SOURCE: Developers Diversified Realty

April 23, 2009 21:20 ET

Developers Diversified Realty Reports FFO per Diluted Share of $1.08 for the Quarter Ended March 31, 2009

CLEVELAND, OH--(Marketwire - April 23, 2009) - Developers Diversified Realty Corporation (NYSE: DDR), the nation's leading owner, manager and developer of market-dominant shopping centers, today reported operating results for the first quarter ended March 31, 2009.

--  FFO applicable to common shareholders for the three-month period ended
    March 31, 2009 was $140.0 million or $1.08 per diluted share which compares
    to restated FFO of $96.3 million or $0.80 per diluted share for the prior-
    year comparable period.  Net income applicable to common shareholders for
    the three-month period ended March 31, 2009 was $76.8 million or $0.59 per
    diluted share which compares to restated net income of $29.6 million or
    $0.25 per diluted share for the prior-year comparable period.  The 2008
    amounts have been restated to reflect the change in accounting relating to
    convertible debt which is discussed in more detail later in this release.
    
--  After adjusting for the gain on repurchase of unsecured notes and
    impairment-related charges associated with assets marketed for sale
    aggregating $55 million, as summarized below (in millions), the Company's
    FFO applicable to common shareholders for the three-month period ended
    March 31, 2009 was $85.0 million or $0.66 per share.
    

Gain on repurchase of unsecured notes                              $  72.6
Consolidated non-cash impairment charges                             (10.9)
Loss on disposition of joint venture investment                       (5.8)
Non-cash impairment charge on equity method investment                (0.9)
                                                                   -------
                                                                   $  55.0
                                                                   =======

--  Executed leases during the first quarter totaled approximately 1.9
    million square feet, including 124 new leases and 227 renewals.
    
--  On a cash basis, base rental rates decreased 0.6% on new leases,
    increased 0.9% on renewals and increased 0.6% overall.
    
--  Core portfolio leased percentage at March 31, 2009 was 90.7%.
    
--  Same store net operating income ("NOI") for the quarter decreased 2.2%
    over the prior-year comparable period.  The decrease in same store NOI is
    primarily related to the bankruptcies and subsequent store closings of
    Linens 'n Things, Goody's, Steve & Barry's and Circuit City.
    

Scott A. Wolstein, Developers Diversified's Chairman and Chief Executive Officer, stated, "Despite the challenging macro environment, we are pleased with our first quarter 2009 operating results which came in as expected. We executed nearly 2 million square feet of leases, and are making headway in leasing space that we have recently recaptured from retailer bankruptcies."

"Lowering leverage and enhancing liquidity continue to be our key areas of focus. With overwhelming shareholder approval of the equity investment by the Otto family, we look forward to closing that transaction in the coming weeks, and aggressively moving forward with our other leverage reducing initiatives."

Financial Results:

Net income applicable to common shareholders was $76.8 million, or $0.59 per share (diluted and basic), for the three-month period ended March 31, 2009, as compared to restated net income of $29.6 million, or $0.25 per share (diluted and basic), for the prior-year comparable period.

For the three-month period ended March 31, 2009, FFO per share was $1.08 (diluted and basic) compared to restated FFO of $0.80 (diluted and basic) for the prior-year comparable period. FFO applicable to common shareholders was $140.0 million for the three-month period ended March 31, 2009, as compared to restated FFO of $96.3 million for the three-month period ended March 31, 2008.

FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry and a widely accepted measure of real estate investment trust ("REIT") performance. 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 ("GAAP"), 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 share dividends, (ii) gains from disposition of depreciable real estate property, except for those sold through the Company's merchant building program, which are presented net of taxes, (iii) extraordinary items and (iv) 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:

The following results for the three-month period ended March 31, 2009 highlight continued strong leasing activity throughout the portfolio despite the current economic environment:

--  Executed 124 new leases aggregating approximately 0.6 million square
    feet and 227 renewals aggregating approximately 1.3 million square feet.
    
