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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Ddr Corp. | NYSE:DDR | NYSE | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 11.99 | 0.00 | 01:00:00 |
From Jul 2019 to Jul 2024
Hot Features
Premium
-- The Company's fourth quarter operating Funds From Operations ("FFO")
was $0.74 per share after adjusting for the $216.3 million of charges
summarized below and eliminating the gain on repurchase of unsecured notes
of $11.4 million.
FFO and net income for the three-month period ended December 31, 2008,
reflected $216.3 million, or $1.78 per share, of net charges, primarily
non cash, summarized as follows (in millions):
Consolidated non-cash impairment charges $ 79.9
Non-cash termination of an equity award plan 15.8
Abandoned projects, transaction costs and other expenses 20.8
Non-cash impairment charges on equity investments 107.0
Impairment charges and other expense recorded in equity income
(loss) from joint ventures 8.5
Loss on sale of discontinued operations 3.0
Effect of above charges allocated to minority interest (18.7)
-----------
$ 216.3
===========
-- FFO applicable to common shareholders for the three-month period ended
December 31, 2008 was a loss of $114.9 million or a loss of $0.95 per
diluted share which compares to FFO income of $100.0 million or $0.82 per
diluted share for the prior-year comparable period. Net loss applicable to
common shareholders for the three-month period ended December 31, 2008 was
$190.2 million or a loss of $1.57 per diluted share which compares to net
income of $32.2 million or $0.27 per diluted share for the prior-year
comparable period.
-- The Company's operating FFO for the year was $3.29 per share after
adjusting for the $225.7 million of charges summarized below and
eliminating the gain on repurchase of unsecured notes of $11.6 million.
FFO and net income for the year ended December 31, 2008, reflected
$225.6 million, or $1.86 per share, of net charges, primarily non cash,
summarized as follows (in millions):
Consolidated non-cash impairment charges $ 79.9
Non-cash termination of an equity award plan 15.8
Abandoned projects, transaction costs and other expenses 28.3
Non-cash impairment charges on equity investments 107.0
Impairment charges and other expense recorded in equity income
(loss) from joint ventures 4.6
Loss on sale of discontinued operations 8.7
Effect of above charges allocated to minority interest (18.7)
-----------
$ 225.6
===========
-- FFO applicable to common shareholders for the year ended December 31,
2008 was $183.8 million, or $1.52 per diluted share which compares to
$465.0 million or $3.79 per diluted share in 2007. For the year ended
December 31, 2008, net loss applicable to common shareholders was $100.0
million or $0.83 per diluted share which compares to net income of $225.1
million or $1.85 per diluted share in 2007. The decrease in FFO and net
income per share for the year ended December 31, 2008, is primarily related
to the charges described above for the three-month period and a reduction
in the amount of transactional income recognized in 2008, primarily related
to gains on disposition of real estate that occurred in 2007, as described
below.
-- Executed leases during the fourth quarter totaled approximately 1.9
million square feet, including 105 new leases and 204 renewals.
-- On a cash basis, base rental rates increased 10.0% on new leases, 2.7%
on renewals and 4.0% overall.
-- Core portfolio leased percentage at December 31, 2008 was 92.2%.
-- Same store net operating income ("NOI") for the year increased 1.7%
over the prior-year comparable period.
Scott A. Wolstein, Developers Diversified's Chairman and Chief Executive Officer, stated, "I am pleased to announce this quarter's operating results, which have proven to be relatively resilient despite the severe economic challenges. We continue to see consumers shift their shopping habits to value-oriented retailers, which make up a large percentage of our portfolio. We are very proud of our leasing team's ability to execute leases in this challenging environment, reflected by nearly 2 million square feet of executed leases this quarter.
"While our financial results were lowered by significant impairment charges and certain other non-recurring charges, our core operating results were in line with expectations and continue to display relative stability as we weather these unprecedented economic challenges. We made progress in the fourth quarter, but are extremely focused on further improving our liquidity and lowering leverage."
Financial Results:
Net loss applicable to common shareholders was $190.2 million, or $1.57 per share (diluted and basic), for the three-month period ended December 31, 2008, as compared to net income of $32.2 million, or $0.27 per share (diluted and basic), for the prior year comparable period.
