UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

DEVELOPERS DIVERSIFIED REALTY CORPORATION

(Exact name of registrant as specified in its charter)

Ohio		34-1723097
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3300 Enterprise Parkway, Beachwood, Ohio 44122

(216) 755-5500

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No þ

     As of May 5, 2009, the registrant had 137,585,964 outstanding common shares, $0.10 par value.

 

 

PART I
FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS — Unaudited

Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008.

Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2009 and 2008.

Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2009 and 2008.

Notes to Condensed Consolidated Financial Statements.

EX-3.1

EX-10.4

EX-31.1

EX-31.2

EX-32.1

EX-32.2

DEVELOPERS DIVERSIFIED REALTY CORPORATION

(Dollars in thousands, except per share amounts)
(Unaudited)

						December 31, 2008
		March 31, 2009				(As Adjusted)
Assets
Real estate rental property:
Land		$	2,058,254			$	2,073,947
Buildings			5,871,679				5,890,332
Fixtures and tenant improvements			270,854				262,809
			8,200,787				8,227,088
Less: Accumulated depreciation			(1,252,769	)			(1,208,903	)
			6,948,018				7,018,185
Construction in progress and land under development			887,459				882,478
Real estate held for sale			1,442				—
			7,836,919				7,900,663
Investments in and advances to joint ventures			587,543				583,767
Cash and cash equivalents			36,323				29,494
Restricted cash			110,621				111,792
Notes receivable			81,041				75,781
Deferred charges, net			23,367				25,579
Other assets, net			279,501				293,146
		$	8,955,315			$	9,020,222
Liabilities and Equity
Unsecured indebtedness:
Senior notes		$	2,023,074			$	2,402,032
Revolving credit facilities			1,251,131				1,027,183
			3,274,205				3,429,215
Secured indebtedness:
Term debt			800,000				800,000
Mortgage and other secured indebtedness			1,676,415				1,637,440
			2,476,415				2,437,440
Total indebtedness			5,750,620				5,866,655
Accounts payable and accrued expenses			138,550				169,014
Dividends payable			32,842				6,967
Other liabilities			100,100				112,165
			6,022,112				6,154,801
Redeemable operating partnership units			627				627
Commitments and contingencies
Developers Diversified Realty Corporation equity:
Class G — 8.0% cumulative redeemable preferred shares, without par value, $250 liquidation value; 750,000 shares authorized; 720,000 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively			180,000				180,000
Class H — 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 410,000 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively			205,000				205,000
Class I — 7.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 340,000 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively			170,000				170,000
Common shares, $0.10 par value; 300,000,000 shares authorized; 129,479,063 and 128,642,765 shares issued at March 31, 2009 and December 31, 2008, respectively			12,948				12,864
Paid-in-capital			2,854,944				2,849,363
Accumulated distributions in excess of net income			(584,279	)			(635,239	)
Deferred compensation obligation			14,550				13,882
Accumulated other comprehensive loss			(39,567	)			(49,849	)
Less: Common shares in treasury at cost: 403,094 and 224,063 shares at March 31, 2009 and December 31, 2008, respectively			(9,373	)			(8,731	)
Non-controlling interests			128,353				127,504
Total equity			2,932,576				2,864,794
		$	8,955,315			$	9,020,222

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

DEVELOPERS DIVERSIFIED REALTY CORPORATION

FOR THE THREE-MONTH PERIODS ENDED MARCH 31,
(Dollars in thousands, except per share amounts)
(Unaudited)

						2008
		2009				(As Adjusted)
Revenues from operations:
Minimum rents		$	145,212			$	156,312
Percentage and overage rents			2,743				3,005
Recoveries from tenants			49,050				52,388
Ancillary and other property income			5,050				4,617
Management fees, development fees and other fee income			14,461				16,287
Other			3,250				3,487
			219,766				236,096
Rental operation expenses:
Operating and maintenance			36,232				35,708
Real estate taxes			29,136				26,985
Impairment charges			10,905				—
General and administrative			19,171				20,715
Depreciation and amortization			62,941				55,462
			158,385				138,870
Other income (expense):
Interest income			3,029				574
Interest expense			(60,834	)			(64,405	)
Gains on repurchases of senior notes			72,578				—
Other expense, net			(3,662	)			(497	)
			11,111				(64,328	)
Income before equity in net income of joint ventures, impairment of joint venture investment, tax benefit (expense) of taxable REIT subsidiaries and franchise taxes, discontinued operations and gain on disposition of real estate, net of tax			72,492				32,898
Equity in net income of joint ventures			351				7,388
Impairment of joint venture investment			(875	)			—
Income before tax benefit (expense) of taxable REIT subsidiaries and franchise taxes, discontinued operations and gain on disposition of real estate, net of tax			71,968				40,286
Tax benefit (expense) of taxable REIT subsidiaries and franchise taxes			1,025				(1,037	)
Income from continuing operations			72,993				39,249
Discontinued operations:
(Loss) income from discontinued operations			(271	)			1,100
Gain (loss) on disposition of real estate, net of tax			11,609				(191	)
			11,338				909
Income before gain on disposition of real estate, net of tax			84,331				40,158
Gain on disposition of real estate, net of tax			445				2,367
Net income		$	84,776			$	42,525
Non-controlling interests:
Income (loss) attributable to non-controlling interests			2,631				(2,345	)
Loss attributable to redeemable operating partnership units			(6	)			(20	)
			2,625				(2,365	)
Net income attributable to DDR		$	87,401			$	40,160
Preferred dividends			10,567				10,567
Net income applicable to DDR common shareholders		$	76,834			$	29,593
Per share data:
Basic earnings per share data:
Income from continuing operations attributable to DDR common shareholders		$	0.51			$	0.24
Income from discontinued operations attributable to DDR common shareholders			0.08				0.01
Net income attributable to DDR common shareholders		$	0.59			$	0.25
Diluted earnings per share data:
Income from continuing operations attributable to DDR common shareholders		$	0.51			$	0.24
Income from discontinued operations attributable to DDR common shareholders			0.08				0.01
Net income attributable to DDR common shareholders		$	0.59			$	0.25
Dividends declared per common share		$	0.20			$	0.69

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

DEVELOPERS DIVERSIFIED REALTY CORPORATION

FOR THE THREE-MONTH PERIODS ENDED MARCH 31,
(Dollars in thousands)
(Unaudited)

						2008
		2009				(As Adjusted)
Net cash flow provided by operating activities:		$	69,657			$	85,583
Cash flow from investing activities:
Real estate developed or acquired, net of liabilities assumed			(72,130	)			(101,568	)
Equity contributions to joint ventures			(5,243	)			(18,993	)
(Issuance) repayment of joint venture advances, net			(3,485	)			1,590
Proceeds from sale and refinancing of joint venture interests			—				736
Return on investments in joint ventures			5,195				7,970
Issuance of notes receivable, net			(5,260	)			(519	)
Decrease in restricted cash			1,171				9,323
Proceeds from disposition of real estate			56,849				11,214
Net cash flow used for investing activities			(22,903	)			(90,247	)
Cash flow from financing activities:
Proceeds from revolving credit facilities, net			230,719				30,945
Repayment of senior notes			(303,566	)			(100,000	)
Proceeds from mortgage and other secured debt			68,940				391,299
Principal payments on mortgage debt			(29,964	)			(205,083	)
Payment of deferred finance costs			(429	)			(3,109	)
Proceeds from issuance of common shares			1,010				—
Proceeds (payment) from issuance of common shares in conjunction with the exercise of stock options and dividend reinvestment plan			(829	)			87
Contributions from non-controlling interests			5,295				3,179
Distributions to non-controlling interests			(424	)			(2,973	)
Distributions to redeemable operating partnership units			—				(541	)
Dividends paid			(10,567	)			(89,452	)
Net cash flow (used for) provided by financing activities			(39,815	)			24,352
Cash and cash equivalents
Increase in cash and cash equivalents			6,939				19,688
Effect of exchange rate changes on cash and cash equivalents			(110	)			1,729
Cash and cash equivalents, beginning of period			29,494				49,547
Cash and cash equivalents, end of period		$	36,323			$	70,964

Supplemental disclosure of non-cash investing and financing activities:

          At March 31, 2009, other liabilities included approximately $17.2 million, which represents the fair value of the Company’s interest rate swaps. At March 31, 2009, dividends payable were $32.8 million. The foregoing transactions did not provide for or require the use of cash for the three-month period ended March 31, 2009.

