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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Ohio | 34-1723097 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if smaller reporting company) | Smaller reporting company o |
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Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
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2 | |||
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Condensed Consolidated Statements of Operations for the Three-Month Periods Ended June 30, 2010 and 2009
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3 | |||
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Condensed Consolidated Statements of Operations for the Six-Month Periods Ended June 30, 2010 and 2009
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4 | |||
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Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2010 and 2009
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5 | |||
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Notes to Condensed Consolidated Financial Statements
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6 |
- 1 -
| June 30, 2010 | December 31, 2009 | |||||||
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Assets
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||||||||
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Land
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$ | 1,932,469 | $ | 1,971,782 | ||||
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Buildings
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5,593,976 | 5,694,659 | ||||||
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Fixtures and tenant improvements
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308,128 | 287,143 | ||||||
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||||||||
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7,834,573 | 7,953,584 | ||||||
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Less: Accumulated depreciation
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(1,403,028 | ) | (1,332,534 | ) | ||||
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||||||||
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6,431,545 | 6,621,050 | ||||||
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Land held for development and construction in progress
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796,093 | 858,900 | ||||||
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Real estate held for sale, net
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3,000 | 10,453 | ||||||
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||||||||
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Total real estate assets, net — (variable interest entities $517.1 million at June 30, 2010)
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7,230,638 | 7,490,403 | ||||||
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Investments in and advances to joint ventures
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415,829 | 420,541 | ||||||
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Cash and cash equivalents
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20,920 | 26,172 | ||||||
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Restricted cash — (variable interest entities $21.0 million at June 30, 2010)
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35,474 | 95,673 | ||||||
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Notes receivable, net
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60,547 | 74,997 | ||||||
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Other assets, net — (variable interest entities $6.1 million at June 30, 2010)
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288,535 | 318,820 | ||||||
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||||||||
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$ | 8,051,943 | $ | 8,426,606 | ||||
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||||||||
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Liabilities and Equity
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||||||||
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Unsecured indebtedness:
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||||||||
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Senior notes
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$ | 1,596,505 | $ | 1,689,841 | ||||
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Revolving credit facilities
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649,844 | 775,028 | ||||||
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||||||||
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2,246,349 | 2,464,869 | ||||||
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Secured indebtedness:
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||||||||
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Term debt
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800,000 | 800,000 | ||||||
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Mortgage and other secured indebtedness — (variable interest entities $231.6 million at June 30, 2010)
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1,591,702 | 1,913,794 | ||||||
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||||||||
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2,391,702 | 2,713,794 | ||||||
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||||||||
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Total indebtedness
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4,638,051 | 5,178,663 | ||||||
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Accounts
payable and accrued expenses — (variable interest entities $15.5 million at June 30, 2010)
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134,332 | 130,404 | ||||||
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Dividends payable
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11,969 | 10,985 | ||||||
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Other liabilities
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138,624 | 153,591 | ||||||
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||||||||
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Total liabilities
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4,922,976 | 5,473,643 | ||||||
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||||||||
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Redeemable operating partnership units
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627 | 627 | ||||||
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||||||||
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Commitments and contingencies (Note 8)
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||||||||
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Developers Diversified Realty Corporation Equity:
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||||||||
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Class G — 8.0% cumulative redeemable preferred shares, without par value, $250 liquidation value; 750,000 shares authorized; 720,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively
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180,000 | 180,000 | ||||||
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Class H — 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 410,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively
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205,000 | 205,000 | ||||||
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Class I — 7.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 340,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively
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170,000 | 170,000 | ||||||
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Common shares, with par value, $0.10 stated value; 500,000,000 shares authorized; 250,123,575 and 201,742,589 shares issued at June 30, 2010 and December 31, 2009, respectively
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25,012 | 20,174 | ||||||
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Paid-in-capital
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3,756,218 | 3,374,528 | ||||||
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Accumulated distributions in excess of net income
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(1,248,469 | ) | (1,098,661 | ) | ||||
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Deferred compensation obligation
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12,874 | 17,838 | ||||||
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Accumulated other comprehensive income
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5,184 | 9,549 | ||||||
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Less: Common shares in treasury at cost: 508,980 and 657,012 shares at June 30, 2010 and December 31, 2009, respectively
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(11,877 | ) | (15,866 | ) | ||||
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Non-controlling interests — (variable interest entities $23.6 million at June 30, 2010)
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34,398 | 89,774 | ||||||
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||||||||
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Total equity
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3,128,340 | 2,952,336 | ||||||
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||||||||
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$ | 8,051,943 | $ | 8,426,606 | ||||
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||||||||
- 2 -
| 2010 | 2009 | |||||||
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Revenues from operations:
|
||||||||
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Minimum rents
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$ | 135,869 | $ | 132,470 | ||||
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Percentage and overage rents
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600 | 845 | ||||||
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Recoveries from tenants
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42,926 | 43,503 | ||||||
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Ancillary and other property income
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4,936 | 4,881 | ||||||
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Management fees, development fees and other fee income
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13,145 | 14,040 | ||||||
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Other
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4,540 | 1,737 | ||||||
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202,016 | 197,476 | ||||||
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Rental operation expenses:
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||||||||
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Operating and maintenance
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37,197 | 33,626 | ||||||
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Real estate taxes
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26,517 | 26,168 | ||||||
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Impairment charges
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129,727 | 48,246 | ||||||
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General and administrative
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19,090 | 28,412 | ||||||
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Depreciation and amortization
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56,738 | 56,836 | ||||||
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||||||||
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269,269 | 193,288 | ||||||
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||||||||
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||||||||
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Other income (expense):
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||||||||
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Interest income
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1,525 | 3,228 | ||||||
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Interest expense
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(59,692 | ) | (57,765 | ) | ||||
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(Loss) gain on repurchase of senior notes
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(1,090 | ) | 45,901 | |||||
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Gain (loss) on equity derivative instruments
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21,527 | (80,025 | ) | |||||
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Other expense, net
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(11,850 | ) | (6,656 | ) | ||||
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||||||||
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(49,580 | ) | (95,317 | ) | ||||
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||||||||
