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DDR Corp. (DDR) Beats Q1 Earnings, Raises 2016 Outlook

DDR Corp. 's DDR first-quarter 2016 funds from operations ("FFO") per share of 31 cents were higher than both the Zacks Consensus Estimate and the prior-year quarter tally by a penny.

Total revenue was $246.2 million, down from $250.8 million recorded in the year-ago quarter. The Zacks Consensus Estimate was pegged at $244.3 million.

Quarter in Detail

DDR inked 301 new and renewal leases for 1.9 million square feet of space during the quarter. The company generated positive leasing spreads, with 19.5% rise in new leases and renewals up 8.7% on a pro rata basis. Also, same-store net operating income ("NOI") climbed 3.4% year over year on a pro rata basis.

As of Mar 31, 2016, the company's portfolio average annualized base rent per occupied square foot was $14.86, up 4% on a year-over-year basis. Further, as of the same date, the company's portfolio was 96.1% leased, up 10 basis points (bps) sequentially.

During the quarter, DDR acquired Phoenix, Arizona-based prime power center for a price of $61 million. Also, the REIT divested 16 assets & 3 land parcels worth $224 million at its share.

DDR exited first-quarter 2016 with $23.7 million cash compared with $22.4 million as of Dec 31, 2015.

2016 Outlook

DDR has raised the lower end of the 2016 operating FFO guidance range to $1.20-$1.25 from the earlier range of $1.19-$1.25. The Zacks Consensus Estimate for the same is currently pegged at $1.23.

To Conclude

DDR's solid portfolio of value-oriented shopping centers bodes well for the long term. At the same time, addition of premium assets to the company's high-end asset pool will not only strengthen its tenant base but also promises steady rental revenues for the company.

However, an increasing competition from other retail channels like catalogs and e-Commerce websites has become a major concern for this Zacks Rank #3 (Hold) stock.

We now look forward to other REITs that are scheduled to release first-quarter 2016 results next week. These include General Growth Properties, Inc GGP , Taubman Centers, Inc. TCO and Vornado Realty Trust VNO .

Note: 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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