          At March 31, 2008, other liabilities included approximately $32.7 million, which represents the fair value of the Company’s interest rate swaps. At March 31, 2008, dividends payable were $89.6 million. In 2008, Company issued 107,879 of its common shares in accordance with the terms of the outperformance unit plans. The foregoing transactions did not provide for or require the use of cash for the three-month period ended March 31, 2008.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

DEVELOPERS DIVERSIFIED REALTY CORPORATION

Notes to Condensed Consolidated Financial Statements

1.

NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

          Developers Diversified Realty Corporation and its related real estate joint ventures and subsidiaries (collectively, the “Company” or “DDR”) owns, manages and develops an international portfolio of shopping centers.

          Use of Estimates

          The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

          Unaudited Interim Financial Statements

          These financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the three-month periods ended March 31, 2009 and 2008, are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2008.

          The Company consolidates certain entities in which it owns less than a 100% equity interest if the entity is a variable interest entity (“VIE”), as defined in Financial Accounting Standards Board (“FASB”) Interpretation No. 46(R), “Consolidation of Variable Interest Entities” (“FIN 46(R)”), and the Company is deemed to be the primary beneficiary in the VIE. The Company also consolidates certain entities that are not VIEs as defined in FIN 46(R) in which it has effective control. The Company consolidates one entity pursuant to the provisions of Emerging Issues Task Force (“EITF”) 04-05, “Investor’s Accounting for an Investment in a Limited Partnership When the Investor Is the Sole General Partner and the Limited Partners Have Certain Rights.” The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined by FIN 46(R), or does not have effective control, but can exercise significant influence over the entity with respect to its operations and major decisions.

Comprehensive Income

          Comprehensive income is as follows (in thousands):

		Three-Month Periods
		Ended March 31,
						2008
		2009				(As Adjusted)
Net income		$	84,776			$	42,525
Other comprehensive income(loss):
Change in fair value of interest-rate contracts			4,723				(21,439	)
Amortization of interest-rate contracts			(93	)			(364	)
Foreign currency translation			5,652				4,104
Total other comprehensive income (loss)			10,282				(17,699	)
Comprehensive income		$	95,058			$	24,826
Comprehensive income attributable to the non-controlling interest			(1,318	)			—
Total comprehensive income		$	93,740			$	24,826

          New Accounting Standards Implemented

Business Combinations — SFAS 141(R)

          In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”). The objective of this statement is to improve the relevance, representative faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, this statement establishes principles and requirements for how the acquirer: (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest of the acquiree, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption was not permitted. The Company adopted SFAS 141(R) on January 1, 2009. To the extent that the Company enters into acquisitions that qualify as businesses, this standard will require that acquisition costs and certain fees, which were previously capitalized and allocated to the basis of the acquired assets, be expensed as these costs are incurred. Because of this change in accounting for costs, the Company expects that the adoption of this standard could have a negative impact on the Company’s results of operations depending on the size of a transaction and the amount of costs incurred. The Company will assess the impact of significant transactions, if any, as they are contemplated.

Non-Controlling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51 — SFAS 160

          In December 2007, the FASB issued Statement No. 160, “Non-Controlling Interest in Consolidated Financial Statements — an Amendment of ARB No. 51” (“SFAS 160”).

A non-controlling interest, sometimes referred to as minority equity interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The objective of this statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require: (i) the ownership interest in subsidiaries held by other parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; (ii) the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of operations; (iii) changes in a parent’s ownership interest while the parent retains its controlling financial interest in a subsidiary be accounted for consistently and requires that they be accounted for similarly, as equity transactions; (iv) when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be initially measured at fair value (the gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any non-controlling equity investments rather than the carrying amount of that retained investment) and (v) entities provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and the interest of the non-controlling owners. This statement was effective for fiscal years, and interim reporting periods within those fiscal years, beginning on or after December 15, 2008, and applied on a prospective basis, except for the presentation and disclosure requirements, which have been applied on a retrospective basis. Early adoption was not permitted. The Company adopted SFAS 160 on January 1, 2009. As required by SFAS 160, the Company adjusted the presentation of non-controlling interests, as appropriate, in both the condensed consolidated balance sheet as of December 31, 2008 and the condensed consolidated statement of operations for three-month period ended March 31, 2008. The Company’s condensed consolidated balance sheets no longer have a line item referred to as Minority Interests. Equity at December 31, 2008 was adjusted to include $127.5 million attributable to non-controlling interests, and the Company reflected approximately $0.6 million as redeemable operating partnership units. In connection with the Company’s adoption of SFAS 160, the Company also adopted the recent revisions to EITF Topic D-98 “Classification and Measurement of Redeemable Securities” (“D-98”). As a result of the Company’s adoption of these standards, amounts previously reported as minority equity interests and operating partnership minority interests on the Company’s consolidated condensed balance sheets are now presented as non-controlling interests within equity. There has been no change in the measurement of these line items from amounts previously reported except as follows. Due to certain redemption features, certain operating partnership minority interests in the amount of approximately $0.6 million are reflected as redeemable operating partnership units in the temporary equity section (between liabilities and equity). These units are exchangeable, at the election of the OP Unit holder, and under certain circumstances at the option of the Company, into an equivalent number of the Company’s common shares or for the equivalent amount of cash. Based on the requirements of D-98, the measurement of the redeemable operating partnership units are now presented at the greater of their carrying amount or redemption value at the end of each reporting period. The Company will assess the impact of significant transactions involving changes in controlling interests, if any, as they are contemplated.

Disclosures about Derivative Instruments and Hedging Activities — SFAS 161

          In March 2008, the FASB issued statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”), which is intended to help investors better understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows through enhanced disclosure requirements. The enhanced disclosures primarily surround disclosing the objectives and strategies for using derivative instruments by their underlying risk as well as a tabular format of the fair values of the derivative instruments and their gains and losses. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company adopted the financial statement disclosures required by SFAS 161 in this Form 10-Q.

Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) — FSP APB 14-1

          In May 2008, the FASB issued the FSP, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). The FSP prohibits the classification of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, as debt instruments within the scope of FSP APB 14-1

and requires issuers of such instruments to separately account for the liability and equity components by allocating the proceeds from the issuance of the instrument between the liability component and the embedded conversion option (i.e., the equity component). The liability component of the debt instrument is accreted to par using the effective yield method; accretion is reported as a component of interest expense. The equity component is not subsequently re-valued as long as it continues to qualify for equity treatment. FSP APB 14-1 must be applied retrospectively issued cash-settleable convertible instruments as well as prospectively to newly issued instruments. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years

          FSP APB 14-1 was adopted by the Company as of January 1, 2009 with retrospective application to prior periods. As a result of the adoption, the initial debt proceeds from the $250 million 3.5% convertible notes, due in 2011, and $600 million 3.0% convertible notes, due in 2012, were required to be allocated between a liability component and an equity component. This allocation was based upon what the assumed interest rate would have been if the Company had issued similar nonconvertible debt. Accordingly, the Company’s condensed consolidated balance sheet at December 31, 2008 was adjusted to reflect a decrease in unsecured debt of approximately $50.7 million, reflecting the unamortized discount. In addition, real estate assets increased by $2.9 million relating to the impact of capitalized interest and deferred charges decreased by $1.0 million relating to the reallocation of original issuance costs to reflect such amounts as a reduction of proceeds from the reclassification of the equity component. FSP APB 14-2 also amended the guidance under EITF D-98 “Classification and Measurement of Redeemable Securities” (“D-98”), whereas the equity component related to the convertible debt would need to be evaluated in accordance with D-98 if the convertible debt were currently redeemable at the balance sheet date. As the Company’s convertible debt are not currently redeemable no evaluation is required as of March 31, 2009.

