Exhibit 99.1

QUARTERLY FINANCIAL SUPPLEMENT
The Maxwell // Chicago, IL
FOR THE QUARTER ENDED SEPTEMBER 30, 2016
ddr

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DDR Corp.

Table of Contents

 

Section		Page
Earnings Release & Financial Statements
Press Release			1 - 10
Asset Summary
Portfolio Summary			11
Same Store Metrics			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 - 33

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 September 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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Exhibit 99.1

 

For immediate release:

 

Media Contact:				Investor Contact:
Brandon Glenn				Matt Lougee
bglenn@ddr.com				mlougee@ddr.com
216.755.5500				216.755.5500

DDR REPORTS THIRD QUARTER 2016 OPERATING RESULTS

BEACHWOOD, OHIO, October 26, 2016 – DDR Corp. (NYSE: DDR) today announced operating results for the third quarter ended September 30, 2016.

Financial Highlights

 

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Third quarter net loss attributable to common shareholders was $66.0 million, or $0.18 per diluted share, compared to net income of $54.0 million, or $0.15 per diluted share, for the prior-year comparable period.

 

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Third quarter operating funds from operations attributable to common shareholders (“Operating FFO”) increased $7.1 million, or 6.3%, to $120.6 million or $0.33 per diluted share, compared to $113.5 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 3.4% on a pro rata basis

 

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Executed 310 new leases and renewals for 2.9 million square feet

 

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Generated new leasing spreads of 21.1% and renewal leasing spreads of 8.0%, both on a pro rata basis

 

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The portfolio leased rate was 95.4% at September 30, 2016, compared to 96.0% at December 31, 2015, on a pro rata basis

 

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Increased the annualized base rent per occupied square foot by 5.6% on a pro rata basis to $15.36 at September 30, 2016, from $14.54 at September 30, 2015

 

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Sold seven operating assets for $61 million during the quarter, totaling $55 million at DDR’s share

 

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Sold an additional 17 properties for $402 million in October at DDR’s share

“I am pleased to report that we continue to show strong operating and transactional performance as well as remain firmly on track toward our goal of significantly reduced leverage. Fundamentals are sound, and I am proud of our team’s execution this quarter as we make great strides toward our corporate and portfolio objectives,” 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 $1.26 to $1.28 per diluted share from a range of $1.23 to $1.26 per diluted share primarily driven by the impact of disposition timing. The Company is also revising its full year disposition guidance estimate to a range of $700 million to $900 million at DDR’s pro rata share from $600 million to $800 million at DDR’s share.

About DDR Corp.

DDR is an owner and manager of 327 value-oriented shopping centers representing 107 million square feet in 36 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

The Company will hold its quarterly conference call tomorrow, October 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-and-presentations.cfm. A copy of the Company’s Supplemental package is available on the Company’s website at www.ddr.com.

 

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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 generally defined and calculated by the Company as net income (loss), 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 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 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 presents NOI information herein on a same store basis or “SSNOI.” 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). The SSNOI calculation for the three-month period ended September 30, 2016, also excludes a portfolio of 16 assets sold on October 7, 2016, given the significance of the sale and transaction closing proximity to the quarter end. 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 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 above.

FFO, Operating FFO, NOI 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 this release and the accompanying financial supplement.

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

 

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finalization of the financial statements for the period ended September 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
		3Q16				3Q15				9M16				9M15
Revenues:
Minimum rents (1)		$	177,844			$	180,523			$	533,275			$	540,583
Percentage rent			1,193				835				4,783				3,592
Recoveries			59,743				61,915				182,718				188,016
Other property revenues (2)			6,458				5,614				16,563				16,379
			245,238				248,887				737,339				748,570
Expenses (3):
Operating and maintenance			31,269				35,963				102,365				110,718
Real estate taxes			36,900				37,385				110,710				112,811
			68,169				73,348				213,075				223,529
Net operating income			177,069				175,539				524,264				525,041
Other income (expense):
Fee income			8,562				8,248				28,205				24,713
Interest income			9,304				7,331				27,800				21,703
Interest expense (4)			(53,940	)			(58,217	)			(165,849	)			(182,524	)
Depreciation and amortization			(95,451	)			(97,155	)			(290,051	)			(299,470	)
General and administrative (5)			(18,785	)			(17,596	)			(55,160	)			(55,462	)
Other income (expense), net (6)			(384	)			(240	)			3,470				(1,300	)
Impairment charges (7)			(104,877	)			0				(104,877	)			(279,021	)
(Loss) income before earnings from JVs and other			(78,502	)			17,910				(32,198	)			(246,320	)
Equity in net (loss) income of JVs			(1,457	)			648				14,081				2,351
(Loss) gain on sale and change in control			(1,087	)			0				(1,087	)			7,772
Tax expense			(398	)			(528	)			(1,101	)			(6,001	)
Gain on disposition of real estate, net			21,368				41,793				47,470				78,154
Net (loss) income			(60,076	)			59,823				27,165				(164,044	)
Non-controlling interests			(284	)			(268	)			(894	)			(1,590	)
Net (loss) income DDR			(60,360	)			59,555				26,271				(165,634	)
Preferred dividends			(5,594	)			(5,594	)			(16,781	)			(16,781	)
Net (loss) income Common Shareholders			(65,954	)			53,961				9,490				(182,415	)
Depreciation and amortization of real estate			93,334				95,159				283,814				293,265
Equity in net loss (income) of JVs			1,457				(648	)			(14,081	)			(2,351	)
JVs’ FFO			6,581				6,595				19,157				21,114
Non-controlling interests			76				69				227				566
Impairment of depreciable real estate			104,877				0				104,877				179,748
Gain on disposition of depreciable real estate, net			(20,234	)			(41,734	)			(48,484	)			(78,282	)
FFO Common Shareholders			120,137				113,402				355,000				231,645
Non-operating items, net (8)			499				136				2,306				100,423
Operating FFO		$	120,636			$	113,538			$	357,306			$	332,068
FFO per share – Diluted (9)		$	0.33			$	0.31			$	0.97			$	0.64
Operating FFO per share – Diluted (9)		$	0.33			$	0.31			$	0.98			$	0.91

 

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DDR Corp.

