DEVELOPERS DIVERSIFIED REALTY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)


	September 30,			December 31, 2008
	2009			(As Adjusted)			March 31, 2010			December 31, 2009
Assets
Real estate rental property:
Land	$	1,968,142		$	2,073,947		$	1,963,032		$	1,971,782
Buildings		5,574,306			5,890,332			5,674,571			5,694,659
Fixtures and tenant improvements		277,153			262,809			297,114			287,143

		7,819,601			8,227,088			7,934,717			7,953,584
Less: Accumulated depreciation		(1,317,117	)		(1,208,903	)		(1,358,870	)		(1,332,534	)

		6,502,484			7,018,185			6,575,847			6,621,050
Construction in progress and land under development		957,298			882,478
Land held for development and construction in progress								848,552			858,900
Real estate held for sale, net								2,430			10,453

		7,459,782			7,900,663
Total real estate assets, net- (variable interest entities $635.6 million at March 31, 2010)								7,426,829			7,490,403
Investments in and advances to joint ventures		521,161			583,767			409,639			420,541
Cash and cash equivalents		26,415			29,494			25,748			26,172
Restricted cash		102,716			111,792
Notes receivable		75,547			75,781
Restricted cash — (variable interest entities $43.3 million at March 31, 2010)								57,782			95,673
Notes receivable, net								59,234			74,997
Deferred charges, net		22,547			25,579			33,387			33,162
Other assets, net		270,801			293,146
Other assets, net — (variable interest entities $13.6 million at March 31, 2010)								275,384			285,658

							$	8,288,003		$	8,426,606
	$	8,478,969		$	9,020,222

Liabilities and Equity
Unsecured indebtedness:
Senior notes	$	1,825,834		$	2,402,032		$	1,840,275		$	1,689,841
Revolving credit facilities		826,262			1,027,183
Revolving credit facility								346,015			775,028

		2,652,096			3,429,215			2,186,290			2,464,869
Secured indebtedness:
Term debt		800,000			800,000			800,000			800,000
Mortgage and other secured indebtedness		1,712,991			1,637,440
Mortgage and other secured indebtedness — (variable interest entities $279.3 million at March 31, 2010)								1,744,611			1,913,794

		2,512,991			2,437,440			2,544,611			2,713,794

Total indebtedness		5,165,087			5,866,655			4,730,901			5,178,663

Accounts payable and accrued expenses		158,677			169,014
Accounts payable and accrued expenses — (variable interest entities $14.4 million at March 31, 2010)								110,895			130,404
Dividends payable		10,899			6,967			11,968			10,985
Other liabilities		150,510			112,165			169,331			153,591

		5,485,173			6,154,801

Total liabilities								5,023,095			5,473,643

Redeemable operating partnership units		627			627			627			627

Commitments and contingencies
Developers Diversified Realty Corporation equity:
Class G – 8.0% cumulative redeemable preferred shares, without par value, $250 liquidation value; 750,000 shares authorized; 720,000 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		180,000			180,000
Class H – 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 410,000 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		205,000			205,000
Class I – 7.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 340,000 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		170,000			170,000
Common shares, $0.10 par value; 500,000,000 and 300,000,000 shares authorized; 196,654,601 and 128,642,765 shares issued at September 30, 2009 and December 31, 2008, respectively		19,665			12,864
Commitments and contingencies (Note 7)
Developers Diversified Realty Corporation Equity:
Class G — 8.0% cumulative redeemable preferred shares, without par value, $250 liquidation value; 750,000 shares authorized; 720,000 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively								180,000			180,000
Class H — 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 410,000 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively								205,000			205,000
Class I — 7.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 340,000 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively								170,000			170,000
Common shares, with par value, $0.10 stated value; 500,000,000 shares authorized; 250,087,719 and 201,742,589 shares issued at March 31, 2010 and December 31, 2009, respectively								25,009			20,174
Paid-in-capital		3,318,798			2,849,364			3,755,574			3,374,528
Accumulated distributions in excess of net income		(1,004,512	)		(635,239	)		(1,146,324	)		(1,098,661	)
Deferred compensation obligation		16,977			13,882			12,999			17,838
Accumulated other comprehensive income (loss)		2,288			(49,849	)
Less: Common shares in treasury at cost: 515,641 and 224,063 shares at September 30, 2009 and December 31, 2008, respectively		(10,022	)		(8,731	)

		2,898,194			2,737,291
Non-controlling interests		94,975			127,503
Accumulated other comprehensive income								2,493			9,549
Less: Common shares in treasury at cost: 542,977 and 657,012 shares at March 31, 2010 and December 31, 2009, respectively								(12,479	)		(15,866	)
Non-controlling interests — (variable interest entities $61.1 million at March 31, 2010)								72,009			89,774

Total equity		2,993,169			2,864,794			3,264,281			2,952,336

	$	8,478,969		$	9,020,222		$	8,288,003		$	8,426,606

DEVELOPERS DIVERSIFIED REALTY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED ~~SEPTEMBER 30,~~MARCH 31,
(Dollars in thousands, except per share amounts)
(Unaudited)


				2008
	2009			(As Adjusted)			2010			2009
Revenues from operations:
Minimum rents	$	135,481		$	149,335		$	136,889		$	136,130
Percentage and overage rents		1,441			1,054			2,119			2,429
Recoveries from tenants		43,758			49,548			47,434			46,476
Ancillary and other property income		5,698			4,889			4,973			4,922
Management fees, development fees and other fee income		14,693			15,378			14,016			14,461
Other		1,193			2,656			1,270			3,248

		202,264			222,860			206,701			207,666


Rental operation expenses:
Operating and maintenance		36,952			34,572			36,101			34,320
Real estate taxes		27,965			26,872			28,940			27,275
Impairment charges		2,653			—			2,050			7,305
General and administrative		25,886			19,560			23,275			19,171
Depreciation and amortization		53,621			60,031			57,069			59,605

		147,077			141,035			147,435			147,676


Other income (expense):
Interest income		3,289			1,660			1,330			3,029
Interest expense		(57,268	)		(61,713	)		(59,909	)		(57,750	)
Gain on repurchases of senior notes		23,881			—
Gain on repurchase of senior notes								1,091			72,579
Loss on equity derivative instruments		(118,174	)		—			(24,868	)		—
Other income (expense), net		2,203			(6,859	)
Other expense, net								(3,079	)		(4,507	)

		(146,069	)		(66,912	)		(85,435	)		13,351

(Loss) income before equity in net (loss) income of joint ventures, impairment of joint venture investments, tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes, discontinued operations and gain on disposition of real estate, net of tax		(90,882	)		14,913
Equity in net (loss) income of joint ventures		(183	)		1,981
Impairment of joint venture investments		(61,200	)		—
(Loss) income before equity in net income of joint ventures, tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes, discontinued operations and (loss) gain on disposition of real estate, net of tax								(26,169	)		73,341
Equity in net income of joint ventures								1,647			351

(Loss) income before tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes, discontinued operations and gain on disposition of real estate, net of tax		(152,265	)		16,894
(Loss) income before tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes, discontinued operations and (loss) gain on disposition of real estate, net of tax								(24,522	)		73,692
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes		(639	)		16,426			(1,017	)		1,036

(Loss) income from continuing operations		(152,904	)		33,320			(25,539	)		74,728

Discontinued operations:
Income from discontinued operations		678			3,133
Gain (loss) on disposition of real estate, net of tax		4,448			(2,717	)
Loss from discontinued operations								(936	)		(2,006	)
Gain on disposition of real estate, net of tax								566			11,609

		5,126			416			(370	)		9,603

(Loss) income before gain on disposition of real estate, net of tax		(147,778	)		33,736
Gain on disposition of real estate, net of tax		7,128			3,093
(Loss) income before (loss) gain on disposition of real estate								(25,909	)		84,331
(Loss) gain on disposition of real estate, net of tax								(675	)		445

Net (loss) income	$	(140,650	)	$	36,829		$	(26,584	)	$	84,776

Non-controlling interests:
Loss (income) attributable to non-controlling interests		2,804			(1,558	)
Loss attributable to non-controlling interests								2,338			2,631
Income attributable to redeemable operating partnership units		—			(21	)		(1	)		(6	)

		2,804			(1,579	)		2,337			2,625

Net (loss) income attributable to DDR	$	(137,846	)	$	35,250		$	(24,247	)	$	87,401

Preferred dividends		10,567			10,567			10,567			10,567

Net (loss) income applicable to DDR common shareholders	$	(148,413	)	$	24,683
Net (loss) income attributable to DDR common shareholders							$	(34,814	)	$	76,834


Per share data:
Basic earnings per share data:
(Loss) income from continuing operations attributable to DDR common shareholders	$	(0.93	)	$	0.20		$	(0.15	)	$	0.52
Income from discontinued operations attributable to DDR common shareholders		0.03			—			—			0.07

Net (loss) income attributable to DDR common shareholders	$	(0.90	)	$	0.20		$	(0.15	)	$	0.59

Diluted earnings per share data:
(Loss) income from continuing operations attributable to DDR common shareholders	$	(0.93	)	$	0.20		$	(0.15	)	$	0.52
Income from discontinued operations attributable to DDR common shareholders		0.03			—			—			0.07

Net (loss) income attributable to DDR common shareholders	$	(0.90	)	$	0.20		$	(0.15	)	$	0.59

Dividends declared per common share	$	0.02		$	0.69

DEVELOPERS DIVERSIFIED REALTY CORPORATION

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~
~~FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30,~~
~~(Dollars in thousands, except per share amounts)~~
~~(Unaudited)~~

2008
2009 (As Adjusted)
Revenues from operations:
Minimum rents $ 408,623 $ 448,511
Percentage and overage rents 5,075 4,947
Recoveries from tenants 135,181 145,801
Ancillary and other property income 15,696 15,748
Management fees, development fees and other fee income 43,194 47,302
Other 6,173 7,383

613,942 669,692

Rental operation expenses:
Operating and maintenance 107,155 102,206
Real estate taxes 83,076 79,128
Impairment charges 80,167 —
General and administrative 73,469 61,607
Depreciation and amortization 171,552 167,769

515,419 410,710

Other income (expense):
Interest income 9,546 2,775
Interest expense (175,165 ) (185,977 )
Gain on repurchases of senior notes 142,360 200
Loss on equity derivative instruments (198,199 ) —
Other expense, net (9,123 ) (7,459 )

(230,581 ) (190,461 )

(Loss) income before equity in net (loss) income of joint ventures, impairment of joint venture investments, tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes, discontinued operations and gain on disposition of real estate, net of tax (132,058 ) 68,521
Equity in net (loss) income of joint ventures (8,984 ) 21,924
Impairment of joint venture investments (101,571 ) —

(Loss) income before tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes, discontinued operations and gain on disposition of real estate, net of tax (242,613 ) 90,445
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes (527 ) 15,111

(Loss) income from continuing operations (243,140 ) 105,556

Discontinued operations:
(Loss) income from discontinued operations (61,994 ) 7,955
Loss on disposition of real estate, net of tax (19,965 ) (1,830 )

(81,959 ) 6,125

(Loss) income before gain on disposition of real estate, net of tax (325,099 ) 111,681
Gain on disposition of real estate, net of tax 8,222 6,368

Net (loss) income $ (316,877 ) $ 118,049

Non-controlling interests:
Loss (income) attributable to non-controlling interests 39,860 (5,914 )
Income attributable to redeemable operating partnership units (12 ) (61 )

39,848 (5,975 )

Net (loss) income attributable to DDR $ (277,029 ) $ 112,074

Preferred dividends 31,702 31,702

Net (loss) income applicable to DDR common shareholders $ (308,731 ) $ 80,372

Per share data:
Basic earnings per share data:
(Loss) income from continuing operations attributable to DDR common shareholders $ (1.55 ) $ 0.61
(Loss) income from discontinued operations attributable to DDR common shareholders (0.56 ) 0.05

Net (loss) income attributable to DDR common shareholders $ (2.11 ) $ 0.66

Diluted earnings per share data:
(Loss) income from continuing operations attributable to DDR common shareholders $ (1.55 ) $ 0.61
(Loss) income from discontinued operations attributable to DDR common shareholders (0.56 ) 0.05

Net (loss) income attributable to DDR common shareholders $ (2.11 ) $ 0.66

Dividends declared per common share $ 0.42 $ 2.07

~~- 5 -~~

~~DEVELOPERS DIVERSIFIED REALTY CORPORATION~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE ~~NINE-MONTH~~THREE-MONTH PERIODS ENDED ~~SEPTEMBER 30,~~

MARCH 31,
(Dollars in thousands)
(Unaudited)


				2008
	2009			(As Adjusted)			2010			2009
Net cash flow provided by operating activities:	$	216,651		$	304,155		$	44,304		$	69,657

Cash flow from investing activities:
Real estate developed or acquired, net of liabilities assumed		(168,669	)		(315,637	)		(37,599	)		(72,130	)
Equity contributions to joint ventures		(18,817	)		(80,471	)		(729	)		(5,243	)
Issuance of joint venture advances, net		(7,335	)		(24,376	)		(82	)		(3,485	)
Distributions of proceeds from sale and refinancing of joint venture interests		7,442			2,416
Return of investments in joint ventures		15,314			24,653			8,129			5,195
Issuance of notes receivable, net		(5,173	)		(38,274	)		(2,352	)		(5,260	)
Decrease (increase) in restricted cash		9,076			(47,433	)
Decrease in restricted cash								37,891			1,171
Proceeds from disposition of real estate		304,490			95,459			29,429			56,849

Net cash flow provided by (used for) investing activities		136,328			(383,663	)		34,687			(22,903	)

Cash flow from financing activities:
(Repayments of) proceeds from revolving credit facilities, net		(217,448	)		252,850			(426,663	)		230,719
Repayment of senior notes		(725,131	)		(103,425	)		(147,706	)		(303,566	)
Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $200		294,685			—
Proceeds from issuance of senior notes, net of underwriting commissions and offering expenses of $400 in 2010								296,785			—
Proceeds from mortgage and other secured debt		343,369			449,423			1,416			68,940
Principal payments on mortgage debt		(278,818	)		(274,231	)		(169,458	)		(29,964	)
Payment of deferred finance costs		(3,590	)		(5,353	)
Proceeds from issuance of common shares, net of issuance costs of $524		267,457			—
(Payment) proceeds from issuance of common shares in conjunction with the exercise of stock options and dividend reinvestment plan		(1,576	)		1,260
Redemption of non-controlling interest		—			(46	)
Payment of debt issuance costs								(138	)		(429	)
Proceeds from issuance of common shares, net of underwriting commissions and issuance costs of $1,400 in 2010								382,762			1,010
Payment from issuance of common shares in conjunction with the exercise of stock options and dividend reinvestment plan								(260	)		(829	)
Contributions from non-controlling interests		5,640			25,552			50			5,295
Distributions to non-controlling interest and redeemable operating partnership units		(1,454	)		(10,006	)		(1,622	)		(424	)
Dividends paid		(37,838	)		(276,209	)		(14,585	)		(10,567	)

Net cash flow (used for) provided by financing activities		(354,704	)		59,815
Net cash flow used for financing activities								(79,419	)		(39,815	)

Cash and cash equivalents
Decrease in cash and cash equivalents		(1,725	)		(19,693	)
(Decrease) increase in cash and cash equivalents								(428	)		6,939
Effect of exchange rate changes on cash and cash equivalents		(1,354	)		317			4			(110	)
Cash and cash equivalents, beginning of period		29,494			49,547			26,172			29,494

Cash and cash equivalents, end of period	$	26,415		$	30,171		$	25,748		$	36,323

DEVELOPERS DIVERSIFIED REALTY CORPORATION

Notes to Condensed Consolidated Financial Statements

~~NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION~~

1. NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

Developers Diversified Realty Corporation and its related ~~consolidated~~ 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 ~~real estate~~ joint ~~ventures own, manage and develop an international portfolio of shopping centers.~~ventures.

Use of Estimates

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

Unaudited Interim Financial Statements

These financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008,~~ are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form ~~8-K dated and filed on August 10, 2009 (which financial statements reflect the impact of property sales as discontinued operations)~~10-K for the year ended December 31, ~~2008.~~2009.

The Company consolidates certain entities in which it owns less than a 100% equity interest if the entity is a variable interest entity (“VIE”), and the Company is deemed to be the primary beneficiary in the VIE. The Company also consolidates certain entities that are not VIEs in which it has effective control. The equity methodPrinciples of accounting is applied to entities in which the Company is not the primary beneficiary or does not have effective control, but can exercise significant influence over the entity with respect to its operations and major decisions.

~~- 7 -~~

~~Comprehensive (Loss) / Income~~Consolidation

~~Comprehensive (loss) / income is as follows (in thousands):~~

Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2008
2009 (As Adjusted) 2009 (As Adjusted)
Net (loss) income $ (140,650 ) $ 36,829 $ (316,877 ) $ 118,049
Other comprehensive (loss) income:
Change in fair value of interest-rate contracts 4,093 (122 ) 7,315 (4,626 )
Amortization of interest-rate contracts (93 ) (93 ) (279 ) (550 )
Foreign currency translation 24,806 (29,703 ) 48,243 (9,598 )

Total other comprehensive income 28,806 (29,918 ) 55,279 (14,774 )

Comprehensive (loss) income $ (111,844 ) $ 6,911 $ (261,598 ) $ 103,275
Comprehensive income (loss) attributable to non-controlling interests 930 305 36,706 (5,368 )

Total comprehensive (loss) income attributable to DDR $ (110,914 ) $ 7,216 $ (224,892 ) $ 97,907

~~New Accounting Standards~~

In June 2009, the Financial Accounting Standards Board (“FASB”) ~~issued~~amended its ~~final Statement of Financial Accounting Standards –~~~~The FASB~~guidance on accounting for variable interest entities (“VIEs”) and issued Accounting Standards Codification ~~and the Hierarchy of Generally Accepted Accounting Principles~~. This Statement made the FASB Accounting Standards Codification (the “Codification”) the single source of U.S. GAAP used by nongovernmental entities in the preparation of financial statements, except for rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative accounting guidance for SEC registrants. The Codification is meant to simplify user access to all authoritative accounting guidance by reorganizing U.S. GAAP pronouncements into roughly 90 accounting topics within a consistent structure. Its purpose is not to create new accounting and reporting guidance. The Codification supersedes all existing non-SEC accounting and reporting standards and was effective for the Company beginning July 1, 2009. FASB will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates. The FASB will not consider Accounting Standards Updates as authoritative in their own right; these updates will serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. In the description of Accounting Standards Updates that follows, references in “italics” relate to Codification Topics and Subtopics, and their descriptive titles, as appropriate.

~~New Accounting Standards Implemented with Retrospective Application~~

The following accounting standards were implemented on January 1, 2009 with retrospective application as appropriate. As a result, the financial statements as of and for the three- and nine-month periods ended September 30, 2008 have been adjusted as required by the provisions of these standards.

~~- 8 -~~

~~Non-Controlling Interests in Consolidated Financial Statements~~

~~In December 2007, the FASB issued~~~~Non-Controlling Interests in Consolidated Financial Statements.~~A non-controlling interest, sometimes referred to as a minority equity interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The objective of this guidance is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require: (i) the ownership interest in subsidiaries held by other parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; (ii) the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of operations; (iii) changes in a parent’s ownership interest while the parent retains its controlling financial interest in a subsidiary be accounted for consistently and requires that they be accounted for similarly, as equity transactions; (iv) when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be initially measured at fair value (the gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any non-controlling equity investments rather than the carrying amount of that retained investment) and (v) entities provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and the interest of the non-controlling owners. This guidance was effective for fiscal years, and interim reporting periods within those fiscal years, beginning on or after December 15, 2008, and applied on a prospective basis, except for the presentation and disclosure requirements, which have been applied on a retrospective basis. Early adoption was not permitted. The Company adopted this standard on January 1, 2009. As required by the standard, the Company adjusted the presentation of non-controlling interests, as appropriate, in both the condensed consolidated balance sheet as of December 31, 2008 and the condensed consolidated statement of operations for the three- and nine-month periods ended September 30, 2008. The Company’s condensed consolidated balance sheets no longer have a line item referred to as Minority Interests. Equity at December 31, 2008 was adjusted to include $127.5 million attributable to non-controlling interests, and the Company reflected approximately $0.6 million as redeemable operating partnership units. In connection with the Company’s adoption of this standard, the Company also adopted the recent revisions to~~Classification and Measurement of Redeemable Securities~~. As a result of the Company’s adoption of these standards, amounts previously reported as minority equity interests and operating partnership minority interests on the Company’s condensed consolidated balance sheets are now presented as non-controlling interests within equity. There has been no change in the measurement of these line items from amounts previously reported except that due to certain redemption features, certain operating partnership minority interests in the amount of approximately $0.6 million are reflected as redeemable operating partnership units in the temporary equity section (between liabilities and equity). These units are exchangeable, at the election of the operating partnership unit holder, and under certain circumstances at the option of the Company, into an equivalent number of the Company’s common shares or for the equivalent amount of cash. Based on the requirements, the measurement of the redeemable operating partnership units are now presented at the greater of their carrying amount or redemption value at the end of each reporting period.

~~- 9 -~~

~~Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)~~

~~In May 2008, the FASB issued~~~~Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement~~). The standard prohibits the classification of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, as debt instruments within the scope of this standard and requires issuers of such instruments to separately account for the liability and equity components by allocating the proceeds from the issuance of the instrument between the liability component and the embedded conversion option (i.e., the equity component). The liability component of the debt instrument is accreted to par using the effective yield method; accretion is reported as a component of interest expense. The equity component is not subsequently re-valued as long as it continues to qualify for equity treatment. This standard must be applied retrospectively to issued cash-settleable convertible instruments as well as prospectively to newly issued instruments. This standard is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.

This standard was adopted by the Company as of January 1, 2009 with retrospective application to prior periods. As a result of the adoption, the initial debt proceeds from the $250 million aggregate principal amount of 3.5% convertible notes, due in 2011, and $600 million aggregate principal amount of 3.0% convertible notes, due in 2012, were required to be allocated between a liability component and an equity component. This allocation was based upon what the assumed interest rate would have been if the Company had issued similar nonconvertible debt. Accordingly, the Company’s condensed consolidated balance sheet at December 31, 2008 was adjusted to reflect a decrease in unsecured debt of approximately $50.7 million, reflecting the unamortized discount. In addition, at December 31, 2008, real estate assets increased by $2.9 million relating to the impact of capitalized interest and deferred charges decreased by $1.0 million relating to the reallocation of original issuance costs to reflect such amounts as a reduction of proceeds from the reclassification of the equity component. In connection with this standard, the guidance under~~Classification and Measurement of Redeemable Securities~~was also amended, whereas the equity component related to the convertible debt would need to be evaluated if the convertible debt were currently redeemable at the balance sheet date. Because the Company’s convertible debt is not currently redeemable, no evaluation is required as of September 30, 2009.

For the three- and nine-month periods ended September 30, 2008, the Company adjusted the condensed consolidated statements of operations to reflect additional non-cash interest expense of $3.3 million and $9.8 million, respectively, net of the impact of capitalized interest, pursuant to the provisions of this standard. The condensed consolidated statements of operations for the three- and nine-month periods ended September 30, 2009, reflects additional non-cash interest expense of $2.7 million and $9.8 million, respectively. In addition, the Company’s gains on the repurchase of unsecured debt during the three- and nine-month periods ending September 30, 2009 was reduced by $2.4 million and $17.0 million, respectively, due to the reduction in the amount allocated to the senior unsecured notes as required by the provisions of this standard.

~~- 10 -~~

~~Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities~~

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

~~New Accounting Standards Implemented~~

~~Business Combinations~~

~~In December 2007, the FASB issued~~~~Business Combinations.~~The objective of this standard is to improve the relevance, representative faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, this standard establishes principles and requirements for how the acquirer: (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest of the acquiree, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This standard applies prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption was not permitted. The Company adopted this standard on January 1, 2009. To the extent that the Company enters into acquisitions that qualify as businesses, this standard will require that acquisition costs and certain fees, which were previously capitalized and allocated to the basis of the acquired assets, be expensed as these costs are incurred. Because of this change in accounting for costs, the Company expects that the adoption of this standard could have a negative impact on the Company’s results of operations depending on the size of a transaction and the amount of costs incurred. The Company will assess the impact of significant transactions, if any, as they are contemplated.

~~Disclosures about Derivative Instruments and Hedging Activities~~

~~- 11 -~~

effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company adopted the financial statement disclosures required by this standard in the Company’s Quarterly Report on Form on 10-Q for the quarterly period ended March 31, 2009.

~~Subsequent Events~~

~~In May 2009, the FASB issued~~~~Subsequent Events~~, which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This standard also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. This standard is effective for interim and annual periods ending after June 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows. The Company has evaluated subsequent events through November 6, 2009, the date that the Company’s condensed consolidated financial statements were available to be issued, for this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009.

~~Interim Disclosures about Fair Value of Financial Instruments~~

~~In April 2009, the FASB issued~~~~Interim Disclosures about Fair Value of Financial Instruments~~, which requires fair value disclosures for financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value. Prior to the issuance of this standard, the fair values of those assets and liabilities were only disclosed annually. With the issuance of this standard, the Company will be required to disclose this information on a quarterly basis, providing quantitative and qualitative information about fair value estimates for all financial instruments not measured in the Condensed Consolidated Balance Sheets at fair value. This standard will be effective for interim reporting periods that end after June 15, 2009. Early adoption is permitted for periods ending after March 15, 2009. The Company adopted this standard in the second quarter of 2009.

~~Determination of the Useful Life of Intangible Assets~~

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

~~- 12 -~~

~~Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly~~

~~In April 2009, the FASB issued~~~~Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly~~, which clarifies the methodology used to determine fair value when there is no active market or where the price inputs being used represent distressed sales. This standard also reaffirms the objective of fair value measurement, as stated in~~Fair Value Measurements~~, which is to reflect how much an asset would be sold for in an orderly transaction. It also reaffirms the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. This standard should be applied prospectively and will be effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations.

~~Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock~~

~~In June 2008, the FASB issued~~~~Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock~~. This standard provides guidance on determining whether an equity–linked financial instrument (or embedded feature) can be considered indexed to an entity’s own stock, which is a key criterion for determining if the instrument may be classified as equity. There is a provision in this standard that provides new guidance regarding how to account for certain “anti-dilution” provisions that provide downside price protection to an investor. This standard is effective for fiscal years beginning after December 15, 2008. Early adoption was not permitted. Due to certain downward price protection provisions within the Otto Transaction (Note 10), the impact of this standard resulted in a charge to earnings of $118.2 million and $198.2 million for the three- and nine-month periods ended September 2009, respectively, but did not have a material impact on the Company’s financial position or cash flow. Refer to the discussion of the Otto Transaction described further in Note 10.