          For the three months ended March 31, 2008, the Company adjusted the condensed statement of operations to reflect additional non-cash interest expense of $3.3 million, net of the impact of capitalized interest, pursuant to the provisions of FSP APB 14-1. The condensed consolidated statement of operations for the three months ended March 31, 2009, reflects additional non-cash interest expense of $3.9 million, net of capitalized interest. In addition, the Company’s gains on the repurchase of unsecured debt during the three months ending March 31, 2009 was reduced by approximately $7.5 million due to the reduction in the amount allocated to the senior unsecured notes as a result of the adoption of this FSP.

Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock —EITF 07-5

          In June 2008, the FASB issued the EITF, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). This EITF provides guidance on determining whether an equity—linked financial instrument (or embedded feature) can be considered indexed to an entity’s own stock, which is a key criterion for determining if the instrument may be classified as equity. There is a provision in this EITF that provides new guidance regarding how to account for certain “anti-dilution” provisions that provide downside price protection to an investor. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. Early adoption was not permitted. The adoption of this standard did not have an impact on the Company’s financial position and results of operations. The Company is currently valuing the impact this EITF will have on prospective transactions involving the issuance of common shares and warrants (Note 16).

Accounting for Transfers of Financial Assets and Repurchase Financing Transactions — FSP SFAS 140-3

          In February 2008, the FASB issued the FSP “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions” (“FSP SFAS 140-3”). FSP SFAS 140-3 addresses the issue of whether or not these transactions should be viewed as two separate transactions or as one “linked” transaction. FSP FAS 140-3 includes a “rebuttable presumption” linking the two transactions unless the presumption can be overcome by meeting certain criteria. FSP SFAS 140-3 is effective for fiscal years beginning after November 15, 2008, and will apply only to original transfers made after that date. Early adoption was not permitted. The adoption of this standard did not have an impact on the Company’s financial position and results of operations.

Determination of the Useful Life of Intangible Assets — FSP SFAS 142-3

          In April 2008, the FASB issued the FSP “Determination of the Useful Life of Intangible Assets” (“FSP SFAS 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. FSP SFAS 142-3 is intended to improve the consistency between the useful life of an intangible asset determined under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other U.S. Generally Accepted Accounting Principles. The guidance for determining the useful life of a recognized intangible asset in this FSP shall be applied prospectively to intangible assets acquired after the effective date. The disclosure requirements in this FSP shall be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FSP SFAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption was not permitted. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations.

Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities — FSP EITF 03-6-1

          In June 2008, the FASB issued the FSP “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS 128, “Earnings per Share.” Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. All prior-period earnings per share data presented was adjusted retrospectively. Early adoption was not permitted. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations.

Equity Method Investment Accounting Considerations — EITF 08-6

          In November 2008, the FASB issued EITF Issue No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF 08-6”). EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. EITF 08-6 applies to all investments accounted for under the equity method. EITF 08-6 is effective for fiscal years and interim periods beginning on or after December 15, 2008. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations.

     New Accounting Standards to be Implemented

Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly — FSP SFAS 157-4

          In April 2009, the FASB issued the FSP “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP SFAS 157-4”), which clarifies the methodology used to determine fair value when there is no active market or where the price inputs being used represent distressed sales. FSP SFAS 157-4 also reaffirms the objective of fair value measurement, as stated in SFAS 157, “Fair Value Measurements,” (“SFAS 157”) which is to reflect how much an asset would be sold for in an orderly transaction. It also reaffirms the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. FSP SFAS 157-4 should be applied prospectively and will be effective for interim and annual reporting periods ending after June 15, 2009. The Company is currently assessing the impact, if any, that the adoption of FSP SFAS 157-4 will have on its consolidated financial statements.

Interim Disclosures about Fair Value of Financial Instruments — FSP SFAS 107-1 and APB Opinion 28-1

          In April 2009, the FASB issued FSP and APB “Interim Disclosures about Fair Value of Financial Instruments” (“FSP SFAS 107-1 and APB Opinion 28-1”), which require fair value disclosures for financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value. Prior to the issuance of FSP SFAS 107-1 and APB Opinion 28-1, the fair values of those assets and liabilities were only disclosed annually. With the issuance of FSP SFAS 107-1 and APB Opinion No. 28-1, the Company will be required to disclose this information on a quarterly basis, providing quantitative and qualitative information about fair value estimates for all financial instruments not measured in the Condensed Consolidated Balance Sheets at fair value. FSP SFAS 107-1 and APB Opinion 28-1 will be effective for interim reporting periods that end after June 15, 2009. Early adoption is permitted for periods ending after March 15, 2009. The Company will adopt FSP SFAS 107-1 and APB Opinion 28-1 in the second quarter of 2009.

2.

EQUITY INVESTMENTS IN JOINT VENTURES

          At March 31, 2009 and December 31, 2008, the Company had ownership interests in various unconsolidated joint ventures which, as of the respective dates, owned 327 shopping center properties and 329 shopping center properties.

          Combined condensed financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):

		March 31,				December 31,
		2009				2008
Combined Balance Sheets:
Land		$	2,360,887			$	2,378,033
Buildings			6,334,138				6,353,985
Fixtures and tenant improvements			134,135				131,622
			8,829,160				8,863,640
Less: Accumulated depreciation			(651,318	)			(606,530	)
			8,177,842				8,257,110
Construction in progress			426,770				412,357
			8,604,612				8,669,467
Receivables, net			143,537				136,410
Leasehold interests			12,325				12,615
Other assets			329,897				315,591
		$	9,090,371			$	9,134,083
Mortgage debt		$	5,760,277			$	5,776,897
Amounts payable to DDR			70,224				64,967
Other liabilities			232,761				237,363
			6,063,262				6,079,227
Accumulated equity			3,027,109				3,054,856
		$	9,090,371			$	9,134,083
Company’s share of accumulated equity (1)		$	623,612			$	622,569

		Three-Month Periods Ended
		March 31,
		2009				2008
Combined Statements of Operations:
Revenues from operations		$	231,500			$	237,959
Expenses:
Rental operation			87,997				80,863
Depreciation and amortization			64,042				56,545
Interest			70,906				77,295
			222,945				214,703
Income before income tax expense, other income, net and discontinued operations			8,555				23,256
Income tax expense			(1,990	)			(3,780	)
Other income, net			11,678				6,439
Income from continuing operations			18,243				25,915
Discontinued operations:
Income from discontinued operations			45				114
Loss on disposition of real estate, net of tax			(29	)			(2	)
Loss on disposition of real estate (2)			(26,741	)			—
Net (loss) income		$	(8,482	)		$	26,027
Company’s share of equity in net income of joint ventures (3)		$	791			$	7,489

          Investments in and advances to joint ventures include the following items, which represent the difference between the Company’s investment and its share of all of the unconsolidated joint ventures’ underlying net assets (in millions):

