DDR Beats Estimates - Analyst Blog
May 02 2011 - 8:15AM
Zacks
Developers Diversified
Realty Corp. (DDR) reported first quarter 2011 FFO (fund
from operations) of $89.1 million or 25 cents per share compared to
an FFO loss of $28.4 million or 12 cents per share in the
year-earlier quarter. The reported FFO beat the Zacks Consensus
Estimate by four cents. Fund from operations, a widely used metric
to gauge the performance of REITs, is obtained after adding
depreciation and amortization and other non-cash expenses to net
income.
Excluding non-recurring charges of
$25.9 million primarily related to non-cash impairment charges, FFO
in the fourth quarter of 2010 was $63.2 million or 24 cents per
share.
Total revenues during fourth
quarter 2010 were $202.9 million compared with $202.1 million in
the year-ago quarter. Total revenues during the quarter exceeded
the Zacks Consensus Estimate of $198 million.
Developers Diversified executed
strong leasing activities during the quarter. The company signed
168 new leases and 260 renewal leases spanning 0.8 million square
feet and 1.8 million square feet, respectively. The core portfolio
of the company was 92.4% leased at the end of the quarter, compared
with 91.3% in the prior-year quarter.
Rental rates for new leases
increased by 9.0% (cash) over prior rents and renewals increased by
4.9% during the quarter. Average annualized base rents in the
company’s portfolio (including Brazil) reached $13.37 per square
foot at the end of the quarter, up from $13.04 in the year-ago
quarter. Same-store net operating income (NOI) increased 3.9%
during the reported quarter on a year-over-year basis.
Developers Diversified acquired its
partners' 50% ownership interests in two prime shopping centers for
$40 million during the first quarter of 2011. As a result,
the company now owns 100% of the two prime shopping centers.
The value of the shopping centers is $80 million and
helped realize a net gain of $21.7 million from the
acquisition.
Developers Diversified sold
non-strategic assets to improve portfolio demographics and increase
liquidity. The company sold 2 consolidated assets totaling 0.1
million square feet generating gross proceeds of $5.3 million and
realized a net gain of $0.2 million. The company also sold $ 8.0
million of non income producing assets.
In the first quarter of 2011, two
of the company's joint ventures sold two shopping centers, spanning
0.3 million square feet, generating proceeds of approximately $29.7
million.
During the quarter, Developers
Diversified issued $300 million of 4.75% convertible senior notes
due April 2018. At the same time, the company executed the
extension option on its term loan with KeyBank, N.A. to extend the
maturity date by one year to
February 2012. The outstanding balance of the term loan was
reduced to $550 million with proceeds from the unsecured notes
offering.
At quarter-end, the company had
$21.0 million of cash and cash equivalents compared with $19.4
million in the year-ago quarter.
For full-year 2011, the company
expects recurring FFO in the range of $0.90 to $1.05 per share.
Developers Diversified currently
retains a Zacks #3 Rank, which translates into a short-term Hold
rating. We are also maintaining our long-term Neutral
recommendation on the stock. One of its competitors, Kimco
Realty Corporation. (KIM) currently retains a Zacks #3
Rank, which translates into a short-term Hold rating.
DEV DIVERFD RLT (DDR): Free Stock Analysis Report
KIMCO REALTY CO (KIM): Free Stock Analysis Report
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