For the three-month period ended December 31, 2008, FFO per share was a loss of $0.95 (diluted and basic) compared to income of $0.82 (diluted and basic) for the prior-year comparable period. FFO applicable to common shareholders was a loss of $114.9 million for the three-month period ended December 31, 2008, as compared to FFO income of $100.0 million for the three-month period ended December 31, 2007.
Net loss applicable to common shareholders was $100.0 million, or $0.83 per share (diluted and basic), for the year ended December 31, 2008, as compared to net income of $225.1 million, or $1.85 per share (diluted) and $1.86 per share (basic), for the previous year. The decrease in net income for the year ended December 31, 2008, is primarily the result of non-cash impairment charges recorded relating to the Company's consolidated real estate assets as well as its unconsolidated joint venture investments aggregating $169.2 million, net of amounts applicable to minority interests, a non-cash charge of $15.8 million related to the termination of an equity award plan and costs incurred of $28.3 million related to abandoned projects, transaction costs and other non recurring/one time expenses partially offset by a gain on the repurchase of the Company's senior notes of $11.6 million and lower transactional income earned compared to the same period in 2007 (gains on disposition of real estate of approximately $79 million and promoted income from joint venture interests of approximately $14.3 million in 2007) relating to the transfer of 62 assets to unconsolidated joint venture interests and the sale of 67 assets to third parties.
For the years ended December 31, 2008 and 2007, FFO per share was $1.52 (diluted and basic) and $3.79 (diluted) and $3.80 (basic), respectively. FFO applicable to common shareholders was $183.8 million for the year ended December 31, 2008, as compared to $465.0 million for the year ended December 31, 2007. The decrease in FFO for the year ended December 31, 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 three-month period ended December 31, 2008 highlight continued strong leasing activity throughout the portfolio:
-- Executed 105 new leases aggregating approximately 0.5 million square
feet and 204 renewals aggregating approximately 1.4 million square feet.
-- On a cash basis, rental rates on new leases increased 10.0% and rental
rates on renewals increased 2.7%. Overall, rental rates for new leases and
renewals increased 4.0%.
-- Total portfolio average annualized base rent per occupied square foot,
excluding Brazil, as of December 31, 2008 was $12.43, as compared to $12.33
at December 31, 2007.
-- Core portfolio leased rate was 92.2% as of December 31, 2008, as
compared to 96.0% at December 31, 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:
The Company sold 11 shopping center properties, aggregating 0.4 million square feet for approximately $35.6 million and recognized a net loss of approximately $3.0 million in the fourth quarter of 2008. An additional seven assets were sold in the first quarter of 2009 for proceeds of approximately $65.8 million of which a portion of the proceeds will be allocable to minority partners.
Wholly-Owned and Consolidated Joint Venture Development:
The Company currently has the following wholly-owned and consolidated joint venture shopping center projects under construction:
Expected Initial
Net Cost Anchor
Location Owned GLA ($ Millions) Opening * Description
----------------------- --------- ------------ ---------- -----------------
Ukiah (Mendocino),
California ** 228,943 $ 66.9 2H 11 Mixed Use
Guilford, Connecticut 137,527 48.0 2H 10 Lifestyle Center
Miami (Homestead),
Florida 272,610 79.7 2H 08 Community Center
Miami, Florida 391,351 148.8 2H 06 Mixed Use
Boise (Nampa), Idaho 431,689 126.7 2H 07 Community Center
Boston (Norwood),
Massachusetts 56,343 26.7 2H 09 Community Center
Boston, Massachusetts
(Seabrook, New
Hampshire) 210,855 54.5 2H 10 Community Center
Elmira (Horseheads),
New York 350,987 55.0 1H 07 Community Center
Raleigh (Apex), North
Carolina (Promenade) 72,830 16.9 2H 09 Community Center
Austin (Kyle), Texas ** 443,092 77.2 2H 09 Community Center
--------- ------------
Total 2,596,227 $ 700.4
========= ============
* 1H = First Half, 2H = Second Half; either actual or anticipated
** Consolidated 50% Joint Venture
At December 31, 2008, approximately $472.6 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 venture partners intend to commence construction on various other developments only after substantial tenant leasing has occurred and acceptable construction financing is available, including several international projects.