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Loss from continuing operations before equity in net loss of joint ventures, tax benefit (expense) of taxable REIT subsidiaries and state franchise and income taxes and gain on disposition of real estate, net of tax
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(116,833 | ) | (91,129 | ) | ||||
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Impairment of joint ventures
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— | (40,371 | ) | |||||
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Equity in net loss of joint ventures
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(623 | ) | (9,153 | ) | ||||
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||||||||
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Loss from continuing operations before tax benefit (expense) of taxable REIT subsidiaries and state franchise and income taxes and gain on disposition of real estate, net of tax
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(117,456 | ) | (140,653 | ) | ||||
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Tax benefit (expense) of taxable REIT subsidiaries and state franchise and income taxes
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3,590 | (909 | ) | |||||
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||||||||
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Loss from continuing operations
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(113,866 | ) | (141,562 | ) | ||||
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|
||||||||
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Discontinued operations:
|
||||||||
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Loss from discontinued operations
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(3,835 | ) | (84,067 | ) | ||||
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Loss on disposition of real estate, net of tax
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(4,057 | ) | (36,023 | ) | ||||
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|
||||||||
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(7,892 | ) | (120,090 | ) | ||||
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|
||||||||
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Loss before gain on disposition of real estate
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(121,758 | ) | (261,652 | ) | ||||
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Gain on disposition of real estate, net of tax
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592 | 648 | ||||||
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||||||||
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Net loss
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(121,166 | ) | (261,004 | ) | ||||
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Loss attributable to non-controlling interests
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34,591 | 34,419 | ||||||
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||||||||
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Net loss attributable to DDR
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$ | (86,575 | ) | $ | (226,585 | ) | ||
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|
||||||||
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Preferred dividends
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10,567 | 10,567 | ||||||
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|
||||||||
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Net loss attributable to DDR common shareholders
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$ | (97,142 | ) | $ | (237,152 | ) | ||
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|
||||||||
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|
||||||||
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Per share data:
|
||||||||
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Basic earnings per share data:
|
||||||||
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Loss from continuing operations attributable to DDR common shareholders
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$ | (0.37 | ) | $ | (0.88 | ) | ||
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Loss from discontinued operations attributable to DDR common shareholders
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(0.02 | ) | (0.76 | ) | ||||
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|
||||||||
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Net loss attributable to DDR common shareholders
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$ | (0.39 | ) | $ | (1.64 | ) | ||
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|
||||||||
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Diluted earnings per share data:
|
||||||||
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Loss from continuing operations attributable to DDR common shareholders
|
$ | (0.37 | ) | $ | (0.88 | ) | ||
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Loss from discontinued operations attributable to DDR common shareholders
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(0.02 | ) | (0.76 | ) | ||||
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|
||||||||
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Net loss attributable to DDR common shareholders
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$ | (0.39 | ) | $ | (1.64 | ) | ||
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|
||||||||
- 3 -
| 2010 | 2009 | |||||||
|
Revenues from operations:
|
||||||||
|
Minimum rents
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$ | 272,358 | $ | 268,126 | ||||
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Percentage and overage rents
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2,720 | 3,274 | ||||||
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Recoveries from tenants
|
90,232 | 89,843 | ||||||
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Ancillary and other property income
|
9,898 | 9,797 | ||||||
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Management fees, development fees and other fee income
|
27,161 | 28,502 | ||||||
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Other
|
5,809 | 4,984 | ||||||
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|
||||||||
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408,178 | 404,526 | ||||||
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|
||||||||
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|
||||||||
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Rental operation expenses:
|
||||||||
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Operating and maintenance
|
73,144 | 67,773 | ||||||
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Real estate taxes
|
55,177 | 53,160 | ||||||
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Impairment charges
|
131,777 | 55,551 | ||||||
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General and administrative
|
42,366 | 47,583 | ||||||
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Depreciation and amortization
|
113,531 | 116,076 | ||||||
|
|
||||||||
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415,995 | 340,143 | ||||||
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|
||||||||
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|
||||||||
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Other income (expense):
|
||||||||
|
Interest income
|
2,855 | 6,256 | ||||||
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Interest expense
|
(118,981 | ) | (114,793 | ) | ||||
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Gain on repurchase of senior notes
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— | 118,479 | ||||||
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Loss on equity derivative instruments
|
(3,340 | ) | (80,025 | ) | ||||
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Other expense, net
|
(14,924 | ) | (11,161 | ) | ||||
|
|
||||||||
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|
(134,390 | ) | (81,244 | ) | ||||
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|
||||||||
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Loss from continuing operations before equity in net income (loss) of joint ventures, tax benefit of taxable REIT subsidiaries and state franchise and income taxes and (loss) gain on disposition of real estate, net of tax
|
(142,207 | ) | (16,861 | ) | ||||
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Impairment of joint ventures
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— | (40,371 | ) | |||||
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Equity in net income (loss) of joint ventures
|
1,023 | (8,801 | ) | |||||
|
|
||||||||
|
Loss from continuing operations before tax benefit of taxable REIT subsidiaries and state franchise and income taxes and (loss) gain on disposition of real estate, net of tax
|
(141,184 | ) | (66,033 | ) | ||||
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Tax benefit of taxable REIT subsidiaries and state franchise and income taxes
|
2,574 | 127 | ||||||
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|
||||||||
|
Loss from continuing operations
|
(138,610 | ) | (65,906 | ) | ||||
|
|
||||||||
|
Discontinued operations:
|
||||||||
|
Loss from discontinued operations
|
(5,566 | ) | (87,002 | ) | ||||
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Loss on disposition of real estate, net of tax
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(3,491 | ) | (24,416 | ) | ||||
|
|
||||||||
|
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(9,057 | ) | (111,418 | ) | ||||
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|
||||||||
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Loss before (loss) gain on disposition of real estate
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(147,667 | ) | (177,324 | ) | ||||
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(Loss) gain on disposition of real estate, net of tax
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(83 | ) | 1,096 | |||||
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|
||||||||
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Net loss
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(147,750 | ) | (176,228 | ) | ||||
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Loss attributable to non-controlling interests
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36,928 | 37,044 | ||||||
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|
||||||||
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Net loss attributable to DDR
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$ | (110,822 | ) | $ | (139,184 | ) | ||
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|
||||||||
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Preferred dividends
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21,134 | 21,134 | ||||||
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|
||||||||
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Net loss attributable to DDR common shareholders
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$ | (131,956 | ) | $ | (160,318 | ) | ||
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|
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Per share data:
|
||||||||
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Basic earnings per share data:
|
||||||||
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Loss from continuing operations attributable to DDR common shareholders
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$ | (0.53 | ) | $ | (0.43 | ) | ||
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Loss from discontinued operations attributable to DDR common shareholders
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(0.02 | ) | (0.75 | ) | ||||
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||||||||
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Net loss attributable to DDR common shareholders
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$ | (0.55 | ) | $ | (1.18 | ) | ||
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|
||||||||
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Diluted earnings per share data:
|
||||||||
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Loss from continuing operations attributable to DDR common shareholders
|
$ | (0.53 | ) | $ | (0.43 | ) | ||
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Loss from discontinued operations attributable to DDR common shareholders
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(0.02 | ) | (0.75 | ) | ||||
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||||||||
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Net loss attributable to DDR common shareholders
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$ | (0.55 | ) | $ | (1.18 | ) | ||
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||||||||
- 4 -
| 2010 | 2009 | |||||||
|
Net cash flow provided by operating activities:
|
$ | 127,981 | $ | 139,879 | ||||
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|
||||||||
