| Media Contact: | Investor Contact: | |||||
| Marty Richmond | Kate Deck | |||||
| 216-755-5500 | 216-755-5500 | |||||
| mrichmond@ddr.com | kdeck@ddr.com |
| • | Reported operating FFO of $0.27 per diluted share, which excludes certain non-operating items | ||
| • | Executed 396 total leases for 2.6 million square feet | ||
| • | Increased the core portfolio leased rate to 92.3% at December 31, 2010 from 92.0% at September 30, 2010 and 91.2% at December 31, 2009 | ||
| • | Improved the spread on new leases to +8.3% and renewals to +4.8% for a blended overall spread of +5.4%, which compares to a blended spread of +5.0% in the third quarter of 2010 and -4.4% in the fourth quarter of 2009 | ||
| • | Reported Same Store Net Operating Income growth of 3.6% as compared to an increase of 2.0% in the third quarter of 2010 and a decrease of 3.5% in the fourth quarter of 2009 | ||
| • | Refinanced two senior unsecured revolving credit facilities providing $1.015 billion of borrowing capacity through February 2014 | ||
| • | Completed $163.4 million of asset sales, of which the Company’s pro-rata share was $62.8 million | ||
| • | Issued $350 million aggregate principal amount of 1.75% convertible senior notes due November 2040 | ||
| • | Reduced consolidated indebtedness by nearly $100 million to $4.3 billion at December 31, 2010 |
| Three Months | Year | |||||||
| Non-cash impairment charges — consolidated assets | $ | 28.9 | $ | 116.5 | ||||
| Charges related to employee separations | 3.5 | 5.6 | ||||||
| Gain on debt retirement, net | (0.2 | ) | (0.5 | ) | ||||
| Non-cash loss on equity derivative instruments (Otto Family warrants) | 25.5 | 40.2 | ||||||
Other expense, net(1) | 6.0 | 22.0 | ||||||
| Equity in net loss of joint ventures — loss on asset sales and impairment charges | 0.4 | 6.8 | ||||||
| Loss on change in control of interests | — | 0.4 | ||||||
| Tax expense — deferred tax assets reserve | 49.9 | 49.9 | ||||||
| Discontinued operations — non-cash consolidated impairment charges and loss on sales | 1.3 | 67.1 | ||||||
| Discontinued operations — FFO associated with Mervyns Joint Venture, net of non-controlling interest | — | 4.8 | ||||||
| Discontinued operations — gain on deconsolidation of Mervyns Joint Venture | — | (5.6 | ) | |||||
| Gain on disposition of real estate (land) | (0.5 | ) | (0.4 | ) | ||||
| Less non-controlling interests — portion of impairment charges allocated to outside partners | — | (31.2 | ) | |||||
| $ | 114.8 | $ | 275.6 | |||||
| (1) | Amounts included in Other expense are detailed as follows: |
| Three Months | Year | |||||||
| Lease liability reserve — primarily for cancelled development project | $ | 3.3 | $ | 3.3 | ||||
| Litigation expenditures, net of tax benefit | 1.0 | 12.2 | ||||||
| Debt extinguishment costs | 0.5 | 3.7 | ||||||
| Other | 1.2 | 2.8 | ||||||
| $ | 6.0 | $ | 22.0 | |||||
| • | Executed 161 new leases aggregating approximately 1.0 million square feet and 235 renewals aggregating approximately 1.6 million square feet. In total, the Company executed approximately 2.6 million square feet of leases for the quarter and 11.3 million for the full year of 2010. | ||
| • | Total portfolio average annualized base rent per occupied square foot as of December 31, 2010 was $13.36, as compared to $13.01 at December 31, 2009. Excluding the Brazil portfolio, total portfolio average annualized base rent per occupied square foot as of December 31, 2010 was $12.46, as compared to $12.27 at December 31, 2009. | ||
| • | The core portfolio leased rate was 92.3% as of December 31, 2010, as compared to 91.2% at December 31, 2009. The core portfolio and the Brazil portfolio blended leased rate was 92.6% at December 31, 2010. | ||
