Exhibit 99.1

 

 

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DDR Corp.

Table of Contents

 

Section		Page
Earnings Release & Financial Statements
Press Release			1 - 10
Asset Summary
Portfolio Summary			11
Portfolio Detail			12
Leasing Summary			13
Top 50 Tenants			14
Top 50 Assets by ABR at DDR Share			15
Unconsolidated Joint Ventures			16
Investments
Transactions			17
Developments/Redevelopments			18
Balance Sheet Summary
Capital Structure			19
Debt/EBITDA			20
Debt Summary			21
Consolidated Debt Detail			22 - 23
Unconsolidated Debt Detail			24 - 25
Analyst Information and Reporting Policies
Analyst Coverage			26
Notable Accounting and Supplemental Policies			27 - 28
Non-GAAP Measures			29 - 37

Property list available online at http://www.ddr.com

DDR 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 expectations 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; redevelopment and construction activities may not achieve a desired return 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; any impact on strategy or results from the transition in leadership; and the finalization of the financial statements for the period ended June 30, 2016. 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 for the year ended December 31, 2015. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

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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 SECOND QUARTER 2016 OPERATING RESULTS

BEACHWOOD, OHIO, July 26, 2016 – DDR Corp. (NYSE: DDR) today announced operating results for the second quarter ended June 30, 2016.

Financial Highlights

 

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Second quarter net income attributable to common shareholders was $35.5 million, or $0.10 per diluted share, compared to net income of $13.0 million, or $0.03 per diluted share, for the prior-year comparable period.

 

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Second quarter operating funds from operations attributable to common shareholders (“Operating FFO”) increased $11.0 million to $122.4 million, or 6.5%, to $0.33 per diluted share, compared to $111.4 million, or $0.31 per diluted share, for the prior-year comparable period.

Significant Quarterly Activity

 

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Generated same store net operating income growth of 3.1% on a pro rata basis

 

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Executed 338 new leases and renewals for 2.3 million square feet

 

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Generated new leasing spreads of 27.7% and renewal leasing spreads of 7.0%, both on a pro rata basis

 

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Increased the portfolio leased rate by 10 basis points to 96.1% at June 30, 2016, from 96.0% at December 31, 2015 and 95.8% at June 30, 2015, on a pro rata basis

 

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Increased the annualized base rent per occupied square foot by 3.8% on a pro rata basis to $14.92 at June 30, 2016, from $14.37 at June 30, 2015

 

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Sold three operating assets for $45 million and three land parcels for $13 million, totaling $58 million at DDR’s share

“While I have only been at DDR for a short time, I am not surprised by this quarter’s strong operational results given the quality of the portfolio, the people, and the progress made at this Company in recent years. We look forward to delivering many more quarters of similar performance as we strive to build a track record of outperformance,” commented Thomas F. August, President and Chief Executive Officer.

2016 Guidance

The Company is revising its 2016 Operating FFO and NAREIT defined FFO guidance estimate to a range of $1.23 to $1.26 per diluted share from a range of $1.20 to $1.25 per diluted share. The Company’s full year disposition guidance of between $600 and $800 million at DDR’s pro rata share remains unchanged, but will be weighted to the second half of the year.

About DDR Corp.

DDR is an owner and manager of 349 value-oriented shopping centers representing 113 million square feet in 37 states and Puerto Rico. The Company’s assets are concentrated in high barrier-to-entry markets with stable population and high growth potential and its portfolio 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, July 27, 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.

 

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Non-GAAP Disclosures

FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry and a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both 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.

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 and related investments, 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 computes FFO in accordance with the NAREIT definition. The Company calculates Operating FFO by excluding certain non-operating charges and gains. Operating FFO is useful to investors as the Company removes non-comparable charges and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner.

The Company also uses net operating income (“NOI”), a non-GAAP financial measure, as a performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis. The Company presents NOI information herein on a same store basis or “SSNOI.” The Company believes SSNOI provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted below.

The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income and expenses, lease termination income, management fee expense, fair market value of leases, expense recovery adjustments and provisions for uncollectible amounts and/or recoveries thereof. SSNOI also excludes activity associated with development and major redevelopment; and includes assets owned in comparable periods (15 months for quarter comparisons). SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI and SSNOI in a different manner.

This press release includes financial statements presented at DDR’s pro rata share. The amounts shown in the columns labeled “Consolidated’’ reflect the line items contained in the Company’s consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”). The amounts in the columns labeled ‘‘Share of JVs’’ were computed by applying to each financial statement line item the effective ownership interest used to arrive at DDR’s share of net income or loss during the period when applying the equity method of accounting to each of the Company’s unconsolidated joint ventures. Other companies may calculate their pro rata interest differently, limiting the usefulness of the amounts as comparative measures. The Company provides DDR share information because the Company believes it assists investors and analysts in estimating the effective interest in DDR’s unconsolidated joint ventures when read in conjunction with the Company’s reported results under GAAP.

FFO, Operating FFO and SSNOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP as indicators of the Company’s operating performance or as alternatives to cash flow as a measure of liquidity.

Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the non-GAAP measures section.

 

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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; redevelopment and construction activities may not achieve a desired return 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; any impact on strategy or results from the transition in leadership; and the finalization of the financial statements for the period ended June 30, 2016. 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, 2015. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

 

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DDR Corp.

Income Statement: Consolidated Interests

 

$ in thousands, except per share		2Q16												2Q15
		Consolidated				Share of JVs				Total DDR Share (Non-GAAP)				Consolidated				Share of JVs				Total DDR Share (Non-GAAP)
Revenues:
Minimum rents (1)		$	178,064			$	13,666			$	191,730			$	179,363			$	14,275			$	193,638
Percentage rent			1,654				113				1,767				1,372				74				1,446
Recoveries			61,376				4,321				65,697				62,021				4,529				66,550
Other property revenues (2)			4,762				157				4,919				6,176				1,107				7,283
			245,856				18,257				264,113				248,932				19,985				268,917
Expenses (3):
Operating and maintenance			34,588				2,684				37,272				36,029				2,866				38,895
Real estate taxes			37,276				2,542				39,818				37,797				2,650				40,447
			71,864				5,226				77,090				73,826				5,516				79,342
Net operating income (4)			173,992				13,031				187,023				175,106				14,469				189,575
Other income (expense):
Fee income			11,465				(955	)			10,510				8,391				(1,007	)			7,384
Interest income			9,446				(415	)			9,031				7,211				(321	)			6,890
Interest expense (5)			(54,012	)			(5,278	)			(59,290	)			(61,287	)			(5,589	)			(66,876	)
Depreciation and amortization			(97,698	)			(5,635	)			(103,333	)			(99,300	)			(6,115	)			(105,415	)
General and administrative (6)			(18,499	)			0				(18,499	)			(19,271	)			0				(19,271	)
Other income (expense), net (7)			2,081				(56	)			2,025				2,368				(33	)			2,335
Income before earnings from JVs and other			26,775				692				27,467				13,218				1,404				14,622
Equity in net income of JVs			1,117				(1,117	)			0				1,642				(1,642	)			0
Basis differences of JVs			0				403				403				0				307				307
Loss on sale and change in control			0				0				0				(6,507	)			0				(6,507	)
Tax expense			(245	)			0				(245	)			(573	)			0				(573	)
Gain on disposition of real estate, net			13,721				22				13,743				11,267				(69	)			11,198
Net income			41,368				0				41,368				19,047				0				19,047
Non-controlling interests			(310	)			0				(310	)			(449	)			0				(449	)
Net income DDR			41,058				0				41,058				18,598				0				18,598
Preferred dividends			(5,594	)											(5,594	)
Net income Common Shareholders			35,464												13,004
Depreciation and amortization of real estate			95,626												97,239
Equity in net income of JVs			(1,117	)											(1,642	)
JVs’ FFO			6,426												7,502
Non-controlling interests			76												248
Gain on disposition of depreciable real estate, net			(16,154	)											(11,312	)
FFO Common Shareholders			120,321												105,039
Non-operating items, net (9)			2,120												6,357
Operating FFO		$	122,441											$	111,396
FFO per share – Diluted (10)		$	0.33											$	0.29
Operating FFO per share – Diluted (10)		$	0.33											$	0.31

 

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DDR Corp.

Income Statement: Consolidated Interests

 

$ in thousands, except per share		6M16												6M15
		Consolidated				Share of JVs				Total DDR Share (Non-GAAP)				Consolidated				Share of JVs				Total DDR Share (Non-GAAP)
Revenues:
Minimum rents (1)		$	355,431			$	27,311			$	382,742			$	360,060			$	29,353			$	389,413
Percentage rent			3,590				141				3,731				2,757				174				2,931
Recoveries			122,975				8,549				131,524				126,101				9,200				135,301
Other property revenues (2)			10,105				312				10,417				10,764				1,478				12,242
			492,101				36,313				528,414				499,682				40,205				539,887
Expenses (3):
Operating and maintenance			71,096				5,401				76,497				74,755				6,012				80,767
Real estate taxes			73,810				5,141				78,951				75,426				5,406				80,832
			144,906				10,542				155,448				150,181				11,418				161,599
Net operating income			347,195				25,771				372,966				349,501				28,787				378,288
Other income (expense):
Fee income			19,643				(1,890	)			17,753				16,466				(1,977	)			14,489
Interest income			18,496				(828	)			17,668				14,372				(636	)			13,736
Interest expense (5)			(111,909	)			(10,576	)			(122,485	)			(124,307	)			(11,515	)			(135,822	)
Depreciation and amortization			(194,600	)			(11,184	)			(205,784	)			(202,315	)			(13,214	)			(215,529	)
General and administrative (6)			(36,375	)			0				(36,375	)			(37,866	)			0				(37,866	)
Other income (expense), net (7)			3,854				(104	)			3,750				(1,060	)			(94	)			(1,154	)
Impairment charges (8)			0				0				0				(279,021	)			(90	)			(279,111	)
Income before earnings from JVs and other			46,304				1,189				47,493				(264,230	)			1,261				(262,969	)
Equity in net income of JVs			15,538				(15,538	)			0				1,703				(1,703	)			0
Basis differences of JVs			0				3,632				3,632				0				484				484
Gain on sale and change in control			0				0				0				7,772				0				7,772
Tax expense			(703	)			0				(703	)			(5,473	)			0				(5,473	)
Gain on disposition of real estate, net			26,102				10,717				36,819				36,361				(42	)			36,319
Net income (loss)			87,241				0				87,241				(223,867	)			0				(223,867	)
Non-controlling interests			(610	)			0				(610	)			(1,322	)			0				(1,322	)
Net income (loss) DDR			86,631				0				86,631				(225,189	)			0				(225,189	)
Preferred dividends			(11,188	)											(11,188	)
Net income (loss) Common Shareholders			75,443												(236,377	)
Depreciation and amortization of real estate			190,480												198,106
Equity in net income of JVs			(15,538	)											(1,703	)
JVs’ FFO			12,576												14,519
Non-controlling interests			152												497
Impairment of depreciable real estate			0												179,748
Gain on disposition of depreciable real estate, net			(28,250	)											(36,548	)
FFO Common Shareholders			234,863												118,242
Non-operating items, net (9)			1,807												100,287
Operating FFO		$	236,670											$	218,529
FFO per share – Diluted (10)		$	0.64											$	0.33
Operating FFO per share – Diluted (10)		$	0.65											$	0.60

 

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DDR Corp.