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Cash flow from investing activities:
|
||||||||
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Real estate developed or acquired, net of liabilities assumed
|
(75,804 | ) | (113,647 | ) | ||||
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Equity contributions to joint ventures
|
(18,497 | ) | (8,915 | ) | ||||
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Issuance of joint venture advances, net
|
(108 | ) | (5,561 | ) | ||||
|
Proceeds from sale and refinancing of joint venture interests
|
3,567 | 158 | ||||||
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Return of investments in joint ventures
|
14,761 | 10,207 | ||||||
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Issuance of notes receivable, net
|
(4,550 | ) | (4,316 | ) | ||||
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Decrease (increase) in restricted cash
|
60,199 | (1,011 | ) | |||||
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Proceeds from disposition of real estate
|
65,682 | 138,167 | ||||||
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|
||||||||
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Net cash flow provided by investing activities:
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45,250 | 15,082 | ||||||
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|
||||||||
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Cash flow from financing activities:
|
||||||||
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(Repayments of) proceeds from revolving credit facilities, net
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(113,007 | ) | 135,952 | |||||
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Repayment of senior notes
|
(389,924 | ) | (456,918 | ) | ||||
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Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $400 in 2010
|
296,785 | — | ||||||
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Proceeds from mortgage and other secured debt
|
4,327 | 319,389 | ||||||
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Principal payments on mortgage debt
|
(325,278 | ) | (182,839 | ) | ||||
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Payment of debt issuance costs
|
(2,309 | ) | (2,783 | ) | ||||
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Proceeds from issuance of common shares, net of underwriting commissions and issuance costs of $1,400 and $524 in 2010 and 2009, respectively
|
382,755 | 52,966 | ||||||
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Proceeds (payment) from issuance of common shares in conjunction with the exercise of stock options and dividend reinvestment plan
|
90 | (1,046 | ) | |||||
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Contributions from non-controlling interests
|
328 | 5,504 | ||||||
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Return on investment non-controlling interests
|
(2,001 | ) | (850 | ) | ||||
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Distributions to non-controlling interest and redeemable operating partnership units
|
(16 | ) | (80 | ) | ||||
|
Dividends paid
|
(30,153 | ) | (23,914 | ) | ||||
|
|
||||||||
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Net cash flow used for financing activities
|
(178,403 | ) | (154,619 | ) | ||||
|
|
||||||||
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Cash and cash equivalents
|
||||||||
|
(Decrease) increase in cash and cash equivalents
|
(5,172 | ) | 342 | |||||
|
Effect of exchange rate changes on cash and cash equivalents
|
(80 | ) | (1,091 | ) | ||||
|
Cash and cash equivalents, beginning of period
|
26,172 | 29,494 | ||||||
|
|
||||||||
|
Cash and cash equivalents, end of period
|
$ | 20,920 | $ | 28,745 | ||||
|
|
||||||||
- 5 -
- 6 -
- 7 -
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Net loss
|
$ | (121,166 | ) | $ | (261,004 | ) | $ | (147,750 | ) | $ | (176,228 | ) | ||||
|
Other comprehensive (loss) income:
|
||||||||||||||||
|
Change in fair value of
interest-rate contracts
|
4,102 | (1,501 | ) | 7,570 | 3,222 | |||||||||||
|
Amortization of
interest-rate contracts
|
(61 | ) | (93 | ) | (154 | ) | (186 | ) | ||||||||
|
Foreign currency translation
|
(4,255 | ) | 19,103 | (16,157 | ) | 23,437 | ||||||||||
|
|
||||||||||||||||
|
Total other comprehensive
(loss) income
|
(214 | ) | 17,509 | (8,741 | ) | 26,473 | ||||||||||
|
|
||||||||||||||||
|
Comprehensive loss
|
$ | (121,380 | ) | $ | (243,495 | ) | $ | (156,491 | ) | $ | (149,755 | ) | ||||
|
Comprehensive loss
attributable to
non-controlling interests
|
37,495 | 31,833 | 41,304 | 35,776 | ||||||||||||
|
|
||||||||||||||||
|
Total comprehensive loss
attributable to DDR
|
$ | (83,885 | ) | $ | (211,662 | ) | $ | (115,187 | ) | $ | (113,979 | ) | ||||
|
|
||||||||||||||||
| June 30, 2010 | December 31, 2009 | |||||||
|
Condensed Combined Balance Sheets
|
||||||||
|
Land
|
$ | 1,616,270 | $ | 1,782,431 | ||||
|
Buildings
|
4,846,362 | 5,207,234 | ||||||
|
Fixtures and tenant improvements
|
147,186 | 146,716 | ||||||
|
|
||||||||
|
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6,609,818 | 7,136,381 | ||||||
|
Less: Accumulated depreciation
|
(670,233 | ) | (636,897 | ) | ||||
|
|
||||||||
|
|
5,939,585 | 6,499,484 | ||||||
|
Land held for development and construction in progress
(A)
|
173,793 | 130,410 | ||||||
|
|
||||||||
|
Real estate, net
|
6,113,378 | 6,629,894 | ||||||
|
Receivables, net
|
124,504 | 113,630 | ||||||
|
Leasehold interests
|
10,876 | 11,455 | ||||||
|
Other assets
|
309,325 | 342,192 | ||||||
|
|
||||||||
|
|
$ | 6,558,083 | $ | 7,097,171 | ||||
|
|
||||||||
|
|
||||||||
|
Mortgage debt
|
$ | 4,047,156 | $ | 4,547,711 | ||||
|
Notes and accrued interest payable to DDR
|
82,522 | 73,477 | ||||||
|
Other liabilities
|
202,523 | 194,065 | ||||||
|
|
||||||||
|
|
4,332,201 | 4,815,253 | ||||||
|
Accumulated equity
|
2,225,882 | 2,281,918 | ||||||
|
|
||||||||
|
|
$ | 6,558,083 | $ | 7,097,171 | ||||
|
|
||||||||
|
Company’s share of accumulated equity
|
$ | 474,398 | $ | 473,738 | ||||
|
|
||||||||
| (A) | The Deconsolidated Entity (Note 1), was combined with the unconsolidated investments as of January 1, 2010. |
- 8 -
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Condensed Combined Statements of Operations
|
||||||||||||||||
|
Revenues from operations
|
$ | 170,347 | $ | 201,206 | $ | 340,440 | $ | 413,399 | ||||||||
|
|
||||||||||||||||
|
Operating expenses
|
71,124 | 76,104 | 137,237 | 157,672 | ||||||||||||
|
Impairment charge
|
10,922 | — | 10,922 | — | ||||||||||||
|
Depreciation and amortization
|
51,352 | 57,240 | 99,194 | 115,908 | ||||||||||||
|
Interest expense
|
60,838 | 77,348 | 120,488 | 141,264 | ||||||||||||
|
|
||||||||||||||||
|
|
194,236 | 210,692 | 367,841 | 414,844 | ||||||||||||
|
|
||||||||||||||||
|
Loss before income tax expense, other (expense) income,
discontinued operations and gain (loss) on disposition of real
estate
|
(23,889 | ) | (9,486 | ) | (27,401 | ) | (1,445 | ) | ||||||||
|
Income tax expense (primarily Sonae Sierra Brasil), net
|
(5,035 | ) | (2,562 | ) | (9,833 | ) | (4,552 | ) | ||||||||
|
Other (expense) income, net
|
— | (2,241 | ) | — | 9,437 | |||||||||||
|
|
||||||||||||||||
|
(Loss) income from continuing operations
|
(28,924 | ) | (14,289 | ) | (37,234 | ) | 3,440 | |||||||||
|
Discontinued operations:
|
||||||||||||||||
|
Income (loss) from discontinued operations
|
674 | (34,115 | ) | 885 | (33,556 | ) | ||||||||||
|
Loss on disposition of real estate, net of tax
(A)
|
(3,212 | ) | (6,048 | ) | (11,963 | ) | (6,077 | ) | ||||||||
|
|
||||||||||||||||
|
|
(2,538 | ) | (40,163 | ) | (11,078 | ) | (39,633 | ) | ||||||||
|
|
||||||||||||||||
|
Loss before gain (loss) on disposition of real estate, net
|
(31,462 | ) | (54,452 | ) | (48,312 | ) | (36,193 | ) | ||||||||
|
Gain (loss) on disposition of real estate, net
(B)
|
17 | — | 17 | (26,741 | ) | |||||||||||
|
|
||||||||||||||||
|
Net loss
|
$ | (31,445 | ) | $ | (54,452 | ) | $ | (48,295 | ) | $ | (62,934 | ) | ||||
|
|
||||||||||||||||
|
Company’s share of equity in net loss of joint ventures
(C)
|
$ | (1,824 | ) | $ | (11,876 | ) | $ | (164 | ) | $ | (11,073 | ) | ||||
|
|
||||||||||||||||
| (A) | For the six months ended June 30, 2010, loss on disposition of discontinued operations includes the sale of 24 properties by three separate unconsolidated joint ventures, of which 16 of those properties were sold during the first quarter of 2010. In the fourth quarter of 2009, these joint ventures recorded impairment charges aggregating $170.9 million related to certain of these asset sales. The Company’s proportionate share of the loss on sales approximated $1.3 million for the six-months ended June 30, 2010. No loss was recognized by the Company in the second quarter of 2010 as the investment basis of these assets had been previously reduced. | |
| For the three- and six-month periods ended June 30, 2009, loss from discontinued operations consisted of the sale of four properties by two separate unconsolidated joint ventures resulting in a loss of $6.0 million of which the Company’s proportionate share was $1.4 million. The results for the six-month period also included the sale of an additional property by an unconsolidated joint venture resulting in a nominal loss. | ||
| (B) | In March 2009, a joint venture with Coventry transferred its interest in the Kansas City, Missouri project (Ward Parkway) to the lender. The joint venture recorded a loss of $26.7 million on the transfer, which is included in loss on disposition of real estate in the condensed combined statements of operations for the six months ended June 30, 2009. The Company recorded a $5.8 million loss in March 2009 related to the write-off of the book value of its equity investment, which is included within equity in net income (loss) of joint ventures in the condensed consolidated statements of operations. | |
| (C) | The difference between the Company’s share of net loss, as reported above, and the amounts included in the condensed consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in gain (loss) on sale of certain assets due to the basis differentials and other than temporary impairment charges. Adjustments to the Company’s share of joint venture net loss due to impairments, additional basis depreciation and basis differences in assets sold are reflected as follows for the three- and six-month periods ended (in millions): |
- 9 -
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Income, net
|
$ | 1.2 | $ | 2.6 | $ | 1.2 | $ | 2.2 | ||||||||
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
|
Company’s share of accumulated equity
|
$ | 474.4 | $ | 473.7 | ||||
|
Basis differentials
(A)
|
(139.0 | ) | (123.5 | ) | ||||
|
Deferred development fees, net of portion
relating to the Company’s interest
|
(3.3 | ) | (4.4 | ) | ||||
|
Notes receivable from investments
|
1.2 | 1.2 | ||||||
|
Amounts payable to DDR
|
82.5 | 73.5 | ||||||
|
|
||||||||
|
Investments in and advances to joint ventures
|
$ | 415.8 | $ | 420.5 | ||||
|
|
||||||||
| (A) | This amount represents the aggregate difference between the Company’s historical cost basis and the equity basis reflected at the joint venture level. Basis differentials recorded upon transfer of assets are primarily associated with assets previously owned by the Company that have been transferred into an unconsolidated joint venture at fair value. Other basis differentials occur primarily when the Company has purchased interests in existing unconsolidated joint ventures at fair market values, which differ from their proportionate share of the historical net assets of the unconsolidated joint ventures. In addition, certain acquisition, transaction and other costs, including capitalized interest and impairments of the Company’s investments that were other than temporary may not be reflected in the net assets at the joint venture level. Certain basis differentials indicated above are amortized over the life of the related assets. |
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Management and other fees
|
$ | 7.7 | $ | 12.1 | $ | 16.9 | $ | 24.3 | ||||||||
|
Financing and other fees
|
0.2 | 0.2 | 0.2 | 0.6 | ||||||||||||
|
Development fees and leasing commissions
|
2.0 | 1.7 | 3.7 | 3.7 | ||||||||||||
|
Interest income
|
0.1 | 2.0 | 0.2 | 3.9 | ||||||||||||
- 10 -
| June 30, 2010 | December 31, 2009 | |||||||
|
Intangible assets:
|
||||||||
|
In-place leases (including lease origination
costs and fair market value of leases), net
|
$ | 11,387 | $ | 15,556 | ||||
|
Tenant relations, net
|
10,169 | 11,318 | ||||||
|
|
||||||||
|
Total intangible assets
(A)
|
21,556 | 26,874 | ||||||
|
Other assets:
|
||||||||
|
Accounts receivable, net
(B)
|
135,761 | 146,809 | ||||||
|
Deferred charges, net
|
30,221 | 33,162 | ||||||
|
Prepaids, deposits and other assets
|
100,997 | 111,975 | ||||||
|
|
||||||||
|
Total other assets, net
|
$ | 288,535 | $ | 318,820 | ||||
|
|
||||||||
| (A) | The Company recorded amortization expense of $1.7 million for both of the three-month periods ended June 30, 2010 and 2009, and $3.4 million and $3.6 million for the six-month periods ended June 30, 2010 and 2009, respectively, related to these intangible assets. The amortization periods of the in-place leases and tenant relations are approximately two to 31 years and ten years, respectively. | |
