SOURCE: Developers Diversified Realty

July 27, 2005 19:53 ET

Developers Diversified Realty Reports FFO of $0.84 per Share for the Three Month Period Ended June 30, 2005

CLEVELAND, OH -- (MARKET WIRE) -- July 27, 2005 -- Developers Diversified Realty Corporation (NYSE: DDR), a real estate investment trust ("REIT"), today announced that second quarter 2005 Funds From Operations ("FFO"), a widely accepted measure of REIT performance, on a per share basis was $0.84 (diluted) and $0.84 (basic) as compared to $0.84 (diluted) and $0.85 (basic) per share for the same period in the previous year. FFO available to common shareholders reached $92.5 million for the quarter ended June 30, 2005, as compared to $81.6 million for the second quarter of 2004, an increase of 13.4%. Net income available to common shareholders for the three month period ended June 30, 2005 decreased 27.1% to $54.2 million or $0.50 per share (diluted) and $0.50 (basic) compared to second quarter 2004 net income of $74.3 million, or $0.77 per share (diluted) and $0.78 (basic). The decrease in net income for the quarter ended June 30, 2005 is primarily related to a decrease on gain on sales of real estate primarily to the Company's MDT Joint Venture.

On a per share basis, FFO (diluted) was $1.73 and $1.55 for the six month periods ended June 30, 2005 and 2004, respectively, an increase of 11.6%. FFO available to common shareholders for the six months ended June 30, 2005 was $191.6 million compared to FFO available to common shareholders for the six month period ended June 30, 2004 of $144.4 million. Net income available to common shareholders for the six month period ended June 30, 2005 was $145.9 million, or $1.34 per share (diluted) and $1.35 (basic) in 2005, compared to net income available to common shareholders of $114.5 million, or $1.24 per share (diluted) and $1.26 (basic) for the prior comparable period. The increase in net income is primarily attributable to an increase on gain on sales of real estate, primarily to the Company's MDT Joint Venture, the acquisition of assets from Benderson in May 2004 and the acquisition of 15 properties from CPG in late January 2005.

Scott Wolstein, DDR's Chairman and Chief Executive Officer, stated, "I am pleased to report this quarter's earnings, which reflect the continuing solid performance of our portfolio and our successful leasing efforts. We continue to identify and capitalize on opportunities in all aspects of our business, including a burgeoning tenant roster offering a multitude of new open air store formats, a growing development pipeline of key retail sites, and a strengthening financial position achieved through a series of strategic capital markets transactions."

FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry. Management believes that FFO provides an additional indicator of the financial performance of a REIT. The Company also believes that FFO more appropriately measures the core operations of the Company and provides a benchmark to its peer group. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income computed in accordance with GAAP as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. FFO is defined and calculated by the Company as net income, adjusted to exclude: (i) preferred dividends, (ii) gains (or losses) from sales of depreciable real estate property, except for those sold through the Company's merchant building program, which are presented net of taxes, (iii) sales of securities, (iv) extraordinary items, (v) cumulative effect of changes in accounting standards and (vi) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles, equity income from joint ventures and equity income from minority equity investments and adding the Company's proportionate share of FFO from its unconsolidated joint ventures and minority equity investments, determined on a consistent basis. Other real estate companies may calculate FFO in a different manner. A reconciliation of net income to FFO is presented in the financial highlights section.

Leasing:

Leasing activity continues to be strong throughout the portfolio. During the second quarter of 2005, the Company executed 121 new leases aggregating approximately 860,000 square feet and 167 renewals aggregating approximately 841,000 square feet. Rental rates on new leases increased by 26.7% to $13.14 per square foot and rental rates on renewals increased by 8.5% to $12.18 per square foot as compared to previously occupied rental rates. On a blended basis, rental rates for new leases and renewals increased by 12.7% to $12.67 per square foot. At June 30, 2005, the average annualized base rent per occupied square foot, including those properties owned through joint ventures, was $11.27.

At June 30, 2005, the portfolio, including those properties owned through joint ventures, was 95.6% leased. Excluding the impact of the properties acquired from CPG and Benderson, the portfolio was 95.5% leased, as compared to 95.0% at June 30, 2004. These percentages include tenants for which signed leases have been executed and occupancy has not occurred. Based on tenants in place and responsible for paying rent as of June 30, 2005, the portfolio was 95.0% occupied. Excluding the impact of the properties acquired from CPG and Benderson, the portfolio was 95.0% occupied, as compared to 94.4% at June 30, 2004.

