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SITE Centers
SITC
#7844
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$0.33 B
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๐Ÿ‡บ๐Ÿ‡ธ United States
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๐Ÿ  Real estate๐Ÿ’ฐ Investment ๐Ÿ˜๏ธ REITs
Categories
  1. SITE Centers
  2. Annual Reports (10-K)
  3. Financial Year 2010

SITE Centers - 10-K annual report 2010


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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 10-K
 
   
(Mark One)
  
þ
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
OR
o
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to               
 
Commission file number 1-11690
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
(Address of Principal Executive Offices — Zip Code)
 
(216) 755-5500
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
   
  Name of Each Exchange on
Title of Each Class Which Registered
 
Common Shares, Par Value $0.10 Per Share
 New York Stock Exchange
Depositary Shares, each representing 1/10 of a share of 8%
Class G Cumulative Redeemable Preferred Shares without Par Value
 New York Stock Exchange
Depositary Shares, each representing 1/20 of a share of 7.375%
Class H Cumulative Redeemable Preferred Shares without Par Value
 New York Stock Exchange
Depositary Shares, each representing 1/20 of a share of 7.5%
Class I Cumulative Redeemable Preferred Shares without Par Value
 New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ
 
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 ofRegulation 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 þ     No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-Kis not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-Kor any amendment to thisForm 10-K.  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” inRule 12b-2of the Exchange Act. (Check one):
 
       
Large accelerated filer þ
 Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company)		 Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2of the Exchange Act).  Yes o     No þ
 
The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2010 was $2.0 billion.
 
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
 
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
256,869,144 common shares outstanding as of February 11, 2011
 
DOCUMENTS INCORPORATED BY REFERENCE
 
The registrant incorporates by reference in Part III hereof portions of its definitive Proxy Statement for its 2011 Annual Meeting of Shareholders.
 

 

 
TABLE OF CONTENTS
 
 
         
    Report
Item No.   Page
 
PART I
 
1.
  
Business
  3 
 
1A.
  
Risk Factors
  6 
 
1B.
  
Unresolved Staff Comments
  16 
 
2.
  
Properties
  16 
 
3.
  
Legal Proceedings
  53 
 
4.
  
[Removed and Reserved]
  54 
 
PART II
 
5.
  
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  55 
 
6.
  
Selected Financial Data
  57 
 
7.
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  60 
 
7A.
  
Quantitative and Qualitative Disclosures about Market Risk
  109 
 
8.
  
Financial Statements and Supplementary Data
  111 
 
9.
  
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  111 
 
9A.
  
Controls and Procedures
  111 
 
9B.
  
Other Information
  111 
 
PART III
 
10.
  
Directors, Executive Officers and Corporate Governance
  112 
 
11.
  
Executive Compensation
  112 
 
12.
  
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  113 
 
13.
  
Certain Relationships and Related Transactions, and Director Independence
  113 
 
14.
  
Principal Accountant Fees and Services
  113 
 
PART IV
 
15.
  
Exhibits and Financial Statement Schedules
  114 


2

 

 
PART I
 
Item 1.  BUSINESS
 
General Development of Business
 
Developers Diversified Realty Corporation, an Ohio corporation (the “Company” or “DDR”), a self-administered and self-managed real estate investment trust (a “REIT”), is in the business of owning, managing and developing a portfolio of shopping centers and, to a lesser extent, office properties. Unless otherwise provided, references herein to the Company or DDR include Developers Diversified Realty Corporation, its wholly-owned and majority-owned subsidiaries and its consolidated and unconsolidated joint ventures.
 
The Company’s acquisitions and dispositions from January 1, 2006, to February 11, 2011, are listed below:
 
                 
  Property Acquisitions  Property Dispositions 
     Unconsolidated
     Unconsolidated
 
Year Consolidated  Joint Ventures  Consolidated  Joint Ventures 
 
2011
  —   —   1   2 
2010
  —   —   56   37 
2009
  4   —   34   12 
2008
  —   11   22   — 
2007
  249   68   67   7 
2006
  5   15   6   9 
 
The table above does not reflect the Company’s acquisition of its partner’s 50% interest in one shopping center asset in 2011. In 2010, property dispositions include assets for which control has been relinquished and the Company does not have any further significant economic interest. In 2007, 315 shopping centers were acquired through the merger with Inland Retail Real Estate Trust, Inc. (“IRRETI”), of which 66 were held by an unconsolidated joint venture of IRRETI. Of the 15 properties acquired through unconsolidated joint ventures in 2006, nine properties are located in Brazil.
 
The Company files annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain information about the operation of the SEC’s Public Reference Room by calling the SEC at1-800-SEC-0330.The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC(http://www.sec.gov).
 
You can inspect reports and other information that the Company files with the New York Stock Exchange at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
 
The Company’s corporate office is located at 3300 Enterprise Parkway, Beachwood, Ohio 44122, and its telephone number is(216) 755-5500.The Company’s website is located athttp://www.ddr.com.The Company uses its Investor Relations website, (http://www.ddr.com),as a channel for routine distribution of important information, including news releases, analyst presentations, and financial information. The Company posts filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC, including the Company’s annual, quarterly and current reports onForms 10-K,10-Q, and8-K; the Company’s proxy statements; and any amendments to those reports or statements. All such postings and filings are available on the Company’s Investor Relations website free of charge. In addition, this website allows investors and other interested persons to sign up to automatically receivee-mailalerts when the Company posts news releases and financial information on its website. The SEC also maintains a website (http://www.sec.gov)that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Annual Report onForm 10-Kfor the fiscal year ended December 31, 2010, is not incorporated by reference into thisForm 10-Kunless expressly noted.


3

 

Financial Information About Industry Segments
 
The Company is in the business of owning, managing and developing a portfolio of shopping centers and, to a lesser extent, office properties. See the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report onForm 10-Kfor certain information regarding the Company’s reportable segments, which is incorporated herein by reference.
 
Narrative Description of Business
 
The Company’s portfolio as of February 11, 2011, consisted of 522 shopping centers and six office properties (including 233 centers owned through unconsolidated joint ventures and three centers that are otherwise consolidated by the Company) and more than 1,800 acres of undeveloped land (of which approximately 250 acres are owned through unconsolidated joint ventures) (collectively, the “Portfolio Properties”). The shopping center properties consist of shopping centers, enclosed malls and lifestyle centers. From January 1, 2008, to February 11, 2011, the Company sold 137 shopping centers (including 49 properties owned through unconsolidated joint ventures) containing an aggregate of approximately 16 million square feet of gross leasable area (“GLA”) owned by the Company for an aggregate sales price of approximately $1.4 billion. From January 1, 2008, to February 11, 2011, the Company acquired 15 shopping centers (including 11 properties owned through unconsolidated joint ventures) containing an aggregate of approximately 1.9 million square feet of GLA owned by the Company for an aggregate purchase price of approximately $0.3 billion. In addition, the Company manages 41 properties owned by a third party.
 
At December 31, 2010, the Company had three wholly-owned shopping centers under developmentand/orredevelopment.
 
The following tables present the operating statistics impacting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, office property portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:
 
                 
  Shopping Center
  Office Property
 
  Portfolio
  Portfolio
 
  December 31,  December 31, 
  2010  2009  2010  2009 
 
Centers owned
  525   618   6   6 
Aggregate occupancy rate
  88.4%  86.9%  80.7%  71.4%
Average annualized base rent per occupied square foot
 $13.36  $12.75  $11.05  $12.35 
 
                 
  Wholly-Owned
  Joint Venture
 
  Shopping Centers
  Shopping Centers
 
  December 31,  December 31, 
  2010  2009  2010  2009 
 
Centers owned
  286   310   236   274 
Consolidated centers primarily owned through a joint venture previously occupied by Mervyns
  n/a   n/a   3   34 
Aggregate occupancy rate
  88.6%  89.6%  88.2%  83.9%
Average annualized base rent per occupied square foot
 $12.23  $11.79  $14.74  $13.83 
 
The Company’s aggregate occupancy rates in 2010 and 2009 are low relative to historical rates due to the impact of the major tenant bankruptcies that occurred in 2008. However, the Company has been successful in 2010 in executing leases for numerous previously vacant anchor boxes resulting in the overallyear-over-yearimprovement in the occupancy rate for the combined portfolio.
 
The Company is self-administered and self-managed and, therefore, does not engage or pay a REIT advisor. The Company manages substantially all of the Portfolio Properties. At December 31, 2010, the Company ownedand/ormanaged more than 101.8 million square feet of Company-owned GLA, which included all of the Portfolio Properties and 41 properties owned by a third party (aggregating 10.2 million square feet of GLA).


4

 

Strategy and Philosophy
 
The Company’s mission is to enhance shareholder value by exceeding the expectations of its tenants, innovating to create new growth opportunities and fostering the talents of its employees while rewarding their successes. The Company’s vision is to be the most admired provider of retail destinations and the first consideration for tenants, investors, partners and employees.
 
The Company’s investment objective is to increase cash flow and the value of its Portfolio Properties. The Company may pursue the disposition of certain real estate assets and utilize the proceeds to repay debt, to reinvest in other real estate assets and developments or for other corporate purposes. The Company’s real estate strategy and philosophy has been to grow its business through a combination of leasing, expansion, acquisition, development and redevelopment. At the end of 2008, in response to the unprecedented events that had taken place within the economic environment and in the capital markets, the Company refined its strategies to mitigate risk and focus on core operating results. These strategies are, as described below, to highlight the quality of the core portfolio and dispose of those properties that are not likely to generate superior growth, to reduce leverage by utilizing strategic financial measures and to protect the Company’s long-term financial strength.
 
The Company’s strategies are summarized as follows:
 
  • Increase cash flows and property values through strategic leasing, re-tenanting, renovation and expansion of the Company’s portfolio to be the preeminent landlord to the world’s most successful retailers;
 
  • Address capital requirements through asset sales, including sales to joint ventures, retained capital, maintain dividend payments at the amount required to meet minimum REIT requirements, pursue extension of existing loan agreements and enter into new financings, and, to the extent deemed appropriate, minimize further capital expenditures;
 
  • Access equity capital through the public markets and other viable alternatives;
 
  • Reduce total consolidated debt and pursue de-leveraging goals, including extending the duration of the Company’s debt;
 
  • Reduce expected spending within the Company’s development and redevelopment portfolios by phasing construction until sufficient pre-leasing is reached and financing is in place;
 
  • Selectively pursue new investment opportunities only after significant equity and debt financings are identified and underwritten expected returns sufficiently exceed the Company’s current cost of capital;
 
  • Continue leasing strategy of enhancing tenant relationships at a high level through its national account program and increasing occupancy with high-quality tenants;
 
  • Renew tenants’ extension options and execute leases in a timely manner;
 
  • Dedicate Company resources to monitor tenant bankruptcies, identify potential space recapture and focus on marketing and re-tenanting those spaces;
 
  • Increase per share cash flows through the strategic disposition of non-core assets and utilize the proceeds to repay debt and invest in other higher growth real estate assets and developments;
 
  • Selectively develop or sell the Company’s undeveloped parcels or new sites in areas with attractive demographics;
 
  • Hold properties for long-term investment and place a strong emphasis on regular maintenance, periodic renovation and capital improvements;
 
  • Continue to manage and develop the properties of others to generate fee income, subject to restrictions imposed by federal income tax laws and
 
  • Explore international markets and selectively invest where the greatest value creation opportunities exist.
 
At December 31, 2010, the Company’s capitalization, excluding the Company’s proportionate share of indebtedness of its unconsolidated joint ventures, aggregated $8.5 billion and consisted of $4.3 billion of debt,


5

 

$555.0 million of preferred shares and $3.6 billion of market equity (market equity is defined as common shares and Operating Partnership Units (“OP Units”) outstanding, multiplied by $14.09, the closing price of the common shares on the New York Stock Exchange at December 31, 2010), resulting in a debt to total market capitalization ratio of 0.51 to 1.0, as compared to the ratios of 0.68 to 1.0 and 0.83 to 1.0 at December 31, 2009 and 2008, respectively. The improvement in this ratio is primarily a result of the Company’s strategic initiative to delever its balance sheet. At December 31, 2010, the Company’s total debt, excluding the Company’s proportionate share of indebtedness of its unconsolidated joint ventures, consisted of $3.4 billion of fixed-rate debt and $0.9 billion of variable-rate debt, including $150 million of variable-rate debt that had been effectively swapped to a fixed rate. At December 31, 2009, the Company’s total debt, excluding the Company’s proportionate share of indebtedness of its unconsolidated joint ventures, consisted of $3.7 billion of fixed-rate debt and $1.5 billion of variable-rate debt, including $400 million of variable-rate debt that had been effectively swapped to a fixed rate.
 
The strategy, philosophy, investment and financing policies of the Company, and its policies with respect to certain other activities including its growth, debt capitalization, dividends, status as a REIT and operating policies, are determined by the Board of Directors. Although the Board of Directors has no present intention to amend or revise its policies, the Board of Directors may do so from time to time without a vote of the Company’s shareholders.
 
Recent Developments
 
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 and the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report onForm 10-Kfor the year ended December 31, 2010, for information on certain recent developments of the Company, which is incorporated herein by reference.
 
Competition
 
As one of the nation’s largest owners and developers of shopping centers (measured by total GLA), the Company has established close relationships with a large number of major national and regional retailers. The Company’s management is associated with and actively participates in many shopping center and REIT industry organizations.
 
Notwithstanding these relationships, numerous developers and real estate companies, private and public, compete with the Company in leasing space in shopping centers to tenants. In addition, tenants have been more selective in new store openings, which are expected to reduce the demand for new space.
 
Employees
 
As of January 31, 2011, the Company employed 682 full-time individuals, including executive, administrative and field personnel. The Company considers its relations with its personnel to be good.
 
Qualification as a Real Estate Investment Trust
 
As of December 31, 2010, the Company met the qualification requirements of a REIT underSections 856-860of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Company, with the exception of its taxable REIT subsidiary (“TRS”), will not be subject to federal income tax to the extent it meets certain requirements of the Code.
 
Item 1A.  RISK FACTORS
 
The risks described below could materially and adversely affect the Company’s results of operations, financial condition, liquidity and cash flows. These risks are not the only risks that the Company faces. The Company’s business operations could also be affected by additional factors that are not presently known to it or that the Company currently considers to be immaterial to its operations.


6

 

The Economic Performance and Value of the Company’s Shopping Centers Depend on Many Factors, Each of Which Could Have an Adverse Impact on the Company’s Cash Flows and Operating Results
 
The economic performance and value of the Company’s real estate holdings can be affected by many factors, including the following:
 
  • Changes in the national, regional, local and international economic climate;
 
  • Local conditions, such as an oversupply of space or a reduction in demand for real estate in the area;
 
  • The attractiveness of the properties to tenants;
 
  • Competition from other available space;
 
  • The Company’s ability to provide adequate management services and to maintain its properties;
 
  • Increased operating costs, if these costs cannot be passed through to tenants and
 
  • The expense of periodically renovating, repairing and reletting spaces.
 
Because the Company’s properties consist primarily of community shopping centers, the Company’s performance is linked to general economic conditions in the market for retail space. The market for retail space has been and may continue to be adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets and increasing consumer purchases through catalogs and the Internet. To the extent that any of these conditions occur, they are likely to affect market rents for retail space. In addition, the Company may face challenges in the management and maintenance of its properties or incur increased operating costs, such as real estate taxes, insurance and utilities, which may make its properties unattractive to tenants. The loss of rental revenues from a number of the Company’s tenants and its inability to replace such tenants may adversely affect the Company’s profitability and ability to meet its debt and other financial obligations and make distributions to shareholders.
 
The Company’s Dependence on Rental Income May Adversely Affect Its Ability to Meet Its Debt Obligations and Make Distributions to Shareholders
 
Substantially all of the Company’s income is derived from rental income from real property. As a result, the Company’s performance depends on its ability to collect rent from tenants. The Company’s income and funds for distribution would be negatively affected if a significant number of its tenants, or any of its major tenants, were to do the following:
 
  • Experience a downturn in their business that significantly weakens their ability to meet their obligations to the Company;
 
  • Delay lease commencements;
 
  • Decline to extend or renew leases upon expiration;
 
  • Fail to make rental payments when due or
 
  • Close stores or declare bankruptcy.
 
Any of these actions could result in the termination of tenants’ leases and the loss of rental income attributable to the terminated leases. Lease terminations by an anchor tenant or a failure by that anchor tenant to occupy the premises could also result in lease terminations or reductions in rent by other tenants in the same shopping centers under the terms of some leases. In addition, the Company cannot be certain that any tenant whose lease expires will renew that lease or that it will be able to re-lease space on economically advantageous terms. The loss of rental revenues from a number of the Company’s major tenants and its inability to replace such tenants may adversely affect the Company’s profitability and its ability to meet debt and other financial obligations and make distributions to shareholders.


7

 

The Company Relies on Major Tenants, Making It Vulnerable to Changes in the Business and Financial Condition of, or Demand for Its Space by, Such Tenants
 
As of December 31, 2010, the annualized base rental revenues of the Company’s tenants that are equal to or exceed 1.5% of the Company’s aggregate annualized shopping center base rental revenues, including its proportionate share of joint venture aggregate annualized shopping center base rental revenues, are as follows:
 
      
  % of Annualized Base
  
Tenant Rental Revenues  
 
Walmart
  4.1% 
T.J. Maxx
  2.2% 
PetSmart
  1.9% 
Bed Bath & Beyond
  1.8% 
Kohl’s
  1.6% 
Michaels
  1.5% 
 
The retail shopping sector has been affected by economic conditions, as well as the competitive nature of the retail business and the competition for market share where stronger retailers have out-positioned some of the weaker retailers. These shifts have forced some market share away from weaker retailers and required them, in some cases, to declare bankruptcyand/or close stores. For example, in 2008, certain retailers filed for bankruptcy protection and other retailers announced store closings even though they did not file for bankruptcy protection.
 
As information becomes available regarding the status of the Company’s leases with tenants in financial distress or the future plans for their spaces change, the Company may be required to write offand/oraccelerate depreciation and amortization expense associated with a significant portion of the tenant-related deferred charges in future periods. The Company’s income and ability to meet its financial obligations could also be adversely affected in the event of the bankruptcy, insolvency or significant downturn in the business of one of these tenants or any of the Company’s other major tenants. In addition, the Company’s results could be adversely affected if any of these tenants do not renew their leases as they expire.
 
The Company’s Acquisition Activities May Not Produce the Cash Flows That It Expects and May Be Limited by Competitive Pressures or Other Factors
 
The Company intends to acquire existing retail properties only to the extent that suitable acquisitions can be made on advantageous terms. Acquisitions of commercial properties entail risks, such as the following:
 
  • The Company’s estimates on expected occupancy and rental rates may differ from actual conditions;
 
  • The Company’s estimates of the costs of any redevelopment or repositioning of acquired properties may prove to be inaccurate;
 
  • The Company may be unable to operate successfully in new markets where acquired properties are located, due to a lack of market knowledge or understanding of local economies;
 
  • The properties may become subject to environmental liabilities that the Company was unaware of at the time the Company acquired the property;
 
  • The Company may be unable to successfully integrate new properties into its existing operations or
 
  • The Company may have difficulty obtaining financing on acceptable terms or paying the operating expenses and debt service associated with acquired properties prior to sufficient occupancy.
 
In addition, the Company may not be in a position or have the opportunity in the future to make suitable property acquisitions on advantageous terms due to competition for such properties with others engaged in real estate investment who may have greater financial resources than the Company. The Company’s inability to successfully acquire new properties may affect the Company’s ability to achieve its anticipated return on investment, which could have an adverse effect on its results of operations.


8

 

Real Estate Property Investments Are Illiquid; Therefore, the Company May Not Be Able to Dispose of Properties When Desired or on Favorable Terms
 
Real estate investments generally cannot be disposed of quickly. In addition, the federal income tax code imposes restrictions, which are not applicable to other types of real estate companies, on the ability of a REIT to dispose of properties. Therefore, the Company may not be able to diversify its portfolio in response to economic or other conditions promptly or on favorable terms, which could cause the Company to incur losses and reduce its cash flows and adversely affect distributions to shareholders.
 
The Company’s Development and Construction Activities Could Affect Its Operating Results
 
The Company intends to continue the selective development and construction of retail properties in accordance with its development underwriting policies as opportunities arise. The Company expects to phase in construction until sufficient pre-leasing is reached and financing is in place. The Company’s development and construction activities include the following risks:
 
  • The Company may abandon development opportunities after expending resources to determine feasibility;
 
  • Construction costs of a project may exceed the Company’s original estimates;
 
  • Occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;
 
  • Rental rates per square foot could be less than projected;
 
  • Financing may not be available to the Company on favorable terms for development of a property;
 
  • The Company may not complete construction andlease-up on schedule, resulting in increased debt service expense and construction costs and
 
  • The Company may not be able to obtain, or may experience delays in obtaining, necessary zoning, land use, building, occupancy and other required governmental permits and authorizations.
 
Additionally, the time frame required for development, construction andlease-up of these properties means that the Company may wait several years for a significant cash return. If any of the above events occur, the development of properties may hinder the Company’s growth and have an adverse effect on its results of operations and cash flows. In addition, new development activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management.
 
The Company Has Variable-Rate Debt and Is Subject to Interest Rate Risk
 
The Company has indebtedness with interest rates that vary depending upon the market index. In addition, the Company has revolving credit facilities that bear interest at a variable rate on any amounts drawn on the facilities. The Company may incur additional variable-rate debt in the future. Increases in interest rates on variable-rate debt would increase the Company’s interest expense, which would negatively affect net earnings and cash available for payment of its debt obligations and distributions to its shareholders.
 
The Company’s Ability to Increase Its Debt Could Adversely Affect Its Cash Flow
 
At December 31, 2010, the Company had outstanding debt of approximately $4.3 billion (excluding its proportionate share of unconsolidated joint venture mortgage debt aggregating $0.8 billion). The Company intends to maintain a conservative ratio of debt to total market capitalization (the sum of the aggregate market value of the Company’s common shares and operating partnership units, the liquidation preference on any preferred shares outstanding and its total indebtedness). The Company is subject to limitations under its credit facilities and indentures relating to its ability to incur additional debt; however, the Company’s organizational documents do not contain any limitation on the amount or percentage of indebtedness it may incur. If the Company were to become more highly leveraged, its cash needs to fund debt service would increase accordingly. Under such circumstances, the Company’s risk of decreases in cash flow, due to fluctuations in the real estate market, reliance on its major


9

 

tenants, acquisition and development costs and the other factors discussed above, could subject the Company to an even greater adverse impact on its financial condition and results of operations. In addition, increased leverage could increase the risk of default on the Company’s debt obligations, which could further reduce its cash available for distribution and adversely affect its ability to dispose of its portfolio on favorable terms, which could cause the Company to incur losses and reduce its cash flows.
 
Disruptions in the Financial Markets Could Affect the Company’s Ability to Obtain Financing on Reasonable Terms and Have Other Adverse Effects on the Company and the Market Price of the Company’s Common Shares
 
The U.S. and global equity and credit markets have experienced significant price volatility, dislocations and liquidity disruptions over the last few years, which caused market prices of many stocks to fluctuate substantially and the spreads on prospective debt financings to widen considerably. These circumstances materially impacted liquidity in the financial markets, making terms for certain financings less attractive and, in certain cases, resulting in the unavailability of certain types of financing. Continued uncertainty in the equity and credit markets may negatively impact the Company’s ability to access additional financing at reasonable terms or at all, which may negatively affect the Company’s ability to refinance its debt, obtain new financing or make acquisitions. These circumstances may also adversely affect the Company’s tenants, including their ability to enter into new leases, pay their rents when due and renew their leases at rates at least as favorable as their current rates.
 
A prolonged downturn in the equity or credit markets may cause the Company to seek alternative sources of potentially less attractive financing, and may require it to adjust its business plan accordingly. In addition, these factors may make it more difficult for the Company to sell properties or may adversely affect the price it receives for properties that it does sell, as prospective buyers may experience increased costs of financing or difficulties in obtaining financing. These events in the equity and credit markets may make it more difficult or costly for the Company to raise capital through the issuance of its common shares or debt securities. These disruptions in the financial markets also may have a material adverse effect on the market value of the Company’s common shares and other adverse effects on the Company or the economy in general. There can be no assurances that government responses to the disruptions in the financial markets will restore consumer confidence, stabilize the markets or increase liquidity and the availability of equity or credit financing.
 
Changes in the Company’s Credit Ratings or the Debt Markets, as well as Market Conditions in the Credit Markets, Could Adversely Affect the Company’s Publicly Traded Debt and Revolving Credit Facilities
 
The market value for the Company’s publicly traded debt depends on many factors, including the following:
 
  • The Company’s credit ratings with major credit rating agencies;
 
  • The prevailing interest rates being paid by, or the market price for publicly traded debt issued by, other companies similar to the Company;
 
  • The Company’s financial condition, liquidity, leverage, financial performance and prospects and
 
  • The overall condition of the financial markets.
 
The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. The U.S. credit markets and thesub-primeresidential mortgage market have experienced severe dislocations and liquidity disruptions in the last few years. There has been a substantial widening of yield spreads generally, as buyers demand greater compensation for credit risk. In addition, there has been a reduction in the availability of capital for some issuers of debt due to the decrease in the number of available lenders and decreased willingness of lenders to offer capital at cost-efficient rates. Furthermore, current market conditions can be exacerbated by leverage. The continuation of these circumstances in the credit marketsand/oradditional fluctuations in the financial markets and prevailing interest rates could have an adverse effect on the Company’s ability to access capital and its cost of capital.


10

 

In addition, credit rating agencies continually review their ratings for the companies that they follow, including the Company. The credit rating agencies also evaluate the real estate industry as a whole and may change their credit rating for the Company based on their overall view of the industry. Any rating organization that rates the Company’s publicly traded debt may lower the rating or decide not to rate the publicly traded debt in its sole discretion. The ratings of the notes are based primarily on the rating organization’s assessment of the likelihood of timely payment of interest when due and the payment of principal on the maturity date. A negative change in the Company’s rating could have an adverse effect on the Company’s publicly traded debt and revolving credit facilities as well as the Company’s ability to access capital and its cost of capital.
 
The Company’s Cash Flows and Operating Results Could Be Adversely Affected by Required Payments of Debt or Related Interest and Other Risks of Its Debt Financing
 
The Company is generally subject to the risks associated with debt financing. These risks include the following:
 
  • The Company’s cash flow may not satisfy required payments of principal and interest;
 
  • The Company may not be able to refinance existing indebtedness on its properties as necessary, or the terms of the refinancing may be less favorable to the Company than the terms of existing debt;
 
  • Required debt payments are not reduced if the economic performance of any property declines;
 
  • Debt service obligations could reduce funds available for distribution to the Company’s shareholders and funds available for development and acquisitions;
 
  • Any default on the Company’s indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure and
 
  • Necessary capital expenditures for purposes such as re-leasing space cannot be financed on favorable terms.
 
If a property is mortgaged to secure payment of indebtedness and the Company cannot make the mortgage payments, it may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property that may also adversely impact the Company’s credit ratings. Any of these risks can place strains on the Company’s cash flows, reduce its ability to grow and adversely affect its results of operations.
 
The Company’s Financial Condition Could Be Adversely Affected by Financial Covenants
 
The Company’s credit facilities and the indentures under which its senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, leverage ratios, certain coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of its assets and engage in mergers and certain acquisitions. These credit facilities and indentures also contain customary default provisions including the failure to pay principal and interest issued thereunder in a timely manner, the failure to comply with the Company’s financial and operating covenants, the occurrence of a material adverse effect on the Company, and the failure of the Company or its majority — owned subsidiaries (i.e., entities in which the Company has a greater than 50% interest) to pay when due certain indebtedness in excess of certain thresholds beyond applicable grace and cure periods. These covenants could limit the Company’s ability to obtain additional funds needed to address cash shortfalls or pursue growth opportunities or transactions that would provide substantial return to its shareholders. In addition, a breach of these covenants could cause a default or accelerate some or all of the Company’s indebtedness, which could have a material adverse effect on its financial condition.
 
The Company’s Ability to Continue to Obtain Permanent Financing Cannot Be Assured
 
In the past, the Company has financed certain acquisition and development activities in part with proceeds from its credit facilities or offerings of its debt or equity securities. These financings have been, and may continue to be, replaced by other financings. However, the Company may not be able to obtain more permanent financing for future acquisitions or development activities on acceptable terms. If market interest rates were to increase or other


11

 

unfavorable market conditions were to exist at a time when amounts were outstanding under the Company’s credit facilities, or if other variable-rate debt was outstanding, the Company’s interest costs would increase, causing potentially adverse effects on its financial condition and results of operations.
 
If the Company Fails to Qualify as a REIT in Any Taxable Year, It Will Be Subject to U.S. Federal Income Tax as a Regular Corporation and Could Have Significant Tax Liability
 
The Company intends to operate in a manner that allows it to qualify as a REIT for U.S. federal income tax purposes. However, REIT qualification requires that the Company satisfy numerous requirements (some on an annual or quarterly basis) established under highly technical and complex provisions of the Code, for which there are a limited number of judicial or administrative interpretations. The Company’s status as a REIT requires an analysis of various factual matters and circumstances that are not entirely within its control. Accordingly, it is not certain that the Company will be able to qualify and remain qualified as a REIT for U.S. federal income tax purposes. Even a technical or inadvertent violation of the REIT requirements could jeopardize the Company’s REIT qualification. Furthermore, Congress or the Internal Revenue Service (“IRS”) might change the tax laws or regulations and the courts could issue new rulings, in each case potentially having retroactive effect that could make it more difficult or impossible for the Company to continue to qualify as a REIT. If the Company fails to qualify as a REIT in any tax year, the following would result:
 
  • The Company would be taxed as a regular domestic corporation, which, among other things, means that it would be unable to deduct distributions to its shareholders in computing its taxable income and would be subject to U.S. federal income tax on its taxable income at regular corporate rates;
 
  • Any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to shareholders and could force the Company to liquidate assets or take other actions that could have a detrimental effect on its operating results and
 
  • Unless the Company were entitled to relief under applicable statutory provisions, it would be disqualified from treatment as a REIT for the four taxable years following the year during which the Company lost its qualification, and its cash available for distribution to its shareholders, therefore, would be reduced for each of the years in which the Company does not qualify as a REIT.
 
Even if the Company remains qualified as a REIT, it may face other tax liabilities that reduce its cash flow. The Company may also be subject to certain federal, state and local taxes on its income and property either directly or at the level of its subsidiaries. Any of these taxes would decrease cash available for distribution to the Company’s shareholders.
 
Compliance with REIT Requirements May Negatively Affect the Company’s Operating Decisions
 
To maintain its status as a REIT for U.S. federal income tax purposes, the Company must meet certain requirements, on an ongoing basis, including requirements regarding its sources of income, the nature and diversification of its assets, the amounts the Company distributes to its shareholders and the ownership of its shares. The Company may also be required to make distributions to its shareholders when it does not have funds readily available for distribution or at times when the Company’s funds are otherwise needed to fund capital expenditures.
 
As a REIT, the Company must distribute at least 90% of its annual net taxable income (excluding net capital gains) to its shareholders. To the extent that the Company satisfies this distribution requirement, but distributes less than 100% of its net taxable income, the Company will be subject to U.S. federal corporate income tax on its undistributed taxable income. In addition, the Company will be subject to a 4% non-deductible excise tax if the actual amount paid to its shareholders in a calendar year is less than the minimum amount specified under U.S. federal tax laws. From time to time, the Company may generate taxable income greater than its income for financial reporting purposes, or its net taxable income may be greater than its cash flow available for distribution to its shareholders. If the Company does not have other funds available in these situations, it could be required to borrow funds, sell a portion of its securities or properties at unfavorable prices or find other sources of funds in order to meet the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax.


12

 

In addition, the REIT provisions of the Code impose a 100% tax on income from “prohibited transactions.” Prohibited transactions generally include sales of assets that constitute inventory or other property held for sale to customers in the ordinary course of business, other than foreclosure property. This 100% tax could impact the Company’s decisions to sell property if it believes such sales could be treated as a prohibited transaction. However, the Company would not be subject to this tax if it were to sell assets through a taxable REIT subsidiary. The Company will also be subject to a 100% tax on certain amounts if the economic arrangements between the Company and a taxable REIT subsidiary are not comparable to similar arrangements among unrelated parties.
 
Dividends Paid by REITs Generally Do Not Qualify for Reduced Tax Rates
 
In general, the maximum U.S. federal income tax rate for dividends paid to individual U.S. shareholders is 15% (through 2012). Due to its REIT status, the Company’s distributions to individual shareholders generally are not eligible for the reduced rates.
 
Property Ownership Through Partnerships and Joint Ventures Could Limit the Company’s Control of Those Investments and Reduce Its Expected Return
 
Partnership or joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that the Company’s partner or co-venturer might become bankrupt, that its partner or co-venturer might at any time have different interests or goals than the Company, and that its partner or co-venturer may take action contrary to the Company’s instructions, requests, policies or objectives, including the Company’s policy with respect to maintaining its qualification as a REIT. Other risks of joint venture investments include impasse on decisions, such as a sale, because neither the Company’s partner or co-venturer nor the Company would have full control over the partnership or joint venture. These factors could limit the return that the Company receives from such investments or cause its cash flows to be lower than its estimates. There is no limitation under the Company’s Articles of Incorporation, or its code of regulations, as to the amount of funds that the Company may invest in partnerships or joint ventures. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture. Furthermore, if credit conditions in the capital markets deteriorate, the Company could be required to reduce the carrying value of its equity method investments if a loss in the carrying value of the investment is other than a temporary decline. As of December 31, 2010, the Company had approximately $417.2 million of investments in and advances to unconsolidated joint ventures holding 236 operating shopping centers.
 
The Company’s Real Estate Assets May Be Subject to Impairment Charges
 
On a periodic basis, the Company assesses whether there are any indicators that the value of its real estate properties and other investments may be impaired. A property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. In the Company’s estimate of cash flows, it considers factors such as expected future operating income, trends and prospects, the effects of demand, competition and other factors. The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s earnings because recording an impairment charge results in an immediate negative adjustment to earnings. There can be no assurance that the Company will not take additional charges in the future related to the impairment of its assets. Any future impairment could have a material adverse effect on the Company’s results of operations in the period in which the charge is taken.
 
The Company’s Inability to Realize Anticipated Returns from Its Retail Real Estate Investments Outside the United States Could Adversely Affect Its Results of Operations
 
The Company may not realize the intended benefits of transactions outside the United States, as the Company may not have any prior experience with the local economies or culture. The assets may not perform as well as the Company anticipated or may not be successfully integrated, or the Company may not realize the improvements in occupancy and operating results that it anticipated. The Company could be subject to local laws governing these properties, with which it has no prior experience, and which may present new challenges for the management of the


13

 

Company’s operations. In addition, financing may not be available at acceptable rates and equity requirements may be different than the Company’s strategy in the United States. Each of these factors may adversely affect the Company’s ability to achieve anticipated return on investment, which could have an adverse effect on its results of operations.
 
The Company Is Subject to Litigation That Could Adversely Affect Its Results of Operations
 
The Company is a defendant from time to time in lawsuits and regulatory proceedings relating to its business. Due to the inherent uncertainties of litigation and regulatory proceedings, the Company cannot accurately predict the ultimate outcome of any such litigation or proceedings. An unfavorable outcome could adversely impact the Company’s business, financial condition or results of operations. Any such litigation could also lead to increased volatility of the trading price of the Company’s common shares. For a further discussion of litigation risks, see “Legal Matters” in Note 8 — Commitments and Contingencies to the Consolidated Financial Statements.
 
The Company’s Real Estate Investments May Contain Environmental Risks That Could Adversely Affect Its Results of Operations
 
The acquisition of properties may subject the Company to liabilities, including environmental liabilities. The Company’s operating expenses could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. In addition, under various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or to have arranged for the disposal or treatment of hazardous or toxic substances. As a result, the Company may become liable for the costs of removal or remediation of certain hazardous substances released on or in its property. The Company may also be liable for other potential costs that could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property). The Company may incur such liability whether or not it knew of, or was responsible for, the presence of such hazardous or toxic substances. Such liability could be of substantial magnitude and divert management’s attention from other aspects of the Company’s business and, as a result, could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to shareholders.
 
An Uninsured Loss on the Company’s Properties or a Loss That Exceeds the Limits of the Company’s Insurance Policies Could Subject the Company to Lost Capital or Revenue on Those Properties
 
Under the terms and conditions of the leases currently in effect on the Company’s properties, tenants generally are required to indemnify and hold the Company harmless from liabilities resulting from injury to persons, air, water, land or property, on or off the premises, due to activities conducted on the properties, except for claims arising from the negligence or intentional misconduct of the Company or its agents. Additionally, tenants are generally required, at the tenant’s expense, to obtain and keep in full force during the term of the lease, liability and full replacement value property damage insurance policies. The Company has obtained comprehensive liability, casualty, flood and rental loss insurance policies on its properties. All of these policies may involve substantial deductibles and certain exclusions. In addition, tenants could fail to properly maintain their insurance policies or be unable to pay the deductibles. Should a loss occur that is uninsured or is in an amount exceeding the combined aggregate limits for the policies noted above, or in the event of a loss that is subject to a substantial deductible under an insurance policy, the Company could lose all or part of its capital invested in, and anticipated revenue from, one or more of the properties, which could have a material adverse effect on the Company’s operating results and financial condition, as well as its ability to make distributions to shareholders.
 
Compliance with the Americans with Disabilities Act and Fire, Safety and Other Regulations May Require the Company to Make Unplanned Expenditures That Adversely Affect the Company’s Cash Flows
 
All of the Company’s properties are required to comply with the Americans with Disabilities Act, or ADA. The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or


14

 

an award of damages to private litigants, or both. While the tenants to whom the Company leases properties are obligated by law to comply with the ADA provisions, and are typically obligated to cover costs of compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected. As a result, the Company could be required to expend funds to comply with the provisions of the ADA, which could adversely affect the results of operations and financial condition and its ability to make distributions to shareholders. In addition, the Company is required to operate the properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to the properties. The Company may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could have a material adverse effect on its ability to meet its financial obligations and make distributions to shareholders.
 
The Company’s Properties Could be Subject to Damage from Weather-Related Factors
 
A number of the Company’s properties are located in areas that are subject to natural disasters. Certain of the Company’s properties are located in California and in other areas with higher risk of earthquakes. In addition, many of the Company’s properties are located in coastal regions, and would therefore be affected by any future increases in sea levels or in the frequency or severity of hurricanes and tropical storms, whether such increases are caused by global climate changes or other factors.
 
The Company’s Articles of Incorporation Contain Limitations on Acquisitions and Changes in Control
 
In order to maintain the Company’s status as a REIT, its Articles of Incorporation prohibit any person, except for certain shareholders as set forth in the Company’s Articles of Incorporation, from owning more than 5% of the Company’s outstanding common shares. This restriction is likely to discourage third parties from acquiring control of the Company without consent of its Board of Directors even if a change in control were in the best interests of shareholders.
 
The Company Has a Number of Shareholders Who Beneficially Own a Significant Portion of Its Outstanding Common Shares, and Their Interests May Differ from the Interests of Other Shareholders
 
The Company’s significant shareholders are in a position to influence any matters that are brought to a vote of the holders of the Company’s common shares, including, among others, the election of the Company’s Board of Directors and any amendments to its Articles of Incorporation and code of regulations. Without the support of the Company’s significant shareholders, certain transactions, such as mergers, tender offers, sales of assets and business combinations, that could give shareholders the opportunity to realize a premium over the then-prevailing market prices for common shares may be more difficult to consummate. The interests of the Company’s significant shareholders may differ from the interests of other shareholders. If the Company’s significant shareholders sell substantial amounts of the Company’s common shares in the public market, the trading price of the Company’s common shares could decline significantly.
 
Changes in Market Conditions Could Adversely Affect the Market Price of the Company’s Publicly Traded Securities
 
As with other publicly traded securities, the market price of the Company’s publicly traded securities depends on various market conditions, which may change from time to time. Among the market conditions that may affect the market price of the Company’s publicly traded securities are the following:
 
  • The extent of institutional investor interest in the Company;
 
  • The reputation of REITs generally and the reputation of REITs with similar portfolios;
 
  • The attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies);
 
  • The Company’s financial condition and performance;


15

 

 
  • The market’s perception of the Company’s growth potential and future cash dividends;
 
  • An increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for the Company’s shares and
 
  • General economic and financial market conditions.
 
The Company May Issue Additional Securities Without Shareholder Approval
 
The Company can issue preferred shares and common shares without shareholder approval subject to certain limitations in the Company’s Articles of Incorporation. Holders of preferred shares have priority over holders of common shares, and the issuance of additional shares reduces the interest of existing holders in the Company.
 
The Company’s Executive Officers Have Agreements That Provide Them with Benefits in the Event of a Change in Control of the Company or if Their Employment Is Terminated Without Cause
 
The Company has entered into employment and other agreements with certain executive officers that provide them with severance benefits if their employment ends under certain circumstances following a change in control of the Company or if the Company terminates the executive officer “without cause” as defined in the employment agreements. These benefits could increase the cost to a potential acquirer of the Company and thereby prevent or deter a change in control of the Company that might involve a premium price for the common shares or otherwise affect the interests of shareholders.
 
Item 1B.  UNRESOLVED STAFF COMMENTS
 
None.
 
Item 2.  PROPERTIES
 
At December 31, 2010, the Portfolio Properties included 525 shopping centers (including 236 centers owned through unconsolidated joint ventures and three that are otherwise consolidated by the Company) and six office properties. The shopping centers consist of 495 community shopping centers, 22 enclosed malls and eight lifestyle centers. The Portfolio Properties also include more than 1,800 acres of undeveloped land, primarily development sites and parcels, located adjacent to certain of the shopping centers. The shopping centers aggregate approximately 91.5 million square feet of Company-owned GLA (approximately 129 million square feet of total GLA) and are located in 41 states, plus Puerto Rico and Brazil. These centers are principally in the Southeast and Midwest, with significant concentrations in Georgia, Florida, New York and Ohio. The Company owns land in Canada and Russia at which development was deferred. The office properties aggregate 0.5 million square feet of Company-owned GLA and are located in four states, primarily in Maryland.
 
The Company’s shopping centers are designed to attract local area customers and are typically anchored by two or more national tenant anchors (such as Walmart, Kohl’s or Target). The properties often include a supermarket, drug store, junior department storeand/or other major “category-killer” discount retailers as additional anchors or tenants. The tenants of the shopping centers typically offerday-to-daynecessities rather than high-priced luxury items. As one of the nation’s largest owners and operators of shopping centers, the Company has established close relationships with a large number of major national and regional retailers, many of which occupy space in the shopping centers.
 
Shopping centers make up the largest portion of the Company’s portfolio, constituting 80.5 million (87.9%) square feet of Company-owned GLA. Enclosed malls account for 8.0 million square feet (8.8%) of Company-owned GLA, and lifestyle centers account for 3.0 million square feet (3.3%) of Company-owned GLA. At December 31, 2010, the average annualized base rent per square foot of Company-owned GLA of the Company’s 286 wholly-owned shopping centers was $12.23. For the 236 shopping centers owned through joint ventures and three of which are consolidated, annualized base rent per square foot was $14.74. The average annualized base rent per square foot of the Company’s office properties was $11.05.


16

 

Information as to the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA at December 31, 2010, is set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of this Annual Report onForm 10-Kfor the year ended December 31, 2010. In addition, as of December 31, 2010, unless otherwise indicated, with respect to the 525 shopping centers:
 
  • 130 of these properties are anchored by a Walmart, Kohl’s or Target store;
 
  • These properties range in size from 6,800 square feet to approximately 1,500,000 square feet of total GLA (with 75 properties exceeding 400,000 square feet of total GLA and 220 properties exceeding 200,000 square feet of total GLA);
 
  • Approximately 64.8% of the aggregate Company-owned GLA of these properties is leased to national tenants, including subsidiaries of national tenants, approximately 14.0% is leased to regional tenants, and approximately 9.6% is leased to local tenants;
 
  • Approximately 88.4% of the aggregate Company-owned GLA of these properties was occupied as of December 31, 2010. With respect to the properties owned by the Company, or its unconsolidated joint ventures, as of December 31 of each of the last five years beginning with 2006, between 86.9% and 95.2% of the aggregate Company-owned GLA of these properties was occupied and
 
  • The Company had three wholly-owned shopping centers under developmentand/orredevelopment.
 
Tenant Lease Expirations and Renewals
 
The following table shows the impact of tenant lease expirations for the next 10 years at the Company’s 286 wholly-owned shopping centers and six office properties, assuming that none of the tenants exercise any of their renewal options:
 
                         
           Average
  Percentage of
    
        Annualized
  Base
  Total Leased
  Percentage of
 
     Approximate
  Base Rent
  Rent Per Square
  Square Footage
  Total Base
 
  No. of
  Lease Area in
  Under Expiring
  Foot Under
  Represented
  Rental Revenues
 
Expiration
 Leases
  Square Feet
  Leases
  Expiring
  by Expiring
  Represented by
 
Year Expiring  (Thousands)  (Thousands)  Leases  Leases  Expiring Leases 
 
2011
  708   3,698  $52,303  $14.15   7.4%  9.9%
2012
  678   5,251   64,554   12.29   10.5   12.3 
2013
  606   4,409   56,120   12.73   8.8   10.7 
2014
  502   4,838   59,362   12.27   9.7   11.3 
2015
  469   4,999   57,372   11.48   10.0   10.9 
2016
  244   3,080   39,689   12.89   6.1   7.5 
2017
  144   2,757   31,567   11.45   5.5   6.0 
2018
  162   2,169   27,816   12.83   4.3   5.3 
2019
  116   2,521   29,901   11.86   5.0   5.7 
2020
  129   1,553   21,170   13.63   3.1   4.0 
                         
Total
  3,758   35,275  $439,854  $12.47   70.4%  83.7%
                         


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The following table shows the impact of tenant lease expirations at the joint venture level for the next 10 years at the Company’s 236 unconsolidated joint venture shopping centers and three consolidated shopping centers, assuming that none of the tenants exercise any of their renewal options:
 
                         
           Average
  Percentage of
    
        Annualized
  Base
  Total Leased
  Percentage of
 
     Approximate
  Base Rent
  Rent Per Square
  Square Footage
  Total Base
 
  No. of
  Lease Area in
  Under Expiring
  Foot Under
  Represented by
  Rental Revenues
 
Expiration
 Leases
  Square Feet
  Leases
  Expiring
  Expiring
  Represented by
 
Year Expiring  (Thousands)  (Thousands)  Leases  Leases  Expiring Leases 
 
2011
  1,044   3,315  $64,764  $19.54   7.9%  12.5%
2012
  951   4,243   75,847   17.87   10.1   14.6 
2013
  846   3,681   61,592   16.73   8.8   11.9 
2014
  889   4,584   70,552   15.39   10.9   13.6 
2015
  604   3,430   54,397   15.86   8.2   10.5 
2016
  204   3,417   37,699   11.03   8.1   7.3 
2017
  94   1,682   22,355   13.29   4.0   4.3 
2018
  93   1,544   20,573   13.32   3.7   4.0 
2019
  94   1,701   23,043   13.54   4.1   4.4 
2020
  80   1,763   18,708   10.61   4.2   3.6 
                         
Total
  4,899   29,360  $449,530  $15.31   70.0%  86.5%
                         
 
The rental payments under certain of these leases will remain constant until the expiration of their base terms, regardless of inflationary increases. There can be no assurance that any of these leases will be renewed or that any replacement tenants will be obtained if not renewed.


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Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
    Alabama                                      
 
1
  Birmingham, AL Brook Highland Plaza
5291 Highway 280 South		 35242 SC  Fee  1994/2003  1994   100%   424,981  $4,378,602  $10.36   86.9% Dick’s Sporting Goods, Lowe’s, Stein Mart, OfficeMax, Michaels, HomeGoods, Books-A-Million, Ross Dress For Less, Big Lots
 
2
  Birmingham, AL Eastwood Festival Centre 7001 Crestwood Boulevard 35210 SC  Fee  1989/1999  1995   100%   300,280  $1,085,122  $5.34   67.7% Dollar Tree, Burlington Coat Factory, The Edge, Food Smart (Not Owned), Home Depot (Not Owned)
 
3
  Birmingham, AL River Ridge
U.S. Highway 280		 35242 SC  Fee (3) 2001  2007   15%   172,304  $2,212,052  $16.82   76.3% Staples, Best Buy, Super Target (Not Owned)
 
4
  Dothan, AL Dothan
2821 Montgomery Highway		 36303 SC  Fee  2004  2007   100%   33,906  $—  $—   —   
 
5
  Dothan, AL Shops on the Circle
3500 Ross Clark Circle		 36303 SC  Fee  2000  2007   100%   149,085  $1,592,375  $11.71   91.2% Old Navy, T.J. Maxx, OfficeMax
 
6
  Florence, AL Cox Creek Shopping Center 374-398 Cox Creek Parkway 35360 SC  Fee (3) 2001  2007   15%   173,989  $1,678,807  $10.24   94.3% Best Buy, Dick’s Sporting Goods, Burke’s Outlet, Target (Not Owned)
 
7
  Huntsville, AL Westside Centre
6275 University Drive		 35806 SC  Fee (3) 2002  2007   15%   476,146  $4,774,290  $11.86   84.6% Babies “R” Us, Marshalls, Bed Bath & Beyond, Michaels, Dick’s Sporting Goods, Stein Mart, Ross Dress For Less, Big Lots, Super Target (Not Owned)
 
8
  Opelika, AL Pepperell Corners I
2300-2600 Pepperell Parkway		 36801 SC  Fee  1995  2003   100%   234,817  $479,893  $7.08   28.9%  
 
9
  Scottsboro, AL Scottsboro Marketplace 24833 John P. Reid Parkway 35766 SC  Fee  1999  2003   100%   40,560  $356,040  $8.78   100% Burke’s Outlet, Walmart Supercenter (Not Owned)
 
10
  Tuscaloosa, AL McFarland Plaza
2600 McFarland Boulevard East		 35404 SC  Fee (3) 1999  2007   15%   229,296  $1,036,079  $7.05   64.1% Stein Mart, OfficeMax, Toys “R” Us
    Arizona                                      
 
11
  Ahwatukee, AZ Ahwatukee Foothills Towne Center 4711 East Ray Road 85044 SC  Fee (3) 1996/1997/
1999		  1998   50%   647,623  $9,793,857  $15.56   93.5% Jo-Ann Stores, Best Buy, AMC Theatres, Bassett Furniture, Ashley Furniture Homestore, Barnes & Noble, Babies “R” Us, Stein Mart, Ross Dress For Less, OfficeMax
 
12
  Phoenix, AZ Arrowhead Crossing 7553 West Bell Road 85382 SC  Fee (3) 1995  1996   50%   346,428  $4,327,282  $12.99   96.1% Staples, HomeGoods, Mac Frugal’s, Barnes & Noble, T.J. Maxx, Hobby Lobby, DSW Shoe Warehouse, Nordstrom Rack, Fry’s (Not Owned)
 
13
  Phoenix, AZ Christown Spectrum Mall 1703 West Bethany Home Road 85015 SC  GL (3) 1961  2004   20%   710,923  $7,311,334  $9.39   93.7% Walmart Supercenter, Costco, Ross Dress For Less, PetSmart, J.C. Penney, Harkins Theatre, Target (Not Owned)


19

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
14
  Phoenix, AZ Deer Valley Towne Center 2805 West Aqua Fria Freeway 85027 SC  Fee  1996  1999   100%   194,009  $3,295,274  $16.97   97.7% Ross Dress For Less, OfficeMax, PetSmart, Michaels, AMC Theatres (Not Owned), Target (Not Owned)
 
15
  Phoenix, AZ Paradise Village Gateway Tatum and Shea Boulevards 85028 SC  Fee  1997/2004  2003   67%   223,658  $4,507,258  $18.96   95.2% Bed Bath & Beyond, Ross Dress For Less, PetSmart, Staples, Albertson’s
    Arkansas                                      
 
16
  North Little Rock, AR McCain Plaza
4124 East McCain Boulevard		 72117 SC  Fee  1991/2004  1994   100%   295,013  $1,564,687  $6.75   78.6% Bed Bath & Beyond,
T.J. Maxx, Cinemark, Burlington Coat Factory, Michaels
 
17
  Russellville, AR Valley Park Centre
3093 East Main Street		 72801 SC  Fee  1992  1994   100%   280,706  $1,794,271  $6.98   91.6% Hobby Lobby, T.J. Maxx, J.C. Penney, Belk
    Brazil                                      
 
18
  Brasilia Patio Brasil Shopping
Scs Quadra 07 Building A		 70307-902 MM  Fee  1997/2001  2006   5%   335,822  $16,182,045  $49.68   97.0% Lojas Americanas, Otoch, Riachuelo, Renner, Centauro
 
19
  Campinas Parque Dom Pedro
Avenue Guilherme Campos, 500		 01387-001 MM  Fee  2001/2010  2006   37.3%   1,348,075  $34,790,825  $27.77   92.9% Alpini Veiculos, Clinical Center, Lojas Americanas, Siberian/Crawford, Casas Bahia, Fast Shop, Centauro, Pet Center Marginal, Marisa, Star Bowling, Walmart Supercenter, Etna, Pernambucanas, Formula Academia, Riachuelo, Zara, Renner, Fnac, Multiplex P.D.Pedro
 
20
  Franca Franca Shopping
Avenue Rio Negro, 1100		 14406-901 MM  Fee  1993  2006   32.2%   194,858  $2,730,130  $14.87   94.2% Renner, C&C Casa E Construcao, C&A, Casas Bahia, Magazine Luiza, Lojas Americanas
 
21
  Manaura Manaura Shopping
Avenue Mario Ypiranga, 1300		 69057-002 MM  Fee (3) 2007  2007   47.8%   504,729  $14,891,075  $30.81   95.8% Marisa, Centauro, Saraiva Mega Store, Hitech Imports, C&A, Renner, Riachuelo, Bemol
 
22
  Sao Bernardo Do Campo Shopping Metropole
Praca Samuel Sabatine, 200		 09750-902 MM  Fee (3) 1980/1995/
1997		  2006   47.8%   217,400  $9,999,326  $47.51   96.8% Renner, Lojas Americanas
 
23
  Sao Paulo Boavista Boavista Shopping
Rua Borba Gato, 59		 04747-030 MM  Fee (3) 2004  2006   47.8%   279,770  $3,627,258  $13.30   97.5% C&A, Marisa & Familia, Americanas Express, Luigi Bertolli, Sonda
 
24
  Sao Paulo Campo Limpo Campo Limpo Shopping Estrada Do Campo Limpo 459 05777-001 MM  Fee (3) 2005  2006   9.6%   214,909  $5,091,208  $23.97   98.8% C&A, Marisa, Compre Bem, Casas Bahia
 
25
  Sao Paulo Penha Shopping Penha
Rua Drive Joao Ribeiro, 304		 03634-010 MM  Fee  1992/2004  2006   35%   319,756  $8,847,901  $28.25   97.9% Marisa, Magazine Luiza, Sonda, Lojas Americanas, Kalunga, C&A
 
26
  Sao Paulo Plaza Plaza Sul
Praca Leonor Kaupa		 04151-100 MM  Fee  1994  2006   14.3%   248,664  $12,325,352  $49.67   99.8% Lojas Americanas, Luigi Bertolli, Camicado, Monday Academia, Renner
 
27
  Sao Paulo Tivoli Tivoli Shopping
Avenue Santa Barbara, 777		 13456-080 MM  Fee  1993/2006  2006   14.3%   237,528  $4,653,510  $20.14   97.3% Lojas Americanas, Unimed, Magazine Luiza, C&A, C&C, Paulistao


20

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
    California                                      
 
28
  Buena Park, CA Buena Park Downtown
8308 On The Mall		 90620 SC  Fee (3) 1965  2004   20%   734,757  $9,126,787  $17.10   71.5% DSW Shoe Warehouse, Ross Dress For Less, Bed Bath & Beyond, 24 Hour Fitness, Kohl’s, Krikorian Theatres, John’s Incredible Pizza Company, Michaels, Toys “R” Us(4), Sears (Not Owned), Walmart (Not Owned)
 
29
  Long Beach, CA The Pike at Rainbow Harbor
95 South Pine Avenue		 90802 SC  GL  2005  1*  100%   314,977  $4,463,139  $16.14   78.9% KDB, Cinemark, Borders
 
30
  Oceanside, CA Ocean Place Cinemas
401-409 Mission Avenue		 92054 SC  Fee  2000  2000   100%   79,884  $1,421,003  $17.81   99.9% Regal Cinemas
 
31
  Pasadena, CA Paseo Colorado
280 E Colorado Boulevard		 91101 LC  Fee  2001  2003   100%   556,271  $11,248,727  $21.71   93.1% Gelson’s Market, Loehmann’s, Equinox, Macy’s, Pacific Theatres Exhibit Corporation, DSW Shoe Warehouse
 
32
  Richmond, CA Hilltop Plaza
3401 Blume Drive		 94803 SC  Fee (3) 1996/2000  2002   20%   245,774  $2,705,958  $14.91   73.9% .99 Cents Only Stores, PetSmart, Ross Dress For Less, Century Theatre
 
33
  San Francisco, CA Van Ness Plaza
1000 Van Ness Avenue		 94109 SC  Fee  1998  2002   100%   123,903  $3,527,592  $42.84   66.5% AMC Theatres
 
34
  Valencia, CA River Oaks Shopping Center
24235 Magic Mountain Parkway		 91355 SC  GL  1986  2006   100%   75,590  $975,132  $17.75   72.7% Sprouts Farmers Market, buybuy BABY
    Colorado                                      
 
35
  Broomfield, CO Flatiron Marketplace Garden 1 West Flatiron Circle 80021 SC  Fee  2001  2003   100%   252,035  $3,552,999  $19.26   73.2% Nordstrom Rack, Best Buy, Office Depot, Great Indoors (Not Owned)
 
36
  Denver, CO Centennial Promenade
9555 East County Line Road		 80223 SC  Fee  1997/2002  1997   100%   407,964  $6,602,003  $17.09   94.7% Golfsmith Golf Center, Soundtrack, Ross Dress For Less, OfficeMax, Michaels, Toys “R” Us, Stickley Furniture, Recreational Equipment (Not Owned), Home Depot (Not Owned)
 
37
  Denver, CO Tamarac Square
7777 East Hampden		 80231 SC  Fee  1976  2001   100%   183,606  $1,091,941  $14.69   38.0% Regency Theatres Tamarac Square
 
38
  Denver, CO University Hills
2730 South Colorado Boulevard		 80222 SC  Fee  1997  2003   100%   244,383  $4,173,944  $17.08   100% Michaels, Pier 1 Imports, OfficeMax, 24 Hour Fitness, King Soopers
 
39
  Fort Collins, CO Mulberry and Lemay Crossing
Mulberry Street and South Lemay Avenue		 80525 SC  Fee  2004  2003   100%   18,988  $475,180  $25.03   100% Home Depot (Not Owned), Walmart Supercenter (Not Owned)
 
40
  Highland Ranch, CO Highland Ranch
8575 South Quebec Street		 80130 SC  Fee  1998  2007   100%   43,480  $—  $—   —   
 
41
  Littleton, CO Aspen Grove
7301 South Santa Fe		 80120 LC  Fee  2002  1*  100%   232,488  $6,020,640  $27.15   89.3%  


21

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
42
  Parker, CO Flatacres Marketcenter I South Parker Road 80134 SC  GL (3) 2003  2003   0.01%   116,644  $1,995,485  $15.12   96.2% Bed Bath & Beyond, Sports Authority, Michaels, Kohl’s (Not Owned), Home Depot (Not Owned), Walmart Supercenter (Not Owned)
    Connecticut                                      
 
43
  Waterbury, CT Naugatuck Valley Shopping Center
950 Wolcott Street		 06705 SC  Fee (3) 2003  2007   15%   231,584  $3,846,985  $17.38   84.0% Walmart, Bob’s Stores, Stop & Shop, Staples
 
44
  Windsor, CT Windsor Court Shopping Center
1095 Kennedy Road		 06095 SC  Fee  1993  2007   100%   78,480  $1,316,096  $18.06   92.9% Stop & Shop
    Delaware                                      
 
45
  Dover, DE Kmart Shopping Center
515 North Dupont Highway		 19901 SC  Fee (3) 1973  2008   25.25%   84,180  $305,800  $2.86   100% Kmart
    Florida                                      
 
46
  Bayonet Point, FL Point Plaza
U.S. 19 & State Route 52		 34667 SC  Fee  1985/2003  1/2*  100%   209,714  $747,440  $4.59   77.7% Beall’s, T.J. Maxx, Publix Super Markets
 
47
  Boynton Beach, FL Meadows Square
Hypoluxo Road North Congress Avenue		 33461 SC  Fee (3) 1986  2004   20%   106,224  $1,070,509  $13.22   76.3% Publix Super Markets
 
48
  Boynton Beach, FL Aberdeen Square
4966 Le Chalet Boulevard		 33426 SC  Fee (3) 1990  2007   20%   70,555  $675,818  $10.13   94.5% Publix Super Markets
 
49
  Boynton Beach, FL Village Square at Golf 3775 West Woolbright Road 33436 SC  Fee (3) 1983/2002  2007   20%   131,466  $1,427,909  $13.08   78.7% Publix Super Markets
 
50
  Bradenton, FL Lakewood Ranch Plaza
1755 Lakewood Ranch Boulevard		 34211 SC  Fee (3) 2001  2007   20%   73,384  $1,016,296  $12.45   97.1% Publix Super Markets
 
51
  Bradenton, FL Cortez Plaza
905 Cortez Road West		 34207 SC  Fee  1966/1988  2007   100%   288,540  $2,432,370  $11.11   75.8% Burlington Coat Factory, PetSmart, hhgregg
 
52
  Bradenton, FL Creekwood Crossing
7395 52nd Place East		 34203 SC  Fee (3) 2001  2007   20%   189,120  $1,944,160  $9.96   92.3% Beall’s, Beall’s Outlet, Lifestyle Family Fitness, Macy’s Furniture & Mattress Clearance Center, Lowe’s (Not Owned)
 
53
  Brandon, FL Kmart Shopping Center 1602 Brandon Boulevard 33511 SC  GL  1972/1997/
2003		  2*  100%   161,900  $799,876  $3.62   100% Kmart, Kane Furniture
 
54
  Brandon, FL Lake Brandon Plaza Causeway Boulevard 33511 SC  Fee  1999  2003   100%   148,267  $1,955,387  $12.11   100% CompUSA, Jo-Ann Stores, Babies “R” Us, Publix Super Markets
 
55
  Casselberry, FL Casselberry Commons
1455 South Semoran Boulevard		 32707 SC  Fee (3) 1973/1998/
2010		  2007   20%   244,084  $2,391,326  $11.06   79.7% Ross Dress For Less, T.J. Maxx, Stein Mart, Publix Super Markets
 
56
  Clearwater, FL Clearwater Collection 21688-21800 U.S. Highway 19 North 33765 SC  Fee  1995/2005  2007   100%   132,023  $1,454,608  $12.32   89.4% LA Fitness International, Floor & Decor


22

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
57
  Crystal River, FL Crystal Springs
6760 West Gulf to Lake		 34429 SC  Fee (3) 2001  2007   20%   66,986  $728,966  $11.23   96.9% Publix Super Markets
 
58
  Crystal River, FL Crystal River Plaza
420 Sun Coast Highway		 33523 SC  Fee  1986/2001  1/2*  100%   169,101  $1,266,742  $7.55   99.3% Beall’s, Beall’s Outlet, Sibex Electronics
 
59
  Dania Beach, FL Bass Pro Outdoor World
200 Gulf Stream Way		 33004 SC  Fee  1999  2007   100%   165,000  $1,600,000  $9.70   100% Bass Pro Outdoor World
 
60
  Dania, FL Sheridan Square
401-435 East Sheridan Street		 33004 SC  Fee (3) 1991  2007   20%   67,475  $626,019  $10.25   90.6% Publix Super Markets
 
61
  Davie, FL Paradise Promenade
5949-6029 Stirling Road		 33314 SC  Fee (3) 2004  2007   20%   74,499  $1,035,237  $15.26   91.1% Publix Super Markets
 
62
  Daytona Beach, FL Volusia Point Shopping Center
1808 West International Speedway		 32114 SC  Fee  1984  2001   100%   76,115  $850,146  $12.89   86.6% Marshalls
 
63
  Deerfield Beach, FL Hillsboro Square
Hillsboro Boulevard and Highway One		 33441 SC  Fee (3) 1978/2002  2007   15%   145,385  $2,131,649  $15.75   93.1% Publix Super Markets, Office Depot
 
64
  Englewood, FL Rotonda Plaza
5855 Placida Road		 34224 SC  Fee  1991  2004   100%   46,835  $437,407  $10.04   93.0% Sweetbay Supermarkets
 
65
  Fort Myers, FL Market Square
13300 South Cleveland Avenue		 33919 SC  Fee (3) 2004  2007   15%   107,179  $1,744,224  $14.78   100% American Signature, Total Wine & More, DSW Shoe Warehouse, Super Target (Not Owned), Barnes & Noble (Not Owned)
 
66
  Fort Myers, FL Cypress Trace
Cypress Lake Drive & U.S. 41		 33907 SC  Fee (3) 2004  2007   15%   276,288  $2,373,066  $9.65   89.0% Beall’s, Stein Mart, Beall’s Outlet, Ross Dress For Less
 
67
  Fort Walton Beach, FL Shoppes at Paradise Pointe U.S. Highway 98 and Perry Avenue 32548 SC  Fee (3) 1987/2000  2007   20%   83,936  $725,016  $11.93   72.4% Publix Super Markets
 
68
  Gulf Breeze, FL Gulf Breeze Marketplace 3749-3767 Gulf Breeze Parkway 32561 SC  Fee  1998  2003   100%   29,827  $492,022  $16.50   100% Lowe’s (Not Owned), Walmart Supercenter (Not Owned)
 
69
  Hernando, FL Shoppes of Citrus Hills
2601 Forest Ridge Boulevard		 34442 SC  Fee (3) 1994/2003  2007   20%   68,927  $645,259  $10.13   92.5% Publix Super Markets
 
70
  Hialeah, FL Paraiso Plaza
3300-3350 West 80th Street		 33018 SC  Fee (3) 1997  2007   20%   60,712  $885,689  $14.59   100% Publix Super Markets
 
71
  Homestead, FL Homestead Pavilion
3300 Northeast 10th Court		 33030 SC  Fee  2008  2008   100%   201,897  $3,561,415  $15.73   98.6% Bed Bath & Beyond, Staples, Michaels, Ross Dress For Less, Sports Authority
 
72
  Jacksonville, FL Jacksonville Regional
3000 Dunn Avenue		 32218 SC  Fee  1988  1995   100%   219,735  $1,272,444  $6.57   88.2% J.C. Penney, Winn Dixie Stores
 
73
  Jacksonville, FL Arlington Plaza
926 Arlington Road		 32211 SC  Fee  1990/1999  2004   100%   182,098  $334,102  $6.45   28.4%  