Balance Sheet: Consolidated Interests

 

$ in thousands		At Period End
		3Q16				4Q15
Assets:
Land		$	2,122,070			$	2,184,145
Buildings			6,890,141				6,965,632
Fixtures and tenant improvements			773,664				743,037
			9,785,875				9,892,814
Depreciation			(2,174,268	)			(2,062,899	)
			7,611,607				7,829,915
Construction in progress and land			125,557				235,385
Real estate, net			7,737,164				8,065,300
Investments in JVs			58,318				72,576
Receivable – preferred equity interest			402,291				395,156
Cash			20,658				22,416
Restricted cash			12,696				10,104
Notes receivable, net			44,823				42,534
Receivables, net			127,249				129,089
Other assets, net (10)			317,817				359,913
Total Assets			8,721,016				9,097,088
Liabilities and Equity:
Revolving credit facilities			310,000				210,000
Unsecured debt			2,912,247				3,149,188
Unsecured term loan			398,284				397,934
Secured debt			1,345,848				1,382,415
			4,966,379				5,139,537
Dividends payable			75,158				68,604
Other liabilities (11)			398,829				425,478
Total Liabilities			5,440,366				5,633,619
Preferred shares			350,000				350,000
Common shares			36,594				36,529
Paid-in capital			5,480,292				5,466,511
Distributions in excess of net income			(2,590,837	)			(2,391,793	)
Deferred compensation			15,332				15,537
Other comprehensive income			(4,484	)			(6,283	)
Common shares in treasury at cost			(14,826	)			(15,316	)
Non-controlling interests			8,579				8,284
Total Equity			3,280,650				3,463,469
Total Liabilities and Equity		$	8,721,016			$	9,097,088

 

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DDR Corp.

Income Statement: Unconsolidated Interests at 100%

 

$ in thousands
		3Q16				3Q15				9M16				9M15
Revenues:
Minimum rents		$	96,856			$	95,218			$	290,391			$	297,392
Percentage rent			503				383				1,407				1,325
Recoveries			28,875				28,772				89,156				90,234
Other property revenues			1,442				2,325				3,522				8,413
			127,676				126,698				384,476				397,364
Expenses:
Operating and maintenance			17,337				18,320				54,980				57,635
Real estate taxes			18,210				17,118				55,196				52,859
			35,547				35,438				110,176				110,494
Net operating income			92,129				91,260				274,300				286,870
Other income (expense):
Interest expense			(33,567	)			(33,202	)			(100,208	)			(107,698	)
Depreciation and amortization			(47,955	)			(49,949	)			(146,011	)			(158,168	)
Impairment charges			(13,598	)			0				(13,598	)			(448	)
Preferred share expense			(8,438	)			(6,518	)			(25,007	)			(19,248	)
Other (expense) income, net			(5,829	)			(6,309	)			(17,959	)			(18,503	)
			(17,258	)			(4,718	)			(28,483	)			(17,195	)
Gain (loss) on disposition of real estate, net			658				(2,626	)			54,255				(4,197	)
Net (loss) income attributable to unconsolidated JVs			(16,600	)			(7,344	)			25,772				(21,392	)
Depreciation and amortization			47,955				49,949				146,011				158,168
Impairment of depreciable real estate			13,598				0				13,598				448
(Gain) loss on disposition of depreciable real estate, net			(658	)			2,626				(54,255	)			4,197
FFO			44,295				45,231				131,126				141,421
FFO at DDR’s ownership interests			6,581				6,595				19,157				21,114
Operating FFO at DDR’s ownership interests (8)		$	6,587			$	6,639			$	19,183			$	21,162

 

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DDR Corp.

Balance Sheet: Unconsolidated Interests at 100%

 

$ in thousands
		At Period End
		3Q16				4Q15
Assets:
Land		$	1,296,413			$	1,343,889
Buildings			3,398,184				3,551,227
Improvements			198,657				191,581
			4,893,254				5,086,697
Depreciation			(854,821	)			(817,235	)
			4,038,433				4,269,462
Land held for development and construction in progress			51,967				52,390
Real estate, net			4,090,400				4,321,852
Cash and restricted cash			76,447				58,916
Receivables, net			50,461				52,768
Other assets, net			268,726				318,546
Total Assets			4,486,034				4,752,082
Liabilities and Equity:
Mortgage debt			3,095,354				3,177,603
Notes and accrued interest payable to DDR			2,481				1,556
Other liabilities			216,229				219,799
Total Liabilities			3,314,064				3,398,958
Redeemable preferred equity			402,291				395,156
Accumulated equity			769,679				957,968
Total Liabilities and Equity		$	4,486,034			$	4,752,082

 

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DDR Corp.

Financial Statements: Footnotes

 

$ in millions, except per share
				3Q16				3Q15				9M16				9M15
(1)		Minimum rents:
		Straight-line rent, net		$	1.1			$	1.6			$	3.7			$	3.8
		Below-market rent, net			2.2				1.0				3.6				2.2
		Ground lease revenue			10.3				9.5				30.6				27.9
(2)		Other property revenues:
		Lease termination fees			1.7				0.7				3.2				2.3
(3)		Operating expenses:
		Recoverable expenses			(62.8	)			(66.9	)			(194.0	)			(204.1	)
		Non-recoverable expenses			(5.4	)			(6.4	)			(19.1	)			(19.4	)
		Straight-line ground rent expense			(0.1	)			(0.1	)			(0.3	)			(0.4	)
		Expensed costs of suspended developments			(0.1	)			(0.1	)			(0.3	)			(0.4	)
(4)		Non-cash interest expense:
		Debt fair value amortization			1.6				3.0				4.7				12.7
		Loan cost amortization			(2.1	)			(2.4	)			(6.3	)			(7.3	)
		Interest expense (capitalized)			0.7				1.9				2.6				5.1
(5)		General and administrative expenses:
		Executive separation charges			(0.0	)			(0.0	)			(0.0	)			(2.3	)
		Stock compensation expenses			(1.4	)			(1.5	)			(4.7	)			(5.2	)
		Internal leasing expenses			(2.0	)			(1.8	)			(6.1	)			(5.5	)
		Construction administrative costs (capitalized)			1.8				2.3				5.7				7.0
(6)		Other income (expense):
		Other income (primarily insurance recovery in 2016), net			0.0				(0.2	)			3.9				(0.4	)
		Debt extinguishment, net			(0.4	)			(0.0	)			(0.4	)			(0.9	)
(7)		Impairment charges:
		Assets marketed for sale			(104.9	)			(0.0	)			(104.9	)			(179.7	)
		Land previously held for development			(0.0	)			(0.0	)			(0.0	)			(99.3	)
(8)		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				0.0				0.0				2.3
		Transaction, debt extinguishment, litigation, other, net			0.5				0.1				0.5				1.6
		Gain on sale and change in control of interests, net			0.0				0.0				0.0				(7.8	)
		Tax expense (primarily Puerto Rico restructuring), net			0.0				0.0				(0.3	)			4.4
		Loss on disposition of non-depreciable real estate, net			0.0				0.0				2.1				0.6
					0.5				0.1				2.3				100.4

 

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DDR Corp.