--  On a cash basis, rental rates on new leases decreased 0.6% and rental
    rates on renewals increased 0.9%.  Overall, rental rates for new leases and
    renewals increased 0.6%.
    
--  Total portfolio average annualized base rent per occupied square foot,
    excluding assets in Brazil, as of March 31, 2009 was $12.45, as compared to
    $12.38 at March 31, 2008.
    
--  Core portfolio leased rate was 90.7% as of March 31, 2009, as compared
    to 95.6% at March 31, 2008.
    

Total annual recurring leasing capital expenditures for the Company and its joint ventures are estimated to be approximately $32 million ($0.27 per square foot of owned GLA) in 2009 calculated based on 100% of the funding.

Strategic Transactions:

On February 23, 2009, the Company entered into a stock purchase agreement (the "Stock Purchase Agreement") with Mr. Alexander Otto (the "Investor") to issue and sell 30 million common shares for aggregate gross proceeds of approximately $112.5 million. In addition, the Company will issue warrants to purchase up to 10 million common shares with an exercise price of $6.00 per share to the Investor and certain members of his family (collectively with the Investor, the "Otto Family"). In April 2009, the Company's shareholders approved the sale of the common shares and warrants to the Investor. The transaction is expected to occur in two closings each consisting of 15 million common shares and warrants to purchase up to 5 million common shares, the first of which is expected to occur in the next several weeks upon the satisfaction of certain closing conditions and will generate estimated gross equity proceeds of approximately $52.5 million.

In March 2009, the Company entered into a secured bridge loan agreement with an affiliate of the Investor for $60 million (the "Bridge Loan"). The Bridge Loan bears interest at a rate of 10.0% per annum for a term maturing on the earlier of the initial closing date of the common share issuance to the Investor, the 90th day after the termination of the Stock Purchase Agreement or September 15, 2009. It is expected that the Bridge Loan will be repaid with proceeds from a $60 million five-year secured loan, which will bear a 9.0% interest rate, and obtained from an affiliate of the Investor concurrent with the first closing of the common shares and warrants discussed above.

Dispositions:

The Company and its joint ventures sold seven properties, aggregating 0.7 million square feet in the first quarter of 2009 generating gross proceeds of $67.4 million.

Wholly-Owned and Consolidated Joint Venture Development:

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


                                 Expected Net   Initial
                                     Cost        Anchor
Location             Owned GLA   ($ Millions)   Opening *     Description
                    ------------ ------------ ------------ ----------------
Miami (Homestead),
 Florida                 272,610 $       79.7        2H 08 Community Center
Boise (Nampa),
 Idaho                   431,689        126.7        2H 07 Community Center
Boston (Norwood),
 Massachusetts            56,343         26.7        1H 10 Community Center
Elmira
 (Horseheads), New
 York                    350,987         56.0        1H 07 Community Center
Raleigh (Apex),
 North Carolina
 (Promenade)              72,830         16.9        1H 09 Community Center
Austin (Kyle),
 Texas **                443,092         77.2        2H 09 Community Center
                    ------------ ------------
  Total                1,627,551 $      383.2
                    ============ ============
       *    1H = First Half, 2H = Second Half; either actual or anticipated
       **   Consolidated 50% Joint Venture

At March 31, 2009, approximately $287.0 million of costs were incurred in relation to the above development projects under construction.

In addition to these current developments, several of which will be phased in, the Company and its joint venture partners intend to commence construction on various other developments only after substantial tenant leasing has occurred and acceptable construction financing is available, including several international projects.

Unconsolidated Joint Venture Development:

The Company's unconsolidated joint ventures have the following shopping center projects under construction. At March 31, 2009, approximately $303.2 million of costs had been incurred in relation to these development projects.