~~Equity Method Investment Accounting Considerations~~

~~In November 2008, the FASB issued~~~~Equity Method Investment Accounting Considerations~~. This standard clarifies the accounting for certain transactions and impairment considerations involving equity method investments. This standard applies to all investments accounted for under the equity method. This standard is effective for fiscal years and interim periods beginning on or after December 15, 2008. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations.

~~New Accounting Standards To Be Implemented~~

No. 810,Amendments to Consolidation of Variable Interest Entities

~~In June 2009, the FASB issued~~~~Amendments to Consolidation of Variable Interest Entities,~~~~which is effective for fiscal years beginning after November 15, 2009~~(“ASC 810”) and ~~introduces~~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

~~- 13 -~~

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 assessments 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.

The ~~Company is currently assessing the impact, if any, the~~Company’s adoption of this standard ~~will~~resulted in the deconsolidation of one entity in which the Company has a 50% interest (“Deconsolidated Entity”). The Deconsolidated 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 Entity at its carrying amount. The difference between the net amount removed from the balance sheet of the Deconsolidated 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 onbeen recorded had ASC 810 been effective when the Company first became involved with the Deconsolidated Entity. The Company’s maximum exposure to loss is equal to its investment in the Deconsolidated Entity of $12.4 million and certain fees earned by the Company.

At March 31, 2010, the Company’s joint venture with Macquarie DDR Trust, DDR MDT MV, owned the underlying real estate of 30 assets formerly occupied by Mervyns. DDR provides management, financing, expansion, re-tenanting and oversight services for this real estate investment. The Company holds a 50% economic interest in DDR MDT MV, which is considered a VIE. The Company was determined to be the primary beneficiary due to related party considerations, as well as being the member determined to have a greater exposure to variability in expected losses as DDR is entitled to earn certain fees from the joint venture. All fees earned from the joint venture are eliminated in consolidation. The Company’s condensed consolidated ~~financial statements.~~balance sheet discloses the amounts relating to this entity aggregated with the Company’s other consolidated VIEs.

-7-

Comprehensive (Loss) Income

Comprehensive (loss) income is as follows (in thousands):

Three-Month Periods
Ended March 31,
2010 2009
Net (loss) income $ (26,584 ) $ 84,776
Other comprehensive (loss) income:
Change in fair value of interest-rate contracts 3,468 4,723
Amortization of interest-rate contracts (93 ) (93 )
Foreign currency translation (11,902 ) 5,652

Total other comprehensive (loss) income (8,527 ) 10,282

Comprehensive (loss) income $ (35,111 ) $ 95,058
Comprehensive loss (income) attributable to non-controlling interests 3,811 (1,318 )

Total comprehensive (loss) income attributable to DDR $ (31,300 ) $ 93,740

2. EQUITY INVESTMENTS IN JOINT VENTURES

At ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008,~~2009, the Company had ownership interests in various unconsolidated joint ventures which ~~as of the respective dates,~~ owned ~~318~~258 and ~~329~~327 shopping center properties, respectively.

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


	September 30,			December 31,			March 31, 2010			December 31, 2009
	2009			2008
Combined Balance Sheets:
Condensed Combined Balance Sheets
Land	$	2,316,638		$	2,378,033		$	1,645,455		$	1,782,431
Buildings		6,418,500			6,353,985			4,879,556			5,207,234
Fixtures and tenant improvements		159,375			131,622			144,493			146,716

		8,894,513			8,863,640			6,669,504			7,136,381
Less: Accumulated depreciation		(748,754	)		(606,530	)		(637,662	)		(636,897	)

		8,145,759			8,257,110			6,031,842			6,499,484
Construction in progress		295,222			412,357
Land held for development and construction in progress^(A)								159,249			130,410

		8,440,981			8,669,467
Real estate, net								6,191,091			6,629,894
Receivables, net		156,567			136,410			114,758			113,630
Leasehold interests		11,746			12,615			11,166			11,455
Other assets		408,901			315,591			328,014			342,192

	$	9,018,195		$	9,134,083		$	6,645,029		$	7,097,171


Mortgage debt	$	5,619,195		$	5,776,897		$	4,151,864		$	4,547,711
Amounts payable to DDR		73,746			64,967
Notes and accrued interest payable to DDR								74,724			73,477
Other liabilities		258,518			237,363			195,498			194,065

		5,951,459			6,079,227			4,422,086			4,815,253
Accumulated equity		3,066,736			3,054,856			2,222,943			2,281,918

	$	9,018,195		$	9,134,083		$	6,645,029		$	7,097,171

Company’s share of accumulated equity⁽¹⁾	$	619,715		$	622,569
Company’s share of accumulated equity							$	468,765		$	473,738

Three-Month Periods Ended Nine-Month Periods Ended
September 30, September 30,
2009 2008 2009 2008
Combined Statements of Operations:
Revenues from operations^(a)
$ 221,437 $ 234,804 $ 662,265 $ 698,925

Expenses:
Rental operation 87,084 85,416 253,670 241,245
Depreciation and amortization 62,103 58,058 186,856 172,081
Interest^(b)
84,896 74,718 237,959 221,958

234,083 218,192 678,485 635,284

(Loss) income before income tax expense, other (expense) income, net and discontinued operations (12,646 ) 16,612 (16,220 ) 63,641
Income tax expense (2,513 ) (4,011 ) (7,065 ) (11,994 )
Other (expense) income, net^(c)
(3,602 ) (36,728 ) 5,833 19,811

(Loss) income from continuing operations (18,761 ) (24,127 ) (17,452 ) 71,458
Discontinued operations:
Income (loss) from discontinued operations^(d)
358 1,334 (31,060 ) 4,138
Loss on disposition of real estate, net of tax^(e)
(13,767 ) — (19,852 ) —
Loss on disposition of real estate⁽²⁾
(74 ) — (26,815 ) (13 )

Net (loss) income $ (32,244 ) $ (22,793 ) $ (95,179 ) $ 75,583

Company’s share of equity in net (loss) income of joint ventures⁽³⁾
$ (1,302 ) $ 2,603 $ (12,375 ) $ 22,816


^(A)		The combined condensed balance sheet at March 31, 2010 included the Deconsolidated Entity (Note 1), which is an entity under development with assets of approximately $24.9 million.

Three-Month Periods Ended
March 31,
2010 2009
Condensed Combined Statements of Operations

Revenues from operations $ 172,225 $ 214,154

Operating expenses 66,887 82,081
Depreciation and amortization 48,058 58,727
Interest expense 59,995 64,500

174,940 205,308

(Loss) income before income tax expense, other income, loss on disposition of real estate and discontinued operations (2,715 ) 8,846
Income tax expense (primarily Sonae Sierra Brazil), net (4,799 ) (1,990 )
Other income, net — 11,678
Loss on disposition of real estate, net — (26,741 )

Loss from continuing operations (7,514 ) (8,207 )
Discontinued operations:
Loss from discontinued operations (584 ) (246 )
Loss on disposition of real estate, net of tax^(A)
(8,752 ) (29 )

(9,336 ) (275 )

Net loss $ (16,850 ) $ (8,482 )

Company’s share of equity in net income of joint ventures^(B)
$ 1,660 $ 791


~~(a)~~^(A)		~~Revenues from~~Loss on disposition of discontinued operations ~~for~~includes the ~~nine-month period ended September 30, 2009, as compared to~~sale of 16 properties by one of the ~~prior-year comparable period, decreased primarily due to store closings related to four major tenant bankruptcies.~~

~~(b)~~		~~Interest expense includes charges related to ineffective derivative instruments at~~Company’s unconsolidated joint ventures in the ~~DDR Macquarie Fund~~first quarter of ~~$3.6 million and $5.1~~2010. This disposition of assets resulted in a loss of $8.7 million for the ~~three- and nine-month periods~~three months ended ~~September 30, 2009, respectively, and $0.2~~March 31, 2010 in addition to the $145.0 million ~~and $0.7 million for the three- and nine-month periods ended September 30, 2008, respectively.~~

~~(c)~~		Includes the effects of certain derivative instruments that are marked-to-market through earnings from the Company’s equity investment in Macquarie DDR Trust aggregating approximately $2.3 million of loss and $7.2 million of income through the Company’s ownership periodimpairment charge recorded by this joint venture in the units for the three- and nine-month periods ended September 30, 2009, respectively, and $37.7 million of loss and $16.5 million of income for the three- and nine-month periods ended September 30, 2008, respectively.

~~(d)~~		~~The DDR Macquarie Fund reported impairment losses of $33.9 million on three assets under contract to be sold as of June 30, 2009 that were subsequently sold in the third~~fourth quarter of 2009. The Company’s proportionate share of ~~these impairment losses was reduced by~~ the ~~impact of the impairment~~loss on sale recorded ~~on this investment~~ in the ~~fourth~~first quarter of ~~2008.~~2010 was approximately $1.3 million.

~~(e)~~^(B)		The ~~results for~~difference between the ~~nine-month period ended September 30, 2009 also include~~Company’s share of net income, as reported above, and the amounts included in the condensed consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in gain (loss) on sale of ~~12 properties~~certain assets due to the basis differentials. The Company’s share of joint venture net income decreased by ~~three separate unconsolidated joint ventures resulting in a loss of $13.8 million and $19.9~~$0.4 million for the ~~three-~~three months ended March 31, 2009, reflecting adjustments due to impairments, additional basis depreciation and ~~nine-month periods ended September 30, 2009, respectively.~~basis differences in assets sold.

~~- 15 -~~


~~(1)~~^(A)		~~The~~This amount represents the aggregate difference between the Company’s ~~share of accumulated equity and the investments in and advances to joint ventures recorded on the Company’s condensed consolidated balance sheets primarily results from~~historical cost basis differentials, as described below, including deferred development fees, net of the portion relating to the Company’s interest, notes and amounts receivable from the unconsolidated joint venture investments and amounts payable to DDR.

~~(2)~~		For the Kansas City, Missouri (Ward Parkway) project owned by the Coventry II Fund in which the Company had a 20% interest, a $35.0 million loan matured on January 2, 2009, and on January 6, 2009, the lender sent to the borrower a formal notice of default the Company did not provide a payment guaranty with respect to such loan. On March 26, 2009, the Coventry II Fund transferred its ownership of this property to the lender. The joint venture recorded a loss of $26.7 million on the transfer. The Company recorded a $5.8 million loss in March 2009 related to the write-off of the book value of its equity investment, which is included within equity in net (loss) income of joint ventures in the condensed consolidated statements of operations. Pursuant to the agreement with the lender, the Company initially managed the shopping center while DDR’s partner, the Coventry II Fund, marketed the property for sale. Although the Coventry II Fund continues to market the property, the Company terminated the property management agreement effective June 30, 2009. The joint venture has the ability to receive excess sale proceeds, if any, depending upon the timing and terms of a future sale arrangement.

~~(3)~~		The difference between the Company’s share of net (loss) income, as reported above, and the amounts included in the condensed consolidated statements of operations is attributable to the amortization of such basis differentials, deferred gains and differences in gain (loss) on sale of certain assets due to the basis differentials. For the three-month periods ended September 30, 2009 and 2008, the difference between the $1.3 million loss and $2.6 million income, respectively, of the Company’s share of equity in net (loss) income of joint ventures reflected above and the $0.2 million loss and $2.0 million income, respectively, of equity in net (loss) income of joint ventures reflected in the Company’s condensed consolidated statements of operations is primarily attributable to amortization associated with the basis differentials and differences in the recognition of gains (losses) on asset sales and impairments. The Company’s share of joint venture net loss was decreased by approximately $1.2 million and the equity ~~in net income was decreased by approximately $0.6 million for~~basis reflected at the three-month periods ended September 30, 2009 and 2008, respectively, to reflect additional basis depreciation and basis differences in assets sold. For the nine-month periods ended September 30, 2009 and 2008, the difference between the $12.4 million loss and $22.8 million income, respectively, of the Company’s share of equity in net (loss) income of joint ventures reflected above and the $9.0 million loss and $21.9 million income, respectively, of equity in net (loss) income of joint ventures reflected in the Company’s condensed consolidated statements of operations is primarily attributable to amortization associated with the basis differentials and differences in the recognition of gains (losses) on asset sales and impairments. The Company’s share of joint venture net loss was decreased by approximately $3.4 million and the equity in net income was decreased by approximately $0.9 million for the nine-month periods ended September 30, 2009 and 2008, respectively, to reflect additional basis depreciation and basis differences in assets sold.level. Basis differentials recorded upon transfer of assets are primarily associated with assets previously owned by the Company that have been transferred into aan unconsolidated joint venture at fair value.

~~(4)~~		~~Basis~~ 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. 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. This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level. Certain basis differentials indicated above are amortized over the life of the related ~~assets.~~asset.

~~- 16 -~~

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

Three-Month Periods Ended Nine-Month Periods Ended
September 30, September 30,
2009 2008 2009 2008
Management and other fees $ 12.2 $ 12.4 $ 36.6 $ 37.9
Acquisition, financing, guarantee and other fees 0.4 1.2 1.0 1.3
Development fees and leasing commissions 2.1 2.9 5.8 9.0
Interest income 2.1 0.1 5.9 0.3

~~Macquarie DDR Trust~~

In the third quarter of 2009, the Company liquidated its investment in Macquarie DDR Trust (ASX: MDT) for aggregate proceeds of $6.4 million. The Company recorded a gain on sale of these units of approximately $3.5 million for the three months ended September 30, 2009, which is included in other income on the consolidated statements of operations. For the nine months ended September 30, 2009, the gain on sale was reduced to $2.7 million, which is net of the $0.8 million loss incurred on the sale units in Macquarie DDR Trust in the second quarter of 2009. During 2008, the Company recognized an other than temporary impairment charge of approximately $31.7 million on this investment.

~~Coventry II DDR Merriam Village LLC~~

In the third quarter of 2009, the Company acquired its partner’s 80% interest in Merriam Village through the assumption and guarantee of $17.0 million face value of debt, of which the Company had previously guaranteed 20%. The Company did not expend any funds for this interest, which was consolidated at the acquisition date. In connection with the Company’s assumption of the remaining 80% guarantee, the lender agreed to modify and extend this secured mortgage.

~~Impairment of Joint Venture Investments~~

During the three- and nine- month periods ended September 30, 2009, the Company recorded impairment charges of $61.2 million and $101.6 million, respectively, associated with several unconsolidated joint venture investments as management believes these investments realized a loss in value that was an other than “temporary” decline. The impairments recognized during the nine-month period ended September 30, 2009 related to the DDRTC Core Retail Fund LLC ($55.0 million), DDR-SAU Retail Fund LLC ($6.2 million) and the Company’s joint ventures with the Coventry Real Estate Fund II (“Coventry II Fund”) ($40.4 million). In December 2008, the Company recorded $107.0 million of other than temporary impairment charges associated with seven unconsolidated joint venture investments. When the underlying assets of the entities are not required to be impaired, 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

~~- 17 -~~

allocates the aggregate impairment charge to each of the respective properties owned by a 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. If the unconsolidated joint venture reflects an impairment charge on the underlying real estate, where appropriate, the Company reduces the charge in equity in net income (loss) of joint ventures to the extent that any basis difference was allocated to the real estate.

Three-Month Periods
Ended March 31,
2010 2009
Management and other fees $ 9.2 $ 12.3
Acquisition, financing, guaranty and other fees 0.2 0.3
Development fees and leasing commissions 1.7 2.0
Interest income 0.1 1.9

3. ~~RESTRICTED CASH~~

~~Restricted cash is comprised of the following (in thousands):~~

September 30, 2009 December 31, 2008
DDR MDT MV LLC⁽¹⁾
$ 24,236 $ 31,806
DDR MDT MV LLC⁽²⁾
33,060 33,000
Bond fund⁽³⁾
45,420 46,986

Total restricted cash $ 102,716 $ 111,792


~~(1)~~		DDR MDT MV LLC (“MV LLC”), which is consolidated by the Company, owns 32 and 37 locations formerly occupied by Mervyns at September 30, 2009 and December 31, 2008, respectively. The terms of the original acquisition contained a contingent refundable purchase price adjustment secured by a letter of credit (“LOC”) from the seller of the real estate portfolio, which was owned in part by an affiliate of one of the former members of the Company’s board of directors. In addition, MV LLC held a Security Deposit Letter of Credit (“SD LOC”) from Mervyns. These LOCs were drawn in full in 2008 due to Mervyns filing for protection under Chapter 11 of the United States Bankruptcy Code. Although the funds are required to be placed in escrow with MV LLC’s lender to secure MV LLC’s mortgage loan, these funds are available for re-tenanting expenses or to fund debt service. Certain of the funds will be released as the related properties are either sold or released.

~~(2)~~		In connection with MV LLC’s draw of the LOC, MV LLC was required under the loan agreement to provide an additional $33.0 million as collateral security for MV LLC’s mortgage loan. DDR and its partner funded the escrow requirement with proportionate capital contributions.

~~(3)~~		Under the terms of a bond issue by the Mississippi Business Finance Corporation, the proceeds of approximately $60.0 million from the sale of bonds were placed in a trust in connection with a development project in Mississippi. As construction is completed on the Company’s project in Mississippi, the Company receives disbursement of these funds.

4. OTHER ASSETS, NET

Other assets consist of the following (in thousands):


	September 30, 2009		December 31, 2008		March 31, 2010		December 31, 2009
Intangible assets:
In-place leases (including lease origination costs and fair market value of leases), net	$	14,861	$	21,721	$	12,740	$	15,556
Tenant relations, net		11,086		15,299		10,678		11,318

Total intangible assets ~~(1)~~(A)		25,947		37,020		23,418		26,874
Other assets:
Accounts receivable, net ~~(2)~~(B)		148,184		164,356		137,955		146,809
Prepaids, deposits and other assets		96,670		91,770		114,011		111,975

Total other assets	$	270,801	$	293,146
Total other assets, net					$	275,384	$	285,658

are maintained, and an accordion feature for a future expansion to $1.4 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level, and a maturity date of June 2010, with a one-year extension option at the option of the Company subject to certain customary closing conditions. The Unsecured Credit Facility includes a competitive bid option on periodic interest rates for up to 50% of the facility. The Company’s borrowings under the Unsecured Credit Facility bear interest at variable rates at the Company’s election, based on either (i) the prime rate plus a specified spread ~~(0.125%~~(-0.125% at ~~September 30, 2009)~~March 31, 2010), as defined in the facility, or (ii) LIBOR, plus a specified spread (0.75% at ~~September 30, 2009)~~March 31, 2010). The specified spreads vary depending on the Company’s long-term senior unsecured debt rating from Standard and Poor’s and Moody’s Investors Service. The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets and fixed charge coverage. The Unsecured Credit Facility is used to temporarily finance ~~the acquisition,~~redevelopment, development and ~~expansion~~acquisition of shopping center properties, to provide working capital and for general corporate purposes. The Company was in compliance with these covenants at ~~September 30, 2009.~~March 31, 2010. The Unsecured Credit Facility also provides for an annual facility fee of ~~0.25%~~0.175% on the entire facility. At ~~September 30, 2009,~~March 31, 2010, total borrowings under the Unsecured Credit Facility aggregated ~~$822.5~~$346.0 million with a weighted average interest rate of ~~1.6%~~2.4%.

The Company also maintains a $75 million unsecured revolving credit facility with PNC Bank, National ~~City Bank~~Association (“PNC”) (together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). This facility has a maturity date of June 2010, with a one-year extension option at the option of the Company subject to certain customary closing ~~conditions, and~~conditions. The PNC facility reflects terms consistent with those contained in the Unsecured Credit Facility. Borrowings under this facility bear interest at variable rates based on (i) the prime rate plus a specified spread (0.125% at ~~September 30, 2009)~~March 31, 2010), as defined in the facility, or (ii) LIBOR, plus a specified spread ~~(0.75%~~(1.0% at ~~September 30, 2009)~~March 31, 2010). The specified spreads are dependent on the Company’s long-term senior unsecured debt rating from Standard and Poor’s and Moody’s Investors Service. The Company is required to comply with certain covenants relating to total outstanding indebtedness, secured indebtedness, maintenance of unencumbered real estate assets and fixed charge coverage. The Company was in compliance with these covenants at ~~September 30, 2009.~~March 31, 2010. At ~~September 30, 2009, total~~March 31, 2010 there were no borrowings under the ~~National City Bank facility aggregated $3.8 million with a weighted average interest rate of 1.2%.~~PNC facility.

~~6. FIXED-RATE~~5. SENIOR NOTES

In September 2009, the Company issued $300 million aggregate principal amount of 9.625% senior unsecured notes due March 2016. The notes were offered to investors at 99.42% of par with a yield to maturity of 9.75%.

~~- 19 -~~

In March 2007, the Company issued $600 million aggregate principal amount of 3.0% senior convertible notes due in 2012 (the “2007 Senior Convertible Notes”). In August 2006, the Company issued $250 million aggregate principal amount of 3.5% senior convertible notes due in 2011 (the “2006 Senior Convertible Notes” and, together with the 2007 Senior Convertible Notes, the “Senior Convertible Notes”). The Senior Convertible Notes are senior unsecured obligations and rank equally with all other senior unsecured indebtedness. For further description of the Company’s Senior Convertible Notes see Note 8, “Fixed-Rate Debt,” in the Company’s Current Report on Form 8-K filed August 10, 2009. Effective January 1, 2009, the Company retrospectively adopted the provisions of the standard,~~Accounting For Convertible Debt Instruments That May Be Settled in Cash Upon Conversion~~(Note 1). Concurrent with the issuance of the Senior Convertible Notes, the Company purchased an option on its common shares in a private transaction in order to effectively increase the conversion price of the notes to a specified option price (“Option Price”). This purchase option, which has the same term as the underlying debt, allows the Company to receive a number of the Company’s common shares (“Maximum Common Shares”) from counterparties equal to the amounts of common shares and/or cash related to the excess conversion value that it would pay to the holders of the Senior Convertible Notes upon conversion. The option cost was recorded as a reduction of shareholders’ equity at issuance.

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

Maximum
Conversion Price⁽¹⁾ Option Price Common Shares Option Cost
2007 Senior Convertible Notes $ 74.56 $ 82.71 1.1 $ 32.6
2006 Senior Convertible Notes $ 64.23 $ 65.17 0.5 $ 10.3


~~(1)~~		~~At September 30, 2009 and December 31, 2008.~~

~~The following tables reflect the Company’s previously reported amounts, along with the adjusted amounts as required by the standard,~~~~Accounting For Convertible Debt Instruments That May Be Settled in Cash Upon Conversion~~~~, and as adjusted to reflect the impact of discontinued operations (Note 13) (in thousands, except per share).~~

Three-Month Period Ended September 30, 2008 Nine-Month Period Ended September 30, 2008
As As
Previously As Effect of Previously As Effect of
Reported Adjusted Change Reported Adjusted Change
Condensed Consolidated Statements of Operations:

Income from continuing operations $ 37,681 ⁽¹⁾ $ 33,320 $ (4,361 ) $ 117,789 ⁽¹⁾ $ 105,556 $ (12,233 )
Net income attributable to DDR 38,515 35,250 (3,265 ) 121,866 112,074 (9,792 )
Net income attributable to DDR per share, basic and diluted $ 0.23 $ 0.20 $ (0.03 ) $ 0.75 $ 0.66 $ (0.09 )


⁽¹⁾		~~Adjusted to reflect the impact of discontinued operations (Note 13).~~

~~- 20 -~~

December 31, 2008
As Previously As Effect of
Reported Adjusted Change
Condensed Consolidated Balance Sheets:

Construction in progress and land under development $ 879,547 $ 882,478 $ 2,931
Deferred charges, net 26,613 25,579 (1,034 )
Senior unsecured notes (2,452,741 ) (2,402,032 ) 50,709
Paid-in-capital (2,770,194 ) (2,849,364 ) (79,170 )
Accumulated distributions in excess of net income 608,675 635,239 26,564

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

September 30, 2009 December 31, 2008
Carrying value of equity component $ (48,684 ) $ (77,587 )

Stated principal amount of convertible debt $ 522,683 $ 833,000
Remaining unamortized debt discount (23,875 ) (50,709 )

Net carrying value of convertible debt $ 498,808 $ 782,291

As of September 30, 2009, the remaining amortization period for the debt discount was approximately 23 and 30 months for the 2006 Senior Convertible Notes and the 2007 Senior Convertible Notes, respectively.

The adjusted effective interest rates for the liability components of the 2006 Senior Convertible Notes and the 2007 Senior Convertible Notes were 5.7% and 5.2%, respectively. The impact of this accounting change required the Company to adjust its interest expense and record a non-cash interest-related charge of $2.7 million and $9.8 million, net of capitalized interest, for the three- and nine-month periods ended September 30, 2009, respectively. The Company recorded non-cash interest expense of approximately $3.3 million and $9.8 million for the three- and nine-month periods ended September 30, 2008, respectively. The Company recorded contractual interest expense associated with the Senior Convertible Notes of approximately $4.3 million and $15.9 million for the three- and nine-month periods ended September 30, 2009, respectively, and $6.7 million and $20.1 million for the three- and nine-month periods September 30, 2008, respectively.

During the ~~nine~~three months ended ~~September 30, 2009,~~March 31, 2010, the Company purchased approximately ~~$673.6~~$155.9 million aggregate principal amount of its outstanding senior unsecured notes (of which ~~$310.3~~$71.7 million related to the ~~Senior Convertible Notes)~~senior convertible notes) at a discount to par resulting in a net ~~GAAP~~ gain of approximately ~~$142.4~~$1.1 million. The amount of the gain recognized by the Company ~~allocated the consideration paid for the convertible notes between the liability component and equity component based on the fair value of those components immediately prior~~relating to the purchases ~~and reflected a gain~~of the senior convertible notes is based on the difference on the amount of consideration paid that was allocated to the liability component as compared to the carrying amount of the debt, net of the unamortized ~~discount.~~discount and unamortized deferred financing fees.

In March 2010, the Company issued $300 million aggregate principal amount of 7.5% senior unsecured notes due April 2017. Proceeds from the issuance were used to repay debt with shorter-term maturities and to repay amounts outstanding on the Revolving Credit Facilities.

~~- 21 -~~-11-

7.6. FINANCIAL INSTRUMENTS

~~Cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accruals and other liabilities~~

The carrying amounts reported in the balance sheet for these financial instruments approximated fair value because of their short-term maturities. The carrying amount of straight-line rents receivable does not materially differ from its fair market value.

~~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 was approximately $141.4 million and $134.0 million at September 30, 2009 and December 31, 2008, respectively, as compared to the carrying amounts of $136.6 million and $134.0 million, respectively. The carrying value of the tax increment financing bonds approximated its fair value at September 30, 2009 and December 31, 2008. 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 on disposition of the financial instruments.