| • | On a cash basis, rental rates for new leases increased by 8.3% over prior rents and renewals increased by 4.8%. For the U.S.-portion of the portfolio, rental rates increased 6.5% for new leases and 3.1% for renewals. On a blended basis, leasing spreads increased by 5.4% during the quarter for the total portfolio and 3.5% for the U.S.-portion of the portfolio. The increase in the overall leasing spreads marks an improvement from the increase of 5.0% for the portfolio reported in the third quarter of 2010 and an improvement from the decrease of 4.4% for the portfolio reported in the fourth quarter of 2009. Total blended leasing spreads for the full year of 2010 increased 3.7%. | ||
| • | Same store net operating income (“NOI”) increased 3.6% for the three-month comparable period and 1.1% for the full year 2010 as compared to 2009. |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: | ||||||||||||||||
Minimum rents(A) | $ | 134,645 | $ | 133,831 | $ | 535,284 | $ | 528,230 | ||||||||
Percentage and overage rents(A) | 2,653 | 3,413 | 6,299 | 7,751 | ||||||||||||
| Recoveries from tenants | 42,041 | 43,823 | 175,309 | 174,826 | ||||||||||||
| Ancillary and other property income | 6,825 | 6,931 | 21,941 | 21,610 | ||||||||||||
| Management, development and other fee income | 13,312 | 14,489 | 53,434 | 57,683 | ||||||||||||
Other(B) | 4,000 | 1,128 | 10,802 | 7,299 | ||||||||||||
| 203,476 | 203,615 | 803,069 | 797,399 | |||||||||||||
Expenses: | ||||||||||||||||
Operating and maintenance(C) | 33,996 | 36,191 | 137,862 | 135,153 | ||||||||||||
| Real estate taxes | 25,843 | 25,623 | 108,299 | 102,391 | ||||||||||||
Impairment charges(D) | 28,877 | — | 116,462 | 12,745 | ||||||||||||
General and administrative(E) | 23,028 | 20,896 | 85,573 | 94,365 | ||||||||||||
| Depreciation and amortization | 57,506 | 54,362 | 222,862 | 217,841 | ||||||||||||
| 169,250 | 137,072 | 671,058 | 562,495 | |||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 2,873 | 2,564 | 7,346 | 11,984 | ||||||||||||
Interest expense(F) | (59,776 | ) | (59,805 | ) | (226,464 | ) | (221,334 | ) | ||||||||
Gain on debt retirement, net(F) | 152 | 2,690 | 485 | 145,050 | ||||||||||||
Loss on equity derivative instruments(G) | (25,539 | ) | (1,597 | ) | (40,157 | ) | (199,797 | ) | ||||||||
Other expense(H) | (5,954 | ) | (19,888 | ) | (24,346 | ) | (29,192 | ) | ||||||||
| (88,244 | ) | (76,036 | ) | (283,136 | ) | (293,289 | ) | |||||||||
| Loss before earnings from equity method investments and other items | (54,018 | ) | (9,493 | ) | (151,125 | ) | (58,385 | ) | ||||||||
Equity in net income (loss) of joint ventures(I) | 9,377 | (749 | ) | 5,600 | (9,733 | ) | ||||||||||
Impairment of joint venture investments(D) | (227 | ) | (83,013 | ) | (227 | ) | (184,584 | ) | ||||||||
Gain (loss) on change in control of interests(J) | — | 23,471 | (428 | ) | 23,865 | |||||||||||
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes(K) | (49,469 | ) | 1,228 | (47,992 | ) | 767 | ||||||||||
| Loss from continuing operations | (94,337 | ) | (68,556 | ) | (194,172 | ) | (228,070 | ) | ||||||||
Income (loss) from discontinued operations(L) | 8,871 | (19,099 | ) | (54,867 | ) | (184,697 | ) | |||||||||
| Loss before gain on disposition of real estate | (85,466 | ) | (87,655 | ) | (249,039 | ) | (412,767 | ) | ||||||||
| Gain on disposition of real estate, net of tax | 1,257 | 905 | 1,318 | 9,127 | ||||||||||||
| Net loss | (84,209 | ) | (86,750 | ) | (247,721 | ) | (403,640 | ) | ||||||||
| (Income) loss attributable to non-controlling interests | (17 | ) | 7,186 | 38,363 | 47,047 | |||||||||||
Net loss attributable to DDR | $ | (84,226 | ) | $ | (79,564 | ) | $ | (209,358 | ) | $ | (356,593 | ) | ||||