Balance Sheet: Consolidated Interests

 

$ in thousands		At Period End
		2Q16												4Q15
		Consolidated				Share of JVs				Total DDR Share (Non-GAAP)				Consolidated				Share of JVs				Total DDR Share (Non-GAAP)
Assets:
Land		$	2,137,889			$	174,406			$	2,312,295			$	2,184,145			$	181,843			$	2,365,988
Buildings			6,893,792				471,139				7,364,931				6,965,632				491,662				7,457,294
Fixtures and tenant improvements			756,617				30,764				787,381				743,037				31,105				774,142
			9,788,298				676,309				10,464,607				9,892,814				704,610				10,597,424
Depreciation			(2,115,084	)			(152,440	)			(2,267,524	)			(2,062,899	)			(152,035	)			(2,214,934	)
			7,673,214				523,869				8,197,083				7,829,915				552,575				8,382,490
Construction in progress and land			161,663				7,048				168,711				235,385				5,654				241,039
Real estate, net			7,834,877				530,917				8,365,794				8,065,300				558,229				8,623,529
Investments in JVs			65,186				2,330				67,516				72,576				636				73,212
Preferred equity interest			400,203				0				400,203				395,156				0				395,156
Cash			17,981				8,956				26,937				22,416				7,815				30,231
Restricted cash			9,173				727				9,900				10,104				803				10,907
Notes receivable, net			47,294				0				47,294				42,534				0				42,534
Receivables, net			124,878				7,213				132,091				129,089				8,151				137,240
Other assets, net (11)			321,994				19,900				341,894				359,913				21,598				381,511
Total Assets			8,821,586				570,043				9,391,629				9,097,088				597,232				9,694,320
Liabilities and Equity:
Revolving credit facilities			265,000				0				265,000				210,000				0				210,000
Unsecured debt			2,911,277				0				2,911,277				3,149,188				0				3,149,188
Unsecured term loan			398,167				0				398,167				397,934				0				397,934
Secured debt			1,364,363				425,166				1,789,529				1,382,415				441,918				1,824,333
			4,938,807				425,166				5,363,973				5,139,537				441,918				5,581,455
Dividends payable			75,078				0				75,078				68,604				0				68,604
Other liabilities (12)			398,909				20,367				419,276				425,478				19,686				445,164
Total Liabilities			5,412,794				445,533				5,858,327				5,633,619				461,604				6,095,223
JVs share of equity			0				22,340				22,340				0				20,393				20,393
Preferred shares			350,000				0				350,000				350,000				0				350,000
Common shares			36,551				0				36,551				36,529				0				36,529
Paid-in capital			5,473,632				0				5,473,632				5,466,511				0				5,466,511
Distributions in excess of net income			(2,455,319	)			102,170				(2,353,149	)			(2,391,793	)			115,235				(2,276,558	)
Deferred compensation			15,425				0				15,425				15,537				0				15,537
Other comprehensive income			(5,157	)			0				(5,157	)			(6,283	)			0				(6,283	)
Common shares in treasury at cost			(14,919	)			0				(14,919	)			(15,316	)			0				(15,316	)
Non-controlling interests			8,579				0				8,579				8,284				0				8,284
Total Equity			3,408,792				124,510				3,533,302				3,463,469				135,628				3,599,097
Total Liabilities and Equity		$	8,821,586			$	570,043			$	9,391,629			$	9,097,088			$	597,232			$	9,694,320

 

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DDR Corp.

Income Statement: Unconsolidated Interests at 100%

 

$ in thousands
		2Q16				2Q15				6M16				6M15
Revenues:
Minimum rents		$	96,960			$	98,437			$	193,535			$	202,174
Percentage rent			573				353				904				942
Recoveries			30,312				30,603				60,281				61,462
Other property revenues			1,045				3,673				2,080				6,088
			128,890				133,066				256,800				270,666
Expenses:
Operating and maintenance			18,644				18,620				37,643				39,315
Real estate taxes			18,329				17,470				36,986				35,741
			36,973				36,090				74,629				75,056
Net operating income (4)			91,917				96,976				182,171				195,610
Other income (expense):
Interest expense			(33,319	)			(33,593	)			(66,641	)			(74,496	)
Depreciation and amortization			(49,021	)			(51,482	)			(98,056	)			(108,219	)
Impairment charges			0				0				0				(448	)
Preferred share expense			(8,305	)			(6,415	)			(16,569	)			(12,729	)
Other (expense) income, net			(6,319	)			(6,126	)			(12,130	)			(12,195	)
			(5,047	)			(640	)			(11,225	)			(12,477	)
Gain (loss) on disposition of real estate, net			114				(1,358	)			53,597				(1,571	)
Net (loss) income attributable to unconsolidated JVs			(4,933	)			(1,998	)			42,372				(14,048	)
Depreciation and amortization			49,021				51,482				98,056				108,219
Impairment of depreciable real estate			0				0				0				448
(Gain) loss on disposition of depreciable real estate, net			(114	)			1,358				(53,597	)			1,571
FFO			43,974				50,842				86,831				96,190
FFO at DDR’s ownership interests			6,426				7,502				12,576				14,519
Operating FFO at DDR’s ownership interests		$	6,446			$	7,501			$	12,596			$	14,523

 

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DDR Corp.

Balance Sheet: Unconsolidated Interests at 100%

 

$ in thousands
		At Period End
		2Q16				4Q15
Assets:
Land		$	1,306,704			$	1,343,889
Buildings			3,449,494				3,551,227
Improvements			192,647				191,581
			4,948,845				5,086,697
Depreciation			(840,227	)			(817,235	)
			4,108,618				4,269,462
Land held for development and construction in progress			58,654				52,390
Real estate, net			4,167,272				4,321,852
Cash and restricted cash			69,815				58,916
Receivables, net			48,568				52,768
Other assets, net			286,501				318,546
Total Assets			4,572,156				4,752,082
Liabilities and Equity:
Mortgage debt			3,118,908				3,177,603
Notes and accrued interest payable to DDR			2,555				1,556
Other liabilities			223,109				219,799
Total Liabilities			3,344,572				3,398,958
Redeemable preferred equity			400,203				395,156
Accumulated equity			827,381				957,968
Total Liabilities and Equity		$	4,572,156			$	4,752,082

 

8

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DDR Corp.

Financial Statements: Footnotes

 

$ in millions, except per share
				2Q16				2Q15				6M16				6M15
(1)		Minimum rents:
		Straight-line rent, net		$	1.3			$	0.7			$	2.6			$	2.1
		Below-market rent, net			1.1				0.9				1.4				1.2
		Ground lease revenue			10.2				9.3				20.3				18.4
(2)		Other property revenues:
		Lease termination fees			0.3				1.4				1.5				1.6
(3)		Operating expenses:
		Recoverable expenses			(65.0	)			(67.0	)			(131.1	)			(137.2	)
		Non-recoverable expenses			(6.9	)			(6.8	)			(13.8	)			(13.0	)
		Straight-line ground rent expense			(0.2	)			(0.1	)			(0.3	)			(0.3	)
		Expensed costs of suspended developments			(0.1	)			(0.2	)			(0.2	)			(0.3	)
(4)		Same Store NOI:
		Consolidated NOI			174.0				175.1
		Less: Non-controlling interests			(0.4	)			(0.4	)
		Unconsolidated NOI at DDR Share			13.0				14.5
					186.6				189.2
		Less: Non-Same Store NOI			(14.2	)			(22.0	)
		Same Store NOI			172.4				167.2
		% Increase at DDR share			3.1	%
(5)		Non-cash interest expense:
		Debt fair value amortization			1.6				4.5				3.1				9.8
		Loan cost amortization			(2.1	)			(2.4	)			(4.3	)			(5.0	)
		Interest expense (capitalized)			0.7				1.6				1.9				3.2
(6)		General and administrative expenses:
		Executive separation charges			(0.0	)			(1.7	)			(0.0	)			(2.3	)
		Stock compensation expenses			(1.7	)			(1.5	)			(3.3	)			(3.6	)
		Internal leasing expenses			(2.0	)			(1.7	)			(4.1	)			(3.7	)
		Construction administrative costs (capitalized)			1.9				2.2				3.9				4.6
(7)		Other income (expense):
		Other income (primarily insurance recovery), net			2.1				(0.0	)			3.9				(0.2	)
		Debt extinguishment, net			(0.0	)			2.4				(0.0	)			(0.9	)
(8)		Impairment charges:
		Assets marketed for sale			(0.0	)			(0.0	)			(0.0	)			(179.7	)
		Land previously held for development			(0.0	)			(0.0	)			(0.0	)			(99.3	)

 

9

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$ in millions, except per share
				2Q16				2Q15				6M16				6M15
(9)		Non-operating items excluded from Operating FFO:
		Impairment charges – non-depreciable assets		$	0.0			$	0.0			$	0.0			$	99.3
		Executive separation charges			0.0				1.7				0.0				2.3
		Transaction, debt extinguishment, litigation, other, net			0.0				(1.9	)			0.0				1.5
		Loss (gain) on sale and change in control of interests, net			0.0				6.5				0.0				(7.8	)
		Tax expense (primarily Puerto Rico restructuring), net			(0.3	)			0.0				(0.3	)			4.4
		Loss on disposition of non-depreciable real estate, net			2.4				0.1				2.1				0.6
					2.1				6.4				1.8				100.3
(10)		Outstanding per share information:
		Common shares (at quarter end)			365.5				361.1				365.5				361.1
		OP units (at quarter end)			0.4				1.4				0.4				1.4
		Total shares and units (at quarter end)			365.9				362.5				365.9				362.5
		Weighted average shares and units – Basic – EPS			365.0				360.1				364.9				359.9
		Assumed conversion of dilutive securities			0.3				4.1				0.3				0.0
		Weighted average shares and units – Diluted – EPS			365.3				364.2				365.2				359.9
		Weighted average shares and units – Basic – FFO & OFFO			365.9				362.5				365.8				362.4
		Assumed conversion of dilutive securities			0.3				0.4				0.3				0.5
		Weighted average shares and units – Diluted – FFO & OFFO			366.2				362.9				366.1				362.9
		Earnings per common share – Basic & Diluted		$	0.10			$	0.03			$	0.21			$	(0.66	)
		FFO per share – Basic & Diluted		$	0.33			$	0.29			$	0.64			$	0.33
		Operating FFO per share – Diluted		$	0.33			$	0.31			$	0.65			$	0.60
		Common stock dividends declared, per share		$	0.19			$	0.1725			$	0.38			$	0.345
(11)		Intangible assets, net (at quarter and year end)											271.5				311.0
(12)		Below-market leases, net (at quarter and year end)											152.2				155.3
Additional financial information:
		Capital expenditures (DDR share):
		Retenanting		$	7.9			$	10.7			$	16.3			$	22.7
		Maintenance – reimbursable and non reimbursable			6.0				4.3				7.0				5.9
		Maintenance PSF of owned GLA – non reimbursable											0.04				0.04
		Miscellaneous (DDR share):
		Est. value of land owned adjacent to existing centers										$	26
		Cost basis of headquarters (non-income producing)											40

 

10

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DDR Corp.