| (B) | Includes straight-line rent receivables, net, of $55.6 million and $54.9 million at June 30, 2010 and December 31, 2009, respectively. |
- 11 -
- 12 -
| Fair Value Measurement at | ||||||||||||||||
| June 30, 2010 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Derivative financial instruments
|
$ | — | $ | — | $ | 7.8 | $ | 7.8 | ||||||||
|
Marketable securities
|
$ | 3.0 | $ | — | $ | — | $ | 3.0 | ||||||||
| Derivative | ||||
| Financial | ||||
| Instruments | ||||
|
Balance of Level 3 at December 31, 2009
|
$ | (15.4 | ) | |
|
Total unrealized gain included in other comprehensive
(loss) income
|
7.6 | |||
|
|
||||
|
Balance of Level 3 at June 30, 2010
|
$ | (7.8 | ) | |
|
|
||||
- 13 -
| June 30, 2010 | December 31, 2009 | |||||||||||||||
| Carrying | Carrying | |||||||||||||||
| Amount | Fair Value | Amount | Fair Value | |||||||||||||
|
Senior notes
|
$ | 1,596,505 | $ | 1,641,363 | $ | 1,689,841 | $ | 1,691,445 | ||||||||
|
Revolving Credit Facilities and Term Debt
|
1,449,844 | 1,428,412 | 1,575,028 | 1,544,481 | ||||||||||||
|
Mortgage payables and other indebtedness
|
1,591,702 | 1,588,735 | 1,913,794 | 1,875,187 | ||||||||||||
|
|
||||||||||||||||
|
|
$ | 4,638,051 | $ | 4,658,510 | $ | 5,178,663 | $ | 5,111,113 | ||||||||
|
|
||||||||||||||||
- 14 -
| Aggregate Notional | ||||||||
| Amount | LIBOR Fixed | |||||||
| (in millions) | Rate | Maturity Date | ||||||
|
$100
|
4.9 | % |
September 2010
|
|||||
|
$100
|
4.8 | % |
February 2012
|
|||||
- 15 -
| Liability Derivatives | ||||||||||||||||
| June 30, 2010 | December 31, 2009 | |||||||||||||||
| Derivatives Designated as | Balance Sheet | Fair | Balance Sheet | |||||||||||||
| Hedging Instruments | Location | Value | Location | Fair Value | ||||||||||||
|
Interest rate products
|
Other liabilities | $ | 7.8 | Other liabilities | $ | 15.4 | ||||||||||
| Location of | ||||||||||||||||||||||||||||||||||||
| Gain or | ||||||||||||||||||||||||||||||||||||
| (Loss) | ||||||||||||||||||||||||||||||||||||
| Amount of Gain (Loss) Recognized | Reclassified | Amount of Gain Reclassified from | ||||||||||||||||||||||||||||||||||
| in OCI on Derivatives (Effective | from | Accumulated OCI into Loss | ||||||||||||||||||||||||||||||||||
| Portion) | Accumulated | (Effective Portion) | ||||||||||||||||||||||||||||||||||
| Derivatives | Three-Month | Six-Month | OCI into | Three-Month | Six-Month | |||||||||||||||||||||||||||||||
| in Cash | Periods Ended | Periods Ended | Loss | Periods Ended | Periods Ended | |||||||||||||||||||||||||||||||
| Flow | June 30 | June 30 | (Effective | June 30 | June 30 | |||||||||||||||||||||||||||||||
| Hedging | 2010 | 2009 | 2010 | 2009 | Portion) | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||||
|
Interest rate
products
|
$ | 4.1 | $ | (4.3 | ) | $ | 7.6 | $ | 0.2 | Interest expense | $ | 0.1 | $ | 0.1 | $ | 0.2 | $ | 0.2 | ||||||||||||||||||
- 16 -
| Amount of Gain (Loss) Recognized in OCI on | ||||||||||||||||
| Derivatives (Effective Portion) | ||||||||||||||||
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Derivatives in Net Investment Hedging | Ended June 30 | Ended June 30 | ||||||||||||||
| Relationships | 2010 | 2009 | 2010 | 2009 | ||||||||||||
|
Euro denominated
revolving credit
facilities
designated as hedge
of the Company’s
net investment in
its subsidiary
|
$ | 6.7 | $ | (5.3 | ) | $ | 12.4 | $ | (0.7 | ) | ||||||
|
|
||||||||||||||||
|
Canadian
denominated
revolving credit
facilities
designated as hedge
of the Company’s
net investment in
its subsidiaries
|
$ | 3.1 | $ | (7.8 | ) | $ | (0.2 | ) | $ | (5.7 | ) | |||||
|
|
||||||||||||||||
- 17 -
- 18 -
| Developers Diversified Realty Corporation Equity | ||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||
| Distributions | Accumulated | |||||||||||||||||||||||||||||||||||
| in Excess of | Deferred | Other | Treasury | Non- | ||||||||||||||||||||||||||||||||
| Preferred | Common | Paid-in- | Net Income | Compensation | Comprehensive | Stock at | Controlling | |||||||||||||||||||||||||||||
| Shares | Shares | Capital | (Loss) | Obligation | Income (Loss) | Cost | Interests | Total | ||||||||||||||||||||||||||||
|
Balance, December 31, 2009
|
$ | 555,000 | $ | 20,174 | $ | 3,374,528 | $ | (1,098,661 | ) | $ | 17,838 | $ | 9,549 | $ | (15,866 | ) | $ | 89,774 | $ | 2,952,336 | ||||||||||||||||
|
Cumulative effect of adoption of a new accounting standard
|
— | — | — | (7,848 | ) | — | — | — | (12,384 | ) | (20,232 | ) | ||||||||||||||||||||||||
|
Issuance of common shares related to dividend
reinvestment plan and director compensation
|
— | 11 | 517 | — | — | — | 138 | — | 666 | |||||||||||||||||||||||||||
|
Issuance of common shares for cash offering
|
— | 4,773 | 376,907 | — | — | — | 1,074 | — | 382,754 | |||||||||||||||||||||||||||
|
Contributions from non-controlling interests
|
— | — | — | — | — | — | — | 328 | 328 | |||||||||||||||||||||||||||
|
Issuance of restricted stock
|
— | 54 | — | — | 496 | — | (822 | ) | — | (272 | ) | |||||||||||||||||||||||||
|
Vesting of restricted stock
|
— | — | 3,029 | — | (5,460 | ) | — | 3,599 | — | 1,168 | ||||||||||||||||||||||||||
|
Stock-based compensation
|
— | — | 1,237 | — | — | — | — | — | 1,237 | |||||||||||||||||||||||||||
|
Dividends declared-common shares
|
— | — | — | (10,004 | ) | — | — | — | — | (10,004 | ) | |||||||||||||||||||||||||
|
Dividends declared-preferred shares
|
— | — | — | (21,134 | ) | — | — | — | — | (21,134 | ) | |||||||||||||||||||||||||
|
Distributions to non-controlling interests
|
— | — | — | — | — | — | — | (2,016 | ) | (2,016 | ) | |||||||||||||||||||||||||
|
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||
|
Net loss
|
— | — | — | (110,822 | ) | — | — | — | (36,928 | ) | (147,750 | ) | ||||||||||||||||||||||||
|
Other comprehensive (loss) income:
|
||||||||||||||||||||||||||||||||||||
|
Change in fair value of interest rate contracts
|
— | — | — | — | — | 7,570 | — | — | 7,570 | |||||||||||||||||||||||||||
|
Amortization of interest rate contracts
|
— | — | — | — | (154 | ) | — | — | (154 | ) | ||||||||||||||||||||||||||
|
Foreign currency translation
|
— | — | — | — | (11,781 | ) | — | (4,376 | ) | (16,157 | ) | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Comprehensive loss
|
— | — | — | (110,822 | ) | — | (4,365 | ) | — | (41,304 | ) | (156,491 | ) | |||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2010
|
$ | 555,000 | $ | 25,012 | $ | 3,756,218 | $ | (1,248,469 | ) | $ | 12,874 | $ | 5,184 | $ | (11,877 | ) | $ | 34,398 | $ | 3,128,340 | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
- 19 -
| Liability Derivatives | ||||||||||||||||
| June 30, 2010 | December 31, 2009 | |||||||||||||||
| Derivatives not Designated as | Balance Sheet | Fair | Balance Sheet | |||||||||||||
| Hedging Instruments | Location | Value | Location | Fair Value | ||||||||||||
|
Warrants
|
Other liabilities | $ | 59.4 | Other liabilities | $ | 56.1 | ||||||||||
| Three-Month Periods | Six-Month Periods | |||||||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||||||
| Derivatives not Designated | Income Statement | 2010 | 2009 | 2010 | 2009 | |||||||||||||||
| as Hedging Instruments | Location | Gain (Loss) | Gain (Loss) | |||||||||||||||||
|
Warrants
|
Gain (loss) on equity derivative instruments | $ | 21.5 | $ | (10.3 | ) | $ | (3.3 | ) | $ | (10.3 | ) | ||||||||
|
Equity forward — issued shares
|
Loss on equity derivative instruments | — | (69.7 | ) | — | (69.7 | ) | |||||||||||||
- 20 -
| Fair Value Measurement at | ||||||||||||||||
| June 30, 2010 (in millions) | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Warrants
|
$ | — | $ | — | $ | 59.4 | $ | 59.4 | ||||||||
| Equity | ||||
| Derivative | ||||
| Instruments – | ||||
| Liability | ||||
|
Balance of Level 3 at December 31, 2009
|
$ | (56.1 | ) | |
|
Unrealized loss
|
(3.3 | ) | ||
|
|
||||
|
Balance of Level 3 at June 30, 2010
|
$ | (59.4 | ) | |
|
|
||||
- 21 -
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Lease termination fees
|
$ | 3.0 | $ | 1.1 | $ | 3.6 | $ | 2.6 | ||||||||
|
Financing fees
|
0.2 | 0.3 | 0.4 | 0.6 | ||||||||||||
|
Other miscellaneous
|
1.3 | 0.3 | 1.8 | 1.8 | ||||||||||||
|
|
||||||||||||||||
|
|
$ | 4.5 | $ | 1.7 | $ | 5.8 | $ | 5.0 | ||||||||
|
|
||||||||||||||||
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Assets formerly occupied by Mervyns
(a)
|
$ | 32.2 | $ | 43.3 | $ | 32.2 | $ | 43.3 | ||||||||
|
Land held for development
(b)
|
54.3 | — | 54.3 | — | ||||||||||||
|
Undeveloped land
(c)
|
4.9 | 0.4 | 4.9 | 0.4 | ||||||||||||
|
Assets marketed for sale
(c)
|
38.3 | 4.5 | 40.4 | 11.8 | ||||||||||||
|
|
||||||||||||||||
|
Impairments from continuing operations
|
$ | 129.7 | $ | 48.2 | $ | 131.8 | $ | 55.5 | ||||||||
|
|
||||||||||||||||
|
Sold assets included in discontinued operations
|
3.2 | 83.9 | 4.2 | 87.5 | ||||||||||||
|
Joint venture investments
|
— | 40.4 | — | 40.4 | ||||||||||||
|
|
||||||||||||||||
|
Total impairment charges
|
$ | 132.9 | $ | 172.5 | $ | 136.0 | $ | 183.4 | ||||||||
|
|
||||||||||||||||
| (a) | The Company’s proportionate share of these impairments was $16.5 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture and including those assets classified as discontinued operations, for the three- and six-month periods ended June 30, 2010. The 2010 impairment charges were triggered in the three months ended June 30, 2010 primarily due to a change in the Company’s business plans for these assets and the resulting impact on its holding period assumptions for this substantially vacant portfolio. During the second quarter of 2010, the Company determined it was no longer committed to the long-term management and investment of these assets. See discussion of the default status of the joint venture’s mortgage note payable in Note 6. |
- 22 -
| The Company’s proportionate share of these impairments was $29.7 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture and including those assets classified as discontinued operations, for the three- and six-month periods ended June 30, 2009. The 2009 impairment charges were triggered primarily due to the Company’s marketing of certain assets for sale combined with the then overall economic downturn in the retail real estate environment. A full write down of this portfolio was not recorded in 2009 due to the Company’s then holding period assumptions and future investment plans for these assets. | ||
| (b) | Amounts reported in the second quarter of 2010 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. The asset impairments were triggered primarily due to a change in the Company’s investment plans for these projects. Both investments relate to large-scale development projects in Russia. During the second quarter of 2010, the Company determined that it is no longer committed to invest the necessary amount of capital to complete the projects without alternative sources of capital from third-party investors or lending institutions. | |
| (c) | The impairment charges were triggered primarily due to the Company’s marketing of these assets for sale during the six months ended June 30, 2010. These assets were not classified as held for sale as of June 30, 2010, due to outstanding substantive contingencies associated with the respective contracts. |
| Fair Value Measurement at June 30, 2010 | ||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total |
Total
Losses |
||||||||||||||||
|
Long-lived assets -
held and used and
held for sale
|
$ | — | $ | — | $ | 217.0 | $ | 217.0 | $ | 136.0 | ||||||||||
- 23 -
| June 30, 2010 | ||||
|
Building
|
$ | 4,623 | ||
|
Less: Accumulated depreciation
|
(1,623 | ) | ||
|
|
||||
|
Total assets held for sale
|
$ | 3,000 | ||
|
|
||||
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Revenues from operations
|
$ | 459 | $ | 11,180 | $ | 1,655 | $ | 24,036 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Operating expenses
|
426 | 4,449 | 1,244 | 8,946 | ||||||||||||
|
Impairment charges
|
3,160 | 83,859 | 4,182 | 87,459 | ||||||||||||
|
Interest, net
|
504 | 3,636 | 1,213 | 7,490 | ||||||||||||
|
Depreciation and amortization of real
estate investments
|
204 | 3,303 | 582 | 7,143 | ||||||||||||
|
|
||||||||||||||||
|
Total expenses
|
4,294 | 95,247 | 7,221 | 111,038 | ||||||||||||
|
|
||||||||||||||||
|
Loss before disposition of real estate
|
(3,835 | ) | (84,067 | ) | (5,566 | ) | (87,002 | ) | ||||||||
|
Loss on disposition of real estate,
net
|
(4,057 | ) | (36,023 | ) | (3,491 | ) | (24,416 | ) | ||||||||
|
|
||||||||||||||||
|
Net loss
|
$ | (7,892 | ) | $ | (120,090 | ) | $ | (9,057 | ) | $ | (111,418 | ) | ||||
|
|
||||||||||||||||
- 24 -
| Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Basic and Diluted Earnings:
|
||||||||||||||||
|
Continuing Operations:
|
||||||||||||||||
|
Loss from continuing operations
|
$ | (113,866 | ) | $ | (141,562 | ) | $ | (138,610 | ) | $ | (65,906 | ) | ||||
|
Plus: Gain (loss) on disposition of real estate
|
592 | 648 | (83 | ) | 1,096 | |||||||||||
|
Plus: Loss attributable to non-controlling
interests
|