23

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
74
  Lake Mary, FL Shoppes of Lake Mary 4155 West Lake Mary Boulevard 32746 SC  Fee (3) 2001  2007   15%   73,343  $1,204,783  $20.32   80.0% Staples, Target (Not Owned), Publix Super Markets (Not Owned)
 
75
  Lake Wales, FL Shoppes on the Ridge Highway 27 and Chalet Suzanne Road 33859 SC  Fee (3) 2003  2007   20%   115,578  $1,041,926  $11.55   78.1% Publix Super Markets
 
76
  Lakeland, FL Lakeland Marketplace Florida Lakeland 33803 SC  Fee  2006  2003   100%   77,582  $581,865  $7.50   100% Beall’s, Lowe’s (Not Owned)
 
77
  Lakeland, FL Highlands Plaza
2228 Lakelands Highland Road		 33803 SC  Fee  1990  2004   100%   102,572  $640,990  $8.82   70.9% Winn Dixie Stores
 
78
  Largo, FL Bardmoor Promenade
10801 Starkey Road		 33777 SC  Fee (3) 1991  2007   20%   152,667  $1,859,670  $12.61   95.1% Publix Super Markets
 
79
  Largo, FL Kmart Shopping Center 1000 Missouri Avenue 33770 SC  Fee (3) 1969  2008   25.25%   116,805  $214,921  $1.84   100% Kmart
 
80
  Melbourne, FL Melbourne Shopping Center
1301-1441 South Babcock		 32901 SC  Fee (3) 1960/1999  2007   20%   204,202  $1,273,631  $7.09   85.6% Big Lots, Publix Super Markets
 
81
  Miami, FL Midtown Miami
3401 North Miami Avenue		 33127 SC  Fee  2006  1*  100%   276,886  $4,342,935  $13.88   95.3% HomeGoods, Loehmann’s, Marshalls, Ross Dress For Less, Target, West Elm, Sports Authority
 
82
  Miami, FL Plaza Del Paraiso
12100 Southwest 127th Avenue		 33186 SC  Fee (3) 2003  2007   20%   82,441  $1,244,653  $13.50   100% Publix Super Markets
 
83
  Miramar, FL River Run
Miramar Parkway and Palm Avenue		 33025 SC  Fee (3) 1989  2007   20%   93,643  $1,073,747  $11.74   97.7% Publix Super Markets
 
84
  Naples, FL Countryside Shoppes
4025 Santa Barbara		 34104 SC  Fee (3) 1997  2007   20%   73,986  $871,266  $11.78   100% Sweetbay Supermarkets
 
85
  New Port Richey, FL Shoppes at Golden Acres 9750 Little Road 34654 SC  Fee (3) 2002  2007   20%   130,707  $971,719  $12.97   57.3% Publix Super Markets
 
86
  Ocala, FL Heather Island
7878 Southeast Maricamp		 34472 SC  Fee (3) 2005  2007   20%   70,970  $709,393  $10.35   96.6% Publix Super Markets
 
87
  Ocala, FL Steeplechase Plaza
8585 State Road 200		 34481 SC  Fee  1993  2007   100%   92,180  $389,922  $9.11   41.7% Save-A-Lot
 
88
  Ocala, FL Ocala West
2400 Southwest College Road		 32674 SC  Fee  1991  2003   100%   105,276  $814,097  $8.13   95.1% Sports Authority, Hobby Lobby, Blocker’s Furniture (Not Owned)
 
89
  Ocoee, FL West Oaks Town Center 9537-49 West Colonial 34761 SC  Fee (3) 2000  2007   20%   66,539  $960,808  $16.74   86.3% Michaels
 
90
  Orlando, FL Chickasaw Trail
2300 South Chickasaw Trial		 32825 SC  Fee (3) 1994  2007   20%   75,492  $848,074  $11.69   96.1% Publix Super Markets
 
91
  Orlando, FL West Colonial Center
Good Homes Road and Colonial Drive		 32818 SC  Fee (3) 1999  2007   15%   78,625  $176,264  $5.27   42.5% Staples


24

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
92
  Orlando, FL Conway Plaza
4400 Curry Ford Road		 32812 SC  Fee (3) 1985/1999  2007   20%   117,723  $959,362  $9.34   87.3% Publix Super Markets
 
93
  Orlando, FL Skyview Plaza
7801 Orange Blossom Trail		 32809 SC  Fee (3) 1994/1998  2007   20%   281,260  $2,121,884  $9.01   83.8% Publix Super Markets, Office Depot, Kmart, Best Buy (Not Owned)
 
94
  Oviedo, FL Oviedo Park Crossing
Route 417 and Red Bug Lake Road		 32765 SC  Fee (3) 1999  1*  20%   186,212  $1,819,602  $10.04   97.3% OfficeMax, Ross Dress For Less, Michaels, T.J. Maxx, Bed Bath & Beyond, Lowe’s (Not Owned), Borders (Not Owned)
 
95
  Palm Beach Garden, FL Northlake Commons Northlake Boulevard 33403 SC  Fee (3) 1987/2003  2007   20%   146,825  $1,550,578  $14.50   72.8% Ross Dress For Less, Tiger Direct, Home Depot (Not Owned)
 
96
  Palm Harbor, FL The Shoppes of Boot Ranch 300 East Lake Road 34685 SC  Fee  1990  1995   100%   52,395  $1,018,311  $19.98   97.3% Target (Not Owned), Publix Super Markets (Not Owned)
 
97
  Palm Harbor, FL Brooker Creek
36301 East Lake Road		 34685 SC  Fee (3) 1994  2007   20%   77,596  $887,456  $11.87   96.4% Publix Super Markets
 
98
  Pembroke Pines, FL Flamingo Falls
2000-2216 North Flamingo Road		 33028 SC  Fee (3) 2001  2007   20%   108,565  $2,053,422  $21.77   86.9% Fresh Market, LA Fitness (Not Owned)
 
99
  Plantation, FL The Fountains
801 South University Drive		 33324 SC  Fee  1989/2010  2007   100%   231,388  $3,583,999  $14.65   83.4% Dick’s Sporting Goods, Marshalls, Kohl’s, Jo-Ann Fabrics, Fountains Professional Center (Not Owned)
 
100
  Plantation, FL Vision Works
801 South University Drive		 33324 SC  Fee  1989  2007   100%   6,891  $175,087  $25.41   100%  
 
101
  Santa Rosa Beach, FL Watercolor Crossing
110 Watercolor Way		 32459 SC  Fee (3) 2003  2007   20%   43,207  $555,755  $14.03   91.7% Publix Super Markets
 
102
  Spring Hill, FL Mariner Square
13050 Cortez Boulevard		 34613 SC  Fee  1988/1997  1/2*  100%   188,347  $1,478,900  $8.36   90.5% Beall’s, Ross Dress For Less, Walmart (Not Owned), Sam’s Club (Not Owned)
 
103
  St. Petersburg, FL Kmart Plaza
3951 34th Street South		 33711 SC  Fee (3) 1973  2008   25.25%   94,500  $277,400  $2.94   100% Kmart
 
104
  Tallahassee, FL Capital West
4330 West Tennessee Street		 32312 SC  Fee  1994/2004  2003   100%   85,951  $683,146  $8.47   93.8% Office Depot, Beall’s Outlet, Walmart Supercenter (Not Owned)
 
105
  Tallahassee, FL Killearn Shopping Center
3479-99 Thomasville Road		 32309 SC  Fee (3) 1980  2007   20%   95,229  $797,248  $19.95   42.0%  
 
106
  Tallahassee, FL Southwood Village
Northwest Corner Capital Circle and Blairstone Road		 32301 SC  Fee (3) 2003  2007   20%   62,840  $715,405  $12.33   92.4% Publix Super Markets
 
107
  Tamarac, FL Midway Plaza
University Drive and Commercial Boulevard		 33321 SC  Fee (3) 1985  2007   20%   227,209  $2,453,727  $13.06   82.7% Ross Dress For Less, Publix Super Markets
 
108
  Tampa, FL New Tampa Commons Bruce B. Downs Boulevard and Donna Michelle Drive 33647 SC  Fee  2005  2007   100%   10,000  $304,449  $35.40   86.0%  
 
109
  Tampa, FL North Pointe Plaza
15001-15233 North Dale Mabry Highway		 33618 SC  Fee (3) 1990  1/2*  20%   104,460  $1,131,925  $12.34   87.8% Publix Super Markets, Walmart (Not Owned)


25

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
110
  Tampa, FL Walk at Highwood Preserve I
18001 Highwoods Preserve Parkway		 33647 SC  Fee (3) 2001  2007   15%   169,081  $2,219,327  $17.95   73.1% Michaels, Best Buy
 
111
  Tarpon Springs, FL Tarpon Square
41232 U.S. 19 North		 34689 SC  Fee  1974/1998  1/2*  100%   198,797  $893,002  $8.34   50.4% Big Lots, Staples
 
112
  Tequesta, FL Tequesta Shoppes
105 North U.S. Highway 1		 33469 SC  Fee  1986  2007   100%   109,760  $1,000,809  $10.70   85.2% Stein Mart
 
113
  Valrico, FL Brandon Boulevard Shoppes
1930 State Route 60 East		 33594 SC  Fee  1994  2007   100%   85,377  $763,893  $10.49   85.3% Publix Super Markets
 
114
  Valrico, FL Shoppes at Lithia
3461 Lithia Pinecrest Road		 33594 SC  Fee (3) 2003  2007   20%   71,430  $1,004,016  $15.38   91.4% Publix Super Markets
 
115
  Venice, FL Jacaranda Plaza
1687 South Bypass		 34293 SC  Fee (3) 1974  2008   25.25%   84,180  $—  $—   —   
 
116
  Vero Beach, FL Vero Beach
6560 20th Street		 32966 SC  Fee  2001  2007   100%   33,243  $—  $—   —   
 
117
  Wesley Chapel, FL The Shoppes at New Tampa
1920 County Road 581		 33543 SC  Fee (3) 2002  2007   20%   158,602  $1,864,022  $12.29   95.6% Publix Super Markets, Beall’s
    Georgia                                      
 
118
  Athens, GA Athens East
4375 Lexington Road		 30605 SC  Fee  2000  2003   100%   24,000  $348,900  $14.54   100% Walmart Supercenter (Not Owned)
 
119
  Atlanta, GA Brookhaven Plaza
3974 Peachtree Road Northeast		 30319 SC  Fee (3) 1993  2007   20%   65,320  $1,194,717  $17.07   100% Kroger
 
120
  Atlanta, GA Cascade Corners
3425 Cascade Road		 30311 SC  Fee (3) 1993  2007   20%   66,844  $463,642  $7.06   98.2% Kroger
 
121
  Atlanta, GA Pleasant Hill Plaza
1630 Pleasant Hill Road		 30136 SC  Fee  1990  1994   100%   99,025  $904,825  $11.97   76.3% Assi Plaza (Not Owned), Walmart (Not Owned)
 
122
  Atlanta, GA Perimeter Pointe
1155 Mount Vernon Highway		 30136 SC  Fee  1995/2002  1995   100%   349,955  $5,359,714  $15.16   99.0% Stein Mart, Babies “R” Us, Sports Authority, L.A. Fitness, Office Depot, HomeGoods, United Artists Theatre
 
123
  Atlanta, GA Abernathy Square
6500 Roswell Road		 30328 SC  Fee  1983/1994  2007   100%   125,870  $2,118,852  $19.17   84.1% Publix Super Markets
 
124
  Atlanta, GA Cascade Crossing
3695 Cascade Road Southwest		 30331 SC  Fee (3) 1994  2007   20%   63,346  $610,042  $9.63   100% Publix Super Markets
 
125
  Augusta, GA Augusta Shopping Center
2360 Georgetown Road		 30906 SC  Fee (3) 1999  2007   15%   22,560  $—  $—   —  Walmart Supercenter (Not Owned)
 
126
  Austell, GA Burlington Plaza
3753-3823 Austell Road Southwest		 30106 SC  Fee (3) 1973  2008   25.25%   146,950  $519,461  $3.53   100% Burlington Coat Factory, Topp’s Fashion (Not Owned)


26

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
127
  Buford, GA Marketplace at Millcreek I Mall of Georgia Boulevard 30519 SC  Fee (3) 2003  2007   15%   402,941  $4,712,460  $12.43   94.1% REI, Borders, OfficeMax, PetSmart, Michaels, DSW Shoe Warehouse, Ross Dress For Less, Marshalls, Bed Bath & Beyond, Costco (Not Owned)
 
128
  Canton, GA Hickory Flat Village
6175 Hickory Flat Highway		 30115 SC  Fee (3) 2000  2007   20%   74,020  $873,266  $12.83   92.0% Publix Super Markets
 
129
  Canton, GA Riverstone Plaza
1451 Riverstone Parkway		 30114 SC  Fee (3) 1998  2007   20%   302,131  $3,239,044  $11.83   87.6% Michaels, Ross Dress For Less, Belk, Publix Super Markets
 
130
  Chamblee, GA Chamblee Plaza
Peachtree Industrial Boulevard		 30341 SC  Fee  1976  2003   100%   151,016  $535,469  $10.09   35.1%  
 
131
  Columbus, GA Bradley Park Crossing
1591 Bradley Park Drive		 31904 SC  Fee  1999  2003   100%   119,571  $1,225,585  $12.03   85.2% PetSmart, Michaels, Fresh Market, Target (Not Owned)
 
132
  Cumming, GA Sharon Greens
1595 Peachtree Parkway		 30041 SC  Fee (3) 2001  2007   20%   98,301  $944,075  $11.79   81.4% Kroger
 
133
  Cumming, GA Cumming Marketplace Marketplace Boulevard 30041 SC  Fee  1997/1999  2003   100%   316,527  $3,640,154  $11.40   99.2% Lowe’s, Michaels, OfficeMax, Appliance Mart, Home Depot (Not Owned), Walmart Supercenter (Not Owned)
 
134
  Decatur, GA Flat Shoals Crossing
3649 Flakes Mill Road		 30034 SC  Fee (3) 1994  2007   20%   69,699  $718,675  $10.31   100% Publix Super Markets
 
135
  Decatur, GA Hairston Crossing
2075 S Hairston Road		 30035 SC  Fee (3) 2002  2007   20%   57,884  $716,132  $12.37   100% Publix Super Markets
 
136
  Douglasville, GA Douglasville Marketplace 6875 Douglas Boulevard 30135 SC  Fee  1999  2003   100%   86,158  $1,526,026  $10.76   100% Best Buy, Babies “R” Us, Lowe’s (Not Owned)
 
137
  Douglasville, GA Douglasville Pavilion
2900 Chapel Hill Road		 30135 SC  Fee (3) 1998  2007   15%   266,945  $2,314,282  $12.30   70.5% PetSmart, OfficeMax, Marshalls, Ross Dress For Less, Big Lots(4), Target (Not Owned)
 
138
  Douglasville, GA Market Square
9503-9579 Highway 5		 30135 SC  Fee (3) 1974/1990  2007   20%   121,766  $890,759  $9.69   69.9% Office Depot
 
139
  Duluth, GA SoGood Bridal & Beauty 3480 Steve Reynolds Boulevard 30096 SC  Fee  2004  2007   100%   20,000  $160,000  $8.00   100% SoGood Bridal & Beauty
 
140
  Ellenwood, GA Paradise Shoppes of Ellenwood
East Atlanta Road and Fairview Road		 30294 SC  Fee (3) 2003  2007   20%   67,721  $703,592  $12.60   82.4% Publix Super Markets


27

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
141
  Fayetteville, GA Fayette Pavilion I
New Hope Road and Georgia Highway 85		 30214 SC  Fee (3) 1995/2002  2007   15%   1,279,810  $10,449,279  $9.45   86.4% hhgregg, Hobby Lobby, Bed Bath & Beyond, Sports Authority, T.J. Maxx, Publix Super Markets, Belk, Best Buy, Ross Dress For Less, Toys “R” Us, Tinseltown USA, Marshalls, PetSmart, Kohl’s, Jo-Ann Stores, Dick’s Sporting Goods, Home Depot (Not Owned), Target (Not Owned), Walmart Supercenter
 
142
  Flowery Branch, GA Clearwater Crossing
7380 Spout Springs Road		 30542 SC  Fee (3) 2003  2007   20%   90,566  $943,015  $12.15   85.7% Kroger
 
143
  Griffin, GA Ellis Crossing
649-687 North Expressway		 30223 SC  Fee  1986  2003   100%   9,200  $19,200  $6.00   34.8%  
 
144
  Kennesaw, GA Barrett Pavilion I
740 Barrett Parkway		 30144 SC  Fee (3) 1998  2007   15%   439,784  $6,683,812  $16.55   88.2% AMC Theatres, HomeGoods, Golfsmith Golf Center, hhgregg, Hobby Lobby, Old Navy, Jo-Ann Stores, Total Wine & More, REI, Target (Not Owned)
 
145
  Kennesaw, GA Town Center Commons
725 Earnest Barrett Parkway		 30144 SC  Fee  1998  2007   100%   72,108  $830,752  $13.18   87.4% J.C. Penney, Dick’s Sporting Goods (Not Owned)
 
146
  Lawrenceville, GA Rite Aid
1545 Lawrenceville Highway		 30044 SC  Fee  1997  2007   100%   9,504  $184,328  $19.39   100%  
 
147
  Lawrenceville, GA Springfield Park
665 Duluth Highway		 30045 SC  Fee  1992/2000  2007   100%   105,300  $736,694  $8.31   69.7% Hobby Lobby
 
148
  Lithonia, GA Shops at Turner Hill
8200 Mall Parkway		 30038 SC  Fee (3) 2004  2003   0.01%   113,675  $1,480,367  $13.49   90.3% Best Buy, Bed Bath & Beyond, Toys “R” Us, Sam’s Club (Not Owned)
 
149
  Loganville, GA Midway Plaza
910 Athens Highway		 30052 SC  Fee (3) 1995  2003   20%   91,196  $999,202  $11.41   96.1% Kroger
 
150
  Macon, GA Eisenhower Annex
4685 Presidential Parkway		 31206 SC  Fee  2002  2007   100%   81,977  $644,093  $11.28   69.7% hhgregg, PetSmart
 
151
  Macon, GA Eisenhower Crossing I
4685 Presidential Parkway		 31206 SC  Fee (3) 2002  2007   15%   414,653  $4,860,555  $11.53   99.4% Kroger, Staples, Michaels, Ross Dress For Less, Bed Bath & Beyond, Old Navy, Marshalls, Dick’s Sporting Goods, Ashley Furniture, Target (Not Owned), Best Buy (Not Owned)
 
152
  Marietta, GA Towne Center Prado
2609 Bells Ferry Road		 30066 SC  Fee  1995/2002  1995   100%   316,786  $3,453,267  $12.44   86.4% Stein Mart, Ross Dress For Less, Publix Super Markets
 
153
  Marietta, GA Rite Aid
731 Whitlock Avenue		 30064 SC  Fee  1997  2007   100%   10,880  $183,507  $16.87   100%  
 
154
  McDonough, GA Shoppes at Lake Dow
900-938 Highway 81 East		 30252 SC  Fee (3) 2002  2007   20%   72,727  $859,460  $12.95   91.2% Publix Super Markets


28

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
155
  Morrow, GA Southlake Pavilion
1912 Mount Zion Road		 30260 SC  Fee (3) 1996/2001  2007   15%   527,866  $4,464,508  $12.28   68.2% Ross Dress For Less, Barnes & Noble, Ashley Furniture Homestore, L.A. Fitness, Staples, Old Navy, hhgregg, Shoppers World(4), Sears, Target (Not Owned)
 
156
  Newnan, GA Newnan Crossing
955-1063 Bullsboro Drive		 30264 SC  Fee  1995  2003   100%   156,497  $1,229,763  $8.14   96.5% Lowe’s, Walmart Supercenter (Not Owned), Hobby Lobby (Not Owned)
 
157
  Newnan, GA Newnan Pavilion
1074 Bullsboro Drive		 30265 SC  Fee (3) 1998  2007   15%   263,635  $2,509,982  $11.72   77.0% OfficeMax, PetSmart, Home Depot, Ross Dress For Less, Kohl’s
 
158
  Norcross, GA Jones Bridge Square
5075 Peachtree Parkway		 30092 SC  Fee  1999  2007   100%   83,363  $838,113  $10.23   98.3% Ingles
 
159
  Rome, GA Rome
2700 Martha Berry Highway Northeast		 30165 SC  Fee  2001  2007   100%   33,056  $—  $—   —   
 
160
  Roswell, GA Sandy Plains Village I
Georgia Highway 92 and Sandy Plains Road		 30075 SC  Fee  1978/1995  2007   100%   177,529  $599,933  $16.26   20.8%  
 
161
  Roswell, GA Stonebridge Square
610-20 Crossville Road		 30075 SC  Fee (3) 2002  2007   15%   160,104  $1,590,859  $13.88   71.6% Kohl’s
 
162
  Smyrna, GA Heritage Pavilion
2540 Cumberland Boulevard		 30080 SC  Fee (3) 1995  2007   15%   262,971  $3,081,882  $12.04   97.3% PetSmart, Ross Dress For Less, American Signature, T.J. Maxx, Marshalls
 
163
  Snellville, GA Rite Aid
3295 Centerville Highway		 30039 SC  Fee  1997  2007   100%   10,594  $199,601  $18.84   100%  
 
164
  Snellville, GA Presidential Commons
1630-1708 Scenic Highway		 30078 SC  Fee  2000  2007   100%   371,586  $3,843,611  $11.00   90.8% Jo-Ann Stores, Kroger, Stein Mart, Home Depot, buybuy Baby(4)
 
165
  Stone Mountain, GA Deshon Plaza
380 North Deshon Road		 30087 SC  Fee (3) 1994  2007   20%   64,055  $687,797  $10.74   100% Publix Super Markets
 
166
  Suwanee, GA Suwanee Crossroads Lawrenceville Road and Satellite Boulevard 30024 SC  Fee (3) 2002  2007   15%   69,600  $511,951  $15.47   47.6% Walmart Supercenter (Not Owned)
 
167
  Suwanee, GA Johns Creek Town Center 3630 Peachtree Parkway Suwanee 30024 SC  Fee  2001/2004  2003   100%   285,336  $3,880,682  $14.01   97.1% Borders, PetSmart, Kohl’s, Michaels, Staples, Shoe Gallery
 
168
  Sylvania, GA BI-LO
1129 West Ogeechee Street		 30467 SC  Fee  2002  2007   100%   36,000  $378,000  $10.50   100% BI-LO
 
169
  Tucker, GA Cofer Crossing
4349-4375 Lawrenceville Highway		 30084 SC  Fee (3) 1998/2003  2003   20%   130,832  $854,414  $6.87   87.0% Kroger, A.J. Wright, Walmart (Not Owned)
 
170
  Tyrone, GA Southampton Village
Highway 74 and Swanson Road		 30290 SC  Fee (3) 2003  2007   20%   77,956  $758,996  $11.89   81.9% Publix Super Markets


29

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
171
  Warner Robins, GA Warner Robins Place
2724 Watson Boulevard		 31093 SC  Fee  1997  2003   100%   107,941  $1,330,878  $12.10   95.6% T.J. Maxx, Staples, Lowe’s (Not Owned), Walmart Supercenter (Not Owned)
 
172
  Woodstock, GA Woodstock Place
10029 Highway 928		 30188 SC  Fee  1995  2003   100%   44,691  $313,140  $13.74   51.0%  
 
173
  Woodstock, GA Woodstock Square
120-142 Woodstock Square		 30189 SC  Fee (3) 2001  2007   15%   218,859  $2,863,055  $13.18   99.3% OfficeMax, Old Navy, Kohl’s, Super Target (Not Owned)
    Idaho                                      
 
174
  Idaho Falls, ID Country Club Mall
1515 Northgate Mile		 83401 SC  Fee  1976/1992/
1997		  1998   100%   138,495  $545,268  $8.57   46.0% OfficeMax, Fred Meyer Supercenter (Not Owned)
 
175
  Meridian, ID Meridian Crossroads
Eagle and Fairview Road		 83642 SC  Fee  1999/2001/
2002/2003/
2004		  1*  100%   461,023  $6,657,564  $13.25   98.0% Bed Bath & Beyond, Old Navy, Shopko, Office Depot, Ross Dress For Less, Marshalls, Sportsman’s Warehouse, Babies “R” Us, Craft Warehouse, Walmart Supercenter (Not Owned)
 
176
  Nampa, ID Nampa Gateway Center 1200 North Happy Valley Road 83687 SC  Fee  2008  1*  100%   223,786  $1,359,778  $11.50   68.7% Idaho Athletic Club, Sports Authority, J.C. Penney, Macy’s, Regal Cinemas
    Illinois                                      
 
177
  Deer Park, IL Deer Park Town Center I 20530 North Rand Road Suite 133 60010 LC  Fee (3) 2000/2004  1*  25.75%   301,632  $8,956,799  $30.05   91.8% Gap, Crate & Barrel, Century Theatre, Barnes & Noble (Not Owned)
 
178
  McHenry, IL The Shops at Fox River 3340 Shoppers Drive 60050 SC  Fee  2006  1*  100%   263,015  $2,578,020  $12.72   74.3% Dick’s Sporting Goods, PetSmart, Bed Bath & Beyond, Best Buy. T.J. Maxx, J.C. Penney (Not Owned)
 
179
  Mount Vernon, IL Times Square Mall
42nd and Broadway Street		 62864 MM  Fee  1974/1998/
2000		  1993   100%   269,328  $941,589  $4.01   82.1% Sears, Dunham’s Sports, J.C. Penney
 
180
  Orland Park, IL Marley Creek Square 179th Street and Wolf Road 60467 SC  Fee (3) 2006  2006   50%   57,499  $655,919  $19.57   58.3% Jewel-Osco (Not Owned)
 
181
  Orland Park, IL Home Depot Center
15800 Harlem Avenue		 60462 SC  Fee  1987/1993  2004   100%   149,498  $1,255,569  $10.16   82.6% Home Depot
 
182
  Roscoe, IL Hilander Village
4860 Hononegah Road		 61073 SC  Fee (3) 1994  2007   20%   125,712  $949,659  $9.28   81.4% Kroger
 
183
  Skokie, IL Village Crossing
5507 West Touhy Avenue		 60077 SC  Fee (3) 1989  2007   15%   437,249  $7,548,518  $18.87   90.1% Michaels, Bed Bath & Beyond, OfficeMax, PetSmart, Best Buy, Crown Theatres, Barnes & Noble
    Indiana                                      
 
184
  Bedford, IN Town Fair Center
1320 James Avenue		 47421 SC  Fee  1993/1997  2*  100%   223,431  $1,049,787  $5.65   83.2% Kmart, J.C. Penney, Goody’s
 
185
  Evansville, IN East Lloyd Commons
6300 East Lloyd Expressway		 47715 SC  Fee  2005  2007   100%   159,682  $2,173,371  $13.73   99.1% Gordman’s, Michaels, Best Buy


30

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
186
  Highland, IN Highland Grove Shopping Center
Highway 41 and Main Street		 46322 SC  Fee (3) 1995/2001  1996   20%   312,450  $3,357,525  $12.10   88.8% Marshalls, Kohl’s, OfficeMax, Michaels, Target (Not Owned), Best Buy (Not Owned), Borders (Not Owned), Dick’s Sporting Goods (Not Owned)
 
187
  Indianapolis, IN Glenlake Plaza
2629 East 65th Street		 46220 SC  Fee (3) 1980  2007   20%   102,549  $755,246  $8.99   81.9% Kroger
 
188
  Lafayette, IN Park East Marketplace
4205 - 4315 Commerce Drive		 47905 SC  Fee  2000  2003   100%   35,100  $232,355  $14.16   46.8% Walmart Supercenter (Not Owned)
 
189
  South Bend, IN Broadmoor Plaza
1217 East Ireland Road		 46614 SC  Fee (3) 1987  2007   20%   114,968  $1,170,211  $11.31   90.0% Kroger
    Iowa                                      
 
190
  Cedar Rapids, IA Northland Square
303-367 Collins Road Northeast		 52404 SC  Fee  1984  1998   100%   187,068  $1,991,431  $10.65   100% T.J. Maxx, OfficeMax, Barnes & Noble, Kohl’s
 
191
  Ottumwa, IA Quincy Place Mall I
1110 Quincy Avenue		 52501 MM  Fee  1990/1999/
2002		  1/2*  100%   241,427  $1,127,158  $7.11   65.6% Herberger’s, J.C. Penney, Target (Not Owned)
    Kansas                                      
 
192
  Leawood, KS Town Center Plaza
5000 West 119th Street		 66209 LC  Fee  1996/2002  1998   100%   309,421  $8,672,036  $31.22   88.5% Barnes & Noble, Macy’s (Not Owned), Dick’s Sporting Goods (Not Owned), AMC Theaters (Not Owned)
 
193
  Overland Park, KS Overland Pointe Marketplace Intersection 135 and Antioch Road 66213 SC  Fee (3) 2001/2004  2003   0.01%   42,632  $899,278  $18.34   97.1% Babies “R” Us, Sam’s Club (Not Owned), Home Depot (Not Owned)
    Kentucky                                      
 
194
  Louisville, KY Outer Loop Plaza
7505 Outer Loop Highway		 40228 SC  Fee  1973/1989/
1998		  2004   100%   120,777  $600,924  $6.00   83.0% Valu Market, Outer Loop Bingo
 
195
  Richmond, KY Carriage Gate
833-847 Eastern By-Pass		 40475 SC  Fee  1992  2003   100%   134,701  $678,949  $5.49   91.8% Dunham’s Sporting Goods, Office Depot, Hobby Lobby, Ballard’s (Not Owned)
    Maine                                      
 
196
  Brunswick, ME Cook’s Corners
172 Bath Road		 04011 SC  GL  1965  1997   100%   301,853  $2,104,062  $7.59   87.3% Hoyts Cinemas, Big Lots, T.J. Maxx, Sears
    Maryland                                      
 
197
  Bowie, MD Duvall Village
4825 Glenn Dale Road		 20720 SC  Fee  1998  2007   100%   88,022  $1,466,059  $17.12   97.3%  
 
198
  Glen Burnie, MD Harundale Plaza
7440 Ritchie Highway		 21061 SC  Fee (3) 1999  2007   20%   217,619  $2,305,415  $11.41   92.9% A & P, A.J. Wright, Burlington Coat Factory
 
199
  Hagerstown, MD Valley Park Commons
1520 Wesel Boulevard		 21740 SC  Fee  1993/2006  2007   100%   88,893  $1,072,259  $13.26   90.9%  
 
200
  Salisbury, MD The Commons I
East North Point Drive		 21801 SC  Fee  1999  1*  100%   126,135  $1,579,705  $13.46   88.8% Best Buy, Michaels, Home Depot (Not Owned), Target (Not Owned)


31

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
201
  Upper Marlboro, MD Largo Town Center
950 Largo Center Drive		 20774 SC  Fee (3) 1991  2007   20%   260,797  $3,835,883  $12.57   98.2% Shoppers Food Warehouse, Marshalls, Regency Furniture
 
202
  White Marsh, MD Costco Plaza
9919 Pulaski Highway		 21220 SC  Fee (3) 1987/1992  2007   15%   187,331  $1,648,956  $8.09   100% Costco, PetSmart, Pep Boys, Sports Authority, Home Depot (Not Owned)
    Massachusetts                                      
 
203
  Everett, MA Gateway Center
1 Mystic View Road		 02149 SC  Fee  2001  1*  100%   222,236  $4,791,107  $17.32   100% Home Depot, Bed Bath & Beyond, Old Navy, OfficeMax, Babies “R” Us, Michaels, Target (Not Owned), Costco (Not Owned)
 
204
  West Springfield, MA Riverdale Shops
935 Riverdale Street		 01089 SC  Fee (3) 1985/2003  2007   20%   273,492  $3,483,265  $13.22   96.3% Kohl’s, Stop & Shop
 
205
  Worcester, MA Sam’s Club
301 Barber Avenue		 01606 SC  Fee  1998  2007   100%   107,929  $1,116,581  $10.35   100% Sam’s Club
    Michigan                                      
 
206
  Bad Axe, MI Huron Crest Plaza
850 North Van Dyke Road		 48413 SC  Fee  1991  1993   100%   63,415  $155,013  $6.83   35.8% Walmart (Not Owned)
 
207
  Benton Harbor, MI Fairplain Plaza
1000 Napier Avenue		 49022 SC  Fee (3) 1998  2006   20%   280,216  $2,157,011  $10.73   71.7% Office Depot, PetSmart, T.J. Maxx, Target (Not Owned), Kohl’s (Not Owned)
 
208
  Cheboygan, MI Kmart Plaza
1109 East State		 49721 SC  Fee  1988  1994   100%   70,076  $285,195  $4.38   92.9% Kmart
 
209
  Dearborn Heights, MI Walgreens
8706 North Telegraph Road		 48127 SC  Fee  1998/1999  2007   100%   13,905  $385,510  $27.72   100%  
 
210
  Gaylord, MI Pine Ridge Square
1401 West Main Street		 49735 SC  Fee  1991/2004  1993   100%   188,219  $797,609  $4.30   98.6% Family Farm & Home, Hobby Lobby, Dunham’s Sporting Goods, Big Lots
 
211
  Grand Rapids, MI Green Ridge Square I
3390B Alpine Avenue Northwest		 49504 SC  Fee  1989  1995   100%   133,538  $1,369,607  $10.92   94.0% T.J. Maxx, Office Depot, Target (Not Owned), Toys “R” Us (Not Owned)
 
212
  Grand Rapids, MI Green Ridge Square II
3410 Alpine Avenue		 49504 SC  Fee  1991/1995  2004   100%   85,254  $938,118  $11.00   100% Bed Bath & Beyond, Best Buy
 
213
  Houghton, MI Copper Country Mall Highway M26 49931 MM  Fee  1981/1999  1/2*  100%   257,863  $220,146  $2.48   34.4% J.C. Penney, OfficeMax
 
214
  Howell, MI Grand River Plaza
3599 East Grand River		 48843 SC  Fee  1991  1993   100%   214,501  $1,341,689  $7.05   88.7% Elder-Beerman, Dunham’s Sporting Goods, OfficeMax, T.J. Maxx
 
215
  Lansing, MI Marketplace at Delta Township
8305 West Saginaw Highway		 48917 SC  Fee  2000/2001  2003   100%   135,703  $1,477,879  $11.30   96.4% Michaels, Gander Mountain, Staples, PetSmart, Lowe’s (Not Owned), Walmart Supercenter (Not Owned)
 
216
  Livonia, MI Walgreens
29200 6 Mile Road		 48152 SC  Fee  1998/1999  2007   100%   13,905  $269,061  $19.35   100%  
 
217
  Milan, MI Milan Plaza
531 West Main Street		 48160 SC  Fee (3) 1955  2007   20%   65,764  $273,692  $4.61   90.2% Kroger


32

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
218
  Mt. Pleasant, MI Indian Hills Plaza
4208 East Blue Grass Road		 48858 SC  Fee  1990  2*  100%   249,680  $933,277  $7.57   49.4% T.J. Maxx, Kroger, Jo-Ann Stores
 
219
  Port Huron, MI Walgreens
Northwest Corner 10th Street and Oak Street		 48060 SC  Fee  2000  2007   100%   15,120  $359,856  $23.80   100%  
 
220
  Sault St. Marie, MI Cascade Crossing
4516 I-75 Business Spur		 49783 SC  Fee  1993/1998  1994   100%   270,761  $1,123,244  $7.56   54.9% J.C. Penney, Dunham’s Sporting Goods, Glen’s Market
 
221
  Westland, MI Walgreens
7210 North Middlebelt		 48185 SC  Fee  2005  2007   100%   13,905  $285,053  $20.50   100%  
    Minnesota                                      
 
222
  Bemidji, MN Paul Bunyan Mall
1401 Paul Bunyan Drive Northwest		 56601 MM  Fee  1977/1998  2*  100%   297,803  $1,720,147  $5.85   98.8% Kmart, Herberger’s, J.C. Penney
 
223
  Brainerd, MN Westgate Mall
1200 Highway		 56401 MM  Fee  1985/1998  1/2*  100%   260,845  $1,337,368  $7.85   65.3% Herberger’s, Movies 10
 
224
  Eagan, MN Eagan Promenade
1299 Promenade Place		 55122 SC  Fee (3) 1997/2001  1997   50%   278,211  $3,767,776  $13.61   99.5% Byerly’s, PetSmart, Barnes & Noble, OfficeMax, T.J. Maxx, Bed Bath & Beyond, Ethan Allen Furniture (Not Owned)
 
225
  Maple Grove, MN Maple Grove Crossing Weaver Lake Road and I-94 55369 SC  Fee (3) 1995/2002  1996   50%   265,957  $3,032,945  $11.48   99.3% Kohl’s, Barnes & Noble, Gander Mountain, Michaels, Bed Bath & Beyond, Cub Foods (Not Owned)
    Mississippi                                      
 
226
  Gulfport, MS Crossroads Center Crossroads Parkway 39503 SC  GL  1999  2003   100%   423,505  $5,401,884  $11.72   95.0% Academy Sports, Bed Bath & Beyond, Ross Dress For Less, T.J. Maxx, Cinemark, Office Depot, Belk, Barnes & Noble, Burke’s Outlet
 
227
  Jackson, MS The Junction
6351 I-55 North 3		 39213 SC  Fee  1996  2003   100%   107,780  $1,137,800  $11.15   94.7% PetSmart, Office Depot, Home Depot (Not Owned), Target (Not Owned)
 
228
  Oxford, MS Oxford Place
2015-2035 University Avenue		 38655 SC  Fee (3) 2000  2003   20%   13,200  $262,076  $15.29   91.7% Kroger
 
229
  Starkville, MS Starkville Crossings
882 Highway 12 West		 39759 SC  Fee  1999/2004  1994   100%   133,691  $888,855  $6.96   95.5% J.C. Penney, Kroger, Lowe’s (Not Owned)
 
230
  Tupelo, MS Big Oaks Crossing
3850 North Gloster Street		 38801 SC  Fee  1992  1994   100%   348,236  $1,861,670  $5.90   90.6% Sam’s Club, Walmart Supercenter, Jo-Ann Stores(4)
    Missouri                                      
 
231
  Arnold, MO Jefferson County Plaza Vogel Road 63010 SC  Fee (3) 2002  1*  50%   42,091  $510,302  $14.14   85.7% Home Depot (Not Owned), Target (Not Owned)
 
232
  Brentwood, MO The Promenade at Brentwood
1 Brentwood Promenade Court		 63144 SC  Fee  1998  1998   100%   299,584  $4,267,916  $14.33   99.4% Target, Bed Bath & Beyond, PetSmart, Micro Center, Trader Joe’s


33

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
233
  Des Peres, MO Olympic Oaks Village
12109 Manchester Road		 63121 SC  Fee  1985  1998   100%   92,372  $1,454,545  $16.65   94.6% T.J. Maxx
 
234
  Fenton, MO Fenton Plaza
Gravois and Highway 141		 63206 SC  Fee  1970/1997  1/2*  100%   93,420  $1,078,943  $11.77   94.0% Aldi
 
235
  Independence, MO Independence Commons
900 East 39th Street		 64057 SC  Fee (3) 1995/1999  1995   14.5%   386,066  $4,948,104  $13.06   98.1% Kohl’s, Bed Bath & Beyond, Marshalls, Best Buy, Barnes & Noble, AMC Theatres
 
236
  Springfield, MO Morris Corners
1425 East Battlefield		 65804 SC  GL  1989  1998   100%   56,033  $548,416  $10.43   93.9% Toys “R” Us
 
237
  St. John, MO St. John Crossings
9000-9070 St. Charles Rock Road		 63114 SC  Fee  2003  2003   100%   89,110  $1,126,527  $12.08   98.5% Shop ‘N Save
 
238
  St. Louis, MO Plaza at Sunset Hills
10980 Sunset Plaza		 63128 SC  Fee  1997  1998   100%   415,435  $5,428,717  $12.56   94.1% Toys “R” Us, Bed Bath & Beyond, Marshalls, Home Depot, PetSmart, Borders
 
239
  St. Louis, MO Southtowne Centre Kings Highway and Chippewa 63109 SC  Fee  2004  1998   100%   88,364  $1,307,076  $16.24   91.1% OfficeMax
    Nevada                                      
 
240
  Reno, NV Reno Riverside
East First Street and Sierra		 89505 SC  Fee  2000  2000   100%   52,474  $736,346  $14.32   98.0% Century Theatre
    New Jersey                                      
 
241
  East Hanover, NJ East Hanover Plaza
154 State Route 10		 07936 SC  Fee  1994  2007   100%   97,500  $1,650,097  $18.23   92.8% Branch Brook Pool & Patio, Sports Authority
 
242
  East Hanover, NJ Loews Theatre Complex
145 State Route 10		 07936 SC  Fee  1993  2007   100%   20,737  $1,096,126  $21.03   100% Loews East Hanover Cinemas
 
243
  Edgewater, NJ Edgewater Towne Center I
905 River Road		 07020 LC  Fee  2000  2007   100%   77,508  $1,858,581  $23.98   100% Whole Foods
 
244
  Freehold, NJ Freehold Marketplace
N.J. Highway 33 and West Main Street (Route 537)		 07728 SC  Fee  2005  1*  100%   7,619  $570,000  $18.38   100% Sam’s Club (Not Owned), Walmart (Not Owned)
 
245
  Hamilton, NJ Hamilton Marketplace
N.J. State Highway 130 and Klockner Road		 08691 SC  Fee  2004  2003   100%   471,236  $8,492,166  $15.45   99.0% Staples, Kohl’s, Bed Bath & Beyond, Michaels, Ross Dress For Less, Shoprite, Barnes & Noble, Walmart (Not Owned), BJ’s Wholesale (Not Owned), Lowe’s (Not Owned)
 
246
  Lumberton, NJ Crossroads Plaza
1520 Route 38		 08036 SC  Fee (3) 2003  2007   20%   89,627  $1,625,474  $18.14   100% Shoprite, Lowe’s (Not Owned)
 
247
  Lyndhurst, NJ Lewandowski Commons
434 Lewandowski Street		 07071 SC  Fee (3) 1998  2007   20%   78,097  $1,639,378  $22.68   92.6% Stop & Shop
 
248
  Mays Landing, NJ Hamilton Commons
4215 Black Horse Pike		 08330 SC  Fee  2001  2004   100%   398,770  $5,899,175  $15.36   96.3% Regal Cinemas, Ross Dress For Less, Bed Bath & Beyond, Marshalls, Sports Authority, hhgregg


34

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
249
  Mays Landing, NJ Wrangleboro Consumer Square I & II
2300 Wrangleboro Road		 08330 SC  Fee  1997  2004   100%   841,433  $9,783,937  $11.82   98.4% Borders, Best Buy, Kohl’s, Staples, Babies “R” Us, BJ’s Wholesale Club, Dick’s Sporting Goods, Just Cabinets, Christmas Tree Shops, Michaels, Target, PetSmart
 
250
  Mount Laurel, NJ Centerton Square
Centerton Road and Marter Avenue		 08054 SC  Fee (3) 2005  1*  10%   280,067  $6,257,455  $19.99   90.4% Wegman’s Food Markets, Bed Bath & Beyond, PetSmart, DSW Shoe Warehouse, Jo-Ann Stores, T.J. Maxx, Costco (Not Owned), Target (Not Owned)
 
251
  Princeton, NJ Nassau Park Pavilion
Route 1 and Quaker Bridge Road		 02071 SC  Fee  1995/1999/
2002/2004		  1997   100%   491,953  $9,239,207  $17.84   95.6% Borders, Best Buy, PetSmart, Dick’s Sporting Goods, Michaels, Wegman’s Food Markets, Kohl’s, HomeGoods, Babies “R” Us, Target (Not Owned), Sam’s Club (Not Owned), Home Depot (Not Owned), Walmart (Not Owned)
 
252
  Union, NJ Route 22 Retail Center
2700 U.S. Highway 22 East		 07083 SC  Fee  1997  2007   100%   107,348  $1,122,268  $19.03   54.9% Babies “R” Us, Target (Not Owned)
 
253
  West Long Branch, NJ Consumer Centre
310 State Highway 36		 07764 SC  Fee  1993  2004   100%   292,999  $3,671,128  $13.62   92.0% Sports Authority, PetSmart, Home Depot
 
254
  Woodland Park, NJ West Falls Plaza
1730 Route 46		 07424 SC  Fee (3) 1995  2007   20%   81,261  $1,917,571  $21.75   100% A & P
    New York                                      
 
255
  Amherst, NY Burlington Plaza
1551 Niagara Falls Boulevard		 14228 SC  GL  1978/1982/
1990/1998		  2004   100%   199,504  $1,996,131  $10.97   91.2% Burlington Coat Factory, Jo-Ann Stores
 
256
  Amherst, NY Tops Plaza
3035 Niagara Falls Boulevard		 14226 SC  Fee (3) 1986  2004   20%   145,642  $1,192,904  $8.64   94.8% Tops Markets
 
257
  Big Flats, NY Big Flats Consumer Square
830 County Route 64		 14814 SC  Fee  1993/2001  2004   100%   641,264  $4,769,760  $9.54   78.0% Hobby Lobby, Sam’s Club, Tops Markets, Bed Bath & Beyond, Michaels, Old Navy, Staples, Barnes & Noble, T.J. Maxx
 
258
  Buffalo, NY Elmwood Regal Center
1951 - 2023 Elmwood Avenue		 14207 SC  Fee  1997  2004   100%   133,940  $1,620,080  $15.03   80.5% Regal Cinemas, Office Depot
 
259
  Buffalo, NY Rite Aid
1625 Broadway Street		 14212 SC  Fee  2000  2007   100%   12,739  $280,861  $22.05   100%  
 
260
  Buffalo, NY Delaware Consumer Square
2636-2658 Delaware Avenue		 14216 SC  GL  1995  2004   100%   238,416  $2,037,351  $9.11   93.8% A.J. Wright, OfficeMax, Target
 
261
  Cheektowaga, NY Rite Aid
2401 Gennesee Street		 14225 SC  Fee  2000  2007   100%   10,908  $335,592  $30.77   100%  


35

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
262
  Cheektowaga, NY Thruway Plaza
2195 Harlem Road		 14225 SC  Fee  1965/1995/
1997/2004		  2004   100%   381,812  $2,971,615  $7.78   100% Walmart, Movieland 8 Theatres, Tops Markets, A.J. Wright, Value City Furniture, Home Depot (Not Owned)
 
263
  Cheektowaga, NY Tops Plaza
3825-3875 Union Road		 14225 SC  Fee (3) 1978/1989/
1995/2004		  2004   20%   151,357  $1,554,728  $12.16   84.5% Tops Markets
 
264
  Chili, NY Kmart Plaza
800 Paul Road		 14606 SC  Fee  1998  2004   100%   116,868  $763,623  $6.06   100% Kmart
 
265
  Dewitt, NY Michaels
3133 Erie Boulevard		 13214 SC  Fee  2002  2004   100%   38,413  $448,543  $11.68   100% Michaels
 
266
  Dunkirk, NY Rite Aid
1166 Central Avenue		 14048 SC  GL  2000  2007   100%   10,908  $210,569  $19.30   100%  
 
267
  Gates, NY Westgate Plaza
2000 Chili Avenue		 14624 SC  Fee  1998  2004   100%   330,312  $3,326,774  $10.11   99.6% Walmart Supercenter, Staples
 
268
  Greece, NY Jo-Ann/PetSmart Plaza
3042 West Ridge Road		 14626 SC  Fee  1993/1999  2004   100%   75,916  $830,521  $10.94   100% PetSmart, Jo-Ann Stores
 
269
  Hamburg, NY McKinley Mall
3701 McKinley Parkway		 14075 SC  Fee  1990/2001  2004   100%   128,944  $1,540,132  $11.94   100% Rosa’s Home Store
 
270
  Hamburg, NY BJ’s Plaza
4408 Milestrip Road		 14075 SC  GL  1990/1997  2004   100%   175,965  $1,788,633  $10.37   98.0% OfficeMax, BJ’s Wholesale Club
 
271
  Hamburg, NY McKinley Milestrip
4405 Milestrip Road		 14219 SC  GL  1999/2000  2004   100%   139,413  $1,208,998  $10.00   86.8% Home Depot
 
272
  Hamburg, NY McKinley Milestrip
3540 McKinley Parkway		 14075 SC  Fee  1999  2004   100%   106,774  $1,374,804  $13.75   93.6% Old Navy, Jo-Ann Stores
 
273
  Horseheads, NY Southern Tier Crossing
Ann Page Road and I-86		 14845 SC  Fee  2008  1*  100%   143,694  $1,962,482  $14.05   97.2% Jo-Ann Stores, Dick’s Sporting Goods, Walmart Supercenter (Not Owned), Kohl’s (Not Owned)
 
274
  Irondequoit, NY Culver Ridge Plaza
2255 Ridge Road East		 14622 SC  Fee (3) 1972/1984/
1997		  2004   20%   226,768  $2,259,309  $11.55   86.3% Regal Cinemas, A.J. Wright
 
275
  Ithaca, NY Tops Plaza
614-722 South Meadow		 14850 SC  Fee  1990/1999/
2003		  2004   100%   229,320  $3,197,628  $17.07   81.7% Tops Markets, Michaels, Barnes & Noble
 
276
  Jamestown, NY Tops Plaza
75 Washington Street		 14702 SC  Fee (3) 1997  2004   20%   98,001  $928,300  $11.77   80.5% Tops Markets
 
277
  Leroy, NY Tops Plaza
128 West Main Street		 14482 SC  Fee (3) 1997  2004   20%   62,747  $489,026  $9.05   86.1% Tops Markets
 
278
  Lockport, NY Tops Plaza
5789-5839 Transit Road and Hamm		 14094 SC  GL  1993  2004   100%   296,582  $2,680,047  $9.30   97.2% Walmart, Tops Markets, Sears
 
279
  North Tonawanda, NY Mid-City Plaza
955-987 Payne Avenue		 14120 SC  Fee  2004  2004   100%   223,022  $2,437,247  $11.42   95.7% Grossman’s Bargain Outlet, Tops Markets
 
280
  New Hartford, NY Hannaford Plaza
40 Kellogg Road		 13413 SC  Fee  1998  2004   100%   110,732  $1,108,130  $12.78   78.3% Hannaford Brothers


36

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
281
  Niskayuna, NY Mohawk Commons
402-442 Balltown Road		 12121 SC  Fee  2002  2004   100%   399,901  $4,678,792  $11.65   98.5% Price Chopper, Lowe’s, Marshalls, Barnes & Noble, Bed Bath & Beyond, Target (Not Owned)
 
282
  Norwich, NY Tops Plaza
54 East Main Street		 13815 SC  GL  1997  2004   10%   85,453  $1,105,778  $13.66   94.7% Tops Markets
 
283
  Olean, NY Walmart Plaza
3142 West State Street		 14760 SC  Fee  1993/2004  2004   100%   353,326  $2,355,628  $6.72   99.3% Walmart Supercenter, Eastwynn Theatres, BJ’s Wholesale Club, Home Depot (Not Owned)
 
284
  Ontario, NY Tops Plaza
6254-6272 Furnace Road		 14519 SC  Fee (3) 1998  2004   20%   77,040  $668,065  $10.12   85.7% Tops Markets
 
285
  Orchard Park, NY Crossroads Centre
3245 Southwestern Boulevard		 14127 SC  Fee (3) 2000  2004   20%   167,805  $1,708,362  $11.52   88.4% Tops Markets, Stein Mart, Lowe’s (Not Owned)
 
286
  Penfield, NY Panorama Plaza
1601 Penfield Road		 14625 SC  Fee (3) 1959/1965/
1972/1980/
1986/1994		  2004   20%   279,219  $3,208,870  $13.29   86.5% Staples, Tops Markets, Tuesday Morning(4)
 
287
  Rome, NY Freedom Plaza
205-211 Erie Boulevard West		 13440 SC  Fee  1978/2000/
2001		  2004   100%   194,467  $1,363,427  $6.74   100% Staples, J.C. Penney, Tops Markets, Marshalls
 
288
  Tonawanda, NY Office Depot Plaza
2309 Eggert Road		 14150 SC  Fee  1976/1985/
1996		  2004   100%   121,846  $894,325  $8.88   82.6% Best Fitness, Office Depot
 
289
  Victor, NY Victor Square
2-10 Commerce Drive		 14564 SC  Fee  2000  2004   100%   56,134  $664,754  $11.84   100% Optigolf
 
290
  Warsaw, NY Tops Plaza
2382 Route 19		 14569 SC  Fee (3) 1998  2004   20%   74,105  $523,583  $8.66   81.6% Tops Markets, Walmart (Not Owned)
 
291
  West Seneca, NY Home Depot Plaza
1881 Ridge Road		 14224 SC  GL  1975/1983/
1987/1995		  2004   100%   139,453  $1,322,819  $10.14   93.6% Home Depot
 
292
  West Seneca, NY Seneca Ridge Plaza
3531 Seneca Street		 14224 SC  Fee  1980/1996/
2004		  2004   100%   62,403  $248,602  $6.95   57.3% Planet Fitness West Seneca
 
293
  Williamsville, NY Williamsville Place
5395 Sheridan Drive		 14221 SC  Fee  1986/1995/
2003		  2004   100%   102,917  $1,328,269  $14.57   88.6%  
    North Carolina                                      
 
294
  Apex, NC Beaver Creek Crossings
1335 West Williams Street		 27502 SC  Fee  2006  1*  100%   300,622  $4,431,551  $15.13   92.7% Borders, Dick’s Sporting Goods, Consolidated Theaters, T.J. Maxx
 
295
  Apex, NC Beaver Creek Commons
1335 West Williams Street		 27502 SC  Fee (3) 2005  1*  10%   118,046  $2,485,324  $17.15   96.2% A.C. Moore, OfficeMax, Lowe’s (Not Owned), Super Target (Not Owned)
 
296
  Asheville, NC Oakley Plaza
Fairview Road at Interstate 240		 28801 SC  Fee  1988  2007   100%   118,699  $943,150  $8.19   97.0% Babies “R” Us, BI-LO
 
297
  Cary, NC hhgregg
1401 Piney Plains Road		 27511 SC  Fee  2000  2007   100%   29,235  $292,350  $10.00   100% hhgregg


37

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
298
  Cary, NC Mill Pond Village
3434-3490 Kildaire Farm Road		 27512 SC  Fee  2004  2007   100%   84,364  $1,127,654  $15.08   84.2% Lowe’s Foods
 
299
  Chapel Hill, NC Meadowmont Village
West Barbee Chapel Road		 27517 SC  Fee (3) 2002  2007   20%   132,619  $2,349,205  $19.92   88.9% Harris Teeter Supermarkets
 
300
  Charlotte, NC Camfield Corners
8620 Camfield Street		 28277 SC  Fee  1994  2007   100%   69,857  $858,351  $12.64   97.2% BI-LO
 
301
  Clayton, NC Clayton Corners
U.S. Highway 70 West		 27520 SC  Fee (3) 1999  2007   20%   125,708  $1,318,778  $11.51   91.2% Lowe’s Foods
 
302
  Concord, NC Rite Aid
Highway 29 at Pitts School		 28027 SC  Fee  2002  2007   100%   10,908  $227,814  $20.89   100%  
 
303
  Cornelius, NC The Shops at the Fresh Market
20601 Torrence Chapel Road		 28031 SC  Fee  2001  2007   100%   130,114  $951,185  $9.75   74.9% Stein Mart, Fresh Market
 
304
  Durham, NC Patterson Place
3616 Witherspoon Boulevard		 27707 SC  Fee (3) 2004  2007   20%   160,942  $2,098,462  $14.19   91.9% DSW Shoe Warehouse, A.C. Moore, Bed Bath & Beyond, Home Depot (Not Owned), Kohl’s (Not Owned), Kroger (Not Owned)
 
305
  Durham, NC Oxford Commons
3500 Oxford Road		 27702 SC  Fee  1990/2001  1/2*  100%   208,014  $1,241,286  $6.29   94.9% Food Lion, Burlington Coat Factory, Walmart (Not Owned)
 
306
  Durham, NC South Square
4001 Durham Chapel		 27707 SC  Fee (3) 2005  2007   20%   107,812  $1,636,201  $15.39   95.3% Office Depot, Ross Dress For Less, Sam’s Club (Not Owned), Super Target (Not Owned)
 
307
  Fayetteville, NC Cross Pointe Centre
5075 Morganton Road		 28314 SC  Fee  1985/2003  2003   100%   226,089  $1,921,587  $8.50   100% T.J. Maxx, Bed Bath & Beyond
 
308
  Fayetteville, NC Fayetteville Pavilion
2061 Skibo Road		 28314 SC  Fee (3) 1998/2001  2007   20%   273,969  $2,662,039  $11.71   83.0% Dick’s Sporting Goods, PetSmart, Food Lion, Marshalls, Michaels
 
309
  Fuquay Varina, NC Sexton Commons
1420 North Main Street		 27526 SC  Fee (3) 2002  2007   20%   49,097  $730,536  $14.88   100% Harris Teeter Supermarkets
 
310
  Greensboro, NC Adam’s Farm
5710 High Point Road		 27407 SC  Fee  2004  2007   100%   112,010  $990,207  $11.13   79.5% Harris Teeter Supermarkets
 
311
  Greensboro, NC Golden Gate
East Cornwallis Drive		 27405 SC  Fee  1962/2002  2007   100%   153,113  $1,075,549  $8.68   81.0% Harris Teeter Supermarkets, Staples, Food Lion
 
312
  Greensboro, NC Wendover Village II
4203-4205 West Wendover Avenue		 27407 SC  Fee  2004  2007   100%   35,895  $941,601  $26.23   100% Costco (Not Owned)
 
313
  Greensboro, NC Wendover Village II
West Wendover Avenue		 27407 SC  Fee (3) 2004  2007   20%   134,810  $1,177,676  $12.72   68.7% A.C. Moore, Klaussner Furniture
 
314
  Huntersville, NC Birkdale Village
8712 Lindholm Drive Suite 206		 28078 LC  Fee (3) 2003  2007   15%   300,894  $6,349,547  $24.78   85.2% Barnes & Noble, Dick’s Sporting Goods, Regal Cinemas (Not Owned)
 
315
  Huntersville, NC Rosedale Shopping Center
9911 Rose Commons Drive		 28078 SC  Fee (3) 2000  2007   20%   119,087  $1,714,884  $15.95   90.3% Harris Teeter Supermarkets


38

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
316
  Indian Trail, NC Union Town Center Independence and Faith Church Road 28079 SC  Fee  1999  2004   100%   96,160  $825,875  $9.31   92.3% Food Lion
 
317
  Mooresville, NC Mooresville Consumer Square I
355 West Plaza Drive		 28117 SC  Fee  1999/2006  2006   100%   472,182  $3,496,499  $8.30   89.3% Walmart Supercenter, Gander Mountain, Ollie’s Bargain Outlet
 
318
  Mooresville, NC Winslow Bay Commons Bluefield Road and Highway 150 28117 SC  Fee (3) 2003  2007   15%   255,798  $3,304,948  $13.74   88.8% Ross Dress For Less, Dick’s Sporting Goods, T.J. Maxx, Michaels, Super Target (Not Owned)
 
319
  New Bern, NC Rivertowne Square
3003 Claredon Boulevard		 28561 SC  Fee  1989/1999  1/2*  100%   68,045  $616,949  $9.27   97.8% PetSmart, Walmart Supercenter (Not Owned)
 
320
  Raleigh, NC Alexander Place
Glenwood Ave and Brier Creek Parkway		 27617 SC  Fee (3) 2004  2007   15%   188,254  $2,582,930  $14.35   95.6% Kohl’s, hhgregg, Walmart Supercenter (Not Owned)
 
321
  Raleigh, NC Capital Crossing
2900-2950 East Mill Brook Road		 27613 SC  Fee  1995  2007   100%   83,248  $913,920  $10.98   99.9% Lowe’s Foods, Staples
 
322
  Raleigh, NC Wakefield Crossing Wakefield Pines Drive and New Falls of Neuse 27614 SC  Fee  2001  2007   100%   75,927  $811,991  $12.80   83.6% Food Lion
 
323
  Salisbury, NC Alexander Pointe
850 Jake Alexander Boulevard		 28144 SC  Fee (3) 1997  2007   20%   57,710  $668,044  $11.58   100% Harris Teeter Supermarkets
 
324
  Wake Forest, NC Capital Plaza
11825 Retail Drive		 27587 SC  Fee (3) 2004  2007   15%   46,793  $570,486  $13.98   87.2% Home Depot (Not Owned), Super Target (Not Owned)
 
325
  Washington, NC Pamlico Plaza
536 Pamlico Plaza		 27889 SC  Fee  1990/1999  1/2*  100%   80,644  $528,642  $6.76   97.0% Burke’s Outlet, Office Depot, Walmart Supercenter (Not Owned)
 
326
  Wilmington, NC University Centre
South College Road and New Centre Drive		 28403 SC  Fee  1989/2001  1/2*  100%   411,887  $2,992,740  $9.98   72.8% Lowe’s, Old Navy, Bed Bath & Beyond, Ross Dress For Less, Sam’s Club (Not Owned)
 
327
  Wilmington, NC Oleander Shopping Center
3804 Oleander Drive		 28401 SC  GL  1989  2007   100%   51,888  $495,650  $10.46   91.4% Lowe’s Foods
 
328
  Wilson, NC Forest Hills Centre
1700 Raleigh Road Northwest		 27896 SC  Fee  1989  2007   100%   73,020  $318,752  $9.92   44.0%  
 
329
  Winston Salem, NC Harper Hill Commons
5049 Country Club Road		 27104 SC  Fee (3) 2004  2007   20%   55,394  $723,391  $20.66   60.3% Harris Teeter Supermarkets
 
330
  Winston Salem, NC Shops at Oliver Crossing Peters Creek Parkway Oliver Crossing 27127 SC  Fee (3) 2003  2007   20%   76,512  $840,362  $12.56   87.5% Lowe’s Foods
 
331
  Winston Salem, NC Walmart Supercenter
4550 Kester Mill Road		 27103 SC  Fee  1998  2007   100%   204,931  $1,403,777  $6.85   100% Walmart Supercenter


39

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
    Ohio                                      
 
332
  Alliance, OH Walmart Supercenter
2700 West State Street		 44601 SC  Fee  1998  2007   100%   200,084  $1,190,500  $5.95   100% Walmart Supercenter
 
333
  Ashtabula, OH Ashtabula Commons
1144 West Prospect Road		 44004 SC  Fee  2000  2004   100%   57,874  $852,400  $14.73   100% Tops Markets
 
334
  Aurora, OH Barrington Town Center
70-130 Barrington Town Square		 44202 SC  Fee  1996/2004  1*  100%   102,683  $1,034,769  $11.37   86.2% Cinemark, Heinen’s (Not Owned)
 
335
  Boardman, OH Southland Crossings
I-680 and U.S. Route 224		 44514 SC  Fee  1997  1*  100%   506,254  $4,192,313  $8.30   98.3% Lowe’s, Babies “R” Us, Staples, Dick’s Sporting Goods, Walmart, PetSmart, Giant Eagle
 
336
  Chillicothe, OH Chillicothe Place
867 North Bridge Street		 45601 SC  GL (3) 1974/1998  1/2*  20%   106,262  $1,048,806  $10.22   96.6% Kroger, OfficeMax
 
337
  Chillicothe, OH Chillicothe Place
867 North Bridge Street		 45601 SC  Fee  1998  1981   100%   130,497  $822,132  $6.30   100% Lowe’s
 
338
  Cincinnati, OH Glenway Crossing
5100 Glencrossing Way		 45238 SC  Fee  1990  1993   100%   235,433  $1,302,276  $11.56   45.1% Michaels
 
339
  Cincinnati, OH Kroger
6401 Colerain Avenue		 45239 SC  Fee  1998  2007   100%   56,634  $556,486  $9.83   100% Kroger
 
340
  Cincinnati, OH Tri-County Mall
11700 Princeton Pike		 45246 SC  Fee (3) 1960/1990/
1992		  2005   20%   758,031  $11,292,206  $18.54   85.6% Dillard’s, Sears, Macy’s (Not Owned)
 
341
  Cleveland, OH Kmart Plaza
14901-14651 Lorain Avenue		 44111 SC  Fee (3) 1982  2008   25.25%   109,250  $724,137  $7.29   90.9% Kmart
 
342
  Columbus, OH Consumer Square West
3630 Soldano Boulevard		 43228 SC  Fee  1989/2003  2004   100%   222,206  $2,009,987  $10.09   82.0% Kroger, Target
 
343
  Columbus, OH Easton Market
3740 Easton Market		 43230 SC  Fee  1998  1998   100%   506,911  $6,545,795  $13.00   99.3% Staples, PetSmart, buybuy BABY, Golfsmith Golf Center, Michaels, Dick’s Sporting Goods, DSW Shoe Warehouse, Kittle’s Home Furnishings, Bed Bath & Beyond, T.J. Maxx
 
344
  Columbus, OH Lennox Town Center
1647 Olentangy River Road		 43212 SC  Fee (3) 1997  1998   50%   352,913  $3,721,477  $10.55   100% Target, Barnes & Noble, Staples, AMC Theatres
 
345
  Columbus, OH Sun Center
3622-3860 Dublin Granville Road		 43017 SC  Fee (3) 1995  1998   79.45%   315,828  $3,809,987  $12.35   97.7% Babies “R” Us, Michaels, Ashley Furniture Homestore, Stein Mart, Whole Foods, Staples
 
346
  Columbus, OH Hilliard Rome Commons
1710-60 Hilliard Rome Road		 43026 SC  Fee (3) 2001  2007   20%   110,871  $1,507,003  $13.59   100% Giant Eagle
 
347
  Dublin, OH Perimeter Center
6644-6804 Perimeter Loop Road		 43017 SC  Fee  1996  1998   100%   137,556  $1,433,289  $11.73   88.9% Giant Eagle
 
348
  Elyria, OH Elyria Shopping Center
841 Cleveland		 44035 SC  Fee  1977  2*  100%   92,125  $171,300  $7.81   23.8%  


40

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
349
  Grove City, OH Derby Square
2161-2263 Stringtown Road		 43123 SC  Fee (3) 1992  1998   20%   128,250  $1,223,213  $9.86   96.7% Giant Eagle
 
350
  Huber Hts., OH North Heights Plaza
8280 Old Troy Pike		 45424 SC  Fee  1990  1993   100%   182,749  $1,647,060  $12.54   71.9% hhgregg, Dick’s Sporting Goods, Hobby Lobby (Not Owned), Bed Bath & Beyond (Not Owned)
 
351
  Macedonia, OH Macedonia Commons I Macedonia Commons Boulevard 44056 SC  Fee (3) 1994  1994   50%   244,056  $3,094,410  $12.87   94.4% Hobby Lobby, Kohl’s, Walmart Supercenter (Not Owned), Home Depot (Not Owned)
 
352
  Macedonia, OH Macedonia Commons II
8210 Macedonia Commons		 44056 SC  Fee  1999  1/2*   100%   57,658  $915,609  $15.88   100% Cinemark
 
353
  Solon, OH Uptown Solon
Kruse Drive		 44139 SC  Fee  1998  1*  100%   183,255  $2,961,707  $16.51   97.9% Mustard Seed Market & Cafe, Bed Bath & Beyond, Borders
 