Financial Statements: Footnotes

 

$ in millions, except per share
				3Q16				3Q15				9M16				9M15
(9)		Outstanding per share information:
		Common shares (at quarter end)			365.9				362.1				365.9				362.1
		OP units (at quarter end)			0.4				0.4				0.4				0.4
		Total shares and units (at quarter end)			366.3				362.5				366.3				362.5
		Weighted average shares and units – Basic – EPS			365.5				361.1				365.1				360.3
		Assumed conversion of dilutive securities			0.0				2.5				0.3				0.0
		Weighted average shares and units – Diluted – EPS			365.5				363.6				365.4				360.3
		Weighted average shares and units – Basic – FFO & OFFO			366.2				362.5				365.9				362.4
		Assumed conversion of dilutive securities			0.3				0.4				0.3				0.5
		Weighted average shares and units – Diluted – FFO & OFFO			366.5				362.9				366.2				362.9
		Earnings per common share – Basic & Diluted		$	(0.18	)		$	0.15			$	0.02			$	(0.51	)
		FFO per share – Basic & Diluted		$	0.33			$	0.31			$	0.97			$	0.64
		Operating FFO per share – Diluted		$	0.33			$	0.31			$	0.98			$	0.91
		Common stock dividends declared, per share		$	0.19			$	0.1725			$	0.57			$	0.5175
(10)		Intangible assets, net (at quarter and year end)											265.6				311.0
(11)		Below-market leases, net (at quarter and year end)											151.7				155.3
Additional financial information:
		Capital expenditures (DDR share):
		Retenanting		$	8.8			$	13.4			$	25.0			$	36.1
		Maintenance – reimbursable and non reimbursable			7.9				7.4				14.9				13.3
		Maintenance PSF of owned GLA – non reimbursable											0.10				0.09
		Miscellaneous (DDR share):
		Est. value of land owned adjacent to existing centers										$	24
		Cost basis of headquarters (non-income producing)											40

Guidance Reconciliation:

				2016E				2016E (Per Share – Diluted)
		Net income Common Shareholders			$19 - $24				$0.05 - $0.06
		Depreciation and amortization of real estate			372 - 375				1.01 - 1.02
		Equity in net income of JVs			(14) - (16	)			(0.04	)
		JVs’ FFO			25 - 27				0.07
		Impairment of depreciable real estate			105				0.29
		Gain on disposition of real estate, net			(48	)			(0.13	)
		Loss on disposition of non-depreciable real estate, net			2				0.01
		Operating FFO			$461 - $469				$1.26 - $1.28

 

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DDR Corp.

Reconciliation of Net Income Attributable to DDR to Same Store NOI (1)

 

$ in millions
										At DDR Share
		3Q16				3Q15				3Q16				3Q15
GAAP Reconciliation:
Net income attributable to DDR		($	60.4	)		$	59.6			($	60.4	)		$	59.6
Fee income			(8.6	)			(8.3	)			(8.6	)			(8.3	)
Interest income			(9.3	)			(7.3	)			(9.3	)			(7.3	)
Interest expense			53.9				58.2				53.9				58.2
Depreciation and amortization			95.5				97.2				95.5				97.2
General and administrative			18.8				17.6				18.8				17.6
Other expense			0.4				0.2				0.4				0.2
Impairment charges			104.9				0.0				104.9				0.0
Equity in net income of joint ventures			1.4				(0.7	)			1.4				(0.7	)
Loss on sale and change in control			1.1				0.0				1.1				0.0
Tax expense			0.4				0.5				0.4				0.5
Gain on disposition of real estate			(21.3	)			(41.8	)			(21.3	)			(41.8	)
Income from non-controlling interests			0.3				0.3				0.3				0.3
Consolidated NOI			177.1				175.5				177.1				175.5
DDR’s consolidated JV			0.0				0.0				(0.4	)			(0.4	)
Consolidated NOI, net of non-controlling interests			177.1				175.5				176.7				175.1
Net income from unconsolidated joint ventures			(16.6	)			(7.3	)			(1.8	)			0.3
Interest expense			33.6				33.2				5.3				5.5
Depreciation and amortization			48.0				49.9				5.6				6.2
Impairment charges			13.6				0.0				2.7				0.0
Preferred share expense			8.4				6.5				0.4				0.3
Other expense, net			5.8				6.4				1.0				1.1
(Gain) loss on disposition of real estate, net			(0.7	)			2.6				0.0				0.1
Unconsolidated NOI			92.1				91.3				13.2				13.5
Total Consolidated + Unconsolidated NOI			269.2				266.8				189.9				188.6
Less: Non-Same Store NOI adjustments			29.9				35.2				24.6				28.8
Total SSNOI		$	239.3			$	231.6			$	165.3			$	159.8
SSNOI % Increase			3.3	%							3.4	%

 

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

 

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			171								156								327								327
Owned GLA			42.8								4.0								46.8								70.1
Ground Lease GLA			4.4								0.3								4.7								6.5
Additional Unowned			—								—								—								30.6
Base Rent PSF		$	15.44							$	14.56							$	15.36							$	14.92
Leased Rate			95.4	%							94.9	%							95.4	%							95.1	%
Commenced Rate			94.0	%							93.7	%							93.9	%							93.8	%
Leased Rate <10,000 SF			90.1	%							88.0	%							89.9	%							89.1	%
% of Total SF <10,000 SF			23.0	%							27.0	%							23.3	%							23.8	%
Leased Rate >10,000 SF			97.0	%							97.5	%							97.0	%							97.0	%
% of Total SF >10,000 SF			77.0	%							73.0	%							76.7	%							76.2	%
% of NOI (Pro Rata)			92.4	%							7.6	%							100.0	%							100.0	%
Same Store NOI			3.3	%							4.2	%							3.4	%							3.3	%

 

Lease Expiration Schedule (at 100%)
		Greater than 10,000 SF																		Less than 10,000 SF
Year		Leases				ABR				Rent PSF				% of ABR						Leases				ABR				Rent PSF				% of ABR
2016			10			$	2.3			$	13.44				0.2	%					158			$	8.9			$	24.08				0.9	%
2017			130				47.2				10.63				4.9	%					774				47.4				24.08				4.9	%
2018			211				73.3				11.64				7.6	%					887				63.2				24.68				6.6	%
2019			200				80.3				12.07				8.4	%					705				46.7				24.50				4.9	%
2020			178				69.0				12.15				7.2	%					661				43.3				24.62				4.5	%
2021			250				99.3				11.25				10.3	%					650				46.4				24.78				4.8	%
2022			182				66.6				11.54				6.9	%					290				24.4				24.88				2.5	%
2023			110				40.5				11.38				4.2	%					177				16.6				24.88				1.7	%
2024			97				34.7				12.26				3.6	%					201				19.4				24.70				2.0	%
2025			70				24.6				13.88				2.6	%					164				15.1				25.15				1.6	%
2016-2025			1,438			$	537.8			$	11.69				56.1	%					4,667			$	331.4			$	24.60				34.5	%
Total Rent Roll			1,568			$	605.6			$	11.97				63.1	%					4,968			$	353.9			$	24.72				36.9	%

 

11

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DDR Corp.