Portfolio Summary

 

$, GLA in millions, except PSF
		Wholly Owned Portfolio At 100%								JV Portfolio DDR Share								Total Portfolio DDR Share								Total Portfolio At 100%
Portfolio Metrics
Operating Centers			191								158								349								349
Owned GLA			46.9								4.0								50.9								74.2
Ground Lease GLA			4.7								0.3								5.0								6.9
Additional Unowned			—								—								—								31.4
Base Rent PSF		$	14.95							$	14.55							$	14.92							$	14.63
Leased Rate			96.2	%							94.9	%							96.1	%							95.7	%
Commenced Rate			94.5	%							93.8	%							94.4	%							94.1	%
Same Store NOI			3.1	%							3.9	%							3.1	%							2.7	%
% of NOI (Pro Rata)			92.8	%							7.2	%							100.0	%							100.0	%
		Same Store NOI at 100% (1)																Same Store NOI at DDR Share (1)
		2Q16				2Q15				Change								2Q16				2Q15				Change
Same Store Leased Rate			95.8	%			95.6	%			0.2	%							96.3	%			96.0	%			0.3	%
Revenues:
Base Rents		$	251.4			$	245.0				2.6	%						$	175.0			$	170.3				2.8	%
Recoveries			85.7				83.0				3.3	%							61.5				59.4				3.5	%
Other			4.3				4.1				6.3	%							3.5				3.2				9.2	%
			341.4				332.1				2.8	%							240.0				232.9				3.1	%
Expenses:
Operating			(45.4	)			(44.4	)			2.4	%							(31.6	)			(30.9	)			2.3	%
Real Estate Taxes			(50.0	)			(48.1	)			3.9	%							(36.0	)			(34.8	)			3.5	%
			(95.4	)			(92.5	)			3.2	%							(67.6	)			(65.7	)			2.9	%
Same Store NOI		$	246.0			$	239.6				2.7	%						$	172.4			$	167.2				3.1	%
Non-Same Store NOI			19.9				32.5												14.2				22.0
		$	265.9			$	272.1											$	186.6			$	189.2

 

(1)	Excludes major redevelopment activity; see Investments section for additional detail. See definition and reconciliation in Non-GAAP Measures section.

 

11

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DDR Corp.

Portfolio Detail (at 100% unless otherwise noted)

 

Lease Expiration Schedule
		Greater than 10,000 SF																		Less than 10,000 SF
Year		Leases				ABR (mil)				Rent PSF				% of ABR						Leases				ABR (mil)				Rent PSF				% of ABR
2016			31			$	9.9			$	9.50				1.0	%					320			$	18.5			$	25.21				1.8	%
2017			192				69.2				10.71				6.9	%					869				53.8				23.70				5.4	%
2018			225				79.0				11.65				7.9	%					917				65.1				24.45				6.5	%
2019			219				86.7				11.91				8.7	%					698				46.7				24.40				4.7	%
2020			187				72.6				12.28				7.3	%					693				45.5				24.05				4.5	%
2021			252				98.5				11.19				9.8	%					558				40.9				24.15				4.1	%
2022			139				54.3				11.46				5.4	%					242				20.8				24.68				2.1	%
2023			109				40.5				11.30				4.0	%					181				17.2				24.38				1.7	%
2024			102				36.5				11.71				3.6	%					207				20.0				24.40				2.0	%
2025			73				25.8				13.90				2.6	%					174				16.0				24.75				1.6	%
2016-2025			1,529			$	573.0			$	11.56				57.2	%					4,859			$	344.5			$	24.29				34.4	%
Total Rent Roll			1,648			$	637.1			$	11.82				63.6	%					5,146			$	364.1			$	24.31				36.4	%

Annual Metrics																Leased Rate Breakdown at DDR Share
Period Ending		Centers				Leased Rate				ABR PSF						SF		Leased Rate				% of GLA				% of Vacancy
2Q 2016			349				95.7	%		$	14.63					< 5,000			87.9	%			14.0	%			43.8	%
YE 2015			367				95.6	%			14.48					5,000-9,999			92.1	%			9.0	%			18.4	%
YE 2014			415				95.7	%			13.91					³ 10,000			98.1	%			77.0	%			37.8	%
YE 2013			406				95.0	%			13.35
YE 2012			444				94.1	%			12.77					Total			96.1	%			100.0	%			100.0	%
YE 2011			422				93.3	%			12.54
YE 2010			476				92.3	%			12.46					Portfolio Concentration
YE 2009			534				91.2	%			12.27
YE 2008			611				92.6	%			12.34								% of								% of
YE 2007			619				95.8	%			12.22								ABR				MSF				GLA
YE 2006			370				96.2	%			11.57					Florida			12.1	%			10.4				12.8	%
YE 2005			379				96.3	%			11.30					Georgia			9.5	%			8.7				10.8	%
YE 2004			373				95.4	%			11.13					Puerto Rico			7.6	%			4.8				5.9	%
YE 2003			274				95.1	%			10.82					Ohio			7.5	%			6.7				8.3	%
YE 2002			189				95.9	%			10.58					N. Carolina			6.2	%			4.7				5.8	%
YE 2001			192				95.4	%			10.03					California			4.7	%			3.5				4.3	%
YE 2000			190				96.9	%			9.66					Illinois			4.6	%			2.6				3.2	%
YE 1999			186				95.7	%			9.20					New Jersey			4.6	%			3.2				4.0	%
YE 1998			159				96.5	%			8.99					Arizona			4.2	%			2.9				3.6	%
YE 1997			123				96.1	%			8.49					Texas			4.2	%			3.2				3.9	%
YE 1996			112				94.8	%			7.85
YE 1995			106				96.3	%			7.60
YE 1994			84				97.1	%			5.89
YE 1993			69				96.2	%			5.60
YE 1992			53				95.4	%			5.37

 

12

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DDR Corp.

Leasing Summary

Leases and GLA at 100%

All other figures at DDR share

Leasing Activity

 

										New								Wtd Avg								Comparable Pool
		# of Leases				GLA (000)				Rent PSF				Rent Spread				Term (Years)								# of Leases				GLA (000)
New Leases
1Q16			115				541			$	19.53				19.5	%			8.3								59				272
2Q16			103				430				20.18				27.7	%			7.9								41				160
			218				971			$	19.78				22.5	%			8.1								100				432
Renewals
1Q16			186				1,375			$	16.01				8.7	%			4.9								186				1,375
2Q16			235				1,919				17.17				7.0	%			5.1								235				1,919
			421				3,294			$	16.62				7.8	%			5.0								421				3,294
New + Renewals
1Q16			301				1,916			$	16.99				10.7	%			5.9								245				1,647
2Q16			338				2,349				17.70				9.1	%			5.6								276				2,079
			639				4,265			$	17.34				9.9	%			5.7								521				3,726

Net Effective Rents

 

		GLA (1) (000)				Avg Rent PSF				Capex PSF				Net Effective Rent PSF				Wtd Avg Term (Years)
New Leases
1Q16			509			$	20.06			$	4.44			$	15.62				8.3
2Q16			422				20.91				4.45				16.46				7.8
			931			$	20.40			$	4.45			$	15.95				8.1
Renewals
1Q16			1,375			$	16.26			$	0.38			$	15.88				4.9
2Q16			1,919				17.33				0.05				17.28				5.1
			3,294			$	16.82			$	0.21			$	16.61				5.0

 

(1)	New Leases GLA excludes development and redevelopment activity.

 

13

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DDR Corp.

Top 50 Tenants

 