		March 31, 2009				December 31, 2008
Company’s share of accumulated equity		$	623.6			$	622.6
Basis differentials (3)			(7.5	)			(4.6	)
Deferred development fees, net of portion relating to the Company’s interest			(5.4	)			(5.2	)
Basis differential upon transfer of assets (3)			(94.7	)			(95.4	)
Notes receivable from investments			1.3				1.4
Amounts payable to DDR			70.2				65.0
Investments in and advances to joint ventures (1)		$	587.5			$	583.8

Service fees earned by the Company through management, acquisition, financing, leasing and development activities performed related to all of the Company’s unconsolidated joint ventures are as follows (in millions):

		Three-Month Periods
		Ended March 31,
		2009				2008
Management and other fees		$	12.3			$	12.9
Acquisition, financing, guarantee and other fees			0.3				—
Development fees and leasing commissions			2.0				3.2
Interest income			1.9				0.1

          In December 2008, the Company recorded $107.0 million of impairment charges associated with seven unconsolidated joint venture investments pursuant to the provisions of APB No. 18, “The Equity Method of Accounting for Investments in Common Stock”. The provisions of this opinion require that a loss in value of an investment under the equity method of accounting that is an other than “temporary” decline must be recognized. These impairment charges create a basis difference between the Company’s share of accumulated equity as compared to the investment balance of the respective unconsolidated joint venture. The Company allocates the aggregate impairment charge to each of the respective properties owned by a joint venture on a relative fair value basis and amortizes this basis differential as an adjustment to the equity in net income recorded by the Company over the estimated remaining useful lives of the underlying assets.

3.

RESTRICTED CASH

Restricted Cash is comprised of the following (in thousands):

		March 31, 2009				December 31, 2008
DDR MDT MV LLC (1)		$	31,108			$	31,806
DDR MDT MV LLC (2)			33,000				33,000
Bond fund (3)			46,513				46,986
Total restricted cash		$	110,621			$	111,792

4.

OTHER ASSETS, NET

Other assets consist of the following (in thousands):

		March 31, 2009				December 31, 2008
Intangible assets:
In-place leases (including lease origination costs and fair market value of leases), net		$	18,116			$	21,721
Tenant relations, net			13,685				15,299
Total intangible assets (1)			31,801				37,020
Other assets:
Accounts receivable, net (2)			158,463				164,356
Prepaids, deposits and other assets			89,237				91,770
Total other assets		$	279,501			$	293,146

5.

REVOLVING CREDIT FACILITIES

          The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, for which JP Morgan serves as the administrative agent (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of $1.25 billion, if certain financial covenants are maintained, and an accordion feature for a future expansion to $1.4 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level, and a maturity date of June 2010, with a one-year extension option at the option of the Company subject to certain customary closing conditions. The Unsecured Credit Facility includes a competitive bid option on periodic interest rates for up to 50% of the facility. The Company’s borrowings under the Unsecured Credit Facility bear interest at variable rates at the Company’s election, based on either (i) the prime rate less a specified spread (-0.125% at March 31, 2009), as defined in the facility or (ii) LIBOR, plus a specified spread (0.75% at March 31, 2009). The specified spreads vary depending on the Company’s long-term senior unsecured debt rating from Standard and Poor’s and Moody’s Investors Service. The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets and fixed charge coverage. The Unsecured Credit Facility is used to finance the acquisition, development and expansion of shopping center properties, to provide working capital and for general corporate purposes. The Company was in compliance with these covenants at March 31, 2009. The facility also provides for an annual facility fee of 0.175% on the entire facility. At March 31, 2009, total borrowings under the Unsecured Credit Facility aggregated $1,213.1 million with a weighted average interest rate of 1.7%.

          The Company also maintains a $75 million unsecured revolving credit facility with National City Bank (together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). This facility has a maturity date of June 2010, with a one-year extension option at the option of the Company subject to certain customary closing conditions, and reflects terms consistent with those

contained in the Unsecured Credit Facility. Borrowings under this facility bear interest at variable rates based on (i) the prime rate less a specified spread (-0.125% at March 31, 2009), as defined in the facility or (ii) LIBOR, plus a specified spread (0.75% at March 31, 2009). The specified spreads are dependent on the Company’s long-term senior unsecured debt rating from Standard and Poor’s and Moody’s Investors Service. The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets and fixed charge coverage. The Company was in compliance with these covenants at March 31, 2009. At March 31, 2009, total borrowings under the National City Bank facility aggregated $38.0 million with a weighted average interest rate of 1.3%.

6.

FIXED-RATE NOTES

          In March 2007, the Company issued $600 million of 3.0% senior convertible notes due in 2012 (the “2007 Senior Convertible Notes”). In August 2006, the Company issued $250 million of 3.5% senior convertible notes due in 2011 (the “2006 Senior Convertible Notes” and, together with the 2007 Senior Convertible Notes, the “Senior Convertible Notes”). The Senior Convertible Notes are senior unsecured obligations and rank equally with all other senior unsecured indebtedness. For further description of the Company’s Senior Convertible Notes see Note 8, “Fixed-Rate Debt” in the Company’s 2008 Annual Report. Effective January 1, 2009, the Company retrospectively adopted the provision of FSP APB 14-1 (Note 1). Concurrent with the issuance of the Senior Convertible Notes, the Company purchased an option on its common shares in a private transaction in order to effectively increase the conversion price of the notes to a specified option price (“Option Price”). This purchase option allows the Company to receive a number of the Company’s common shares (“Maximum Common Shares”) from counterparties equal to the amounts of common shares and/or cash related to the excess conversion value that it would pay to the holders of the Senior Convertible Notes upon conversion. The option was recorded as a reduction of shareholders’ equity.

     The following table summarizes the information related to the Senior Convertible Notes (shares and dollars in millions):

										Maximum Common
		Conversion Price				Option Price				Shares				Option Cost
2007 Senior Convertible Notes		$	74.56			$		82.71			1.1			$	32.6
2006 Senior Convertible Notes		$	64.23			$		65.17			0.5			$	10.3

     The following tables reflects the Company’s previously reported amounts, along with the adjusted amounts as required by FSP APB 14-1 (in thousands, except per share).

		Three-Month Periods Ended March 31,
		2008
		As				As				Effect of
		Reported				Adjusted				Change
Condensed Consolidated Statement of Operations (Unaudited)
Income from continuing operations		$	42,513	(1)		$	39,249			$	3,264
Net income attributable to DDR			43,424				40,160				3,264
Net income attributable to DDR per share, basic and diluted		$	0.28			$	0.25			$	0.03

(1) Adjusted to reflect the impact of discontinued operations in accordance with SFAS 144 (Note 13).

		December 31, 2008
						As				Effect of
		As Reported				Adjusted				Change
Condensed Consolidated Balance Sheet (Unaudited)
Senior unsecured notes		$	2,452,741			$	2,402,032			$	50,709
Paid-in-capital			2,770,194				2,849,363				(79,169	)
Accumulated distributions in excess of net income			(608,675	)			(635,239	)			26,564

          The effect of this accounting change on the carrying amounts of the Company’s debt and equity balances, are as follows (in thousands):

		March 31, 2009				December 31, 2008
Carrying value of equity component		$	80,863			$	80,863
Principal amount of convertible debt		$	696,239			$	833,000
Remaining unamortized debt discount			(39,397	)			(50,709	)
Net carrying value of convertible debt		$	656,842			$	782,291

          As of March 31, 2009, the remaining amortization period for the debt discount was approximately 29 and 36 months for the 2006 Senior Convertible Notes and the 2007 Senior Convertible Notes, respectively.

          The effective interest rates for the liability components of the 2006 Senior Convertible Notes and the 2007 Senior Convertible Notes were 5.7% and 5.2%, respectively for the three month periods ended March 31 2009 and 2008. The impact of this accounting change required the Company to adjust its interest expense and record a non-cash interest-related charge of $3.3 million, net of capitalized interest, for the three months ended March 31, 2008. The Company recorded non-cash interest expense of approximately $3.9 million for the three months ended March 31, 2009. The Company recorded contractual interest expense of $6.4 million and $6.7 million for the three month periods ended March 31, 2009 and 2008, respectively.