Net loss applicable to common shareholders | $ | (94,793 | ) | $ | (90,131 | ) | $ | (251,627 | ) | $ | (398,862 | ) | ||||
Funds From Operations (“FFO”): | ||||||||||||||||
| Net loss applicable to common shareholders | $ | (94,793 | ) | $ | (90,131 | ) | $ | (251,627 | ) | $ | (398,862 | ) | ||||
| Depreciation and amortization of real estate investments | 55,399 | 53,970 | 217,168 | 224,207 | ||||||||||||
Equity in net (income) loss of joint ventures(I) | (9,377 | ) | 749 | (5,600 | ) | 9,306 | ||||||||||
Joint ventures’ FFO(I) | 15,226 | 11,113 | 47,545 | 43,665 | ||||||||||||
| Non-controlling interests (OP Units) | 8 | 8 | 32 | 175 | ||||||||||||
| Gain on disposition of depreciable real estate | (10,409 | ) | (3,718 | ) | (18,803 | ) | (23,123 | ) | ||||||||
| FFO applicable to common shareholders | (43,946 | ) | (28,009 | ) | (11,285 | ) | (144,632 | ) | ||||||||
| Preferred dividends | 10,567 | 10,567 | 42,269 | 42,269 | ||||||||||||
| FFO | $ | (33,379 | ) | $ | (17,442 | ) | $ | 30,984 | $ | (102,363 | ) | |||||
| Per share data: | ||||||||||||||||
| Earnings per common share | ||||||||||||||||
| Basic | $ | (0.37 | ) | $ | (0.46 | ) | $ | (1.03 | ) | $ | (2.51 | ) | ||||
| Diluted | $ | (0.37 | ) | $ | (0.46 | ) | $ | (1.03 | ) | $ | (2.51 | ) | ||||
| Basic — average shares outstanding | 253,872 | 196,399 | 244,712 | 158,816 | ||||||||||||
| Diluted — average shares outstanding | 253,872 | 196,399 | 244,712 | 158,816 | ||||||||||||
| Dividends Declared | $ | 0.02 | $ | 0.02 | $ | 0.08 | $ | 0.44 | ||||||||
Funds From Operations — Basic(M) | $ | (0.17 | ) | $ | (0.14 | ) | $ | (0.05 | ) | $ | (0.90 | ) | ||||
Funds From Operations — Diluted(M) | $ | (0.17 | ) | $ | (0.14 | ) | $ | (0.05 | ) | $ | (0.90 | ) | ||||
| December 31, 2010 | December 31, 2009 | |||||||
Assets: | ||||||||
| Real estate and rental property: | ||||||||
| Land | $ | 1,837,403 | $ | 1,971,782 | ||||
| Buildings | 5,491,489 | 5,694,659 | ||||||
| Fixtures and tenant improvements | 339,129 | 287,143 | ||||||
| 7,668,021 | 7,953,584 | |||||||
| Less: Accumulated depreciation | (1,452,112 | ) | (1,332,534 | ) | ||||
| 6,215,909 | 6,621,050 | |||||||
| Land held for development and construction in progress | 743,218 | 858,900 | ||||||
| Real estate held for sale, net | — | 10,453 | ||||||
| Real estate, net | 6,959,127 | 7,490,403 | ||||||
Investments in and advances to joint ventures(O) | 417,223 | 420,541 | ||||||
| Cash | 19,416 | 26,172 | ||||||
| Restricted cash | 4,285 | 95,673 | ||||||
| Notes receivable, net | 120,330 | 74,997 | ||||||
| Receivables, including straight-line rent, net | 123,259 | 146,809 | ||||||
Other assets, net(K) | 124,450 | 172,011 | ||||||
| $ | 7,768,090 | $ | 8,426,606 | |||||
Liabilities & Equity: | ||||||||
| Indebtedness: | ||||||||
| Revolving credit facilities | $ | 279,865 | $ | 775,028 | ||||
| Unsecured debt | 2,043,582 | 1,689,841 | ||||||
| Mortgage and other secured debt | 1,978,553 | 2,713,794 | ||||||
| 4,302,000 | 5,178,663 | |||||||
| Dividends payable | 12,092 | 10,985 | ||||||
Equity derivative liability(G) | 96,237 | 56,080 | ||||||
| Other liabilities | 223,074 | 228,542 | ||||||
| Total liabilities | 4,633,403 | 5,474,270 | ||||||
| Preferred shares | 555,000 | 555,000 | ||||||
Common shares(M) | 25,627 | 20,174 | ||||||
| Paid-in-capital | 3,868,990 | 3,374,528 | ||||||
| Accumulated distributions in excess of net income | (1,378,341 | ) | (1,098,661 | ) | ||||
| Deferred compensation obligation | 14,318 | 17,838 | ||||||
| Accumulated other comprehensive income | 25,646 | 9,549 | ||||||
| Less: Common shares in treasury at cost | (14,638 | ) | (15,866 | ) | ||||
| Non-controlling interests | 38,085 | 89,774 | ||||||
| Total equity | 3,134,687 | 2,952,336 | ||||||
| $ | 7,768,090 | $ | 8,426,606 | |||||
