or $1.59
per share (diluted) and $1.60 per share (basic), for the prior-year
comparable period. The decrease in net income for the nine-month
period ended September 30, 2008, is primarily related to a
reduction in the amount of transactional income earned during the
same period in 2007 (gains on disposition of real estate of
approximately $72.5 million and promoted income from joint venture
interests of approximately $14.3 million) and the transfer of 62
assets to unconsolidated joint venture interests in 2007 and the
sale of 67 assets to third parties in 2007.
For the nine-month periods ended September 30, 2008 and 2007,
FFO per share was $2.48 (diluted and basic) and $2.97 (diluted) and
$2.98 (basic), respectively. FFO applicable to common shareholders
was $298.7 million for the nine-month period ended September 30,
2008, as compared to $365.0 million for the nine-month period ended
September 30, 2007. The decrease in FFO for the nine-month period
ended September 30, 2008, is primarily a result of the same factors
impacting net income as described above.
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 provides an additional indicator of the financial
performance of a REIT. The Company also believes that FFO more
appropriately measures the core operations of the Company and
provides a benchmark to its peer group. FFO does not represent cash
generated from operating activities in accordance with generally
accepted accounting principles ("GAAP"), is not necessarily
indicative of cash available to fund cash needs and should not 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 from disposition
of depreciable real estate property, except for those sold through
the Company's merchant building program, which are presented net of
taxes, (iii) 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 minority equity investments and adding the
Company's proportionate share of FFO from its unconsolidated joint
ventures and minority equity investments, determined on a
consistent basis. Other real estate companies may calculate FFO in
a different manner. A reconciliation of net income to FFO is
presented in the financial highlights section.
Leasing:
The following results from the third quarter ended September 30,
2008 highlight continued strong leasing activity throughout the
portfolio:
-- Executed 176 new leases aggregating 1.0 million square feet and 289
renewals aggregating 1.8 million square feet.
-- On a cash basis, rental rates on new leases increased 16.4% and rental
rates on renewals increased 6.9%. Overall, rental rates for new leases and
renewals increased 8.9%.
-- Total portfolio average annualized base rent per occupied square foot,
excluding Brazil, as of September 30, 2008 was $12.38, as compared to
$12.28 at September 30, 2007.
-- Core portfolio leased rate was 94.5% as of September 30, 2008, as
compared to 95.9% at September 30, 2007.
Total annual recurring leasing capital expenditures for the
Company and its joint ventures are estimated to be approximately
$32 million ($0.27 per square foot of owned GLA) in 2009 calculated
based on 100% of the funding.
Dispositions:
In the third quarter of 2008, the Company sold six shopping
center assets and one business center, aggregating approximately
0.6 million square feet, for aggregate sales proceeds of $69.8
million and recorded an aggregate loss of approximately $2.4
million. The Company recorded a loss on sale of $5.8 million
relating to the sale of one of its business centers in
Massachusetts. This loss was recorded as a charge to FFO for the
three- and nine-month periods ended September 30, 2008.
Wholly-Owned and Consolidated Joint Venture Development:
The Company currently has the following wholly-owned and
consolidated joint venture shopping center projects under
construction:
Expected
Net Cost Initial
($ Anchor
Location Owned GLA Millions) Opening * Description
------------------- ---------- ---------- ---------- -----------------
Ukiah (Mendocino),
California ** 227,500 $ 66.2 2H 10 Mixed Use
Guilford, Connecticut 146,396 47.6 2H 10 Lifestyle Center
Miami (Homestead),
Florida 275,839 74.9 2H 08 Community Center
Miami, Florida 400,685 142.6 2H 06 Mixed Use
Boise (Nampa), Idaho 450,855 123.1 2H 07 Community Center
Boston (Norwood),
Massachusetts 72,340 25.5 2H 09 Community Center
Boston, Massachusetts
(Seabrook, New
Hampshire) 215,905 57.5 2H 10 Community Center
Elmira (Horseheads), New
York 350,987 53.7 1H 07 Community Center
Raleigh (Apex), North
Carolina (Promenade) 81,780 17.9 2H 09 Community Center
Austin (Kyle), Texas ** 443,092 77.2 2H 09 Community Center
---------- ----------
Total 2,665,379 $ 686.2
========== ==========
* 1H = First Half, 2H = Second Half; either actual or anticipated
** Consolidated 50% Joint Venture
At September 30, 2008, approximately $447.4 million of costs
were incurred in relation to the Company's 10 wholly-owned and
consolidated joint venture development projects under
construction.