354
  Solon, OH Sears Solon
6221 SOM Center Road		 44139 SC  Fee (3) 1977  2008   25.25%   84,180  $299,819  $3.56   100% Sears Grand, Marc’s (Not Owned)
 
355
  Stow, OH Stow Community Center I 44224 SC  Fee  1997/2000  1*  100%   389,668  $3,734,388  $10.17   94.2% Bed Bath & Beyond,
      Kent Road                                   Giant Eagle, Kohl’s, OfficeMax, Target (Not Owned)
 
356
  Tiffin, OH Tiffin Mall
870 West Market Street		 44883 MM  Fee  1980/2004  1/2*  100%   176,095  $585,279  $4.83   68.9% Cinemark, J.C. Penney
 
357
  Toledo, OH Springfield Commons
South Holland-Sylvania Road		 43528 SC  Fee (3) 1999  1*  20%   241,129  $2,858,661  $11.42   98.3% Kohl’s, Gander Mountain, Bed Bath & Beyond, Old Navy, Babies “R” Us
 
358
  Toledo, OH North Towne Commons
851 West Alexis Road		 43612 SC  Fee  1995  2004   100%   80,160  $501,000  $6.25   100% Dick’s Sporting Goods, Kroger (Not Owned), Target (Not Owned)
 
359
  Westlake, OH West Bay Plaza
30100 Detroit Road		 44145 SC  Fee  1974/1997/
2000		  1/2*  100%   162,330  $1,358,280  $8.47   98.8% Marc’s, Sears Grand
 
360
  Willoughby Hills, OH Shoppes at Willoughby Hills Chardon Road 44092 SC  Fee (3) 1985  2007   15%   376,977  $2,787,995  $8.73   84.7% Giant Eagle, National College, OfficeMax, Phoenix Theaters(4)
 
361
  Xenia, OH West Park Square
1700 West Park Square		 45385 SC  Fee  1994/1997/
2001		  1*  100%   112,361  $513,056  $7.40   61.7% Kroger, Walmart (Not Owned)
 
362
  Zanesville, OH Kmart Shopping Center
3515 North Maple Avenue		 43701 SC  Fee (3) 1973  2008   25.25%   84,180  $223,160  $2.65   100% Kmart
    Oklahoma                                      
 
363
  Enid, OK Kmart Plaza
4010 West Owen Garriot Road		 73703 SC  Fee (3) 1983  2008   25.25%   84,000  $196,206  $2.34   100% Kmart, United Supermarkets (Not Owned)
 
364
  Oklahoma City, OK CVS Pharmacy
2323 North Martin Luther King Boulevard		 73102 SC  Fee  1997  2007   100%   9,504  $159,358  $16.77   100%  


41

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
    Oregon                                      
 
365
  Portland, OR Tanasbourne Town Center I Evergreen Parkway and
Ring Road		 97006 SC  Fee (3) 1995/2001  1996   50%   309,617  $5,363,784  $17.94   96.6% Bed Bath & Beyond, Ross Dress For Less, Michaels, Barnes & Noble, Office Depot, Haggan’s, Nordstrom Rack (Not Owned), Target (Not Owned)
    Pennsylvania                                      
 
366
  Allentown, PA BJ’s Wholesale Club
1785 Airport Road South		 18109 SC  Fee  1991  2004   100%   112,230  $863,266  $7.69   100% BJ’s Wholesale Club
 
367
  Allentown, PA West Valley Marketplace 1091 Mill Creek Road 18106 SC  Fee  2001/2004  2003   100%   259,239  $2,653,025  $10.37   98.7% Walmart Supercenter
 
368
  Camp Hill, PA Camp Hill Center
3414 Simpson Ferry Road		 17011 SC  Fee  1978/2002  2007   100%   62,888  $288,000  $10.03   45.6% Michaels, Linens & More(4)
 
369
  Carlisle, PA Carlisle Commons Shopping Center
Ridge Street and Noble Boulevard		 17013 SC  Fee (3) 2001  2007   15%   393,033  $3,281,824  $8.85   94.4% Walmart Supercenter, T.J. Maxx, Ross Dress For Less, Regal Cinemas
 
370
  Cheswick, PA Rite Aid
1200 Pittsburgh Street		 15024 SC  Fee  2000  2007   100%   10,908  $248,609  $22.79   100%  
 
371
  Connellsville, PA Rite Aid
100 Memorial Boulevard		 15425 SC  Fee  1999  2007   100%   10,908  $312,181  $28.62   100%  
 
372
  E. Norriton, PA Dekalb Plaza
2692 Dekalb Pike		 19401 SC  Fee  1975/1997  1/2*  100%   173,876  $1,199,759  $6.68   96.4% Aldi, Big Lots
 
373
  Erie, PA Peach Street Square
1902 Keystone Drive		 16509 SC  GL  1995/1998/
2003		  1*  100%   557,791  $4,137,442  $9.21   75.9% Lowe’s, PetSmart, hhgregg, Kohl’s, Cinemark, Hobby Lobby, Erie Sports, Home Depot (Not Owned)
 
374
  Erie, PA Rite Aid
4145 Buffalo Road		 16510 SC  Fee  1999  2007   100%   10,908  $235,940  $21.63   100%  
 
375
  Erie, PA Rite Aid
404 East 26th Street		 16503 SC  Fee  1999  2007   100%   10,908  $260,047  $23.84   100%  
 
376
  Erie, PA Rite Aid
353 East 6th Street		 16507 SC  Fee  1999  2007   100%   10,908  $266,969  $24.47   100%  
 
377
  Erie, PA Rite Aid
5440 Peach Street		 16508 SC  Fee  2000  2007   100%   10,908  $354,691  $32.52   100%  
 
378
  Erie, PA Rite Aid
2923 West 26th Street		 16506 SC  Fee  1999  2007   100%   10,908  $332,311  $30.46   100%  
 
379
  Erie, PA Rite Aid
2184 West 12th Street		 16505 SC  Fee  1999  2007   100%   10,908  $373,661  $34.26   100%  
 
380
  Homestead, PA Waterfront Market Amity
149 West Bridge Street		 15120 LC  Fee (3) 2003  2007   15%   764,691  $11,173,951  $15.81   92.4% Dick’s Sporting Goods, Loews Theater, Best Buy, Michaels, Office Depot, T.J. Maxx, Old Navy, DSW Shoe Warehouse, Bed Bath & Beyond, Marshalls, Barnes & Noble, Dave & Buster’s, Target (Not Owned), Macy’s (Not Owned)


42

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
381
  Irwin, PA Rite Aid
3550 Route 130		 15642 SC  Fee  1999  2007   100%   10,908  $262,741  $24.09   100%  
 
382
  King of Prussia, PA Overlook at King of Prussia
301 Goddard Boulevard		 19046 SC  Fee (3) 2002  2007   15%   105,615  $5,044,175  $26.04   100% United Artists Theatre, Nordstrom Rack, Best Buy
 
383
  Monroeville, PA Rite Aid
2604 Monroeville Boulevard		 15146 SC  Fee  1999  2007   100%   10,908  $295,339  $27.08   100%  
 
384
  Mt. Nebo, PA Mount Nebo Pointe
Mount Nebo and Lowries Run Road		 15237 SC  Fee (3) 2005  1*  10%   104,909  $717,875  $15.52   39.5% Sam’s Club (Not Owned), Target (Not Owned)
 
385
  New Castle, PA Rite Aid
31 North Jefferson Street		 16101 SC  Fee  1999  2007   100%   10,908  $267,194  $24.50   100%  
 
386
  Pittsburgh, PA Rite Aid
1804 Golden Mile Highway		 15239 SC  Fee  1999  2007   100%   10,908  $326,940  $29.97   100%  
 
387
  Pittsburgh, PA Rite Aid
2501 Saw Mill Run Boulevard		 15227 SC  Fee  1999  2007   100%   10,908  $342,233  $31.37   100%  
 
388
  Pottstown, PA Kmart Shopping Center
2200 East High Street		 19464 SC  Fee (3) 1973  2008   25.25%   84,180  $275,000  $3.27   100% Kmart
 
389
  Willow Grove, PA Kmart Shopping Center
2620 Moreland Road		 19090 SC  Fee (3) 1973  2008   25.25%   94,500  $341,125  $3.61   100% Kmart
    Puerto Rico                                      
 
390
  Arecibo, PR Plaza Del Atlantico
Ave Miramar (PR 2) and Ave San Daniel		 00612 MM  Fee  1980/1993  2005   100%   214,191  $2,863,433  $13.16   91.5% Kmart, Capri Del Atlantico
 
391
  Bayamon, PR Plaza Del Sol
Calle Comerio Principal (PR 167) and Calle
Principal Oeste (PR 29)		 00961 MM  Fee  1998/2003/
2004		  2005   100%   524,409  $17,741,285  $33.95   95.0% Walmart, Old Navy, Science Park Cinema, Bed Bath & Beyond, Home Depot (Not Owned)
 
392
  Bayamon, PR Rexville Plaza
PR 167 and Ave Las Cumbres (PR 199)		 00961 SC  Fee  1980/2002  2005   100%   126,022  $1,627,688  $11.70   96.6% Pueblo Xtra, Tiendas Capri
 
393
  Bayamon, PR Plaza Rio Hondo
Expo Jose de Diego (PR 22) and Ave Comerio (PR 167)		 00936 MM  Fee  1982/2001  2005   100%   484,656  $12,769,518  $27.26   89.8% Best Buy, Kmart, Pueblo Xtra, Rio Hondo Cinemas, Marshalls, T.J. Maxx
 
394
  Carolina, PR Plaza Escorial
SWQ Ave 65 Infanteria (PR 3) and PR 8		 00987 SC  Fee  1997  2005   100%   420,470  $7,996,095  $14.78   100% OfficeMax, Walmart Supercenter, Plaza Escorial Cinemas, Borders, Old Navy, Sam’s Club, Home Depot (Not Owned)
 
395
  Cayey, PR Plaza Cayey
PR 1 and PR 735		 00736 SC  Fee  1999/2004  2005   100%   261,126  $2,964,164  $8.53   96.7% Walmart Supercenter, Cayey Cinema Corp. (Not Owned)
 
396
  Fajardo, PR Plaza Fajardo
PR 3 and Ave Valero		 00738 SC  Fee  1992  2005   100%   245,319  $4,115,511  $16.76   98.0% Walmart, Pueblo Xtra
 
397
  Guayama, PR Plaza Walmart
PR 3 and La Concordia Ave		 00784 SC  Fee  1994  2005   100%   163,598  $1,709,709  $10.95   95.5% Walmart


43

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
398
  Hatillo, PR Plaza Del Norte
PR 2 and PR 493		 00659 MM  Fee  1992  2005   100%   513,156  $10,567,204  $25.17   82.3% Sears, T.J. Maxx, Toys “R” Us, J.C. Penney, OfficeMax, Rooms to Go(4), Walmart
 
399
  Humacao, PR Plaza Palma Real
PR 3 and PR 53		 00791 SC  Fee  1995  2005   100%   345,489  $7,085,154  $19.48   93.1% Pep Boys, J.C. Penney, Capri Stores, OfficeMax, Marshalls, Walmart
 
400
  Isabela, PR Plaza Isabela
PR 2 and PR 4494		 00662 SC  Fee  1994  2005   100%   238,410  $3,707,914  $14.77   96.4% Co-Op Isabela Supermarket, Walmart
 
401
  San German, PR Camino Real PR 2 and PR 122 00683 SC  Fee  1991  2005   100%   0  $363,595   —   100% Pep Boys
 
402
  San German, PR Plaza Del Oeste
PR 2 and PR 122		 00683 SC  Fee  1991  2005   100%   174,172  $2,488,759  $12.90   99.8% Kmart, Econo San German, Pep Boys
 
403
  San Juan, PR Senorial Plaza
Expo Las Americas and PR 177		 00926 MM  Fee  1978/
Mutiple		  2005   100%   160,349  $2,782,203  $16.79   94.7% Kmart, Pueblo Xtra
 
404
  Vega Baja, PR Plaza Vega Baja
PR 2 and Ave Betances		 00693 SC  Fee  1990  2005   100%   180,488  $1,899,113  $10.41   96.9% Kmart, Pueblo Xtra
    Rhode Island                                      
 
405
  Middletown, RI Middletown Village
1315 West Main Street		 02842 SC  Fee  2003  2007   100%   98,161  $970,192  $13.83   71.5% Barnes & Noble, Michaels
 
406
  Warwick, RI Warwick Center
1324 Bald Hill Road		 02886 SC  Fee (3) 2004  2007   15%   159,958  $2,171,965  $17.78   76.4% Dick’s Sporting Goods, Barnes & Noble, DSW Shoe Warehouse
    South Carolina                                      
 
407
  Aiken, SC Aiken Exchange
Whiskey Road and Brook Haven Drive		 29803 SC  Fee (3) 2004  2007   15%   101,558  $458,570  $8.42   53.6% PetSmart, Target (Not Owned)
 
408
  Camden, SC Springdale Plaza
1671 Springdale Drive		 29020 SC  Fee  1990/2000  1993   100%   180,127  $1,065,042  $7.65   77.3% Belk, Walmart Supercenter (Not Owned)
 
409
  Charleston, SC Ashley Crossing
2245 Ashley Crossing Drive		 29414 SC  Fee  1991  2003   100%   188,883  $696,766  $11.45   29.4% Food Lion, Kohl’s
 
410
  Columbia, SC Columbiana Station OEA Harbison Boulevard and Bower Parkway 29212 SC  Fee (3) 2003  2007   15%   375,950  $4,133,584  $14.78   74.4% Dick’s Sporting Goods, buybuy BABY, Michaels, PetSmart, hhgregg
 
411
  Easley, SC Center Pointe Plaza II Calhoun Memorial Highway and Brushy Creek Road 29642 SC  GL (3) 2004  2007   20%   72,287  $648,084  $11.13   80.6% Publix Super Markets, Home Depot (Not Owned)
 
412
  Gaffney, SC Rite Aid
1320 West Floyd Baker Boulevard		 29341 SC  Fee  2003  2007   100%   13,818  $291,984  $21.13   100%  
 
413
  Greenville, SC Rite Aid
3679 Augusta Road		 29605 SC  Fee  2001  2007   100%   10,908  $283,423  $25.98   100%  
 
414
  Greenville, SC Walmart Supercenter
1451 Woodruff Road		 29607 SC  Fee  1998  2007   100%   200,084  $1,272,534  $6.36   100% Walmart Supercenter


44

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
415
  Greenville, SC The Point
1140 Woodruff Road		 29601 SC  Fee (3) 2005  2007   20%   104,560  $1,022,417  $16.93   57.8% Whole Foods
 
416
  Greenwood, SC Northside Plaza U.S. Highway 25 and Northside Drive 29649 SC  Fee  1999  2007   100%   41,581  $334,437  $8.04   100% BI-LO
 
417
  Lexington, SC Lexington Place
U.S. Highway 378 and Old Cherokee Road		 29072 SC  Fee  2003  2007   100%   83,167  $842,533  $10.26   98.7% Ross Dress For Less, T.J. Maxx, Publix Super Markets (Not Owned), Kohl’s (Not Owned)
 
418
  Mt. Pleasant, SC Wando Crossing
1500 Highway 17 North		 29465 SC  Fee  1992/2000  1995   100%   209,810  $2,157,654  $11.72   87.7% Office Depot, T.J. Maxx, Marshalls, Walmart (Not Owned)
 
419
  Mt. Pleasant, SC BI-LO at Shelmore
672 Highway 17 By-Pass		 29464 SC  Fee  2002  2007   100%   64,368  $920,894  $14.31   100% BI-LO
 
420
  Myrtle Beach, SC The Plaza at Carolina Forest 3735 Renee Drive 29579 SC  Fee (3) 1999  2007   20%   116,657  $1,368,467  $13.02   80.3% Kroger
 
421
  N. Charleston, SC North Pointe Plaza
7400 Rivers Avenue		 29406 SC  Fee  1989/2001  2*  100%   294,471  $2,090,034  $7.12   99.7% Walmart Supercenter, OfficeMax
 
422
  N. Charleston, SC North Charleston Center
5900 Rivers Avenue		 29406 SC  Fee  1980/1993  2004   100%   236,437  $1,324,925  $6.92   80.9% Northern Tool, Home Decor Liquidators
 
423
  Orangeburg, SC North Road Plaza
2795 North Road		 29115 SC  Fee  1994/1999  1995   100%   50,760  $543,850  $10.71   100% T.J. Maxx, Walmart Supercenter (Not Owned)
 
424
  Piedmont, SC Rite Aid
915 Anderson Street		 29601 SC  Fee  2000  2007   100%   10,908  $181,052  $16.60   100%  
 
425
  Simpsonville, SC Fairview Station
621 Fairview Road		 29681 SC  Fee  1990  1994   100%   142,086  $872,870  $6.25   98.3% Ingles, Kohl’s
 
426
  Spartanburg, SC Rite Aid
1510 W.O. Ezell Boulevard		 29301 SC  Fee  2001  2007   100%   10,908  $271,599  $24.90   100%  
 
427
  Spartanburg, SC Northpoint Marketplace
8642-8760 Asheville Highway		 29316 SC  Fee  2001  2007   100%   102,252  $589,709  $7.00   79.2% Ingles
 
428
  Spartanburg, SC Rite Aid
780 North Pine Street		 29301 SC  Fee  2002  2007   100%   10,908  $283,656  $26.00   100%  
 
429
  Taylors, SC North Hampton Market
6019 Wade Hampton		 29687 SC  Fee (3) 2004  2007   20%   114,935  $1,224,630  $11.33   94.1% Hobby Lobby, Target (Not Owned)
 
430
  Taylors, SC Hampton Point
3033 Wade Hampton Boulevard		 29687 SC  Fee  1993  2007   100%   58,316  $436,242  $7.96   94.0% BI-LO
 
431
  Woodruff, SC Rite Aid
121 North Main Street		 29388 SC  Fee  2002  2007   100%   13,824  $288,178  $20.85   100%  
    Tennessee                                      
 
432
  Chattanooga, TN Overlook at Hamilton Place
2288 Gunbarrel Road		 37421 SC  Fee  1992/2004  2003   100%   213,105  $1,900,885  $8.99   99.2% Best Buy, Hobby Lobby, Fresh Market
 
433
  Farragut, TN Farragut Pointe
11132 Kingston Pike		 37922 SC  Fee  1991  2003   10%   71,311  $471,594  $7.61   86.9% Food City


45

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
434
  Goodlettsville, TN Northcreek Commons
101-139 Northcreek Boulevard		 37072 SC  Fee (3) 1987  2003   20%   84,441  $659,289  $8.69   89.8% Kroger
 
435
  Hendersonville, TN Lowe’s Home Improvement 1050 Lowe’s Road 37075 SC  Fee  1999  2003   100%   129,044  $1,139,939  $8.83   100% Lowe’s
 
436
  Jackson, TN West Towne Commons
41 Stonebrook Place		 38305 SC  Fee (3) 1992  2007   20%   62,925  $525,816  $8.86   94.3% Kroger
 
437
  Johnson City, TN Johnson City Marketplace Franklin and Knob Creek Roads 37604 SC  GL  2005  2003   100%   11,749  $534,609  $15.46   100% Kohl’s, Lowe’s (Not Owned)
 
438
  Knoxville, TN Pavilion of Turkey Creek I
10936 Parkside Drive		 37922 SC  Fee (3) 2001  2007   15%   280,776  $3,127,417  $12.89   86.4% Ross Dress For Less, OfficeMax, Old Navy, Hobby Lobby, Target (Not Owned), Walmart Supercenter (Not Owned)
 
439
  Knoxville, TN Town & Country Commons I North Peters Road and Town & Country Circle 37923 SC  Fee (3) 1985/1997  2007   15%   638,334  $5,785,239  $10.72   84.5% Jo-Ann Stores, Staples, Food City, Best Buy, Lowe’s, Carmike Cinemas, Dick’s Sporting Goods
 
440
  Memphis, TN American Way
4075 American Way		 38118 SC  Fee (3) 1988  2007   20%   121,222  $773,974  $7.88   81.1% Kroger
 
441
  Morristown, TN Crossroads Square
130 Terrace Lane		 37816 SC  Fee (3) 2004  2007   20%   70,000  $573,000  $8.68   94.3% T.J. Maxx, OfficeMax (Not Owned)
 
442
  Nashville, TN Willowbrook Commons
61 East Thompson Lane		 37211 SC  Fee (3) 2005  2007   20%   93,600  $698,266  $8.56   87.2% Kroger
 
443
  Nashville, TN Bellevue Place
7625 Highway 70 South		 37221 SC  Fee (3) 2003  2007   15%   77,099  $880,292  $12.18   93.8% Michaels, Bed Bath & Beyond, Home Depot (Not Owned)
 
444
  Oakland, TN Oakland Market Place
7265 U.S. Highway 64		 38060 SC  Fee (3) 2004  2007   20%   64,600  $382,053  $6.63   89.2% Kroger
    Texas                                      
 
445
  Allen, TX Watters Creek
Bethany Road		 75013 LC  Fee (3) 2008  1*  10%   347,211  $6,037,405  $20.92   80.5% United Market Street, Borders
 
446
  Austin, TX The Shops at Tech Ridge Center Ridge Drive 78728 SC  Fee (3) 2003  2003   25.75%   282,845  $3,360,774  $14.06   83.3% Ross Dress For Less, Toys “R” Us, Hobby Lobby, Best Buy, Super Target (Not Owned)
 
447
  Fort Worth, TX CVS Pharmacy
2706 Jacksboro Highway		 76114 SC  Fee  1997  2007   100%   10,908  $239,784  $21.98   100%  
 
448
  Frisco, TX Frisco Marketplace
7010 Preston Road		 75035 SC  Fee (3) 2003  2003   0.01%   20,959  $691,254  $21.54   96.3% Kohl’s
 
449
  Garland, TX Garland Plaza
3265 Broadway Boulevard		 75043 SC  Fee  1994  2007   100%   70,576  $—  $—   —   
 
450
  Grand Prairie, TX Kroger
2525 West Interstate 20		 75052 SC  Fee  1998  2007   100%   60,835  $433,615  $7.13   100% Kroger


46

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
451
  Houston, TX Lowe’s Home Improvement
19935 Katy Freeway		 77094 SC  Fee  1998  2007   100%   131,644  $917,000  $6.97   100% Lowe’s
 
452
  McKinney, TX McKinney Marketplace
U.S. Highway 75 and El Dorado Parkway		 75070 SC  Fee (3) 2000  2003   0.01%   118,967  $1,165,985  $10.70   91.6% Kohl’s, Albertson’s (Not Owned)
 
453
  Mesquite, TX Marketplace at Towne Center
Southbound Frontage Road and I-635		 75150 SC  Fee (3) 2001  2003   0.01%   170,645  $2,165,073  $14.24   82.2% PetSmart, Michaels, Ross Dress For Less, Kohl’s (Not Owned), Home Depot (Not Owned)
 
454
  Pasadena, TX Kroger Junction
2619 Red Bluff Road		 77506 SC  Fee (3) 1984  2007   20%   81,161  $392,066  $6.38   75.7% Kroger
 
455
  Richardson, TX CVS Pharmacy
2090 Arapahoe Boulevard		 75081 SC  Fee  1997  2007   100%   10,560  $206,585  $19.56   100%  
 
456
  San Antonio, TX Bandera Pointe
State Loop 1604 and Bandera Road		 78227 SC  Fee  2001/2002  1*  100%   278,815  $3,972,683  $15.03   90.3% Lowe’s, T.J. Maxx, Old Navy, Ross Dress For Less, Barnes & Noble, Las Palapas, Raquetball & Fitness (Not Owned), Kohl’s (Not Owned), Chuck E Cheese (Not Owned), Credit Union (Not Owned), Super Target (Not Owned), Lack’s Furniture (Not Owned)
 
457
  San Antonio, TX Village at Stone Oak
22610 U.S. Highway 281 North		 78258 SC  Fee  2007  1*  100%   387,352  $5,805,636  $17.27   84.5% T.J. Maxx, Alamo Drafthouse Cinema, Hobby Lobby, Super Target (Not Owned)
 
458
  San Antonio, TX Westover Marketplace
State Highway 151 at Loop 410		 78209 SC  Fee (3) 2005  1*  20%   225,164  $2,353,979  $15.03   68.8% PetSmart, Office Depot, Ross Dress For Less, Target (Not Owned), Lowe’s (Not Owned)
 
459
  San Antonio, TX Terrell Plaza
1201 Austin Highway		 78209 SC  Fee  1958/1986  2007   50%   171,083  $828,555  $7.18   67.4% Big Lots
    Utah                                      
 
460
  Midvale, UT The Family Center at For Union
900 East Fort Union Boulevard		 84047 SC  Fee  1973/2000  1998   100%   658,952  $7,941,815  $13.66   88.2% Babies “R” Us, OfficeMax, Smith’s Food & Drug, F.Y.E., Bed Bath & Beyond, Walmart, Ross Dress For Less, Michaels
 
461
  Ogden, UT The Family Center at Ogden 5-Points
21-129 Harrisville Road		 84404 SC  Fee  1977  1998   100%   162,316  $708,127  $5.59   78.0% Harmons
 
462
  Orem, UT The Family Center at Orem
1300 South Street		 84058 SC  Fee  1991  1998   100%   150,667  $1,347,849  $11.52   77.6% Babies “R” Us, F.Y.E., Jo-Ann Stores, Toys “R” Us (Not Owned), R.C. Willey (Not Owned)
 
463
  Riverdale, UT The Family Center at Riverdale (North)
1050 West Riverdale Road		 84405 SC  Fee  1995/2003  1998   100%   593,398  $4,149,937  $7.77   88.4% OfficeMax, Sports Authority, Sportsman’s Warehouse, Target, F.Y.E.


47

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
 
464
  Riverdale, UT The Family Center at Riverdale (East)
1050 West Riverdale Road		 84405 SC  Fee  2005  1*  100%   55,747  $510,001  $10.94   83.6% Jo-Ann Stores, Sam’s Club (Not Owned), Walmart Supercenter (Not Owned)
 
465
  Taylorsville, UT The Family Center at Taylorsville
5600 South Redwood		 84123 SC  Fee  1982/2003  1998   100%   741,906  $6,250,820  $10.86   76.9% Shopko, Jo-Ann Stores, Sports Authority, 24 Hour Fitness, PetSmart, Bed Bath & Beyond, Ross Dress For Less, F.Y.E., Harmons Superstore (Not Owned)
    Virginia                                      
 
466
  Chester, VA Bermuda Square
12607-12649 Jefferson Davis		 23831 SC  Fee  1978  2003   100%   114,589  $1,558,999  $13.74   95.3% Martin’s Food Store
 
467
  Glen Allen, VA Creeks at Virginia Center
9830-9992 Brook Road		 23059 SC  Fee (3) 2002  2007   15%   266,308  $2,913,739  $12.52   87.4% Barnes & Noble, Bed Bath & Beyond, Michaels, Dick’s Sporting Goods
 
468
  Martinsville, VA Liberty Fair Mall
240 Commonwealth Boulevard		 24112 MM  Fee  1989/1997  1/2*  50%   434,417  $2,178,354  $6.19   78.9% Belk, J.C. Penney, Sears, OfficeMax, Kroger
 
469
  Midlothian, VA Chesterfield Crossings
Highway 360 and Warbro Road		 23112 SC  Fee (3) 2000  2007   15%   79,802  $1,185,734  $14.86   87.6% Ben Franklin Crafts, Walmart Supercenter (Not Owned), Home Depot (Not Owned)
 
470
  Midlothian, VA Commonwealth Center
4600-5000 Commonwealth Center Parkway		 23112 SC  Fee (3) 2002  2007   15%   165,413  $2,110,815  $13.39   95.3% Stein Mart, Michaels, Barnes & Noble
 
471
  Newport News, VA Denbigh Village
Warwick Boulevard and Denbigh Boulevard		 23608 SC  Fee  1998/2006  2007   100%   324,450  $2,344,265  $8.06   82.8% Burlington Coat Factory
 
472
  Newport News, VA Jefferson Plaza
121 Jefferson Avenue		 23602 SC  Fee (3) 1999  2007   15%   47,341  $793,413  $16.76   100% Fresh Market, Costco (Not Owned)
 
473
  Richmond, VA Downtown Short Pump
11500-900 West Broad Street		 23233 SC  Fee  2000  2007   100%   126,055  $2,353,813  $20.40   91.5% Barnes & Noble, Regal Cinemas
 
474
  Springfield, VA Loisdale Center
6646 Loisdale Road		 22150 SC  Fee  1999  2007   100%   120,320  $2,291,523  $19.05   100% Barnes & Noble, DSW Shoe Warehouse, Bed Bath & Beyond, hhgregg
 
475
  Springfield, VA Spring Mall Center
6717 Spring Mall Road		 22150 SC  Fee  1995/2001  2007   100%   56,511  $998,611  $17.67   100% The Tile Shop, Michaels
 
476
  Sterling, VA Park Place at Cascades Marketplace Cascades Parkway and Route 7 20165 SC  Fee  1998  2007   100%   101,606  $1,544,217  $15.20   100% Staples, Sports Authority
 
477
  Virginia Beach, VA Kroger Plaza
1800 Republic Drive		 23454 SC  Fee (3) 1997  2007   20%   63,324  $168,488  $2.91   91.5% Kroger
 
478
  Waynesboro, VA Waynesboro Commons
109 Lee Dewitt Boulevard		 22980 SC  Fee (3) 1993  2007   20%   52,415  $457,084  $8.72   100% Kroger
 
479
  Winchester, VA Apple Blossom Corners
2190 South Pleasant Valley		 22601 SC  Fee (3) 1990/1997  2*  20%   240,560  $2,579,489  $10.57   98.5% Martin’s Food Store, Kohl’s, OfficeMax, Books-A-Million


48

 

 
                                           
Developers Diversified Realty Corporation
Shopping Center Property List at December 31, 2010
                  Company-
        
                  Owned
   Average
    
            Year
   DDR
 Gross
 Total
 Base
    
      Zip
 Type of
 Ownership
 Developed/
 Year
 Ownership
 Leasable
 Annualized
 Rent
 Percent
  
  Location Center/Property Code Property(1) Interest Redeveloped Acquired Interest Area (SF) Base Rent (Per SF)(2) Occupied Anchor Tenants
 
    Washington                                      
 
480
  Kirkland, WA Totem Lake Malls
Totem Lakes Boulevard		 98034 SC  Fee (3) 1999/2004  2004   20%   255,738  $2,251,683  $17.64   50.7% Guitar Center, Ross Dress For Less
 
481
  Olympia, WA Olympia
2815 Capital Mall
Drive Southwest		 98502 SC  Fee  1998  2007   100%   35,776  $—  $—   —   
    West Virginia                                      
 
482
  Barboursville, WV Barboursville Center
5-13 Mall Road		 25504 SC  GL  1985  1998   100%   70,900  $251,887  $3.63   97.7% Discount Emporium, Ashley Furniture, Hobby Lobby (Not Owned)
 
483
  Morgantown, WV Glenmark Centre Interstate 68 and Pierpont Road 26508 SC  Fee  1999/2000  2007   100%   111,278  $1,242,196  $10.31   97.4% Shop ‘N Save, Michaels, Lowe’s (Not Owned)
 
484
  Weirton, WV Rite Aid
1360 Cove Road		 26062 SC  Fee  2000  2007   100%   10,908  $221,870  $20.34   100%  
    Wisconsin                                      
 
485
  Milwaukee, WI Point Loomis
South 27th Street		 53221 SC  Fee  1962  2003   100%   160,533  $707,569  $4.41   100% Kohl’s, Pick ‘N Save
 
486
  Racine, WI Village Center Outlot Washington Avenue and Village Center Drive 53406 SC  Fee (3) 2003  2007   20%   227,922  $2,420,335  $10.69   99.3% Jewel, Kohl’s
 
487
  West Allis, WI West Allis Center
West Cleveland Avenue and South 108th Street		 53214 SC  Fee  1968  2003   100%   246,081  $1,514,305  $5.85   100% Kohl’s, Marshalls Mega Store, Pick ‘N Save
1*Property developed by the Company.
2*Original IPO Property.
(1)“SC” indicates a power center or a community shopping center, “LC” indicates a lifestyle center, and “MM” indicates an enclosed mall.
(2)Calculated as total annualized base rentals divided by Company-owned GLA actually leased as of December 31, 2010.
(3)One of the two hundred twenty-eight (228) properties owned through unconsolidated joint ventures, which serve as collateral for joint venture mortgage debt aggregating approximately $4.0 billion (of which the Company’s proportionate share is $835.8 million) as of December 31, 2010, and which is not reflected in the consolidated indebtedness.
(4)The Company has an executed lease with this tenant, but the rent commencement date has not occurred.


49

 

 
 
                                         
Developers Diversified Realty Corporation
Service Merchandise Joint Venture Property List at December 31, 2010
                    Company-
            
                    Owned
     Average
      
           Year
     DDR
  Gross
  Total
  Base
      
    Zip
  Type of
 Ownership
 Developed/
  Year
  Ownership
  Leasable
  Annualized
  Rent
  Percent
   
Location Center/Property Code  Property(1) Interest(3) Redeveloped  Acquired  Interest  Area (SF)  Base Rent  (Per SF)(2)  Occupied  Anchor Tenants
 
Alabama
                                        
1 Huntsville, AL
 930 A Old Monrovia Road  35806  SC Fee  1984   2002   20%  54,200  $406,500  $7.50   100% hhgregg
Arizona
                                        
2 Mesa, AZ
 6233 East Southern Boulevard  85206  SC Fee  1991   2002   20%  53,312  $698,079  $13.09   100% Ashley Furniture Homestore
Connecticut
                                        
3 Danbury, CT
 67 Newton Road  06810  SC Lease  1978   2002   20%  51,750  $555,677  $10.74   100% HomeGoods, Namco Pool Supplies
4 Manchester, CT
 1520 Pleasant Valley Road  06040  SC GL  1993   2002   20%  49,905  $523,144  $10.48   100% Michaels, PetSmart
Delaware
                                        
5 Dover, DE
 1380 North Dupont Highway  19901  SC Fee  1992   2002   20%  50,000  $405,350  $8.11   100% hhgregg, PetSmart
Florida
                                        
6 Bradenton, FL
 825 Cortez Road West  34207  SC Lease  1995   2002   20%  53,638  $330,870  $6.17   100% Bed Bath & Beyond, Michaels
7 Ocala, FL
 2405 Southwest 27th Avenue  32671  SC Lease  1981   2002   20%  54,816  $314,140  $5.73   100% Kimco Ocala 665, Beall’s Outlet
8 Orlando, FL
 7175 West Colonial Drive  32818  SC Fee  1989   2002   20%  51,550  $—  $—   —   
9 Pensacola, FL
 7303 Plantation Road  32504  SC Fee  1976   2002   20%  64,053  $832,689  $13.00   100% American Water Works
Illinois
                                        
10 Crystal Lake, IL
 5561 Northwest Highway  60014  SC Fee  1989   2002   20%  50,092  $288,900  $6.91   83.4% Big Lots
11 Downers Grove, IL
 1508 Butterfield Road  60515  SC Lease  1973   2002   20%  35,943  $—  $—   —   
Indiana
                                        
12 Evansville, IN
 300 North Green River Road  47715  SC Lease  1978   2002   20%  60,000  $440,575  $9.44   77.8% Bed Bath & Beyond
Kentucky
                                        
13 Lexington, KY
 1555 New Circle Road  40509  SC Lease  1978   2002   20%  60,000  $397,683  $6.63   100% HomeGoods, The Tile Shop
14 Louisville, KY
 4601 Outer Loop Road  40219  SC Fee  1973   2002   20%  49,410  $321,201  $6.50   100% PetSmart, A.J. Wright
15 Paducah, KY
 5109 Hinkleville Road  42001  SC Fee  1984   2002   20%  52,500  $—  $—   —   
Louisiana
                                        
16 Bossier City, LA
 2950 East Texas Street  71111  SC Fee  1982   2002   20%  58,500  $—  $—   —   
17 Houma, LA
 1636 Martin Luther King Boulevard  70360  SC Fee  1992   2002   20%  49,721  $335,534  $8.39   80.4% Best Buy, Bed Bath & Beyond
Massachusetts
                                        
18 Burlington, MA
 34 Cambridge Street  01803  SC Lease  1978   2002   20%  70,800  $1,018,666  $14.39   100% E & A Northeast, Off Broadway Shoes
19 Swansea, MA
 58 Swansea Mall Drive  02777  SC GL  1985   2002   20%  49,980  $337,380  $6.75   100% PriceRite Supermarket
Michigan
                                        
20 Westland, MI
 7638 Nankin Road  48185  SC Fee  1980   2002   20%  50,000  $—  $—   —   
Mississippi
                                        
21 Hattiesburg, MS
 1000 Turtle Creek Drive  39402  SC Fee  1995   2002   20%  50,809  $—  $—   —   


50

 

 
                                         
Developers Diversified Realty Corporation
Service Merchandise Joint Venture Property List at December 31, 2010
                    Company-
            
                    Owned
     Average
      
           Year
     DDR
  Gross
  Total
  Base
      
    Zip
  Type of
 Ownership
 Developed/
  Year
  Ownership
  Leasable
  Annualized
  Rent
  Percent
   
Location Center/Property Code  Property(1) Interest(3) Redeveloped  Acquired  Interest  Area (SF)  Base Rent  (Per SF)(2)  Occupied  Anchor Tenants
 
Nevada
                                        
22 Las Vegas, NV
 4701 Faircenter Parkway  89102  SC Lease  1990   2002   20%  24,975  $174,825  $7.00   100% Michaels
New Hampshire
                                        
23 Salem, NH
 271 South Broadway  03079  SC Lease  1985   2002   20%  50,110  $604,779  $12.07   100% Bed Bath & Beyond, A.C. Moore
New Jersey
                                        
24 Paramus, NJ
 651 Route 17 East  06117  SC Lease  1978   2002   20%  54,850  $958,740  $19.52   89.6% HomeGoods, Modell’s Sporting Goods
25 Wayne, NJ
 Route 23 West Belt Plaza  07470  SC Lease  1978   2002   20%  49,157  $809,705  $16.47   100% HomeGoods, PetSmart
New York
                                        
26 Middletown, NY
 88-25 Dunning Road  10940  SC Lease  1989   2002   20%  50,144  $444,149  $8.86   100% HomeGoods, PetSmart
North Carolina
                                        
27 Raleigh, NC
 U.S. 17 Millbrook  27604  SC Fee  1994   2002   20%  50,000  $470,589  $9.41   100% A.C. Moore, K & G Menswear
Oklahoma
                                        
28 Warr Acres, OK
 5537 Northwest Expressway  73132  SC Fee  1985   2002   20%  50,000  $—  $—   —   
South Carolina
                                        
29 N. Charleston, SC
 7400 Rivers Avenue  29418  SC Fee  1989   2002   20%  50,000  $333,612  $6.67   100% Developers Diversified Realty, Dollar Tree
Tennessee
                                        
30 Antioch, TN
 5301 Hickory Hollow Parkway  37013  SC Fee  1984   2002   20%  59,319  $432,935  $7.30   100% Office Depot, Bed Bath & Beyond
31 Franklin, TN
 1735 Galleria Boulevard  37064  SC Fee  1992   2002   20%  60,000  $684,217  $11.40   100% hhgregg, Whole Foods Market
32 Knoxville, TN
 9333 Kingston Pike  37922  SC Fee  1986   2002   20%  50,092  $—  $—   —   
Texas
                                        
33 Baytown, TX
 6731 Garth Road  77521  SC Fee  1981   2002   20%  52,288  $—  $—   —   
34 Longview, TX
 3520 McCann Road  75605  SC Fee  1978   2002   20%  40,524  $364,716  $9.00   100% Stage
35 McAllen, TX
 6600 U.S. Expressway 83  78503  SC Fee  1993   2002   20%  63,445  $530,664  $8.36   100% Michaels, Bed Bath & Beyond
36 Richardson, TX
 1300 East Beltline  75081  SC Fee  1978   2002   20%  62,463  $399,020  $6.39   100% Staples, Conn’s Appliance
37 Sugar Land, TX
 15235 South West Freeway  77478  SC GL  1992   2002   20%  50,000  $350,000  $7.00   100% Conn’s Appliance
Virginia
                                        
38 Chesapeake, VA
 4300 Portsmouth Boulevard  23321  SC GL  1990   2002   20%  50,062  $407,783  $8.15   100% PetSmart, Michaels
 
 
(1)SC indicates a power center or a community shopping center.
 
(2)Calculated as total annualized base rental divided by Company-owned GLA actually leased as of December 31, 2010.
 
(3)See footnote 3 of the Shopping Center Property List on page 48 describing indebtedness.

51

 

 
                                       
Developers Diversified Realty Corporation
 
Office Property List at December 31, 2010
 
                    Company-
          
                    Owned
     Average
    
           Year
     DDR
  Gross
  Total
  Base
    
    Zip
  Type of
 Ownership
 Developed/
  Year
  Ownership
  Leasable
  Annualized
  Rent
  Percent
 
Location Center/Property Code  Property(1) Interest Redeveloped  Acquired  Interest  Area (SF)  Base Rent  (Per SF)(2)  Occupied 
 
Maryland
                                      
1 Silver Springs, MD (I)
 Tech Center 29 (I)
2120-2162 Tech Road		  20904  IND Fee  1970   2001   100%  175,410  $1,599,806  $9.71   93.9%
2 Silver Springs, MD (II)
 Tech Center 29 (II)
2180 Industrial Parkway		  20904  IND Fee  1991   2001   100%  58,280  $260,698  $4.49   99.5%
3 Silver Springs, MD (III)
 Tech Center 29 (III)
12200 Tech Road		  20904  IND Fee  1988   2001   100%  55,422  $1,271,679  $25.40   90.0%
Ohio
                                      
4 Twinsburg, OH
 Heritage Business I
9177 Dutton Drive		  44087  IND Fee  1990   2*  100%  35,866  $98,297  $7.82   35.0%
Pennsylvania
                                      
5 Erie, PA
 West 38th Street Plaza
2301 West 38th Street		  16506  OFF Fee  1973   2*  100%  96,000  $340,650  $5.98   59.4%
Utah
                                      
6 Salt Lake City, UT
 The Hermes Building
455 East 500 South Street		  84111  OFF Fee  1985   1998   100%  53,476  $660,277  $16.24   65.8%
 
 
2*Original IPO Property transferred to American Industrial Properties (“AIP”) in 1998 and reacquired in 2001 through AIP merger.
 
(1)These properties are classified as the Company’s office properties segment. “OFF” indicates office property and “IND” indicates industrial property.
 
(2)Calculated as total annualized base rental divided by Company-owned GLA actually leased as of December 31, 2010.


52

 

 
Item 3.  LEGAL PROCEEDINGS
 
Other than routine litigation and administrative proceedings arising in the ordinary course of business, the Company is not presently involved in any litigation nor, to its knowledge, is any litigation threatened against the Company or its properties that is reasonably likely to have a material adverse effect on the liquidity or results of operations of the Company.
 
The Company is a party to various joint ventures with Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C., which funds are advised and managed by Coventry Real Estate Advisors L.L.C. (collectively, the “Coventry II Fund”), through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with major renovationand/orground-updevelopment contemplated for many of the properties. The Company is generally responsible forday-to-daymanagement of the properties. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted in part (regarding Coventry’s claim that the Company breached a fiduciary duty owed to Coventry) and denied in part (all other claims) the Company’s motion. Coventry has filed a notice of appeal regarding that portion of the motion granted by the court. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry.
 
The Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will vigorously defend itself against the allegations contained in the complaint. This lawsuit is subject to the uncertainties inherent in the litigation process and, therefore, no assurance can be given as to its ultimate outcome. However, based on the information presently available to the Company, the Company does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
 
On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company has filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. The Court has not yet ruled on the Company’s motion for summary judgment. A trial on the Company’s request for a permanent injunction has not yet been scheduled. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of the litigation process, no assurance can be given as to the ultimate outcome of this action.


53

 

Item 4.  [REMOVED AND RESERVED]
 
EXECUTIVE OFFICERS
 
The executive officers of the Company are as follows:
 
       
Name Age Position and Office with the Company
 
Scott A. Wolstein
  58  Executive Chairman of the Board of Directors
Daniel B. Hurwitz
  46  President and Chief Executive Officer
David J. Oakes
  32  Senior Executive Vice President and Chief Financial Officer
Paul Freddo
  55  Senior Executive Vice President of Leasing and Development
John S. Kokinchak
  51  Senior Executive Vice President of Property Management
Christa A. Vesy
  40  Senior Vice President and Chief Accounting Officer
 
Scott A. Wolstein was appointed Executive Chairman of the Board in January 2010. Mr. Wolstein had served as the Chief Executive Officer of the Company from its organization in 1992 until December 2009. Mr. Wolstein has been a Director of the Company since 1992 and served as Chairman of the Board of Directors of the Company from May 1997 through December 2009.
 
Daniel B. Hurwitz was appointed President and Chief Executive Officer in January 2010 and has served as a director of the Company since June 2009. Mr. Hurwitz had served as the President and Chief Operating Officer of the Company from May 2007 to January 2010, as Senior Executive Vice President and Chief Investment Officer from May 2005 through May 2007 and as Executive Vice President of the Company from June 1999 through April 2005. He was previously a member of the Company’s Board of Directors from May 2002 to May 2004.
 
David J. Oakes was appointed Senior Executive Vice President and Chief Financial Officer in February 2010. Mr. Oakes had served as Senior Executive Vice President of Finance and Chief Investment Officer from December 2008 to February 2010 and as Executive Vice President of Finance and Chief Investment Officer from April 2007 to December 2008. Prior to joining the Company, Mr. Oakes served as Senior Vice President and portfolio manager at Cohen & Steers Capital Management, an investment firm, from April 2002 through March 2007.
 
Paul Freddo was appointed Senior Executive Vice President of Leasing and Development in December 2008. Mr. Freddo joined the Company in August 2008 and served as Senior Vice President of Development-Western Region from August 2008 to December 2008. Prior to joining the Company, Mr. Freddo served as Vice President and Director of Real Estate for JCPenney, a retail department store, from January 2004 through August 2008.
 
John S. Kokinchak was appointed Senior Executive Vice President of Property Management in March 2010. Mr. Kokinchak was the Executive Vice President of Property Management from March 2008 to March 2010 and Senior Vice President of Property Management from March 2006 to March 2008. Mr. Kokinchak joined the Company in August 2004 and served as Vice President of Property Management, Specialty Centers from August 2004 to March 2006.
 
Christa A. Vesy was appointed Senior Vice President and Chief Accounting Officer in November 2006. From September 2004 to November 2006, Mrs. Vesy worked for The Lubrizol Corporation, a specialty chemicals company, where she served as manager of external financial reporting and then as controller for the lubricant additives business segment.


54

 

 
Part II
 
Item 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
The high and low sale prices per share of the Company’s common shares, as reported on the New York Stock Exchange (the “NYSE”) composite tape, and declared dividends per share for the quarterly periods indicated were as follows:
 
             
  High  Low  Dividends 
 
2010
            
First
 $13.16  $8.11  $0.02 
Second
  13.73   9.79   0.02 
Third
  12.01   8.84   0.02 
Fourth
  14.39   11.15   0.02 
2009:
            
First
 $8.38  $1.38  $0.20 
Second
  5.81   1.99   0.20 
Third
  10.47   4.09   0.02 
Fourth
  10.66   7.71   0.02 
 
As of February 11, 2011, there were 8,981 record holders and approximately 33,000 beneficial owners of the Company’s common shares.
 
The Company’s Board of Directors approved a 2011 dividend policy that it believes will increase the Company’s free cash flow, while still adhering to REIT payout requirements. It is expected this payout policy will result in a 2011 annual dividend at nearly the minimum distribution required to maintain REIT status, which will be determined and approved by the Board of Directors on a quarterly basis. The Company’s 2011 dividend policy should result in additional free cash flow, which is expected to be applied primarily to reduce leverage. In January 2011, the Company declared its first quarter 2011 dividend of $0.04 per common share, payable on April 5, 2011, to shareholders of record at the close of business on March 22, 2011.
 
The Company intends to continue to declare quarterly dividends on its common shares. The Company is required by the Internal Revenue Code of 1986, as amended, to distribute at least 90% of its REIT taxable income. The amount of cash available for dividends is impacted by capital expenditures and debt service requirements to the extent the Company was to fund such items out of cash flow from operations. However, no assurances can be made as to the amounts of future dividends, as the decision to declare and pay dividends on the common shares in 2011, as well as the timing, amount and composition of any such future dividends, will be at the discretion of the Company’s Board of Directors and will be subject to the Company’s cash flow from operations, earnings, financial condition, capital requirements and such other factors as the Board of Directors considers relevant.
 
An Internal Revenue Service (“IRS”) revenue procedure allows the Company to satisfy REIT distribution requirements by distributing up to 90% of the aggregate common share dividends utilizing the Company’s common shares in lieu of cash. The Company paid a portion of the 2009 common share dividend through the issuance of its common shares. Although the Company does not currently intend to distribute a portion of the dividends in shares, the Company may distribute a portion of its dividends in shares in the future.
 
The Company has a dividend reinvestment plan under which shareholders may elect to reinvest their dividends automatically in common shares. Under the plan, the Company may, from time to time, elect to purchase common shares in the open market on behalf of participating shareholders or may issue new common shares to such shareholders.


55

 

ISSUER PURCHASES OF EQUITY SECURITIES
 
                 
        (c)
    
        Total
  (d)
 
        Number
  Maximum Number
 
  (a)
     of Shares
  (or Approximate Dollar
 
  Total
  (b)
  Purchased as
  Value) of Shares that
 
  Number of
  Average
  Part of Publicly
  May Yet Be Purchased
 
  Shares
  Price Paid
  Announced Plans
  Under the Plans or
 
  Purchased(1)  per Share  or Programs  Programs (Millions) 
 
October 1 — 31, 2010
  —  $—   —  $— 
November 1 — 30, 2010
  —   —   —   — 
December 1 — 31, 2010
  100,530  $14.09   —   — 
                 
Total
  100,530  $14.09   —  $— 
 
(1)Consists of common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with the vesting and/or exercise of awards under the Company’s equity-based compensation plans.


56

 

 
Item 6.  SELECTED FINANCIAL DATA
 
The consolidated financial data included in the following table has been derived from the financial statements for the last five years and includes the information required by Item 301 ofRegulation S-K.The following selected consolidated financial data should be read in conjunction with the Company’s consolidated financial statements and related notes and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All consolidated financial data has been restated, as appropriate, to reflect the impact of activity classified as discontinued operations for all periods presented.
 
COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA
(Amounts in thousands, except per share data)
 
                     
  For the Year Ended December 31,(A) 
  2010  2009  2008  2007  2006 
 
Operating Data:
                    
Revenues
 $803,069  $797,399  $825,068  $827,264  $679,764 
                     
Expenses:
                    
Rental operations
  246,161   237,544   227,051   214,807   174,496 
General and administrative
  85,573   94,365   97,719   81,244   60,679 
Impairment charges
  116,462   12,745   29,603   —   — 
Depreciation and amortization
  222,862   217,841   210,541   183,390   152,495 
                     
   671,058   562,495   564,914   479,441   387,670 
                     
Interest income
  7,346   11,984   5,230   8,582   8,820 
Interest expense
  (226,464)  (221,334)  (229,163)  (239,878)  (183,539)
Gain on debt retirement, net
  485   145,050   10,455   —   — 
Loss on equity derivative instruments
  (40,157)  (199,797)  —   —   — 
Other expense, net
  (24,346)  (29,192)  (28,131)  (3,097)  (596)
                     
   (283,136)  (293,289)  (241,609)  (234,393)  (175,315)
                     
(Loss) income before earnings from equity method investments and other items
  (151,125)  (58,385)  18,545   113,430   116,779 
Equity in net income (loss) of joint ventures
  5,600   (9,733)  17,719   43,229   30,337 
Impairment of joint venture investments
  (227)  (184,584)  (106,957)  —   — 
(Loss) gain on change in control of interests
  (428)  23,865   —   —   — 
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes
  (47,992)  767   17,544   14,807   2,608 
                     
(Loss) income from continuing operations
  (194,172)  (228,070)  (53,149)  171,466   149,724 


57

 

ITEM 6.  SELECTED FINANCIAL DATA (CONTINUED)
 
                     
  For the Year Ended December 31,(A) 
  2010  2009  2008  2007  2006 
 
(Loss) income from discontinued operations
  (54,867)  (184,697)  (36,882)  42,331   38,512 
                     
(Loss) income before gain on disposition of real estate
  (249,039)  (412,767)  (90,031)  213,797   188,236 
Gain on disposition of real estate, net of tax
  1,318   9,127   6,962   68,851   72,023 
                     
Net (loss) income
 $(247,721) $(403,640) $(83,069) $282,648  $260,259 
                     
Loss (income) attributable to non-controlling interests
  38,363   47,047   11,139   (17,706)  (8,301)
                     
Net (loss) income attributable to DDR
 $(209,358) $(356,593) $(71,930) $264,942  $251,958 
                     
(Loss) earnings per share data — Basic:
                    
(Loss) income from continuing operations attributable to DDR common shareholders
 $(0.91) $(1.65) $(0.75) $1.45  $1.49 
(Loss) income from discontinued operations attributable to DDR common shareholders
  (0.12)  (0.86)  (0.21)  0.31   0.31 
                     
Net (loss) income attributable to DDR common shareholders
 $(1.03) $(2.51) $(0.96) $1.76  $1.80 
                     
Weighted-average number of common shares
  244,712   158,816   119,843   120,879   109,002 
(Loss) earnings per share data — Diluted:
                    
(Loss) income from continuing operations attributable to DDR common shareholders
 $(0.91) $(1.65) $(0.75) $1.43  $1.47 
(Loss) income from discontinued operations attributable to DDR common shareholders
  (0.12)  (0.86)  (0.21)  0.32   0.32 
                     
Net (loss) income attributable to DDR common shareholders
 $(1.03) $(2.51) $(0.96) $1.75  $1.79 
                     
Weighted-average number of common shares
  244,712   158,816   119,843   121,335   109,548 
Dividends declared
 $0.08  $0.44  $2.07  $2.64  $2.36 
 
                     
  At December 31,(A) 
  2010  2009  2008  2007  2006 
 
Balance Sheet Data:
                    
Real estate (at cost)
 $8,411,239  $8,823,719  $9,109,566  $8,985,749  $7,447,459 
Real estate, net of accumulated depreciation
  6,959,127   7,490,403   7,900,663   7,961,701   6,586,193 
Investments in and advances to joint ventures
  417,223   420,541   583,767   638,111   291,685 
Total assets
  7,768,090   8,426,606   9,020,222   9,089,514   7,179,278 
Total debt
  4,302,000   5,178,663   5,866,655   5,523,953   4,227,096 
Equity
  3,134,687   2,952,336   2,864,794   3,193,302   2,636,838 


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ITEM 6.  SELECTED FINANCIAL DATA (CONTINUED)
 
                     
  For the Year Ended December 31,(A) 
  2010  2009  2008  2007  2006 
 
Cash Flow Data:
                    
Cash flow provided by (used for):
                    
Operating activities
 $278,124  $228,935  $391,941  $420,667  $348,478 
Investing activities
  31,762   150,884   (468,572)  (1,162,287)  (203,047)
Financing activities
  (317,065)  (381,348)  56,296   763,411   (147,708)
Other Data:
                    
Funds from operations(B):
                    
Net (loss) income applicable to common shareholders
 $(251,627) $(398,862) $(114,199) $214,008  $196,789 
Depreciation and amortization of real estate investments
  217,168   224,207   236,344   214,396   185,449 
Equity in net (income) loss from joint ventures
  (5,600)  9,306   (17,719)  (43,229)  (30,337)
Joint ventures’ funds from operations(B):
  47,545   43,665   68,355   84,423   44,473 
Non-controlling interests (OP Units)
  32   175   1,145   2,275   2,116 
Gain on disposition of depreciable real estate
  (18,803)  (23,123)  (4,244)  (17,956)  (21,987)
                     
Funds from operations applicable to DDR common shareholders(B):
  (11,285)  (144,632)  169,682   453,917   376,503 
Preferred share dividends
  42,269   42,269   42,269   50,934   55,169 
                     
FFO
 $30,984  $(102,363) $211,951  $504,851  $431,672 
                     
Weighted-average shares and OP Units (Diluted)(C):
  246,987   160,130   121,030   122,716   110,826 
 
(A) As described in the consolidated financial statements, the Company and its unconsolidated joint ventures completed the following property acquisitions and dispositions for the periods presented. Dispositions also include assets for which control has been relinquished and the Company does not have any further significant economic interest.
 
                 
  Property Acquisitions  Property Dispositions 
     Unconsolidated
     Unconsolidated
 
Year Consolidated  Joint Ventures  Consolidated  Joint Ventures 
 
2010
  —   —   56   37 
2009
  4   —   34   12 
2008
  —   11   22   — 
2007
  249   68   67   7 
2006
  5   15   6   9 
 
(B) Management believes that Funds From Operations (“FFO”), which is a non-GAAP financial measure, provides an additional and useful means to assess the financial performance of a REIT. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP. FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies utilize different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate, gains and certain losses from depreciable property dispositions, and extraordinary items, it can provide a performance measure that, when compared


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year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities and interest costs. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP. FFO is generally defined and calculated by the Company as net income (loss), adjusted to exclude (i) preferred share dividends, (ii) gains from disposition of depreciable real estate property, except for gains generated from merchant build asset sales, which are presented net of taxes, and those gains that represent the recapture of a previously recognized impairment charge, (iii) extraordinary items and (iv) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests, and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis. For the reasons described above, management believes that FFO (as described below) provides the Company and investors with an important indicator of the Company’s operating performance. It provides a recognized measure of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO in a different manner.
 
(C) Represents weighted-average shares and operating partnership units, or OP Units, at the end of the respective period.
 
Item 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Executive Summary
 
The Company is a self-administered and self-managed Real Estate Investment Trust (“REIT”), in the business of owning, managing and developing a portfolio of shopping centers. As of December 31, 2010, the Company’s portfolio consisted of 525 shopping centers and six office properties (including 236 properties owned through unconsolidated joint ventures and three that are otherwise consolidated by the Company). These properties consist of shopping centers, lifestyle centers and enclosed malls owned in the United States, Puerto Rico and Brazil. At December 31, 2010, the Company ownedand/ormanaged approximately 129.0 million total square feet of gross leasable area (“GLA”), which includes all of the aforementioned properties and 41 properties owned by a third party. The Company owns more than 1,800 acres of undeveloped land including an interest in land in Canada and Russia at which development was deferred. The Company believes that its portfolio of shopping center properties is one of the largest (measured by the amount of total GLA) currently held by any publicly-traded REIT. At December 31, 2010, the aggregate occupancy of the Company’s shopping center portfolio was 88.4%, as compared to 86.9% at December 31, 2009. The Company’s portfolio consisted of 525 shopping centers at December 31, 2010, as compared to 618 shopping centers at December 31, 2009. The average annualized base rent per occupied square foot was $13.36 at December 31, 2010, as compared to $12.75 at December 31, 2009.
 
Current Strategy
 
The Company seeks to continue to decrease leverage and focus on operational execution in order to improve the Company’s risk profile, portfolio quality and property-level operating results. The Company expects to decrease leverage and improve liquidity through retained cash flow enhanced by incremental leasing, new financings, asset sales and other means.
 
The Company’s portfolio and asset class have demonstrated limited volatility during prior economic downturns and continue to generate relatively consistent cash flows. The following set of core competencies is expected to continue to benefit the Company:
 
  • Strong tenant relationships with the nation’s leading retailers, maintained through a national tenant account program;
 
  • A retail partnerships group to optimize portfolio management by enhancing communication between retailers, the leasing department and other areas of the Company;
 
  • An anchor store redevelopment department solely dedicated to aggressively identifying opportunities to re-tenant vacant anchor space created by retailer bankruptcies and store closings;


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  • An ancillary income department generating revenue at a low cost of investmentand/orcreating cash flow streams from empty or underutilized space;
 
  • A focus on growth and value creation within the prime portfolio, from which over 80% of the Company’s net operating income (defined as property level revenues less property level operating expenses) is generated. The prime portfolio (“Prime Portfolio”) consists of market-dominant shopping centers with high-quality tenants located in attractive markets with strong demographic profiles;
 
  • A redevelopment department focused on identifying viable projects with attractive returns;
 
  • A capital markets department with broad and diverse relationships with capital providers to facilitate access to secured and unsecured debt and public and private equity;
 
  • An experienced funds management team dedicated to generating consistent returns and comprehensive reporting for institutional partners;
 
  • A focused asset transaction team dedicated to finding buyers for non-core assets and sourcing potential acquisition opportunities; and
 
  • A development department adhering to disciplined standards for development.
 
Balance Sheet
 
The Company took the following steps in 2010 to reduce leverage and enhance financial flexibility:
 
  • Refinanced its revolving credit facilities to extend the term to February 2014;
 
  • Sold consolidated and joint venture assets in 2010 that generated gross proceeds of approximately $791 million (of which the Company’s proportionate share was approximately $250 million), respectively;
 
  • Expanded its pool of unencumbered assets;
 
  • Raised $454.4 million of proceeds through the sale of common stock through both an underwritten offering and the Company’s continuous equity program;
 
  • Issued $300 million aggregate principal amount of 7.50%, seven-year senior unsecured notes; issued $300 million aggregate principal amount of 7.875%,10-yearsenior unsecured notes; and issued $350 million aggregate principal amount of 1.75%5-yearconvertible senior unsecured notes;
 
  • Maintained the 2010 common dividend near the minimum required to maintain REIT status in order to maximize capital to pay down debt and invest in the business; and
 
  • Reduced total consolidated debt to $4.3 billion, nearly a $0.9 billion reduction from year-end 2009.
 
Currently, new debt and equity capital remains available and mortgages are being extended or refinanced at acceptable terms. The Company extended its average debt term to approximately 4.0 years, an increase of approximately one year from year-end 2009.
 
Operational Accomplishments
 
The Company accomplished the following in 2010 to improve the quality of its portfolio:
 
  • Increased the portfolio occupancy rate to 88.4% at year-end 2010 from 86.9% at year-end 2009;
 
  • Executed 738 new leases and 1,060 renewals for an aggregate of 11.3 million square feet of GLA. This full year of activity represents a company record for both the number of deals executed and on a square footage basis;
 
  • Sold, leased, or have a pending lease orletter-of-intentfor approximately 20% of space vacated by four bankrupt retailers (Linens ‘N Things, Circuit City, Steve & Barry’s and Goody’s), bringing the total activity on space vacated by these bankrupt retailers in 2008 and 2009 to approximately 80%;


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  • Increased consolidated and unconsolidated joint venture combined portfolio ancillary income by approximately 22% for a total of approximately $44 million and
 
  • Eliminated through disposition of non-prime assets over $1.5 million of net operating losses from non-income producing assets.
 
Retail Environment
 
The retail market in the United States continued to be challenged throughout 2010 by high unemployment and lagging consumer confidence. However, consumer spending improved marginally, and retailers formed optimistic store opening plans in order to meet their projected demand in 2011 and 2012. Retailers became more flexible with their design and prototype requirements, in some cases agreeing to take available space that they had previously rejected.
 
Due to continued consumer cautiousness, retailers that specialize in low-cost necessity goods and services are taking market share from high-end discretionary retailers that dominate traditional mall portfolios. The Company’s largest tenants, including Walmart/Sam’s Club, Target, T.J. Maxx/Marshalls and Kohl’s, appeal to value-oriented consumers, remain well-capitalized, and have outperformed other retail categories. Additionally, several retailers have been able to access capital this past year through equity and debt offerings, which was positive news for the retail industry.
 
Company Fundamentals
 
The following table lists the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA of the wholly-owned properties and the Company’s proportionate share of unconsolidated joint venture properties combined as of December 31, 2010:
 
             
    % of Total
    
    Shopping Center
  % of Company-
 
    Base Rental
  Owned Shopping
 
Tenant   Revenues  Center GLA 
 
 
1.
  Walmart/Sam’s Club  4.1%  6.9%
 
2.
  T.J. Maxx/Marshalls/A.J.Wright/Homegoods  2.2%  2.6%
 
3.
  PetSmart  1.9%  1.6%
 
4.
  Bed, Bath & Beyond  1.8%  1.7%
 
5.
  Kohl’s  1.6%  2.4%
 
6.
  Michaels  1.5%  1.4%
 
7.
  Lowe’s  1.4%  2.5%
 
8.
  Rite Aid  1.3%  0.6%
 
9.
  GAP  1.2%  0.9%
 
10.
  OfficeMax  1.2%  1.1%


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The following table lists the Company’s 10 largest tenants based on total annualized rental revenues and Company-owned GLA of both the wholly-owned properties and the Company’s 10 largest tenants for the unconsolidated joint venture properties as of December 31, 2010:
 
                 
  Wholly-Owned Properties  Joint Venture Properties 
  % of
  % of
  % of
  % of
 
  Shopping
  Company-
  Shopping
  Company-
 
  Center Base
  Owned
  Center Base
  Owned
 
  Rental
  Shopping
  Rental
  Shopping
 
Tenant Revenues  Center GLA  Revenues  Center GLA 
 
Walmart/Sam’s Club
  4.8%  7.8%  1.3%  2.4%
T.J. Maxx/Marshalls/A.J.Wright/Homegoods
  2.3%  2.7%  1.9%  2.5%
PetSmart
  1.9%  1.6%  2.1%  2.1%
Bed, Bath & Beyond
  1.9%  1.7%  1.6%  2.0%
Lowe’s
  1.7%  2.9%  0.2%  0.3%
Rite Aid
  1.6%  0.7%  0.1%  0.1%
Michaels
  1.6%  1.4%  1.5%  1.8%
Kohl’s
  1.5%  2.3%  2.0%  3.4%
OfficeMax
  1.3%  1.1%  0.8%  1.0%
Dick’s Sporting Goods
  1.3%  1.3%  1.2%  1.3%
Publix Supermarkets
  0.3%  0.4%  3.2%  4.5%
Kroger
  1.0%  1.2%  1.7%  3.0%
Ross Dress for Less
  1.1%  1.0%  1.7%  2.1%
AMC Theatres
  0.8%  0.3%  1.3%  1.0%
Tops Markets
  1.1%  0.9%  1.3%  1.5%
 
The Company has shown relatively consistent occupancy historically. Despite the decrease in occupancy that occurred in 2009, occupancy improved throughout 2010 in the portfolio as a whole, and with year-end occupancy at 88.4%, overall occupancy remains healthy.


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The Company continues to sign a large number of new leases as reflected below. Leasing spreads for the combined portfolio improved to approximately 3.7% in 2010.
 
(PIE CHART)
 
As reflected below, the Company’s long-term performance shows strong rent growth and resilient occupancy throughout multiple economic cycles.
 


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The Company’s innovative ancillary income platform produces value and mitigates risk. This program seeks to create cash flow streams from empty or underutilized space with a low cost of investment for the Company.
 
(PIE CHART)
 
The Company’s value-oriented shopping center format is ideal for keeping maintenance costs and capital expenditures low, while still maintaining an attractive, high quality retail environment. The Company believes its capital expenditures as a percentage of net operating income are low relative to its industry peers which benefits the Company’s cash flow.
 