| (A) | Base and percentage rental revenues for the year ended December 31, 2010, as compared to the prior-year comparable period, increased $7.0 million primarily due to the acquisition of three shopping centers, which generated an additional $8.5 million in revenues offset by a net decrease in operating assets of $1.5 million. Included in rental revenues for the years ended December 31, 2010 and 2009, is approximately $2.5 million and $4.3 million, respectively, of revenue resulting from the recognition of straight-line rents, including discontinued operations. | |
| (B) | Other revenues were comprised of the following (in millions): |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Lease termination fees | $ | 3.4 | $ | 0.6 | $ | 7.5 | $ | 4.0 | ||||||||
| Financing fees | 0.5 | 0.2 | 1.2 | 1.1 | ||||||||||||
| Other miscellaneous | 0.1 | 0.3 | 2.1 | 2.2 | ||||||||||||
| $ | 4.0 | $ | 1.1 | $ | 10.8 | $ | 7.3 | |||||||||
| (C) | Operating and maintenance expense, including discontinued operations, includes the following expenses (in millions): |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Bad debt expense | $ | 3.2 | $ | 5.4 | $ | 13.4 | $ | 16.1 | ||||||||
Ground rent expense(1) | 1.2 | 1.3 | 4.9 | 4.8 | ||||||||||||
| (1) | Includes non-cash expense of approximately $0.5 million for the three-month periods ended December 31, 2010 and 2009, respectively, and approximately $2.0 million and $1.9 million for the years ended December 31, 2010 and 2009, respectively, related to straight-line ground rent expense. |
| (D) | The Company recorded impairment charges during both the three-month periods and years ended December 31, 2010 and 2009, on the following consolidated assets and investments (in millions): |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Land held for development(1) | $ | — | $ | — | $ | 54.3 | $ | — | ||||||||
| Undeveloped land and CIP | 25.6 | — | 30.5 | 0.4 | ||||||||||||
| Assets marketed for sale | 3.3 | — | 31.7 | 12.3 | ||||||||||||
| $ | 28.9 | $ | — | $ | 116.5 | $ | 12.7 | |||||||||
Sold assets(2) | — | 1.3 | 20.1 | 73.3 | ||||||||||||
Assets formerly occupied by Mervyns(3) | — | 7.8 | 35.3 | 68.7 | ||||||||||||
| Total discontinued operations | — | 9.1 | 55.4 | 142.0 | ||||||||||||
| Joint venture investments | 0.2 | 83.0 | 0.2 | 184.6 | ||||||||||||
| Total impairment charges | $ | 29.1 | $ | 92.1 | $ | 172.1 | $ | 339.3 | ||||||||
| (1) | Amounts reported relate to land held for development in Togliatti and Yaroslavl, Russia, of which the Company’s proportionate share was $41.9 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture. |
| (2) | See summary of discontinued operations activity in note (L). | ||
| (3) | The Company’s proportionate share of these impairments was $16.5 million and $33.6 million, after adjusting for the allocation of loss to the non-controlling interest in this previously consolidated joint venture for the years ended December 31, 2010 and 2009, respectively. As discussed in note (N), these assets were deconsolidated in the third quarter of 2010 and all operating results have been reclassified as discontinued operations. |
| (E) | General and administrative expenses include internal leasing salaries, legal salaries and related expenses associated with the releasing of space, which are charged to operations as incurred. For the years ended December 31, 2010 and 2009, general and administrative expenses were approximately 5.2% and 5.4% of total revenues, respectively, including joint venture and managed property revenues. | |
