DDR Corp. (DDR)

[Enterprising Investor]

DDR Reports First Quarter 2018 Operating Results (4/24/18)

BEACHWOOD, Ohio--(BUSINESS WIRE)--DDR Corp. (NYSE: DDR) today announced operating results for the quarter ended March 31, 2018.

“I am thrilled with our progress in the first quarter, both operationally and with the execution of our strategic transformation through the planned spin-off of RVI. Our strong same store NOI and operating FFO results were ahead of our budget, and demonstrate the strength of our high-quality portfolio. The completion of the securitization of the $1.35 billion mortgage loan secured by the RVI assets represented the last significant hurdle ahead of the expected July spin-off. Finally, we closed the disposition of our first RVI asset at a compelling price, an auspicious beginning for the execution of RVI’s business plan,” commented David R. Lukes, president and chief executive officer.

Results for the Quarter

First quarter net loss attributable to common shareholders was $62.5 million, or $0.17 per diluted share, as compared to net loss of $59.8 million, or $0.16 per diluted share, in the year ago-period. The year-over-year increase in net loss is primarily attributable to debt extinguishment charges and transaction costs of $61.6 million partially offset by lower impairment charges and the reserve on preferred equity interests in 2017.

First quarter operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was $97.8 million, or $0.26 per diluted share, compared to $108.5 million, or $0.30 per diluted share, in the year ago-period. The year-over-year decrease in OFFO is primarily attributable to the dilutive impact of deleveraging asset sales partially offset by a reduction in general and administrative expenses.

Significant First Quarter Activity

Sold 15 shopping centers and land parcels for an aggregate sales price of $365.9 million, totaling $208.7 million at DDR’s share, including $36.1 million from the repayment of the Company’s preferred equity investment in its two joint ventures with Blackstone.

In February 2018, in connection with the previously announced planned spin-off of 38 continental U.S. assets and all 12 Puerto Rico assets into RVI, completed $1.35 billion of mortgage financing and repaid $452 million of mortgage debt, $900 million aggregate principal amount of senior unsecured notes and $200 million of unsecured term loan using proceeds from the new financing and asset sales. DDR recorded approximately $5.2 million of costs related to the planned RVI spin-off in the first quarter of 2018.

Sold Silver Spring Square in Harrisburg, PA, for $80.8 million on April 17, 2018 marking the completion of the first RVI asset sale.

Key Quarterly Operating Results

Reported 2.6% same store net operating income growth on a pro rata basis for New DDR. The results of “New DDR” represent the results of the assets that will remain in DDR after the completion of both the spin-off of RVI and the previously announced $900 million disposition program.

Generated new leasing spreads of 21.2% and renewal leasing spreads of 6.4%, both on a pro rata basis for New DDR for the quarter, and new leasing spreads of 21.6% and renewal leasing spreads of 7.2%, both on a pro rata basis for New DDR for the trailing twelve-month period.
Reported a leased rate of 93.7% at March 31, 2018 for New DDR on a pro rata basis, compared to 93.6% at December 31, 2017.

Annualized base rent per occupied square foot on a pro rata basis was $17.29 at March 31, 2018 for New DDR, compared to $17.00 at March 31, 2017.

Guidance

There has been no change in the Company’s Operating FFO per share guidance since the initial release on February 15, 2018 and the related assumptions. The Company continues to estimate Operating FFO for the third quarter of 2018 to be at least $0.15 per diluted share, after an assumed spin-off date of July 2018.

About DDR Corp.

DDR is an owner and manager of 258 value-oriented shopping centers representing 89 million square feet in 32 states and Puerto Rico. The Company owns a high-quality portfolio of open-air shopping centers in major metropolitan areas that provide a highly-compelling shopping experience and merchandise mix for retail partners and consumers. The Company actively manages its assets with a focus on creating long-term shareholder value. DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company, and is publicly traded on the New York Stock Exchange under the ticker symbol DDR. Additional information about the Company is available at www.ddr.com.

Conference Call and Supplemental Information

The Company will hold its quarterly conference call today at 5:00 p.m. Eastern Time. To participate with access to the slide presentation, please visit the Investors portion of DDR's website, ir.ddr.com, or for audio only, dial 888-317-6003 (U.S.), 866-284-3684 (Canada) or 412-317-6061 (international) using pass code 3646421 at least ten minutes prior to the scheduled start of the call. A replay of the conference call will also be available at ir.ddr.com for one year after the call. A copy of the Company’s Supplemental package is available on the Company’s website.

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