Year in Review — 2010
 
For the year ended December 31, 2010, the Company recorded a loss attributable to DDR of approximately $209.4 million, or $1.03 per share (diluted), compared to net loss attributable to DDR of $356.6 million, or $2.51 per share (diluted), for the prior year. Funds From Operations (“FFO”) applicable to common shareholders for the year ended December 31, 2010, was a loss of $11.3 million compared to a loss of $144.6 million for the year ended December 31, 2009. The decrease in reported loss and FFO applicable to common shareholders for the year ended December 31, 2010, is primarily the result of a decrease in impairment-related charges and lower expense associated with the equity derivative instruments, partially offset by the establishment of a reserve against certain deferred tax assets in 2010 and lower gain on debt retirement.
 
During 2010, the Company focused on its core competencies and internal growth. These core competencies include its stable relationships with national tenants and the lending and investment community, maintained by strong internal leasing, management and investment teams. The Company continued making progress on its balance sheet initiatives; strengthening the operations of its Prime Portfolio, including selling non-prime assets; and maintaining the strength and depth of the organization.
 
At December 31, 2010, total consolidated outstanding indebtedness was $4.3 billion as compared to $5.2 billion at December 31, 2009, representing a decrease of nearly $0.9 billion. In 2010, the Company opportunistically raised capital, reduced leverage and extended its debt maturities. The Company refinanced its unsecured revolving credit facilities and extended the term to February 2014. The Company issued $350 million aggregate principal amount of five-year convertible unsecured notes in November, $300 million aggregate principal amount of10-yearunsecured notes in August and $300 million aggregate principal amount of seven-year unsecured notes in March. The Company also repurchased $259.1 million aggregate principal amount of its senior unsecured notes due in 2010, 2011 and 2012 through open market purchases and through a tender offer. The Company issued approximately 53.0 million common shares, generating $454.4 million of gross proceeds.


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These financing activities contributed to the Company’s extended maturity profile and assisted in lowering the Company’s corporate risk profile.
 
In 2010, the Company generated approximately $791 million of proceeds from the sale of wholly-owned and joint venture assets, of which the Company’s share was approximately $250 million. The Company continues to be focused on selling those assets that are not part of its Prime Portfolio, including non-income producing or negative income producing assets.
 
On the operational side, the Company executed a total of 1,798 leases during 2010 representing 11.3 million square feet. In addition, the spreads on new leases executed during 2010 were positive as compared to the negative spreads experienced in 2009. Portfolio occupancy of 88.4% at December 31, 2010, marks an improvement over the 2009end-of-yearrate of 86.9%. The Company’s accomplishments in thelease-up of large-box space (generally greater than 20,000 square feet of GLA) is expected to contribute to operating results in 2011 as tenants take possession of space and start paying rent.
 
As the Company looks forward to 2011 and its strategic plans, it is concentrating on generating and maintaining sustainable and consistent economic value that produces compelling total shareholder returns. The Company intends to be a disciplined investor, focused on cash flow growth and long-term goals, and to continue to respond to economic developments and operate in the best interest of its shareholders.
 
CRITICAL ACCOUNTING POLICIES
 
The consolidated financial statements of the Company include the accounts of the Company and all subsidiaries where the Company has financial or operating control. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has utilized available information, including the Company’s history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments of certain amounts included in the consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by management in formulating its estimates inherent in these financial statements might not materialize. Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties. As a result, actual results could differ from these estimates. In addition, other companies may utilize different estimates that may affect the comparability of the Company’s results of operations to those of companies in similar businesses.
 
Revenue Recognition and Accounts Receivable
 
Rental revenue is recognized on a straight-line basis that averages minimum rents over the current term of the leases. Certain of these leases provide for percentage and overage rents based upon the level of sales achieved by the tenant. Percentage and overage rents are recognized after a tenant’s reported sales have exceeded the applicable sales break point set forth in the applicable lease. The leases also typically provide for tenant reimbursements of common area maintenance and other operating expenses and real estate taxes. Accordingly, revenues associated with tenant reimbursements are recognized in the period in which the expenses are incurred based upon the tenant lease provision. Management fees are recorded in the period earned. Ancillary and other property-related income, which includes the leasing of vacant space to temporary tenants, is recognized in the period earned. Lease termination fees are included in other revenue and recognized and earned upon termination of a tenant’s lease and relinquishment of space in which the Company has no further obligation to the tenant. Acquisition and financing fees are earned and recognized at the completion of the respective transaction in accordance with the underlying agreements. Fee income derived from the Company’s unconsolidated joint venture investments is recognized to the extent attributable to the unaffiliated ownership interest.
 
The Company makes estimates of the collectibility of its accounts receivable related to base rents, including straight-line rentals, expense reimbursements and other revenue or income. The Company specifically analyzes accounts receivable and analyzes historical bad debts, customer credit worthiness, current economic trends and


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changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, the Company makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the timing of the ultimate resolution of these claims can exceed one year. These estimates have a direct impact on the Company’s earnings because a higher bad debt reserve results in reduced earnings.
 
Notes Receivable
 
Notes receivable include certain loans that are held for investment and are generally collateralized by real estate related investments. Loan receivables are recorded at stated principal amounts or at initial investment plus accretable yield for loans purchased at a discount. The Company defers certain loan origination and commitment fees, net of certain origination costs, and amortizes them over the term of the related loan. The Company considers notes receivable to be past-due or delinquent when a contractually required principal or interest payment is not remitted in accordance with the provisions of the underlying agreement. The Company evaluates the collectability of both interest and principal on each loan based on an assessment of the underlying collateral to determine whether it is impaired, and not by using internal risk ratings. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value of the underlying collateral. As the underlying collateral for a majority of the notes receivable are real estate related investments, the same valuation techniques are utilized to value the collateral as those used to determine the fair value of real estate investments for impairment purposes. Interest income on performing loans is accrued as earned. Interest income on non-performing loans is generally recognized on a cash basis.
 
Consolidation
 
The Company has a number of joint venture arrangements with varying structures. The Company consolidates entities in which it owns less than a 100% equity interest if it is determined that it is a variable interest entity (“VIE”) and the Company has a controlling financial interest in that VIE, or is the controlling general partner. The analysis to identify whether the Company is the primary beneficiary of a VIE is based upon which party has (a) the power to direct activities of the VIE that most significantly affect the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, the Company is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed. This qualitative assessment has a direct impact on the Company’s financial statements as the detailed activity of off-balance sheet joint ventures are not presented within the Company’s consolidated financial statements.
 
Further, under its consolidation policy, the Company believes that it no longer has the contractual ability to direct the activities that most significantly affect the economic performance of entities that have been transferred to the control of a court-appointed receiver (“Receivership”). The Company’s accounting policy for evaluating Receivership transactions is based upon Accounting Standards Codification No. 810, Consolidation(“ASC 810”), whereas diversity in practice exists whereby others may apply the provisions ofASC 360-20,Property, Plant, and Equipment — Real Estate Sales(“Alternative View”). Under the Alternative View, the Company would likely not record a gain (or loss) upon deconsolidation and would continue to consolidate the entity (and its assets and non-recourse liabilities) until it legally transferred the title of the underlying assets and was relieved of its obligations. The Emerging Issues Task Force (“EITF”) of the FASB discussed this type of transaction during 2010 but did not reach a conclusion. The EITF determined that further research was necessary to more fully understand the scope and implications of the matter prior to issuing a consensus for exposure. If the EITF reaches a consensus in favor of the Alternative View, the Company will evaluate the impact of such conclusion on its financial statements.
 
Real Estate and Long-Lived Assets
 
Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The Company is required to make subjective assessments as to the useful lives of its properties for purposes of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on


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the Company’s net income. If the Company would lengthen the expected useful life of a particular asset, it would be depreciated over more years and result in less depreciation expense and higher annual net income.
 
On a periodic basis, management assesses whether there are any indicators that the value of real estate assets, including land held for development and construction in progress, may be impaired. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. The determination of undiscounted cash flows requires significant estimates by management. In management’s estimate of cash flows, it considers factors such as expected future operating income (loss), trends and prospects, the effects of demand, competition and other factors. In addition, the undiscounted cash flows may consider a probability-weighted cash flow estimation approach when alternative courses of action to recover the carrying amount of a long-lived asset are under consideration or a range is estimated at the balance sheet date. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated actions could affect the determination of whether an impairment exists and whether the effects could have a material impact on the Company’s net income. If the Company is evaluating the potential sale of an asset or land held for development, the undiscounted future cash flows analysis is probability-weighted based upon management’s best estimate of the likelihood of the alternative courses of action. To the extent an impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property.
 
The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties and other investments. These assessments have a direct impact on the Company’s net income because recording an impairment charge results in an immediate negative adjustment to net income.
 
Assessment of recoverability by the Company of certain other lease-related costs must be made when the Company has a reason to believe that the tenant may not be able to perform under the terms of the lease as originally expected. This requires management to make estimates as to the recoverability of such assets.
 
The Company allocates the purchase price to assets acquired and liabilities assumed on a gross basis based on their relative fair values at the date of acquisition. In estimating the fair value of the tangible and intangible assets and liabilities acquired, the Company considers information obtained about each property as a result of its due diligence, marketing and leasing activities. It applies various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information. The Company is required to make subjective estimates in connection with these valuations and allocations. These intangible assets are reviewed as part of the overall carrying basis of an asset for impairment.
 
Off-Balance Sheet Arrangements — Impairment Assessment
 
The Company has a number of off-balance sheet joint ventures and other unconsolidated arrangements with varying structures. On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other than temporary. To the extent an impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.
 
Measurement of Fair Value
 
Real Estate and Unconsolidated Joint Venture Investments
 
The Company is required to assess the value of certain impaired consolidated and unconsolidated joint venture investments as well as the underlying collateral for certain financing notes receivable. The fair value of real estate investments utilized in the Company’s impairment calculations is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. Investments without a public market are valued based on assumptions made and valuation techniques used by the Company. The decline in liquidity and prices of real estate and real estate related investments in the past several years, as well as the availability of observable transaction data and inputs, have made it more difficultand/or


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subjective to determine the fair value of such investments. As a result, amounts ultimately realized by the Company from investments sold may differ from the fair values presented, and the differences could be material.
 
The valuation of impaired real estate assets, investments and real estate collateral is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each asset as well as the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations, bona fide purchase offers received from third partiesand/orconsideration 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.
 
For operational real estate assets, the significant assumptions included the capitalization rate used in the income capitalization valuation, as well as the projected property net operating income. For projects under development, the significant assumptions included the discount rate, the timing for the construction completion and project stabilization and the exit capitalization rate. For investments in unconsolidated joint ventures, the Company also considered the valuation of any underlying joint venture debt. Valuation of real estate assets are calculated based on market conditions and assumptions made by management at the measurement date, which may differ materially from actual results if market conditions or the underlying assumptions change.
 
Equity Derivative Instruments
 
The Company’s equity derivative instruments are recognized in the financial statements based on their fair value. The fair value is estimated at the end of each period based on a pricing model that includes all relevant assumptions including (but not limited to) expected volatility, expected term, dividend yield and risk-free interest rate. These assumptions are subjective and generally require significant analysis and judgment to develop.
 
Real Estate Held for Sale
 
Pursuant to the definition of a component of an entity, assuming no significant continuing involvement, the sale of a property is considered a discontinued operation. In addition, the operations from properties classified as held for sale are considered discontinued operations. The Company generally considers assets to be held for sale when the transaction has been approved by the appropriate level of management and there are no known significant contingencies relating to the sale such that the sale of the property within one year is considered probable. This generally occurs when a sales contract is executed with no contingencies and the prospective buyer has significant funds at risk to ensure performance. Accordingly, the results of operations of operating properties disposed of or classified as held for sale, for which the Company has no significant continuing involvement, are reflected in the current period and retrospectively as discontinued operations.
 
Deferred Tax Assets and Tax Liabilities
 
The Company accounts for income taxes related to its taxable REIT subsidiary under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage the Company. Based on this assessment, management must evaluate the need for, and amount of, valuation allowances against the Company’s deferred tax assets. The Company would record a valuation allowance to reduce deferred tax assets when it has determined that an uncertainty exists regarding their realizability, which would increase the provision for income taxes. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required. In the event the Company were to determine that it would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would adjust the valuation allowance, which would reduce the provision for income taxes. The Company makes


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certain estimates in the determination on the use of valuation reserves recorded for deferred tax assets. These estimates could have a direct impact on the Company’s earnings, as a difference in the tax provision would impact the Company’s earnings.
 
The Company has made estimates in assessing the impact of the uncertainty of income taxes. Accounting standards prescribe a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. These estimates have a direct impact on the Company’s net income because higher tax expense will result in reduced earnings.
 
Accrued Liabilities
 
The Company makes certain estimates for accrued liabilities and litigation reserves. These estimates are subjective and based on historical payments, executed agreements, anticipated trends and representations from service providers. These estimates are prepared based on information available at each balance sheet date and are reevaluated upon the receipt of any additional information. Many of these estimates are for payments that occur within one year. These estimates have a direct impact on the Company’s net income because a higher accrual will result in reduced earnings.
 
Stock-Based Employee Compensation
 
Stock-based compensation requires all share-based payments to employees, including grants of stock options, to be recognized in the financial statements based on their fair value. The fair value is estimated at the date of grant using a Black-Scholes option pricing model with weighted-average assumptions for the activity under stock plans. Option pricing model input assumptions, such as volatility, expected term and risk-free interest rate, impact the fair value estimate. Further, the forfeiture rate impacts the amount of aggregate compensation. These assumptions are subjective and generally require significant analysis and judgment to develop.
 
When estimating fair value, some of the assumptions will be based on or determined from external data, and other assumptions may be derived from experience with share-based payment arrangements. The appropriate weight to place on experience is a matter of judgment, based on relevant facts and circumstances.
 
The risk-free interest rate is based upon a U.S. Treasury Strip with a maturity date that approximates the expected term of the option. The expected life of an award is derived by referring to actual exercise experience. The expected volatility of the stock is derived by referring to changes in the Company’s historical share prices over a time frame similar to the expected life of the award.
 
Comparison of 2010 to 2009 Results of Operations
 
Continuing Operations
 
Shopping center properties owned as of January 1, 2009, but excluding acquisitions, properties under development/redevelopment and those classified in discontinued operations, are referred to herein as the “Core Portfolio Properties.”
 
Revenues from Operations (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Base and percentage rental revenues(A)
 $541,583  $535,981  $5,602   1.0%
Recoveries from tenants(B)
  175,309   174,826   483   0.3 
Other(C)
  86,177   86,592   (415)  (0.5)
                 
Total Revenues
 $803,069  $797,399  $5,670   0.7%
                 


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(A) This increase is due to the following (in millions):
 
     
  Increase
 
  (Decrease) 
 
Core Portfolio Properties
 $(1.0)
Acquisition of real estate assets
  8.5 
Development/redevelopment of shopping center properties
  (0.4)
Office properties
  (0.1)
Straight-line rents
  (1.4)
     
  $5.6 
     
 
The decrease in the Core Portfolio Properties is due to net leasing activity across numerous shopping center assets. The Company acquired three assets in the fourth quarter of 2009 contributing to the increase above. The decrease in straight-line rents primarily is due to write-offs associated with the early termination of tenant leases.
 
The following tables present the operating statistics impacting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, office property portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:
 
                 
  Shopping Center
  Office Property
 
  Portfolio
  Portfolio
 
  December 31,  December 31, 
  2010  2009  2010  2009 
 
Centers owned
  525   618   6   6 
Aggregate occupancy rate
  88.4%  86.9%  80.7%  71.4%
Average annualized base rent per occupied square foot
 $13.36  $12.75  $11.05  $12.35 
 
                 
  Wholly-Owned
  Joint Venture
 
  Shopping Centers
  Shopping Centers
 
  December 31,  December 31, 
  2010  2009  2010  2009 
 
Centers owned
  286   310   236   274 
Consolidated centers primarily owned through a joint venture previously occupied by Mervyns
  n/a   n/a   3   34 
Aggregate occupancy rate
  88.6%  89.6%  88.2%  83.9%
Average annualized base rent per occupied square foot
 $12.23  $11.79  $14.74  $13.83 
 
The Company’s aggregate occupancy rates in 2010 and 2009 are low relative to historical rates due to the impact of the major tenant bankruptcies that occurred in 2008. However, the Company was successful in 2010 in executing leases for numerous previously vacant anchor boxes resulting in the overallyear-over-yearimprovement in the occupancy rate for the combined portfolio.
 
(B) The increase in recoveries is primarily a function of the acquisition of three assets in 2009. Recoveries were approximately 71.2% and 73.6% of operating expenses and real estate taxes for the years ended December 31, 2010 and 2009, respectively, including the impact of bad debt expense recognized for both years. The decrease in the recoveries percentage is primarily a function of real estate tax assessments discussed below that are not expected to be recoverable from tenants at varying amounts.


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(C) Composed of the following (in millions):
 
             
        (Decrease)
 
  2010  2009  Increase 
 
Management fees
 $51.9  $56.3  $(4.4)
Development fees
  1.5   1.4   0.1 
Ancillary income
  19.9   20.6   (0.7)
Other property related income
  2.0   1.0   1.0 
Lease termination fees
  7.5   4.0   3.5 
Financing fees
  1.2   1.1   0.1 
Other
  2.2   2.2   — 
             
  $86.2  $86.6  $(0.4)
             
 
The reduction in management fees was primarily attributed to asset sales by several of the Company’s unconsolidated joint ventures. During 2010, the Company executed lease terminations on three vacant Walmart spaces.
 
Expenses from Operations (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Operating and maintenance(A)
 $137,862  $135,153  $2,709   2.0%
Real estate taxes(A)
  108,299   102,391   5,908   5.8 
Impairment charges(B)
  116,462   12,745   103,717   813.8 
General and administrative(C)
  85,573   94,365   (8,792)  (9.3)
Depreciation and amortization(A)
  222,862   217,841   5,021   2.3 
                 
  $671,058  $562,495  $108,563   19.3%
                 
 
 
(A) The changes for 2010, compared to 2009 are due to the following (in millions):
 
             
  Operating and
  Real Estate
    
  Maintenance  Taxes  Depreciation 
 
Core Portfolio Properties
 $(0.7) $4.8  $(2.3)
Acquisition of real estate assets
  1.2   1.3   2.3 
Development/redevelopment of shopping center properties
  3.7   (0.2)  3.9 
Provision for bad debt expense
  (1.5)  —   — 
Personal property
  —   —   1.1 
             
  $2.7  $5.9  $5.0 
             
 
The increase in real estate taxes primarily is due to an approximately $3.0 million real estate tax assessment received in 2010 that was retroactive to 2006 for one of the Company’s largest properties in California. The entire expense for the four-year supplemental tax bill is included in the 2010 results. In addition, the real estate taxes for the Puerto Rico assets increased $1.4 million due to a reassessment effective in the third quarter of 2009. The Company continues to aggressively appeal real estate tax valuations, as appropriate, particularly for those shopping centers impacted by major tenant bankruptcies. The fluctuations in depreciation expense are attributable to development assets placed in service and redevelopment activities partially offset by higher real estate assets written off in 2009 related to major tenant bankruptcies and early lease terminations within the Core Portfolio.


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(B) The Company recorded impairment charges during the years ended December 31, 2010 and 2009, on the following consolidated assets (in millions):
 
         
  Year Ended
 
  December 31, 
  2010  2009 
 
Land held for development(1)
 $54.3  $— 
Undeveloped land and construction in progress(2)
  30.5   0.4 
Assets marketed for sale(3)
  31.7   12.3 
         
  $116.5  $12.7 
         
Sold assets
  20.1   73.3 
Assets formerly occupied by Mervyns(4)
  35.3   68.7 
         
Total discontinued operations
 $55.4  $142.0 
         
Total impairment charges
 $171.9  $154.7 
         
 
(1)Amounts reported in the year ended December 31, 2010, relate to land held for development in Togliatti and Yaroslavl, Russia, of which the Company’s proportionate share was $41.9 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture. The asset impairments were triggered primarily due to a change in the Company’s investment plans for these projects. Both investments relate to large-scale development projects in Russia. During 2010, the Company determined that it was no longer committed to invest the necessary amount of capital to complete the projects without alternative sources of capital from third-party investors or lending institutions.
 
(2)Amounts reported include a $19.3 million impairment charge recognized in 2010 associated with a development project the Company no longer plans to pursue. A subsidiary of the Company’s taxable REIT subsidiary (“TRS”) acquired a leasehold interest in a development project located in Norwood, Massachusetts, as part of a portfolio acquisition in 2003 and no longer expects to fund the ground rent expense.
 
(3)The impairment charges were triggered primarily due to the Company’s marketing of these assets for sale. These assets were not classified as held for sale as of December 31, 2010, due to substantive contingencies associated with the respective contracts.
 
(4)These assets were deconsolidated in 2010 and all operating results have been reclassified as discontinued operations. For the years ended December 31, 2010 and 2009, the Company’s proportionate share of these impairment charges was $16.5 million and $33.6 million, respectively, after adjusting for the allocation of loss to the non-controlling interest in this previously consolidated joint venture. The 2010 impairment charges were triggered primarily due to a change in the Company’s business plans for these assets and the resulting impact on its holding period assumptions for this substantially vacant portfolio. During 2010, the Company determined it was no longer committed to the long-term management and investment in these assets. The 2009 impairment charges were triggered primarily due to the Company’s marketing of certain assets for sale combined with the then-overall economic downturn in the retail real estate environment. A full write down of this portfolio was not recorded prior to 2010 due to the Company’s then-holding period assumptions and future investment plans for these assets.
 
(C) General and administrative expenses were approximately 5.2% and 5.4% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for the years ended December 31, 2010 and 2009, respectively.
 
During 2010, the Company incurred $5.3 million in employee separation charges. In 2009, the Company recorded an accelerated non-cash charge of approximately $15.4 million related to certain equity awards as a result of the Company’s change in control provisions included in the Company’s equity-based award plans (see 2009 Strategic Transaction Activity). The Company continues to expense internal leasing salaries, legal salaries and related expenses associated with certain leasing and re-leasing of existing space.


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Other Income and Expenses (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Interest income(A)
 $7,346  $11,984  $(4,638)  (38.7)%
Interest expense(B)
  (226,464)  (221,334)  (5,130)  2.3 
Gain on retirement of debt, net(C)
  485   145,050   (144,565)  (99.7)
Loss on equity derivative instruments(D)
  (40,157)  (199,797)  159,640   (79.9)
Other expense, net(E)
  (24,346)  (29,192)  4,846   (16.6)
                 
  $(283,136) $(293,289) $10,153   (3.5)%
                 
 
 
(A) Decreased primarily due to interest earned from loan receivables, which aggregated $103.7 million and $125.6 million at December 31, 2010 and 2009, respectively. In the fourth quarter of 2009, the Company established a full reserve on an advance to an affiliate of $66.9 million and ceased the recognition of interest income. The Company recorded $7.0 million of interest income during the year ended December 31, 2009, relating to this advance. In addition, partially offsetting this decrease is interest income of $1.7 million in 2010 relating to $58.3 million in loan receivables issued in mid-September 2010, which does not reflect a full period of income in 2010.
 
(B) The weighted-average debt outstanding and related weighted-average interest rates including amounts allocated to discontinued operations are as follows:
 
         
  Year Ended
 
  December 31, 
  2010  2009 
 
Weighted-average debt outstanding (in billions)
 $4.6  $5.5 
Weighted-average interest rate
  5.1%  4.6%
 
         
  At December 31, 
  2010  2009 
 
Weighted-average interest rate
  5.1%  4.5%
 
The increase in 2010 interest expense is primarily due to an increase in the spread on the Company’s revolving credit facilities, the unsecured debt issued in 2010 at higher rates and a decrease in the amount of interest expense capitalized partially offset by a reduction in outstanding debt. The Company ceases the capitalization of interest as assets are placed in service or upon the suspension of construction. Interest costs capitalized in conjunction with development and expansion projects and unconsolidated development joint venture interests were $12.2 million for the year ended December 31, 2010, as compared to $21.8 million for the respective period in 2009. Because the Company has suspended certain construction activities, the amount of capitalized interest has significantly decreased in 2010.
 
(C) The Company purchased approximately $259.1 million and $816.2 million aggregate principal amount of its outstanding senior unsecured notes, including senior convertible notes, at a net discount to par during the years ended December 31, 2010 and 2009, respectively. Approximately $83.1 million and $250.1 million aggregate principal amount of senior unsecured notes repurchased in 2010 and 2009, respectively, occurred through a cash tender offer. Included in the net gain, the Company recorded $4.9 million and $20.9 million related to the required write-off of unamortized deferred financing costs and accretion related to the senior unsecured notes repurchased during the years ended December 31, 2010 and 2009, respectively.
 
(D) Represents the impact of the valuation adjustments for the equity derivative instruments issued as part of the stock purchase agreement with Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”). The share issuances, together with the warrant issuances, are collectively referred to as the “Otto Transaction” (see 2009 Strategic Transaction Activity). The valuation and resulting charges primarily relate to the difference between the closing trading value of the Company’s common shares from the beginning of the period through the end of the respective period presented.


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(E) Other (expenses) income comprised the following (in millions):
 
         
  Year Ended
 
  December 31, 
  2010  2009 
 
Litigation-related expenses
 $(14.6) $(6.4)
Lease liability
  (3.3)  — 
Debt extinguishment costs
  (3.7)  (14.2)
Note receivable reserve
  0.1   (5.4)
Sale of MDT units
  —   2.8 
Abandoned projects and other expenses
  (2.8)  (6.0)
         
  $(24.3) $(29.2)
         
 
The year ended December 31, 2010, included a $5.1 million expense recorded in connection with a legal matter at a property in Long Beach, California (see discussion in Economic Conditions — Legal Matters). This reserve was partially offset by a tax benefit of approximately $2.4 million because the asset is owned through the Company’s TRS. Litigation-related expenses also include costs incurred by the Company to defend the litigation arising from joint venture assets that are owned through the Company’s investments with the Coventry Real Estate Fund II (“Coventry II Fund”) (see Economic Conditions — Legal Matters). Total litigation-related expenditures, net of the tax benefit, were $12.2 million for the year ended December 31, 2010.
 
The lease liability relates to a charge recorded on three operating leases as a result of an abandoned development project and two office closures.
 
Other items (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Equity in net income (loss) of joint ventures(A)
 $5,600  $(9,733) $15,333   (157.5)%
Impairment of joint venture investments(B)
  (227)  (184,584)  184,357   (99.9)
(Loss) gain on change in control of interests(C)
  (428)  23,865   24,293   101.8 
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes(D)
  (47,992)  767   (48,759)  (6,357.1)
 
 
(A) The higher equity in net income of joint ventures for the year ended December 31, 2010, compared to the prior year is primarily a result of a decrease in impairments and losses triggered by joint venture asset sales that occurred prior to January 1, 2010, and operating losses from certain Coventry II investments in 2009. Because the Company wrote off its basis in certain of the Coventry II investments in 2009, and it has no intention or obligation to fund any additional losses, no additional operating losses were recorded in 2010 for these investments (see Off-Balance Sheet Arrangements).
 
At December 31, 2010, the Company had an approximate 48% interest in an unconsolidated joint venture, Sonae Sierra Brasil BV Sarl, which owns real estate in Brazil and is managed in San Paulo, Brazil. This entity utilizes the functional currency of Brazilian Reais. The Company has generally chosen not to mitigate any of the residual foreign currency risk through the use of hedging instruments for this entity. The operating cash flow generated by this investment has been retained by the joint venture and reinvested in ground up


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developments and expansions in Brazil. The effects of foreign currency translation in the Company’s financial statements relating to this investment are as follows (in millions):
 
         
  Year Ended
 
  December 31, 
  2010  2009 
 
Net income of Sonae Sierra Brasil BV Sarl
 R$ 33.4  R$ 27.8 
         
Weighted-average exchange rate
  1.77   2.04 
         
  $18.9  $13.6 
Disproportionate partner income
  (5.8)  (1.6)
         
Equity in net income of joint venture
  13.1   12.0 
Amortization of basis differential
  (2.5)  (2.5)
         
DDR share of equity in net income
 $10.6  $9.5 
         
 
(B) The Company determined that various of its unconsolidated joint venture investments in 2009 had suffered an “other than temporary impairment” due to the then-deteriorating real estate fundamentals, the market dislocation in the U.S. capital markets, the general lack of liquidity and its related impact on the real estate market and retail industry, which accelerated in the fourth quarter of 2008 and continued through 2009. A summary of the other than temporary impairment charges by joint venture investment is as follows (in millions):
 
         
  Year Ended
 
  December, 31 
  2010  2009 
 
Various Coventry II Fund joint ventures
 $0.2  $119.3 
DDRTC Core Retail Fund
  —   55.0 
DDR-SAU Retail Fund
  —   6.2 
DPG Realty Holdings
  —   3.6 
Central Park Solon/RO & SW Realty
  —   0.5 
         
Total impairment of joint venture investments
 $0.2  $184.6 
         
 
(C) The 2009 activity primarily relates to the redemption of the Company’s interest in the MDT US LLC joint venture (See 2009 Strategic Transaction Activity). In October 2009, the EDT Retail Trust (formerly, Macquarie DDR Trust (“MDT”)) (ASX: EDT) (“EDT”) unitholders approved the redemption of the Company’s interest in the MDT US LLC joint venture. A 100% interest in three shopping center assets was transferred to the Company in October 2009 in exchange for its approximate 14.5% ownership interest and an initial cash payment of $1.6 million. The redemption transaction was effectively considered a step acquisition/business combination. As a result, the real estate assets received were recorded at fair value, and a $23.5 million gain was recognized relating to the difference between the fair value of the net assets received as compared to the Company’s investment basis in the joint venture.
 
(D) Management regularly assesses established tax-related reserves and adjusts these reserves when facts and circumstances indicate that a change in estimates is warranted. The Company incurred a fourth quarter income tax expense of $49.9 million recognized due to the establishment of a reserve against certain deferred tax assets within its TRS. Based upon the continued loss activity recognized by the TRS over the past three years, including significant charges in 2010 relating to litigation activity as well as a fourth quarter impairment and lease liability charge of $22.3 million associated with an abandoned development project, it was determined that it was more likely than not that the deferred tax assets would not be utilizable, thus requiring a current reserve. The $49.9 million fourth quarter income tax expense consists of a gross valuation allowance tax expense of $58.3 million reduced by an $8.4 million tax benefit as a result of a $22.3 million abandoned project charge.


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Discontinued Operations (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Loss from discontinued operations(A)
 $(66,291) $(160,670) $94,379   (58.7) %
Gain on deconsolidation of interests, net(B)
  5,649   —   5,649   100.0 
Gain (loss) on disposition of real estate, net of tax(A)
  5,775   (24,027)  29,802   (124.0)
                 
  $(54,867) $(184,697) $129,830   (70.3)%
                 
 
 
(A) The Company sold 31 properties in 2010 (including two properties held for sale at December 31, 2009) aggregating 2.9 million square feet and 32 properties sold in 2009 aggregating 3.8 million square feet. In addition, included in discontinued operations are 25 other properties that were deconsolidated for accounting purposes in the third quarter of 2010, aggregating 1.9 million square feet which represents the activity associated with the Mervyns Joint Venture. These assets were classified as discontinued operations for the years ended December 31, 2010, 2009 and 2008. In addition, included in the reported loss for the years ended December 31, 2010 and 2009, is $55.4 million and $142.0 million, respectively, of impairment charges related to these assets.
 
(B) The deconsolidation of the Mervyns Joint Venture resulted in a $5.6 million gain as the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets. (See Mervyns Joint Venture discussion in Liquidity and Capital Resources.)
 
Gain on Disposition of Real Estate (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Gain on disposition of real estate, net(A)
 $1,318  $9,127  $(7,809)  (85.6) %
 
 
(A) The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions):
 
         
  Year Ended
 
  December 31, 
  2010  2009 
 
Land sales
 $1.0  $4.8 
Previously deferred gains and other gains and losses on dispositions
  0.3   4.3 
         
  $1.3  $9.1 
         
 
The sales of land did not meet the criteria for discontinued operations because the land did not have any significant operations prior to disposition. The previously deferred gains are a result of assets that were contributed to joint ventures in prior years.
 
Non-controlling interests (in thousands)
 
                 
  For the Year Ended
    
  December 31,    
  2010 2009 $ Change %Change
 
Non-controlling interests(A)
 $38,363  $47,047  $(8,684)  (18.5) %
 
 
(A) The change in loss attributable to non-controlling interests includes the following (in millions):
 
     
  Increase
 
  (Decrease) 
 
Mervyns Joint Venture — non-controlling interest
 $(21.5)
Other non-controlling interests
  12.7 
Decrease in the quarterly distribution to operating partnership unit investments
  0.1 
     
  $(8.7)
     


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The Mervyns Joint Venture owns real estate formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008. The Company’s proportionate share of impairment losses of $18.8 million during the year ended December 31, 2010, was lower than the $35.1 million in 2009. This entity was deconsolidated in 2010, and the operating results are retrospectively reported as a component of discontinued operations. (See Mervyns Joint Venture discussion in Liquidity and Capital Resources.) Partially offsetting this decrease are losses associated with the impairment charges recorded in 2010 by one of the Company’s 75% owned consolidated investments, which owns land held for development in Togliatti and Yaroslavl, Russia.
 
Net Loss (in thousands)
 
                 
  2010  2009  $ Change  % Change 
 
Net loss attributable to DDR
 $(209,358) $(356,593) $147,235   (41.3)%
                 
 
The decrease in net loss attributable to DDR for the year ended December 31, 2010, as compared to 2009, is primarily the result of a decrease in impairment-related charges and lower expense associated with the equity derivative instruments partially offset by the establishment of a reserve against certain deferred tax assets in 2010 and lower gain on debt retirement. A summary of changes in 2010 as compared to 2009 is as follows (in millions):
 
     
Decrease in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes)
 $(2.9)
Increase in consolidated impairment charges
  (103.7)
Decrease in general and administrative expenses
  8.8 
Increase in depreciation expense
  (5.0)
Decrease in interest income
  (4.6)
Increase in interest expense
  (5.1)
Decrease in gain on retirement of debt, net
  (144.6)
Decrease in loss on equity derivative instruments
  159.6 
Change in other expense
  4.8 
Increase in equity in net income of joint ventures
  15.3 
Decrease in impairment of joint venture investments
  184.4 
Reduction in gain on change in control of interests
  (24.3)
Increase in income tax expense
  (48.8)
Increase in income from discontinued operations(A)
  129.8 
Decrease in gain on disposition of real estate
  (7.8)
Change in non-controlling interests
  (8.7)
     
Decrease in net loss attributable to DDR
 $147.2 
     
 
 
(A) Includes an $86.5 million decrease in impairment charges.
 
Comparison of 2009 to 2008 Results of Operations
 
Continuing Operations
 
Shopping center properties owned as of January 1, 2008, but excluding properties under development/redevelopment and those classified in discontinued operations, are considered the “Core Portfolio Properties.”


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Revenues from Operations (in thousands)
 
                 
  2009  2008  $ Change  % Change 
 
Base and percentage rental revenues(A)
 $535,981  $552,087  $(16,106)  (2.9)%
Recoveries from tenants(B)
  174,826   180,711   (5,885)  (3.3)
Other(C)
  86,592   92,270   (5,678)  (6.2)
                 
Total revenues
 $797,399  $825,068  $(27,669)  (3.4)%
                 
 
 
(A) The decrease was due to the following (in millions):
 
     
  Increase
 
  (Decrease) 
 
Core Portfolio Properties
 $(16.9)
Acquisition of real estate assets
  2.1 
Development/redevelopment of shopping center properties
  (0.2)
Office properties
  (0.3)
Straight-line rents
  (0.8)
     
  $(16.1)
     
 
The decrease in Core Portfolio Properties is due almost exclusively to the impact of the major tenant bankruptcies including Goody’s, Linens ‘N Things, Circuit City and Steve and Barry’s.
 
The following tables present the operating statistics impacting base and percentage rental revenues summarized by the following portfolios: combined shopping center portfolio, office property portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:
 
                 
  Shopping Center
  Office Property
 
  Portfolio
  Portfolio
 
  December 31,  December 31, 
  2009  2008  2009  2008 
 
Centers owned
  618   702   6   6 
Aggregate occupancy rate
  86.9%  92.1%  71.4%  72.4%
Average annualized base rent per occupied square foot
 $12.75  $12.33  $12.35  $12.28 
 
The decrease in occupancy is primarily a result of the tenant bankruptcies discussed above.
 
                 
  Wholly-Owned
  Joint Venture
 
  Shopping Centers
  Shopping Centers
 
  December 31,  December 31, 
  2009  2008  2009  2008 
 
Centers owned
  310   333   274   329 
Consolidated centers primarily owned through a joint venture previously occupied by Mervyns
  n/a   n/a   34   40 
Aggregate occupancy rate
  89.6%  90.7%  83.9%  93.4%
Average annualized base rent per occupied square foot
 $11.79  $11.74  $13.83  $12.85 
 
The decrease in occupancy and annualized base rent is primarily a result of the tenant bankruptcies discussed above. The joint venture shopping center portfolio was also affected by the vacancy of the Mervyns sites in 2009.
 
(B) Recoveries were approximately 73.6% and 79.6% of operating expenses and real estate taxes for the years ended December 31, 2009 and 2008, respectively, including the impact of bad debt expense recognized for both years. The decrease in recoveries from tenants was primarily a result of the decrease in occupancy of the Company’s portfolio, as discussed above, due to major tenant bankruptcies. The decrease in the recoveries percentage was due in part to higher bad debt expense also related to the major tenant bankruptcies.


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(C) Composed of the following (in millions):
 
             
        (Decrease)
 
  2009  2008  Increase 
 
Management fees
 $56.3  $58.2  $(1.9)
Development fees
  1.4   4.7   (3.3)
Ancillary income
  20.6   18.0   2.6 
Other property related income
  1.0   3.2   (2.2)
Lease termination fees
  4.0   5.2   (1.2)
Financing fees
  1.1   2.0   (0.9)
Other
  2.2   1.0   1.2 
             
  $86.6  $92.3  $(5.7)
             
 
The reduction in management fees was primarily attributed to tenant bankruptcies at the unconsolidated joint ventures and joint venture asset dispositions. Development fee income decreased primarily as a result of the reduced construction and redevelopment activity of joint venture assets that are owned through the Coventry II Fund (see Off-Balance Sheet Arrangements).
 
Expenses from Operations (in thousands)
 
                 
  2009  2008  $ Change  % Change 
 
Operating and maintenance(A)
 $135,153  $129,852  $5,301   4.1%
Real estate taxes(A)
  102,391   97,199   5,192   5.3 
Impairment charges(B)
  12,745   29,603   (16,858)  (56.9)
General and administrative(C)
  94,365   97,719   (3,354)  (3.4)
Depreciation and amortization(A)
  217,841   210,541   7,300   3.5 
                 
  $562,495  $564,914  $(2,419)  (0.4)%
                 
 
 
(A) The changes for 2009, compared to 2008 are due to the following (in millions):
 
             
  Operating and
  Real Estate
    
  Maintenance  Taxes  Depreciation 
 
Core Portfolio Properties
 $1.7  $1.6  $0.6 
Acquisitions of real estate assets
  0.3   0.6   0.3 
Development/redevelopment of shopping center properties
  1.9   3.0   5.0 
Office properties
  —   —   (0.1)
Provision for bad debt expense
  1.4   —   — 
Personal property
  —   —   1.5 
             
  $5.3  $5.2  $7.3 
             
 
The majority of the increase in operating and maintenance expenses is related to increased landlord expenses primarily associated with tenant vacancies. The Company has aggressively appealed numerous real estate charges given the economic environment and increased vacancy resulting from tenant bankruptcies. The increase in depreciation expense primarily relates to additional assets placed in service.


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(B) The Company recorded impairment charges during the years ended December 31, 2009 and 2008, on the following consolidated assets (in millions):
 
         
  Year Ended
 
  December 31, 
  2009  2008 
 
Undeveloped land and construction in progress(1)
 $0.4  $8.6 
Assets marketed for sale(1)
  12.3   21.0 
         
  $12.7  $29.6 
         
Sold assets
  73.3   15.0 
Assets formerly occupied by Mervyns(2)
  68.7   35.3 
         
Total discontinued operations
 $142.0  $50.3 
         
Total impairment charges
 $154.7  $79.9 
         
 
(1)The impairment charges were triggered primarily due to the Company’s marketing of these assets for sale.
 
(2)These assets were deconsolidated in 2010, and all operating results have been reclassified as discontinued operations. For the years ended December 31, 2009 and 2008, the Company’s proportionate share of these impairment charges was $33.6 million and $16.9 million, respectively, after adjusting for the allocation of loss to the non-controlling interest in this previously consolidated joint venture. The 2009 and 2008 impairment charges were triggered primarily due to the Company’s marketing of certain assets for sale combined with the then-overall economic downturn in the retail real estate environment. A full write down of this portfolio was not recorded in 2009 and 2008 due to the Company’s then-holding period assumptions and future investment plans for these assets.
 
(C) General and administrative expenses were approximately 5.4% and 5.2% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for the years ended December 31, 2009 and 2008, respectively. The overall decrease in the total expense reflects the impact of the 2009 “change in control” charge triggered by the Otto Transaction (see 2009 Strategic Transaction Activity) and payments required in 2009 under executed compensation agreements, which was less than the charge recorded for the termination of a supplemental equity award program in December 2008 and a reduction in general corporate expenses.
 
Other Income and Expenses (in thousands)
 
                 
  2009  2008  $ Change  % Change 
 
Interest income(A)
 $11,984  $5,230  $6,754   129.1%
Interest expense(B)
  (221,334)  (229,163)  7,829   (3.4)
Gain on retirement of debt, net(C)
  145,050   10,455   134,595   1,287.4 
Loss on equity derivative instruments(D)
  (199,797)  —   (199,797)  100.0 
Other expense, net(E)
  (29,192)  (28,131)  (1,061)  3.8 
                 
  $(293,289) $(241,609) $(51,680)  21.4%
                 
 
 
(A) Increased primarily due to interest earned from loan receivables, which aggregated $125.6 million and $115.4 million at December 31, 2009 and 2008, respectively.
 
(B) The weighted-average debt outstanding and related weighted-average interest rates including amounts allocated to discontinued operations are as follows (as adjusted):
 
         
  Year Ended
  December 31,
  2009 2008
 
Weighted-average debt outstanding (billions)
 $5.5  $5.8 
Weighted-average interest rate
  4.6%  5.0%


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  At December 31,
  2009 2008
 
Weighted-average interest rate
  4.5%  5.2%
 
The decrease in 2009 expense is primarily due to a reduction in outstanding debt and a decrease in short-term interest rates, partially offset by a decline in capitalized interest. The reduction in weighted-average interest rates in 2009 is primarily related to the decline in short-term interest rates. Interest costs capitalized in conjunction with development and expansion projects and unconsolidated development joint venture interests were $21.8 million for the year ended December 31, 2009, as compared to $41.1 million for the same period in 2008. Because the Company suspended certain construction activities, the amount of capitalized interest decreased in 2009.
 
 
(C) Relates to the Company’s purchase of approximately $816.2 million and $66.9 million aggregate principal amount of its outstanding senior unsecured notes at a discount to par during the years ended December 31, 2009 and 2008, resulting in a net gain of $145.1 million and $10.5 million, respectively. Approximately $250.1 million aggregate principal amount of the senior unsecured notes repurchased in 2009 occurred through a cash tender offer.
 
(D) Represents the impact of the valuation adjustments for the equity derivative instruments issued as part of the Otto Transaction (see 2009 Strategic Transaction Activity). The magnitude of the charge recognized primarily relates to the difference between the closing trading value of the Company’s common shares on April 9, 2009, the shareholder approval date, through the actual exercise date or December 31, 2009, as appropriate.
 
(E) Other (expenses) income composed the following (in millions):
 
         
  Year Ended
 
  December 31, 
  2009  2008 
 
Litigation-related expenses
 $(6.4) $(8.0)
Debt extinguishment costs
  (14.2)  — 
Note receivable reserve
  (5.4)  (5.4)
Sale of MDT units
  2.8   — 
Abandoned projects and other expenses
  (6.0)  (14.7)
         
  $(29.2) $(28.1)
         
 
Other items (in thousands)
 
                 
  2009  2008  $ Change  % Change 
 
Equity in net (loss) income of joint ventures(A)
 $(9,733) $17,719  $(27,452)  (154.9)%
Impairment of joint venture investments(B)
  (184,584)  (106,957)  (77,627)  72.6 
Gain on change in control of interests(C)
  23,865   —   23,865   100.0 
Tax benefit of taxable REIT subsidiaries and state franchise and income taxes(D)
  767   17,544   (16,777)  (95.6)
 
 
(A) A summary of the decrease in equity in net (loss) income of joint ventures for the year ended December 31, 2009, is composed of the following (in millions):
 
     
  (Decrease)
 
  Increase 
 
Decrease in income from existing joint ventures
 $(14.6)
Decrease in income at certain joint ventures primarily attributable to loss on sales and impairment charges on unconsolidated assets
  (3.4)
Newly acquired joint venture assets
  1.1 
Disposition of joint venture interests (see Off-Balance Sheet Arrangements)
  (10.6)
     
  $(27.5)
     


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The decrease in income from existing joint ventures is primarily due to lower occupancy levels and ceasing of the capitalization of interest and real estate taxes on joint ventures previously under development due to a reductionand/orcessation in construction activity.
 
At December 31, 2009, the Company had an approximate 48% interest in an unconsolidated joint venture, Sonae Sierra Brasil BV Sarl, which owns real estate in Brazil and is managed in San Paulo, Brazil. This entity utilizes the functional currency of Brazilian Reais. The Company has generally chosen not to mitigate any of the residual foreign currency risk through the use of hedging instruments for this entity. The operating cash flow generated by this investment has been retained by the joint venture and reinvested in ground up developments and expansions in Brazil. The effects of the foreign currency in the Company’s financial statements are as follows (in millions):
 
         
  Year Ended
 
  December 31, 
  2009  2008 
 
Net income of Sonae Sierra Brasil BV Sarl
 R $27.8  R $24.3 
Weighted-average exchange rate
  2.04   1.84 
         
  $13.6  $13.2 
Disproportionate partner income
  (1.6)  — 
         
Equity in net income of joint venture
  12.0   13.2 
Amortization of basis differential
  (2.5)  (2.5)
         
DDR’s share of equity in net income
 $9.5  $10.7 
         
 
(B) The Company determined that various of its unconsolidated joint venture investments in 2009 and 2008 had suffered an “other than temporary impairment” due to the then-deteriorating real estate fundamentals, the market dislocation in the U.S. capital markets, the general lack of liquidity and its related impact on the real estate market and retail industry, which accelerated in the fourth quarter of 2008 and continued through 2009. A summary of the other than temporary impairment charges by joint venture investment is as follows (in millions):
 
         
  For the Year Ended
 
  December 31, 
  2009  2008 
 
Various Coventry II Fund joint ventures
 $119.3  $14.1 
DDRTC Core Retail Fund
  55.0   47.3 
MDT
  —   31.7 
DDR-SAU Retail Fund
  6.2   9.0 
DPG Realty Holdings
  3.6   1.7 
Central Park Solon /RO & SW Realty
  0.5   3.2 
         
Total impairments of joint venture investments
 $184.6  $107.0 
         
 
 
(C) In October 2009, EDT unitholders approved the redemption of the Company’s interest in the MDT US LLC joint venture. A 100% interest in three shopping center assets was transferred to the Company in October 2009 in exchange for its approximate 14.5% ownership interest and an initial cash payment of $1.6 million. The redemption transaction was effectively considered a step acquisition/business combination. As a result, the real estate assets received were recorded at fair value, and a $23.5 million gain was recognized relating to the difference between the fair value of the net assets received as compared to the Company’s investment basis in the joint venture.
 
(D) Management regularly assesses established tax-related reserves and adjusts these reserves when facts and circumstances indicate that a change in estimates is warranted. During 2008, the Company recognized a $17.5 million income tax benefit. Approximately $15.6 million of this amount related to the release of valuation allowances associated with deferred tax assets that were established in prior years. These valuation allowances were previously established due to the uncertainty that the deferred tax assets would be utilizable.


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Based on the Company’s evaluation of the then-current facts and circumstances, the Company determined during 2008 that the valuation allowance should be released, as it was more likely than not that the deferred tax assets would be utilized in future years. This determination was based upon the increase in fee and miscellaneous other non-real estate-related income that was projected to be recognized within the Company’s TRS. As of both December 31, 2009 and 2008, the Company had no valuation allowances recorded against its deferred tax assets of $51.9 million and $45.2 million, respectively.
 
Discontinued Operations (in thousands)
 
                 
  2009  2008  $ Change  % Change 
 
Loss from discontinued operations(A)
 $(160,670) $(32,052) $(128,618)  401.3%
Loss on disposition of real estate, net of tax(B)
  (24,027)  (4,830)  (19,197)  397.5 
                 
  $(184,697) $(36,882) $(147,815)  400.8%
                 
 
 
(A) Included in discontinued operations for the years ended December 31, 2009 and 2008 are 31 properties sold in 2010 (including two properties held for sale at December 31, 2009) aggregating 2.9 million square feet, 32 properties sold in 2009 aggregating 3.8 million square feet and 22 properties sold in 2008 (including one office property and one property held for sale at December 31, 2007) aggregating 1.3 million square feet. In addition, included in discontinued operations are 25 other properties that were deconsolidated for accounting purposes in the third quarter of 2010, aggregating 1.9 million square feet, which represents the activity associated with the Mervyn’s Joint Venture. These assets were classified as discontinued operations for the years ended December 31, 2010, 2009 and 2008. In addition, included in the reported loss for the years ended December 31, 2009 and 2008, is $142.0 million and $50.3 million, respectively, of impairment charges related to these assets.
 
(B) In September 2008, the Company sold its approximate 56% interest in one of its office properties to its partner for $20.7 million and recorded an aggregate loss of $5.8 million.
 
Gain on Disposition of Real Estate, net (in thousands)
 
                 
  2009 2008 $ Change % Change
 
Gain on disposition of real estate, net(A)
 $9,127  $6,962  $2,165   31.1%
 
 
(A) Includes the following (in millions):
 
         
  Year Ended
 
  December 31, 
  2009  2008 
 
Land sales
 $4.8  $6.2 
Previously deferred gains and other gains and losses on dispositions
  4.3   0.8 
         
  $9.1  $7.0 
         
 
The sales of land did not meet the criteria for discontinued operations because the land did not have any significant operations prior to disposition. The previously deferred gains are primarily a result of assets that were contributed to joint ventures in prior years.
 
Non-controlling interests (in thousands)
 
                 
  For the Year Ended
    
  December 31,    
  2009 2008 $ Change % Change
 
Non-controlling interests(A)
 $47,047  $11,139  $35,908   322.4%


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(A) The change in loss attributable to non-controlling interests includes the following (in millions):
 
     
  Increase
 
  (Decrease) 
 
Mervyns Joint Venture — non-controlling interest
 $35.8 
Net loss from consolidated joint venture investments
  (0.9)
Conversion of 0.5 million operating partnership units (“OP Units”) to common shares
  0.3 
Decrease in the quarterly distribution to operating partnership unit investments
  0.7 
     
  $35.9 
     
 
There was a significant decrease in rental revenues reported by the Mervyns Joint Venture in 2009 due to the declaration of Mervyns’ bankruptcy in 2008. In addition, during the years ended December 31, 2009 and 2008, the joint venture recorded gross impairment charges of $70.3 million and $31.9 million, respectively, of which $35.1 million and $15.9 million in loss was allocated to non-controlling interests, respectively. This entity was deconsolidated in 2010 and the operating results are reported as a component of discontinued operations. (See discussion of Mervyns Joint Venture in Liquidity and Capital Resources.)
 
Net Loss attributable to DDR (in thousands)
 
                 
  2009 2008 $ Change % Change
 
Net loss attributable to DDR
 $(356,593) $(71,930) $(284,663)  395.8%
                 
 
The increase in net loss attributable to DDR for the year ended December 31, 2009, is primarily the result of higher impairment-related charges, loss on sales of assets and equity derivative related charges in addition to several major tenant bankruptcies that occurred in late 2008, offset by gains on debt retirements. Also contributing to the increase was a release of an approximate $16.0 million deferred tax valuation allowance in 2008 and the impact of asset sales associated with the Company’s deleveraging efforts. A summary of changes in 2009 as compared to 2008 is as follows (in millions):
 
     
Decrease in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes)
 $(38.2)
Decrease in consolidated impairment charges
  16.9 
Decrease in general and administrative expenses
  3.4 
Increase in depreciation expense
  (7.3)
Increase in interest income
  6.7 
Decrease in interest expense
  7.8 
Increase in gain on retirement of debt, net
  134.6 
Loss on equity derivative instruments
  (199.8)
Change in other expense
  (1.1)
Decrease in equity in net income of joint ventures
  (27.5)
Increase in impairment of joint venture investments
  (77.6)
Gain on change in control of interests
  23.9 
Change in income tax benefit (expense)
  (16.8)
Decrease in income from discontinued operations(A)
  (147.8)
Increase in net gain on disposition of real estate
  2.2 
Decrease in non-controlling interest expense
  35.9 
     
Decrease in net income attributable to DDR
 $(284.7)
     
 
 
(A) Includes a $91.7 million increase in impairment charges.


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FUNDS FROM OPERATIONS
 
The Company believes that FFO, which is a non-GAAP financial measure, provides an additional and useful means to assess the financial performance of REITs. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP.
 
FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies utilize different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate, gains and certain losses from depreciable property dispositions, and extraordinary items, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities and interest costs. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.
 
FFO is generally defined and calculated by the Company as net income (loss), adjusted to exclude (i) preferred share dividends, (ii) gains from disposition of depreciable real estate property, except for gains generated from merchant build asset sales, which are presented net of taxes, and those gains that represent the recapture of a previously recognized impairment charge, (iii) extraordinary items and (iv) certain non-cash items. These non-cash items principally include real property depreciation, equity income (loss) from joint ventures and equity income (loss) from non-controlling interests, and adding the Company’s proportionate share of FFO from its unconsolidated joint ventures and non-controlling interests, determined on a consistent basis.
 
For the reasons described above, management believes that FFO and operating FFO (as described below) provide the Company and investors with an important indicator of the Company’s operating performance. It provides a recognized measure of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO and operating FFO in a different manner.
 
These measures of performance are used by the Company for several business purposes. The Company uses FFOand/oroperating FFO in part (i) as a measure of a real estate asset’s performance, (ii) to influence acquisition, disposition and capital investment strategies, and (iii) to compare the Company’s performance to that of other publicly traded shopping center REITs.
 
Management recognizes FFO’s and operating FFO’s limitations when compared to GAAP’s income from continuing operations. FFO and operating FFO do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. Management does not use FFO or operating FFO (described below) as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash available to fund cash needs, including the payment of dividends. Neither FFO nor operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and operating FFO are simply used as additional indicators of the Company’s operating performance.
 
In 2010, FFO attributable to DDR common shareholders was a loss of $11.3 million, as compared to a loss of $144.6 million in 2009 and income of $169.7 million in 2008. The FFO loss for the year ended December 31, 2010, is primarily the result of impairment-related charges, the equity derivative adjustment associated with the Otto Family investment and the establishment of a reserve against certain deferred tax assets.


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The Company’s calculation of FFO is as follows (in thousands):
 
             
  For the Years Ended 
  2010  2009  2008 
 
Net loss applicable to common shareholders(A)
 $(251,627) $(398,862) $(114,199)
Depreciation and amortization of real estate investments
  217,168   224,207   236,344 
Equity in net (income) loss of joint ventures
  (5,600)  9,306   (17,719)
Joint ventures’ FFO(B)
  47,545   43,665   68,355 
Non-controlling interests (OP Units)
  32   175   1,145 
Gain on disposition of depreciable real estate(C)
  (18,803)  (23,123)  (4,244)
             
FFO applicable to common shareholders
  (11,285)  (144,632)  169,682 
Preferred dividends
  42,269   42,269   42,269 
             
Total FFO
 $30,984  $(102,363) $211,951 
             
 
 
(A) Includes straight-line rental revenues of approximately $2.5 million, $4.3 million and $8.0 million in 2010, 2009 and 2008, respectively (including discontinued operations). In addition, includes straight-line ground rent expense of approximately $2.0 million, $1.9 million and $1.8 million in 2010, 2009 and 2008, respectively (including discontinued operations).
 
(B) At December 31, 2010, 2009 and 2008, the Company owned unconsolidated joint venture interests relating to 236, 274 and 329 operating shopping center properties, respectively.
 
Joint ventures’ FFO is summarized as follows (in thousands):
 
             
  For the Years Ended 
  2010  2009  2008 
 
Net (loss) income(1)
 $(75,030) $(494,955) $24,951 
Loss on sale of real estate
  (24,734)  (843)  (7,350)
Depreciation and amortization of real estate investments
  198,323   245,000   241,651 
             
FFO
 $98,559  $(250,798) $259,252 
             
FFO at DDR’s ownership interests(2)
 $47,545  $43,665  $68,355 
             
 
(1)Revenues for the three years ended December 31, 2010, include the following (in millions):
 
             
  2010 2009 2008
 
Straight-line rents
 $3.9  $2.7  $6.3 
DDR’s proportionate share
 $0.6  $0.2  $0.8 
 
 
(2)Adjustments to the Company’s share of joint venture equity in net (loss) income is related primarily to differences impacting amortization and depreciation, impairment charges and (loss) gain on dispositions which aggregated approximately $(0.7) million, $24.8 million and $0.4 million in 2010, 2009 and 2008, respectively.
 
(C) The amount reflected as gain on disposition of real estate and real estate investments from continuing operations in the consolidated statements of operations includes residual land sales, which management considers to be the disposition of non-depreciable real property and the sale of newly developed shopping centers. These dispositions are included in the Company’s FFO and therefore are not reflected as an adjustment to FFO. For the years ended December 31, 2010, 2009 and 2008, net gains resulting from residual land sales aggregated $1.0 million, $4.8 million and $6.2 million, respectively. For the years ended December 31, 2009 and 2008, merchant building gains, net of tax, aggregated $0.5 million and $0.4 million, respectively.


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Operating FFO
 
FFO excluding the net non-operating charges detailed below, or operating FFO, is useful to investors as the Company removes these net charges to analyze the results of its operations and assess performance of the core operating real estate portfolio.
 
The Company incurred net non-operating charges for the years ended December 31, 2010, 2009 and 2008, aggregating $275.6 million, $442.8 million and $217.8 million, respectively, summarized as follows (in millions):
 
             
  For the Years Ended 
  2010  2009  2008 
 
Impairment charges — consolidated assets(A)
 $116.5  $12.7  $29.6 
Employee separations and related compensation and benefit charges(B)
  5.6   15.4   15.8 
Gain on debt retirement, net(A)
  (0.5)  (145.1)  (10.5)
Loss on equity derivative instruments(A)
  40.2   199.8   — 
Other expense, net(C)
  22.0   30.0   27.1 
Equity in net loss of joint ventures — loss on asset sales, impairment charges and MDT derivative losses
  6.6   19.0   6.6 
Impairment of joint venture interests(A)
  0.2   184.6   107.0 
Loss (gain) on change in control of interests(A)
  0.4   (23.9)  — 
Tax expense — deferred tax assets reserve(D)
  49.9   —   — 
Discontinued operations — consolidated impairment charges and loss on sales
  67.1   185.5   60.9 
Discontinued operations — FFO associated with Mervyns Joint Venture, net of non-controlling interest
  4.8   —   — 
Discontinued operations — gain on deconsolidation of Mervyns Joint Venture
  (5.6)  —   — 
Gain on disposition of real estate (land)
  (0.4)  —   — 
Less non-controlling interests — portion of impairment charges allocated to outside partners
  (31.2)  (35.2)  (18.7)
             
Total non — operating items
 $275.6  $442.8  $217.8 
FFO applicable to DDR common shareholders
  (11.3)  (144.6)  169.7 
             
Operating FFO applicable to DDR common shareholders
 $264.3  $298.2  $387.5 
             
 
 
(A) Amount agrees to the face of the consolidated statements of operations.
 
(B) Amounts included in general and administrative expenses. Amounts relate to employee separation costs in 2010, charges as a result of the vesting of awards triggered by the change in control in 2009 and the termination of an equity award plan in 2008.
 
(C) Amounts included in other expenses in the consolidated statements of operations and detailed as follows:
 
             
  2010  2009  2008 
 
Litigation-related expenses, net of tax
 $(12.2) $(6.7) $(8.1)
Lease liability
  (3.3)  —   — 
Debt extinguishment costs
  (3.7)  (14.4)  — 
Note receivable reserve
  —   (5.4)  (5.4)
Sales of MDT units
  —   2.8   — 
Abandoned projects and other expenses
  (2.8)  (6.3)  (13.6)
             
  $(22.0) $(30.0) $(27.1)
             


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(D) The $49.9 million net income tax expense consists of a gross valuation allowance tax expense of $58.3 million reduced by an $8.4 million tax benefit attributed to a $22.3 million abandoned project charge.
 
During 2008, due to the volatility and volume of significant and unusual accounting charges and gains recorded in the Company’s operating results, management began computing operating FFO and discussing it with the users of the Company’s financial statements, in addition to other measures such as net loss determined in accordance with GAAP as well as FFO. The Company believes that FFO and operating FFO, along with reported GAAP measures, enable management to analyze the results of its operations and assess the performance of its operating real estate and also may be useful to investors. The Company will continue to evaluate the usefulness and relevance of the reported non-GAAP measures, and such reported measures could change. Additionally, the Company provides no assurances that these charges and gains are non-recurring. These charges and gains could be reasonably expected to recur in future results of operations.
 
Operating FFO is a non-GAAP financial measure, and, as described above, its use combined with the required primary GAAP presentations has been beneficial to management in improving the understanding of the Company’s operating results among the investing public and making comparisons of other REITs’ operating results to the Company’s more meaningful. The adjustments above may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of operating FFO differs from NAREIT’s definition of FFO.
 
Operating FFO has the same limitations as FFO as described above and should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s performance. Operating FFO does not represent cash generated from operating activities determined in accordance with GAAP, and is not a measure of liquidity or an indicator of the Company’s ability to make cash distributions. The Company believes that to further understand its performance operating FFO should be compared with the Company’s reported net loss and considered in addition to cash flows in accordance with GAAP, as presented in its consolidated financial statements.
 
LIQUIDITY AND CAPITAL RESOURCES
 
The Company periodically evaluates opportunities to issue and sell debt or equity securities, obtain credit facilities from lenders, or repurchase, refinance or otherwise restructure long-term debt for strategic reasons or to further strengthen the financial position of the Company. In 2010, the Company strategically allocated cash flow from operating and financing activities. The Company utilized debt and equity offerings to strengthen the balance sheet, extend debt duration and improve its financial flexibility.
 
The Company’s and its unconsolidated debt obligations generally require monthly payments of principaland/orinterest over the term of the obligation. No assurance can be provided that these obligations will be refinanced or repaid as currently anticipated. Also, additional financing may not be available at all or on terms favorable to the Company or its joint ventures (see Contractual Obligations and Other Commitments).
 
In October 2010, the Company refinanced its unsecured revolving credit facility with a syndicate of financial institutions arranged by JP Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A. (“the Unsecured Credit Facility”). The syndicate of lenders in the Unsecured Credit Facility is substantially the same as the original facility. The size of the Unsecured Credit Facility was reduced from $1.25 billion to $950 million, with an accordion feature up to $1.2 billion (as compared to the previous ability to increase to up to $1.4 billion) upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and certain financial covenants are maintained. In addition, the Company entered into a new $65 million unsecured credit facility with PNC Bank, N.A. (the “PNC Facility” and, together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). The size of the PNC Facility was reduced from $75 million to $65 million. The Revolving Credit Facilities mature in February 2014 and currently bear interest at variable rates based on LIBOR plus 275 basis points, subject to adjustment based on the Company’s current corporate credit ratings from Moody’s Investors Service (“Moody’s”) and Standard and Poor’s (“S&P”).
 
The 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 and require the


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Company to comply with certain covenants including, among other things, leverage ratios and 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 credit facilities and indentures also contain customary default provisions including the failure to make timely payments of principal and interest payable thereunder, the failure to comply with the Company’s financial and operating covenants, the occurrence of a material adverse effect on the Company, and the failure of the Company or its majority-owned subsidiaries (i.e., entities in which the Company has a greater than 50% interest) to pay when due certain indebtedness in excess of certain thresholds beyond applicable grace and cure periods. In the event the Company’s lenders or noteholders declare a default, as defined in the applicable debt documentation, this could result in the Company’s inability to obtain further fundingand/or an acceleration of any outstanding borrowings. As of December 31, 2010, the Company was in compliance with all of its financial covenants. The Company’s current business plans indicate that it will continue to be able to operate in compliance with these covenants in 2011 and beyond.
 
Certain of the Company’s credit facilities and indentures permit the acceleration of the maturity of the underlying debt 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 may 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 financial flexibility.
 
The Company expects to fund its obligations from available cash, current operations and utilization of its Revolving Credit Facilities. The following information summarizes the availability of the Revolving Credit Facilities at December 31, 2010 (in millions):
 
     
Cash and cash equivalents
 $19.4 
     
Revolving Credit Facilities
 $1,015.0 
Less:
    
Amount outstanding
  (279.9)
Letters of credit
  (12.6)
     
Borrowing capacity available
 $722.5 
     
 
As of December 31, 2010, the Company also had unencumbered consolidated operating properties generating income in excess of the amounts required by the Revolving Credit Facilities covenants, thereby providing a potential collateral base for future borrowings or to sell to generate cash proceeds, subject to consideration of the financial covenants on its unsecured borrowings.
 
The Company is committed to prudently managing and minimizing discretionary operating and capital expenditures and raising the necessary equity and debt capital to maximize liquidity, repay outstanding borrowings as they mature and comply with financial covenants in 2011 and beyond. Over the past 12 months, the Company has already implemented several steps integral to the successful execution of its capital raising plans through a combination of retained capital, the issuance of common shares, debt financing and refinancing and asset sales.
 
The Company intends to continue implementing a longer-term financing strategy and reduce its reliance on short-term debt. The Company believes its Revolving Credit Facilities should be appropriately sized for the Company’s liquidity strategy. The execution of these agreements was an integral part of the Company’s strategy to extend debt maturities and align the Revolving Credit Facilities with longer-term capital structure needs.
 
Part of the Company’s overall strategy includes addressing debt maturing in 2011 and years following well before the contractual maturity date. As part of this strategy in 2010, the Company purchased approximately $259.1 million aggregate principal amount of its outstanding senior unsecured notes, which includes the repurchase of $83.1 million aggregate principal amount of outstanding senior unsecured notes through a cash tender offer at par in March 2010.


