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EX-99.2 - EX-99.2 - SITE Centers Corp.d135794dex992.htm

Exhibit 99.1

 

LOGO

For immediate release:

 

Media Contact:      Investor Contact:
Matt Schuler      Matt Lougee
mschuler@ddr.com      mlougee@ddr.com
216.755.5500      216.755.5500

DDR REPORTS A 6.0% INCREASE IN OPERATING FFO PER DILUTED SHARE TO $1.23

FOR THE YEAR ENDED DECEMBER 31, 2015

BEACHWOOD, OHIO, February 11, 2016 – DDR Corp. (NYSE: DDR) today announced operating results for the fourth quarter and year ended December 31, 2015.

Financial Highlights

 

    Fourth quarter operating funds from operations attributable to common shareholders (“Operating FFO”) increased $1.9 million to $114.1 million, or $0.31 per diluted share, compared to $112.2 million, or $0.31 per diluted share, for the prior-year comparable period.

 

    Fourth quarter net income attributable to common shareholders was $87.9 million, or $0.24 per diluted share, compared to net loss of $16.3 million, or $0.05 per diluted share, for the prior-year comparable period.

Significant Quarterly Activity

 

    Generated same-store net operating income growth of 3.4% on a pro rata basis

 

    Executed 290 new leases and renewals for 2.5 million square feet

 

    Generated new leasing spreads of 24.5% and renewal leasing spreads of 7.0%, both on a pro rata basis

 

    Increased the portfolio leased rate by 20 basis points to 96.0% at December 31, 2015, from 95.8% at September 30, 2015, on a pro rata basis

 

    Closed on a new joint venture with Blackstone that acquired six shopping centers with a total investment of $96 million at DDR’s share

 

    Acquired one prime power center in Orlando for $67 million

 

    Sold nine operating assets and three non-operating assets totaling $211 million at DDR’s share

 

    Issued $400 million aggregate principal amount of 4.25% senior unsecured notes due 2026 and redeemed $350 million of senior convertible notes

2015 Year-End Highlights

 

    Generated Operating FFO of $1.23 per diluted share for the full year 2015, an increase of 6.0% compared to 2014

 

    Acquired 10 shopping centers and three outparcels for $326 million at DDR’s share

 

    Sold 66 operating assets and eight non-operating assets for $569 million at DDR’s share

 

    Executed 1,330 new leases and renewals for 10.9 million square feet in 2015

 

    The portfolio leased rate was 96.0% at December 31, 2015 and 2014, on a pro rata basis

 

    Increased the annualized base rent per occupied square foot by 4.1% on a pro rata basis to $14.76 at December 31, 2015, from $14.15 at December 31, 2014

 

    Generated new leasing spreads for the full year 2015 of 22.0% and renewal leasing spreads of 7.0%, both on a pro rata basis

“I am pleased to report another year of positive results and portfolio improvement. I am extremely proud of the efforts of our team in 2015. Our portfolio evolution is evident in our operating statistics, as same-store net operating income grew 3.1% in 2015, above the high end of our original guidance range. The operating figures translated into strong earnings and dividend growth in excess of 6%, and 10%, respectively, which highlights our team’s focus on best positioning DDR for long-term growth,” commented David J. Oakes, president and chief executive officer of DDR.

2016 Guidance

There has been no change in guidance since the initial release on January 4, 2016. The Company continues to estimate Operating and NAREIT defined FFO for 2016 between $1.19 and $1.25 per diluted share.


Non-GAAP Disclosures

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 and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with generally accepted accounting principles (“GAAP”), is 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 and losses from disposition of depreciable real estate property, which are presented net of taxes, (iii) impairment charges on depreciable real estate property and related investments 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 non-controlling interests and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. The Company calculates Operating FFO by excluding the non-operating charges and gains described below. The Company computes FFO in accordance with the NAREIT definition. Other real estate companies may calculate FFO and Operating FFO in a different manner. Operating FFO is useful to investors as the Company removes these charges and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. A reconciliation of net income (loss) to FFO and Operating FFO is presented herein.

Safe Harbor

DDR Corp. considers portions of the information in this press release 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 our results to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as supply 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 buy or sell assets on commercially reasonable terms; our ability to complete acquisitions or dispositions of assets under contract; 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; the success of our capital recycling strategy; and the finalization of the financial statements for the three months and year ended December 31, 2015. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company’s Form 10-K for the year ended December 31, 2014, as amended. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

About DDR Corp.