In addition to these current developments, several of which will
be phased in, the Company and its joint ventures intend to commence
construction on various other developments only after substantial
tenant leasing has occurred and construction financing is
available, including several international projects. The Company
has also identified several additional potential development
opportunities. While there are no assurances any of these projects
will be undertaken, they provide a source of potential development
projects over the next several years.
Unconsolidated Joint Venture Development:
The Company's unconsolidated joint ventures have the following
shopping center projects under construction. At September 30, 2008,
approximately $433 million of costs had been incurred in relation
to these development projects.
DDR?s Expected
Effective Net Cost Initial
Ownership ($ Anchor
Location Percentage Owned GLA Millions) Opening* Description
------------ ----------- ---------- ---------- -------- -----------------
Kansas City
(Merriam),
Kansas 20.0% 158,632 $ 43.7 2H 08 Community Center
Detroit
(Bloomfield
Hills),
Michigan 10.0% 623,782 189.8 2H 09 Lifestyle Center
Dallas
(Allen),
Texas 10.0% 797,665 171.2 1H 08 Lifestyle Center
Manaus,
Brazil 47.4% 477,630 124.6 1H 09 Enclosed Mall
---------- ----------
Total 2,057,709 $ 529.3
========== ==========
* 1H = First Half, 2H = Second Half; either actual or anticipated
Wholly-Owned and Consolidated Joint Venture Redevelopments and
Expansions:
The Company is currently expanding/redeveloping the following
wholly-owned and consolidated joint venture shopping centers at a
projected aggregate net cost of approximately $121.5 million. At
September 30, 2008, approximately $85 million of costs had been
incurred in relation to these projects.
Property Description
------------------- --------------
Miami (Plantation),
Florida Redevelop shopping center to include Kohl?s and
additional junior tenants
Chesterfield,
Michigan Construct 25,400 sf of small shop space and retail
space
Fayetteville,
North Carolina Redevelop 18,000 sf of small shop space and
construct an outparcel building
Akron (Stow),
Ohio Redevelop former K-Mart space and develop new
outparcels
Unconsolidated Joint Venture Redevelopments and Expansions:
The Company's unconsolidated joint ventures are currently
expanding/redeveloping the following shopping centers at a
projected net cost of $449.2 million, which includes original
acquisition costs related to assets acquired for redevelopment. At
September 30, 2008, approximately $401.8 million of costs had been
incurred in relation to these projects. The following is a summary
of these joint venture redevelopment and expansion projects:
DDR?s
Effective
Ownership
Property Percentage Description
---------------------- ---------- -------------------------------------
Buena Park, California 20.0% Large-scale re-development of enclosed
mall to open-air format
Los Angeles (Lancaster),
California 21.0% Relocate Wal-Mart and redevelop former
Wal-Mart space
Chicago (Deer Park),
Illinois 25.75% Re-tenant former retail shop space
with junior tenant and construct
13,500 sf multi-tenant outparcel
building
Benton Harbor, Michigan 20.0% Construct 89,000 sf of anchor space
and retail shops
Kansas City, Missouri 20.0% Relocate retail shops and re-tenant
former retail shop space
Cincinnati, Ohio 18.0% Redevelop former JCPenney space
Developers Diversified Realty Corporation currently owns and
manages approximately 720 retail operating and development
properties in 45 states, plus Puerto Rico, Brazil, Russia and
Canada, totaling approximately 159 million square feet. Developers
Diversified Realty Corporation is a self-administered and
self-managed REIT operating as a fully integrated real estate
company which acquires, develops, leases and manages shopping
centers.
A copy of the Company's Supplemental Financial/Operational
package is available to all interested parties upon request at our
corporate office to Michelle M. Dawson, Vice President of Investor
Relations, Developers Diversified Realty Corporation, 3300
Enterprise Parkway, Beachwood, OH 44122 or on our Web site which is
located at http://www.ddr.com.