~~Financial instruments at September 30, 2009 and December 31, 2008, with carrying values that are different than estimated fair values, based on the valuation methods outlined in the standard,~~~~Fair Value Measurements~~~~, at September 30, 2009 and December 31, 2008 are summarized as follows (in thousands):~~

September 30, 2009 December 31, 2008
Carrying Amount Fair Value Carrying Amount Fair Value
Senior notes $ 1,825,834 $ 1,780,821 $ 2,402,032 $ 1,442,264
Revolving Credit Facilities and Term Debt 1,626,262 1,584,412 1,827,183 1,752,260
Mortgages payable and other indebtedness 1,712,991 1,651,132 1,637,440 1,570,877

$ 5,165,087 $ 5,016,365 $ 5,866,655 $ 4,765,401

Measurement of Fair Value

At ~~September 30, 2009,~~March 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.

~~- 22 -~~

Although the Company has determined that the significant inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of September 30, 2009, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are significant to the overall valuation of all of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. 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 ~~consist~~consists of interest rate swap agreements and marketable securities included in the Company’s elective deferred compensation plan that are included in other liabilities at ~~September 30, 2009,~~March 31, 2010, measured at fair value on a recurring basis as of ~~September 30, 2009,~~March 31, 2010, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair ~~value (in millions):~~value.

Fair Value Measurement at
September 30, 2009
Level 1 Level 2 Level 3 Total
Derivative financial instruments $ — $ — $ 19.9 $ 19.9

Fair Value Measurement at
March 31, 2010
Level 1 Level 2 Level 3 Total
Derivative financial instruments $ — $ — $ 12.0 $ 12.0
Marketable Securities $ 4.0 $ — $ — $ 4.0

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
Balance of Level 3 at December 31, 2008 $ (21.7 )
Total unrealized gain included in other comprehensive (loss) income 1.8

Balance of Level 3 at September 30, 2009 $ (19.9 )

Derivative
Financial
Instruments
Balance of Level 3 at December 31, 2009 $ (15.4 )
Total unrealized gain included in other comprehensive (loss) income 3.4

Balance of Level 3 at March 31, 2010 $ (12.0 )

The unrealized gain of ~~$1.8~~$3.4 million above included in other comprehensive (loss) income (“OCI”) is attributable to the net change in unrealized gains or losses relating to derivative liabilities that are still held at ~~September 30, 2009,~~March 31, 2010, none of which were reported in the Company’s condensed consolidated statements of operations asbecause they are documented and qualify as hedging instruments.

~~Accounting Policy for Derivative Instruments 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~~

~~- 23 -~~-12-

~~Company has elected~~Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable, Accruals and Other Liabilities

The carrying amounts reported in the balance sheet 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 ~~designate a derivative in a hedging relationship and apply hedge accounting and whether~~Affiliates

The fair value is estimated by discounting 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~~current rates at which management believes similar loans would be made. The fair value of ~~an asset, liability, or firm commitment attributable~~these notes was approximately $59.2 million and $74.6 million at March 31, 2010 and December 31, 2009, respectively, as compared to ~~a particular risk, such as interest rate risk, are considered~~the carrying amounts of $60.5 million and $76.2 million, respectively. The carrying value of the tax increment financing bonds approximated its fair value ~~hedges. Derivatives designated~~at March 31, 2010 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 theDecember 31, 2009. The fair value of loans to affiliates is not readily determinable and has been estimated by management based upon its assessment of the ~~hedged asset~~interest rate, credit risk and performance risk.

Debt

The fair market value of debt is determined using the trading price of public debt, or ~~liability~~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.

Financial instruments at March 31, 2010 and December 31, 2009, with carrying values that are ~~attributable to~~different than estimated fair values based on the ~~hedged risk~~valuation methods outlined 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~~standard,Fair Value Measurements, at March 31, 2010 and December 31, 2009, are ~~intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.~~summarized as follows (in thousands):

March 31, 2010 December 31, 2009
Carrying Carrying
Amount Fair Value Amount Fair Value
Senior notes $ 1,840,275 $ 1,895,343 $ 1,689,841 $ 1,691,445
Revolving Credit Facilities and Term Debt 1,146,015 1,131,103 1,575,028 1,544,481
Mortgage payable and other indebtedness 1,744,611 1,769,694 1,913,794 1,875,187

$ 4,730,901 $ 4,796,140 $ 5,178,663 $ 5,111,113

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources and

-13-

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.

Aggregate Notional LIBOR
Amount (in millions) Fixed Rate Maturity Date
$200 5.1 % June 2010
$100 4.9 % September 2010
$100 4.8 % February 2012

All components of the Swaps were included in the assessment of hedge effectiveness. The Company has six Swaps with notional amounts aggregating $600 million ($200 million of which expires in 2009, $300 million of which expires in 2010 and $100 million of which expires in 2012) which effectively converts variable-rate debtexpects that within the next 12 months, it will reflect as an increase to interest expense (and a ~~fixed-rate of 6.2% at September 30, 2009.~~corresponding decrease to earnings) approximately $9.1 million.

~~- 24 -~~

~~Credit-risk-related~~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, then the Company could also be declared in default on its derivative obligations ~~which could result~~resulting in an acceleration of ~~payment.~~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 to the net investment in its Canadian and European subsidiaries. Changes in the spot rate value are recorded as adjustments to the debt balance with offsetting unrealized gains and losses recorded in ~~other comprehensive income (“OCI”).~~OCI. 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.

The effect of the Company’s net investment hedge derivative instruments on OCI is as follows (in millions):


													Amount of Gain (Loss)
	Amount of Gain (Loss) Recognized in OCI on												Recognized in OCI on
	Derivatives (Effective Portion)												Derivatives (Effective Portion)
	Three-Month Periods						Nine-Month Periods						Three-Month Periods Ended
	Ended September 30						Ended September 30						March 31,
Derivatives in Net Investment Hedging Relationships	2009			2008			2009			2008			2010			2009
Euro denominated revolving credit facilities designated as hedge of the Company’s net investment in its subsidiary	$	(3.4	)	$	(5.7	)	$	(4.1	)	$	(1.8	)	$	5.7		$	4.6

Canadian denominated revolving credit facilities designated as hedge of the Company’s net investment in its subsidiaries	$	(6.7	)	$	(3.2	)	$	(12.4	)	$	(4.6	)	$	(3.3	)	$	2.1

~~8. COMMITMENTS AND CONTINGENCIES~~

~~Business Risks~~Parallel Fund, L.L.C. (collectively, “Coventry”) filed suit against the Company and ~~Uncertainties~~

~~The retail~~certain of its affiliates and ~~real estate markets have been significantly impacted by~~officers in the ~~continued deterioration~~Supreme Court of the ~~global credit markets~~State of New York, County of New York. The complaint alleges that the Company: (i) breached contractual obligations under a co-investment agreement and ~~other macro economic factors including, among others, rising unemployment~~various joint venture limited liability company agreements, project development agreements and management and leasing agreements, (ii) breached its fiduciary duties as a ~~decline~~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 ~~consumer confidence leading to a decline in consumer spending. Although a majority~~favor of the ~~Company’s tenants (in particular~~Company in connection with one of the ~~anchor tenants) remain~~joint venture properties should be voided on the grounds of economic duress. The complaint seeks compensatory and consequential damages in ~~relatively strong financial standing,~~an amount not less than $500 million as well as punitive damages. In response, the ~~current economic environment has resulted in tenant bankruptcies affecting~~Company filed a motion to dismiss the ~~Company’s real estate portfolio, including Mervyns, Linens ‘N Things, Steve and Barry’s, Goody’s and Circuit City, which occurred primarily~~complaint or, in the ~~second half of 2008. In addition, certain other tenants may be experiencing financial difficulties.~~alternative, to sever the plaintiffs’ claims. The ~~decrease in occupancy and the projected timing associated with re-leasing these vacated spaces~~court has ~~resulted in downward pressure~~not yet ruled on the Company’s ~~2009 operating results.~~motion.

The ~~reduced occupancy~~Company believes that the allegations in the lawsuit are without merit and that it has strong defenses against this lawsuit. The Company will ~~likely have a negative impact~~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 ~~Company’s consolidated cash flows, results of operations, financial position and financial ratios that are integral~~information presently available to the ~~continued compliance with the covenants on the Company’s Revolving Credit Facilities as further described below. Offsetting some of the current challenges within the retail environment,~~Company, the Company ~~has a low occupancy cost relative to other retail formats and historical averages, as well as a diversified tenant base with only one tenant exceeding 2.0%~~does not expect that the ultimate resolution of total consolidated revenues, which is Walmart at 5.3%. Other significant tenants include Target, Lowe’s Home Improvement, Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all of whichthis lawsuit will have relatively strong credit ratings. Management believes these tenants should continue providing the Company with a stable revenue base for the foreseeable future given the long-term nature of their leases. Moreover, the majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus toward value and convenience versus high-priced discretionary luxury items, which should enable many tenants to continue operating within this challenging economic environment.

The Company’s Revolving Credit Facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants, including, among other things, leverage ratios, debt service coverage and fixed charge coverage ratios, as well as limitations on the Company’s ability to incur secured and unsecured indebtedness, sell all or substantially all of the Company’s assets and engage in mergers and certain acquisitions. These Revolving Credit Facilities and indentures also contain customary default provisions, including the failure to timely pay principal and interest issued thereunder, the failure to comply with the Company’s financial and operating covenants, the occurrence of 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 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 ~~failure to pay when due any other~~various joint ventures because the Company ~~consolidated indebtedness (including non-recourse obligations)~~believes that requisite conduct in ~~excess~~a “for-cause” termination (i.e., fraud or willful misconduct committed by an executive of ~~certain specified levels. In~~ the ~~event~~Company at the level of at least senior vice president) did not occur. The court heard testimony in support of the Company’s ~~lenders declare~~motion (and Coventry’s opposition) and on December 4, 2009 issued a ~~default, as defined~~ruling in the ~~applicable loan documentation, this could result in~~Company’s favor. Specifically, the ~~inability to obtain further funding and/or an acceleration of all outstanding borrowings.~~

~~As of September 30, 2009,~~court issued a temporary restraining order enjoining Coventry from terminating the Company as property manager “for cause.” The court found that the Company was ~~in compliance with all of its financial covenants under its Revolving Credit Facilities term debt~~likely to succeed on the merits, that immediate and senior notes. However, due to the economic environment, the Company has less financial flexibility than desired given the current market dislocation. The Company’s current business plans indicate that it will be able to operate in compliance with these covenants for the remainder of 2009 and beyond. However, the current economic downturn, along with the dislocation in the global credit markets, has

~~- 27 -~~

~~significantly impacted the projected cash flows, financial position and effective leverage of the Company. If there is a continued decline in the retail and real estate industries and/~~irreparable injury, loss or ~~the Company is unable to successfully execute its plans as further described below, the Company could violate these financial covenants, and as a~~damage would result may be subject to higher finance costs and fees and/or accelerated maturities. In addition, certain of the Company’s credit facilities and indentures permit the acceleration of the maturity of debt issued thereunder in the event certain other debt of the Company has been accelerated. Furthermore, a default under a loan to the Company ~~or its affiliates, a foreclosure on a mortgaged property owned by~~in the ~~Company or its affiliates or~~absence of such restraint, and that the ~~inability to refinance existing indebtedness, would have a negative impact~~balance of equities favored injunctive relief in the Company’s favor. A trial on the Company’s ~~financial condition, cash flows and results~~request for a permanent injunction is currently scheduled for September 27, 2010. The temporary restraining order will remain in effect until the trial. Due to the inherent uncertainties of ~~operations. These facts and an inability~~the litigation process, no assurance can be given as to ~~predict future economic conditions have encouraged~~ the ~~Company to adopt a strict focus on lowering leverage and increasing its financial flexibility and improve its liquidity.~~ultimate outcome of this action.

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

	•		Retained Equity — With regard to retained capital, the Company has adjusted its dividend policy to the minimum required to maintain its REIT status. The Company did not pay a dividend in January 2009 because it had already distributed sufficient funds to comply with its 2008 tax requirements. Moreover, the Company funded its first and second quarter 2009 dividends in a combination of 90% common shares and 10% cash. After it was determined that the Company would be able to meet the minimum payout required to maintain its REIT status for 2009, the Company’s Board of Directors approved the continuation of the cash portion of the prior two quarters’ dividend in order to retain additional capital and enhance financial flexibility, while remaining committed to distributing cash flow to the Company’s investors. As a result, the Company declared an all cash dividend of $0.02 per common share in the third quarter of 2009. The changes to the Company’s 2009 dividend policy to date have resulted in additional free cash flow, which has been applied primarily to reduce leverage. This change in the Company’s quarterly dividend payments, including the elimination of a quarterly payment of a dividend in January 2009, is expected to result in approximately $300 million of retained capital in 2009 relative to the Company’s 2008 dividend policy.

	•		Issuance of Common Shares — The Company has several alternatives to raise equity through the sale of its common shares. In May and September 2009, the Company issued common shares as part of the transaction with Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”), resulting in aggregate gross equity proceeds of approximately $112.5 million (Note 10). The Company used the total gross proceeds to reduce leverage. The Company also ~~raised $157.6 million through the issuance of 18.6 million common shares at a weighted average price of $8.46 per~~

~~- 28 -~~

			share in the nine months ended September 30, 2009, under the continuous equity program. The Company expects to commence a new common equity program pursuant to which the Company can sell equity into the open market from time to time at its discretion at other than fixed prices.

	•		Debt Financing and Refinancing — The Company does not have any remaining 2009 maturities for wholly-owned debt. As a result, the Company is currently focused on extending or refinancing 2010 maturities, all but six of the Company’s wholly-owned 2010 mortgage maturities aggregating approximately $59 million have been addressed.

			In September 2009, the Company issued $300 million aggregate principal amount of 9.625% senior unsecured notes due March 2016. The notes were offered to investors at 99.42% of par with a yield to maturity of 9.75%. In July 2009, the Company obtained $17 million of mortgage debt from a life insurance company on two shopping centers at a 6% interest rate and maturing in 2017.

			In October 2009, the Company obtained a $400 million, five-year loan secured by a portfolio of 28 stabilized shopping centers from Goldman Sachs Commercial Mortgage Capital, L.P., an affiliate of Goldman, Sachs & Co.

	•		Asset Sales — For the nine months ended September 2009, the Company and both its consolidated and unconsolidated joint ventures sold numerous assets generating nearly $450 million in estimated total proceeds (of which approximately $309 million related to consolidated assets and $141 million related to unconsolidated joint venture assets). The Company and its joint ventures are also in various stages of discussions with third parties for the sale of additional non-prime assets.

	•		Debt Repurchases — Because of the current economic environment, the Company’s publicly traded debt securities have been trading at discounts to par. During the first nine months of 2009, the Company repurchased approximately $673.6 million aggregate principal amount of its outstanding senior unsecured notes at a cash discount to par aggregating $164.3 million. Although the Company will evaluate all of its alternatives to optimize its use of cash generated from the sources above to achieve the strategic goal of de-leveraging, the Company expects that it will continue to opportunistically repurchase its debt securities at a discount to par to further improve its leverage ratios.

As described above, although the Company believes it has made considerable progress in implementing the steps to address its objectives of reducing leverage, improving liquidity and continuing to comply with its covenants and repay obligations as they become due, certain transactions may not close as anticipated, or at all and, therefore, there can be no assurances that the Company will be able to execute these plans, which could adversely impact the Company’s operations, including its ability to remain compliant with its covenants and repay the Company’s obligations as they become due.

~~- 29 -~~

appeal of the verdict. Included in other liabilities on the condensed consolidated balance ~~sheet~~sheets is a provision ~~which~~that represents management’s best estimate of loss based upon a range of liability. The Company will continue to monitor the status of the litigation and revise the estimate of loss as appropriate. Although the Company believes it has a meritorious basis for reversing the jury verdict, there can be no assurance that the Company will be successful in its appeal.

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.

9.8. REDEEMABLE OPERATING PARTNERSHIP UNITS

At ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008,~~2009, the Company had 29,524 operating partnership units (“OP Units”) outstanding, which are classified as redeemable operating partnership units on the condensed consolidated balance sheets. These OP Units, issued to different partnerships, are exchangeable, at the election of the OP Unit holder, and under certain circumstances at the option of the Company, into an equivalent number of the Company’s common shares or for the equivalent amount of cash. The OP Unit holders are entitled to receive distributions, per OP Unit, generally equal to the per share distributions on the Company’s common shares. Redeemable OP Units are presented at the greater of their carrying amount ~~(September 30,~~(at March 31, 2010 and December 31, 2009) or redemption value ~~(September 30, 2008)~~ at the end of each reporting period. Changes in the value from period to period are charged to paid in capital in the Company’s condensed consolidated balance sheets. Below is a table reflecting the activity of the redeemable OP units (in thousands):

September 30, 2008
Balance at December 31, 2007 $ 1,163
Net income 61
Distributions (61 )
Adjustment to redeemable operating partnership units (215 )

Balance at September 30, 2008 $ 948

September 30, 2009
Balance at December 31, 2008 $ 627
Net income 12
Distributions (12 )

Balance at September 30, 2009 $ 627

Balance at December 31, 2009 $ 627
Net income 1
Distributions (1 )
Balance at March 31, 2010 $ 627

~~- 30 -~~-18-

~~10.~~9. EQUITY

The following table summarizes the changes in equity since December 31, ~~2007 as adjusted~~2009 (in thousands):

Developers Diversified Realty Corporation Equity
Common
Shares Accumulated Accumulated
($0.10 Distributions Other Treasury Non-
Preferred Par Paid-in in Excess of Deferred Comprehensive Stock at Controlling
Shares Value) Capital Net Income Obligation (Loss) Income 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 common shares related to exercise of stock options, dividend reinvestment plan, performance plan and director compensation 1 (2,190 ) 8,759 6,570
Contributions from non-controlling interests 51,714 51,714
Issuance of restricted stock (5,177 ) 6,074 897
Vesting of restricted stock 7,436 194 (5,462 ) 2,168
Stock-based compensation 6,386 6,386
Redemption of 463,185 operating partnership units in exchange for common shares (14,268 ) 23,327 (9,104 ) (45 )
Dividends declared common shares (248,612 ) (248,612 )
Dividends declared— preferred shares (31,702 ) (31,702 )
Distributions to non-controlling interests (30,222 ) (30,222 )
Adjustment to redeemable partnership units 215 215
Comprehensive income:

Net income 112,074 5,914 117,988
Other comprehensive income:
Change in fair value of interest rate contracts (4,626 ) (4,626 )
Amortization of interest rate contracts (550 ) (550 )
Foreign currency translation (8,991 ) (607 ) (9,598 )

Comprehensive income — — — 112,074 — (14,167 ) — 5,307 103,214

Balance, September 30, 2008 $ 555,000 $ 12,680 $ 3,100,211 $ (440,668 ) $ 23,056 $ (5,202 ) $ (337,141 ) $ 145,949 $ 3,053,885

~~- 31 -~~

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


	Developers Diversified Realty Corporation Equity																							Developers Diversified Realty Corporation Equity
			Common																											Accumulated
			Shares				Accumulated					Accumulated																		Distributions						Accumulated
			($0.10				Distributions					Other			Treasury			Non-												in Excess of			Deferred			Other			Treasury			Non-
	Preferred		Par		Paid-in		in Excess of			Deferred		Comprehensive			Stock at			Controlling						Preferred		Common		Paid-in		Net Income			Compensation			Comprehensive			Stock at			Controlling
	Shares		Value)		Capital		Net Income			Obligation		(Loss) Income			Cost			Interests			Total			Shares		Shares		Capital		(Loss)			Obligation			Income (Loss)			Cost			Interests			Total

Balance, December 31, 2008	$	555,000	$	12,864	$	2,849,364	$	(635,239	)	$	13,882	$	(49,849	)	$	(8,731	)	$	127,503		$	2,864,794
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																									—		—		—		(7,848	)		—			—			—			(12,384	)		(20,232	)
Issuance of common shares related to dividend reinvestment plan and director compensation				13		601										222						836			—		8		445		—			—			—			(213	)		—			240
Issuance of common shares for cash offering				1,864		154,179																156,043			—		4,773		376,915		—			—			—			1,074			—			382,762
Otto Transaction				3,286		108,128																111,414
Equity derivative instruments						143,716																143,716
Contributions from non-controlling interests																			5,641			5,641			—		—		—		—			—			—			—			44			44
Issuance of restricted stock				194		1,069					98					(629	)					732			—		54		—		—			371			—			(822	)		—			(397	)
Vesting of restricted stock						396					2,997					(884	)					2,509			—		—		3,029		—			(5,210	)		—			3,348			—			1,167
Stock-based compensation						12,315																12,315			—		—		657		—			—			—			—			—			657
Dividends declared—common shares				1,444		49,030		(60,542	)													(10,068	)
Dividends declared—preferred shares								(31,702	)													(31,702	)
Dividends declared-common shares																									—		—		—		(5,001	)		—			—			—			—			(5,001	)
Dividends declared-preferred shares																									—		—		—		(10,567	)		—			—			—			—			(10,567	)
Distributions to non-controlling interests																			(1,451	)		(1,451	)		—		—		—		—			—			—			—			(1,616	)		(1,616	)
Comprehensive income:
Comprehensive loss:
Net loss								(277,029	)										(39,860	)		(316,889	)		—		—		—		(24,247	)		—			—			—			(2,338	)		(26,585	)
Other comprehensive income:
Other comprehensive (loss) income:
Change in fair value of interest rate contracts													7,315									7,315			—		—		—		—			—			3,468			—			—			3,468
Amortization of interest rate contracts													(279	)								(279	)		—		—		—		—			—			(93	)		—			—			(93	)
Foreign currency translation													45,101						3,142			48,243			—		—		—		—			—			(10,431	)		—			(1,471	)		(11,902	)

Comprehensive income								(277,029	)				52,137						(36,718	)		(261,610	)
Comprehensive loss																									—		—		—		(24,247	)		—			(7,056	)		—			(3,809	)		(35,112	)

Balance, September 30, 2009	$	555,000	$	19,665	$	3,318,798	$	(1,004,512	)	$	16,977	$	2,288		$	(10,022	)	$	94,975		$	2,993,169
Balance, March 31, 2010																								$	555,000	$	25,009	$	3,755,574	$	(1,146,324	)	$	12,999		$	2,493		$	(12,479	)	$	72,009		$	3,264,281

~~The~~Equity Derivative Instruments — Otto Transaction

OnIn February ~~23,~~ 2009, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with ~~the Investor to issue~~Mr. Alexander Otto (the “Investor”) and ~~sell 30.0 million common shares for aggregate gross proceeds of approximately $112.5 million to the~~certain members of the Otto ~~Family. The agreement also provides~~family (collectively with the Investor, the “Otto Family”) which 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 members of 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~~ None 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 one in September 2009. In May 2009, the Company issued and sold 15.0 million shares and warrants to purchase 5.0 million common shares to the Otto Family for a purchase pricehad been exercised as of $52.5 million. The Company also issued an additional 1,071,428, shares as a result of the first quarter 2009 dividend to the Otto Family associated with the initial 15.0 million, 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 as a result of the first and second quarter 2009 dividends to the Otto Family associated with the second 15.0 million shares. In total, the Company issued 32,858,732 million common shares to the Otto Family.

~~Equity Derivative Instruments – Otto Transaction~~March 31, 2010.

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 the Stock Purchase Agreement of April 9, 2009, and marked-to-market through earnings as of each balance sheet date thereafter until exercise or expiration.

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.

~~- 33 -~~

The table below presents the fair value of the Company’s equity derivative instruments as well as their classification on the condensed consolidated balance sheet as follows (in millions):


	~~September 30, 2009~~
~~Derivatives not designated as~~
~~hedging instruments~~	~~Balance Sheet Location~~	~~Fair Value~~
~~Warrants~~	~~Other liabilities~~	~~$54.5~~

Liability Derivatives
March 31, 2010 December 31, 2009

Derivatives notDesignated as Balance Sheet Fair Balance Sheet
Hedging Instruments Location Value Location Fair Value
Warrants Other liabilities $ 81.0 Other liabilities $ 56.1

The effect of the Company’s equity derivative instruments on net loss is as follows (in millions):

Three-Month Nine-Month
Period Ended Period Ended
September 30, September 30,
2009 2009
Derivatives not designated Income Statement
as hedging instruments Location Gain (Loss) Gain (Loss)
Equity forward – issued shares Loss on equity derivative instruments $ (83.2 ) $ (152.8 )
Warrants Loss on equity derivative instruments (35.0 ) (45.4 )

$ (118.2 ) $ (198.2 )

Three-Month Periods Ended
March 31,
2010 2009

Derivatives notDesignated Income Statement
as Hedging Instruments Location Gain (Loss)
Loss on equity
derivative
Warrants instruments $ (24.9 ) $ —

The above loss ~~above~~ for ~~these~~the warrant contracts was derived principally from the increase of the Company’s stock price from ~~April 9, 2009, the shareholder approval date,~~January 1, 2010 to ~~the market price on the date of the second closing, September 18, 2009, related to the equity issued, or September 30, 2009, related to the warrants.~~March 31, 2010.

Measurement of Fair Value –— Equity Derivative Instruments Valued on a Recurring Basis

The valuation of these instruments is determined using a Bloomberg pricing model. 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

-20-

Fair Value Measurement at
September 30, 2009 (in millions)
Level 1 Level 2 Level 3 Total
Warrants $ — $ — $ 54.5 $ 54.5

Fair Value Measurement at
March 31, 2010 (in millions)
Level 1 Level 2 Level 3 Total
Warrants $ — $ — $ 81.0 $ 81.0

The table presented below presents a reconciliation of the beginning and ending balances of the equity derivative instruments that are included in other liabilities as noted above having fair value measurements based on significant unobservable inputs (Level 3) (in millions).

Equity Derivative
Instruments –
Liability
Balance of Level 3 at March 31, 2009⁽¹⁾
$ —
Initial Valuation (9.2 )
Unrealized loss (45.3 )

Balance of Level 3 at September 30, 2009 $ (54.5 )


~~(1)~~		~~As described above, the instruments were not valued until the shareholder approval, which occurred on April 9, 2009.~~

~~Stock-Based Compensation~~

Equity
Derivative
Instruments Liability
Balance of Level 3 at December 31, 2009 $ (56.1 )
Unrealized loss (24.9 )

Balance of Level 3 at March 31, 2010 $ (81.0 )

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 which were not subject to deferral elections became fully exercisable and 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 an accelerated non-cash charge of approximately $4.7 million and $15.2 million for the three- and nine-month periods ended September 30, 2009, respectively, related to these equity awards.

~~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, 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.