Same store Net Operating Income ("NOI") relating to Core Portfolio Properties (i.e., shopping center properties owned since January 1, 2004, excluding properties under redevelopment) increased approximately $3.6 million (or 1.9%) for the six months ended June 30, 2005.

Strategic Real Estate Transactions:

MDT Joint Venture

In April 2005, the Company sold three properties to the Company's MDT Joint Venture for approximately $63.8 million and recognized additional merchant building gains of approximately $14.6 million in the second quarter of 2005. The Company maintains an approximate 14.5% ownership in the properties through this joint venture. The Company has been engaged for all day-to-day operations of the properties and will receive its share of ongoing fees for property management, leasing and construction management, in addition to other periodic fees for financing and due diligence.

Expansions:

During the six month period ended June 30, 2005, the Company completed four expansion and redevelopment projects located in Tallahassee, Florida; Suwanee, Georgia; Hendersonville, North Carolina and Johnson City, Tennessee at an aggregate cost of $13.6 million. The Company is currently expanding/redeveloping eleven shopping centers located in Gadsden, Alabama; Hoover, Alabama; Ocala, Florida; Ottumwa, Iowa; Gaylord, Michigan; Princeton, New Jersey; Mooresville, North Carolina; Allentown, Pennsylvania; Erie, Pennsylvania and two projects in Bayamon, Puerto Rico, at a projected incremental cost of approximately $57.2 million. The Company is also scheduled to commence construction on an additional expansion and redevelopment project at its shopping center located in Amherst, New York.

During the six month period ended June 30, 2005, a joint venture of the Company completed the expansion of its shopping center located in Merriam, Kansas at an aggregate cost of $1.2 million. Three of the Company's joint ventures are currently expanding/redeveloping their shopping centers located in Phoenix, Arizona; Lancaster, California and Kansas City, Missouri at a projected incremental cost of approximately $48 million. Two of the Company's joint ventures are also scheduled to commence additional expansion/redevelopment projects at their shopping centers located in Deer Park, Illinois and Kirkland, Washington.

Development (Consolidated):

During the six month period ended June 30, 2005, the Company substantially completed the construction of its shopping center located in Overland Park, Kansas.

The Company currently has seven shopping center projects under construction. These projects are located in Miami, Florida; Chesterfield, Michigan; Lansing, Michigan; Freehold, New Jersey; Mount Laurel, New Jersey; Apex, North Carolina (Beaver Creek Crossings - Phase I) and Pittsburgh, Pennsylvania. These projects are scheduled for completion during 2005 and 2006 at a projected aggregate cost of approximately $287.4 million and will create an additional 2.8 million square feet of retail space. At June 30, 2005, approximately $172.3 million of costs were incurred in relation to these development projects.

The Company anticipates commencing construction in 2005 on five additional shopping centers located in McHenry, Illinois; Norwood, Massachusetts; Seabrook, New Hampshire; Horseheads, New York and McKinney, Texas.

Development (Joint Ventures):

The Company has joint venture development agreements for four shopping center projects. These projects have an aggregate projected cost of approximately $110.1 million. These projects are located in Merriam, Kansas; Jefferson County (St. Louis), Missouri; Apex, North Carolina (Beaver Creek Crossings - Phase II), adjacent to a wholly-owned development project; and San Antonio, Texas. The projects located in Merriam, Kansas and San Antonio, Texas are being developed through the Coventry II program. A portion of the project located in Jefferson County (St. Louis), Missouri has been substantially completed. The remaining projects are scheduled for completion in 2005 and 2006. At June 30, 2005, approximately $48.7 million of costs were incurred in relation to these development projects.

Dispositions:

In April 2005, one of the Company's RVIP joint ventures sold a 77,000 square foot shopping center in Richmond, California (Richmond City Center) for approximately $13 million. The joint venture recognized a non-FFO gain of approximately $2.4 million, of which the Company's proportionate share was approximately $0.9 million in the second quarter of 2005.