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In March 2010, the Company issued $300 million aggregate principal amount of its 7.5% senior unsecured notes due April 2017. In August 2010, the Company issued $300 million aggregate principal amount of its 7.875% senior unsecured notes due September 2020. In November 2010, the Company issued $350 million aggregate principal amount of its 1.75% convertible senior unsecured notes due November 2040. In addition, the Company issued 53.0 million of its common shares in 2010 for aggregate gross proceeds of $454.4 million. Substantially all of the net proceeds from these offerings were used to repay debt with shorter-term maturities, to repay amounts outstanding on the Revolving Credit Facilities and to invest in two loans aggregating $58.3 million that are secured by seven shopping centers, six of which are managed and leased by the Company.
 
The Company has been focused on balancing the amount and timing of its debt maturities. As a result of the debt repurchases, unsecured debt issuances and the refinancing of the Revolving Credit Facilities, all completed in 2010, the Company extended its weighted-average debt duration to four years. The Company is focused on the timing and deleveraging opportunities for the consolidated debt maturing in 2011. In October 2010, the Company repaid $200 million of the term loan and in February 2011, executed a one-year extension on the remaining $600.0 million of the term loan to February 2012. The Company is in discussion with certain banks and expects to refinance this term loan by the end of 2011, but there can be no assurance that the refinancing can be done on satisfactory terms or at all. The wholly-owned maturities for 2011 include the unsecured notes due in April and August 2011 aggregating $180.6 million and mortgage maturities of approximately $209.1 million, of which $24.4 million was extended for one-year in January 2011, $98.9 million was repaid in February 2011 and $35.3 million has a one-year extension option. The Company continually evaluates its debt maturities and, based on management’s current assessment, believes it has viable financing and refinancing alternatives.
 
The Company continues to look beyond 2011 to ensure that it executes its strategy to lower leverage, increase liquidity, improve the Company’s credit ratings and extend debt duration with the goal of lowering the Company’s risk profile and long-term cost of capital.
 
Unconsolidated Joint Ventures
 
At December 31, 2010, the Company’s unconsolidated joint venture mortgage debt that had matured and is now past due is as follows:
 
         
     Company’s
 
  Debt Matured
  Proportionate Share
 
Unconsolidated Joint Ventures (Millions)  (Millions) 
 
Coventry II(A)
 $39.5  $— 
Other(B)
  7.4   1.1 
         
  $46.9  $1.1 
         
 
 
(A) See Off-Balance Sheet Arrangements
 
(B) In accordance with the terms of a consensual foreclosure agreement entered into between the borrower and the servicer of the loan, a foreclosure complaint with respect to one property was filed by the servicer in the applicable circuit court in February 2011. The foreclosure is proceeding in the ordinary course in accordance with governing state law.
 
At December 31, 2010, the Company’s unconsolidated joint venture mortgage debt maturing in 2011 was $891.6 million (of which the Company’s proportionate share is $275.5 million). Of this amount, $42.0 million (of which the Company’s proportionate share is $15.9 million) related to one loan that was refinanced in January 2011 and assumed by the Company in connection with its purchase of the asset and another loan that was repaid when the collateralized asset was sold.
 
Additionally, $264.4 million (of which the Company’s proportionate share was $52.9 million) was attributable to the Coventry II Fund assets (see Off-Balance Sheet Arrangements).
 
Deconsolidation of Mervyns Joint Venture
 
The Company’s joint venture with EDT, Mervyns Joint Venture, owns underlying real estate assets formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008. The


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Company owns a 50% interest in the Mervyns Joint Venture, which was previously consolidated by the Company. During the second quarter of 2010, the Company changed its holding period assumptions for this primarily vacant portfolio as it was no longer committed to providing any additional capital. This triggered the recording of aggregated consolidated impairment charges of approximately $37.6 million on the remaining Mervyns Joint Venture assets, of which the Company’s proportionate share was $16.5 million after adjusting for the allocation of loss to the non-controlling interest. In June 2010, the Mervyns Joint Venture received a notice of default from the servicer for the non-recourse loan secured by all of the remaining former Mervyns stores due to the non-payment of required monthly debt service. In August 2010, a court appointed a third-party receiver to manage and liquidate the remaining former Mervyns sites. Due to the receiver appointment, the Company no longer has the contractual ability to direct the activities that most significantly impact the economic performance of the Mervyns Joint Venture, nor does it have the obligation to absorb losses or receive a benefit from the Mervyns Joint Venture that could potentially be significant to the entity. As a result, in September 2010, the Company deconsolidated the assets and obligations of the Mervyns Joint Venture. Upon deconsolidation, the Company recorded a gain of approximately $5.6 million because the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets of the joint venture. The amount outstanding under the mortgage note payable was $155.7 million upon deconsolidation. The revenues and expenses associated with the Mervyns Joint Venture for all of the periods presented, including the $5.6 million gain, are classified within discontinued operations in the consolidated statements of operations.
 
Cash Flow Activity
 
The Company’s core business of leasing space to well-capitalized retailers continues to generate consistent and predictable cash flow after expenses, interest payments and preferred share dividends. This cash flow is closely monitored by the Company to implement decisions for investment, debt repayment and the payment of dividends on the common shares.
 
The Company’s cash flow activities are summarized as follows (in thousands):
 
             
  Year Ended December 31, 
  2010  2009  2008 
 
Cash flow provided by operating activities
 $278,124  $228,935  $391,941 
Cash flow provided by (used for) investing activities
  31,762   150,884   (468,572)
Cash flow (used for) provided by financing activities
  (317,065)  (381,348)  56,296 
 
Operating Activities:  The increase in cash flow from operating activities in the year ended December 31, 2010, as compared to the year ended December 31, 2009, was due to the impact of the change in assets and liabilities, due in part to the collection of accounts receivable.
 
Investing Activities:  The change in cash flow from investing activities for the year ended December 31, 2010, as compared to the year ended December 31, 2009, was primarily due to a reduction in proceeds from the disposition of real estate, a reduction in capital expenditure spending for redevelopment andground-updevelopment projects, as well as the release of restricted cash partially offset by the issuance of notes receivable.
 
Financing Activities:  The change in cash flow used for financing activities for the year ended December 31, 2010, as compared to the year ended December 31, 2009, was primarily due to proceeds received from the issuance of common shares and senior notes in 2010 net of debt repayments.
 
The Company satisfied its REIT requirement of distributing at least 90% of ordinary taxable income with declared common and preferred share cash dividends of $62.5 million in 2010, as compared to $106.8 million of dividends paid in a combination of cash and the Company’s common shares in 2009 and $290.9 million cash dividends paid in 2008. Because actual distributions were greater than 100% of taxable income, federal income taxes were not incurred by the Company in 2010.
 
For each of the four quarters of 2010, the Company paid a quarterly cash dividend of $0.02 per common share. In January 2011, the Company declared its first quarter 2011 dividend of $0.04 per common share payable on April 5, 2011, to shareholders of record at the close of business on March 22, 2011. The Company will continue to


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monitor the 2011 dividend policy and provide for adjustments as determined in the best interest of the Company and its shareholders to maximize the Company’s free cash flow, while still adhering to REIT payout requirements.
 
SOURCES AND USES OF CAPITAL
 
2010 Strategic Transaction Activity
 
Dispositions
 
As part of the Company’s deleveraging strategy, the Company has been marketing non-prime assets for sale. The Company is focusing on selling single-tenant assets and smaller shopping centers with limited opportunity for growth. For certain real estate assets for which the Company has entered into agreements that are subject to contingencies, including contracts executed subsequent to December 31, 2010, a loss of approximately $10 million could be recorded if all such sales were consummated on the terms currently being negotiated. Given the Company’s experience over the past few years, it is difficult for many buyers to complete these transactions in the timing contemplated or at all. The Company has not recorded an impairment charge on these assets at December 31, 2010, as the undiscounted cash flows, when considering and evaluating the various alternative courses of action that may occur, exceed the assets’ current carrying value. The Company evaluates all potential sale opportunities taking into account the long-term growth prospects of assets being sold, the use of proceeds and the impact to the Company’s balance sheet, in addition to the impact on operating results. As a result, if actual results differ from expectations, it is possible that additional assets could be sold in subsequent periods for a loss after taking into account the above considerations.
 
In 2010, the Company sold 31 shopping center properties in various states, aggregating 2.9 million square feet, at a sales price of $150.7 million. The Company recorded a net gain of $5.8 million, which excludes the impact of $77.3 million in related impairment charges.
 
In 2010, the Company’s unconsolidated joint ventures had the following sales transactions:
 
                 
           Company’s
 
  Company’s
  Company-
     Proportionate
 
  Effective
  Owned Square
  Sale
  Share of Gain
 
  Ownership
  Feet
  Price
  (Loss)
 
Joint Venture Percentage  (Thousands)  (Millions)  (Millions) (A) 
 
Retail Value Investment Program VII (two sites)
  21.0%  717  $108.2  $7.0 
DDR — SAU Retail Fund (one site)
  20.0%  7   1.3   — 
Service Holdings (four sites)
  20.0%  218   3.5   — 
DDRTC Core Retail Fund (22 sites)
  15.0%  3,854   455.9   (2.1)
DPG Realty Holdings (seven sites)
  10.0%  760   46.9   — 
                 
       5,556  $615.8  $4.9 
                 
 
 
(A) The Company’s proportionate share of loss was reduced by the impairment charges previously recorded against its investment in the joint venture.
 
Developments, Redevelopments and Expansions
 
During 2010, the Company expended an aggregate of approximately $102.7 million, net, after deducting sales proceeds from outlot sales, to develop, expand, improve and re-tenant various consolidated properties. The Company projects to expend approximately $21.6 million, net, for these activities in 2011.
 
The Company will continue to closely monitor its spending in 2011 for developments and redevelopments, both for consolidated and unconsolidated projects, as the Company considers this funding to be discretionary spending. The Company does not anticipate expending a significant amount of funds on joint venture development projects in 2011. One of the important benefits of the Company’s asset class is the ability to phase development projects over time until appropriate leasing levels can be achieved. To maximize the return on capital spending and


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balance the Company’s de-leveraging strategy, the Company adheres to strict investment criteria thresholds. The revised underwriting criteria followed over the past two years includes a highercash-on-costproject return threshold, a longer period before the leases commence and a higher stabilized vacancy rate. The Company applies this revised strategy to both its consolidated and certain unconsolidated joint ventures that own assets under development because the Company has significant influence and, in most cases, approval rights over decisions relating to significant capital expenditures.
 
The Company has two consolidated projects that are being developed in phases at a projected aggregate net cost of approximately $204.0 million. At December 31, 2010, approximately $188.1 million of costs had been incurred in relation to these projects. The Company is also currently expanding/redeveloping a wholly-owned shopping center in Miami (Plantation), Florida, at a projected aggregate net cost of approximately $51.4 million. At December 31, 2010, approximately $44.0 million of costs had been incurred in relation to this redevelopment project.
 
At December 31, 2010, the Company has approximately $537.5 million of recorded costs related to land and projects under development, for which active construction has temporarily ceased or not yet commenced. Based on the Company’s current intentions and business plans, the Company believes that the expected undiscounted cash flows exceed its current carrying value on each of these projects. However, if the Company were to dispose of certain of these assets in the current market, the Company would likely incur a loss, which may be material. The Company evaluates its intentions with respect to these assets each reporting period and records an impairment charge equal to the difference between the current carrying value and fair value when the expected undiscounted cash flows are less than the asset’s carrying value.
 
The Company and its joint venture partners intend to commence construction on various other developments, including several international projects only after substantial tenant leasing has occurred and acceptable construction financing is available.
 
2009 Strategic Transaction Activity
 
Otto Transaction
 
On February 23, 2009, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with the Investor to issue and sell 30.0 million common shares to the Investor and certain members of the Otto Family for aggregate gross proceeds of approximately $112.5 million. In addition, the Company issued warrants to purchase up to 10.0 million common shares with an exercise price of $6.00 per share to the Otto Family. Under the terms of the Stock Purchase Agreement, the Company issued additional common shares to the Otto Family in an amount equal to dividends payable in shares declared by the Company after February 23, 2009, and prior to the applicable closing.
 
On April 9, 2009, the Company’s shareholders approved the sale of the common shares and warrants to the Otto Family pursuant to the Otto Transaction. The transaction occurred in two closings. In May 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $52.5 million. In September 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $60.0 million. The Company also issued an additional 1,071,428 common shares as a result of the first quarter 2009 dividend to the Otto Family, associated with the initial 15.0 million common shares, and 1,787,304 common shares as a result of the first and second quarter 2009 dividends to the Otto Family, associated with the second 15.0 million common shares. As a result, the Company issued 32.8 million common shares and warrants to purchase 10.0 million common shares to the Otto Family in 2009.
 
The shareholders’ approval of the Otto Transaction in April 2009 resulted in a “potential change in control” as of that date under the Company’s equity-based award plans. In addition, in September 2009, as a result of the second closing in which the Otto Family acquired beneficial ownership of more than 20% of the Company’s outstanding common shares, a “change in control” was deemed to have occurred under the Company’s equity deferred compensation plans. In accordance with the equity-based award plans, all unvested stock options became fully exercisable and all restrictions on unvested shares lapsed, and, in accordance with the equity deferred compensation


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plans, all unvested deferred stock units vested and were no longer subject to forfeiture. As such, the Company recorded charges for the year ended December 31, 2009, of $15.4 million.
 
The equity forward commitments and warrants are considered derivatives. However, the equity forward commitments and warrants did not qualify for equity treatment due to the existence of downward price protection provisions. As a result, both instruments were required to be recorded at fair value as of the shareholder approval date of April 9, 2009, andmarked-to-marketthrough earnings as of each balance sheet date thereafter until exercise or expiration.
 
DDR Macquarie Fund/EDT Retail Trust
 
In 2003, the Company formed a joint venture with Macquarie Bank to acquire ownership interests in institutional-quality community center properties in the United States (“DDR Macquarie Fund”). In 2010, Macquarie DDR Trust (“MDT”) was recapitalized with an investment by EPN GP, LLC and became known as EDT. The Company continues to be engaged to manageday-to-dayoperations of the properties and receives fees at prevailing rates for property management, leasing, construction management, acquisitions, dispositions (including outparcel dispositions) and financings.
 
During December 2008, the Company and MDT modified certain terms of their investment that provided for the redemption of the Company’s interest with properties in the DDR Macquarie Fund in lieu of cash or MDT shares. In October 2009, the MDT unitholders approved the redemption of the Company’s interest in the MDT US LLC joint venture. A 100% interest in three shopping center assets was transferred to the Company in October 2009 in exchange for its approximate 14.5% ownership interest and assumption of $65.3 million of non-recourse debt, and a cash payment of $1.6 million was made to the DDR Macquarie Fund. The redemption transaction was effectively considered a business combination. As a result, the real estate assets received were recorded at fair value, and a $23.5 million gain was recognized relating to the difference between the fair value of the net assets received as compared to the Company’s then-investment basis in the joint venture.
 
The Company believed this transaction simplified the ownership structure of the joint venture and enhanced flexibility for both DDR and EDT while lowering the Company’s leverage. As a result of this transaction, the Company’s proportionate share of unconsolidated joint venture debt was reduced by approximately $146 million, offset by the assumption of debt by the Company of approximately $65.3 million, resulting in an overall reduced leverage of approximately $80 million in 2009.
 
Macquarie DDR Trust Liquidation
 
In 2009, the Company liquidated its investment in MDT for aggregate proceeds of $6.4 million. The Company recorded a gain on sale of these units of approximately $2.7 million during the year ended December 31, 2009, which is included in other income on the consolidated statement of operations. During 2008, the Company recognized an other than temporary impairment charge of approximately $31.7 million on this investment.
 
Dispositions
 
In 2009, the Company sold 34 shopping center properties in various states, aggregating 3.9 million square feet, at a sales price of $332.7 million. The Company recorded a net gain of $24.5 million, which excludes the impact of $74.1 million in related impairment charges.


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In 2009, the Company’s unconsolidated joint ventures had the following sales transactions, excluding those purchased by other unconsolidated joint venture interests:
 
                 
  Company’s
  Company-
     Company’s
 
  Effective
  Owned Square
  Sale
  Proportionate
 
  Ownership
  Feet
  Price
  Share of Loss
 
Joint Venture Percentage  (Thousands)  (Millions)  (Millions)(A) 
 
Coventry II DDR Ward Parkway
  20.0%  388  $—  $5.8 
Service Holdings (two sites)
  20.0%  137   12.7   0.5 
DDR Macquarie Fund (eight sites)
  14.5%  1,751   118.3   0.7 
DPG Realty Holding (two sites)
  10.0%  163   10.1   0.3 
                 
       2,439  $141.1  $7.3 
                 
 
 
(A) The Company’s proportionate share of loss was reduced by the impairment charges previously recorded against the Company’s investment in the joint venture.
 
Acquisitions, Developments, Redevelopments and Expansions
 
During the year ended December 31, 2009, the Company and its unconsolidated joint ventures expended an aggregate of approximately $635.9 million, net ($331.8 million by the Company, (which includes the acquisition of assets that were generally in exchange for a partnership interest and did not involve the use of cash), and $304.1 million by its unconsolidated joint ventures), before deducting sales proceeds, to acquire, develop, expand, improve and re-tenant various properties.
 
At December 31, 2009, approximately $323.7 million of costs were incurred in relation to the Company’s three wholly-owned and consolidated joint venture development projects substantially completed and three projects under construction.
 
2008 Strategic Transaction Activity
 
DDR MDT Trust Investment
 
In February 2008, the Company began purchasing units of MDT, its then-joint venture partner in the DDR Macquarie Fund. Through the combination of its purchase of the units in MDT (8.3% ownership on a weighted-average basis for the year ended December 31, 2008, and 12.3% ownership as of December 31, 2008) and its 14.5% direct and indirect ownership of the DDR Macquarie Fund, DDR had an approximate 25.0% effective economic interest in the DDR Macquarie Fund as of December 31, 2008. Through December 31, 2008, as described in filings with the Australian Securities Exchange (“ASX Limited”), the Company had purchased an aggregate 115.7 million units of MDT in open market transactions at an aggregate cost of approximately $43.4 million. Because the Company’s direct and indirect investments in MDT and the DDR Macquarie Fund gave it the ability to exercise significant influence over operating and financial policies, the Company accounted for its interest in both MDT and the DDR Macquarie Fund using the equity method of accounting.
 
At December 31, 2008, the market price of the MDT shares as traded on the ASX Limited was $0.04 per share, as compared to $0.25 per share at September 30, 2008. This represented a decline of over 80% in value in the fourth quarter of 2008. Due to the significant decline in the unit value of this investment, as well as the then-continued deterioration of the global capital markets and the related impact on the real estate market and retail industry, the Company determined that the loss in value was other than temporary. Accordingly, the Company recorded an impairment charge of approximately $31.7 million related to this investment, reducing its investment in MDT to $4.8 million at December 31, 2008. This investment was liquidated in 2009 for a gain of $2.7 million (see 2009 Strategic Transaction Activity).


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Dispositions
 
In 2008, the Company sold the following properties:
 
             
  Company-Owned
  Sale
    
  Square Feet
  Price
  Net Gain/(Loss)
 
Location (Thousands)  (Millions)  (Millions) 
 
Shopping Center Properties(A)
  981  $111.8  $1.3 
Office Property(B)
  291   20.7   (5.8)
             
   1,272  $132.5  $(4.5)
             
 
 
(A) The Company sold 21 shopping center properties in various states.
 
(B) Represents the sale of a consolidated joint venture asset. The Company’s ownership was 55.84%, and the amount reflected above represents the proceeds received by the Company.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
The Company has a number of off-balance sheet joint ventures and other unconsolidated entities with varying economic structures. Through these interests, the Company has investments in operating properties, development properties and two management and development companies. Such arrangements are generally with institutional investors and various developers throughout the United States.
 
The unconsolidated joint ventures that have total assets greater than $250 million (based on the historical cost of acquisition by the unconsolidated joint venture) at December 31,2010, are as follows:
 
               
  Effective
    Company-Owned
  Total
 
  Ownership
    Square Feet
  Debt
 
Unconsolidated Real Estate Ventures Percentage(A)  Assets Owned (Thousands)  (Millions) 
 
DDRTC Core Retail Fund LLC
  15.0% 43 shopping centers in several states  11,712  $1,222.7 
DDR Domestic Retail Fund I
  20.0% 63 shopping centers in several states  8,284   965.5 
Sonae Sierra Brasil BV Sarl
  47.9% 10 shopping centers, a management company and three development projects in Brazil  3,902   109.7 
DDR — SAU Retail Fund LLC
  20.0% 27 shopping centers in several states  2,352   183.1 
 
 
(A) Ownership may be held through different investment structures. Percentage ownerships are subject to change, as certain investments contain promoted structures.
 
Funding for Joint Ventures
 
In connection with the development of shopping centers owned by certain affiliates, the Companyand/or its equity affiliates have agreed to fund the required capital associated with approved development projects aggregating approximately $3.1 million at December 31, 2010. These obligations, composed principally of construction contracts, are generally due in 12 to 36 months, as the related construction costs are incurred, and are expected to be financed through new or existing construction loans, revolving credit facilities and retained capital.
 
The Company has provided loans and advances to certain unconsolidated entitiesand/orrelated partners in the amount of $71.1 million at December 31, 2010, for which the Company’s joint venture partners have not funded their proportionate share. Included in this amount, the Company advanced $66.9 million of financing to one of its unconsolidated joint ventures, which accrued interest at the greater of LIBOR plus 700 basis points or 12% and a default rate of 16%, and has an initial maturity of July 2011. The Company reserved this entire advance in 2009 (see Coventry II Fund discussion below). In addition, the Company guaranteed annual base rental income at certain centers held through Service Holdings, aggregating $2.2 million at December 31, 2010. The Company has not


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recorded a liability for the guaranty, as the subtenants of Service Holdings are paying rent as due. The Company has recourse against the other parties in the joint venture for their pro rata share of any liability under this guaranty.
 
Coventry II Fund
 
At December 31, 2010, the Company maintains several investments with the Coventry II Fund. The Company co-invested approximately 20% in each joint venture and is generally responsible forday-to-daymanagement of the properties. Pursuant to the terms of the joint venture, the Company earns fees for property management, leasing and construction management. The Company also could earn a promoted interest, along with Coventry Real Estate Advisors L.L.C., above a preferred return after return of capital to fund investors (see Legal Matters).
 
As of December 31, 2010, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was approximately $10.4 million. This basis reflects impairment charges aggregating $0.2 million, $52.4 million and $14.1 million for the years ended December 31, 2010, 2009 and 2008, respectively. As discussed above, the Company has also advanced $66.9 million of financing to one of the Coventry II Fund joint ventures, Coventry II DDR Bloomfield, relating to the development of the project in Bloomfield Hills, Michigan (“Bloomfield Loan”). In addition to its existing equity and note receivable, the Company has provided partial payment guaranties to third-party lenders in connection with the financing for five of the Coventry II Fund projects. The amount of each such guaranty is not greater than the proportion to the Company’s investment percentage in the underlying projects, and the aggregate amount of the Company’s guaranties is approximately $39.5 million at December 31, 2010.
 
Although the Company will not acquire additional assets through the Coventry II Fund joint ventures, additional funds may be required to address ongoing operational needs and costs associated with the joint ventures undergoing development or redevelopment. The Coventry II Fund is exploring a variety of strategies to obtain such funds, including potential dispositions and financings. The Company continues to maintain the position that it does not intend to fund any of its joint venture partners’ capital contributions or their share of debt maturities. This position led to the Ward Parkway Center in Kansas City, Missouri being transferred to the lender in 2009. In addition, in 2009 the Company acquired its partner’s 80% interest in the Merriam Village project in Merriam, Kansas through the assumption and guaranty of $17.0 million face value of debt, of which the Company had previously guaranteed 20%. DDR did not expend any funds for this interest. In connection with DDR’s assumption of an additional guaranty, the lender agreed to modify and extend this secured mortgage.
 
A summary of the Coventry II Fund investments is as follows:
 
        
    Loan
 
    Balance
 
    Outstanding
 
    at
 
  Shopping Center or
 December 31,
 
Unconsolidated Real Estate Ventures Development Owned 2010 
 
Coventry II DDR Bloomfield LLC
 Bloomfield Hills, Michigan $39.5(A),(B),(D)
Coventry II DDR Buena Park LLC
 Buena Park, California  61.0(B)
Coventry II DDR Fairplain LLC
 Benton Harbor, Michigan  15.7(B),(C)
Coventry II DDR Phoenix Spectrum LLC
 Phoenix, Arizona  65.0 
Coventry II DDR Marley Creek Square LLC
 Orland Park, Illinois  10.7(B),(C)
Coventry II DDR Montgomery Farm LLC
 Allen, Texas  139.2(B),(C),(D)
Coventry II DDR Totem Lakes LLC
 Kirkland, Washington  27.9(B),(C)
Coventry II DDR Westover LLC
 San Antonio, Texas  20.6(B)
Coventry II DDR Tri-County LLC
 Cincinnati, Ohio  161.3(B),(D)
Service Holdings LLC
 38 retail sites in several states  97.0(B),(C)
 
 
(A) In 2009, the senior secured lender sent to the borrower a formal notice of default and filed a foreclosure action. The Company paid its 20% guarantee of this loan in 2009, and the senior secured lender initiated legal proceedings against the Coventry II Fund for its failure to fund its 80% payment guaranty. The above-


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referenced $66.9 million Bloomfield Loan from the Company relating to the Bloomfield Hills, Michigan, project is cross-defaulted with this third-party loan.
 
(B) As of February 11, 2011, lenders are managing the cash receipts and expenditures related to the assets collateralizing these loans.
 
(C) As of February 11, 2011, the Company provided payment guaranties that are not greater than the proportion to its investment percentage.
 
(D) As of February 11, 2011, these loans are in default, and the Coventry II Fund is exploring a variety of strategies with the lenders.
 
Other Joint Ventures
 
The Company is involved with overseeing the development activities for several of its unconsolidated joint ventures that are constructing, redeveloping or expanding shopping centers. The Company earns a fee for its services commensurate with the level of services or oversight provided. The Company generally provides a completion guaranty to the third party lending institution(s) providing construction financing.
 
The Company’s unconsolidated joint ventures have aggregate outstanding indebtedness to third parties of approximately $3.9 billion and $4.5 billion at December 31, 2010 and 2009, respectively (see Item 7A. Quantitative and Qualitative Disclosures About Market Risk). Such mortgages and construction loans are generally non-recourse to the Company and its partners; however, certain mortgages may have recourse to the Company and its partners in certain limited situations, such as misuse of funds and material misrepresentations. In connection with certain of the Company’s unconsolidated joint ventures, the Company agreed to fund any amounts due to the joint venture’s lender if such amounts are not paid by the joint venture based on the Company’s pro rata share of such amount aggregating $41.3 million at December 31, 2010, including guaranties associated with the Coventry II Fund joint ventures.
 
The Company entered into an unconsolidated joint venture that owns real estate assets in Brazil and has generally chosen not to mitigate any of the residual foreign currency risk through the use of hedging instruments for this entity. The Company will continue to monitor and evaluate this risk and may enter into hedging agreements at a later date.
 
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 the Company’s Canadian and European subsidiaries primarily through foreign currency-denominated debt agreements that the Company enters into. Gains and losses in the parent company’s net investments in its subsidiaries are economically offset by losses and gains in the parent company’s foreign currency-denominated debt obligations.
 
For the year ended December 31, 2010, $3.0 million of net gains related to the foreign currency-denominated debt agreements was included in the Company’s cumulative translation adjustment. As the notional amount of the non-derivative instrument substantially matches the portion of the net investment designated as being hedged and the non-derivative instrument is denominated in the functional currency of the hedged net investment, the hedge ineffectiveness recognized in earnings was not material.
 
FINANCING ACTIVITIES
 
The Company has historically accessed capital sources through both the public and private markets. The Company’s acquisitions, developments, redevelopments and expansions are generally financed through cash provided from operating activities, revolving credit facilities, mortgages assumed, construction loans, secured debt, unsecured public debt, common and preferred equity offerings, joint venture capital and asset sales. Total debt outstanding at December 31, 2010, was $4.3 billion, as compared to $5.2 billion and $5.9 billion at December 31, 2009 and 2008, respectively.


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In October 2010, the Company refinanced its Revolving Credit Facilities. The size of the Unsecured Credit Facility was reduced from $1.25 billion to $950 million with an accordion feature up to $1.2 billion. The size of the PNC Facility was reduced from $75 million to $65 million. The Revolving Credit Facilities mature in February 2014 and currently bear interest at variable rates based on LIBOR plus 275 basis points, subject to adjustment as determined by the Company’s current corporate credit ratings from Moody’s and S&P.
 
In October 2010, the Company amended its secured term loan with KeyBank National Association to conform the covenants to the Unsecured Credit Facility provisions and repaid $200 million of the outstanding balance.
 
For the year ended 2010, the Company purchased approximately $259.1 million aggregate principal amount of its outstanding senior unsecured notes (of which $140.6 million related to convertible notes) at a discount to par resulting in a gross gain of approximately $0.1 million, prior to the write-off of $4.9 million of unamortized convertible debt accretion, unamortized deferred financing costs and unamortized discount. Included in the purchase amount was approximately $83.1 million aggregate principal amount of near-term outstanding senior unsecured notes repurchased through a cash tender offer at par in March 2010. These purchases included debt maturities in 2010 and 2011 as well as convertible senior unsecured notes due in 2012.
 
Debt and equity financings aggregated $3.2 billion during the three years ended December 31, 2010, and are summarized as follows (in millions):
 
                
  2010  2009  2008 
 
Equity:
               
Common shares
 $454.4(A) $317.0(A) $41.9(A)
Debt:
               
Unsecured notes
  600.0(B)  300.0(D)  —  
Convertible unsecured notes
  350.0(C)  —    —  
Construction
  3.4   24.2   116.9 
Mortgage financing
  —    561.9(E)  350.0 
Mortgage debt assumed
  —    65.4   17.5 
                
Total debt
  953.4   951.5   484.4 
                
  $1,407.8  $1,268.5  $526.3 
                
 
 
(A) The Company issued 53.0 million shares, 56.3 million shares and 8.3 million shares in 2010, 2009 and 2008, respectively.
 
(B) In August 2010, the Company issued $300 million aggregate principal amount of 7.875% senior unsecured notes due September 2020. In March 2010, the Company issued $300 million aggregate principal amount of 7.5% senior unsecured notes due April 2017.
 
(C) In November 2010, the Company issued 1.75% convertible senior notes due November 2040. Amount represents the face value and excludes the $53.6 million reduction as required by accounting standards due to the initial value of the equity conversion feature. The notes have an initial conversion rate of 61.0361 common shares per $1,000 principal amount of the notes, representing an initial conversion price of $16.38 per common share. The initial conversion rate is subject to adjustment under certain circumstances.
 
(D) In September 2009, the Company issued $300 million aggregate principal amount of 9.625% senior unsecured notes due March 2016.
 
(E) In November 2009, the Company closed the securitization of a $400 million, five-year loan that was originated in October 2009. The blended interest rate on the loan is 4.225% and is secured by a pool of 28 assets. The triple-A rated portion of the certification in the securitization constituted “eligible collateral” under the Term Asset-Backed Securities Loan Facility (“TALF”), provided by the Federal Reserve Bank of New York.


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CAPITALIZATION
 
At December 31, 2010, the Company’s capitalization consisted of $4.3 billion of debt, $555 million of preferred shares and $3.6 billion of market equity (market equity is defined as common shares and OP Units outstanding multiplied by $14.09, the closing price of the common shares on the New York Stock Exchange at December 31, 2010), resulting in a debt to total market capitalization ratio of 0.51 to 1.0, as compared to the ratios of 0.68 to 1.0 and 0.83 to 1.0 at December 31, 2009 and 2008, respectively. The closing price of the common shares on the New York Stock Exchange was $9.26 and $4.88 at December 31, 2009 and 2008, respectively. At December 31, 2010, the Company’s total debt consisted of $3.4 billion of fixed-rate debt and $0.9 billion of variable-rate debt, including $150 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts. At December 31, 2009, the Company’s total debt consisted of $3.7 billion of fixed-rate debt and $1.5 billion of variable-rate debt, including $400 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts.
 
It is management’s strategy to have access to the capital resources necessary to manage its balance sheet, to repay upcoming maturities and to consider making prudent investments should such opportunities arise. Accordingly, the Company may seek to obtain funds through additional debt or equity financingsand/or joint venture capital in a manner consistent with its intention to operate with a conservative debt capitalization policy and maintain an investment grade rating with Moody’s and re-establish an investment grade rating with S&P and Fitch. The security rating is not a recommendation to buy, sell or hold securities, as it may be subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating. The Company may not be able to obtain financing on favorable terms, or at all, which may negatively affect future ratings.
 
The Company’s 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, 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. Although the Company intends to operate in compliance with these covenants, if the Company were to violate these covenants, the Company may be subject to higher finance costs and fees or accelerated maturities. In addition, certain of the Company’s credit facilities and indentures may permit the acceleration of maturity in the event certain other debt of the Company has been accelerated. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would have a negative impact on the Company’s financial condition and results of operations.


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CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
 
The Company has debt obligations relating to its revolving credit facilities, term loan, fixed-rate senior notes and mortgages payable with maturities ranging from one to 27 years. In addition, the Company has non-cancelable operating leases, principally for office space and ground leases.
 
These obligations are summarized as follows for the subsequent five years ending December 31 (in thousands):
 
         
     Operating
 
Year Debt  Leases 
 
2011
 $993,727(1) $4,578 
2012
  550,457   4,495 
2013
  457,785   4,444 
2014
  666,011   3,934 
2015
  492,985   4,409 
Thereafter
  1,141,035   132,973 
         
  $4,302,000  $154,833 
         
 
 
(1) Included in principal payments is $600.0 million in 2011 associated with the maturing of the term loan. In February 2011, the Company executed its one-year extension option.
 
The Company has loans receivable, including accrued interest, that are collateralized by certain rights in development projects, partnership interests, sponsor guaranties and real estate assets.
 
The Company had eight and seven notes receivable outstanding, with total commitments of up to $117.0 million and $77.7 million, at December 31, 2010 and 2009, respectively. Of these loans, approximately $4.0 million and $8.2 million was unfunded in 2010 and 2009, respectively.
 
At December 31, 2010, the Company had letters of credit outstanding of approximately $36.3 million. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.
 
In conjunction with the development of shopping centers, the Company has entered into commitments aggregating approximately $24.7 million with general contractors for its wholly-owned and consolidated joint venture properties at December 31, 2010. These obligations, composed principally of construction contracts, are generally due in 12 to 18 months, as the related construction costs are incurred, and are expected to be financed through operating cash flow, new or existing construction loansand/orrevolving credit facilities.
 
Related to one of the Company’s developments in Long Beach, California, an affiliate of the Company has agreed to make an annual payment of approximately $0.6 million to defray a portion of the operating expenses of a parking garage through the earlier of October 2032 or the date when the city’s parking garage bonds are repaid. There are no assets held as collateral or liabilities recorded related to these obligations.
 
The Company has guaranteed certain special assessment and revenue bonds issued by the Midtown Miami Community Development District. The bond proceeds were used to finance certain infrastructure and parking facility improvements. In the event of a debt service shortfall, the Company is responsible for satisfying the shortfall. There are no assets held as collateral or liabilities recorded related to these guaranties. To date, tax revenues have exceeded the debt service payments for these bonds.
 
The Company routinely enters into contracts for the maintenance of its properties, which typically can be canceled upon 30 to 60 days notice without penalty. At December 31, 2010, the Company had purchase order obligations, typically payable within one year, aggregating approximately $3.2 million related to the maintenance of its properties and general and administrative expenses.
 
The Company has entered into employment contracts with certain executive officers. These contracts generally provide for base salary, bonuses based on factors including the financial performance of the Company


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and personal performance, participation in the Company’s equity plans, reimbursement of various expenses, and health and welfare benefits, and may also provide for certain perquisites (which may include insurance coverage, country or social club expenses, or reimbursement for certain business expenses). The contracts for the Company’s Executive Chairman of the Board and President and Chief Executive Officer extend through December 31, 2012. The contracts for the other executive officers currently contain a one-year “evergreen” term and are subject to cancellation without cause upon at least 90 days notice. The Company recently announced that the Executive Chairman of the Board was stepping down. The Executive Chairman’s separation from the Company will constitute a termination “without cause” in accordance with the terms of his employment agreement. As a result of the termination of the Company’s employment agreement with its Executive Chairman, the Company is obligated to pay approximately $8 million and provide certain other benefits to the Executive Chairman pursuant to the terms of his employment agreement. In addition, the Executive Chairman of the Board is entitled to receive all unvested retention shares and equity awards earned, but unvested, under the Company’s Value Sharing Equity Program, which are valued in the aggregate at approximately $8 million based on the closing price of the Company’s common shares on the New York Stock Exchange on February 15, 2011. Pursuant to the employment agreement, the Company may elect, at its option, to pay cash in lieu of these equity awards.
 
INFLATION
 
Most of the Company’s long-term leases contain provisions designed to partially mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive additional rental income from escalation clauses that generally increase rental rates during the terms of the leasesand/orpercentage rentals based on tenants’ gross sales. Such escalations are determined by negotiation, increases in the consumer price index or similar inflation indices. In addition, many of the Company’s leases are for terms of less than 10 years, permitting the Company to seek increased rents at market rates upon renewal. Most of the Company’s leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company’s exposure to increases in costs and operating expenses resulting from inflation.
 
ECONOMIC CONDITIONS
 
The retail market in the United States significantly weakened in 2008 and continued to be challenged in 2009. Retail sales declined and tenants became more selective for new store openings. Some retailers closed existing locations, and, as a result, the Company experienced a loss in occupancy compared to its historic levels. The reduction in occupancy in 2009 has continued to have a negative impact on the Company’s consolidated cash flows, results of operations and financial position in 2010. However, the Company believes there is an improvement in the level of optimism within its tenant base. Many retailers executed contracts in 2010 to open new stores and have strong store opening plans for 2011 and 2012. The lack of new supply is causing retailers to reconsider opportunities to open new stores in quality locations in well-positioned shopping centers. The Company continues to see strong demand from a broad range of retailers, particularly in the off-price sector, which is a reflection on the general outlook of consumers who are responding to the broader economic uncertainty by demanding more value for their dollars. Offsetting some of the impact resulting from the reduced occupancy is the Company’s low occupancy cost relative to other retail formats and historic averages, as well as a diversified tenant base with only one tenant exceeding 2.5% of total consolidated and joint venture revenues (Walmart at 4.1%). Other significant tenants include Target, Lowe’s, Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all of which have relatively strong credit ratings, remain well-capitalized and have outperformed other retail categories on a relative basis. The Company believes these tenants should continue providing it with a stable 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 provideday-to-dayconsumer necessities with a focus on value and convenience versus high-priced discretionary luxury items, which the Company believes will enable many of the tenants to continue operating within this challenging economic environment.
 
The Company consistently monitors potential credit issues of its tenants, and analyzes their possible impact on the financial statements of the Company and its unconsolidated joint ventures. In addition to the collectibility assessment of outstanding accounts receivable, the Company evaluates the related real estate for recoverability, as well as any tenant-related deferred charges for recoverability, which may include straight-line rents, deferred lease


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costs, tenant improvements, tenant inducements and intangible assets (“Tenant-Related Deferred Charges”). The Company routinely evaluates its exposure relating to tenants in financial distress. Where appropriate, the Company has either written off the unamortized balance or accelerated depreciation and amortization expense associated with the Tenant-Related Deferred Charges for such tenants.
 
The retail shopping sector has been affected by the competitive nature of the retail business and the competition for market share as well as general economic conditions where stronger retailers have out-positioned some of the weaker retailers. These shifts have forced some market share away from weaker retailers and required them, in some cases, to declare bankruptcyand/or close stores. Certain retailers have announced store closings even though they have not filed for bankruptcy protection. However, these store closings often represent a relatively small percentage of the Company’s overall GLA and, therefore, the Company does not expect these closings to have a material adverse effect on the Company’s overall long-term performance. Overall, the Company’s portfolio remains stable. However, there can be no assurance that these events will not adversely affect the Company (see Item 1A. Risk Factors).
 
Historically, the Company’s portfolio has performed consistently throughout many economic cycles, including downward cycles. Broadly speaking, national retail sales have grown since World War II, including during several recessions and housing slowdowns. In the past, the Company has not experienced significant volatility in its long-term portfolio occupancy rate. The Company has experienced downward cycles before and has made the necessary adjustments to leasing and development strategies to accommodate the changes in the operating environment and mitigate risk. In many cases, the loss of a weaker tenant creates an opportunity to re-lease space at higher rents to a stronger retailer. More importantly, the quality of the property revenue stream is high, as it is generally derived from retailers with good credit profiles under long-term leases, with very little reliance on overage rents generated by tenant sales performance. The Company believes that the quality of its shopping center portfolio is strong, as evidenced by the high historical occupancy rates, which have previously ranged from 92% to 96% since the Company’s initial public offering in 1993. Although the Company experienced a significant decline in occupancy in 2009 due to the major tenant bankruptcies, the shopping center portfolio occupancy was at 88.4% at December 31, 2010. Notwithstanding the decline in occupancy compared to historic levels, the Company continues to sign a large number of new leases at rental rates that are returning to historic averages. Moreover, the Company has been able to achieve these results without above-normal capital investment in tenant improvements or leasing commissions. The Company is very conscious of, and sensitive to, the risks posed to the economy, but is currently comfortable that the position of its portfolio and the general diversity and credit quality of its tenant base should enable it to successfully navigate through these challenging economic times.
 
LEGAL MATTERS
 
The Company is a party to various joint ventures with the Coventry II Fund through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with major renovationand/orground-updevelopment contemplated for many of the properties. The Company is generally responsible forday-to-daymanagement of the properties. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (“Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted in part (regarding Coventry’s claim that the Company breached a fiduciary duty owed to Coventry) and denied in part (all other claims) the Company’s motion. Coventry


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has filed a notice of appeal regarding that portion of the motion granted by the court. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry.
 
The Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will vigorously defend itself against the allegations contained in the complaint. This lawsuit is subject to the uncertainties inherent in the litigation process and, therefore, no assurance can be given as to its ultimate outcome and no loss provision has been recorded in the accompanying financial statements because a loss contingency is not deemed probable or estimable. However, based on the information presently available to the Company, the Company does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
 
On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company has filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. The Court has not yet ruled on the Company’s motion for summary judgment. A trial on the Company’s request for a permanent injunction has not yet been scheduled. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of the litigation process, no assurance can be given as to the ultimate outcome of this action.
 
The Company was also 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 attorneys’ fees and expenses in the amount of approximately $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 disagreed with the verdict as well as the denial of the post-trial motions. As a result, the Company appealed the verdict. In July 2010, the California Court of Appeals entered an order affirming the jury verdict. The Company had a $6.0 million liability accrued for this matter as of December 31, 2009. A charge of approximately $2.7 million, net of $2.4 million in taxes, was recorded in the second quarter of 2010 relating to this matter. In November 2010, the Company made payment in full and final satisfaction of the judgment.
 
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.
 
NEW ACCOUNTING STANDARDS
 
New Accounting Standards Implemented
 
Amendments to Consolidation of Variable Interest Entities
 
In June 2009, the Financial Accounting Standards Board (“FASB”) amended its guidance on VIEs and issued ASC 810, which introduced a more qualitative approach to evaluating VIEs for consolidation. The new accounting


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guidance resulted in a change in the Company’s accounting policy effective January 1, 2010. This standard requires a company to perform an analysis to determine whether its variable interests give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the entity that has (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, this standard requires a company to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed. This standard requires continuous reassessment of primary beneficiary status, rather than periodic, event-driven reassessments as previously required, and incorporates expanded disclosure requirements. This new accounting guidance was effective for the Company on January 1, 2010, and is being applied prospectively.
 
At December 31, 2010, the Company’s investments in consolidated real estate joint ventures in which the Company is deemed to be the primary beneficiary have total real estate assets of $374.2 million, mortgages of $42.9 million and liabilities of $13.7 million.
 
The Company’s adoption of this standard resulted in the deconsolidation of one entity in which the Company has a 50% interest (the “Deconsolidated Land Entity”). The Deconsolidated Land Entity owns one real estate project, consisting primarily of land under development, which had $28.5 million of assets as of December 31, 2009. As a result of the initial application of ASC 810, the Company recorded its retained interest in the Deconsolidated Land Entity at its carrying amount. The difference between the net amount removed from the balance sheet of the Deconsolidated Land Entity and the amount reflected in investments in and advances to joint ventures of approximately $7.8 million was recognized as a cumulative effect adjustment to accumulated distributions in excess of net income. This difference was primarily due to the recognition of an other than temporary impairment charge that would have been recorded had ASC 810 been effective in 2008. The Company’s maximum exposure to loss at December 31, 2010, is equal to its investment in the Deconsolidated Entity of $12.6 million.
 
FORWARD-LOOKING STATEMENTS
 
Management’s discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the consolidated financial statements, including trends that might appear, should not be taken as indicative of future operations. The Company considers portions of this information to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company’s expectations for future periods. Forward-looking statements include, without limitation, statements related to acquisitions (including any related pro forma financial information) and other business development activities, future capital expenditures, financing sources and availability, and the effects of environmental and other regulations. Although the Company believes that the expectations reflected in these forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not statements of historical fact should be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Readers should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements and that could materially affect the Company’s actual results, performance or achievements.
 
Factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:
 
  • The Company is subject to general risks affecting the real estate industry, including the need to enter into new leases or renew leases on favorable terms to generate rental revenues, and the economic downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new


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 leases or the ability of the Company’s existing tenants to renew their leases at rates at least as favorable as their current rates;
 
  • The Company could be adversely affected by changes in the local markets where its properties are located, as well as by adverse changes in national economic and market conditions;
 
  • The Company may fail to anticipate the effects on its properties of changes in consumer buying practices, including catalog sales and sales over the Internet and the resulting retailing practices and space needs of its tenants, or a general downturn in its tenants’ businesses, which may cause tenants to close stores or default in payment of rent;
 
  • The Company is subject to competition for tenants from other owners of retail properties, and its tenants are subject to competition from other retailers and methods of distribution. The Company is dependent upon the successful operations and financial condition of its tenants, in particular of its major tenants, and could be adversely affected by the bankruptcy of those tenants;
 
  • The Company relies on major tenants, which makes it vulnerable to changes in the business and financial condition of, or demand for its space by, such tenants;
 
  • The Company may not realize the intended benefits of acquisition or merger transactions. The acquired assets may not perform as well as the Company anticipated, or the Company may not successfully integrate the assets and realize the improvements in occupancy and operating results that the Company anticipates. The acquisition of certain assets may subject the Company to liabilities, including environmental liabilities;
 
  • The Company may fail to identify, acquire, construct or develop additional properties that produce a desired yield on invested capital, or may fail to effectively integrate acquisitions of properties or portfolios of properties. In addition, the Company may be limited in its acquisition opportunities due to competition, the inability to obtain financing on reasonable terms, or any financing at all, and other factors;
 
  • The Company may fail to dispose of properties on favorable terms. In addition, real estate investments can be illiquid, particularly as prospective buyers may experience increased costs of financing or difficulties obtaining financing, and could limit the Company’s ability to promptly make changes to its portfolio to respond to economic and other conditions;
 
  • The Company may abandon a development opportunity after expending resources if it determines that the development opportunity is not feasible due to a variety of factors, including a lack of availability of construction financing on reasonable terms, the impact of the economic environment on prospective tenants’ ability to enter into new leases or pay contractual rent, or the inability of the Company to obtain all necessary zoning and other required governmental permits and authorizations;
 
  • The Company may not complete development projects on schedule as a result of various factors, many of which are beyond the Company’s control, such as weather, labor conditions, governmental approvals, material shortages or general economic downturn resulting in limited availability of capital, increased debt service expense and construction costs, and decreases in revenue;
 
  • The Company’s financial condition may be affected by required debt service payments, the risk of default and restrictions on its ability to incur additional debt or to enter into certain transactions under its credit facilities and other documents governing its debt obligations. In addition, the Company may encounter difficulties in obtaining permanent financing or refinancing existing debt. Borrowings under the Company’s revolving credit facilities are subject to certain representations and warranties and customary events of default, including any event that has had or could reasonably be expected to have a material adverse effect on the Company’s business or financial condition;
 
  • Changes in interest rates could adversely affect the market price of the Company’s common shares, as well as its performance and cash flow;


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  • Debt and/orequity financing necessary for the Company to continue to grow and operate its business may not be available or may not be available on favorable terms;
 
  • Disruptions in the financial markets could affect the Company’s ability to obtain financing on reasonable terms and have other adverse effects on the Company and the market price of the Company’s common shares;
 
  • The Company is subject to complex regulations related to its status as a REIT and would be adversely affected if it failed to qualify as a REIT;
 
  • The Company must make distributions to shareholders to continue to qualify as a REIT, and if the Company must borrow funds to make distributions, those borrowings may not be available on favorable terms or at all;
 
  • Joint venture investments may involve risks not otherwise present for investments made solely by the Company, including the possibility that a partner or co-venturer may become bankrupt, may at any time have different interests or goals than those of the Company and may take action contrary to the Company’s instructions, requests, policies or objectives, including the Company’s policy with respect to maintaining its qualification as a REIT. In addition, a partner or co-venturer may not have access to sufficient capital to satisfy its funding obligations to the joint venture. The partner could cause a default under the joint venture loan for reasons outside the Company’s control. Furthermore, the Company could be required to reduce the carrying value of its equity method investments if a loss in the carrying value of the investment is other than temporary;
 
  • The outcome of pending or future litigation, including litigation with tenants or joint venture partners, may adversely affect the Company’s results of operations and financial condition;
 
  • The Company may not realize anticipated returns from its real estate assets outside the United States. The Company expects to continue to pursue international opportunities that may subject the Company to different or greater risks than those associated with its domestic operations. The Company owns an interest in an unconsolidated joint venture that owns properties in Brazil and an interest in consolidated joint ventures that were formed to develop and own properties in Canada and Russia;
 
  • International development and ownership activities carry risks in addition to those the Company faces with the Company’s domestic properties and operations. These risks include the following:
 
   Adverse effects of changes in exchange rates for foreign currencies;
 
   Changes in foreign political or economic environments;
 
   Challenges of complying with a wide variety of foreign laws, including tax laws, and addressing different practices and customs relating to corporate governance, operations and litigation;
 
   Different lending practices;
 
   Cultural and consumer differences;
 
   Changes in applicable laws and regulations in the United States that affect foreign operations;
 
   Difficulties in managing international operations; and
 
   Obstacles to the repatriation of earnings and cash.
 
  • Although the Company’s international activities are currently a relatively small portion of its business, to the extent the Company expands its international activities, these risks could significantly increase and adversely affect its results of operations and financial condition;
 
  • The Company is subject to potential environmental liabilities;
 
  • The Company may incur losses that are uninsured or exceed policy coverage due to its liability for certain injuries to persons, property or the environment occurring on its properties;


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  • The Company could incur additional expenses to comply with or respond to claims under the Americans with Disabilities Act or otherwise be adversely affected by changes in government regulations, including changes in environmental, zoning, tax and other regulations; and
 
  • The Company may have to restate certain financial statements as a result of changes in, or the adoption of, new accounting rules and regulations to which the Company is subject, including accounting rules and regulations affecting the Company’s accounting policies.
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
The Company’s primary market risk exposure is interest rate risk. The Company’s debt, excluding unconsolidated joint venture debt, is summarized as follows:
 
                                 
  December 31, 2010 December 31, 2009
    Weighted-
 Weighted-
     Weighted-
 Weighted-
  
    Average
 Average
     Average
 Average
  
  Amount
 Maturity
 Interest
 Percentage
 Amount
 Maturity
 Interest
 Percentage
  (Millions) (Years) Rate of Total (Millions) (Years) Rate of Total
 
Fixed-Rate Debt(A)
 $3,428.1   4.3   5.8%  79.7% $3,684.0   3.3   5.7%  71.1%
Variable-Rate Debt(A)
 $873.9   1.7   2.3%  20.3% $1,494.7   2.0   1.5%  28.9%
 
 
(A) Adjusted to reflect the $150 million and $400 million of variable-rate debt that LIBOR was swapped to a fixed-rate of 3.4% and 5.0% at December 31, 2010 and 2009, respectively.
 
The Company’s unconsolidated joint ventures’ fixed-rate indebtedness is summarized as follows:
 
                                 
  December 31, 2010  December 31, 2009 
  Joint
  Company’s
  Weighted-
  Weighted-
  Joint
  Company’s
  Weighted-
  Weighted-
 
  Venture
  Proportionate
  Average
  Average
  Venture
  Proportionate
  Average
  Average
 
  Debt
  Share
  Maturity
  Interest
  Debt
  Share
  Maturity
  Interest
 
  (Millions)  (Millions)  (Years)  Rate  (Millions)  (Millions)  (Years)  Rate 
 
Fixed-Rate Debt
 $3,289.3  $707.3   4.1   5.6% $3,807.2  $785.4   4.8   5.6%
Variable-Rate Debt
 $661.5  $128.5   1.8   4.0% $740.5  $131.6   0.6   3.0%
 
The Company intends to utilize retained cash flow, including proceeds from asset sales, debt and equity financing, including variable-rate indebtedness available under its Revolving Credit Facilities, to initially fund future acquisitions, developments and expansions of shopping centers. Thus, to the extent the Company incurs additional variable-rate indebtedness, its exposure to increases in interest rates in an inflationary period would increase. The Company does not believe, however, that increases in interest expense as a result of inflation will significantly affect the Company’s distributable cash flow.
 
The interest rate risk on a portion of the Company’s variable-rate debt described above has been mitigated through the use of interest rate swap agreements (the “Swaps”) with major financial institutions. At December 31, 2010 and 2009, the interest rate on the Company’s $150 million and $400 million consolidated floating rate debt, respectively, was swapped to fixed rates. The Company is exposed to credit risk in the event of nonperformance by the counter-parties to the Swaps. The Company believes it mitigates its credit risk by entering into Swaps with major financial institutions.
 
The carrying value of the Company’s fixed-rate debt is adjusted to include the $150 million and $400 million that were swapped to a fixed rate at December 31, 2010 and 2009, respectively, The fair value of the Company’s fixed-rate debt is adjusted to (i) include the swaps reflected in the carrying value, and (ii) include the Company’s


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proportionate share of the joint venture fixed-rate debt. An estimate of the effect of a 100-point increase at December 31, 2010, is summarized as follows (in millions):
 
                         
  December 31, 2010  December 31, 2009 
        100 Basis-
        100 Basis-
 
        Point
        Point
 
        Increase in
        Increase in
 
        Market
        Market
 
  Carrying
     Interest
  Carrying
     Interest
 
  Value  Fair Value  Rates  Value  Fair Value  Rates 
 
Company’s fixed-rate debt
 $3,428.1  $3,647.2(A) $3,527.0(B) $3,684.0  $3,672.1(A) $3,579.4(B)
Company’s proportionate share of joint venture fixed-rate debt
 $707.3  $691.9  $672.7  $785.4  $703.1  $681.0 
 
 
(A) Includes the fair value of interest rate swaps, which was a liability of $5.2 million and $15.4 million at December 31, 2010 and 2009, respectively.
 
(B) Includes the fair value of interest rate swaps, which was a liability of $3.1 million and $12.2 million at December 31, 2010 and 2009, respectively.
 
The sensitivity to changes in interest rates of the Company’s fixed-rate debt was determined utilizing a valuation model based upon factors that measure the net present value of such obligations that arise from the hypothetical estimate as discussed above.
 
Further, a 100 basis-point increase in short-term market interest rates at December 31, 2010, would result in an increase in interest expense of approximately $8.7 million for the Company and $1.3 million representing the Company’s proportionate share of the joint ventures’ interest expense relating to variable-rate debt outstanding for the twelve-month period. The estimated increase in interest expense for the year does not give effect to possible changes in the daily balance for the Company’s or joint ventures’ outstanding variable-rate debt.
 
The Company and its joint ventures intend to continually monitor and actively manage interest costs on their variable-rate debt portfolio and may enter into swap positions based on market fluctuations. In addition, the Company believes that it has the ability to obtain funds through additional equityand/or debt offerings, including the issuance of unsecured notes and joint venture capital. Accordingly, the cost of obtaining such 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. As of December 31, 2010, the Company had no other material exposure to market risk.


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Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
The response to this item is included in a separate section at the end of this report beginning onpage F-1.
 
Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
Item 9A.  CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Based on their evaluation as required by Securities Exchange ActRules 13a-15(b)and15d-15(b),the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange ActRules 13a-15(e)and15d-15(e))are effective as of December 31, 2010, to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and were effective as of December 31, 2010, to ensure that information required to be disclosed by the Company issuer in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
Management’s Report on Internal Control Over Financial Reporting
 
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Securities Exchange ActRule 13a-15(f).Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of its internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on those criteria, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2010.
 
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2010, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein and is incorporated in this Item 9A by reference.
 
Changes in Internal Control over Financial Reporting
 
During the three-month period ended December 31, 2010, there were no changes in the Company’s internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
 
Item 9B.  OTHER INFORMATION
 
None.


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PART III
 
Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
The Company’s Board of Directors has adopted the following corporate governance documents:
 
  • Corporate Governance Guidelines that guide the Board of Directors in the performance of its responsibilities to serve the best interests of the Company and its shareholders;
 
  • Written charters of the Audit Committee, Executive Compensation Committee and Nominating and Corporate Governance Committee;
 
  • Code of Ethics for Senior Financial Officers that applies to the chief executive officer, chief financial officer, chief accounting officer, controllers, treasurer and chief internal auditor, if any, of the Company (amendments to, or waivers from, the Code of Ethics for Senior Financial Officers will be disclosed on the Company’s website); and
 
  • Code of Business Conduct and Ethics that governs the actions and working relationships of the Company’s employees, officers and directors with current and potential customers, consumers, fellow employees, competitors, government and self-regulatory agencies, investors, the public, the media and anyone else with whom the Company has or may have contact.
 
Copies of the Company’s corporate governance documents are available on the Company’s website, www.ddr.com, under “Investor Relations — Corporate Governance.”
 
Certain other information required by this Item 10 is incorporated herein by reference to the information under the headings “Proposal One: Election of Directors — Nominees for Director” and “— Corporate Governance” and “Section 16(a) Beneficial Ownership Reporting Compliance” contained in the Company’s Proxy Statement in connection with its annual meeting of shareholders to be held on May 10, 2011, and the information under the heading “Executive Officers” in Part I of this Annual Report onForm 10-K.
 
Item 11.  EXECUTIVE COMPENSATION
 
Information required by this Item 11 is incorporated herein by reference to the information under the headings “Proposal One: Election of Directors — Compensation of Directors” and “Executive Compensation” contained in the Company’s Proxy Statement in connection with its annual meeting of shareholders to be held on May 10, 2011.


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Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
Certain information required by this Item 12 is incorporated herein by reference to the “Security Ownership of Certain Beneficial Owners and Management” section of the Company’s Proxy Statement in connection with its annual meeting of shareholders to be held on May 10, 2011. The following table sets forth the number of securities issued and outstanding under the existing plans, as of December 31, 2010, as well as the weighted-average exercise price of outstanding options.
 
EQUITY COMPENSATION PLAN INFORMATION
 
             
  Number of
       
  Securities to Be
     Number of Securities
 
  Issued upon
     Remaining Available for
 
  Exercise of
  Weighted-Average
  Future Issuance Under
 
  Outstanding
  Exercise Price of
  Equity Compensation Plans
 
  Options,
  Outstanding
  (excluding securities
 
  Warrants and
  Options, Warrants
  reflected
 
  Rights
  and Rights
  in column (a))
 
Plan category (a)  (b)  (c) 
 
Equity compensation plans approved by security holders(1)
  3,223,553(2) $28.33   3,255,236 
Equity compensation plans not approved by security holders(3)
  20,000  $20.37   N/A 
             
Total
  3,243,553  $28.28   3,255,236 
 
 
(1)Includes the Company’s 1992 Employee’s Share Option Plan, 1996 Equity Based Award Plan, 1998 Equity Based Award Plan, 2002 Equity Based Award Plan, 2004 Equity Based Award Plan and 2008 Equity Based Award Plan.
 
(2)Does not include 1,860,064 shares of restricted stock, as these shares have been reflected in the Company’s total shares outstanding.
 
(3)Represents options previously issued to certain directors of the Company. The options granted to the directors were at the fair market value at the date of grant and are fully vested.
 
Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Information required by this Item 13 is incorporated herein by reference to the “Certain Transactions” section of the Company’s Proxy Statement in connection with its annual meeting of shareholders to be held on May 10, 2011.
 
Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
Incorporated herein by reference to the “Fees Paid to PricewaterhouseCoopers LLP” section of the Company’s Proxy Statement in connection with its annual meeting of shareholders to be held on May 10, 2011.


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PART IV
 
Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
a)  1. Financial Statements
 
The following documents are filed as a part of this report:
 
     
Report of Independent Registered Public Accounting Firm.
    
Consolidated Balance Sheets at December 31, 2010 and 2009.
    
Consolidated Statements of Operations for the three years ended December 31, 2010.
    
Consolidated Statements of Equity for the three years ended December 31, 2010.
    
Consolidated Statements of Cash Flows for the three years ended December 31, 2010.
    
Notes to the Consolidated Financial Statements.
    
 
2.  Financial Statement Schedules
 
The following financial statement schedules are filed herewith as part of this Annual Report onForm 10-Kand should be read in conjunction with the Consolidated Financial Statements of the registrant:
 
Schedule
 
II — Valuation and Qualifying Accounts and Reserves for the three years ended December 31, 2010.
 
III — Real Estate and Accumulated Depreciation at December 31, 2010.
 
IV — Mortgage Loans on Real Estate at December 31, 2010.
 
Schedules not listed above have been omitted because they are not applicable or because the information required to be set forth therein is included in the Consolidated Financial Statements or notes thereto.
 