                 DDR's
               Effective              Expected   Initial
               Ownership    Owned     Net Cost    Anchor
Location      Percentage     GLA    ($ Millions) Opening*    Description
               ---------  ---------- ---------- ---------- ----------------
Kansas City
 (Merriam),
 Kansas             20.0%    158,632 $     43.7        TBD Community Center
Dallas
 (Allen),
 Texas              10.0%    797,665      171.2      1H 08 Lifestyle Center
Manaus, Brazil      47.4%    502,529      114.0      1H 09    Enclosed Mall
                          ---------- ----------
Total                      1,458,826 $    328.9
                          ========== ==========
       * 1H = First Half, 2H = Second Half; either actual or anticipated;
         TBD = to be determined.

Wholly-Owned and Consolidated Joint Venture Redevelopments and Expansions:

The Company is currently expanding/redeveloping the following wholly-owned and consolidated joint venture shopping centers at a projected aggregate net cost of approximately $106.9 million. At March 31, 2009, approximately $78.7 million of costs had been incurred in relation to these projects.

Property                        Description
--------                        -----------
Miami (Plantation), Florida     Redevelop shopping center to include Kohl's
                                and additional junior tenants
Chesterfield, Michigan          Construct 25,400 sf of small shop space and
                                retail space
Fayetteville, North Carolina    Redevelop 18,000 sf of small shop space and
                                construct an outparcel building

Unconsolidated Joint Venture Redevelopments and Expansions:

The Company's unconsolidated joint ventures are currently expanding/redeveloping the following shopping centers at a projected net cost of $154.3 million, which includes original acquisition costs related to assets acquired for redevelopment. At March 31, 2009, approximately $117.5 million of costs had been incurred in relation to these projects.

             DDR's
           Effective
           Ownership
Property  Percentage                      Description
--------   ---------  -----------------------------------------------------
Buena
 Park,                Large-scale redevelopment of enclosed mall to
 California       20% open-air format
Los
 Angeles
 (Lancaster),         Relocate Walmart and redevelop former Walmart space
 California       21%
Benton
 Harbor,              Construct 89,000 square feet of anchor space and
 Michigan         20% retail shops

Dividends:

The Company's first quarter dividend was paid in a combination of cash and the Company's common shares. The aggregate amount of cash paid to shareholders on April 21, 2009, was limited to 10% of the total dividend paid. The Company issued 8.3 million common shares based on volume weighted average trading prices of $2.80 per share and paid $2.6 million in cash. This new payout initiative is a part of the Company's strategy to further enhance liquidity and maximize free cash flow while continuing to maintain its REIT status.

Financings:

In the first quarter of 2009, the Company purchased approximately $163.5 million face amount of its outstanding senior notes at a discount to par resulting in a gross gain of approximately $80.1 million. This gain was reduced by approximately $7.5 million due to the adoption of FSP APB 14-1, "Accounting for Convertible Debt That May Be Settled in Cash Upon Conversion" ("Convertible Debt Restatement"), 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 $250 million 3.5% convertible notes, due in 2011, and $600 million 3.0% convertible notes, due in 2012, were required to be allocated between a liability and equity component. This allocation was based upon what the assumed interest rate would have been if the Company had issued traditional senior unsecured notes. Accordingly, the debt balances on the Company's balance sheet relating to the convertible debt were reduced such that non-cash interest expense would be recognized with a corresponding increase to the convertible debt balance to reflect the higher interest rate referred to above.

As discussed under Strategic Transactions, the Company entered into a $60 million secured Bridge Loan with an affiliate of the Otto Family. As indicated in our April 14, 2009 press release, we currently expect the first tranche of 15 million common shares to be sold to the Otto Family within the next several weeks which will be concurrent with our closing on more than $120 million of new debt financing separate and apart from the secured term loan obtained from the Investor affiliate. The Company has obtained commitments for new loans well in excess of the $112.5 million required as a condition of the first equity closing.

The Company also extended three mortgage loans for an additional term ranging between six and twelve months at the existing rates aggregating approximately $30 million.

