February 8, 2010 / 11:51 PM / 8 years ago

UPDATE 2-Developers Diversified to issue more shares

* Sees Q4 oper shr FFO 30-32 cents; View 32 cents

* Says to issue 36 million shares

* Stock down 2.8 percent after-hours (Adds January stock sale, I/B/E/S share view, updates share price, adds byline)

NEW YORK, Feb 8 (Reuters) - Shopping center owner Developers Diversified Realty Corp (DDR.N) said on Monday it would issue 36 million shares to raise money to pay down debt, an action that would dilute shareholdings by more than 18 percent.

The real estate investment trust, which has for more than a year been trying to strengthen its balance sheet, said it would use the proceeds to repay its short-term debt and lower the balance on its revolving credit facility. In addition, the company granted the underwriters an option to purchase up to 5.4 million more shares to cover any over-allotments.

The new offering would be in addition to the 5 million common shares the company sold in the current quarter. That resulted in $46.1 million gross proceeds through its continuous equity program.

Separately, Developers Diversified, which owns and manages about 665 shopping centers in the Unites States, Brazil and Canada, said it sees operating FFO in the range of 30 cents to 32 cents per share, excluding non-cash items, impairments and gains and losses on joint-venture redemptions and early extinguishment of debt.

Analysts had forecast 32 cents a share, according to Thomson Reuters I/B/E/S.

Including the non-cash items and some gains, the company estimated that it would report negative funds from operations of 13 to 15 cents a share for the fourth quarter.

Developers Diversified said that it ended the year with $5.2 billion of consolidated debt. For 2010, it said it has $43 million of property loans and $329 million of unsecured debt maturing.

It also said it had about $530 million available under its revolving credit facility. During the fourth quarter, the company issued shares to raise $50 million and repurchased $142.5 million of its senior notes to achieve a net gain of $2.7 million. It also redeemed its net interest in one of several of its joint ventures and recorded a gain of $23.5 million.

On the property front, Beachwood, Ohio-based Developers Diversified leased 3 million square feet, which included 166 new leases and 306 renewals. However, base rents on those leases came at a price, falling 4.6 percent overall.

Shares of Developers Diversified closed at $8.33 on the New York Stock Exchange and were down to $8.10 in after-hours trade. (Reporting by Ilaina Jonas; Editing by Steve Orlofsky)

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