DDR is an owner and manager of 367 value-oriented shopping centers representing 115 million square feet in 38 states and Puerto Rico. The Company’s portfolio is comprised primarily of large-format power centers located in top markets across the United States, and is actively managed to create 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

A copy of the Company’s Supplemental package is available upon request to Brooke Vanek at the Company’s corporate office, 3300 Enterprise Parkway, Beachwood, Ohio 44122 or at www.ddr.com.

The Company will hold its quarterly conference call tomorrow, February 12, 2016, at 10:00 a.m. Eastern Time. To participate, please dial 877-249-1119 (domestic) or 412-542-4143 (international) at least ten minutes prior to the scheduled start of the call. The conference call webcast will be recorded and available for replay through the Investors portion of DDR’s website, http://ir.ddr.com/events.cfm.


DDR Corp.

Income Statement: Consolidated Interests

 

$ in thousands, except per share                         
     4Q15     4Q14     12M15     12M14  

Revenues:

        

Minimum rents (1)

   $ 179,154      $ 181,081      $ 719,737      $ 688,556   

Percentage rent

     2,675        2,459        6,267        5,231   

Recoveries

     58,703        59,040        246,719        230,987   

Ancillary income

     5,525        5,824        19,038        24,288   

Other revenues (2)

     473        153        3,339        4,706   
  

 

 

   

 

 

   

 

 

   

 

 

 
     246,530        248,557        995,100        953,768   

Expenses (3):

        

Operating and maintenance

     33,893        35,355        144,611        142,336   

Real estate taxes

     36,271        34,729        149,082        138,771   
  

 

 

   

 

 

   

 

 

   

 

 

 
     70,164        70,084        293,693        281,107   

Net operating income

     176,366        178,473        701,407        672,661   

Other income (expense):

        

Fee income

     8,258        8,211        32,971        31,907   

Interest income

     7,510        6,989        29,213        15,927   

Interest expense (4)

     (59,203     (61,014     (241,727     (237,120

Depreciation and amortization

     (102,575     (106,732     (402,045     (402,825

General and administrative (5)

     (17,920     (25,606     (73,382     (84,484

Other income (expense), net (6)

     (439     (1,221     (1,739     (12,262

Impairment charges (7)

     0        (11,055     (279,021     (29,175
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before earnings from equity method investments and other items

     11,997        (11,955     (234,323     (45,371

Equity in net (loss) income of joint ventures

     (5,486     748        (3,135     10,989   

Impairment of joint venture investments

     (1,909     (21,552     (1,909     (30,652

Gain on sale and change in control of interests, net

     0        183        7,772        87,996   

Income from discontinued operations (8)

     0        21,471        0        89,398   

Tax expense

     (285     (742     (6,286     (1,855

Gain on disposition of real estate, net of tax

     89,417        415        167,571        3,060   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     93,734        (11,432     (70,310     113,565   

Non-controlling interests (9)

     (268     732        (1,858     3,717   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to DDR

     93,466        (10,700     (72,168     117,282   

Write-off of preferred share original issuance costs

     0        0        0        (1,943

Preferred dividends

     (5,594     (5,594     (22,375     (24,054
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Common Shareholders

     87,872        (16,294     (94,543     91,285   

FFO:

        

Net income (loss) attributable to common shareholders

     87,872        (16,294     (94,543     91,285   

Depreciation and amortization of real estate investments

     100,582        105,887        393,847        410,172   

Equity in net loss (income) of joint ventures

     5,486        (748     3,135        (10,989

Impairment of depreciable joint venture investments

     1,909        0        1,909        0   

Joint ventures’ FFO

     6,465        5,836        27,579        30,344   

Non-controlling interests (OP units)

     69        223        635        732   

Impairment of depreciable real estate

     0        7,555        179,748        19,412   

Gain on disposition of depreciable real estate, net

     (85,728     (21,565     (164,010     (181,319
  

 

 

   

 

 

   

 

 

   

 

 

 

FFO attributable to Common Shareholders

     116,655        80,894        348,300        359,637   

Non-operating items, net (10)

     (2,533)        31,311        97,890        60,756   

Operating FFO

   $ 114,122      $ 112,205      $ 446,190      $ 420,393   

FFO per share – Diluted (11)

   $ 0.32      $ 0.22      $ 0.96      $ 1.00   

Operating FFO per share – Diluted (11)

   $ 0.31      $ 0.31      $ 1.23      $ 1.16   


DDR Corp.