Developers Diversified Realty Corporation currently owns and manages over 700 retail operating and development properties in 45 states, plus Puerto Rico, Brazil and Canada, totaling approximately 153 million square feet. Developers Diversified Realty Corporation is a self-administered and self-managed 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 Francine Glandt, Vice President of Capital Markets and Treasurer, Developers Diversified Realty Corporation, 3300 Enterprise Parkway, Beachwood, Ohio 44122 or on our Web site 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 21E 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 our results 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, significant downsizing of or bankruptcy of a major tenant; constructing properties or expansions that produce a desired yield on investment; our ability to sell assets on commercially reasonable terms; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing and joint venture arrangements or our failure to satisfy conditions to the completion of these arrangements; our ability to complete in a timely manner or at all, the new debt financings required to consummate the sale of common shares to the Otto Family; our ability to satisfy various other conditions to consummate the sale of common shares to the Otto Family; and the finalization of the financial statements for three-month period ended March 31, 2009. For additional factors that could cause the results of the Company to differ materially from these indicated in the forward-looking statements, please refer to the Company's Form 10-K as of December 31, 2008. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

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

                                                       Three-Month Period
                                                        Ended March 31,
Revenues:                                               2009      2008(E)
                                                      ---------  ---------
   Minimum rents (A)                                  $ 145,212  $ 156,312
   Percentage and overage rents (A)                       2,743      3,005
   Recoveries from tenants                               49,050     52,388
   Ancillary and other property income                    5,050      4,617
   Management, development and other fee income          14,461     16,287
   Other (B)                                              3,250      3,487
                                                      ---------  ---------
                                                        219,766    236,096
                                                      ---------  ---------
Expenses:
   Operating and maintenance                             36,232     35,708
   Real estate taxes                                     29,136     26,985
   Impairment charges (C)                                10,905          -
   General and administrative (D)                        19,171     20,715
   Depreciation and amortization                         62,941     55,462
                                                      ---------  ---------
                                                        158,385    138,870
                                                      ---------  ---------
Other income (expense):
   Interest income                                        3,029        574
   Interest expense (E)                                 (60,834)   (64,405)
   Gain on repurchase of senior notes                    72,578          -
   Other expenses (F)                                    (3,662)      (497)
                                                      ---------  ---------
                                                         11,111    (64,328)
                                                      ---------  ---------
Income before equity in net income of joint ventures,
 impairment of joint venture investment, income tax
 benefit (expense) of taxable REIT subsidiaries and
 franchise taxes, discontinued operations and gain on
 disposition of real estate, net of tax                  72,492     32,898
Equity in net income of joint ventures (G)                  351      7,388
Impairment of joint venture investment (C)                 (875)         -
Income tax benefit (expense) of taxable REIT
 subsidiaries and franchise  taxes                        1,025     (1,037)
                                                      ---------  ---------
Income from continuing operations                        72,993     39,249
Income from discontinued operations (H)                  11,338        909
                                                      ---------  ---------
Income before gain on disposition of real estate         84,331     40,158
Gain on disposition of real estate, net of tax              445      2,367
                                                      ---------  ---------
Net income                                               84,776     42,525
Loss (income) attributable to non-controlling
 interests (I)                                            2,625     (2,365)
                                                      ---------  ---------
Net income attributable to DDR                        $  87,401  $  40,160
                                                      =========  =========
Net income applicable to common shareholders          $  76,834  $  29,593
                                                      =========  =========
Funds From Operations ("FFO"):
   Net income applicable to common shareholders       $  76,834  $  29,593
   Depreciation and amortization of real estate
    investments                                          61,036     54,362
   Equity in net income of joint ventures (G)              (778)    (7,388)
   Joint ventures' FFO (G)                               15,159     19,181
   Non-controlling interests (OP Units) (I)                  79        595
   Gain on disposition of depreciable real estate       (12,334)       (19)
                                                      ---------  ---------
   FFO applicable to common shareholders                139,996     96,324
   Preferred dividends                                   10,567     10,567
                                                      ---------  ---------
   FFO                                                $ 150,563  $ 106,891
                                                      =========  =========
   Per share data:
   Earnings per common share
     Basic                                            $    0.59  $    0.25
                                                      =========  =========
     Diluted                                          $    0.59  $    0.25
                                                      =========  =========
   Dividends Declared                                 $    0.20  $    0.69
                                                      =========  =========
   Funds From Operations -  Basic (J)                 $    1.08  $    0.80
                                                      =========  =========
   Funds From Operations - Diluted (J)                $    1.08  $    0.80
                                                      =========  =========
   Basic - average shares outstanding                   128,485    119,148
                                                      =========  =========
   Diluted - average shares outstanding                 129,684    119,300
                                                      =========  =========