Unconsolidated Joint Venture Development:
The Company's unconsolidated joint ventures have the following shopping center projects under construction. At December 31, 2008, approximately $479.7 million of costs had been incurred in relation to these development projects.
DDR's
Effective Expected Initial
Ownership Net Cost Anchor
Location Percentage Owned GLA ($ Millions) Opening* Description
------------ ---------- --------- ------------ -------- ----------------
Kansas City
(Merriam),
Kansas 20.0% 158,632 $ 43.7 TBD Community Center
Detroit
(Bloomfield
Hills),
Michigan 10.0% 623,782 189.8 TBD Lifestyle Center
Dallas
(Allen),
Texas 10.0% 797,665 171.2 1H 08 Lifestyle Center
Manaus, Brazil 47.4% 477,630 98.2 1H 09 Enclosed Mall
--------- ------------
Total 2,057,709 $ 502.9
========= ============
* 1H = First Half, 2H = Second Half; either actual or anticipated;
TBD = to be determined.
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 $106.9 million. At December 31, 2008, approximately $76.6 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
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 $154.2 million, which includes original acquisition costs related to assets acquired for redevelopment. At December 31, 2008, approximately $116.7 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% Large-scale re-development of
enclosed mall to open-air format
Los Angeles (Lancaster), 21% Relocate Wal-Mart and redevelop
California former Wal-Mart space
Benton Harbor, Michigan 20% Construct 89,000 square feet of
anchor space and retail shops
Dividends:
The Company's board of directors has approved the payment of DDR's first quarter dividend in a combination of cash and shares of the Company's common stock. The Company intends to limit the aggregate amount of cash payable to shareholders in the dividend to 10% of the total dividend paid. This new payout initiative is a part of the Company's strategy to further enhance liquidity and maximize free cash flow and maintain its REIT status.
Financings:
The Company's joint venture in Brazil obtained 8.5% fixed-rate, twelve-year financing of R$112 million for the development in Manaus, Brazil. In addition, during the fourth quarter, the Company refinanced a $19 million development loan for a consolidated joint venture with a new loan of approximately $30 million at an interest rate of LIBOR plus 300 bps, which matures in January 2010.
In the fourth quarter of 2008, the Company purchased approximately $66.9 million face amount of its outstanding senior notes at a discount to par resulting in a gain of approximately $11.4 million. Additionally, during January 2009, the Company purchased an additional $10 million of senior notes. In January 2009, the Company repaid in full approximately $227 million of its senior notes upon maturity primarily with borrowings under its revolving credit facility.
Equity Issuances:
The Company sold approximately 8.6 million of its common shares in December 2008, generating net proceeds of approximately $43 million in the aggregate through its continuous equity program. Substantially, all net proceeds have been used to repay debt.
Developers Diversified Realty Corporation currently owns and manages over 710 retail operating and development properties in 45 states, plus Puerto Rico, Brazil and Canada, totaling approximately 157 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 Francine Glandt, Vice President of Capital Markets and Treasurer, Developers Diversified Realty Corporation, 3300 Enterprise Parkway, Beachwood, Ohio 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, 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 three-month period and year ended December 31, 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 Period Year Ended
Ended December 31, December 31,
Revenues: 2008 2007 2008 2007
----------- ----------- ----------- -----------
Minimum rents (A) $ 156,158 $ 157,870 $ 628,664 $ 635,415
Percentage and
overage rents (A) 4,267 5,066 9,414 10,540
Recoveries from
tenants 47,269 51,009 198,919 203,126
Ancillary and other
property income 6,460 5,505 22,294 19,518
Management,
development and
other fee income 15,588 15,934 62,890 50,840
Other (B) 1,457 161 9,291 13,697
----------- ----------- ----------- -----------
231,199 235,545 931,472 933,136
----------- ----------- ----------- -----------
Expenses:
Operating and
maintenance (C) 40,340 37,790 146,346 131,409