          During the three months ended March 31, 2009, the Company purchased approximately $163.5 million aggregate principal amount of its outstanding senior unsecured notes at a discount to par resulting in net GAAP gains of approximately $72.6 million. The net GAAP gain reflects a decrease of approximately $7.5 million due to the adoption of FSP APB 14-1 (Note 1) in the first quarter of 2009. As required by FSP APB 14-1, the Company allocated the consideration paid between the liability component and equity component based on the fair value of those components immediately prior to the purchases.

7.

FINANCIAL INSTRUMENTS

          Measurement of Fair Value

          At March 31, 2009, the Company used pay-fixed interest rate swaps to manage its exposure to changes in benchmark interest rates. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative.

          Although the Company has determined that the significant inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of March 31, 2009, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are significant to the overall valuation of all of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy.

     Items Measured at Fair Value on a Recurring Basis

          The following table presents information about the Company’s financial assets and liabilities (in millions), which consists of interest rate swap agreements that are included in other liabilities at March 31, 2009, measured at fair value on a recurring basis as of March 31, 2009, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

		Fair Value Measurement at
		March 31, 2009
		Level 1				Level 2				Level 3				Total
Derivative Financial Instruments		$	—			$	—			$	17.2			$	17.2

          The table presented below presents a reconciliation of the beginning and ending balances of interest rate swap agreements that are included in other liabilities having fair value measurements based on significant unobservable inputs (Level 3).

		Derivative
		Financial
		Instruments
Balance of Level 3 at December 31, 2008		$	(21.7	)
Total unrealized gain included in other comprehensive income			4.5
Balance at March 31, 2009		$	(17.2	)

          The unrealized gain of $4.5 million above included in other comprehensive income is attributable to the change in unrealized gains or losses relating to derivative liabilities that are still held at March 31, 2009, none of which were reported in our condensed consolidated statement of operations as they are documented and qualify as hedging instruments pursuant to SFAS 133.

Accounting Policy for Derivative Instruments and Hedging Activities

          SFAS 161 amends and expands the disclosure requirements of SFAS 133 (“SFAS 133”) with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

          As required by SFAS 133, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting under SFAS 133.

Risk Management Objective of Using Derivatives

          The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

          The Company entered into consolidated joint

ventures that own real estate assets in Canada and Russia. The net assets of these subsidiaries are exposed to volatility in currency exchange rates. As such, the Company uses non-derivative financial instruments to hedge this exposure. The Company manages currency exposure related to the net assets of its Canadian and European subsidiaries primarily through foreign currency-denominated debt agreements.

Cash Flow Hedges of Interest Rate Risk

          The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company generally uses interest rate swaps (“Swaps”) as part of its interest rate risk management strategy. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company has six Swaps with notional amounts aggregating $600 million ($200 million which expires in 2009, $300 million which expires in 2010 and $100 million which expires in 2012). Swaps aggregating $500 million effectively convert term loan floating rate debt into a fixed rate of approximately 5.7%. Swaps aggregating $100 million effectively convert Revolving Credit Facilities floating rate debt into a fixed rate of approximately 5.5%.

          The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2009, such derivatives were used to hedge the variable cash flows associated with existing obligations. The ineffective portion of the change in fair value of derivatives is recognized directly in earnings. All components of the interest rate swaps were included in the assessment of hedge effectiveness. During the three months ended March 31, 2009 and March 31, 2008, the amount of hedge ineffectiveness recorded was not material.

          Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The Company expects that within the next 12 months it will reflect as an increase to interest expense (and a corresponding decrease to earnings) approximately $20.9 million.

          As of March 31, 2009, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

		Number of				Notional
Interest Rate Derivative		Instruments				(in Millions)
Interest rate swaps		Six				$	600.0

          The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheet as of March 31, 2009 and March 31, 2008 (in millions):

Liability Derivatives

March 31, 2009

December 31, 2008

Derivatives designated as

hedging instruments under

Balance Sheet

Fair

Balance Sheet

SFAS 133

Location

Value

Location

Fair Value

Interest rate products

Other liabilities

$

17.2

Other liabilities

$

21.7

Amount of Gain

Amount of (gain) loss

Reclassified from

Recognized in OCI

Accumulated OCI into

on Derivative

Location of Gain or

Income (Effective

(Effective Portion)

(Loss) Reclassified

Portion)

Derivatives in SFAS

Three-Month Periods

from Accumulated

Three-Month Periods

133 Cash Flow

Ended March 31

OCI into Income

Ended March 31

Hedging

2009

2008

(Effective Portion)

2009

2008

Interest rate products

$

(4.5

)

$

14.9

Interest expense

$

0.1

$

0.4

          The Company is exposed to credit risk in the event of non-performance by the counterparties to the Swaps. The Company believes it mitigates its credit risk by entering into Swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. In addition, the Company continually assesses its ability to obtain funds through additional equity and/or debt offerings, including the issuance of medium term notes and joint venture capital. Accordingly, the cost of obtaining interest rate protection agreements in relation to the Company’s access to capital markets will continue to be evaluated. The Company has not, and does not plan to, enter into any derivative financial instruments for trading or speculative purposes.

Credit-risk-related Contingent Features

          The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on primarily its unsecured indebtedness, then the Company could also be declared in default on its derivative obligations.

Net Investment Hedges

          The Company is exposed to foreign exchange risk from its consolidated and unconsolidated international investments. The Company has foreign currency-denominated debt agreements, which exposes the Company to fluctuations in foreign exchange rates. The Company has designated these foreign currency borrowings as a hedge to the net investment in its Canadian and European subsidiaries. Changes in the spot rate are recorded as adjustments to the debt balance with

offsetting unrealized gains and losses recorded in OCI. As the notional amount of the nonderivative instrument substantially matches the portion of the net investment designated as being hedged and the nonderivative instrument is denominated in the functional currency of the hedged net investment, the hedge ineffectiveness recognized in earnings was not material.

          The effect of the Company’s net investment hedge derivative instrument on OCI for the three months ended March 31, 2009 and 2008, is as follows (in millions):

		Amount of Gain(Loss)
		Recognized in OCI on Derivative
		(Effective Portion)
		Three-Month Periods Ended
		March 31
Derivatives in SFAS 133 Net Investment Hedging Relationships		2009				2008
Euro denominated revolving credit facilities designated as hedge of the Company’s net investment in its subsidiary		$	4.6			$	(5.2	)
Canadian denominated revolving credit facilities designated as hedge of the Company’s net investment in its subsidiaries		$	2.1			$	2.6

8.

COMMITMENTS AND CONTINGENCIES

Business Risks and Uncertainties

          The retail and real estate markets have been significantly impacted by the continued deterioration of the global credit markets and other macro economic factors including, among others, rising unemployment and a decline in consumer confidence leading to a decline in consumer spending. Although a majority of the Company’s tenants remain in relatively strong financial standing, especially the anchor tenants, the current recession has resulted in tenant bankruptcies affecting the Company’s real estate portfolio including Mervyns, Linens ‘N Things, Steve and Barry’s, Goody’s and Circuit City, which occurred primarily in the second half of 2008. In addition, certain other tenants may be experiencing financial difficulties. The decrease in occupancy and the projected timing associated with re-leasing these vacated spaces has resulted in downward pressure on the Company’s 2009 projected operating results. The reduced occupancy will likely have a negative impact on the Company’s consolidated cash flows, results of operations, financial position and financial ratios that are integral to the continued compliance with the covenants on the Company’s revolving credit facilities as further described below. Offsetting some of the current challenges within the retail environment, the Company has a low occupancy cost relative to other retail formats and historical averages, as well as a diversified tenant base with only one tenant exceeding 2.5% of total consolidated revenues, Walmart at 5.3%. Other significant tenants include Target, Lowe’s Home Improvement, Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all of which have relatively strong credit ratings. Management believes these tenants should continue providing the Company with a stable ongoing revenue base for the foreseeable future given the long-term nature of these leases. Moreover, the majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities versus high priced discretionary luxury items with a focus toward value and convenience, which should enable many tenants to continue operating within this challenging economic environment.