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

(A) Base and percentage rental revenues for the three-month period ended March 31, 2009, as compared to the prior-year comparable period, decreased $10.1 million due to store closings related to tenant bankruptcies, the most significant of which relates to Mervyns which is 50% owned by the Company through a consolidated joint venture. Included in rental revenues for the three-month periods ended March 31, 2009 and 2008, is approximately $1.0 million and $2.8 million, respectively, of revenue resulting from the recognition of straight-line rents.

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

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

(C) The Company recorded impairment charges on two wholly-owned operating shopping centers being marketed for sale as the book basis of the assets was in excess of the estimated fair market value. In addition, the Company recorded an approximate $0.9 million impairment charge associated with a joint venture investment in accordance with Accounting Principles Board Opinion No. 18, "The Equity Method of Accounting for Investment in Common Stock."

(D) 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 three-month periods ended March 31, 2009 and 2008, general and administrative expenses were approximately 4.3% of total revenues, including joint venture revenues.

(E) In 2009, the Company adopted FSP APB 14-1 resulting in the Convertible Debt Restatement. The adoption of this standard required the Company to restate its interest expense and record a non-cash interest-related charge of $3.3 million, net of capitalized interest, for the three months ended March 31, 2008. The Company recorded non-cash interest expense of approximately $3.9 million for the three months ended March 31, 2009 in accordance with this new accounting standard.

(F) Includes litigation related expenditures as well as the write off costs related to abandoned development projects and costs incurred for transactions that are not expected to close.

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

(G) The following is a summary of the combined operating results of the Company's joint ventures:

                                        Three-Month Period Ended March 31,
                                              2009              2008
                                        ----------------  ----------------
Revenues from operations (a)            $        231,500  $        237,959
                                        ----------------  ----------------

Operating expense                                 87,997            80,863
Depreciation and amortization of real
 estate investments                               64,042            56,545
Interest expense                                  70,906            77,295
                                        ----------------  ----------------
                                                 222,945           214,703
                                        ----------------  ----------------
Income from operations before tax
 expense and discontinued operations               8,555            23,256
Income tax expense                                (1,990)           (3,780)
Income from discontinued operations,
 net of tax                                           45               114
Loss on disposition of discontinued
 operations, net of tax                              (29)               (2)
Loss on disposition of assets (b)                (26,741)                -
Other, net (c)                                    11,678             6,439
                                        ----------------  ----------------
Net (loss) income                       $         (8,482) $         26,027
                                        ================  ================
DDR ownership interests (d)             $            791  $          7,489
                                        ================  ================

FFO from joint ventures are summarized as follows:

Net (loss) income                       $         (8,482) $         26,027
Loss on disposition of real estate,
 including discontinued operations                     -                 2
Depreciation and amortization of real
 estate investments                               64,041            56,604
                                        ----------------  ----------------
                                        $         55,559  $         82,633
                                        ================  ================
DDR ownership interests (d)             $         15,159  $         19,181
                                        ================  ================
DDR joint venture distributions
 received, net                          $          8,675  $         13,700
                                        ================  ================

(a) Revenues for the three-month periods ended March 31, 2009 and 2008 included approximately $0.7 million and $2.3 million, respectively, resulting from the recognition of straight-line rents, of which the Company's proportionate share was not material and $0.3 million, respectively.

(b) An unconsolidated joint venture disposed of a property in March 2009 resulting in a loss of $26.7 million of which the Company's proportionate share was $5.8 million.

