BEACHWOOD, Ohio, April 27, 2011 /PRNewswire/ -- Developers
Diversified Realty Corporation (NYSE: DDR) today announced
operating results for the quarter ended March 31, 2011.
SIGNIFICANT FIRST QUARTER ACTIVITY
- Reported operating FFO of $0.24
per diluted share, which excludes certain non-operating items
- Maintained strong operating performance with the execution of
428 total leases for over 2.6 million square feet
- The portfolio leased rate increased to 92.4% at March 31, 2011 from 92.3% at December 31, 2010 and 91.3% at March 31, 2010; including Brazil, the March 31,
2011 blended leased rate was 92.6%
- Generated positive leasing spreads, with new leases at 9.0% and
renewals at 4.9% for a blended overall spread of 5.4%, which is
consistent with the blended spread of 5.4% in the fourth quarter of
2010 and an improvement from -2.7% in the first quarter of
2010
- Reported same store net operating income growth of 3.9% as
compared to an increase of 3.6% in the fourth quarter of 2010 and a
decrease of 2.6% in the first quarter of 2010
- Completed $40 million of
acquisitions
- Completed $43 million of asset
sales, of which the Company's pro-rata share was $20 million
- Issued $300 million aggregate
principal amount of 4.75% senior unsecured notes due April 2018
- Unconsolidated joint venture in Brazil completed an initial public offering
raising US$280 million of gross
proceeds
- Raised $190.2 million of equity
proceeds in connection with the exercise of warrants for 10 million
common shares in March 2011 and
through the issuance of 9.5 million common shares in April 2011, which were utilized to redeem
$180 million of 8.0% Class G
preferred shares in April 2011
"Our first quarter results highlight the successful execution of
our strategic initiatives consistent with our guidance," commented
Developers Diversified's president and chief executive officer,
Daniel B. Hurwitz. "We expect
this momentum to continue and our portfolio to benefit in the
current environment."
FINANCIAL HIGHLIGHTS
The Company's first quarter operating Funds From Operations
("FFO") was $63.2 million, or
$0.24 per diluted share, before
$25.9 million of net adjustments.
The charges and gains, primarily non-cash, for the period ended
March 31, 2011, are summarized as
follows (in millions):
|
|
|
|
Three
Months
|
|
|
Non-cash impairment charges –
consolidated assets
|
|
$
3.8
|
|
|
Executive separation
charge
|
|
10.7
|
|
|
Non-cash gain on equity
derivative instruments (Otto Family warrants)
|
|
(21.9)
|
|
|
Other income, net
|
|
(1.3)
|
|
|
Equity in net income of joint
ventures – loss on asset sales
|
|
1.6
|
|
|
Gain on change in control of
interests
|
|
(21.7)
|
|
|
Discontinued operations –
non-cash consolidated impairment charges and loss on
sales
|
|
1.9
|
|
|
Loss on disposition of real
estate (land), net
|
|
1.0
|
|
|
Total Adjustments from
FFO to operating FFO
|
|
$ (25.9)
|
|
|
|
|
|
|
|
|
FFO applicable to common shareholders for the three-month period
ended March 31, 2011, including the
above net adjustments, was $89.1
million, or $0.25 per diluted
share, which compares to FFO of $28.4
million, or $0.12 per diluted
share, for the prior-year comparable period. The increase in
FFO for the three-month period ended March
31, 2011, is primarily the result of the gain on change in
control of interests relating to the Company's acquisition of two
assets from unconsolidated joint ventures and the effect of the
non-cash valuation adjustments associated with the warrants that
were exercised in full for cash in the first quarter of 2011
partially offset by the executive separation charge.
Net income applicable to common shareholders for the three-month
period ended March 31, 2011, was
$24.7 million, or $0.01 per diluted share, which compares to a net
loss of $34.8 million, or
$0.15 per diluted share, for the
prior-year comparable period. The increase in net income
applicable to common shareholders for the three-month period ended
March 31, 2011, is primarily due to
the same items impacting FFO as explained above.
LEASING & PORTFOLIO OPERATIONS
The following results for the three-month period ended
March 31, 2011, highlight continued
strong leasing activity throughout the portfolio:
- Executed 168 new leases aggregating approximately 0.8 million
square feet and 260 renewals aggregating approximately 1.8 million
square feet.