31,843 | 25,173 | 34,069 | 27,578 | ||||||||||||
|
|
||||||||||||||||
|
Loss from continuing operations attributable to
DDR
|
(81,431 | ) | (115,741 | ) | (104,624 | ) | (37,232 | ) | ||||||||
|
Less: Preferred share dividends
|
(10,567 | ) | (10,567 | ) | (21,134 | ) | (21,134 | ) | ||||||||
|
|
||||||||||||||||
|
Basic and Diluted — Loss from continuing
operations attributable to DDR common
shareholders
|
(91,998 | ) | (126,308 | ) | (125,758 | ) | (58,366 | ) | ||||||||
|
Less: Earnings attributable to unvested shares
and operating partnership units
|
(31 | ) | (73 | ) | (62 | ) | (146 | ) | ||||||||
|
|
||||||||||||||||
|
Basic and Diluted — Loss from continuing
operations
|
$ | (92,029 | ) | (126,381 | ) | $ | (125,820 | ) | (58,512 | ) | ||||||
|
|
||||||||||||||||
|
Discontinued Operations:
|
||||||||||||||||
|
Loss from discontinued operations
|
(7,892 | ) | (120,090 | ) | (9,057 | ) | (111,418 | ) | ||||||||
|
Plus: Loss attributable to non-controlling
interests
|
2,748 | 9,246 | 2,859 | 9,466 | ||||||||||||
|
|
||||||||||||||||
|
Basic and Diluted — Loss from discontinued
operations
|
(5,144 | ) | (110,844 | ) | (6,198 | ) | (101,952 | ) | ||||||||
|
|
||||||||||||||||
|
Net loss attributable to DDR common
shareholders after allocation to participating
securities
|
(97,173 | ) | (237,225 | ) | (132,018 | ) | (160,464 | ) | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Number of Shares:
|
||||||||||||||||
|
Basic and Diluted— Average shares outstanding
|
248,533 | 144,227 | 237,892 | 136,514 | ||||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Basic Earnings Per Share:
|
||||||||||||||||
|
Loss from continuing operations attributable to
DDR common shareholders
|
$ | (0.37 | ) | $ | (0.88 | ) | $ | (0.53 | ) | $ | (0.43 | ) | ||||
|
Loss from discontinued operations attributable
to DDR common shareholders
|
(0.02 | ) | (0.76 | ) | (0.02 | ) | (0.75 | ) | ||||||||
|
|
||||||||||||||||
|
Net loss attributable to DDR common shareholders
|
$ | (0.39 | ) | $ | (1.64 | ) | $ | (0.55 | ) | $ | (1.18 | ) | ||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Dilutive Earnings Per Share:
|
||||||||||||||||
|
Loss from continuing operations attributable to
DDR common shareholders
|
$ | (0.37 | ) | $ | (0.88 | ) | $ | (0.53 | ) | $ | (0.43 | ) | ||||
|
Loss from discontinued operations attributable
to DDR common shareholders
|
(0.02 | ) | (0.76 | ) | (0.02 | ) | (0.75 | ) | ||||||||
|
|
||||||||||||||||
|
Net loss attributable to DDR common shareholders
|
$ | (0.39 | ) | $ | (1.64 | ) | $ | (0.55 | ) | $ | (1.18 | ) | ||||
|
|
||||||||||||||||
| • | Options to purchase 3.4 million and 3.5 million common shares were outstanding at June 30, 2010 and 2009, respectively, all of which were anti-dilutive in the calculations at June 30, 2010 and 2009. Accordingly, the anti-dilutive options were excluded from the computations. |
- 25 -
| • | Shares subject to issuance under the Company’s value sharing equity program are not considered in the computation of diluted EPS for the three- and six-month periods ended June 30, 2010, as the shares were considered anti-dilutive due to the Company’s net loss from continuing operations. There were no awards outstanding under this program at June 30, 2009. | ||
| • | The Company has excluded from its basic and diluted EPS for the three- and six-month periods ended June 30, 2010 warrants to purchase 5.0 million common shares issued in May 2009 and warrants to purchase 5.0 million common shares issued in September 2009 because the warrants were considered anti-dilutive due to the Company’s net loss from continuing operations. | ||
| • | The Company’s two issuances of senior convertible notes, which are convertible into common shares of the Company with conversion prices of approximately $74.56 and $64.23 at June 30, 2010 and 2009, respectively, were not included in the computation of diluted EPS for the three- and six-month periods ended June 30, 2010 and 2009, because the Company’s stock price did not exceed the conversion price of the conversion feature of the senior convertible notes in these periods and would therefore be anti-dilutive. In addition, the purchased option related to the senior convertible notes is not included in the computation of diluted EPS as the purchase option is anti-dilutive. |
| June 30, | ||||||||
| 2010 | 2009 | |||||||
|
Shopping centers owned
|
581 | 682 | ||||||
|
Unconsolidated joint ventures
|
249 | 324 | ||||||
|
Consolidated joint ventures
|
29 | 35 | ||||||
|
States
(A)
|
43 | 45 | ||||||
|
Business centers
|
6 | 6 | ||||||
|
States
|
4 | 4 | ||||||
| (A) | In addition to Puerto Rico and Brazil. |
- 26 -
| Three-Month Period Ended June 30, 2010 | ||||||||||||||||
| Other | Shopping | |||||||||||||||
| Investments | Centers | Other | Total | |||||||||||||
|
Total revenues
|
$ | 1,205 | $ | 200,811 | $ | 202,016 | ||||||||||
|
Operating expenses
|
(496 | ) | (192,945 | ) (A) | (193,441 | ) | ||||||||||
|
|
||||||||||||||||
|
Net operating income
|
709 | 7,866 | 8,575 | |||||||||||||
|
Unallocated expenses
(B)
|
$ | (121,818 | ) | (121,818 | ) | |||||||||||
|
Equity in net loss of joint ventures
|
(623 | ) | (623 | ) | ||||||||||||
|
|
||||||||||||||||
|
Loss from continuing operations
|
$ | (113,866 | ) | |||||||||||||
|
|
||||||||||||||||
| Three-Month Period Ended June 30, 2009 | ||||||||||||||||
| Other | Shopping | |||||||||||||||
| Investments | Centers | Other | Total | |||||||||||||
|
Total revenues
|
$ | 1,285 | $ | 196,191 | $ | 197,476 | ||||||||||
|
Operating expenses
|
(894 | ) | (107,146 | ) (A) | (108,040 | ) | ||||||||||
|
|
||||||||||||||||
|
Net operating income
|
391 | 89,045 | 89,436 | |||||||||||||
|
Unallocated expenses
(B)
|
$ | (181,474 | ) | (181,474 | ) | |||||||||||
|
Equity in net loss of joint ventures
|
(49,524 | ) | (49,524 | ) | ||||||||||||
|
|
||||||||||||||||
|
Loss from continuing operations
|
$ | (141,562 | ) | |||||||||||||
|
|
||||||||||||||||
| Six-Month Period Ended June 30, 2010 | ||||||||||||||||
| Other | Shopping | |||||||||||||||
| Investments | Centers | Other | Total | |||||||||||||
|
Total revenues
|
$ | 2,653 | $ | 405,525 | $ | 408,178 | ||||||||||
|
Operating expenses
|
(1,264 | ) | (258,834 | ) (A) | (260,098 | ) | ||||||||||
|
|
||||||||||||||||
|
Net operating income
|
1,389 | 146,691 | 148,080 | |||||||||||||
|
Unallocated expenses
(B)
|
$ | (287,713 | ) | (287,713 | ) | |||||||||||
|
Equity in net income of joint ventures
|
1,023 | 1,023 | ||||||||||||||
|
|
||||||||||||||||
|
Loss from continuing operations
|
$ | (138,610 | ) | |||||||||||||
|
|
||||||||||||||||
|
Total real estate assets
|
$ | 49,909 | $ | 8,583,757 | $ | 8,633,666 | ||||||||||
|
|
||||||||||||||||
- 27 -
| Six-Month Period Ended June 30, 2009 | ||||||||||||||||
| Other | Shopping | |||||||||||||||
| Investments | Centers | Other | Total | |||||||||||||
|
Total revenues
|
$ | 2,808 | $ | 401,718 | $ | 404,526 | ||||||||||
|
Operating expenses
|
(1,433 | ) | (175,051 | ) (A) | (176,484 | ) | ||||||||||
|
|
||||||||||||||||
|
Net operating income
|
1,375 | 226,667 | 228,042 | |||||||||||||
|
Unallocated expenses
(B)
|
$ | (244,776 | ) | (244,776 | ) | |||||||||||
|
Equity in net loss of joint ventures
|
(49,172 | ) | (49,172 | ) | ||||||||||||
|
|
||||||||||||||||
|
Loss from continuing operations
|
$ | (65,906 | ) | |||||||||||||
|
|
||||||||||||||||
|
Total real estate assets
|
$ | 49,485 | $ | 8,817,660 | $ | 8,867,145 | ||||||||||
|
|
||||||||||||||||
| (A) | Includes impairment charges of $129.7 million and $48.2 million for the three-month periods ended June 30, 2010 and 2009, respectively, and $131.8 million and $55.6 million for the six-month periods ended June 30, 2010 and 2009, respectively. | |
| (B) | Unallocated expenses consist of general and administrative, depreciation and amortization, other income/expense and tax benefit/expense as listed in the condensed consolidated statements of operations. |
- 28 -
| Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| • | The Company is subject to general risks affecting the real estate industry, including the need to enter into new leases or renew leases on favorable terms to generate rental revenues, and the economic downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new leases or the ability of the Company’s existing tenants to renew their leases at rates at least as favorable as their current rates; | ||
| • | The Company could be adversely affected by changes in the local markets where its properties are located, as well as by adverse changes in national economic and market conditions; | ||
| • | The Company may fail to anticipate the effects on its properties of changes in consumer buying practices, including catalog sales and sales over the internet and the resulting retailing practices and space needs of its tenants or a general downturn in its tenants’ businesses, which may cause tenants to close stores or default in payment of rent; | ||
| • | The Company is subject to competition for tenants from other owners of retail properties, and its tenants are subject to competition from other retailers and methods of distribution. The Company is dependent upon the successful operations and financial condition of its tenants, in particular of its major tenants, and could be adversely affected by the bankruptcy of those tenants; |
- 29 -
| • | The Company relies on major tenants, which makes it vulnerable to changes in the business and financial condition of, or demand for its space, by such tenants; | ||
| • | The Company may not realize the intended benefits of acquisition or merger transactions. The acquired assets may not perform as well as the Company anticipated, or the Company may not successfully integrate the assets and realize the improvements in occupancy and operating results that the Company anticipates. The acquisition of certain assets may subject the Company to liabilities, including environmental liabilities; | ||
| • | The Company may fail to identify, acquire, construct or develop additional properties that produce a desired yield on invested capital, or may fail to effectively integrate acquisitions of properties or portfolios of properties. In addition, the Company may be limited in its acquisition opportunities due to competition, the inability to obtain financing on reasonable terms or any financing at all, and other factors; | ||
| • | The Company may fail to dispose of properties on favorable terms. In addition, real estate investments can be illiquid, particularly as prospective buyers may experience increased costs of financing or difficulties obtaining financing, and could limit the Company’s ability to promptly make changes to its portfolio to respond to economic and other conditions; | ||
| • | The Company may abandon a development opportunity after expending resources if it determines that the development opportunity is not feasible due to a variety of factors, including a lack of availability of construction financing on reasonable terms, the impact of the economic environment on prospective tenants’ ability to enter into new leases or pay contractual rent, or the inability of the Company to obtain all necessary zoning and other required governmental permits and authorizations; | ||
| • | The Company may not complete development projects on schedule as a result of various factors, many of which are beyond the Company’s control, such as weather, labor conditions, governmental approvals, material shortages or general economic downturn resulting in limited availability of capital, increased debt service expense and construction costs, and decreases in revenue; | ||
| • | The Company’s financial condition may be affected by required debt service payments, the risk of default, and restrictions on its ability to incur additional debt or to enter into certain transactions under its credit facilities and other documents governing its debt obligations. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt. Borrowings under the Company’s revolving credit facilities are subject to certain representations and warranties and customary events of default, including any event that has had or could reasonably be expected to have a material adverse effect on the Company’s business or financial condition; | ||
| • | Changes in interest rates could adversely affect the market price of the Company’s common shares, as well as its performance and cash flow; | ||
| • | Debt and/or equity financing necessary for the Company to continue to grow and operate its business may not be available or may not be available on favorable terms; |
- 30 -
| • | Disruptions in the financial markets could affect the Company’s ability to obtain financing on reasonable terms and have other adverse effects on the Company and the market price of the Company’s common shares; | ||
| • | The Company is subject to complex regulations related to its status as a real estate investment trust (“REIT”) and would be adversely affected if it failed to qualify as a REIT; | ||
| • | The Company must make distributions to shareholders to continue to qualify as a REIT, and if the Company must borrow funds to make distributions, those borrowings may not be available on favorable terms or at all; | ||
| • | Joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that a partner or co-venturer may become bankrupt, may at any time have different interests or goals than those of the Company and may take action contrary to the Company’s instructions, requests, policies or objectives, including the Company’s policy with respect to maintaining its qualification as a REIT. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture. The partner could cause a default under the joint venture loan for reasons outside of the Company’s control. Furthermore, the Company could be required to reduce the carrying value of its equity method investments if a loss in the carrying value of the investment is other than temporary; | ||
| • | The outcome of pending or future litigation, including litigation with tenants or joint venture partners, may adversely effect the Company’s results of operations and financial condition; | ||
| • | The Company may not realize anticipated returns from its real estate assets outside the United States. The Company expects to continue to pursue international opportunities that may subject the Company to different or greater risks than those associated with its domestic operations. The Company owns assets in Puerto Rico, an interest in an unconsolidated joint venture that owns properties in Brazil and an interest in consolidated joint ventures that were formed to develop and own properties in Canada and Russia; | ||
| • | International development and ownership activities carry risks in addition to those the Company faces with the Company’s domestic properties and operations. These risks include: |
| • | Adverse effects of changes in exchange rates for foreign currencies; | ||
| • | Changes in foreign political or economic environments; | ||
| • | Challenges of complying with a wide variety of foreign laws, including tax laws, and addressing different practices and customs relating to corporate governance, operations and litigation; | ||
| • | Different lending practices; | ||
| • | Cultural and consumer differences; | ||
| • | Changes in applicable laws and regulations in the United States that affect foreign operations; |
- 31 -
| • | Difficulties in managing international operations and | ||
| • | Obstacles to the repatriation of cash; |
| • | Although the Company’s international activities are currently a relatively small portion of its business, to the extent the Company expands its international activities, these risks could significantly increase and adversely affect its results of operations and financial condition; | ||
| • | The Company is subject to potential environmental liabilities; | ||
| • | The Company may incur losses that are uninsured or exceed policy coverage due to its liability for certain injuries to persons, property or the environment occurring on its properties and | ||
| • | The Company could incur additional expenses in order to comply with or respond to claims under the Americans with Disabilities Act or otherwise be adversely affected by changes in government regulations, including changes in environmental, zoning, tax and other regulations. |
- 32 -
- 33 -
| Three-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Base and percentage rental revenues
|
$ | 136,469 | $ | 133,315 | $ | 3,154 | 2.4 | % | ||||||||
|
Recoveries from tenants
|
42,926 | 43,503 | (577 | ) | (1.3 | ) | ||||||||||
|
Ancillary and other property income
|
4,936 | 4,881 | 55 | 1.1 | ||||||||||||
|
Management fees, development fees
and other fee income
|
13,145 | 14,040 | (895 | ) | (6.4 | ) | ||||||||||
|
Other
|
4,540 | 1,737 | 2,803 | 161.4 | ||||||||||||
|
|
||||||||||||||||
|
Total revenues
|
$ | 202,016 | $ | 197,476 | $ | 4,540 | 2.3 | % | ||||||||
|
|
||||||||||||||||
| Six-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Base and percentage rental revenues
(A)
|
$ | 275,078 | $ | 271,400 | $ | 3,678 | 1.4 | % | ||||||||
|
Recoveries from tenants
(B)
|
90,232 | 89,843 | 389 | 0.4 | ||||||||||||
|
Ancillary and other property income
(C)
|
9,898 | 9,797 | 101 | 1.0 | ||||||||||||
|
Management fees, development fees and other fee
income
(D)
|
27,161 | 28,502 | (1,341 | ) | (4.7 | ) | ||||||||||
|
Other
(E)
|
5,809 | 4,984 | 825 | 16.6 | ||||||||||||
|
|
||||||||||||||||
|
Total revenues
|
$ | 408,178 | $ | 404,526 | $ | 3,652 | 0.9 | % | ||||||||
|
|
||||||||||||||||
| (A) | The increase was due to the following (in millions): |
| Increase | ||||
|
Core Portfolio Properties
|
$ | (3.1 | ) | |
|
Acquisition of real estate assets
|
5.3 | |||
|
Development/redevelopment of shopping center properties
|
1.5 | |||
|
|
||||
|
|
$ | 3.7 | ||
|
|
||||
| The decrease in Core Portfolio Properties is primarily attributable to the major tenant bankruptcies that occurred in the first quarter of 2009. These bankruptcies have also driven the current lower occupancy level as compared to the Company’s historical levels. The Company acquired three assets in the fourth quarter of 2009 contributing to the $5.3 million increase. | ||
| The following tables present the operating statistics impacting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, business center portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio: |
- 34 -
| Shopping Center | Business Center | |||||||||||||||
| Portfolio | Portfolio | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Centers owned
|
581 | 682 | 6 | 6 | ||||||||||||
|
Aggregate occupancy rate
|
86.6 | % | 87.4 | % | 72.3 | % | 71.6 | % | ||||||||
|
Average annualized base
rent per occupied
square foot
|
$ | 12.96 | $ | 12.52 | $ | 12.10 | $ | 12.30 | ||||||||
| Wholly-Owned | Joint Venture | |||||||||||||||
| Shopping Centers | Shopping Centers | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Centers owned
|
303 | 323 | 249 | 324 | ||||||||||||
|
Consolidated centers
primarily owned through
a joint venture
previously occupied by
Mervyns
|
n/a | n/a | 29 | 35 | ||||||||||||
|
Aggregate occupancy rate
|
88.5 | % | 90.0 | % | 84.6 | % | 85.2 | % | ||||||||
|
Average annualized base
rent per occupied
square foot
|
$ | 11.91 | $ | 11.74 | $ | 14.24 | $ | 13.22 | ||||||||
| (B) | Recoveries were approximately 70.3% and 74.3% of operating expenses and real estate taxes including the impact of bad debt expense recognized for the six months ended June 30, 2010 and 2009, respectively. The decrease in the recovery percentage from tenants was primarily a result of an overall increase in bad debt expense. Bad debt expense was approximately 1.8% of total revenues in 2010 as compared to 1.4% in 2009. | |
| (C) | Ancillary revenue opportunities have historically included short-term and seasonal leasing programs, outdoor advertising programs, wireless tower development programs, energy management programs, sponsorship programs and various other programs. | |
| (D) | Decreased primarily due to the following (in millions): |
| (Decrease) | ||||
| Increase | ||||
|
Development fee income
|
$ | (0.1 | ) | |
|
Leasing commissions
|
1.3 | |||
|
Decrease in management fee income primarily related to asset sales
|
(1.6 | ) | ||
|
Property and asset management fee income at various
unconsolidated joint ventures
|
(0.9 | ) | ||
|
|
||||
|
|
$ | (1.3 | ) | |
|
|
||||
- 35 -
| (E) | Composed of the following (in millions): |
| Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Lease terminations
|
$ | 3.0 | $ | 1.1 | $ | 3.6 | $ | 2.6 | ||||||||
|
Financing fees
|
0.2 | 0.3 | 0.4 | 0.6 | ||||||||||||
|
Other miscellaneous
|
1.3 | 0.3 | 1.8 | 1.8 | ||||||||||||
|
|
||||||||||||||||
|
|
$ | 4.5 | $ | 1.7 | $ | 5.8 | $ | 5.0 | ||||||||
|
|
||||||||||||||||
| Three-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Operating and maintenance
|
$ | 37,197 | $ | 33,626 | $ | 3,571 | 10.6 | % | ||||||||
|
Real estate taxes
|
26,517 | 26,168 | 349 | 1.3 | ||||||||||||
|
Impairment charges
|
129,727 | 48,246 | 81,481 | 168.9 | ||||||||||||
|
General and administrative
|
19,090 | 28,412 | (9,322 | ) | (32.8 | ) | ||||||||||
|
Depreciation and amortization
|
56,738 | 56,836 | (98 | ) | (0.2 | ) | ||||||||||
|
|
||||||||||||||||
|
|
$ | 269,269 | $ | 193,288 | $ | 75,981 | 39.3 | % | ||||||||
|
|
||||||||||||||||
| Six-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Operating and maintenance
(A)
|
$ | 73,144 | $ | 67,773 | $ | 5,371 | 7.9 | % | ||||||||
|
Real estate taxes
(A)
|
55,177 | 53,160 | 2,017 | 3.8 | ||||||||||||
|
Impairment charges
(B)
|
131,777 | 55,551 | 76,226 | 137.2 | ||||||||||||
|
General and administrative
(C)
|
42,366 | 47,583 | (5,217 | ) | (11.0 | ) | ||||||||||
|
Depreciation and amortization
(A)
|
113,531 | 116,076 | (2,545 | ) | (2.2 | ) | ||||||||||
|
|
||||||||||||||||
|
|
$ | 415,995 | $ | 340,143 | $ | 75,852 | 22.3 | % | ||||||||
|
|
||||||||||||||||
| (A) | The changes for the six months ended June 30, 2010 compared to 2009, are due to the following (in millions): |
| Operating | ||||||||||||
| and | Real Estate | |||||||||||
| Maintenance | Taxes | Depreciation | ||||||||||
|
Core Portfolio Properties
|
$ | 1.6 | $ | 0.1 | (1) | $ | (3.7 | ) (2) | ||||
|
Acquisitions of real estate assets
|
0.7 | 1.1 | 1.2 | |||||||||
|
Development/redevelopment of shopping
center properties
|
1.2 | 0.8 | (1.0 | ) (2) | ||||||||
|
Business Center Properties
|
0.1 | — | — | |||||||||
|
Provision for bad debt expense
|
1.8 | (3) | — | — | ||||||||
|
Personal property
|
— | — | 1.0 | |||||||||
|
|
||||||||||||
|
|
$ | 5.4 | $ | 2.0 | $ | (2.5 | ) | |||||
|
|
||||||||||||
| (1) | The Company is in the process of appealing numerous real estate tax charges given the current economic environment and increased vacancy resulting from tenant bankruptcies. | |
| (2) | Primarily relates to accelerated depreciation and write offs in 2009 as a result of major tenant bankruptcies partially offset by additional assets placed in service in 2010. |
- 36 -
| (3) | The increase in bad debt expense as compared to the prior year relates to an increase in reserves associated with local tenants in litigation and bankruptcy. | |
| (B) | The Company recorded impairment charges during the three- and six-month periods ended June 30, 2010 and 2009, on the following consolidated assets and investments (in millions): |
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Assets formerly occupied by Mervyns
(1)
|
$ | 32.2 | $ | 43.3 | $ | 32.2 | $ | 43.3 | ||||||||
|
Land held for development
(2)
|
54.3 | — | 54.3 | — | ||||||||||||
|
Undeveloped land
(3)
|
4.9 | 0.4 | 4.9 | 0.4 | ||||||||||||
|
Assets marketed for sale
(3)
|
38.3 | 4.5 | 40.4 | 11.8 | ||||||||||||
|
|
||||||||||||||||
|
Impairments from continuing operations
|
$ | 129.7 | $ | 48.2 | $ | 131.8 | $ | 55.5 | ||||||||
|
|
||||||||||||||||
|
Sold assets included in discontinued
operations
|
3.2 | 83.9 | 4.2 | 87.5 | ||||||||||||
|
Joint venture investments
|
— | 40.4 | — | 40.4 | ||||||||||||
|
|
||||||||||||||||
|
Total impairment charges
|
$ | 132.9 | $ | 172.5 | $ | 136.0 | $ | 183.4 | ||||||||
|
|
||||||||||||||||
| (1) | The Company’s proportionate share of these impairments was $16.5 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture and including those assets classified as discontinued operations, for the three- and six-month periods ended June 30, 2010. The 2010 impairment charges were triggered primarily due to a change in the Company’s holding period assumptions for this substanitally vacant portfolio. During the second quarter of 2010, the Company determined it was no longer committed to the long-term management and investment of these assets. (See discussion of the default status of the joint venture’s mortgage note payable in Liquidity and Capital Resources.) | |
| The Company’s proportionate share of these impairments was $29.7 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture and including those assets classified as discontinued operations, for the three- and six-month periods ended June 30, 2009. The 2009 impairment charges were triggered primarily due to the Company’s marketing of certain assets for sale combined with the then overall economic downturn in the retail real estate environment. A full write down of this portfolio was not recorded in 2009 due to the Company’s then holding period assumptions and future investment plans for these assets. | ||
| (2) | Amounts reported in 2010 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. The asset impairments were triggered primarily due to a change in the Company’s investment plans for these projects. Both investments relate to large-scale development projects in Russia. During the second quarter of 2010, the Company determined that it is no longer committed to invest the necessary amount of capital to complete the projects without alternative sources of capital from third party investors or lending institutions. | |
| (3) | The impairment charges were triggered primarily due to the Company’s marketing of these assets for sale during the six months ended June 30, 2010. These assets were not classified as held for sale as of June 30, 2010, due to outstanding substantive contingencies associated with the respective contracts. | |
