Developers Realty (NYSE:DDR)
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/C O R R E C T I O N -- Developers Diversified Realty Corporation/
In the news release, Developers Diversified Realty (NYSE: DDR) Reports a 5.1%
Increase in FFO Per Share for the Nine Month Period Ended September 30, 2003,
issued yesterday, Oct. 30, by Developers Diversified Realty Corporation over PR
Newswire, we are advised by the company that in the tabular material, Financial
Highlights, the basic and diluted average shares outstanding for the three and
nine month periods ended Sept. 30, 2003 were incorrect as originally issued
inadvertently. The correct figures follow:
CLEVELAND, Oct. 30 /PRNewswire-FirstCall/ -- Developers Diversified Realty
Corporation , a real estate investment trust ("REIT"), today announced that
third quarter 2003 Funds From Operations ("FFO"), a widely accepted measure of
REIT performance, on a per share basis was $0.58 (diluted) and $0.59 (basic) as
compared to $0.61 (diluted) and $0.62 (basic) per share for the same period in
the previous year, a per share decrease of 4.9% diluted and 4.8% basic. The
figures in 2003 include a $0.07 per share charge relating to the original
issuance costs associated with the redemption of preferred shares during the
third quarter 2003. Excluding this non-cash charge, FFO, on a per share basis
was $0.65 (diluted) and $0.66 (basic), a per share increase of 6.6% diluted and
6.5% basic. FFO reached $51.3 million for the quarter ended September 30, 2003,
as compared to $40.6 million for 2002. Net income for the three months ended
September 30, 2003 was $42.0 million compared to second quarter 2002 net income
of $25.2 million, or $0.28 per share (diluted) and $0.29 (basic) for each
quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990826/DDRLOGO )
On a per share basis, FFO (diluted) was $1.86 and $1.77 for the nine month
periods ended September 30, 2003 and 2002, respectively, an increase of 5.1%.
Excluding the non-cash charges associated with the redemption of preferred
shares in 2003 and 2002, FFO, on a per share basis was $1.99 diluted in 2003
compared to $1.86 (diluted) in 2002, an increase of 7.0%. FFO for the nine
months ended September 30, 2003 was $154.2 million compared to FFO for the nine
months ended September 30, 2002 of $116.4 million. Net income for the nine
months ended September 30, 2003 was $148.8 million, or $1.32 per share
(diluted), compared to net income of $72.4 million, or $0.72 per share (diluted)
for the prior comparable period. An increase in net income of $26.2 million is
due to the net gain on sale of real estate assets. The remainder of the
increase in net income is attributable to the merger with JDN Realty on March
13, 2003, core operations and a reduction in minority interest expense
associated with preferred operating partnership units which were redeemed in
2003.
Scott A. Wolstein, DDR's chairman and chief executive officer stated, "We are
pleased to announce this quarter's financial results, which demonstrate strong
earnings growth and the Company's continued commitment to improving its balance
sheet. Furthermore, property level fundamentals remain stable, driven by strong
demand from our key tenants such as Wal*Mart, Target and Kohl's; plus demand
from other tenants migrating from enclosed malls to open air centers. During
the quarter, Developers Diversified announced its $730 million joint venture
transaction to create an Australian investment entity. Not only does this
transaction tap the Australian public market's overwhelming demand for
institutional quality community centers, but it also creates a long-term equity
partner."
FFO is a supplemental non-GAAP financial measurement used as a standard in the
real estate industry. Management believes that FFO provides an additional
indicator of the financial performance of a REIT. The Company also believes
that FFO 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
and is not necessarily indicative of cash available to fund cash needs and
should not be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flow as a measure
of liquidity. FFO available to common shareholders is defined and calculated by
the Company as net income, adjusted to exclude: (i) preferred dividends, (ii)
gains (or losses) from sales of depreciable real estate property, except for
those sold through the Company's merchant building program, which are presented
net of taxes, (iii) sales of securities, (iv) extraordinary items and (v)
certain non-cash items. These non-cash items principally include real property
depreciation, 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:
Leasing activity continues to be strong throughout the portfolio. During the
third quarter of 2003, the Company executed 110 new leases aggregating
approximately 633,000 square feet and 140 renewals aggregating approximately
494,000 square feet. Rental rates on new leases increased by 15.2% to $11.83
per square foot and rental rates on renewals increased by 7.6% to $11.37 per
square foot. On a blended basis, rental rates for new leases and renewals
increased by 10.1% to $11.63 per square foot.