- Total portfolio average annualized base rent per occupied
square foot as of March 31, 2011 was
$13.37, as compared to $13.04 at March 31,
2010.
- The portfolio leased rate was 92.4% as of March 31, 2011, as compared to 91.3% at
March 31, 2010. The U.S.
portfolio and the Brazil portfolio
blended leased rate was 92.6% at March 31,
2011.
- On a cash basis, rental rates for new leases increased by 9.0%
over prior rents and renewals increased by 4.9%. The
continued strong leasing spreads are consistent with the blended
spread of 5.4% for the portfolio reported in the fourth quarter of
2010 and an improvement from the -2.7% spread in the first quarter
of 2010.
- Same store net operating income ("NOI") increased 3.9% for the
three-month period ended March 31,
2011 over the prior-year comparable period.
ACQUISITIONS
The Company acquired its partners' 50% ownership interests in
two prime shopping centers for $40
million during the first quarter of 2011. As a result
of the transactions, the Company now owns 100% of the two prime
shopping centers. The aggregate gross value of the shopping
centers is $80 million, and a new
$21.0 million, eleven-year mortgage
encumbers one of the assets. The Company recorded an
aggregate gain of approximately $21.7
million in connection with the acquisitions related to the
step-up of its investment basis to fair value due to the change in
control that occurred.
DISPOSITIONS
The Company sold two consolidated assets, aggregating
approximately 0.1 million square feet, in the first quarter of
2011, generating gross proceeds of approximately $5.3 million. The Company recorded an
aggregate net gain of approximately $0.2
million related to asset sales in the first quarter.
The Company also sold $8.0
million of consolidated non-income producing assets.
In the first quarter of 2011, two of the Company's
unconsolidated joint ventures sold two shopping centers,
aggregating approximately 0.3 million square feet, generating gross
proceeds of approximately $29.7
million. The joint ventures recorded an aggregate net
loss of approximately $0.9 million
related to these asset sales, of which the Company recorded a net
loss of approximately $1.9 million
related to the write-off of its basis in the investments.
CAPITAL MARKETS ACTIVITIES
Mr. Alexander Otto and certain
members of his family (the "Otto Family") exercised their warrants
for 10 million common shares issued in 2009 for cash proceeds of
$60 million in March 2011. The Company also entered into a
forward sale agreement to sell an aggregate of 9.5 million of its
common shares for net proceeds aggregating $130.2 million, which settled in April 2011. The net proceeds from the
issuance of these common shares were utilized to redeem
$180 million of the Company's 8.0%
Class G preferred shares in April
2011. The Company expects to record a non-cash charge
of approximately $6.4 million to net
income applicable to common shareholders in the second quarter of
2011 relating to the write-off of the Class G preferred shares'
original issuance costs.
In March 2011, the Company issued
$300 million aggregate principal
amount of 4.75% senior unsecured notes due April 2018. Net proceeds from the offering
were used to repay short-term, higher cost mortgage debt and to
reduce borrowings under the Company's revolving credit facilities
and secured term loan.
In February 2011, the Company
executed the extension option on its term loan with KeyBank, N.A.
to extend the maturity date one year to February 2012. The outstanding balance of
the term loan was reduced to $550
million with proceeds from the unsecured notes offering.
On February 2, 2011, the Company's
unconsolidated joint venture, Sonae Sierra
Brasil (BM&FBOVESPA: SSBR3), completed an initial public
offering of its common shares on the Sao Paulo Stock Exchange.
The total proceeds raised of approximately US$280 million from the initial public offering
will be used primarily to fund future developments and expansions,
as well as repay a loan from its parent company, in which DDR owns
a 50% interest. Our proportionate share of the loan repayment
proceeds was approximately US$22.4
million. As a result of the initial public offering,
the Company's effective ownership interest in Sonae Sierra Brasil was reduced from 48% to
approximately 33%.
2011 GUIDANCE
There has been no change in guidance since the last update
provided on January 10, 2011.
