Developers Diversified first-quarter FFO falls

* Q1 FFO 12 cents vs average market forecast 28 cents

* Cuts 2010 forecast to adjust for equity raising

NEW YORK, April 22 (Reuters) - Shopping center owner Developers Diversified Realty Corp (DDR.N) said operating funds from operations fell in the first quarter, mainly due to smaller gains from the repurchase of debt and a loss on derivatives.

First-quarter operating funds from operations (FFO), including charges, totaled $28.4 million, or 12 cents per share, down from $140 million, or $1.08 per diluted share, in the year-earlier period, the company said.

Analysts had expected FFO of 28 cents per share, according to Thomson Reuters I/B/E/S.

Excluding charges of $36.8 million, the company reported FFO of $65.2 million, or 28 cents per share.

Those charges include a non-cash charge of $24.9 million for a loss on equity derivatives, $2.1 million for a departed executive, and $3 million for early extinguishment of debt.

Developers Diversified, which owns 640 retail and development properties in the United States, Canada and Brazil, signed leases for 2.6 million square feet of store space during the quarter. But rents were down 2.9 percent.

The company ended the quarter with its core portfolio leased at 91.3 percent, slightly higher than the 91.2 percent at the end of the prior quarter.

Developers Diversified lowered its FFO forecast for the year to adjust for the 42.9 million shares it sold in February. It now sees 2010 FFO in the range of $1.00 to $1.05, down from its prior forecast of $1.05 to $1.15 set in January.

The company's shares closed up 1.3 percent at $13.11 on the New York Stock Exchange, before their quarterly results were released. The stock was slightly lower in after-hours trade.

(Reporting by Ilaina Jonas; Editing by Ted Kerr)