| During the year ended December 31, 2010, the Company incurred $5.3 million in employee separation charges. During the year ended December 31, 2009, the Company recorded a non-cash charge of $15.4 million as a result of the change in control provisions included in the Company’s equity-based award plans. Excluding these charges, general and administrative expenses were 4.9% and 4.5% of total revenues for the years ended December 31, 2010 and 2009, respectively. | ||
| (F) | The Company recorded the following in connection with its outstanding convertible debt (in millions): |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Non-cash interest expense related to amortization of the debt discount | $ | 3.0 | $ | 2.5 | $ | 8.2 | $ | 12.2 | ||||||||
| Non-cash adjustment to gain on repurchase | 0.1 | 3.9 | 4.9 | 20.9 | ||||||||||||
| (G) | Represents the non-cash impact of the valuation adjustments of the equity derivative instruments (warrants) issued as part of the share purchase transaction with the Otto Family completed in 2009, as a result of changes in the Company’s stock price. The liability will be reclassified into equity upon ultimate exercise or expiration of the warrants. | |
| (H) | Other (expenses) income were comprised of the following (in millions): |
| Three-Month Periods Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Litigation-related expenses(1) | $ | (1.0 | ) | $ | (2.1 | ) | $ | (14.6 | ) | $ | (6.4 | ) | ||||
Lease liability reserve(2) | (3.3 | ) | — | (3.3 | ) | — | ||||||||||
| Debt extinguishment costs | (0.5 | ) | (13.9 | ) | (3.7 | ) | (14.2 | ) | ||||||||
| Note receivable reserve | — | — | 0.1 | (5.4 | ) | |||||||||||
| Sale of MDT units | — | — | — | 2.8 | ||||||||||||
| Abandoned projects and other expenses | (1.2 | ) | (3.9 | ) | (2.8 | ) | (6.0 | ) | ||||||||
| $ | (6.0 | ) | $ | (19.9 | ) | $ | (24.3 | ) | $ | (29.2 | ) | |||||
| (1) | The year ended December 31, 2010 includes a $5.1 million reserve recorded in connection with a legal matter at a property in Long Beach, California. This reserve was offset by a tax benefit of approximately $2.4 million, classified in the tax expense (benefit) line item in the consolidated statements of operations, because the asset is owned through the Company’s TRS. Total litigation-related expenditures, net of the tax benefit, were $1.0 |
| million and $12.2 million for the three-month period and year ended December 31, 2010, respectively. | |||
| (2) | Represents the liability recorded pursuant to ASC 420, Exit or Disposal Cost Obligations, primarily relating to the contractual obligations associated with the ground lease for an abandoned development project in Norwood, Massachusetts. |
| (I) | At December 31, 2010 and 2009, the Company owned joint venture interests, excluding consolidated joint ventures, in 236 and 274 shopping center properties, respectively. See below for a summary of the combined condensed operating results and select balance sheet data of the Company’s unconsolidated joint ventures. | |
| (J) | In October 2009, the Company’s approximate 14.5% interest in the MDT US LLC joint venture was redeemed in exchange for a 100% interest in three shopping center assets and a cash payment of $1.6 million. The Company accounted for this transaction as a step acquisition and, as a result, recognized a $23.5 million gain. | |
| (K) | The Company incurred a fourth quarter non-cash income tax expense of $49.9 million recognized due to the establishment of a reserve against certain deferred tax assets within its TRS. Based upon the continued loss activity recognized by the TRS, including a fourth quarter impairment and lease liability charge of $22.3 million associated with an abandoned development project, it was determined that it was more likely than not that the deferred tax assets would not be utilizable, thus requiring a current reserve. Net deferred tax assets are classified within Other assets on the consolidated balance sheet at December 31, 2009. | |