(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 $11.7 million of income for the three-month period ended March 31, 2009, of which the Company's share was approximately $1.5 million.

(d) The Company's share of joint venture net income was decreased by $0.1 million for the three-month period ended March 31, 2008. This adjustment relates to basis differences impacting amortization and depreciation and gain on dispositions.

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

At March 31, 2009 and 2008, the Company owned joint venture interests, excluding consolidated joint ventures, in 327 and 317 shopping center properties, respectively.

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

                                                  Three Month Period Ended
                                                          March 31,
                                                      2009         2008
                                                  -----------  -----------
Revenues                                          $       141  $     5,919
                                                  -----------  -----------

Expenses:
  Operating                                               212        1,993
  Interest, net                                            62        1,075
  Depreciation                                            138        1,745
  Non-controlling interest                                  -            6
                                                  -----------  -----------
    Total expenses                                        412        4,819
                                                  -----------  -----------
  (Loss) income before gain (loss) on disposition
   of real estate                                        (271)       1,100
  Gain (loss) on disposition of real estate, net       11,609         (191)
                                                  -----------  -----------
  Net income                                      $    11,338  $       909
                                                  ===========  ===========

(I) Non-controlling interests are comprised of the following:

                                                  Three-Month Period Ended
                                                          March 31,
                                                      2009         2008
                                                  -----------  -----------
Loss (income) attributable to non-controlling
 interests                                        $     2,704  ($    1,770)
Operating partnership units                               (79)        (595)
                                                  -----------  -----------
                                                  $     2,625  ($    2,365)
                                                  ===========  ===========

In June 2008, 0.5 million operating partnership units were converted into an equivalent number of common shares of the Company.

(J) For purposes of computing FFO per share (basic), the weighted average shares outstanding were adjusted to reflect the assumed conversion of approximately 0.4 million and 0.9 million Operating Partnership Units ("OP Units") outstanding at March 31, 2009 and 2008, respectively, into 0.4 million and 0.9 million common shares for the three-month periods ended March 31, 2009 and 2008, respectively, on a weighted average basis. The weighted average diluted shares and OP Units outstanding, for purposes of computing FFO, were approximately 129.7 million and 120.6 million for the three-month periods ended March 31, 2009 and 2008, respectively.

                DEVELOPERS DIVERSIFIED REALTY CORPORATION
                           Financial Highlights
                              (In thousands)



Selected Balance Sheet Data (A):
                                    March 31, 2009     December 31, 2008(B)
                                  -------------------  -------------------
Assets:
Real estate and rental property:
    Land                          $         2,058,254  $         2,073,947
    Buildings                               5,871,679            5,890,332
    Fixtures and tenant
     improvements                             270,854              262,809
                                  -------------------  -------------------
                                            8,200,787            8,227,088
Less: Accumulated depreciation             (1,252,769)          (1,208,903)
                                  -------------------  -------------------
                                            6,948,018            7,018,185
Construction in progress                      887,459              882,478
Assets held for sale                            1,442                    -
                                  -------------------  -------------------
Real estate, net                            7,836,919            7,900,663

Investments in and advances to
 joint ventures                               587,543              583,767
Cash                                           36,323               29,494
Restricted cash (C)                           110,621              111,792
Notes receivable                               81,041               75,781
Receivables, including
 straight-line rent, net                      158,464              164,356
Other assets, net                             144,404              154,369
                                  -------------------  -------------------
                                  $         8,955,315  $         9,020,222
                                  ===================  ===================

Liabilities:
Indebtedness:
    Revolving credit facilities   $         1,251,131  $         1,027,183
    Unsecured debt                          2,023,074            2,402,032
    Mortgage and other secured
     debt                                   2,476,415            2,437,440
                                  -------------------  -------------------
                                            5,750,620            5,866,655
    Dividends payable                          32,842                6,967
    Other liabilities                         238,650              281,179
                                  -------------------  -------------------
                                            6,022,112            6,154,801
Redeemable operating partnership
 units                                            627                  627
Shareholders' equity                        2,932,576            2,864,794
                                  -------------------  -------------------
                                  $         8,955,315  $         9,020,222
                                  ===================  ===================