		$, GLA in millions
				# of Units								Base Rent												Owned GLA												Credit Ratings
		Tenant		Owned				Total				at 100%				% of Total				Pro Rata				at 100%				% of Total				Pro Rata				(S&P/Moody’s/Fitch)
1		TJX Companies (1)			110				111			$	37.7				3.5	%		$	26.2				3.4				4.2	%			2.3			A+ / A2 / NR
2		Bed Bath & Beyond (2)			91				92				32.6				3.0	%			23.6				2.6				3.2	%			1.8			BBB+ / Baa1 / NR
3		PetSmart			96				97				30.8				2.9	%			20.8				2.0				2.5	%			1.4			B+ / B1 / NR
4		Walmart (3)			27				71				25.7				2.4	%			22.6				4.0				4.9	%			3.6			AA / Aa2 / AA
5		Dick’s Sporting Goods (4)			41				42				24.9				2.3	%			15.0				2.0				2.5	%			1.2			NR
6		Best Buy			40				46				23.4				2.2	%			16.1				1.5				1.8	%			1.1			BB+ / Baa1 / BBB-
7		Ross Stores (5)			75				75				23.3				2.2	%			15.1				2.2				2.7	%			1.3			A- / A3 / NR
8		Kohl’s			34				48				22.6				2.1	%			16.8				3.0				3.7	%			2.2			BBB / Baa2 / BBB
9		AMC Theatres			11				12				21.0				2.0	%			15.6				0.9				1.1	%			0.6			B+ / NR / B+
10		Michaels			68				71				20.0				1.9	%			14.0				1.6				2.0	%			1.1			B+ / Ba3 / NR
11		Gap (6)			67				67				16.8				1.6	%			12.2				1.1				1.4	%			0.7			BB+ / Baa2 / BB+
12		Ulta			61				63				14.7				1.4	%			10.3				0.7				0.9	%			0.5			NR
13		Office Depot (7)			47				50				14.4				1.3	%			10.2				1.0				1.2	%			0.7			B- / B1 / NR
14		Publix			34				36				14.4				1.3	%			3.5				1.6				2.0	%			0.4			NR
15		Ascena (8)			108				108				12.2				1.1	%			9.5				0.6				0.7	%			0.5			BB- / Ba2 / NR
16		Barnes & Noble			26				28				11.8				1.1	%			8.7				0.6				0.7	%			0.5			NR
17		Jo-Ann			33				33				10.5				1.0	%			8.0				1.0				1.2	%			0.7			B / B3 / NR
18		Toys “R” Us (9)			26				29				10.1				0.9	%			9.1				1.1				1.4	%			0.9			B- / B3 / CCC
19		Staples			33				34				9.8				0.9	%			6.0				0.7				0.9	%			0.4			BBB- / Baa2 / BB+
20		Lowe’s			11				30				9.4				0.9	%			8.7				1.4				1.7	%			1.3			A- / A3 / NR
21		Kroger (10)			19				23				9.2				0.9	%			4.8				1.1				1.4	%			0.6			BBB / Baa1 / BBB
22		Regal Cinemas			9				10				9.1				0.8	%			7.0				0.5				0.6	%			0.5			B+ / B1 / B+
23		Royal Ahold (11)			10				10				9.1				0.8	%			3.0				0.6				0.7	%			0.2			BBB / Baa2 / BBB
24		Dollar Tree Stores			76				79				9.0				0.8	%			6.2				0.8				1.0	%			0.5			BB+ / Ba2 / NR
25		Cinemark			10				10				8.9				0.8	%			7.1				0.6				0.7	%			0.5			BB / NR / NR
26		Nordstrom Rack			13				14				8.7				0.8	%			6.8				0.5				0.6	%			0.4			BBB+ / Baa1 / BBB+
27		Petco			33				35				8.6				0.8	%			6.5				0.5				0.6	%			0.3			B / B2 / NR
28		DSW			26				27				8.5				0.8	%			5.7				0.6				0.7	%			0.4			NR
29		Party City			42				42				8.4				0.8	%			5.8				0.5				0.6	%			0.4			NR
30		Mattress Firm (12)			65				66				8.2				0.8	%			6.3				0.3				0.4	%			0.2			B+ / NR / NR
31		LA Fitness			12				13				7.9				0.7	%			5.7				0.5				0.6	%			0.4			NR
32		Pier 1 Imports			35				39				7.8				0.7	%			5.8				0.4				0.5	%			0.3			B+ / NR / NR
33		Home Depot			10				38				7.8				0.7	%			6.3				1.1				1.4	%			0.8			A / A2 / A
34		Hobby Lobby			18				20				7.6				0.7	%			4.4				1.0				1.2	%			0.6			NR
35		Five Below			54				54				7.4				0.7	%			5.6				0.5				0.6	%			0.3			NR
36		Sports Authority			11				12				6.6				0.6	%			6.6				0.5				0.6	%			0.5			NR
37		Whole Foods			6				6				6.4				0.6	%			4.7				0.3				0.4	%			0.2			BBB- / Baa3 / NR
38		hhgregg			18				19				6.3				0.6	%			4.4				0.6				0.7	%			0.4			NR
39		AT&T			68				70				6.2				0.6	%			4.8				0.2				0.2	%			0.1			BBB+ / Baa1 / A-
40		Giant Eagle			6				7				6.0				0.6	%			3.3				0.5				0.6	%			0.3			NR
41		Famous Footwear			40				40				5.8				0.5	%			4.5				0.3				0.4	%			0.2			BB / Ba3 / NR
42		Burlington			10				10				5.7				0.5	%			4.1				0.7				0.9	%			0.5			BB- / NR / NR
43		Beall’s			22				22				5.5				0.5	%			2.3				0.8				1.0	%			0.4			NR
44		BJ’s Wholesale Club			5				6				5.4				0.5	%			4.1				0.5				0.6	%			0.4			B- / B3 / NR
45		Panera			39				40				5.4				0.5	%			3.7				0.2				0.2	%			0.1			NR
46		Stein Mart			17				17				5.1				0.5	%			3.0				0.6				0.7	%			0.3			NR
47		Shoe Carnival			31				31				4.9				0.5	%			3.1				0.3				0.4	%			0.2			NR
48		24 Hour Fitness			6				6				4.7				0.4	%			2.1				0.2				0.2	%			0.1			B / NR / NR
49		Gamestop			95				95				4.6				0.4	%			3.4				0.2				0.2	%			0.1			BB+ / Ba1 / NR
50		Tailored Brands (13)			32				32				4.6				0.4	%			3.3				0.2				0.2	%			0.1			B / Ba3 / NR
		Top 50 Total			1,877				2,036			$	595.5				55.6	%		$	416.4				48.6				59.9	%			33.5
		Total Portfolio										$	1,071.2				100.0	%		$	750.9				81.1				100.0	%			55.9

 

 

14

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DDR Corp.

Top 50 Assets

 

		$, GLA in thousands
						DDR				Base Rent								Total GLA
		Asset		MSA		Own%				Pro Rata				% of Pro Rata				Pro Rata				% of Pro Rata
1		Shoppers World		Boston			100	%		$	17,588				2.3	%			784				0.9	%
2		Plaza del Sol		San Juan			100	%			16,573				2.2	%			724				0.8	%
3		Winter Garden Village		Orlando			100	%			13,797				1.8	%			1,127				1.3	%
4		Plaza Rio Hondo		San Juan			100	%			13,471				1.8	%			555				0.6	%
5		Plaza del Norte		San Juan			100	%			12,216				1.6	%			699				0.8	%
6		Wrangleboro Consumer Square		Atlantic City			100	%			10,402				1.4	%			842				1.0	%
7		Riverdale Village		Minneapolis			100	%			10,321				1.4	%			969				1.1	%
8		Ahwatukee Foothills		Phoenix			100	%			10,192				1.4	%			693				0.8	%
9		Nassau Park Pavilion		Trenton			100	%			9,622				1.3	%			1,106				1.3	%
10		Tucson Spectrum		Tucson			100	%			9,476				1.3	%			969				1.1	%
11		Hamilton Marketplace		Trenton			100	%			9,450				1.3	%			960				1.1	%
12		Woodfield Village Green		Chicago			100	%			9,100				1.2	%			692				0.8	%
13		Carolina Pavilion		Charlotte			100	%			8,843				1.2	%			871				1.0	%
14		The Shops at Midtown Miami		Miami			100	%			8,482				1.1	%			467				0.5	%
15		Plaza Escorial		San Juan			100	%			8,463				1.1	%			636				0.7	%
16		Great Northern Plaza		Cleveland			100	%			8,293				1.1	%			669				0.8	%
17		Village at Stone Oak		San Antonio			100	%			8,237				1.1	%			622				0.7	%
18		Plaza Palma Real		San Juan			100	%			7,835				1.0	%			449				0.5	%
19		Polaris Towne Center		Columbus			100	%			7,424				1.0	%			725				0.8	%
20		Connecticut Commons		Hartford			100	%			7,169				1.0	%			562				0.6	%
21		Centennial Promenade		Denver			100	%			7,113				0.9	%			827				0.9	%
22		Peach Street Marketplace		Erie			100	%			6,924				0.9	%			995				1.1	%
23		Easton Market		Columbus			100	%			6,472				0.9	%			559				0.6	%
24		Crossroads Center		Gulfport			100	%			6,313				0.8	%			591				0.7	%
25		Hamilton Commons		Atlantic City			100	%			6,246				0.8	%			397				0.5	%
26		Belden Park Crossings		Cleveland			100	%			6,045				0.8	%			596				0.7	%
27		Silver Springs Square		Harrisburg			100	%			5,944				0.8	%			569				0.7	%
28		Falcon Ridge Town Center		Los Angeles			100	%			5,847				0.8	%			447				0.5	%
29		Aspen Grove		Denver			100	%			5,837				0.8	%			267				0.3	%
30		The Fountains		Miami			100	%			5,724				0.8	%			489				0.6	%
31		The Maxwell		Chicago			100	%			5,683				0.8	%			240				0.3	%
32		Cotswold Village		Charlotte			100	%			5,649				0.8	%			261				0.3	%
33		Ridge at Creekside		Sacramento			100	%			5,632				0.8	%			289				0.3	%
34		Bandera Pointe		San Antonio			100	%			5,553				0.7	%			851				1.0	%
35		Sycamore Crossing		Cincinnati			100	%			5,524				0.7	%			466				0.5	%
36		Merriam Village		Kansas City			100	%			5,502				0.7	%			921				1.1	%
37		Perimeter Pointe		Atlanta			100	%			5,499				0.7	%			353				0.4	%
38		Big Flats Consumer Square		Elmira			100	%			5,488				0.7	%			577				0.7	%
39		Independence Commons		Kansas City			100	%			5,397				0.7	%			403				0.5	%
40		Meridian Crossroads		Boise			100	%			5,393				0.7	%			732				0.8	%
41		Mohawk Commons		Albany			100	%			5,196				0.7	%			530				0.6	%
42		Beaver Creek Crossings		Raleigh			100	%			5,116				0.7	%			321				0.4	%
43		Homestead Pavilion		Miami			100	%			5,067				0.7	%			397				0.5	%
44		Arrowhead Crossing		Phoenix			100	%			5,051				0.7	%			407				0.5	%
45		Deer Park Town Center		Chicago			50	%			4,996				0.7	%			202				0.2	%
46		Willowbrook Plaza		Houston			100	%			4,991				0.7	%			393				0.4	%
47		Chapel Hills		Colorado Springs			100	%			4,988				0.7	%			541				0.6	%
48		The Promenade at Brentwood		St. Louis			100	%			4,959				0.7	%			338				0.4	%
49		Fairfax Towne Center		Balt-Wash DC			100	%			4,891				0.7	%			253				0.3	%
50		Gateway Center		Boston			100	%			4,803				0.6	%			640				0.7	%
		Top 50 Total								$	374,797				49.9	%			29,973				34.3	%
		Total Portfolio								$	750,923				100.0	%			87,378				100.0	%

 

15

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DDR Corp.

Unconsolidated Joint Ventures

 

$, GLA in millions
		Partner				DDR Own %				Operating Properties				Owned GLA				ABR				Gross Book Value				Debt (1)
BRE DDR Retail Holdings			Blackstone Real Estate Partners				5	% (2)			62				11.3			$	149.7			$	1,788.3			$	1,232.3
DDRTC Core Retail Fund			TIAA-CREF				15	%			25				8.2				105.6				1,530.4				791.5
DDR Domestic Retail Fund I			Various				20	%			55				7.6				87.3				1,306.7				898.2
DDR-SAU Retail Fund			State of Utah				20	%			12				1.0				10.9				134.5				61.0
Other			Various				Various				3				1.0				18.8				195.0				117.6
Total											157				29.1			$	372.3			$	4,954.9			$	3,100.6

 

(1)	Includes fair market value of debt adjustment and unamortized loan costs, net of $9.5 million, $0.1 million at DDR’s share.

(2)	In addition to DDR’s 5% common equity, DDR has $391.9 million of Preferred Equity plus $8.3 million of accrued interest with an interest rate of 8.5%.

 

16

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DDR Corp.