          The Company’s revolving credit facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be issued, contain certain financial and operating covenants, including, among other things, leverage ratios, debt service coverage and fixed charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets and engage in mergers and certain acquisitions. These revolving credit facilities and indentures also contain customary default provisions including the failure to timely pay principal and interest issued thereunder, the failure to comply with our financial and operating covenants, the occurrence of a material adverse effect on the Company, and the failure to pay when due any other Company consolidated indebtedness (including non-recourse obligations) in excess of certain specified levels. In the event the Company’s lenders declare a default, as defined in the applicable loan documentation, this could result in the inability to obtain further funding and/or an acceleration of any outstanding borrowings.

          As of March 31, 2009, the Company was in compliance with all of its financial covenants. However, due to the economic environment, the Company has less financial flexibility than desired given the current market dislocation. The Company’s current business plans indicate that it will be able to operate in compliance with these covenants in 2009 and beyond; however, the current dislocation in the global credit markets has significantly impacted the projected cash flows, financial position and effective leverage of the Company. If there is a continued decline in the retail and real estate industries and/or we are unable to successfully execute our plans as further described below, we could violate these covenants, and as a result may be subject to higher finance costs and fees and/or accelerated maturities. In addition, certain of the Company’s credit facilities and indentures permit the acceleration of the maturity of debt issued thereunder in the event certain other debt of the Company has been accelerated. Furthermore, a default under a loan to the Company or its affiliates, a foreclosure on a mortgaged property owned by the Company or its affiliates or the inability to refinance existing indebtedness would have a negative impact on the Company’s financial condition, cash flows and results of operations. These facts and an inability to predict future economic conditions have encouraged the Company to adopt a strict focus on lowering leverage and increasing our financial flexibility.

          The Company is committed to prudently managing and minimizing discretionary operating and capital expenditures and raising the necessary equity and debt capital to maximize its liquidity, repay its outstanding borrowings as they mature and comply with its financial covenants in 2009 and beyond. As discussed below, we plan to raise additional equity and debt through a combination of retained capital, the issuance of common shares, debt financing and refinancing and asset sales. In addition, the Company will strategically utilize proceeds from the above sources to repay outstanding borrowings on our credit facilities and strategically repurchase our publicly traded debt at a discount to par to further improve our leverage ratios.

•

Retained Equity — With regard to retained capital, the Company has adjusted its dividend policy to the minimum required to maintain its REIT status. The Company did not pay a dividend in January 2009 as it had already distributed sufficient funds to comply with its 2008 tax requirements. Moreover, the Company expects to fund a portion of its 2009 dividend through a combination of cash and common shares and has the flexibility to distribute up to 90% of dividends in shares which will be determined on a quarterly basis. The changes to the Company’s 2009 dividend policy should result in additional free cash

			flow, which is expected to be applied primarily to reduce leverage. This change in dividend payment is expected to save approximately $300 million of retained capital in 2009 relative to the Company’s 2008 dividend policy.
	•		Issuance of Common Shares — The Company has several alternatives to raise equity through the sale of its common shares. The Company intends to continue to issue additional shares under the continuous equity program in 2009. The Company expects to close on the issuance of 15 million common shares as part of the closing of the transaction with Mr. Alexander Otto and certain members of the Otto family (collectively with Mr. Otto, the “Otto Family”) in May 2009, resulting in gross equity proceeds of approximately $52.5 million (Note 16). The Company will issue approximately 1.1 million additional common shares at the first closing as a result of its first quarter 2009 dividend. The Company expects to close on the sale of the remaining 15 million common shares no later than in the fourth quarter of 2009 for estimated gross proceeds of $60 million, subject to certain closing conditions. The Company intends to use the total estimated $112.5 million in gross proceeds received from this strategic investment in 2009 to reduce leverage.
	•		Debt Financing and Refinancing — As of March 31, 2009, the Company had approximately $183.3 million of consolidated debt maturing during 2009, including regular principal amortization, excluding obligations where there is an extension option. These maturities are related to various loans secured by certain shopping centers. The Company plans to refinance approximately $60 million of this remaining indebtedness related to one asset. The Company is planning to either repay the remaining 2009 maturities with its Revolving Credit Facility or financings discussed below or seek extensions with the existing lender.
			In March 2009, the Company entered into a secured bridge loan agreement with an affiliate of the Otto Family (Note 16) for $60.0 million (the “Bridge Loan”). The Bridge Loan bore interest at a rate of 10% per annum and was repaid on May 6, 2009 with the proceeds from a $60.0 million five-year secured loan, which bears interest at a 9.0% interest rate, and obtained from an affiliate of the Otto Family.
			In May 2009, the Company closed on two secured loans for aggregate proceeds of approximately $125 million (Note 16). The Company is also in active discussions with various life insurance companies and financial institutions regarding the financing of assets that are currently unencumbered. The loan-to-value ratio required by these lenders is expected to fall within the 45% to 55% range.
	•		Asset Sales — During the first quarter of 2009, the Company and its consolidated and unconsolidated joint ventures sold seven assets generating in excess of $65.8 million in gross proceeds. The Company is also in various stages of discussions with third parties for the sale of additional assets with aggregate values in excess of $500 million.
	•		Debt Repurchases — Given the current economic environment, the Company’s publicly traded debt securities are trading at significant discounts to par. During the first quarter of 2009, the Company repurchased approximately $163.5 million aggregate principal amount of its outstanding senior unsecured notes at a cash discount to par aggregating $81.4 million. The debt with maturities in 2010 and beyond have been trading at wide discounts. The Company intends to utilize the proceeds from retained capital, equity issuances, secured financing and asset sales, as discussed above, to repurchase its debt securities at a discount to par to further improve its leverage ratios.

          As further described above, although the Company believes it has made considerable progress in implementing the steps to address its objectives of reducing leverage and continuing to comply with its covenants and repay obligations as they become due, the Company does not have binding agreements for all of the planned transactions discussed above, and therefore, there can be no assurances that the Company will be able to execute these plans, which could adversely impact the Company’s operations including its ability to remain compliant with its covenants.

          The Company is a party to litigation filed in November 2006 by a tenant in a Company property located in Long Beach, California. The tenant filed suit against the Company and certain affiliates, claiming the Company and its affiliates failed to provide adequate valet parking at the property pursuant to the terms of the lease with the tenant. After a six-week trial, the jury returned a verdict in October 2008, finding the Company liable for compensatory damages in the amount of approximately $7.8 million. In addition, the trial court awarded the tenant attorney’s fees in the amount of $1.5 million. The Company filed motions for a new trial and for judgment notwithstanding the verdict, both of which were denied. The Company strongly disagrees with the verdict, as well as the denial of the post-trial motions. As a result, the Company plans to pursue an appeal of the verdict. Included in other liabilities on the condensed consolidated balance sheet is a provision which represents management’s best estimate of loss based upon a range of liability pursuant to SFAS 5, “Accounting for Contingencies.” The Company will continue to monitor the status of the litigation and revise the estimate of loss as appropriate. Although the Company believes it has meritorious defenses, there can be no assurance that the Company will be successful in appealing the verdict.

