DOW JONES NEWSWIRES
Developers Diversified Realty Corp. (DDR) swung to a
fourth-quarter loss on charges related to investments, write-downs
and abandoned projects.
The nation's largest shopping center owner has been debt-laden
through acquisitions, and in recent months has been looking to pare
down its borrowings amid the cash crunch and refinancing woes at
smaller rival General Growth Properties Inc. (GGP).
Real-estate investment trusts have been slammed by the global
recession as the housing market continues to drop because of tight
credit, high foreclosure rates and rising unemployment. Residential
REITs were hurt first, but commercial-property owners have
increasingly been impacted as retailers close shops or can't pay
rent. Some of Developers Diversified's tenants, including its
second-largest, department-store owner Mervyn's, have gone bankrupt
and liquidated.
Chief Executive Scott Wolstein said Monday Developers
Diversified was "relatively resilient despite the severe economic
challenges." He added the REIT continues to see consumers shift
their shopping to discount retailers, which make up a large part of
the company's portfolio.
Developers Diversified posted a net loss of $179.6 million, or
$1.57 a share, compared with year-earlier net income of $42.8
million, or 27 cents a share. The latest results included $1.78 a
share in charges related to investments, the sale of real estate
and write-downs.
Funds from operations, a key measure of REIT profitability, fell
to negative 95 cents from 82 cents. FFO excluding items was 74
cents.
Revenue decreased 1.8% to $231.2 million.
Excluding items, analysts surveyed by Thomson Reuters expected
earnings of 17 cents, FFO of 78 cents and revenue of $222
million.
During the quarter, the company executed 105 new leases and 204
renewals, totaling 1.9 million square feet. Rental rates increased
10% on new leases, 2.7% on renewals and 4% overall. Average
annualized base rent per occupied square foot, excluding Brazil,
edged up 0.8%.
Of the core portfolio, 92.2% was leased as of Dec. 31, down from
96% a year earlier.
As it looks to preserve cash, Developers Diversifed in October
to shrink and raise capital so it could pay down debt. The company
started taking action after Wolstein was forced to sell nearly half
his stake in the REIT to satisfy margin calls.
Developers Diversified said Monday it sold 11 shopping center
properties in the fourth quarter and seven more so far this
year.
Shares premarket were up 4.56% to $2.75. The stock is off about
46% so far this year and has lost 93% of its value in the last
year.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com