Transactions

 

$ in millions, GLA in thousands
								Total				At 100%								At DDR Share
				DDR				Owned
				Own%				GLA				Price				Debt				Price				Debt				Anchors
Acquisitions
02/16		Phoenix, AZ			100	%			233			$	60.5			$	0.0			$	60.5			$	0.0			Ross, Ulta, Total Wine & More
Dispositions
01/16		SAU Portfolio (11 assets)			20	%			1,083				170.5				77.3				34.1				15.5			Various
01/16		Buffalo, NY			100	%			139				13.8				0.0				13.8				0.0			Home Depot
01/16		Lexington, SC			100	%			83				12.2				0.0				12.2				0.0			Ross, T.J. Maxx
01/16		Pasadena, CA			100	%			540				131.9				0.0				131.9				0.0			Arclight Cinemas, Hyatt, West Elm, DSW
02/16		Brunswick, ME			100	%			305				13.2				0.0				13.2				0.0			Big Lots, Regal, Sears
02/16		Newport News, VA			100	%			341				10.7				0.0				10.7				0.0			Burlington
1Q		Non-operating sales											7.6				0.0				7.6				0.0
		1Q Total							2,491			$	359.9			$	77.3			$	223.5			$	15.5
04/16		Fort Collins, CO			100	%			19				6.7				0.0				6.7				0.0
05/16		St. Louis, MO			100	%			88				14.9				0.0				14.9				0.0			OfficeMax
06/16		N. Little Rock, AR			100	%			290				23.2				0.0				23.2				0.0			Bed Bath & Beyond, Burlington, Michaels, Ross, T.J. Maxx
2Q		Non-operating sales											13.3				0.0				13.3				0.0
		2Q Total							397			$	58.1			$	0.0			$	58.1			$	0.0
		Total Year to Date							2,888			$	418.0			$	77.3			$	281.6			$	15.5

 

17

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DDR Corp.

Developments/Redevelopments

 

$ in millions, GLA in thousands
		Owned SF				Est. Total Net Cost				Cost Incurred To Date				Est. Remain Costs				Placed In Service				CIP (a)				Est. Anchor Opening				Est. Stabilized Quarter				Key Tenants
Consolidated Summary
Developments in Progress						$	69			$	67			$	2			$	48			$	19
Redevelopments - Major							240				129				111				63				66
Redevelopments - Minor							158				67				91				38				29
Retenanting							29				9				20				5				4
Undeveloped Land (b)							N/A				44				0				0				44
						$	496			$	316			$	224			$	154			$	162
Developments in Progress
Guilford Commons (New Haven, CT)			130			$	69			$	67			$	2			$	48			$	19				4Q15				4Q16			Michaels, Ulta, Bed Bath & Beyond, DSW
Redevelopments - Major
The Pike Outlets (Long Beach, CA)						$	66			$	52			$	14			$	51			$	1				N/A				3Q15			Restoration Hardware, H&M, Nike, Gap Factory
Sycamore Crossing (Cincinnati, OH)							30				14				16				3				11				N/A				2Q17			Dick’s Sporting Goods, T.J. Maxx
Belgate (expansion) (Charlotte, NC)							23				15				8				0				15				N/A				4Q17			Burlington, T.J. Maxx
Bermuda Square (Richmond, VA)							18				13				5				9				4				N/A				4Q17			Martin’s, Petco
Plaza del Sol (expansion) (San Juan, PR)							12				2				10				0				2				N/A				4Q17			Dave & Busters
Other Redevelopments - Major							91				33				58				0				33
						$	240			$	129			$	111			$	63			$	66

 

(a)	This balance is in addition to DDR’s pro rata share of joint venture CIP of $7 million.

(b)	This balance is in addition to owned land adjacent to existing centers that has an estimated value of $26 million.

 

18

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DDR Corp.

Capital Structure

 

$, shares and units in millions, except per share
		June 30, 2016								June 30, 2015
		Amount				% of Total				Amount				% of Total
Capital Structure
Common Shares Equity		$	6,637.4				56	%		$	5,605.0				50	%
Perpetual Preferred Stock			350.0				3	%			350.0				3	%
Unsecured Credit Facilities			265.0				2	%			241.5				2	%
Unsecured Term Loan			400.0				3	%			300.0				3	%
Unsecured Public Debt			2,926.7				24	%			3,119.5				28	%
Secured Term Loan			200.0				2	%			200.0				2	%
Fixed Rate Mortgage Debt			1,081.2				9	%			1,287.2				11	%
Variable Rate Mortgage Debt			77.3				1	%			98.6				1	%
			4,950.2				41	%			5,246.8				47	%
Total		$	11,937.6				100	%		$	11,201.8				100	%
Capital Structure Detail
Debt to Market Capitalization			41.5	%							46.8	%
Common Shares Outstanding			365.5								361.1
Operating Partnership Units			0.4								1.4
Market Value per Share		$	18.14							$	15.46
Accretion on Convertible Notes (excluded above)		$	0.0							$	4.0
Partners’ Share of Consolidated Debt (included above)		$	9.9							$	9.9
DDR Share of Unconsolidated Debt (excluded above)		$	425.3							$	452.1

 

Credit Ratings

Covenants

Covenant Threshold

Actual Covenant

Debt Rating

Outlook

Moody’s

Baa2

Stable

Total Debt to Real Estate Assets Ratio

£ 65

%

48

%

S&P

BBB-

Stable

Secured Debt to Assets Ratio

£ 40

%

12

%

Fitch

BBB-

Stable

Unencumbered Assets to Unsecured Debt

³ 135

%

204

%

Fixed Charge Coverage Ratio

³ 1.5x

2.5x

 

19

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DDR Corp.

Debt/EBITDA

 

$ in millions
		2Q16				2Q15
Consolidated
Net income to DDR		$	41.1			$	18.6
Depreciation and amortization			97.7				99.3
Interest expense			54.0				61.3
Loss on sale and change in control of interests, net			0.0				6.5
Other income, net			0.0				(0.2	)
Equity in net income of JVs			(1.1	)			(1.6	)
Income tax expense			0.2				0.6
Gain on disposition of real estate, net			(13.7	)			(11.3	)
Adjustments for non-controlling interests			(0.2	)			(0.2	)
JV FFO (at DDR share)			6.4				7.5
EBITDA – current quarter (1)			184.4				180.5
EBITDA – annualized			737.6				722.0
Consolidated debt			4,938.8				5,236.6
Partner share of consolidated debt			(9.9	)			(9.9	)
Loan costs, net			21.1				23.6
Face value adjustments			(9.7	)			(13.5	)
Cash and restricted cash			(26.8	)			(36.3	)
Net effective debt		$	4,913.5			$	5,200.5
Debt/EBITDA – Consolidated			6.66x				7.20x
Pro rata including JVs
EBITDA – current quarter			189.9				186.2
EBITDA – annualized			759.6				744.8
Consolidated net debt			4,913.5				5,200.5
JV debt (at DDR share)			425.3				451.2
Cash and restricted cash			(9.7	)			(10.2	)
Net effective debt		$	5,329.1			$	5,641.5
Debt/EBITDA – Pro rata			7.02x				7.57x

 

(1)	See definition in Non-GAAP Measures section.

 

20

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DDR Corp.

Debt Summary

 

$ in millions
		Consolidated														Unconsolidated
		Total 100%				Total DDR Share				Interest Rate DDR Share						Total 100%				Total DDR Share				Interest Rate DDR Share
Debt Composition
Unsecured Credit Facilities		$	265.0			$	265.0				1.47	%
Unsecured Term Loan			400.0				400.0				1.57	%
Unsecured Public Debt			2,926.7				2,926.7				4.88	%
Secured Term Loan			200.0				200.0				1.82	%
Fixed Rate Mortgage Loans			1,081.2				1,071.3				4.99	%				$	2,053.5			$	336.4				5.38	%
Variable Rate Mortgage Loans			77.3				77.3				1.87	%					1,055.9				88.9				2.19	%
Subtotal			4,950.2				4,940.3				4.28	%					3,109.4				425.3				4.71	%
Fair Market Value Adjustment			9.7				9.7										17.8				0.9
Unamortized Loan Costs, Net			(21.1	)			(21.0	)									(8.3	)			(1.0	)
Total		$	4,938.8			$	4,929.0				4.28	%				$	3,118.9			$	425.2				4.71	%

 

		Scheduled Principal Payments				Secured Debt Maturities				Unsecured Debt Maturities				Total 100%				Total Pro Rata				Cash Interest Rate Pro Rata				GAAP Interest Rate Pro Rata
Consolidated Maturity Schedule (1)
2016		$	16.1			$	112.2			$	0.0			$	128.3			$	128.3				4.13	%			3.40	%
2017			30.0				203.2				300.0				533.2				533.2				6.59	%			5.88	%
2018			22.7				327.2				382.2				732.1				732.1				4.24	%			4.15	%
2019			16.5				169.3				0.0				185.8				185.8				5.32	%			5.23	%
2020			7.3				280.2				965.0				1,252.5				1,252.5				3.71	%			3.65	%
2021			4.4				126.4				300.0				430.8				430.8				3.90	%			3.81	%
2022			0.1				42.8				450.0				492.9				483.0				4.67	%			4.67	%
2023			0.0				0.0				300.0				300.0				300.0				3.38	%			3.38	%
2024			0.0				0.0				0.0				0.0				0.0				0.00	%			0.00	%
2025 and beyond			0.0				0.0				900.0				900.0				900.0				3.90	%			3.90	%
Unsecured debt discount											(5.4	)			(5.4	)			(5.4	)
		$	97.1			$	1,261.3			$	3,591.8			$	4,950.2			$	4,940.3				4.28	%			4.15	%
Unconsolidated Maturity Schedule (1)
2016		$	3.6			$	4.6			$	0.0			$	8.2			$	0.3				5.99	%			5.99	%
2017			6.6				1,304.3				0.0				1,310.9				249.3				5.56	%			5.54	%
2018			4.7				180.7				0.0				185.4				15.1				4.39	%			3.98	%
2019			4.8				655.9				0.0				660.7				32.8				2.39	%			2.34	%
2020			5.0				421.2				0.0				426.2				60.9				2.43	%			2.39	%
2021			4.3				80.5				0.0				84.8				36.3				5.32	%			5.32	%
2022			2.7				244.1				0.0				246.8				12.3				4.39	%			3.40	%
2023			2.1				100.1				0.0				102.2				5.2				4.00	%			4.21	%
2024			0.5				83.7				0.0				84.2				13.1				4.33	%			4.28	%
2025 and beyond			0.0				0.0				0.0				0.0				0.0				0.00	%			0.00	%
Total		$	34.3			$	3,075.1			$	0.0			$	3,109.4			$	425.3				4.71	%			4.65	%
% of Total		Consolidated																Unconsolidated
Fixed			81.0	%															66.0	%
Variable			19.0	%															34.0	%
Recourse to DDR			77.4	%															0.0	%
Non-recourse to DDR			22.6	%															100.0	%

 

(1)	Assumes borrower extension options are exercised.