Financial statements of the Company’s unconsolidated joint venture companies have been omitted because they do not meet the significant subsidiary definition of S-X 210.1-02(w).
 
b)  Exhibits — The following exhibits are filed as part of or incorporated by reference into, this report:
 
           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 3   3.1 Second Amended and Restated Articles of Incorporation of the Company, as amended effective July 10, 2009 Current Report on Form 8-K (Filed with the SEC on August 10, 2009; FileNo. 001-11690)
 3   3.2 Amended and Restated Code of Regulations of the Company Quarterly Report on Form 10-Q (Filed with the SEC on May 11, 2009; FileNo. 001-11690)
 4   4.1 Specimen Certificate for Common Shares Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 4   4.2 Specimen Certificate for 8.0% Class G Cumulative Redeemable Preferred Shares Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)


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Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 4   4.3 Deposit Agreement, dated as of October 26, 2009, by and between the Company and Mellon Investor Services LLC Relating to Depositary Shares Representing 8.0% Class G Cumulative Redeemable Preferred Shares (including Specimen Certificate for Depositary Shares) Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 4   4.4 Specimen Certificate for 73/8% Class H Cumulative Redeemable Preferred Shares Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 4   4.5 Deposit Agreement, dated as of October 26, 2009, by and between the Company and Mellon Investor Services LLC Relating to Depositary Shares Representing 73/8% Class H Cumulative Redeemable Preferred Shares (including Specimen Certificate for Depositary Shares) Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 4   4.6 Specimen Certificate for 7.50% Class I Cumulative Redeemable Preferred Shares Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 4   4.7 Deposit Agreement, dated as of October 26, 2009, by and between the Company and Mellon Investor Services LLC Relating to Depositary Shares Representing 7.50% Class I Cumulative Redeemable Preferred Shares (including Specimen Certificate for Depositary Shares) Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 4   4.8 Indenture, dated as of May 1, 1994, by and between the Company and The Bank of New York (as successor to JP Morgan Chase Bank, N.A., successor to Chemical Bank), as Trustee Form S-3 Registration No. 333-108361 (Filed with the SEC on August 29, 2003)
 4   4.9 Indenture, dated as of May 1, 1994, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (as successor to National City Bank)), as Trustee Form S-3 Registration No. 333-108361 (Filed with the SEC on August 29, 2003)
 4   4.10 First Supplemental Indenture, dated as of May 10, 1995, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Form S-3 Registration No. 333-108361 (Filed with the SEC on August 29, 2003)

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Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 4   4.11 Second Supplemental Indenture, dated as of July 18, 2003, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Form S-3 Registration No. 333-108361 (Filed with the SEC on August 29, 2003)
 4   4.12 Third Supplemental Indenture, dated as of January 23, 2004, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Form S-4 Registration No. 333-117034 (Filed with the SEC on June 30, 2004)
 4   4.13 Fourth Supplemental Indenture, dated as of April 22, 2004, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Form S-4 Registration No. 333-117034 (Filed with the SEC on June 30, 2004)
 4   4.14 Fifth Supplemental Indenture, dated as of April 28, 2005, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Annual Report onForm 10-K(Filed with the SEC on February 21, 2007; File No. 001-11690)
 4   4.15 Sixth Supplemental Indenture, dated as of October 7, 2005, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Annual Report onForm 10-K(Filed with the SEC on February 21, 2007; File No. 001-11690)
 4   4.16 Seventh Supplemental Indenture, dated as of August 28, 2006, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Current Report on Form 8-K (Filed with the SEC on September 1, 2006; File No. 001-11690)
 4   4.17 Eighth Supplemental Indenture, dated as of March 13, 2007, by and between the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Current Report on Form 8-K (Filed with the SEC on March 16, 2007; FileNo. 001-11690)
 4   4.18 Ninth Supplemental Indenture, dated as of September 30, 2009, by and between the Company and U.S. Bank National, Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Form S-3 Registration No. 333-162451 (Filed on October 13, 2009)

116

 

           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 4   4.19 Tenth Supplemental Indenture, dated as of March 19, 2010, by and between the Company and U.S. Bank National, Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Quarterly Report onForm 10-Q(Filed with the SEC on May 7, 2010; FileNo. 001-11690)
 4   4.20 Eleventh Supplemental Indenture, dated as of August 12, 2010, by and between the Company and U.S. Bank National, Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Quarterly Report onForm 10-Q(Filed with the SEC on November 11, 2010; File No. 001-11690)
 4   4.21 Twelfth Supplemental Indenture, dated as of November 5, 2010, by and between the Company and U.S. Bank National, Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee Filed herewith
 4   4.22 Form of Fixed Rate Senior Medium-Term Note Annual Report onForm 10-K(Filed with the SEC on March 30, 2000; FileNo. 001-11690)
 4   4.23 Form of Fixed Rate Subordinated Medium-Term Note Annual Report onForm 10-K(Filed with the SEC on March 30, 2000; FileNo. 001-11690)
 4   4.24 Form of Floating Rate Subordinated Medium-Term Note Annual Report onForm 10-K(Filed with the SEC on March 30, 2000; FileNo. 001-11690)
 4   4.25 Form of 5.25% Note due 2011 Form S-4 Registration No. 333-117034 (Filed with the SEC on June 30, 2004)
 4   4.26 Form of 3.00% Convertible Senior Note due 2012 Current Report on Form 8-K (Filed with the SEC on March 16, 2007; FileNo. 001-11690)
 4   4.27 Form of 3.50% Convertible Senior Note due 2011 Current Report on Form 8-K (Filed with the SEC on September 1, 2006; File No. 001-11690)
 4   4.28 Eighth Amended and Restated Credit Agreement, dated as of October 20, 2010, by and among the Company, DDR PR Ventures LLC, S.E., the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent Current Report on Form 8-K (Filed with the SEC on October 21, 2010; File No. 001-11690)
 4   4.29 First Amended and Restated Secured Term Loan Agreement, dated June 29, 2006, by and among the Company and Keybanc Capital Markets and Banc of America Securities, LLC and other lenders named therein Current Report on Form 8-K (Filed with the SEC on July 6, 2006; File No. 001-11690)

117

 

           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 4   4.30 Second Amendment to the First Amended and Restated Secured Term Loan Agreement, dated March 30, 2007, by and among the Company, Keybanc Capital Markets and Banc of America Securities, LLC and other lenders named therein Quarterly Report on Form 10-Q (Filed with the SEC on May 10, 2007; FileNo. 001-11690)
 4   4.31 Third Amendment to the First Amended and Restated Secured Term Loan Agreement, dated December 10, 2007, by and among the Company, Keybanc Capital Markets and Banc of America Securities, LLC and other lenders named therein Current Report on Form 8-K (Filed with the SEC on December 12, 2007; File No. 001-11690)
 4   4.32 Fourth Amendment to the First Amended and Restated Secured Term Loan Agreement, dated October 20, 2010, by and among the Company, DDR PR Ventures LLC, S.E., KeyBank National Association, as Administrative Agent, and the other several banks, financial institutions and other entities from time to time parties to such loan agreement Current Report on Form 8-K (Filed with the SEC on October 21, 2010; File No. 001-11690)
 4   4.33 Registration Rights Agreement, dated March 3, 2007, by and among the Company and the Initial Purchasers named therein Current Report on Form 8-K (Filed with the SEC on March 16, 2007; FileNo. 001-11690)
 4   4.34 Registration Rights Agreement, dated August 28, 2006, by and among the Company and the Initial Purchasers named therein Current Report on Form 8-K (Filed with the SEC on September 1, 2006; File No. 001-11690)
 10   10.1 Amended and Restated Directors’ Deferred Compensation Plan* Form S-8 Registration No. 333-147270 (Filed with the SEC on November 9, 2007)
 10   10.2 Elective Deferred Compensation Plan (Amended and Restated as of January 1, 2004)* Annual Report onForm 10-K(Filed with the SEC on March 15, 2004; FileNo. 001-11690)
 10   10.3 Developers Diversified Realty Corporation Equity Deferred Compensation Plan, restated as of January 1, 2009* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.4 Developers Diversified Realty Corporation 2005 Directors’ Deferred Compensation Plan* Form S-8 Registration No. 333-147270 (Filed with the SEC on November 9, 2007)
 10   10.5 Amended and Restated 1998 Developers Diversified Realty Corporation Equity-Based Award Plan* Form S-8 Registration No. 333-76537 (Filed with the SEC on April 19, 1999)
 10   10.6 Amended and Restated 2002 Developers Diversified Realty Corporation Equity-Based Award Plan* Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)
 10   10.7 Amended and Restated 2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Annual Report onForm 10-K(Filed with the SEC on February 26, 2010; File No. 001-11690)

118

 

           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 10   10.8 Amended and Restated 2008 Developers Diversified Realty Corporation Equity-Based Award Plan (Amended and Restated as of June 25, 2009)* Quarterly Report onForm 10-Q(Filed with the SEC August 7, 2009; FileNo. 001-11690)
 10   10.9 Form of Restricted Share Agreement under the 1996/1998/2002/2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Annual Report onForm 10-K(Filed with the SEC on March 16, 2005; FileNo. 001-11690)
 10   10.10 Form of Restricted Share Agreement for Executive Officers under the 2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Quarterly Report onForm 10-Q(Filed with the SEC on November 9, 2006; File No. 001-11690)
 10   10.11 Form Restricted Shares Agreement* Quarterly Report on Form 10-Q (Filed with the SEC August 7, 2009; FileNo. 001-11690)
 10   10.12 Form of Unrestricted Shares Agreement* Quarterly Report onForm 10-Q(Filed with the SEC on May 11, 2009; FileNo. 001-11690)
 10   10.13 Form of Incentive Stock Option Grant Agreement for Executive Officers under the 2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Quarterly Report onForm 10-Q(Filed with the SEC on November 9, 2006; File No. 001-11690)
 10   10.14 Form of Incentive Stock Option Grant Agreement for Executive Officers (with accelerated vesting upon retirement) under the 2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Quarterly Report onForm 10-Q(Filed with the SEC on November 9, 2006; File No. 001-11690)
 10   10.15 Form of Non-Qualified Stock Option Grant Agreement for Executive Officers under the 2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Quarterly Report onForm 10-Q(Filed with the SEC on November 9, 2006; File No. 001-11690)
 10   10.16 Form of Non-Qualified Stock Option Grant Agreement for Executive Officers (with accelerated vesting upon retirement) under the 2004 Developers Diversified Realty Corporation Equity-Based Award Plan* Quarterly Report onForm 10-Q(Filed with the SEC on November 9, 2006; File No. 001-11690)
 10   10.17 Form Stock Option Agreement for Incentive Stock Options Grants to Executive Officers* Quarterly Report onForm 10-Q(Filed with the SEC August 7, 2009; FileNo. 001-11690)
 10   10.18 Form Stock Options Agreement for Non-Qualified Stock Option Grants to Executive Officers* Quarterly Report onForm 10-Q(Filed with the SEC August 7, 2009; FileNo. 001-11690)
 10   10.19 Form of Directors’ Restricted Shares Agreement, dated January 1, 2000* Form S-11 Registration No. 333-76278 (Filed with SEC on January 4, 2002; see Exhibit 10(ff) therein)
 10   10.20 Form 2009 Retention Award Agreement* Quarterly Report onForm 10-Q(Filed with the SEC on November 6, 2009; File No. 001-11690)

119

 

           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 10   10.21 Promotion Grant Agreement, dated January 1, 2010, by and between the Company and Daniel B. Hurwitz* Quarterly Report onForm 10-Q(Filed with the SEC on May 7, 2010; FileNo. 001-11690)
 10   10.22 Developers Diversified Realty Corporation Value Sharing Equity Program* Quarterly Report onForm 10-Q(Filed with the SEC on November 6, 2009; File No. 001-11690)
 10   10.23 Amended and Restated Employment Agreement, dated July 29, 2009, by and between the Company and Daniel B. Hurwitz* Quarterly Report onForm 10-Q(Filed with the SEC on November 6, 2009; File No. 001-11690)
 10   10.24 Amended and Restated Employment Agreement, dated July 29, 2009, by and between the Company and Scott A. Wolstein* Quarterly Report onForm 10-Q(Filed with the SEC on November 6, 2009; File No. 001-11690)
 10   10.25 Amended and Restated Employment Agreement, dated December 29, 2008, by and between the Company and David J. Oakes* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.26 Employment Agreement, dated December 29, 2008, by and between the Company and Paul Freddo* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.27 Amended and Restated Employment Agreement, dated December 29, 2008, by and between the Company and John S. Kokinchak* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.28 Amended and Restated Employment Agreement, dated December 29, 2008, by and between the Company and Robin R. Walker-Gibbons* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.29 Amended and Restated Employment Agreement, dated December 29, 2008, by and between the Company and Richard E. Brown* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.30 Letter Agreement, dated March 23, 2010, by and between the Company and Richard E. Brown* Quarterly Report onForm 10-Q(Filed with the SEC on August 6, 2010; FileNo. 001-11690)
 10   10.31 Amended and Restated Employment Agreement, dated December 29, 2008, by and between the Company and William H. Schafer* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.32 Separation Agreement and Release, dated January 26, 2010, by and between the Company and William H. Schafer* Current Report on Form 8-K (Filed with the SEC on January 26, 2010; File No. 001-11690)
 10   10.33 Amended and Restated Employment Agreement, dated December 29, 2008, by and between the Company and Joan U. Allgood* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)

120

 

           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 10   10.34 Separation Agreement and Release, dated December 20, 2010, by and between the Company and Joan U. Allgood* Filed herewith
 10   10.35 Separation Agreement and Release, dated July 28, 2009, by and between the Company and Timothy J. Bruce* Quarterly Report onForm 10-Q(Filed with the SEC on November 6, 2009; File No. 001-11690)
 10   10.36 Form of Change in Control Agreement, entered into with certain officers of the Company* Annual Report onForm 10-K(Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.37 Form of Indemnification Agreement for directors of the Company Current Report on Form 8-K (Filed with the SEC on April 7, 2009; FileNo. 001-11690)
 10   10.38 Form of Indemnification Agreement for executive officers of the Company Current Report on Form 8-K (Filed with the SEC on April 7, 2009; FileNo. 001-11690)
 10   10.39 Form of Medium-Term Note Distribution Agreement Annual Report onForm 10-K(Filed with the SEC on March 30, 2000; FileNo. 001-11690)
 10   10.40 Program Agreement for Retail Value Investment Program, dated February 11, 1998, by and among Retail Value Management, Ltd., the Company and The Prudential Insurance Company of America Annual Report onForm 10-K(Filed with the SEC on March 15, 2004; FileNo. 001-11690)
 10   10.41 Stock Purchase Agreement, dated as of February 23, 2009, between the Company and Alexander Otto (including the forms of Warrant, Investor Rights Agreement, Waiver Agreement, Tax Agreement and Voting Agreement) Current Report on Form 8-K (Filed with the SEC on February 27, 2009; File No. 001-11690)
 10   10.42 Investors’ Rights Agreement, dated as of May 11, 2009, by and between the Company and Alexander Otto Current Report on Form 8-K (Filed with the SEC on May 11, 2009; FileNo. 001-11690)
 10   10.43 Waiver Agreement, dated as of May 11, 2009, by and between the Company and Alexander Otto Current Report on Form 8-K (Filed with the SEC on May 11, 2009; FileNo. 001-11690)
 10   10.44 Purchase and Sale Agreement, dated July 9, 2008, by and between the Company and Wolstein Business Enterprises, L.P. Current Report on Form 8-K (Filed with the SEC on July 15, 2008; FileNo. 001-11690)
 12   12.1 Computation of Ratio of Earnings to Fixed Charges Filed herewith
 12   12.2 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends Filed herewith
 21   21.1 List of Subsidiaries Filed herewith
 23   23.1 Consent of PricewaterhouseCoopers LLP Filed herewith
 31   31.1 Certification of principal executive officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 Filed herewith

121

 

           
Exhibit
      
No.
 Form
    
Under
 10-K
   Filed Herewith or
Reg.S-K
 Exhibit
   Incorporated Herein by
Item 601 No. Description Reference
 
 31   31.2 Certification of principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 Filed herewith
 32   32.1 Certification of chief executive officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 Filed herewith
 32   32.2 Certification of chief financial officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 Filed herewith
 101   101.INS XBRL Instance Document Submitted electronically herewith
 101   101.SCH XBRL Taxonomy Extension Schema Document Submitted electronically herewith
 101   101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Submitted electronically herewith
 101   101.DEF XBRL Taxonomy Extension Definition Linkbase Document Submitted electronically herewith
 101   101.LAB XBRL Taxonomy Extension Label Linkbase Document Submitted electronically herewith
 101   101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Submitted electronically herewith
 
 
* Management contracts and compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 15(b) ofForm 10-K.
 
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2010 and 2009, (ii) Consolidated Statements of Operations for the Three Years Ended December 31, 2010, (iii) Consolidated Statements of Equity for the Three Years Ended December 31, 2010, (iv) Consolidated Statements of Cash Flows for the Three Years Ended Decembers 31, 2010, and (v) Notes to the Consolidated Financial Statements.
 
In accordance with Rule 406T ofRegulation S-T,the XBRL related information in Exhibit 101 to this Annual Report onForm 10-Kshall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

122

 

DEVELOPERS DIVERSIFIED REALTY CORPORATION
 
INDEX TO FINANCIAL STATEMENTS
 
     
  Page
 
Financial Statements:
    
Report of Independent Registered Public Accounting Firm
  F-2 
Consolidated Balance Sheets at December 31, 2010 and 2009
  F-3 
Consolidated Statements of Operations for the three years ended December 31, 2010
  F-4 
Consolidated Statements of Equity for the three years ended December 31, 2010
  F-5 
Consolidated Statements of Cash Flows for the three years ended December 31, 2010
  F-6 
Notes to Consolidated Financial Statements
  F-7 
Financial Statement Schedules:
    
II — Valuation and Qualifying Accounts and Reserves for the three years ended December 31, 2010
  F-56 
III — Real Estate and Accumulated Depreciation at December 31, 2010
  F-57 
IV — Mortgage Loans on Real Estate at December 31, 2010
  F-68 
 
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
 
Financial statements of the Company’s unconsolidated joint venture companies have been omitted because they do not meet the significant subsidiary definition of S-X 210.1-02(w).


F-1

 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Shareholders of
Developers Diversified Realty Corporation:
 
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Developers Diversified Realty Corporation and its subsidiaries (the “Company”) at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010 based on criteria established inInternal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in “Management’s Report on Internal Control over Financial Reporting” appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
 
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it assesses consolidation principles for variable interest entities in 2010.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
/s/  PRICEWATERHOUSECOOPERS LLP
 
Cleveland, Ohio
February 28, 2011


F-2

 

CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 
         
  December 31, 
  2010  2009 
 
Assets
        
Land
 $1,837,403  $1,971,782 
Buildings
  5,491,489   5,694,659 
Fixtures and tenant improvements
  339,129   287,143 
         
   7,668,021   7,953,584 
Less: Accumulated depreciation
  (1,452,112)  (1,332,534)
         
   6,215,909   6,621,050 
Land held for development and construction in progress
  743,218   858,900 
Real estate held for sale, net
  —   10,453 
         
Total real estate assets, net
  6,959,127   7,490,403 
Investments in and advances to joint ventures
  417,223   420,541 
Cash and cash equivalents
  19,416   26,172 
Restricted cash
  4,285   95,673 
Accounts receivable, net
  123,259   146,809 
Notes receivable
  120,330   74,997 
Deferred charges, less accumulated amortization of $25,446 and $34,945, respectively
  44,988   33,162 
Other assets, net
  79,462   138,849 
         
  $7,768,090  $8,426,606 
         
Liabilities and Equity
        
Unsecured indebtedness:
        
Senior notes
 $2,043,582  $1,689,841 
Revolving credit facility
  279,865   775,028 
         
   2,323,447   2,464,869 
Secured indebtedness:
        
Term debt
  600,000   800,000 
Mortgage and other secured indebtedness
  1,378,553   1,913,794 
         
   1,978,553   2,713,794 
         
Total indebtedness
  4,302,000   5,178,663 
Accounts payable and accrued expenses
  127,715   130,404 
Dividends payable
  12,092   10,985 
Equity derivative liability - affiliate
  96,237   56,080 
Other liabilities
  95,359   98,138 
         
   4,633,403   5,474,270 
         
Commitments and contingencies (Note 8)
        
         
Developers Diversified Realty Corporation Equity:
        
Preferred shares (Note 9)
  555,000   555,000 
Common shares, with par value, $0.10 stated value; 500,000,000 shares authorized; 256,267,750 and 201,742,589 shares issued at December 31, 2010 and 2009, respectively
  25,627   20,174 
Paid-in capital
  3,868,990   3,374,528 
Accumulated distributions in excess of net income
  (1,378,341)  (1,098,661)
Deferred compensation obligation
  14,318   17,838 
Accumulated other comprehensive income
  25,646   9,549 
Less: Common shares in treasury at cost: 712,310 and 657,012 shares at December 31, 2010 and 2009, respectively
  (14,638)  (15,866)
         
Total DDR shareholders’ equity
  3,096,602   2,862,562 
Non-controlling interests
  38,085   89,774 
         
Total equity
  3,134,687   2,952,336 
         
  $7,768,090  $8,426,606 
         
 
The accompanying notes are an integral part of these consolidated financial statements.


F-3

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Revenues from operations:
            
Minimum rents
 $535,284  $528,230  $543,457 
Percentage and overage rents
  6,299   7,751   8,630 
Recoveries from tenants
  175,309   174,826   180,711 
Fee and other income
  86,177   86,592   92,270 
             
   803,069   797,399   825,068 
             
Rental operation expenses:
            
Operating and maintenance
  137,862   135,153   129,852 
Real estate taxes
  108,299   102,391   97,199 
Impairment charges
  116,462   12,745   29,603 
General and administrative
  85,573   94,365   97,719 
Depreciation and amortization
  222,862   217,841   210,541 
             
   671,058   562,495   564,914 
             
Other income (expense):
            
Interest income
  7,346   11,984   5,230 
Interest expense
  (226,464)  (221,334)  (229,163)
Gain on debt retirement, net
  485   145,050   10,455 
Loss on equity derivative instruments
  (40,157)  (199,797)  — 
Other expense, net
  (24,346)  (29,192)  (28,131)
             
   (283,136)  (293,289)  (241,609)
             
(Loss) income before earnings from equity method investments and other items
  (151,125)  (58,385)  18,545 
Equity in net income (loss) of joint ventures
  5,600   (9,733)  17,719 
Impairment of joint venture investments
  (227)  (184,584)  (106,957)
(Loss) gain on change in control of interests
  (428)  23,865   — 
             
Loss before tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes
  (146,180)  (228,837)  (70,693)
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes
  (47,992)  767   17,544 
             
Loss from continuing operations
  (194,172)  (228,070)  (53,149)
Loss from discontinued operations
  (54,867)  (184,697)  (36,882)
             
Loss before gain on disposition of real estate
  (249,039)  (412,767)  (90,031)
Gain on disposition of real estate, net of tax
  1,318   9,127   6,962 
             
Net loss
 $(247,721) $(403,640) $(83,069)
             
Non-controlling interests
  38,363   47,047   11,139 
             
Net loss attributable to DDR
 $(209,358) $(356,593) $(71,930)
             
Preferred dividends
  (42,269)  (42,269)  (42,269)
             
Net loss attributable to DDR common shareholders
 $(251,627) $(398,862) $(114,199)
             
Per share data:
            
Basic earnings per share data:
            
Loss from continuing operations attributable to DDR common shareholders
 $(0.91) $(1.65) $(0.75)
Loss from discontinued operations attributable to DDR common shareholders
  (0.12)  (0.86)  (0.21)
             
Net loss attributable to DDR common shareholders
 $(1.03) $(2.51) $(0.96)
             
Diluted earnings per share data:
            
Loss from continuing operations attributable to DDR common shareholders
 $(0.91) $(1.65) $(0.75)
Loss from discontinued operations attributable to DDR common shareholders
  (0.12)  (0.86)  (0.21)
             
Net loss attributable to DDR common shareholders
 $(1.03) $(2.51) $(0.96)
             
 
The accompanying notes are an integral part of these consolidated financial statements.


F-4

 

CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share amounts)
 
                                     
  Developers Diversified Realty Corporation Equity       
           Accumulated
     Accumulated
          
           Distributions in
  Deferred
  Other
  Treasury
  Non-
    
  Preferred
  Common
  Paid-in
  Excess of Net
  Compensation
  Comprehensive
  Stock
  Controlling
    
  Shares  Shares  Capital  Income (Loss)  Obligation  Income (Loss)  at Cost  Interests  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 8,142 common shares related to exercise of stock options, dividend reinvestment plan, performance plan and director compensation
  —   1   (2,671)  —   702   —   8,711   —   6,743 
Issuance of 1,840,939 common shares for cash
  —   184   (286,220)  —   —   —   327,387   —   41,351 
Issuance of restricted stock
  —   —   (5,681)  —   4,289   —   6,578   —   5,186 
Vesting of restricted stock
  —   —   16,745   —   (13,971)  —   (4,895)  —   (2,121)
Stock-based compensation
  —   —   24,018   —   —   —   —   —   24,018 
Redemption of 463,185 operating partnership units in exchange for common shares
  —   —   (5,172)  —   —   —   23,327   (9,104)  9,051 
Contributions from non-controlling interests
  —   —   —   —   —   —   —   55,039   55,039 
Distributions to non-controlling interests
  —   —   —   —   —   —   —   (11,162)  (11,162)
Loss on sale of non-controlling interest
  —   —   —   —   —   —   —   (20,562)  (20,562)
Adjustment to redeemable operating partnership units
  —   —   536   —   —   —   —   —   536 
Dividends declared-common shares
  —   —   —   (248,612)  —   —   —   —   (248,612)
Dividends declared-preferred shares
  —   —   —   (42,269)  —   —   —   —   (42,269)
Comprehensive loss (Note 13):
                                    
Allocation of net loss
  —   —   —   (71,930)  —   —   —   (11,139)  (83,069)
Other comprehensive income:
                                    
Change in fair value of interest rate contracts
  —   —   —   —   —   (13,293)  —   —   (13,293)
Amortization of interest rate contracts
  —   —   —   —   —   (643)  —   —   (643)
Foreign currency translation
  —   —   —   —   —   (44,878)  —   (3,823)  (48,701)
                                     
Comprehensive loss
  —   —   —   (71,930)  —   (58,814)  —   (14,962)  (145,706)
                                     
Balance, December 31, 2008
  555,000   12,864   2,849,364   (635,239)  13,882   (49,849)  (8,731)  127,503   2,864,794 
Issuance of 261,580 common shares related to the exercise of stock options, dividend reinvestment plan and director compensation
  —   16   795   —   —   —   362   —   1,173 
Issuance of 56,630,606 common shares for cash
  —   5,656   311,140   —   —   —   709   —   317,505 
Equity derivative instruments
  —   —   143,716   —   —   —   —   —   143,716 
Issuance of restricted stock
  —   194   1,069   —   3,045   —   (629)  —   3,679 
Vesting of restricted stock
  —   —   6,554   —   911   —   (7,577)  —   (112)
Stock-based compensation
  —   —   12,813   —   —   —   —   —   12,813 
Contributions from non-controlling interests
  —   —   —   —   —   —   —   8,271   8,271 
Distributions to non-controlling interests
  —   —   —   —   —   —   —   (1,992)  (1,992)
Dividends declared-common shares
  —   1,444   49,077   (64,560)  —   —   —   —   (14,039)
Dividends declared-preferred shares
  —   —   —   (42,269)  —   —   —   —   (42,269)
Comprehensive loss (Note 13):
                                    
Allocation of net loss
  —   —   —   (356,593)  —   —   —   (47,047)  (403,640)
Other comprehensive income:
                                    
Change in fair value of interest rate contracts
  —   —   —   —   —   15,664   —   —   15,664 
Amortization of interest rate contracts
  —   —   —   —   —   (373)  —   —   (373)
Foreign currency translation
  —   —   —   —   —   44,107   —   3,039   47,146 
                                     
Comprehensive loss
  —   —   —   (356,593)  —   59,398   —   (44,008)  (341,203)
                                     
Balance, December 31, 2009
  555,000   20,174   3,374,528   (1,098,661)  17,838   9,549   (15,866)  89,774   2,952,336 
Cumulative effect of adoption of a new accounting standard (Note 1)
  —   —   —   (7,848)  —   —   —   (12,384)  (20,232)
Deconsolidation of interests
  —   —   —   —   —   —   —   3,876   3,876 
Issuance of 212,349 common shares related to the exercise of stock options, dividend reinvestment plan and director compensation
  —   21   1,232   —   —   —   109   —   1,362 
Issuance of 52,792,716 common shares for cash
  —   5,279   433,473   —   —   —   1,678   —   440,430 
Convertible debt instruments
  —   —   52,497   —   —   —   —   —   52,497 
Issuance of restricted stock
  —   153   (199)  —   741   —   (1,542)  —   (847)
Vesting of restricted stock
  —   —   4,761   —   (4,261)  —   983   —   1,483 
Stock-based compensation
  —   —   2,698   —   —   —   —   —   2,698 
Contributions from non-controlling interests
  —   —   —   —   —   —   —   746   746 
Distributions to non-controlling interests
  —   —   —   —   —   —   —   (2,886)  (2,886)
Dividends declared-common shares
  —   —   —   (20,205)  —   —   —   —   (20,205)
Dividends declared-preferred shares
  —   —   —   (42,269)  —   —   —   —   (42,269)
Comprehensive loss (Note 13):
                                    
Allocation of net loss
  —   —   —   (209,358)  —   —   —   (38,363)  (247,721)
Other comprehensive income:
                                    
Change in fair value of interest rate contracts
  —   —   —   —   —   10,261   —   —   10,261 
Amortization of interest rate contracts
  —   —   —   —   —   (430)  —   —   (430)
Foreign currency translation
  —   —   —   —   —   6,266   —   (2,678)  3,588 
                                     
Comprehensive loss
  —   —   —   (209,358)  —   16,097   —   (41,041)  (234,302)
                                     
  $555,000  $25,627  $3,868,990  $(1,378,341) $14,318  $25,646  $(14,638) $38,085  $3,134,687 
                                     
 
The accompanying notes are an integral part of these consolidated financial statements.


F-5

 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
             
  For the Year Ended December 31 
  2010  2009  2008 
 
Cash flow from operating activities:
            
Net loss
 $(247,721) $(403,640) $(83,069)
Adjustments to reconcile net loss to net cash flow provided by operating activities:
            
Depreciation and amortization
  227,304   233,967   246,374 
Stock-based compensation
  6,459   20,398   27,970 
Amortization of deferred finance costs and settled interest rate protection agreements
  13,269   10,894   9,946 
Accretion of convertible debt discount
  8,204   12,238   15,255 
Gain on debt retirement, net
  (485)  (145,050)  (10,455)
Loss on equity derivative instruments
  40,157   199,797   — 
Settlement of accreted debt discount on repurchase of convertible senior notes
  (8,358)  (17,560)  (541)
Net cash paid from interest rate hedging contracts
  —   —   (5,410)
Equity in net (income) loss of joint ventures
  (5,600)  9,733   (17,719)
Impairment of joint venture investments
  227   184,584   106,957 
Net gain on change in control of interests
  (5,221)  (23,865)  — 
Gain on sale of joint venture stock
  —   (2,824)  — 
Cash distributions from joint ventures
  7,334   10,889   24,427 
(Gain) loss on disposition of real estate
  (7,093)  14,900   (2,132)
Impairment charges
  171,900   160,112   85,264 
Change in notes receivable interest reserve
  (3,005)  (9,683)  — 
Net change in accounts receivable
  21,045   13,902   (1,520)
Net change in accounts payable and accrued expenses
  4,323   (11,691)  18,783 
Net change in other operating assets and liabilities
  55,385   (28,166)  (22,189)
             
Total adjustments
  525,845   632,575   475,010 
             
Net cash flow provided by operating activities
  278,124   228,935   391,941 
             
Cash flow from investing activities:
            
Proceeds from disposition of real estate
  156,374   348,176   133,546 
Real estate developed or acquired, net of liabilities assumed
  (164,391)  (208,768)  (398,563)
Equity contributions to joint ventures
  (30,311)  (28,115)  (98,113)
Repayment of (advances to) joint venture advances, net
  442   (1,650)  (56,926)
Distributions of proceeds from sale and refinancing of joint venture interests
  24,339   7,442   12,154 
Return on investments in joint ventures
  22,094   19,565   28,211 
Issuance of notes receivable, net
  (62,958)  (1,885)  (36,047)
Decrease (increase) in restricted cash
  86,173   16,119   (52,834)
             
Net cash flow provided by (used for) investing activities
  31,762   150,884   (468,572)
             
Cash flow from financing activities:
            
(Repayments of) proceeds from revolving credit facilities, net
  (492,224)  (270,692)  343,201 
Proceeds from term loan borrowings, mortgages and other secured debt
  23,686   699,221   466,936 
Repayment on term loans and mortgage debt
  (601,678)  (497,632)  (306,309)
Repayment of senior notes
  (541,606)  (854,720)  (158,239)
Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $1,183 and $200 in 2010 and 2009, respectively
  933,370   294,685   — 
Payment of debt issuance costs
  (13,773)  (20,634)  (5,522)
(Purchase of) proceeds from the issuance of common shares in conjunction with exercise of stock options and dividend reinvestment plan
  (1,763)  (3,079)  1,371 
Proceeds from issuance of common shares, net of underwriting commissions and offering expenses of $998 and $459 in 2010 and 2009, respectively
  440,430   317,505   41,352 
Contributions from non-controlling interests
  746   8,271   55,039 
Purchase of redeemable operating partnership units
  —   —   (46)
Distributions to non-controlling interest and redeemable operating partnership units
  (2,886)  (1,984)  (11,722)
Dividends paid
  (61,367)  (52,289)  (369,765)
             
Net cash (used for) provided by financing activities
  (317,065)  (381,348)  56,296 
             
Cash and cash equivalents
            
Decrease in cash and cash equivalents
  (7,179)  (1,529)  (20,335)
Effect of exchange rate changes on cash and cash equivalents
  423   (1,793)  282 
Cash and cash equivalents, beginning of year
  26,172   29,494   49,547 
             
Cash and cash equivalents, end of year
 $19,416  $26,172  $29,494 
             
 
The accompanying notes are an integral part of these consolidated financial statements.


F-6

 

Notes to Consolidated Financial Statements
 
1.  Summary of Significant Accounting Policies
 
Nature of Business
 
Developers Diversified Realty Corporation and its related real estate joint ventures and subsidiaries (collectively, the “Company” or “DDR”) are primarily engaged in the business of acquiring, expanding, owning, developing, redeveloping, leasing, managing and operating shopping centers. Unless otherwise provided, references herein to the Company or DDR include Developers Diversified Realty Corporation, its wholly-owned and majority-owned subsidiaries and its consolidated and unconsolidated joint ventures. The tenant base primarily includes national and regional retail chains and local retailers. Consequently, the Company’s credit risk is concentrated in the retail industry.
 
Consolidated revenues, including those classified within discontinued operations, derived from the Company’s largest tenant, Walmart, aggregated approximately 5.3%, 4.9% and 4.3% of total revenues for the years ended December 31, 2010, 2009 and 2008, respectively. Adverse changes in general or local economic conditions could result in the inability of some existing tenants to meet their lease obligations and could adversely affect the Company’s ability to attract or retain tenants. During the three years ended December 31, 2010, 2009 and 2008, certain national and regional retailers experienced financial difficulties, and several filed for protection under bankruptcy laws.
 
Principles of Consolidation
 
In June 2009, the Financial Accounting Standards Board (“FASB”) amended its guidance on accounting for variable interest entities (“VIEs”) and issued Accounting Standards Codification No. 810, Consolidation(“ASC 810”), which introduced a more qualitative approach to evaluating VIEs for consolidation. The new accounting guidance resulted in a change in the Company’s accounting policy effective January 1, 2010. This standard requires a company to perform an analysis to determine whether its variable interests give it a controlling financial interest in a VIE. This analysis identifies the primary beneficiary of a VIE as the entity that has (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, this standard requires a company to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed. This standard requires continuous reassessment of primary beneficiary status rather than periodic, event-driven reassessments as previously required and incorporates expanded disclosure requirements. This new accounting guidance was effective for the Company on January 1, 2010, and is being applied prospectively.
 
At December 31, 2010, the Company’s investments in consolidated real estate joint ventures in which the Company is deemed to be the primary beneficiary have total real estate assets of $374.2 million, mortgages of $42.9 million and other liabilities of $13.7 million.
 
The Company’s adoption of ASC 810 resulted in the deconsolidation of one entity in which the Company has a 50% interest (the “Deconsolidated Land Entity”). The Deconsolidated Land Entity owns one real estate project, consisting primarily of land under development, which had $28.5 million of assets as of December 31, 2009. As a result of the initial application of ASC 810, the Company recorded its retained interest in the Deconsolidated Land Entity at its carrying amount. The difference between the net amount removed from the balance sheet of the Deconsolidated Land Entity and the amount reflected in investments in and advances to joint ventures of approximately $7.8 million was recognized as a cumulative effect adjustment to accumulated distributions in excess of net income. This difference was primarily due to the recognition of an other than temporary impairment charge that would have been recorded had ASC 810 been effective in 2008. The Company’s maximum exposure to loss at December 31, 2010 is equal to its investment in the Deconsolidated Land Entity of $12.6 million.
 
The Company has a 50% interest in a joint venture with EDT Retail Trust (formerly, Macquarie DDR Trust (“MDT”)), DDR MDT MV, that currently owns the underlying real estate formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008 (the “Mervyns Joint Venture”). In connection with the recapitalization of MDT in June 2010, EDT Retail Trust (ASX: EDT) (“EDT”) assumed


F-7

 

 
MDT’s 50% interest in the Mervyns Joint Venture. The Company held a 50% economic interest in the Mervyns Joint Venture, which was considered a VIE. DDR provided management, financing, expansion, re-tenanting and oversight services for this real estate investment through August 2010.
 
The Company was determined to be the primary beneficiary until August 2010 due to related party considerations, as well as being the member determined to have a greater exposure to variability in expected losses, as DDR was entitled to earn certain fees from the Mervyns Joint Venture. DDR earned aggregate fees of $0.9 million, $0.1 million and $1.4 million during 2010, 2009 and 2008, respectively. All fees earned from the joint venture were eliminated in consolidation prior to deconsolidation. The amounts related to this entity are aggregated with the Company’s other consolidated VIEs on the Company’s consolidated balance sheet at December 31, 2009.
 
In August 2010, the 25 assets owned by the Mervyns Joint Venture were transferred to the control of a court-appointed receiver. As a result, the Company no longer has a controlling financial interest in the entity. Consequently, the Mervyns Joint Venture was deconsolidated as the Company was no longer in control of the entity. Upon deconsolidation, the Company recorded a gain of approximately $5.6 million because the carrying value of the non-recourse debt exceeded the carrying value of the collateralized assets of the joint venture. Following the appointment of the receiver, the Company no longer has any effective economic rights or obligations in the Mervyns Joint Venture. The revenues and expenses associated with the Mervyns Joint Venture for all of the periods presented, including the $5.6 million gain, are classified within discontinued operations in the consolidated statements of operations (Note 12). Subsequent to the deconsolidation of this joint venture, the Company accounts for its retained interest in this joint venture investment, which approximates zero at December 31, 2010, under the cost method of accounting because the Company does not have the ability to exercise significant influence.
 
The Company’s consolidated balance sheet includes the following relating to the Mervyns Joint Venture (in millions):
 
     
  December 31, 2009
 
Real estate, net
 $218.7 
Restricted cash
  50.5 
Mortgage debt
  225.4 
Non-controlling interests
  22.4 
 
Statement of Cash Flows and Supplemental Disclosure of Non-Cash Investing and Financing Information
 
Non-cash investing and financing activities are summarized as follows (in millions):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Consolidation of the net assets (excluding mortgages as disclosed below) of previously unconsolidated joint ventures
 $—  $136.6  $— 
Redemption of interest in a joint venture
  —   (27.9)  — 
Mortgages and liabilities assumed of previously unconsolidated joint ventures
  —   82.8   17.5 
Dividends declared, not paid
  12.1   11.0   7.0 
Dividends paid in common shares
  —   50.8   — 
Deconsolidation of net assets from the adoption of ASC 810
  20.2   —   — 
Reduction of non-controlling interests from the adoption of ASC 810
  12.4   —   — 
Deconsolidation of net assets of Mervyns Joint Venture
  15.2   —   — 
Reduction of non-controlling interests due to deconsolidation of Mervyns Joint Venture
  3.9   —   — 
Foreclosure of note receivable and transfer of collateral
  19.0   —   — 
Share issuance for operating partnership unit redemption
  —   —   9.1 


F-8

 

 
The transactions above did not provide or use cash in the years presented and, accordingly, are not reflected in the consolidated statements of cash flows.
 
Real Estate
 
Real estate assets, which includes construction in progress and land held for development, are stated at cost less accumulated depreciation.
 
Depreciation and amortization is recorded on a straight-line basis over the estimated useful lives of the assets as follows:
 
   
Buildings
 Useful lives, ranging from 30 to 40 years
Building improvements
 Useful lives, ranging from five to 40 years
Fixtures and tenant improvements
 Useful lives, which approximate lease terms, where applicable
 
Expenditures for maintenance and repairs are charged to operations as incurred. Significant renovations that improve or extend the life of the asset are capitalized.
 
Land held for development and construction in progress includes land held for future development, shopping center developments and significant expansions and redevelopments. In addition, the Company capitalized certain direct and incremental internal construction and software development and implementation costs of $9.7 million, $11.7 million and $14.6 million in 2010, 2009 and 2008, respectively.
 
Purchase Price Accounting
 
Upon acquisition of properties, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and intangible assets generally consisting of: (i) above- and below-market leases; (ii) in-place leases; and (iii) tenant relationships. The Company allocates the purchase price to assets acquired and liabilities assumed on a gross basis based on their relative fair values at the date of acquisition. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence, marketing and leasing activities and utilizes various valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, estimates of replacement costs net of depreciation and available market information. Above- and below-market lease values are recorded based on the present value of the difference between the contractual amounts to be paid and management’s estimate of the fair market lease rates for each in-place lease and amortized over the remaining life of the respective leases (plus fixed-rate renewal periods for below market leases) as an adjustment to base rental revenue. The purchase price is further allocated to in-place lease values and tenant relationship values based on management’s evaluation of the specific characteristics of the acquired lease portfolio and the Company’s overall relationship with anchor tenants. Such amounts are amortized to depreciation and amortization expense over the weighted average remaining initial term (and expected renewal periods for tenant relationships). The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.
 
Intangible assets associated with property acquisitions are included in other assets and other liabilities, as appropriate, in the Company’s consolidated balance sheets. In the event a tenant terminates its lease prior to the contractual expiration, the unamortized portion of the related intangible asset or liability is written off. At December 31, 2010 and 2009, below-market leases aggregated a liability of $22.8 million and $25.9 million, respectively. At December 31, 2010 and 2009, above-market leases aggregated an asset of $6.4 million and $8.7 million, respectively.
 
Real Estate Impairment Assessment
 
The Company reviews its real estate assets, including land held for development and construction in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment indicators are assessed separately for each operating property and include, but are not limited to, significant decreases in real estate property net operating income and occupancy percentages, as well as projected losses on potential future sales. Impairment indicators for pre-development projects, which


F-9

 

 
typically include costs incurred during the beginning stages of a potential development, and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, projected revenues or cash flows, development costs, market factors and sustainability of development projects. An asset is considered impaired when the undiscounted future cash flows are not sufficient to recover the asset’s carrying value. Estimates of future cash flows used to assess the recoverability of construction in progress and land held for development are based upon the expected service potential of the asset when development is substantially complete and include all cash flows associated with future expenditures necessary to develop the asset, including interest payments that will be capitalized as part of its cost. The determination of undiscounted cash flows requires significant estimates made by management and considers the most likely expected course of action at the balance sheet date based on current plans, intended holding periods and available market information. If the Company’s estimates of the projected future cash flows, anticipated holding periods or market conditions change, its evaluation of impairment losses may be different, and such differences could be material to the consolidated financial statements. The determination of anticipated cash flows is inherently subjective and is based, in part, on assumptions regarding holding periods, future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. If the Company is evaluating the potential sale of an asset or land held for development, the undiscounted future cash flows analysis is probability weighted based upon management’s best estimate of the likelihood of the alternative courses of action as of the balance sheet date. If such impairment is present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The Company recorded aggregate impairment charges, including those classified within discontinued operations, of approximately $171.9 million, $154.7 million and $79.9 million (Note 11) relating to consolidated real estate investments during the years ended December 31, 2010, 2009 and 2008, respectively.
 
Real Estate Held for Sale
 
The Company generally considers assets to be held for sale when the transaction has been approved by the appropriate level of management and there are no known significant contingencies relating to the sale such that the property sale within one year is considered probable. This generally occurs when a sales contract is executed with no contingencies and the prospective buyer has significant funds at risk to ensure performance. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. If the Company is not expected to have any significant continuing involvement following the sale, the results of operations are reflected in the current period and retrospectively as discontinued operations.
 
Disposition of Real Estate and Real Estate Investments
 
Sales of real estate include the sale of outparcels, operating properties, investments in real estate joint ventures and partial sales to real estate joint ventures. Gains from dispositions are recognized using the full accrual or partial sale methods, provided that various criteria relating to the terms of sale and any subsequent involvement by the Company with the properties sold are met. If the criteria for sale recognition or gain recognition are not met because of a form of continuing involvement, the accounting for such transactions is dependent on the nature of the continuing involvement. In certain cases, a sale might not be recognized, and in others all or a portion of the gain might be deferred.
 
Pursuant to the definition of a component of an entity and, assuming no significant continuing involvement, the sale of a retail or industrial operating property is considered discontinued operations. Interest expense, which is specifically identifiable to the property, is included in the computation of interest expense attributable to discontinued operations. Consolidated interest at the corporate level is allocated to discontinued operations based on the proportion of net assets disposed.
 
Interest and Real Estate Taxes
 
Interest and real estate taxes incurred relating to the construction, expansion or redevelopment of shopping centers are capitalized and depreciated over the estimated useful life of the building. This includes interest incurred on funds invested in or advanced to unconsolidated joint ventures with qualifying development activities. The Company will cease the capitalization of these expenses when construction activities are substantially completed


F-10

 

 
and the property is available for occupancy by tenants. If the Company suspends substantially all activities related to development of a qualifying asset, the Company will cease capitalization of interest, insurance and taxes until activities are resumed.
 
Interest paid during the years ended December 31, 2010, 2009 and 2008, aggregated $221.5 million, $249.3 million and $281.4 million, respectively, of which $12.2 million, $21.8 million and $41.1 million, respectively, was capitalized.
 
Investments in and Advances to Joint Ventures
 
To the extent that the Company’s cost basis is different from the basis reflected at the unconsolidated joint venture level, the basis difference is amortized over the life of the related assets and included in the Company’s share of equity in net (loss) income of the joint venture. On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other than temporary. The Company recorded aggregate impairment charges of approximately $0.2 million, $184.6 million and $107.0 million (Note 11) relating to its investments in unconsolidated joint ventures during the years ended December 31, 2010, 2009 and 2008, respectively. 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 the joint venture on a relative fair value basis and, where appropriate, amortizes this basis differential as an adjustment to the equity in net income (loss) recorded by the Company over the estimated remaining useful lives of the underlying assets.
 
Cash and Cash Equivalents
 
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash deposits with major financial institutions, which from time to time may exceed federally insured limits. The Company periodically assesses the financial condition of these institutions and believes that the risk of loss is minimal. Cash flows associated with items intended as hedges of identifiable transactions or events are classified in the same category as the cash flows from the items being hedged.
 
Restricted Cash
 
Restricted Cash is composed of the following (in thousands):
 
         
  December 31, 
  2010  2009 
 
Bond fund(A)
 $4,285  $45,196 
Mervyns Joint Venture(B)
  —   50,477 
         
Total restricted cash
 $4,285  $95,673 
         
 
 
(A)Under the terms of a bond issued by the Mississippi Business Finance Corporation, the initial proceeds of approximately $60.0 million from the sale of bonds are held in a trust in connection with a Company development project in Mississippi. As construction is completed on the project, the Company receives disbursements of these funds. During 2010, $40.0 million of bond funds were utilized to repay the related outstanding bond obligation.
 
(B)At December 31, 2009, the Mervyns Joint Venture had funds that were required to be held in escrow with the lender as collateral security for its mortgage loan. During 2010, $45.3 million of restricted cash was used to repay a portion of the mortgage loan and other operating expenses. The Mervyns Joint Venture was deconsolidated in the third quarter of 2010 as disclosed above.
 
Accounts Receivable
 
The Company makes estimates of the amounts that will not be collected of its accounts receivable related to base rents, straight-line rents receivable, expense reimbursements and other revenues. The Company analyzes


F-11

 

 
accounts receivable and historical bad debt levels, tenant credit worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims.
 
Accounts receivable, other than straight-line rents receivable, are expected to be collected within one year and are net of estimated unrecoverable amounts of approximately $22.6 million and $29.4 million at December 31, 2010 and 2009, respectively. At December 31, 2010 and 2009, straight-line rents receivable, net of a provision for uncollectible amounts of $3.4 million and $3.5 million, respectively, aggregated $56.2 million and $54.9 million, respectively.
 
Notes Receivable
 
Notes receivable include certain loans that are held for investment and are generally collateralized by real estate related investments. Loan receivables are recorded at stated principal amounts or at initial investment plus accretable yield for loans purchased at a discount. The Company defers certain loan origination and commitment fees, net of certain origination costs, and amortizes them over the term of the related loan. The Company considers notes receivable to be past-due or delinquent when a contractually required principal or interest payment is not remitted in accordance with the provisions of the underlying agreement. The Company evaluates the collectability of both interest and principal on each loan based on an assessment of the underlying collateral to determine whether it is impaired, and not by using internal risk ratings. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value of the underlying collateral. As the underlying collateral for a majority of the notes receivable are real estate related investments, the same valuation techniques are utilized to value the collateral as those used to determine the fair value of real estate investments for impairment purposes. Interest income on performing loans is accrued as earned. Interest income on non-performing loans is generally recognized on a cash basis.
 
Deferred Charges
 
Costs incurred in obtaining indebtedness are included in deferred charges in the accompanying consolidated balance sheets and are amortized on a straight-line basis over the terms of the related debt agreements, which approximates the effective interest method. Such amortization is reflected as interest expense in the consolidated statements of operations.
 
Revenue Recognition
 
Minimum rents from tenants are recognized using the straight-line method over the lease term of the respective leases. Percentage and overage rents are recognized after a tenant’s reported sales have exceeded the applicable sales breakpoint set forth in the applicable lease. Revenues associated with tenant reimbursements are recognized in the period that the expenses are incurred based upon the tenant lease provision. Management fees are recorded in the period earned based on a percentage of collected rent at the properties under management. Ancillary and other property-related income, included in fee and other income, includes the leasing of vacant space to temporary tenants and kiosk income, is recognized in the period earned. Lease termination fees are included in fee and other income and recognized upon the effective termination of a tenant’s lease when the Company has no further obligations under the lease. Fee income derived from the Company’s unconsolidated joint venture investments is recognized to the extent attributable to the unaffiliated ownership interest.
 
General and Administrative Expenses
 
General and administrative expenses include certain internal leasing and legal salaries and related expenses associated with the re-leasing of existing space, which are charged to operations as incurred.


F-12

 

 
Stock Option and Other Equity-Based Plans
 
Compensation cost relating to stock-based payment transactions is recognized in the financial statements based upon the grant date fair value. Forfeitures are estimated at the time of grant in order to estimate the amount of share-based awards that will ultimately vest. The forfeiture rate is based on historical rates.
 
For the years ended December 31, 2010, 2009 and 2008, stock-based compensation cost recognized by the Company was $5.7 million (which includes accelerated vesting of awards due to employee severance charges of $0.4 million), $17.4 million (which includes a charge of $15.4 million related to a change in control as defined in the equity award plan) and $29.0 million (which includes a charge of $15.8 million related to the termination of an equity award plan), respectively. For the years ended December 31, 2010, 2009 and 2008, the Company capitalized $0.2 million, $0.1 million and $0.4 million of stock-based compensation, respectively related to certain direct and incremental internal construction costs.
 
Income Taxes
 
The Company has made an election to qualify, and believes it is operating so as to qualify, as a real estate investment trust (“REIT”) for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that it makes distributions to its shareholders equal to at least the amount of its REIT taxable income as defined under Sections 856 through 860 of the Internal Revenue Code of 1986, as Amended (the “Code”) and continues to satisfy certain other requirements.
 
In connection with the REIT Modernization Act, which became effective January 1, 2001, the Company is permitted to participate in certain activities that it was previously precluded from in order to maintain its qualification as a REIT, so long as these activities are conducted in entities that elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to federal and state income taxes on the income from these activities.
 
Deferred Tax Assets
 
The Company accounts for income taxes related to its taxable REIT subsidiary (“TRS”) under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the income statement in the period that includes the enactment date.
 
The Company records net deferred tax assets to the extent it believes it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including forecasts of future taxable income, the reversal of other existing temporary differences, available net operating loss carryforwards, tax planning strategies and recent results of operations. Several of these considerations require assumptions and significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is utilizing to manage the Company. Based on this assessment, management must evaluate the need for, and amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required. In the event the Company were to determine that it would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would adjust the valuation allowance, which would reduce the provision for income taxes. Accordingly, the Company would record a valuation allowance to reduce deferred tax assets when it has determined that an uncertainty exists regarding their realizability, which would increase the provision for income taxes. The Company recorded a valuation allowance of $58.3 million (Note 17) during the year ended December 31, 2010.


F-13

 

 
Foreign Currency Translation
 
The financial statements of several international consolidated and unconsolidated joint venture investments are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and an average exchange rate for each period for revenues, expenses, gains and losses, with the Company’s proportionate share of the resulting translation adjustments recorded as Accumulated Other Comprehensive Income (Loss). Gains or losses resulting from foreign currency transactions, translated to local currency, are included in income as incurred. Foreign currency gains or losses from changes in exchange rates were not material to the consolidated operating results.
 
Treasury Stock
 
The Company’s share repurchases are reflected as treasury stock utilizing the cost method of accounting and are presented as a reduction to consolidated shareholders’ equity. Reissuances of the Company’s treasury stock at an amount below cost are recorded as a charge to paid-in capital due to the Company’s cumulative distributions in excess of net loss.
 
Derivative and Hedging Activities
 
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 if hedge accounting does not apply or the Company elects not to apply hedge accounting.
 
Use of Estimates in Preparation of Financial Statements
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.
 
Reclassifications
 
Certain reclassifications have been made to the 2009 and 2008 financial statements to conform to the 2010 presentation.


F-14

 

 
2.  Investments in and Advances to Joint Ventures
 
The Company’s significant equity method joint ventures at December 31, 2010, are as follows:
 
       
  Effective
   
  Ownership
   
Unconsolidated Real Estate Ventures Percentage(A)  Assets Owned
 
Sun Center Limited
  79.45% A shopping center in Columbus, Ohio
DDRA Community Centers Five LP
  50.0  Five shopping centers in several states
DOTRS LLC
  50.0  A shopping center in Macedonia, Ohio
Jefferson County Plaza LLC
  50.0  A shopping center in St. Louis (Arnold), Missouri
Lennox Town Center Limited
  50.0  A shopping center in Columbus, Ohio
Sansone Group/DDRC LLC
  50.0  A management and development company
Sonae Sierra Brasil BV Sarl
  47.9  10 shopping centers, a management company and three development projects in Brazil
Retail Value Investment Program IIIB LP
  25.75  A shopping center in Deer Park, Illinois
Retail Value Investment Program VIII LP
  25.75  A shopping center in Austin, Texas
RO & SW Realty LLC
  25.25  11 retail sites in several states
Coventry II DDR Buena Park LLC
  20.0  A shopping center in Buena Park, California
Coventry II DDR Fairplain LLC
  20.0  A shopping center in Benton Harbor, Michigan
Coventry II DDR Phoenix Spectrum LLC
  20.0  A shopping center in Phoenix, Arizona
Coventry II DDR Totem Lakes LLC
  20.0  A shopping center in Kirkland, Washington
DDR Domestic Retail Fund I
  20.0  63 grocery-anchored retail centers in several states
DDR Markaz II LLC
  20.0  13 neighborhood grocery-anchored retail centers in several states
DDR — SAU Retail Fund LLC
  20.0  27 grocery-anchored retail centers in several states
Service Holdings LLC
  20.0  38 retail sites in several states
Coventry II DDR Westover LLC
  20.0  A shopping center in San Antonio, Texas
Coventry II DDR Tri-County LLC
  20.0  A shopping center in Cincinnati, Ohio
DDRTC Core Retail Fund LLC
  15.0  43 shopping centers in several states
Cole MT Independence Missouri JV LLC
  14.5  A shopping center in Independence, Missouri
Coventry II DDR Bloomfield LLC
  10.0  A suspended development project in Bloomfield Hills, Michigan
Coventry II DDR Marley Creek Square LLC
  10.0  A shopping center in Orland Park, Illinois
Coventry II DDR Montgomery Farm LLC
  10.0  A shopping center in Allen, Texas
DPG Realty Holdings LLC
  10.0  Two neighborhood grocery-anchored retail centers in two states
TRT DDR Venture I
  10.0  Three shopping centers in several states
DDR MDT PS LLC
  0.0  Six shopping centers in several states
 
 
(A)Ownership may be held through different investment structures. Percentage ownerships are subject to change as certain investments contain promoted structures.


F-15

 

 
 
Combined condensed financial information of the Company’s unconsolidated joint venture investments is summarized as follows (in thousands):
 
         
  December 31, 
  2010  2009 
 
Combined balance sheets
        
Land
 $1,566,682  $1,782,431 
Buildings
  4,783,841   5,207,234 
Fixtures and tenant improvements
  154,292   146,716 
         
   6,504,815   7,136,381 
Less: Accumulated depreciation
  (726,291)  (636,897)
         
   5,778,524   6,499,484 
Land held for development and construction in progress(A)
  174,237   130,410 
         
Real estate, net
  5,952,761   6,629,894 
Receivables, net
  111,569   113,630 
Leasehold interests
  10,296   11,455 
Other assets
  303,826   342,192 
         
  $6,378,452  $7,097,171 
         
Mortgage debt
 $3,950,794  $4,547,711 
Amounts payable to DDR
  87,282   73,477 
Other liabilities
  186,728   194,065 
         
   4,224,804   4,815,253 
Accumulated equity
  2,153,648   2,281,918 
         
  $6,378,452  $7,097,171 
         
Company’s share of accumulated equity
 $480,200  $473,738 
         
 
 
(A)The Deconsolidated Land Entity (Note 1) was combined with the unconsolidated investments as of January 1, 2010.
 


F-16

 

 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Combined statements of operations
            
Revenues from operations
 $668,946  $778,770  $846,196 
             
Operating expenses
  256,380   301,637   297,454 
Impairment charges(A)
  12,291   218,479   — 
Depreciation and amortization
  187,876   218,547   213,285 
Interest expense
  230,649   280,345   274,836 
             
   687,196   1,019,008   785,575 
             
(Loss) income before other items
  (18,250)  (240,238)  60,621 
Income tax expense (primarily Sonae Sierra Brasil), net
  (20,449)  (10,013)  (15,479)
Other income (expense), net(B)
  —   7,153   (31,318)
             
(Loss) income from continuing operations
  (38,699)  (243,098)  13,824 
Discontinued operations:
            
(Loss) income from discontinued operations(C)
  (9,674)  (206,436)  3,830 
(Loss) gain on disposition of real estate, net of tax
  (26,674)  (19,448)  7,364 
             
(Loss) income before gain (loss) on disposition of real estate, net
  (75,047)  (468,982)  25,018 
Gain (loss) on disposition of real estate, net(D)
  17   (25,973)  (67)
             
Net (loss) income
 $(75,030) $(494,955) $24,951 
             
Company’s share of equity in net income (loss) of joint ventures(E)
 $6,319  $(34,522) $17,335 
             
 
 
(A)For the year ended December 31, 2010, impairment charges were recorded on three assets of which the Company’s proportionate share was $0.5 million. For the year ended December 31, 2009, the Coventry II DDR Bloomfield joint venture recorded an impairment charge of $218.5 million related to a development project that is currently suspended. The Company recorded aggregate impairment charges of $16.5 million and $10.8 million on its Coventry II DDR Bloomfield investment during the years ended December 31, 2009 and 2008, respectively.
 
(B)Activity related to the Company’s investment in the MDT units, which were liquidated in 2009.
 
(C)For the year ended December 31, 2010, impairment charges reclassified to discontinued operations related to assets sales were $8.8 million. The Company’s proportionate share of these impairment charges was $0.3 million. For the year ended December 31, 2009, impairment charges aggregating $170.9 million were recorded by two joint ventures, related to a combined 22 shopping centers that were sold in 2010. The year ended December 31, 2009, also includes $33.9 million of impairment charges related to three assets in the EDT joint venture that were sold in 2009. The Company’s proportionate share of these impairment charges aggregated $8.1 million and was reduced by the impact of the other than temporary impairment charges recorded on these investments in 2008 and 2009 as discussed below.
 
(D)In 2009, a joint venture with Coventry II Fund (hereinafter defined) transferred its interest in the Kansas City, Missouri, project (Ward Parkway) to the lender and recorded a loss of $26.7 million. The Company recorded a $5.8 million loss in 2009 related to the write-off of the book value of its equity investment, which is included within equity in net loss of joint ventures in the consolidated statements of operations.
 
(E)The difference between the Company’s share of net income (loss), as reported above, and the amounts included in the consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in the gain (loss) recognized on the sale of certain assets due to the basis differentials and other than temporary impairment charges. Adjustments to the Company’s share of joint venture net income (loss) for these items are reflected as follows (in millions):
 
             
  For the Year Ended December 31,
  2010 2009 2008
 
(Loss) income, net
 $(0.7) $24.8  $0.4 

F-17

 

 
Investments in and advances to joint ventures include the following items, which represent the difference between the Company’s investment and its proportionate share of all of the unconsolidated joint ventures’ underlying net assets (in millions):
 
         
  For the Year Ended
 
  December 31, 
  2010  2009 
 
Company’s share of accumulated equity
 $480.2  $473.7 
Basis differential upon transfer of assets(A)
  (43.4)  (92.1)
Basis differentials(A)
  (104.1)  (31.4)
Deferred development fees, net of portion relating to the Company’s interest
  (3.4)  (4.4)
Notes receivable from investments
  0.6   1.2 
Amounts payable to DDR
  87.3   73.5 
         
Investments in and advances to joint ventures
 $417.2  $420.5 
         
 
 
(A)This amount represents the aggregate difference between the Company’s historical cost basis and the equity basis reflected at the joint venture level. Basis differentials recorded upon transfer of assets are primarily associated with assets previously owned by the Company that have been transferred into an unconsolidated joint venture at fair value. Other basis differentials occur primarily when the Company has purchased interests in existing unconsolidated joint ventures at fair market values, which differ from their proportionate share of the historical net assets of the unconsolidated joint ventures. In addition, certain acquisition, transaction and other costs, including capitalized interest and impairments of the Company’s investments that were other than temporary may not be reflected in the net assets at the joint venture level. Certain basis differentials indicated above are amortized over the life of the related assets.
 
The Company has made advances to several joint ventures in the form of notes receivable and fixed-rate loans that bear annual interest at rates ranging from 10.5% to 12.0%. Maturity dates are all payment on demand. Included in the Company’s accounts receivables are approximately $1.7 million and $3.0 million at December 31, 2010 and 2009, respectively, due from affiliates primarily related to construction receivables.
 
Service fees earned by the Company through management, leasing, development and financing activities related to all of the Company’s unconsolidated joint ventures are as follows (in millions):
 
             
  For the Year Ended
  December 31,
  2010 2009 2008
 
Management and other fees
 $34.0  $47.0  $50.3 
Acquisition, financing and other fees
  0.3   1.0   1.6 
Development fees and leasing commissions
  7.2   9.2   12.0 
Interest income
  0.4   7.4   0.8 
 
The Company’s joint venture agreements generally include provisions whereby each partner has the right to trigger a purchase or sale of its interest in the joint venture (Reciprocal Purchase Rights), to initiate a purchase or sale of the properties (Property Purchase Rights) after a certain number of years or if either party is in default of the joint venture agreements. Under these provisions, the Company is not obligated to purchase the interests of its outside joint venture partners.
 
Coventry II Fund
 
The Company and Coventry Real Estate Advisors L.L.C. (“CREA”) formed Coventry Real Estate Fund II L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, the “Coventry II Fund”) to invest in a variety of retail properties that presented opportunities for value creation, such as re-tenanting, market repositioning, resale, redevelopment or expansion. The Coventry II Fund was formed with several institutional investors and CREA as the investment manager.
 
At December 31, 2010, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was approximately $10.4 million. This basis reflects the impact of impairment charges, as


F-18

 

 
discussed below, recorded during the years ended December 31, 2010, 2009 and 2008, aggregating $0.2 million, $52.4 million and $14.1 million, respectively. The Company also advanced financing of $66.9 million, which includes accrued interest of $8.8 million, to one of the Coventry II Fund joint ventures, Coventry II DDR Bloomfield, relating to a development project in Bloomfield Hills, Michigan. This loan accrues interest at a base rate of the greater of LIBOR plus 700 basis points or 12% and a default rate of 16% and has an initial maturity of July 2011 (“Bloomfield Loan”). The Bloomfield Loan is considered past due as of December 31, 2010 and 2009 due to the default status. In addition to its existing equity and note receivable, the Company provided payment guaranties to third-party lenders in connection with the financing for five of the joint ventures. The amount of each such guaranty is not greater than the proportion to the Company’s investment percentage in the underlying projects, and the aggregate amount of the Company’s guaranties was approximately $39.5 million at December 31, 2010.
 
For the Bloomfield Hills, Michigan, project, a $48.0 million land loan provided by a third party matured on December 31, 2008, and on February 24, 2009, the lender for the land loan sent to the borrower a formal notice of default (the Company provided a payment guaranty in the amount of $9.6 million with respect to such loan, and in July 2009, paid such guaranty in full in exchange for a complete release from the lender). The above referenced $66.9 million Bloomfield Loan from the Company relating to the Bloomfield Hills, Michigan, project is cross-defaulted with this third-party loan. As a result, on March 3, 2009, the Company sent the borrower a formal notice of default relating to its loan. The lender for the land loan subsequently filed a foreclosure action and initiated legal proceedings against the Coventry II Fund for its failure to fund its 80% payment guaranty. During the fourth quarter of 2009, the Company determined that, due to the status of the existing lender foreclosure action and other litigation related to the project as well as current market and economic conditions, management of the joint venture had not definitively or formally made a determination as to whether development of the project would be resumed. Consequently, the Company determined that the fair value of the joint venture assets, consisting of land and development costs, was insufficient to repay the Company’s note receivable. As a result, in December 2009, the Company recorded a charge of $66.9 million on the carrying value of the note receivable, including accrued interest, based upon the estimated fair value of the land and its improvements. This charge is reflected in the impairment of joint venture investments line item in the consolidated statement of operations for the year ended December 31, 2009. The Company also recorded an impairment charge on this investment in both the years ended December 31, 2009 and 2008.
 
In July 2009, the Company acquired the Coventry II Fund’s 80% interest in Coventry II DDR Merriam Village through the assumption of additional recourse relating to the $17.0 million aggregate principal amount of debt, of which the Company had previously guaranteed 20%. The Company did not expend any funds for this interest, which was consolidated upon acquisition. In connection with the Company’s assumption of such additional recourse, the lender agreed to release the Coventry II Fund’s 80% guaranty and modify and extend this secured mortgage.
 
See discussion of legal matters surrounding the Coventry II Fund (Note 8).
 
Discontinued Operations
 
Included in discontinued operations in the combined statements of operations for the unconsolidated joint ventures are the following properties sold subsequent to December 31, 2007:
 
  • Seven shopping centers owned through the DDR Macquarie Fund, sold in 2009;
 
  • Two shopping centers owned through the Retail Value Investment Program VII LLC, sold in 2010;
 
  • Two shopping centers owned through the DDR-SAU Retail Fund, LLC, sold in 2010;
 
  • Service Merchandise sites, two sold in 2009 and four sold in 2010;
 
  • 22 shopping centers owned through the DDRTC Core Retail Fund, sold in 2010 and
 
  • DPG Realty Holdings LLC assets, two sold in 2009 and seven sold in 2010.
 
In addition, a 50%-owned joint venture sold its interest in a vacant land parcel in 2009. This disposition did not meet the discontinued operations disclosure requirement.


F-19

 

 
Other than Temporary Impairment of Joint Venture Investments
 
Due to the then-deterioration of the U.S. capital markets that began in 2008, which continued in 2009, the lack of liquidity and the related impact on the real estate market and retail industry, the Company determined that several of its unconsolidated joint venture investments incurred an “other than temporary impairment.” The Company recorded impairment charges, which are separate and apart from the impairments recorded at the investee level, on the following unconsolidated joint venture investments during the years ended December 31, 2010, 2009 and 2008, respectively, (in millions):
 
             
  For the Year Ended
 
  December 31, 
  2010  2009  2008 
 
Various Coventry II Fund joint ventures
 $0.2  $52.4  $14.1 
DDRTC Core Retail Fund
  —   55.0   47.3 
MDT
  —   —   31.7 
DDR-SAU Retail Fund
  —   6.2   9.0 
DPG Realty Holdings
  —   3.6   1.7 
Central Park Solon/RO & SW Realty (Note 14)
  —   0.5   3.2 
             
   0.2   117.7   107.0 
Loan loss reserve — Bloomfield Loan
  —   66.9   — 
             
Total impairments of joint venture investments
 $0.2  $184.6  $107.0 
             
 
3.  Notes Receivable
 
The Company has notes receivable, including accrued interest, that are collateralized by certain rights in development projects, partnership interests, sponsor guaranties and real estate assets.
 
Notes receivable consist of the following (in millions):
 
             
  December 31,     
  2010  2009  Maturity Date Interest Rate
 
Loans receivable(A)
 $103.7  $58.7  March 2011 to
September 2017		 5.7% - 12.0%
Other notes
  2.8   1.1  November 2014 to
September 2017		 8.5% - 12.0%
Tax Increment Financing Bonds (“TIF Bonds”):(B)
            
Chemung County Industrial Development Agency
  2.0   2.1  April 2014 to
April 2018		 5.5%
City of Merriam, Kansas
  2.3   3.6  February 2016 6.9%
City of St. Louis, Missouri
  3.2   3.0  July 2026 7.1% - 8.5%
Town of Plainville, Connecticut
  6.3   6.5  April 2021 7.1%
             
   13.8   15.2     
             
  $120.3  $75.0     
             
 
 
(A)Amounts exclude notes receivable and advances from unconsolidated joint ventures including the Bloomfield Loan, which was in default and fully reserved at December 31, 2010 and 2009 (Note 2).
 
(B)Principal and interest are payable solely from the incremental real estate taxes, if any, generated by the respective shopping center and development project pursuant to the terms of the financing agreement.


F-20

 

 
 
As of December 31, 2010 and 2009, the Company had eight and seven loans receivable, respectively, with total remaining non-discretionary commitments of $4.0 million and $8.2 million, respectively. The following table reconciles the loans receivable on real estate from January 1, 2009, to December 31, 2010 (in thousands):
 
         
  2010  2009 
 
Balance at January 1
 $58,719  $57,329 
Additions:
        
New loans
  58,300   4,440 
Interest
  5,424   2,356 
Accretion of discount
  250   — 
         
Deductions:
        
Loan foreclosure
  (18,988)  — 
Loan loss reserve(A)
  —   (5,406)
         
Balance at December 31
 $103,705  $58,719 
         
 
 
(A)Amount classified in other expense, net in the consolidated statement of operations for the year ended December 31, 2009.
 
The Company identified a loan receivable with a carrying value of $10.8 million that was impaired resulting in a specific loan loss reserve of approximately $10.8 million. A charge to the loan loss reserve of $5.4 million was recorded in each of the years ended December 31, 2009 and 2008 relating to this loan resulting in a full reserve of the loan receivable at December 31, 2009. The impairment was driven by the then-deterioration of the economy and the dislocation of the credit markets. Interest is no longer being recorded on this loan. This is the only loan receivable in the Company’s portfolio that has a loan loss reserve or that is considered non-performing at December 31, 2010. The following table reconciles the loan loss reserve from January 1, 2009, to December 31, 2010 (in thousands):
 
         
  2010  2009 
 
Balance at January 1
 $10,806  $5,400 
Additions:
        
Loan loss reserve
  —   5,406 
         
Deductions:
        
Write downs
  —   — 
         
Balance at December 31
 $10,806  $10,806 
         
 
In addition to the one loan that is fully reserved at December 31, 2010, the Company has one loan aggregating $11.5 million that is more than 90 days past due on interest payments. The Company has continued to record interest income as the Company anticipates the note (including accrued interest) to be collected in full based upon the underlying estimated fair value of the real estate collateral. A loan receivable in the amount of $19.0 million that was considered non-performing at December 31, 2009 was foreclosed in 2010. The foregoing transaction resulted in an increase in real estate assets and a decrease in notes receivable of $19.0 million in 2010, as the carrying value of the loan receivable approximated the fair value of the real estate assets acquired through foreclosure.