~~- 35 -~~

Each participant will be 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, respectively, 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 each outperformance unit grant for the share price metrics 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~~	%
~~Average dividend yield~~		~~6.2~~	%
~~Expected life~~	~~3.4 years~~
~~Expected volatility~~		88	%

As of September 30, 2009, $11.9 million of total unrecognized compensation costs were related to the two market metric components associated with the awards granted under the VSEP and expected to be recognized over the seven year term, which includes, the vesting period.

~~Adoption of Non-Controlling Interests and Accounting for Convertible Debt Instruments That May Be Settled for Cash upon Conversion (including Partial Cash Settlement)~~

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

Dividends

~~The Company~~Common share dividends declared ~~a dividend~~were $0.02 per share for the three-month period ended March 31, 2010, which will be paid in ~~the first and second quarters on March 2, 2009 and May 28, 2009, respectively, on its common shares of~~cash. Common share dividends declared were $0.20 per share ~~that was~~for the three-month period ended March 31, 2009, which were 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 first and second quarter dividends, 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.stock.

~~The Company declared an all-cash dividend of $0.02 per common share in the third quarter of 2009.~~

Common share dividends declared, per share, were $0.02 and $0.42 for the three- and nine-month periods ended September 30, 2009. Common share dividends declared, per share, were $0.69 and $2.07 for the three- and nine-month periods ended September 30, 2008.

~~- 36 -~~

combined with the overall economic downturn in the retail real estate environment. 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. The Company believed the value of these investments in the current environment was other than temporarily impaired.

~~Measurement of Fair Value~~

The Company is required to assess the value of both impaired consolidated assets 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, the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company considers multiple valuation techniques when measuring fair value of an investment. However, in certain circumstances, a single valuation technique may be appropriate.

Items Measured at Fair Value on a Non-Recurring Basis

~~The following table presents information about the Company’s impairment charges that were measured on a fair value basis for the nine months ended September 30, 2009.~~
The following table presents information about the Company’s impairment charges that were measured on a fair value basis for the three months ended March 31, 2010. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in millions).

Fair Value Measurement at September 30, 2009
Total
Level 1 Level 2 Level 3 Total Losses
Long-lived assets held and used $ — $ — $ 238.5 $ 238.5 $ 145.7
Unconsolidated joint venture investments — — 104.4 104.4 101.6

Fair Value Measurement at March 31, 2010
Total
Level 1 Level 2 Level 3 Total Losses
Long-lived assets - held and used and held for sale $ — $ — $ 3.6 $ 3.6 $ 3.1

~~13.~~12. DISCONTINUED OPERATIONS

All ~~earnings~~revenues and expenses of discontinued operations sold have been reclassified in the condensed consolidated statements of operations for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2009~~March 31, 2010 and ~~2008.~~2009. The Company ~~did not have any assets~~has one asset considered held for sale at ~~September 30, 2009 or December~~March 31, ~~2008.~~2010. The Company considers assets held for sale when the transaction has been approved by the appropriate levels of management and there are no known significant contingencies relating to the sale such that the sale of the property within one year is considered probable. Included in discontinued operations for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ are 27five properties sold in ~~2009 aggregating 3.2 million square feet, and 22 shopping centers sold in 2008~~2010, (including one ~~business center~~held for sale at December 31, 2009) and one property held for sale at ~~December~~March 31, ~~2007)~~2010 aggregating ~~1.3~~1.0 million square ~~feet.~~feet, and 32 properties sold in 2009 aggregating 3.8 million square feet, respectively. The operating results relating to assets sold or designated as held for sale as of ~~September 30, 2009,~~March 31, 2010, are as follows (in thousands):

~~- 38 -~~-22-

Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2008 2008
2009 (As Adjusted) 2009 (As Adjusted)
Basic and Diluted Earnings

(Loss) income from continuing operations $ (152,904 ) $ 33,320 $ (243,140 ) $ 105,556
Add: Gain on disposition of real estate 7,128 3,093 8,222 6,368
Less: Loss (income) attributable to non-controlling interests 2,804 (1,579 ) 39,848 (5,975 )

(Loss) income from continuing operations attributable to DDR common shareholders (142,972 ) 34,834 (195,070 ) 105,949
Less: Preferred share dividends (10,567 ) (10,567 ) (31,702 ) (31,702 )

(Loss) income from continuing operations attributable to DDR common shareholders (153,539 ) 24,267 (226,772 ) 74,247
Less: Earnings attributable to unvested shares and operating partnership units (30 ) (401 ) (236 ) (1,211 )

(Loss) income from continuing operations — Basic (153,569 ) 23,866 (227,008 ) 73,036

Basic Earnings Per Share

Basic – Average shares outstanding 165,073 119,795 146,151 119,447

(Loss) income from continuing operations attributable to DDR common shareholders $ (0.93 ) $ 0.20 $ (1.55 ) $ 0.61
Income (loss) from discontinued operations attributable to DDR common shareholders 0.03 — (0.56 ) 0.05

Net (loss) income attributable to DDR common shareholders $ (0.90 ) $ 0.20 $ (2.11 ) $ 0.66

Diluted Earnings Per Share

Basic – Average shares outstanding 165,073 119,795 146,151 119,447
Effect of dilutive securities:
Stock options — 87 — 136

Diluted – Average shares outstanding 165,073 119,882 146,151 119,583

(Loss) income from continuing operations attributable to DDR common shareholders $ (0.93 ) $ 0.20 $ (1.55 ) $ 0.61
Income (loss) from discontinued operations attributable to DDR common shareholders 0.03 — (0.56 ) 0.05

Net (loss) income attributable to DDR common shareholders $ (0.90 ) $ 0.20 $ (2.11 ) $ 0.66

Three-Month Periods
Ended March 31,
2010 2009
Basic and Diluted Earnings:

(Loss) income from continuing operations $ (25,539 ) $ 74,728
Plus: (Loss) gain on disposition of real estate (675 ) 445
Less: Loss attributable to non-controlling interests 2,337 2,625

(Loss) income from continuing operations attributable to DDR (23,877 ) 77,798
Less: Preferred share dividends (10,567 ) (10,567 )

Basic and Diluted — (Loss) income from continuing operations attributable to DDR common shareholders (34,444 ) 67,231
Less: Earnings attributable to unvested shares and operating partnership units (31 ) (603 )

Basic and Diluted — (Loss) income from continuing operations $ (34,475 ) $ 66,628

Basic Earnings Per Share:

Basic — Average shares outstanding 227,133 128,485

(Loss) income from continuing operations attributable to DDR common shareholders $ (0.15 ) $ 0.52
Income from discontinued operations attributable to DDR common shareholders — 0.07

Net (loss) income attributable to DDR common shareholders $ (0.15 ) $ 0.59

Number of Shares:

Basic — Average shares outstanding 227,133 128,485
Effect of dilutive securities:
Restricted stock — 800
Operating partnership units — 399

Diluted — Average shares outstanding 227,133 129,684

Dilutive Earnings Per Share:

(Loss) income from continuing operations attributable to DDR common shareholders $ (0.15 ) $ 0.52
Income from discontinued operations attributable to DDR common shareholders — 0.07

Net (loss) income attributable to DDR common shareholders $ (0.15 ) $ 0.59

Amounts attributable to DDR’s common shareholders:

(Loss) income from continuing operations, net of tax $ (24,003 ) $ 77,718
Discontinued operations, net of tax (244 ) 9,683

Net (loss) income attributable to DDR $ (24,247 ) $ 87,401

Preferred dividends 10,567 10,567

Net (loss) income attributable to DDR common shareholders $ (34,814 ) $ 76,834

Options to purchase 3.4 million and ~~2.2~~3.6 million common shares were outstanding at ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ respectively, ~~a portion~~all of which ~~has been reflected above~~were anti-dilutive in the ~~diluted per share amounts. Options aggregating 3.4 million~~calculations at March 31, 2010 and ~~2.0 million common shares, respectively, were anti-dilutive at September 30, 2009 and 2008.~~2009. Accordingly, the anti-dilutive options were excluded from the computations.

Shares subject to issuance under the Company’s ~~VSEP plan~~value sharing equity program are not considered in the ~~three- and nine-month periods~~computation of diluted EPS for three-month period ended ~~September 30, 2009,~~March 31, 2010, as the shares were considered ~~anti-dilutive.~~anti-dilutive due to the Company’s net loss from continuing operations. There were no awards outstanding under this program at March 31, 2009.

-24-

would therefore be anti-dilutive. In addition, the purchased option related to the ~~Senior Convertible Notes will~~senior convertible notes is not be included in the computation of diluted EPS as the purchase option is anti-dilutive.

The Company has excluded from its basic and diluted EPS for the three-month period ended March 31, 2010 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 ~~average market price of~~warrants were considered anti-dilutive due to the Company’s common stock did not exceed the exercise price of the warrants and accordingly are anti-dilutive. 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 EPSnet loss from ~~the date of issuance.~~continuing operations.

~~15.~~14. SEGMENT INFORMATION

The Company has two reportable segments, shopping centers and other investments. Each shopping center is considered a separate operating segment; however, each shopping center on a stand-alone basis is less than 10% of the revenues, profit or loss, and assets of the combined reported operating segment and meets the majority of the aggregation criteria under the applicable standard.

~~At September 30, 2009,~~The following table summarizes the Company’s combined shopping and business center ~~segment consisted~~portfolios as of 664 shopping centers (including 318 properties owned through unconsolidated joint ventures and 35 that are otherwise consolidated by the Company) in 44 states, Puerto Rico and Brazil. At September 30, 2008, the shopping center segment consisted of 713 shopping centers (including 329 properties owned through unconsolidated joint ventures and 40 that are otherwise consolidated by the Company) in 45 states, Puerto Rico and Brazil. At September 30, 2009 and 2008, the Company also owned six business centers in four states, which are included in other investments.each balance sheet date:

March 31,
2010 2009
Shopping centers owned 597 694
Unconsolidated joint ventures 258 327
Consolidated joint ventures 33 35
States^(A)
44 45
Business centers 6 6
States 4 4


(A)		In addition to Puerto Rico and Brazil.

The table below presents information about the Company’s reportable segments ~~for the three- and nine-month periods ended September 30, 2009 and 2008~~ (in thousands).


	Three-Month Period Ended September 30, 2009												Three-Month Period Ended March 31, 2010
	Other			Shopping									Other			Shopping
	Investments			Centers			Other			Total			Investments			Centers			Other			Total
Total revenues	$	1,327		$	200,937					$	202,264		$	1,449		$	205,252					$	206,701
Operating expenses		(457	)		(67,113	)⁽¹⁾					(67,570	)		(769	)		(66,322	)^(A)					(67,091	)

Net operating income		870			133,824						134,694			680			138,930						139,610
Unallocated expenses^(2)(B)							$	(226,215	)		(226,215	)							$	(166,796	)		(166,796	)
Equity in net loss of joint ventures and impairment of joint venture interests					(61,383	)					(61,383	)
Equity in net income of joint ventures																	1,647						1,647

Loss from continuing operations										$	(152,904	)										$	(25,539	)

Total real estate assets													$	49,727		$	8,735,972					$	8,785,699

Three-Month Period Ended September 30, 2008
Other Shopping
Investments Centers Other Total
Total revenues $ 2,028 $ 220,832 $ 222,860
Operating expenses (692 ) (60,752 ) (61,444 )

Net operating income 1,336 160,080 161,416
Unallocated expenses⁽²⁾
$ (130,077 ) (130,077 )
Equity in net loss of joint ventures and impairment of joint venture interests 1,981 1,981

Loss from continuing operations $ 33,320

Nine-Month Period Ended September 30, 2009
Other Shopping
Investments Centers Other Total
Total revenues $ 4,134 $ 609,808 $ 613,942
Operating expenses (1,898 ) (268,500 )⁽¹⁾ (270,398 )

Net operating income 2,236 341,308 343,544
Unallocated expenses⁽²⁾
$ (476,129 ) (476,129 )
Equity in net loss of joint ventures and impairment of joint venture interests (110,555 ) (110,555 )

Loss from continuing operations $ (243,140 )

Total real estate assets $ 49,469 $ 8,727,430 $ 8,776,899


	Nine-Month Period Ended September 30, 2008												Three-Month Period Ended March 31, 2009
	Other			Shopping									Other			Shopping
	Investments			Centers			Other			Total			Investments			Centers			Other			Total
Total revenues	$	4,786		$	664,906					$	669,692		$	1,523		$	206,143					$	207,666
Operating expenses		(1,519	)		(179,815	)					(181,334	)		(539	)		(68,361	)^(A)					(68,900	)

Net operating income		3,267			485,091						488,358			984			137,782						138,766
Unallocated expenses^(2)(B)							$	(404,726	)		(404,726	)							$	(64,389	)		(64,389	)
Equity in net loss of joint ventures and impairment of joint venture interests					21,924						21,924
Equity in net income of joint ventures																	351						351

Loss from continuing operations										$	105,556
Income from continuing operations																						$	74,728

Total real estate assets	$	49,825		$	9,136,355					$	9,186,180		$	49,844		$	9,039,844					$	9,089,688


Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements and the notes thereto ~~and the comparative summary of selected financial data~~ appearing elsewhere in this report. Historical results and percentage relationships set forth in the condensed 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 those 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 ~~current~~ economic downturn may adversely affect the ability of the Company’s tenants, or new tenants, to enter into new 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~~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;~~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;

~~- 44 -~~-27-

	•		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 ~~current~~ economic environment on prospective tenants’ ability to enter into new leases or pay contractual rent, or the inability byof 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;

~~- 45 -~~

	•		~~Recent disruptions~~Disruptions in the financial markets could affect the Company’s ability to obtain financing on reasonable terms and have other adverse effects on usthe Company and the market price of the Company’s common shares;

	•		The Company is subject to complex regulations related to its status as a real estate investment trust (“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 onunder the ~~loans~~joint venture loan for reasons outside of the Company’s control. Furthermore, ~~if the current constrained credit conditions in the capital markets persist or deteriorate further,~~ 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 an other than ~~temporary~~;temporary;

	•		The outcome of pending or future litigation, including litigation with tenants or joint venture partners, may adversely effect the Company’s results of operations and financial ~~condition.~~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 assets in Puerto Rico, an interest in an unconsolidated joint venture that owns properties in Brazil and an interest in consolidated joint ventures that were formed ~~for the purpose~~ to develop and own properties in Canada ~~Russia~~ and ~~Ukraine;~~Russia;

	•		International development and ownership activities carry risks ~~that are different from~~in addition to those the Company faces with the Company’s domestic properties and operations. These risks include:

	o•		Adverse effects of changes in exchange rates for foreign currencies;

	o•		Changes in foreign political or economic environments;

	o•		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;

	o•		Different lending practices;

~~- 46 -~~

	o•		Changes in applicable laws and regulations in the United States that affect foreign operations;

	o•		Difficulties in managing international operations and

	o•		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 and

	•		The Company could incur additional expenses in order 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.

Executive Summary

The Company is a self-administered and self-managed REIT, in the business of owning, managing and developing a portfolio of shopping centers. As of ~~September 30, 2009,~~March 31, 2010, the Company’s portfolio consisted of ~~664~~597 shopping centers and six business centers (including ~~318~~258 owned through unconsolidated joint ventures and 3533 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 ~~September 30, 2009,~~March 31, 2010, the Company owned and/or managed approximately ~~143.5~~118.1 million total square feet of Gross Leasable Area (“GLA”), which includes all of the aforementioned properties and ~~one property~~42 properties owned by a third party. The Company owns land in Canada and Russia at which ~~the~~ development was deferred. At ~~September 30, 2009,~~March 31, 2010, the aggregate occupancy of the Company’s shopping center portfolio was ~~87.1%~~86.4%, as compared to ~~94.5%~~88.3% at ~~September 30, 2008.~~March 31, 2009. Excluding the impact of the Mervyns vacancy, the aggregate occupancy of the Company’s shopping center portfolio was ~~89.1%~~88.5% at ~~September 30, 2009.~~March 31, 2010. The Company owned ~~713~~694 shopping centers and six business centers at ~~September 30, 2008.~~March 31, 2009. The average annualized base rent per occupied square foot was ~~$12.59~~$12.77 at ~~September 30, 2009,~~March 31, 2010, as compared to ~~$12.47~~$12.30 at ~~September 30, 2008.~~March 31, 2009.

Net loss applicable to DDR common shareholders for the three-month period ended ~~September 30, 2009~~March 31, 2010 was ~~$148.4~~$34.8 million, or ~~$0.90~~$0.15 per share (diluted and basic), compared to ~~revised~~ net income applicable to DDR common shareholders of ~~$24.7~~$76.8 million, or ~~$0.20~~$0.59 per share (diluted and basic), for the prior-year comparable period. Net loss applicable to DDR common shareholders for the nine-month period ended September 30, 2009 was $308.7 million, or $2.11 per share (diluted and basic), as compared to revised net income applicable to DDR commons shareholders of $80.4 million, or $0.66 per share (diluted and basic), for the prior-year period. Funds from operations (“FFO”) applicable to

~~- 47 -~~

DDR common shareholders for the three-month period ended ~~September 30, 2009~~March 31, 2010 was ~~a loss of $90.1~~$28.4 million compared to ~~revised FFO income of $96.7~~$140.0 million for the three-month period ended September 30, 2008. FFO applicable to DDR common shareholders for the nine-month period ended September 30, 2009 was a loss of $116.6 million as compared to revised FFO income of $288.9 million for the nine-month period ended September 30, 2008.March 31, 2009. The decrease in ~~net income and reported loss as well as~~ FFO ~~applicable to common shareholders~~ for the ~~three- and nine-month periods~~three-month period ended ~~September 30, 2009~~March 31, 2010, is primarily ~~related to non-operating activity consisting~~the result of ~~impairment charges,~~a decrease in the gain recognized on the repurchases of senior notes, the loss on ~~sale of assets and~~ equity derivative ~~related charges in addition to several major tenant bankruptcies in late 2008~~instruments and early 2009, offset by gains on debt repurchases as well as lower interest rates on variable rate debt. Also contributing to the decrease was a release of an approximately $16 million deferred tax allowance in 2008 as well as the impact of 2009 asset ~~sales associated with the Company’s deleveraging efforts.~~

~~Third quarter 2009 operating results~~

The Company’s 2009 goals included improving liquidity and lowering leverage. In the third quarter of 2009, the Company made great strides towards achievement of these goals as evidenced by the capital raised, which was applied to lower leverage, enhance liquidity and extend debt maturities.

	•		The Company reduced its consolidated debt by more than $700 million in the nine months ended September 30, 2009. On December 31, 2008, the Company had $5.9 billion of consolidated debt as compared to $5.2 billion at September 30, 2009. Additionally, the Company reduced its share of unconsolidated joint venture debt by approximately $140 million in the same period. In October 2009, the Company further reduced its proportionate share of unconsolidated joint venture debt by approximately $80 million with the redemption of its interest in the MDT US LLC joint venture, as discussed below.

	•		The Company took advantage of the opportunity that arose in the unsecured debt market by raising $300 million in new senior unsecured notes maturing in 2016. This offering of long-term debt to repay short-term debt extended the duration of the Company’s overall debt maturities. The interest rate was higher than historic rates and, as such, the Company remains focused on executing upon the balance sheet improvements that should lower this cost over time.

	•		The Company has improved its debt maturity schedule by decreasing debt and by extending debt maturities. The Company does not have any remaining 2009 wholly-owned debt maturities, and all but six of the Company’s wholly-owned 2010 mortgage maturities, aggregating approximately $59 million, have been addressed.

	•		~~The Company closed approximately $600 million in new mortgage loans.~~

	•		Through September 30, 2009, the Company purchased $250.1 million aggregate principal amount of unsecured senior notes through a tender offer, and an additional $423.5 million aggregate principal amount of unsecured senior notes through open market purchases, for a total cash discount to par of approximately $164.3 million. The tender offer achieved the Company’s goal of retiring unsecured notes, especially those with near-dated maturities.

	•		The Company sold assets aggregating approximately $450 million in gross proceeds, of which the Company’s share was more than $300 million. Almost all of these sales were non-prime assets (prime assets are considered those assets that the Company intends to hold for a long term and not offer for sale to a third party), and the sales contributed to the de-leveraging and liquidity enhancing efforts by reducing secured mortgage debt and unsecured note and revolver balances.

sales.

~~- 48 -~~-30-

First quarter 2010 operating results

The Company continues to demonstrate progress in its balance sheet initiatives since the end of 2009 and believes this improvement underscores its unwavering commitment to reduce debt and enhance the quality of its portfolio. The Company continues to be focused on its operating and balance sheet initiatives, and believes it will continue to make strides throughout the remainder of 2010 as new leases commence. In addition to enhancing the quality of the Company’s shopping centers through the commencement of new leases, the Company remains focused on overall portfolio management by selling non-prime assets.

The Company’s liquidity position continued to improve in the first quarter of 2010. Proceeds from the Company’s various capital raising activities this past quarter were utilized primarily to repay debt. As a result, the Company reduced total consolidated debt from $5.2 billion at December 31, 2009 to $4.7 billion as of March 31, 2010. Additionally, the Company’s liquidity increased to approximately $1.0 billion of cash and availability on its revolving credit facilities as of March 31, 2010 from $0.1 billion at March 31, 2009.

The retail environment continues to show signs of improvement. Many retailers announced stronger sales this year and solid earnings growth, which could translate into expansion plans for some retailers. Quality space continues to be in demand, which could result in additional occupancy in the Company’s portfolio. Deal economics are still challenged and lease spreads remain negative; however, the Company is encouraged by some improvement in deal economics. The Company’s anchor store redevelopment team continues to make progress with backfilling big-box vacancies that occurred in 2008 and 2009.

The Company continues to minimize ground-up development spending in its domestic portfolio, and instead allocates capital to the lease-up of existing projects because the Company believes there may be opportunities to redevelop many of its existing assets. These redevelopments should create a future growth opportunity of the Company’s existing assets and create future value without the level of risk or capital required for a new development.

As evidenced by the Company’s capital markets activity this quarter, the Company continued to opportunistically raise capital, reduce leverage and extend the Company’s debt duration. In January 2010, the Company raised ~~$157.6~~gross proceeds of approximately $46.1 million through the ~~issuance~~use of ~~18.6 million common shares~~its continuous equity program at a ~~weighted average~~weighted-average price of ~~nearly $8.50~~$9.30 per ~~share~~share. In February, the Company completed a common equity offering generating net proceeds of approximately $338.1 million and in March, the Company issued $300 million aggregate principal amount of senior unsecured notes with a seven-year term. The Company also repurchased through a cash tender offer $83.1 million aggregate principal amount of its senior unsecured notes due in 2010 and 2011, sold $456.4 million of wholly-owned and joint venture assets in addition to generating retained earnings, all of which contributed to leverage reduction. The net capital from all of this activity was predominately used to de-lever and also to reinvest in the ~~nine months ended September 30, 2009 and,~~Company’s assets.

In April, the Company also participated, through one of its unconsolidated joint ventures, DDR Domestic Retail Fund, in ~~addition, raised $112.5 million of cash as part~~one of the ~~transaction with Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”).~~

	•		~~The Company simplified its structure by redeeming its interest in the MDT US LLC joint venture in October 2009.~~close since 2008. This redemption eliminated approximately $1.0 billion of unconsolidated debt and the Company assumed debt of approximately $65.3 million. This simplified structure reduced the Company’s proportionate share of unconsolidated joint venture debt by approximately $146 million offset by the assumption of debt by the Company of approximately $65.3 million resulting in an overall reduced leverage by approximately $80 million. In exchange for its interest, the Company owns three wholly-owned prime assets.

	•		The Company focused on the re-tenanting of space formerly occupied by bankrupt retailers. Activity was generated on a majority of the space in the form of signed leases, sales, leases pending signature or letters of intent, and, importantly, the Company remains focused on pursuing the retailers that are anticipating 2010 and 2011 openings. The Company continues to be prudent in evaluating deal terms and, while rents have moderated, the Company is pursuing economically efficient deals with lower than average capital expenditures.

	•		~~Maximizing rent spreads remains challenging, yet the Company achieved marginal improvement in blended rental rate spreads over the second quarter of 2009.~~

	•		The Company remains focused on tenant relationships and has strategically invested in human capital by reassigning responsibilities communicating with its tenants, conducting portfolio reviews, and discussing new store opportunities.

			~~The Company continues to focus on its current strategy and various other initiatives, including the following:~~

	•		~~The Company expects to commence a new common equity program pursuant to which the Company can sell equity into the open market from time to time at its discretion at other than fixed prices.~~

	•		The Company may complete several other secured financings at its discretion by year end. The Company does not believe that these transactions are required to be completed in order to meet its near-term maturities, but remain part of the Company’s long-term strategy to provide for more liquidity.

	•		~~The Company is focused on improving its debt to EBITDA ratio (Earnings before interest, taxes, depreciation and amortization).~~

$30 million financing has a five-year term at an interest rate of 4.2%. It replaces three loans with a comparable balance maturing in 2010.

~~Despite~~The Company had a very active first quarter and made significant progress on its balance sheet and operating initiatives. The Company has been executing capital raising activities proactively and prudently based on opportunities in the ~~high level of transactional activity this~~market. For the last year, the Company ~~has not lost sight of the operational side of the business. Although the Company is pleased with its ability to execute on its strategic plan thus far, it acknowledges~~believes it has ~~more to complete.~~articulated a strategy of lowering leverage, increasing liquidity and extending debt maturities with the goal of lowering the Company’s risk profile and long-term cost of capital. The Company ~~continues~~intends to ~~prepare~~remain focused on continuing such improvement for ~~a prudent strategy for 2010 and beyond.~~the remainder of 2010.