Real estate taxes 27,610 25,617 110,773 107,428
Impairment charges (D) 79,864 - 79,864 -
Termination of equity
award plan (E) 15,837 - 15,837 -
General and
administrative (E) 20,275 20,940 81,882 81,244
Depreciation and
amortization 65,085 53,358 242,032 214,445
----------- ----------- ----------- -----------
249,011 137,705 676,734 534,526
----------- ----------- ----------- -----------
Other income (expense):
Interest income 2,682 1,045 5,473 8,772
Interest expense (61,790) (63,789) (244,212) (258,149)
Gain on repurchase of
senior notes 11,351 - 11,552 -
Abandoned projects
and transaction
costs (D) (11,519) - (12,433) -
Other expenses (F) (9,273) (2,344) (15,819) (3,019)
----------- ----------- ----------- -----------
(68,549) (65,088) (255,439) (252,396)
----------- ----------- ----------- -----------
(Loss) income before
equity in net (loss)
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 (86,361) 32,752 (701) 146,214
Equity in net (loss)
income of joint
ventures (G) (4,205) 9,343 17,719 43,229
Impairment of joint
venture investments (D) (106,957) - (106,957) -
Minority interests (H) 17,053 (2,013) 11,188 (18,218)
Income tax benefit
(expense) of taxable
REIT subsidiaries
And Franchise
Taxes (I) 2,351 (633) 17,434 14,669
----------- ----------- ----------- -----------
(Loss) income from
continuing operations (178,119) 39,449 (61,317) 185,894
(Loss) income from
discontinued
operations (J) (2,117) (1,795) (3,421) 21,302
----------- ----------- ----------- -----------
(Loss) income before
gain on disposition of
real estate (180,236) 37,654 (64,738) 207,196
Gain on disposition of
real estate, net of
tax 594 5,137 6,962 68,851
----------- ----------- ----------- -----------
Net (loss) income $ (179,642) $ 42,791 $ (57,776) $ 276,047
=========== =========== =========== ===========
Net (loss) income
applicable to common
shareholders $ (190,209) $ 32,224 $ (100,045) $ 225,113
=========== =========== =========== ===========
Funds From Operations
("FFO"):
Net (loss) income
applicable to
common
shareholders $ (190,209) $ 32,224 $ (100,045) $ 225,113
Depreciation and
amortization of
real estate
investments 63,603 53,577 236,344 214,396
Equity in net loss
(income) of joint
ventures (I) 4,205 (9,343) (17,719) (43,229)
Joint ventures' FFO
(I) 7,433 21,949 68,355 84,423
Minority interests
(OP Units) (J) - 569 1,145 2,275
Loss (gain) on
disposition of
depreciable real
estate 77 1,057 (4,244) (17,956)
----------- ----------- ----------- -----------
FFO applicable to
common shareholders (114,891) 100,033 183,836 465,022
Preferred dividends 10,567 10,567 42,269 50,934
----------- ----------- ----------- -----------
FFO $ (104,324) $ 110,600 $ 226,105 $ 515,956
=========== =========== =========== ===========
Per share data:
(Loss) earnings per
common share
Basic $ (1.57) $ 0.27 $ (0.83) $ 1.86
=========== =========== =========== ===========
Diluted $ (1.57) $ 0.27 $ (0.83) $ 1.85
=========== =========== =========== ===========
Dividends Declared $ - $ 0.66 $ 2.07 $ 2.64
=========== =========== =========== ===========
Funds From Operations
- Basic (K) $ (0.95) $ 0.82 $ 1.52 $ 3.80
=========== =========== =========== ===========
Funds From Operations
- Diluted (K) $ (0.95) $ 0.82 $ 1.52 $ 3.79
=========== =========== =========== ===========
Basic - average
shares outstanding 121,019 120,786 119,843 120,879
=========== =========== =========== ===========
Diluted - average
shares outstanding 121,019 121,103 119,987 121,497
=========== =========== =========== ===========
(A) Base and percentage rental revenues for the year ended December 31,
2008, as compared to the prior year, decreased $7.9 million, primarily
due to the disposition of properties in 2008 and 2007 to joint venture
interests and third parties aggregating $29.0 million. Partially
offsetting this decrease were the following increases in base and
percentage rental revenues: an increase of $3.3 million relating to the
core portfolio properties (an increase of 0.6% over the comparable
period in 2007), $17.8 million from the acquisition of assets and the
merger with IRRETI, $3.8 million related to developments and
redevelopments and $0.4 million from an increase in occupancy at the
Company's business centers. Included in rental revenues for the years
ended December 31, 2008 and 2007, is approximately $8.0 million and
$12.1 million, respectively, of revenue resulting from the recognition
of straight-line rents.