| (C) | Total general and administrative expenses were approximately 5.1% and 5.4% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for the six-month periods ended June 30, 2010 and 2009, respectively. During the six months ended June 30, 2010, the Company incurred a $2.1 million separation charge relating to the departure of an executive officer. In 2009, the Company recorded an accelerated non-cash charge of |
- 37 -
| approximately $10.5 million related to certain equity awards as a result of the Company’s shareholders approving a potential change in control. The Company continues to expense internal leasing salaries, legal salaries and related expenses associated with certain leasing and re-leasing of existing space. |
| Three-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Interest income
|
$ | 1,525 | $ | 3,228 | $ | (1,703 | ) | (52.8 | )% | |||||||
|
Interest expense
|
(59,692 | ) | (57,765 | ) | (1,927 | ) | 3.3 | |||||||||
|
(Loss) gain on repurchase of senior notes
|
(1,090 | ) | 45,901 | (46,991 | ) | (102.4 | ) | |||||||||
|
Gain (loss) on equity derivative
instruments
|
21,527 | (80,025 | ) | 101,552 | (126.9 | ) | ||||||||||
|
Other expense, net
|
(11,850 | ) | (6,656 | ) | (5,194 | ) | 78.0 | |||||||||
|
|
||||||||||||||||
|
|
$ | (49,580 | ) | $ | (95,317 | ) | $ | 45,737 | (48.0 | )% | ||||||
|
|
||||||||||||||||
| Six-Month Periods Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Interest income
(A)
|
$ | 2,855 | $ | 6,256 | $ | (3,401 | ) | (54.4 | )% | |||||||
|
Interest expense
(B)
|
(118,981 | ) | (114,793 | ) | (4,188 | ) | 3.6 | |||||||||
|
Gain on repurchase of senior notes
(C)
|
— | 118,479 | (118,479 | ) | (100.0 | ) | ||||||||||
|
Loss on equity derivative instruments
(D)
|
(3,340 | ) | (80,025 | ) | 76,685 | (95.8 | ) | |||||||||
|
Other expense, net
(E)
|
(14,924 | ) | (11,161 | ) | (3,763 | ) | 33.7 | |||||||||
|
|
||||||||||||||||
|
|
$ | (134,390 | ) | $ | (81,244 | ) | $ | (53,146 | ) | 65.4 | % | |||||
|
|
||||||||||||||||
| (A) | Decreased primarily due to interest earned from mortgage receivables, which aggregated $110.7 million and $121.0 million at June 30, 2010 and 2009, respectively. In the fourth quarter of 2009, the Company established a full reserve on an advance to an affiliate of $66.9 million and ceased the recognition of interest income. The Company recorded $3.7 million of interest income for the six-month period ended June 30, 2009 relating to this advance. | |
| (B) | The weighted-average debt outstanding and related weighted-average interest rates including amounts allocated to discontinued operations are as follows: |
| Six-Month Periods Ended | ||||||||
| June 30, | ||||||||
| 2010 | 2009 | |||||||
|
Weighted-average debt outstanding (in billions)
|
$ | 4.8 | $ | 5.7 | ||||
|
Weighted-average interest rate
|
5.0 | % | 4.5 | % | ||||
| At June 30, | ||||||||
| 2010 | 2009 | |||||||
|
Weighted-average interest rate
|
4.6 | % | 4.2 | % | ||||
|
The increase in 2010 interest expense is primarily due to an increase in short-term interest rates partially offset by a reduction in outstanding debt. The Company ceases the capitalization of interest as assets are placed in service or upon the suspension of construction. Interest costs capitalized in conjunction with development and expansion projects and unconsolidated development joint venture interests were $3.2 million and $6.3 million for the three and six months ended June 30, 2010, respectively, as compared to |
- 38 -
| $5.8 million and $11.6 million for the respective periods in 2009. Because the Company has suspended certain construction activities, the amount of capitalized interest has significantly decreased in 2010. | ||
| (C) | Relates to the Company’s purchase of approximately $256.6 million and $376.2 million aggregate principal amount of its outstanding senior unsecured notes, including senior convertible notes, at a net discount to par during the six months ended June 30, 2010 and 2009, respectively. Approximately $83.1 million aggregate principal amount of near-term outstanding senior unsecured notes repurchased at par in March 2010 occurred through a cash tender offer. The Company recorded $5.9 million and $17.0 million during the six months ended June 30, 2010 and 2009, respectively, related to the required write-off of unamortized deferred financing costs and accretion related to the senior unsecured notes repurchased for the six months ended June 30, 2010 and 2009, respectively. | |
| (D) | Represents the impact of the valuation adjustments for the equity derivative instruments issued as part of the stock purchase agreement with Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”). The magnitude of the charge recognized primarily relates to the difference between the closing trading value of the Company’s common shares from January 1, 2010 to June 30, 2010 and April 9, 2009 through the date of issuance or June 30, 2009. | |
| (E) | Other (expenses) income were comprised of the following (in millions): |
| Six-Month Period | ||||||||
| Ended June 30, | ||||||||
| 2010 | 2009 | |||||||
|
Litigation-related expenses
(1)
|
$ | (10.0 | ) | $ | (3.7 | ) | ||
|
Debt extinguishment costs
|
(4.0 | ) | — | |||||
|
Note receivable reserve
|
0.1 | (5.4 | ) | |||||
|
Sale of MDT units
|
— | (0.8 | ) | |||||
|
Abandoned projects and other expenses
|
(1.0 | ) | (1.3 | ) | ||||
|
|
||||||||
|
|
$ | (14.9 | ) | $ | (11.2 | ) | ||
|
|
||||||||
| (1) | Increase primarily relates to an increase in a reserve of $5.1 million in the second quarter of 2010 relating to a legal matter involving a property in Long Beach, California (See discussion in Economic Conditions – Legal Matters). |
| Three-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Equity in net loss of joint ventures
|
$ | (623 | ) | $ | (9,153 | ) | $ | 8,530 | (93.2 | )% | ||||||
|
Tax benefit (expense) of taxable
REIT subsidiaries and state
franchise and income taxes
|
3,590 | (909 | ) | 4,499 | (494.9 | ) | ||||||||||
| Six-Month Periods Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Equity in net income (loss) of joint ventures
(A)
|
$ | 1,023 | $ | (8,801 | ) | $ | 9,824 | (111.6 | )% | |||||||
|
Tax benefit of taxable REIT subsidiaries and state
franchise and income taxes
(B)
|
2,574 | 127 | 2,447 | 1,926.8 | ||||||||||||
- 39 -
| (A) | A summary of the increase in equity in net income of joint ventures for the six months ended June 30, 2010, is composed of the following (in millions): |
| (Decrease) | ||||
| Increase | ||||
|
Decrease in income from existing joint ventures
(1)
|
$ | (0.6 | ) | |
|
Coventry II Fund investments
(2)
|
7.5 | |||
|
Disposition of joint venture assets
(3)
|
2.9 | |||
|
|
||||
|
|
$ | 9.8 | ||
|
|
||||
| (1) | Net decrease in income from several joint ventures due in part to change in tenant mix. | |
| (2) | Primarily related to the losses from Coventry II investments recorded in 2009. As the Company wrote off its basis in certain of these investments in 2009, and it has no intention or obligation to fund any additional losses, no additional losses were recorded in 2010 (see Coventry II Fund discussion in Off Balance Sheet Arrangements below). | |
| (3) | Primarily related to a decrease in impairments and losses from joint ventures sold prior to January 1, 2010. | |
| (B) | Primarily a result of a change in the net taxable income position in 2010 of the Company’s wholly-owned taxable REIT subsidiary and certain state tax refunds. |
| Three-Month Periods | ||||||||||||||||
| Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Loss from discontinued operations
(A)
|
$ | (3,835 | ) | $ | (84,067 | ) | $ | 80,232 | (95.4 | )% | ||||||
|
Loss on disposition of real estate, net of tax
|
(4,057 | ) | (36,023 | ) | 31,966 | (88.7 | ) | |||||||||
|
|
||||||||||||||||
|
|
$ | (7,892 | ) | $ | (120,090 | ) | $ | 112,198 | (93.4 | )% | ||||||
|
|
||||||||||||||||
| Six-Month Periods | ||||||||||||||||
| Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Loss from discontinued operations
(A)
|
$ | (5,566 | ) | $ | (87,002 | ) | $ | 81,436 | (93.6 | )% | ||||||
|
Loss on disposition of real estate, net of tax
|
(3,491 | ) | (24,416 | ) | 20,925 | (85.7 | ) | |||||||||
|
|
||||||||||||||||
|
|
$ | (9,057 | ) | $ | (111,418 | ) | $ | 102,361 | (91.9 | )% | ||||||
|
|
||||||||||||||||
| (A) | Included in discontinued operations for the six months ended June 30, 2010 and 2009, are 12 properties in 2010 (including one property classified as held for sale at June 30, 2010) aggregating 1.5 million square feet, and 32 properties sold in 2009 aggregating 3.8 million square feet, respectively. In addition, included in the reported loss for the six months ended June 30, 2010 and 2009, is $4.2 million and $87.5 million, respectively, of impairment charges triggered by the sale of the related assets. |
- 40 -
| Three-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Gain on disposition of real estate, net
(A)
|
$ | 592 | $ | 648 | $ | (56 | ) | (8.6 | )% | |||||||
| Six-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
(Loss) gain on disposition of real estate, net
(A)
|
$ | (83 | ) | $ | 1,096 | $ | (1,179 | ) | (107.6 | )% | ||||||
| (A) | The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions): |
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Land sales
(1)
|
$ | 0.3 | $ | — | $ | 0.3 | $ | — | ||||||||
|
Previously deferred
gains and other gains
and losses on
dispositions
(1)
(2)
|
0.3 | 0.6 | (0.4 | ) | 1.1 | |||||||||||
|
|
||||||||||||||||
|
|
$ | 0.6 | $ | 0.6 | $ | (0.1 | ) | $ | 1.1 | |||||||
|
|
||||||||||||||||
| (1) | These dispositions did not meet the criteria for discontinued operations as the land did not have any significant operations prior to disposition. | |
| (2) | These gains and losses are primarily attributable to the subsequent leasing of units subject to master leases and other obligations originally established on disposed properties, which are no longer required. |
| For the Three Months | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Non-controlling interests
|
$ | 34,591 | $ | 34,419 | $ | 172 | 0.5 | % | ||||||||
| For the Six Months | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Non-controlling interests
(A)
|
$ | 36,928 | $ | 37,044 | $ | (116 | ) | (0.3 | )% | |||||||
| (A) | Includes the following (in millions): |
| (Increase) | ||||
| Decrease | ||||
|
DDR MDT MV (owned approximately 50% by the Company)
(1)
|
$ | (12.8 | ) | |
|
Other non-controlling interests
(2)
|
12.6 | |||
|
Decrease in the quarterly distribution to operating partnership
unit investments
|
0.1 | |||
|
|
||||
|
|
$ | (0.1 | ) | |
|
|
||||
- 41 -
| (1) | The consolidated joint venture owns real estate formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008. The increase is primarily a result of the decrease in the amount of impairment charges recorded in 2010 as compared to 2009. The non-controlling interest’s share of impairment charges was approximately $18.8 million for the six-month period ended June 30, 2010 as compared to $31.3 million for the six-month period ended June 30, 2009, including discontinued operations. | |
| (2) | The decrease is a result of the non-controlling interest’s share of impairment chares recorded in the second quarter of 2010 related to land held for development in Togliatti and Yaroslavl, Russia. |
| Three-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Net loss attributable to DDR
|
$ | (86,575 | ) | $ | (226,585 | ) | $ | 140,010 | (61.8 | )% | ||||||
|
|
||||||||||||||||
| Six-Month Periods | ||||||||||||||||
| Ended June 30, | ||||||||||||||||
| 2010 | 2009 | $ Change | % Change | |||||||||||||
|
Net loss attributable to DDR
|
$ | (110,822 | ) | $ | (139,184 | ) | $ | 28,362 | (20.4 | )% | ||||||
|
|
||||||||||||||||
| Three-Month | Six-Month | |||||||
| Period Ended | Period Ended | |||||||
| June 30, | June 30, | |||||||
|
Increase (decrease) in net operating revenues
(total revenues in excess of operating and
maintenance expenses and real estate taxes)
|
$ | 0.6 | $ | (3.5 | ) | |||
|
Increase in impairment charges
|
(81.5 | ) | (76.2 | ) | ||||
|
Decrease in general and administrative expenses
|
9.3 | 5.2 | ||||||
|
Decrease in depreciation expense
|
0.1 | 2.5 | ||||||
|
Decrease in interest income
|
(1.7 | ) | (3.4 | ) | ||||
|
Increase in interest expense
|
(1.9 | ) | (4.2 | ) | ||||
|
Decrease in gain on repurchase of senior notes
|
(47.0 | ) | (118.5 | ) | ||||
|
Decrease in loss on equity derivative instruments
|
101.6 | 76.7 | ||||||
|
Change in other expense
|
(5.2 | ) | (3.8 | ) | ||||
|
Decrease in equity in net loss of joint ventures
|
8.5 | 9.8 | ||||||
|
Decrease in impairment of joint venture investments
|
40.4 | 40.4 | ||||||
|
Change in income tax (expense) benefit
|
4.5 | 2.4 | ||||||
|
Decrease in loss from discontinued operations
|
80.2 | 81.4 | ||||||
|
Increase in net gain on disposition of real estate
of discontinued operations properties
|
32.0 | 20.9 | ||||||
|
Increase in net loss on disposition of real estate
|
(0.1 | ) | (1.2 | ) | ||||
|
Change in non-controlling interests
|
0.2 | (0.1 | ) | |||||
|
|
||||||||
|
Decrease in net loss attributable to DDR
|
$ | 140.0 | $ | 28.4 | ||||
|
|
||||||||
- 42 -
- 43 -
| Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Net loss applicable to DDR common