The Company continues to estimate operating FFO for 2011
between $0.90-$1.05 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 from disposition of
depreciable real estate property, except for gains generated from
merchant build asset sales, which are presented net of taxes, and
those gains that represent the recapture of a previously recognized
impairment charge, (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 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. Other real estate companies may calculate FFO and operating
FFO in a different manner. FFO excluding the net non-operating
items detailed above 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.
SAFE HARBOR
Developers Diversified Realty Corporation 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 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 the three-month period
ended March 31, 2011. 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, 2010. The
Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that
arise after the date hereof.
ABOUT DEVELOPERS DIVERSIFIED REALTY
Developers Diversified owns and manages approximately 520 retail
properties in 41 states, Puerto
Rico and Brazil totaling
approximately 127 million square feet. The Company's prime
portfolio features open-air, value-oriented shopping centers in
high barrier-to-entry markets with stable populations and high
growth potential. Developers Diversified is the largest landlord in
Puerto Rico and owns a premier
portfolio of regional malls primarily clustered around Sao Paulo, Brazil. Developers Diversified is a
self-administered and self-managed REIT operating as a fully
integrated real estate company. Additional information about the
Company is available on the Company's website 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 at the
Company's corporate office to Kate
Deck, Investor Relations Director, Developers Diversified
Realty Corporation, 3300 Enterprise Parkway, Beachwood, Ohio 44122 or at www.ddr.com.
The Company will hold its quarterly conference call tomorrow,
April 28, 2011 at 10:00 a.m. Eastern Daylight Time. To
participate, please dial 800.265.0241 (domestic), or 617.847.8704
(international) at least ten minutes prior to the scheduled start
of the call. When prompted, provide the passcode: 30366082.
Access to the live call and replay will also be available
through the Company's website. The replay will be available
through May 5, 2011.
DEVELOPERS
DIVERSIFIED REALTY CORPORATION
Financial
Highlights
(In
thousands)
|
|
|
|
|
Three-Month
Periods
Ended March 31,
|
|
Revenues:
|
2011
|
|
2010
|
|
Minimum rents (A)
|
$ 134,291
|
|
$ 133,746
|
|
Percentage and overage rents
(A)
|
2,038
|
|
2,041
|
|
Recoveries from
tenants
|
46,614
|
|
46,370
|
|
Ancillary and other property
income
|
7,169
|
|
4,689
|
|
Management, development and
other fee income
|
11,751
|
|
14,017
|
|
Other (B)
|
1,121
|
|
1,268
|
|
|
202,984
|
|
202,131
|
|
Expenses:
|
|
|
|
|
Operating and maintenance
(C)
|
38,104
|
|
34,385
|
|
Real estate taxes
|
26,841
|
|
27,400
|
|
Impairment charges
(D)
|
3,856
|
|
817
|
|
General and administrative
(E)
|
29,378
|
|
23,275
|
|
Depreciation and
amortization
|
56,042
|
|
55,177
|
|
|
154,221
|
|
141,054
|
|
Other income
(expense):
|
|
|
|
|
Interest income
|
2,796
|
|
1,333
|
|
Interest expense (F)
|
(60,243)
|
|
(56,096)
|
|
Gain on debt retirement, net
(F)
|
—
|
|
1,091
|
|
Gain (loss) on equity derivative
instruments (G)
|
21,926
|
|
(24,868)
|
|
Other income (expense)
(H)
|
1,341
|
|
(3,059)
|
|
|
(34,180)
|
|
(81,599)
|
|
Income (loss) before earnings
from equity method investments and other items
|
14,583
|
|
(20,522)
|
|
Equity in net income of joint
ventures (I)
|
1,974
|
|
1,647
|
|
Impairment of joint venture
investments
|
(35)
|
|
—
|
|
Gain on change in control of
interests (J)
|
21,729
|
|
—
|
|
Tax expense of taxable REIT
subsidiaries and state franchise and income taxes
|
(326)
|
|
(1,002)
|
|
Income (loss) from continuing
operations
|
37,925
|
|
(19,877)
|
|
Loss from discontinued
operations (K)
|
(1,685)
|
|
(6,033)
|
|
