UPDATE 2-Developers Diversified posts FFO loss with items

* Q3 FFO loss 54 cents/share

* Q3 FFO, excluding items, a positive 44 cents/share

* Stock closed up 4.27 pct, unchanged after-hours

(Adds rental rates, occupancy, company statement, updates

stock price)

NEW YORK, Oct 22 (Reuters) - Mall and shopping center owner Developers Diversified Realty Corp (DDR.N) recorded a third- quarter funds from operations loss, driven chiefly by non-cash accounting items.

The owner of 670 shopping centers in the United States, Brazil and Canada reported FFO of a loss of $90.1 million, or 54 cents per diluted share, compared with a revised profit of $96.7 million, or 80 cents per share in the year-earlier quarter.

Excluding a long list of one-time items that totaled $164.6 million, FFO was $74.5 million or 44 cents per share in the third quarter 2009.

Analysts on average expected FFO of 43 cents per share, according to Thomson Reuters I/B/E/S.

The charges chiefly related to a $118.2 million non-cash equity loss for derivatives related to an investment from German investor Alexander Otto and his family and a non-cash impairment of $63.9 million. The 2008 results were revised to reflect a change in accounting rules relating to convertible debt.

FFO, a performance metric used by real estate investment trusts that neutralizes the profit-reducing effects that non- cash accounting items such as depreciation and amortization have on earnings.

During the quarter, the Ohio-based company leased about 700,000 square feet of space for new leases and 1.9 million square feet under renewed leases.

Rent rates for new and renewed leases fell 3.5 percent. At the end of the quarter, the company's core portfolio was 90.9 percent leased, down from 94.5 percent a year earlier, but up slightly from June's 90.7 percent.

For property the company has owned and operated for at least a year, net operating income, which reflects the cash the properties generate, fell 4.1 percent from the prior year, chiefly due to bankruptcies and store closings of Circuit City, Linens 'N Things, Goody's and Steve & Barry's.

"While the resulting rental spreads and core occupancy level are much less favorable than what the company has historically achieved, it should be no surprise that rental rates are under pressure as bankruptcy driven vacancy has increased across the retail sector," the company said in a statement.

The company's shares closed up 4.27 percent, or 41 cents, at $10.01 on the New York Stock Exchange on Thursday as the benchmark MSCI U.S. REIT Index .RMZ gained 2.7 percent. The shares were unchanged in after-hours trading. (Reporting by Ilaina Jonas; editing by Leslie Gevirtz and Andre Grenon)