At September 30, 2003, the average annualized base rent per occupied square
foot, including those properties owned through joint ventures, was $10.65.
Excluding the impact of the properties acquired through the JDN merger, the
average annualized base rent per occupied square foot for the portfolio was
$10.95, as compared to $10.49 at September 30, 2002.
As of September 30, 2003, the portfolio was 94.6% leased. Excluding the impact
of the properties acquired through the JDN merger, the portfolio was 95.2%
leased, as compared to 95.9% at September 30, 2002. These percentages include
tenants for which signed leases have been executed and occupancy has not
occurred. Based on tenants in place and responsible for paying rent as of
September 30, 2003, the portfolio was 94.0% occupied. Excluding the impact of
the properties acquired through the JDN merger, the portfolio was 94.6%
occupied, as compared to 94.2% at September 30, 2002.
Same store tenant sales performance over the trailing 12 month period within the
Company's portfolio remained strong at approximately $234 per square foot for
those tenants required to report. Aggregate base and percentage rental revenues
relating to Core Portfolio Properties (i.e., shopping center properties owned
since January 1, 2002, excluding properties under redevelopment) increased
approximately $2.9 million (or 2.1%) for the nine month period ended September
30, 2003, compared to the same period in 2002.
Strategic Transactions:
Macquarie DDR Trust
The Company announced that it intends to form an Australian based Listed
Property Trust with Macquarie Bank Limited (ASX:MBL), an international
investment bank and leading advisor and manager of specialized real estate funds
in Australia. Macquarie DDR Trust ("MDT") will focus on acquiring ownership
interests in institutional-quality community center properties in the U.S. The
aggregate purchase value (assuming 100% ownership) of the initial portfolio of
eleven assets currently owned by DDR and DDR joint ventures is approximately
$730 million and MDT will operate with a targeted leverage ratio of 50%.
MDT, which is expected to be listed on the Australian Stock Exchange during the
fourth quarter, will own an 81% interest in the 11 asset portfolio. DDR will
retain a 14.5% effective ownership interest in the assets and MBL will own the
remaining 4.5%. DDR will be responsible for all day-to-day operations of the
properties and will receive fees for property management, leasing, construction
management, acquisitions, due diligence, dispositions (including outparcel
sales), and financing. The Company will also receive base asset management fees
and incentive fees based on the performance of MDT.
It is anticipated that an additional asset in Minneapolis, MN (Coon Rapids --
Inner Quadrant) will be sold to MDT after construction and leasing are
completed, subject to the satisfaction of MDT's investment criteria and the
availability of financing. MDT will have a two year right of first offer on
twenty pre-determined joint venture and wholly owned assets currently in DDR's
portfolio. MDT also is expected to pursue acquisitions of additional
stabilized, institutional-quality community center properties.
DDR is expected to receive approximately $185 million in cash and retain a $53
million equity investment in the joint venture, representing its 14.5% effective
ownership interest. The newly formed joint venture is expected to carry
approximately $374 million in debt, or approximately 50% of total asset value.
The interest rate for this debt will generally be structured with 80% fixed and
20% floating. The new fixed rate financing will have a weighted average
interest rate of approximately 4.40% and the floating rate debt will have an
estimated initial weighted average interest rate of 3.85%. A portion of the
initial outstanding floating rate debt reflects financing to MDT under its
anticipated $100 million secured revolving credit facility.