In the second quarter of 2005, the Company sold two shopping center properties aggregating 0.1 million square feet for approximately $4.2 million and recognized a non-FFO gain of approximately $3.0 million. The Company sold several out parcels during the second quarter and recognized a gain of approximately $2.7 million from these sales. In July, the Company sold two shopping center properties aggregating 0.2 million square feet for approximately $2.0 million and will recognize a non-FFO gain of approximately $1.0 million in the third quarter of 2005. The second quarter operating results for these assets are reflected in discontinued operations.

Financings:

In June 2005, the Company entered into a $220 million secured term loan agreement with KeyBank Capital Markets and Banc of America Securities LLC acting as joint lead arrangers for the facility. The secured term loan matures in June 2008 with two one-year extension options available to the Company. The interest rate, which is currently 0.85% over LIBOR, is based on grid pricing determined by the Company's corporate credit ratings from S&P and Moody's. The term loan is secured by the equity in certain assets that are already encumbered by first mortgages. The initial amount of the term loan is $220 million, with an accordion feature that allows for a future increase to $400 million. Proceeds from the term loan were used to repay amounts outstanding on the Company's revolving credit facilities.

In July 2005, the Company's Community Centers V and VII joint ventures closed on several loans aggregating $298.0 million of which $280.0 million bears a fixed rate of 5.295% for five years and the remaining $18.0 million bears a floating rate of LIBOR plus 2.0% for two years. The loan proceeds were used to repay existing debt of approximately $167.0 million, with a weighted average interest rate of 6.5%. The additional $131 million was remitted to DDR, of which $65.2 million related to the repayment of an advance made to certain joint venture partners in the Community Centers V and VII joint ventures in April 2005.

In April 2005, the Company issued $400 million of senior unsecured notes, $200 million of five-year notes and $200 million of ten-year notes. The five-year notes have an interest rate of 5.0%, are due on May 3, 2010 and were offered at 99.806% of par. The ten-year notes have an interest rate of 5.5%, are due on May 1, 2015 and were offered at 99.642% of par. The effective interest rate, after taking into account the treasury rate locks that were previously entered into by the Company, will adjust the five-year rate to approximately 4.95% and the ten-year rate to approximately 5.37%. Proceeds from the offering were primarily used to repay indebtedness of the Company's subsidiary, DDR PR Ventures LLC, S.E., under the Company's primary revolving credit facility.

Developers Diversified Realty Corporation currently owns and manages approximately 470 retail operating and development properties in 44 states, plus Puerto Rico, comprising approximately 107 million square feet of real estate. DDR is a self-administered and self-managed real estate investment trust (REIT) operating as a fully integrated real estate company which acquires, develops, leases and manages shopping centers.

A copy of the Company's Supplemental Financial/Operational package is available to all interested parties upon request at our corporate office to Michelle M. Dawson, Vice President of Investor Relations, Developers Diversified Realty Corporation, 3300 Enterprise Parkway, Beachwood, OH 44122 or on our Website which is located at http://www.ddr.com.

Developers Diversified Realty Corporation considers portions of this information to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such 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 historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause the results of the Company to differ materially from those indicated by such forward-looking statements, including, among other factors, local conditions such as oversupply of space or a reduction in demand for real estate in the area, competition from other available space, dependence on rental income from real property, the loss of a major tenant, constructing properties or expansions that produce a desired yield on investment or inability to enter into definitive agreements with regard to our financing arrangements or our failure to satisfy conditions to the completion of these arrangements. For more details on the risk factors, please refer to the Company's Form on 10-K as of December 31, 2004.


                  DEVELOPERS DIVERSIFIED REALTY CORPORATION
                           Financial Highlights
                   (In thousands - except per share data)