 

21

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DDR Corp.

Consolidated Debt Detail

 

$ in millions
		Balance 100%				Balance DDR Share				Maturity Date (1)				Cash Interest Rate (2) (3)
Senior Debt
Unsecured Revolver ($750m)		$	265.0			$	265.0				06/20				L + 100
Unsecured Revolver ($50m)			0.0				0.0				06/20				L + 100
Secured Term Loan ($200m)			200.0				200.0				04/18				L + 135
Unsecured Term Loan ($400m)			400.0				400.0				04/20				L + 110
		$	865.0			$	865.0
Public Debt
Unsecured Notes		$	300.0			$	300.0				04/17				7.50	%
Unsecured Notes			299.5				299.5				04/18				4.75	%
Unsecured Notes			82.2				82.2				07/18				7.50	%
Unsecured Notes			298.9				298.9				09/20				7.88	%
Unsecured Notes			298.7				298.7				01/21				3.50	%
Unsecured Notes			455.3				455.3				07/22				4.63	%
Unsecured Notes			298.7				298.7				05/23				3.38	%
Unsecured Notes			496.8				496.8				02/25				3.63	%
Unsecured Notes			396.6				396.6				02/26				4.25	%
		$	2,926.7			$	2,926.7
Mortgage Debt
Sycamore Crossing, OH		$	62.1			$	62.1				12/16				5.81	%
The Maxwell, IL			50.5				50.5				12/16				L + 160
Falcon Ridge Town Center, CA			43.5				43.5				01/17				5.68	%
Vista Village, CA			33.2				33.2				04/17				5.71	%
Walmart Supercenter, NC			1.6				1.6				08/17				6.00	%
Connecticut Commons, CT			46.1				46.1				10/17				5.01	%
Riverdale Village, MN			25.3				25.3				10/17				5.01	%
Riverdale Village Perimeter, MN			31.7				31.7				10/17				5.01	%
Lake Brandon Village, FL			9.1				9.1				10/17				5.01	%
Shoppers World Brookfield, WI			5.7				5.7				10/17				5.01	%
Marketplace of Brown Deer, WI			4.1				4.1				10/17				5.01	%
Brown Deer Center, WI			7.7				7.7				10/17				5.01	%
Thruway Plaza (Walmart), NY			0.8				0.8				10/17				6.78	%
Tops Plaza, NY			3.5				3.5				01/18				7.05	%
Falcon Ridge Town Center, CA			14.2				14.2				01/18				5.91	%
Walmart Supercenter, SC			1.9				1.9				01/18				6.00	%
Fortuna Center, VA			12.1				12.1				02/18				6.18	%
Johns Creek Town Center, GA			23.8				23.8				03/18				5.06	%
Southland Crossings, OH			23.8				23.8				03/18				5.06	%
The Promenade at Brentwood, MO			30.2				30.2				03/18				5.06	%
DDR Headquarters, OH			26.8				26.8				03/18				L + 105
Mohawk Commons, NY			6.4				6.4				12/18				5.75	%

 

22

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DDR Corp.

Consolidated Debt Detail

 

$ in millions
		Balance 100%				Balance DDR Share				Maturity Date (1)				Cash Interest Rate (2) (3)
Lowe’s, TN			2.9				2.9				01/19				7.66	%
Nassau Park Pavilion, NJ			55.5				55.5				02/19				3.40	%
Bandera Pointe, TX			24.2				24.2				02/19				3.40	%
Presidential Commons, GA			20.6				20.6				02/19				3.40	%
Plaza Cayey, PR			20.5				20.5				06/19				7.59	%
Plaza Fajardo, PR			24.6				24.6				06/19				7.59	%
Plaza Isabela, PR			21.6				21.6				06/19				7.59	%
Plaza Walmart, PR			11.5				11.5				06/19				7.59	%
Mariner Square, FL			1.9				1.9				09/19				9.75	%
Northland Square, IA			3.9				3.9				01/20				9.38	%
Plaza Rio Hondo, PR			122.5				122.5				01/20				3.95	%
Easton Marketplace, OH			48.9				48.9				01/20				3.95	%
The Fountains, FL			44.6				44.6				01/20				3.95	%
Perimeter Pointe, GA			42.2				42.2				01/20				3.95	%
Polaris Towne Center, OH			42.7				42.7				04/20				6.76	%
Chapel Hills West, CO			11.8				11.8				06/21				5.49	%
West Valley Marketplace, PA			8.1				8.1				07/21				6.95	%
Plaza Escorial, PR			71.3				71.3				07/21				3.59	%
Wrangleboro Consumer Sq, NJ			58.5				58.5				10/21				5.41	%
Chapel Hills East, CO			8.0				8.0				12/21				5.24	%
Paradise Village Gateway, AZ			30.0				20.1				01/22				4.65	%
Macedonia Commons, OH			18.6				18.6				02/22				5.71	%
		$	1,158.5			$	1,148.6
FMV adjustment – assumed debt			9.7				9.7
Unamortized Loan Costs, Net			(21.1	)			(21.0	)
Grand Total		$	4,938.8			$	4,929.0
Rate Type
Fixed		$	4,007.9			$	3,998.0				4.9 years				4.91	%
Variable			942.3				942.3				3.1 years				1.62	%
		$	4,950.2			$	4,940.3				4.5 years				4.28	%
Perpetual Preferred Stock
Class J		$	200.0			$	200.0				Perpetual				6.500	%
Class K			150.0				150.0				Perpetual				6.250	%
		Notional Amount				Rate Hedged				Fixed Rate				Termination Date
Interest Rate Swaps
Underlying Debt Hedged:
Mortgage Portfolio		$	77.7				1 mo. LIBOR				2.81	%			9/1/17

 

(1)	Assumes borrower extension options are exercised.

(2)

L = LIBOR

(3)	Does not include discounts or premiums.

 

23

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DDR Corp.

Unconsolidated Debt Detail

 

$ in millions
		Balance 100%				Balance DDR Share				Maturity Date (1)				Cash Interest Rate (2)
BRE DDR Retail Holdings III
Telegraph Plaza, MI		$	4.7			$	0.2				12/16				5.99	%
Camp Creek, GA			42.0				2.1				12/18				4.62	%
May 2019 Loan Pool (2 assets)			20.3				1.0				05/19				4.85	%
November 2019 Loan Pool (32 assets)			636.5				31.8				11/19				L + 185
Whittwood Town Center, CA			43.0				2.2				12/20				5.20	%
January 2022 Loan Pool (3 assets)			23.0				1.1				01/22				4.75	%
Kyle Marketplace, TX			24.8				1.2				03/22				4.09	%
March 2022 Loan Pool (3 assets)			23.4				1.2				03/22				5.49	%
Eastland Center, CA			90.0				4.5				07/22				4.50	%
Greenway Commons, TX			33.0				1.7				07/22				4.10	%
July 2022 Loan Pool (4 assets)			17.0				0.9				07/22				4.40	%
White Oak Village, VA			34.3				1.7				09/22				3.60	%
January 2023 Loan Pool (4 assets)			22.7				1.1				01/23				4.27	%
Kingsbury Center, IL			14.5				0.7				06/23				3.97	%
Valley Bend, AL			43.5				2.2				06/23				3.75	%
		$	1,072.7			$	53.6
BRE DDR Retail Holdings IV
The Hub, NY		$	15.6			$	0.8				01/17				7.53	%
Southmont Plaza, PA			34.0				1.7				02/18				L + 250
Ashbridge Square, PA			35.0				1.7				03/18				6.08	%
Fountains of Miramar, FL			24.8				1.2				02/21				L + 250
Millenia Crossing, FL			22.8				1.1				01/23				4.25	%
Concourse Village, FL			14.2				0.7				02/24				4.86	%
		$	146.4			$	7.2
DDR Domestic Retail Fund I
July 2017 Loan Pool (52 assets)		$	883.5			$	176.7				07/17				5.60	%
Heather Island, FL			4.4				0.9				02/18				3.56	%
Hilliard Rome, OH			11.5				2.3				02/18				3.56	%
		$	899.4			$	179.9
DDRTC Core Retail Fund
March 2017 Loan Pool (9 assets)		$	350.2			$	52.5				03/17				5.45	%
July 2020 Loan Pool (10 assets) (3)			195.4				29.3				07/20				L + 150
July 2020 Loan Pool (6 assets) (3)			165.3				24.8				07/20				L + 175
Birkdale Village, NC			82.5				12.4				04/24				4.30	%
		$	793.4			$	119.0

 

24

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DDR Corp.

Unconsolidated Debt Detail

 

$ in millions
		Balance 100%				Balance DDR Share				Maturity Date (1)				Cash Interest Rate (2)
DDR-SAU Retail Fund
September 2017 Loan Pool (7 assets)		$	29.0			$	5.8				09/17				4.74	%
April 2018 Loan Pool (5 assets)			32.0				6.4				04/18				4.65	%
		$	61.0			$	12.2
Other Joint Ventures
Lennox Town Center Limited, OH		$	1.0			$	0.5				07/17				6.44	%
Lennox Town Center Limited, OH			26.0				13.0				07/17				5.64	%
RO & SW Realty (9 assets)			18.5				4.7				10/20				5.25	%
Sun Center Limited, OH			21.7				17.3				05/21				5.99	%
RVIP IIIB, Deer Park, IL			69.3				17.9				09/21				4.84	%
		$	136.5			$	53.4
Subtotal		$	3,109.4			$	425.3
FMV Adjustment – Assumed Debt			17.8				0.9
Unamortized Loan Costs, Net			(8.3	)			(1.0	)
Total		$	3,118.9			$	425.2
Rate Type
Fixed		$	2,053.5			$	336.4				2.0 years				5.38	%
Variable			1,055.9				88.9				3.7 years				2.19	%
		$	3,109.4			$	425.3				2.4 years				4.71	%
		Notional Amount				Rate Hedged				Fixed Rate				Termination Date
Interest Rate Swaps
Underlying Debt Hedged:
Mortgage Loan Camp Creek		$	42.0				1 mo. LIBOR				1.87	%			12/1/18

 

(1)	Assumes borrower extension options are exercised.

(2)

L = LIBOR

(3)	Loans have interest rate floors of 1 mo. Libor at 0.25%

 

25

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DDR Corp.