shareholders
(A)
|
$ | (97,142 | ) | $ | (237,152 | ) | $ | (131,956 | ) | $ | (160,318 | ) | ||||
|
Depreciation and amortization of
real estate investments
|
54,148 | 57,565 | 108,742 | 118,601 | ||||||||||||
|
Equity in net loss (income) of
joint ventures
|
623 | 9,153 | (1,023 | ) | 8,374 | |||||||||||
|
Joint ventures’ FFO
(B)
|
10,307 | 3,809 | 21,862 | 18,968 | ||||||||||||
|
Non-controlling interests (OP Units)
|
8 | 80 | 16 | 159 | ||||||||||||
|
(Gain) loss on disposition of
depreciable real estate
(C)
|
(788 | ) | 60 | (2,055 | ) | (12,274 | ) | |||||||||
|
|
||||||||||||||||
|
FFO applicable to DDR common
shareholders
|
(32,844 | ) | (166,485 | ) | (4,414 | ) | (26,490 | ) | ||||||||
|
Preferred dividends
|
10,567 | 10,567 | 21,134 | 21,134 | ||||||||||||
|
|
||||||||||||||||
|
Total FFO
|
$ | (22,277 | ) | $ | (155,918 | ) | $ | 16,720 | $ | (5,356 | ) | |||||
|
|
||||||||||||||||
| (A) | Includes straight-line rental revenue of approximately $0.3 million and $0.4 million for the three-month periods ended June 30, 2010 and 2009, respectively, and $1.3 million and $1.4 million for the six-month periods ended June 30, 2010 and 2009, respectively. In addition, includes straight-line ground rent expense of approximately $0.5 million and $0.4 million for the three-month periods ended June 30, 2010 and 2009, respectively, and $1.0 and $0.8 million for the six-month periods ended June 30, 2010 and 2009, respectively (including discontinued operations). | |
| (B) | At June 30, 2010 and 2009, the Company owned unconsolidated joint venture interests relating to 249 and 324 operating shopping center properties, respectively. |
- 44 -
| Joint ventures’ FFO is summarized as follows (in thousands): |
| Three-Month Periods Ended | Six-Month Periods Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Net loss
(1)
|
$ | (31,445 | ) | $ | (54,452 | ) | $ | (48,295 | ) | $ | (62,934 | ) | ||||
|
Loss on sale of real estate
|
(47 | ) | — | (47 | ) | — | ||||||||||
|
Depreciation and amortization of real
estate investments
|
51,688 | 62,947 | 102,001 | 127,037 | ||||||||||||
|
|
||||||||||||||||
|
|
$ | 20,196 | $ | 8,495 | $ | 53,659 | $ | 64,103 | ||||||||
|
|
||||||||||||||||
|
DDR ownership interests
(2)
|
$ | 10,307 | $ | 3,809 | $ | 21,862 | $ | 18,968 | ||||||||
|
|
||||||||||||||||
| (1) | Revenues for the three- and six-month periods includes the following (in millions): |
| Three-Month Periods | Six-Month Periods | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Straight-line rents
|
$ | 0.9 | $ | 0.9 | $ | 2.1 | $ | 1.7 | ||||||||
|
DDR’s proportionate share
|
0.1 | 0.1 | 0.3 | 0.1 | ||||||||||||
| (2) | Adjustments to the Company’s share of joint venture equity in net loss is related primarily to differences impacting amortization and depreciation, impairment charges and (loss) gain on dispositions as follows: |
| Three-Month Period | Six-Month Period | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Income, net
|
$ | 1.2 | $ | 2.6 | $ | 1.2 | $ | 2.2 | ||||||||
| (C) | The amount reflected as (gain) loss on disposition of real estate and real estate investments from continuing operations in the condensed consolidated statements of operations includes residual land sales, which management considers to be the disposition of non-depreciable real property and the sale of newly developed shopping centers. These dispositions are included in the Company’s FFO and therefore are not reflected as an adjustment to FFO. For the six-month period ended June 30, 2010, the Company recorded $0.3 million of gain on land sales. There were no gains on land sales during the three- and six-month periods ended June 30, 2009. |
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| For the Three-Month | For the Six-Month | |||||||||||||||
| Periods Ended June 30, | Periods Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Impairment charges – consolidated assets
|
$ | 129.7 | $ | 48.2 | $ | 131.8 | $ | 55.6 | ||||||||
|
Less portion of impairment charges allocated
to non-controlling interests
|
(31.2 | ) | (31.3 | ) | (31.2 | ) | (31.1 | ) | ||||||||
|
Executive separation charge
|
— | — | 2.1 | — | ||||||||||||
|
Loss (gain) on debt retirement
|
1.1 | (45.9 | ) | — | (118.5 | ) | ||||||||||
|
(Gain) loss on equity derivative instruments
related to Otto investment
|
(21.5 | ) | 80.0 | 3.3 | 80.0 | |||||||||||
|
Litigation expenditures, debt extinguishment
costs and other expenses
|
9.1 | 6.9 | 12.1 | 10.8 | ||||||||||||
|
Loss on asset sales and impairment charges –
equity method investments
|
2.0 | 11.4 | 3.3 | 10.0 | ||||||||||||
|
Consolidated impairment charges and loss on
sales – discontinued operations
|
6.9 | 119.9 | 9.4 | 123.6 | ||||||||||||
|
FFO associated with Mervyns joint venture, net
of non-controlling interest
|
1.7 | — | 3.8 | — | ||||||||||||
|
Change-in-control compensation charge
|
— | 10.5 | — | 10.5 | ||||||||||||
|
Impairment charges on equity method investments
|
— | 40.3 | — | 46.9 | ||||||||||||
|
|
||||||||||||||||
|
Total non-operating items
|
$ | 97.8 | $ | 240.0 | $ | 134.6 | $ | 187.8 | ||||||||
|
FFO attributable to DDR common shareholders
|
(32.8 | ) | (166.5 | ) | (4.4 | ) | (26.5 | ) | ||||||||
|
|
||||||||||||||||
|
Operating FFO
attributable to DDR common
shareholders
|
$ | 65.0 | $ | 73.5 | $ | 130.2 | $ | 161.3 | ||||||||
|
|
||||||||||||||||
- 46 -
- 47 -
|
Revolving Credit Facilities
|
$ | 1.325 | ||
|
Less:
|
||||
|
Amount outstanding
|
(0.650 | ) | ||
|
Unfunded Lehman Brothers Holdings Commitment
|
(0.008 | ) | ||
|
Letters of credit
|
(0.020 | ) | ||
|
|
||||
|
Amount Available
|
$ | 0.647 | ||
|
|
||||
- 48 -
- 49 -
- 50 -
| Six-Month Periods Ended | ||||||||
| June 30, | ||||||||
| 2010 | 2009 | |||||||
|
Cash flow provided by operating activities
|
$ | 127,981 | $ | 139,879 | ||||
|
Cash flow provided by investing activities
|
45,250 | 15,082 | ||||||
|
Cash flow used for financing activities
|
(178,403 | ) | (154,619 | ) | ||||
- 51 -
- 52 -
| Company- | ||||||||||||||||
| Effective | Owned Square | |||||||||||||||
| Unconsolidated Real Estate | Ownership | Feet | Total Debt | |||||||||||||
| Ventures | Percentage (A) | Assets Owned | (Thousands) | (Millions) | ||||||||||||
|
DDRTC Core Retail Fund LLC
|
15.0 | % | 50 shopping centers in several states | 12,161 | $ | 1,233.8 | ||||||||||
|
Domestic Retail Fund
|
20.0 | % | 63 shopping centers in several states | 8,279 | 966.2 | |||||||||||
|
Sonae Sierra Brasil BV Sarl
|
47.8 | % | Ten shopping centers and a management company in Brazil | 3,787 | 90.1 | |||||||||||
|
DDR – SAU Retail Fund
|
20.0 | % | 29 shopping centers in several states | 2,377 | 226.2 | |||||||||||
| (A) | Ownership may be held through different investment structures. Percentage ownerships are subject to change, as certain investments contain promoted structures. |
- 53 -
- 54 -
- 55 -
- 56 -
- 57 -
- 58 -
- 59 -
- 60 -
- 61 -
| June 30, 2010 | December 31, 2009 | |||||||||||||||||||||||||||||||
| Weighted- | Weighted- | Weighted- | Weighted- | |||||||||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||||||||||
| Amount | Maturity | Interest | Percentage | Amount | Maturity | Interest | Percentage | |||||||||||||||||||||||||
| (Millions) | (Years) | Rate | of Total | (Millions) | (Years) | Rate | of Total | |||||||||||||||||||||||||
|
Fixed-Rate Debt
(A)
|
$ | 3,230.8 | 3.6 | 5.9 | % | 69.7 | % | $ | 3,684.0 | 3.3 | 5.7 | % | 71.1 | % | ||||||||||||||||||
|
Variable-Rate Debt
(A)
|
$ | 1,407.3 | 1.9 | 1.6 | % | 30.3 | % | $ | 1,494.7 | 2.0 | 1.5 | % | 28.9 | % | ||||||||||||||||||
| (A) | Adjusted to reflect the $200 million and $400 million of variable-rate debt that LIBOR was swapped to a fixed-rate of 4.9% and 5.0% at June 30, 2010 and December 31, 2009, respectively. |
| June 30, 2010 | December 31, 2009 | |||||||||||||||||||||||||||||||
| Joint | Company’s | Weighted- | Weighted- | Joint | Company’s | Weighted- | Weighted | |||||||||||||||||||||||||
| Venture | Proportionate | Average | Average | Venture | Proportionate | Average | -Average | |||||||||||||||||||||||||
| Debt | Share | Maturity | Interest | Debt | Share | Maturity | Interest | |||||||||||||||||||||||||
| (Millions) | (Millions) | (Years) | Rate | (Millions) | (Millions) | (Years) | Rate | |||||||||||||||||||||||||
|
Fixed-Rate Debt
|
$ | 3,336.7 | $ | 715.8 | 4.4 | 5.6 | % | $ | 3,807.2 | $ | 785.4 | 4.8 | 5.6 | % | ||||||||||||||||||
|
Variable-Rate Debt
|
$ | 710.5 | $ | 134.7 | 1.4 | 3.3 | % | $ | 740.5 | $ | 131.6 | 0.6 | 3.0 | % | ||||||||||||||||||
- 62 -
| June 30, 2010 | December 31, 2009 | |||||||||||||||||||||||
| 100 Basis Point | 100 Basis Point | |||||||||||||||||||||||
| Increase in | Increase in | |||||||||||||||||||||||
| Carrying | Fair | Market Interest | Carrying | Fair | Market Interest | |||||||||||||||||||
| Value | Value | Rates | Value | Value | Rates | |||||||||||||||||||
|
Company’s fixed-rate debt
|
$ | 3,230.8 | $ | 3,284.7 | (A) | $ | 3,194.5 | (B) | $ | 3,684.0 | $ | 3,672.1 | (A) | $ | 3,579.4 | |||||||||
|
Company’s proportionate
share of joint venture
fixed-rate debt
|
$ | 715.8 | $ | 668.3 | $ | 648.1 | $ | 785.4 | $ | 703.1 | $ | 681.0 | ||||||||||||
| (A) | Includes the fair value of interest rate swaps, which was a liability of $7.8 million and $15.4 million at June 30, 2010 and December 31, 2009, respectively. | |
| (B) | Includes the fair value of interest rate swaps, which was a liability of $6.2 million and $12.2 million at June 30, 2010 and December 31, 2009, respectively. |
- 63 -
- 64 -
- 65 -
| (d) Maximum Number | ||||||||||||||||
| (c) Total Number | (or Approximate | |||||||||||||||
| of Shares | Dollar Value) of | |||||||||||||||
| Purchased as Part | Shares that May Yet | |||||||||||||||
| of Publicly | Be Purchased Under | |||||||||||||||
| (a) Total number of | (b) Average Price | Announced Plans | the Plans or | |||||||||||||
| shares purchased (1) | Paid per Share | or Programs | Programs | |||||||||||||
|
April 1 – 30, 2010
|
— | $ | — | — | — | |||||||||||
|
May 1 – 31, 2010
|
891 | 11.83 | — | — | ||||||||||||
|
June 1 – 30, 2010
|
— | — | — | — | ||||||||||||
|
|
||||||||||||||||
|
Total
|
891 | $ | 11.83 | — | — | |||||||||||
| (1) | Consists of common shares surrendered or deemed surrendered to the Company to satisfy minimum tax withholding obligations in connection with the vesting and/or exercise of awards under the Company’s equity-based compensation plans with respect to stock options. |
- 66 -
- 67 -
|
10.1
|
Letter Agreement, dated March 23, 2010, by and between Developers Diversified Realty Corporation and Richard E. Brown | |
|
|
||
|
31.1
|
Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934 | |
|
|
||
|
31.2
|
Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934 | |
|
|
||
|
32.1
|
Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1 | |
|
|
||
|
32.2
|
Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1 | |
|
|
||
|
101.INS
|
XBRL Instance Document. 2 | |
|
|
||
|
101.SCH
|
XBRL Taxonomy Extension Schema Document. 2 | |
|
|
||
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document. 2 | |
|
|
||
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document. 2 | |
|
|
||
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document. 2 | |
|
|
||
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document. 2 |
| 1 | Pursuant to SEC Release No. 34-4751, these exhibits are deemed to accompany this report and are not “filed” as part of this report. | |
| 2 | Submitted electronically herewith. |
- 68 -
|
August 6, 2010
|
/s/ Christa A. Vesy
|
||||||
|
(Date)
|
Christa A. Vesy, Senior Vice President and Chief | ||||||
|
|
Accounting Officer (Authorized Officer) |
- 69 -
| Exhibit No. | Filed Herewith or | |||||||
| Under Reg. | Form 10-Q | Incorporated Herein | ||||||
| S-K Item 601 | Exhibit No. | Description | by Reference | |||||
|
10
|
10.1 |
Letter Agreement, dated March 23,
2010, by and between Developers
Diversified Realty Corporation and
Richard E. Brown
|
Filed herewith | |||||
|
|
||||||||
|
31
|
31.1 |
Certification of principal executive
officer pursuant to Rule 13a-14(a) of
the Exchange Act of 1934
|
Filed herewith | |||||
|
|
||||||||
|
31
|
31.2 | Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934 | Filed herewith | |||||
|
|
||||||||
|
32
|
32.1 | Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1 | Filed herewith | |||||
|
|
||||||||
|
32
|
32.2 | Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1 | Filed herewith | |||||
|
|
||||||||
|
101
|
101.INS | XBRL Instance Document | Submitted electronically herewith | |||||
|
|
||||||||
|
101
|
101.SCH | XBRL Taxonomy Extension Schema Document | Submitted electronically herewith | |||||
|
|
||||||||
|
101
|
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Submitted electronically herewith | |||||
|
|
||||||||
|
101
|
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Submitted electronically herewith | |||||
|
|
||||||||
|
101
|
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Submitted electronically herewith | |||||
|
|
||||||||
|
101
|
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Submitted electronically herewith | |||||
- 70 -
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|