DOW JONES NEWSWIRES 
 

Developers Diversified Realty Corp. (DDR) swung to a fourth-quarter loss on charges related to investments, write-downs and abandoned projects.

The nation's largest shopping center owner has been debt-laden through acquisitions, and in recent months has been looking to pare down its borrowings amid the cash crunch and refinancing woes at smaller rival General Growth Properties Inc. (GGP).

Real-estate investment trusts have been slammed by the global recession as the housing market continues to drop because of tight credit, high foreclosure rates and rising unemployment. Residential REITs were hurt first, but commercial-property owners have increasingly been impacted as retailers close shops or can't pay rent. Some of Developers Diversified's tenants, including its second-largest, department-store owner Mervyn's, have gone bankrupt and liquidated.

Chief Executive Scott Wolstein said Monday Developers Diversified was "relatively resilient despite the severe economic challenges." He added the REIT continues to see consumers shift their shopping to discount retailers, which make up a large part of the company's portfolio.

Developers Diversified posted a net loss of $179.6 million, or $1.57 a share, compared with year-earlier net income of $42.8 million, or 27 cents a share. The latest results included $1.78 a share in charges related to investments, the sale of real estate and write-downs.

Funds from operations, a key measure of REIT profitability, fell to negative 95 cents from 82 cents. FFO excluding items was 74 cents.

Revenue decreased 1.8% to $231.2 million.

Excluding items, analysts surveyed by Thomson Reuters expected earnings of 17 cents, FFO of 78 cents and revenue of $222 million.

During the quarter, the company executed 105 new leases and 204 renewals, totaling 1.9 million square feet. Rental rates increased 10% on new leases, 2.7% on renewals and 4% overall. Average annualized base rent per occupied square foot, excluding Brazil, edged up 0.8%.

Of the core portfolio, 92.2% was leased as of Dec. 31, down from 96% a year earlier.

As it looks to preserve cash, Developers Diversifed in October to shrink and raise capital so it could pay down debt. The company started taking action after Wolstein was forced to sell nearly half his stake in the REIT to satisfy margin calls.

Developers Diversified said Monday it sold 11 shopping center properties in the fourth quarter and seven more so far this year.

Shares premarket were up 4.56% to $2.75. The stock is off about 46% so far this year and has lost 93% of its value in the last year.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com