DDR Corp. (DDR) Beats Q3 FFO Estimates, Ups 2016 Outlook

DDR Corp.’s (NYSE:DDR) third-quarter 2016 funds from operations (“FFO”) per share of 33 cents were higher than both the Zacks Consensus Estimate and the prior-year quarter tally by 2 cents.

Total revenue of $245.2 million also exceeded the Zacks Consensus Estimate of $243 million. However, the figure was down from the prior-year quarter’s tally of $248.9 million.

DDR’s portfolio exhibited strength and the company remains well poised to grow. The company also remains committed to lower its leverage substantially.

Quarter in Detail

DDR inked 310 new and renewal leases for 2.9 million square feet of space during the reported quarter. On a pro rata basis, the company generated new leasing spreads of 21.1% and renewal leasing spreads of 8.0%. Also, same-store net operating income (“NOI”) climbed 3.4% year over year on a pro rata basis.

As of Sep 30, 2016, the company’s portfolio was 95.4% leased, down 60 basis points from year-end 2015. Annualized base rent per occupied square foot increased by 5.6% on a pro rata basis to $15.36 at Sep 30, 2016, from $14.54 at the end of the year-ago quarter.

During the quarter, DDR sold seven operating assets for $61 million, aggregating $55 million at its share.

DDR exited third-quarter 2016 with $$20.7 million cash compared with $22.4 million as of Dec 31, 2015.

2016 Outlook

DDR has raised its 2016 operating FFO per share guidance range to $1.26–$1.28 from $1.23–$1.26 provided earlier. This is mainly due to the impact of disposition timing. The Zacks Consensus Estimate for the same is currently pegged at $1.26.

Further, the company revised its disposition guidance for the full year to $700–$900 million at its pro rata share from $600–$800 million range guided earlier.

To Conclude

DDR’s diversified portfolio, concentrated mostly in prosperous regions, helps in generating relatively stable revenues. Further, the presence of well-capitalized tenants in its roster keeps its growth momentum going.

Also, aggressive capital recycling program of the company amid an overall economic recovery, bode well for the long term. However, stiff competition, increasing online sales and any rise in interest rate pose concerns.

DDR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other retail REITs, like General Growth Properties, Inc. (NYSE:GGP) , Regency Centers Corporation (NYSE:REG) and Taubman Centers, Inc. (NYSE:TCO) , scheduled next week.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.


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