Balance Sheet: Consolidated Interests

 

$ in thousands    At Year End  
     4Q15     4Q14  

Assets:

    

Land

   $ 2,184,145      $ 2,208,468   

Buildings

     6,965,632        7,087,040   

Fixtures and tenant improvements

     743,037        645,035   
  

 

 

   

 

 

 
     9,892,814        9,940,543   

Less: Accumulated depreciation

     (2,062,899     (1,909,585
  

 

 

   

 

 

 
     7,829,915        8,030,958   

Construction in progress and land

     235,385        395,242   
  

 

 

   

 

 

 

Real estate, net

     8,065,300        8,426,200   

Investments in and advances to joint ventures

     72,576        109,538   

Preferred equity interest

     395,156        305,310   

Cash

     22,416        20,937   

Restricted cash

     10,104        11,375   

Notes receivable, net

     42,534        56,245   

Receivables, including straight-line rent, net

     129,089        132,661   

Other assets, net (12), (13)

     359,913        457,146   
  

 

 

   

 

 

 

Total Assets

     9,097,088        9,519,412   

Liabilities and Equity:

    

Revolving credit facilities

     210,000        29,009   

Unsecured debt (13)

     3,149,188        2,752,394   

Unsecured term loan (13)

     397,934        347,883   

Mortgage and other secured debt (13)

     1,382,415        2,082,938   
  

 

 

   

 

 

 
     5,139,537        5,212,224   

Dividends payable

     68,604        61,468   

Other liabilities (14)

     425,478        448,192   
  

 

 

   

 

 

 

Total Liabilities

     5,633,619        5,721,884   

Preferred shares

     350,000        350,000   

Common shares

     36,529        36,071   

Paid-in capital

     5,466,511        5,438,778   

Accumulated distributions in excess of net income

     (2,391,793     (2,047,212

Deferred compensation obligation

     15,537        16,609   

Accumulated other comprehensive income

     (6,283     (7,352

Less: Common shares in treasury at cost

     (15,316     (16,646

Non-controlling interests

     8,284        27,280   
  

 

 

   

 

 

 

Total Equity

     3,463,469        3,797,528   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 9,097,088      $ 9,519,412   


DDR Corp.

Income Statement: Unconsolidated Interests at 100%

 

$ in thousands       
     4Q15     4Q14     12M15     12M14  

Revenues:

        

Minimum rents

   $ 95,265      $ 99,018      $ 392,657      $ 359,140   

Percentage rent

     1,106        858        2,431        1,909   

Recoveries

     29,087        27,256        119,321        91,917   

Other revenues

     1,875        1,700        10,288        32,798   
  

 

 

   

 

 

   

 

 

   

 

 

 
     127,333        128,832        524,697        485,764   

Expenses:

        

Operating and maintenance

     31,376        28,810        125,589        112,800   

Real estate taxes

     17,509        17,040        70,368        54,891   
  

 

 

   

 

 

   

 

 

   

 

 

 
     48,885        45,850        195,957        167,691   

Net operating income:

     78,448        82,982        328,740        318,073   

Other income (expense):

        

Interest expense

     (33,003     (42,306     (140,701     (171,803

Depreciation and amortization

     (49,648     (44,485     (207,816     (151,651

Impairment charges

     (52,252     (20,983     (52,700     (21,583

Tax expense

     0        0        0        (6,565

Other income (expense), net

     (6,020     (15,285     (7,193     (18,249
  

 

 

   

 

 

   

 

 

   

 

 

 
     (140,923     (123,059     (408,410     (369,851

Loss from continuing operations

     (62,475     (40,077     (79,670     (51,778

Gain (loss) from discontinued operations

     0        3,151        0        (13,955

Gain on disposition of discontinued operations, net

     0        26,797        0        55,020   

Gain on disposition of real estate, net

     21,385        6,283        17,188        10,116   

Non-controlling interests

     0        0        0        (2,022
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to unconsolidated joint ventures

     (41,090     (3,846     (62,482     (2,619

Depreciation and amortization of real estate investments

     49,648        46,647        207,816        164,668   

Impairment of depreciable real estate

     52,252        20,983        52,700        32,675   

Gain on disposition of depreciable real estate, net

     (21,385     (33,080     (17,188     (65,045
  

 

 

   

 

 

   

 

 

   

 

 

 

FFO

     39,425        30,704        180,846        129,679   

FFO at DDR’s ownership interests

     6,465        5,836        27,579        30,344   

Operating FFO at DDR’s ownership interests

     6,667        6,771        27,829        31,414   

Net (loss) income at DDR’s ownership interests

     (6,694     (264     (5,289     9,218   

Basis differences

     1,208        1,012        2,154        1,771   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in net (loss) income of joint ventures

   ($ 5,486   $ 748      ($ 3,135   $ 10,989   


DDR Corp.