| (L) | The operating results relating to assets classified as discontinued operations are summarized as follows: |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenues from operations | $ | 892 | $ | 6,666 | $ | 12,015 | $ | 45,910 | ||||||||
| Operating expenses | 70 | 4,844 | 8,535 | 24,915 | ||||||||||||
| Impairment charges | — | 9,055 | 55,438 | 141,973 | ||||||||||||
| Interest, net | 134 | 5,583 | 9,892 | 23,566 | ||||||||||||
| Depreciation and amortization | 194 | 2,222 | 4,441 | 16,126 | ||||||||||||
| Total expenses | 398 | 21,704 | 78,306 | 206,580 | ||||||||||||
| Loss before disposition of real estate | 494 | (15,038 | ) | (66,291 | ) | (160,670 | ) | |||||||||
| Gain on deconsolidation of interests | — | — | 5,649 | — | ||||||||||||
| Gain (loss) on disposition of real estate, net | 8,377 | (4,061 | ) | 5,775 | (24,027 | ) | ||||||||||
| Net income (loss) | $ | 8,871 | $ | (19,099 | ) | $ | (54,867 | ) | $ | (184,697 | ) | |||||
| Discontinued operations for all periods presented include the activity associated with the 50% owned joint venture, DDR MDT MV LLC (“MV LLC” or the “Mervyns Joint Venture”), which was deconsolidated during the third quarter of 2010. See further discussion in note (N). |
| (M) | For purposes of computing FFO and operating FFO per share, the following share information was utilized (in millions): |
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
| Common shares outstanding | 256.2 | 201.6 | ||||||
| OP Units outstanding (“OP Units”) | 0.4 | 0.4 | ||||||
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Weighted average common shares outstanding | 256.2 | 197.9 | 246.6 | 159.7 | ||||||||||||
| Assumed conversion of OP Units | 0.4 | 0.4 | 0.4 | 0.4 | ||||||||||||
| FFO Weighted average common shares and OP Units — Basic and Diluted | 256.6 | 198.3 | 247.0 | 160.1 | ||||||||||||
| Assumed conversion of dilutive securities | 8.2 | 5.2 | 7.4 | 3.1 | ||||||||||||
| Operating FFO Weighted average common shares and OP Units —Diluted | 264.8 | 203.5 | 254.4 | 163.2 | ||||||||||||
| (N) | The December 31, 2009 balance sheet reflects the consolidation of a 50% owned joint venture, MV LLC, which as of that date owned 31 sites formerly occupied by Mervyns. |
| December 31, 2009 | ||||
| Real estate, net | $ | 218.7 | ||
| Restricted cash | $ | 50.5 | ||
| Mortgage debt | $ | 225.4 | ||
| Non-controlling interests | $ | 22.4 | ||
| The 25 assets owned by MV LLC in August 2010 were placed in the control of a court appointed receiver and as a result, the entity that holds the assets and nonrecourse mortgage loan was deconsolidated for accounting purposes pursuant to the provisions of Accounting Standards Codification No. 810, “Consolidation” (“ASC 810”). Upon deconsolidation in the third quarter of 2010, the Company recorded a gain of approximately $5.6 million because the carrying value of the nonrecourse debt exceeded the carrying value of the collateralized assets. Following the deconsolidation, the Company no longer has any economic rights or obligations in MV LLC. The revenues and expenses associated with MV LLC for the current and prior periods, including the $5.6 million gain, are classified within discontinued operations in the statements of operations. | ||
| (O) | Included in the Company’s balance sheet as of December 31, 2009, was $28.5 million of assets owned by a consolidated joint venture that was deconsolidated in accordance with the adoption of ASC 810 as of January 1, 2010. |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues from operations(A) | $ | 171,846 | $ | 172,531 | $ | 668,946 | $ | 778,770 | ||||||||
| Operating expenses | 61,309 | 67,630 | 256,380 | 301,637 | ||||||||||||