Same Store Metrics

 

$ in millions
		Same Store at 100% (1)																Same Store at DDR Share (1)
		3Q16				3Q15				Change								3Q16				3Q15				Change
Leased Rate			95.3	%			95.8	%			-0.5	%							95.5	%			96.4	%			-0.9	%
Revenues:
Base Rents		$	242.9			$	237.0				2.5	%						$	166.0			$	162.2				2.4	%
Recoveries			80.8				79.9				1.1	%							57.4				56.9				0.9	%
Other			4.9				4.5				8.9	%							4.0				3.6				9.1	%
			328.6				321.4				2.2	%							227.4				222.7				2.1	%
Expenses:
Operating			(41.1	)			(43.9	)			-6.5	%							(28.0	)			(30.5	)			-8.0	%
Real Estate Taxes			(48.2	)			(45.9	)			5.1	%							(34.1	)			(32.4	)			5.3	%
			(89.3	)			(89.8	)			-0.6	%							(62.1	)			(62.9	)			-1.1	%
Same Store NOI		$	239.3			$	231.6				3.3	%						$	165.3			$	159.8				3.4	%
Non-Same Store NOI			29.9				35.2												24.6				28.8
		$	269.2			$	266.8											$	189.9			$	188.6
GAAP Reconciliation:
Net income attributable to DDR		($	60.4	)		$	59.6											($	60.4	)		$	59.6
Fee income			(8.6	)			(8.3	)											(8.6	)			(8.3	)
Interest income			(9.3	)			(7.3	)											(9.3	)			(7.3	)
Interest expense			53.9				58.2												53.9				58.2
Depreciation and amortization			95.5				97.2												95.5				97.2
General and administrative			18.8				17.6												18.8				17.6
Other expense			0.4				0.2												0.4				0.2
Impairment charges			104.9				0.0												104.9				0.0
Equity in net income of joint ventures			1.4				(0.7	)											1.4				(0.7	)
Loss on sale and change in control			1.1				0.0												1.1				0.0
Tax expense			0.4				0.5												0.4				0.5
Gain on disposition of real estate			(21.3	)			(41.8	)											(21.3	)			(41.8	)
Income from non-controlling interests			0.3				0.3												0.3				0.3
Consolidated NOI			177.1				175.5												177.1				175.5
DDR’s consolidated JV			0.0				0.0												(0.4	)			(0.4	)
Consolidated NOI, net of non-controlling interests			177.1				175.5												176.7				175.1
Net income from unconsolidated joint ventures			(16.6	)			(7.3	)											(1.8	)			0.3
Interest expense			33.6				33.2												5.3				5.5
Depreciation and amortization			48.0				49.9												5.6				6.2
Impairment charges			13.6				0.0												2.7				0.0
Preferred share expense			8.4				6.5												0.4				0.3
Other expense, net			5.8				6.4												1.0				1.1
(Gain) loss on disposition of real estate, net			(0.7	)			2.6												0.0				0.1
Unconsolidated NOI			92.1				91.3												13.2				13.5
Total Consolidated + Unconsolidated NOI			269.2				266.8												189.9				188.6

 

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

 

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
3Q16			83				427				18.29				21.1	%			8.3						42				182
			301				1,398			$	19.35				22.1	%			8.2						142				614
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
3Q16			227				2,458				14.52				8.0	%			5.6						227				2,458
			648				5,752			$	15.75				7.9	%			5.2						648				5,752
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
3Q16			310				2,885				15.08				9.2	%			6.0						269				2,640
			949				7,150			$	16.47				9.6	%			5.8						790				6,366

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
3Q16			414				18.91				5.40				13.51				8.2
			1,345			$	19.96			$	4.73			$	15.23				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
3Q16			2,458				14.67				0.74				13.93				5.6
			5,752			$	15.94			$	0.43			$	15.51				5.2

 