The aggregate size of the MDT portfolio is approximately 5.4 million square feet
of total GLA (of which 4.8 million is owned GLA), and the average size of the
eleven properties is approximately 490,000 square feet of total GLA. The
Company currently holds seven of the MDT portfolio assets in existing joint
ventures. These properties are located in Boston (Framingham), Massachusetts;
Chicago (Schaumburg), Illinois; Minneapolis (Coon Rapids), Minnesota; Atlanta,
Georgia; Washington, D.C. (Fairfax, Virginia); Atlanta (Marietta), Georgia and
Naples, Florida. The remaining four assets are wholly owned by DDR and located
in St. Paul, Minnesota; Kansas City (Independence), Missouri; Canton, Ohio and
Cleveland (N. Olmsted), Ohio.
MDT will be governed by a board of directors that include three members from
DDR, three members from MBL and two independent members to be selected after the
listing of MDT.
Expansions:
For the nine month period ended September 30, 2003, the Company completed
expansions and redevelopments at nine shopping centers located in Birmingham,
Alabama; Bayonet Point, Florida; Brandon, Florida; Tucker, Georgia;
Fayetteville, North Carolina; North Canton, Ohio; Erie, Pennsylvania; Riverdale,
Utah and Taylorsville, Utah at an aggregate cost of approximately $26.8 million.
The Company is currently expanding/redeveloping four shopping centers located
in North Little Rock, Arkansas; Aurora, Ohio; Tiffin, Ohio and Monaca,
Pennsylvania at a projected incremental cost of approximately $22.9 million.
The Company is also scheduled to commence two additional expansion projects at
the Princeton, New Jersey and Starkville, Mississippi shopping centers.
For the nine month period ended September 30, 2003, the Company's joint ventures
completed expansions and redevelopments at three shopping centers located in San
Ysidro, California; Shawnee, Kansas and North Olmsted, Ohio at an aggregate cost
of approximately $9.7 million. The Company's joint ventures are currently
expanding/redeveloping a shopping center located in Deer Park, Illinois at a
projected incremental cost of approximately $13.9 million.
Development (Consolidated):
During the nine month period ended September 30, 2003, the Company completed the
construction of ten shopping centers located in Fayetteville, Arkansas; Aurora,
Colorado; Parker, Colorado; Parker South, Colorado; Lithonia, Georgia;
McDonough, Georgia; Coon Rapids (Minneapolis) Minnesota; St. John's, Missouri;
Erie, Pennsylvania and Frisco, Texas.
The Company currently has 15 shopping center projects under construction, 10 of
which resulted from the merger with JDN. These projects are located in
Meridian, Idaho (Phase II of the existing shopping center); Long Beach,
California; Sacramento, California; Fort Collins, Colorado; Overland Park,
Kansas; Chesterfield, Michigan; Grandville, Michigan; Lansing, Michigan; St.
Louis, Missouri; Apex, North Carolina; Hamilton, New Jersey; Mount Laurel, New
Jersey; Pittsburgh, Pennsylvania; Irving, Texas and Mesquite, Texas. These
projects are scheduled for completion during 2003 and 2004 and will create an
additional 3.6 million square feet of retail space.
The Company anticipates commencing construction in 2004 on two additional
shopping centers located in Norwood, Massachusetts and McKinney, Texas.
Development (Joint Ventures):
The Company has joint venture development agreements for three shopping center
projects. These three projects have an aggregate projected cost of
approximately $97.8 million and are currently scheduled for completion during
2003 and 2004. At September 30, 2003, approximately $90.3 million of costs were
incurred in relation to these development projects. The projects located in
Long Beach, California (City Place) and Austin, Texas are being financed through
the Prudential/DDR Retail Value Fund. The other project is located in St.
Louis, Missouri.
Dispositions:
In September 2003, one of the Company's RVIP joint ventures sold two west coast
shopping centers, a 103,000 square foot shopping center located in suburban
Sacramento, California for approximately $19.3 million and a 109,000 square foot
shopping center located in Fullerton, California for approximately $15.0 million
and recognized a gain of approximately $12.5 million of which the Company's
proportionate share was $2.5 million. In October 2003, this joint venture also
sold a 208,000 square foot shopping center located in Bellingham, Washington for
approximately $23.5 million.