                            Three Month Period        Six Month Period
                               Ended June 30,           Ended June 30,
                             2005         2004         2005         2004
Revenues:                ----------   ----------   ----------   ----------
   Minimum rents (A)     $  130,229   $  103,195   $  258,887   $  190,504
   Percentage and
    overage rents (A)         1,586        1,400        3,619        3,128
   Recoveries from tenants   39,742       29,587       78,012       54,973
   Ancillary income           2,063          615        3,880        1,377
   Other property
    related income            1,657        1,157        2,747        2,055
   Management fee income      4,983        3,592        9,275        6,702
   Development fees             681          604        1,168          794
   Other (B)                  2,236        6,516        4,379       10,056
                         ----------   ----------   ----------   ----------
                            183,177      146,666      361,967      269,589
                         ----------   ----------   ----------   ----------
Expenses:
   Operating and
    maintenance              25,399       15,714       50,429       31,646
   Real estate taxes         21,115       19,624       42,748       34,933
   General and
    administrative (C)       12,964       11,050       26,607       21,494
   Depreciation and
    amortization             39,620       31,558       80,942       56,289
                         ----------   ----------   ----------   ----------
                             99,098       77,946      200,726      144,362
                         ----------   ----------   ----------   ----------
Other income (expense):
   Interest income            2,425          997        3,434        2,358
   Interest expense         (45,196)     (30,471)     (87,119)     (55,142)
   Other expense (D)         (1,642)         (11)      (1,942)         (32)
                         ----------   ----------   ----------   ----------
                            (44,413)     (29,485)     (85,627)     (52,816)
Income before equity in net
 income of joint ventures,
 minority equity interests,
 income tax of taxable REIT
 subsidiaries, discontinued
 operations, gain on sales
 of real estate and
 cumulative effect of
 adoption of a new
 accounting standard         39,666       39,235       75,614       72,411
Equity in net income
 of joint ventures (E)        8,055        6,943       14,566       25,164
Minority equity
 interests (F)               (1,253)        (966)      (2,660)      (2,110)
Income tax of taxable REIT
 subsidiaries and
 franchise taxes               (398)        (221)        (565)        (892)
                         ----------   ----------   ----------   ----------
Income from
 continuing operations       46,070       44,991       86,955       94,573
Income from discontinued
 operations (G)               3,010          815        3,014          650
                         ----------   ----------   ----------   ----------
Income before gain on
 sales of real estate and
 cumulative effect of
 adoption of a
 new accounting standard     49,080       45,806       89,969       95,223
Gain on sales of real
 estate, net of tax          18,874       41,006       83,534       45,376
                         ----------   ----------   ----------   ----------
Income before cumulative
 effect of adoption of a
 new accounting standard     67,954       86,812      173,503      140,599
Cumulative effect of
 adoption of a new
 accounting standard (H)          -            -            -       (3,001)
                         ----------   ----------   ----------   ----------
Net income               $   67,954   $   86,812   $  173,503   $  137,598
                         ==========   ==========   ==========   ==========
Net income, applicable
 to common shareholders  $   54,162   $   74,295   $  145,920   $  114,476
                         ==========   ==========   ==========   ==========
Funds From Operations
 ("FFO"):
   Net income
    applicable to
    common shareholders  $   54,162   $   74,295   $  145,920   $  114,476
   Depreciation and
    amortization of real
    estate investments       39,492       31,208       80,335       55,966
   Equity in net income
    of joint ventures (E)    (8,055)      (6,943)     (14,566)     (25,164)
   Joint ventures' FFO (E)   10,764       11,065       22,080       23,741
   Minority equity
    interests
    (OP Units) (F)              729          625        1,458        1,197
   Gain on sales of
    depreciable real
    estate, net (D)          (4,557)     (28,639)     (43,620)     (28,799)
   Cumulative effect of
    adoption of a new
    accounting standard (H)       -            -            -        3,001
                         ----------   ----------   ----------   ----------
   FFO available to
    common shareholders      92,535       81,611      191,607      144,418
   Preferred dividends       13,792       12,517       27,583       23,122
                         ----------   ----------   ----------   ----------
   FFO                   $  106,327   $   94,128   $  219,190   $  167,540
                         ==========   ==========   ==========   ==========
   Per share data:
     Earnings per
      common share
        Basic            $     0.50   $     0.78   $     1.35   $     1.26
                         ==========   ==========   ==========   ==========
        Diluted          $     0.50   $     0.77   $     1.34   $     1.24
                         ==========   ==========   ==========   ==========
   Dividends Declared    $     0.54   $     0.46   $     1.08   $     0.92
                         ==========   ==========   ==========   ==========
   Funds From Operations
    - Basic (I)          $     0.84   $     0.85   $     1.74   $     1.57
                         ==========   ==========   ==========   ==========
   Funds From Operations
    - Diluted (I)        $     0.84   $     0.84   $     1.73   $     1.55
                         ==========   ==========   ==========   ==========
   Basic - average
    shares outstanding
    (thousands) (I)         108,276       95,018      108,142       90,682
                         ==========   ==========   ==========   ==========
   Diluted - average
    shares outstanding
    (thousands) (I)         109,022       97,415      110,354       93,104
                         ==========   ==========   ==========   ==========