(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)			107				108			$	37.9				3.7	%		$	26.4				3.3				4.3	%			2.2			A+ / A2 / NR
2		Bed Bath & Beyond (2)			92				93				32.6				3.2	%			23.6				2.6				3.4	%			1.9			BBB+ / Baa1 / NR
3		PetSmart			94				95				30.3				2.9	%			20.2				2.0				2.6	%			1.3			B+ / B1 / NR
4		Dick’s Sporting Goods (3)			38				39				23.2				2.3	%			13.3				1.8				2.3	%			1.0			NR
5		Best Buy			40				46				23.2				2.3	%			15.9				1.5				2.0	%			1.1			BBB- / Baa1 / BBB-
6		Ross Stores (4)			75				75				22.7				2.2	%			14.7				2.2				2.9	%			1.3			A- / A3 / NR
7		Kohl’s			34				48				22.6				2.2	%			16.8				3.0				3.9	%			2.2			BBB / Baa2 / BBB
8		Walmart (5)			24				67				22.4				2.2	%			19.0				3.4				4.4	%			3.0			AA / Aa2 / AA
9		AMC Theatres			11				12				21.2				2.1	%			15.8				0.9				1.2	%			0.6			B+ / NR / B+
10		Michaels			65				68				19.3				1.9	%			13.3				1.5				2.0	%			1.0			B+ / Ba2 / NR
11		Gap (6)			64				64				16.0				1.6	%			11.4				1.0				1.3	%			0.7			BB+ / Baa2 / BB+
12		Ulta			60				62				14.5				1.4	%			10.1				0.6				0.8	%			0.4			NR
13		Publix			34				36				14.4				1.4	%			3.5				1.6				2.1	%			0.4			NR
14		Office Depot (7)			44				47				13.6				1.3	%			9.4				0.9				1.2	%			0.6			B- / B1 / NR
15		Ascena (8)			106				106				12.2				1.2	%			9.5				0.6				0.8	%			0.5			BB- / Ba2 / NR
16		Barnes & Noble			24				26				11.1				1.1	%			7.9				0.6				0.8	%			0.4			NR
17		Toys “R” Us (9)			25				28				9.9				1.0	%			9.0				1.0				1.3	%			0.9			B- / B3 / CCC
18		Royal Ahold (10)			11				11				9.5				0.9	%			3.1				0.6				0.8	%			0.2			BBB / Baa2 / BBB
19		Jo-Ann			31				31				9.4				0.9	%			6.9				0.9				1.2	%			0.6			B / Ba3 / NR
20		Staples			32				33				9.4				0.9	%			5.7				0.7				0.9	%			0.4			BBB- / Baa2 / BB+
21		Cinemark			10				10				9.0				0.9	%			7.1				0.6				0.8	%			0.5			BB / NR / NR
22		Nordstrom Rack			13				14				8.7				0.8	%			6.8				0.5				0.7	%			0.4			BBB+ / Baa1 / BBB+
23		Kroger (11)			18				22				8.6				0.8	%			4.2				1.0				1.3	%			0.5			BBB / Baa1 / BBB
24		DSW			26				27				8.6				0.8	%			5.7				0.6				0.8	%			0.4			NR
25		Petco			32				34				8.3				0.8	%			6.3				0.4				0.5	%			0.3			B / B2 / NR
26		Mattress Firm (12)			63				64				8.3				0.8	%			6.4				0.3				0.4	%			0.2			NR
27		Lowe’s			9				28				8.2				0.8	%			7.5				1.2				1.6	%			1.1			A- / A3 / NR
28		Dollar Tree Stores			70				73				8.2				0.8	%			5.4				0.7				0.9	%			0.5			BB+ / Ba2 / NR
29		LA Fitness			12				13				8.1				0.8	%			6.0				0.6				0.8	%			0.4			NR
30		Regal Cinemas			8				9				8.0				0.8	%			5.9				0.5				0.7	%			0.4			B+ / B1 / B+
31		Party City			40				40				7.8				0.8	%			5.2				0.5				0.7	%			0.3			NR
32		Five Below			55				55				7.7				0.7	%			5.7				0.5				0.7	%			0.3			NR
33		Pier 1 Imports			34				38				7.7				0.7	%			5.7				0.4				0.5	%			0.2			B / NR / NR
34		Hobby Lobby			17				19				7.5				0.7	%			4.2				0.9				1.2	%			0.6			NR
35		Home Depot			9				35				6.8				0.7	%			5.3				1.0				1.3	%			0.7			A / A2 / A
36		Whole Foods			6				6				6.4				0.6	%			4.7				0.3				0.4	%			0.2			BBB- / Baa3 / NR
37		hhgregg			18				19				6.3				0.6	%			4.5				0.6				0.8	%			0.4			NR
38		AT&T			70				72				6.3				0.6	%			4.9				0.2				0.3	%			0.1			BBB+ / Baa1 / A-
39		Giant Eagle			6				7				6.0				0.6	%			3.3				0.5				0.7	%			0.3			NR
40		Famous Footwear			39				39				5.7				0.6	%			4.5				0.3				0.4	%			0.2			BB / Ba3 / NR
41		Beall’s			22				22				5.5				0.5	%			2.3				0.8				1.0	%			0.4			NR
42		Burlington			9				9				5.3				0.5	%			3.7				0.6				0.8	%			0.4			BB- / NR / NR
43		Panera			37				38				5.1				0.5	%			3.5				0.2				0.3	%			0.1			NR
44		Stein Mart			16				16				4.9				0.5	%			2.8				0.6				0.8	%			0.3			NR
45		24 Hour Fitness			6				6				4.7				0.5	%			2.1				0.2				0.3	%			0.1			B / NR / NR
46		Shoe Carnival			29				29				4.6				0.4	%			2.8				0.3				0.4	%			0.2			NR
47		Tailored Brands (13)			31				31				4.5				0.4	%			3.3				0.2				0.3	%			0.1			B / Ba3 / NR
48		Carter’s Childrenswear			39				39				4.1				0.4	%			3.4				0.2				0.3	%			0.1			BB+ / Ba1 / NR
49		Rainbow Apparel			36				36				4.0				0.4	%			3.4				0.2				0.3	%			0.2			NR
50		Verizon			37				43				3.8				0.4	%			2.7				0.1				0.1	%			0.1			BBB+ / Baa1 / A-
		Top 50 Total			1,828				1,988			$	574.1				55.9	%		$	394.8				45.7				59.7	%			30.7
		Total Portfolio										$	1,027.5				100.0	%		$	707.7				76.6				100.0	%			51.5

 

 

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	%		$	17,889				2.5	%			783				1.0	%
2		Plaza del Sol		San Juan			100	%			16,451				2.3	%			724				0.9	%
3		Plaza Rio Hondo		San Juan			100	%			13,514				1.9	%			555				0.7	%
4		Winter Garden Village		Orlando			100	%			13,269				1.9	%			1,127				1.4	%
5		Plaza del Norte		San Juan			100	%			11,671				1.6	%			699				0.9	%
6		Wrangleboro Consumer Square		Atlantic City			100	%			10,415				1.5	%			842				1.0	%
7		Ahwatukee Foothills		Phoenix			100	%			10,146				1.4	%			693				0.8	%
8		Riverdale Village		Minneapolis			100	%			10,083				1.4	%			969				1.2	%
9		Nassau Park Pavilion		Trenton			100	%			9,752				1.4	%			1,117				1.4	%
10		Hamilton Marketplace		Trenton			100	%			9,508				1.3	%			960				1.2	%
11		Tucson Spectrum		Tucson			100	%			9,237				1.3	%			969				1.2	%
12		Carolina Pavilion		Charlotte			100	%			9,198				1.3	%			871				1.1	%
13		Woodfield Village Green		Chicago			100	%			8,630				1.2	%			692				0.8	%
14		The Shops at Midtown Miami		Miami			100	%			8,417				1.2	%			467				0.6	%
15		Great Northern Plaza		Cleveland			100	%			8,324				1.2	%			669				0.8	%
16		Plaza Escorial		San Juan			100	%			8,269				1.2	%			636				0.8	%
17		Village at Stone Oak		San Antonio			100	%			8,228				1.2	%			622				0.8	%
18		Plaza Palma Real		San Juan			100	%			7,671				1.1	%			449				0.5	%
19		Centennial Promenade		Denver			100	%			7,560				1.1	%			747				0.9	%
20		Connecticut Commons		Hartford			100	%			7,422				1.0	%			562				0.7	%
21		Polaris Towne Center		Columbus			100	%			7,385				1.0	%			730				0.9	%
22		Peach Street Marketplace		Erie			100	%			7,088				1.0	%			998				1.2	%
23		Easton Market		Columbus			100	%			6,796				1.0	%			559				0.7	%
24		Crossroads Center		Gulfport			100	%			6,301				0.9	%			591				0.7	%
25		Belden Park Crossings		Cleveland			100	%			6,101				0.9	%			596				0.7	%
26		Silver Springs Square		Harrisburg			100	%			6,001				0.8	%			569				0.7	%
27		Aspen Grove		Denver			100	%			5,984				0.8	%			267				0.3	%
28		The Fountains		Miami			100	%			5,930				0.8	%			489				0.6	%
29		Kenwood Square		Cincinnati			100	%			5,835				0.8	%			466				0.6	%
30		Falcon Ridge Town Center		Los Angeles			100	%			5,793				0.8	%			437				0.5	%
31		Hamilton Commons		Atlantic City			100	%			5,778				0.8	%			397				0.5	%
32		Cotswold Village		Charlotte			100	%			5,722				0.8	%			261				0.3	%
33		Bandera Pointe		San Antonio			100	%			5,713				0.8	%			851				1.0	%
34		Ridge at Creekside		Sacramento			100	%			5,710				0.8	%			289				0.4	%
35		The Maxwell		Chicago			100	%			5,683				0.8	%			240				0.3	%
36		Meridian Crossroads		Boise			100	%			5,674				0.8	%			732				0.9	%
37		Merriam Village		Kansas City			100	%			5,523				0.8	%			921				1.1	%
38		Independence Commons		Kansas City			100	%			5,475				0.8	%			403				0.5	%
39		Perimeter Pointe		Atlanta			100	%			5,451				0.8	%			353				0.4	%
40		Beaver Creek Crossings		Raleigh			100	%			5,209				0.7	%			321				0.4	%
41		Gresham Station		Portland			100	%			5,172				0.7	%			339				0.4	%
42		Gateway Center		Boston			100	%			5,166				0.7	%			640				0.8	%
43		Arrowhead Crossing		Phoenix			100	%			5,144				0.7	%			407				0.5	%
44		The Promenade at Brentwood		St. Louis			100	%			5,077				0.7	%			338				0.4	%
45		Deer Park Town Center		Chicago			50	%			5,004				0.7	%			202				0.2	%
46		Willowbrook Plaza		Houston			100	%			5,001				0.7	%			393				0.5	%
47		Tanasbourne Town Center		Portland			100	%			4,931				0.7	%			545				0.7	%
48		Fairfax Towne Center		Balt-Wash DC			100	%			4,894				0.7	%			253				0.3	%
49		Chapel Hills		Colorado Springs			100	%			4,784				0.7	%			541				0.7	%
50		The Pike Outlets		Los Angeles			100	%			4,763				0.7	%			391				0.5	%
		Top 50 Total								$	374,742				53.0	%			29,672				36.1	%
		Total Portfolio								$	707,710				100.0	%			82,130				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)			60				11.3				$148.9				$1,785.6				$1,227.4
DDRTC Core Retail Fund			TIAA-CREF				15	%			25				8.2				106.1				1,534.1				791.7
DDR Domestic Retail Fund I			Various				20	%			55				7.6				87.4				1,295.0				898.4
DDR-SAU Retail Fund			State of Utah				20	%			12				1.0				11.0				134.5				60.7
Other			Various				Various				3				1.0				18.6				196.0				117.1
Total											155				29.1				$372.0				$4,945.2				$3,095.3