In September 2003, the Company sold a 57,000 square foot shopping center located
in Nacogdoches, Texas for approximately $5.7 million and in October 2003, the
Company sold a 123,000 square foot shopping center located in Decatur, Alabama
for approximately $6.9 million. The Company acquired both of these properties
in the merger with JDN Realty in March 2003. Additionally, in October 2003, the
Company sold a 92,000 square foot shopping center located in St. Louis, Missouri
for approximately $3.3 million.
Financings:
In July 2003, the Company sold $205 million of Class H Cumulative Redeemable
Preferred Shares with an annual dividend coupon of 7.375%. In addition, the
Company called all outstanding shares of its 8.375% Class C Depositary
Cumulative Preferred Shares aggregating $100 million in July 2003, all
outstanding shares of its 8.68% Class D Depositary Cumulative Preferred Shares
aggregating $54 million in August 2003 and all outstanding shares of its 9.375%
Voting Preferred Shares aggregating $50 million in September 2003.
In July 2003, the Company issued $300 million of seven-year senior unsecured
notes with a coupon rate of 4.625%. These notes are due August 1, 2010 and were
offered at 99.843% of par. Proceeds from this offering were used to repay
borrowings under the Company's unsecured credit facility and to selectively
prepay secured mortgage financing.
Developers Diversified Realty Corporation currently owns and manages over 360
retail operating and development properties in 44 states comprising
approximately 82 million square feet of real estate. DDR is a self-
administered and self-managed real estate investment trust (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 written request at our corporate office to
Michelle A. Mahue, Vice President of Investor Relations, Developers Diversified
Realty Corporation, 3300 Enterprise Parkway, Beachwood, OH 44122 or on our
Website 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 Exchange Act of 1933 and Section 21 E 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 or the loss of a major tenant. For more details on the risk
factors, please refer to the Company's Form on 10-K as of December 31, 2002.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
2003 (F) 2002 2003 (F) 2002
Revenues:
Minimum rent (A) $89,894 $65,934 $255,267 $187,198
Percentage and overage
rents (A) 769 812 3,247 2,282
Recoveries from tenants 24,972 18,446 67,878 50,723
Ancillary income 537 502 1,333 1,167
Other property related
income 369 615 677 1,189
Management fee income 2,601 2,427 7,733 7,789
Development fees 303 1,236 976 2,042
Interest income 1,133 1,496 3,892 4,056
Other (B) 3,599 155 9,520 4,895
124,177 91,623 350,523 261,341
Expenses:
Operating and
maintenance 15,653 10,810 43,962 29,942
Real estate taxes 15,987 11,294 42,491 32,041
General and
administrative (C) 9,088 6,632 28,001 20,012
Interest 23,515 19,700 65,620 57,588
Impairment charge (D) - - 2,640 -
Depreciation and
amortization 24,760 18,415 68,840 56,645
89,003 66,851 251,554 196,228
Income before equity
in net income of
joint ventures,
minority equity
interests, income
tax expense,
discontinued
operations and gain
on sales of real
estate and real
estate investments 35,174 24,772 98,969 65,113
Equity in net income
of joint ventures (E) 6,852 4,781 23,748 22,398
Minority equity
interests (F) (864) (5,570) (4,802) (16,770)
Income tax expense of
taxable REIT
subsidiary (130) - (130) -
Income from continuing
operations 41,032 23,983 117,785 70,741
Income (loss) from
discontinued
operations (G) 59 1,035 1,848 (1,377)
Income before gain on
sales of real estate
and real estate
Investments 41,091 25,018 119,633 69,364
Gain on sales of real
estate and real
estate investments,
net of tax 897 159 29,142 2,988
Net income $41,988 $25,177 $148,775 $72,352
Net income,
applicable to common
shareholders (H) $24,525 $18,687 $108,175 $46,241