Analyst Coverage

 

Corporate Headquarters				Investor Relations
DDR Corp.				Matt Lougee
3300 Enterprise Parkway				Toll Free: (877) 225-5337
Beachwood, Ohio 44122				Main: (216) 755-5500
Website: www.ddr.com				Email: mlougee@ddr.com
Equity Research
Bank of America Merrill Lynch		Craig Schmidt		craig.schmidt@baml.com		(646) 855-3640
Boenning & Scattergood		Floris van Dijkum		fvandijkum@boenninginc.com		(212) 209-3916
Canaccord Genuity		Paul Morgan		pmorgan@canaccordgenuity.com		(415) 229-7181
Capital One		Chris Lucas		christopher.lucas@capitalone.com		(571) 633-8151
Citigroup		Michael Bilerman		michael.bilerman@citi.com		(212) 816-1383
		Christy McElroy		christy.mcelroy@citi.com		(212) 816-6981
Credit Suisse		Ian Weissman		ian.weissman@credit-suisse.com		(212) 538-6889
Deutsche Bank		Vincent Chao		vincent.chao@db.com		(212) 250-6799
Evercore ISI		Steve Sakwa		steve.sakwa@evercoreisi.com		(212) 446-9462
		Samir Khanal		samir.khanal@evercoreisi.com		(212) 888-3796
Goldman Sachs		Andrew Rosivach		andrew.rosivach@gs.com		(212) 902-2796
		Caitlin Burrows		caitlin.burrows@gs.com		(212) 902-4736
Green Street Advisors		Jason White		jwhite@greenstreetadvisors.com		(949) 640-8780
Hilliard Lyons		Carol Kemple		ckemple@hilliard.com		(502) 588-1839
Jefferies and Company		George Hoglund		ghoglund@jefferies.com		(212) 284-2226
J.P. Morgan		Michael Mueller		michael.w.mueller@jpmorgan.com		(212) 622-6689
KeyBanc Capital Markets		Jordan Sadler		jsadler@keybanccm.com		(917) 368-2280
		Todd Thomas		tthomas@keybanccm.com		(917) 368-2286
Mizuho Securities		Haendel St. Juste		haendel.stjuste@us.mizuho-sc.com		(212) 205-7860
RBC Capital Markets		Rich Moore		rich.moore@rbccm.com		(440) 715-2646
Robert W. Baird & Co.		RJ Milligan		rjmilligan@rwbaird.com		(813) 273-8252
Sandler O’Neill		Alex Goldfarb		agoldfarb@sandleroneill.com		(212) 466-7937
SunTrust Robinson Humphrey		Ki Bin Kim		kibin.kim@suntrust.com		(212) 303-4124
UBS		Jeremy Metz		jeremy.metz@ubs.com		(212) 713-2429
Wells Fargo		Jeff Donnelly		jeff.donnelly@wellsfargo.com		(617) 603-4262
		Tamara Fique		tamara.fique@wellsfargo.com		(443) 263-6568
Fixed Income Research
Barclays		Peter Troisi		peter.troisi@barclays.com		(212) 412-3695
Citigroup		Tom Cook		thomas.n.cook@citigroup.com		(212) 723-1112
J.P. Morgan		Mark Streeter		mark.streeter@jpmorgan.com		(212) 834-5086
Wells Fargo		Thierry Perrein		thierry.perrein@wellsfargo.com		(704) 715-8455

 

26

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DDR Corp.

Notable Accounting and Supplemental Policies

The information contained in the Quarterly Financial Supplement does not purport to disclose all items required by the accounting principles generally accepted in the United States of America (“GAAP”) and is unaudited information. The Company’s Form 10-K and Form 10-Q should be read in conjunction with the Quarterly Financial Supplement.

Revenues

 

•

Percentage and overage rents are recognized after the tenants’ reported sales have exceeded the applicable sales breakpoint.

 

•

Tenant reimbursements are recognized in the period in which the expenses are incurred.

 

•

Lease termination fees are recognized upon termination of a tenant’s lease when the Company has no further obligations under the lease.

General and Administrative Expenses

 

•

General and administrative expenses include certain internal leasing salaries, legal salaries and related expenses associated with the leasing of space which are charged to operations as incurred.

 

•

All internal and external acquisition costs are expensed as incurred.

 

•

The Company does not capitalize any executive officer compensation.

 

•

General and administrative expenses include executive property management compensation and related expenses. Property management services’ direct compensation is reflected in operating and maintenance expenses.

Deferred Financing Costs

 

•

Costs incurred in obtaining term financing are included as a reduction of the related debt liability and costs incurred related to the revolving credit facilities are included in other assets on the consolidated balance sheets. All costs are amortized on a straight-line basis over the term of the related debt agreement; such amortization is reflected as interest expense in the consolidated income statements.

Real Estate

 

•

Real estate assets are stated at cost less accumulated depreciation, which, in the opinion of management, is not in excess of the individual property’s estimated undiscounted future cash flows, including estimated proceeds from disposition.

 

•

Construction in progress includes shopping center developments and significant expansions and redevelopments.

 

•

Acquisitions of a partner’s interest in an unconsolidated joint venture in which a change of control has occurred are recorded at fair value.

 

•

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows:

 

Buildings		20 to 40 years
Building Improvements		5 to 20 years
Furniture/Fixtures/		Shorter of economic life or lease terms
Tenant Improvements

 

27

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DDR Corp.

Notable Accounting and Supplemental Policies

Capitalization

 

•

Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and expenditures that improve or extend the life of the asset are capitalized.

 

•

The Company capitalizes interest on funds used for the construction or expansion of shopping centers and certain construction administration costs. Capitalization of interest and administration costs ceases when construction activities are completed and the property is available for occupancy by tenants or when activities are suspended.

 

•

Interest expense and real estate taxes incurred during construction are capitalized and depreciated over the building life. The Company does not capitalize interest on land held for development which is on hold and is not undergoing any development activities.

Gains on Sales of Real Estate

 

•

Gains on sales of real estate generally related to the sale of outlots and land adjacent to existing shopping centers are recognized at closing when the earnings process is deemed to be complete.

 

•

Effective in 2015, the operating activity and the gains or losses on the sales of operating shopping centers are generally no longer reflected as discontinued operations.

Leasing Spreads

 

•

Leasing spreads are calculated by comparing the prior tenant’s annual base rent in the final year of the old lease to the new tenant’s annual base rent in the first year of the new lease. The reported calculation, “Comparable”, only includes deals executed within one year of the date that the prior tenant vacated. “Non-comp” deals consist of deals not executed within one year of the date the prior tenant vacated, deals which resulted in a significant difference in size or deals for space which was vacant at acquisition.

Net Effective Rents

 

•

Net effective rents are calculated as a weighted average per rentable square foot over the lease term with full consideration for all costs associated with leasing the space rather than pro rata costs. Landlord work represents property level improvements associated with the lease transactions; however, those improvements are attributed to the landlord’s property value and typically extend the life of the asset in excess of the lease term.

 

28

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DDR Corp.

Non-GAAP Measures

Performance Measures

FFO and OFFO

The Company believes that Funds from Operations (“FFO”) and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by the real estate industry including securities analysts, investors and other interested parties to evaluate the performance of REITs.

FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from depreciable property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) preferred share dividends, (ii) gains and losses from disposition of depreciable real estate property and related investments, 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 (loss) from joint ventures and equity income (loss) 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’s calculation of FFO is consistent with the definition of FFO provided by the National Association of Real Estate Investment Trusts (“NAREIT”).

The Company believes that certain gains and charges recorded in its operating results are not comparable or reflective of its core operating performance. As a result, the Company also computes Operating FFO and discusses it with the users of its financial statements, in addition to other measures such as net income (loss) determined in accordance with GAAP and FFO. Operating FFO is generally defined and calculated by the Company as FFO excluding certain charges and gains that management believes are not comparable and indicative of the results of the Company’s operating real estate portfolio. Such adjustments include gains on the sale of and/or change in control of interests, gains/losses on the sale of non-depreciable real estate, impairments of non-depreciable real estate, gains/losses on the early extinguishment of debt, transaction costs and other restructuring type costs. The disclosure of these charges and gains is regularly requested by users of the Company’s financial statements.

 

29

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DDR Corp.

Non-GAAP Measures

The adjustment for these charges and gains may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO. Additionally, the Company provides no assurances that these charges and gains are non-recurring. These charges and gains could be reasonably expected to recur in future results of operations.

These measures of performance are used by the Company for several business purposes and by other REITs. The Company uses FFO and/or Operating FFO in part (i) as a disclosure to improve the understanding of the Company’s operating results among the investing public, (ii) as a measure of a real estate asset’s performance, (iii) to influence acquisition, disposition and capital investment strategies and (iv) to compare the Company’s performance to that of other publicly traded shopping center REITs.

For the reasons described above, management believes that FFO and Operating FFO provide the Company and investors with an important indicator of the Company’s operating performance. They provide recognized measures of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO and Operating FFO in a different manner.

Management recognizes the limitations of FFO and Operating FFO when compared to GAAP’s net income. FFO and Operating FFO do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash available to fund cash needs. Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance. The Company believes that to further understand its performance, FFO and Operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows determined in accordance with GAAP, as presented in its condensed consolidated financial statements. Reconciliations of these measures to their most directly comparable GAAP measure of net income (loss) have been provided herein.

 

30

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DDR Corp.

Non-GAAP Measures

Net Operating Income (“NOI”) and Same Store Net Operating Income (“SSNOI”)

The Company uses NOI, which is a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.

The Company also presents NOI information on a same store basis, or SSNOI. The Company believes SSNOI provides investors with additional information regarding the operating performances of comparable assets because it excludes certain non-cash and non-comparable items as noted below. SSNOI is frequently used by the real estate industry including securities analysts, investors and other interested parties to evaluate the performance of REITs.

The Company defines SSNOI as property revenues less property-related expenses which exclude straight-line rental income and expenses, lease termination income, management fee expense, fair market value of leases, expense recovery adjustments and provisions for uncollectible amounts and/or recoveries thereof. SSNOI also excludes activity associated with development and major redevelopment; and includes assets owned in comparable periods (15 months for quarter comparisons). SSNOI excludes all non-property and corporate level revenue and expenses. Other real estate companies may calculate NOI and SSNOI in a different manner.

The Company believes that SSNOI is not, and is not intended to be, a presentation in accordance with GAAP. SSNOI information has its limitations as it excludes any capital expenditures associated with the re-leasing of tenant space or as needed to operate the assets. SSNOI does not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use SSNOI as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. SSNOI does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of cash available to fund cash needs. SSNOI should not be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. A reconciliation of SSNOI to its most directly comparable GAAP measure of net income (loss) has been provided herein.

 

31

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DDR Corp.

Non-GAAP Measures

Other Measures

DDR Pro Rata Share Information (Income Statements and Balance Sheets)

The Company believes that the DDR Pro rata Share financial information presented in the press release section of the quarterly supplement is not, and is not intended to be, a presentation in accordance with GAAP. The DDR Share Information included with the Income Statements and Balance Sheets in this quarterly supplement reflect DDR’s effective ownership of each asset in the Company’s portfolio that DDR does not wholly-own. DDR Share financial information is frequently used by the real estate industry including securities analysts, investors and other interested parties to evaluate the performance of DDR compared to other REITs. Other real estate companies may calculate such information in a different manner.