 

(1)	Includes fair market value of debt adjustment and unamortized loan costs, net of $10.1 million, that net to zero at DDR’s share.

(2)	In addition to DDR’s 5% common equity, DDR has $393.9 million of Preferred Equity plus $8.4 million of accrued interest with an interest rate of 8.5%.

 

DDR Pro Rata Share of Select  Financial Statement Information (See Non-GAAP Measures section)
Net Operating Income (NOI) – 3Q16		$	13.2
Land and CIP			5.4
Preferred Equity			402.3
Other Assets/Receivables			26.2
Other Liabilities			18.9
Debt			420.1

 

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
09/16		Portland, OR			100	%			338				87.0				0.0				86.3				0.0			Best Buy, Bed Bath & Beyond, Ulta, Cost Plus, LA Fitness, Old Navy
		Total Year to Date							571			$	147.5			$	0.0			$	146.8			$	0.0
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
07/16		Charlotte, NC			100	%			29				13.7				0.0				13.7				0.0
07/16		Douglasville, GA			100	%			129				19.9				0.0				19.9				0.0			Babies “R” Us, Best Buy
08/16		Taylors, SC			100	%			58				3.1				0.0				3.1				0.0
09/16		New Bern, NC			100	%			75				10.1				0.0				10.1				0.0			PetSmart
09/16		Alamogordo, NM			5	%			19				3.5				1.9				0.2				0.1
09/16		Cincinnati, OH			100	%			58				7.9				0.0				7.9				0.0			Kroger
09/16		Madison, NC			5	%			10				3.0				1.6				0.1				0.1
3Q		Non-operating sales											0.0				0.0				0.0				0.0
		3Q Total							378			$	61.2			$	3.5			$	55.0			$	0.2
10/16		16 Asset Portfolio			100	%			4,477				390.0				11.6				390.0				11.6			Various
10/16		Sault St. Marie, MI			100	%			266				11.5				0.0				11.5				0.0			Dunham’s, Glen’s Market, JCPenney, Kohl’s, T.J. Maxx
		4Q Total to Date							4,743			$	401.5			$	11.6			$	401.5			$	11.6
		Total Year to Date							8,009			$	880.7			$	92.4			$	738.1			$	27.3

 

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			$	68			$	1			$	66			$	2
Redevelopments - Major							240				139				101				75				64
Redevelopments - Minor							144				45				99				19				26
Retenanting							31				8				23				4				4
Undeveloped Land (b)							N/A				30				0				0				30
						$	484			$	290			$	224			$	164			$	126
Developments in Progress
Guilford Commons (New Haven, CT)			130			$	69			$	68			$	1			$	66			$	2				4Q15				4Q16			Michaels, Ulta, DSW, Bed Bath & Beyond
Redevelopments - Major
The Pike Outlets (Los Angeles, CA)						$	66			$	52			$	14			$	51			$	1				N/A				3Q15			Restoration Hardware, H&M, Nike, Gap Factory
Kenwood Square (Cincinnati, OH)							31				21				10				3				18				N/A				4Q17			Dick’s Sporting Goods, T.J. Maxx, Five Below
Belgate (expansion) (Charlotte, NC)							22				17				5				12				5				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				3				9				0				3				N/A				4Q17			Dave & Busters
Other Redevelopments - Major							91				33				58				0				33
						$	240			$	139			$	101			$	75			$	64

 

(a)	This balance is in addition to DDR’s pro rata share of joint venture CIP of $5 million.

(b)	This balance is in addition to owned land adjacent to existing centers that has an estimated value of $24 million.

 

18

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DDR Corp.

Capital Structure

 

$, shares and units in millions, except per share
		September 30, 2016								September 30, 2015
		Amount				% of Total				Amount				% of Total
Capital Structure
Common Shares Equity		$	6,385.1				55	%		$	5,575.6				50	%
Perpetual Preferred Stock			350.0				3	%			350.0				3	%
Unsecured Credit Facilities			310.0				2	%			395.0				3	%
Unsecured Term Loan			400.0				3	%			300.0				3	%
Unsecured Public Debt			2,927.0				25	%			3,119.7				28	%
Secured Term Loan			200.0				2	%			200.0				2	%
Fixed Rate Mortgage Debt			1,064.1				9	%			1,104.3				10	%
Variable Rate Mortgage Debt			77.0				1	%			91.1				1	%
			4,978.1				42	%			5,210.1				47	%
Total		$	11,713.2				100	%		$	11,135.7				100	%
Capital Structure Detail
Debt to Market Capitalization			42.5	%							46.8	%
Common Shares Outstanding			365.9								362.1
Operating Partnership Units			0.4								0.4
Market Value per Share		$	17.43							$	15.38
Accretion on Convertible Notes (excluded above)		$	0.0							$	1.0
Partners’ Share of Consolidated Debt (included above)		$	9.9							$	9.9
DDR Share of Unconsolidated Debt (excluded above)		$	420.1							$	445.2

 

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

2.6x

 

19

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DDR Corp.