Results of Operations

~~Revenues from~~Continuing Operations ~~(in thousands)~~

Three-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Base and percentage rental revenues $ 136,922 $ 150,389 $ (13,467 ) (9.0 )%
Recoveries from tenants 43,758 49,548 (5,790 ) (11.7 )
Ancillary and other property income 5,698 4,889 809 16.6
Management fees, development fees and other fee income 14,693 15,378 (685 ) (4.5 )
Other 1,193 2,656 (1,463 ) (55.1 )

Total revenues $ 202,264 $ 222,860 $ (20,596 ) (9.2 )%

Nine-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Base and percentage rental revenues $ 413,698 $ 453,458 $ (39,760 ) (8.8 )%
Recoveries from tenants 135,181 145,801 (10,620 ) (7.3 )
Ancillary and other property income 15,696 15,748 (52 ) (0.3 )
Management fees, development fees and other fee income 43,194 47,302 (4,108 ) (8.7 )
Other 6,173 7,383 (1,210 ) (16.4 )

Total revenues $ 613,942 $ 669,692 $ (55,750 ) (8.3 )%

~~- 50 -~~

~~Base and percentage rental revenues of the core portfolio properties (shopping~~ Shopping center properties owned as of January 1, ~~2008,~~2009, but excluding properties under development/redevelopment and those classified in discontinued ~~operations) (“Core Portfolio”) decreased approximately $34.1 million, or 8.2%, for the nine-month period ended September 30, 2009, as compared~~operations, are referred to ~~the same period in 2008. The decrease in overall base and percentage rental revenues was due to the following (in millions):~~

Decrease
Core Portfolio Properties $ (34.1 )
Development/redevelopment of shopping center properties (1.6 )
Business center properties (0.3 )
Straight-line rents (3.8 )

$ (39.8 )

At September 30, 2009, the aggregate occupancy rate of the Company’s shopping center portfolio was 87.1%, as compared to 94.5% at September 30, 2008. The Company owned 664 shopping centers at September 30, 2009, as compared to 713 shopping centers at September 30, 2008. The average annualized base rent per occupied square foot was $12.59 at September 30, 2009, as compared to $12.47 at September 30, 2008. The base and percentage rental revenue decrease within the Core Portfolio is due almost exclusively to the impact of the major tenant bankruptcies including Mervyns, Goody’s, Linens ‘N Things, Circuit City and Steve and Barry’s. These bankruptcies have also driven the Company’s current lower occupancy level as compared to the Company’s historical levels.

At September 30, 2009, the aggregate occupancy rate of the Company’s wholly-owned shopping centers was 89.8%, as compared to 93.3% at September 30, 2008. The Company had 311 wholly-owned shopping centers at September 30, 2009, as compared to 344 shopping centers at September 30, 2008. The average annualized base rent per occupied square foot for wholly-owned shopping centers was $11.73 at September 30, 2009, as compared to $11.68 at September 30, 2008. The decrease in occupancy rate is primarily a result of the bankruptcies discussed above, excluding Mervyns.

At September 30, 2009, the aggregate occupancy rate of the Company’s joint venture shopping centers was 84.8%, as compared to 94.0% at September 30, 2008. The Company’s joint ventures owned 353 shopping centers including 35 consolidated centers primarily owned through a joint venture which owns sites previously occupied by Mervyns at September 30, 2009, as compared to 369 shopping centers including 40 consolidated centers primarily owned through a joint venture which owns sites previously occupied by Mervyns at September 30, 2008. The average annualized base rent per occupied square foot was $13.36 at September 30, 2009, as compared to $13.15 at September 30, 2008. The decrease in the occupancy rate and annualized base rent is primarily a result of the bankruptcies discussed above as wellherein as the ~~impact of the vacancy of the Mervyns sites in 2009.~~

At September 30, 2009, the aggregate occupancy rate of the Company’s business centers was 71.4%, as compared to 80.9% at September 30, 2008. The business center portfolio includes six assets in four states at September 30, 2009 and 2008.

~~Recoveries from tenants decreased $10.6 million, or 7.3%, for the nine-month period ended September 30, 2009, as compared to the same period in 2008. Recoveries were approximately 71.1%~~

~~- 51 -~~

and 80.4% of operating expenses and real estate taxes including bad debt expense for the nine-months ended September 30, 2009 and 2008, respectively. 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.

Ancillary revenue opportunities have historically included short-term and seasonal leasing programs, outdoor advertising programs, wireless tower development programs, energy management programs, sponsorship programs and various other programs.

~~The decrease in management, development and other fee income for the nine-month period ended September 30, 2009, is primarily due to the following (in millions):~~

Decrease
Development fee income $ (2.9 )
Leasing commissions (0.1 )
Decrease in property and asset management fee income at various unconsolidated joint ventures (1.1 )

$ (4.1 )

The decrease in development fee income was primarily the result of the reduced construction activity and the redevelopment of joint venture assets that are owned through the Company’s investments with the Coventry Real Estate Fund II (“Coventry II Fund”) discussed below. In light of current market conditions, development fees may continue to decline if development or redevelopment projects are delayed and/or cancelled. The reduction in management fees was primarily attributed to tenant bankruptcies previously discussed and joint venture asset dispositions.

~~Other revenue was comprised of the following (in millions):~~

Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
2009 2008 2009 2008
Lease termination fees $ 0.8 $ 0.8 $ 3.4 $ 5.0
Financing fees 0.2 1.9 0.9 1.9
Other 0.2 — 1.9 0.5

$ 1.2 $ 2.7 $ 6.2 $ 7.4

“Core Portfolio Properties.”

~~Expenses~~Revenues from Operations (in thousands)

Three-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Operating and maintenance $ 36,952 $ 34,572 $ 2,380 6.9 %
Real estate taxes 27,965 26,872 1,093 4.1
Impairment charges 2,653 — 2,653 100.0
General and administrative 25,886 19,560 6,326 32.3
Depreciation and amortization 53,621 60,031 (6,410 ) (10.7 )

$ 147,077 $ 141,035 $ 6,042 4.3 %

~~- 52 -~~

Nine-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Operating and maintenance $ 107,155 $ 102,206 $ 4,949 4.8 %
Real estate taxes 83,076 79,128 3,948 5.0
Impairment charges 80,167 — 80,167 100.0
General and administrative 73,469 61,607 11,862 19.3
Depreciation and amortization 171,552 167,769 3,783 2.3

$ 515,419 $ 410,710 $ 104,709 25.5 %

Operating and maintenance expenses include the Company’s provision for bad debt expense, disclosed below, which approximated 1.7% and 1.4% of total revenues for the nine-month periods ended September 30, 2009 and 2008, respectively (see Economic Conditions). Also included in operating and maintenance are the following:

Three-Month Period Nine-Month Period
Ended September 30, Ended September 30,
2009 2008 2009 2008
Bad debt expense^(a)
$ 4.8 $ 3.5 $ 10.8 $ 10.2
Ground Rent Expense^{(a) (b)}
1.3 1.0 3.5 3.1

Three-Month Periods
Ended March 31,
2010 2009 $ Change % Change
Base and percentage rental revenues^(A)
$ 139,008 $ 138,559 $ 449 0.3 %
Recoveries from tenants^(B)
47,434 46,476 958 2.1
Ancillary and other property income^(C)
4,973 4,922 51 1.0
Management fees, development fees and other fee income^(D)
14,016 14,461 (445 ) (3.1 )
Other^(E)
1,270 3,248 (1,978 ) (60.9 )

Total revenues $ 206,701 $ 207,666 $ (965 ) (0.5 )%


~~(a)~~(A)		~~Includes discontinued operations.~~

~~(b)~~		Includes expense for the three-month periods ended September 30, 2009 and 2008 of approximately $0.6 million and $0.4 million, respectively, and for the nine-month periods ended September 30, 2009 and 2008 of approximately $1.4 million and $1.3 million, respectively, relatedThis decrease in Core Portfolio Properties is primarily due to the ~~straight-line~~impact of ~~ground leases.~~the major tenant bankruptcies in the first quarter of 2009. These bankruptcies have also driven the current lower occupancy level as compared to the Company’s historical levels. The increase was due to the following (in millions):

Increase
(Decrease)
Core Portfolio Properties $ (3.0 )
Acquisition of real estate assets 2.6
Development/redevelopment of shopping center properties 0.8

$ 0.4

-32-

The ~~increase in~~following tables present the operating statistics impacting base and percentage rental ~~operation expenses, excluding general and administrative and impairment charges, for the nine-month period ended September 30, 2009 compared to 2008, is due to~~revenues summarized by the following ~~(in millions):~~portfolios: combined shopping center portfolio, business center portfolio, wholly-owned shopping center portfolio and joint venture shopping center portfolio:

Operating and Real Estate Depreciation and
Maintenance Taxes Amortization
Core Portfolio Properties $ 3.0 $ 2.0 $ 1.4 ^(a)
Development/redevelopment of shopping center properties 0.9 2.0 1.6
Provision for bad debt expense 1.0 — —
Business center properties — (0.1 ) (0.1 )
Personal property — — 0.9

$ 4.9 $ 3.9 $ 3.8

Shopping Center Business Center
Portfolio Portfolio
March 31, March 31,
2010 2009 2010 2009
Centers owned 597 694 6 6
Aggregate occupancy rate 86.4 % 88.3 % 71.9 % 72.4 %
Average annualized base rent per occupied square foot $ 12.77 $ 12.30 $ 12.27 $ 12.33

Wholly-Owned Joint Venture
Shopping Centers Shopping Centers
March 31, March 31,
2010 2009 2010 2009
Centers owned 306 332 258 327
Consolidated centers primarily owned through a joint venture previously occupied by Mervyns n/a n/a 33 35
Aggregate occupancy rate 87.2 % 90.5 % 83.2 % 86.2 %
Average annualized base rent per occupied square foot $ 11.88 $ 11.72 $ 13.84 $ 12.83


^(a)(B)		~~Primarily relates to accelerated depreciation~~Recoveries were approximately 72.9% and 75.5% of operating expenses and real estate taxes including bad debt expense for the three months ended March 31, 2010 and 2009, respectively. The increase in recoveries from tenants was primarily a result of the increase in operating costs as described below.

(C)		Ancillary revenue opportunities have historically included short-term and seasonal leasing programs, outdoor advertising programs, wireless tower development programs, energy management programs, sponsorship programs and various other programs.

(D)		Decreased primarily due to ~~changes in estimate regarding asset useful lives and additional assets placed in service.~~the following (in millions):

The majority of the increase in operating and maintenance expenses is related to increased landlord expenses primarily relating to the tenant vacancies, in particular the sites formerly occupied by Mervyns, which were generally triple net leased space. The Company is in the process of appealing numerous real estate tax charges given the current economic environment and increased vacancy resulting from these tenant bankruptcies.

Increase
(Decrease)
Development fee income $ 0.1
Leasing commissions 0.3
Decrease in management fee income primarily related to asset sales (0.5 )
Property and asset management fee income at various unconsolidated joint ventures (0.3 )

$ (0.4 )

~~- 53 -~~-33-

The Company recorded impairment charges of $145.7 million for the nine-month period ended September 30, 2009 on various of its consolidated real estate investments of which $65.5 million is reflected in discontinued operations. Of the aggregate amount, approximately $84.7 million in asset impairments were triggered primarily due to the Company’s marketing of assets for sale combined with the overall economic downturn in the retail real estate environment during the nine-months ended September 30, 2009. The remaining $61.0 million of impairment charges related to 13 assets formerly occupied by Mervyns, of which the Company’s proportionate share of the charge was $29.7 million after adjusting for the allocation of the loss to the non-controlling interest in this consolidated joint venture.

The increase in general and administrative expenses is primarily attributable to the “change in control” charge discussed below and payments required under newly executed compensation agreements, partially offset by a reduction in 2009 expense as a result of the termination of a supplemental equity award program in December 2008, lower headcount in 2009 as compared to 2008 and a reduction in general corporate expenses. Total general and administrative expenses were approximately 5.6% and 4.3% of total revenues, including total revenues of unconsolidated joint ventures and discontinued operations, for the nine-month periods ended September 30, 2009 and 2008, respectively.

~~Other Income and Expenses (in thousands)~~

Three-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Interest income $ 3,289 $ 1,660 $ 1,629 98.1 %
Interest expense (57,268 ) (61,713 ) 4,445 (7.2 )
Gain on repurchases of senior notes 23,881 — 23,881 100.0
Loss on equity derivative instruments (118,174 ) — (118,174 ) 100.0
Other income (expense), net 2,203 (6,859 ) 9,062 (132.1 )

$ (146,069 ) $ (66,912 ) $ (79,157 ) 118.3 %

Nine-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Interest income $ 9,546 $ 2,775 $ 6,771 244.0 %
Interest expense (175,165 ) (185,977 ) 10,812 (5.8 )
Gain on repurchases of senior notes 142,360 200 142,160 71,080.0
Loss on equity derivative instruments (198,199 ) — (198,199 ) 100.0
Other expense, net (9,123 ) (7,459 ) (1,664 ) 22.3

$ (230,581 ) $ (190,461 ) $ (40,120 ) 21.1 %

~~Interest income increased primarily due to interest earned from financing receivables which aggregated $123.7 million at September 30, 2009 as compared to $38.3 million at September 30, 2008.~~

Interest expense decreased 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 weighted-average debt outstanding and related weighted-average interest rates are as follows (as adjusted):

Nine-Month Periods
Ended September 30,
2009 2008
Weighted average debt outstanding (billions) $ 5.6 $ 5.8
Weighted average interest rate 4.5 % 5.0 %

At September 30,
2009 2008
Weighted average interest rate 4.7 % 4.9 %

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 $5.7 million and $17.3 million for the three- and nine-month periods ended September 30, 2009, respectively, as compared to $10.4 million and $29.8 million for the same periods in 2008. The Company will cease the capitalization of interest as assets are placed in service or upon the temporary suspension of construction. Because the Company has suspended certain construction activities, the amount of capitalized interest has decreased in 2009.

~~- 55 -~~

Gains on the repurchase of senior notes relates to the Company’s purchase of approximately $673.6 million aggregate principal amount of its outstanding senior unsecured notes at a discount to par during the nine months ended September 30, 2009, resulting in a net GAAP gain of $142.4 million. A portion of the $673.6 million occurred in September 2009 where the Company purchased approximately $250.1 million face amount of its outstanding senior unsecured notes through a cash tender offer.

Other income (expenses) for the third quarter of 2009 primarily related to a $3.5 million gain on the sale of Macquarie DDR Trust units offset by litigation-related expenditures, the write off of costs related to abandoned development projects, costs incurred for transactions that are not expected to close and debt extinguishment costs. Other expenses for the nine months ended September 30, 2009 also included a reserve associated with a mezzanine note receivable of $5.4 million and an $0.8 million loss on Macquarie DDR Trust units sold in the second quarter of 2009.

Three-Month Periods
Ended March 31,
2010 2009
Lease terminations $ 0.6 $ 1.5
Acquisition and financing fees 0.2 0.3
Other 0.5 1.4

$ 1.3 $ 3.2

~~Other items (in thousands)~~

Three-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Equity in net (loss) income of joint ventures $ (183 ) $ 1,981 $ (2,164 ) (109.2 )%
Impairment of joint venture investments (61,200 ) — (61,200 ) 100.0
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes (639 ) 16,426 (17,065 ) (103.9 )

Nine-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Equity in net (loss) income of joint ventures $ (8,984 ) $ 21,924 $ (30,908 ) (141.0 )%
Impairment of joint venture investments (101,571 ) — (101,571 ) 100.0
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes (527 ) 15,111 (15,638 ) (103.5 )

~~A summary of the change in equity in net (loss) income of joint ventures for the nine-month period ended September 30, 2009, is composed of the following (in millions):~~

Decrease
Decrease in income from existing joint ventures, primarily due to lower occupancy levels and ceasing of capitalizing interest and real estate taxes on joint ventures previously under development due to a reduction and/or cessation in construction activity $ (12.5 )
Decrease in income at certain joint ventures primarily attributable to loss on sale or impairment charges on unconsolidated assets (9.8 )
Disposition of joint venture assets (see Off-Balance Sheet Arrangements) (8.6 )

$ (30.9 )

~~- 56 -~~

Impairment of joint venture investments is a result of the Company’s determination that several of the Company’s unconsolidated joint venture investments suffered an “other than temporary impairment.” For the three and nine months ended September 30, 2009, the Company recorded impairment charges of approximately $61.2 million and $101.6 million, respectively, primarily related to the Company’s investments in the DDRTC Core Retail Fund LLC ($55.0 million) and DDR-SAU Retail Fund LLC ($6.2 million) as well as investments with the Coventry II Fund ($40.4 million). A loss in value of an investment under the equity method of accounting that is an other than temporary decline must be recognized. The major factor contributing to the timing of the charges recorded in the second quarter of 2009 on the Coventry II Fund investments was the communication by Coventry II Fund investors indicating they would not contribute any additional capital for any of the projects.

In the third quarter of 2008, the Company recognized a $16.7 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 able to be utilized.

~~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~~Expenses from the active conduct of a trade or business. The Company utilizes its Taxable REIT Subsidiary (“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.

Therefore, based on the Company’s evaluation of the current facts and circumstances, the Company determined during the third quarter of 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 which is projected to be recognized within the Company’s TRS.

~~Discontinued~~ Operations (in thousands)

Three-Month Periods
Ended September 30,
2009 2008 $ Change % Change
Income from discontinued operations $ 678 $ 3,133 $ (2,455 ) (78.4 )%
Gain (loss) on disposition of real estate, net of tax 4,448 (2,717 ) 7,165 (263.7 )

Nine-Month Periods
Ended September 30,
2009 2008 $ Change % Change
(Loss) income from discontinued operations $ (61,994 ) $ 7,955 $ (69,949 ) (879.3 )%
Loss on disposition of real estate, net of tax (19,965 ) (1,830 ) (18,135 ) 991.0

Included in discontinued operations for the three- and nine-month periods ended September 30, 2009 and 2008, are 27 properties sold in 2009 aggregating 3.2 million square feet, and 22 properties sold in 2008 (including one business center and one property classified as held for sale at December 31, 2007) aggregating 1.3 million square feet. In addition, included in the reported loss for the nine- month period ended September 30, 2009 is $65.5 million of impairment charges on assets sold in 2009.

~~- 57 -~~

~~Gain on Disposition of Real Estate (in thousands)~~

Three-Month Periods Ended
September 30, %
2009 2008 $ Change Change
Gain on disposition of real estate, net of tax $7,128 $3,093 $4,035 130.5%

Nine-Month Periods Ended
September 30, %
2009 2008 $ Change Change
Gain on disposition of real estate, net of tax $8,222 $6,368 $1,854 29.1%

~~The Company recorded net gains on disposition of real estate and real estate investments as follows (in millions):~~

Three-Month Periods Ended Nine-Month Periods Ended
September 30, September 30,
2009 2008 2009 2008
Land sales^(a)
$ 7.3 $ 3.0 $ 7.3 $ 5.7
Previously deferred gains and other gains and losses on dispositions^(b)
(0.2 ) 0.1 0.9 0.7

$ 7.1 $ 3.1 $ 8.2 $ 6.4

Three-Month Periods
Ended March 31,
2010 2009 $ Change % Change
Operating and maintenance^(A)
$ 36,101 $ 34,320 $ 1,781 5.2 %
Real estate taxes^(A)
28,940 27,275 1,665 6.1
Impairment charges^(B)
2,050 7,305 (5,255 ) (71.9 )
General and administrative^(C)
23,275 19,171 4,104 21.4
Depreciation and amortization^(A)
57,069 59,605 (2,536 ) (4.3 )

$ 147,435 $ 147,676 $ (241 ) (0.2 )%


~~(a)~~(A)		~~These dispositions did not meet~~The changes for the ~~criteria for discontinued operations as~~three months ended March 31, 2010 compared to 2009, are due to the ~~land did not have any significant operations prior to disposition.~~following (in millions):

Operating and
Maintenance Real Estate Taxes Depreciation
Core Portfolio Properties $ 0.7 $ 0.2 ⁽¹⁾ $ (4.2 )⁽²⁾
Acquisitions of real estate assets 0.3 0.6 0.6
Development/redevelopment of shopping center properties — 0.9 0.5 ⁽²⁾
Business Center Properties 0.2 — —
Provision for bad debt expense 0.6 — —
Personal property — — 0.6

$ 1.8 $ 1.7 $ (2.5 )


(1)		The Company is in the process of appealing numerous real estate tax charges given the current economic environment and increased vacancy resulting from tenant bankruptcies.

~~(b)~~(2)		Primarily relates to accelerated depreciation in 2009 of Fixtures and tenant Improvements as a result of major tenant bankruptcies partially offset by additional assets placed in service in 2010.

(B)		The Company recorded impairment charges of $3.1 million and $10.9 million for the three months ended March 31, 2010 and 2009, respectively, on several consolidated real estate assets of which $2.1 million and $7.3 million, respectively, is reflected in consolidated operating expenses and $1.0 million and $3.6 million, respectively, is reflected in discontinued operations.

(C)		The increase is primarily attributable to a $2.1 million separation charge relating to the departure of an executive officer and general corporate expenses. Total general and administrative expenses were approximately 5.5% and 4.3% of total revenues, including total revenues of unconsolidated joint ventures and managed properties and discontinued operations, for the three-month periods ended March

-34-


		31, 2010 and 2009, respectively. The Company continues to expense internal leasing salaries, legal salaries and related expenses associated with certain leasing and re-leasing of existing space.

Other Income and Expenses (in thousands)

Three-Month Periods
Ended March 31,
2010 2009 $ Change % Change
Interest income^(A)
$ 1,330 $ 3,029 $ (1,699 ) (56.1 )%
Interest expense^(B)
(59,909 ) (57,750 ) (2,159 ) 3.7
Gain on repurchase of senior notes^(C)
1,091 72,579 (71,488 ) (98.5 )
Loss on equity derivative instruments^(D)
(24,868 ) — (24,868 ) (100.0 )
Other expense, net^(E)
(3,079 ) (4,507 ) 1,428 (31.7 )

$ (85,435 ) $ 13,351 $ (98,786 ) (739.9 )%


(A)		Decreased primarily due to interest earned from financing receivables, the principal of which aggregated $109.7 million and $124.2 million at March 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 $1.8 million of interest income in the first quarter of 2009 relating to this advance.

(B)		The weighted-average debt outstanding and related weighted-average interest rates are as follows:

Three-Month Periods
Ended March 31,
2010 2009
Weighted-average debt outstanding (billions) $ 4.9 $ 5.8
Weighted-average interest rate 4.9 % 4.4 %

At March 31,
2010 2009
Weighted-average interest rate 5.1 % 4.2 %


		The increase in 2010 interest expense is primarily due to an increase in short-term interest rates partially offset by a reduction in outstanding debt. The increase in weighted-average interest rates in 2010 as compared to 2009 is also primarily related to the increase in short-term interest rates. The Company ceases the capitalization of interest as assets are placed in service or upon the temporary suspension of construction. Interest costs capitalized in conjunction with development and expansion projects and unconsolidated development joint venture interests were $3.1 million for the three months ended March 31, 2010 as compared to $5.8 million for the same period in 2009. Because the Company has suspended certain construction activities, the amount of capitalized interest has decreased in 2010.

(C)		Relates to the Company’s purchase of approximately $155.9 million and $163.9 million aggregate principal amount of its outstanding senior unsecured notes, including senior convertible notes, at a discount to par during the three months ended March 31, 2010 and 2009, respectively. Approximately $83.1 million aggregate principal amount of near-term outstanding senior unsecured notes repurchased at par in March 2010 occurred through a cash tender offer.

(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 magnitude of the charge

-35-


		recognized primarily relates to the difference between the closing trading value of the Company’s common shares on December 31, 2009 compared to March 31, 2010.

(E)		Other expenses for the three months ended March 31, 2010, primarily related to debt extinguishment costs of $1.1 million, litigation-related expenditures of $1.7 million and the write off of costs related to abandoned development projects and other transactions of $0.7 million. Other expenses for the three months ended March 31, 2009, primarily related to the write-off of costs associated with abandoned development projects and other transactions as well as litigation-related expenditures aggregating $3.6 million and a $0.9 million loss on the sale of Macquarie DDR Trust units.

Other items (in thousands)

Three-Month Periods
Ended March 31,
2010 2009 $ Change % Change
Equity in net income of joint ventures^(A)
$ 1,647 $ 351 $ 1,296 369.2 %
Tax (expense) benefit of taxable REIT subsidiaries and state franchise and income taxes^(B)
(1,017 ) 1,036 (2,053 ) (198.2 )


(A)		A summary of the increase in equity in net income of joint ventures for the three months ended March 31, 2010, is composed of the following (in millions):

Increase
Increase in income from existing joint ventures⁽¹⁾
$ 0.2
Coventry II Fund investments⁽²⁾
0.8
Disposition of joint venture assets⁽³⁾
0.3

$ 1.3


(1)		Primarily due to increased operating results.

(2)		Losses associated with Coventry II investments recorded in 2009. As the Company wrote down its basis in certain of these investments in 2009, additional losses were not recorded in 2010 (see Coventry II Fund discussion in Off Balance Sheet Arrangements below).

(3)		Primarily related to the decrease in net charges incurred by joint ventures as a result of the disposition of assets in 2010 and 2009.

(B)		Primarily a result of a change in the net taxable income position in 2010 of the Company’s wholly-owned taxable REIT subsidiary.

Discontinued Operations (in thousands)

Three-Month Periods
Ended March 31,
2010 2009 $ Change %Change
Loss from discontinued operations^(A)
$ (936 ) $ (2,006 ) $ 1,070 (53.3 )%
Gain on disposition of real estate, net of tax 566 11,609 (11,043 ) (95.1 )%

$ (370 ) $ 9,603 $ (9,973 ) (103.9 )%


(A)		Included in discontinued operations for the three months ended March 31, 2010 and 2009, are six properties in 2010 (including one property classified as held for sale at March 31, 2010) aggregating 1.0

-36-

~~Non-controlling interests decreased for the nine-month period ended September 30, 2009, primarily due to the following (in millions):~~

Increase
(Decrease)
DDR MDT MV LLC (owned approximately 50% by the Company)^(a)
$ (44.3 )
Net loss from consolidated joint venture investments (0.5 )
Conversion of 0.5 million operating partnership units to common shares (0.3 )
Decrease in the quarterly distribution to operating partnership units investments (0.7 )

$ (45.8 )

For the Three Months
Ended March 31,
2010 2009 $ Change % Change
Non-controlling interests^(A)
$ 2,337 $ 2,625 $ (288 ) (11.0 )%


^(a)(A)		Includes the following (in millions):

(Increase) Decrease
DDR MDT MV (owned approximately 50% by the Company)⁽¹⁾
$ (0.7 )
Other non-controlling interests 0.3
Decrease in the quarterly distribution to operating partnership unit investments 0.1

$ (0.3 )


(1)		The consolidated joint venture owns ~~32 locations~~real estate formerly occupied by Mervyns, which declared bankruptcy in 2008 and vacated all sites as of December 31, 2008. ~~This amount~~The decrease is primarily ~~the~~a result of a reduction in net losses by the ~~$61.0 million in impairment charges recorded on 13~~joint venture due to the sale of ~~the~~ assets ~~during the nine-month period ended September 30, 2009.~~and commencement of leases at certain sites.