                DEVELOPERS DIVERSIFIED REALTY CORPORATION
                           Financial Highlights
                              (In thousands)

(A) Amounts include the consolidation of a 50% owned joint venture, DDR MDT MV LLC ("MV LLC"), that owns 32 sites formerly occupied by Mervyns at March 31, 2009, which includes $318.0 and $348.5 million of net real estate assets at March 31, 2009 and December 31, 2008, respectively, $237.5 million and $258.5 million of mortgage debt at March 31, 2009 and December 31, 2008, respectively, and $67.1 million and $70.2 million of non-controlling interest at March 31, 2009 and December 31, 2008, respectively.

(B) The December 31, 2008 selected balance sheet data was restated to reflect the adoption of two accounting standards in the first quarter of 2009.

--  The Company adopted the provisions of FSP APB 14-1 resulting in the
    Convertible Debt Restatement.  The Company increased real estate assets by
    $2.9 million and shareholders' equity by $52.6 million and decreased
    unsecured debt by $50.7 and deferred charges by $1.0 million.
    
--  The Company adopted the provisions of SFAS No. 160, "Non-controlling
    Interests in Consolidated Financial Statements - an Amendment of ARB No.
    51," which impacted the accounting for transactions with non-controlling
    shareholders.  The Company no longer has a line item in its balance sheet
    referred to as Minority Interests.  Shareholders' equity at December 31,
    2008 has been restated to include $120.1 million attributable to non-
    controlling interests.  Shareholders' equity at March 31, 2009 includes
    $133.5 million attributable to non-controlling interests.
    

(C) Restricted cash includes $64.1 million and $64.8 million at MV LLC at March 31, 2009 and December 31, 2008, respectively. At March 31, 2009, the MV LLC restricted cash is comprised of $23.9 million received from the seller of the Mervyns portfolio relating to Mervyns bankruptcy filing in the third quarter 2008, a $33.0 million net capital contribution by the members of MV LLC, and $7.2 million related to a security deposit letter of credit, all of which are required to be held in escrow by the lender. Also included in restricted cash is $46.5 million and $47.0 million at March 31, 2009 and December 31, 2008, respectively, relating to the terms of a bond issue for one of the Company's projects in Mississippi.


                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:


                                        March 31, 2009   December 31, 2008
                                      -----------------  -----------------

Land                                  $       2,360,887  $       2,378,033
Buildings                                     6,334,138          6,353,985
Fixtures and tenant improvements                134,135            131,622
                                      -----------------  -----------------
                                              8,829,160          8,863,640
Less: Accumulated depreciation                 (651,318)          (606,530)
                                      -----------------  -----------------
                                              8,177,842          8,257,110
Construction in progress                        426,770            412,357
                                      -----------------  -----------------
Real estate, net                              8,604,612          8,669,467
Receivables, including straight-line
 rent, net                                      143,537            136,410
Leasehold interests                              12,325             12,615
Other assets                                    329,897            315,591
                                      -----------------  -----------------
                                      $       9,090,371  $       9,134,083
                                      =================  =================

Mortgage debt (a)                     $       5,760,277  $       5,776,897
Notes and accrued interest payable to
 DDR                                             70,224             64,967
Other liabilities                               232,761            237,363
                                      -----------------  -----------------
                                              6,063,262          6,079,227
Accumulated equity                            3,027,109          3,054,856
                                      -----------------  -----------------
                                      $       9,090,371  $       9,134,083
                                      =================  =================

(a) The Company's proportionate share of joint venture debt aggregated
    approximately $1,215.6 million and $1,216.1 million at March 31, 2009
    and December 31, 2008, respectively.

Contact Information

  • Contact:

    Scott A. Wolstein
    Chairman and Chief Executive Officer
    216-755-5500

    Thomas Morabito
    Senior Director of Investor Relations
    216-755-5500