Balance Sheet: Unconsolidated Interests at 100%

 

$ in thousands    At Year End  
     4Q15     4Q14  

Assets:

    

Land

   $ 1,343,889      $ 1,439,849   

Buildings

     3,551,227        3,854,585   

Fixtures and tenant improvements

     191,581        200,696   
  

 

 

   

 

 

 
     5,086,697        5,495,130   

Less: Accumulated depreciation

     (817,235     (773,256
  

 

 

   

 

 

 
     4,269,462        4,721,874   

Land held for development and construction in progress

     52,390        55,698   
  

 

 

   

 

 

 

Real estate, net

     4,321,852        4,777,572   

Cash and restricted cash

     58,916        100,812   

Receivables, including straight-line rent, net

     52,768        80,508   

Other assets, net

     318,546        376,540   
  

 

 

   

 

 

 

Total Assets

     4,752,082        5,335,432   

Liabilities and Equity:

    

Mortgage debt

     3,177,603        3,534,553   

Notes and accrued interest payable to DDR

     1,556        144,831   

Other liabilities

     219,799        276,998   
  

 

 

   

 

 

 

Total Liabilities

     3,398,958        3,956,382   

Redeemable preferred equity

     395,156        305,310   

Accumulated equity

     957,968        1,073,740   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 4,752,082      $ 5,335,432   


DDR Corp.

Financial Statements: Footnotes

 

$ in millions, except per share              
Includes discontinued operations    4Q15      4Q14      12M15      12M14  

(1)

 

Minimum rents:

           
 

Straight-line rent, net

   $ 1.5       $ 1.9       $ 5.3       $ 5.9   
 

Below-market rent, net

     0.7         0.4         2.9         1.3   
 

Ground lease revenue

     9.5         9.2         37.4         33.7   

(2)

 

Other revenues:

           
 

Lease termination fees

     0.5         0.0         2.8         4.1   
 

Other miscellaneous

     0.0         0.1         0.5         0.6   

(3)

 

Operating expenses:

           
 

Recoverable expenses (2014 excludes sold assets)

     (64.2      (64.1      (268.3      (251.7
 

Non-recoverable expenses (2014 excludes sold assets)

     (6.0      (6.0      (25.4      (29.4
 

Straight-line ground rent expense

     (0.1      (0.3      (0.5      (1.1
 

Expensed costs of suspended developments

     (0.1      (0.5      (0.5      (1.3

(4)

 

Non-cash interest expense:

           
 

Convertible debt accretion

     (1.0      (2.9      (9.9      (11.4
 

Debt fair value amortization

     1.6         5.4         14.4         17.9   
 

Loan cost amortization

     (2.3      (2.5      (9.6      (12.0
 

Interest expense (capitalized)

     1.5         2.0         6.7         8.7   

(5)

 

General and administrative expenses:

           
 

Executive separation charges

     (0.3      (5.4      (2.6      (5.6
 

Stock compensation expenses

     (1.4      (1.9      (6.6      (7.7
 

Internal leasing expenses

     (2.0      (1.6      (7.5      (7.1
 

Construction administrative costs (capitalized)

     2.1         2.5         9.1         9.9   

(6)

 

Other income (expense):

           
 

Transactions and other, net

     (0.3      (0.8      (0.7      (9.7
 

Litigation expenses

     (0.0      (1.0      (0.0      (3.2
 

Debt extinguishment, net

     (0.1      0.6        (1.0      0.6   

(7)

 

Impairment charges:

           
 

Assets marketed for sale

     (0.0      (7.6      (179.7      (19.5
 

Land previously held for development

     (0.0      (3.5      (99.3      (18.6


DDR Corp.