Net (Loss) Income (in thousands)

Three-Month Periods Ended
September 30,
2009 2008 $ Change % Change
Net (loss) income attributable to DDR $ (137,846 ) $ 35,250 $ (173,096 ) (491.1 )%

Three-Month Periods
Ended March 31,
2010 2009 $ Change %Change
Net (loss) income attributable to DDR $ (24,247 ) $ 87,401 $ (111,648 ) (127.7 )%

-37-

Three-Month Period Nine-Month Period
Ended September 30, Ended September 30,
Decrease in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes) $ (24.0 ) $ (64.7 )
Increase in impairment charges (2.7 ) (80.2 )
Increase in general and administrative expenses (6.3 ) (11.9 )
Decrease (increase) in depreciation expense 6.4 (3.8 )
Increase in interest income 1.6 6.8
Decrease in interest expense 4.4 10.8
Increase in gain on repurchases of senior notes 23.9 142.2
Change in equity derivative instruments (118.2 ) (198.2 )
Change in other expense 9.1 (1.7 )
Decrease in equity in net income of joint ventures (2.2 ) (30.9 )
Increase in impairment of joint ventures investments (61.2 ) (101.6 )
Change in income tax benefit/expense (17.1 ) (15.6 )
Decrease in income from discontinued operations (2.4 ) (69.9 )
Increase (decrease) in gain on disposition of real estate of discontinued operations properties 7.2 (18.1 )
Increase in gain on disposition of real estate 4.0 1.9
Decrease in non-controlling interest expense 4.4 45.8

Increase in net loss attributable to DDR $ (173.1 ) $ (389.1 )

Decrease in net operating revenues (total revenues in excess of operating and maintenance expenses and real estate taxes) $ (4.2 )
Decrease in impairment charges 5.3
Increase in general and administrative expenses (4.1 )
Decrease in depreciation expense 2.5
Decrease in interest income (1.7 )
Increase in interest expense (2.2 )
Decrease in gain on repurchase of senior notes (71.5 )
Loss on equity derivative instruments (24.9 )
Change in other expense 1.4
Increase in equity in net income of joint ventures 1.3
Change in income tax (expense) benefit (2.1 )
Decrease in loss from discontinued operations 1.0
Decrease in net gain on disposition of real estate of discontinued operations properties (11.0 )
Increase in net loss on disposition of real estate (1.1 )
Change in non-controlling interests (0.3 )

Decrease in net income attributable to DDR $ (111.6 )

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 attributable to DDR as calculated in accordance with GAAP.

FFO is intended to exclude 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 provides 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 those properties sold through the Company’s merchant building program, 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

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For the reasons described above, management believes that FFO ~~provides~~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.

This measure of performance is used by the Company for several business purposes and by other REITs. The Company uses FFO in part (i) as a measure of a real estate asset’s performance, (ii) to shape 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 ~~does~~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 as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO ~~does not represent~~nor Operating FFO represents cash generated from operating activities in accordance with GAAP and neither is ~~not~~ necessarily indicative of cash available to fund cash needs, including the payment of dividends. Neither FFO nor Operating FFO should ~~not~~ 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 isand Operating FFO are simply used as an additional ~~indicator~~indicators of the Company’s operating performance.

For the three-month period ended ~~September 30, 2009,~~March 31, 2010, FFO applicable to DDR common shareholders was ~~a loss of $90.1~~$28.4 million, as compared to ~~adjusted FFO income of $96.7~~$140.0 million for the same period in 2008. For the nine-month period ended September 30, 2009, FFO applicable to DDR common shareholders was a loss of $116.6 million, as compared to adjusted FFO income of $288.9 million for the same period in 2008.2009. The decrease in FFO ~~applicable to common shareholders~~ for the ~~three- and nine-month periods~~three-month period ended ~~September 30, 2009~~March 31, 2010, is primarily ~~related to non-operating activity including impairment charges,~~the result of a decrease in the gain recognized on the repurchases of senior notes, the loss on ~~sale of assets and~~ equity derivative ~~related charges, in addition to several major tenant bankruptcies in late 2008~~instruments and early 2009, offset by gains on debt repurchases as well as lower interest rates on variable rate debt. Also contributing to the decrease was a release of an approximately $16 million deferred tax allowance in 2008 as well as the impact of 2009 asset ~~sales associated with the Company’s deleveraging efforts.~~sales.

~~- 61 -~~


(A)		Includes straight-line rental revenues of approximately $1.0 million for both of the three-month periods ended March 31, 2010 and 2009. In addition, includes straight-line ground rent expense of approximately $0.5 million and $0.4 million in 2010 and 2009, respectively (including discontinued operations).

(B)		Joint ventures’ FFO is summarized as follows (in thousands):

Three-Month Periods Ended
March 31,
2010 2009
Net loss⁽¹⁾
$ (16,850 ) $ (8,482 )
Depreciation and amortization of real estate investments 50,314 64,041

$ 33,464 $ 55,559

DDR ownership interests⁽²⁾
$ 11,555 $ 15,159


(1)		Includes straight-line rental ~~revenues~~revenue of approximately ~~$1.1~~$1.2 million and ~~$2.3~~$0.7 million for the three-month periods ended ~~September 30,~~March 31, 2010 and 2009, ~~and 2008, respectively, and $2.5 million and $7.2 million for the nine-month periods ended September 30, 2009 and 2008, respectively.~~

~~(2)~~		~~Joint venture’s FFO is summarized as follows (in thousands):~~

Three-Month Periods Ended Nine-Month Periods Ended
September 30, September 30,
2009 2008 2009 2008
Net (loss) income (a) $ (32,244 ) $ (22,793 ) $ (95,179 ) $ 75,583
Gain on disposition of real estate, net — — — 13
Depreciation and amortization of real estate investments 62,434 59,274 189,472 175,723

$ 30,190 $ 36,481 $ 94,293 $ 251,319

DDR ownership interest (b) $ 13,584 $ 15,883 $ 32,553 $ 60,922


~~(a)~~		~~Includes straight-line rental revenue of approximately $1.4 million and $1.5 million for the three-month periods ended September 30, 2009 and 2008,~~ respectively, of which the Company’s proportionate share was $0.2 million ~~for both periods. For the nine-month periods ended September 30, 3009~~ and 2008, includes straight-line rental revenue of approximately $3.0 million and $5.7 million, respectively, of which the Company’s proportionate share was $0.3 million and $0.7 million, respectively.de minimis in 2009.

~~(b)~~(2)		The Company’s share of joint venture equity in net loss was decreased by ~~$1.2 million and the equity in net income was decreased by $0.6~~$0.4 million for the three-month ~~periods~~period ended ~~September 30,~~March 31, 2009 ~~and 2008, respectively. The Company’s share~~due to the impact of joint venture net loss was decreased by $3.4 million and the equity in net income was decreased by $0.9 million for the nine-month periods ended September 30, 2009 and 2008, respectively, related to basis ~~differences in depreciation and adjustments to gain on sales.~~differentials.

		At ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ the Company owned unconsolidated joint venture interests relating to ~~318~~258 and ~~329~~327 operating shopping center properties, respectively.

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~~(3)~~(C)		The amount reflected as gain on disposition of real estate and real estate investments from continuing operations in the condensed 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~~There were no gain on land sales during the three-month periods ended ~~September 30, 2009~~March 31, 2010 and 2008, net gains resulting from residual land sales aggregated $7.3 million and $3.0 million, respectively. For the nine-month periods ended September 30, 2009 and 2008, net gains resulting from residual land sales aggregated $7.3 million and $5.7 million, respectively.2009.

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 the following net non-operating charges and gains for the three months ended March 31, 2010 and 2009, aggregating $36.8 million and $55.0 million, respectively, as summarized as follows (in millions):

-40-

For the Three-Month
Periods Ended March 31,
2010 2009
Loss on equity derivative instruments related to Otto investment $ 24.9 $ —
Executive separation charge 2.1 —
Impairment charges — consolidated assets 2.1 10.9
Consolidated impairment charges and loss on sales included in discontinued operations 2.4 —
Debt extinguishment costs and other expenses 3.1 —
FFO associated with Mervyns joint venture, net of non-controlling interest 2.0 —
Loss on asset sales — equity method investments 1.3 —
Loss on disposition of joint venture investment — 5.8
Impairment charges on equity method investment — 0.9
Gain on repurchases of senior notes (1.1 ) (72.6 )

Total non-operating items
$ 36.8 $ (55.0 )
FFO attributable to DDR common shareholders 28.4 140.0

Operating FFO
$ 65.2 $ 85.0

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 excluding the net non-operating charges and gains detailed above, or Operating FFO, along with reported GAAP measures, enables management to analyze the results of its operations and assess 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 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 our 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

-41-

considered in addition to cash flows in accordance with GAAP, as presented in its condensed consolidated financial statements.

Liquidity and Capital Resources

The Company relies on capital to buy, develop and improve its shopping center ~~properties, as well as repay its obligations as they become due.~~properties. Events in ~~2008 and continuing into~~early 2009, including ~~recent~~ failures and ~~near failures~~near-failures of a number of large financial services companies, have made the capital markets increasingly volatile. The Company periodically evaluates opportunities to issue and sell additional 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 and anticipates utilizing a combination of these capital sources to achieve its goal of deleveraging.~~Company.

The Company maintains an unsecured revolving credit facility with a syndicate of financial institutions, for which JP Morgan Securities, Inc. serves as the administrative agent (the “Unsecured Credit Facility”). The Unsecured Credit Facility provides for borrowings of $1.25 billion if certain financial covenants are maintained and an accordion feature for a future expansion to $1.4 billion upon the Company’s request, provided that new or existing lenders agree to the existing terms of the facility and increase their commitment level, and a maturity date of June 2010, with a one-year extension ~~option at the option of the Company.~~option. The Company also maintains a $75 million unsecured revolving credit facility with PNC Bank, National ~~City Bank~~Association (together with the Unsecured Credit Facility, the “Revolving Credit Facilities”). This facility has a maturity date of June 2010, with a one-year extension option at the option of the Company subject to certain customary closing conditions.

The ~~Company’s~~ Revolving Credit Facilities and the indentures under which the Company’s senior and subordinated unsecured indebtedness is, or may be, issued contain certain financial and operating covenants and require the 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. ~~The Revolving Credit Facilities~~These credit facilities and indentures also contain customary default provisions including the failure to make timely ~~pay~~payments of principal and interest ~~issued~~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 to pay when due any other Company consolidated indebtedness (including non-recourse obligations) in excess of ~~certain specified levels.~~$50 million. In the event ~~the Company’s~~our lenders declare a default, as defined in the applicable loan documentation, this could result in ~~the~~our inability to obtain further funding and/or an acceleration of any outstanding borrowings.

As of ~~September 30, 2009,~~March 31, 2010, the Company was in compliance with all of its financial ~~covenants under its Unsecured Credit Facilities, term debt and senior notes.~~covenants. However, due to the economic environment, the Company has less financial flexibility than desired given the current market dislocation. The Company’s current business plans indicate that it will continue to be able to operate in compliance with these covenants ~~for the remainder of 2009~~in 2010 and beyond. ~~However,~~

~~- 63 -~~

refinance existing indebtedness ~~would~~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 Revolving Credit Facilities have an initial maturity in June 2010, but have a one-year extension at the Company’s option. The Company anticipates exercising this option in the second quarter. The Company is currently in discussions with the participating banks as well as several banks that have expressed interest in participating in the Revolving Credit Facilities. It is expected that the size of these Revolving Credit Facilities will be reduced because the Company intends to implement a longer-term financing strategy and reduce its ~~financial flexibility and improving its liquidity.~~reliance on short-term debt. The Company believes the Revolving Credit Facilities should be appropriately sized for the Company’s future growth strategy.

At ~~September 30, 2009,~~March 31, 2010, the following information summarizes the availability of the Revolving Credit Facilities (in billions):



Revolving Credit Facilities	$	1.325		$	1.325
Less:
Amount outstanding		(0.826	)		(0.346	)
Unfunded Lehman Brothers Holdings Commitment		(0.008	)		(0.008	)
Letters of credit		(0.005	)		(0.020	)

Amount Available	$	0.486		$	0.951

The retail and real estate markets have been significantly impacted by the continued deterioration of the global credit markets and other macro economic factors including, among others, rising unemployment and a decline in consumer confidence leading to a decline in consumer spending. Although a majority of the Company’s tenants (in particular the anchor tenants) remain in relatively strong financial standing, the current economic environment has resulted in tenant bankruptcies affecting the Company’s real estate portfolio, including Mervyns, Linens ‘N Things, Steve and Barry’s, Goody’s and Circuit City, which occurred primarily in the second half of 2008. In addition, certain other tenants may be experiencing financial difficulties. The decrease in occupancy and the projected timing associated with re-leasing these vacated spaces has resulted in downward pressure on the Company’s 2009 operating results. The reduced occupancy will likely have a negative impact on the Company’s consolidated cash flows, results of operations, financial position and financial ratios that are integral to the continued compliance with the covenants on the Company’s revolving credit facilities as further described above. Offsetting some of the current challenges within the retail environment, the Company has a low occupancy cost relative to other retail formats and historical averages, as well as a diversified tenant base with only one tenant exceeding 2.0% of total consolidated revenues, Walmart at 5.3%. Other significant tenants include Target, Lowe’s Home Improvement, Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all of which have relatively strong credit ratings. Management believes these tenants should continue providing the Company with a stable revenue base for the foreseeable future given the long-term nature of these leases. Moreover, the majority of the tenants in the Company’s shopping centers provide day-to-day consumer necessities with a focus toward value and convenience versus high-priced discretionary luxury items, which should enable many tenants to continue operating within this challenging economic environment.

The Company is committed to prudently managing and minimizing discretionary operating and capital expenditures and raising the necessary equity and debt capital to maximize ~~its~~ liquidity, repay ~~its~~ outstanding borrowings as they mature and comply with ~~its~~ financial covenants ~~for the remainder of 2009~~in 2010 and beyond. ~~As discussed below, the~~The Company has already implemented several steps integral to the successful execution of its capital raising plans ~~to raise additional equity and debt capital~~ through a combination of retained capital, the issuance of common shares, debt financing and refinancing, and asset sales. In addition, the Company will continue to strategically utilize proceeds from the above sources to repay outstanding borrowings on its credit facilities and strategically repurchase its publicly traded debt at a discount to par to further improve its leverage ratios.

Retained Equity — With regard to retained capital, the Company has adjusted its dividend policy to the minimum required to maintain its REIT status. The Company did not pay a dividend in January 2009 as it had already distributed sufficient funds to comply with its 2008 tax requirements. Moreover, the Company funded its first and second quarter 2009 dividends in a combination of 90% DDR common shares and 10% cash. After it was determined that the Company would be able to meet the minimum payout required to maintain its REIT status for 2009, the Company’s Board of Directors approved the continuation of the cash portion of the prior two quarters’ dividend in order to retain additional capital and enhance financial flexibility, while remaining committed to distributing cash flow to the Company’s investors. As a result, the Company declared an all cash dividend of $0.02 per common share in the third quarter of 2009. The changes to the Company’s 2009 dividend policy to date have resulted in additional free cash flow, which has been applied primarily to reduce leverage. This change in the Company’s quarterly

~~- 65 -~~

			dividend payments, including the elimination of a quarterly payment of a dividend in January 2009, is expected to result in approximately $300 million of retained capital in 2009 relative to the Company’s 2008 dividend policy.

	•		Issuance of Common Shares — The Company has several alternatives to raise equity through the sale of its common shares. In May and September 2009, the Company issued common shares as part of the transaction with the Otto Family, resulting in aggregate gross equity proceeds of approximately $112.5 million (See Strategic Transactions). The Company used the total gross proceeds to reduce leverage. The Company also raised $157.6 million through the issuance of 18.6 million common shares at a weighted average price of $8.46 per share during the nine months ended September 30, 2009, under the continuous equity program. The Company expects to commence a new common equity program pursuant to which the Company can sell equity into the open market from time to time at its discretion at other than fixed prices.

	•		Debt Financing and Refinancing — The Company does not have any remaining 2009 maturities for wholly-owned debt. As a result, the Company is currently focused on extending or refinancing 2010 maturities, all but six of the Company’s wholly-owned 2010 mortgage maturities aggregating approximately $59 million have been addressed.

			In September 2009, the Company issued $300 million aggregate principal amount of 9.625% senior unsecured notes due March 2016. The notes were offered to investors at 99.42% of par with a yield to maturity of 9.75%. The net proceeds were utilized to repay debt with shorter term maturities and to reduce balances on the Company’s revolving credit facilities. In July 2009, the Company obtained $17 million of mortgage debt from a life insurance company on two shopping centers at a 6% interest rate and maturing in 2017.

			In October 2009, the Company obtained a $400 million, five-year loan secured by a portfolio of 28 stabilized shopping centers from Goldman Sachs Commercial Mortgage Capital, L.P., an affiliate of Goldman, Sachs & Co.

	•		Asset Sales — For the nine months ended September 2009, the Company and both its consolidated and unconsolidated joint ventures sold numerous assets generating nearly $450 million in estimated total proceeds. The Company and its joint ventures are also in various stages of discussions with third parties for the sale of additional non-prime assets.

	•		Debt Repurchases — Because of the current economic environment, the Company’s publicly traded debt securities have been trading at discounts to par. During the first nine months of 2009, the Company repurchased approximately $673.6 million aggregate principal amount of its outstanding senior unsecured notes at a cash discount to par aggregating $164.3 million. Although the Company will evaluate all of its alternatives to optimize its use of cash generated from the sources above to achieve the strategic goal of de-leveraging, the Company expects that it will continue to opportunistically repurchase its debt securities at a discount to par to further improve its leverage ratios.

~~As described above, although the Company believes it~~ has made considerable progress during 2009 and thus far in 2010 implementing the steps to address its objectives of reducing leverage, ~~and~~improving liquidity, continuing to comply with its covenants and ~~repay~~repaying obligations as they become due, certain transactions may not close as

~~- 66 -~~

able to execute these plans, which could adversely impact the Company’s operations, including its ability to remain compliant with its ~~covenants and repay the Company’s obligations as they become due.~~covenants.

~~As discussed above, part~~Part of the Company’s overall strategy includes ~~actively~~ addressing debt maturing ~~after 2009,~~in 2010 and ~~considering alternative courses~~years following. As part of ~~action~~this strategy, in February 2010, the Company issued approximately 42.9 million of its common shares in an underwritten offering for net proceeds of approximately $338.1 million. In January 2010, the Company also sold approximately 5.0 million of its common shares through its continuous equity program, generating gross proceeds of approximately $46.1 million. In the first quarter of 2010, the Company purchased approximately $155.9 million aggregate principal amount of its outstanding senior unsecured notes. Included in the ~~event that~~first quarter purchases was $83.1 million aggregate principal amount of outstanding senior unsecured notes repurchased through a cash tender offer at par in March 2010. The first quarter purchases primarily included debt maturing in 2010 and 2011. In March 2010, the ~~capital markets continue~~Company issued $300 million aggregate principal amount of its 7.5% senior unsecured notes due April 2017. Substantially all of the proceeds from these offerings were used to ~~be volatile.~~repay debt with shorter-term maturities and to repay amounts outstanding on the Revolving Credit Facilities.

The Company has been very careful to balance the amount and timing of its debt maturities. For the nine months ended September 30, 2009, the Company purchased $673.6 million of aggregate principal amount of its outstanding senior unsecured notes at a discount to par. The Company has no major maturities until May 2010, providing time to address the larger maturities (including the Company’s credit facilities) which occur in 2010 through 2012. The Company continually evaluates its debt maturities, and based on management’s current assessment, believes it has viable financing and refinancing alternatives. However, these alternatives ~~that~~ may materially ~~impact~~affect its expected financial results as interest rates ~~in the future~~on replacement financing will likely be ~~at levels~~ higher than ~~the amounts it is presently incurring.~~current rates. Although the credit environment has become much more difficult since ~~the third quarter of~~late 2008, the Company continues to pursue opportunities in the unsecured debt market as well with the largest U.S. banks, select life insurance companies, certain local banks and some international ~~lenders and the United States Term Asset — Backed Securities Loan Facility (“TALF”) program.~~lenders. The approval process from the lenders ~~has slowed,~~is slow, but lenders are continuing to execute financing agreements. While pricing and loan-to-value ratios remain dependent on specific deal terms, in general, pricing spreads ~~in general, are higher~~have declined and loan-to-values ratios are ~~lower.~~lower than historic norms but better than the past year. Moreover, the Company continues to look beyond ~~2009~~2010 to ensure that it continues to execute its strategy to lower leverage, increase liquidity and extend debt duration with the ~~Company is prepared if~~goal of lowering the ~~current credit market dislocation continues (See Contractual Obligations~~Company’s risk profile and ~~Other Commitments).~~long-term cost of capital.

At ~~September 30, 2009,~~March 31, 2010, the Company’s consolidated 2010 debt maturities consist ~~of: $375.2~~of $298.9 million of unsecured notes, of which ~~$151.2~~$147.3 million mature in May 2010 and ~~$224.0~~$151.6 million mature in August 2010; ~~$384.1~~$248.2 million of consolidated mortgage ~~debt; $63.8~~debt (of which the Company’s proportionate share is $110.3 million); $8.8 million of construction ~~loans; $826.3~~loans (of which the Company’s proportionate share is $4.4 million) and $346.0 million of Unsecured Revolving Credit Facilities (subject to extension as described above). The Company intends to address these maturities using the availability on its Revolving Credit Facilities, proceeds from asset sales, retained cash flow and ~~$1.7 billion of~~funds from additional discretionary capital-raising initiatives.

At March 31, 2010, the Company’s unconsolidated joint venture mortgage debt was $755.4 million (of which the Company’s proportionate share is ~~$0.4 billion)~~$230.1 million). ~~The Company’s Unsecured Revolving Credit Facilities allow for a one-year extension option at the option of the Company to June 2011. The Company repaid approximately $112.8~~Of this amount, $248.7 million ~~of the 2010 mortgage debt maturities in October 2009. At September 30, 2009, unconsolidated joint venture mortgage debt of $220.7 million maturing in 2009~~ (of which the Company’s proportionate share is ~~$70.8~~$41.9 million) ~~consists of $111.1 million of debt attributable to the DDR Macquarie Fund (see Off Balance Sheet Arrangements) and $105.5 million of debt~~is attributable to the Coventry II Fund assets (see Coventry II Fund discussion ~~above). The Company’s proportionate share consists off $55.6 million~~below) that, except for one, have all matured and are currently in default. At March 31, 2010, the remainder of ~~debt attributable to the DDR Macquarie Fund and $13.2 million of debt attributable to Coventry II assets. At September 30, 2009,~~ the Company’s unconsolidated joint venture mortgage debt of maturing in 2010 aggregated $1.7 billion, of which the Company’s proportionate share is $372.5 million. Of the 2010 unconsolidated joint venture mortgage debt, the Company or the joint venture has the option to extend approximately $584.7 million at existing terms. The Company’s share of unconsolidated joint venture mortgage debt maturing in 2010 ~~was reduced by $67.9~~aggregated $506.7 million, ~~in October 2009 in connection with~~of which the ~~redemption of its interest in the MDT US LLC joint venture (See Off-Balance Sheet Arrangements).~~

In the first nine months of 2009, the Company repurchased approximately $122.8 million aggregate principal amount of the senior unsecured notes maturing in 2010, approximately $166.2 million aggregate principal amount of senior unsecured notes maturing in 2011 and approximatelyCompany’s proportionate

~~- 67 -~~-44-

~~$336.5~~share is approximately $188.2 million. Of this amount $34.0 million ~~aggregate principal amount~~was repaid or refinanced in April 2010. Most of ~~the senior unsecured notes maturing in 2012 with proceeds from its Unsecured Credit Facilities. The Company may repurchase additional unsecured notes~~these loans are in the ~~public market as operating cash and/~~process of being refinanced or ~~cash from equity and debt financings becomes available.~~extended.

These obligations generally require monthly payments of principal and/or interest over the term of the obligation. In light of the current economic conditions, no assurance can be provided that the aforementioned 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 ~~(See~~(see Contractual Obligations and Other Commitments).

The Company’s core business of leasing space to well-capitalized retailers continues to perform well, as the Company’s primarily discount-oriented tenants gain market share from retailers offering higher price points and ~~offering~~ more discretionary goods. These long-term leases generate consistent and predictable cash flow after expenses, interest payments and preferred share dividends. This capital is available for use at the Company’s discretion for investment, debt repayment, share repurchases and the payment of dividends on the common shares.

The Company’s cash flow activities are summarized as follows (in thousands):


	Nine-Month Periods Ended						Three-Month Periods
	September 30,						Ended March 31,
	2009			2008			2010			2009
Cash flow provided by operating activities	$	216,651		$	304,155		$	44,304		$	69,657
Cash flow provided by (used for) investing activities		136,328			(383,663	)		34,687			(22,903	)
Cash flow (used for) provided by financing activities		(354,704	)		59,815
Cash flow used for financing activities								(79,419	)		(39,815	)

as determined to be in ~~either cash or common shares at~~ the ~~election of shareholders, provided that the dividends payable in cash could not exceed 10%~~best interests of the ~~aggregate dividend. The~~ Company ~~declared a third quarter dividend of $0.02 per common share in September 2009, payable entirely in cash. Based upon the Company’s current results of operations~~ and ~~debt maturities, the Company’s Board of Directors approved a 2009 dividend policy that will~~its shareholders, to maximize the Company’s free cash flow while still adhering to REIT payout requirements. ~~This payout policy will result in a 2009 annual dividend at or near the minimum distribution required to maintain REIT status. The Company will continue to monitor the 2009 dividend policy~~

Sources and ~~provide for adjustments as determined in the best interest~~Uses of the Company and its shareholders. The 2009 payout policy should result in additional free cash flow, which is expected to be applied primarily to reduce leverage (see Off-Balance Sheet Arrangements and Contractual Obligations and Other Commitments for further discussion of capital resources).

~~Current Strategies~~Capital

~~Strategic Transactions~~

~~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 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 any dividends payable in shares declared by the Company after February 23, 2009 and prior to the applicable closing of the stock purchase to the extent payable in common shares which the dividend is payable to all shareholders all or in part with Company stock.

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” 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

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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 plans, all unvested deferred stock units vested and were no longer subject to forfeiture. As such, in September 2009, the Company recorded an additional accelerated non-cash charge of approximately $4.9 million related to these equity awards. The total non-cash change in control charge recorded for the nine-month period ended September 30, 2009 was $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, and marked-to-market through earnings as of each balance sheet date thereafter until exercise or expiration. Accordingly, the Company reported an aggregate non-cash loss of $118.2 million and $198.2 million relating to the valuation adjustments associated with these instruments for the three- and nine-month periods ending September 30, 2009, respectively.

Dispositions

The Company sold 27five consolidated properties, aggregating ~~3.2~~0.9 million square feet, in the ~~nine~~three months ended ~~September 30, 2009,~~March 31, 2010, generating an aggregate ~~loss~~gain on disposition of approximately $20.0 million related to these consolidated assets. The Company’s unconsolidated joint ventures sold 12 properties, aggregating 2.1 million square feet in the nine months ended September 2009, generating gross proceeds of $141.0 million and an aggregate loss on disposition of approximately $19.9$0.6 million.