Income (loss) before loss on
disposition of real estate
|
36,240
|
|
(25,910)
|
|
Loss on disposition of real
estate, net of tax
|
(861)
|
|
(675)
|
|
Net income (loss)
|
35,379
|
|
(26,585)
|
|
Non-controlling
interests
|
(67)
|
|
2,338
|
|
Net income (loss) attributable
to DDR
|
$ 35,312
|
|
$ (24,247)
|
|
Net income (loss) applicable to
common shareholders
|
$ 24,745
|
|
$ (34,814)
|
|
Funds From Operations
("FFO"):
|
|
|
|
|
Net income (loss) applicable to
common shareholders
|
$ 24,745
|
|
$ (34,814)
|
|
Depreciation and amortization of
real estate investments
|
53,803
|
|
54,594
|
|
Equity in net income of joint
ventures (I)
|
(1,974)
|
|
(1,647)
|
|
Joint ventures' FFO
(I)
|
12,808
|
|
11,555
|
|
Non-controlling interests (OP
Units)
|
16
|
|
8
|
|
Gain on disposition of
depreciable real estate
|
(311)
|
|
(1,267)
|
|
FFO applicable to common
shareholders
|
89,087
|
|
28,429
|
|
Preferred dividends
|
10,567
|
|
10,567
|
|
FFO
|
$ 99,654
|
|
$ 38,996
|
|
Per share data:
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
Basic
|
$
0.10
|
|
$
(0.15)
|
|
Diluted
|
$
0.01
|
|
$
(0.15)
|
|
Basic – average shares
outstanding
|
255,966
|
|
227,133
|
|
Diluted – average shares
outstanding
|
262,581
|
|
227,133
|
|
Dividends Declared
|
$
0.04
|
|
$
0.02
|
|
Funds From Operations – Basic
(L)
|
$
0.34
|
|
$
0.12
|
|
Funds From Operations – Diluted
(L)
|
$
0.25
|
|
$
0.12
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet
Data
|
|
|
|
|
|
March 31,
2011
|
|
December 31,
2010
|
|
Assets:
|
|
|
|
|
Real estate and rental
property:
|
|
|
|
|
Land
|
$ 1,865,716
|
|
$ 1,837,403
|
|
Buildings
|
5,551,683
|
|
5,491,489
|
|
Fixtures and tenant
improvements
|
356,104
|
|
339,129
|
|
|
7,773,503
|
|
7,668,021
|
|
Less: Accumulated
depreciation
|
(1,500,524)
|
|
(1,452,112)
|
|
|
6,272,979
|
|
6,215,909
|
|
Land held
for development and construction in progress
|
714,972
|
|
743,218
|
|
Real estate held for sale,
net
|
6,427
|
|
—
|
|
Real estate, net
|
6,994,378
|
|
6,959,127
|
|
|
|
|
|
|
Investments in and advances to
joint ventures
|
402,875
|
|
417,223
|
|
Cash
|
21,025
|
|
19,416
|
|
Restricted cash
|
4,148
|
|
4,285
|
|
Notes receivable, net
|
121,335
|
|
120,330
|
|
Receivables, including
straight-line rent, net
|
112,982
|
|
123,259
|
|
Other assets, net
|
124,787
|
|
124,450
|
|
|
$ 7,781,530
|
|
$ 7,768,090
|
|
|
|
|
|
|
Liabilities &
Equity:
|
|
|
|
|
Indebtedness:
|
|
|
|
|
Revolving credit
facilities
|
$
42,681
|
|
$
279,865
|
|
Unsecured debt
|
2,345,533
|
|
2,043,582
|
|
Mortgage and other secured
debt
|
1,881,795
|
|
1,978,553
|
|
|
4,270,009
|
|
4,302,000
|
|
Dividends
payable
|
18,409
|
|
12,092
|
|
Equity derivative
liability (G)
|
—
|
|
96,237
|
|
Other
liabilities
|
205,463
|
|
223,074
|
|
Total
liabilities
|
4,493,881
|
|
4,633,403
|
|
|
|
|
|
|
Preferred shares
|
555,000
|
|
555,000
|
|
Common shares (L)
|
26,714
|
|
25,627
|
|
Paid-in-capital (G)
|
4,004,030
|
|
3,868,990
|
|
Accumulated distributions in
excess of net income
|
(1,365,039)
|
|
(1,378,341)
|
|
Deferred compensation
obligation
|
12,571
|
|
14,318
|
|
Accumulated other comprehensive
income
|
27,707
|
|
25,646
|
|
Less: Common shares in
treasury at cost
|
(12,320)
|
|
(14,638)
|
|
Non-controlling
interests
|
38,986
|
|
38,085
|
|
Total equity
|
3,287,649
|
|
3,134,687
|
|
|
$ 7,781,530
|
|
$ 7,768,090
|
|
|
|
|
|
|
|
(A) Base and percentage rental revenues for the three-month
period ended March 31, 2011, as
compared to the prior-year comparable period, increased
$1.2 million. This increase
consisted of increased leasing activity at core portfolio
properties, contributing $0.9
million, the acquisition of a 50% interest in two shopping
centers, which generated an additional $0.6
million in revenues offset by a net decrease in revenues
from development and redevelopment assets of $0.3 million. Included in rental revenues
for the three-month periods ended March 31,
2011 and 2010, is approximately $0.3
million and $1.0 million,
respectively, of revenue resulting from the recognition of
straight-line rents, including discontinued operations.