Financial Statements: Footnotes

 

$ in millions, except per share              
Includes discontinued operations    4Q15      4Q14      12M15      12M14  

(8)

  Discontinued operations:            
  Revenues      n/a      $ 3.2         n/a      $ 39.5   
  Expenses      n/a        (2.0      n/a        (21.0
  Impairments      n/a        (0.0      n/a        (8.9
  Depreciation      n/a        (1.4      n/a        (16.2
  Gain on disposition of real estate, net      n/a        21.7         n/a        96.0   
    

 

 

    

 

 

    

 

 

    

 

 

 
  Net income      n/a        21.5         n/a        89.4   
  Note: Presented only for 2014 as DDR adopted new accounting guidance on January 1, 2015, which changed the definition for reporting.    

(9)

  Non-controlling interests:            
  FFO attributable to non-controlling interests      (0.2      0.9         (1.4      2.8   
  Operating FFO attributable to non-controlling interests      (0.2      (0.1      (1.0      (0.8

(10)

  Non-operating items excluded from Operating FFO:            
  Non-cash impairment charges – non-depreciable assets      0.0         25.0         99.3         49.3   
  Executive separation charges      0.3         5.4         2.6         5.6   
  Transaction, debt extinguishment, litigation, other, net      0.7         1.8         2.3         13.7   
  Joint ventures – transaction, currency, other      0.2         0.9         0.2         1.1   
  Non-cash gain on sale and change in control of interests, net      0.0         (0.3      (7.8      (4.3
  Tax expense (primarily Puerto Rico restructuring)      0.0         0.0         4.4         0.0   
  Gain on sale of non-depreciable real estate, net      (3.7      (1.5      (3.1      (6.5
  Non-cash write-off of preferred share original issuance costs      0.0         0.0         0.0         1.9   
    

 

 

    

 

 

    

 

 

    

 

 

 
       (2.5      31.3         97.9         60.8   

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  Outstanding per share information:            
  Common shares (at quarter end)      365.3         360.7         365.3         360.7   
  OP units (at quarter end)      0.4         1.4         0.4         1.4   
    

 

 

    

 

 

    

 

 

    

 

 

 
  Total shares and units (at quarter end)      365.7         362.1         365.7         362.1   
  Weighted average shares and units – Basic – EPS      362.7         359.0         360.9         358.1   
  Assumed conversion of dilutive securities      2.5         0.0         0.0         0.0   
    

 

 

    

 

 

    

 

 

    

 

 

 
  Weighted average shares and units – Diluted – EPS      365.2         359.0         360.9         358.1   
  Weighted average shares and units – Basic – FFO & OFFO      364.0         361.9         362.9         360.6   
  Assumed conversion of dilutive securities      0.4         0.5         0.4         0.5   
    

 

 

    

 

 

    

 

 

    

 

 

 
  Weighted average shares and units – Diluted – FFO & OFFO      364.4         362.4         363.3         361.1   
  Earnings per common share – Basic & Diluted    $ 0.24       $ (0.05    $ (0.27    $ 0.25   
  FFO per share – Basic & Diluted    $ 0.32       $ 0.22       $ 0.96       $ 1.00   
  Operating FFO per share – Diluted    $ 0.31       $ 0.31       $ 1.23       $ 1.16   
  Common stock dividends declared, per share    $ 0.1725       $ 0.155       $ 0.69       $ 0.62   


DDR Corp.

Financial Statements: Footnotes

 

$ in millions, except per share              
Includes discontinued operations    4Q15      4Q14      12M15      12M14  

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   Intangible assets, net (at year end)          $ 311.0       $ 389.2   

(13)

   Loan costs, net (at year end)            23.8         22.5   
   Note: DDR adopted new accounting guidance, which changed the presentation requirements retroactively. Loan costs for term debt are now required to be presented as a direct deduction from the related debt liability rather than as an asset.     

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   Below-market leases, net (at year end)            155.3         139.3   
Additional financial information:            
  

Capital expenditures (DDR share):

           
  

Retenanting

   $ 12.9       $ 8.5       $ 49.0       $ 39.0   
  

Maintenance – total

     2.9         5.2         16.2         14.4   
  

Maintenance PSF of owned GLA – non reimbursable

           0.13         0.14   
  

Miscellaneous (DDR share):

           
  

Est. value of land owned adjacent to existing centers (at 12/31/15)

           26.0      
   Cost basis of headquarters (non-income producing at 12/31/15)            40.0