Developers Diversified Realty Corporation considers portions of
this information 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 the
results of the Company 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 or significant downsizing of a major tenant;
constructing properties or expansions that produce a desired yield
on investment; our ability to sell assets on commercially
reasonable terms; 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 and the finalization of the
financial statements for three- and nine-month periods ended
September 30, 2008. For additional factors that could cause the
results of the Company to differ materially from these indicated in
the forward-looking statements, please refer to the Company's Form
10-K as of December 31, 2007. The Company undertakes no obligation
to publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date hereof.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2007 2008 2007
Revenues: --------- --------- --------- ---------
Minimum rents (A) $ 158,223 $ 156,911 $ 474,885 $ 479,576
Percentage and overage rents
(A) 1,062 1,980 5,145 5,511
Recoveries from tenants 51,644 51,609 152,194 152,640
Ancillary and other property
income 4,950 5,110 15,932 14,048
Management, development and
other fee income 15,378 13,827 47,302 34,906
Other (B) 2,656 2,110 7,834 13,536
--------- --------- --------- ---------
233,913 231,547 703,292 700,217
--------- --------- --------- ---------
Expenses:
Operating and maintenance 35,992 32,596 106,512 93,990
Real estate taxes 28,407 26,516 83,719 82,284
General and administrative (C) 19,560 19,626 61,607 60,304
Depreciation and amortization 63,297 55,803 177,544 161,274
--------- --------- --------- ---------
147,256 134,541 429,382 397,852
--------- --------- --------- ---------
Other income (expense):
Interest income 1,663 1,564 2,791 7,726
Interest expense (60,651) (61,666) (182,782) (194,581)
Other expense (D) (6,859) (225) (7,259) (675)
--------- --------- --------- ---------
(65,847) (60,327) (187,250) (187,530)
--------- --------- --------- ---------
Income before equity in net
income of joint ventures,
minority interests, income tax
benefit (expense) of taxable
REIT subsidiaries and
franchise taxes, discontinued
operations and gain on
disposition of real estate,
net of tax 20,810 36,679 86,660 114,835
Equity in net income of joint
ventures (E) 1,981 6,003 21,924 33,887
Minority interests (F) (1,524) (2,204) (5,865) (16,204)
Income tax benefit (expense) of
taxable REIT subsidiaries
and franchise taxes (G) 16,414 (483) 15,070 15,294
--------- --------- --------- ---------
Income from continuing
operations 37,681 39,995 117,789 147,812
(Loss) income from discontinued
operations (H) (2,259) (403) (2,291) 21,731
--------- --------- --------- ---------
Income before gain on
disposition of real estate 35,422 39,592 115,498 169,543
Gain on disposition of real
estate, net of tax 3,093 3,691 6,368 63,713
--------- --------- --------- ---------
Net income $ 38,515 $ 43,283 $ 121,866 $ 233,256
========= ========= ========= =========
Net income applicable to common
shareholders $ 27,948 $ 32,716 $ 90,164 $ 192,889
========= ========= ========= =========
Funds From Operations ("FFO"):
Net income applicable to
common shareholders $ 27,948 $ 32,716 $ 90,164 $ 192,889
Depreciation and amortization
of real estate investments 61,099 54,235 172,740 160,819
Equity in net income of joint
ventures (E) (1,981) (6,003) (21,924) (33,887)
Joint ventures' FFO (E) 15,833 17,602 60,922 62,475
Minority interests (OP Units)
(F) 261 569 1,145 1,706
Gain on disposition of
depreciable real estate (3,170) 430 (4,321) (19,013)
--------- --------- --------- ---------
FFO applicable to common
shareholders 99,990 99,549 298,726 364,989
Preferred dividends 10,567 10,567 31,702 40,367
--------- --------- --------- ---------
FFO $ 110,557 $ 110,116 $ 330,428 $ 405,356
========= ========= ========= =========
Per share data:
Earnings per common share
Basic $ 0.23 $ 0.27 $ 0.75 $ 1.60
========= ========= ========= =========
Diluted $ 0.23 $ 0.26 $ 0.75 $ 1.59
========= ========= ========= =========
Dividends Declared $ 0.69 $ 0.66 $ 2.07 $ 1.98
========= ========= ========= =========
Funds From Operations -
Basic (I) $ 0.83 $ 0.80 $ 2.48 $ 2.98
========= ========= ========= =========
Funds From Operations -
Diluted (I) $ 0.83 $ 0.80 $ 2.48 $ 2.97
========= ========= ========= =========
Basic - average shares
outstanding (I) 119,795 123,329 119,447 120,910
========= ========= ========= =========
Diluted - average shares
outstanding (I) 119,882 123,727 119,631 121,594
========= ========= ========= =========
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(A) Base and percentage rental revenues for the nine-month period ended
September 30, 2008, as compared to the prior-year period, decreased
$2.8 million, primarily due to the disposition of properties in 2007
and 2008 to joint venture interests of $28.9 million. Increases in base
and percentage rental revenues of core portfolio properties increased
$4.1 million (an increase of 1.0% over the comparable period in 2007),
$18.3 million from the acquisition of assets and the merger with
IRRETI, $3.3 million related to developments and redevelopments and
$0.4 million from an increase in occupancy at the Company's business
centers. Included in the rental revenues for the nine-month periods
ended September 30, 2008 and 2007, is approximately $7.2 million and
$9.4 million, respectively, of revenue resulting from the recognition
of straight-line rents.