F-21

 

 
4.  Other Assets
 
Other assets consist of the following (in thousands):
 
         
  December 31, 
  2010  2009 
 
Intangible assets:
        
In-place leases (including lease origination costs and fair market value of leases), net
 $14,228  $15,556 
Tenant relations, net
  9,035   11,318 
         
Total intangible assets
  23,263   26,874 
Other assets:
        
Prepaids
  11,566   6,213 
Deposits
  41,160   49,263 
Other assets(A)
  3,473   56,499 
         
Total other assets
 $79,462  $138,849 
         
 
 
(A)The Company established a valuation allowance of $58.3 million for certain deferred tax assets within its TRS during the year ended December 31, 2010 (Note 17).
 
The Company recorded amortization expense of approximately $6.6 million, $7.1 million and $8.8 million for the years ended December 31, 2010, 2009 and 2008, respectively. The estimated amortization expense associated with the Company’s intangible assets is $5.5 million, $5.3 million, $4.9 million, $2.8 million and $1.3 million for the years ending December 31, 2011, 2012, 2013, 2014 and 2015, respectively.
 
5.  Revolving Credit Facilities, Term Loan, Mortgages Payable and Scheduled Principal Repayments
 
The following table discloses certain information regarding the Company’s revolving credit facilities, term loan and mortgages payable (in millions):
 
                   
     Weighted- average
   
  Carrying Value
  Interest Rate
   
  at December 31,  at December 31,   
  2010  2009  2010  2009  Maturity Date
 
Unsecured indebtedness:
                  
Unsecured Credit Facility
 $279.9  $775.0   3.5%  1.6% February 2014
PNC Facility
  —   —   —   —  February 2014
Secured indebtedness:
                  
Term debt
  600.0   800.0   2.2%  3.2% February 2011
Mortgage and other secured indebtedness — Fixed Rate
  1,226.0   1,584.1   5.6%  5.7% April 2011 -
December 2029
Mortgage and other secured indebtedness — Variable Rate
  144.1   319.6   3.5%  2.6% May 2011 -
December 2037
Tax-exempt certificates — Fixed Rate
  8.5   10.0   7.1%  7.0% February 2016 -
April 2021
 
Revolving Credit Facilities
 
The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, arranged by JP Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A. (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of $950 million, if certain financial covenants are maintained,


F-22

 

 
and an accordion feature for expansion to $1.2 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. The Unsecured Credit Facility includes a competitive bid option on periodic interest rates for up to 50% of the facility. The Unsecured Credit Facility also provides for an annual facility fee, currently at 0.50% on the entire facility.
 
The Company also maintains a $65 million unsecured revolving credit facility with PNC Bank, N.A. (the “PNC Facility” and, together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). The PNC Facility reflects terms consistent with those contained in the Unsecured Credit Facility.
 
The Company’s borrowings under the Revolving Credit Facilities bear interest at variable rates at the Company’s election, based on either (i) the prime rate plus a specified spread (2.75% at December 31, 2010), as defined in the facility, or (ii) LIBOR, plus a specified spread (2.75% at December 31, 2010). The specified spreads vary depending on the Company’s long-term senior unsecured debt rating from Standard and Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”). The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets, unencumbered debt yield and fixed charge coverage. The Company is in compliance with these covenants at December 31, 2010. The Revolving Credit Facilities are used to temporarily finance redevelopment, development and acquisition of shopping center properties, to provide working capital and for general corporate purposes.
 
Term Loan
 
The Company maintains a collateralized term loan with a syndicate of financial institutions, for which KeyBank, NA serves as the administrative agent (the “Term Loan”). The Term Loan had a one-year extension option which was exercised in February 2011 (Note 19). Borrowings under the Term Loan bear interest at variable rates based on LIBOR plus a specified spread based on the Company’s current credit rating (1.2% at December 31, 2010). The collateral for this Term Loan is assets, or investment interests in certain assets, that are already collateralized by first mortgage loans. The Company is required to comply with similar covenants as agreed upon in the Revolving Credit Facilities. The Company was in compliance with these covenants at December 31, 2010.
 
Mortgages Payable and other Secured Indebtedness
 
At December 31, 2010, mortgages payable, collateralized by investments and real estate with a net book value of approximately $2.8 billion and related tenant leases are generally due in monthly installments of principaland/orinterest. Fixed interest rates on mortgage payables range from approximately 4.2% to 10.5%.
 
Scheduled Principal Repayments
 
As of December 31, 2010, the scheduled principal payments of the Revolving Credit Facilities, Term Loan, senior notes (Note 6) and mortgages payable, excluding extension options, for the next five years and thereafter are as follows (in thousands):
 
     
Year Amount 
 
2011
 $993,727 
2012
  550,457 
2013
  457,785 
2014
  666,011 
2015
  492,985 
Thereafter
  1,141,035 
     
  $4,302,000 
     
 
Included in principal payments is $600.0 million in 2011 associated with the maturing of the Term Loan, which had a one-year extension option through 2012. The extension option was exercised in February 2011 (Note 19).
 
Total gross fees paid by the Company for the Revolving Credit Facilities and Term Loan in 2010, 2009 and 2008 aggregated approximately $2.9 million, $2.3 million and $2.1 million, respectively. For the years ended


F-23

 

 
December 31, 2010 and 2009, the Company incurred debt extinguishment costs associated with the prepayment of mortgages payable of $4.2 million and $14.4 million, respectively, which are reflected in other expense in the Company’s consolidated statements of operations.
 
6.  Senior Notes
 
The following table discloses certain information regarding the Company’s Fixed-Rate Senior Notes (in millions):
 
                   
           Effective Interest
   
  Carrying Value
  Coupon Rate
  Rate
   
  at December 31,  at
  at
   
  2010  2009  December 31, 2010  December 31, 2010  Maturity Date
 
Unsecured indebtedness:
                  
Senior Notes
 $1,468.4  $1,283.1   5.25% - 9.625%   5.3% - 9.9%  April 2011-
September 2020
Discount
  (4.4)  (4.0)          
2006 Convertible Senior Notes, net
  87.5   116.1   3.50%   5.7%  August 2011
2007 Convertible Senior Notes, net
  194.1   294.6   3.00%   5.2%  March 2012
2010 Convertible Senior Notes, net(A)
  298.0   —   1.75%   5.3%  November 2040
                   
Total Senior Notes
 $2,043.6  $1,689.8           
                   
 
 
(A)The Company may redeem the notes any time on or after November 15, 2015 in whole or in part for cash equal to 100% of the principal amount of the notes plus accrued and unpaid interest to but excluding the redemption date.
 
In each of March and August 2010, the Company issued $300 million aggregate principal amount (aggregating $600 million) of 7.5% and 7.875% senior unsecured notes, due in April 2017 and September 2020, respectively. The notes were offered to investors at a discount to par. In November 2010, the Company issued $350 million aggregate principal amount of 1.75% convertible senior convertible notes due November 2040 (the “2010 Senior Convertible Notes”).
 
The 2006 Senior Convertible Notes, the 2007 Senior Convertible Notes and the 2010 Senior Convertible Notes are referred to as the “Senior Convertible Notes.” The Senior Convertible Notes are senior unsecured obligations and rank equally with all other senior unsecured indebtedness of the Company.
 
The following table summarizes the information related to the Senior Convertible Notes:
 
                 
      Maximum
 Option
  Conversion
 Option
 Common Shares
 Cost
  Price Price (millions) (millions)
 
2006 Senior Convertible Notes(A)
 $64.23  $65.17   0.5  $10.3 
2007 Senior Convertible Notes(A)
 $74.56  $82.71   1.1  $32.6 
2010 Senior Convertible Notes(B)
 $16.38   N/A   N/A   N/A 
 
 
(A)Conversion price as of December 31, 2010 and 2009.
 
(B)Conversion price as of December 31, 2010.
 
Concurrent with the issuance of the 2006 and 2007 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 senior convertible 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 number of common sharesand/or cash related to the excess conversion value that it would pay to the holders of the senior convertible notes upon conversion. The options were recorded as a reduction of equity at issuance. No option was purchased related to the 2010 Senior Convertible Notes.


F-24

 

 
The Senior Convertible Notes are subject to net settlement based on conversion prices (“Conversion Price”) that are subject to adjustment based on increases in the Company’s quarterly stock dividend. If certain conditions are met, the incremental value can be settled in cash or in the Company’s common shares at the Company’s option. The Senior Convertible Notes may only be converted prior to maturity based on certain provisions in the governing note documents. In connection with the issuance of these notes, the Company entered into a registration rights agreement for the common shares that may be issuable upon conversion of the Senior Convertible Notes.
 
The Company’s carrying amounts of its debt and equity balances for the Senior Convertible Notes are as follows (in thousands):
 
         
  December 31, 
  2010  2009 
 
Carrying value of equity component
 $79,287  $39,887 
         
Principal amount of convertible debt
 $637,626  $428,243 
Remaining unamortized debt discount
  (58,032)  (17,571)
         
Net carrying value of convertible debt
 $579,594  $410,672 
         
 
As of December 31, 2010, the remaining amortization periods for the debt discount were approximately eight months, 15 months and 58 months for the 2006 Senior Convertible Notes, the 2007 Senior Convertible Notes and the 2010 Senior Convertible Notes, respectively.
 
The Company retrospectively adopted the FASB standard,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion, effective January 1, 2008. For the year ended December 31, 2008, the Company adjusted the consolidated statement of operations to reflect additional non-cash interest expense of $13.1 million net of the impact of capitalized interest, pursuant to the provisions of this standard. The following table reflects the Company’s previously reported amounts, along with the adjusted amounts as required by the adoption of the standard and as adjusted to reflect the impact of discontinued operations (Note 12) (in thousands, except per share):
 
             
  Year Ended December 31, 2008
  As Previously
 As
 Effect of
  Reported Adjusted Change
 
Consolidated statement of operations
            
Loss from continuing operations
 $(61,317) $(53,149)(A) $8,168 
Net loss attributable to DDR
  (57,776)  (71,930)  (14,154)
Net loss attributable to DDR per share, basic
  (0.83)  (0.96)  (0.13)
Net loss attributable to DDR per share, diluted
  (0.83)  (0.96)  (0.13)
 
 
(A)Adjusted to reflect the impact of discontinued operations activity in 2010 (Note 12).
 
The impact of this accounting standard required the Company to adjust its interest expense and record additional non-cash interest-related charges of $8.2 million, $12.2 million and $14.2 million for the years ended December 31, 2010, 2009 and 2008, respectively. The Company recorded contractual interest expense of $11.1 million, $19.6 million and $26.8 million for the years ended December 31, 2010, 2009 and 2008, respectively, relating to the Senior Convertible Notes.
 
During the years ended December 31, 2010, 2009 and 2008, the Company purchased approximately $259.1 million, $816.2 million and $66.9 million, respectively, aggregate principal amount of its outstanding senior unsecured notes (of which $140.6 million, $404.8 million and $17.0 million related to the 2006 and 2007 Senior Convertible Notes, respectively) at a discount to par resulting in net gains of approximately $0.1 million, $145.1 million and $10.5 million, respectively. The Company allocated the consideration paid for the 2006 and 2007 Senior Convertible Notes between the liability components and equity components based on the fair value of those components immediately prior to the purchases and recorded a gain based on the difference in the amount of consideration paid as compared to the carrying amount of the debt, net of the unamortized discount. The net gain for


F-25

 

 
the years ended December 31, 2010, 2009, and 2008, reflects a decrease of approximately $4.9 million, $20.9 million and $1.1 million, respectively, relating to the impact of the above accounting standard.
 
The Company’s various fixed-rate senior notes have interest coupon rates averaging 5.9% and 5.6% at December 31, 2010 and 2009, respectively. Notes issued prior to December 31, 2001, aggregating $82.2 million, may not be redeemed by the Company prior to maturity and will not be subject to any sinking fund requirements. Notes issued subsequent to 2001, aggregating $1.2 billion at December 31, 2010, may be redeemed based upon a yield maintenance calculation. The notes issued in October 2005 (aggregating $223.5 million) are redeemable prior to maturity at par value plus a make-whole premium. If the notes issued in October 2005 are redeemed within 90 days of the maturity date, no make-whole premium is required.
 
The Senior Convertible Notes, with outstanding aggregate principal amounts of $637.6 million and $428.2 million at December 31, 2010 and 2009, respectively, may be converted prior to maturity into cash equal to the lesser of the principal amount of the note or the conversion value and, to the extent the conversion value exceeds the principal amount of the note, the Company’s common shares.
 
The fixed-rate senior notes and Senior Convertible Notes were issued pursuant to indentures that contain certain covenants including limitation on incurrence of debt, maintenance of unencumbered real estate assets and debt service coverage. Interest is paid semi-annually in arrears. At December 31, 2010 and 2009, the Company was in compliance with all of the financial and other covenant requirements.
 
7.  Financial Instruments
 
The following methods and assumptions were used by the Company in estimating fair value disclosures of financial instruments:
 
Fair Value Hierarchy
 
The standard Fair Value Measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following summarizes the fair value hierarchy:
 
   
   
•   Level 1
 Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
   
•   Level 2
 Quoted prices for identical assets and liabilities in markets that are inactive, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly, such as interest rates and yield curves that are observable at commonly quoted intervals; and
   
•   Level 3
 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
 
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
 
Measurement of Fair Value
 
At December 31, 2010, 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.
 
The Company transferred its interest rate swaps into Level 2 from Level 3 during 2010 due to changes in the significance on the Company’s derivative valuations as a result of changes in nonperformance risk associated with the Company’s credit standing. In the fourth quarter of 2008, the Company determined that its derivative valuations in their entirety were classified in Level 3 of the fair value hierarchy. During the second half of 2008, the credit


F-26

 

 
spreads on the Company and certain of its counterparties widened significantly and, as a result, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were significant to the overall valuation of all of its derivatives. The credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilized Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. These inputs reflect the Company’s assumptions.
 
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 and securities included in the Company’s Elective Deferred Compensation Plan (Note 15) that are included in other liabilities at December 31, 2010 and 2009, measured at fair value on a recurring basis as of December 31, 2010 and 2009, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in millions):
 
                 
  Fair Value Measurements
  Level 1 Level 2 Level 3 Total
 
December 31, 2010
                
Derivative Financial Instruments
 $—  $5.2  $—  $5.2 
Marketable Securities
 $5.5  $—  $—  $5.5 
December 31, 2009
                
Derivative Financial Instruments
 $—  $—  $15.4  $15.4 
Marketable Securities
 $2.4  $—  $—  $2.4 
 
As discussed above, the Company transferred its interest rate swaps into Level 2 from Level 3 during 2010 due to changes in the significance on the Company’s derivative’s valuation as a result of changes in nonperformance risk associated with the Company’s credit standing. 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) (in millions):
 
     
  Derivative
  Financial
  Instruments-
  Liability
 
Balance of Level 3 at December 31, 2007
 $— 
Transfers into Level 3
  (17.1)
Total losses included in other comprehensive (loss) income
  (4.6)
     
Balance of Level 3 at December 31, 2008
 $(21.7)
Total losses included in other comprehensive (loss) income
  6.3 
     
Balance of Level 3 at December 31, 2009
 $(15.4)
Total losses included in other comprehensive (loss) income
  7.6 
Transfers into Level 2
  7.8 
     
Balance of Level 3 at December 31, 2010
 $— 
     
 
The unrealized gain included in other comprehensive (loss) income is attributable to the change in unrealized gains or losses relating to derivative liabilities that were outstanding — none of which were reported in the Company’s consolidated statements of operations because they are documented and qualify as hedging instruments.
 
The Company calculates the fair value of its interest rate swaps based upon the amount of the expected future cash flows paid and received on each leg of the swap. The cash flows on the fixed leg of the swap are agreed to at inception, and the cash flows on the floating leg of the swap change over time as interest rates change. To estimate the floating cash flows at each valuation date, the Company utilizes a forward curve that is constructed using


F-27

 

 
LIBOR fixings, Eurodollar futures and swap rates, which are observable in the market. Both the fixed and floating legs’ cash flows are discounted at market discount factors. For purposes of adjusting its derivative values, the Company incorporates the non-performance risk for both the Company and its counterparties to these contracts based upon either credit default swap spreads (if available) or Moody’s KMV ratings in order to derive a curve that considers the term structure of credit.
 
Other Fair Value Instruments
 
Investments in unconsolidated joint ventures are considered financial assets. See discussion of equity derivative instruments in Note 9 and a discussion of fair value considerations in Note 11.
 
Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable, Accruals and Other Liabilities
 
The carrying amounts reported in the consolidated balance sheets for these financial instruments, excluding the liability associated with the equity derivative instruments, approximated fair value because of their short-term maturities.
 
Notes Receivable and Advances to Affiliates
 
The fair value is estimated by discounting the current rates at which management believes similar loans would be made. The fair value of these notes, excluding those that are fully reserved, was approximately $120.8 million and $74.6 million at December 31, 2010 and 2009, respectively, as compared to the carrying amounts of $122.6 million and $76.2 million, respectively. The carrying value of the tax increment financing bonds, which was $13.8 million and $15.2 million at December 31, 2010 and 2009, respectively, approximated its fair value at the respective dates. The fair value of loans to affiliates is not readily determinable and has been estimated by management based upon its assessment of the interest rate, credit risk and performance risk.
 
Debt
 
The fair market value of debt is determined using the trading price of public debt or a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality and risk profile including the Company’s non-performance risk.
 
Considerable judgment is necessary to develop estimated fair values of financial instruments. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize upon redemption.
 
Financial instruments at December 31, 2010 and 2009, with carrying values that are different than estimated fair values are summarized as follows (in thousands):
 
                 
  December 31, 2010  December 31, 2009 
  Carrying
     Carrying
    
  Amount  Fair Value  Amount  Fair Value 
 
Senior notes
 $2,043,582  $2,237,320  $1,689,841  $1,691,445 
Revolving Credit Facilities and Term Debt
  879,865   875,851   1,575,028   1,544,481 
Mortgages payable and other indebtedness
  1,378,553   1,394,393   1,913,794   1,875,187 
                 
  $4,302,000  $4,507,564  $5,178,663  $5,111,113 
                 
 
Risk Management Objective of Using Derivatives
 
The Company is exposed to certain risks 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


F-28

 

 
and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, 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 economically hedge a portion of 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. In 2010, the Company entered into one interest rate swap to hedge a portion of its interest rate risk associated with variable rate borrowings. As of December 31, 2010 and 2009, the aggregate fair value of the Company’s $150 million and $400 million of Swaps was a liability of $5.2 million and $15.4 million, respectively, which is included in other liabilities in the consolidated balance sheets.
 
       
Aggregate Notional Amount
 LIBOR
   
(in millions) Fixed Rate  Maturity Date
 
$100
  4.8% February 2012
$50
  0.6% November 2012
 
All components of the Swaps were included in the assessment of hedge effectiveness. The Company expects that within the next 12 months it will reflect an increase to interest expense (and a corresponding decrease to earnings) of approximately $4.6 million.
 
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) Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2010, such derivatives were used to hedge the variable cash flows associated with existing obligations. The ineffective portion of the change in the fair value of derivatives is recognized directly in earnings. During the three years ended December 31, 2010, the amount of hedge ineffectiveness recorded was not material.
 
Amounts reported in accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of December 31, 2010, the Company had the following outstanding interest rate swap derivatives that were designated as cash flow hedges of interest rate risk:
 
         
     Notional
 
Interest Rate Derivative Number of Instruments  (in millions) 
 
Interest rate swaps
  Two  $150.0 
 
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2010 and 2009 (in millions):
 
                 
  Liability Derivatives 
Derivatives
 December 31, 2010  December 31, 2009 
designated as hedging
 Balance Sheet
     Balance Sheet
    
Instruments Location  Fair Value  Location  Fair Value 
 
Interest rate products
  Other liabilities  $5.2   Other liabilities  $15.4 


F-29

 

 
The effect of the Company’s derivative instruments on net (loss) and income is as follows (in millions):
 
                           
           Location of
         
           Gain (Loss)
         
           Reclassified
         
  Amount of Gain (Loss)
  from
 Amount of Gain (Loss) Reclassified
 
  Recognized in OCI on
  Accumulated
 from Accumulated OCI
 
  Derivative
  OCI into
 into Income
 
  (Effective Portion)  Income
 (Effective Portion) 
Derivatives in Cash
 Year Ended December 31,  (Effective
 Year Ended December 31, 
Flow Hedging 2010  2009  2008  Portion) 2010  2009  2008 
 
Interest rate products
 $10.2  $6.3  $(1.7) Interest expense $0.4  $0.4  $0.6 
 
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 equityand/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 entered, 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 whereby if the Company defaults on certain of its unsecured indebtedness the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment under those 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 of its 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. Because the notional amount of the non-derivative instrument substantially matches the portion of the net investment designated as being hedged, and the non-derivative 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 instruments on OCI is as follows (in millions):
 
             
  Amount of Gain (Loss)
 
  Recognized in OCI on
 
  Derivatives
 
  (Effective Portion) 
  Year Ended December 31, 
Derivatives in Net Investment Hedging Relationships 2010  2009  2008 
 
Euro — denominated revolving credit facilities designated as a hedge of the Company’s net investment in its subsidiary
 $8.6  $(2.2) $22.2 
Canadian dollar — denominated revolving credit facilities designated as a hedge of the Company’s net investment in its subsidiary
  (5.6)  (16.3)  3.3 
 
8.  Commitments and Contingencies
 
Legal Matters
 
The Company is a party to various joint ventures with the Coventry II Fund, through which 11 existing or proposed retail properties, along with a portfolio of former Service Merchandise locations, were acquired at various times from 2003 through 2006. The properties were acquired by the joint ventures as value-add investments, with


F-30

 

 
major renovationand/orground-updevelopment contemplated for many of the properties. The Company is generally responsible forday-to-daymanagement of the properties. On November 4, 2009, Coventry Real Estate Advisors L.L.C., Coventry Real Estate Fund II, L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and certain of its affiliates and officers in the Supreme Court of the State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and various joint venture limited liability company agreements, project development agreements and management and leasing agreements; (ii) breached its fiduciary duties as a member of various limited liability companies; (iii) fraudulently induced the plaintiffs to enter into certain agreements; and (iv) made certain material misrepresentations. The complaint also requests that a general release made by Coventry in favor of the Company in connection with one of the joint venture properties be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in an amount not less than $500 million, as well as punitive damages. In response, the Company filed a motion to dismiss the complaint or, in the alternative, to sever the plaintiffs’ claims. In June 2010, the court granted in part (regarding Coventry’s claim that the Company breached a fiduciary duty owed to Coventry) and denied in part (all other claims) the Company’s motion. Coventry has filed a notice of appeal regarding that portion of the motion granted by the court. The Company filed an answer to the complaint, and has asserted various counterclaims against Coventry.
 
The Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will vigorously defend itself against the allegations contained in the complaint. This lawsuit is subject to the uncertainties inherent in the litigation process and, therefore, no assurance can be given as to its ultimate outcome and no loss provision has been recorded in the accompanying financial statements because a loss contingency is not deemed probable or estimable. However, based on the information presently available to the Company, the Company does not expect that the ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
 
On November 18, 2009, the Company filed a complaint against Coventry in the Court of Common Pleas, Cuyahoga County, Ohio, seeking, among other things, a temporary restraining order enjoining Coventry from terminating “for cause” the management agreements between the Company and the various joint ventures because the Company believes that the requisite conduct in a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of the Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s motion (and Coventry’s opposition) and on December 4, 2009, issued a ruling in the Company’s favor. Specifically, the court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was likely to succeed on the merits, that immediate and irreparable injury, loss or damage would result to the Company in the absence of such restraint, and that the balance of equities favored injunctive relief in the Company’s favor. The Company has filed a motion for summary judgment seeking a ruling by the Court that there was no basis for Coventry’s “for cause” termination as a matter of law. The Court has not yet ruled on the Company’s motion for summary judgment. A trial on the Company’s request for a permanent injunction has not yet been scheduled. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of the litigation process, no assurance can be given as to the ultimate outcome of this action.
 
The Company was also 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 attorneys’ fees and expenses in the amount of approximately $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 disagreed with the verdict, as well as the denial of the post-trial motions. As a result, the Company appealed the verdict. In July 2010, the California Court of Appeals entered an order affirming the jury verdict. The Company had a $6.0 million liability accrued for this matter as of December 31, 2009. An additional charge of approximately $2.7 million, net of $2.4 million in taxes, was recorded in the second quarter of 2010. In November 2010, the Company made payment in full and final satisfaction of the judgment.


F-31

 

 
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.
 
Commitments and Guaranties
 
In conjunction with the development and expansion of various shopping centers, the Company has entered into agreements with general contractors for the construction of shopping centers aggregating approximately $24.7 million as of December 31, 2010.
 
At December 31, 2010, the Company had outstanding letters of credit of approximately $36.3 million. The Company has not recorded any obligation associated with these letters of credit. The majority of the letters of credit are collateral for existing indebtedness and other obligations of the Company.
 
In conjunction with certain unconsolidated joint venture agreements, the Companyand/or its equity affiliates have agreed to fund the required capital associated with approved development projects, composed principally of outstanding construction contracts aggregating approximately $3.1 million as of December 31, 2010. The Companyand/or its equity affiliates are entitled to receive a priority return on these capital advances at rates ranging from 10.5% to 12.0%.
 
In connection with certain of the Company’s unconsolidated joint ventures, the Company agreed to fund amounts due to the joint venture’s lender if such amounts are not paid by the joint venture based on the Company’s pro rata share of such amount, aggregating $41.3 million at December 31, 2010.
 
In connection with Service Holdings, the Company guaranteed the annual base rental income for various affiliates of Service Holdings in the aggregate amount of $2.2 million. The Company has not recorded a liability for the guaranty, as the subtenants of Service Holdings are paying rent as due. The Company has recourse against the other parties in the partnership in the event of default. No assets of the Company are currently held as collateral to pay this guaranty.
 
Related to one of the Company’s developments in Long Beach, California, an affiliate of the Company has agreed to make an annual payment of approximately $0.6 million to defray a portion of the operating expenses of a parking garage through the earlier of October 2032 or the date when the city’s parking garage bonds are repaid. No assets of the Company are currently held as collateral related to these obligations. The Company has not recorded a liability for the guaranty.
 
The Company has guaranteed certain special assessment and revenue bonds issued by the Midtown Miami Community Development District. The bond proceeds were used to finance certain infrastructure and parking facility improvements. In the event of a debt service shortfall, the Company is responsible for satisfying the shortfall. There are no assets held as collateral or liabilities recorded related to these guaranties. To date, tax revenues have exceeded the debt service payments for these bonds.
 
Leases
 
The Company is engaged in the operation of shopping centers that are either owned or, with respect to certain shopping centers, operated under long-term ground leases that expire at various dates through 2070, with renewal options. Space in the shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one month to 30 years and, in some cases, for annual rentals subject to upward adjustments based on operating expense levels, sales volume or contractual increases as defined in the lease agreements.


F-32

 

 
The scheduled future minimum rental revenues from rental properties under the terms of all non-cancelable tenant leases, assuming no new or renegotiated leases or option extensions for such premises for the subsequent five years ending December 31, are as follows for continuing operations (in thousands):
 
     
2011
 $519,601 
2012
  456,824 
2013
  398,432 
2014
  338,679 
2015
  275,966 
Thereafter
  1,070,579 
     
  $3,060,081 
     
 
Scheduled minimum rental payments under the terms of all non-cancelable operating leases in which the Company is the lessee, principally for office space and ground leases, for the subsequent five years ending December 31, are as follows for continuing operations (in thousands):
 
     
2011
 $4,578 
2012
  4,495 
2013
  4,444 
2014
  3,934 
2015
  4,409 
Thereafter
  132,973 
     
  $154,833 
     
 
9.  Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury
 
Transfers from Non-Controlling Interest
 
             
  December 31, 
  2010  2009  2008 
 
Net loss attributable to DDR
 $(209,358) $(356,593) $(71,930)
Purchase of OP Units
  —   —   (5,172)
             
Change from net loss attributable to DDR and decrease from the non-controlling interest
 $(209,358) $(356,593) $(77,102)
             
 
Non-Controlling Interests
 
Non-controlling interests consist of the following (in millions):
 
         
  December 31, 
  2010  2009 
 
Mervyns Joint Venture(A)
 $—  $22.5 
Shopping centers and development parcels in Arizona, Missouri, Utah and Wisconsin
  3.4   15.9 
Consolidated joint venture interests primarily outside the United States
  27.3   44.0 
Operating partnership units
  7.4   7.4 
         
  $38.1  $89.8 
         
 
 
(A)This entity was deconsolidated by the Company in 2010 as described in Note 1.
 
At December 31, 2010 and 2009, the Company had 369,176 operating partnership units (“OP Units”) outstanding. These OP Units, issued to different partnerships, are exchangeable, at the election of the OP Unit


F-33

 

 
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. Most of these OP Units have registration rights agreements equivalent to the number of OP Units held by the holder if the Company elects to settle in its common shares. The OP Units are classified on the Company’s balance sheet as non-controlling interests.
 
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. At December 31, 2010 and 2009, the Company had 29,525 redeemable OP Units outstanding. Redeemable OP Units are presented at the greater of their carrying amount (for all periods presented) or redemption value at the end of each reporting period. Changes in the value from period to period are recorded to paid-in capital in the Company’s consolidated balance sheets.
 
Preferred Shares
 
The Company’s preferred shares outstanding at December 31 are as follows (in thousands):
 
         
  December 31, 
  2010  2009 
 
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 December 31, 2010 and 2009
 $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 December 31, 2010 and 2009
  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 December 31, 2010 and 2009
  170,000   170,000 
         
  $555,000  $555,000 
         
 
The Class G depositary shares represent 1/10 of a preferred share and have a stated value of $250 per share. The Class H and I depositary shares represent 1/20 of a Class H and Class I preferred share and have a stated value of $500 per share. The Class G, Class H and Class I depositary shares are redeemable by the Company, except in certain circumstances relating to the preservation of the Company’s status as a REIT.
 
The Company’s authorized preferred shares consist of the following:
 
  • 750,000 Class A Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class B Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class C Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class D Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class E Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class F Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class G Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class H Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class I Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class J Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Class K Cumulative Redeemable Preferred Shares, without par value
 
  • 750,000 Non-Cumulative Preferred Shares, without par value


F-34

 

 
 
Common Shares
 
The Company’s common shares have a $0.10 per share par value. Dividends declared per share of common stock were $0.08, $0.44 and $2.07 for 2010, 2009 and 2008, respectively.
 
The Company declared a dividend payable for the first and second quarters of 2009 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 was limited to 10% of the total dividend paid. In connection with the dividends in the first and second quarters of 2009, the Company issued approximately 8.3 million and 6.1 million common shares, respectively, based on the volume weighted-average trading price of $2.80 and $4.49 per share, respectively, and paid $2.6 million and $3.1 million, respectively, in cash. The Company declared an all-cash dividend of $0.02 per common share in each of the third and fourth quarters of 2009.
 
The Company issued common shares through open market sales, including through the use of its continuous equity programs, for the years ended December 31, 2010, 2009 and 2008, as follows (amounts in millions, except per share):
 
             
  Number of
  Average Price
    
  Shares Sold  Per Share  Net Proceeds 
 
2010
  53.0  $8.33  $441.3 
2009
  23.5  $8.78  $204.5 
2008
  8.3  $4.92  $41.9 
 
The Otto Transaction
 
On February 23, 2009, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Mr. Alexander Otto (the “Investor”) to issue and sell 30.0 million common shares for aggregate gross proceeds of approximately $112.5 million to the Investor and certain members of the Otto family (collectively with the Investor, the “Otto Family”). The Stock Purchase Agreement also provided for the issuance of warrants to purchase up to 10.0 million common shares with an exercise price of $6.00 per share to the Otto Family. No separate consideration was paid for the warrants. The share issuances, together with the warrant issuances, are collectively referred to as the “Otto Transaction.” Under the terms of the Stock Purchase Agreement, the Company also issued additional common shares to the Otto Family in an amount equal to any dividend payable in shares declared by the Company after February 23, 2009, and prior to the applicable closing. The exercise price of the warrants is also subject to downward adjustment if the weighted-average purchase price of all additional common shares sold, as defined, from the date of issuance of the applicable warrant is less than $6.00 per share (herein, along with the share issuances, referred to as “Downward Price Protection Provisions”). Each warrant may be exercised at any time on or after the issuance thereof for a five-year term.
 
On April 9, 2009, the Company’s shareholders approved the sale of the common shares and warrants to the Otto Family in connection with the Otto Transaction. The transaction was completed in two closings, May 2009 and September 2009. In May 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $52.5 million. The Company also issued an additional 1,071,428 common shares to the Otto Family as a result of the first quarter 2009 dividend associated with the initial 15.0 million common shares. In September 2009, the Company issued and sold 15.0 million common shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase price of $60.0 million. The Company also issued an additional 1,787,304 common shares to the Otto Family as a result of the first and second quarter 2009 dividends associated with the second 15.0 million shares. In total, the Company issued 32,858,732 common shares to the Otto Family.
 
Equity Derivative Instruments — Otto Transaction
 
The Downward Price Protection Provisions described above resulted in the equity forward commitments and warrants being required to be recorded at fair value as of the shareholder approval date of April 9, 2009, andmarked-to-marketthrough earnings as of each balance sheet date thereafter until exercise or expiration. None of the warrants had been exercised as of December 31, 2010.


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These equity instruments were issued as part of the Company’s overall deleveraging strategy and were not issued in connection with any speculative trading activity or to mitigate any market risks.
 
The table below presents the fair value of the Company’s equity derivative instruments as well as their classification on the consolidated balance sheet as follows (in millions):
 
             
  Liability Derivatives 
  December 31, 2010  December 31, 2009 
Derivatives not Designated as
 Balance Sheet
    Balance Sheet
   
Hedging Instruments Location Fair Value  Location Fair Value 
 
Warrants
 Equity derivative
liability		 $96.2  Equity derivative
liability		 $56.1 
 
The effect of the Company’s equity derivative instruments on net loss is as follows (in millions):
 
             
     Year Ended December 31, 
Derivatives not Designated as
    2010  2009 
Hedging Instruments Income Statement Location  Loss  Loss 
 
Warrants
  Loss on equity derivative instruments  $40.1  $46.9 
Equity forward — issued shares
  Loss on equity derivative instruments   —   152.9 
             
      $40.1  $199.8 
             
 
The loss above for these contracts was derived principally from the increase of the Company’s stock price from April 9, 2009, the shareholder approval date, to the market price on the date of the respective closings, related to the equity issued, or December 31, 2010, related to the warrants.
 
Measurement of Fair Value — Equity Derivative Instruments Valued on a Recurring Basis
 
The valuation of these instruments is determined using an option pricing model that considers all relevant assumptions including the Downward Price Protection Provisions. The Company has determined that the significant inputs used to value its equity forwards fall within Level 2 of the fair value hierarchy. However, the Company has determined that the warrants fall within Level 3 of the fair value hierarchy due to the significance of the volatility and dividend yield assumptions in the overall valuation. The Company utilized historical volatility assumptions as it believes this better reflects the true valuation of the instruments. Although the Company considered using an implied volatility based upon certain short-term publicly traded options on its common shares, it instead utilized its historical share price volatility when determining an estimate of fair value of its five-year warrants. The Company believes that the historic volatility better represents long-term future volatility and is more consistent with how an investor would view the value of these securities. The Company will continually evaluate its significant assumptions to determine what it believes provides the most relevant measurements of fair value at each reporting date.
 
The following table presents information about the Company’s equity derivative instruments (in millions) at December 31, 2010 and 2009, measured at fair value on a recurring basis as of December 31, 2010 and 2009, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in millions).
 
                 
  Fair Value Measurements 
  Level 1  Level 2  Level 3  Total 
 
December 31, 2010
                
Warrants
 $—  $—  $96.2  $96.2 
December 31, 2009
                
Warrants
 $—  $—  $56.1  $56.1 


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The table presented below presents a reconciliation of the beginning and ending balances of the equity derivative instruments that are disclosed as an equity derivative liability having fair value measurements based on significant unobservable inputs (Level 3) (in millions).
 
     
  Equity
 
  Derivative
 
  Instruments—
 
  Liability 
 
Balance of Level 3 at January 1, 2009
 $— 
Initial Valuation
  9.2 
Unrealized loss
  46.9 
     
Balance of Level 3 at December 31, 2009
 $56.1 
Unrealized loss
  40.1 
     
Balance of Level 3 at December 31, 2010
 $96.2 
     
 
10.  Fee and Other Income
 
Fee and other income from continuing operations was composed of the following (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Management, development and other fee income
 $53,434  $57,683  $62,890 
Ancillary and other property income
  21,941   21,610   21,210 
Lease termination fees
  7,497   4,015   5,224 
Financing fees
  1,158   1,050   1,991 
Other
  2,147   2,234   955 
             
Total fee and other income
 $86,177  $86,592  $92,270 
             
 
11.  Impairment Charges and Impairment of Joint Venture Investments
 
Due to the continued deterioration of the U.S. capital markets in 2008, the lack of liquidity and the related impact on the real estate market and retail industry that accelerated through the end of 2009, as well as changes in the Company’s hold period assumptions triggered by these factors, the Company determined that certain of its consolidated real estate investments and unconsolidated joint venture investments were impaired. As a result, the Company recorded impairment charges on the following consolidated assets and unconsolidated joint venture investments (in millions):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Land held for development(A)
 $54.3  $—  $— 
Undeveloped land and construction in progress(B)
  30.5   0.4   8.6 
Assets marketed for sale(C)
  31.7   12.3   21.0 
             
Impairments from continuing operations
 $116.5  $12.7  $29.6 
             
Sold assets
  20.1   73.3   15.0 
Assets formerly occupied by Mervyns(D)
  35.3   68.7   35.3 
             
Impairments from discontinued operations
 $55.4  $142.0  $50.3 
             
Joint venture investments(E)
  0.2   184.6   107.0 
             
Total impairment charges
 $172.1  $339.3  $186.9 
             


F-37

 

 
 
(A)Amounts reported in the year ended December 31, 2010, relate to land held for development in Togliatti and Yaroslavl, Russia, of which the Company’s proportionate share was $41.9 million after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture. The asset impairments were triggered primarily due to a change in the Company’s investment plans for these projects. Both investments relate to large-scale development projects in Russia. During 2010, the Company determined that it was no longer committed to invest the necessary amount of capital to complete the projects without alternative sources of capital from third-party investors or lending institutions.
 
(B)Amounts reported include a $19.3 million impairment charge recognized in the fourth quarter of 2010 associated with a development project the Company no longer plans to pursue. A subsidiary of the Company’s TRS acquired a leasehold interest in a development project located in Norwood, Massachusetts, as part of a portfolio acquisition in 2003 and no longer expects to fund the ground rent expense.
 
(C)The impairment charges were triggered primarily due to the Company’s marketing of these assets for sale combined with the overall economic downturn in the retail real estate environment beginning in late 2008. These assets were not classified as held for sale as of December 31, 2010, due to substantive contingencies associated with the respective contracts.
 
(D)As discussed in Notes 1 and 12, these assets were deconsolidated in 2010 and all operating results have been reclassified as discontinued operations.
 
For the years ended December 31, 2010, 2009 and 2008, the Company’s proportionate share of these impairment charges was $16.5 million, $33.6 million and $16.9 million, respectively, after adjusting for the allocation of loss to the non-controlling interest in this consolidated joint venture. The 2010 impairment charges were triggered primarily due to a change in the Company’s business plans for these assets and the resulting impact on its holding period assumptions for this substantially vacant portfolio. During 2010, the Company determined it was no longer committed to the long-term management and investment in these assets. The 2009 and 2008 impairment charges were triggered primarily due to the Company’s marketing of certain assets for sale combined with the then-overall economic downturn in the retail real estate environment. A full write-down of this portfolio was not recorded in 2009 and 2008 due to the Company’s then-holding period assumptions and future investment plans for these assets.
 
(E)The impairments were recognized because these investments incurred an “other than temporary impairment.”
 
Measurement of Fair Value
 
The Company is required to assess the fair value of certain impaired consolidated and unconsolidated joint venture investments. The valuation of impaired real estate assets and investments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each asset as well as 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 partiesand/orconsideration 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.
 
For operational real estate assets, the significant assumptions included the capitalization rate used in the income capitalization valuation, as well as the projected property net operating income. For projects under development, the significant assumptions included the discount rate, the timing and the estimated costs for the construction completion and project stabilization, projected net operating income and the exit capitalization rate. For investments in unconsolidated joint ventures, the Company also considered the valuation of any underlying joint venture debt. These valuation adjustments were calculated based on market conditions and assumptions made by management at the time the valuation adjustments were recorded, which may differ materially from actual results if market conditions or the underlying assumptions change.
 
Items Measured at Fair Value on a Non-Recurring Basis
 
The following table presents information about the Company’s impairment charges on both financial and nonfinancial assets that were measured on a fair value basis for the years ended December 31, 2010 and 2009, and


F-38

 

 
for financial assets only for the year ended December 31, 2008. The table also indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in millions).
 
                     
  Fair Value Measurements 
  Level 1  Level 2  Level 3  Total  Total Losses 
 
December 31, 2010
                    
Long-lived assets held and used
 $—  $—  $229.2  $229.2  $171.9 
Unconsolidated joint venture investments
  —   —   —   —   0.2 
December 31, 2009
                    
Long-lived assets held and used
  —   —   241.1   241.1   150.2 
Unconsolidated joint venture investments
  —   —   96.6   96.6   184.6 
Assets held for sale
  —   —   10.5   10.5   4.5 
December 31, 2008
                    
Unconsolidated joint venture investments
  4.8   —   174.5   179.3   107.0 
 
12.  Discontinued Operations and Disposition of Real Estate and Real Estate Investments
 
Discontinued Operations
 
During the year ended December 31, 2010, the Company sold 31 properties (including two properties held for sale at December 31, 2009) that were classified as discontinued operations for the years ended December 31, 2010, 2009 and 2008, aggregating 2.9 million square feet of Company-owned gross leasable area (“GLA”) (all references to GLA or square feet are unaudited). In addition, included in discontinued operations are 25 other properties that were deconsolidated for accounting purposes in the third quarter of 2010, aggregating 1.9 million square feet, which represents the activity associated with the Mervyns Joint Venture (Note 1).
 
Included in discontinued operations for the three years ended December 31, 2010, are 110 properties (including the 25 deconsolidated properties noted above) aggregating 9.8 million square feet of Company-owned GLA. Of these properties, 109 were previously included in the shopping center segment, and one of these properties was previously included in the other investments segment (Note 18). The operations of these properties have been reflected on a comparative basis as discontinued operations in the consolidated financial statements for the three years ended December 31, 2010, included herein.
 
The operating results relating to assets classified as discontinued operations at December 31, 2010, are summarized as follows (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Revenues
 $12,015  $45,910  $118,586 
             
Operating expenses
  8,535   24,915   34,351 
Impairment charges
  55,438   141,973   50,261 
Interest, net
  9,892   23,566   30,194 
Depreciation and amortization
  4,441   16,126   35,832 
             
   78,306   206,580   150,638 
             
Loss from discontinued operations
  (66,291)  (160,670)  (32,052)
Gain on deconsolidation of interests
  5,649   —   — 
Gain (loss) on disposition of real estate, net of tax
  5,775   (24,027)  (4,830)
             
Net loss
 $(54,867) $(184,697) $(36,882)
             


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Disposition of Real Estate and Real Estate Investments
 
The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions):
 
             
  For the Year Ended December 31 
  2010  2009  2008 
 
Land sales(A)
 $1.0  $4.8  $6.2 
Previously deferred gains and other gains and losses on dispositions(B)
  0.3   4.3   0.8 
             
  $1.3  $9.1  $7.0 
             
 
 
(A)These dispositions did not meet the criteria for discontinued operations, as the land did not have any significant operations prior to disposition.
 
(B)These gains are primarily a result of assets that were contributed to joint ventures in prior years.
 
13.  Comprehensive (Loss) Income
 
Comprehensive loss attributable to DDR is as follows (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Net loss
 $(247,721) $(403,640) $(83,069)
Other comprehensive (loss) income:
            
Change in fair value of interest-rate contracts
  10,261   15,664   (13,293)
Amortization of interest-rate contracts
  (430)  (373)  (643)
Foreign currency translation
  3,588   47,146   (48,701)
             
Total other comprehensive income (loss)
  13,419   62,437   (62,637)
             
Comprehensive loss
 $(234,302) $(341,203) $(145,706)
             
Comprehensive loss attributable to the non-controlling interests
  41,041   44,008   14,962 
             
Total comprehensive loss attributable to DDR
 $(193,261) $(297,195) $(130,744)
             
 
14.  Transactions with Related Parties
 
In September 2010, the Company funded a $31.7 million mezzanine loan to a subsidiary of EDT collateralized by equity interests in six shopping center assets owned by EDT and managed by the Company. The mezzanine loan bears interest at a fixed rate of 10% and matures in 2017. The Company recorded $0.9 million in interest income for the year ended December 31, 2010. Although the Company’s interest in EDT was redeemed in 2009, the Company retained two positions on EDT’s board of directors.
 
In 2009, the Company completed the Otto Transaction (Note 9). Mr. Otto is currently the Chairman of the Executive Board of ECE Projektmanagement G.m.b.H. & Co. KG (“ECE”) which is a fully integrated international developer, owner and manager of shopping centers. In May 2007, DDR and ECE formed a joint venture to fund investments in new retail developments to be located in western Russia and Ukraine. DDR contributed 75% of the equity of the joint venture, and ECE contributed the remaining 25% of the equity. The Company consolidates this entity. In addition, two of the Company’s directors hold various positions with affiliates of ECE, the Otto Family and/or the joint venture’s general partner.
 
In April 2009, the Company entered into a $60 million secured bridge loan with an affiliate of the Otto Family. The bridge loan was repaid in May 2009 with the proceeds of a $60 million collateralized loan also obtained from an affiliate of the Otto Family, which was included in Mortgage and other secured indebtedness on the Consolidated Balance Sheets. The loan had an interest rate of 9%, and was collateralized by a shopping center. The Company


F-40

 

 
repaid this loan, at par, in 2010 and paid a prepayment penalty of approximately $0.9 million. The Company paid interest of approximately $1.9 million and $3.9 million on these loans for the years ended December 31, 2010 and 2009, respectively.
 
In July 2008, the Company purchased a 25.2525% membership interest in RO & SW Realty (“ROSW”), a Delaware limited liability company, from Wolstein Business Enterprises, L.P. (“WBE”), a limited partnership established for the benefit of the children of Scott A. Wolstein, the Company’s Executive Chairman of the Board of Directors, and a 50% membership interest in Central Park Solon, an Ohio limited liability company (“Central Park”), from Mr. Wolstein, for $10.0 million. The acquired interests in both ROSW and Central Park are referred to herein as the “Membership Interests.” ROSW is a real estate company that owns 11 properties (the “Properties”). Central Park is a real estate company that owns the development rights relating to a large-scale mixed use project in Solon, Ohio (the “Project”). The Company had identified a number of development projects located near the Properties as well as several value-add opportunities relating to the Properties, including the Project. In October 2008, the Company assumed Mr. Wolstein’s obligation under a promissory note that funded the pre-development expenses of the Project. Mr. Wolstein and his 50% partner, who also holds the remaining membership interest in each of Central Park and ROSW, were jointly and severally liable for the obligations under the promissory note, and they agreed to indemnify each other for 50% of such obligations. The promissory note was repaid by the Company in 2009.
 
The purchase of the Membership Interests by the Company, including the assumption of the promissory note obligations, was approved by a special committee of disinterested directors of the Company who were appointed and authorized by the Nominating and Corporate Governance Committee of the Company’s Board of Directors to review and approve the terms of the acquisition and assumption.
 
The Company accounts for its interest in ROSW and Central Park under the equity method of accounting and recorded the aggregate $11.3 million acquisition of the Membership Interests as Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheet. In the fourth quarter of 2008, due to deteriorating market conditions, the Company and its partner in Central Park decided not to pursue the Project. As a result, the Company recorded a charge of approximately $3.2 million, representing a write-off of the purchase price allocated to the Project and the 50% interest in Central Park. In addition, it was determined that approximately $1.9 million of the pre-development costs, assumed upon acquisition and subsequently incurred, should be written off as “dead-deal” costs, of which the Company has a 50% interest.
 
The Company leased office space owned by Mr. Wolstein’s mother. General and administrative rental expense associated with this office space aggregated $0.5 million and $0.6 million for the years ended December 31, 2009 and 2008, respectively. This office lease expired on December 31, 2009. The Company periodically utilized a conference center owned by the trust of Bert Wolstein, deceased founder of the Company, Mr. Wolstein’s father, and one of the Company’s principal shareholders, for Company-sponsored events and meetings. The Company paid $0.2 million in 2008 for the use of this facility.
 
Transactions with the Company’s equity affiliates are described in Note 2.
 
15.  Benefit Plans
 
Stock-Based Compensation
 
The Company’s equity-based award plans provide for grants to Company employees and directors of incentive and non-qualified options to purchase common shares, rights to receive the appreciation in value of common shares, awards of common shares subject to restrictions on transfer, awards of common shares issuable in the future upon satisfaction of certain conditions, and rights to purchase common shares and other awards based on common shares. Under the terms of the plans, awards available for grant approximated 3.3 million common shares at December 31, 2010.
 
During 2010, 2009 and 2008, approximately $5.7 million, $17.4 million, and $29.0 million, respectively, was charged to expense associated with awards under the Company’s equity-based award plans. This charge is included in general and administrative expenses in the Company’s consolidated statements of operations.


F-41

 

 
Stock Options
 
Stock options may be granted at per-share prices not less than fair market value at the date of grant and must be exercised within the maximum contractual term of 10 years thereof (or, with respect to incentive options granted to certain employees, within five years thereof). Options granted under the plans generally vest over three years in one-third increments, beginning one year after the date of grant.
 
In previous years, the Company granted options to its directors. Options are no longer granted to the Company’s directors. Such options were granted at the fair market value of the Company’s common shares on the date of grant. All of the options granted to the directors are currently exercisable.
 
The fair values for stock-based awards granted in 2010, 2009 and 2008 were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
 
       
  For the Year Ended December 31,
  2010 2009 2008
 
Weighted-average fair value of grants
 $5.30 $2.21 $3.39
Risk-free interest rate (range)
 1.4% - 2.6% 1.1% - 2.7% 2.0% - 2.9%
Dividend yield (range)
 4.2% - 5.6% 8.6% - 24.9% 6.9% - 9.0%
Expected life (range)
 4 - 5 years 3 - 6 years 3 - 5 years
Expected volatility (range)
 87.0% - 97.8% 58.0% - 93.8% 22.3% - 36.3%
 
The risk-free rate was based upon a U.S. Treasury Strip with a maturity date that approximates the expected term of the award. The expected life of the award was derived by referring to actual exercise experience. The expected volatility of the stock was derived by referring to changes in the Company’s historical stock prices over a time frame consistent with the expected life of the award.
 
The following table reflects the stock option activity described above (aggregate intrinsic value in thousands):
 
                     
           Weighted-
    
           Average
    
        Weighted-
  Remaining
    
        Average
  Contractual
  Aggregate
 
  Number of Options  Exercise
  Term
  Intrinsic
 
  Employees  Directors  Price  (years)  Value 
  (thousands)          
 
Balance December 31, 2007
  1,653   42  $43.37         
Granted
  665   —   37.43         
Exercised
  (51)  (10)  27.01         
Forfeited
  (82)  —   45.31         
                     
Balance December 31, 2008
  2,185   32  $41.97         
Granted
  1,415   —   6.00         
Exercised
  (149)  —   5.83         
Forfeited
  (121)  (10)  25.10         
                     
Balance December 31, 2009
  3,330   22  $29.02         
Granted
  373   —   10.37         
Exercised
  (212)  —   6.02         
Forfeited
  (268)  (2)  30.21         
                     
Balance December 31, 2010
  3,223   20  $28.28   6.2  $9,260 
                     
Options exercisable at December 31,
                    
2010
  2,900   20  $30.27   5.8  $8,035 
2009
  3,329   22   29.02   6.8   3,947 
2008
  1,268   32   40.06   5.3   — 


F-42

 

 
The following table summarizes the characteristics of the options outstanding at December 31, 2010 (in thousands):
 
                     
Options Outstanding       
     Weighted-
          
     Average
     Options Exercisable 
  Outstanding
  Remaining
  Weighted-
     Weighted-
 
Range of
 as of
  Contractual Life
  Average
  Exercisable as of
  Average
 
Exercise Prices 12/31/10  (years)  Exercise Price  12/31/10  Exercise Price 
 
$0.00-$6.50
  995   7.9  $6.02   995  $6.02 
$6.51-$12.50
  323   9.2   10.31   —   — 
$12.51-$29.50
  161   1.6   22.14   161   22.14 
$29.51-$49.50
  1,226   5.0   38.32   1,226   38.32 
$49.51-$69.50
  538   5.1   59.21   538   59.21 
                     
   3,243   6.2  $28.28   2,920  $30.27 
                     
 
The following table reflects the activity for unvested stock option awards for the year ended (in thousands):
 
         
     Weighted-
 
     Average
 
     Grant Date
 
  Options  Fair Value 
 
Unvested at December 31, 2009
  1  $2.21 
Granted
  373   5.28 
Forfeited
  (51)  5.61 
         
Unvested at December 31, 2010
  323  $5.22 
         
 
As of December 31, 2010, total unrecognized stock option compensation cost granted under the plans was $1.3 million and is expected to be recognized over a weighted-average 2.2-year term.
 
Exercises of Employee Stock Options
 
The total intrinsic value of options exercised for the year ended December 31, 2010, was approximately $1.3 million. The total cash received from employees as a result of employee stock option exercises for the year ended December 31, 2010, was approximately $1.3 million. The Company settles employee stock option exercises primarily with newly issued common shares or with treasury shares, if available.
 
Restricted Stock Awards
 
In 2010, 2009 and 2008, the Board of Directors approved grants of 573,100; 2,109,798 and 132,394 restricted common shares, respectively, to certain executives of the Company. The restricted stock grants vest in equal annual amounts over a four-year period. Restricted stock awards have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding. These grants have a weighted-average fair value at the date of grant ranging from $5.08 to $11.41, which was equal to the market value of the Company’s common shares at the date of grant. In 2010, 2009 and 2008, grants of 72,901; 111,181 and 16,978 common shares, respectively, were issued as compensation to the Company’s outside directors. These grants were issued equal to the market value of the Company’s stock at the date of grant.


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The following table reflects the activity for unvested restricted stock awards for the year ended December 31, 2010 (awards in thousands):
 
         
     Weighted-
 
     Average
 
     Grant Date
 
  Awards  Fair Value 
 
Unvested at December 31, 2009
  1,143  $5.08 
Granted
  573   9.92 
Vested
  (551)  6.01 
Forfeited
  (19)  10.11 
         
Unvested at December 31, 2010
  1,146  $6.97 
         
 
As of December 31, 2010, total unrecognized compensation of restricted stock award arrangements granted under the plans was $8.0 million and is expected to be recognized over a weighted-average 2.7-year term.
 
Value Sharing Equity Program
 
In July 2009, the Company’s Board of Directors approved and adopted the Value Sharing Equity Program (the “VSEP”) and the grant of awards to certain of the Company’s officers. The VSEP is designed to allow the Company to reward participants with a portion of “Value Created” (as described below).
 
On six specified measurement dates (July 31, 2010; January 31, 2011; July 31, 2011; January 31, 2012; July 31, 2012 and December 31, 2012), the Company will measure the Value Created during the period between the start of the VSEP and the applicable measurement date. Value Created is measured as the increase in the Company’s market capitalization (i.e., the product of the Company’s share price and the number of shares outstanding as of the measurement date), as adjusted for any equity issuances or equity repurchases between the start of the VSEP and the applicable measurement date.
 
Each participant was assigned a “percentage share” of the Value Created. After the first measurement date, each participant will receive a number of Company shares with an aggregate value equal to two-sevenths of the participant’s percentage share of the Value Created. After each of the next four measurement dates, each participant will receive a number of Company shares with an aggregate value equal to three-sevenths, then four-sevenths, then five-sevenths, and then six-sevenths of the participant’s percentage share of the Value Created. After the final measurement date, each participant will receive a number of Company shares with an aggregate value equal to the participant’s full percentage share of the Value Created. For each measurement date, however, the number of Company shares awarded to a participant will be reduced by the number of Company shares previously earned by the participant as of prior measurement dates. This will keep the participants from benefiting more than once for increases in the Company’s share price that occurred during earlier measurement periods.
 
The Company shares granted to a participant will then be subject to an additional time-based vesting period. During this period, Company shares will generally vest in 20% annual increments beginning on the date of grant and on each of the first four anniversaries of the date of grant.
 
The fair value of the VSEP grants was estimated on the date of grant using a Monte Carlo approach model based on the following assumptions:
 
   
  Range
 
Risk-free interest rate
 1.9%
Dividend yield
 6.2%
Expected life
 3.4 years
Expected volatility
 88%


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The following table reflects the activity for unvested VSEP awards for the year ended (in thousands):
 
         
     Weighted-
 
     Average Grant
 
     Date Fair
 
  Awards  Value 
 
Unvested at December 31, 2009
  —  $— 
Granted
  955   11.35 
Vested
  (241)  11.35 
         
Unvested at December 31, 2010
  714  $11.35 
         
 
As of December 31, 2010, $8.7 million of total unrecognized compensation costs were related to the two market metric components associated with the awards granted under the VSEP and is expected to be recognized over the remaining six-year term, which includes the vesting period.
 
Stock-Based Compensation — Change in Control
 
In April 2009, the Otto Transaction was approved by the Company’s shareholders, resulting in a “potential change in control” under the Company’s equity-based award plans. In addition, in September 2009, as a result of the second closing in which the Otto Family acquired beneficial ownership of more than 20% of the Company’s outstanding common shares, a “change in control” was deemed to have occurred under the Company’s equity deferred compensation plans. In accordance with the equity-based award plans, all unvested stock options that were not subject to deferral elections became fully exercisable, all restrictions on unvested restricted shares lapsed, and, in accordance with the equity deferred compensation plans, all unvested deferred stock units vested and were no longer subject to forfeiture. As such, the Company recorded accelerated non-cash charges aggregating approximately $15.4 million for the year ended December 31, 2009, related to these equity awards. This charge is included in general and administrative expenses in the Company’s consolidated statement of operations.
 
401(k) Plan
 
The Company has a 401(k) defined contribution plan covering substantially all of the officers and employees of the Company that permits participants to defer up to a maximum of 50% of their compensation subject to statutory limits. The Company matches the participant’s contribution in an amount equal to 50% of the participant’s elective deferral for the plan year up to a maximum of 6% of a participant’s base salary plus annual cash bonus, not to exceed the sum of 3% of the participant’s base salary plus annual cash bonus. The Company’s plan allows for the Company to make additional discretionary contributions. No discretionary contributions have been made. Employees’ contributions are fully vested, and the Company’s matching contributions vest 20% per year over five years. The Company funds all matching contributions with cash. The Company’s contributions for each of the three years ended December 31, 2010, 2009 and 2008, were $1.1 million, $1.0 million and $1.0 million, respectively. The 401(k) plan is fully funded at December 31, 2010.
 
Elective Deferred Compensation Plan
 
The Company has a non-qualified elective deferred compensation plan for certain officers that permits participants to defer up to 100% of their base salaries and annual performance-based cash bonuses, less applicable taxes and benefits deductions. The Company provides a matching contribution to any participant who has contributed the maximum permitted under the 401(k) plan. This matching contribution is equal to the difference between (a) 3% of the sum of the participant’s base salary and annual performance-based bonus deferred under the 401(k) plan and the deferred compensation combined and (b) the actual employer matching contribution under the 401(k) plan. Deferred compensation related to an employee contribution is charged to expense and is fully vested. Deferred compensation related to the Company’s matching contribution is charged to expense and vests 20% per year. Once an employee has been with the Company five years, all matching contributions are fully vested. The Company’s contributions were $0.1 million for both of the years ended December 31, 2010 and 2008 (not material in 2009). At December 31, 2010, 2009 and 2008, deferred compensation under this plan aggregated approximately $2.8 million, $2.4 million and $3.3 million, respectively. The plan is fully funded at December 31, 2010.


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Equity Deferred Compensation Plan
 
The Company maintains the Developers Diversified Realty Corporation Equity Deferred Compensation Plan (the “Equity Deferred Compensation Plan”), a non-qualified compensation plan for certain officers and directors of the Company to defer the receipt of restricted shares. At December 31, 2010 and 2009, there were 0.4 million and 0.3 million common shares, respectively, of the Company in the Plan valued at $5.5 million and $3.0 million, respectively. The Plan is fully funded at December 31, 2010.
 
Vesting of restricted stock grants approximating 0.1 million, 0.2 million and 0.1 million common shares in 2010, 2009 and 2008, respectively, was deferred through the Equity Deferred Compensation Plan. The Company recorded $1.2 million, $6.7 million and $4.3 million in 2010, 2009 and 2008, respectively, in equity as deferred compensation obligations for the vested restricted stock deferred into the Company’s Equity Deferred Compensation Plan.
 
In 2010, certain officers elected to have their deferred compensation distributed, which resulted in a reduction of the deferred obligation of approximately $5.5 million. In 2009, in accordance with the transition rules under Section 409A of the Internal Revenue Code and the change in control that occurred in September 2009, certain officers and directors 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 $2.8 million. In 2008, deferred obligations aggregating $14.0 million were distributed from the Equity Deferred Compensation Plan to the current Executive Chairman of the Board of the Company resulting in a reduction of the deferred obligation and corresponding increase in paid-in capital.
 
Directors’ Deferred Compensation Plan
 
In 2000, the Company established the Directors’ Deferred Compensation Plan (the “Directors Plan”), a non-qualified compensation plan for the directors of the Company to defer the receipt of quarterly compensation. At December 31, 2010 and 2009, there were 0.3 million and 0.2 million common shares, respectively, of the Company in the Directors Plan valued at $3.7 million and $1.9 million, respectively. The Directors Plan is fully funded at December 31, 2010.
 
16.  Earnings and Dividends Per Share
 
Effective January 1, 2009, the Company adopted,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. The Company’s unvested restricted share units contain rights to receive non-forfeitable dividends, and thus are participating securities requiring the two-class method of computing EPS. Under the two-class method, EPS is computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of commons 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 (loss) income from continuing operations and the number of common shares used in the computations of “basic” EPS, which utilizes the weighted-average number of


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common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares (in thousands, except per share amounts):
 
             
  For the Year Ended December 31, 
Basic and Diluted Earnings: 2010  2009  2008 
 
Continuing Operations:
            
Loss from continuing operations
 $(194,172) $(228,070) $(53,149)
Plus: Gain on disposition of real estate
  1,318   9,127   6,962 
Plus: Loss (income) attributable to non-controlling interests
  12,071   (711)  (668)
             
Loss from continuing operations attributable to DDR
  (180,783)  (219,654)  (46,855)
Less: Preferred dividends
  (42,269)  (42,269)  (42,269)
             
Basic and Diluted — Loss from continuing operations attributable to DDR common shareholders
  (223,052)  (261,923)  (89,124)
Less: Earnings attributable to unvested shares and operating partnership units
  (155)  (259)  (1,211)
             
Basic and Diluted — Loss from continuing operations
 $(223,207) $(262,182) $(90,335)
Discontinued Operations:
            
Loss from discontinued operations
  (54,867)  (184,697)  (36,882)
Plus: Loss attributable to non-controlling interests
  26,292   47,758   11,807 
             
Basic and Diluted — Loss from discontinued operations
  (28,575)  (136,939)  (25,075)
             
Net loss attributable to DDR common shareholders after allocation to participating securities
 $(251,782) $(399,121) $(115,410)
             
Number of Shares:
            
Basic and Diluted — Average shares outstanding
  244,712   158,816   119,843 
             
Basic Earnings Per Share:
            
Loss from continuing operations attributable to DDR common shareholders
 $(0.91) $(1.65) $(0.75)
Loss from discontinued operations attributable to DDR common shareholders
  (0.12)  (0.86)  (0.21)
             
Net loss attributable to DDR common shareholders
 $(1.03) $(2.51) $(0.96)
             
Dilutive Earnings Per Share:
            
Loss from continuing operations attributable to DDR common shareholders
 $(0.91) $(1.65) $(0.75)
Loss from discontinued operations attributable to DDR common shareholders
  (0.12)  (0.86)  (0.21)
             
Net loss attributable to DDR common shareholders
 $(1.03) $(2.51) $(0.96)
             
 
Basic average shares outstanding do not include restricted shares totaling 1,860,064; 1,143,000 and 192,984 that were not vested at December 31, 2010, 2009 and 2008, respectively, or performance units totaling 294,667 that were not vested at December 31, 2008.
 
Anti-dilutive Securities:
 
  • Options to purchase 3.2 million, 3.4 million and 2.2 million common shares were outstanding at December 31, 2010, 2009 and 2008, respectively (Note 15). These outstanding options were considered as anti-dilutive in the calculations at December 31, 2010, 2009 and 2008. Accordingly, the anti-dilutive options were excluded from the computations.


F-47

 

 
 
  • The Company has excluded from its basic and diluted EPS warrants to purchase 5.0 million common shares issued in May 2009 and warrants to purchase 5.0 million common shares issued in September 2009 because the warrants were considered anti-dilutive due to the Company’s net loss from continuing operations for the years ended December 31, 2010 and 2009. The warrants were not outstanding during the year ended December 31, 2008. The 15.0 million common shares issued in May 2009 and the 15.0 million common shares issued in September 2009 relating to the Otto Transaction were included in basic and diluted EPS from the date of issuance (Note 9).
 
  • Shares subject to issuance under the Company’s VSEP (Note 15) were not included in the computation of diluted EPS for 2010 and 2009 because the shares were considered anti-dilutive due to the Company’s net loss from continuing operations. This plan was not in effect in 2008.
 
  • The exchange into common shares associated with OP Units was not included in the computation of diluted shares outstanding for 2010, 2009 or 2008 because the effect of assuming conversion was anti-dilutive (Note 9).
 
  • The Company’s issuances of Senior Convertible Notes, which are convertible into common shares of the Company with conversion prices of approximately $74.56; $64.23 and $16.38 at December 31, 2010, were not included in the computation of diluted EPS for 2010, 2009 and 2008 because the Company’s stock price did not exceed the conversion price of the conversion feature (Note 6) of the Senior Convertible Notes in these periods and would therefore be anti-dilutive. The 2010 Senior Convertible Notes were not outstanding at December 31, 2009 or 2008. In addition, the purchased option related to the Senior Convertible Notes will not be included in the computation of diluted EPS as the purchase option is anti-dilutive.
 