As part of the Company’s deleveraging strategy, the Company is actively marketing non-prime assets for sale. Opportunities for large portfolio asset sales are not occurring as ~~frequently;~~frequently as in the past; therefore, the Company is also focusing on selling ~~single tenant~~single-tenant assets and smaller shopping centers. For certain real estate assets in which the Company has entered into agreements ~~and~~subsequent to March 31, 2010, that are subject to contingencies, ~~subsequent to September 30, 2009,~~ a loss of approximately ~~$27~~$40 million could be recorded if all such sales were consummated on the terms currently being negotiated. 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, including financial covenants, in addition to the impact on operating results. As a result, it is possible that additional assets could be sold for a loss after taking into account the above considerations.

Developments, Redevelopments and Expansions

~~During the nine-month period ended September 30, 2009,~~In 2010, the Company ~~and its unconsolidated joint ventures expended~~expects to expend an aggregate of approximately ~~$423.9~~$88.6 million, ~~($190.1~~of which approximately $26.4 million ~~by the Company and $233.8 million by its unconsolidated joint ventures),~~was spent through March 31, 2010, before deducting sales proceeds, to ~~acquire,~~ develop, expand, improve and re-tenant various properties. The Company’s ~~acquisition,~~ development, redevelopment and expansion activity is summarized below.

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The Company ~~expects to~~will continue to ~~reduce~~closely monitor its ~~anticipated~~ spending in ~~2009~~2010 for ~~its~~ 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 2010. 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 balance the Company’s de-leveraging strategy, the Company has revised its investment criteria thresholds. The revised underwriting criteria ~~includes~~include a higher cash-on-cost project return threshold, a longer ~~lease-up~~ 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 ~~which~~that own assets under development asbecause the Company has significant influence and, in some cases, approval rights over decisions relating to capital expenditures.

Development (Wholly-Owned and Consolidated Joint Ventures)

The Company currently has the following wholly-owned and consolidated joint venture shopping center projects under construction:

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~~Development (Unconsolidated Joint Ventures)~~

~~One of the Company’s unconsolidated joint ventures has the following shopping center project under construction.~~

Expected
DDR’s Remaining
Effective Capital
Ownership Owned Cost
Location Percentage GLA ($ Millions) Description
Dallas (Allen), Texas⁽¹⁾
10.0% 797,665 (4.6 ) Lifestyle Center

Total 797,665 $ (4.6 )


~~(1)~~		~~Includes a reduction in costs from future land sales~~

~~The unconsolidated joint venture development estimated funding schedule, net of reimbursements, as of September 30, 2009, is as follows (in millions):~~

Anticipated
DDR’s JV Partners’ Proceeds from
Proportionate Proportionate Construction
Share Share Loans Total
Funded as of September 30, 2009 $ 61.2 $ 91.7 $ 192.9 $ 345.8
Projected net funding 4Q 2009 1.6 1.8 5.3 8.7
Projected net funding (reimbursements) thereafter 1.2 5.0 (16.2 ) (10.0 )

Total $ 64.0 $ 98.5 $ 182.0 $ 344.5

available.

Redevelopments and Expansions (Wholly-Owned and Consolidated Joint Ventures)

The Company is currently expanding/redeveloping ~~the following~~a wholly-owned shopping center in Miami (Plantation), Florida, at a projected aggregate net cost of approximately ~~$89.1~~$48.1 million. At ~~September 30, 2009,~~March 31, 2010, approximately ~~$73.5~~$24.0 million of costs had been incurred in relation to ~~this projects.~~


~~Property~~		~~Description~~
~~Miami (Plantation), Florida~~		~~Redevelop shopping center to include Kohl’s and additional junior anchor tenants~~

~~Redevelopments and Expansions (Unconsolidated Joint Ventures)~~

~~One~~the redevelopment of the Company’s unconsolidated joint ventures is currently expanding/redeveloping the following shopping center at a projected net cost of $90.3 million, which includes original acquisition costs related to this asset which was acquired for redevelopment. At September 30, 2009, approximately $76.5 million of costs had been incurred in relation to this project.

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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 located 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) are as follows:

Company-
Effective Owned
Unconsolidated Real Estate Ownership Square Feet Total Debt
Ventures Percentage⁽¹⁾ Assets Owned (Thousands) (Millions)
Sonae Sierra Brazil BV Sarl 50.0 % Ten shopping centers and a management company in Brazil 3,770 $ 104.9
Domestic Retail Fund 20.0 63 shopping center assets in several states 8,275 967.2
DDR — SAU Retail Fund 20.0 29 shopping center assets in several states 2,376 226.2
DDRTC Core Retail Fund LLC 15.0 66 assets in several states 15,746 1,768.8
DDR Macquarie Fund⁽²⁾
14.5 44 shopping centers in several states 10,327 1,092.7

Effective Ownership Company-Owned
Unconsolidated Real Percentage Square Feet Total Debt
Estate Ventures ^(A) Assets Owned (Thousands) (Millions)
DDRTC Core Retail Fund LLC 15.0 % 50 shopping centers in several states 12,164 $ 1,330.5
Domestic Retail Fund 20.0 63 shopping centers in several states 8,279 966.4
Sonae Sierra Brazil BV Sarl 50.0 Ten shopping centers and a management company in Brazil 3,780 92.4
DDR – SAU Retail Fund 20.0 29 shopping centers in several states 2,376 226.2


~~(1)~~(A)		Ownership may be held through different investment structures. Percentage ownerships are subject to change, as certain investments contain promoted structures.

~~(2)~~		~~See discussion below regarding redemption in October 2009.~~

~~DDR Macquarie Fund and Macquarie DDR Trust~~

In December 2008, MDT, DDR’s partner in the DDR Macquarie Fund joint venture, announced that it was undergoing a strategic review. This strategic review could result in asset sales, bringing in a new capital partner or other strategic initiative. During December 2008, the Company and MDT modified certain terms of its investment that provide for the redemption of the Company’s interest with properties in the MDT US LLC in lieu of cash or MDT shares. In October 2009, the Macquarie DDR Trust 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 stake, 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 Company remains the joint manager for the Macquarie DDR Trust and continues to lease and manage the remaining assets in the DDR Macquarie Fund and to earn fees for those services.

The Company believes this transaction will simplify the ownership structure of the joint venture and enhance flexibility for both DDR and MDT and lower the Company’s leverage. The Company expects that it will continue to receive fees for leasing and managing all the remaining assets owned by MDT and the DDR Macquarie Fund joint venture. 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 by approximately $80 million.

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In the third quarter of 2009, the Company liquidated its investment in Macquarie DDR Trust (ASX: MDT) for aggregate proceeds of $6.4 million. The Company recorded a gain on sale of these units of approximately $3.5 million for the three months ended September 30, 2009. The Company also incurred an $0.8 million loss on Macquarie DDR Trust units sold in the second quarter of 2009. During 2008, the Company recognized an other than temporary impairment charge on this investment of approximately $31.7 million.

~~Coventry II DDR Merriam Village LLC~~

In the third quarter of 2009, the Company acquired its partner’s 80% interest in Merriam Village through the assumption and guarantee 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 the remaining 80% guarantee, the lender agreed to modify and extend this secured mortgage (See Coventry II Fund discussion below).

Funding for Joint Ventures

In connection with the development of shopping centers owned by certain affiliates, the Company and/or its equity affiliates have agreed to fund ~~its pro rate share of~~ the required capital associated with approved development projects aggregating approximately ~~$52.2~~$4.1 million at ~~September 30, 2009.~~March 31, 2010. These obligations, ~~comprised~~

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composed principally of construction contracts, are generally due in 12 to 1836 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 entities and/or related partners in the amount of ~~$4.1~~$71.0 million at ~~September 30, 2009,~~March 31, 2010, for which the Company’s joint venture partners have not funded their proportionate share. ~~These entities are current on all debt service owed to DDR. In addition to these loans,~~Included in this amount, the Company has advanced ~~$65.5~~$66.9 million of financing to one of its unconsolidated joint ventures, ~~with Coventry II (the “Bloomfield Loan”),~~ which ~~accrued~~accrues interest at the greater of LIBOR plus 700 basis points or 12% ~~through February 28, 2009. As of March 1, 2009, the interest in the Bloomfield Loan began accruing at the~~and a default rate of 16%, ~~due to the joint venture’s default under a third party secured land loan on the project as discussed below. The loan~~and has an initial maturity ~~date~~ of July 2011. The Company established a reserve for the full amount recorded related to this advance in 2009 (see Coventry II Fund discussion below).

Coventry II Fund

~~The~~At March 31, 2010, Coventry Real Estate Advisors L.L.C., sponsored and, its affiliate served as managing member of, Coventry Real Estate Fund II, L.L.C. and Coventry Fund ~~and~~II Parallel Fund, L.L.C. (collectively the “Coventry II Fund”), which along with the Company, through a series of joint ventures, ~~acquired 11~~owned nine value-added retail properties and ~~own~~ 42 sites formerly occupied by Service ~~Merchandise in the United States.~~Merchandise. The Company co-invested approximately 20% in each joint venture and is generally responsible for day-to-day management 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 the Coventry II Fund, above a preferred return after return of capital to fund ~~investors.~~investors (see Legal Matters).

As of ~~September 30, 2009,~~March 31, 2010, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures ~~is $29.1~~was approximately $15.1 million. As discussed above, the Company has also advanced ~~$65.5~~$66.9 million of financing to one of the Coventry II Fund joint ~~ventures.~~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

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with the ~~financing~~financings 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 project, and the aggregate amount of the Company’s guaranties is approximately ~~$25.3 million.~~$39.2 million at March 31, 2010.

Although the Company will not acquire additional assets through the Coventry II Fund joint ventures, additional funds ~~maybe~~may be required to address ongoing operational needs and costs associated with the ~~one~~ 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 March 2009 as indicated below.~~

~~Six of the Coventry II Fund joint ventures’ third-party credit facilities have matured.~~ For the Bloomfield Hills, Michigan project, a $48.0 million land loan 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 onin July 8, 2009, paid such guaranty in full in exchange for a complete release from the lender). The above referenced ~~$65.5~~$66.9 million Bloomfield Loan from the Company relating to the Bloomfield Hills, Michigan project is ~~cross defaulted~~cross-defaulted with this third-party loan. As a result, on March

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3, 2009, the Company sent the borrower a formal notice of default relating to its loan. The third party 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 current 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 has 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 the joint venture investments line item in the consolidated statement of operations for the year ended December 31, 2009.

Six of the remaining Coventry II Fund joint ventures also have third-party credit facilities that matured.

For the Kansas City, Missouri project, a $35.0 million loan matured on January 2, 2009, and on January 6, 2009, the lender sent to the borrower a formal notice of default (the Company did not provide a payment guaranty with respect to such loan). On March 26, 2009, the Coventry II Fund joint venture transferred its ownership of this property to the lender. The Company recorded a $5.8 million loss related to the ~~write off~~write-off of the book value of its equity investment. Pursuant to the agreement with the lender, the Company initially managed the shopping center while the Coventry II Fund marketed the property for sale. Although the Coventry II Fund continues to market the property, the Company elected to terminate its management agreement for the shopping center, effective on June 30, 2009. The joint venture has the ability to receive excess sale proceeds depending upon the timing and terms of a future sale arrangement.

For the Merriam, Kansas project, a $17.0 million land loan matured on January 20, 2009, and on February 17, 2009, the lender sent to the borrower a formal notice of default (the Company provided a payment guaranty in the amount of $2.2 million with respect to such loan). On July 21, 2009, the Company closed on a three-party transaction with the lender and the Coventry II Fund, pursuant to which the Coventry II Fund transferred to the Company its entire interest in the project, the lender released the Coventry II Fund from its payment guaranty, and the lender extended the loan. As a result, the Merriam, Kansas project now is wholly owned by ~~DDR,~~the Company, and the debt matures on May 31, 2011.

For the San Antonio, Texas project, a $20.9 million loan matured on July 7, 2009. ~~The~~On November 9, 2009, the Company, ~~and~~ the Coventry II Fund ~~have received from~~and the lender ~~(and are reviewing)~~executed a ~~proposed~~modification agreement extending the term ~~sheet outlining the terms required by the lender in order to extend~~of the loan ~~through July 7,~~to November 9, 2011. The Company did not provide a payment guaranty with respect to such loan.

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with respect to such loans. The Coventry II Fund and the Company are in negotiations with the lender to extend such loans.

On April 8, 2009, the lender of the Service Merchandise portfolio sent to the borrower a formal notice of default based upon the Coventry II Fund’s failure to satisfy certain net worth covenants. On April 1, 2010 the loan matured, and on April 2, 2010, the lender sent to the borrower a formal notice of default with respect to the borrower’s failure to repay the loan on or before the maturity date. The Company provided a payment guaranty in the amount of $1.8 million with respect to such loan. The Coventry II Fund is exploring a variety of strategies to pay down the outstanding obligation and ~~the current violation and~~is negotiating forbearance terms with the lender. On September 22, 2009, the lender on the Orlando Park, Illinois project sent to the borrower a formal notice of default based upon the Coventry II Fund’s failure to satisfy certain net worth covenants. The Company did not provide a payment guaranty with respect to such loan.

On August 13, 2009, the senior and mezzanine lenders in the Cincinnati, Ohio, project sent to the borrowers a formal notice of default, based upon the borrowers’ inability to fund mezzanine loan payments and protective advances. The Company did not provide a payment guaranty with respect to such loan. The Coventry II Fund is exploring restructuring strategies with the lenders.

On September 22, 2009, the lender on the Orland Park, Illinois project sent to the borrower a formal notice of default based upon the Coventry II Fund’s failure to satisfy certain net worth covenants. The Company did not provide a payment guaranty with respect to such loan.

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 oversight provided. The Company generally provides a completion ~~guarantee~~guaranty to the ~~third-party~~third party lending institution(s) providing construction financing.

The Company’s unconsolidated joint ventures have aggregate outstanding indebtedness to third parties of approximately ~~$5.6~~$4.2 billion and $5.8 billion at ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ respectively (see Item 3. 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 industry-standard recourse provisions 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 ~~and its joint venture partners have~~ 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 ~~$31.8~~$43.9 million at ~~September 30, 2009.~~March 31, 2010, including guarantees associated with the Coventry II Fund.

The Company entered into an unconsolidated joint venture that owns real estate assets in ~~Brazil. The Company~~Brazil and has generally chosen not to ~~hedge~~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.

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For the ~~nine~~three months ended ~~September 30, 2009, $16.5~~March 31, 2010, $2.4 million of net ~~losses~~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 debt, common and preferred equity offerings, joint venture capital, preferred OP Units and asset sales. Total consolidated debt outstanding at ~~September 30, 2009,~~March 31, 2010, was approximately ~~$5.2~~$4.7 billion, as compared to approximately ~~$5.9~~$5.8 billion at ~~September 30, 2008~~March 31, 2009 and ~~$5.9~~$5.2 billion at December 31, ~~2008.~~2009.

In March 2010, the Company issued $300 million aggregate principal amount of 7.5% senior unsecured notes due April 2017. Proceeds from the offering were used to repay debt with shorter-term maturities and to reduce amounts outstanding on the Company’s unsecured credit facilities.

In the first ~~nine months~~quarter of ~~2009,~~2010, the Company purchased approximately ~~$673.6~~$155.9 million aggregate principal amount of its outstanding senior unsecured notes, ~~(of which $310.3 million related to~~including senior convertible ~~notes)~~notes, at a discount to par, resulting in ~~GAAP gains~~a gross gain of approximately ~~$142.4 million. These gains were reduced by approximately $17.0~~$4.1 million ~~due~~prior to the ~~adoption~~write off of ~~the standard~~~~Accounting for Convertible Debt That May Be Settled in Cash Upon Conversion~~,unamortized deferred financing costs and unamortized discount. Included in the first quarter of 2009. This standard requires that debt issuers separately recognize the liability and equity components of convertible instruments that may be settled in cash upon conversion. As a result of the adoption, the initial debt proceeds from the offering of the Company’s $250purchases was approximately $83.1 million aggregate principal amount of 3.5% convertible notes, due in 2011, and $600 million aggregate principal amount of 3.0% convertible notes, due in 2012, were required to be allocated between a liability and equity component. This allocation was based upon what the assumed interest rate would have been if the Company had issued traditionalnear-term outstanding senior unsecured ~~notes. Accordingly, the~~notes repurchased through a cash tender offer at par in March 2010. The first quarter purchases included debt ~~balances on the Company’s balance sheet relating to the~~maturities in 2010 and 2011 as well as convertible ~~debt were reduced such that non-cash interest expense would be recognized with a corresponding increase to the convertible debt balance.~~

~~In September 2009, the Company issued $300 million aggregate principal amount of 9.625%~~ senior unsecured notes due ~~March 2016. The notes were offered to~~in 2012.

In February 2010, the ~~investors at 99.42%~~Company issued approximately 42.9 million of ~~par with a yield to maturity~~its common shares in an underwritten offering for net proceeds of ~~9.75%. Proceeds~~approximately $338.1 million. In January 2010, the Company also sold approximately 5.0 million of its common shares through its continuous equity program, generating gross proceeds of approximately $46.1 million. Substantially all of the proceeds from ~~the offering~~these offerings were used to repay debt with ~~shorter term~~shorter-term maturities and to ~~reduce~~repay amounts outstanding on the ~~Company’s Unsecured~~ Revolving Credit Facilities.

~~In October 2009, the Company obtained a $400 million, five-year loan secured by a portfolio of 28 stabilized shopping centers.~~

~~In July 2009, the Company obtained $17 million of mortgage debt from a life insurance company on two shopping centers at a 6% interest rate and maturing in 2017.~~

The Company entered into a $60 million secured bridge loan with an affiliate of the Otto Family. This was repaid on May 6, 2009 with the proceeds of a $60 million secured loan also obtained from an affiliate of the Otto Family. In May 2009, the Company closed on $125 million of new secured financings comprised of two loans.

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The first is an $85 million, 10-year loan secured by four assets in Puerto Rico with an interest rate of 7.59%. The second financing is a $40 million, two-year loan with a one-year extension option secured by a shopping center in New Jersey, which was repaid in October 2009 with proceeds obtained from the $400 million financing discussed above.

Capitalization

At ~~September 30, 2009,~~March 31, 2010, the Company’s capitalization consisted of ~~$5.2~~$4.7 billion of debt, $555 million of preferred shares and ~~$1.8~~$3.0 billion of market equity (market equity is defined as common shares and OP Units outstanding multiplied by $12.17, the closing price of the common shares on the New York Stock Exchange at ~~September 30, 2009, of $9.24)~~March 31, 2010), resulting in a debt to total market capitalization ratio of ~~0.7~~0.57 to ~~1.0.~~1.0, as compared to a ratio of 0.9 to 1.0 at March 31, 2009. The closing price of the common shares on the New York Stock Exchange was $2.13 at March 31, 2009. At ~~September 30, 2009,~~March 31, 2010, the Company’s total debt consisted of $3.8 billion of fixed-rate debt and ~~$1.4~~$0.9 billion of variable-rate debt, including $400.0 million of variable-rate debt that had been effectively swapped to a fixed rate through the use of interest rate derivative contracts. At March 31, 2009, the Company’s total debt consisted of $4.1 billion of fixed-rate debt and $1.7 billion of variable-rate debt, including $600 million of variable-rate debt that ~~was~~had been effectively swapped to a fixed ~~rate. At September 30, 2008,~~rate through the ~~Company’s total debt consisted~~use of ~~$4.5 billion of fixed-rate debt and $1.4 billion of variable-rate debt, including $600 million of variable-rate debt that was effectively swapped to a fixed rate.~~interest rate derivative contracts.

It is management’s current 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 financings and/or joint venture capital in a manner consistent with its intention to operate with a conservative debt capitalization ~~policy. In 2009, the Company’s~~policy and maintain an investment grade rating ~~agencies,~~with Moody’s Investors Service and re-establish an investment grade rating with Standard and Poor’s ~~reduced the Company’s debt ratings.~~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. In light of the current economic conditions, the Company may not be able to obtain financing on favorable terms, or at all, which may negatively ~~impact~~affect future ratings. The interest spread over LIBOR on the Company’s Revolving Credit Facilities, term loans, letters of credit and certain construction debt are determined based upon the Company’s credit ratings. The Company’s interest rate on its Revolving Credit Facilities was increased from 60 basis points over LIBOR at December 31, 2008 to 75 basis points over LIBOR at September 30,In August 2009, and the facility fee increased from 15 basis points to 17.5 basis points, for the same periods. The Company’s interest rate on its term loans was increased from 70 basis points at December 31, 2008 to 120 basis points at September 30, 2009.

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 allone 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 ofrating agencies reduced 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~~rating to ~~refinance existing indebtedness would have a negative impact on the Company’s financial condition and results of operations.~~below investment grade.

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Contractual Obligations and Other Commitments

The ~~Company does not have any remaining 2009 wholly-owned debt maturities.~~Company’s maturities for the remainder of 2010 consist of $298.9 million aggregate principal amount of senior unsecured notes and $257.1 million in consolidated mortgage loans, of which $110.3 million is attributable to the Company’s 50% owned joint venture that owns the assets formerly occupied by Mervyns. These maturities are expected to be refinanced or repaid from operating cash flow, the Revolving Credit Facilities, assets sales and/or new financings. No assurance can be provided that the aforementioned obligations will be refinanced or repaid as anticipated (see Liquidity and Capital Resources).

At ~~September 30, 2009,~~March 31, 2010, the Company had letters of credit outstanding of approximately ~~$88.1~~$54.3 million on its consolidated assets. The Company has not recorded any obligation associated with these letters of credit. The majority of 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 ~~$59.9~~$68.0 million with general contractors for its wholly-owned and consolidated joint venture properties at ~~September 30, 2009.~~March 31, 2010. These obligations, comprised principally of construction contracts, are generally due in 12 to 18 months as the related construction costs are

-52-

incurred and are expected to be financed through operating cash flow and/or new or existing construction loans, assets sales or revolving credit facilities.

The Company routinely enters into contracts for the maintenance of its properties which typically can be cancelled upon 30 to 60 days notice without penalty. At ~~September 30, 2009,~~March 31, 2010, the Company had purchase order obligations, typically payable within one year, aggregating approximately ~~$7.1~~$3.2 million related to the maintenance of its properties and general and administrative expenses.

The Company continually monitors its obligations and commitments. There have been no other material items entered into by the Company since December 31, 2003, through ~~September 30, 2009,~~March 31, 2010, other than as described above. See discussion of commitments relating to the Company’s joint ventures and other unconsolidated arrangements in ~~“Off-Balance~~Off-Balance Sheet Arrangements.”

Inflation

~~Substantially all~~Most of the Company’s long-term leases contain provisions designed to 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 leases and/or percentage 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 10ten 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 ~~continues~~continued to be challenged in 2009. Consumer spending has declined in response to erosion in housing values and stock market investments, more stringent lending practices and job losses. Retail sales have declined

~~- 79 -~~

and tenants have become more selective in new store openings. Some retailers have closed existing locations and, as a result, the Company has experienced a loss in occupancy. The reduced occupancy will likely continue to have a negative impact on the Company’s consolidated cash flows, results of operations and financial position in ~~2009.~~2010. Offsetting some of the current challenges within the retail environment, the Company has a low occupancy cost relative to other retail formats and historic averages, as well as a diversified tenant base with only one tenant exceeding 2.0% of total ~~third quarter 2009~~2010 consolidated revenues ~~(which is Walmart~~(Walmart at ~~5.3%~~5.2%). Other significant tenants include Target, Lowe’s, ~~Home Improvement,~~ Home Depot, Kohl’s, T.J. Maxx/Marshalls, Publix Supermarkets, PetSmart and Bed Bath & Beyond, all 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 usit 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 provide day-to-day consumer necessities with a focus ~~towards~~toward value and convenience versus ~~high priced~~high-priced discretionary luxury items, which the Company believes will enable many of the tenants to continue operating within this challenging economic environment.

-53-

The Company monitors potential credit issues of its tenants, and analyzes the possible effects to the financial statements of the Company and its unconsolidated joint ventures. In addition to the ~~collectibility~~collectability 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 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 bankruptcy and/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 gross leasable area 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 in the Company’s Annual Report of Form 10-K for the year ended December 31, ~~2008)~~2009).

Historically, the Company’s portfolio has performed consistently throughout many economic cycles, including downward cycles. Broadly speaking, national retail sales have grown consistently 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 and

~~- 80 -~~

consistent, 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 ~~occupancy,~~due to the major tenant bankruptcies, the shopping center portfolio occupancy, excluding the impact of the Mervyns vacancy, iswas at ~~89.1%~~88.5% at ~~September 30, 2009.~~March 31, 2010. Notwithstanding the decline in occupancy compared to historic levels, the Company continues to sign a large number of new leases, with overall leasing spreads that continue to stabilize, as new leases and renewals have historically. Moreover, the Company has been able to achieve these results without significant capital investment in tenant improvements or leasing commissions. In 2008, the Company assembled an Anchor Store Redevelopment Department staffed with seasoned leasing professionals dedicated to releasing vacant anchor space created by recent bankruptcies and store closings. While tenants may come and go over time, shopping centers that are well-located and actively managed are expected to perform well. 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.

-54-

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 renovation and/or ground-up development contemplated for many of the properties. The Company is generally responsible for day-to-day management of the retail 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 should 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. The court has not yet ruled on the Company’s motion.

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 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 since the Company believes that 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. A trial on the Company’s request for a permanent injunction is currently scheduled for September 27, 2010. 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.

-55-

The Company is 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 attorney’s 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 disagrees with the verdict, as well as the denial of the post-trial motions. As a result, the Company is pursuing an appeal of the verdict. Included in other liabilities on the ~~condensed~~ consolidated balance sheet is a provision ~~which~~that represents management’s best estimate of loss based upon a range of liability. The Company will continue to monitor the status of the litigation and revise the estimate of loss as appropriate. Although the Company believes it has a meritorious basis for reversing the jury verdict, there can be no assurance that the Company will be successful in its appeal.

The Company is a party to various joint ventures with Coventry Real Estate Fund II L.L.C. 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. All properties were acquired by the joint ventures as value-add investments, with major renovation and/or ground-up development contemplated for many of these properties. The Company is generally responsible for day-to-day management of the retail 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 should 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.

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. Although this lawsuit is subject to the uncertainties inherent in the litigation process and the Company cannot provide assurances as to its ultimate outcome, 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.