(B) Other revenues were comprised of the following (in
millions):
|
|
|
|
Three-Month
Periods
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
Lease termination
fees
|
|
$0.6
|
|
$ 0.6
|
|
Financing fees
|
|
0.4
|
|
0.2
|
|
Other miscellaneous
|
|
0.1
|
|
0.5
|
|
|
|
$1.1
|
|
$ 1.3
|
|
|
|
|
|
|
|
|
(C) Operating and maintenance expense, including discontinued
operations, includes the following expenses (in millions):
|
|
|
|
Three-Month
Periods
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
Bad debt
expense
|
|
$2.4
|
|
$ 3.2
|
|
Ground rent expense
(a)
|
|
$1.0
|
|
$ 1.3
|
|
(a) Includes non-cash expense of
approximately $0.5 million for both of the three-month periods
ended March 31, 2011 and 2010 related to straight-line ground rent
expense.
|
|
|
|
|
|
|
(D) The Company recorded impairment charges during the
three-month periods ended March 31,
2011 and 2010, on the following consolidated assets (in
millions):
|
|
|
|
Three-Month
Periods
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Undeveloped
land
|
|
$ 3.8
|
|
$ —
|
|
Assets marketed for
sale
|
|
—
|
|
0.8
|
|
Total continuing
operations
|
|
3.8
|
|
0.8
|
|
|
|
|
|
|
|
Sold assets or assets held
for sale (1)
|
|
2.0
|
|
2.3
|
|
Total discontinued
operations
|
|
2.0
|
|
2.3
|
|
|
|
|
|
|
|
Total impairment
charges
|
|
$ 5.8
|
|
$ 3.1
|
|
(1) See summary
of discontinued operations activity in note (K).
|
|
|
|
|
|
|
(E) 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 three-month periods ended March 31, 2011 and 2010, general and
administrative expenses were approximately 7.1% and 5.5% of total
revenues, respectively, including joint venture and managed
property revenues.
During the three-months ended March 31,
2011, the Company recorded a charge of $10.7 million as a result of the termination
without cause of its Executive Chairman, the terms of which were
pursuant to his amended and restated employment agreement. In
addition to the cash payment component, the charge also includes
stock-based compensation expense of $1.5
million (representing the acceleration of expense associated
with the grant-date fair value of the unvested stock-based awards
that had a market value of $7.8
million based upon the closing price of the Company's common
shares of $14.00 as of March 31, 2011). During the three months
ended March 31, 2010, the Company
incurred a $2.1 million separation
charge relating to the departure of another executive officer.
Excluding these separation charges, general and administrative
expenses were 4.5% and 5.0% of total revenues for the three-month
periods ended March 31, 2011 and
2010, respectively.
(F) The Company recorded the following in connection with its
outstanding convertible debt (in millions):
|
|
|
|
Three-Month
Periods
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
Non-cash interest expense
related to amortization of the debt discount
|
|
$3.8
|
|
$ 2.0
|
|
Non-cash adjustment to
gain on repurchase
|
|
—
|
|
2.6
|
|
|
|
|
|
|
|
|
(G) Represents the non-cash impact of the valuation adjustments
of the equity derivative instruments (warrants) issued as part of
the share purchase transaction with the Otto Family completed in
2009. Because all of the warrants were exercised in
March 2011, the Company will no
longer record the changes in fair value of these instruments in its
future earnings. The liability at the date of exercise was
reclassified into paid-in-capital.