The amounts shown in the columns labeled ‘‘Consolidated’’ reflect the line items contained in the Company’s consolidated financial statements in accordance with GAAP. The amounts in the columns labeled ‘‘Share of JVs’’ were computed by applying to each financial statement line item the effective ownership interest used to arrive at DDR’s share of net income or loss during the period when applying the equity method of accounting to each of the Company’s unconsolidated joint ventures. Other companies may calculate their pro rata interest differently, limiting the usefulness of the amounts as comparative measures.

DDR does not control the unconsolidated joint ventures and the presentations of the assets, liabilities, revenues and expenses of the unconsolidated joint ventures do not represent the Company’s legal claim to such items. The Company provides DDR Share information because the Company believes it assists investors and analysts in estimating the effective interest in DDR’s unconsolidated joint ventures when read in conjunction with the Company’s reported results under GAAP. The presentation of DDR Share information has limitations as an analytical tool. One such limitation is that the amounts shown on the individual line items are derived by applying DDR’s effective interest determined when applying the equity method of accounting and does not necessarily represent the Company’s legal claim to the assets and liabilities or the revenues and expenses of the unconsolidated joint ventures. Because of the limitations, the DDR Share Information should not be considered in isolation or as a substitute for the Company’s financial statements as reported under GAAP.

Included herein are the Company’s consolidated financial statements in accordance with GAAP that will be filed with the SEC on Form 10-Q or 10-K, as applicable.

 

32

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DDR Corp.

Non-GAAP Measures

Debt/Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)

The Company uses the ratio Debt to EBITDA (“Debt/EBITDA”) as it believes it provides a meaningful metric as it relates to the Company’s ability to meet various leverage tests for the corresponding periods.

The Components of Debt/EBITDA include adjusted EBITDA as the numerator, as opposed to net income determined in accordance with GAAP. The Company calculates adjusted EBITDA to account for items it does not believe are representative of ongoing operating results. The Company uses Net Effective Debt as the denominator in the calculation. Net Effective Debt is calculated as the Company’s consolidated debt outstanding adjusted to remove non-cash unamortized loan costs and fair market value adjustments, as well as include cash and restricted cash as of the balance sheet date presented. Such amounts are calculated at the Company’s proportionate share of ownership.

Adjusted EBITDA should not be considered as an alternative to earnings as an indicator of the Company’s financial performance, or an alternative to cash flow from operating activities as a measure of liquidity. The Company’s calculation of adjusted EBITDA may differ from the methodology utilized by other companies. Investors are cautioned that items excluded from EBITDA are significant components in understanding and assessing the Company’s financial condition.

A reconciliation of adjusted EBITDA and net effective debt used in the Debt/EBITDA ratio to their most directly comparable GAAP measures of net income (loss) and debt has been provided in the Balance Sheet Summary section.

 

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DDR Corp.

Net Income (Loss) Reconciliation to FFO and Operating FFO

$ in millions

		2Q16				2Q15				6M16				6M15
Net income (loss) attributable to common shareholders		$	35.5			$	13.0			$	75.4			($	236.4	)
Depreciation and amortization of real estate investments			95.6				97.2				190.5				198.1
Equity in net income of joint ventures			(1.1	)			(1.6	)			(15.5	)			(1.7	)
Joint ventures’ FFO			6.4				7.5				12.6				14.5
Non-controlling interests (OP Units)			0.1				0.2				0.2				0.5
Impairment of depreciable real estate assets			0.0				0.0				0.0				179.7
Gain on disposition of depreciable real estate			(16.2	)			(11.3	)			(28.3	)			(36.5	)
FFO attributable to common shareholders			120.3				105.0				234.9				118.2
Impairment charges – non-depreciable assets			0.0				0.0				0.0				99.3
Executive separation charges			0.0				1.7				0.0				2.3
Transaction, debt extinguishment, litigation, other, net			0.0				(1.9	)			0.0				1.5
Loss (gain) on sale and change in control of interests, net			0.0				6.5				0.0				(7.8	)
Tax expense (primarily Puerto Rico restructuring), net			(0.3	)			0.0				(0.3	)			4.4
Loss on disposition of non-depreciable real estate, net			2.4				0.1				2.1				0.6
Total non-operating items, net			2.1				6.4				1.8				100.3
Operating FFO attributable to common shareholders		$	122.4			$	111.4			$	236.7			$	218.5

 

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DDR Corp.

Net Income (Loss) Reconciliation to SSNOI

$ in millions

										DDR Share
		2Q16				2Q15				2Q16				2Q15
Net income attributable to DDR		$	41.1			$	18.6			$	41.1			$	18.6
Adjustments:
Fee income			(11.5	)			(8.4	)			(11.5	)			(8.4	)
General and administrative			18.5				19.3				18.5				19.3
Depreciation and amortization			97.7				99.3				97.7				99.3
Interest income			(9.4	)			(7.2	)			(9.4	)			(7.2	)
Interest expense			54.0				61.3				54.0				61.3
Other (income) expense, net			(2.1	)			(2.4	)			(2.1	)			(2.4	)
Equity in net income of joint ventures			(1.1	)			(1.6	)			(1.1	)			(1.6	)
Loss on sale and change in control of interests, net			0.0				6.5				0.0				6.5
Tax expense of taxable REIT subsidiaries and state franchise and income taxes			0.2				0.6				0.2				0.6
Gain on disposition of real estate, net			(13.7	)			(11.3	)			(13.7	)			(11.3	)
Income attributable to non-controlling interests, net			0.3				0.4				0.3				0.4
Consolidated NOI			174.0				175.1				174.0				175.1
DDR’s consolidated JV			0.0				0.0				(0.4	)			(0.4	)
Consolidated NOI, net of non-controlling interest			174.0				175.1				173.6				174.7
Net (loss) income attributable to unconsolidated joint ventures			(4.9	)			(2.0	)			0.7				1.3
Adjustments:
Depreciation and amortization			49.0				51.5				5.6				6.1
Interest expense			33.3				33.6				5.3				5.6
Preferred share expense			8.3				6.4				0.4				0.3
Other expense, net			6.3				6.1				1.0				1.1
(Gain) loss on disposition of real estate, net			(0.1	)			1.4				0.0				0.1
Unconsolidated NOI at 100%			91.9				97.0				13.0				14.5
Total Consolidated + Unconsolidated NOI at 100%			265.9				272.1				186.6				189.2
Less: Non-Same Store NOI adjustments			19.9				32.5				14.2				22.0
Total SSNOI		$	246.0			$	239.6			$	172.4			$	167.2
% Increase in SSNOI			2.7	%							3.1	%

 

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DDR Corp.

GAAP Consolidated Statements of Operations

$ in millions, except per share

		2Q16				2Q15				6M16				6M15
Revenues from operations:
Minimum rents		$	178.1			$	179.4			$	355.4			$	360.1
Percentage and overage rents			1.7				1.4				3.6				2.7
Recoveries from tenants			61.4				62.0				123.0				126.1
Fee and other income			16.2				14.5				29.7				27.2
			257.4				257.3				511.7				516.1
Rental operation expenses:
Operating and maintenance			34.6				36.0				71.1				74.8
Real estate taxes			37.3				37.8				73.8				75.4
Impairment charges			0.0				0.0				0.0				279.0
General and administrative			18.5				19.3				36.4				37.9
Depreciation and amortization			97.7				99.3				194.6				202.3
			188.1				192.4				375.9				669.4
Other income (expense):
Interest income			9.4				7.2				18.5				14.4
Interest expense			(54.0	)			(61.3	)			(111.9	)			(124.3	)
Other income (expense), net			2.1				2.4				3.9				(1.1	)
			(42.5	)			(51.7	)			(89.5	)			(111.0	)
Income (loss) before earnings from equity method investments and other items			26.8				13.2				46.3				(264.3	)
Equity in net income of joint ventures			1.1				1.6				15.5				1.7
(Loss) gain on sale and change in control of interests, net			0.0				(6.5	)			0.0				7.8
Income before tax expense			27.9				8.3				61.8				(254.8	)
Tax expense of taxable REIT subsidiaries and state franchise and income taxes			(0.2	)			(0.6	)			(0.7	)			(5.5	)
Income (loss) from continuing operations			27.7				7.7				61.1				(260.3	)
Gain on disposition of real estate, net			13.7				11.3				26.1				36.4
Net income (loss)			41.4				19.0				87.2				(223.9	)
Income attributable to non-controlling interests, net			(0.3	)			(0.4	)			(0.6	)			(1.3	)
Net income (loss) attributable to DDR			41.1				18.6				86.6				(225.2	)
Preferred dividends			(5.6	)			(5.6	)			(11.2	)			(11.2	)
Net income (loss) attributable to common shareholders			35.5				13.0				75.4				(236.4	)
Earnings per common share – Basic & Diluted		$	0.10			$	0.03			$	0.21			($	0.66	)

 

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DDR Corp.

GAAP Consolidated Balance Sheets

$ in millions

		At Period End
		2Q16				4Q15
Assets:
Land		$	2,137.9			$	2,184.1
Buildings			6,893.8				6,965.6
Fixtures and tenant improvements			756.6				743.1
			9,788.3				9,892.8
Less: Accumulated depreciation			(2,115.1	)			(2,062.9	)
			7,673.2				7,829.9
Construction in progress and land			161.7				235.4
Total real estate assets, net			7,834.9				8,065.3
Investments in and advances to joint ventures			465.4				467.7
Cash and cash equivalents			18.0				22.4
Restricted cash			9.2				10.1
Accounts receivable, net			124.9				129.1
Notes receivable, net			47.3				42.5
Other assets, net			321.9				359.9
Total assets			8,821.6				9,097.0
Liabilities and Equity:
Unsecured indebtedness:
Senior notes			2,911.2				3,149.2
Unsecured term loan			398.2				397.9
Revolving credit facilities			265.0				210.0
			3,574.4				3,757.1
Secured indebtedness:
Secured term loan			199.6				199.2
Mortgage indebtedness			1,164.8				1,183.2
			1,364.4				1,382.4
Total indebtedness			4,938.8				5,139.5
Accounts payable and other liabilities			398.9				425.5
Dividends payable			75.1				68.6
Total liabilities			5,412.8				5,633.6
DDR Equity:
Preferred shares			350.0				350.0
Common shares			36.6				36.5
Additional paid-in capital			5,473.6				5,466.5
Accumulated distributions in excess of net income			(2,455.3	)			(2,391.8	)
Deferred compensation obligation			15.4				15.5
Accumulated other comprehensive loss			(5.2	)			(6.3	)
Common shares in treasury			(14.9	)			(15.3	)
Total DDR shareholders’ equity			3,400.2				3,455.1
Non-controlling interests			8.6				8.3
Total equity			3,408.8				3,463.4
Total liabilities and equity		$	8,821.6			$	9,097.0

 

 

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