Funds From Operations ("FFO"):
Net income applicable
to common
shareholders (H) $24,525 $18,687 $108,175 $46,241
Depreciation and
amortization of
real estate
investments 24,319 18,029 68,013 56,237
Equity in net income
of joint ventures (6,852) (4,781) (23,748) (22,398)
Joint ventures'
FFO (E) 8,872 8,794 24,815 32,145
Minority equity
interests (OP Units) 444 342 1,303 1,104
(Gain) loss on sales
and impairment charge
on depreciable real
estate and real
estate investments,
net - (468) (24,377) 3,058
FFO available to common
shareholders 51,308 40,603 154,181 116,387
Preferred
dividends (H) 17,463 6,490 40,600 26,111
FFO (H) $68,771 $47,093 $194,781 $ 142,498
Per share data: (H)
Earnings per common
share
Basic $0.29 $0.29 $1.34 $0.73
Diluted $0.28 $0.28 $1.32 $0.72
Dividends Declared $0.41 $0.38 $1.23 $1.14
Funds From Operations
- Basic (I), (H) $0.59 $0.62 $1.89 $1.80
Funds From Operations
- Diluted (I), (H) $0.58 $0.61 $1.86 $1.77
Basic - average shares
outstanding
(thousands) 85,997 64,712 80,447 63,395
Diluted - average
shares outstanding
(thousands) 87,066 65,761 82,756 64,451
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(A) Increases in base and percentage rental revenues for the nine month
period ended September 30, 2003 as compared to 2002, aggregated $67.3
million consisting of $2.9 million related to leasing of core
portfolio properties (an increase of 2.1% from 2002), $20.2 million
from the acquisition of thirteen shopping centers in 2002 and 2003,
$49.1 million is attributed to the JDN merger and $2.0 million
related to developments and redevelopments. These amounts were
offset by a decrease of $0.9 million relating to the business center
properties and $6.0 million due to the transfer of eight properties
to joint ventures in 2002 and 2003. Included in the rental revenues
for the nine month period ended September 30, 2003 and 2002 is
approximately $4.8 million and $3.1 million, respectively, of revenue
resulting from the recognition of straight line rents.
(B) Other income for the three month period ended September 30, 2003 and
2002 included approximately $3.7 million and $0.2 million,
respectively, in lease termination revenue. Other income for the
nine month period ended September 30, 2003 and 2002 included
approximately $6.5 million and $3.0 million in lease termination
revenue, respectively. Other income for the nine month period ended
September 30, 2003 includes approximately $2.4 million of income from
the settlement of a call option relating to the MOPPRS debt assumed
from JDN. Included in other income for the nine month period ended
September 30, 2003 and 2002 was approximately $1.1 million and $2.4
million, respectively, primarily associated with the sale of certain
option rights (2003), the sale of development rights to the Wilshire
project in Los Angeles, California (2002), financing and other
miscellaneous fees. Offsetting these revenues for the nine months
ended September 30, 2003 and 2002 was a charge of $0.5 million
relating to the write-off of abandoned development projects in each
year.
(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, 2003 and 2002, general and
administrative expenses were approximately 5.1% and 4.4%,
respectively, of total revenues, including joint venture revenues,
for each period. In addition to increases attributable to the
merger with JDN in March 2003, included in the nine month period
ended September 30, 2003 general and administrative expense is
approximately $2.8 million of non-cash executive management incentive
compensation primarily associated with performance unit grants which
compares to $1.1 million in 2002. The increase of $1.7 million is
attributed to the increase in the Company's stock price in 2003.
Excluding this additional non-cash incentive compensation, general
and administrative expense, as a percentage of total revenues,
including joint venture revenues, was approximately 4.8%.