Debt/EBITDA

 

$ in millions
		3Q16				3Q15
Consolidated
Net (loss) income to DDR		($	60.4	)		$	59.6
Impairments			104.9				0.0
Depreciation and amortization			95.5				97.2
Interest expense			53.9				58.2
Loss on sale and change in control of interests			1.1				0.0
Other expenses, net			0.5				0.2
Equity in net loss (income) of JVs			1.4				(0.6	)
Income tax expense			0.4				0.5
Gain on disposition of real estate, net			(21.3	)			(41.8	)
Adjustments for non-controlling interests			(0.2	)			(0.3	)
JV FFO (at DDR share)			6.6				6.6
EBITDA – current quarter (1)			182.4				179.6
EBITDA – annualized			729.6				718.4
Consolidated debt			4,966.4				5,201.7
Partner share of consolidated debt			(9.9	)			(9.9	)
Loan costs, net			19.8				21.9
Face value adjustments			(8.1	)			(13.5	)
Cash and restricted cash			(32.9	)			(62.6	)
Net effective debt		$	4,935.3			$	5,137.6
Debt/EBITDA – Consolidated			6.76x				7.15x
Pro rata including JVs
EBITDA – current quarter			187.9				185.4
EBITDA – annualized			751.6				741.6
Consolidated net debt			4,935.3				5,137.6
JV debt (at DDR share)			420.1				444.4
Cash and restricted cash			(10.7	)			(8.8	)
Net effective debt		$	5,344.7			$	5,573.2
Debt/EBITDA – Pro rata			7.11x				7.52x

 

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

 

20

---

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		$	310.0			$	310.0				1.53	%
Unsecured Term Loan			400.0				400.0				1.63	%
Unsecured Public Debt			2,927.0				2,927.0				4.88	%
Secured Term Loan			200.0				200.0				1.88	%
Fixed Rate Mortgage Loans			1,064.1				1,054.2				4.97	%						$	2,029.3			$	331.2				5.38	%
Variable Rate Mortgage Loans			77.0				77.0				1.94	%							1,055.9				88.9				2.26	%
Subtotal			4,978.1				4,968.2				4.26	%							3,085.2				420.1				4.72	%
Fair Market Value Adjustment			8.1				8.1												16.6				0.8
Unamortized Loan Costs, Net			(19.8	)			(19.7	)											(6.5	)			(0.8	)
Total		$	4,966.4			$	4,956.6				4.26	%						$	3,095.3			$	420.1				4.72	%

 

		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		$	6.9			$	112.2			$	0.0			$	119.1			$	119.1				4.16	%			3.43	%
2017			24.7				203.2				300.0				527.9				527.9				6.59	%			5.90	%
2018			20.2				326.9				382.2				729.3				729.3				4.23	%			4.14	%
2019			16.5				169.3				0.0				185.8				185.8				5.32	%			5.23	%
2020			7.3				280.2				1,010.0				1,297.5				1,297.5				3.67	%			3.61	%
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											(5.2	)			(5.2	)			(5.2	)
		$	80.1			$	1,261.0			$	3,637.0			$	4,978.1			$	4,968.2				4.26	%			4.14	%
Unconsolidated Maturity Schedule (1)
2016		$	1.5			$	4.6			$	0.0			$	6.1			$	0.2				5.99	%			5.99	%
2017			6.0				1,304.3				0.0				1,310.3				249.2				5.56	%			5.55	%
2018			4.8				121.9				0.0				126.7				13.4				4.57	%			4.11	%
2019			4.8				655.9				0.0				660.7				32.8				2.46	%			2.40	%
2020			5.0				403.7				0.0				408.7				56.3				2.26	%			2.21	%
2021			4.3				139.2				0.0				143.5				37.8				5.22	%			5.22	%
2022			2.7				244.1				0.0				246.8				12.3				4.39	%			3.41	%
2023			2.1				96.1				0.0				98.2				5.0				3.99	%			4.20	%
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		$	31.7			$	3,053.5			$	0.0			$	3,085.2			$	420.1				4.72	%			4.66	%
% of Total		Consolidated																Unconsolidated
Fixed			80.2	%															65.8	%
Variable			19.8	%															34.2	%
Recourse to DDR			78.6	%															0.0	%
Non-recourse to DDR			21.4	%															100.0	%

 

(1)	Assumes borrower extension options are exercised.

 

21

---

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)		$	310.0			$	310.0				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
		$	910.0			$	910.0
Public Debt
Unsecured Notes		$	300.0			$	300.0				04/17				7.50	%
Unsecured Notes			299.6				299.6				04/18				4.75	%
Unsecured Notes			82.2				82.2				07/18				7.50	%
Unsecured Notes			299.0				299.0				09/20				7.88	%
Unsecured Notes			298.8				298.8				01/21				3.50	%
Unsecured Notes			455.0				455.0				07/22				4.63	%
Unsecured Notes			298.8				298.8				05/23				3.38	%
Unsecured Notes			496.9				496.9				02/25				3.63	%
Unsecured Notes			396.7				396.7				02/26				4.25	%
		$	2,927.0			$	2,927.0
Mortgage Debt
Kenwood Square, OH		$	61.8			$	61.8				12/16				5.81	%
The Maxwell, IL (4)			50.5				50.5				12/16				L + 160
Falcon Ridge Town Center, CA (4)			43.5				43.5				01/17				5.68	%
Vista Village, CA			33.2				33.2				04/17				5.71	%
Walmart Supercenter, NC			1.3				1.3				08/17				6.00	%
Connecticut Commons, CT			45.8				45.8				10/17				5.01	%
Riverdale Village, MN			25.2				25.2				10/17				5.01	%
Riverdale Village Perimeter, MN			31.5				31.5				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			4.0				4.0				10/17				5.01	%
Brown Deer Center, WI			7.6				7.6				10/17				5.01	%
Falcon Ridge Town Center, CA			14.2				14.2				01/18				5.91	%
Walmart Supercenter, SC			1.7				1.7				01/18				6.00	%
Fortuna Center, VA			12.1				12.1				02/18				6.18	%
Johns Creek Town Center, GA			23.7				23.7				03/18				5.06	%
Southland Crossings, OH			23.7				23.7				03/18				5.06	%
The Promenade at Brentwood, MO			30.0				30.0				03/18				5.06	%
DDR Headquarters, OH			26.5				26.5				03/18				L + 105

 