          In addition to the litigation discussed above, the Company and its subsidiaries are subject to various legal proceedings, which, taken together, are not expected to have a material adverse effect on the Company. The Company is also subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of its business, most of which are covered by insurance. While the resolution of all matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material adverse effect on the Company’s liquidity, financial position or results of operations.

          At March 31, 2009 and December 31, 2008, the Company had 29,524 operating partnership units (“OP Units”) outstanding. These OP Units, issued to different partnerships, are exchangeable, at the election of the OP Unit holder, and under certain circumstances at the option of the Company, into an equivalent number of the Company’s common shares or for the equivalent amount of cash. The OP Unit holders are entitled to receive distributions, per OP Unit, generally equal to the per share distributions on the Company’s common shares. Redeemable OP Units are accounted for in accordance with EITF Topic D-98, “Classification and Measurement of Redeemable Securities,” and are presented at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to paid in capital in the Company’s condensed consolidated balance sheets. Below is a table reflecting the activity of the redeemable OP units (in thousands):

		March 31, 2008
Balance at December 31, 2007		$	1,163
Net income			20
Distributions			(20	)
Adjustment to redeemable operating partnership units			56
Balance at March 31, 2008		$	1,219

		March 31, 2009
Balance at December 31, 2008		$	627
Net income			6
Distributions			(6	)
Balance at March 31, 2009		$	627

The following table summarizes the changes in equity since December 31, 2007 as adjusted (in thousands):

		Developers Diversified Realty Corporation Equity
						Common
						Shares								Accumulated								Accumulated
						($0.10								Distributions								Other				Treasury				Non-
		Preferred				Par				Paid-in				in Excess of				Deferred				Comprehensive				Stock at				Controlling
		Shares				Value)				Capital				Net Income				Obligation				Income				Cost				Interest				Total
Balance, December 31, 2007		$	555,000			$	12,679			$	3,107,809			$	(272,428	)		$	22,862			$	8,965			$	(369,839	)		$	128,254			$	3,193,302
Issuance of common shares related to exercise of stock options, dividend reinvestment plan, performance plan and director compensation											(1,429	)															6,700								5,271
Contributions from non-controlling interests																															3,179				3,179
Issuance of restricted stock											(5,184	)															6,081								897
Vesting of restricted stock											7,113								(498	)							(4,770	)							1,845
Stock-based compensation											2,287																								2,287
Dividends declared—common shares															(82,639	)																			(82,639	)
Dividends declared—preferred shares															(10,567	)																			(10,567	)
Distributions to non-controlling interests																															(3,548	)			(3,548	)
Adjustment to redeemable operating partnership units											(56	)																							(56	)
Comprehensive income:
Net income															40,160																2,345				42,505
Other comprehensive income:
Change in fair value of interest rate contracts																							(21,439	)											(21,439	)
Amortization of interest rate contracts																							(364	)											(364	)
Foreign currency translation																							4,104												4,104
Comprehensive income			—				—				—				40,160				—				(17,699	)			—				2,345				24,806
Balance, March 31, 2008		$	555,000			$	12,679			$	3,110,540			$	(325,474	)		$	22,364			$	(8,734	)		$	(361,828	)		$	130,230			$	3,134,777

          The following table summarizes the changes in equity since December 31, 2008 as adjusted (in thousands):

		Developers Diversified Realty Corporation Equity
						Common								Accumulated								Accumulated
						Shares								Distributions								Other				Treasury				Non-
		Preferred				($0.10 Par				Paid-in				in Excess of				Deferred				Comprehensive				Stock at				Controlling
		Shares				Value)				Capital				Net Income				Obligation				Income				Cost				Interest				Total
Balance, December 31, 2008		$	555,000			$	12,864			$	2,849,363			$	(635,239	)		$	13,882			$	(49,849	)		$	(8,731	)			127,504			$	2,864,794
Issuance of common shares related to dividend reinvestment plan and director compensation											(80	)															186								106
Issuance of common shares for cash-underwritten offering							25				985																								1,010
Contributions from non-controlling interests																															5,295				5,295
Issuance of restricted stock							59				1,962								98								(629	)							1,490
Vesting of restricted stock											2,044								570								(199	)							2,415
Stock-based compensation											670																								670
Dividends declared—common shares															(25,874	)																			(25,874	)
Dividends declared—preferred shares															(10,567	)																			(10,567	)
Distributions to non-controlling interests																															(497	)			(497	)
Comprehensive income:
Net income															87,401																(2,631	)			84,770
Other comprehensive income:
Change in fair value of interest rate contracts																							4,723												4,723
Amortization of interest rate contracts																							(93	)											(93	)
Foreign currency translation																							5,652								(1,318	)			4,334
Comprehensive income			—				—				—				87,401				—				10,282				—				(3,949	)			93,734
Balance, March 31, 2009		$	555,000			$	12,948			$	2,854,944			$	(584,279	)		$	14,550			$	(39,567	)		$	(9,373	)		$	128,353			$	2,932,576

          The Company’s balance sheet was adjusted as of December 31, 2008 to include $127.5 million in non-controlling interests as a component of equity pursuant to the provisions of SFAS 160. In addition, paid-in capital as of December 31, 2008 was increased by $52.6 million relating to the retrospection adoption of FSP APB 14-1 relating to the allocated value of the equity component of certain of the Company’s senior convertible unsecured notes (Note 1).

          The Company declared a first quarter dividend on its common shares of $0.20 per share that was paid in a combination of cash and the Company’s common shares. The aggregate amount of cash paid to shareholders on April 21, 2009 was limited to 10% of the total dividend paid. The Company issued approximately 8.3 million common shares based on the volume weighted average trading price

of $2.80 per share and paid $2.6 million in cash. This new payout initiative is a part of the Company’s strategy to further enhance liquidity and maximize free cash flow while continuing to maintain its REIT status. Common share dividends declared, per share, were $0.69 for the three-month period ended March 31, 2008.

          In June 2007, the Company’s Board of Directors authorized a common share repurchase program. Under the terms of the program, the Company may purchase up to a maximum value of $500 million of its common shares over a two-year period. As of March 31, 2009, the Company had repurchased under this program 5.6 million of its common shares for an aggregate cost of $261.9 million at a weighted average cost of $46.66 per share. The Company has not repurchased any of its shares pursuant to this program in 2008 or 2009.

          During the three-month period ended March 31, 2009, the vesting of restricted stock grants to certain officers and directors of the Company, approximating 0.1 million common shares of the Company, was deferred through the Company’s non-qualified deferred compensation plans and, accordingly, the Company recorded approximately $2.5 million in deferred obligations. Also, in the first quarter of 2009, in accordance with the transition rules under Section 409A of the Internal Revenue Code, certain officers elected to have their deferrals distributed which resulted in a reduction of the deferred obligation and a corresponding increase in paid in capital of approximately $1.8 million.

11. OTHER REVENUE

          Other revenue for the three-month periods ended March 31, 2009 and 2008, was comprised of the following (in millions):

		Three-Month Periods Ended
		March 31,
		2009				2008
Lease termination fees		$	1.5			$	3.3
Financing fees			0.3				—
Other			1.5				0.2
		$	3.3			$	3.5

12. IMPAIRMENT CHARGES

          During the three months ended March 31, 2009 the Company recorded impairment charges of $10.9 million on two consolidated real estate investments determined pursuant to the provisions of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). The asset impairments were triggered primarily due to the Company’s marketing of these assets for sale during the three months ended March 31, 2009. These assets were not classified as held for sale as of March 31, 2009, due to outstanding contingencies. As of January 1, 2009, the Company was required to assess the value of its real estate investments (nonfinancial assets) in accordance with SFAS 157. The valuation of impaired real estate assets is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows, the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties

and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company considers multiple valuation techniques when measuring fair value of an investment. However, in certain circumstances, a single valuation technique may be appropriate. The fair value of real estate investments generally reflects estimated sale costs as required by SFAS 144, which may be incurred upon disposition of the real estate investments. Such costs are estimated to approximate 2% to 3% of the estimated sales price.