Impairment charges(B) | 1,304 | 218,479 | 12,291 | 218,479 | ||||||||||||
| Depreciation and amortization of real estate investments | 47,752 | 49,619 | 187,876 | 218,547 | ||||||||||||
| Interest expense | 59,285 | 63,440 | 230,649 | 280,345 | ||||||||||||
| 169,650 | 399,168 | 687,196 | 1,019,008 | |||||||||||||
| Income (loss) from operations before tax expense and discontinued operations | 2,196 | (226,637 | ) | (18,250 | ) | (240,238 | ) | |||||||||
| Income tax expense | (6,502 | ) | (2,948 | ) | (20,449 | ) | (10,013 | ) | ||||||||
Income (loss) from discontinued operations, net of tax(C) | 219 | (172,417 | ) | (9,674 | ) | (206,436 | ) | |||||||||
(Loss) gain on disposition of discontinued operations, net of tax(D) | (1,371 | ) | 64 | (26,674 | ) | (19,448 | ) | |||||||||
Gain (loss) on disposition of assets(E) | — | 843 | 17 | (25,973 | ) | |||||||||||
Other, net(F) | — | — | — | 7,153 | ||||||||||||
| Net loss | $ | (5,458 | ) | $ | (401,095 | ) | $ | (75,030 | ) | $ | (494,955 | ) | ||||
Net gain (loss) at DDR ownership interests(G) | $ | 10,676 | $ | (22,147 | ) | $ | 6,319 | $ | (34,522 | ) | ||||||
FFO at DDR’s ownership interests(H) | $ | 15,226 | $ | 11,113 | $ | 47,545 | $ | 43,665 | ||||||||
| December 31, 2010 | December 31, 2009 | |||||||
| Land | $ | 1,566,682 | $ | 1,782,431 | ||||
| Buildings | 4,783,841 | 5,207,234 | ||||||
| Fixtures and tenant improvements | 154,292 | 146,716 | ||||||
| 6,504,815 | 7,136,381 | |||||||
| Less: Accumulated depreciation | (726,291 | ) | (636,897 | ) | ||||
| 5,778,524 | 6,499,484 | |||||||
Land held for development and construction in progress(I) | 174,237 | 130,410 | ||||||
| Real estate, net | 5,952,761 | 6,629,894 | ||||||
| Receivables, including straight-line rent, net | 111,569 | 113,630 | ||||||
| Leasehold interests | 10,296 | 11,455 | ||||||
| Other assets, net | 303,826 | 342,192 | ||||||
| $ | 6,378,452 | $ | 7,097,171 | |||||
Mortgage debt(J) | $ | 3,950,794 | $ | 4,547,711 | ||||
| Notes and accrued interest payable to DDR | 87,282 | 73,477 | ||||||
| Other liabilities | 186,728 | 194,065 | ||||||
| 4,224,804 | 4,815,253 | |||||||
| Accumulated equity | 2,153,648 | 2,281,918 | ||||||
| $ | 6,378,452 | $ | 7,097,171 | |||||
| (A) | Revenues for the three-month periods and years ended reflect the following (in millions): |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Straight-line rents | $ | 1.0 | $ | (0.3 | ) | $ | 3.9 | $ | 2.7 | |||||||
| DDR’s proportionate share | 0.2 | — | 0.6 | 0.2 | ||||||||||||
| The 2009 combined condensed income statement includes the results of operation of the EDT joint venture. In October 2009, the Company redeemed its ownership interest in this joint venture and are not reflected in discontinued operations. | ||
| (B) | For the three months and year ended December 31, 2010, impairment charges were recorded by two of the Company’s unconsolidated joint ventures relating to three assets, of which the Company’s proportionate share of these impairment charges for the year ended was approximately $0.5 million. The Company’s proportionate share of the fourth quarter charge was immaterial. For the three months and year ended December 31, 2009, an impairment charge of $218.5 million was recorded by one of the Company’s unconsolidated joint ventures related to a suspended development project. The Company’s proportionate share of the loss was zero as the Company had written off its basis in the investment in the second quarter of 2009. | |
| (C) | Impairment charges reclassified to discontinued operations relating to assets sales were $8.8 million for the year ended December 31, 2010 and $170.9 million and $204.8 for the three months and year ended December 31, 2009, respectively. The Company’s proportionate share of these impairment charges was $0.3 million for the year ended December 31, 2010 and $2.6 million and $8.1 million for the three months and year ended December 31, 2009, respectively. | |