               DEVELOPERS DIVERSIFIED REALTY CORPORATION
                         Financial Highlights
                (In thousands - except per share data)

(A) Increases in base and percentage rental revenues for the six month
    period ended June 30, 2005 as compared to 2004, aggregated $66.5
    million consisting of $2.8 million related to leasing of core
    portfolio properties (an increase of 2.2% from 2004), $81.3 million
    from the acquisition of assets, and $3.5 million related to
    developments and redevelopments.  These amounts were offset by a
    decrease of $0.9 million relating to the business center properties
    and $20.2 million due to the sale of properties to joint ventures in
    2004 and 2005.  Included in the rental revenues for the six month
    period ended June 30, 2005 and 2004 is approximately $5.8 million
    and $3.5 million, respectively, of revenue resulting from the
    recognition of straight line rents.

(B) Other income for the three and six month periods ended June 30, 2005
    and 2004 was comprised of the following (in millions):

                                  Three Month Period   Six Month Period
                                   Ended June 30,      Ended June 30,
                                    2005      2004      2005      2004
                                   ------    ------    ------    ------
Lease termination fees             $  1.0    $  3.5    $  1.5    $  7.0
Financing fees                        0.9       3.0       2.3       3.0
Other miscellaneous                   0.3         -       0.6       0.1
                                   ------    ------    ------    ------
                                   $  2.2    $  6.5    $  4.4    $ 10.1
                                   ======    ======    ======    ======

(C) General and administrative expenses include internal leasing salaries,
    legal salaries and related expenses associated with the releasing of
    space, which are charged to operations as incurred.  For the six month
    periods ended June 30, 2005 and 2004, general and administrative
    expenses were approximately 4.6% and 4.9%, respectively, of total
    revenues, including joint venture revenues, for each period.

(D) Other expense is comprised of abandoned acquisition and development
    project costs, an impairment charge and certain litigation costs. In
    the second quarter of 2005, the Company recorded an impairment charge
    of approximately $0.6 million  relating to the one remaining former
    Best Products site and certain non-recurring litigation costs of
    $0.7 million.

(E) The following is a summary of the Company's share of the combined
    operating results relating to its joint   ventures (in thousands):

                                   Three month period   Six month period
                                     ended June 30,      ended June 30,
                                     2005(b)   2004(b)   2005      2004
                                   --------  --------  --------  --------
Revenues from operations (a)       $109,577  $ 80,273  $213,297  $154,013
                                   --------  --------  --------  --------

Operating expense                    38,893    27,797    75,221    52,904
Depreciation and amortization of
 real estate investments             22,983    13,829    42,605    24,315
Interest expense                     32,502    17,669    58,345    35,560
                                   --------  --------  --------  --------
                                     94,378    59,295   176,171   112,779
                                   --------  --------  --------  --------
Income from operations before
 gain on sale of real estate and
 discontinued operations             15,199    20,978    37,126    41,234
Gain (loss) on sale of real estate      456         5       759        (8)
(Loss) income from discontinued
 operations, net of tax                (115)      515       339       297
Gain (loss) on sale of discontinued
 operations, net of tax               7,721      (132)    8,722    23,892
                                   --------  --------  --------  --------
Net income                         $ 23,261  $ 21,366  $ 46,946  $ 65,415
                                   ========  ========  ========  ========
DDR Ownership interests (b)        $  7,502  $  7,064  $ 13,997  $ 25,365
                                   ========  ========  ========  ========