(B) Other income for the three-month periods and years ended December 31,
2008 and 2007 was comprised of the following (in millions):
Three-Month Period Year Ended
December 31, December 31,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Acquisition fees $ - $ 0.1 $ - $ 6.4
Lease termination fees 0.8 0.1 6.3 5.0
Financing fees 0.1 - 2.0 1.5
Other miscellaneous 0.6 - 1.0 0.8
------------ ------------ ------------ ------------
$ 1.5 $ 0.2 $ 9.3 $ 13.7
============ ============ ============ ============
(C) Included in operating and maintenance expense is bad debt expense
aggregating $8.5 million and $2.4 million relating to the three-month
periods ended December 31, 2008 and 2007, respectively. Fourth quarter
2008 bad debt expense includes the write off of $4.1 million of
straight-line rents relating to Mervyns, of which 50% is allocable to
minority interest. For the years ended December 31, 2008 and 2007, bad
debt expense was $18.7 million and $9.0 million or 2% and 1% of total
revenues, respectively.
(D) Due to the continued deterioration of the U.S. capital markets and the
lack of liquidity and the related impact on the real estate market and
retail industry, during the fourth quarter of 2008, the Company
recorded impairment charges on several consolidated real estate
investments, including both operating shopping centers and land under
development, to the extent the book basis of the asset was in excess of
the estimated fair market value. As discussed below, some of these
charges are allocable to minority interest thereby providing a partial
offset. In addition, the Company determined that several of its
unconsolidated joint venture investments suffered an "Other than
Temporary Impairment." The Company recorded approximately $107.0
million of impairment charges associated with certain of its joint
venture investments in accordance with Accounting Principles Board
Opinion No. 18, "The Equity Method of Accounting for Investment in
Common Stock." The provisions of this opinion require that a loss in
value of an investment under the equity method of accounting which is
an other than "temporary" decline must be recognized. The Company also
wrote off costs related to abandoned development projects as well as
costs incurred for transactions that are not expected to close.
(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 years ended
December 31, 2008 and 2007, general and administrative expenses were
approximately 5.2% and 4.5%, respectively, of total revenues, including
joint venture revenues. For the year ended December 31, 2008, the
Company recorded a non-cash charge of approximately $15.8 million
related to the termination of a supplemental equity award plan.
Excluding this charge, general and administrative expenses were 4.3%
of total revenues for the year ended December 31, 2008. For the year
ended December 31, 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 year ended December 31, 2007.
(F) Other expense primarily relates to a reserve associated with a
mezzanine notes receivable as well as litigation costs related to a
potential liability associated with a legal verdict. The accrual for
the legal verdict was established in the third quarter of 2008.
(G) The following is a summary of the combined operating results of the
Company's joint ventures:
Three-Month Period Year Ended
Ended December 31, December 31,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues from operations (a) $ 231,716 $ 237,654 $ 946,340 $ 812,630
--------- --------- --------- ---------
Operating expense 82,682 84,547 328,875 272,277
Impairment charges (b) 3,887 - 3,887 -
Depreciation and amortization
of real estate investments 65,929 57,825 241,652 193,032
Interest expense 82,572 79,543 307,580 269,405
--------- --------- --------- ---------
235,070 221,915 881,994 734,714
--------- --------- --------- ---------
Income (loss) from operations
before tax benefit (expense)
and discontinued operations (3,354) 15,739 64,346 77,916
Income tax (expense) benefit (3,485) 2,664 (15,479) (4,839)
(Loss) gain on disposition of
real estate (18) 1,399 (67) 94,386
(Loss) income from discontinued
operations, net of tax (10) 75 105 (784)
Income (loss) on disposition of
discontinued operations, net
of tax 7,364 (12) 7,364 2,516
Other expense, net (c) (47,791) - (31,318) -
--------- --------- --------- ---------
Net (loss) income $ (47,294) $ 19,865 $ 24,951 $ 169,195
========= ========= ========= =========
DDR ownership interests (d) $ (5,482) $ 10,017 $ 17,335 $ 44,537
========= ========= ========= =========
FFO from joint ventures are summarized as follows:
Net income $ (47,294) $ 19,865 $ 24,951 $ 169,195
Loss (gain) on disposition of
real estate, including
discontinued operations (7,364) 228 (7,350) (91,111)
Depreciation and amortization
of real estate investments 65,928 57,919 241,651 193,437
--------- ---------- --------- ---------
$ 11,270 $ 78,012 $ 259,252 $ 271,521
========= ========== ========= =========
DDR ownership interests (d) $ 7,433 $ 21,949 $ 68,355 $ 84,423
========= ========== ========= =========
DDR joint venture distributions
received, net (e) $ 24,467 $ 17,323 $ 65,957 $ 97,104
========= ========== ========= =========
(a) Revenues for the three-month periods ended December 31, 2008 and 2007
included approximately $0.7 million and $2.7 million, respectively,
resulting from the recognition of straight-line rents, of which the
Company's proportionate share was not material and $0.4 million,
respectively. Revenues for the years ended December 31, 2008 and 2007
included approximately $6.3 million and $9.3 million, respectively,
resulting from the recognition of straight-line rents, of which the
Company's proportionate share was $0.8 million and $1.4 million,
respectively.
