Developers Diversified Realty Corp. (DDR), a real estate investment trust (REIT), reported fourth quarter 2009 FFO (fund from operations) of ($28.0) million or (14 cents) per share compared to ($119.3) million or (98 cents) per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Excluding non-recurring charges of $90.8 million primarily related to the non-cash impairment charges, FFO in the fourth quarter was $62.8 million or 31 cents per share. For full year 2009, FFO was $144.6 million or 90 cents per share compared to $169.7 million or $1.40 per share in the previous year. Excluding non-recurring charges of $442.8 million, FFO for full year 2009 was $298.2 million or $1.83 per share.
Despite challenging market conditions, Developers Diversified executed strong leasing activities during the quarter. The company signed 166 new leases and 306 renewal leases spanning over 1.1 million square feet and 1.9 million square feet, respectively. The core portfolio of the company was 91.2% leased at the end of the quarter, compared to 92.2% in the prior-year quarter.
Overall rental rates decreased 4.6% on cash basis year-over-year during the quarter. Average annualized base rents in the company’s portfolio (excluding Brazil) reached $12.51 per square foot at the end of the quarter, up from $12.43 in the year-ago quarter. Same-store net operating income (NOI) decreased 3.6% for full year 2009, largely due to bankruptcies and related store-closings of Circuit City, Linens ‘N Things, Goody’s and Steve & Barry’s.
Developers Diversified is selling assets to raise cash. During the quarter, the company sold 5 shopping centers totaling 0.6 million square feet generating gross proceeds of $30.5 million and realized a loss of $4.0 million. The company also recorded a loss of $2.3 million on land sale. Subsequent to the end of the quarter, Developers Diversified sold 3 assets for approximately $26 million.
At quarter end, Developers Diversified had 3 wholly-owned and consolidated JV development projects under construction, and a single wholly-owned redevelopment and expansion project under construction.
During the quarter, Developers Diversified purchased $142.5 million aggregate principal amount of senior unsecured notes at a discount to par, resulting in a gross profit of $7.9 million. In addition, the company raised $400 million through Term Asset-backed Securities Loan Facility (TALF program) secured by a pool of 28 assets.
Developers Diversified also sold 5.1 million common shares during the quarter, generating gross proceeds of $50.0 million, all of which were utilized to repay debt. Subsequent to the end of the quarter, the company sold approximately 47.9 million common shares for total gross proceeds of $384.2 million.
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