(D) Impairment charge relates to the potential sale of two shopping
center assets, aggregating 150,000 square feet of GLA, in 2003 with a
projected loss of approximately $2.6 million. One of these
properties sold in October 2003.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(E) The following is a summary of the Company's share of the combined
operating results relating to its joint ventures (in thousands):
Three Month Period Nine Month Period
ended September 30, ended September 30,
2003(b) 2002(b) 2003(b) 2002(b)
Revenues from
operations (a) $64,933 $55,588 $ 190,778 $ 166,498
Operating expense 21,526 18,998 68,601 57,883
Depreciation and
amortization
of real estate
investments 11,536 7,686 32,226 23,180
Interest expense 19,848 16,521 59,777 49,639
52,910 43,205 160,604 130,702
Income from operations
before gain on sale
of real estate and
real estate investments
and discontinued
operations 12,023 12,383 30,174 35,796
Gain on sale of real
estate and real
estate investments 1,603 2,420 3,935 13,697
Income from discontinued
operations (227) 2,013 396 7,427
Gain on sale of
discontinued operations 12,446 - 53,333 15,596
Net income $25,845 $16,816 $87,838 $72,516
DDR Ownership
interests (b) $7,148 $4,775 $24,678 $24,103
Funds From Operations from joint ventures
are summarized as follows:
Net income $25,845 $16,816 $87,838 $72,516
(Gain) loss on sale
of real estate and
real estate
investments, including
discontinued
operations (12,181) 273 (53,069) (15,075)
Depreciation and
amortization of real
estate investments 11,627 8,537 33,109 26,822
$25,291 $25,626 $67,878 $84,263
DDRC Ownership
interests (b) $8,872 $8,794 $24,815 $32,145
DDRC Partnership
distributions
received, net $19,940 $9,700 $54,149 $47,854
(a) Revenues for the three month periods ended September 30, 2003 and
2002 included approximately $0.9 million and $0.7 million,
respectively, resulting from the recognition of straight line rents
of which the Company's proportionate share is $0.3 million and $0.2
million, respectively. Revenues for the nine month periods ended
September 30, 2003 and 2002 included approximately $2.5 million in
each year resulting from the recognition of straight line rents, of
which the Company's proportionate share is $0.6 million and $0.9
million, respectively.
(b) At September 30, 2003 and 2002, the Company owned joint venture
interests relating to 52 and 49 shopping center properties,
respectively. In addition, at September 30, 2003 and 2002,
respectively, the Company owned through its approximately 25% owned
joint venture, 75 and 117 shopping center sites formerly owned by
Service Merchandise.
(c) The Company's share of joint venture net income has been reduced by
$0.9 million and $1.9 million for the nine month periods ended
September 30, 2003 and 2002, respectively, to reflect additional
basis depreciation and the elimination of gain on sale in relation
to a property acquired by the Company from a joint venture.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands - except per share data)
(F) Minority Equity Interests are comprised of the following:
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
2003 2002 2003 2002
Minority interests $420 $458 $1,263 $1,355
Preferred Operating
Partnership Units - 4,770 2,236 14,311
Operating Partnership
Units 444 342 1,303 1,104
$864 $5,570 $4,802 $16,770
The financial statement amounts presented herein do not reflect the
adoption of SFAS 150, "Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity" ("SFAS 150")
with respect to minority interests in entities that are considered
mandatorily redeemable financial instruments. It is our
understanding that the Financial Accounting Standards Board ("FASB")
voted to defer the adoption of the provisions in SFAS 150 that relate
to mandatorily redeemable noncontrolling interests at its meeting on
October 29, 2003. We will incorporate a discussion in the Company's
Form 10-Q for the period ended September 30, 2003 reflecting the
decisions reached in the FASB Staff Position regarding this matter.