Funds From Operations from joint
 ventures are summarized as follows:
  Net income                       $ 23,261  $ 21,366  $ 46,946  $ 65,415
  (Gain) loss on sale of real
   estate, including discontinued
   operations                        (7,443)      126    (7,773)  (23,988)
  Depreciation and amortization
   of real estate investments        23,042    14,260    42,925    25,038
                                   --------  --------  --------  --------
                                   $ 38,860  $ 35,752  $ 82,098  $ 66,465
                                   ========  ========  ========  ========
 DDRC Ownership interests (b)      $ 10,764  $ 11,065  $ 22,080  $ 23,741
                                   ========  ========  ========  ========
 DDRC Partnership distributions
  received, net                    $ 12,330  $ 20,738  $ 23,470  $ 49,054
                                   ========  ========  ========  ========

               DEVELOPERS DIVERSIFIED REALTY CORPORATION
                         Financial Highlights
                (In thousands - except per share data)

    (a) Revenues for the three month periods ended June 30, 2005 and 2004
        included approximately $2.1 million and $1.6 million, respectively,
        resulting from the recognition of straight line rents of which the
        Company's proportionate share is $0.3 million in each period.
        Revenues for the six month periods ended June 30, 2005 and 2004
        included approximately $3.6 million and $2.7 million, respectively,
        resulting from the recognition of straight line rents of which the
        Company's proportionate share is $0.6 million and $0.5 million,
        respectively.

    (b) Included in the Company's equity in net income and FFO from joint
        ventures for the six months ended June 30, 2004, is approximately
        $3.2 million of gain related to the sale of joint venture property
        at the end of 2003.  This amount was recorded as a gain at the
        joint venture level in 2003 but was deferred by DDR until certain
        construction and leasing obligations were achieved.

        The Company's share of joint venture net income has been reduced
        by $0.5 million and $0.1 million for the three month period ended
        June 30, 2005 and 2004, respectively and by $0.6 million and $0.2
        million for the six month period ended June 30, 2005 and 2004,
        respectively, to reflect additional basis depreciation and
        adjustments to gain on sale.

        At June 30, 2005 and 2004, the Company owned joint venture
        interests relating to 113 and 74 shopping center properties,
        respectively. In addition, at June 30, 2005 and 2004,
        respectively, the Company, through a joint venture, owned an
        interest of approximately 25% in 59 and 69 shopping center
        sites formerly owned by Service Merchandise, respectively.

(F) Minority equity interests are comprised of the following (in
    thousands):

                                   Three Month Period   Six Month Period
                                     Ended June 30,      Ended June 30,
                                     2005      2004      2005      2004
                                   --------  --------  --------  --------
Minority interests                 $    524  $    341  $  1,202  $    914
Operating partnership units             729       625     1,458     1,196
                                   --------  --------  --------  --------
                                   $  1,253  $    966  $  2,660  $  2,110
                                   ========  ========  ========  ========

(G) The operating results relating to assets classified as discontinued
    operations are summarized as follows (in thousands):

                                   Three Month Period   Six Month Period
                                     Ended June 30,      Ended June 30,
                                     2005      2004      2005      2004
                                   --------  --------  --------  --------
Revenues                           $    233  $  1,836  $    489  $  3,788
                                   --------  --------  --------  --------

Expenses:
  Operating                             118       487       254     1,352
  Interest                               37       224        78       468
  Depreciation                           67       302       142       642
  Minority interests                      -         -         -         4
                                   --------  --------  --------  --------
    Total expenses                      222     1,013       474     2,466
                                   --------  --------  --------  --------
  Income before loss on sale
   of real estate                        11       823        15     1,322
  Gain (loss) on sales of
   real estate                        2,999        (9)    2,999      (700)
                                   --------  --------  --------  --------
    Net income                     $  3,010  $    814  $  3,014  $    622
                                   ========  ========  ========  ========

               DEVELOPERS DIVERSIFIED REALTY CORPORATION
                         Financial Highlights
                (In thousands - except per share data)

(H) The Company recorded a charge of $3.0 million in 2004 as a cumulative
    effect of adoption of a new accounting standard (FIN 46) attributable
    to the consolidation of the shopping center in Martinsville, Virginia.
    This amount represents the minority partner's share of cumulative
    losses in the partnership.