| (D) | For the three months ended December 31, 2010, a $4.9 million net gain was recorded for the Company’s proportionate share of the assets sold during that period as a result of promoted interests from one of the asset sales. For the year ended December 31, 2010, loss on disposition of discontinued operations includes the sale of 35 properties by five separate unconsolidated joint ventures. In 2009, $170.9 million of impairment charges were recorded by these joint ventures in anticipation of the sales transactions as noted in (C) above. The Company’s proportionate share of the aggregate loss for the assets sold for the year ended December 31, 2010 was a gain of approximately $0.8 million. | |
| For the year ended December 31, 2009, loss on disposition of discontinued operations included the sale of 12 properties by three separate unconsolidated joint ventures resulting in a loss of $19.4 million of which the Company’s proportionate share was $1.4 million. | ||
| (E) | In the first quarter of 2009, an unconsolidated joint venture disposed of a property resulting in a loss of $26.7 million, of which the Company’s proportionate share was $5.8 million. | |
| (F) | Activity related to the Company’s investment in the MDT units that were liquidated in 2009. |
| (G) | Adjustments to the Company’s share of joint venture equity in net loss is related primarily to basis differences impacting amortization and depreciation, impairment charges and (loss) gain on dispositions as follows (in millions): |
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (Loss) income, net | $ | (1.2 | ) | $ | 21.4 | $ | (0.7 | ) | $ | 24.8 | ||||||
| (H) FFO from unconsolidated joint ventures are summarized as follows: | ||||||||||||||||
| Three-Month Periods | Year Ended | |||||||||||||||
| Ended December 31, | December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net loss | $ | (5,458 | ) | $ | (401,095 | ) | $ | (75,030 | ) | $ | (494,955 | ) | ||||
| Loss on sale of real estate | (24,687 | ) | (843 | ) | (24,734 | ) | (843 | ) | ||||||||
| Depreciation and amortization of real estate investments | 48,508 | 55,528 | 198,323 | 245,000 | ||||||||||||
| FFO | $ | 18,363 | $ | (346,410 | ) | $ | 98,559 | $ | (250,798 | ) | ||||||
| FFO at DDR’s ownership interests | $ | 15,226 | $ | 11,113 | $ | 47,545 | $ | 43,665 | ||||||||
Operating FFO at DDR’s ownership interests(1) | $ | 15,721 | $ | 13,722 | $ | 54,433 | $ | 62,690 | ||||||||
DDR joint venture distributions received, net(2) | $ | 24,470 | $ | 7,963 | $ | 53,768 | $ | 31,455 | ||||||||
| (1) | Excluded from operating FFO is the Company’s pro rata share of net charges primarily related to impairment charges and losses on the disposition of assets as disclosed on page 2 of this press release. | |
| (2) | Distributions for 2009 included $2.5 million from a foreign investment that have yet to be expatriated to the United States. |
| (I) | The Company’s proportionate share of joint venture land held for development and construction in progress aggregated approximately $71.7 million and $37.6 million at December 31, 2010 and December 31, 2009, respectively. | |
| The combined condensed balance sheet at December 31, 2010 included a joint venture under development that was deconsolidated by the Company as of January 1, 2010 due to the adoption of ASC 810 (Footnote O in this release). | ||
| (J) | The Company’s proportionate share of joint venture debt aggregated approximately $835.8 million and $917.0 million at December 31, 2010 and December 31, 2009, respectively. |