          For the two impaired shopping center properties the estimated fair value was determined based upon actual sale negotiations and bona fide purchase offers received from third parties.

          The following table presents information about the Company’s impairment charges that were measured on fair value basis for the three months ended March 31, 2009. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in millions).

		Fair Value Measurement at
		March 31, 2009
		Level 1				Level 2				Level 3				Total				Total Losses
Long-lived assets held and used		$	—			$	11.3			$	—			$	11.3				($  10.9	)

          In accordance with the provisions of SFAS 144, long-lived assets held and used with a carrying amount of $22.2 million were written down to their fair value of $11.3 million, resulting in an impairment charge of $10.9 million, which was included in earnings for the period.

13. DISCONTINUED OPERATIONS

          Pursuant to the definition of a component of an entity in SFAS 144, all earnings of discontinued operations sold or held for sale, assuming no significant continuing involvement, have been reclassified in the condensed consolidated statements of operations for the three-month periods ended March 31, 2009 and 2008. The Company considers assets held for sale when the transaction has been approved by the appropriate levels of management and there are no known significant contingencies relating to the sale such that the property sale within one year is considered probable. Included in discontinued operations for the three-month periods ended March 31, 2009 and 2008, are seven properties in 2009 (including one property considered as held for sale at March 31, 2009) aggregating 0.6 million square feet, and 22 shopping centers sold in 2008 (including one business center and one property held for sale at December 31, 2007) aggregating 1.3 million square feet. The balance sheet relating to the assets held for sale and the operating results relating to assets sold or designated as assets held for sale at March 31, 2009, are as follows (in thousands):

		March 31, 2009
Land		$	316
Building			1,208
Other real estate assets			11
			1,535
Less: Accumulated depreciation			(93	)
Total assets held for sale		$	1,442

		Three-Month Periods Ended
		March 31,
		2009				2008
Revenues		$	141			$	5,919
Expenses:
Operating			212				1,999
Interest, net			62				1,075
Depreciation and amortization			138				1,745
Total expense			412				4,819
(Loss) income before gain (loss) on disposition of real estate			(271	)			1,100
Gain (loss) on disposition of real estate			11,609				(191	)
Net income		$	11,338			$	909

          Earnings per share (“EPS”) have been computed pursuant to the provisions of SFAS 128, “Earnings Per Share.” Effective January 1, 2009, we adopted FSP EITF 03-6-1. The Company’s unvested restricted share units contain rights to receive nonforfeitable dividends, and thus, are participating securities requiring the two-class method of computing EPS. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. The following table provides a reconciliation of net income from continuing operations and the number of common shares used in the computations of “basic” EPS, which utilizes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares (in thousands, except per share amounts):

		Three-Month Periods
		Ended March 31,
						2008
		2009				(As Adjusted)
Basic and Diluted Earnings
Income from continuing operations		$	72,993			$	39,249
Add: Gain on disposition of real estate			445				2,367
Less: Income attributable to non-controlling interests			2,625				(2,365	)
Income from continuing operations attributable to DDR common shareholders		$	76,063			$	39,251
Less: Preferred share dividends			(10,567	)			(10,567	)
Income from continuing operations attributable to DDR common shareholders		$	65,496			$	28,684
Less: Earnings attributable to unvested shares and operating partnership units			(603	)			(406	)
Income from continuing operations — Basic		$	64,893			$	28,278
Add: Earnings and distributions attributable to unvested shares and operating partnership units			682				—
		$	65,575			$	28,278
Basic Earnings Per Share
Basic — Average shares outstanding			128,485				119,148
Income from continuing operations attributable to DDR common shareholders		$	0.51			$	0.24
Income from discontinued operations attributable to DDR common shareholders			0.08				0.01
Net income attributable to DDR common shareholders		$	0.59			$	0.25
Diluted Earnings Per Share
Basic — Average shares outstanding			128,485				119,148
Effect of dilutive securities:
Stock options			—				152
Restricted stock			800				—
Operating partnership units			399				—
Diluted — Average shares outstanding			129,684				119,300
Income from continuing operations attributable to DDR common shareholders		$	0.51			$	0.24
Income from discontinued operations attributable to DDR common shareholders			0.08				0.01
Net income attributable to DDR common shareholders		$	0.59			$	0.25

          Options to purchase 3.6 million and 2.3 million common shares were outstanding at March 31, 2009 and 2008, respectively, a portion of which has been reflected above in diluted per share amounts using the treasury stock method. Options aggregating 3.6 million and 1.0 million common shares, respectively, were anti-dilutive at March 31, 2009 and 2008. Accordingly, the anti-dilutive options were excluded from the computations.

          The Company’s two issuances of senior convertible notes, which are convertible into common shares of the Company with conversion prices of approximately $64.23 and $74.56, respectively, were not included in the computation of diluted EPS for the three-month periods ended March 31, 2009 and 2008 as the Company’s stock price did not exceed the strike price of the conversion feature of the senior convertible notes in these periods. In addition, the purchased option related to the convertible notes will not be included in the computation of diluted EPS as the purchase option would always be anti-dilutive.

          The Company has excluded from its basic and diluted earnings per share approximately 8.3 million common shares relating to the stock dividend that was declared during the three months ended March 31, 2009, but issued in April 2009 upon determination of the number of shares that would be issued. Additionally, the Company has also excluded from its basic and diluted earnings per share approximately 30 million common shares and warrants to purchase 10,000,000 common shares relating to the Otto Transaction due to the contingencies that existed at March 31, 2009. These shares and warrants will be included, or considered for inclusion, as appropriate, for the period ending June 30, 2009.

15. SEGMENT INFORMATION

          The Company has two reportable segments, shopping centers and other investments, determined in accordance with SFAS 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”). Each shopping center is considered a separate operating segment; however, each shopping center on a stand-alone basis is less than 10% of the revenues, profit or loss, and assets of the combined reported operating segment and meets the majority of the aggregation criteria under SFAS 131.

          At March 31, 2009, the shopping center segment consisted of 694 shopping centers (including 327 owned through unconsolidated joint ventures and 35 that are otherwise consolidated by the Company) in 45 states, Puerto Rico and Brazil. At March 31, 2008, the shopping center segment consisted of 710 shopping centers (including 317 owned through unconsolidated joint ventures and 40 that are otherwise consolidated by the Company) in 45 states, Puerto Rico and Brazil. At March 31, 2009 the Company also owned six business centers in four states and at March 31, 2008, the Company owned seven business centers in five states.

The table below presents information about the Company’s reportable segments for the three-month periods ended March 31, 2009 and 2008 (in thousands).

		Three-Month Period Ended March 31, 2009
		Other				Shopping
		Investments				Centers				Other				Total
Total revenues		$	1,523			$	218,243							$	219,766
Operating expenses			(539	)			(75,734	)							(76,273	)
Net operating income			984				142,509								143,493
Unallocated expenses (1)										$	(69,976	)			(69,976	)
Equity in net income of joint ventures and impairment of joint venture interests							(524	)							(524	)
Income from continuing operations														$	72,993
Total real estate assets		$	49,844			$	9,039,844							$	9,089,688

		Three-Month Period Ended March 31, 2008
		Other				Shopping
		Investments				Centers				Other				Total
Total revenues		$	1,402			$	234,694							$	236,096
Operating expenses			(504	)			(62,189	)							(62,693	)
Net operating income			898				172,505								173,403
Unallocated expenses (1)										$	(141,542	)			(141,542	)
Equity in net income of joint ventures							7,388								7,388
Income from continuing operations														$	39,249
Total real estate assets		$	103,160			$	8,976,319							$	9,079,479