(B) Other income for the three- and nine-month periods ended September 30,
2008 and 2007 was comprised of the following (in millions):
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Acquisition fees $ - $ 0.1 $ - $ 6.4
Lease termination fees 0.8 1.4 5.5 4.9
Financing fees 1.9 0.1 1.9 1.5
Other miscellaneous - 0.5 0.4 0.8
---------- ---------- ---------- ----------
$ 2.7 $ 2.1 $ 7.8 $ 13.6
========== ========== ========== ==========
(C) General and administrative expenses include internal leasing salaries,
legal salaries and related expenses associated with the releasing of
space, which are charged to operations as incurred. For the nine-month
periods ended September 30, 2008 and 2007, general and administrative
expenses were approximately 4.3% and 4.6%, respectively, of total
revenues, including joint venture revenues. For the nine-month period
ended September 30, 2007, the Company recorded a charge of
approximately $4.1 million to general and administrative expense in
connection with the Company's former president's resignation as an
executive officer. Excluding this charge, general and administrative
expenses were 4.3% of total revenues for the nine-month period ended
September 30, 2007.
(D) Other expense primarily relates to abandoned acquisition and
development project costs and litigation costs. The increase in other
expense for the third quarter of 2008 is due in part to an accrual for
the potential liability associated with a legal verdict as well as the
related litigation expenses.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(E) The following is a summary of the combined operating results of the
Company's joint ventures:
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues from operations (a) $ 239,921 $ 230,935 $ 714,624 $ 577,877
--------- --------- --------- ---------
Operating expense 86,976 74,091 246,229 187,729
Depreciation and amortization
of real estate investments 59,274 55,568 175,723 135,207
Interest expense 75,725 80,884 225,008 193,211
--------- --------- --------- ---------
221,975 210,543 646,960 516,147
--------- --------- --------- ---------
Income from operations before
tax expense and discontinued
operations 17,946 20,392 67,664 61,730
Income tax expense (4,010) (2,958) (11,994) (7,503)
(Loss) gain on disposition of
real estate - (103) (13) 92,987
(Loss) income from discontinued
operations, net of tax (1) (323) 115 (412)
Income on disposition of
discontinued operations, net
of tax - 1,790 - 2,529
Other income, net (b) (36,728) - 19,811 -
--------- --------- --------- ---------
Net income $ (22,793) $ 18,798 $ 75,583 $ 149,331
========= ========= ========= =========
DDR ownership interests (c) $ 2,603 $ 6,263 $ 22,816 $ 34,520
========= ========= ========= =========
FFO from joint ventures are
summarized as follows:
Net income $ (22,793) $ 18,798 $ 75,583 $ 149,331
Loss (gain) on disposition of
real estate, including
discontinued operations - 103 13 (91,339)
Depreciation and amortization
of real estate investments 59,274 55,702 175,723 135,539
--------- ---------- ---------- ---------
$ 36,481 $ 74,603 $ 251,319 $ 193,531
========= ========== ========== =========
DDR ownership interests (c) $ 15,833 $ 17,602 $ 60,922 $ 62,475
========= ========== ========== =========
DDR joint venture distributions
received, net (d) $ 15,189 $ 14,088 $ 41,490 $ 79,782
========= ========== ========== =========
(a) Revenues for the three-month periods ended September 30, 2008 and
2007 included approximately $1.5 million and $2.3 million,
respectively, resulting from the recognition of straight-line rents
of which the Company\'s proportionate share was $0.2 million and
$0.3 million, respectively. Revenues for the nine-month periods
ended September 30, 2008 and 2007 included approximately $5.7
million and $6.6 million, respectively, resulting from the
recognition of straight-line rents of which the Company's
proportionate share was $0.7 million and $1.0 million,
respectively.