17.  Income Taxes
 
The Company elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 1993. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute at least 90% of its taxable income to its shareholders. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to corporate level federal income tax on taxable income it distributes to its shareholders. As the Company distributed sufficient taxable income for the three years ended December 31, 2010, no U.S. federal income or excise taxes were incurred.
 
If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income. In addition, at December 31, 2010, the Company has taxable REIT subsidiaries that generate taxable income from non-REIT activities and is subject to federal, state and local income taxes.
 
At December 31, 2010, 2009 and 2008, the tax cost basis of assets was approximately $8.6 billion, $9.0 billion and $9.2 billion, respectively. For the year ended December 31, 2010, the Company recorded a net refund of approximately $2.1 million and for the years ended December 31, 2009 and 2008, the Company paid taxes of approximately $2.8 million and $1.7 million, respectively. These amounts reflect taxes paid to federal and state authorities for franchise and other taxes.
 
The following represents the combined activity of the Company’s TRS (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Book loss before income taxes
 $(22,843) $(19,104) $(11,605)
             


F-48

 

 
Components of income tax (benefit) expense are as follows:
 
             
Current:
            
Federal
  (1,775)  (1,614)  1,611 
State and local
  —   —   237 
             
   (1,775)  (1,614)  1,848 
             
Deferred:
            
Federal
  45,311   (5,810)  (18,747)
State and local
  6,663   (855)  (2,757)
             
   51,974   (6,665)  (21,504)
             
Total expense (benefit)
 $50,199  $(8,279) $(19,656)
             
 
In order to maintain its REIT status, the Company must meet certain income tests to ensure that its gross income consists of passive income and not income from the active conduct of a trade or business. The Company utilizes its TRS to the extent certain fee and other miscellaneous non-real estate related income cannot be earned by the REIT. During the third quarter of 2008, the Company began recognizing certain fee and miscellaneous other non-real estate related income within its TRS.
 
Management regularly assesses established reserves and adjusts these reserves when facts and circumstances indicate that a change in estimate is necessary. During 2008, the Company recognized a $19.7 million income tax benefit. Approximately $15.6 million of this amount related to the release of the valuation allowance in the third quarter of 2008, associated with deferred tax assets that were established in prior years. This determination was based upon the increase in fee and miscellaneous other non-real estate related income that was projected to be recognized within the Company’s TRS. Additionally, the Company released a portion of the valuation allowance in 2007 based upon projections of gains recognized from the sale of merchant build assets and anticipated profit levels of the Company’s TRS. Based on the Company’s evaluation of the facts and circumstances, the Company determined at these times that the valuation allowance should be released, as it was more-likely-than-not that the deferred tax assets would be utilized in future years.
 
At December 31, 2010, the Company had net deferred tax assets of approximately $58.3 million, which included $26.5 million attributed to net operating loss carryforwards that expire in varying amounts between the years 2017 through 2030. Realization of the net deferred tax assets is dependent on the existence of significant positive evidence, such as the Company’s ability to generate sufficient income to utilize the deferred tax assets within the relevant carryforward periods. Over the past several years, the Company has initiated various tax actions within the TRS that generated income (“Tax Actions”). These Tax Actions were initiated based upon management’s expectations of the REIT’s future liquidity and cash flow strategies. Due to the Company’s continued progress in raising capital over the past several years and expected improvements within its core operating results, it discontinued initiating these actions during the second half of 2010 and expects that it is unlikely that these Tax Actions will be utilized in future periods. In addition, throughout 2010, the Company continued to experience adverse unexpected charges within its TRS, and during the fourth quarter of 2010, the TRS recorded an impairment charge of $19.3 million and a $3.0 million lease liability charge related to a development project that the Company no longer plans to pursue, resulting in a loss within the TRS for the year ended December 31, 2010. As a result, as of December 31, 2010, the Company has a three-year cumulative pre-tax book loss, adjusted for permanent differences. This, in conjunction with the historical and continued volatility of the activities within the TRS, is sufficient negative evidence that a future benefit of the deferred tax asset may not exist. As such, management believes that it is now more-likely-than-not that the deferred tax assets would not be utilized in future years, and, accordingly, a full valuation allowance of $58.3 million against those deferred tax assets was recorded at December 31, 2010.


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The differences between total income tax expense or benefit and the amount computed by applying the statutory federal income tax rate to income before taxes were as follows (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Statutory rate of 34% applied to pre-tax loss
 $(7,767) $(6,495) $(3,946)
Effect of state and local income taxes, net of federal tax benefit
  (1,142)  (955)  (580)
Valuation allowance increase (decrease)
  58,322   —   (17,410)
Other
  786   (829)  2,280 
             
Total expense (benefit)
 $50,199  $(8,279) $(19,656)
             
Effective tax rate
  (219.76)%(A)  43.34%  169.37%(B)
             
 
 
(A)The 2010 effective tax rate includes the impact from the recording of the valuation allowance in the fourth quarter of 2010. Without this impact, the effective tax rate is approximately 37.59%.
 
(B)The 2008 effective tax rate includes the impact from the release of the valuation allowance in the third quarter of 2008. Without this impact, the effective tax rate is approximately 33.97%.
 
Deferred tax assets and liabilities of the Company’s TRS were as follows (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Deferred tax assets
 $58,923  $52,671  $45,960 
Deferred tax liabilities
  (601)  (775)  (729)
Valuation allowance
  (58,322)  —   — 
             
Net deferred tax asset(A)
 $—  $51,896  $45,231 
             
 
 
(A)The components of the net deferred tax assets are primarily attributable to net operating losses, interest expense, subject to limitations, and basis differentials in assets due to purchase price accounting.


F-50

 

 
 
Reconciliation of GAAP net loss attributable to DDR to taxable income is as follows (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
GAAP net loss attributable to DDR
 $(209,358) $(356,593) $(71,930)
Plus: Book depreciation and amortization(A)
  217,035   221,119   179,015 
Less: Tax depreciation and amortization(A)
  (179,377)  (171,684)  (147,606)
Book/tax differences on gains/losses from capital transactions
  (103,331)  (131,909)  1,598 
Joint venture equity in earnings, net(A)
  (28,659)  (4,194)  68,856 
Dividends from subsidiary REIT investments
  1,609   2,833   3,640 
Deferred income
  1,937   (2,734)  13,212 
Compensation expense
  1,199   19,122   6,892 
Impairment charges
  172,127   339,303   186,821 
Otto shares and warrant valuation
  40,157   199,797   — 
Convertible debt interest expense
  8,204   12,238   14,154 
Miscellaneous book/tax differences, net
  (7,148)  (24,838)  (2,923)
             
Taxable (loss) income before adjustments
  (85,605)  102,460   251,729 
Less: Capital gains
  —   —   (1,388)
Less: Taxable loss carried forward
 $85,605   —   — 
             
Taxable income subject to the 90% dividend requirement
 $—  $102,460  $250,341 
             
 
 
(A)Depreciation expense from majority-owned subsidiaries and affiliates, which are consolidated for financial reporting purposes but not for tax reporting purposes, is included in the reconciliation item “Joint venture equity in earnings, net.”
 
Reconciliation between cash dividends paid and the dividends paid deduction is as follows (in thousands):
 
             
  For the Year Ended December 31, 
  2010  2009  2008 
 
Dividends paid(A)
 $61,204  $102,460  $366,049 
Less: Dividends designated to prior year
  (6,967)  (6,967)  (6,967)
Plus: Dividends designated from the following year
  6,967   6,967   6,967 
Less: Portion designated capital gain distribution
  —   —   (1,388)
Less: Return of capital
  (61,204)  —   (114,320)
             
Dividends paid deduction
 $—  $102,460  $250,341 
             
 
 
(A)Dividends paid in 2009 include stock dividends distributed under IRS Revenue Procedure2009-15.
 
The fourth quarter common share dividends for the years ended December 31, 2010 and 2009, have been allocated and reported to shareholders in the subsequent year. The tax characterization of common share dividends


F-51

 

 
per share as reported to shareholders for the years ended December 31, 2010, 2009 and 2008, are summarized as follows:
 
                     
     Gross
          
2010
 Date
  Ordinary
  Capital Gain
  Return of
  Total
 
Dividends Paid  Income  Distributions  Capital  Dividends 
 
4th quarter 2009
  01/06/10  $     —  $     —  $0.0200  $0.0200 
1st quarter
  04/06/10   —   —   0.0200   0.0200 
2nd quarter
  07/07/10   —   —   0.0200   0.0200 
3rd quarter
  10/05/10   —   —   0.0200   0.0200 
4th quarter
  01/05/11   —   —   —   — 
                     
      $—  $—  $0.0800  $0.0800 
                     
 
                     
     Gross
          
2009
 Date
  Ordinary
  Capital Gain
  Return of
  Total
 
Dividends Paid  Income  Distributions  Capital  Dividends 
 
1st quarter
  04/21/09  $0.2000  $     —  $     —  $0.2000 
2nd quarter
  07/21/09   0.2000   —   —   0.2000 
3rd quarter
  10/15/09   0.0200   —   —   0.0200 
4th quarter
  01/06/10   —   —   —   — 
                     
      $0.4200  $—  $—  $0.4200 
                     
 
                     
     Gross
          
2008
 Date
  Ordinary
  Capital Gain
  Return of
  Total
 
Dividends Paid  Income  Distributions  Capital  Dividends 
 
4th quarter 2007
  01/08/08  $0.4246  $0.0023  $0.2331  $0.6600 
1st quarter
  04/08/08   0.4439   0.0025   0.2436   0.6900 
2nd quarter
  07/08/08   0.4439   0.0025   0.2436   0.6900 
3rd quarter
  10/07/08   0.4439   0.0025   0.2436   0.6900 
                     
      $1.7563  $0.0098  $0.9639  $2.7300 
                     
 
The Company did not pay a dividend in the fourth quarter of 2008.
 
18.  Segment Information
 
The Company has three reportable operating segments, shopping centers, Brazil equity investment and other investments. Each consolidated shopping center is considered a separate operating segment and follows the accounting policies described in Note 1; however, each shopping center on a stand-alone basis represents 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 the applicable standard. Effective October 1, 2010 the Company’s equity method investment in Sonae Sierra Brasil is also considered a reportable segment due to the increased level of income reported from the investment as well as how executive management analyzes this investment and allocates resources accordingly. The operating segment information for the years ended December 31, 2009 and 2008 has


F-52

 

 
been restated to conform to the current year presentation. The following table summarizes the Company’s shopping and office properties, including those located in Brazil:
 
             
  December 31, 
  2010  2009  2008 
 
Shopping centers owned
  525   618   702 
Unconsolidated joint ventures
  236   274   329 
Consolidated joint ventures
  3   34   40 
States(A)
  41   44   45 
Office properties
  6   6   6 
States
  4   4   4 
 
 
(A)Excludes shopping centers owned in Puerto Rico and Brazil.
 
The table below presents information about the Company’s reportable operating segments reflecting the impact of discontinued operations (Note 12) (in thousands):
 
                     
  For the Year Ended December 31, 2010 
  Other
  Shopping
  Brazil Equity
       
  Investments  Centers  Investment  Other  Total 
 
Total revenues
 $5,306  $797,763          $803,069 
Operating expenses(A)
  (2,143)  (360,480)          (362,623)
                     
Net operating income
  3,163   437,283           440,446 
Unallocated expenses(B)
             $(639,991)  (639,991)
Equity in net income of joint ventures and impairment of joint venture interests(C)
      (5,185) $10,558       5,373 
                     
Loss from continuing operations
                 $(194,172)
                     
Total real estate assets
 $49,607  $8,361,632          $8,411,239 
                     
 
                     
  For the Year Ended December 31, 2009 
  Other
  Shopping
  Brazil Equity
       
  Investments  Centers  Investment  Other  Total 
 
Total revenues
 $5,478  $791,921          $797,399 
Operating expenses(A)
  (2,425)  (247,864)          (250,289)
                     
Net operating income
  3,053   544,057           547,110 
Unallocated expenses(B)
             $(580,863)  (580,863)
Equity in net loss of joint ventures and impairment of joint venture interests(C)
      (203,823) $9,506       (194,317)
                     
Loss from continuing operations
                 $(228,070)
                     
Total real estate assets
 $49,637  $8,773,300          $8,822,937 
                     
 


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  For the Year Ended December 31, 2008 
  Other
  Shopping
  Brazil Equity
       
  Investments  Centers  Investments  Other  Total 
 
Total revenues
 $6,060  $819,008          $825,068 
Operating expenses(A)
  (2,036)  (254,618)          (256,654)
                     
Net operating income
  4,024   564,390           568,414 
Unallocated expenses(B)
             $(532,325)  (532,325)
Equity in net loss of joint ventures and impairment of joint venture interests(C)
      (99,958) $10,720       (89,238)
                     
Loss from continuing operations
                 $(53,149)
                     
Total real estate assets
 $49,707  $9,059,859          $9,109,566 
                     
 
 
(A)Includes impairment charges of $116.5 million, $12.7 million and $29.6 million for the years ended December 31, 2010, 2009 and 2008, respectively.
 
(B)Unallocated expenses consist of general and administrative expenses, interest income, interest expense, other income/expense, tax benefit/expense and depreciation and amortization as listed in the consolidated statements of operations.
 
(C)Includes impairment charges of $0.2 million, $184.6 million and $107.0 million of joint venture investments for the years ended December 31, 2010, 2009 and 2008, respectively.
 
19.  Subsequent Events
 
In February 2011, the Company announced that Scott A. Wolstein would be stepping down as Executive Chairman of the Company’s Board of Directors. Mr. Wolstein’s separation from the Company as Executive Chairman will constitute a termination “without cause” in accordance with the terms of his Amended and Restated Employment Agreement with the Company, dated July 29, 2009.
 
In February 2011, the Company’s unconsolidated joint venture, Sonae Sierra Brasil, completed an initial public offering of its common shares on the Sao Paulo Stock Exchange. The Company received a distribution of US$22.4 million from a portion of the net proceeds. As a result of the initial public offering, the Company’s ownership interest in Sonae Sierra Brasil was reduced from approximately 48% to approximately 34%.
 
In February 2011, the Company executed the extension option of its Term Loan with KeyBank, N.A. to extend the maturity date to February 2012.
 
In January 2011, the Company acquired its partner’s 50% interest in an unconsolidated joint venture that owns one shopping center at a purchase price of $20.3 million, which was partially funded through the assumption of $10.5 million aggregate principal amount of debt.

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20.  Quarterly Results of Operations (Unaudited)
 
The following table sets forth the quarterly results of operations, as restated for discontinued operations, for the years ended December 31, 2010 and 2009 (in thousands, except per share amounts):
 
                     
  First  Second  Third  Fourth  Total 
 
2010
                    
Revenues
 $202,594  $198,715  $198,284  $203,476  $803,069 
Net loss attributable to DDR
  (24,247)  (86,575)  (14,310)  (84,226)(A)  (209,358)
Net loss attributable to DDR common shareholders
  (34,814)  (97,143)  (24,877)  (94,793)(A)  (251,627)
Basic:
                    
Net loss per common share attributable to DDR common shareholders
 $(0.15) $(0.39) $(0.10) $(0.37) $(1.03)
Weighted average number of shares
  227,133   248,533   249,139   253,872   244,712 
Diluted:
                    
Net loss per common share attributable to DDR common shareholders
 $(0.15) $(0.39) $(0.10) $(0.37) $(1.03)
Weighted average number of shares
  227,133   248,533   249,139   253,872   244,712 
2009
                    
Revenues
 $203,946  $194,537  $195,301  $203,615  $797,399 
Net income (loss) attributable to DDR
  87,401   (226,585)  (137,846)  (79,563)(A)  (356,593)
Net income (loss) attributable to DDR common shareholders
  76,834   (237,152)  (148,413)  (90,131)(A)  (398,862)
Basic:
                    
Net income (loss) per common share attributable to DDR common shareholders
 $0.59  $(1.64) $(0.90) $(0.46) $(2.51)
Weighted average number of shares
  128,485   144,227   165,073   196,399   158,816 
Diluted:
                    
Net income (loss) per common share attributable to DDR common shareholders
 $0.59  $(1.64) $(0.90) $(0.46) $(2.51)
Weighted average number of shares
  129,684   144,227   165,073   196,399   158,816 
 
 
(A)Includes impairment charges of $29.1 million and $92.1 million for the three months ended December 31, 2010 and 2009, respectively, and an adjustment to the valuation allowance (Note 17) for the three months ended December 31, 2010.


F-55

 

 
.
Schedule II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

 
SCHEDULE II
 
DEVELOPERS DIVERSIFIED REALTY CORPORATION

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the years ended December 31, 2010, 2009 and 2008
(in thousands)
 
                 
  Balance at
  Charged to
       
  Beginning of
  (Income)
     Balance at
 
  Year  Expense  Deductions  End of Year 
 
Year ended December 31, 2010
                
Allowance for uncollectible accounts
 $43,763  $13,588  $20,557  $36,794 
                 
Valuation allowance for deferred tax assets
 $—  $58,322  $—  $58,322 
                 
Year ended December 31, 2009
                
Allowance for uncollectible accounts
 $39,008  $21,218(A) $16,463  $43,763 
                 
Year ended December 31, 2008
                
Allowance for uncollectible accounts
 $34,163  $24,343(A) $19,498  $39,008 
                 
Valuation allowance for deferred tax assets
 $17,410  $(17,410) $—  $— 
                 
 
 
(A)Includes loan loss reserves of approximately $5.4 million and $5.4 million for the years ended December 31, 2009 and 2008, respectively. This amount excludes the impairment charge of $66.9 million on the Bloomfield Loan.
.


F-56

 

 
 
.
Real Estate and Accumulated Depreciation

Developers Diversified Realty Corporation
Real Estate and Accumulated Depreciation
December 31, 2010
(In thousands)
 
                                             
                      Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Brandon, FL
 $0  $4,111  $0  $0  $6,333  $6,333  $5,060  $1,273  $0   S/L 30.0   1972(C) 
Stow, OH
  1,036   9,028   0   993   35,249   36,242   12,676   23,566   0   S/L 30.0   1969(C) 
Westlake, OH
  424   3,803   203   424   10,014   10,438   5,939   4,499   0   S/L30.0   1974(C) 
E. Norrition, PA
  80   4,698   233   70   8,779   8,849   6,501   2,348   0   S/L 30.0   1975(C) 
Palm Harbor, FL
  1,137   4,089   0   1,137   4,195   5,332   2,110   3,222   0   S/L 31.5   1995(A) 
Tarpon Springs, FL
  248   7,382   81   244   12,214   12,458   9,421   3,037   0   S/L 30.0   1974(C) 
Bayonet Pt., FL
  2,113   8,181   128   1,806   11,453   13,259   7,827   5,432   0   S/L 30.0   1985(C) 
McHenry, IL
  963   3,949   0   10,936   43,888   54,824   4,542   50,282   0   S/L 31.5   2006(C) 
Miami, FL
  11,626   30,457   0   26,743   98,728   125,471   10,517   114,954   0   S/L 31.5   2006(C) 
San Antonio, TX (Village)
  3,370   21,033   0   2,976   28,528   31,504   2,530   28,974   0   S/L 31.5   2007(C) 
Starkville, MS
  1,271   8,209   0   703   6,783   7,486   3,101   4,385   0   S/L 31.5   1994(A) 
Gulfport, MS
  8,795   36,370   0   0   51,123   51,123   13,437   37,686   25,872   S/L 31.5   2003(A) 
Tupelo, MS
  2,282   14,979   0   2,213   17,687   19,900   8,592   11,308   0   S/L 31.5   1994(A) 
Jacksonville, FL
  3,005   9,425   0   3,028   10,358   13,386   5,145   8,241   0   S/L 31.5   1995(A) 
Long Beach, CA (Pike)
  0   111,512   0   0   138,102   138,102   29,855   108,247   0   S/L 31.5   2005(C) 
Brunswick, MA
  3,836   15,459   0   3,796   19,782   23,578   8,203   15,375   0   S/L 30.0   1973(C) 
Oceanside, CA
  0   10,643   0   0   14,495   14,495   4,586   9,909   0   S/L 31.5   2000(C) 
Reno, NV
  0   366   0   1,132   4,696   5,828   921   4,907   3,036   S/L 31.5   2000(C) 
Everett, MA
  9,311   44,647   0   9,462   51,315   60,777   15,063   45,714   0   S/L 31.5   2001(C) 
Pasadena, CA
  47,215   101,475   2,053   47,360   106,773   154,133   17,830   136,303   79,100   S/L 31.5   2003(A) 
Salisbury, MD
  2,070   12,495   278   2,071   13,022   15,093   4,069   11,024   9,182   S/L 31.5   1999(C) 
Atlanta, GA
  475   9,374   0   475   10,448   10,923   5,546   5,377   0   S/L 31.5   1994(A) 
Jackson, MS
  4,190   6,783   0   4,190   6,836   11,026   1,795   9,231   0   S/L 31.5   2003(A) 
Freehold, NJ
  2,460   2,475   0   3,166   3,267   6,433   196   6,237   0   S/L 31.5   1994(A) 
Opelika, AL
  3,183   11,666   0   1,843   7,221   9,064   5,098   3,966   0   S/L 31.5   2003(A) 
Scottsboro, AL
  788   2,781   0   788   3,218   4,006   809   3,197   0   S/L 31.5   2003(A) 
Gulf Breeze, FL
  2,485   2,214   0   2,485   2,379   4,864   619   4,245   0   S/L 31.5   2003(A) 
Apex, NC (South)
  9,576   43,619   0   10,521   53,578   64,099   6,916   57,183   0   S/L 31.5   2006(C) 
Ocala, FL
  1,916   3,893   0   1,916   5,991   7,907   1,339   6,568   0   S/L 31.5   2003(A) 
Tallahassee, FL
  1,881   2,956   0   1,881   7,145   9,026   1,510   7,516   0   S/L 31.5   2003(A) 
Chamblee, GA
  5,862   5,971   0   5,582   6,388   11,970   1,833   10,137   0   S/L 31.5   2003(A) 
Cumming, GA (Marketplace)
  14,255   23,653   0   14,249   24,593   38,842   6,343   32,499   0   S/L 31.5   2003(A) 
Douglasville, GA
  3,856   9,625   0   3,540   9,680   13,220   2,513   10,707   0   S/L 31.5   2003(A) 


F-57

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Athens, GA
  1,649   2,084   0   1,477   2,179   3,656   584   3,072   0   S/L 31.5   2003(A) 
Griffin, GA
  138   2,638   0   138   2,693   2,831   693   2,138   0   S/L 31.5   2003(A) 
Columbus, GA
  4,220   8,159   0   4,220   9,872   14,092   2,257   11,835   0   S/L 31.5   2003(A) 
Newnan, GA
  2,632   11,063   0   2,620   11,542   14,162   2,968   11,194   0   S/L 31.5   2003(A) 
Warner Robins, GA
  5,977   7,459   0   5,729   7,630   13,359   2,064   11,295   7,153   S/L 31.5   2003(A) 
Woodstock, GA
  2,022   8,440   0   1,486   2,580   4,066   1,748   2,318   0   S/L 31.5   2003(A) 
Fayetteville, NC
  8,524   10,627   0   8,524   14,426   22,950   3,268   19,682   10,450   S/L 31.5   2003(A) 
Charleston, SC
  3,479   9,850   0   3,479   10,093   13,572   6,817   6,755   0   S/L 31.5   2003(A) 
Denver, CO
  20,733   22,818   0   20,804   24,273   45,077   6,357   38,720   25,095   S/L 31.5   2003(A) 
Chattanooga, TN
  1,845   13,214   0   1,845   16,290   18,135   4,467   13,668   10,476   S/L 31.5   2003(A) 
Hendersonville, TN
  3,743   9,268   0   3,249   9,068   12,317   2,349   9,968   6,658   S/L 31.5   2003(A) 
Johnson City, TN
  124   521   0   0   2,121   2,121   390   1,731   0   S/L 31.5   2003(A) 
Chester, VA
  10,780   4,752   0   10,780   6,927   17,707   1,828   15,879   7,863   S/L 31.5   2003(A) 
Brookfield, WI
  588   0   0   588   3,109   3,697   375   3,322   0   S/L 31.5   2003(A) 
Milwaukee, WI
  4,527   3,600   0   4,527   4,800   9,327   1,125   8,202   0   S/L 31.5   2003(A) 
Richmond, KY
  1,870   5,661   0   1,870   8,460   10,330   2,365   7,965   0   S/L 31.5   2003(A) 
Allentown, PA
  5,882   20,060   0   5,882   22,804   28,686   5,457   23,229   14,201   S/L 31.5   2003(A) 
St. John, MO
  2,613   7,040   0   2,827   8,118   10,945   1,989   8,956   0   S/L 31.5   2003(A) 
Suwanee, GA
  13,479   23,923   0   13,479   28,869   42,348   7,543   34,805   0   S/L 31.5   2003(A) 
West Allis, WI
  2,452   10,982   0   2,452   11,542   13,994   2,912   11,082   0   S/L 31.5   2003(A) 
Chesterfield, MI
  566   2,324   0   382   3,900   4,282   371   3,911   0   S/L 31.5   2006(A) 
Ft. Collins, CO
  2,767   2,054   0   1,129   4,513   5,642   1,068   4,574   0   S/L 31.5   2003(A) 
Lafayette, IN
  1,217   2,689   0   1,217   2,703   3,920   700   3,220   0   S/L 31.5   2003(A) 
Hamilton, NJ
  8,039   49,896   0   11,774   84,577   96,351   17,189   79,162   43,628   S/L 31.5   2003(A) 
Lansing, MI
  1,598   6,999   0   1,801   11,662   13,463   2,543   10,920   7,001   S/L 31.5   2003(A) 
Erie, PA (Peach)
  10,880   19,201   0   6,373   46,363   52,736   19,950   32,786   23,709   S/L 31.5   1995(C) 
Erie, PA (Hills)
  0   2,564   13   723   3,842   4,565   3,250   1,315   0   S/L 30.0   1973(C) 
Bedford, IN
  706   8,425   6   1,067   10,690   11,757   5,480   6,277   0   S/L 31.5   1993(A) 
San Francisco, CA
  15,332   35,803   0   10,464   25,228   35,692   5,097   30,595   0   S/L 31.5   2002(A) 
Chillicothe, OH
  43   2,549   2   1,170   4,366   5,536   2,115   3,421   4,515   S/L 30.0   1974(C) 
Phoenix, AZ
  18,701   18,811   118   18,701   19,457   38,158   2,941   35,217   18,516   S/L 30.0   1999(A) 
Martinsville, VA
  3,163   28,819   0   3,163   29,649   32,812   18,315   14,497   18,469   S/L 30.0   1989(C) 

F-58

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Macedonia, OH (Phase II)
  4,392   10,885   0   2,315   7,014   9,329   2,629   6,700   0   S/L 31.5   1998(C) 
Huber Hts, OH
  757   14,469   0   757   25,273   26,030   10,133   15,897   0   S/L 31.5   1993(A) 
Xenia, OH
  948   3,938   0   673   6,040   6,713   3,008   3,705   0   S/L 31.5   1994(A) 
Boardman, OH
  9,025   27,983   0   8,152   28,300   36,452   12,007   24,445   22,067   S/L 31.5   1997(A) 
Solon, OH
  6,220   7,454   0   6,220   21,690   27,910   8,126   19,784   0   S/L 31.5   1998(C) 
Cincinnati, OH
  2,399   11,238   172   2,399   13,892   16,291   7,824   8,467   0   S/L 31.5   1993(A) 
St. Louis, MO (Sunset)
  12,791   38,404   0   13,403   44,803   58,206   18,702   39,504   29,423   S/L 31.5   1998(A) 
St. Louis, MO (Brentwood)
  10,628   32,053   0   10,018   32,370   42,388   13,021   29,367   21,256   S/L 31.5   1998(A) 
Cedar Rapids, IA
  4,219   12,697   0   4,219   14,035   18,254   5,670   12,584   7,648   S/L 31.5   1998(A) 
St. Louis, MO (Olympic)
  2,775   8,370   0   2,775   10,223   12,998   4,549   8,449   0   S/L 31.5   1998(A) 
St. Louis, MO (Morris)
  0   2,048   0   0   2,468   2,468   868   1,600   0   S/L 31.5   1998(A) 
St. Louis, MO (Southtowne)
  4,159   3,818   0   5,403   7,810   13,213   1,743   11,470   0   S/L 31.5   2004(C) 
Aurora, OH
  832   7,560   0   1,592   13,588   15,180   5,427   9,753   0   S/L 31.5   1995(C) 
Nampa, ID
  1,395   8,563   0   6,421   63,861   70,282   2,416   67,866   0   S/L 31.5   2007(A) 
Idaho Falls, ID
  1,302   5,703   0   1,418   6,453   7,871   3,007   4,864   0   S/L 31.5   1998(A) 
Mount Vernon, IL
  1,789   9,399   111   1,789   15,844   17,633   7,549   10,084   0   S/L 31.5   1993(A) 
Fenton, MO
  414   4,244   476   430   7,356   7,786   5,346   2,440   0   S/L 30.0   1983(A) 
Simpsonville, SC
  431   6,563   0   417   6,811   7,228   3,735   3,493   0   S/L 31.5   1994(A) 
Cambden, SC
  627   7,519   7   1,021   10,638   11,659   5,514   6,145   0   S/L 31.5   1993(A) 
N. Charleston, SC
  911   11,346   0   1,081   16,872   17,953   9,288   8,665   11,516   S/L 31.5   1993(A) 
Orangeburg, SC
  318   1,693   0   318   3,534   3,852   1,527   2,325   0   S/L 31.5   1995(A) 
Mt. Pleasant, SC
  2,584   10,470   0   2,430   19,640   22,070   7,692   14,378   12,606   S/L 31.5   1995(A) 
Sault St. Marie, MI
  1,826   13,710   0   1,826   15,497   17,323   7,809   9,514   0   S/L 31.5   1994(A) 
Cheboygan, MI
  127   3,612   0   127   4,135   4,262   2,270   1,992   0   S/L 31.5   1993(A) 
Walker, MI (Grand Rapids)
  1,926   8,039   0   1,926   8,989   10,915   4,216   6,699   0   S/L 31.5   1995(A) 
Houghton, MI
  440   7,301   1,821   535   12,831   13,366   10,926   2,440   0   S/L 30.0   1980(C) 
Bad Axe, MI
  184   3,647   0   184   4,585   4,769   2,341   2,428   0   S/L 31.5   1993(A) 
Gaylord, MI
  270   8,728   0   251   11,263   11,514   5,729   5,785   0   S/L 31.5   1993(A) 
Howell, MI
  332   11,938   0   332   15,846   16,178   7,773   8,405   0   S/L 31.5   1993(A) 
Mt. Pleasant, MI
  767   7,769   20   1,142   14,626   15,768   7,058   8,710   0   S/L 31.5   1993(A) 
Elyria, OH
  352   5,693   0   352   8,471   8,823   5,236   3,587   0   S/L 30.0   1977(C) 
Meridian, ID
  24,591   31,779   0   24,841   60,983   85,824   14,892   70,932   37,200   S/L 31.5   2001(C) 

F-59

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Midvale, UT (Fort Union I, II, III, Wingers)
  25,662   56,759   0   28,393   80,500   108,893   25,209   83,684   0   S/L 31.5   1998(A) 
Taylorsville, UT (North)
  24,327   53,686   0   31,368   76,963   108,331   27,807   80,524   0   S/L 31.5   1998(A) 
Orem, UT
  5,428   12,259   0   5,428   13,262   18,690   5,345   13,345   0   S/L 31.5   1998(A) 
Riverdale, UT (North)
  15,845   36,479   0   15,845   43,362   59,207   17,282   41,925   0   S/L 31.5   1998(A) 
Bemidji, MN
  442   8,229   500   436   11,676   12,112   8,934   3,178   0   S/L 30.0   1977(C) 
Salt Lake City, UT (Hermes Bl)
  2,801   5,997   0   2,801   7,190   9,991   2,933   7,058   0   S/L 31.5   1998(A) 
Ogden, UT
  3,620   7,716   0   3,620   8,352   11,972   3,429   8,543   0   S/L 31.5   1998(A) 
Birmingham, AL Eastwood)
  3,726   13,974   0   3,726   17,693   21,419   11,086   10,333   0   S/L 31.5   1994(A) 
Birmingham, AL (Brook Highland)
  10,573   26,002   0   11,434   52,016   63,450   20,392   43,058   25,923   S/L 31.5   1995(A) 
West Seneca, NY
  2,929   12,926   0   2,929   13,008   15,937   2,800   13,137   0   S/L 31.5   2004(A) 
N. Tonawanda, NY
  5,878   21,291   0   5,823   22,355   28,178   5,040   23,138   0   S/L 31.5   2004(A) 
Amherst, NY
  5,873   22,458   0   5,873   23,226   29,099   5,073   24,026   0   S/L 31.5   2004(A) 
Ithaca, NY (Tops)
  9,198   42,969   0   9,198   43,324   52,522   9,215   43,307   13,242   S/L 31.5   2004(A) 
Hamburg, NY
  3,303   16,239   0   3,303   16,816   20,119   3,879   16,240   0   S/L 31.5   2004(A) 
Hamburg, NY
  4,071   17,142   0   4,071   17,703   21,774   3,826   17,948   0   S/L 31.5   2004(A) 
West Seneca, NY
  2,576   2,590   0   2,576   3,530   6,106   820   5,286   0   S/L 31.5   2004(A) 
Orland Park, IL
  10,430   13,081   0   10,430   13,061   23,491   2,829   20,662   7,051   S/L 31.5   2004(A) 
Tonawanda, NY
  3,061   6,887   0   3,061   7,808   10,869   1,725   9,144   0   S/L 31.5   2004(A) 
Hamburg, NY
  4,152   22,075   0   4,152   22,663   26,815   4,835   21,980   0   S/L 31.5   2004(A) 
Columbus, OH (Consumer Square)
  9,828   22,858   0   4,643   11,537   16,180   5,020   11,160   10,781   S/L 31.5   2004(A) 
Louisville, KY (Outer Loop)
  4,180   747   0   4,288   1,877   6,165   339   5,826   0   S/L 31.5   2004(A) 
Olean, NY
  8,834   29,813   0   8,834   31,534   40,368   7,101   33,267   0   S/L 31.5   2004(A) 
N. Charleston, SC (N Charl Ctr)
  5,146   5,990   0   5,146   9,300   14,446   1,987   12,459   9,524   S/L 31.5   2004(A) 
Jacksonville, FL (Arlington Road)
  4,672   5,085   0   1,672   2,536   4,208   2,137   2,071   0   S/L 31.5   2004(A) 
West Long Branch, NJ (Monmouth)
  14,131   51,982   0   14,131   53,895   68,026   11,502   56,524   5,866   S/L 31.5   2004(A) 
Big Flats, NY (Big Flats I, II, III, IV)
  22,229   52,579   0   22,279   57,200   79,479   14,398   65,081   0   S/L 31.5   2004(A) 
Hanover, PA
  4,408   4,707   0   4,408   4,707   9,115   1,071   8,044   0   S/L 31.5   2004(A) 
Mays Landing, NJ (Wrangelboro)
  49,033   107,230   0   49,033   113,042   162,075   24,109   137,966   38,127   S/L 31.5   2004(A) 
Williamsville, NY
  5,021   6,768   0   5,021   8,706   13,727   2,038   11,689   0   S/L 31.5   2004(A) 
Greece, NY
  3,901   4,922   0   3,901   4,923   8,824   1,080   7,744   0   S/L 31.5   2004(A) 
Buffalo, NY (Elmwood)
  6,010   19,044   0   6,010   19,255   25,265   4,214   21,051   0   S/L 31.5   2004(A) 
Lakeland, FL (Highlands)
  4,112   4,328   0   4,112   4,500   8,612   985   7,627   0   S/L 31.5   2004(A) 

F-60

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Lockport, NY
  9,253   23,829   0   9,253   24,123   33,376   5,249   28,127   7,818   S/L 31.5   2004(A) 
Buffalo, NY (Delaware)
  3,568   29,001   0   3,620   29,642   33,262   6,275   26,987   10,755   S/L 31.5   2004(A) 
Cheektowaga, NY (Thruway)
  15,471   25,600   0   15,471   27,072   42,543   6,476   36,067   3,341   S/L 31.5   2004(A) 
Walker, MI (Alpine Ave.)
  1,454   9,284   0   1,454   14,009   15,463   3,504   11,959   0   S/L 31.5   2004(A) 
Toledo, OH
  1,316   3,961   0   1,316   3,961   5,277   881   4,396   0   S/L 31.5   2004(A) 
New Hartford, NY
  1,279   13,685   0   1,279   13,748   15,027   2,991   12,036   0   S/L 31.5   2004(A) 
Mays Landing, NJ (Hamilton)
  36,224   56,949   0   36,224   60,689   96,913   13,301   83,612   8,352   S/L 31.5   2004(A) 
Gates, NY (Walmart)
  9,369   40,672   0   9,369   42,122   51,491   9,265   42,226   23,001   S/L 31.5   2004(A) 
Rome, NY (Freedom)
  4,565   5,078   0   4,565   9,411   13,976   1,821   12,155   2,857   S/L 31.5   2004(A) 
Englewood, FL
  2,172   2,983   0   2,172   3,196   5,368   635   4,733   806   S/L 31.5   2004(A) 
Hamburg, NY (Milestrip)
  2,527   14,711   0   2,527   15,134   17,661   3,401   14,260   0   S/L 31.5   2004(A) 
Mooresville, NC
  14,369   43,688   0   14,369   45,075   59,444   9,110   50,334   19,125   S/L 31.5   2004(A) 
Indian Trail, NC
  3,172   7,075   0   3,172   7,338   10,510   1,649   8,861   6,407   S/L 31.5   2004(A) 
Dewitt, NY
  1,140   6,756   0   881   5,686   6,567   1,215   5,352   0   S/L 31.5   2004(A) 
Chili, NY
  2,143   8,109   0   2,143   8,109   10,252   1,774   8,478   0   S/L 31.5   2004(A) 
Horseheads, NY
  659   2,426   0   4,777   28,459   33,236   1,570   31,666   0   S/L 31.5   2007(A) 
Ashtabula, OH
  1,444   9,912   0   1,444   10,058   11,502   2,132   9,370   6,310   S/L 31.5   2004(A) 
Niskayuna, NY
  20,297   51,155   0   20,297   52,187   72,484   11,716   60,768   17,539   S/L 31.5   2004(A) 
Victor, NY
  2,374   6,433   0   2,374   6,765   9,139   1,459   7,680   6,064   S/L 31.5   2004(A) 
Wilmington, NC
  4,785   16,852   1,183   4,287   33,583   37,870   17,327   20,543   24,500   S/L 31.5   1989(C) 
Brainerd, MN
  703   9,104   272   1,182   16,437   17,619   8,535   9,084   0   S/L 31.5   1991(A) 
Spring Hill, FL
  1,084   4,816   266   2,096   11,395   13,491   5,958   7,533   3,994   S/L 30.0   1988(C) 
Tiffin, OH
  432   5,908   435   432   7,241   7,673   5,761   1,912   0   S/L 30.0   1980(C) 
Broomfield, CO (FlatIron)
  23,681   31,809   0   13,707   43,201   56,908   9,971   46,937   0   S/L 31.5   2003(A) 
Denver, CO (Centennial)
  7,833   35,550   0   8,082   57,129   65,211   21,703   43,508   31,879   S/L 31.5   1997(C) 
New Bern, NC
  780   8,204   72   441   6,557   6,998   3,096   3,902   0   S/L 31.5   1989(C) 
Bayamon, PR (Plaza Del Sol)
  132,074   152,441   0   132,759   155,995   288,754   29,566   259,188   0   S/L 31.5   2005(A) 
Carolina, PR (Plaza Escorial)
  28,522   76,947   0   28,601   77,914   106,515   14,918   91,597   57,500   S/L 31.5   2005(A) 
Humacao, PR (Palma Real)
  16,386   74,059   0   16,386   81,505   97,891   15,540   82,351   0   S/L 31.5   2005(A) 
Isabela, PR (Plaza Isabela)
  8,175   41,094   0   8,175   42,557   50,732   8,204   42,528   23,174   S/L 31.5   2005(A) 
San German, PR (Camino Real)
  3,215   24   0   3,215   41   3,256   21   3,235   0   S/L 31.5   2005(A) 
Cayey, PR (Plaza Cayey)
  19,214   25,584   0   18,629   26,276   44,905   5,149   39,756   21,941   S/L 31.5   2005(A) 

F-61

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Bayamon, PR (Rio Hondo)
  91,645   98,007   0   91,898   105,138   197,036   19,294   177,742   109,500   S/L 31.5   2005(A) 
San Juan, PR (Senorial Plaza)
  10,338   23,285   0   10,338   29,380   39,718   4,862   34,856   0   S/L 31.5   2005(A) 
Bayamon, PR (Rexville Plaza)
  4,294   11,987   0   4,294   12,258   16,552   2,407   14,145   0   S/L 31.5   2005(A) 
Arecibo, PR (Atlantico)
  7,965   29,898   0   8,094   30,989   39,083   6,027   33,056   0   S/L 31.5   2005(A) 
Hatillo, PR (Plaza Del Norte)
  101,219   105,465   0   101,219   115,006   216,225   21,342   194,883   0   S/L 31.5   2005(A) 
Vega Baja, PR (Plaza Vega Baja)
  7,076   18,684   0   7,076   18,764   25,840   3,645   22,195   0   S/L 31.5   2005(A) 
Guyama, PR (Plaza Walmart)
  1,960   18,721   0   1,960   18,934   20,894   3,661   17,233   12,328   S/L 31.5   2005(A) 
Fajardo, PR (Plaza Fajardo)
  4,376   41,199   0   4,376   41,554   45,930   7,959   37,971   26,380   S/L 31.5   2005(A) 
San German, PR (Del Oeste)
  6,470   20,751   0   6,470   21,155   27,625   4,121   23,504   0   S/L 31.5   2005(A) 
Princeton, NJ
  7,121   29,783   0   7,121   37,057   44,178   13,917   30,261   0   S/L 31.5   1998(A) 
Princeton, NJ (Pavilion)
  6,327   44,466   0   7,343   55,748   63,091   16,323   46,768   0   S/L 31.5   2000(C) 
Phoenix, AZ
  15,352   22,813   1,601   15,352   26,342   41,694   10,561   31,133   30,000   S/L 31.5   2000(C) 
Russellville, AR
  624   13,391   0   624   15,738   16,362   7,375   8,987   0   S/L 31.5   1994(A) 
N. Little Rock, AR
  907   17,160   0   907   19,725   20,632   8,268   12,364   0   S/L 31.5   1994(A) 
Ottumwa, IA
  338   8,564   103   317   15,560   15,877   8,020   7,857   0   S/L 31.5   1990(C) 
Washington, NC
  991   3,118   34   878   6,131   7,009   2,642   4,367   0   S/L 31.5   1990(C) 
Leawood, KS
  13,002   69,086   0   11,297   81,539   92,836   20,356   72,480   53,266   S/L 31.5   1998(A) 
Littleton, CO
  12,249   50,709   0   12,621   54,268   66,889   14,775   52,114   42,200   S/L 31.5   2002(C) 
Durham, NC
  2,210   11,671   278   2,210   14,019   16,229   8,868   7,361   0   S/L 31.5   1990(C) 
San Antonio, TX (N. Bandera)
  3,475   37,327   0   3,537   38,844   42,381   10,443   31,938   0   S/L 31.5   2002(A) 
Crystal River, FL
  1,217   5,796   365   1,219   10,129   11,348   5,609   5,739   0   S/L 31.5   1986(C) 
Dublin, OH (Perimeter Center)
  3,609   11,546   0   3,609   11,821   15,430   4,787   10,643   0   S/L 31.5   1998(A) 
Hamilton, OH
  495   1,618   0   495   1,618   2,113   654   1,459   0   S/L 31.5   1998(A) 
Barboursville, WV
  431   1,417   2   0   1,959   1,959   773   1,186   0   S/L 31.5   1998(A) 
Columbus, OH (Easton Market)
  11,087   44,494   0   12,243   52,176   64,419   19,632   44,787   0   S/L 31.5   1998(A) 
Denver, CO (Tamarac Square Mall)
  2,990   12,252   0   2,987   12,929   15,916   9,943   5,973   0   S/L 31.5   2001(A) 
Daytona Beach, FL (Volusia Point)
  3,838   4,485   0   3,834   5,040   8,874   1,545   7,329   0   S/L 31.5   2001(A) 
Twinsburg, OH (Heritage Business)
  254   1,623   0   254   1,784   2,038   550   1,488   0   S/L 31.5   2001(A) 
Silver Springs, MD (Tech Center29-1)
  7,484   20,980   0   7,476   25,510   32,986   8,535   24,451   0   S/L 31.5   2001(A) 
San Antonio, TX (Center)
  1,232   7,881   0   1,014   7,278   8,292   766   7,526   0   S/L 31.5   2007(C) 
San Antonio, TX (Lifestyle)
  1,613   10,791   0   6,168   67,809   73,977   4,655   69,322   0   S/L 31.5   2007(C) 
McHenry, IL
  332   1,302   0   2,246   8,448   10,694   600   10,094   0   S/L 31.5   2006(C) 

F-62

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
San Antonio, TX (Terrell)
  4,980   11,880   0   4,757   11,732   16,489   1,123   15,366   0   S/L 31.5   2007(A) 
Kyle, TX (Kyle Crossing)
  2,548   7,349   0   3,436   10,943   14,379   224   14,155   24,396   S/L 40.0   2009(C) 
Brandon, FL
  4,775   13,117   0   4,775   14,045   18,820   451   18,369   0   S/L 40.0   2009(A) 
Atlanta, GA
  14,078   42,130   0   14,078   40,902   54,980   1,304   53,676   27,374   S/L 40.0   2009(A) 
Marietta, GA
  9,745   27,737   0   9,745   28,456   38,201   931   37,270   19,201   S/L 40.0   2009(A) 
Macon, GA
  2,940   5,192   0   2,940   5,482   8,422   687   7,735   0   S/L 31.5   2007(A) 
Snellville, GA (Commons)
  10,185   51,815   0   10,318   52,607   62,925   6,557   56,368   0   S/L 31.5   2007(A) 
Union, NJ
  7,659   15,689   0   7,650   19,366   27,016   2,080   24,936   0   S/L 31.5   2007(A) 
Spartanburg, SC (Northpoint)
  1,015   8,992   0   1,015   4,470   5,485   938   4,547   0   S/L 31.5   2007(A) 
Taylors, SC (Hampton)
  1,732   4,506   0   1,732   4,506   6,238   567   5,671   0   S/L 31.5   2007(A) 
Dothan, AL (Shops)
  2,065   20,972   0   2,065   21,095   23,160   2,617   20,543   0   S/L 31.5   2007(A) 
Bradenton, FL (Cortez)
  10,766   31,203   0   10,766   33,524   44,290   4,337   39,953   11,139   S/L 31.5   2007(A) 
Clearwater, FL
  5,579   15,855   0   5,579   16,279   21,858   2,142   19,716   7,508   S/L 31.5   2007(A) 
New Tampa, FL
  1,707   3,338   0   1,707   3,345   5,052   435   4,617   0   S/L 31.5   2007(A) 
Tequesta, FL
  2,108   7,400   0   2,108   8,297   10,405   1,301   9,104   0   S/L 31.5   2007(A) 
Kennesaw, GA (Town)
  6,175   9,028   0   6,175   9,033   15,208   1,113   14,095   0   S/L 31.5   2007(A) 
Lawrenceville, GA (Springfield)
  3,049   10,890   0   3,049   11,050   14,099   1,360   12,739   0   S/L 31.5   2007(A) 
Roswell, GA (Village)
  6,566   15,005   0   6,566   15,208   21,774   1,923   19,851   0   S/L 31.5   2007(A) 
Hagerstown, MD
  2,440   9,697   0   2,440   10,727   13,167   1,523   11,644   0   S/L 31.5   2007(A) 
Greensboro, NC (Golden)
  5,012   11,162   0   5,012   11,165   16,177   1,418   14,759   0   S/L 31.5   2007(A) 
Greensboro, NC (Wendover)
  3,153   9,455   0   3,153   9,545   12,698   1,206   11,492   5,048   S/L 31.5   2007(A) 
East Hanover, NJ (Plaza)
  3,847   23,798   0   3,847   23,998   27,845   3,014   24,831   0   S/L 31.5   2007(A) 
East Hanover, NJ (Sony)
  6,861   11,165   0   6,861   11,668   18,529   1,437   17,092   0   S/L 31.5   2007(A) 
Camp Hill, PA
  1,631   8,402   0   1,631   8,402   10,033   1,056   8,977   0   S/L 31.5   2007(A) 
Middletown, RI
  3,804   16,805   0   3,804   16,809   20,613   2,111   18,502   0   S/L 31.5   2007(A) 
Lexington, SC
  1,795   9,933   0   1,795   9,972   11,767   1,240   10,527   4,540   S/L 31.5   2007(A) 
Newport News, VA (Denbigh)
  10,064   21,272   0   10,064   21,551   31,615   2,793   28,822   0   S/L 31.5   2007(A) 
Richmond, VA (Downtown)
  12,002   34,736   0   11,879   35,242   47,121   4,384   42,737   13,190   S/L 31.5   2007(A) 
Springfield, VA (Loisdale)
  12,627   30,572   0   12,627   31,521   44,148   3,798   40,350   11,668   S/L 31.5   2007(A) 
Springfield, VA (Spring Mall)
  4,389   9,466   0   4,389   10,145   14,534   1,366   13,168   0   S/L 31.5   2007(A) 
Sterling, VA
  8,426   18,651   0   8,426   18,666   27,092   2,318   24,774   0   S/L 31.5   2007(A) 
Windsor Court, CT
  6,090   11,745   0   6,090   11,749   17,839   1,466   16,373   7,660   S/L 31.5   2007(A) 

F-63

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Ocala, FL
  2,877   9,407   0   2,877   9,427   12,304   1,185   11,119   0   S/L 31.5   2007(A) 
Brandon, FL
  3,571   12,190   0   3,282   12,223   15,505   1,500   14,005   0   S/L 31.5   2007(A) 
Atlanta, GA (Abernathy)
  11,634   31,341   0   11,120   31,207   42,327   3,858   38,469   12,733   S/L 31.5   2007(A) 
Norcross, GA
  3,007   8,489   0   3,007   8,498   11,505   1,054   10,451   0   S/L 31.5   2007(A) 
Bowie, MD
  5,739   14,301   0   5,739   14,341   20,080   1,822   18,258   0   S/L 31.5   2007(A) 
Ashville, NC (Oakley)
  2,651   8,908   0   2,651   8,943   11,594   1,250   10,344   0   S/L 31.5   2007(A) 
Cary, NC (Mill Pond)
  6,913   17,301   0   3,533   8,923   12,456   2,012   10,444   0   S/L 31.5   2007(A) 
Charlotte, NC (Camfield)
  2,842   9,807   0   2,842   9,845   12,687   1,247   11,440   0   S/L 31.5   2007(A) 
Cornelius, NC
  4,382   15,184   0   4,382   17,902   22,284   2,373   19,911   0   S/L 31.5   2007(A) 
Greensboro, NC (Capital)
  3,070   13,386   0   1,682   7,571   9,253   1,325   7,928   0   S/L 31.5   2007(A) 
Raleigh, NC (Capital)
  2,728   10,665   0   2,728   10,816   13,544   1,344   12,200   0   S/L 31.5   2007(A) 
Raleigh, NC (Wakefield)
  3,345   11,482   0   3,345   11,583   14,928   1,459   13,469   0   S/L 31.5   2007(A) 
Wilmington, NC (Oleander)
  2,270   4,812   0   1,170   2,765   3,935   684   3,251   0   S/L 31.5   2007(A) 
Wilson, NC
  1,598   8,160   0   1,598   8,296   9,894   1,095   8,799   0   S/L 31.5   2007(A) 
Morgantown, WV
  4,645   10,341   0   4,645   10,343   14,988   1,405   13,583   0   S/L 31.5   2007(A) 
Greenwood, SC
  607   4,094   0   607   4,094   4,701   525   4,176   0   S/L 31.5   2007(A) 
Edgewater, NJ
  7,714   30,473   0   7,714   30,702   38,416   3,783   34,633   0   S/L 31.5   2007(A) 
Dothan, AL
  1,293   6,005   0   1,293   5,931   7,224   723   6,501   0   S/L 31.5   2007(A) 
Highland Ranch, CO
  1,380   4,739   0   1,380   4,682   6,062   571   5,491   0   S/L 31.5   2007(A) 
Dania Beach, FL
  9,593   17,686   0   9,593   17,688   27,281   2,246   25,035   0   S/L 31.5   2007(A) 
Plantation, FL (Vision)
  1,032   580   0   1,032   580   1,612   73   1,539   0   S/L 31.5   2007(A) 
Vero Beach, FL
  2,653   4,667   0   2,653   4,609   7,262   562   6,700   0   S/L 31.5   2007(A) 
Duluth, GA (Sofa)
  815   2,692   0   815   2,789   3,604   366   3,238   0   S/L 31.5   2007(A) 
Lawrenceville, GA (Eckerd)
  1,457   1,057   0   1,457   1,057   2,514   134   2,380   0   S/L 31.5   2007(A) 
Marietta, GA (Eckerd)
  1,622   1,050   0   1,622   1,050   2,672   133   2,539   0   S/L 31.5   2007(A) 
Rome, GA
  1,523   4,065   0   1,523   4,007   5,530   488   5,042   0   S/L 31.5   2007(A) 
Snellville, GA (Eckerd)
  1,303   1,494   0   1,303   1,494   2,797   187   2,610   0   S/L 31.5   2007(A) 
Sylvania, GA
  431   3,774   0   431   3,774   4,205   491   3,714   0   S/L 31.5   2007(A) 
Worcester, MA
  5,395   10,938   0   5,395   10,938   16,333   1,370   14,963   5,682   S/L 31.5   2007(A) 
Dearborn Heights, MI
  2,463   2,946   0   2,463   2,946   5,409   371   5,038   3,550   S/L 31.5   2007(A) 
Livonia, MI
  1,411   2,727   0   1,411   2,727   4,138   345   3,793   2,477   S/L 31.5   2007(A) 
Port Huron, MI
  1,662   3,270   0   1,662   3,270   4,932   412   4,520   0   S/L 31.5   2007(A) 

F-64

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Westland, MI
  1,400   2,531   0   1,400   2,531   3,931   323   3,608   2,625   S/L 31.5   2007(A) 
Cary, NC
  2,264   4,581   0   2,264   5,664   7,928   692   7,236   0   S/L 31.5   2007(A) 
Concord, NC (Eckerd)
  885   2,119   0   885   2,119   3,004   267   2,737   0   S/L 31.5   2007(A) 
Winston-Salem, NC (Walmart)
  7,156   15,010   0   7,156   15,010   22,166   1,943   20,223   7,549   S/L 31.5   2007(A) 
Buffalo, NY (Eckerd)
  1,229   2,428   0   1,229   2,428   3,657   305   3,352   0   S/L 31.5   2007(A) 
Cheektowaga, NY (Eckerd)
  1,740   2,417   0   1,740   2,417   4,157   302   3,855   0   S/L 31.5   2007(A) 
Dunkirk, NY
  0   1,487   0   0   1,487   1,487   189   1,298   0   S/L 31.5   2007(A) 
Alliance, OH
  812   16,244   0   812   16,244   17,056   2,092   14,964   7,559   S/L 31.5   2007(A) 
Cincinnati, OH (Kroger)
  2,805   5,028   0   2,805   5,028   7,833   633   7,200   2,739   S/L 31.5   2007(A) 
Oklahoma City, OK
  395   1,697   0   395   1,697   2,092   211   1,881   0   S/L 31.5   2007(A) 
Cheswick, PA
  863   2,225   0   863   2,225   3,088   279   2,809   0   S/L 31.5   2007(A) 
Connelsville, PA
  1,356   2,524   0   1,356   2,524   3,880   315   3,565   0   S/L 31.5   2007(A) 
Harborcreek, PA
  1,062   2,124   0   1,062   2,124   3,186   266   2,920   0   S/L 31.5   2007(A) 
Erie, PA (Eckerd)
  958   2,223   0   958   2,223   3,181   277   2,904   0   S/L 31.5   2007(A) 
Millcreek, PA (Eckerd)
  1,525   2,416   0   1,525   2,416   3,941   302   3,639   0   S/L 31.5   2007(A) 
Millcreek, PA (Eckerd)
  0   1,486   0   0   1,486   1,486   189   1,297   0   S/L 31.5   2007(A) 
Erie, PA (Eckerd)
  1,578   2,721   0   1,578   2,721   4,299   339   3,960   0   S/L 31.5   2007(A) 
Erie, PA (Eckerd)
  1,641   2,015   0   1,641   2,015   3,656   252   3,404   0   S/L 31.5   2007(A) 
Penn, PA
  852   2,418   0   852   2,418   3,270   303   2,967   0   S/L 31.5   2007(A) 
Monroeville, PA (Eckerd)
  1,431   2,024   0   1,431   2,024   3,455   255   3,200   0   S/L 31.5   2007(A) 
New Castle, PA
  1,331   2,016   0   1,331   2,016   3,347   253   3,094   0   S/L 31.5   2007(A) 
Pittsburgh, PA
  1,771   2,523   0   1,771   2,523   4,294   315   3,979   0   S/L 31.5   2007(A) 
Plum Borough, PA
  1,671   2,424   0   1,671   2,424   4,095   303   3,792   0   S/L 31.5   2007(A) 
Gaffney, SC
  1,189   2,363   0   1,189   2,363   3,552   300   3,252   0   S/L 31.5   2007(A) 
Greenville, SC (Eckerd)
  1,452   1,909   0   1,452   1,909   3,361   240   3,121   0   S/L 31.5   2007(A) 
Greenville, SC (Walmart)
  5,659   14,411   0   5,659   14,411   20,070   1,871   18,199   7,165   S/L 31.5   2007(A) 
Mt. Pleasant, SC (Bi-Lo)
  2,420   7,979   0   2,420   7,979   10,399   1,028   9,371   0   S/L 31.5   2007(A) 
Piedmont, SC
  589   1,687   0   589   1,687   2,276   214   2,062   0   S/L 31.5   2007(A) 
Spartanburg, SC (Blackstock)
  1,223   2,128   0   1,223   2,128   3,351   269   3,082   0   S/L 31.5   2007(A) 
Spartanburg, SC (Eckerd)
  1,255   2,226   0   1,255   2,226   3,481   280   3,201   0   S/L 31.5   2007(A) 
Woodruff, SC
  1,145   2,353   0   1,145   2,353   3,498   299   3,199   0   S/L 31.5   2007(A) 
Ft. Worth, TX (CVS)
  860   1,913   0   860   1,913   2,773   239   2,534   0   S/L 31.5   2007(A) 

F-65

 

 
                                             
Developers Diversified Realty Corporation
              
Real Estate and Accumulated Depreciation — (continued)
              
December 31, 2010
              
(In thousands)
             Date of
  Initial Cost Total Cost(B)         Construction
    Buildings
     Buildings
     Total Cost, Net of
   Depreciable
 (C)
    &
     &
   Accumulated
 Accumulated
   Lives
 Acquisition
  Land Improvements Improvements Land Improvements Total Depreciation Depreciation Encumbrances (Years)(1) (A)
 
Garland, TX
  1,567   73   0   750   73   823   73   750   0   S/L 31.5   2007(A) 
Grand Prairie, TX
  2,892   3,226   0   2,892   3,226   6,118   428   5,690   0   S/L 31.5   2007(A) 
Houston, TX
  4,380   8,729   0   4,380   8,775   13,155   1,135   12,020   0   S/L 31.5   2007(A) 
Richardson, TX (CVS)
  1,045   1,594   0   1,045   1,594   2,639   200   2,439   0   S/L 31.5   2007(A) 
Olympia, WA
  2,946   3,094   0   2,946   3,050   5,996   372   5,624   0   S/L 31.5   2007(A) 
Weirton, WV
  694   2,109   0   694   2,109   2,803   265   2,538   0   S/L 31.5   2007(A) 
Lakeland, FL (Highlands)
  2,800   3,148   0   2,800   3,682   6,482   828   5,654   0   S/L 31.5   2007(A) 
Plantation, FL (Fountains)
  20,697   36,751   0   20,691   66,305   86,996   6,902   80,094   0   S/L 31.5   2007(A) 
Evansville, IN (East)
  8,964   18,764   0   8,964   18,895   27,859   2,459   25,400   0   S/L 31.5   2007(A) 
Portfolio Balance (DDR) – unencumbered
  444,990   381,545   0   444,990   381,545   826,535   6,569   819,966   0   S/L 31.5     
Portfolio Balance (DDR) – encumbered
  25,446   141,491   0   25,446   141,491   166,937   43,347   123,590   50,051   S/L 31.5     
                                           
  $2,257,707  $5,194,190  $10,833  $2,270,107(2) $6,141,132(3) $8,411,239  $1,452,112  $6,959,127  $1,350,045(4)        
                                           
 
 
(1)S/L refers to straight-line depreciation.
(2)Includes $432.7 million of land under development at December 31, 2010.
(3)Includes $310.5 million of construction in progress at December 31, 2010.
(4)Does not include tax-exempt certificates aggregating $28.5 million.
(B)The Aggregate Cost for Federal Income Tax purposes was approximately $8.6 billion at December 31, 2010.
 

F-66

 

The changes in Total Real Estate Assets, excluding real estate held for sale, for the three years ended December 31, 2010 are as follows:
 
             
  2010  2009  2008 
 
Balance, beginning of year
 $8,812,484  $9,109,566  $8,979,953 
Acquisitions and transfers from joint ventures
  —   130,567   10,994 
Developments, improvements and expansions
  174,315   224,850   215,045 
Changes in land under development and construction in progress
  (2,409)  (23,614)  216,475 
Real estate held for sale
  —   (11,235)  — 
Adjustment of property carrying values
  (171,900)  (154,718)  (79,864)
Sales, transfers to joint ventures and retirements
  (401,251)  (462,932)  (233,037)
             
Balance, end of year
 $8,411,239  $8,812,484  $9,109,566 
             
 
The changes in Accumulated Depreciation and Amortization, excluding real estate held for sale, for the three years ended December 31, 2010 are as follows:
 
             
  2010  2009  2008 
 
Balance, beginning of year
 $1,332,534  $1,208,903  $1,024,048 
Depreciation for year
  227,304   233,967   246,374 
Real estate held for sale
  —   (782)  — 
Sales and retirements
  (107,726)  (109,554)  (61,519)
             
Balance, end of year
 $1,452,112  $1,332,534  $1,208,903 
             


F-67

 

Schedule IV — Mortgage Loans on Real Estate
December 31, 2010
(Dollars amounts in thousands)
 
                         
                  Principal
 
                  Amount of
 
                  Loans
 
                  subject to
 
     Final
 Periodic
          delinquent
 
     Maturity
 Payment
 Prior
  Face Amount of
  Carrying Amount of
  principal
 
Description Interest Rate  Date Terms Liens  Mortgages  Mortgages(1)  or interest 
 
MEZZANINE
LOANS

MULTI-FAMILY
                        
Borrower A
  LIBOR+6.0%,
Floor 11%		 Mar-11 Interest
Monthly,
principal
at
maturity		  —  $5,868  $5,868  $— 
Borrower B
  LIBOR+6.5%,
Floor 11.5%		 Apr-11 Interest
Monthly,
principal
at
maturity		  —   6,330   6,330   — 
Borrower C
  LIBOR+6.0%,
Floor 11%		 Jun-11 Interest
Monthly,
principal
at
maturity		  —   11,506   11,506   1,306(2)
RETAIL
                        
Borrower D
  LIBOR+8.0%,
Floor 12%		 Sep-11 Interest
Monthly,
principal
at
maturity		  —   10,806   —   10,806 
Borrower E
  5.73% Sep-17 Interest only
thru
08/30/2011,
Interest
and
principal
effective
09/01/2011		  —   33,000   26,850   — 
Borrower F
  10.00% Oct-17 Interest Monthly,
principal
at
maturity		  —   31,700   31,700   — 
MIXED USE
                        
Borrower G
  LIBOR+7.0%,
Floor 11%		 Dec-11 Interest Monthly,
principal
at
maturity		  —   12,600   12,600   — 
Borrower H
  LIBOR+10.0%,
Floor 14%		 Sep-11 Interest Monthly,
principal
at
maturity		  —   8,851   8,851   — 
                         
              $120,661  $103,705  $12,112 
INVESTMENTS IN
AND
ADVANCES
TO JOINT
VENTURES
                        
Borrower I
  LIBOR+7.0%,
Floor 12%		 on demand (loan in
default)		 Interest Monthly,
principal
at
maturity		  —   66,846   —   66,846 
                         
              $187,507  $103,705  $78,958 
                         


F-68

 

 
(1)Carrying amount includes all applicable accrued interest and accretion of discount to date.
 
(2)Amount represents delinquent interest only.
         
  Year Ended
  Year Ended
 
  December 31,
  December 31,
 
  2010  2009 
 
Balance at beginning of period
 $58,719  $115,419 
Additions during period:
        
New mortgage loans
  58,300   6,197 
Interest
  5,424   9,355 
Accretion of discount
  250   — 
Deductions during period:
        
Provision for loan loss reserve
  —   (72,252)
Collections of principal
  —   — 
Foreclosures
  (18,988)  — 
         
Balance at close of period
 $103,705  $58,719 
         
 


F-69

 

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
DEVELOPERS DIVERSIFIED REALTY CORPORATION
 
  By: 
/s/  Daniel B. Hurwitz
Daniel B. Hurwitz, President and Chief Executive Officer
 
Date: February 28, 2011
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 28th day of February, 2011.
 
     
   
/s/  Scott A. Wolstein

Scott A. Wolstein		 
Executive Chairman of the Board of Directors
   
/s/  Daniel B. Hurwitz

Daniel B. Hurwitz		 
President and Chief Executive Officer
   
/s/  David J. Oakes

David J. Oakes		 
Senior Executive Vice President & Chief Financial Officer (Principal Financial Officer)
   
/s/  Christa A. Vesy

Christa A. Vesy		 
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
   
/s/  Terrance R. Ahern

Terrance R. Ahern		 
Director
   
/s/  James C. Boland

James C. Boland		 
Director
   
/s/  Thomas Finne

Thomas Finne		 
Director
   
/s/  Robert H. Gidel

Robert H. Gidel		 
Director
   
/s/  Volker Kraft

Volker Kraft		 
Director
   
/s/  Victor B. MacFarlane

Victor B. MacFarlane		 
Director
   
/s/  Craig Macnab

Craig Macnab		 
Director
   
/s/  Scott D. Roulston

Scott D. Roulston		 
Director
   
/s/  Barry A. Sholem

Barry A. Sholem		 
Director
   
/s/  William B. Summers, Jr.

William B. Summers, Jr.		 
Director


F-70

What is the market capitalization of a company?

The market capitalization sometimes referred as Marketcap, is the value of a publicly listed company.
In most cases it can be easily calculated by multiplying the share price with the amount of outstanding shares.

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