(b) Impairment charges aggregating $3.9 million were recorded at two
joint ventures related to assets under contract expected to be sold
in the first half of 2009 of which the Company's share was $0.5
million.
(c) Includes non-cash impairment charges and loss on sale of assets of
which the Company's share aggregated $2.4 million. Also includes the
effects of certain derivative instruments that are marked to market
through earnings from the Company's equity investment in Macquarie
DDR Trust aggregating approximately $45.9 million and $29.4 million
of loss for the three-month period and year ended December 31, 2008,
respectively, of which the Company's share was approximately $5.6
million and $1.7 million of loss, respectively.
(d) The Company's share of joint venture net income was increased by
$1.2 million and decreased by $0.6 million for the three-month
periods ended December 31, 2008 and 2007, respectively. The Company's
share of joint venture net income was increased by $0.4 million and
decreased by $1.2 million for the years ended December 31, 2008 and
2007, respectively. These adjustments relate to basis differences
impacting amortization and depreciation and gain on dispositions.
During the year ended December 31, 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 December 31, 2008 and 2007, the Company owned joint venture
interests, excluding consolidated joint ventures, in 329 and 317
shopping center properties, respectively.
(e) Distributions may include funds received from asset sales and
refinancings in addition to ongoing operating distributions.
(H) Minority interests are comprised of the following:
Three-Month Period Year Ended
Ended December 31, Decmeber 31,
2008 2007 2008 2007
---------- --------- --------- ---------
Minority equity interests $ 17,053 $ (1,444) $ 12,333 $ (6,253)
Operating partnership units - (569) (1,145) (2,275)
Preferred operating partnership
units - - - (9,690)
---------- --------- --------- ---------
$ 17,053 $ (2,013) $ 11,188 $ (18,218)
========== ========= ========= =========
The $17.1 million and $12.3 million of income from minority interests for
the three-month period and year ended December 31, 2008, respectively, is
primarily related to asset impairment charges and the write off of
straight-line rent relating to the DDR MDT MV LLC (Mervyns), a
consolidated joint venture, of which the Company has a 50% interest.
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.
(I) 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.