(b) Amount reflects equity in net income associated with a 50% owned
joint venture that owns 37 Mervyn's stores. In addition, the
effects of certain derivative instruments that are marked to market
through earnings from the Company's equity investment in MDT
aggregating approximately $37.7 million of loss and $16.5 million
of gain are reflected in the three- and nine-month periods ended
September 30, 2008, respectively, of which the Company's share was
approximately $3.5 million of loss and $1.0 million of gain,
respectively.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(c) The Company's share of joint venture net income was decreased by
$0.6 million and $0.2 million for the three-month periods ended
September 30, 2008 and 2007, respectively. The Company's share of
joint venture net income was decreased by $0.9 million and $0.6
million for the nine-month periods ended September 30, 2008 and
2007, respectively. These adjustments reflect basis differences
impacting amortization and depreciation and gain on dispositions.
During the nine-month period ended September 30, 2007, the Company
received $13.6 million of promoted income relating to the sale of
assets from the DDR Markaz Joint Venture which is included in the
Company's proportionate share of net income and FFO.
At September 30, 2008 and 2007, the Company owned joint venture
interests, excluding consolidated joint ventures, in 329 and 317
shopping center properties, respectively.
(d) Distributions may include funds received from asset sales and
refinancings in addition to ongoing operating distributions.
(F) Minority interests are comprised of the following:
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Minority equity interests $ 1,263 $ 1,635 $ 4,720 $ 4,808
Operating partnership units 261 569 1,145 1,706
Preferred operating partnership
units - - - 9,690
--------- --------- --------- ---------
$ 1,524 $ 2,204 $ 5,865 $ 16,204
========= ========= ========= =========
The preferred operating partnership units were redeemed in June 2007.
In June 2008, 0.5 million operating partnership units were converted
into an equivalent number of common shares of the Company.
(G) During the third quarter of 2008 and the first quarter of 2007, the
Company released to income approximately $16.0 million and $15.0
million, respectively, of previously established valuation allowances
against certain deferred tax assets as management had determined, due
to several factors, that it is more likely than not that the deferred
tax asset will be realized. The release of this reserve in 2008 was
primarily due to the Company's increased use of its taxable REIT
subsidiaries relating to the recognition of fees, primarily from joint
ventures, and other miscellaneous non real estate related income.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(H) The operating results relating to assets classified as discontinued
operations are summarized as follows:
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues $ 2,179 $ 3,860 $ 7,875 $ 34,163
--------- --------- --------- ---------
Expenses:
Operating 650 2,033 2,962 10,075
Interest, net 371 1,178 1,730 9,170
Depreciation 646 972 3,534 7,025
Minority interest 54 (230) 110 (515)
--------- --------- --------- ---------
Total expenses 1,721 3,953 8,336 25,755
--------- --------- --------- ---------
Income (loss) before gain
(loss) on disposition of
real estate 458 (93) (461) 8,408
(Loss) gain on disposition of
real estate, net (2,717) (310) (1,830) 13,323
--------- --------- --------- ---------
Net (loss) income $ (2,259) $ (403) $ (2,291) $ 21,731
========= ========= ========= =========
(I) For purposes of computing FFO per share (basic), the weighted average
shares outstanding were adjusted to reflect the assumed conversion of
approximately 0.4 million and 0.9 million Operating Partnership Units
("OP Units") outstanding at September 30, 2008 and 2007, respectively,
into 0.4 million and 0.9 million common shares of the Company for the
three-month periods ended September 30, 2008 and 2007, respectively,
and 0.6 million and 0.9 million common shares for the nine-month
periods ended September 30, 2008 and 2007, respectively, on a weighted
average basis. The weighted average diluted shares and OP Units
outstanding, for purposes of computing FFO, were approximately 120.8
million and 125.1 million for the three-month periods ended September