(H) Other income (expenses) were comprised of the following (in
millions):
|
|
|
|
Three-Month
Periods
Ended March
31,
|
|
|
|
2011
|
|
2010
|
|
Litigation-related
expenses
|
|
$ (1.0)
|
|
$ (1.7)
|
|
Debt extinguishment
costs
|
|
(0.2)
|
|
(1.1)
|
|
Settlement of lease
liability obligation
|
|
2.6
|
|
—
|
|
Abandoned projects and
other expenses
|
|
(0.1)
|
|
(0.3)
|
|
|
|
$ 1.3
|
|
$ (3.1)
|
|
|
|
|
|
|
|
|
(I) At March 31, 2011 and 2010,
the Company had an investment in joint ventures, excluding
consolidated joint ventures, in 191 and 213 shopping center
properties, respectively. See below for a summary of the
combined condensed operating results and select balance sheet data
of the Company's unconsolidated joint ventures.
(J) In the first quarter of 2011, the Company acquired its
partners' 50% interest in two shopping centers. The Company
accounted for both of these transactions as step acquisitions.
Due to the change in control that occurred, the Company
recorded an aggregate gain associated with the acquisitions related
to the difference between the Company's carrying value and fair
value of the previously held equity interest.
(K) The operating results relating to assets classified as
discontinued operations are summarized as follows (in
thousands):
|
|
|
Three-Month
Periods
Ended March
31,
|
|
|
2011
|
|
2010
|
|
Revenues from
operations
|
$
327
|
|
$ 5,227
|
|
|
|
|
|
|
Operating
expenses
|
83
|
|
3,671
|
|
Impairment
charges
|
1,983
|
|
2,255
|
|
Interest, net
|
92
|
|
3,906
|
|
Depreciation
and amortization
|
98
|
|
1,994
|
|
Total expenses
|
2,256
|
|
11,826
|
|
Loss before disposition of
real estate
|
(1,929)
|
|
(6,599)
|
|
Gain on disposition of
real estate, net
|
244
|
|
566
|
|
Net loss
|
$ (1,685)
|
|
$ (6,033)
|
|
|
|
|
|
|
|
(L) For purposes of computing FFO and operating FFO per share,
the following share information was utilized (in millions):
|
|
|
At March
31,
|
|
|
2011
|
|
2010
|
|
Common shares
outstanding
|
267.1
|
|
250.0
|
|
OP Units outstanding ("OP
Units")
|
0.4
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
Three-Month
Periods
Ended March
31,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Weighted average common shares
outstanding
|
258.2
|
|
228.5
|
|
Assumed conversion of OP
Units
|
0.4
|
|
0.4
|
|
FFO Weighted average common
shares and OP Units – Basic
|
258.6
|
|
228.9
|
|
Assumed conversion of dilutive
securities
|
6.6
|
|
7.3
|
|
FFO and Operating FFO Weighted
average common shares and OP Units –Diluted
|
265.2
|
|
236.2
|
|
|
|
|
|
|
|
DEVELOPERS
DIVERSIFIED REALTY CORPORATION
Summary
Results of Combined Unconsolidated Joint Ventures
(In
thousands)
Combined condensed income
statements
|
|
|
Three-Month
Periods
Ended March
31,
|
|
|
2011
|
|
2010
|
|
Revenues from operations
(A)
|
$ 172,398
|
|
$ 164,093
|
|
|
|
|
|
|
Operating
expenses
|
63,015
|
|
63,547
|
|
Depreciation and amortization of
real estate investments
|
47,752
|
|
45,968
|
|
Interest
expense
|
58,112
|
|
58,459
|
|
|
168,879
|
|
167,974
|
|
Income (loss) from operations
before tax expense and discontinued operations
|
3,519
|
|
(3,881)
|
|
Income tax expense
|
(6,144)
|
|
(4,799)
|
|
(Loss) income from discontinued
operations, net of tax
|
(441)
|
|
582
|
|
Loss on disposition of
discontinued operations (B)
|
(863)
|
|
(8,752)
|
|
Net loss
|
$ (3,929)
|
|
$ (16,850)
|
|
Net income at DDR's
ownership interests (C)
|
$ 3,899