New Accounting Standards

~~In June 2009, the Financial Accounting Standards Board (“FASB”) issued its final Statement of Financial Accounting Standards — The FASB Accounting Standards Codification and the Hierarchy~~

~~- 81 -~~

of Generally Accepted Accounting Principles. This Statement made the FASB Accounting Standards Codification (the “Codification”) the single source of U.S. GAAP used by nongovernmental entities in the preparation of financial statements, except for rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative accounting guidance for SEC registrants. The Codification is meant to simplify user access to all authoritative accounting guidance by reorganizing U.S. GAAP pronouncements into roughly 90 accounting topics within a consistent structure. Its purpose is not to create new accounting and reporting guidance. The Codification supersedes all existing non-SEC accounting and reporting standards and was effective for the Company beginning July 1, 2009. FASB will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates. The FASB will not consider Accounting Standards Updates as authoritative in their own right; these updates will serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. In the description of Accounting Standards Updates that follows, references in “italics” relate to Codification Topics and Subtopics, and their descriptive titles, as appropriate

New Accounting Standards ~~Implemented with Retrospective Application~~

~~Non-Controlling Interests in Consolidated Financial Statements~~

~~- 82 -~~

consolidated balance sheet as of December 31, 2008 and the condensed consolidated statement of operations for the three- and nine-month periods ended September 30, 2008. The Company’s condensed consolidated balance sheets no longer have a line item referred to as Minority Interests. Equity at December 31, 2008 was adjusted to include $127.5 million attributable to non-controlling interests, and the Company reflected approximately $0.6 million as redeemable operating partnership units. In connection with the Company’s adoption of this standard, the Company also adopted the recent revisions to~~Classification and Measurement of Redeemable Securities~~. As a result of the Company’s adoption of these standards, amounts previously reported as minority equity interests and operating partnership minority interests on the Company’s condensed consolidated balance sheets are now presented as non-controlling interests within equity. There has been no change in the measurement of these line items from amounts previously reported except that due to certain redemption features, certain operating partnership minority interests in the amount of approximately $0.6 million are reflected as redeemable operating partnership units in the temporary equity section (between liabilities and equity). These units are exchangeable, at the election of the operating partnership unit holder, and under certain circumstances at the option of the Company, into an equivalent number of the Company’s common shares or for the equivalent amount of cash. Based on the requirements, the measurement of the redeemable operating partnership units are now presented at the greater of their carrying amount or redemption value at the end of each reporting period.

~~Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)~~

~~- 83 -~~

~~Classification and Measurement of Redeemable Securities~~was also amended, whereas the equity component related to the convertible debt would need to be evaluated if the convertible debt were currently redeemable at the balance sheet date. Because the Company’s convertible debt is not currently redeemable, no evaluation is required as of September 30, 2009.

~~Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities~~

~~New Accounting Standards Implemented~~

~~Business Combinations~~

~~- 84 -~~

January 1, 2009. To the extent that the Company enters into acquisitions that qualify as businesses, this standard will require that acquisition costs and certain fees, which were previously capitalized and allocated to the basis of the acquired assets, be expensed as these costs are incurred. Because of this change in accounting for costs, the Company expects that the adoption of this standard could have a negative impact on the Company’s results of operations depending on the size of a transaction and the amount of costs incurred. The Company will assess the impact of significant transactions, if any, as they are contemplated.

~~Disclosures about Derivative Instruments and Hedging Activities~~

~~In March 2008, the FASB issued~~~~Disclosures about Derivative Instruments and Hedging Activities~~, which is intended to help investors better understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows through enhanced disclosure requirements. The enhanced disclosures primarily surround disclosing the objectives and strategies for using derivative instruments by their underlying risk as well as a tabular format of the fair values of the derivative instruments and their gains and losses. This standard is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company adopted the financial statement disclosures required by this standard in the Company’s Quarterly Report on Form on 10-Q for the quarterly period ended March 31, 2009.

~~Subsequent Events~~

~~Interim Disclosures about Fair Value of Financial Instruments~~

~~- 85 -~~

~~Determination of the Useful Life of Intangible Assets~~

~~Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly~~

~~Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock~~

~~In June 2008, the FASB issued~~~~Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock~~. This standard provides guidance on determining whether an equity—linked financial instrument (or embedded feature) can be considered indexed to an entity’s own stock, which is a key criterion for determining if the instrument may be classified as equity. There is a provision in this standard that provides new guidance regarding how to account for certain “anti-dilution” provisions that provide downside price protection to an investor. This standard is effective for fiscal years beginning after December 15, 2008. Early adoption was not permitted. Due to certain downward price protection provisions within the Otto Transaction, the impact of this standard resulted in a charge to earnings of $118.2 million and $198.2 million for the three- and nine-month periods ended September 2009, respectively, but did not have a material impact on the Company’s financial position or cash flow. Refer to the discussion of the Otto Transaction described further in Strategic Transactions.

~~- 86 -~~

~~Equity Method Investment Accounting Considerations~~

~~New Accounting Standards To Be~~ Implemented

Amendments to Consolidation of Variable Interest Entities

In June 2009, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification No. 810,Amendments to Consolidation of Variable Interest Entities(“ASC 810”), which iswas effective for fiscal years beginning after November 15, 2009, and ~~introduces~~introduced a more qualitative approach to evaluating ~~VIEs~~Variable Interest Entities (“VIEs”) for consolidation. 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 ~~impact~~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 assessments as previously required, and incorporates expanded disclosure requirements. ~~The~~This new accounting guidance was effective for the Company on January 1, 2010, and is ~~currently assessing the impact, if any, the adoption of this standard will have on its consolidated financial statements.~~being applied prospectively.

~~- 87 -~~-56-


ITEM 3.		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:

September 30, 2009 December 31, 2008
Weighted Weighted Weighted Weighted
Average Average Average Average
Amount Maturity Interest Percentage of Amount Maturity Interest Percentage of
(Millions) (Years) Rate Total (Millions) (Years) Rate Total
Fixed- Rate Debt (1) $ 3,827.2 3.1 5.8 % 74.1 % $ 4,375.5 3.0 5.1 % 74.6 %
Variable- Rate Debt (1) $ 1,337.9 2.2 1.6 % 25.9 % $ 1,491.2 2.7 1.7 % 25.4 %

March 31, 2010 December 31, 2009
Weighted-Average Weighted-Average Weighted-Average Weighted-Average
Amount (Millions) Maturity (Years) Interest Rate Percentage of Total Amount (Millions) Maturity (Years) Interest Rate Percentage of Total
Fixed-Rate Debt^(A)
$ 3,797.8 3.4 5.9 % 80.3 % $ 3,684.0 3.3 5.7 % 71.1 %
Variable-Rate Debt^(A)
$ 933.1 1.7 1.7 % 19.7 % $ 1,494.7 2.0 1.5 % 28.9 %


~~(1)~~(A)		Adjusted to reflect the ~~$600~~$400 million of variable-rate debt that LIBOR was swapped to a fixed-rate of ~~6.2% and~~ 5.0% at ~~September 30, 2009 and December~~March 31, ~~2008, respectively. At September 30, 2009 and December 31, 2008, 30-Day LIBOR was 0.25% and 0.43%, respectively.~~2010.

The Company’s unconsolidated joint ventures’ fixed-rate indebtedness is summarized as follows:

September 30, 2009 December 31, 2008
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 $ 4,476.8 $ 881.9 4.7 5.5 % $ 4,581.6 $ 982.3 5.3 5.5 %
Variable- Rate Debt $ 1,142.4 $ 194.8 0.5 2.3 % $ 1,195.3 $ 233.8 1.2 2.2 %

March 31, 2010 December 31, 2009
Company’s Company’s
Joint Venture Debt Proportionate Share Weighted-Average Weighted-Average Joint Venture Debt Proportionate Share Weighted-Average Weighted-Average
(Millions) (Millions) Maturity (Years) Interest Rate (Millions) (Millions) Maturity (Years) Interest Rate
Fixed-Rate Debt $ 3,456.6 $ 735.1 4.5 6.0 % $ 3,807.2 $ 785.4 4.8 5.6 %
Variable-Rate Debt $ 695.3 $ 120.2 0.7 3.0 % $ 740.5 $ 131.6 0.6 3.0 %

The Company intends to utilize retained cash flow, proceeds from asset sales, financing and variable-rate indebtedness available under its Revolving Credit Facilities to repay indebtedness and fund capital expenditures of the Company’s 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 impact the Company’s distributable cash flow.

The interest rate risk on a portion of the Company’s and its unconsolidated joint ventures’ variable-rate debt described above has been mitigated through the use of interest rate swap agreements (the “Swaps”) with major financial institutions. At ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008,~~2009, the interest rate on ~~$600 million of~~ the Company’s $400 million consolidated ~~variable~~floating rate debt, was swapped to fixed rates. The Company is exposed to credit risk in the event of ~~non-performance~~nonperformance by the counterparties to the Swaps. The Company believes it mitigates its credit risk by entering into Swaps with ~~a diversified group of~~ major financial institutions.

~~- 88 -~~-58-


ITEM 4.		CONTROLS AND PROCEDURES

Based on their evaluation as required by Securities Exchange Act Rules 13a-15(b) and 15d-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 Act Rule 13a-15(e)) are effective as of the end of the period covered by this quarterly report on Form 10-Q 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 the end of such period to ensure that information required to be disclosed by the Company issuer in 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.

During the three-month period ended ~~September 30, 2009,~~March 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.

~~- 90 -~~-60-

PART II

OTHER INFORMATION


~~ITEM 1.~~		~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

Other than routine litigation and administrative proceedings arising in the ordinary course of business, the Company is not ~~presently~~currently involved in any litigation nor, to its knowledge, is any litigation threatened against the Company or its properties ~~which~~that is reasonably likely to have a material adverse effect on the liquidity or results of operations of the Company.

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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. A trial on the Company’s request for a permanent injunction is currently scheduled for September 27, 2010. 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.


ITEM 1A.		RISK FACTORS

None.


ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

(c) Total Number (d) Maximum Number
of Shares (or Approximate
Purchased as Part Dollar Value) of
of Publicly Shares that May Yet
(a) Total number of (b) Average Price Announced Plans Be Purchased Under
shares purchased⁽¹⁾ Paid per Share or Programs the Plans or Programs
July 1 – 31, 2009 952 $ 4.49 — —
August 1 – 31, 2009 — — — —
September 1 – 30, 2009 124,271 9.82 — —

Total 125,223 $ 9.78 — —

(d) Maximum Number
(or Approximate
(c) Total Number of Dollar Value) of
(a) Total Shares Purchased as Shares that May Yet
number of shares Part of Publicly Be Purchased Under
purchased (b) Average Price Announced Plans or the Plans or
⁽¹⁾ Paid per Share Programs Programs
January 1 – 31, 2010 21,150 $ 8.89 — —
February 1 – 28, 2010 13,754 10.11 — —
March 1 – 31, 2010 38,555 12.84 — —

Total 73,459 $ 11.19 — —


⁽¹⁾		Consists of common shares surrendered or deemed surrendered to the Company to satisfy minimum tax withholding obligations in connection with the vesting and/or exercise of awards under the Company’s equity-based compensation plans with respect to outstanding shares of restricted ~~stock in September 2009 and the payment of the second quarter dividend in common shares by the Company in July 2009.~~stock.


ITEM 3.		DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.		~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~RESERVED

~~None.~~


ITEM 5.		OTHER INFORMATION

None

~~- 91 -~~-62-

ITEM 6. EXHIBITS


~~ITEM 6.~~4.1		~~EXHIBITS~~

~~3.1~~		Second Amended and Restated Articles of Incorporation, as amended effective July 10, 2009 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 10, 2009, Commission File No. 1-11690)

~~10.1~~		~~Separation Agreement and Release, dated July 28, 2009, by and between Developers Diversified Realty Corporation and Timothy J. Bruce~~

~~10.2~~		~~Amended and Restated Employment Agreement, dated July 29, 2009, by and between Developers Diversified Realty Corporation and Scott A. Wolstein~~

~~10.3~~		~~Amended and Restated Employment Agreement, dated July 29, 2009, by and between Developers Diversified Realty Corporation and Daniel B. Hurwitz~~

~~10.4~~		~~Form 2009 Retention Award Agreement~~

~~10.5~~		~~Developers Diversified Realty Corporation Value Sharing Equity Program~~

~~10.6~~		~~Ninth~~Tenth Supplemental Indenture dated as of ~~September 30, 2009,~~March 19, 2010 by and between ~~Developers Diversified Realty Corporation~~the Company and U.S. Bank National Association (as successor to U.S. Bank Trust National Association (successor to National City Bank)), as Trustee ~~(incorporated~~

10.1		Separation Agreement and Release, dated January 26, 2010, by ~~reference to Exhibit 4.12 to~~and between the ~~Registration Statement on Form S-3 filed on October 13, 2009 (File No. 333-162451))~~Company and William H. Schafer

10.2		Promotion Grant Agreement, dated January 1, 2010, by and between Developers Diversified Realty Corporation and Daniel B. Hurwitz

31.1		Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act pfof 1934

31.2		Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934

32.1		Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002¹

32.2		Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002¹


¹		Pursuant to SEC Release No. 34-4751, these exhibits are deemed to accompany this report and are not “filed” as part of this report.

~~- 92 -~~-63-

EXHIBIT INDEX

Filed Herewith or

Exhibit No.

Incorporated

Filed Herewith or

Under Reg.

Form 10-Q

Herein by

S-K Item 601

Exhibit No.

Description

Reference

3.1

Second Amended and Restated Articles of Incorporation, as amended effective July 10, 2009

Current Report on Form 8-K (Filed with the SEC on August 10, 2009; Commission File No. 1-11690)

Under Reg. S-K Item

Form 10-Q

Incorporated Herein

601

Exhibit No.

Description

by Reference

4.1

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

Filed herewith

10.1

Separation Agreement and Release, dated July 28, 2009, by and between Developers Diversified Realty Corporation and Timothy J. Bruce

Filed herewith

10.1

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; Commission File No. 1-11690

10.2

Amended and Restated Employment Agreement, dated July 29, 2009, by and between Developers Diversified Realty Corporation and Scott A. Wolstein

Filed herewith

10.2

Promotion Grant Agreement, dated January 1, 2010, by and between Developers Diversified Realty Corporation and Daniel B. Hurwitz

Filed herewith

10.3

Amended and Restated Employment Agreement, dated July 29, 2009, by and between Developers Diversified Realty Corporation and Daniel B. Hurwitz

Filed herewith

10.4

Form 2009 Retention Award Agreement

Filed herewith

10.5

Developers Diversified Realty Corporation Value Sharing Equity Program

Filed herewith

10.6

Ninth Supplemental Indenture, dated as of September 30, 2009, by and between Developers Diversified Realty Corporation 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 with the SEC on October 13, 2009)

31.1

Certification of principal executive officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934

Filed herewith

31.1

Certification of principal executive officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934

Filed herewith

31.2

Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934

Filed herewith

31.2

Certification of principal financial officer pursuant to Rule 13a-14(a) of the Exchange Act of 1934

Filed herewith

32.1

Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1

Filed herewith

32.1

Certification of CEO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1

Filed herewith

32.2

Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1

Filed herewith

32.2

Certification of CFO pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of this report pursuant to the Sarbanes-Oxley Act of 2002 1

Filed herewith


Ohio		34-1723097

(State or other jurisdiction of		~~(I.R.S. Employer~~
incorporation or organization)		(I.R.S. Employer Identification No.)


Large accelerated filerþ	Accelerated filero	Non-accelerated filero(Do not check if smaller reporting company)	Smaller reporting companyo
		~~(Do not check if a smaller reporting company)~~


PART I
	Item 1. FINANCIAL STATEMENTS — Unaudited
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. \| CONTROLS AND PROCEDURES
PART II
	ITEM 1. \| LEGAL PROCEEDINGS
	ITEM 1A. RISK FACTORS
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	ITEM 3. \| DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. \| RESERVED
	ITEM 5. \| OTHER INFORMATION
	ITEM 6. \| EXHIBITS
SIGNATURES
EXHIBIT INDEX
EX-4.1
EX-10.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2


~~Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008~~		3

~~Condensed Consolidated Statements of Operations for the Three-Month Periods Ended September 30, 2009 and 2008~~		4

~~Condensed Consolidated Statements of Operations for the Nine-Month Periods Ended September 30, 2009 and 2008~~		5

~~Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2009 and 2008~~		6

~~Notes to Condensed Consolidated Financial Statements~~		7
~~EX-10.1~~
~~EX-10.2~~
~~EX-10.3~~
~~EX-10.4~~
~~EX-10.5~~
~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~
~~EX-32.2~~


							March 31,			December 31,
	September 30, 2009			December 31, 2008			2010			2009
Company’s share of accumulated equity	$	619.7		$	622.6		$	468.8		$	473.7
Basis differentials⁽⁴⁾		(75.7	)		(4.6	)
Basis differentials^(A)								(130.6	)		(123.5	)
Deferred development fees, net of portion relating to the Company’s interest		(5.2	)		(5.2	)		(4.5	)		(4.4	)
Basis differential upon transfer of assets⁽⁴⁾		(92.5	)		(95.4	)
Notes receivable from investments		1.2			1.4			1.2			1.2
Amounts payable to DDR		73.7			65.0			74.7			73.5

Investments in and advances to joint ventures⁽¹⁾	$	521.2		$	583.8		$	409.6		$	420.5


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


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


	Three-Month Periods						Nine-Month Periods
	Ended September 30,						Ended September 30,
				2008						2008
	2009			(As Adjusted)			2009			(As Adjusted)
Net (loss) income	$	(140,650	)	$	36,829		$	(316,877	)	$	118,049
Other comprehensive (loss) income:
Change in fair value of interest-rate contracts		4,093			(122	)		7,315			(4,626	)
Amortization of interest-rate contracts		(93	)		(93	)		(279	)		(550	)
Foreign currency translation		24,806			(29,703	)		48,243			(9,598	)

Total other comprehensive income		28,806			(29,918	)		55,279			(14,774	)

Comprehensive (loss) income	$	(111,844	)	$	6,911		$	(261,598	)	$	103,275
Comprehensive income (loss) attributable to non-controlling interests		930			305			36,706			(5,368	)

Total comprehensive (loss) income attributable to DDR	$	(110,914	)	$	7,216		$	(224,892	)	$	97,907


	September 30, 2009		December 31, 2008
DDR MDT MV LLC⁽¹⁾	$	24,236	$	31,806
DDR MDT MV LLC⁽²⁾		33,060		33,000
Bond fund⁽³⁾		45,420		46,986

Total restricted cash	$	102,716	$	111,792


~~(1)~~^(A)		The Company recorded amortization expense of $1.7 million and ~~$2.3~~$1.9 million for the three-month periods ended ~~September 30,~~March 31, 2010 and 2009, ~~and 2008, respectively, and $5.3 million and $7.1 million for the nine-month periods ended September 30, 2009 and 2008,~~ respectively, related to these intangible assets. The amortization ~~period~~periods of the in-place leases and tenant relations isare approximately two to 31 years and ten years, respectively.

~~(2)~~^(B)		Includes straight-line rent receivables, net, of ~~$53.8~~$55.7 million ~~both~~and $54.9 million at ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008.~~2009, respectively.


					Maximum
	Conversion Price⁽¹⁾		Option Price		Common Shares		Option Cost
2007 Senior Convertible Notes	$	74.56	$	82.71		1.1	$	32.6
2006 Senior Convertible Notes	$	64.23	$	65.17		0.5	$	10.3


	Three-Month Period Ended September 30, 2008								Nine-Month Period Ended September 30, 2008
	As								As
	Previously			As		Effect of			Previously			As		Effect of
	Reported			Adjusted		Change			Reported			Adjusted		Change
Condensed Consolidated Statements of Operations:
Income from continuing operations	$	37,681	⁽¹⁾	$	33,320	$	(4,361	)	$	117,789	⁽¹⁾	$	105,556	$	(12,233	)
Net income attributable to DDR		38,515			35,250		(3,265	)		121,866			112,074		(9,792	)
Net income attributable to DDR per share, basic and diluted	$	0.23		$	0.20	$	(0.03	)	$	0.75		$	0.66	$	(0.09	)


	December 31, 2008
	As Previously			As			Effect of
	Reported			Adjusted			Change
Condensed Consolidated Balance Sheets:
Construction in progress and land under development	$	879,547		$	882,478		$	2,931
Deferred charges, net		26,613			25,579			(1,034	)
Senior unsecured notes		(2,452,741	)		(2,402,032	)		50,709
Paid-in-capital		(2,770,194	)		(2,849,364	)		(79,170	)
Accumulated distributions in excess of net income		608,675			635,239			26,564


	September 30, 2009			December 31, 2008
Carrying value of equity component	$	(48,684	)	$	(77,587	)

Stated principal amount of convertible debt	$	522,683		$	833,000
Remaining unamortized debt discount		(23,875	)		(50,709	)

Net carrying value of convertible debt	$	498,808		$	782,291


	September 30, 2009				December 31, 2008
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior notes	$	1,825,834	$	1,780,821	$	2,402,032	$	1,442,264
Revolving Credit Facilities and Term Debt		1,626,262		1,584,412		1,827,183		1,752,260
Mortgages payable and other indebtedness		1,712,991		1,651,132		1,637,440		1,570,877

	$	5,165,087	$	5,016,365	$	5,866,655	$	4,765,401


		For the transition period fromtoto


~~Item 1.~~		~~FINANCIAL STATEMENTS — Unaudited~~


	Fair Value Measurement at
	September 30, 2009
	Level 1		Level 2		Level 3		Total
Derivative financial instruments	$	—	$	—	$	19.9	$	19.9


	Derivative
	Financial
	Instruments
Balance of Level 3 at December 31, 2008	$	(21.7	)
Total unrealized gain included in other comprehensive (loss) income		1.8

Balance of Level 3 at September 30, 2009	$	(19.9	)


	March 31, 2010				December 31, 2009
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Senior notes	$	1,840,275	$	1,895,343	$	1,689,841	$	1,691,445
Revolving Credit Facilities and Term Debt		1,146,015		1,131,103		1,575,028		1,544,481
Mortgage payable and other indebtedness		1,744,611		1,769,694		1,913,794		1,875,187

	$	4,730,901	$	4,796,140	$	5,178,663	$	5,111,113


Aggregate Notional	LIBOR
Amount (in millions)	Fixed Rate			Maturity Date
$200		5.1	%	June 2010
$100		4.9	%	September 2010
$100		4.8	%	February 2012


	September 30, 2008
Balance at December 31, 2007	$	1,163
Net income		61
Distributions		(61	)
Adjustment to redeemable operating partnership units		(215	)

Balance at September 30, 2008	$	948


	September 30, 2009
Balance at December 31, 2008	$	627
Net income		12
Distributions		(12	)

Balance at September 30, 2009	$	627


Balance at December 31, 2009	$	627
Net income		1
Distributions		(1	)
Balance at March 31, 2010	$	627


		Three-Month			Nine-Month
		Period Ended			Period Ended
		September 30,			September 30,
		2009			2009
Derivatives not designated	Income Statement
as hedging instruments	Location	Gain (Loss)			Gain (Loss)
Equity forward – issued shares	Loss on equity derivative instruments	$	(83.2	)	$	(152.8	)
Warrants	Loss on equity derivative instruments		(35.0	)		(45.4	)

		$	(118.2	)	$	(198.2	)


	Fair Value Measurement at
	September 30, 2009 (in millions)
	Level 1		Level 2		Level 3		Total
Warrants	$	—	$	—	$	54.5	$	54.5


			Fair Value Measurement at
			March 31, 2010 (in millions)
	Level 1		Level 2		Level 3		Total
Warrants	$	—	$	—	$	81.0	$	81.0


	Equity Derivative
	Instruments –
	Liability
Balance of Level 3 at March 31, 2009⁽¹⁾	$	—
Initial Valuation		(9.2	)
Unrealized loss		(45.3	)

Balance of Level 3 at September 30, 2009	$	(54.5	)


	Equity
	Derivative
	Instruments Liability
Balance of Level 3 at December 31, 2009	$	(56.1	)
Unrealized loss		(24.9	)

Balance of Level 3 at March 31, 2010	$	(81.0	)


	Fair Value Measurement at March 31, 2010
									Total
	Level 1		Level 2		Level 3		Total		Losses
Long-lived assets - held and used and held for sale	$	—	$	—	$	3.6	$	3.6	$	3.1


~~(1)~~(A)		Includes impairment charges of ~~$2.7~~$2.1 million and ~~$80.2~~$7.3 million for the ~~three- and nine- month~~three-month periods ended ~~September 30, 2009.~~March 31, 2010 and 2009, respectively.

~~(2)~~(B)		Unallocated expenses consist of general and administrative, ~~interest income, interest expense, tax benefit/expense,~~depreciation and amortization, other income/expense and ~~depreciation and amortization~~tax benefit/expense as listed in the condensed consolidated statements of operations.


	•		Changes in interest rates could adversely affect the market price of the Company’s common shares, as well as its performance and cash flow;

	•		Debt and/or equity 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 or at all;~~terms;

	•		The Company intends to sell non-prime assets to third parties. However, due to the amount of the Company’s capital raising initiatives completed thus far this year, the Company is not intending to sell its assets at significant discounts in order to raise capital. The Company continues to have non-prime assets under contract for sale or subject to letters of intent. The Company will continue to look at asset sales as an available source of capital only when pricing is acceptable and those assets do not fit the Company’s focus on prime properties.

	•		~~The Company intends to continue to repurchase its unsecured notes if discounts continue to be available.~~


	Decrease
Core Portfolio Properties	$	(34.1	)
Development/redevelopment of shopping center properties		(1.6	)
Business center properties		(0.3	)
Straight-line rents		(3.8	)

	$	(39.8	)


	Decrease
Development fee income	$	(2.9	)
Leasing commissions		(0.1	)
Decrease in property and asset management fee income at various unconsolidated joint ventures		(1.1	)

	$	(4.1	)


	Three-Month Period				Nine-Month Period
	Ended September 30,				Ended September 30,
	2009		2008		2009		2008
Bad debt expense^(a)	$	4.8	$	3.5	$	10.8	$	10.2
Ground Rent Expense^{(a) (b)}		1.3		1.0		3.5		3.1


	Increase
	(Decrease)
Core Portfolio Properties	$	(3.0	)
Acquisition of real estate assets		2.6
Development/redevelopment of shopping center properties		0.8

	$	0.4


	Operating and		Real Estate			Depreciation and
	Maintenance		Taxes			Amortization
Core Portfolio Properties	$	3.0	$	2.0		$	1.4	^(a)
Development/redevelopment of shopping center properties		0.9		2.0			1.6
Provision for bad debt expense		1.0		—			—
Business center properties		—		(0.1	)		(0.1	)
Personal property		—		—			0.9

	$	4.9	$	3.9		$	3.8

~~Effective~~

~~Ownership~~

~~Property~~

~~Percentage~~

~~Description~~

~~Buena Park, California~~

~~Large-scale redevelopment of enclosed mall to open-air format~~