(J) The operating results relating to assets classified as discontinued
operations are summarized as follows:
Three-Month Period Year Ended
Ended December 31, December 31,
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 1,334 $ 3,765 $ 12,182 $ 40,554
-------- -------- -------- --------
Expenses:
Operating - 780 3,990 11,708
Interest, net 241 918 2,331 10,308
Depreciation 210 2,718 4,342 9,929
Minority interest - 80 110 (434)
-------- -------- -------- --------
Total expenses 451 4,496 10,773 31,511
-------- -------- -------- --------
Income (loss) before (loss) gain
on disposition of real estate 883 (731) 1,409 9,043
(Loss) gain on disposition of
real estate, net (3,000) (1,064) (4,830) 12,259
-------- -------- -------- --------
Net (loss) income $ (2,117) $ (1,795) $ (3,421) $ 21,302
======== ======== ======== ========
(K) 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 December 31, 2008 and 2007, respectively,
0.9 million common shares of the Company for the three-month period
ended December 31, 2007 (antidilutive at December 31, 2008) and 0.6
million and 0.9 million common shares for the years ended December 31,
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 121.5 million and 122.5 million for
the three-month periods ended December 31, 2008 and 2007,
respectively, and 121.0 million and 122.7 million for the years ended
December 31, 2008 and 2007, respectively.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
Financial Highlights
(in thousands)
Selected Balance Sheet Data:
December 31, December 31,
2008 (A) 2007 (A)
------------ ------------
Assets:
Real estate and rental property:
Land $ 2,073,947 $ 2,142,942
Buildings 5,890,332 5,933,890
Fixtures and tenant improvements 262,809 237,117
------------ ------------
8,227,088 8,313,949
Less: Accumulated depreciation (1,208,903) (1,024,048)
------------ ------------
7,018,185 7,289,901
Construction in progress 879,547 664,926
Assets held for sale - 5,796
------------ ------------
Real estate, net 7,897,732 7,960,623
Investments in and advances to joint ventures 583,767 638,111
Cash 29,494 49,547
Restricted cash (B) 111,792 58,958
Notes receivable 75,781 18,557
Receivables, including straight-line rent, net 164,356 199,354
Other assets, net 155,403 164,666
------------ ------------
$ 9,018,325 $ 9,089,816
============ ============
Liabilities:
Indebtedness:
Revolving credit facilities $ 1,027,183 $ 709,459
Unsecured debt 2,452,741 2,622,219
Mortgage and other secured debt 2,437,440 2,259,336
------------ ------------
5,917,364 5,591,014
Dividends payable 6,967 85,851
Other liabilities 281,179 285,245
------------ ------------
6,205,510 5,962,110
Minority interests 128,130 128,881
Shareholders? equity 2,684,685 2,998,825
------------ ------------
$ 9,018,325 $ 9,089,816
============ ============
(A) Amounts include the consolidation of a 50% owned joint venture, DDR
MDT MV LLC ("MV LLC"), that owns 37 sites formerly occupied by Mervyns,
which includes $348.5 and $405.8 million of real estate assets at
December 31, 2008 and 2007, respectively, $258.5 million of mortgage
debt at December 31, 2008 and 2007, and $70.2 million and $74.6 million
of minority equity interest at December 31, 2008 and 2007,
respectively. The decrease in real estate assets at MV LLC in 2008 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 and approximately $35.3 million of non-cash
impairment charges recorded on these assets in the fourth quarter.
(B) Restricted cash includes $64.8 million at MV LLC at December 31, 2008.
The MV LLC restricted cash is comprised of $23.9 million received from
the seller of the Mervyns portfolio relating to Mervyns bankruptcy
filing in the third quarter, a $33.0 million net capital contribution
by the members of MV LLC, and $7.9 million related to a security
deposit letter of credit, all of which are required to be held in
escrow by the lender. Also included in restricted cash is $47.0
million and $59.0 million at December 31, 2008 and 2007, respectively,
relating to the terms of a bond issue for one of the Company's projects
in Mississippi.
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:
December 31, December 31,
2008 2007
------------ ------------
Land $ 2,378,033 $ 2,384,069
Buildings 6,353,985 6,253,167
Fixtures and tenant improvements 131,622 101,115
------------ ------------
8,863,640 8,738,351
Less: Accumulated depreciation (606,530) (412,806)
------------ ------------
8,257,110 8,325,545
Construction in progress 412,357 207,387
------------ ------------
Real estate, net 8,669,467 8,532,932
Receivables, including straight-line rent, net 136,410 124,540
Leasehold interests 12,615 13,927
Other assets 315,591 365,925
------------ ------------
$ 9,134,083 $ 9,037,324
============ ============
Mortgage debt (a) $ 5,776,897 $ 5,551,839
Notes and accrued interest payable to DDR 64,967 8,492
Other liabilities 237,363 201,083
------------ ------------
6,079,227 5,761,414
Accumulated equity 3,054,856 3,275,910
------------ ------------
$ 9,134,083 $ 9,037,324
============ ============
(a) The Company's proportionate share of joint venture debt aggregated
approximately $1,216.1 million and $1,034.1 million at December 31,
2008 and 2007, respectively.
Contact: Scott A. Wolstein Chairman and Chief Executive Officer 216-755-5500 Francine Glandt Vice President of Capital Markets Treasurer 216-755-5500 Email Contact
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