30, 2008 and 2007, respectively, and 120.6 million and 122.8 million
for the nine-month periods ended September 30, 2008 and 2007,
respectively.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(in thousands)
Selected Balance Sheet Data:
September 30, December 31,
2008 (A) 2007 (A)
-------------- --------------
Assets:
Real estate and rental property:
Land $ 2,084,898 $ 2,142,942
Buildings 5,898,491 5,933,890
Fixtures and tenant improvements 260,902 237,117
-------------- --------------
8,244,291 8,313,949
Less: Accumulated depreciation (1,167,243) (1,024,048)
-------------- --------------
7,077,048 7,289,901
Construction in progress 939,421 664,926
Assets held for sale - 5,796
-------------- --------------
Real estate, net 8,016,469 7,960,623
Investments in and advances to joint
ventures 709,974 638,111
Cash 30,171 49,547
Restricted cash (B) 106,391 58,958
Notes receivable 65,930 18,557
Receivables, including straight-line rent,
net 201,657 199,354
Other assets, net 163,664 164,666
-------------- --------------
$ 9,294,256 $ 9,089,816
============== ==============
Liabilities:
Indebtedness:
Revolving credit facilities $ 955,912 $ 709,459
Unsecured debt 2,519,435 2,622,219
Mortgage and other secured debt 2,434,528 2,259,336
-------------- --------------
5,909,875 5,591,014
Dividends payable 89,956 85,851
Other liabilities 296,560 285,245
-------------- --------------
6,296,391 5,962,110
Minority interests 146,575 128,881
Shareholders' equity 2,851,290 2,998,825
-------------- --------------
$ 9,294,256 $ 9,089,816
============== ==============
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(in thousands)
(A) Amounts include the consolidation of a 50% owned joint venture, DDR
MDT MV LLC ("MV LLC"), that owns 37 sites occupied by Mervyns, which
includes $380.4 and $405.8 million of real estate assets at
September 30, 2008 and December 31, 2007, respectively,
$258.5 million of mortgage debt at September 30, 2008 and
December 31, 2007, and $87.0 million and $74.6 million of minority
equity interest at September 30, 2008 and December 31, 2007,
respectively. The decrease in real estate assets at MV LLC is
primarily due to the application of $25.0 million in cash proceeds
received under a purchase price rebate letter of credit from the
seller of the Mervyns portfolio due to the retailer's bankruptcy
filing during the third quarter.
(B) Restricted cash includes $58.0 million at MV LLC and $48.4 million
relating to the terms of a bond issue for one of the Company's
projects in Mississippi. The MV LLC restricted cash is comprised of
$25.0 million received from the seller of the Mervyns portfolio
relating to Mervyns bankruptcy filing in the third quarter and a
$33.0 million capital contribution by the members of MV LLC, both
of which are required to be held in escrow by the lender.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(in thousands)
Selected Balance Sheet Data (Continued):
Combined condensed balance sheets relating to the Company's joint ventures
are as follows:
September 30, December 31,
2008 2007
-------------- --------------
Land $ 2,388,344 $ 2,384,069
Buildings 6,340,323 6,253,167
Fixtures and tenant improvements 126,547 101,115
-------------- --------------
8,855,214 8,738,351
Less: Accumulated depreciation (568,814) (412,806)
-------------- --------------
8,286,400 8,325,545
Construction in progress 409,514 207,387
-------------- --------------
Real estate, net 8,695,914 8,532,932
Receivables, including straight-line rent,
net 154,955 124,540
Leasehold interests 12,905 13,927
Other assets 363,369 365,925
-------------- --------------
$ 9,227,143 $ 9,037,324
============== ==============
Mortgage debt (a) $ 5,752,459 $ 5,551,839
Notes and accrued interest payable to DDR 34,731 8,492
Other liabilities 229,817 201,083
-------------- --------------
6,017,007 5,761,414
Accumulated equity 3,210,136 3,275,910
-------------- --------------
$ 9,227,143 $ 9,037,324
============== ==============
(a) The Company's proportionate share of joint venture debt aggregated
approximately $1,199.6 million and $1,034.1 million at September 30,
2008 and December 31, 2007, respectively.
Contact: Scott A. Wolstein Chairman and Chief Executive Officer
216-755-5500 Michelle M. Dawson Vice President of Investor
Relations 216-755-5500 Email Contact
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