(I) For purposes of computing FFO per share (basic), the weighted average
    shares outstanding were adjusted to reflect the conversion of 1.3
    million and 1.4 million Operating Partnership Units (OP Units)
    outstanding at June 30, 2005 and 2004 into 1.3 million common shares
    of the Company for each of the three month periods ended June 30,
    2005 and 2004, respectively, and 1.3 million and 1.2 million for the
    six month periods ended June 30, 2005 and 2004, respectively, on a
    weighted average basis. The weighted average diluted shares and OP
    Units outstanding were 110.7 million and 97.6 million for the three
    month periods ended June 30, 2005 and 2004, respectively, and 110.6
    million and 93.2 million for the six month periods ended June 30, 2005
    and 2004, respectively.

                  DEVELOPERS DIVERSIFIED REALTY CORPORATION
                           Financial Highlights
                              (In thousands)

Selected Balance Sheet Data:
                                          June 30, 2005   December 31, 2004
Assets:                                   -------------   -----------------
Real estate and rental property:
    Land                                   $   1,730,868     $   1,238,242
    Buildings                                  4,452,344         3,998,972
    Fixtures and tenant improvements             138,811           120,350
    Construction in progress                     283,495           245,860
                                           -------------     -------------
                                               6,605,518         5,603,424
Less accumulated depreciation                   (622,942)         (568,231)
                                           -------------     -------------
Real estate, net                               5,982,576         5,035,193

Cash                                              36,310            49,871
Restricted cash                                   17,509                 -
Advances to and investments in
 joint ventures                                  440,352 (1)       288,020
Notes receivable                                  17,056            17,823
Receivables, including straight
 line rent, net                                   93,197            84,843
Other assets, net                                 94,232           107,797
Real estate property held for sale, net              939                 -
                                           -------------     -------------
                                           $   6,682,171     $   5,583,547
                                           =============     =============
Liabilities:
Indebtedness:
    Revolving credit facilities            $     338,250     $      60,000
    Variable rate unsecured term debt            200,000           350,000
    Unsecured debt                             1,618,984         1,220,143
    Mortgage and other secured debt            1,597,250         1,088,547
                                           -------------     -------------
                                               3,754,484         2,718,690
    Dividends payable                             65,668            62,089
    Other liabilities                            214,462           192,514
                                           -------------     -------------
                                               4,034,614         2,973,293
Minority interests                                54,650            55,935
Shareholders' equity                           2,592,907         2,554,319
                                           -------------     -------------
                                           $   6,682,171     $   5,583,547
                                           =============     =============

(1)  Includes approximately $100 million of advances to the Service
     Merchandise Joint Venture advanced in the second quarter of 2005.
     Includes $65 million advanced to certain joint venture partners in the
     Community Center V and VII joint ventures in April 2005. This note was
     repaid in July 2005.

                  DEVELOPERS DIVERSIFIED REALTY CORPORATION
                           Financial Highlights
                              (in thousands)

Selected Balance Sheet Data (Continued):

Combined condensed balance sheets relating to the Company's joint ventures
 are as follows:

                                              June 30,        December 31,
                                                2005              2004
                                           -------------     -------------

Land                                       $     905,570     $     798,852
Buildings                                      2,552,810         2,298,424
Fixtures and tenant improvements                  55,714            42,922
Construction in progress                          37,298            25,151
                                           -------------     -------------
                                               3,551,392         3,165,349
Accumulated depreciation                        (179,758)         (143,170)
                                           -------------     -------------
Real estate, net                               3,371,634         3,022,179
Receivables, including straight
 line rent, net                                   68,422            68,596
Leasehold interests                               26,098            26,727
Other assets                                     124,823            96,264
                                           -------------     -------------
                                           $   3,590,977     $   3,213,766
                                           =============     =============

Mortgage debt (a)                          $   2,096,892     $   1,803,420
Notes and accrued interest payable to DDR        112,507            20,616
Amounts payable to other partners                      -            46,161
Other liabilities                                 76,894            75,979
                                           -------------     -------------
                                               2,286,293         1,946,176
     Accumulated equity                        1,304,684         1,267,590
                                           -------------     -------------
                                           $   3,590,977     $   3,213,766
                                           =============     =============

(a)  The Company's proportionate share of joint venture debt aggregated
     approximately $457.9 million and $420.8 million at June 30, 2005 and
     December 31, 2004, respectively.

Contact Information

  • Contact:
    Scott A. Wolstein
    Chairman
    Chief Executive Officer
    216-755-5500

    Michelle M. Dawson
    Vice President of Investor Relations
    216-755-5455