(G) The operating results relating to assets classified as discontinued
operations are summarized as follows in thousands):
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
2003 2002 2003 2002
Revenues $133 $1,289 $1,351 $4,239
Expenses:
Operating 44 331 178 1,026
Interest 13 180 209 591
Depreciation 17 211 322 941
74 722 709 2,558
59 567 642 1,681
Gain on sales of real
estate and
(impairment charge), net - 468 1,206 (3,058)
$59 $1,035 $1,848 $(1,377)
(H) As previously announced, DDR has complied with the Security and
Exchange Commission ("SEC") July 31, 2003's Staff Policy statement
that clarifies EITF Topic No. D-42, "The Effect on the Calculation of
Earnings per Share for the Redemption or Induced Conversion of
Preferred Stock," and restated net income available to common
shareholders for fiscal year 2002 and recorded the charges related to
the 2003 transactions. As a result of this change in accounting
principle, the Company has recorded a charge of $5.7 million for the
three months ended September 30, 2003 and $10.7 million and $5.5
million for the nine months ended September 30, 2003 and 2002,
respectively, to net income available to common shareholders and FFO.
(I) For purposes of computing FFO per share (basic), the weighted
average shares outstanding were adjusted to reflect the conversion,
on a weighted average basis of 1.1 million and 0.9 million Operating
Partnership Units (OP Units) outstanding at September 30, 2003 and
2002 into 1.1 million and 1.0 million common shares of the Company
for the three and nine month periods ended September 30, 2003 and
2002, respectively. The weighted average diluted shares and OP Units
outstanding were 88.3 million and 66.9 million for the three month
periods ended September 30, 2003 and 2002, respectively, and 82.9
million and 65.6 million for the nine month periods ended September
30, 2003 and 2002, respectively.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(In thousands)
Selected Balance Sheet Data:
September 30, 2003 (A) December 31, 2002
Assets:
Real estate and rental property:
Land $843,376 $488,292
Buildings 2,676,442 2,109,675
Fixtures and tenant improvements 81,863 72,674
Land under development 71,180 20,028
Construction in progress 188,148 113,387
3,861,009 2,804,056
Less accumulated depreciation (457,610) (408,792)
Real estate, net 3,403,399 2,395,264
Cash 18,474 16,371
Advances to and investments
in joint ventures 325,825 258,610
Notes receivable 10,985 11,662
Receivables, including straight
line rent 77,562 60,074
Other assets 81,948 34,871
$ 3,918,193 $2,776,852
Liabilities:
Indebtedness:
Revolving credit facilities $148,500 $446,000
Variable rate unsecured
term debt 300,000 22,120
Unsecured debt 839,822 404,900
Mortgage and other secured debt 830,454 625,778
2,118,776 1,498,798
Dividends payable 38,688 25,378
Other liabilities 145,029 92,070
2,302,493 1,616,246
Minority interests 44,499 215,045
Shareholders' equity 1,571,201 945,561
$3,918,193 $2,776,852
(A) See Footnote F on previous page.
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,
2003 2002
Land $442,706 368,520
Buildings 1,331,606 1,219,947
Fixtures and tenant improvements 29,730 24,356
Construction in progress 147,932 91,787
1,951,974 1,704,610
Accumulated depreciation (158,929) (153,537)
Real estate, net 1,793,045 1,551,073
Receivables, including straight
line rent, net 57,365 64,642
Investment in joint ventures 14,283 12,147
Leasehold interests 25,472 26,677
Other assets 87,705 80,285
$1,977,870 $1,734,824
Mortgage debt (a) $1,238,499 $ 1,129,310
Notes and accrued interest
payable to DDRC 129,627 106,485
Amounts payable to other partners 44,533 71,153
Other liabilities 78,004 61,898
1,490,663 1,368,846
Accumulated equity 487,207 365,978
$1,977,870 $1,734,824
(a) The Company's proportionate share of joint venture debt aggregated
approximately $396.4 million and $387.1 million at September 30,
2003 and December 31, 2002, respectively.
http://www.newscom.com/cgi-bin/prnh/19990826/DDRLOGO
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DATASOURCE: Developers Diversified Realty Corporation
CONTACT: Scott A. Wolstein, Chairman, Chief Executive Officer,
+1-216-755-5500, or Michelle A. Mahue, Vice President of Investor Relations,
+1-216-755-5455, both of Developers Diversified Realty Corporation
Web site: http://www.ddr.com/