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			2.6				2.6				01/19				7.66	%
Nassau Park Pavilion, NJ			55.2				55.2				02/19				3.40	%
Bandera Pointe, TX			24.0				24.0				02/19				3.40	%
Presidential Commons, GA			20.5				20.5				02/19				3.40	%
Plaza Cayey, PR			20.4				20.4				06/19				7.59	%
Plaza Fajardo, PR			24.5				24.5				06/19				7.59	%
Plaza Isabela, PR			21.5				21.5				06/19				7.59	%
Plaza Walmart, PR			11.5				11.5				06/19				7.59	%
Mariner Square, FL			1.8				1.8				09/19				9.75	%
Northland Square, IA			3.6				3.6				01/20				9.38	%
Plaza Rio Hondo, PR			121.9				121.9				01/20				3.95	%
Easton Marketplace, OH			48.7				48.7				01/20				3.95	%
The Fountains, FL			44.4				44.4				01/20				3.95	%
Perimeter Pointe, GA			42.0				42.0				01/20				3.95	%
Polaris Towne Center, OH			42.6				42.6				04/20				6.76	%
Chapel Hills West, CO			11.7				11.7				06/21				5.49	%
West Valley Marketplace, PA			7.8				7.8				07/21				6.95	%
Plaza Escorial, PR			70.8				70.8				07/21				3.59	%
Wrangleboro Consumer Sq, NJ			58.1				58.1				10/21				5.41	%
Chapel Hills East, CO			7.9				7.9				12/21				5.24	%
Paradise Village Gateway, AZ			30.0				20.1				01/22				4.65	%
Macedonia Commons, OH			18.5				18.5				02/22				5.71	%
		$	1,141.1			$	1,131.2
FMV Adjustment – Assumed Debt			8.1				8.1
Unamortized Loan Costs, Net			(19.8	)			(19.7	)
Grand Total		$	4,966.4			$	4,956.6
Rate Type
Fixed		$	3,991.1			$	3,981.2				4.6 years				4.91	%
Variable			987.0				987.0				2.9 years				1.67	%
		$	4,978.1			$	4,968.2				4.3 years				4.26	%
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		$	77.4				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.

(4)	Unencumbered in October 2016.

 

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)			20.2				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 (2 assets)			18.6				0.9				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	%
		$	1,068.5			$	53.4
BRE DDR Retail Holdings IV
The Hub, NY		$	15.4			$	0.9				01/17				7.53	%
Ashbridge Square, PA			34.8				1.7				03/18				6.08	%
Fountains of Miramar, FL			24.8				1.2				02/21				L + 250
Southmont Plaza, PA			34.0				1.7				02/21				L + 250
Millenia Crossing, FL			22.7				1.1				01/23				4.25	%
Concourse Village, FL			14.1				0.7				02/24				4.86	%
		$	145.8			$	7.3
DDR Domestic Retail Fund I
July 2017 Loan Pool (52 assets)		$	883.5			$	176.7				07/17				5.60	%
Heather Island, FL			4.3				0.9				02/18				3.56	%
Hilliard Rome, OH			11.5				2.3				02/18				3.56	%
		$	899.3			$	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)		$	28.9			$	5.7				09/17				4.74	%
April 2018 Loan Pool (5 assets)			31.8				6.4				04/18				4.65	%
		$	60.7			$	12.1
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	%
Sun Center Limited, OH			21.5				17.1				05/21				5.99	%
RVIP IIIB, Deer Park, IL			69.0				17.8				09/21				4.84	%
		$	117.5			$	48.4
Subtotal		$	3,085.2			$	420.1
FMV Adjustment – Assumed Debt			16.6				0.8
Unamortized Loan Costs, Net			(6.5	)			(0.8	)
Total		$	3,095.3			$	420.1
Rate Type
Fixed		$	2,029.3			$	331.2				1.7 years				5.38	%
Variable			1,055.9				88.9				3.5 years				2.26	%
		$	3,085.2			$	420.1				2.1 years				4.72	%
		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
BTIG		Michael Gorman		mgorman@btig.com		(212) 738-6138
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
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		Jay Carlington		jcarlington@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
Raymond James		Collin Mings		collin.mings@RaymondJames.com		(727) 567-2585
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 Quarterly Financial Supplement should be read in conjunction with the Company’s Form 10-K and Form 10-Q.

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.

Lease Expirations

 

•

The lease expiration schedule is presented to reflect leases scheduled to expire during the current calendar year and each of the following nine years thereafter, assuming no exercise of renewal options or early termination rights for all leases in the Company’s portfolio at 100%. This table is located in the Asset Summary Section.

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 Operating FFO

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 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). The SSNOI calculation for the three-month period ended September 30, 2016, also excludes a portfolio of 16 assets sold on October 7, 2016, given the significance of the sale and transaction closing proximity to the quarter end. 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 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 above. 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 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 in the Asset Summary section.

 

31

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DDR Corp.

Non-GAAP Measures

Other Measures

DDR Pro Rata Share Financial Information

The Company believes that the DDR Pro Rata Share of Select Financial Statement Information presented in the quarterly supplement is not, and is not intended to be, a presentation in accordance with GAAP. 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.

DDR does not control the unconsolidated joint ventures and the presentations of land and CIP, other assets, debt and net operating income of the unconsolidated joint ventures do not represent the Company’s legal claim to such items. The Company provides this 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 this information has limitations as an analytical tool. Because of the limitations, this information should not be considered in isolation or as a substitute for the Company’s financial statements as reported under GAAP.

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 Net Effective Debt divided by adjusted EBITDA (annualized), as opposed to net income determined in accordance with GAAP. Adjusted EBITDA is calculated as net income attributable to common shareholders before interest, income taxes, depreciation and amortization and further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing performance. Net Effective Debt is calculated as the Company’s consolidated debt outstanding adjusted to remove 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.

 

32

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DDR Corp.

Net (Loss) Income Reconciliation to FFO and Operating FFO

$ in millions

		3Q16				3Q15				9M16				9M15
Net (loss) income attributable to common shareholders		($	66.0	)		$	54.0			$	9.5			($	182.4	)
Depreciation and amortization of real estate investments			93.3				95.1				283.8				293.3
Equity in net loss (income) of joint ventures			1.4				(0.7	)			(14.1	)			(2.3	)
Joint ventures’ FFO			6.6				6.6				19.2				21.1
Non-controlling interests (OP Units)			0.1				0.1				0.2				0.6
Impairment of depreciable real estate assets			104.9				0.0				104.9				179.7
Gain on disposition of depreciable real estate			(20.2	)			(41.7	)			(48.5	)			(78.3	)
FFO attributable to common shareholders			120.1				113.4				355.0				231.7
Impairment charges – non-depreciable assets			0.0				0.0				0.0				99.3
Executive separation charges			0.0				0.0				0.0				2.3
Transaction, debt extinguishment, litigation, other, net			0.5				0.1				0.5				1.6
Gain on sale and change in control of interests, net			0.0				0.0				0.0				(7.8	)
Tax expense (primarily Puerto Rico restructuring), net			0.0				0.0				(0.3	)			4.4
Loss on disposition of non-depreciable real estate, net			0.0				0.0				2.1				0.6
Total non-operating items, net			0.5				0.1				2.3				100.4
Operating FFO attributable to common shareholders		$	120.6			$	113.5			$	357.3			$	332.1

 

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