|
|
$ 1,660
|
|
FFO at DDR's ownership
interests (D)
|
$ 12,808
|
|
$ 11,555
|
|
|
|
|
|
|
|
Combined condensed balance
sheets
|
|
|
March 31,
2011
|
|
December 31,
2010
|
|
|
|
|
|
|
Land
|
$ 1,550,786
|
|
$ 1,566,682
|
|
Buildings
|
4,745,572
|
|
4,783,841
|
|
Fixtures and tenant
improvements
|
158,031
|
|
154,292
|
|
|
6,454,389
|
|
6,504,815
|
|
Less: Accumulated
depreciation
|
(747,737)
|
|
(726,291)
|
|
|
5,706,652
|
|
5,778,524
|
|
Land held for development and
construction in progress (E)
|
197,214
|
|
174,237
|
|
Real estate, net
|
5,903,866
|
|
5,952,761
|
|
Receivables, including
straight-line rent, net
|
100,090
|
|
111,569
|
|
Leasehold interests
|
10,006
|
|
10,296
|
|
Other assets, net
|
517,696
|
|
303,826
|
|
|
$ 6,531,658
|
|
$ 6,378,452
|
|
|
|
|
|
|
Mortgage debt (F)
|
$ 3,884,329
|
|
$ 3,950,794
|
|
Notes and accrued interest
payable to DDR
|
91,290
|
|
87,282
|
|
Other liabilities
|
205,306
|
|
186,728
|
|
|
4,180,925
|
|
4,224,804
|
|
Accumulated equity
|
2,350,733
|
|
2,153,648
|
|
|
$ 6,531,658
|
|
$ 6,378,452
|
|
|
|
|
|
|
|
(A) Revenues for the three-month periods include the following
(in millions):
|
|
|
|
Three-Month
Periods
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
Straight-line
rents
|
|
$ 0.6
|
|
$ 1.2
|
|
DDR's proportionate
share
|
|
0.1
|
|
0.2
|
|
|
|
|
|
|
|
|
(B) For the three months ended March 31,
2011, loss on disposition of discontinued operations
includes the sale of two properties by two separate unconsolidated
joint ventures. The Company's proportionate share of the
aggregate loss for the assets sold for the three-month period ended
March 31, 2011, was approximately
$1.9 million.
(C) The Company's share of joint venture equity in net income
was reduced by $1.9 million for the three-month period ended March
31, 2011 as a result of basis differences impacting amortization
and depreciation, impairment charges and loss on dispositions.
(D) FFO from unconsolidated joint ventures are summarized as
follows (in thousands):
|
|
|
Three-Month
Periods
Ended March
31,
|
|
|
2011
|
|
2010
|
|
Net loss
|
$ (3,929)
|
|
$(16,850)
|
|
Depreciation and
amortization of real estate investments
|
47,836
|
|
50,314
|
|
FFO
|
$ 43,907
|
|
$ 33,464
|
|
FFO at DDR's ownership
interests
|
$ 12,808
|
|
$ 11,555
|
|
Operating FFO at DDR's
ownership interests (1)
|
$ 14,400
|
|
$ 12,864
|
|
DDR joint venture
distributions received, net (2)
|
$ 26,904
|
|
$ 10,799
|
|
(1) Excluded from operating FFO
is the Company's pro rata share of net charges primarily related to
impairment charges and losses on the disposition of assets as
disclosed earlier in this press release.
(2) Includes loan repayments in
2011 of $22.4 million from a foreign investment.
|
|
|
|
|
|
(E) The Company's proportionate share of joint venture land held
for development and construction in progress aggregated
approximately $66.2 million and
$71.7 million at March 31, 2011 and December 31, 2010, respectively.
(F) The Company's proportionate share of joint venture debt
aggregated approximately $790.8
million and $835.8 million at
March 31, 2011 and December 31, 2010, respectively. The
$790.8 million includes approximately
$52.6 million of non-recourse debt
associated with joint ventures for which the Company has written
its investment down to zero and is receiving no allocation of
income or FFO.
SOURCE Developers Diversified Realty Corporation